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Baidu, Inc. v. Register.com, Inc. (S.D.N.Y.) (July 22, 2010)

Baidu, Inc. v. Register.com, Inc. (S.D.N.Y.) (July 22, 2010)

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Baidu sues Register.com based on a cyber-attack where the attacker gained access to Baidu's account through a Register.com customer service representative. Court allows negligence claims to go forward despite broad disclaimer in terms of service.
Baidu sues Register.com based on a cyber-attack where the attacker gained access to Baidu's account through a Register.com customer service representative. Court allows negligence claims to go forward despite broad disclaimer in terms of service.

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Published by: Venkat Balasubramani on Aug 03, 2010
Copyright:Attribution Non-commercial

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10/25/2012

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I
I
USIX
SDNY
11
UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK
DOCUMENT
CI.E~ON~CAL~LY
ILED
-----------------
-xBAIDU,
INC.
and BEIJING BAIDUNETCOM SCIENCE
&
TECHNOLOHY CO.,LTD.
I
Plaintiffs,
OPINION
-
against
-
10 Civ.
444
(DC)REGISTER.COM, INC.,Defendant.
APPUCES
PAUL, WEISS, RIFKIND, WHARTON
&
GARRISON LLPAttorneys for PlaintiffsBy: Carey R. Ramos, Esq.Marc Falcone, Esq.1285 Avenue of the AmericasNew York, New York 10019GIBSON, DUNN
&
CRUTCHER LLPAttorneys for DefendantBy: Orin Snyder, Esq.Alexander
H.
Southwell, Esq.200 Park AvenueNew York. New York 10166
CHIN,
Circuit
Judge:
Plaintiffs Baidu, Inc. and Beijing Baidu Netcom Science
&
Technology Co., Ltd. (together, "Baidu") perate an Internetsearch engine service in China. Baidu registered its domain name"baidu.comm ith defendant Register.com, Inc. ("Register"),domain name registrar. Register provides its clients, includingBaidu, with Internet traffic routing services.On January 11. 2010, someone engaged in a cyber-attackon Baidu by gaining unauthorized access to Baidu's account atRegister. As a consequence, Internet traffic intended for
Case 1:10-cv-00444-DC Document 21 Filed 07/22/2010 Page 1 of 20
 
Baidu's web site was re-directed to a web page showing an Iranianflag and a broken Star of David and proclaiming: "This site hasbeen hacked by the Iranian Cyber Army." web traffic was divertedin this manner for about five hours.In this case, Baidu sues Register for damages,asserting claims for, inter
&,
contributory trademarkinfringement under the Lanham Act, 15 U.S.C. 1114(l) (a), breachof contract, and gross negligence and recklessness. Baiduasserts that Register committed gross negligence by failing tofollow its own security protocols, and permitting the intruder togain unauthorized access to Baidu's confidential and proprietaryaccount information.Register moves to dismiss the complaint pursuant toFed. R. Civ. P. 12 (b)
6)
for failure to state a claim upon whichrelief may be granted. For the reasons that follow, the motionis granted in part and denied in part. Baidu will be permittedto proceed with its claims of gross negligence, recklessness, andbreach of contract.
STATEMENT
OF
THE CASEA.
The Facts
The facts alleged in the complaint are assumed to betrue for purposes of this motion and may be summarized asfollows
1.
TheParties
Baidu, Inc. is incorporated under the laws of theCayman Islands and has its principal place of business in China
Case 1:10-cv-00444-DC Document 21 Filed 07/22/2010 Page 2 of 20
 
(Compl. 6). Beijing Baidu Netcom Science
&
Technology Co.,Ltd. is incorporated under the laws of China and has itsprincipal place of business in China.
(Id.
7). Baidu is thethird largest search engine service provider in the world and thelargest in China, with an estimated more than 70% share of theChinese-language market.
(Id.
13). Baidu owns the registeredtrademark "Baidu" and the domain name "baidu.com."
(Id.
15,16). It generates revenue through the public's use of its searchengine service on its web site.
(Id.
14, 24).Register is incorporated under Delaware law and has itsprincipal place of business in New York.
(Id.
8). Register isan accredited domain name registrar and provides domain nameregistration, Internet traffic routing, and related services forits customers.
(a
16)
2.
Baidu's Relationshin with Reaister
Baidu registered its domain name with Register in 1999.
(Id.
16; Jacobson Decl.
3). The parties entered into aseries of written agreements; the currently operative agreementis the Master Services Agreement dated December 18, 2009 (the"MSA"). (Compl.
11, 16;
see
Jacobson Decl.
9
4
&
Ex. A).Under the MSA, Baidu agreed to use Register's services"entirely at [Baidu's] own risk." (MSA at 9)
2
he
MSA includesassertsthe MSAThe complaint refers to the "contract at issue" anda breach of contract claim (Compl.
11, 34-38) and thusis deemed incorporated into the complaint by reference.
2
References to the MSA are to the pages of the versionattached to the Jacobson Declaration as Exhibit A. For ease of
Case 1:10-cv-00444-DC Document 21 Filed 07/22/2010 Page 3 of 20

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