VPPA Still Doesn’t Protect App Downloaders–Perry v. CNN

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IMG_5662Plaintiff sued CNN under the Video Privacy Protection Act, alleging that CNN wrongly disclosed plaintiff’s viewing records without plaintiff’s consent. The allegation is that plaintiff used the CNN app, which records viewing history, and CNN sent this information to Bango, a third party data analytics company. CNN allegedly disclosed to Bango the viewing activity along with the MAC address (a unique string of numbers associated with plaintiff’s device). Bango then allegedly used the information to link the user’s MAC address to other information and built a profile of plaintiff that includes the name, location, phone number, email address, and payment information, combined with the viewing history that CNN disclosed.

Standing: CNN argued that Spokeo v. Robins deprived plaintiff of standing because plaintiff did not allege any harm apart from the wrongful disclosure in question. The court rejects CNN’s reading of Spokeo. In this court’s view, Spokeo recognized that statutory harm alone can suffice where the legislature demonstrates a clear intent to create cognizable injury through the statute. That was the case here. The court cites to the rationale for passing the statute in the first place–the wrongful disclosure of then-nominee Bork’s videotape viewing records. The court also looks to the common law history of privacy torts and notes that in many circumstances, mere disclosure alone, even without misuse of information, is actionable. Thus, plaintiff does not have to show any more injury than wrongful disclosure to have Article III standing.

Whether plaintiff is a subscriber: The second and dispositive question is whether plaintiff is a “subscriber” as defined by the statute. The limited case law on the issue recognizes plaintiff as a subscriber either where the plaintiff pays to obtain the content or where there is some sort of ongoing subscription relationship. Plaintiff initially alleged in district court that he downloaded the free app and this was the extent of his relationship. This was insufficient under another Eleventh Circuit case (Ellis v. Cartoon Network). This time around, plaintiff alleges that he paid for a premium cable package that entitled him to get “premium content” on his devices, and this satisfied the necessary ongoing relationship. The court says this is still insufficient:

[the] ephemeral investment and commitment associated with [plaintiff’s] downloading of the [app,] even with the fact that [plaintiff] has a separate cable . . . subscription that includes CNN content, is simply not enough to consider [plaintiff] a subscriber under Ellis.

Accordingly, the court declines to reach the issue of whether the information disclosed by CNN is “personally identifiable information” under the VPPA.

__

Whether the Court’s ruling in Spokeo v. Robins would push back the wave of impending privacy litigation was an open question following Spokeo. I think this question can be decisively answered in the negative. It’s rare to see a dismissal on standing grounds supported by Spokeo, and most of those cases would have not satisfied standing pre-Spokeo anyway.

As to the court’s reading of the term “subscriber,” there’s a tension there between reading the statute broadly to protect consumers on the one hand, and facilitating crushing privacy lawsuits on the other. There’s also of course the difference between the state of affairs when the statute was passed (e.g., before Netflix) to the changing landscape of content consumption today. You can certainly argue that content nowadays often involves a non-monetary quid pro quo, so looking to whether the consumer pays money is a poor metric. But it’s certainly a bright line. And as this case illustrates, the “ongoing relationship” test spelled out by Ellis and applied here is vague at best.

Ultimately, it’s a loss for the privacy bar, but courts continue to struggle with aspects of the statute to reach this result.

Case citation: Perry v. CNN, No. 16-13031 (11th Cir. Apr. 27, 2017)

Related posts:

Important and Troubling Video Privacy Protection Act (VPPA) Ruling From First Circuit–Yershov v. Gannett

App Users Aren’t “Subscribers” Under the VPPA–Ellis v. Cartoon Network

9th Circuit Rejects VPPA Claims Against Netflix For Intra-Household Disclosures

Court Rejects VPPA Claim Against Viacom and Google Based on Failure to Disclose Identity

Court Says Plaintiff Lacks Standing to Pursue Failure-to-Purge Claim Under the VPPA – Sterk v. Best Buy

Judge Dismisses Claims Against Pandora for Violating Michigan’s Version of the VPPA – Deacon v. Pandora Media

Ninth Circuit Rejects Video Privacy Protection Act Claims Against Sony

AARP Defeats Lawsuit for Sharing Information With Facebook and Adobe

Lawsuit Fails Over Ridesharing Service’s Disclosures To Its Analytics Service–Garcia v. Zimride

Android ID Isn’t Personally Identifiable Information Under the Video Privacy Protection Act

Minors’ Privacy Claims Against Viacom and Google Over Disclosure of Video Viewing Habits Dismissed

Video Privacy Protection Act Plaintiffs Can Proceed Against Hulu Absent Showing of Actual Injury

Judge Boots Privacy Lawsuit Against Pandora but Plaintiffs Can Replead – Yunker v. Pandora

Split 9th Circuit Panel Approves Facebook Beacon Settlement – Lane v. Facebook

No Privacy Claim Against Netflix for Disclosing Viewing Histories and Instant Queue Titles Through Netflix-Enabled Devices — Mollett v. Netflix

Court Declines to Dismiss Video Privacy Protection Act Claims against Hulu

Granick on CISPA’s Deficiencies (With Some of My Own Comments)

Seventh Circuit: No Private Cause of Action Under the Video Privacy Protection Act for Failure to Purge Information–Sterk v. Redbox

Jan.-Feb. 2012 Quick Links, Part 6 (Privacy and more)

Redbox Can be Liable Under the Video Privacy Protection Act for Failure to Purge Video Rental Records — Sterk v. Redbox

Beacon Class Action Settlement Approved — Lane v. Facebook

May 2nd 2017 Marketing

Catching Up On Some Recent Click Fraud Rulings

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After all of the excitement over click fraud a decade ago, we don’t often see click fraud cases any more. However, just in the past couple months I’ve seen 3 rulings that I wanted to share with you.

Wickfire, LLC v. Woodruff, 2017 WL 1149075 (W.D. Tex. March 23, 2017). The complaint.

This case involves click fraud and other online marketing shenanigans. It leads to a major damages award for the plaintiff. The parties are both SEMs. Wickfire claimed that TriMax “(1) placed fraudulent advertisements on Google AdWords that falsely designated Wickfire as their origin in violation of the Lanham Act, and (2) engaged in “click fraud” and placed fraudulent advertisements to intentionally interfere with Wickfire’s current and prospective contractual and business relationships, and they did so as part of a conspiracy to harm Wickfire.” TriMax made various counterclaims.

The case proceeded to a jury trial. “The jury returned a unanimous verdict in favor of Wickfire, finding Defendants TriMax, Laura Woodruff, WREI, and Josh West (1) misrepresented Wickfire as the source of advertisements by placing advertisements containing identifying information distinctive of Wickfire in a manner that was likely to cause confusion; (2) intentionally interfered with Wickfire’s existing contracts; (3) tortiously interfered with Wickfire’s prospective business relationships; (4) were part of a conspiracy that damaged Wickfire; and (5) acted with malice or gross negligence. The jury awarded Wickfire $2,318,000.00 in compensatory damages as a result of Defendants’ intentional interference with Wickfire’s existing contracts and prospective business relationships.” TriMax’s counterclaims failed.

Regarding click fraud, the court acknowledges the semantic confusion:

Although the witnesses at trial testified to varying definitions of “click fraud,” the parties use the term in their claims to mean the practice where an individual clicks on a competitor’s ad to drive up the competitor’s cost of advertising and prematurely exhaust the budget. Once a competitor’s ads disappeared, the individual committing click fraud can then win the bid.

The court says:

the jury heard evidence Defendants clicked on Wickfire’s online advertisements for 12 to 14 hours a day over a period of months for the sole purpose of forcing Wickfire to pay for the clicks, and this clicking, which ultimately resulted in 4,080 clicks, could have run Wickfire out of business. Moreover, Wickfire has provided sufficient support for the proposition that click fraud is unlawful [citing Findwhat Investor Group v. Findwhat.com, 2011 WL 4506180 (11th Cir. Sept. 30, 2011) and Menagerie v. Citysearch].

TriMax argued in its counterclaims that Wickfire had engaged in predatory bidding. It doesn’t work:

TriMax claims Wickfire manipulated the Google AdWords auction by engaging in “predatory bidding.” Wickfire allegedly did this by (1) running indirect ads below TriMax’s direct ads that linked customers to a website called WebCrawler.com (eventually Wickfire would begin linking these indirect ads to its own website, TheCoupon.co, rather than WebCrawler.com), (2) “plac[ing] exorbitantly high bids on its Webcrawler ads” which caused TriMax’s cost-per-click to “skyrocket,” and (3) once TriMax’s budget was exhausted and its ad campaign paused, Wickfire placed its own direct ads “which easily won the auctions due to the lack of competition from TriMax.” Additionally, in support of its unclean hands defense, TriMax claims Wickfire used tracking identifiers similar to those used by TriMax to make it look like TriMax, not Wickfire, was the predatory bidder.

According to Wickfire, TriMax’s increased costs resulted from its own overbidding, not tortious interference from Wickfire. As Wickfire explains, TriMax alone controls its bids; TriMax has never been charged more than it bid, and this bidding strategy was equally open to TriMax. Wickfire therefore maintains this so-called practice of “predatory bidding” simply constitutes legitimate competition.

The facts in the opinion were a little garbled, so I couldn’t easily tell why TriMax’s predatory bidding claim failed yet Wickfire, which appeared to allege similar conduct, found success. I’m sure there are some key factual differences that persuaded the jury.

There is also some wacky discussion about Wickfire’s unique affiliate tracking code achieving secondary meaning and becoming an enforceable trademark. Ugh.

Satmodo v. Whenever Communications, 2017 WL 1365839 (S.D. Cal. April 14, 2017).

The litigants compete in the satellite phone retailing business. The court suggests that it’s a fiercely competitive business. Both parties engage in search engine marketing. The plaintiff alleges that the defendant deliberately engaged in competitive click fraud to drain its SEM budget. “Plaintiff believes that Defendants are utilizing automated means and rotating through proxy servers in order to avoid detection.” The court discusses several claims:

CFAA 1030(a)(4): “Plaintiff asserts two theories alleging how Defendants acquired improper access: (1) violating the terms and conditions of the search engine’s advertising contracts, and (2) accessing Plaintiff’s website after Plaintiff blocked various IP addresses and asked Defendants to cease.” The court rejects the TOS prong per Power Ventures and Nosal, but the C&D letter was good enough to delimit access.

Still, the CFAA claim gets tossed because the plaintiff didn’t adequately show how the defendant accessed its computers. In a footnote, the court explains “Plaintiff’s opposition explains that clicking on the advertisements on the search engines resulted in Defendants being redirected to Plaintiff’s website, servers, and computers. However, Plaintiff fails to allege this information in its complaint.” The Cal. Penal Code 502 claim fails for the same reason.

CFAA 1030(a)(5): the court says the plaintiff didn’t show how “their data was destroyed, their computer system was harmed, or there was an inability to access their own computer data.”

California UCL: “The crux of Plaintiff’s complaint focuses on Defendants’ alleged click fraud scheme, which takes Plaintiff, “one of its main competitors, out of the marketplace for a period of time, all to the Defendants’ benefit.” These allegations, taken as true, allege unfair conduct that violates the spirit of antitrust laws and significantly threatens competition.”

Intentional Interference with Prospective Economic Relations. “Plaintiff does not allege any facts that show the existence of any specific economic relationship with identifiable third parties.”

In contrast to the Wickfire case, this plaintiff seems to be struggling to find a workable theory to challenge competitive click fraud.

Havensight Capital LLC v. Facebook, Inc., 2017 WL 1507491 (Cal. Ct. App. April 27, 2017):

On several occasions, plaintiff purchased online ads for its business on the Facebook social networking site in order to gain website visits to a single specified website address. According to plaintiff, Facebook has a tool called Ads Manager that shows customers the number of website clicks generated from the ads customers place with it. Google has a similar tool called Google Analytics, which tracks and reports website traffic. After comparing data from Facebook’s Ads Manager to similar data from Google Analytics, plaintiff observed that Ads Manager tallied a visit count to its website that was 30 percent higher than that shown by the Google Analytics data, even though the Google tool measures total visits, not just visits from Facebook, as does Ads Manager. From this disparity, plaintiff asserts defendant is deliberately over-inflating the amount of visits generated from its site. Plaintiff also alleges that defendant has charged it varying amounts per click. For example, the charges ranged from 67 cents per click to 25 cents per click on two different days in 2015. Plaintiff asserts defendant’s conduct resulted in the denial of multiple venture capital funding requests.

The appeals court upholds a dismissal of the lawsuit.

Bonus Track #1: Tropical Sails Corp. v. Yext, Inc., 2017 WL 1048086 (SDNY March 17, 2017)

Yext provides the “PowerListings” service, which enables “subscribers to track their business listing information (e.g., business name, address, and telephone number) across a number of online business directories—or internet Yellow Pages—that partner with Yext.” To drum up business, Yext offers prospective customers a free way to check how their listings are faring on existing sites. When using this tool, Yext presents a list of “Location Data Errors Detected.” The court explains:

For customers not already subscribed to Yext’s PowerListings service, the PowerListings scan reported “not standing out” under the “Special Offer” column and “unverified listing” under the “Status” column for every single online directory in the list. In addition to totaling any entry missing entirely from a directory and any discrepancy in the business name, address, or telephone number as an error, the PowerListings scan counted each “not standing out” and “unverified listing” as an error. The PowerListings scan contained between forty and sixty online directories, meaning that for all customers not subscribed to PowerListings at the time they ran the PowerListings scan, by design, the scan showed at least eighty to 120 errors.

The plaintiff, Tropical Sails, used this scanning tool and unsuccessfully tried to update the business listings manually to reduce the Yext-reported errors. Eventually it decided to subscribe to Yext after a salesperson called. The arrangement was not successful: “the PowerListings service generated ‘zero calls, zero inquiries, or zero leads from all these directories.’” Tropical Sails didn’t renew the subscription, and then it sued Yext (in a putative class action) for fraud/fraudulent inducement, unjust enrichment, and violations of N.Y. General Business Law §§ 349-50.

The court says that Tropical Sails qualifies for most elements of class formation, except that individual questions of fact predominate. Still, the outcome isn’t all good news for Yext. The court denies Yext’s summary judgment to dismiss Tropical Sails’ individual claim, plus it’s never good when a customer reports “zero calls, zero inquiries, or zero leads.” I know business directory listings are popular tools among online marketers because they are easy things to measure (see, e.g., the Kent report in the Larsen v. Larson case I blogged about), but I routinely wonder how much traffic these business directories actually get (other than from SEMs checking their positioning) and if/when it’s worth businesses investing in improving their business directory exposure.

Bonus Track #2: MacFarland v. Le-Vel Brands LLC, 2017 WL 1089684 (Tex. Ct. App. March 23, 2017)

MacFarland runs the Lazy Man and Money website, allegedly with 4M visitors (total? per month? per day?). He posted an article “Is Le-Vel Thrive aScam?” Le-Vel is a multi-level marketer. It sent a demand letter claiming defamation. MacFarland edited the letter but didn’t remove it. At issue is whether MacFarland qualifies for Texas’ anti-SLAPP law. The trial court ruled against MacFarland, but the appellate court easily reverses on all points and gives MacFarland the win and his attorneys’ fees. Let’s hear it for robust anti-SLAPP laws!

More Click Fraud Posts

* Facebook Beats Class Certification in Click Fraud Case
* Google Sued for Click Fraud for the First Time in Years–123 Lock and Key v. Google
* Facebook Gets Partial Win in Click Fraud Lawsuit
* Citysearch Click Fraud Class Certified–Menagerie v. Citysearch
* Facebook Sued for Click Fraud–RootZoo v. Facebook
* Securities Fraud Case Premised on Click Fraud Allegations Dismissed–Brodsky v. Yahoo
* Lambotte’s Click Fraud Lawsuit Against IAC Survives Motion to Dismiss
* Stockholder Derivative Action Against Yahoo Based on Click Fraud Rebuffed–Brodsky v. Yahoo
* Citysearch Sued for Click Fraud–Lambotte v. IAC
* Click Fraud Talk at SMX West
* Lead Fraud (A Cousin of Click Fraud)–NetQuote v. Byrd
* Click Fraud Resources
* Miva Securities Litigation Rejects Most Click Fraud/Syndication Fraud Claims
* Click Fraud Lawsuit Survives Motion to Dismiss–Payday Advance v. FindWhat
* Click Fraud Presentation
* Google Click Fraud Settlement Approved
* Yahoo Click Fraud Settlement Preliminary Approval
* Google Click Fraud Report
* AIT Click Fraud Lawsuit Stayed
* Lane’s Gifts Click Fraud Lawsuit Near Settlement
* Lane’s Gifts Click Fraud Lawsuit Back to State Court
* Lane’s Gift Click Fraud Complaint
* Click Fraud Lawsuit–Click Defense v. Google
* Update on Click Fraud Lawsuit
* Lostclicks.com and Click Fraud

May 2nd 2017 Marketing

A Complaint’s Silence About Section 230 Helps It Survive Judgment on the Pleadings–Moretti v. Hertz

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This is a class action lawsuit against car rental companies for an alleged “currency exchange rate scam.” Allegedly, the rental car companies quote foreign rentals in dollars but then actually charge customers in the local currency at an inflated exchange rate. Also, the rental car companies allegedly didn’t disclose that liability insurance was mandatory in some places.

This post focuses on Hotwire’s liability as an online travel agency, though the opinion never uses that term. The allegations against Hotwire include that “Hotwire continued to [publish misleading information] despite consumer complaints and Hotwire’s knowledge of the information’s fraudulent content….Hotwire [w]as a willing and ratifying participant in this arrangement, and… Hotwire ‘directly profit[s]’ from the scheme.”

Hotwire moved for judgment on the pleadings on Section 230 grounds. We know Section 230 can be resolved via a judgment on the pleadings because the seminal Zeran case ruled on that basis. The court also cites the Obado and DiMeo Third Circuit rulings and the Kabbaj ruling from the District of Delaware, all Section 230 12(b)(6) dismissals. In a footnote, the court adds additional citations that Section 230 is an immunity from suit, including the Nemet Chevrolet, MA v. Village Voice, Evans v. HP and Goddard v. Google cases. Given this stack of precedents, you’d think Hotwire was in good shape.

Here, the plaintiffs didn’t make allegations in the complaint that Hotwire is disqualified from Section 230, i.e., the complaint did not anticipatorily rebut Hotwire’s Section 230’s defense. The court treats Section 230 as an affirmative defense, so the complaint’s silence about Section 230 is OK:

Taking the well-pleaded factual allegations as true, there is no basis in the Complaint from which the Court could conclude that Hotwire did not function as an ICP and did not contribute materially to the alleged misrepresentations.

The court summarizes:

Plaintiff’s allegations are such that there is, based solely on the face of the Complaint, a factual dispute as to the nature and degree of Hotwire’s involvement in the allegedly misleading statement. Under the circumstances here, the Court cannot treat the Complaint’s silence as to whether Hotwire materially contributed to the false statement as an affirmative allegation that Hotwire did not do so.

In support of rejecting Section 230 on a motion to dismiss, the court cites Swift v. Zynga, Chang v. Wozo, Cybersitter v. Google, and Perfect 10 v. Google (the 2006 district court ruling).

There are several moving parts to the court’s double-negative treatment of this issue. First, as the court acknowledges, many other courts have said Section 230 isn’t an affirmative defense; it’s an immunity from liability, in which case the plaintiff bears the pleading burden. Second, even if Section 230 is an affirmative defense, the court doesn’t distinguish between a 12(b)(6) and a motion for judgment on the pleadings. Hotwire’s answer and supporting filings may be sufficient to establish the prima facie elements of the affirmative defense, shifting the burden back onto the plaintiff to rebut the defense or lose. Unfortunately, the way the court phrased its discussion, it implies that a plaintiff’s complaint will survive a judgment on the pleadings so long as it’s murky and ambiguous enough that the court can’t tell whether or not Section 230 might apply. If that’s the court’s true holding, it would reward poor pleading by the plaintiffs and extend–at substantial cost to the parties–cases that may ultimately be governed by Section 230.

Apparently the judge was partially influenced by unspecified representations of plaintiffs’ counsel during oral arguments that they had facts disqualifying Hotwire from Section 230’s coverage. To get those facts into the pleadings, the court requires the plaintiffs to file an amended complaint “to include any specifics which are in his possession that help to show why Plaintiff believes Hotwire is not immune.” I don’t recall seeing a court require an amended complaint in a ruling the plaintiffs won, but it’s a logical step to get the salient facts into the record so Hotwire can contest them.

The court doesn’t get into Section 230’s substantive standards in much detail. In a footnote, the court cryptically suggests that “whether Hotwire is an ICP (and therefore not entitled to Section 230 immunity) will depend on whether there is a sufficient nexus between Hotwire’s conduct and the allegedly misleading nature of the information supplied by Hertz Defendants and displayed on Hotwire’s site.” The court doesn’t address whether Hotwire functions as the retailer or a travel agent rather than just an ad-supported content publisher, but that issue may come up.

BONUS RANT: The case doesn’t directly implicate resort fees, though the allegedly undisclosed mandatory obligation to procure liability insurance is analogous. Any mandatory fee not disclosed as part of the base price is BOGUS. Worse, the FTC knows it’s bogus yet continues to do nothing. I doubt this case will have any implications for resort fees, but if this case can finally stop hotels from imposing resort fees, I’m all for it.

Case citation: Moretti v. The Hertz Corp., 2017 WL 1032783 (D. Del. March 17, 2017). I previously blogged the venue selection ruling in this case.

March 31st 2017 Marketing

Trademark Lawsuit Claiming Organic Search Results Create Initial Interest Confusion Falls Apart–Larsen v. Larson

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Disclosure note: I provided an expert report in this now-dismissed case, so you might consider my comments to be advocacy. I’ll explain my expert role in a bit.

The Court Opinion

Susan Larsen practices business law in the Denver, Colorado metro area under the name Larsen Law Offices. She claims she’s been using the name since 2003, though she did not register the name as a trademark (and would need to address the obvious secondary meaning issues to do so). David Larson practices estate planning law (and more) in the Denver metro area as well. In 2013, Larson set up a website at the domain name davidlarsonlawoffice.com, and he used the domain name larsonlawoffice.com starting in 2016. In 2016, Larsen sued Larson for trademark infringement, ACPA and more. After the complaint, Larson’s website removed references to Larson Law Offices, adopting the name David M. Larson, PLLC. Larson partially moved to dismiss.

Cybersquatting. The court says “Plaintiff does not allege that Mr. Larson had actual knowledge of Larsen Law Offices’ existence in 2013, or that he has ever conducted a Google search that returned plaintiff’s name.” Further (cites omitted):

davidlarsonlawoffice.com and larsonlawoffice.com both consist of a descriptive component (“law office”) and Mr. Larson’s name. And Mr. Larson has apparently used these marks for years in connection with his legitimate business. Plaintiff does not allege, for example, that Mr. Larson has offered to sell these websites to plaintiff for profit or that he falsified registration information in obtaining the domain names.

The court grants the motion to dismiss the ACPA claim.

Protective order. Larson sought a protective order against discovery into his financial affairs. In theory, such information would be relevant to damages. The judge isn’t willing to allow it (cites omitted):

I am not going to let plaintiff go digging in the books of what plaintiff asserts is a competitor when its case is hanging by a thread….

Plaintiff has already obtained most of the relief it seeks: Mr. Larson has changed his business’s name and removed all potentially infringing language from his websites. But plaintiff forges ahead simply because defendants continue to use the websites davidlarsonlawoffice.com and larsonlawoffice.com. The former domain name uses Mr. David Larson’s first and last name, casting doubt on the claim that this website could be confused with the site for Ms. Susan Larsen’s firm. And plaintiff did not notice this website for the first three years of the site’s existence, suggesting that Mr. Larson’s legitimate business activities did not actually harm plaintiff. As for the latter domain name, plaintiff’s exhibit shows that while Mr. Larson began using this website in 2016, the site has been used by others since 2001, if not earlier—at least two years before Larsen Law Offices was formed. Furthermore, plaintiff uses the plural “offices” in its name and website despite having only one office, possibly because larsenlawoffice.com is used by yet another attorney whose last name is Larsen. Thus, plaintiff might have some issues of its own.

To sidestep the discovery request, the court bifurcates liability and damages:

I cannot say that it is completely inconceivable that plaintiff could prevail in the end. However, plaintiff is going to have to show me that defendant is liable for disgorgement of profits before his books become fair game.

The plaintiff internalized the judge’s doubts about the case. The parties settled a week later, the plaintiff dismissed the case, and she wrote a check to the defendant.

My Role as an Expert

Nowadays, I’m careful about undertaking new outside professional activities because of my personal obligations, but I couldn’t say no here. The plaintiff’s trademark claim basically asserted that Larson’s website appearing in search results for “Larsen Law Offices” created initial interest confusion. Regular readers know how I feel about the initial interest confusion doctrine (hint: I think it’s bullshit), and I couldn’t believe that a putative trademark owner (of a dubious mark, no less) in 2017 was willing to go to court claiming that organic search results create initial interest confusion. Recall my tip to plaintiffs from yesterday: “If success in your case depends on establishing initial interest confusion, DON’T BRING THE CASE.” So I decided I couldn’t watch this case from the sidelines.

To support the initial interest confusion claim, the plaintiff procured an expert report from a technologist, Peter Kent. Read his report. I was asked to prepare a report rebutting Kent’s report (rather than prepare my own standalone expert report). Read my rebuttal report. As you know, expert reports become publicly available relatively rarely, but both reports were filed in PACER without redactions, so I’m sharing them here. As much as was possible within the scope of a rebuttal report, my expert report lays out some of my latest thinking about the initial interest confusion doctrine (especially as applied to organic search results), so I encourage you to take a look.

Case citation: Larsen Law Offices v. David Larson, 2017 WL 1131885 (D. Colo. Mar. 14, 2017). The complaint.

March 29th 2017 Marketing

Your Periodic Reminder That Initial Interest Confusion Lawsuits Are Stupid–Epic v. YourCareUniverse

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grumpy catThe plaintiff has a registered trademark for “CARE EVERYWHERE” for B2B healthcare software. The defendant, YourCareUniverse, also makes healthcare software. It extended its brand to include “YOURCAREEVERYWHERE” and launched a public-facing patient healthcare portal under the extended brand. The plaintiff sued for trademark infringement. The court runs through the standard multi-factor likelihood of consumer confusion test and finds most factors favor the defendant.

That should end the case, but no. As we see far too often with weak marks and weak infringement cases, “Epic attempts to save its claims by relying on the doctrine of ‘initial interest confusion.’” In response, the court issues a major burn: “The facts in this case bear no similarity to those in which a court accepted a theory of initial interest confusion as plausible.”

We still don’t have a consistent (or coherent) definition of initial interest confusion. This court applies the Seventh Circuit jurisprudence, which has historically provided a narrow scope for initial interest confusion. The court defines it as when “the defendant ‘lur[es] potential customers away from [the plaintiff] by initially passing off its goods [or services] as those of the [plaintiff’s] even if confusion as to the source of the goods is dispelled by the time any sales are consummated.’…The Seventh Circuit has summarized initial interest confusion as a “bait and switch” technique, in which a competitor will try to ‘get its foot in the door’ and affect a purchasing decision by confusing the consumer.”

All of Epic’s arguments fail:

* There is no evidence of luring: “defendants have provided compelling evidence that their adoption of the YOURCAREEVERYWHERE mark had nothing to do with Epic and Epic has presented no evidence that defendants have attempted to use their mark to lure any customers away from Epic.”
* There is no risk of diversion because “the purchasing decisions at issue in this case involve sophisticated consumers making expensive purchases often over a long period of time after acquiring much information….Epic has not articulated any plausible scenario under which a potential customer could be confused by defendants’ mark long enough to have any influence on a purchasing decision.”
* “Epic has presented no evidence that internet searches will produce misleading results”
* Any searchers will figure out the differences between the two enterprises: “defendants market YOURCAREEVERYWHERE along with other YourCareUniverse products and services and that it is generally clear from the context of the YOURCAREEVERYWHERE mark that defendants are the source”

The court summarizes: “‘[I]nitial interest confusion is not assumed and must be proven by the evidence.’…Particularly when one considers all the factors that would diminish the likelihood of initial interest confusion in this case, Epic’s failure to clearly articulate any likely scenario under which a customer would be confused is fatal to its claims.”

So this is the part of the blog post where I rehash some of my many objections to the initial interest confusion doctrine. As this case shows, the doctrine is often relied upon by plaintiffs as a last ditch tool to prop up their cases; the doctrine gives plaintiffs false hope and encourages them to bring low-merit or meritless enforcement actions; and it’s costly to adjudicate the doctrine (this case is up to PACER entry #234), *especially* if it doesn’t change the result. We have seen very few successful assertions of the doctrine in the past half-decade-plus, suggesting that the doctrine has become mostly theoretical, not actually a common law doctrine that works in court. What will it take to wipe the doctrine out of existence entirely, rather than letting it continue to waste so much time and money?

I’ll close with a free tip for trademark owners. If success in your case depends on establishing initial interest confusion, DON’T BRING THE CASE.

Case citation: Epic Systems Corp. v. YourCareUniverse, Inc., 2017 WL 1093292 (W.D. Wis. March 22, 2017)

March 28th 2017 Marketing

Retailer’s TOS Fails, But New Jersey Warranty Notice Claim Loses Anyway

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Screen Shot 2017-03-23 at 3.51.22 PMPlaintiff alleges that she purchased a cosmetic product from Lush Internet. While she did not allege anything was wrong with the product and does not appear to have any other qualms with the transaction itself, she alleged that Lush’s terms of service contains provisions that conflicted with New Jersey’s Truth in Consumer Contract, Warranty and Notice Act (TCCWNA). Specifically, she argued that Lush’s Terms of Service violated TCCWNA because it disclaimed all liability, absolved Lush of its duty to protect customers from harm, and limited consumers’ rights under product liability law and the UCC.

Lush moved to compel arbitration and also moved to dismiss.

Arbitration: Plaintiff argued that:

because the Terms of Use are hidden in an inconspicuous hyperlink at the bottom of Defendant’s homepage, and because Lush’s website does not require users to “take affirmative action to manifest their assent” to the Terms of Use, the agreement to arbitrate is not enforceable as against her.

The court focuses on reasonable notice and whether the website terms were conspicuously displayed to the consumer. The court concludes that the “design and content” of the website did not amount to clear display, so a reasonably prudent user would not be on notice (citing Nguyen; Specht; Zappos; Hines). The court also notes that Lush did not require users to assent to the terms:

[t]he purchase can readily be completed without the user viewing the terms which relinquish important and customary rights . . . . Without viewing, the user can have no knowledge of the terms, including these waivers.

The court further notes that while the site admonishes users to read the terms, this admonition is not on the home page.

Screen Shot 2017-03-23 at 3.53.23 PMThe Merits: Turning to the plaintiff’s qualms with the Terms of Use, the court notes that the plaintiff takes contradictory positions. On the one hand, she says she never read and agreed to the terms, but on the other she is complaining about provisions in the terms. The court looks at the definition of “consumer” and says it’s not clear whether the statute covers just buyers who purchase household items or something broader.

Setting this aside, the court says plaintiff lacks standing under Spokeo. The Supreme Court in Spokeo said that plaintiffs who allege “bare procedural violations” lack standing. And that was the case here:

Here, because Plaintiff did not assent to the Terms of Use, they simply do not bind her as a matter of contract law. Because Plaintiff does not seek to vindicate any underlying rights secured by the TCCWNA – i.e. she is seeking only to bring the Terms of Use into accord with what she believes New Jersey law requires, not to actually bring a suit or recover damages which she believes are unlawfully barred by the Terms of Use – she does not have standing to sue. Moreover, because the Terms of Use were not displayed to her, she cannot claim harm from their existence in a hidden corner of the Lush website. Based upon the allegations in the Amended Complaint, the harm that Plaintiff has suffered from the allegedly unlawful limitations of liability in the Terms of Use is metaphysical at best. Her strongest allegation of harm is that she was present and made a purchase on a website that, unbeknownst to her, had terms that she now claims are objectionable under the TWCCNA.

The court also reiterates that a plaintiff who argues she has not read and is not bound by terms cannot then complain about provisions in those terms.

__

Ouch. Lush’s terms of service implementation leaves a lot to be desired. As we’ve noted countless times on the blog, it’s trivially easy to implement an enforceable online agreement. Although the court’s order does not include screenshots of Lush’s implementation, I’ve included a few screenshots of its current implementation, which appears to be the same as it was in 2016 (the year of the lawsuit).

Notwithstanding the Terms of Service snafu, the court brushes aside what is an obviously flawed lawsuit. There have been a spate of these lawsuits targeting the purported noncompliance with the New Jersey statute by website terms, but they don’t appear to be getting much traction. The Spokeo ruling was equivocal at best, but the “bare procedural violation” language was a bone to defendants. This is a good example of how it can come into play.

Case citation: Hite v. Lush Internet, 2017 U.S. Dist LEXIS 40949 (D.N.J. Mar. 21, 2017)

Related posts:

Anarchy Has Ensued In Courts’ Handling of Online Contract Formation (Round Up Post)

Courts Approve Terms of Service-Based Arbitration Clauses for Uber and Groupon

“Modified Clickwrap” Upheld In Court–Moule v. UPS

Evidentiary Failings Undermine Arbitration Clauses in Online Terms

Court Enforces Arbitration Clause in Amazon’s Terms of Service–Fagerstrom v. Amazon

‘Flash Sale’ Website Defeats Class Action Claim With Mandatory Arbitration Clause–Starke v. Gilt

Some Thoughts On General Mills’ Move To Mandate Arbitration And Waive Class Actions

Second Circuit Says Arbitration Clause in Terms Emailed After-the-Fact Not Enforceable – Schnabel v. Trilegiant

Users Can’t Sue Sony for Changing Online Terms to Require Arbitration – Fineman v. Sony Network Entertainment

Qwest Gets Mixed Rulings on Contract Arbitration Issue—Grosvenor v. Qwest & Vernon v. Qwest

Zynga Wins Arbitration Ruling on “Special Offer” Class Claims Based on Concepcion — Swift v. Zynga

“Modified Clickwrap” Upheld In Court–Moule v. UPS

Facebook Gets Bad Ruling In Face-Scanning Privacy Case–In re Facebook Biometric Information Privacy Litigation

Defective Call-to-Action Dooms Online Contract Formation–Sgouros v. TransUnion

Court Rejects “Browsewrap.” Is That Surprising?–Long v. ProFlowers

Telephony Provider Didn’t Properly Form a “Telephone-Wrap” Contract–James v. Global Tel*Link

2H 2015 Quick Links, Part 7 (Marketing, Advertising, E-Commerce)

Second Circuit Enforces Terms Hyperlinked In Confirmation Email–Starkey v. G Adventures

If You’re Going To Incorporate Online T&Cs Into a Printed Contract, Do It Right–Holdbrook v. PCS

Clickthrough Agreement Upheld–Whitt v. Prosper

Online Magazine Gets Section 230 Protection For Third Party Article–AdvanFort v. International Registries

The “Browsewrap”/”Clickwrap” Distinction Is Falling Apart

Safeway Can’t Unilaterally Modify Online Terms Without Notice

March 25th 2017 Marketing

Would you like to Brand Like Amazon? Even a Lemonade Stand Can Do It

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Brand Like Amazon preview coverSome of you might have seen through our social media channels that Jeffrey and I have been working on a new book with our friend and mentor Roy H Williams. We have been sharing a new chapter every week. This Monday we will release Chapter 11. The book has only 12 chapters.

If you would like to be among the first to read the book head over to BrandLikeAmazon.com. If you subscribe you will receive by email a PDF of the first 3 chapters and then you will receive a new chapter every 2 days. Do not miss chapter 10 
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      <div class= March 11th 2017 Marketing

Section 230 Protects Grindr From Harrassed User’s Claims–Herrick v. Grindr

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This is a well-constructed and thoughtful Section 230 ruling. If this case keeps going in the same direction, it has the potential to become a major Section 230 precedent.

Herrick claims that ex-boyfriend JC used Grindr to launch a vicious five-month e-personation attack. JC allegedly created fake dating profiles in Herrick’s name, with his contact info, saying Herrick wanted sex; with the predictable result that allegedly hundreds of horny men responded to the profiles and sought out Herrick at his home and workplace. Craigslist has been used for similar attacks for a long time, and California created an “e-personation” crime to combat them. Herrick further claims he’s contacted Grindr over 50 times about this harassment campaign and never received a response other than a form acknowledgement email.

Herrick sued Grindr in state court and got an immediate TRO instructing Grindr to “immediately disable all impersonating profiles created under Plaintiff’s name or with identifying information relating to Plaintiff, Plaintiff’s photograph, address, phone number, email account or place of work.” Grindr removed the case to federal court. The court’s opinion is in response to Herrick’s request to extend the TRO. The court denies the request.

Section 230

If you are a Section 230 fan, I encourage you to read the opinion’s entire discussion about Section 230. It’s not that long, and I considered quoting the whole thing. It’s worth the read.

The court starts out: “At this early stage, it appears likely to the Court that Section 230 bars many (if not all) of Plaintiff’s tort claims,” including the negligence, IIED, NIED and failure to warn claims.

The plaintiff argued that Grindr’s “sorting and matching functions and geo-locational services” turned it into a content creator. The court shuts that down: “Plaintiff’s attempt to artfully plead his case in order to separate the Defendant from the protections of the CDA is a losing proposition.” The court explains:

The fact that an ICS contributed to the production or presentation of content is not enough to defeat CDA immunity.

The court then tries to engage with the Ninth Circuit’s Roommates.com precedent. On the plus side, this is yet another case where a court cites Roommates.com for the defense. On the minus side, the court does so by adopting the Roommates.com nomenclature of “neutral assistance,” a problematic and fundamentally incoherent phrase. On the plus side, unlike the Roommates.com case, this court actually defines what “neutral assistance” means: “tools and functionality made available equally to malefactors and the application’s intended user-base.” The court applies this definition:

Plaintiff has not identified any acts by Grindr—other than “neutral assistance”—that might make Grindr the “provider” of the false profiles created by JC. The Complaint describes the information collected by Grindr to set up an account, such as a profile photograph, name, and “about me” and “I’m looking for” sections. Add-on services allow users to block other users, swipe between profiles, and filter by additional categories. All of these functions appear to be available equally to all Grindr users

This leads to a quotable/tweetable line:

The fact that these offerings have been weaponized by a particular Grindr user does not make Grindr the creator of the allegedly tortious content.

The court further distinguishes the Roommates.com precedent by saying “there is nothing inherently illegal about the Grindr features described in the Complaint. Critically, Grindr has not contributed anything to the objectionable profiles; the profiles are objectionable solely because of the false
information supplied by Plaintiff’s tormenter.”

Citing Gibson v. Craigslist, the court concludes the Section 230 discussion by saying “Allegations premised on an ICS’s failure to “block, screen, or otherwise prevent the dissemination of a third party’s content,” seek to hold the defendant liable in its capacity as a “publisher.””

In a footnote, the court addresses a belated plaintiff argument that Grindr is “inherently dangerous”:

the product is only dangerous in combination with the sort of false content JC has created. While the Court gives Plaintiff credit for his creativity in formulating this argument, his claim rests, at bottom, on the tortious nature of the content that JC created and posted. Congress has clearly stated that an ICS cannot be liable for offensive content created by others. Plaintiff’s theory that Grindr has created a platform that is susceptible to misuse is fundamentally the same.

We’ve seen other attempts to invoke products liability theories to work around Section 230 (Doe v. MySpace comes immediately to mind) but this footnote is the cleanest rejection of the theory I can recall.

Perhaps surprisingly, the court doesn’t discuss any other Section 230 e-personation cases–the most conspicuous omission being the Ninth Circuit’s Carafano case, which perhaps the court felt was eclipsed by the Roommates.com case, or perhaps the more recent Caraccioli v. Facebook ruling. But this case has significant implications for future cases over fake profiles, in the dating context or elsewhere. The bottom line: Section 230 robustly protects against liability for third party-created fake profiles.

Misrepresentations

The court summarizes this part of the opinion: “While the CDA may not apply to Plaintiff’s claims based on false advertising and deceptive business practices (Counts II, III, & VII), Plaintiff has not made an adequate showing of his prospects for success on those claims, and they appear to the Court to be untethered from any of Plaintiff’s alleged injuries…Plaintiff’s injuries are so attenuated from the misstatements that it is highly unlikely Plaintiff will be able to prove causation.” I don’t think Section 230 is as categorically irrelevant to false advertising/deception as the court treats it, but the court gets to the right place anyway.

Herrick claims he joined Grindr in 2011 because he thought it was a “safe space.” He met JC on Grindr 4 years later, dated for a year, then things went south. The court questions the legal implications of this string of events:

the only connection between Plaintiff’s present day injury and Grindr’s alleged misrepresentations approximately five years ago is the fact that Plaintiff would not have otherwise joined Grindr in 2011 and would not have otherwise met JC. This is an exceedingly remote connection. The fact that “but for” Grindr’s advertising, Plaintiff would not have joined Grindr some five years before the harassment relevant to this case—assuming that to be true—is insufficient, standing alone, to establish causation.

The court says that Herrick’s failure-to-warn and contract breach claims all stem from the same underlying concern about product safety, so the court lumps them together with the misrepresentation discussion.

Conclusion

The court reaches the right legal result, but I still have questions about what happened here. Was Grindr really used for such a massive and malicious attack; and if so, what, if anything, did Grindr do to help protect Herrick? As a matter of corporate ethics, it would not be OK for Grindr to do nothing. We may get better answers to these questions later. For now, the court notes that Grindr “committed to continue voluntarily to monitor the Grindr application for fake profiles associated with Plaintiff’s personal information as it has in response to the existing TRO even if this Court does not extend the TRO.” That’s a positive step, but if that’s all Grindr did to protect Herrick, it’s a small and way-too-late step.

Because the opinion is so savvy about Section 230, I’m awarding the rare and coveted Technology & Marketing Law Blog Judge-of-the-Day honors to Judge Valerie Caproni. Congratulations, your honor. Opinions like this remind us why the US judicial system is so respected by other countries. May it always be that way.

Case citation: Herrick v. Grindr, LLC, 2017 WL 744605 (SDNY Feb. 24, 2017). Complaint.

March 2nd 2017 Marketing

Illinois Anti-SLAPP Law Doesn’t Apply To Law Firm Blog Posts–Bock & Hatch v. McGuireWoods

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We’re revisiting the important and entirely self-referential issue of defamation liability for blogging about judicial opinions. As I’ve discussed before (this post is perhaps my most heartfelt), blogging about judicial opinions is automatically risky because at least one side has already demonstrated their litigiousness. A wide range of legal doctrines insulate blogging about legal opinions, including the First Amendment, especially the fact/opinion line; courts’ treatment of online discussions as inherently rough-and-tumble; courts’ treatment of hyperlinks as supporting citations; the fair reporting privilege; and anti-SLAPP laws. Unfortunately for us legal bloggers, these legal doctrines have exceptions and limitations that leave us potentially exposed, as illustrated by today’s case.

The defendant is McGuireWoods, one of the 30 largest law firms in the country. In 2011, one of their attorneys, Andrew Trask, blogged at the McGuireWoods-operated “Class Action Countermeasures” blog about a case in which the law firm Bock & Hatch represented the class-action plaintiffs. The 2011 post said, among other things, that “The trial court ruled that, while the firm’s actions displayed a lack of integrity, the proper remedy was discipline by the Illinois bar.” In 2013, Trask blogged a related case, saying the court “stated that in Ashford Gear, ‘one of the plaintiff’s firms, Bock & Hatch, had lied to a witness about keeping a list of possible faxes and recipients confidential.’” Bock & Hatch sued for defamation and violations of Illinois unfair competition law.

McGuireWoods defended on Illinois’ anti-SLAPP law, which protects the “rights of petition, speech, association, or to otherwise participate in government.” Unfortunately, because of the narrow coverage of this old-school anti-SLAPP law, it does not apply to this dispute:

plaintiffs’ lawsuit does not resemble a strategic lawsuit intended to chill McGuireWoods’ participation in government or to stifle its political expression. It appears that the goal of plaintiffs’ lawsuit was not to interfere with and burden McGuireWoods’ free speech and petition rights, but rather to seek injunctive relief for the personal harm to their reputation from McGuireWoods’ alleged acts.

As a result, McGuireWoods’ anti-SLAPP motion failed and the case will proceed.

Would a more modern anti-SLAPP law lead to a different outcome? I believe it would. Although McGuireWood’s posts weren’t about petitioning the government, the posts help track and report on official government proceedings. That is exactly the kind of socially beneficial speech that anti-SLAPP laws should protect. Thus, this ruling reinforces how a federal anti-SLAPP law would upgrade states like Illinois to more modern anti-SLAPP coverage.

The court doesn’t discuss whether McGuireWoods’ blog posts constitute “commercial speech,” a common exception to anti-SLAPP laws. Law firms are important and knowledgeable sources of public commentary about court proceedings and the law, but they aren’t non-profit journalists. Their posts usually help build a commercially valuable reputation and demonstrate expertise that can draw new clients or retain existing ones. Our legal system doesn’t handle the classification of such “dual-purpose” communications very well, especially when characterizing law firm blog posts under lawyer advertising rules. Depending on where this case goes, the commercial speech angle could be important.

There is an extra irony about McGuireWoods’ posts leading to a law suit. Many law firm blogs–especially Biglaw blogs–tend to be fairly straight-laced, i.e., they tend to summarize court rulings and leave it to the reader to infer the implications (in contrast, editorializing and rhetorical hyperbole are common and expected at blogs like mine). This conservative approach to blogging reflects the law firm’s concerns about criticizing judges that the firm’s lawyers might appear before or that any opinions expressed in the blog post will be cited against the law firm in future filings by litigation opponents. Ironically, McGuireWoods’ posts tried to be conservative reports of the court rulings, but they got sued anyway. Thus, I fear this ruling might be interpreted as another reason for law firms to stop blogging altogether.

Case citation: Bock & Hatch LLC v. McGuireWoods, LLP, 2017 IL App (1st) 160294-U (Ill. App. Ct. Feb 14, 2017)

Related posts:

* Bashing Your Litigation Opponent in an Online Message Board? Go For It!
* Law Professor Blogger Wins Anti-SLAPP Ruling, But It’s Hard To Celebrate The Win–Welch v. USD
* Legal Blog Faces Defamation Liability for Mischaracterizing Prior Legal Proceedings–Huon v. Above the Law (and see Now the Seventh Circuit Is Shitting On Section 230–Huon v. Denton)
* Tweeted Article About Law Grad’s Suit Over Stalking Investigation Isn’t Defamatory (and what a sad denouement to the plaintiff’s story)
* Want To Avoid Defaming Someone Online? Link To Your Sources
* Are the Days of Independent Legal Blogging Over?
* Another Court Finds Online Statements With Links Are Not Defamatory – Seldon v. Compass Restaurant
* Business School Professors May Be Liable for Defamatory Blog Post–ZAGG v. Catanach
* Using Links as Citations Helps Gizmodo Defeat a Defamation Claim–Redmond v. Gawker Media

Also: LA Times, Blogger beware: Postings can lead to lawsuits

February 22nd 2017 Marketing

Amazon Defeats Lawsuit Over Its Keyword Ad Purchases–Lasoff v. Amazon

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Lasoff owns Ingrass, which makes artificial turf. He claims he’s losing business to “cheaper, counterfeit” versions of Ingrass. (The opinion uses the term “counterfeit,” though it probably means knockoffs). He objects to the fact that Amazon runs keyword ads for “Ingrass” at the search engines and in promotional emails that are algorithmically programmed for remarketing (i.e., promoting products the email recipient viewed on Amazon but didn’t buy). The promotional email ad copy comes from third party sources. Prospective customers who saw these ads for “Ingrass” were directed to the Amazon product pages containing listings from the alleged counterfeiters.

Section 230

Citing the Ninth Circuit’s ccBill v. Perfect 10 ruling, the court cleans out all of the state law claims (unfair competition, state trademark infringement, tortious interference, negligence and unjust enrichment) due to Section 230. The court says:

The content to which Plaintiff objects (the “Ingrass” keyword and the misrepresentations by copycat competitors that their products are “Ingrass” products) is provided by third parties and the claims which Plaintiff prosecutes attempt to cast Amazon as the “publisher or speaker” of that content….The fact that Defendant created the automated system which identifies the desirable keywords and then propagated advertisements based on those keywords is not what Lasoff seeks to hold it liable for; it is that the information generated by that system is improperly damaging to his legitimate and protected business interest in the brand “Ingrass.”

Though the court reaches a logical result, it’s weird, or perhaps nonsensical, to say that the word “Ingrass” is third party content for Section 230 purposes.

Federal Trademark

Secton 230 doesn’t preempt federal trademark claims, so we move to the prima facie case there. Ingrass isn’t a registered mark, but the court concludes that it’s suggestive. Amazon argued that it hadn’t “used” the mark because its algorithms did all the work, but the court rejects the argument per Network Automation and Rescuecom.

Still, the court is troubled by the prospect of holding Amazon directly liable for trademark infringement because it doesn’t compete with Ingrass. In a footnote, the court explains:

Trademark infringement law is primarily concerned with stopping one person or entity from gaining an unfair competitive advantage over a business rival by misusing a protected mark. No one who offers their product for sale on amazon.com is a “competitor” of Amazon, and attempting to shoehorn the company into a direct trademark infringement framework creates a “square peg-round hole” situation for which traditional trademark law seems ill-suited.

I totally agree, though these analytical problems haven’t always stopped judges before. The court bolsters this intuition with the directly relevant Tiffany v. eBay precedent. The court says:

The Court finds Amazon’s position directly analogous to that of eBay, and further finds that the holding of Tiffany (NJ) – that there are “uses in commerce” which do not subject the user to liability for direct trademark infringement – applicable to this case.

Lasoff argued contributory trademark infringement but didn’t plead it initially, so the court disregards those arguments.

Lanham Act False Advertising

Frustratingly, the court doesn’t address whether Section 230 applies to Lanham Act false advertising cases. I believe it should because those are not “intellectual property” cases; but courts sometimes have nevertheless excluded Section 230 because the Lanham Act false advertising provisions are in the same section as the Lanham Act trademark provisions.

Nevertheless, the court says this claim suffers problems “similar to” the Section 230 analysis–“that the misrepresentations of which he complains originate with third-party vendors, not with Defendant.” Citing the Baldino’s Lock & Key v. Google case, the court says:

Plaintiff attempts to distinguish the case on the basis that the Google advertisements were published directly by the unlicensed locksmiths, but this argument strengthens Defendant’s position: just as Google could not be held liable for reproducing material which it did not know was false, neither can Amazon. Plaintiff fails to draw a meaningful distinction between two interactive computer service providers who created a platform for advertising which contained misrepresentative material generated by third parties. In both instances, liability lies with the vendors who created the misleading content, not the service providers who transmit that content.

Sherman Act Monopoly

Lasoff argued that Amazon dominates keyword ad buys, which the court says would be more accurately framed as a monopsony rather than a monopoly. The court rejects the argument because of the substitutability between search engine keyword ads and other forms of online marketing (cite to Person v. Google) and the presence of many other keyword ad buyers.

Implications

This wasn’t the most well-constructed case from the plaintiff’s side, so Amazon probably welcomed the opportunity to use the case to set some favorable precedent. The net consequence is that Amazon once again sidesteps exposure for the possible presence of knockoffs/”counterfeits” on its site, following cases like the Tre Milano and Milo & Gabby cases. I’m sure the knockoff/coutnerfeit issue isn’t going away for Amazon, even though Amazon says it is taking more aggressive steps to fight illegitimate offerings on the site, but plaintiffs are running out of legal theories that might support a successful case.

Like the eBay case, or perhaps the Jurin v. Google case from a while ago, this case raises the interesting thought-exercise of what messages Amazon itself communicates to prospective consumers when its ads indicate that something related to Ingrass is available on its site. Fundamentally, Tiffany and Ingrass argued that their brand name as the “lure” and that acted as a type of brand-authenticity warranty to consumers. Fortunately, both courts recognized that consumers can assume that the offerings relate in some manner to the trademark without the follow-on assumption that they are only going to see authentic goods from the manufacturer. I’m not sure Section 230 really gets at the conceptual dilemma in that thought-exercise. However, as we saw with some of the infringing-app-name cases, Section 230 does a great job of screening out the para-IP claims so that the court can devote more energy to resolving the underlying IP questions.

The opinion doesn’t mention the Multi-Time Machine v. Amazon case, but that ruling defended Amazon’s use of keywords on its internal search pages. Combined with this ruling, it seems to give online marketplaces a lot of freedom to use third party brands to make matches between consumers and vendors who aren’t the trademark owner.

Case citation: Lasoff v. Amazon.com, 2017 WL 372948 (W.D. Wash. Jan. 26, 2017)

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February 3rd 2017 Marketing