CAUSE NO. 02-03-00082-CV

IN THE SECOND COURT OF APPEALS FORT WORTH, TEXAS

FARECHASE, INC. and SABRE INC., Appellants, v.

AMERICAN AIRLINES, INC., Appellee.

On Appeal from the 67th Judicial District, Tarrant County, Texas The Honorable Don Cosby, Presiding

BRIEF OF APPELLANT, FARECHASE, INC.

Jennifer Stisa Granick ( In Pro Hac Vice) California State Bar No. 168423 CENTER FOR INTERNET AND SOCIETY STANFORD LAW SCHOOL 559 Nathan Abbott Way Stanford, California 94305-8610 Telephone: (650) 724-0014 Facsimile: (650) 723-4426 Ralph H. Duggins Texas State Bar No. 06183700 Scott A. Fredricks Texas State Bar No. 24012657 CANTEY & HANGER, LLP 2100 Burnett Plaza 801 Cherry Street Fort Worth, Texas 76102 Telephone: (817) 877-2800 Facsimile: (817) 877-2807 Attorneys for Appellant FARECHASE, INC.

APPELLANT REQUESTS ORAL ARGUMENT

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IDENTITY OF PARTIES AND COUNSEL Appellant certifies that the following is a complete list of the parties, attorneys,

and any other person who has any interest in the outcome of this lawsuit:

FARECHASE, INC., Appellant CENTER FOR INTERNET AND SOCIETY STANFORD LAW SCHOOL Jennifer Stisa Granick ( In pro hac vice) California State Bar No. 168423 Crown Quadrangle 559 Nathan Abbott Way Stanford, California 94305-8610 Telephone: (650) 724-0014 Facsimile: (650) 723-4426 CANTEY & HANGER, L.L.P. Ralph H. Duggins, State Bar No. 06183700 Scott A. Fredricks, State Bar No. 24012657 2100 Burnett Plaza 801 Cherry Street Fort Worth, Texas 76102 Telephone: (817) 877-2800 Facsimile: (817) 877-2807

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SABRE, INC., Appellant

JOSE HENRY BRANTLEY & KELTNER, LLP David E. Keltner, State Bar No. 11249500 675 N. Henderson Fort Worth, Texas 76107 Telephone: (817) 877-3303 Facsimile: (817) 338-9109 SHANNON GRACEY RATLIFF & MILLER, LLP R.H. Wallace, Jr., State Bar No. 20778700 Paul F. Gianni, State Bar No. 00784124 Monika T. Cooper, State Bar No. 90001773 777 Main Street, Suite 3800 Fort Worth, Texas 76102 Telephone: (817) 336-9333 Facsimile: (817) 336-3735

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AMERICAN AIRLINES, INC., Appellee HARRIS, FINLEY & BOGLE, P.C. Bill F. Bogle, State Bar No. 02561000 Russell R. Barton, State Bar No. 01857250 777 Main Street, Suite 3600 Fort Worth, Texas 76102-5341 Telephone: (817) 870-8700 Facsimile: (817) 332-6121 YETTER & WARDEN, LLP R. Paul Yetter, State Bar No. 22154200 909 Fannin, Suite 3600 Houston, Texas 77010 Telephone: (713) 632-8000 Facsimile: (713) 632-8002 BLAIES & HIGHTOWER, LLP Gregory P. Blaies, State Bar No. 02412650 777 Main Street, Suite 1900 Fort Worth, Texas 76102 Telephone: (817) 334-0800 Facsimile: (817) 334-0574 HOWREY SIMON ARNOLD & WHITE LLP John R. Keville, State Bar No. 00794085 750 Bering Drive Houston, Texas 77057 Telephone: (713) 787-1400 Facsimile: (713) 787-1440

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TABLE OF CONTENTS

Page

IDENTITY OF PARTIES AND COUNSEL.....................................................................ii TABLE OF CONTENTS ..................................................................................................... v INDEX OF AUTHORITIES .............................................................................................viii STATEMENT OF THE CASE............................................................................................1 ISSUES PRESENTED..........................................................................................................1 STATEMENT OF FACTS...................................................................................................2 The Relationship Between the Parties ....................................................................7 The (Non) Effect Of FareChase Software on AA.com.........................................8 SUMMARY OF THE ARGUMENT ...............................................................................10 ARGUMENT.......................................................................................................................12 I. INTRODUCTION.......................................................................................12 II. AMERICAN AIRLINES HAS NOT MET ITS BURDEN OF PROOF FOR A MANDATORY INJUNCTION....................................14 III. UNDER ANY INJUNCTION STANDARD, AMERICAN AIRLINES

HAS NO PROBABLE RIGHT OF RECOVERY ..................................17 A. American Airlines Cannot Control its Public Data Through The

Trespass To Chattels Tort...............................................................18 1. No Vicarious Liability for the Trespass of Others ..........18 2. AA Cannot Show Harm to its Server as Required by Texas Trespass to Chattels Law...................................20

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3. This Court Should Reject Extending Recent Decisions that Found Trespass For Direct, Recursive Searching to FareChase’s Vicarious, User-Directed, Harmless Website Access ..................................................................24 B. The AA “User Agreement” is Not an Enforceable Contract or a Limitation on Public Use ........................................................26 C. Distributing Software That Allows Users to Search Publicly Available Webfare Data Does Not Violate the Texas Penal Code ........................................................................................29 IV. AA’S STATE LAW CLAIMS, TO THE EXTENT THEY SEEK

REDRESS FOR THE UNAUTHORIZED ACCESS TO, USE AND COPYING OF WEBFARE DATA, ARE PREEMPTED BY FEDERAL LAW 33

V. AMERICAN HAS NOT SHOWN THAT IT IS HARMED BY

FARECHASE ..............................................................................................40 A. AA Has Failed to Show Extreme Necessity or Hardship..........40 1. AA Does Not Face Imminent Harm..................................41 2. AA Cannot Establish Irreparable Injury ...........................42 3. AA Cannot Establish “Lack of Adequate Legal Remedy At Law” .................................................................42 B. In Balancing the Equities, the Scale Tips Decidedly in Favor of Farechase ..........................................................................45 C. The Public Interest is Aligned with the Free Flow of Public Information; thus AA’s Request for Injunctive Relief Must Be Denied....................................................................46 VI. CONCLUSION AND PRAYER ...............................................................49 APPENDIX TO BRIEF OF APPELLANT, FARECHASE, INC..........................................................attached to Brief Temporary Injunction Order .............................................................................Tab 1

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United States Constitution, Article I, Section 8, Clause 8 (“Copyright Clause”) .............................................................................Tab 2 17 United States Code (U.S.C.) § 102 .............................................................Tab 3 17 U.S.C. § 103..................................................................................................Tab 4 17 U.S.C. § 301...................................................................................................Tab 5 Texas Penal Code § 7.01 .................................................................................Tab 6 Texas Penal Code § 7.02 ...................................................................................Tab 7 Texas Penal Code §33.02 ..................................................................................Tab 8 American Airlines’ User Agreement ...............................................................Tab 9 CERTIFICATE OF SERVICE

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INDEX OF AUTHORITIES

Page

Cases Alcatel v. DGI, 166 F.3d 772 (5th Cir. 1999) .............................................................38-39 American Libraries Association v. Pataki, 969 F.Supp. 160 (S.D.N.Y. 1997)................................................................................................ 32, 33 Arthrex Inc. v. dj Orthopedics LLC, ___ F.Supp.2d ___, 2002 WL 818062, *4 (D. Del 2002)...............................................................................44 Austin v. Strong, 1 S.W.2d 872 (Tex. 1928) ....................................................................26 Banzhaf v. ADT Security Systems Southwest, Inc., 28 S.W.3d 180 (Tex. App. -- Eastland 2000, pet. denied) ............................................................27 Beier v. State, 687 S.W.2d 2 (Ct. of Crim.App. 1985) ................................19-20, 31, 32 Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (1989).........................34 Brown-Forman Distillers Corp. v. New York State Liquor Authority, 476 U. S. 573 (1986) ...............................................................................................33 Burdine v. State, 719 S.W.2d 309 (Tex.Crim.App. 1986) .............................................31 Daboub v. Gibbons, 42 F.3d 285 (5th Cir. 1995)................................................36, 37, 38 Doe v. Franklin, 930 S.W.2d 921 (Tex.App. – El Paso 1996, no writ)........................19 Dresser Industries, Inc. v. Page Petroleum, Inc., 853 S.W.2d 505 (Tex. 1993) ...............................................................................................................27 eBay v. Bidder's Edge, Inc., 100 F.Supp.2d 1058 (N.D. Cal. 2000)................23, 24, 25 Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340 (1991)...................................................................................11, 35, 36 Fleming v. Campbell, 537 S.W.2d 118 (Tex.Civ App.--Houston [14th Dist.] 1976; writ ref'd n.r.e)..............................29

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Foley v. Luster, 249 F.3d 1281 (11th Cir. 2001)..............................................................36 Frey v. DeCordova Bend Estates Owners Ass'n, 647 S.W.2d 246 (Tex. 1983)..................................................................................41 Gemcraft Homes, Inc. v. Sumurdy, 688 F.Supp. 289 (E.D.Tex. 1988) ........................35 Gen. Mills Rests. Inc. v. Tex. Wings, Inc. 12 S.W.3d 827 (Tex. App. – Dallas 2000, no pet.) ........................................................................22 Golden Spread Council, Inc. # 562 of the BSA v. Akins, 926 S.W.2d 287 (Tex. 1996)..................................................................................19 Goldstein v. California, 412 U.S. 546 (1973)..................................................................34 Haynie v. General Leasing Co., Inc., 538 S.W.2d 244, 245 (Tex.App. – Dallas 1976, no writ)...............................................................................................16 Healy v. The Beer Institute, 491 U. S. 324 (1989) ..........................................................33 High Tech Medical Instrumentation, Inc. v. New Image Industries, Inc., 49 F.3d 1551 (Fed. Cir. 1995)................................................................................44 Illinois Tool Works v. Grip-Pak, Inc., 906 F.2d 679 (Fed.Cir. 1990)...........................44 J.I. Case Threshing Mach. Co. v. Howth, 293 S.W. 800 (Tex. 1927)..........................26 Jimmerson v. Norris Fence Co., 482 S.W.2d 670 (Tex. Civ. App. – Texarkana 1972, no writ)................................................. 21, 22 Jordan v. Landry’s Seafood Restaurant, 89 S.W.3d 737 (Tex.App. – Houston 2002)....................................................................................41 Kaiser Aetna v. United States, 444 U.S. 164 (1979).......................................................23 Kassel v. Consolidated Freightways Corp. of Del. 450 U.S. 662 (1981) ....................32 Kehler v. Eudaly, 933 S.W.2d 321 (Tex.App. – Fort Worth 1996 writ den.) ..............19 LeFaucheur v. Williams, 807 S.W.2d 20 (Tex.App. – Austin 1991, no writ) ...........................................................15, 16, 43

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Lipscher v. LRP Publications, 266 F.3d 1305 (11th Cir 2001) .................. 36, 37, 38, 39 Mason v. Babin, 474 S.W.2d 809 (Tex.Civ.App.—Houston [1st Dist.] 1971, writ ref'd n.r.e.) ..............................29 Mitchell v. State, 12 S.W.3d 158 (Tex.App. – Dallas 2000, no pet.) ............................30 Mitchell v. Temple, 152 S.W.2d 1116 (Tex.Civ.App.–Austin 1941, writ ref'd w.o.m.)...................................................47 Mother & Unborn Baby Care of North Texas, Inc. v. Doe, 689 S.W.2d 336 (Tex.App.–Fort Worth 1985, writ dism'd w.o.j.) .................................................41 Murphy v. Fannin County, 957 S.W.2d 900 (Tex.App.–Texarkana [6 th Dist.] 1997) ...............................................................22 Murphy v. State, 653 S.W.2d 567 (Tex.App.–San Antonio [4 th Dist.] 1983, pet. ref’d) ...........................................31 Omnibus Int’l v. AT&T, ___ S.W.2d ___, 2002 Tex. App. Lexis 8234, *11, 2002 WL 31618413 (Tex.App. – Dallas [5 th Dist.] Nov. 21, 2002, no pet. h.) ..........................................................................21, 22, 23 Operation Rescue-National v. Planned Parenthood of Houston and Southeast Texas, Inc., 975 S.W.2d 546 (Tex. 1998)...................................................... 23, 41 PSINET Inc. v. Chapman, 167 F. Supp. 2d 878 (W.D. Vir. 2001) ...............................47 RP&R v. Territo, 32 S.W.3d 396 (Tex.App.–Houston [14th Dist.] 2000) ............................................................................................. 15, 16 Ransom v. State, 920 S.W.2d 288 (Tex.Crim.App. 1994) .............................................31 Register.com, Inc. v. Verio, Inc., 126 F. Supp. 2d 238 (S.D.N.Y. 2000)..........................................................................................24, 25, 27 Reno v. ACLU, 521 U.S. 844 (1997).......................................................................... 12, 47 Roark v. Stallworth Oil & Gas, 813 S.W.2d 492 (Tex. 1991).......................................28 San Jacinto Life Ins. Co. v. Brooks, 274 S.W. 648 (Tex.Civ.App.–Fort Worth 1925, no writ) ...........................................................43

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Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984)................................................................................................20 Specht v. Netscape Communications Corp., 306 F.3d 17 (2nd Cir. 2002)............................................................................ 27, 28 Surko Enter., Inc. v. Borg-Warner Acceptance Corp., 782 S.W.2d 223 (Tex. App. – Houston [1st Dist.] 1989, no writ) .......................................... 17, 40 T&R Associates, Inc. v. City of Amarillo, 601 S.W.2d 178 (Tex.Civ.App. Amarillo 1980)...............................................................................14 Taquino v. Teledyne Monarch Rubber, 893 F.2d 1488 (5th Cir. 1990) ................. 37, 40 Texas Indus. Gas Phoenix Metallurgical Corp., 828 S.W.2d 529 (Tex.App. – Houston 1996, no writ) .............................................................. 42, 43 Texas Pipeline Co. v. Burton Drilling Co., 54 S.W.2d 190 (Tex.App. – Dallas 1932, no writ)............................................................16, 17, 45 Thomas v. Hale County, 531 S.W.2d 213, 215 (Tex.App. – Amarillo 1975, no writ)...........................................................................................................16 TicketMaster Corp. v. Tickets.com, Inc., 2000 WL 1887522, *3 (C.D. Cal. 2000).......................................................................................................35 Triplex Communications v. Riley, 900 S.W.2d 716 (Tex. 1995)...................................19 TriStar Petroleum Co. v. Tipperary Corp., 101 S.W.3d 583 (Tex.App.—El Paso 2003).....................................................................................40 United States v. Gines-Perez, 214 F.Supp.2d 205 (D. Puerto Rico 2002)................................................................................13, 26, 30 Universal Health Services v. Thompson, 24 S.W.3d 570 (Tex.App – Austin [3rd Dist.] 2000).................................................. 14, 15, 42, 43 Walker v. Harris, 924 S.W.2d 375 (Tex. 1996) ..............................................................19 White v. State, 122 S.W.2d 714 (Tex.App. – Fort Worth 1938, no writ) .....................16 Zapata v. Ford Motor Credit Co., 615 S.W.2d 198 (Tex. 1981) ..................................21

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Constitutions, Codes and Rules UNITED STATES CONSTITUTION, Commerce Clause Art. I, Sec. 8, Cl. 3 ............................................................................................ 32, 33 UNITED STATES CONSTITUTION, Intellectual Property Clause Art. I., Sec. 8, Cl. 8 ..................................................................................................34 UNITED STATES CODE, TITLE 17 17 U.S.C. § 301........................................................................................................35 TEX. BUS. & COM. CODE § 1.201(10) ..............................................................................27

TEX. CIV. PRAC . & REM. CODE § 51.014(a)(4)...........................................................1, 14 TEX. CIV. PRAC . & REM. CODE ANN. § 143.001(a) .......................................................29 TEX. PENAL CODE § 7.01....................................................................................................30 TEX. PENAL CODE § 7.02....................................................................................................31 TEX. PENAL CODE § 33.02 ....................................................................................29, 32, 33 TEX. RULE APP. PROC. § 28.1 ..............................................................................................1

Other Authorities FEDERAL TRADE COMMISSION, Promoting Competition, and Protecting Consumers: A Plain English Guide to Antitrust Laws (1999), http://www.ftc.gov/bc/compguide/keep.htm.......................................................48 GOLDSTEIN, COPYRIGHT, 1:40 (2nd Ed. 1998) ..........................................................11-12 HIGGASON, ROBERT W., Appeals from Temporary Injunctions in State and Federal Courts, 35-Aug HOUSTON LAWYER 23 (1997).....................................14 LEMLEY, Beyond Preemption: The Law and Policy of Intellectual Property Licensing, 87 CAL.L.REV. 111 (1999)..................................................................34

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STATEMENT OF THE CASE

This is an interlocutory appeal from the March 8, 2003 order of the trial court

granting the application of plaintiff American Airlines (hereafter “American” or “AA”)

for a temporary injunction against defendant FareChase, a software company that authors

and distributes a program that facilitates comparison-shopping for airfares published on

the Internet. (See March 8, 2003 Temporary Injunction.) The order is appealable

pursuant to Texas Civil Practice and Remedies Code section 51.014(a)(4). Intervenor

SABRE filed a Notice of Appeal, as did defendant FareChase. The appeal is accelerated

pursuant to Texas Rule of Appellate Procedure 28.1, and this court has set an accelerated

briefing and submission schedule at FareChase’s request. (See April 22, 2003 Order).

ISSUES PRESENTED

1. CanAmerican Airlines claim legal protection for factual information it publishes on

an unsecured webserver configured, so that anyone in the world with Internet access

can obtain that information?

2. Is FareChase contractually bound by American Airlines’ website terms and conditions

when AA has not configured the site to notify visitors of the terms, display the terms

to visitors, or obtain visitors agreement at any time prior to accessing fare and

scheduling data or booking a ticket?

3. Does FareChase commit a crime when its employees visit American Airlines’

publicly available website without circumventing any security measures, causing any

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damage, or altering any data, simply because American prefers that FareChase not use

its site?

4. Is FareChase vicariously liable for trespass to chattels, violation of contract, or

violation of the Texas Penal Code for the actions of its licensees who use FareChase

software in real time to query American and other airlines publicly available websites

simultaneously, when licensees are equally capable of accessing AA.com without

FareChase software, and the software causes no additional stress to the server than if

the user searched manually?

STATEMENT OF FACTS

Plaintiff, American Airlines, Inc. is the largest airline in the United States and a

subsidiary of AMR Corporation. AA sells tickets for air travel directly to travelers,

through travel agents and through computer reservation systems (“CRS”). Reporter’s

Transcript Vol.2, pp. 151-53, hereinafter cited in the form: RT2:151-53. AA pays costs

associated with sales of tickets through CRS’s and travel agents. RT2:156, 168.

Therefore, AA has chosen to make its webfare price and scheduling data publicly

available over the Internet, and allow the public to book tickets directly with AA through

the AA.com website, enabling AA to avoid the CRS booking costs. RT2:118-19. On the

AA.com website, in addition to its regular tickets, AA publishes fares that are available

only through the AA.com website. RT2:163-4. These fares are often discounted, in light

of the lower booking costs. RT2:163. While there are various definitions for the term

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"webfare" in the travel industry, it is these Internet-only fares that AA defines as its

"webfares." RT2:164.

AA wants the public to purchase tickets through its website, because that is AA’s

lowest cost distribution channel. Technologically, to make webfares or any information

available over the Internet, the data must be stored on a server computer connected to the

Internet. The webfares are published on an unsecured part of the server. AA could have

restricted access to AA.com by implementing passwords. It did not. RT3:209, 212.

Members of the public are not required to log in, or provide a password before searching

for fare or scheduling information or purchasing their tickets. RT2:274. AA chose to

make the fare information physically available to any individual who has access to the

Internet. RT2:207.

AA.com contains a statement of AA’s preferred uses for the website. These terms

are only displayed to the user if he or she clicks a small link entitled "Legal" that appears

at the bottom of each page in the AA.com website. RT3:109. If a user chooses to click

the link, the user will be brought to another page that includes, among other content, the

purported terms of use. RT3:109. The purported terms of use are entitled “User

Agreement”, but no user is required to read or agree to the terms at any time. Nor could

the terms be called a “notice” since the site does not notify users that there are terms of

use unless they click the “legal” link. AA could have configured its site to require users

to view and agree to their proposed terms of use prior to receiving fare and scheduling

information or booking a flight. They did not. RT3:109-11, 162, 212-13.

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Defendant FareChase Inc. ("FareChase"), develops, markets and licenses a

software program that allows users to automate the process of searching publicly

available travel and fare information on the Internet. FareChase is a small, privately held

company that was founded in 1999 and currently has fewer than 30 employees. RT5:7.

FareChase has yet to make a profit but is growing by marketing its products to some of

the largest entities in the travel industry, including Intervenor Sabre1, Worldspan, online

travel agencies, such as Orbitz, large travel agencies, like American Express, and

corporate travel application developers, such as Outtask and corporate travelers.

RT2:127; 5:20, 32, 183.

FareChase has developed and licenses two software products, Web Automation

and Market View. Web Automation enables users to simultaneously search several

websites to obtain scheduling and fare information for the purpose of “comparison

shopping” for travel needs. RT5:19-34. Web Automation allows licensees, including

travel agents and corporate travelers to cost-compare airline tickets available on the

Internet through a single search, thereby spending less time to find that best pricing and

most convenient schedules.

Web Automation software only performs “real-time” data retrieval, searching

airline websites only at the direction of the user. RT6:19-20. The user enters the

requested cities, dates and times and the Web Automation software conducts these

searches through the use of “data retrievers” that are programmed to visit and request fare 1 Intervenor Sabre, Inc. ("Sabre") runs a computer reservation system ("CRS"), also sometimes referred to as a Global Distribution System ("GDS") that provides its subscribers with information on airline schedules, fares, and enables them to book those flights.

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data posted on the web from up to 140 airlines. RT3:45. Before the injunction, the

software was capable of searching AA.com, but each user determined independently

whether to search AA.com or not. RT5:183. To the website, the software operates

exactly like a person browsing the Internet, but the technology saves the individual

purchaser the time of visiting each website separately. RT5:280. FareChase software

does not automatically search for, copy, or maintain a database of airline scheduling or

fare data, or provide travel related services to its customers.

Market View software is an analytical tool for businesses that allows users to

monitor and benchmark competitive airfare pricing. RT5:34-5. Market View also

performs only “real time” data retrieval. Orbitz, which is 25% owned by AA, uses

MarketView on AA.com to ascertain whether AA is meeting its agreement to provide

Orbitz with complete webfare information. RT2:264-65.

FareChase and AA should share common cause here. FareChase helps people find

AA fares quickly, and if those fares suit, links customers directly to AA’s lowest cost

ticket sales mechanism, AA.com. RT5:36. AA pays no travel agent fees or

commissions, no GDS booking fees and no fees to FareChase for such purchases through

FareChase software. RT2:180. Thus, AA receives the exact same revenue and pays no

higher costs for a ticket located with FareChase software, than if an individual located the

same ticket by manual search of AA.com. Additionally, AA has the opportunity to

communicate with FareChase users at the point of sale, since the booking page of the

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AA.com website and the confirmation email contain the same links to other portions of

the website as the homepage. RT2:288, 5:30-31.

AA complains that FareChase software threatens its EveryFare program.

RT2:179-80. The EveryFare program is an attempt by AA to sell webfare pricing,

scheduling and availability information to travel agents in exchange for their agreement

to pay a portion of AA's distribution and booking costs for all AA tickets the travel agent

sells. RT2:174. The EveryFare webfare information is the same data that already is

publicly available without a password or other restriction through the AA.com website

and that can be retrieved by anyone with access to the Internet, including travel agents.

RT3:152. AA claims that travel agents currently do not have access to this data because

the AA.com website asks that users not make commercial use of the data published there.

Of course, AA has allowed the travel agents physical access to that data. The very

question is whether AA can legally limit public access to and use of published, publicly

accessible data through either a trespass to chattels or contract theory.

AA launched its EveryFare program months after it filed the present lawsuit

against FareChase. Since its launch, AA has signed up more than 100 travel agents,

including at least two major agencies that are also users of FareChase software. RT5:51;

Intervenors Exh. 11. The EveryFare program has received mixed reviews from the travel

industry. Complaints about the program include the length of the contract term, the cost

to the travel agent, the benefits to the travel agent, and the onerous provisions of the

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program contract. RT2:193-196. For these reasons, critics have questioned the potential

for success of this program.

The Relationship Between the Parties

As early as January 2001, AA considered using software like FareChase's Web

Automation to provide a comparison-shopping feature on AA.com. RT3:184. AA later

decided that because AA’s fare fares were not always the best, a comparison-shopping

tool might not always display the AA fares in the best light and did not add such a feature

to its website. RT3:185. That same year, AA and FareChase discussed a commercial

relationship in which AA would pay FareChase a referral fee for bookings made on

AA.com. RT4:175. AA declined to pay the referral fee but expressed enthusiasm about

the capabilities of FareChase software.

A few months before the present lawsuit was filed, AA and FareChase again

contemplated a business partnership and began negotiating a license for FareChase's

MarketView software. RT5:42. AA has in the past, and presently continues to, manually

monitor the websites of its competitors to access their webfares and ticket pricing for

commercial, competitive purposes. AA was interested in licensing FareChase's

MarketView so that it could more efficiently, and more broadly, benchmark industry

pricing. RT3:145-46, 188-98. During the MarketView negotiations, AA expressed an

interest in having the functionality to run searches through a proxy server integrated into

the MarketView product -- the so-called "IP Masking" feature. RT 5:48-9. AA was

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interested in IP masking to ensure that the information it gathered was not modified by

competitors trying to conceal their pricing data from AA. RT5:48.

Negotiations progressed for two months before AA informed FareChase that

project was getting pushed back. Shortly after, AA sent a cease and desist letter to

FareChase, claiming that FareChase was making unauthorized use of AA.com.

At a meeting the following week, FareChase told AA that it had removed AA.com

from the list of websites searched during the demonstration on FareChase.com. AA

proposed that FareChase should compensate AA at a rate of $0.10 per search and $12.00

per booking made by users of FareChase software. RT5:252. The parties did not reach an

agreement. On July 24, 2002, AA filed the present lawsuit claiming that FareChase was

liable for trespass to chattels, misappropriation, breach of contract, violating the Texas

Computer Harm statute, unjust enrichment and civil conspiracy.

The (Non) Effect of FareChase Software on AA.com

The trial court found “harm” to AA from the use of FareChase software included

“a use and loss of its computer system capacity, a loss or diminution of customer

goodwill, increased expense, and the inability to pl an for the need for increased

capacity.” (Temporary Injunction, para. 6) However, the designated representative of

Totality, the vendor that manages and maintains the AA.com website, testified that the

AA.com website is running smoothly and that no problems are anticipated through the

end of 2003. RT5:268. No customer has ever complained about malfunctions on

AA.com. RT5:228-29. Setting up “blocking” mechanisms to stop certain IP addresses

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from accessing AA.com is part of the normal maintenance of a website, does not burden

a website, and is included in the price of the overall services Totality provides AA.

RT5:260-61, 270-71. AA.com is not differently affected by searches run by human users

versus those run by an automated users. RT5:261, 263. Furthermore, the Totality

representative testified that he had never been informed of FareChase or AA's concerns

about FareChase prior to his deposition. RT5:264.

FareChase's expert, Dr. Fredrick Scholl, testified, based on his conservative

estimates, that months from now, in December 2003, FareChase licensee's searches of

AA.com would account for an 8 percent increase in the total number of searches on

AA.com. RT6:63. Put differently, Dr. Scholl calculated that FareChase would account

for approximately a 26,000 search per day increase over the approximately 320,000

searches occurring on AA.com presently. RT6:61. Currently, all activity on AA.com

uses between 15 and 37 percent of the capacity of each of the three main web layers of

the AA.com website. RT5:265-66. To translate Dr. Scholl's estimates to server capacity,

one would have to calculate the increase in activity multiplied by the amount of capacity

presently consumed. Therefore, under an overly conservative calculation based on an 8

percent increase in an activity that consumes 15 to 37 percent of capacity, FareChase

searches would account for less than approximately 1 to 3 percent of use of capacity for

any particular web layer. RT6:63.

There are, on average, 750,000 visitors to the AA.com we bsite each day, but only

320,000 fare searches. RT3:164. Thus, fare searching does not presently account for all

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of the capacity consumption of the website. Because Dr. Scholl's calculations show an 8

percent increase in searching activity only, total capacity use by FareChase licensees

would actually be substantially less than 1 to 3 percent. RT6:68-69. The evidence shows

that, even at their most strained moments, AA's servers are still running at only forty

percent capacity. RT2:45.

FareChase software has to date, never physically harmed the AA.com website or

AA servers in any way, never deprived AA of the right to possess the website or servers

for any amount of time and never interfered with user experience of the AA.com website.

SUMMARY OF THE ARGUMENT

Defendant FareChase urges this Court to overturn the temporary injunction

requiring it to alter its software product so as not to facilitate user access to fare and

scheduling information published on unsecured parts of the AA.com website. By granting

the injunction, the trial court has created for American Airlines an unprecedented and

novel right both to control publicly available price data it publishes on the Internet, and to

prevent the distribution of software that enables Internet users to readily access those

prices and comparison shop. No court would entertain the idea that AA could do this, if

the fares were published, for example, in a newspaper or on a publicly distributed flier.

The trial court erroneously found that the Internet is different, because data is stored on

AA’s webserver and AA has the right to control who may use its server.

The injunction should be dissolved because FareChase did not and does not

commit the tort of trespass to chattels by searching AA.com, nor is the company

11

vicariously liable for searches performed by its licensees. AA does not have the legal

right to control who views, copies or distributes published factual data about AA fares

and schedules. Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S.

340, 353 (1991). AA cannot create that legal right through its trespass to chattels proxy

argument. Under Texas law, (1) trespass to chattels requires harm to the chattel, (2) the

creator of a tool that does not restrict trespass is not vicarious liability for trespass by the

tool’s users, and (3) without harm to the chattel, the trespass claim and other state law

claims are preempted by federal intellectual property law.

AA publishes webfare data to anyone in the world with an Internet connection.

AA has not effectively restricted access to its webfares by requiring a password or by

requiring users to agree to terms and conditions of use prior to accessing the price data.

The misnamed “User Agreement” is not a legally enforceable contract under Texas law

and does not limit who may view the fares or how they can be used. Visitors to the site

are not required to view or agree to any terms prior to being allowed access to the fare

information.

The trial court’s holding interferes with the marketplace for airline tickets, by

hindering the customer’s ability to comparison shop for the best prices. It undermines

ages of statutory and common law balancing between financial incentives to create

intellectual property and the right of the public to use published information. Goldstein,

Copyright, 1:40 (2nd Ed. 1998) [Copyright is “a scheme of carefully balanced property

rights that give authors and their publishers sufficient inducements to produce and

12

disseminate original creative works and, at the same time, allow others to draw on these

works in their own creative and educational activities.”] Of course, AA needs little or no

incentive to create prices for its airline tickets, while the public has great need to know

what those prices are. The trial court holding also threatens the fundamental beneficial

value of the World Wide Web, and more generally the Internet, as a “vast library” and a

“sprawling mall”. See, Reno v. A.C.L.U., 521 U.S. 844, 853 (1997).

ARGUMENT

I. INTRODUCTION

The Internet is an invaluable resource that allows anyone with access to it to

communicate over a network of privately owned computers. Every Internet

communication uses processing cycles, memory and storage on privately owned

networked machines. Yet, the beauty and power of the Internet is that it is open for a

myriad of public uses. “[A]ny person with a phone line can become a town crier with a

voice that resonates farther than it could from any soapbox.” Reno v. ACLU, 521 U.S.

844, 870 (1997) [invalidating a law prohibiting indecent speech on the Internet]. Taken

together, the many Internet applications “constitute a unique medium–known to its users

as ‘cyberspace’–located in no particular geographical location but available to anyone,

anywhere in the world, with access to the Internet.” Id.

Because World Wide Web is such an effective communications tool, companies

like American Airlines want to use it to do business with prospective customers.

13

The World Wide Web is a network of links to information mostly stored on

privately owned servers. Those adding websites to the network are inviting public

access, unless they limit that access through technological or contractual means. Internet

publishing should be no different from other forms of publishing, and common sense

dictates that an entity places information on the public Internet precisely for the purpose

of publishing that information. See United States v. Gines-Perez, 214 F.Supp.2d 205, 225

(D. Puerto Rico 2002) [ “[A] person who places a photograph on the Internet precisely

intends to forsake and renounce all privacy rights to such imagery, particularly under

circumstances such as here, where the Defendant did not employ protective measures or

devices that would have controlled access to the Web page or the photograph itself.”]

AA has chosen to publish its webfare data on AA.com, inviting members of the

public to search for flights and book tickets through the site. AA publishes webfares

without any protective measures. AA welcomes the public with unrestricted access to its

website and web fares. Just as someone who sees prices posted in a store may copy them

down and circulate the list among comparison shoppers, anyone is free to compare AA's

webfares with those of other airlines – whether by visual inspection or computer-assisted

search – absent an enforceable agreement to the contrary. In this case, neither trespass to

chattels law, which requires harm to the server, nor contract law, which requires assent

and mutual consideration, gives AA the right to stop FareChase and its licensees from

accessing published fare and scheduling information.

14

II. AMERICAN AIRLINES HAS NOT MET ITS BURDEN OF PROOF FOR A MANDATORY INJUNCTION

FareChase is expressly authorized to appeal the trial court decision to issue a

temporary injunction. See Civ. Prac. & Remedies Code Ann. § 51.014. Appeals courts

review temporary injunctions for abuse of discretion. “The appellate court is strictly

limited to the determination whether there has been a clear abuse of discretion by t he trial

court in granting or denying the interlocutory injunctive order.” T&R Associates, Inc. v.

City of Amarillo, 601 S.W.2d 178, 180 (Tex.Civ.App. Amarillo 1980).

Abuse of discretion includes “clearly erroneous findings of fact (i.e. not supported

by the evidence presented at the hearing), a misapplication of the law, or the failure to

balance the equities.” See Robert W. Higgason, Appeals from Temporary Injunctions in

State and Federal Courts, 35-Aug Houston Lawyer 23, 49 (1997); Universal Health

Services v. Thompson, 24 S.W.3d 570, 576 (Tex.App – Austin [3rd Dist.] 2000), (“Abuse

of discretion arises when the trial court misapplies the law to the established facts of the

case or when it concludes that the movant has demonstrated a probable injury or a

probable right to recovery and the right is not reasonably supported by the evidence.”

Id.)

The trial court abused its discretion in three ways. First, it mischaracterized this

mandatory injunction as a prohibitive injunction and held AA to too low a standard of

proof. Second, under either standard, it wrongly concluded that American had a probable

right to recovery. Finally, it erred in finding irreparable harm.

15

This injunction is mandatory. In order to comply with the injunction, FareChase

must modify its software to remove the AA.com data retriever, the code that executes a

search of AA.com when a licensee uses FareChase software. It must also modify or

replace the software of its current licensees to remove the AA.com data retriever in order

to provide those licensees with updates or improvements to the software they currently

own. (See Temporary Injunction p. 4).

This injunction is mandatory because it requires FareChase to take affirmative

actions to alter software and control its licensees. A mandatory injunction requires a

defendant to engage in conduct, while a prohibitive injunction forbids conduct. See

LeFaucheur v. Williams, 807 S.W.2d 20, 22 (Tex.App.—Austin 1991, no writ). In

LeFaucheur, the appeals court held that an injunction was mandatory because it required

the defendant to take one of two actions: “either the return of the airline tickets or the

payment of money.” Id. at 22. Similarly, an order requiring a company to continue to

issue paychecks to an employee was a mandatory injunction. RP&R v. Territo, 32

S.W.3d 396, 400 (Tex.App.—Houston [14th Dist.] 2000).

The modifications the trial court ordered FareChase to make to its software are not

incidental to the injunction. If the required action is “only incidental” to fulfilling the

mandate of the injunction, the injunction is prohibitive, not mandatory. Universal Health

Services v. Thompson, supra, 24 S.W.3d at 576 (prohibiting investors from closing a

hospital, holding that the implication investors would have to seek funding was “only

incidental to the order’s primary function of preventing the Investors from closing the

16

hospital.”) Here, FareChase infrequently accessed AA.com for testing and customer

demonstration purposes. The core of AA’s claim is that FareChase is liable when its

licensees use its software to access AA.com, so FareChase’s affirmation actions to

prevent licensee access is essential to compliance with the injunction.

AA has not met the requirements for obtaining a mandatory injunction.

Mandatory injunctions are granted only in cases of extreme hardship. RP&R, Inc. v.

Territo, 32 S.W.3d 396, 401 (Tex.App.—Houston [14th Dist.] 2000, no pet.), citing,

Haynie v. General Leasing Co., Inc., 538 S.W.2d 244, 245 (Tex.App.—Dallas 1976, no

writ). The burden of proving extreme hardship is high—the applicant must submit clear

and compelling evidence of extreme necessity or hardship. Id.; see, LeFaucheur, supra,

807 S.W.2d at 22; Texas Pipeline Co. v. Burton Drilling Co., 54 S.W.2d 190, 194-95

(Tex.App.—Dallas 1932, no writ) (explaining mandatory temporary injunction

appropriate only upon showing of “urgent and paramount necessity”). See also, Thomas

v. Hale County, 531 S.W.2d 213, 215 (Tex.App. -- Amarillo 1975, no writ) (holding that

“[o]rdinarily a mandatory injunction will not be granted before final hearing, and not

even then except under pressing necessity to prevent serious damage which would ensue

from the withholding of the writ, or where necessary to effectuate the decree”), emphasis

added, citing, White v. State, 122 S.W.2d 714, 717 (Tex.App. – Fort Worth 1938, no

writ).

In addition to showing extreme hardship or burden, a party seeking mandatory

relief must show a “clear and unmistakable” right to recover on the law and on the facts.

17

Texas Pipeline at 194. A mere “probability” of success on the merits is not enough. See,

Surko Enter., Inc. v. Borg-Warner Acceptance Corp., 782 S.W.2d 223, 225 (Tex.App. –

Houston [1st Dist.] 1989, no writ) (explaining probable right to recovery on application

for prohibitive injunction). Here, AA has not met either this standard, or the lesser

“probable right to recover” and “probable injury” standards for prohibitive relief for the

reasons stated below.

III. UNDER ANY INJUNCTION STANDARD, AMERICAN AIRLINES

HAS NO PROBABLE RIGHT OF RECOVERY FareChase, its licensees, and members of the public cannot be enjoined from

accessing AA’s unsecured web server, obtaining and using factual data that AA publishes

there. When facts are freely published on the Internet, the public may make use of those

facts without the consent or permission of the publisher. AA tries to argue that the

Internet is different, because facts published on-line are stored on a web server that AA

owns. Undoubtably, AA is not concerned here with protecting its webserver; they

concede that FareChase software does not and will not harm it. Rather, AA objects to the

use FareChase licensees make of the webfare data on the server. AA hopes to sell that

data to travel agents, and thus reduce its overall booking costs.

AA can do this, but it must make a choice. Either it web-publishes fares to one and

all, or it restricts access to the fares to those with passwords, or who have explicitly

accepted a user agreement. AA has made the business decision to permit free access, and

so cannot use the law of trespass or contract to pick and choose visitors or uses from

18

among members of the public. AA’s argument should have failed, because Texas law

does not recognize a difference between off-line and on-line publishing, unless access to

the data harms the system, or there is an enforceable contract that limits the public’s right

to use the data.

A. American Airlines Cannot Control its Public Data Through the

Trespass to Chattels Tort

AA has not established the elements of trespass to chattels under Texas law, which

requires harm to the chattel. In the few cases from other jurisdictions enjoining conduct

based upon a computer “trespass,” the plaintiffs would not have been entitled to a finding

of trespass under Texas law. Further, with no demonstrable harm, AA’s trespass claim is

a proxy for seeking legal protection for uncopyrightable data and thus is preempted by

federal intellectual property law.

1. No Vicarious Liability for the Trespass of Others

FareChase has no duty to ensure that its licensees use its software and search

AA.com in accordance with AA’s wishes. Though FareChase demonstrates its software

to its customers, its business is not searching AA.com, but licensing its software. Users

select whether and when to search AA.com when looking for a fare. RT5:183.

FareChase software allows the users to search multiple website simultaneously, but not

automatically. It merely facilitates a user search process that would happen with or

without FareChase.

19

As a general rule, one person is under no duty to control the conduct of another,

even if the former has the practical ability to exercise such control. Triplex

Communications v. Riley, 900 S.W.2d 716 (Tex. 1995); Kehler v. Eudaly, 933 S.W.2d

321 (Tex.App. – Fort Worth 1996 writ den.) “The only time duties to third persons have

been recognized by the Texas Supreme Court are when there is a special relationship

between the defendant and the actor that implicitly includes some right to control the

action (Otis Engineering employer/employee) or when the defendant who created or

contributed to the actor's situation violated a statute (El Chico sale of liquor to intoxicated

patron) or when a duty is imposed to protect the general driving public.” Kehler, supra,

at 331. Thus, if a third person does not act under the defendant’s supervision or control,

the defendant generally has no legal duty to prevent the third person’s illegal acts, even if

the defendant has the practical ability to control the third person. Golden Spread

Council, Inc. # 562 of the BSA v. Akins, 926 S.W.2d 287 (Tex. 1996); Walker v. Harris,

924 S.W.2d 375 (Tex. 1996); Doe v. Franklin, 930 S.W.2d 921 (Tex.App. – El Paso

1996, no writ).

Even if FareChase licensees’ non-consensual use of AA.com were a trespass,

FareChase would not be liable for that trespass. This is true even if FareChase has the

practical ability to control its licensees by configuring its software so that it doesn’t

search AA.com. No Texas case imposes party liability on an actor simply for providing

the tools with which a third party can commit a tort or crime. (See, e.g. Beier v. State,

687 S.W.2d 2 (Ct. of Crim.App. 1985) [No party liability even though defendant

20

involved in general scheme to distribute obscenity, because did not intend sale of specific

obscene film]; see also, Section III C, infra, re Texas Penal Code) More generally, courts

have been properly reluctant to impose liability for distribution of tools, even where some

of the plaintiff’s legitimate rights may be harmed by use of the device, particularly if

there are any current or future beneficial purposes of the technology. The threat of

liability for product design would squelch innovation, business and technological

advances to the detriment of consumers. Thus, in Sony Corp. of America v. Universal

City Studios, Inc., 464 U.S. 417 (1984), Sony was not liable for contributory copyright

infringement for the sale of video cassette recorders, even though Sony knew as a general

matter that the machines could be used, and were being used, to infringe the plaintiff’s

copyrighted works. Because video tape recorders were capable of both infringing and

“substantial noninfringing uses,” generic or constructive knowledge of infringing activity

was insufficient to warrant liability based on the mere sale of Sony’s products. Id. at 442.

Nor should this Court extend vicarious liability to FareChase for the searching decisions

of its users. All FareChase does is enable users to search AA.com while searching other

sites as well. It is AA that configured its website to allow public use, and the licensees

themselves that choose whether and when to search it.

2. AA Cannot Show Harm to its Server as Required by Texas

Trespass to Chattels Law

AA cannot prevail on a trespass to chattels claim. Trespass to chattels requires

physical harm to the chattel itself, or deprivation of use for a substantial period of time.

21

Omnibus Int’l v. AT&T, ___ S.W.2d ___, 2002 Tex.App. Lexis 8234, *11, 2002 WL

31618413 (Tex.App. – Dallas [5th Dist.] Nov. 21, 2002, no pet. h.); see also, Zapata v.

Ford Motor Credit Co., 615 S.W.2d 198, 201 (Tex. 1981). “Liability does not attach,

unless the wrongful detention is accompanied by actual damage to the property, or

deprives the owner of its use for a substantial period of time.” Zapata, 615 S.W.2d at

201; Omnibus Int’l, supra,; RESTATEMENT (SECOND) OF TORTS § 217 Comment a (1965).

Omnibus International is dispositive. In Omnibus, plaintiff alleged that it had received

thousands of facsimile advertisements from defendant, sent without permission. Id. at *1.

Plaintiff sued defendants on various theories, including trespass to chattels, i.e. the fax

machine. The court granted summary judgment in favor of the defendants on the trespass

claim, noting that on the facts presented, plaintiff could not establish injury or

dispossession as required under Texas law:

Omnibus alleged and offered evidence that AT&T wrongfully commandeered its facsimile machines. By doing so, AT&T dispossessed Omnibus’s use of the machines and misappropriated its paper and toner when printing the advertisements. Neither the pleadings nor the summary judgment evidence allege actual damage occurred to Omnibus’s facsimile machine or that the printing of facsimile advertisements deprived Omnibus of the use of its facsimile machine for a substantial period of time. See, Zapata, 615 S.W.2d at 201. Accordingly, we resolve the fourth issue against Omnibus.

Omnibus Int’l, supra, at *4.

No Texas cases support AA’s argument that any interference, “however slight,” is

enough to support a claim for trespass to chattels. In Jimmerson v. Norris Fence Co.,

cited by AA, the court specifically held that it was the “[d]amage to the [gang saw]

22

machine [that] gave rise to a cause of action” for trespass to chattels. Jimmerson v.

Norris Fence Co., 482 S.W.2d 670, 673 (Tex.Civ.App. – Texarkana 1972, no writ)

(pointing to the “[m]olesting and damaging” of the gang saw and evidence by plaintiff

that defendant “dislodged [the gang saw] from its base and thereby damage[d] it.”).

Also misplaced is AA’s reliance on Murphy v. Fannin County, 957 S.W.2d 900

(Tex.App. – Texarkana [6 th Dist.] 1997). That case involved trespass to land, real

property rather than personal property, which has different elements. Trespass to land

does not require that the land be damaged. (See Gen. Mills Rests. Inc. v. Tex. Wings, Inc.

12 S.W.3d 827, 833 (Tex.App. – Dallas 2000, no pet.) “Trespass to real property occurs

when a person enters another’s land without consent.”) The issue in Murphy was

whether the defendants’ entry to land was within the scope of easements granted by the

plaintiff. Since consent is not the determinative factor in trespass to chattels, Murphy is

irrelevant here.

By contrast, every Texas trespass to chattels case recognizes that there must be

harm to the chattel. Just as AT&T’s non-consensual use of the fax machine in Omnibus

neither commandeered, dispossessed, misappropriated, damaged or deprived the owner of

the use of the machine for a sufficient period of time to amount to trespass, FareChase

licensees non-consensual use of AA.com also falls far short of trespass.

The federal cases relied on by AA which suggests that any interference with property,

however slight, constitutes trespass to chattels are not binding on this Court, as the

decisions do not apply Texas law. These rulings inappropriately combine elements of

23

trespass to chattels with that of trespass to land, which Texas law does not. As AA noted

below, the eBay court analogized an absolute right to exclude others from personal

property from the absolute right to exclude granted by a patent and real property law.

See, eBay v. Bidder's Edge, Inc., 100 F.Supp.2d 1058, 1066 (N.D. Cal. 2000), citing

patent law and Kaiser Aetna v. United States, 444 U.S. 164 (1979) re: riparian rights. The

fundamental basis for the holding in eBay, and, thus, the subsequent courts that relied on

eBay, is an incorrect application of rights in real property to personal property. Thus, this

Court should decline to alter Texas law by applying the eBay case here.

AA has not and cannot show that FareChase software currently harms AA.com.

Both trespass to chattels and injunction law require current and imminent harm. See

Omnibus Int’l, supra, at *4; Operation Rescue-National v. Planned Parenthood of

Houston and Southeast Texas, Inc., 975 S.W. 2d 546, 554 (Tex. 1998). AA asserts that

retrieving factual data it chose to make publicly available on the AA website strains its

servers. This “strain” is non-existent. Both AA's own witnesses and FareChase's expert

testified consistently that the FareChase software has caused no actual damage AA’s

computer infrastructure. RT4:62-63; 6:57, 68-69. That infrastructure does not

distinguish between human users and robots or software users. RT5:280. This

automated software only searches when a user wants. Moreover, AA spends millions of

dollars trying to attract more users to search. Its servers are built to handle the extra load

of searches by travelers, and currently are running at only 40 percent capacity at their

most constrained point. AA has not once received a customer complaint regarding the

24

failure of AA.com to function properly. RT2:45, 5:228-29. More users are not a

“problem” but a goal for AA.com.

3. This Court Should Reject Extending Recent Decisions that Found Trespass For Direct, Recursive Searching to FareChase’s Vicarious, User-Directed, Harmless Website Access

The relatively new Internet search cases are highly fact-dependent, yet none has

extended vicarious liability to an entity like FareChase that doesn’t search, but rather

creates software that facilitates searches by others, with or without the consent of the site

owner. Nor has any case imposed liability for user-directed, as opposed to robotic,

recursive, searching.2

Two fairly recent decisions – eBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d

1058 (N.D. Cal. 2000) and Register.com, Inc. v. Verio, Inc., 126 F. Supp. 2d 238

(S.D.N.Y. 2000) which enjoined computer access on trespass theories, are factually and

legally distinct. In eBay, the defendant used an automated program to recursively and

repeatedly search the plaintiff’s website for auction information approximately 100,000

times a day, which it then maintained in its own database. eBay, supra, 100 F.Supp.2d at

1062. In Verio, the defendant used an automated software program that repeatedly and

serially accessed the database of domain name customers maintained by the plaintiff and

others and, despite the marketing prohibitions in the terms of use, used this data to call

and email their competitor’s clients and solicit business. Verio, supra, 126 F.Supp.2d at

2 Recursive searching occurs according to the search programs’ algorithm, repeatedly and at set intervals. In contrast, user-directed searches like FareChase’s only occur when a human sitting at the keyboard requests the information.

25

243. The defendant in each case was found directly liable for accessing the plaintiff’s

website, and not vicariously liable for use of its search program by a third party, as AA

seeks to hold FareChase here.

Nor does FareChase software “recursively crawl” AA.com. The FareChase software

searches AA.com only when the FareChase licensee queries AA.com. It searches only

when requested, and directs users booking tickets to AA.com for the actual purchase. The

FareChase software mimics the behavior of a human user, searching in real-time, but the

user to search multiple travel websites simultaneously. By contrast, in eBay, the Court

enjoined Bidder’s Edge (“BE”) from “recursively crawling” eBay’s website, activity it

found caused eBay irreparable harm. There would have been no injunction if the

defendant searched in real time, as FareChase software does:

It appears that the primary dispute was over the method BE uses to search the eBay database. eBay wanted BE to conduct a search of the eBay system only when the BE system was queried by a BE user. This reduces the load on the eBay system and increases the accuracy of the BE data. BE wanted to recursively crawl the eBay system to compile its own auction database.

eBay at 1062. The defendant in Verio also recursively, automatically, repeatedly and

serially searched the plaintiff’s website. Verio, supra, 126 F.Supp.2d at 243.

In contrast, FareChase software places no greater burden on AA’s computer

greater than that created by the desirable actions of a human user searching AA.com for

flights. FareChase software only searches when a licensee or customer of a licensee

wants to travel, and only for the desired routes and dates, so the use of AA’s server is

entirely different from that in eBay and Verio. Even in aggregate, there is no more harm

26

to AA’s servers from FareChase software than if more members of the traveling public

visited by AA.com to shop for flights whenever they were looking to fly.

B. The AA “User Agreement” is Not an Enforceable Contract, or a Limitation on Public Use

AA has posted its fare data on an unsecured website open to the public. A user can

access all of the fare and scheduling information on the site, and even book tickets,

without ever seeing, let alone agreeing to, AA’s terms and conditions of use, or even a

reference to them. RT3:109-111. The website is public under any common-sense

interpretation of the word. See United States v. Gines-Perez, 214 F.Supp.2d 205, 225.

AA claims that its “User Agreement” limits use of the website, but that document is not

legally enforceable against members of the public who do not agree to its terms prior to

use of the site.

AA asserts that FareChase breaches the terms and conditions posted on AA’s

website by distributing software that facilitates automated searching to commercial

entities. First, FareChase software does not automatically search, but is user-directed.

Second, FareChase does not choose whether or when to search AA.com; the licensees do.

Finally, the terms and conditions of use are not enforceable because AA has chosen not to

display them to users or to get user agreement prior to permitting access to fare data.

An enforceable contract requires both and offer and “acceptance of the offer.” See

J.I. Case Threshing Mach. Co. v. Howth, 293 S.W. 800, 801 (Tex. 1927) (holding that

one cannot be bound to a contract to which he has not given assent). Mutual assent is an

essential element of contract formation. Austin v. Strong, 1 S.W.2d 872, 876 (Tex. 1928).

27

Contract terms must be conspicuous to be enforced. Banzhaf v. ADT Security

Systems Southwest, Inc., 28 S.W.3d 180, 189 (Tex.App. -- Eastland 2000, pet. denied).

To be conspicuous, “something must appear on the face of the [contract] to attract the

attention of a reasonable person when he looks at it.” Dresser Industries, Inc. v. Page

Petroleum, Inc., 853 S.W.2d 505, 508 (Tex. 1993). Stated differently, “a term or clause

is conspicuous when it is so written that a reasonable person against whom it is to operate

ought to have noticed it.” Dresser at 510; see also, Tex. Bus. & Com. Code § 1.201(10).

Verio is in accord with the basic premises of contract law, that contract terms and

conditions must be agreed to and conspicuously located. In the Verio case, Register’s

terms of use were displayed to users prior their search. Verio, 126 F.Supp.2d at 248. The

concluding line of the terms and conditions stated “by submitting this query, you agree to

abide by these terms.” Id. at 248.

Inconspicuous website terms and conditions are not enforceable. Specht v.

Netscape Communications Corp., 306 F. 3d 17, 35 (2d Cir. 2002). The user agreement at

issue in Specht was strikingly similar to AA’s Terms and Conditions. Id. Netscape did

not display the terms of use to visitors prior to allowing access to the site. The sole

reference to the terms of use was hidden behind a link that could only be seen by

scrolling down to the bottom of the home page. Id. The court found these terms were

hidden and the conditions of use unenforceable.

Reasonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms by consumers are essential if electronic bargaining is to have integrity and credibility. We hold that a reasonably prudent offeree in plaintiffs’ position would not have

28

known or learned, prior to acting on the invitation to download, of the reference to SmartDownload’s license terms hidden below the “Download” button on the next screen.

Id. at 35. A visitor to AA.com can search for and book air tickets without ever seeing the

Terms and Conditions, let alone assenting to them—they are hidden behind a “Legal”

button that does nothing to notify the user that any restrictions exist. AA could have

configured its site to display the “User Agreement” to visitors and require their assent,

before permitting them to search the site, but chose not to do so. Thus, the purported

restrictions on use should be unenforceable here as in Specht.

Nor does FareChase’s actual knowledge or subsequent information about the

terms and conditions create an enforceable contract. The “User Agreement” is

unenforceable because AA offers website visitors no consideration in exchange for the

users promise to forbear from reading, copying and disseminating published fare data

with or without automated software. A valuable and sufficient consideration for a

contract may consist of either a benefit to the promisor or a loss or detriment to the

promisee. “Consideration is a present exchange bargained for in return for a promise. It

consists of either a benefit to the promisor or a detriment to the promisee. The detriment

must induce the making of the promise, and the promise must induce the incurring of the

detriment.” Roark v. Stallworth Oil & Gas, 813 S.W.2d 492, 496 (Tex. 1991) (citations

omitted). A past or previously rendered consideration, that imposed no legal obligation at

the time it was furnished, ordinarily will not support a subsequent promise to confer a

29

benefit. See Mason v. Babin, 474 S.W.2d 809, 812 (Tex.Civ.App.—Houston [1st Dist.]

1971, writ ref'd n.r.e.); Fleming v. Campbell, 537 S.W.2d 118, 119-20 (Tex.Civ App.—

Houston [14th Dist.] 1976; writ ref'd n.r.e). AA allows unfettered access to the website

and its data. After the fact, it cannot impose restrictions on how visitors may access and

use fare data unless those restrictions are supported by new and different consideration.

Again, AA could have required users to agree to terms and conditions as a prerequisite to

accessing its webfare data, but it chose not to.

C. Distributing Software That Allows Users to Search Publicly Available Webfare Data Does Not Vi olate the Texas Penal Code

FareChase has not violated Texas Penal Code section 33.02(a). That section states

that “a person commits an offense if the person knowingly accesses a computer,

computer network, or computer system without the effective consent of the owner.”

However, a civil cause of action is available only to a person who has been injured or

whose property has been injured as a result of a violation of section 33.02. Tex. Civ.

Prac. & Rem. Code Ann. § 143.001(a) (Vernon 1997). Since AA is not injured, nor is

AA.com impaired, AA has no civil claim under section 33.02.

AA asserts that FareChase is indirectly liable for violations of section 33.02

because “each time a user of its software accesses AA.com without [AA's] consent,” a

crime has been committed. The statutory interpretation is grossly overbroad. AA’s

position criminalizes any breach of website terms of service. For example, AA’s “User

Agreement” provides that “[b]y using the [AA.com website], you represent and warrant

that you are 18 years of age.” Plaintiff’s Exhibit 1. If an underage visitor accesses

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AA.com has he committed a crime? Surely the Texas legislature did not intend to create

a criminal offense for every use of a website that was outside the scope of the owner's

purported terms of use. Under AA’s interpretation of the statute, the law enforcement

officer who obtained the defendant’s photo in United States v. Gines-Perez, 214

F.Supp.2d 205 (D. Puerto Rico 2002) would be guilty of a crime in Texas for accessing

the defendant’s public web site against his wished.

The only reasonable interpretation of this statute is that the Texas legislature

intended to protect computer owners from circumvention of security measures, from

access and use that harms the server, or from deletion of data. Here, FareChase licensees

access and use the site exactly as AA chose to configure the system to allow. This is not

criminal. The one reported case under this statute supports FareChase’s interpretation.

Mitchell v. State, 12 S.W.3d 158 (Tex.App. – Dallas 2000, no pet.) (finding a former

employee of the Dallas Fire Department liable under the statute when she intentionally

corrupted files on her work computer on her last day of employment).

Nor is FareChase vicarious liable under Texas law of the parties. “A person is

criminally responsible as a party to an offense if the offense is committed by his own

conduct, by the conduct of another for which he is criminally responsible, or by both.”

Tex. Penal Code 7.01. A person is criminally responsible for an offense committed by

the conduct of another if:

(1) acting with the kind of culpability required for the offense, he causes or aids an innocent or nonresponsible person to engage in conduct prohibited by the definition of the offense;

31

(2) acting with intent to promote or assist the commission of the offense, he solicits, encourages, directs, aids, or attempts to aid the other person to commit the offense; or (3) having a legal duty to prevent commission of the offense and acting with intent to promote or assist its commission, he fails to make a reasonable effort to prevent commission of the offense.

Tex. Penal Code 7.02.

To impose party liability, licensee use of the FareChase software would have to

violate the law, and it does not. But FareChase is not vicariously responsible for end user

searches either. For party liability, the defendant and the direct actor must share “an

understanding and common design to do the prohibited act.” Ransom v. State, 920

S.W.2d 288, 302 (Tex.Crim.App. 1994) “A person is criminally responsible for an

offense committed by the conduct of another if acting with intent to promote or assist the

commission of the offense he solicits, encourages, directs, aids or attempts to aid the

other person to commit the offense.” Murphy v. State, 653 S.W.2d 567, 573 (Tex.App. –

San Antonio [4 th Dist.] 1983, pet. ref’d). The evidence must show that at the time of the

offense, the parties were acting together, each doing some part of the execution of the

common purpose. Burdine v. State, 719 S.W.2d 309, 315 (Tex.Crim.App. 1986).

Additionally, section 7.02 requires that the defendant assisted in particular offense,

not a common undertaking that may have lead to that offense. Beier v. State, 687 S.W.2d

2 (Tex.Crim.App. 1985). In Beier, the defendant was convicted of promoting obscenity

because he collected money from the sale of an obscene film. The court, however, held

that the defendant, who may have intentionally and knowingly assisted in a common

32

undertaking to promote obscenity, nonetheless was not involved in the actual sale of the

specific obscene film on the day in question, and was not liable as a party.

Similarly, while FareChase may intentionally and knowingly assist in a common

undertaking to make it easier for its licensees to search AA.com, FareChase does not

enable or execute the actual undesirable searches. Licensees determine where and when

to search, and FareChase, like the defendant in Beier, is not involved in the actual

searching. Nor does FareChase have a special relationship with its customers that creates

a legal responsibility it to control them.

Moreover, AA's overly broad interpretation of the statute would be

unconstitutional if adopted by this Court. The Commerce Clause of the United States

Constitution restricts individual states from interfering with the flow of interstate

commerce by creating regulations that unduly burden interstate commerce. See, Kassel v.

Consolidated Freightways Corp. of Del. 450 U. S. 662 (1981). Application of Te xas

Penal Code section 33.02 to these facts is an unconstitutional extension of Texas law to

conduct that occurs wholly outside the state of Texas, and burdens interstate commerce in

a manner that exceeds any local benefit. As one district court noted, the “Internet is one

of those areas of commerce that must be marked off as a national preserve to protect

users from inconsistent legislation that . . . could paralyze development of the Internet

altogether.” American Libraries Association v. Pataki, 969 F.Supp. 160, 169 (S.D.N.Y.

1997).

33

If section 33.02 is applicable to any access of Internet websites beyond the stated

terms of use, as AA alleges, then its interstate implications are obvious. Whether the

state legislature intended a statute to have extraterritorial effect is irrelevant to the

analysis. Rather, the relevant question is whether the practical effect of the regulation is

to control conduct beyond the boundaries of the state. Healy v. The Beer Institute, 491 U.

S. 324, 336 (1989), citing, Brown-Forman Distillers Corp. v. New York State Liquor

Authority, 476 U. S. 573 (1986).

AA’s efforts to criminalize access of its website outside the scope of its User

Agreement affects interstate Internet communications. The Internet is wholly insensitive

to geographic distinctions. See, American Libraries at 170-71. Any Internet transaction

implicates interstate commerce, and here, the webfare prices are stored on a webserver in

Tulsa, Oklahoma. RT5:218-19, 8:91. AA’s interpretation would apply a Texas statute to

criminalize FareChase, a New York resident, its licensees, who reside in several states,

and its end-users who reside across the nation, from “accessing a computer” located in

Oklahoma. Application of a state statute to control commercial activity outside the state

of Texas is a per se violation of the Commerce Clause. American Libraries, 969 F.Supp.

at 177.

IV. AA’S STATE LAW CLAIMS, TO THE EXTENT THEY SEEK REDRESS FOR THE UNAUTHORIZED ACCESS TO, USE AND COPYING OF WEBFARE DATA, ARE PREEMPTED BY FEDERAL LAW

AA’s state law trespass to chattels, misappropriation, conspiracy and penal code

claims are preempted because AA has not and cannot show it suffered harm from

34

anything other than the unauthorized use of its unprotected webfare prices and schedules.

AA is not seeking to protect its webserver, which can more than handle the additional

business FareChase software brings its way. Rather AA wants to impose limits on who

can access ticket price information it publishes on the Internet, and what uses those

people can make of AA’s prices. Rights to pricing data are defined by federal intellectual

property laws. Unless FareChase software harms AA.com, which it does not, or

FareChase breaches an enforceable contract with AA, which it does not, the state law

claims are preempted.

The Intellectual Property Clause of the United States Constitution grants only

Congress the authority to protect works of authorship. U.S.Const. Art. 1, Sec. 8, Cl. 8.

The Supreme Court has confirmed a clear constitutional directive to “promote national

uniformity in the realm of intellectual property.” Bonito Boats, Inc. v. Thunder Craft

Boats, Inc., 489 U.S. 141, 162 (1989). There are two ways in which federal copyright law

preempts state law. First, Congress has passed an express statutory provision that

partially preempts the field. Second, state law may be preempted because of a conflict

between copyright law or policy and state enforcement. See Lemley, Beyond

Preemption: The Law and Policy of Intellectual Property Licensing, 87 Cal.L.Rev. 111,

138 (1999). States do not have the authority to override federal copyright objectives by

“protect[ing] that which Congress intended to be free from restraint.” Goldstein v.

California, 412 U.S. 546, 559 (1973).

35

Under federal law, AA has no legal right to control who views, copies or

distributes its published fare and scheduling information. Price data is not protected by

copyright law. Feist Publications, Inc. v. Rural Telphone Service Co., Inc., 499 U.S. 340,

353 (1991). AA's schedules and fares cannot be protected from copying even if great

care and expense is expended in gathering the information. Id., see also, TicketMaster

Corp. v. Tickets.com, Inc., 2000 WL 1887522, *3 (C.D. Cal. 2000) (holding that the time,

place, venue, and price information of concerts was not protectable by copyright). In

other words, under federal copyright law, FareChase can access, obtain copy and use

AA’s webfare data however it likes without AA’s consent.

Any state law that protects AA from harm due to unauthorized use of its data is

preempted by federal copyright law, unless the state law protects AA from some

additional element of harm as well; the “extra element” test. The copyright preemption

statute states, “all legal or equitable rights that are equivalent to any of the exclusive

rights within the general scope of copyright: are governed exclusively by this title. . .

[N]o person is entitled to any such right or equivalent right in any such work under the

common law or statutes of any State.” 17 U.S.C. § 301. Preemption occurs if the rights at

issue (1) fall within the subject matter of copyright set forth in sections 102 and 103 and

(2) are equivalent to the exclusive rights of section 106. Gemcraft Homes, Inc. v.

Sumurdy, 688 F.Supp. 289, 294 (E.D.Tex. 1988). As long as a work fits within one of

the general subject matter categories of sections 102 and 103, the [statute] prevents the

States from protecting it even if it fails to achieve Federal statutory copyright because it

36

is too minimal or lacking in originality to qualify, or because it has fallen into the public

domain. Lipscher v. LRP Publications, 266 F.3d 1305, 1312 (11th Cir 2001). To

determine whether a state law claim is preempted by copyright, courts employ an “extra

element” test: “ if an extra element is required instead of or in addition to the acts of

reproduction, performance, distribution or display, in order to constitute a state-created

case of action, then the right does not lie within the general scope of copyright and there

is no preemption.” Foley v. Luster, 249 F.3d 1281, 1285 (11th Cir. 2001); Lipscher,

supra, 266 F.3d at 1312.

The test for preemption requires that AA show harm from something other than

the redistribution of its prices in a manner permitted by federal intellectual property law.

Fare and scheduling data are within the subject matter of copyright. Feist Publications,

Inc. v. Rural Telphone Service Co., Inc., 499 U.S. 340, 345 (1991) [“It is beyond dispute

that compilations of facts are within the subject matter of copyright.”] The first element

of the preemption test is met.

There is no “extra element” in AA’s claim beyond undesirable use of the fare data,

and thus the claims are preempted. The “extra element” test does not depend on whether

the elements of the state claim and federal copyright claims are the same. Rather, courts

look to see whether the core of the claim involves the wrongful copying and distribution

of asserted intellectual property. If so, the claim is preempted. Daboub v. Gibbons, 42

F.3d 285 (5th Cir. 1995). “A right is equivalent if the mere act of reproduction,

37

distribution, or display infringes it.” Taquino v. Teledyne Monarch Rubber, 893 F.2d

1488, 1501 (5th Cir. 1990).

In Lipscher, Law Bulletin, a legal publisher of newsletters summarizing individual

jury verdicts, sued LRP, a competitor that publishes national statistical and historical jury

verdict materials. Law Bulletin complained that LRP surreptitiously obtained

subscriptions to plaintiff’s verdict reporters by posing as law firm, and then used the

newsletter information contained in those reports to report on jury verdicts in its own

newsletter. When LRP initially contacted Law Bulletin for a subscription to the

newsletter, Law Bulletin recognized LRP as a competitor and stated that it was willing to

provide a subscription only if LRP promised not to copy, reproduce, or remarket any

portion of the publication. LRP never returned the letter or manifested agreement to

those conditions. Subsequently, LRP dishonestly obtained a subscription by signing up

under a false law firm name. Law Bulletin then sued, alleging that LRP obtained a

subscription to its verdict reporter by false pretense, knowing that Law Bulletin was

willing to provide defendant LRP with a subscription only upon the safeguards described

in the previous letter.

In Lipscher, though defendant LRP knew about plaintiff Law Bulletin’s

preconditions and restrictions on the use of its data, though the data was compiled at great

effort and expense, and though the plaintiff used false pretenses to obtain the information

for directly competing commercial purposes, the court held that the plaintiff’s claims

38

were preempted. Not even the defendant’s outright lies or status as a direct competitor

precluded preemption.

Clearly the rights Law Bulletin is attempting to protect in its acquisition misconduct claims are copyright rights. Furthermore, obtaining access to a work is a necessary condition to copying it.

Id. at 1312.

In Daboub v. Gibbons, the defunct band the Nightcaps sued the more successful

ZZ Top for copying their song, Thunderbird. The Nightcaps sued for conversion,

misappropriation, plagiarism, a violation of the Texas Free Enterprise and Antitrust Act

of 1983, disparagement, and defamation. However, “the core of each of these state law

theories of recovery in this case, without detailing the specific elements comprising each

claim, is the same: the wrongful copying, distribution, and performance of the lyrics of

Thunderbird.” Again, the court held that the state law claims were preempted. Daboub

v. Gibbons, 42 F.3d 285 (5th Cir. 1995).

In Alcatel v. DGI, 166 F.3d 772 (5th Cir. 1999), the court held that a Texas claim

of misappropriation is preempted if it essentially involves allegations that the defendant

reproduced or copied the plaintiff’s works and distributed them in competition with

plaintiff. Texas misappropriation law is specifically designed to protect the labor -- the

so-called “sweat equity” -- that goes into creating a work, which copyright law is not.

Also, misappropriation requires proof of facts that are not relevant to copyright claims.

But despite the seemingly divergent purposes of federal copyright law and state

misappropriation law, the Alcatel court concluded that, under certain facts, the rights

39

protected under federal copyright and Texas misappropriation law are equivalent. “[T]he

acts that form the basis of DSC’s misappropriation claim touch on interests clearly

protected by the Copyright Act, including (1) the reproduction of its firmware, software,

and manuals; (2) the use of these materials in the preparation of allegedly derivative

works – DGI’s microprocessor and expansion cards; and (3) the distribution of these

works in competition with DSC.” Id. at 788. “We conclude that, because DSC has failed

to demonstrate the presence of any element that renders different in kind its rights under

state and federal law, DSC's state misappropriation claim is preempted by federal

copyright law.” Id.

The core of AA’s claims against FareChase involve the wrongful acquisition,

copying and distribution of AA’s webfares. The trial court found that FareChase harmed

AA on because FareChase, its licensees and end users “access, obtain copy and use

information from AA.com” contrary to AA’s wishes. (Temp. Inj. ¶¶3, 5, 7, 8). There is

no extra element beyond that claim here. Even if FareChase initially accesses the

webfares without AA’s permission and for commercially competitive purposes, even if

the information is expensive to obtain, and even if initial access is achieved through

misrepresentation, as it was in Lipscher, AA’s attempts to control its webfare data are

preempted by federal copyright law.

AA is not without any recourse. If FareChase software harmed the AA.com

server, then AA could both meet the requirements for trespass to chattels and beat

preemption; the state law would be protecting AA from harm beyond that caused by the

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unauthorized use of its price data. If FareChase breached a valid contract with AA, AA

would be able to enforce that contract as state law would compensate for the “extra

element” of that breach of promise. See Taquino v. Teledyne Monarch Rubber, 893 F.2d

1488, 1501 (5th Cir. 1990) [Breach of the contract promise not preempted, but conversion

claim for the use of engineering drawings preempted where plaintiff was not physically

deprived of property and the property was reproduced, distributed and displayed by

defendant.] But AA cannot publish price data on the Internet, then use state law to obtain

the same relief that federal intellectual property law would deny.

V. AMERICAN HAS NOT SHOWN THAT IT IS HARMED BY FARECHASE

A. AA Has Failed to Show Extreme Necessity or Hardship

The trial court erred in finding that AA had a likelihood of prevailing on its claims, never

mind the unmistakable rights under the law it must show to get a mandatory injunction.

AA failed to show, by clear and compelling evidence, that it had extreme need or that it

would suffer extreme hardship without the injunction. AA must establish imminent harm,

irreparable injury and lack of adequate remedy at law. See Surko Enter., Inc v. Borg-

Warner Acceptance Corp., 782 S.W.2d 223, 225 (Tex.App.- Houston 1 st Dist 1989 – no

writ). Since this is a mandatory injunction, AA has a higher evidentiary burden and must

show a clear and compelling need. TriStar Petroleum Co. v. Tipperary Corp., 101

S.W.3d 583 (Tex.App.—El Paso 2003). However, AA fails under either standard.

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1. AA Does Not Face Imminent Harm

Under Texas l aw, “[a] prerequisite for injunctive relief is the threat of imminent

harm.” Operation Rescue-National v. Planned Parenthood of Houston and Southeast

Texas, Inc., 975 S.W. 2d 546, 554 (Tex. 1998), quoting, Frey v. DeCordova Bend Estates

Owners Ass'n, 647 S.W.2d 246, 248 (Tex. 1983). Mere “fear or apprehension of the

possibility of injury alone is not a basis for injunctive relief.” Mother & Unborn Baby

Care of North Texas, Inc. v. Doe, 689 S.W.2d 336, 338 (Tex.App. – Fort Worth 1985,

writ dism'd w.o.j.). AA admits that it has no evidence that FareChase or use of

FareChase software has placed any undue burden on its website infrastructure. RT5:268.

Although AA claims that it fears the use of its server “will be exacerbated by the new

alliances FareChase is forming,” such prospective possibility is not the showing of

immediate harm required to support the issuance of a preliminary injunction. Frey v.

DeCordova Bend Estates Owners Ass’n, 647 S.W.2d 246, 248 (Tex. 1983); Jordan v.

Landry’s Seafood Restaurant, 89 S.W.3d 737, 742 (Tex.App. – Houston 2002) [No

injunction to prevent injury that is purely conjectural.]

AA has two claims that it faced imminent harm. First, it asserts that “FareChase . .

. [and] Sabre have publicly proclaimed their intent to install tens-of-thousands of

additional copies” of FareChase software in the “immediate future.” However, the press

release issued by FareChase and Sabre concerning their licensing arrangement was issued

on April 29, 2002, nearly a year before the injunction was granted. Plaintiff’s Exh. 221.

AA’s other “evidence” is a document produced by FareChase during discovery, entitled

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“FareChase Revenue Model,” which is merely an undated financial forecast for the entire

2002 year, that includes potential revenue projections from the license agreement

between FareChase and Sabre. Plaintiff’s Exh. 136. Indeed, according to this document,

the “imminent” roll-out AA fears would have begun many months before the injunction.

2. AA Cannot Establish Irreparable Injury

AA cannot establish that it will suffer irreparable injury if the injunction is not

granted. AA has not demonstrated harm because FareChase’s software does not interfere

with its website. The “irreparable injuries” must be “actual and substantial” not just a

mere possibility. FareChase software actually enhances AA’s business by providing

prospective travelers, who might not otherwise take the time to visit the AA.com site,

with a tool that allows that traveler to comparison shop in an efficient and accurate

manner. If that traveler chooses to book an AA flight discovered by using the FareChase

software, AA will acquire a sale it would not have otherwise had. FareChase software

facilitates the comparison-shopping for webfares, but any liability for harm AA suffers

from members of the public, including travel agents having access to that information, is

preempted.

3. AA Cannot Establish “Lack of Adequate Legal Remedy At Law”

“Lack of adequate remedy at law” means an injury for which there is no legal

measure of damages available, that is, a noncompensable injury. Universal Health

Services, Inc. v. Thompson, 24 S.W.3d 570, 577 (Tex.App. – Austin 2000, no pet.),

citing, Texas Indus. Gas Phoenix Metallurgical Corp., 828 S.W.2d 529, 533 (Tex.App. –

43

Houston 1996, no writ). In order to show lack of legal remedy, AA must establish that is

has been injured in a manner for which there is either no real legal measure of damages,

or no measure that can be determined with a sufficient degree of certainty. Id. Stated

differently, the injury must be truly noncompensable. Universal Health Services, 24

S.W.3d at 577, citing, Texas Indus. Gas at 533.

Any harm AA might suffer is compensable by monetary damages. An irreparable

injury is an injury for which compensation cannot be made, or for which compensation

cannot be measured by any certain pecuniary standard. Texas Indus. Gas, 828 S.W.2d at

533. Absent an allegation that a defendant is insolvent, a trial court abuses its discretion

if it grants injunctive relief to enforce the payment of money. See LeFaucheur v.

Williams, 807 S.W.2d 20, 23 (Tex.App.--Austin 1991, no writ). In LeFaucher, the court

held that granting a temporary injunction which in the alternative required the defendant

to pay monetary damages was an abuse of discretion. Plaintiff's request to be

compensated in cash “conclusively established” that his injuries were compensable by

money damages. See also, San Jacinto Life Ins. Co. v. Brooks, 274 S.W. 648, 651

(Tex.Civ.App.--Fort Worth 1925, no writ) (trial court improperly granted temporary

injunction prohibiting insurance company from transferring to other defendants funds

claimed both by plaintiffs and those others, where alleged agreement plaintiffs relied

upon, if it existed, merely created debtor-creditor relationship between plaintiffs and

insurance company).

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Here, AA asked FareChase for money costs in exchange for permission or a

license to search AA.com with the Web Automation software. AA proposed that

FareChase compensate it for searches and bookings made on the AA.com website by

FareChase or its licensees in the amount of $0.10 per search and $12.00 per booking.

RT5:252. AA’s willingness to license shows that it will not suffer irreparable harm.

Even where the property owner has a right to exclude, as with a patented invention, if the

owner licenses use of the property, that act “suggests that any injury suffered by the

patentee is compensable in money damages, obviating the claim for injunctive relief.”

Arthrex Inc. v. dj Orthopedics LLC, ___ F.Supp.2d ___, 2002 WL 818062, *4 (D. Del

2002); Illinois Tool Works v. Grip-Pak, Inc., 906 F.2d 679, 683 (Fed.Cir. 1990); High

Tech Medical Instrumentation, Inc. v. New Image Industries, Inc., 49 F.3d 1551, 1557

(Fed. Cir. 1995) (noting that where patentee license product, the evidence suggests that

“any injury suffered by [patentee] [will] be compensable in damages …”) Without a

showing of either imminent or irreparable harm, issuance of a temporary injunction

would be unwarranted.

AA also has admitted the alleged harm caused to its business model by FareChase

licensees’ access to webfares is simply an economic matter. AA has already indicated

the monetary value it places on the right to access its site. AA cannot now argue that its

claimed harm is irreparable when it was willing to accept financial compensation for the

same access. During deposition testimony, AA noted that it had licensed access to its

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webfares to at least two travel distribution websites because “those specific distributors

had agreed to a set of economics.” RT5:254.

B. In Balancing the Equities, the Scale Tips Decidedly in Favor of FareChase

“When the questions to be ultimately decided are serious and doubtful, the legal

discretion of the judge should be influenced largely by the balance of equities between

the parties.” Texas Pipeline, 54 S.W.2d at 194. In balancing the equities, the Court

should determine which of the parties would suffer the greater detriment or

inconvenience by the action of granting or denying the injunction. Id. In cases such as

the instant matter – where substantial doubt as to the propriety of injunctive relief exists –

the balancing of the equities is a factor of controlling importance. Id.

FareChase is a small start-up company with very limited funding that has been

carefully rationed to allow it to cover overhead expenses, as it develops and markets its

software to its initial group of licensees. RT5:184. The revenue from the licensing of its

two software products is necessary to continue operations. If FareChase is required to

modify these products to eliminate the largest airline in the world, then it will likely be in

breach of its existing license agreements and will be severely impeded in efforts to

market its product to new licensees. RT5:58.

To date, FareChase has licensed WebAutomation to less than ten companies,

including third party intervenor Sabre, Inc., and is in the process of negotiating with

others. RT5:35. One potential licensee, with whom FareChase had executed a contract,

46

decided not to go forward with the contract and launch the FareChase software because

of this lawsuit. Defendant’s Exh. 41, 44, 46, 89-94. In short, the potential licensee did

not want to risk exposure to similar litigation.

AA is not harmed by FareChase software. The server is capable of handling

additional traffic, and indeed AA wants more people to purchase tickets off its website.

AA itself chose to make webfare data publicly available to the very travel agents it hopes

to enlist in EveryFare. The success of EveryFare is already in grave doubt, in no small

part because the business plan depends on selling access to already published

information. FareChase just helps travel agents search for that information expeditiously.

If AA wants to avoid this problem, it could limit access to its website, require users to

agree to terms of service, or ask users up front to confirm that they are not commercial

entities. For business reasons, AA chose not to shoulder that burden. Now, they seek to

place that burden squarely on FareChase’s shoulders.

While AA has not proved it faces either imminent or irreparable harm, issuance of

an injunction could seriously injure FareChase, even to the point of putting it out of

business, prior to it receiving a full and fair trial on the merits. The balance of hardships

tips strongly in favor of denying the injunction AA seeks.

C. The Public Interest is Aligned with the Free Flow of Public Information; Thus AA’s Request for Injunctive Relief Must Be Denied

AA’s motion for a preliminary injunction harms public interest. If public

necessity, public health or public convenience outweigh any resulting private injury, the

47

injunction should be denied. See, Mitchell v. Temple, 152 S.W.2d 1116, 1117

(Tex.Civ.App. -- Austin 1941, writ ref'd w.o.m.) (finding the public harm that would

incur from enjoining the operation of a sewage plant would be greater harm than that

occurring if the injunction did not issue.) There are two public interests at issue here: the

interest in maintaining the free flow of public information over the Internet and the

interest in fostering, rather than eliminating, competition in an already fiercely

competitive market. The two are necessarily interrelated, as the ready access to

commercial information on the Internet fosters competition.

The public interest in this case dramatically and overwhelmingly cuts against the

grant of an injunction. Application of the doctrine of trespass to give companies the right

to control information about their prices and products sold on the open market threatens

key benefits of electronic commerce. Such an extension of the law could have

debilitating impact on the way the Internet functions and is contrary to the public interest.

The Internet functions as a “giant computer ‘network of networks’” to connect users to a

body of information “as diverse as human thought.” PSINET Inc. v. Chapman, 167 F.

Supp. 2d 878, 883 (W. D. Vir. 2001); Reno v. ACLU, 521 U.S. 844 (1997). The success

of the Internet, and on competitive commerce over the Internet, depends on the free flow

of this information. However, in requesting this injunction, AA is asking this court to

enjoin the free flow of pricing and travel information that AA itself has made publicly

available through Internet. AA has concocted a non-existent “harm” as its basis for

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making this request, while in truth, AA merely seeks to curtail competition by making it

more difficult for consumers to compare alternative air travel options.

The role of product comparison sites is critical to the benefits of e-commerce.

Aggregators of product and price information, “shop-bots” that automate the price

comparison process, and comparative product evaluators like Consumer Reports and its

online equivalents all reduce transaction costs and improve competition by helping

consumers get fast, cheap and accurate information about products and prices. The

Federal Trade Commission has stated that “[c]ompetition is fostered both by the sellers

vying for [ ] business and shoppers seeking the best deal.” Federal Trade Commission,

Promoting Competition, and Protecting Consumers: A Plain English Guide to Antitrust

Laws (1999), <http://www.ftc.gov/bc/compguide/keep.htm>. The nature of the Internet

makes it an especially efficient medium for fostering such competition, because it allows

sellers from all over the world to promote their business, and it allows buyers to obtain

information from a wide variety of sources offering the items that they wish to purchase.

Thus, the availability of effective software tools that allow the average consumer to

feasibly gather product comparison information are essential to the success of a

competitive e-commerce environment.

If this Court adopts AA’s arguments, many of the benefits of the Internet are

endangered, as individual merchants would have the right to interfere with the free flow

of price and product information and would stifle competition. A ruling that AA can

enjoin prospective traveler’s use of software that simply automates the process of

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searching for unprotectable raw data about product pricing and availability, that AA has

already made publicly available on the Internet, would entice other online businesses to

use similar theories to hinder the flow of information. Companies like AA who already

hold enormous market shares would have a special incentive to shut down companies like

FareChase, who provide tools that allow consumers to comparison shop. These mega-

companies would be able to rely on their strong market influence and brand names to

ensure customers come to their website, while smaller competitors are left with a

disadvantage. Because manually gathering information from individual websites can be

complicated and tedious, many consumers will remain ignorant about less expensive or

better alternatives that are available elsewhere.

The Internet and e-commerce offer the possibility of improving the quality and

quantity of information available to consumers, and of cutting transaction costs to the

benefit of all involved. The trial court’s i njunction threatens to wipe these benefits away

with a single stroke of the pen. On the trial court’s theory, every e-commerce site in the

country can prevent shop bots, price comparison sites, or critical review sites like

Consumer Reports from accessing their Web pages or using the information. Such an

action would also endanger the most basic functions on which the Internet is based. The

public interest weighs heavily against the issuance of the injunction AA now seeks.

VI. CONCLUSION AND PRAYER The trial court applied the wrong standard to determine whether AA was entitled

to the injunctive relief it received. But under any legal standard, AA cannot show that it

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is likely to prevail on any claim that gives it the absolute right to control the use and price

information it publishes without restriction on the Internet. No legal authority supports

the trial court’s finding that FareChase is vicariously liable for the conduct of its

licensees. Nor do FareChase or its users trespass on AA’s personal proerty or violate

AA’s terms of use. AA’s claims that they were harmed by FareChase’s accessing,

obtaining, copying, or using information from AA.com is preempted by federal law.

Where AA chooses to publish webfare prices to the world, the world can comparison-

shop those prices, so long as it does not harm the webserver or violate an agreement.

Sinice FareChase did neither of these things, FareChase respectfully asks the Court to

dissolve the injunction.

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Dated: May 28, 2003 Respectfully submitted,

CENTER FOR INTERNET AND SOCIETY STANFORD LAW SCHOOL BY: ______________________________ Jennifer Stisa Granick In Pro Hac Vice California State Bar No. 168423 Crown Quadrangle 559 Nathan Abbott Way Stanford, California 94305-8610 Telephone: (650) 724-0014 Facsimile: (650) 723-4426 CANTEY & HANGER, LLP Ralph H. Duggins Texas State Bar No. 06183700 Scott A. Fredricks Texas State Bar No. 24012657 2100 Burnett Plaza 801 Cherry Street Fort Worth, Texas 76102 Telephone: (817) 877-2800 Facsimile: (817) 877-2807 ATTORNEYS FOR APPELLANT FARECHASE, INC.

CERTIFICATE OF SERVICE

I, Joanne Newman, do hereby declare:

I am over the age of eighteen years and not a party to the instant proceedings. My

business address is: 559 Nathan Abbott Way, Stanford, California 94305.

On the date set forth below, I caused to be served a true and correct copy of the

following documents:

COVER LETTER TO THE CLERK OF COURT;

BRIEF OF APPELLANT; and

APPENDIX TO BRIEF OF APPELLANT (attached to Brief)

(x) By Overnight Courier. I placed one true copy of the aforementioned

documents in a properly addressed, sealed envelope (freight prepaid) in a pickup station

routinely maintained by Federal Express, for overnight delivery to each the parties on the

attached Service List.

I declare under the penalty of perjury that the foregoing is true and correct.

Executed this 28th day of May 2003 at Stanford, California.

_______________________________ Joanne Newman

SERVICE LIST

CERTIFICATE OF SERVICE

David E. Keltner Jose Henry Brantley & Keltner, LLP 675 N. Henderson Fort Worth, Texas 76107 Telephone: (817) 877-3303 R.H. Wallace, Jr Paul F. Gianni Monika T. Cooper Shannon Gracey Ratliff & Miller LLP 777 Main Street, Suite 3800 Fort Worth, Texas 76102 Telephone: (817) 336-9333 Bill F. Bogle Russell R. Barton Harris Finley & Bogle, PC 777 Main Street, Suite 3600 Fort Worth, Texas 76102-5341 Telephone: (817) 870-8700 R. Paul Yetter Yetter & Warden, LLP 909 Fannin, Suite 3600 Houston, Texas 77010 Telephone: (713) 632-8000 Gregory P. Blaies Blaies & Hightower, LLP 777 Main Street, Suite 1900 Fort Worth, Texas 76102 Telephone: (817) 334-0800 John R. Keville Howrey Simon Arnold & White, LLP 750 Bering Drive Houston, Texas 77057 Telephone: (713) 787-1400