This is really interesting decision. Especially the CLAIMS BASED ON SCRAPING AND SELLING OF DATA

To summarize. X Corp. and other social media companies have to choose:

1. License to use data does not copyright make. Others can use the data too.

2. Copyright makes the company liable.

X Corp. v. Bright Data Ltd. (3:23-cv-03698)
District Court, N.D. California

Order on Motion to Dismiss
https://www.courtlistener.com/docket/67637345/83/x-corp-v-br...

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INTRODUCTION

A social media company asserts breach-of-contract and tort claims against a data-
scraping company. It seeks to bar the data-scraping company from extracting and copying
public data from its social media platform, and from selling tools that enable others to extract
and copy public data from its social media platform. Meanwhile, the social media company
sells its own tools that enable others to extract and copy public data from its social media
platform.
The data-scraping company has moved to dismiss for lack of personal jurisdiction and
failure to state a claim. A prior order denied the motion to dismiss as to lack of personal
jurisdiction. For the reasons stated herein, the motion to dismiss as to failure to state a claim is
GRANTED and the instant complaint is DISMISSED.

Our court of appeals has held that giving social media companies “free rein to decide, on
any basis, who can collect and use data — data that the companies do not own, that they
otherwise make publicly available to viewers, and that the companies themselves collect and
use — risks the possible creation of information monopolies that would disserve the public
interest.” hiQ Labs, Inc. v. LinkedIn Corp., 31 F.4th 1180, 1202 (9th Cir. 2022). With that in
mind, this district court carefully considered each of the claims asserted. It now concludes that
none of the claims passes muster.

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... The two-fold framing (accessing systems vs. scraping and selling data) will be used to
help explain why the instant complaint fails to state a claim upon which relief can be granted.
To the extent the claims are based on access to systems, they fail because X Corp. has alleged
no more than threadbare recitals of elements supported by conclusory statements. To the extent
the claims are based on scraping and selling of data, they fail because they are preempted by
federal law. Specifically, they fail because they stand as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress in enacting the Copyright Act.

... Nor does this order in any way suggest that X Corp. should refrain from implementing
technical measures to restrict access to its systems, e.g., “CAPTCHAs, user identification and
IP rate limits and anomaly detection tools” (Amd. Compl. ¶ 35). Not only does the law decline
to forbid such measures, but it generally allows X Corp. to implement them.

... But harmless interference cannot constitute trespass to chattels.

.... And, once more, this order does not in any way suggest that X Corp. should refrain from
engaging in “technological self-help” to restrict access to its systems. hiQ Labs, 273 F. Supp.
3d at 1113 n.11. The law allows X Corp. to undertake reasonable measures to protect its
possession. But the use and sale of scraping tools and services is not inherently fraudulent
barring allegations that a misrepresentation has, in fact, occurred.

[and now the interesting part]

.... As our court of appeals has explained, a non-exclusive licensee “has no more than a
privilege that protects him from a claim of infringement,” and “because such a licensee has
been granted rights only vis-à-vis the licensor, not vis-à-vis the world, he or she has no legal
right to exclude others.” Minden Pictures, Inc. v. John Wiley & Sons, Inc., 795 F.3d 997, 1004
(9th Cir. 2015). Yet that is exactly what X Corp. seeks to do with its claims based on scraping
and selling of data — to exclude others from using, copying, reproducing, processing,
adapting, modifying, publishing, transmitting, displaying, and distributing X users’ content.

Note the rights X Corp. acquires from X users under the non-exclusive license closely
track the exclusive rights of copyright owners under the Copyright Act. The license gives
X Corp. rights to reproduce and copy, to adapt and modify, and to distribute and display
(Terms 3–4). Section 106 of the Act gives “the owner of copyright . . . the exclusive rights to
do and to authorize any of the following”: “to reproduce . . . in copies,” “to prepare derivative
works,” “to distribute copies . . . to the public by sale,” and “to display . . . publicly.”
17 U.S.C. § 106. But X Corp. disclaims ownership of X users’ content and does not acquire a
right to exclude others from reproducing, adapting, distributing, and displaying it under the
non-exclusive license

... One might ask why X Corp. does not just acquire ownership of X users’ content or grant
itself an exclusive license under the Terms. That would jeopardize X Corp.’s safe harbors
from civil liability for publishing third-party content. Under Section 230(c)(1) of the
Communications Decency Act, social media companies are generally immune from claims
based on the publication of information “provided by another information content provider.”

... 47 U.S.C. § 230(c)(1). Meanwhile, under Section 512(a) of the Digital Millenium Copyright
Act (“DMCA”), social media companies can avoid liability for copyright infringement when
they “act only as ‘conduits’ for the transmission of information.

... invoking state contract and tort law, X Corp. would entrench its own
private copyright system that rivals, even conflicts with, the actual copyright system enacted
by Congress. X Corp. would yank into its private domain and hold for sale information open
to all, exercising a copyright owner’s right to exclude where it has no such right. We are not
concerned here with an arm’s length contract between two sophisticated parties in which one
or the other adjusts their rights and privileges under federal copyright law. We are instead
concerned with a massive regime of adhesive terms imposed by X Corp. that stands to
fundamentally alter the rights and privileges of the world at large (or at least hundreds of
millions of alleged X users). For the reasons that follow, this order holds that X Corp.’s state-
law claims against Bright Data based on scraping and selling of data are preempted by the
Copyright Act.5

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