X Corp. v. Bright Data Ltd.

Background

X Corp. operates the social-media platform X, formerly known as Twitter. Bright Data offers datasets, scraping tools, and proxy-network services that can be used to collect publicly available information from websites. X Corp. alleged that Bright Data scraped information from X, sold scraped information, and helped customers scrape X data in violation of X’s Terms.

X Corp. relied on Terms stating that scraping was prohibited without prior written consent and that users could not sell X services or content unless authorized. The Terms also stated that users retained ownership of content they posted and granted X Corp. a broad, nonexclusive license to use, copy, modify, publish, display, and distribute that content.

X Corp.’s amended complaint asserted claims for breach of contract, tortious interference with contract, trespass to chattels, violation of California Business and Professions Code Section 17200, misappropriation, and unjust enrichment. Bright Data moved to dismiss for lack of personal jurisdiction and failure to state a claim. The court had already denied the personal-jurisdiction motion. At the hearing, the court denied Bright Data’s motion to stay discovery. Bright Data later filed a motion for summary judgment on the contract claim; the court denied that motion as moot because it found the contract claim suitable for dismissal with the other claims.

Claims Based on Access to X’s Systems

The court held that the claims based on access to X’s servers, routers, networks, and other systems were not plausibly pleaded.

For trespass to chattels—a claim alleging intentional interference with personal property that causes legally recognized harm—the court found that X Corp. did not allege impairment, physical damage, or substantial deprivation of use of its servers. General statements about reduced server capacity, reputational harm, and injury were conclusory. The court stated that sending scraper requests does not itself show that servers were impaired or that X Corp. was deprived of their use.

For the alleged fraudulent conduct under Section 17200, the court found that X Corp. did not identify a sufficiently specific misrepresentation. The complaint did not allege that Bright Data or its customers used registered accounts, and users could access X and send requests without logging in. The use of proxy servers or different Internet Protocol addresses was not inherently deceptive, and the court found no general duty requiring an Internet user to identify itself through a particular address.

The court also rejected the tortious-interference and contract theories to the extent they were based on automated access to X’s systems. Although the court found that X Corp. plausibly alleged that some Bright Data customers may have breached X’s Terms, X Corp. did not plausibly allege resulting damage from automated access. The court allowed X Corp. to seek leave to amend to allege such damage, if any.

Claims Based on Scraping and Selling Data

The court held that X Corp.’s state-law claims based on scraping and selling data were preempted by federal copyright law. Preemption means that federal law displaces a conflicting state-law claim.

The court reasoned that X users, not X Corp., owned the user content under the Terms. X Corp. received a nonexclusive license, which gave it rights against the users who granted the license but did not give X Corp. a right to exclude everyone else from reproducing, adapting, distributing, or displaying the content. X Corp.’s claims nevertheless sought to use state contract and tort law to prevent others from copying and selling publicly available content.

The court found three conflicts with the purposes of the Copyright Act. First, the claims would let a nonexclusive licensee exercise exclusionary rights belonging to copyright owners. Second, they could prevent users from making fair use of copyrighted material without X Corp.’s permission or payment. Third, they would restrict material that Congress intended to remain available for public use, including material that might not qualify for copyright protection, such as likes, usernames, and short comments.

The court distinguished claims protecting interests outside copyright, such as user privacy. It found that X Corp. was instead seeking to protect its own sale of data through a paid application-programming-interface subscription service. The court concluded that the claims based on scraping and selling data were an attempt to control exploitation of content through state law and were therefore preempted.

Additional Contract Theory

The court separately addressed X Corp.’s theory that Bright Data breached a newer Terms provision by facilitating or assisting others in violating the Terms. X Corp. added that provision after filing its initial complaint and then expanded its amended complaint to rely on it. The court held that X Corp. could not unilaterally amend the contract midway through litigation concerning that contract and found that no further analysis of that theory was required.

Disposition

The court granted Bright Data’s motion to dismiss for failure to state a claim and dismissed the complaint. The court did not state that the dismissal was with or without prejudice. X Corp. may seek leave to amend by motion no later than June 6, 2024, at noon. The court directed that any proposed amendment address the deficiencies identified in the order and stated that judgment would be entered if X Corp. did not seek leave to amend. Judge William Alsup signed the order on May 9, 2024.