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Collegesource, Inc. v. Academyone

October 25, 2012

COLLEGESOURCE, INC.
v.
ACADEMYONE, INC.



The opinion of the court was delivered by: McLaughlin, J.

MEMORANDUM

This case concerns two companies providing online college transfer services. The plaintiff, CollegeSource, Inc. has accused the defendant, AcademyOne, Inc., of republishing course catalogs and course information digitized and maintained by CollegeSource. Both companies utilize the course catalogs and information to serve schools and individual students seeking to transfer credits from one school to another.

The defendant has moved for summary judgment under Rule 56 of the Federal Rules of Civil Procedure on all remaining counts of the Amended Complaint: Violation of the U.S. Computer Fraud and Abuse Act ("CFAA") (Count III); Breach of Contract (Count IV); Unjust Enrichment (Count V); Trademark Infringement (Count VI) and Unfair Competition (Count VII) under U.S. Lanham Act; Declaration of Trademark Invalidity Due to Fraud on U.S.P.T.O. (Count VIII); and False Advertising under U.S. Lanham Act (Count IX). The Court grants the defendant's motion for summary judgment in its entirety.

I. Summary Judgment Record

CollegeSource's claims stem from four distinct sets of facts.*fn1 First, AcademyOne's course catalog collection efforts form the basis of the plaintiff's breach of contract, unjust enrichment, and CFAA claims. Second, AcademyOne's purchase of Internet search engine AdWords relates to the claims of trademark infringement and unfair competition under the Lanham Act. Third, AcademyOne's registration of the "CollegeTransfer.net" trademark relates to the declaratory judgment sought by the plaintiff on the term's trademark invalidity. The final set of facts, respecting correspondences and advertising proffered by AcademyOne, relates to CollegeSource's false advertising claim.

A. Factual Background

1. CollegeSource and Career Guidance Foundation The plaintiff, CollegeSource, Inc., is a company that provides the public with information and data services relating to college and university course curriculums, equivalencies, and transferability. It is the successor in interest to Career Guidance Foundation ("CGF"), which was founded in 1971. Am. Compl. ¶ 5; Tr. Prelim. Inj. Hr'g 22:2-10 (D. Ex. 1*fn2 ).

CollegeSource offers three products: CollegeSource Online, the Transfer Evaluation System ("TES"), and CataLink. CollegeSource Online is a subscription service that provides access to CollegeSource's archive of PDF digital college course catalogs. The product is available to users who have a paid subscription. Users can also download a free trial and gain access to up to three PDF catalogs. Pl.'s Resp. to Def.'s Mot. for Summ. J. ("Pl.'s Resp.") 8; Kerry Cooper Dep. ("Cooper Dep.") 108:22-109:4, Aug. 23, 2011 (D. Ex. 13); D. Exs. 15-16.

TES is an online database of courses and other course equivalency-related data culled from CollegeSource's library of course catalogs. It is also available by subscription. It is primarily marketed to institutions seeking to facilitate the transfer of credits from one school to another. Am. Compl. ¶¶ 24-25; Pl.'s Resp. 8; Tr. Prelim. Inj. Hr'g 22:2-10.

Finally, CataLink is a hyperlink service developed to assist schools in distributing course catalogs efficiently. CollegeSource provides subscribing schools with a URL hyperlink to CollegeSource's archive of that school's digital course catalogs, which can then be inserted and displayed on the school's home page. When an interested user seeks to browse past catalog titles, he clicks on the CataLink and is brought to CollegeSource's domain. Expert Report of Paul Lewis at 15, Dec. 21, 2011 ("Lewis Report") (D. Ex. 22); Stanley Novak Dep. ("Novak Dep.") 82:20-83:11, Aug. 24, 2011 (D. Ex. 6).

Unlike CollegeSource Online and TES, CataLink is not a subscriber service. Users are transported to CollegeSource's website with no notification that they were leaving the school's Internet domain. Jessica Ybarra Dep. ("Ybarra Dep.") 33:8-36:5, Aug. 26, 2011 (D. Ex. 23); Cooper Dep. 84:16-22 (D. Ex. 13); Lewis Report 10-17 (D. Ex. 22).

2. AcademyOne

The defendant AcademyOne was founded around 2006 with the objective to build administrative systems for schools and to reduce costs associated with student transfers. AcademyOne has since developed two products: the Course Equivalency Management Center ("CEMC") and the National Course Atlas. CEMC allows users, mostly faculty, to evaluate academic courses and curriculum at different institutions to make decisions on credit equivalency. The National Course Atlas is a database of current course information from roughly 4,000 colleges. Tr. Prelim. Inj. Hr'g 114:3-4, 115:2-5, 119:3-8, 121:14-19; D. Ex. 2 at 2.

B. The Parties' Course Catalog Collections

1. CollegeSource's Collection Methods CollegeSource derived its first set of electronic college course catalogs through CGF in 2004, when CGF transferred its assets to CollegeSource as part of a settlement. D. Ex. 10; Am. Compl. ¶ 23. Now, CollegeSource repopulates its course catalogs on a yearly basis. It acquires its collection of college course catalogs by contacting individual colleges by email or telephone and requesting copies of their catalogs. The colleges then provide the catalog, either in electronic or paper form. If the catalog is in electronic form, CollegeSource processes it, converts it to PDF format, and adds it to its database. If the catalog is in paper form, CollegeSource scans it and processes it with optical character recognition software to convert it to PDF format. D. Ex. 17; Tr. Prelim. Inj. Hr'g 49:21-22, 78:1-25, 79:1-9; Novak Dep. 33:10-13, 34:21-35:9, 39:2-40:10 (D. Ex. 6).

Course data is also extracted and placed in the TES course database, and the entire PDF catalog is placed in the CollegeSource Online database. Selected catalogs are also made available via the CataLink system. Pl.'s Resp. 7, Tr. Prelim. Inj. Hr'g Novak Test. 67:12-68:1, 75:21-23, 78:18-79:9.

Finally, CollegeSource inserts a uniform cover page (or "splash page") which includes the CollegeSource logo on each catalog it converts to PDF format. CollegeSource tags the data both on the cover page and throughout the rest of the document. Pl.'s Resp. 7-8; Tr. Prelim. Inj. Hr'g 32:7-11, 49:23-50:1.

2. CollegeSource's Copyright Notices and Subscription Agreement

a. "Copyright & Disclaimer Information" Notices On the inside cover of each of its PDF college catalogs, CollegeSource inserts a page entitled "Copyright & Disclaimer Information." The notice reads in relevant part:

While CollegeSource, Inc. and Career Guidance Foundation provides information as a service to the public, copyright is retained on all digital catalogs. This means you may NOT:

* distribute the digital catalog files to others,

* "mirror" or include this material on an internet (or intranet) server, or

* modify or re-use the files without the express written consent of CollegeSource, Inc. and Career Guidance Foundation and the appropriate school.

D. Ex. 26 at 3; Tr. Prelim. Inj. Hr'g 32:22-24.

In addition, CollegeSource's website contains a "Copyright and Disclaimer" hyperlink in the lower left-hand corner. The page accessed by this link contains language substantively identical to that of the "Copyright & Disclaimer Information" page in the PDF catalogs. D. Exs. 34, 36.

b. Subscription Agreement

CollegeSource also has a subscription agreement for its CollegeSource Online and TES services. To access subscriber-only services on CollegeSource Online and TES, a user must accept the terms of the subscription agreement.*fn3 Troy Holaday Dep. ("Holaday Dep. III") 254:1-255:25, Sep. 27, 2011 (D. Ex. 14).

Such agreements can be accessed by a user in two manners. First, a user seeking to log in encounters a sign-in box. Within the sign-in box is the following language: "By signing in above, I agree to be bound by the terms of the . . . Subscription Agreement." The box includes a link to this agreement. Second, when the user attempts to access a course catalog using CollegeSource Online or TES, he also encounters a pop-up submission form to apply for a free trial. In the submission form, there is a shortened version of the agreement and a link to the complete agreement. D. Ex. 33; Troy Holaday Dep. ("Holaday Dep. I") 87:1-16, Aug. 25, 2011 (D. Ex. 46).

In contrast, when a user accesses a course catalog via a CataLink placed on a college's website, there are neither links to CollegeSource's Copyright and Disclaimer notice nor to its subscription agreement. However, the Copyright and Disclaimer page is still included in the course catalog. Lewis Report at 17 (screenshot of CataLink page) (D. Ex. 22).

2. AcademyOne Begins Collecting Its Course Catalog Because both of its products require course data, AcademyOne began a process to electronically gather course descriptions in 2008. In order to obtain the course catalog data needed to run their services, AcademyOne first made several attempts to license CollegeSource's database. However, CollegeSource denied its requests. Tr. Prelim. Inj. Hr'g Stanley Test. 5:7-6:13 (D. Ex. 56); Tr. Prelim. Inj. Hr'g 60:2-3; Cooper Decl. ¶ 13 (ECF No. 185).

Thereafter, AcademyOne turned to the Chinese company Beijing Zhongtian-Noah Sports Science Co., Ltd. ("Noah") to retrieve the data. AcademyOne hired Noah to pull PDF or HTML college catalogs directly from the college websites. The agreement between the parties stipulated that AcademyOne would provide Noah with a list of links to online catalogs and that Noah would compile the course information into a single course database. (D. Ex. 58 at ex. A).

Approximately half of the 4,000 schools targeted by Noah posted their course catalogs in PDF format, which had to be converted and processed before being copied as text, or "scraped," into AcademyOne's database. To collect the PDF course catalogs, Noah downloaded over 18,000 PDF files. Tr. Prelim.

Inj. Hr'g Stanley Test. 7:21-22 (D. Ex. 56); Stanley Decl. ¶ 9, (D. Ex. 59); Moldoff Decl. ("Moldoff Decl. II") ¶ 13, Jan. 5, 2011 (D. Ex. 60).

Initially, AcademyOne provided Noah the URLs at which to find the college catalogs. Some of these schools utilized CollegeSource's CataLink service. Noah eventually took over the task of locating the URLs based on a list of accredited colleges provided by AcademyOne. Lin Zhou Dep., July 30, 2009, 83:11-13 (D. Ex. 62); Def.'s Mem. Supp. Summ. J. ("Def. Mot.") at 21; D. Ex. 65; Lin Zhou Dep., Oct. 11, 2011, 37:11-24 (D. Ex. 66).

There is evidence that between 2005 and 2007, several AcademyOne employees registered for free trial subscriptions to CollegeSource Online. These free trials allowed for a limited number of course catalog downloads. D. Exs. 109-10.

3. CollegeSource Finds Copies of Its PDF Catalogs on AcademyOne's Websites

In early 2007, AcademyOne launched its websites, which provided free access to its course description database. This included around 2,000 of the 18,000 PDF documents that Noah had collected. David Moldoff Dep. 52:15-53:17, 90:14-19, Mar. 20, 2009 (D. Ex. 67); Tr. Prelim. Inj. Hr'g 123:16-20.

Soon thereafter, CollegeSource's CEO, Kerry Cooper, discovered that some of the PDF documents posted by AcademyOne had been copied from CollegeSource servers. CollegeSource was able to determine the identity of the documents because they included, on page two, CollegeSource's Copyright and Disclaimer Information page. Cooper and other CollegeSource employees then spent a full workday identifying around 680 CollegeSource course catalogs located on AcademyOne's website. Tr. Prelim. Inj. Hr'g 31:21-32:19, 35:21-36:13. Noah later reported to AcademyOne that out of the over 18,000 PDF documents it provided, 783 were "CollegeSource PDFs." D. Exs. 71-72.

The 783 "CollegeSource PDFs" had been obtained by Noah through CollegeSource's CataLink service. CataLink is a "hyperlink" archival service provided to subscribing schools and universities with which educational institutions can copy a link to CollegeSource's PDF version of their catalog and post it to their own websites. Over 1,700 PDF course catalogs containing the name "CollegeSource" are publicly available on college websites.*fn4 Novak Dep. 77:7-80:12 (D. Ex. 6); Lewis Report at 8-9 (D. Ex. 22); D. Exs. 47, 51-54.

In 2008, CollegeSource hired a computer expert, Michael Bandemer, to examine and analyze whether AcademyOne had improperly used electronically stored intellectual property of CollegeSource. Bandemer confirmed that some PDFs posted on AcademyOne's website were identifiable as "encrypted [CollegeSource] PDF data." Expert Report of Michael R. Bandemer ("Bandemer Report") 2, 4 (D. Ex. 91).

CollegeSource has not identified any signs of a firewall breach of CollegeSource's servers or any unusually large downloads of CollegeSource data. Ybarra Dep. 19:8-11, 40:13-18

(D. Ex. 23).

4. The Cease and Desist Letter and Its Aftermath On April 23, 2007, Kerry Cooper, the CEO of CollegeSource, hand-delivered a cease and desist letter to AcademyOne. This letter asserted that there were "approximately 700 instances" of "literal copying and display of the CollegeSource Materials by AcademyOne." CollegeSource claimed that AcademyOne willfully infringed its copyright, violated the Lanham Act, and violated the California Business and Professions Code § 17200. The letter demanded that AcademyOne remove all CollegeSource PDF catalogs from its websites and servers. Tr. Prelim. Inj. Hr'g 36:22-37:1; Moldoff Decl. II ¶ 19, Ex. 1 (D. Ex. 60).

Upon receiving the cease and desist letter, AcademyOne disabled the links on its website which allowed access to all PDF catalogs and initiated an internal investigation regarding CollegeSource's allegations. During the investigation, the PDFs were not linked onto the website, but the catalogs remained on AcademyOne's servers, meaning anyone who had saved the URL for a specific catalog could still access it. Tr. Prelim. Inj. Hr'g 39:13-17, 125:12-21; D. Exs. 71-72.

Following the investigation, AcademyOne removed all PDF catalogs from its servers. At that time, AcademyOne did not delete the course descriptions "scraped," or copied, from the CollegeSource PDFs. In January 2011, AcademyOne initiated a new method of repopulating its databases in a manner which did not involve Noah's PDF files. Thus, it removed at that time all course descriptions derived from PDF catalogs (including catalogs not created by CollegeSource) from its database. Tr. Prelim.

Inj. Hr'g 126:10-16, 127:15-24; Moldoff Decl.("Moldoff Decl. III") ¶ 14, Feb. 27, 2012 (D. Ex. 3).

5. Damages Incurred by CollegeSource CollegeSource embarked on a number of steps upon its discovery of AcademyOne's actions in early 2007. First, CollegeSource initiated an internal investigation of AcademyOne's websites, which involved many employees' working hours. Tr. Prelim. Inj. Hr'g 31:21-32:19. In addition, CollegeSource hired a computer expert, Michael Bandemer, to analyze the full scope of AcademyOne's actions. Finally, CollegeSource incurred costs by implementing increased security measures on their catalogs, such as "seeding," "salting," and "watermarking." These costs were well in excess of $5,000. Cooper Decl. ¶ 16, (ECF No. 185).

C. AcademyOne's AdWords

Beginning in 2007, AcademyOne purchased the terms "college," "college source," "career guidance," and "career guidance foundation" from several Internet search engines such as Google. This form of Internet advertising, known as "AdWords," presents advertisements as "sponsored links" or "sponsored results" in addition to the standard search results. Thus, a user who entered the search terms purchased by the advertiser would, in addition to the normal search results, be presented with an ad for the advertiser's website. Moldoff Decl. III ¶¶ 16, 18 (D. Ex. 3).

Here, AcademyOne's advertisements are titled with a key phrase such as "College Transfer Help" or "Find Transfer Information." It identifies its website "collegetransfer.net," not AcademyOne. The display of the advertisements vary depending on the Internet service provider. On AOL, for example, the links are listed above the normal results, shaded a different color from the normal search results, and listed as a "Sponsored Link." On Google, the links are listed to the right of the normal results under the banner "Sponsored Links." On Ask.com, the advertisement is nestled within the normal results and under a small "Sponsored Results" banner. Troy Holaday Decl. ("Holaday Decl. II") Ex. I, Apr. 5, 2012 (ECF No. 186-9).

CollegeSource and its predecessor CGF have continuously used the "CAREER GUIDANCE FOUNDATION" name and marks in advertising and in general commerce since 1980. They have used "COLLEGESOURCE" continuously since 1994. Finally, CollegeSource owns all title and interest to the mark "CollegeSource." Cooper Decl. ¶¶ 17-18 (ECF No. 185); Holaday Decl. II, Ex. H (ECF No. 186-9).

D. AcademyOne's Trademark in CollegeTransfer.net AcademyOne filed an application with the U.S. Patent and Trademark Office (USPTO) to register "collegetransfer.net" as a service mark on July 3, 2009, and thereafter requested that the mark be moved to the Supplemental Register. The mark was registered on the Supplemental Register on May 25, 2010. It has not yet been registered on the Principal Register. Am. Compl. 267, 279, 284; Papaefthimiou Decl. Ex. 23, 26 (ECF No. 187-21, 23).

In its application to the USPTO, AcademyOne represented that it first used collegetransfer.net in commerce on December 1, 2005. However, there is evidence in the record to suggest that the correct date of its first use was sometime after March 2007. Papaefthimiou Decl. Ex. 4 ΒΆ 12 (ECF No. 187-4). In addition, AcademyOne did not inform the USPTO about an Eastern District of Pennsylvania decision which held that CollegeSource did not infringe on the collegetransfer.net trademark with its own website, collegetransfer.com. AcademyOne, Inc. v. CollegeSource, Inc., No. 08-5707, 2009 WL 5184491 (E.D. Pa. Dec. 21, 2009). ...


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