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FTC MOTION FOR SUMMARY JUDGMENT

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ALDEN F. ABBOTT

GENERAL COUNSEL

Kevin H. Moriarty (D.C. Bar No. 975904) 

Cathlin Tully (NY Bar)

Shameka L. Walker (D.C. Bar No. 493891) 

Jarad A. Brown (Ca. Bar No. 294516) 

Katherine E. McCarron (D.C. Bar No. 486335) 

James A. Trilling (D.C. Bar No. 467273) 

Federal Trade Commission

600 Pennsylvania Avenue NW, Mail Drop CC-8232 

Washington, DC 20580 

P: (202) 326-2949/F: (202) 326-3062 

kmoriarty@ftc.gov; ctully@ftc.gov; swalker@ftc.gov;

jbrown4@ftc.gov; kmccarron@ftc.gov; jtrilling@ftc.gov

Attorneys for Plaintiff Federal Trade Commission 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

FEDERAL TRADE COMMISSION,

Plaintiff,

v.

D-LINK SYSTEMS, INC.,

Defendant.

No. 3:17-CV-00039-JD

FEDERAL TRADE COMMISSION’S

MOTION FOR SUMMARY 

JUDGMENT ON LIABILITY ON 

COUNTS 2, 3, AND 6

Hearing Date: November 8, 2018 

Hearing Time: 10:00 a.m.

Location: Courtroom 11, 19th Floor 

Judge: Hon. James Donato

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TABLE OF CONTENTS

TABLE OF CONTENTS ................................................................................................................. I

TABLE OF AUTHORITIES .......................................................................................................... II

NOTICE OF MOTION FOR SUMMARY JUDGMENT .............................................................. 1

MEMORANDUM OF POINTS AND AUTHORITIES ................................................................ 1

I. INTRODUCTION ........................................................................................................ 1

II. FACTUAL BACKGROUND .......................................................................................... 2

III. LEGAL STANDARD ................................................................................................... 4

A. Summary Judgment Standard ..................................................................... 4

B. Elements of Deception Under the FTC Act ................................................ 4

1. Determining What Claims Are Made in the Representations ......... 5

2. Determining Whether the Claims Were Likely to Mislead ............ 5

3. Determining Whether the Claims Are Material .............................. 5

IV. LIABILITY ARGUMENT ............................................................................................. 6

A. D-Link’s Security Event Response Policy (“SERP”) Claims

Violate the FTC Act (Count 2; Complaint Exhibit 1) ................................. 6

1. D-Link Claims It Engaged in Particular Software Security

Practices in Its SERP. ..................................................................... 7

2. D-Link’s SERP Was Likely to Mislead Because D-Link

Did Not Engage in the Claimed Software Security

Practices. ......................................................................................... 9

3. D-Link’s SERP Claims Are Material Because They Are

Express and Because Security Is a Central Characteristic of

Routers and IP Cameras. ............................................................... 13

B. D-Link’s Router Brochures Claims Violate the FTC Act (Count 3;

Complaint Exhibits 2-5) ............................................................................ 15

1. D-Link Router Brochures Promoted the High Quality of

Their Security................................................................................ 15

2. D-Link’s Router Brochures Claims Are Likely to Mislead

Because the Routers Were Not Secure from Basic Threats. ......... 20

3. D-Link’s Router Brochures Claims Are Material Because

They Are Express and Refer to Central Characteristics of

Routers. ......................................................................................... 21

C. D-Link’s IP Camera Interface Claims Violated the FTC Act

(Count 6; Complaint Exhibits 10-11) ....................................................... 22

1. D-Link Made Claims in Its IP Camera Interface that Setting

a Password Would Secure the Device. ......................................... 22

2. D-Link’s IP Camera Interface Claims Are Likely to

Mislead Because the Devices Had Another Secret

Password that Could Be Used Maliciously for

Unauthorized Access. ................................................................... 23

3. D-Link’s IP Camera Interface Claims Are Material

Because They Are Express and Because They Relate to a

Central Characteristic of IP Cameras. ........................................... 24

CONCLUSION ............................................................................................................................. 25

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TABLE OF AUTHORITIES 

Cases

Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ........................................................................... 4, 5 

Cliffdale Assocsiates, Inc., 103 F.T.C. 110 (1984) ........................................................... 5, 6, 7, 16 

Commerce Planet, 878 F. Supp. 2d 1048 (C.D. Cal. 2012) ............................................................ 5 

FTC v. AMG Services, Inc., 29 F. Supp. 3d 1338 (D. Nev. 2014) .................................................. 6 

FTC v. Colgate-Palmolive Co., 380 U.S. 374 (1965) ..................................................................... 5 

FTC v. Cyberspace.com, LLC, 453 F.3d 1196 (9th Cir. 2006) ............................................. 6, 8, 16 

FTC v. Figgie International, Inc., 994 F.2d 595 (9th Cir.1993) ..................................................... 6 

FTC v. Gill, 71 F. Supp. 2d 1030 (C.D. Cal. 1999) ........................................................................ 6 

FTC v. Medlab, 615 F. Supp. 2d 1068 (N.D. Cal. 2009) .......................................................... 9, 24 

FTC v. Mortgage Relief Advocates LLC, No. CV-14-5434-MWF (AGRx), 2015 WL 11257575, 

at *2 (C.D. Cal. July 1, 2015) .............................................................................................. 7, 15 

FTC v. Pantron I Corp., 33 F.3d 1088 (9th Cir. 1994) .......................................................... passim 

FTC v. QT, Inc., 448 F. Supp. 2d 908 (N.D. Ill. 2006) ................................................................... 7 

FTC v. US Sales Corp., 785 F. Supp. 737 (N.D. Ill. 1992) ............................................................ 5 

Kraft, Inc. v. FTC, 970 F.2d 311 (7th Cir. 1992) ............................................................................ 5 

Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099 (9th Cir. 2000) ................................ 4 

Resort Car Rental Systems, Inc. v. FTC, 518 F.2d 962 (9th Cir. 1975) ......................................... 6 

Simeon Mangement Corp. v. FTC, 579 F.2d 1137 (9th Cir. 1978) ...................................... 6, 9, 24 

Thompson Medical Co., Inc., 104 F.T.C. 648 WL 565377, at *102 (1984) (FTC) ................ 14, 21 

Statutes

15 U.S.C. § 45(a) (2012) ............................................................................................................. 1, 4 

Rules

FEDERAL RULES OF CIVIL PROCEDURE 56(a) .................................................................................. 4 

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NOTICE OF MOTION FOR SUMMARY JUDGMENT

On November 8, 2018, at 10:00 a.m., pursuant to Federal Rule of Civil Procedure 56, the 

Federal Trade Commission (“FTC”) will move this Court for summary judgment against D-Link 

Systems, Inc., for violations of Sections 5(a) of the FTC Act, 15 U.S.C. § 45(a) (2012). 

The FTC respectfully requests this Court to grant summary judgment against Defendant 

as to liability on all three counts remaining in this case. As explained below, the FTC has 

established sufficient material facts, about which there is no genuine dispute, to support a finding 

that Defendant is liable as a matter of law. The FTC has attached a proposed order granting 

summary judgment as to liability and ordering additional briefing on injunctive relief.1

MEMORANDUM OF POINTS AND AUTHORITIES

I. INTRODUCTION

D-Link Systems, Inc. (“D-Link”) promises consumers that the software on D-Link

routers and IP cameras is secure from unauthorized access. D-Link has made these promises on 

its website, on its brochures advertising its routers, and in the consumer interface for its IP 

cameras. These promises are false and misleading. D-Link routers and IP cameras have many 

serious, foreseeable, easily preventable, and undisputed security vulnerabilities that permit 

unauthorized access to these devices. 

The vulnerabilities in D-Link routers and IP cameras reflect real threats to consumers’ 

privacy and security. Because these vulnerabilities exist on devices that are the digital and 

physical gateway into the home, they afford criminals the opportunity to invade consumers’ 

privacy and steal their personal information. Cybercriminals often target vulnerable routers to 

access consumers’ personal information, commit fraud, and to use the routers as “bots” to mask 

the origin of criminal attacks launched across the Internet. Cybercriminals target Internetconnected devices to surveil activities inside consumers’ homes. 

1

 The FTC believes that broad injunctive relief is appropriate, but that is beyond the scope of this 

motion. Accordingly, the FTC has attached a proposed order reflecting a finding of liability. 

The scope of injunctive relief to protect consumers from D-Link’s practices violating the FTC 

Act is properly the subject matter of separate briefing.

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A trial is unnecessary in light of the undisputed record. D-Link does not dispute that it 

made the representations at issue. There is no genuine dispute that D-Link routers and IP 

cameras have contained serious, foreseeable, and easily preventable vulnerabilities permitting 

unauthorized access; that D-Link knew of these vulnerabilities; and that D-Link sold and 

marketed these devices as secure anyway. Further, there is no genuine dispute that D-Link’s 

representations regarding the security of its devices are material to consumers.

II. FACTUAL BACKGROUND

D-Link is a California-based corporation that markets and sells IP cameras that connect 

to the Internet (“D-Link cameras”) and routers (“D-Link routers”) under the D-Link brand 

(collectively, “D-Link devices”). D-Link Corporation is the Taiwanese-based parent corporation 

to D-Link. In its Complaint, the FTC alleges that D-Link deceived consumers when it promised, 

then failed, to take reasonable steps to protect D-Link devices2

 from unauthorized access.3

The Complaint alleges that D-Link, has made a series of misrepresentations to U.S. 

consumers regarding the security of D-Link devices. Specifically, D-Link: 

x published a “Security Event Response Policy” on its website, that touted 

the fact that D-Link “prohibited” features, such as undocumented account 

credentials and backdoors, that would allow unauthorized access on DLink devices (Count 2);4

2

 Brown Decl. Ex. 1, App. A to Pl.’s Fourth Am. Initial Disclosures (identifying the routers and 

IP cameras that are at issue in this case).

3

 Compl. for Perm. Inj. and Other Equitable Relief (“FTC Compl.”) (Mar. 20, 2017) ¶ 15 (Dkt. 

No. 44). The original complaint also named D-Link Corporation. Notwithstanding the central 

role D-Link Corporation plays in developing D-Link devices, the FTC agreed to dismiss D-Link 

Corporation for two reasons. First, D-Link accepted responsibility for the relevant secure 

software development practices when it represented to this Court that “D-Link Systems is 

responsible for addressing any potential security vulnerabilities for any products that are sold by 

D-Link Systems in the United States.” Brown Decl. Ex. 15, Decl. of William Brown in Supp. of 

D-Link Corp.’s Mot. to Dismiss ¶ 25 (Apr. 3, 2017) (Dkt. No. 50-2). Second, based on D-Link’s 

representations to this Court, the FTC is satisfied that this Court would be able to fashion 

injunctive relief sufficient to protect consumers from the sale and marketing by D-Link of routers 

and IP cameras that are not secure from unauthorized access.

4

 Brown Decl. Ex. 2, FTC Compl. Ex. 1 (“PX 1”). 

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view the feed with the easily-guessed credentials of username “guest” and password “guest.”15

Instead of developing set-up software that would require an update to fix this vulnerability, DLink pushed out updates only to consumers who separately signed up for D-Link’s “mydlink 

cloud” service.16 And, instead of warning consumers or recalling these cameras, D-Link did the 

opposite: It published its Security Event Response Policy, promising consumers that such 

backdoors were “prohibited,” and were given the “highest priority.”17

There is no genuine issue as to these facts and, for these reasons alone, summary 

judgment is appropriate as to all remaining counts.18

III. LEGAL STANDARD

A. Summary Judgment Standard

Summary judgment is appropriate “if the movant shows that there is no genuine dispute 

as to any material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P.

56(a). A party moving for summary judgment must show the absence of a genuine dispute as to 

any material fact with respect to an essential element of the non-moving party’s claim, or to a 

defense on which the non-moving party will bear the burden of persuasion at trial. Celotex Corp. 

v. Catrett, 477 U.S. 317, 322-23 (1986); Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 

1099, 1102 (9th Cir. 2000). The burden then shifts to the opposing party to designate “specific 

facts showing there is a genuine issue for trial.” Celotex, 477 U.S. at 324. 

B. Elements of Deception Under the FTC Act

An act or practice is deceptive pursuant to 15 U.S.C. § 45(a) (2012) if “first, there is a 

representation, omission, or practice that, second, is likely to mislead consumers acting 

reasonably under the circumstances, and third, the representation, omission, or practice is 

15 See Section IV. A.2.

16 Id. 17 See Brown Decl. Ex. 4, FTC Compl. Ex. 1 (“PX 1”). 

18 As set forth below, there are sufficient undisputed facts now to support summary judgment. If 

this matter proceeds to trial, however, the FTC will present additional facts to support a finding 

of liability, including that that D-Link’s software development program was not capable of 

preventing serious, well-known, foreseeable, and easily preventable vulnerabilities. 

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material.” FTC v. Pantron I Corp., 33 F.3d 1088, 1095 (9th Cir. 1994) (quoting and adopting 

standard in Cliffdale Assocs., Inc., 103 F.T.C. 110, 164–65 (1984)) (emphasis added). 

1. Determining What Claims Are Made in the Representations

To establish deception, the FTC must first demonstrate that D-Link made the challenged 

representations. No additional facts are necessary to interpret the language of the statements 

themselves: the Court can simply read the D-Link’s statements to understand their meaning. 

FTC v. US Sales Corp., 785 F. Supp. 737, 745 (N.D. Ill. 1992) (citing FTC v. Colgate-Palmolive 

Co., 380 U.S. 374 (1965)). The Court does not need a consumer survey or other extrinsic 

evidence to support a finding that a representation violates Section 5 of the FTC Act; a facial 

analysis is sufficient. Kraft, Inc. v. FTC, 970 F.2d 311, 318-19 (7th Cir. 1992); see also 

Commerce Planet, 878 F. Supp. 2d 1048, 1068 (C.D. Cal. 2012) (citing Kraft).

When interpreting an implied representation, the Court should evaluate “the overall, 

common sense ‘net impression’ of the representation or act as a whole to determine whether it is 

misleading,” FTC v. AMG Servs., Inc., 29 F. Supp. 3d 1338, 1349 (D. Nev. 2014) (quoting 

Commerce Planet, 878 F. Supp. 2d at 1063). A representation “capable of being interpreted in a 

misleading way should be construed against” the party making the representation. Simeon 

Mgmt. Corp. v. FTC, 579 F.2d 1137, 1146 (9th Cir. 1978) (quoting Resort Car Rental Sys., Inc. 

v. FTC, 518 F.2d 962, 964 (9th Cir. 1975)).

2. Determining Whether the Claims Were Likely to Mislead

Simply put, representations are misleading when they are false. Pantron I, 33 F.3d at 

1096. Both express and implied claims may violate the FTC Act. FTC v. Gill, 71 F. Supp. 2d 

1030, 1043 (C.D. Cal. 1999); FTC v. Figgie Int’l., Inc., 994 F.2d 595, 604 (9th Cir.1993) 

(“[Defendant] can point to nothing in statute or case law which protects from liability those who 

merely imply their deceptive claims; there is no such loophole.”). 

3. Determining Whether the Claims Are Material

A misleading impression created by a representation is material if it “involves 

information that is important to consumers and, hence, likely to affect their choice of, or conduct 

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regarding, a product.” FTC v. Cyberspace.com, LLC, 453 F.3d 1196, 1201 (9th Cir. 2006) 

(quoting Cliffdale Assocs., 103 F.T.C. at 165). Certain types of representations are 

presumptively material, including express product claims, Pantron I, 33 F.3d at 1095-96, health 

and safety claims, FTC v. QT, Inc., 448 F. Supp. 2d 908, 960 (N.D. Ill. 2006), claims involving 

purpose, safety, or efficacy, Cliffdale Assocs., 103. F.T.C. at 182, and express or implied claims 

relating to a product’s central characteristics, FTC v. Mortg. Relief Advocates LLC, No. CV-14-

5434-MWF (AGRx), 2015 WL 11257575, at *2 (C.D. Cal. July 1, 2015). 

IV. LIABILITY ARGUMENT

Summary judgment is appropriate here because there is no dispute that: (a) D-Link made 

representations that D-Link devices were secure from unauthorized access; (b) D-Link devices 

contained many vulnerabilities, which made D-Link devices not secure from unauthorized 

access; and (c) D-Link’s statements about security are material to consumers.

This section discusses each of D-Link’s alleged misrepresentations separately. It first 

discusses the claims made in D-Link’s Security Event Response Policy (“SERP”). Next, it 

discusses D-Link’s claims in the promotional brochures for its routers. Finally, it discusses DLink’s claims in the user interface for its IP cameras. 

A. D-Link’s Security Event Response Policy (“SERP”) Claims Violate the FTC 

Act (Count 2; Complaint Exhibit 1)

The FTC prevails on Count 2 because D-Link’s SERP deceived consumers through its 

express claims about the security of its devices and through the net impression conveyed by the 

SERP in its entirety—that D-Link took reasonable steps to secure its devices from unauthorized 

access.19 In fact, these express and implied claims were false.

19 See FTC Compl. ¶¶ 31-33; Brown Decl. Ex. 2, PX 1. 

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1. D-Link Claims It Engaged in Particular Software Security Practices

in Its SERP.

There is no factual dispute that the SERP contains express claims related to the security 

of D-Link’s devices.20 Specifically, in the section “D-Link’s Commitment to Product Security,” 

D-Link explicitly promises:

D-Link prohibits at all times, including during product development by D-Link or 

its affiliates, any intentional product features or behaviors which allow 

unauthorized access to the device or network, including but not limited to 

undocumented account credentials, covert communication channels, “backdoors” 

or undocumented traffic diversion. All such features and behaviors are 

considered serious and will be given the highest priority.21

This statement expressly notes that D-Link will “prohibit” any “features or behaviors” that 

“allow unauthorized access.” Despite its express claims, D-Link’s devices did in fact contain, 

and continue to contain, both undocumented account credentials and backdoors. D-Link did not 

disclose the existence of these vulnerabilities to consumers. 

In addition to the foregoing express claims, a facial analysis of D-Link’s SERP 

representations reveals that D-Link creates the net impression that it has taken reasonable steps 

to secure its products from unauthorized access. See FTC v. Cyberspace, 453 F.3d at 1200 

(stating that a representation “may be likely to mislead by virtue of the net impression it creates 

even though [it] also contains truthful disclosures.”). In the SERP, D-Link also assures 

consumers that: 

x it uses global “security event response teams” that work with and respond 

to “customers, vendors, partners, consultants, security researchers, 

industry organizations, and others to identify potential security issues in 

our products”; 

20 There is no factual dispute that D-Link disseminated the SERP on its website from 

approximately December 2013 to September 2015. D-Link Sys. Answer to FTC Compl. ¶ 20 

(Oct. 3, 2017) (Dkt. No. 92) (“DLS admits that from approximately December 2013 until 

September 2015, a document titled “Security Event Response Policy” was posted on its webpage 

at http://support.dlink.com/securityadvisories.aspx.”). This motion describes the SERP in the 

past tense, because it was eventually taken down. By contrast, the router brochures and the GUI 

representations remain on the D-Link website and software set-up wizard, respectively, and so 

are describe in the present perfect tense.

21 Brown Decl. Ex. 2, PX 1. 

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x it encourages anyone who suspects a product security issue to bring that 

concern to the attention of its security event response team;

x the “security event response team” monitors security requests received via 

e-mail on a 24/7/365 basis; that “Reports [of security vulnerabilities] are 

typically acknowledged within 24 hours” and “Plan of actions are 

typically offered with in [sic] 48 hours of a recognition and posting of a 

report”; and

x consumers can readily track security vulnerability information from DLink by accessing any of various sources (web, e-mail, RSS, Twitter, or 

various public relations contacts).22

A facial analysis of the SERP establishes that reasonable consumers who viewed the SERP

would believe that D-Link has taken reasonable steps to secure its products from unauthorized 

access. See FTC v. Medlab, 615 F. Supp. 2d 1068, 1078 (N.D. Cal. 2009) (holding that no 

extrinsic evidence was necessary to prove “obvious” implied claims). The Court should construe 

this reasonable interpretation of D-Link’s representations in the SERP against them. Simeon 

Mgmt., 579 F.2d 1146. Here, the FTC is not required to present extrinsic evidence of what DLink’s claims implied in order to prove “what is obvious to any rational reader.” Medlab, 615 F. 

Supp. 2d 1078. 

Although the Court may conduct a facial analysis without looking to extrinsic evidence, 

to assist the trier of fact, in further support of this analysis, the FTC submits extrinsic evidence in 

the form of a facial analysis by a marketing communications expert, Dr. Terrence A. Shimp.23

Dr. Shimp’s expert report comprehensively describes the process by which consumers research 

routers and IP cameras, including by conducting online research on brands’ websites.24 Dr. 

Shimp analyzed the SERP and offered opinions on the implied claims that D-Link made in this 

document.25 Dr. Shimp concluded that the type of reasonable consumers who would read the 

SERP would form the belief, upon reading it, that D-Link takes security very seriously and that 

D-Link has taken reasonable steps to secure its products from unauthorized access.26 D-Link’s

experts do not present evidence contrary to this conclusion. 

22 Id.

23 See Brown Decl. Ex. 55, Shimp Decl. incorporating Expert Report (“Shimp Report”). 

24 Brown Decl. Ex. 55, Shimp Report ¶¶ 19-24, 55. 

25 Id. ¶¶ 56-60. 

26 Id. ¶¶ 57, 60. 

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