Unfair Competition – Page 2 – Attorney Evan Brown

October 15, 2019 Fraud/Misrepresentation, Section 230, Unfair Competition

Intellectual property exception to CDA 230 immunity did not apply in case against Google

Plaintiff sued Google for false advertising and violations of New Jersey’s Consumer Fraud Act over Google’s provision of Adwords services for other defendants’ website, which plaintiff claimed sold counterfeit versions of plaintiff’s products. Google moved to dismiss these two claims and the court granted the motion.

On the false advertising issue, the court held that plaintiff had failed to allege the critical element that Google was the party that made the alleged misrepresentations concerning the counterfeit products.

As for the Consumer Fraud Act claim, the court held that Google enjoyed immunity from such a claim in accordance with the Communications Decency Act at 47 U.S.C. 230(c).

Specifically, the court found: (1) Google’s services made Google the provider of an interactive computer service, (2) the claim sought to hold Google liable for the publishing of the offending ads, and (3) the offending ads were published by a party other than Google, namely, the purveyor of the allegedly counterfeit goods. CDA immunity applied because all three of these elements were met.

The court rejected plaintiff’s argument that the New Jersey Consumer Fraud Act was an intellectual property statute and that therefore under Section 230(e)(2), CDA immunity did not apply. With immunity present, the court dismissed the consumer fraud claim.

InvenTel Products, LLC v. Li, No. 19-9190, 2019 WL 5078807 (D.N.J. October 10, 2019)

About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown@internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

November 19, 2018 Copyright, Unfair Competition

Web scraping case fails under Dastar

Plaintiff sued defendant claiming that defendant wrongfully scraped sales listings from plaintiff’s website and copied those listings on defendant’s own website. It brought the following claims:

Violation of the Copyright Act’s prohibitions against distributing false copyright management information (“CMI”) (17 U.S.C. §1202(a)), and removing or altering CMI (Id., §1202(b)); and
Violation of the Lanham Act for reverse passing off and false endorsement.

Defendant moved to dismiss for failure to state a claim upon which relief could be granted. The court granted the motion.

CMI claim

The court dismissed the claim asserting distribution of false CMI because plaintiff alleged that the false CMI was a blanket copyright notice found on defendant’s website’s terms of use, and not on the pages where the copied content was displayed.

It also dismissed plaintiff’s claim for removal of CMI because it found that the allegations concerning the CMI allegedly removed – a copyright notice found at the bottom of the pages of plaintiff’s website – covered the pages of the website itself, not the particular listings that were allegedly copied without the CMI. It held that:

To violate the DMCA, the false CMI must be “conveyed in connection” with the work. General copyright notices are not “conveyed” with the work, and thus do not violate the DMCA. [See GC2 Inc. v. Int’l Game Tech. PLC, 255 F. Supp. 3d 812, 821 (N.D. Ill. 2017)] (“Courts, however, have generally required more than a boilerplate terms of use notice near a copyrighted work in order to find a party liable for distributing false CMI”); Pers. Keepsakes, Inc. v. Personalizationmall.com, Inc., 2012 WL 414803, at *7 (N.D. Ill. Feb. 8, 2012) (“[A]s a matter of law, if a general copyright notice appears on an entirely different webpage than the work at issue, then that CMI is not ‘conveyed’ with the work and no claim will lie under the DMCA.”)

Lanham Act claim

On the Lanham Act claim, the court found that plaintiff failed to allege that it had a protectible mark that was being used in a manner that was likely to cause confusion among consumers.

The court also applied the 2003 Supreme Court case of Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003) to find that plaintiff’s Lanham Act claim failed. In Dastar, the Supreme Court concluded that “false designation of origin” as it is used in the Lanham Act attaches to the producer of tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods. In this case, the defendant created the final product (website listings), albeit using the plaintiff’s content (just like in Dastar). Because plaintiff was not the source of the product (the duplicated listings), it did not have a claim under the Lanham Act.

Alan Ross Machinery Corp. v. Machinio Corporation, 2018 WL 6018603 (N.D.Ill. November 16, 2018)

October 30, 2017 Contracts, Unfair Competition

Court reinstates SCO’s misappropriation claim against IBM in long-running lawsuit

For almost a decade and a half, SCO and IBM have been fighting over their collaboration gone wrong concerning the development of a new version of UNIX for Intel processors. The case has garnered much attention, including from the open source community. You can read the backstory here on the Wikipedia page for the dispute. The case has been on appeal to the Tenth Circuit, which released its opinion on October 30. The decision was a mixed ruling – the court affirmed summary judgment in favor of IBM on most of the issues, but ruled in favor of SCO on one important claim – misappropriation.

SCO sued IBM for the tort of misappropriation (a form of unfair competition) arising from IBM’s alleged use in its own product of source code that SCO had contributed to the joint efforts to develop the new UNIX version. The district court granted IBM’s motion for summary judgment on the misappropriation claim, holding that such a claim was barred under New York law’s “independent tort doctrine”. SCO sought review with the Tenth Circuit Court of Appeals. The court reversed and remanded the case on the misappropriation claim.

This doctrine provides that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated. This separate duty must spring from circumstances extraneous to, and not constituting elements of, the contract, although it may be connected with and dependent upon the contract.

In this case, the court held that while IBM and SCO may not have had a formal partnership or joint venture as a matter of law, they surely enjoyed a business relationship in which each reposed a degree of trust and confidence in the other. In such a situation, there exists a duty not to take a business collaborator’s property in bad faith and without its consent in order to compete against that owner’s use of the same property.

SCO v. IBM, — F.3d —, 2017 WL 4872572 (10th Cir., October 30, 2017)

About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

July 5, 2017 Defamation, First Amendment, Unfair Competition

Reports to advertisers about website content were protected speech

Plaintiff sued defendant in California state court for trade libel and other business torts over confidential reports that defendant provided to its customers (who advertised on plaintiff’s website) characterizing plaintiff’s websites as associated with copyright infringement and adult content.

Defendant moved to dismiss under California’s anti-SLAPP statute which, among other things, protects speech that is a matter of public concern. The trial court granted the anti-SLAPP motion. Plaintiff sought review. On appeal, the court affirmed the anti-SLAPP dismissal.

The court held that the communications concerning plaintiff’s websites (as being associated with intellectual property infringement or adult content) were matters of public concern, even though the communications were not public.

FilmOn.com v. DoubleVerify, Inc., 2017 WL 2807911 (Cal. Ct. App., June 29, 2017)

February 11, 2014 Copyright, Unfair Competition

Co-founder liable for sending company’s social media followers to new competing company’s Facebook page

The owners of an LLC successfully published a magazine for several years, but the business declined and the company eventually filed bankruptcy. While the bankruptcy proceedings were still underway, one of the owners started up a new magazine publishing the same subject matter. He essentially took over the old company’s website to promote the new magazine. And he posted to the LLC’s Facebook page on three separate occasions, “reminding” those who liked the page to instead like his new company’s Facebook page.

The bankruptcy trustee began an adversary proceeding against the owner asserting, among other things, breach of fiduciary duty, unfair trade practices, and copyright infringement. The bankruptcy court held a trial on these claims and found the owner liable.

On the breach of fiduciary duty claim, the court equated the “reminding” of Facebook users to visit and like the new company’s Facebook page was equivalent to using the company’s confidential information. Similarly, as for the unfair trade practices claim (under the Louisiana Unfair Trade Practices Act), the court found that social media is “an important marketing tool,” and held that “taking away followers of [the old company] and diverting them to [the Facebook page of the new company]” was an unfair trade practice.

On the copyright infringement claim, the court found that the images and articles on the website belonged to the old company under the work made for hire doctrine and that the owner had not obtained consent nor paid compensation for their use in connection with the new enterprise.

In re Thundervision, L.L.C., 2014 WL 468224 (Bkrtcy.E.D.La. February 5, 2014)

Photo credit: Flickr user 1lenore under this Creative Commons license.

February 3, 2014 Copyright, Trademarks, Unfair Competition

No copyright protection for two word phrase

In a final pretrial order, plaintiff stated that “to this day [defendant] persists in using [plaintiff’s] copyrighted ‘usurpassed performance’ language on its packages.” Defendant filed a motion in limine (a motion to exclude evidence) to preclude plaintiff from introducing evidence or putting on testimony that would infer or suggest the phrase “unsurpassed performance” has been registered as a copyright.

The court granted the motion.

Under the Copyright Act, “[w]ords and short phrases such as names, titles, and slogans” are not subject to copyright. 37 C.F.R. § 202.1(a). The court looked to a number of cases in which short phrases had been denied copyright protection. For example, other courts had held that “Where Words Come Alive,” “Earth Protector,” “Chipper,” and “Retail Plus” were not copyrightable material.

One wonders whether plaintiff was really trying to assert some form of unfair competition or trademark infringement. The notion is worth entertaining for but a brief moment, till one realizes that laudatory phrases such as “unsurpassed performance” find no protection under trademark law either.

Predator International, Inc. v. Gamo Outdoor USA, Inc., 2014 WL 321069 (D.Colo. January 29, 2014)

January 13, 2013 Trade Secrets, Unfair Competition

When do you need a nondisclosure agreement?

I wrote a blog post for Tech Cocktail called 5 Reasons You May Need an NDA. I hope you’ll click on over and give it a read.

Here are the 5 reasons I came up with. Can you think of others?:

Your discussions turn from “what” to “how.”
You are dealing with someone other than an investor.
You have made substantial investment in your innovation.
You will be sharing documents or data.
You want to save on legal fees.

Leave your comments below. I know there are many other reasons — pro and con — concerning NDAs.

December 20, 2011 Trademarks, Unfair Competition

Use of trademark in gripe site subdomain was not likely to cause confusion

Ascentive, LLC v. Opinion Corp., 2001 WL 6181452 (E.D.N.Y. December 13, 2011)

Plaintiffs sued gripe site pissedconsumer.com for trademark infringement and other forms of unfair competition. The court denied plaintiffs’ motion for preliminary injunction. It found, among other things, that defendants’ use of plaintiffs’ trademarks as subdomains (e.g., ascentive.pissedconsumer.com) was not likely to cause confusion.

The court looked to other cases where gripe site operators chose negative words to use in conjunction with the company being criticized. Over the years, gripe site operators have commonly chosen to add the word “sucks” to the target brand. For example, in Taubman Co. v. Webfeats, 319 F.3d 770 (6th Cir. 2003), the court held there was no trademark violation by the site taubmansucks.com.

Other “suck” parts of the URL have risen above the trademark infringement fray. A case from over a decade ago found that the web address compupix.com/ballysucks would not create a likelihood of confusion because no reasonable visitor to the site would assume it to come from the same source or think it to be affiliated with, connected with, or sponsored by Bally’s. Bally Total Fitness v. Faber, 29 F.Supp.2d 1161 (C.D. Cal. 1998).

And it’s not just that these brands purport to suck. In Taylor Building Corp. v. Benfield, 507 F.Supp.2d 832 (S.D. Ohio 2007), the court found that taylorhomesripoff.com, used in connection with a forum for criticizing plaintiff, did not create any likelihood of confusion.

In this case, the notion of being “pissed” joins a lexicon of permissible gripe site nomenclature (depending on the circumstances, of course). So says the court: “Like the word ‘sucks,’ the word ‘pissed’ has entered the vernacular as a word instinct with criticism and negativity. Thus, no reasonable visitor to the [offending pages] would assume the sites to be affiliated with [plaintiffs], and PissedConsumer’s use of plaintiffs’ marks in the various domain names at issue is not likely to cause confusion as to source.”

Aside: Good lawyering by my friend Ron Coleman for the defendants in this case.

June 16, 2011 Evidence, Trademarks, Unfair Competition

Customer reviews on social media provide important evidence in trademark dispute

Chipotle Mexican Grill, Inc. v. Chipotles Grill of Jonesboro, Inc., 2011 WL 2292357 (E.D. Ark. June 9, 2011)

The awesome burrito place Chipotle sued another restaurant that called itself Chipotles for trademark infringement. Plaintiff sought a preliminary injunction. The court granted the motion.

One of the most important factors in the court’s decision to grant injunctive relief was the plaintiff’s showing that it will likely succeed on the merits of the case. In a trademark infringement action, that analysis takes the form of the likelihood of confusion analysis.

Among the factors that a court should consider in determining whether there is a likelihood of confusion is whether there has been any actual confusion among members of the consuming public. In this case, the court found that the evidence plaintiff submitted of actual confusion was “substantial.”

In addition to a number of emails that customers had sent to plaintiff, the court looked to a couple of customer review sites — urbanspoon.com and Yahoo’s associatedcontent.com — each of which contained customer reviews that erroneously linked plaintiff and defendant. The court found this to constitute actual confusion, which could not be remedied even through reasonable care on the part of the consumers.

The case gives a good example of how companies (and their competitors) should be aware of how their brands appear in social media. Evidence of actual confusion is a powerful tool for a trademark plaintiff (and a potentially damning one for a trademark defendant). Smart companies will ensure they remain aware of how their marks and overall brand identity are being put forth, even off the beaten path on the web.

Evan Brown is a Chicago-based attorney practicing technology and intellectual property law. Send email to ebrown@internetcases.com, call (630) 362-7237, or follow on Twitter at @internetcases.

June 11, 2011 Electronic Discovery, Trademarks, Unfair Competition

Court allows discovery of competitor’s keyword purchases

Scooter Store, Inc. v. Spinlife.com, LLC, 2011 WL 2160462 (S.D. Ohio June 1, 2011)

The Scooter Store and a related company sued a competitor for trademark infringement and other causes of action for unfair competition based in part on the competitor’s purchase of keywords such as “scooter store” and “your scooter store” to trigger sponsored advertisements on the web. Defendant moved for summary judgment and also moved for a protective order that would prevent it from having to turn over information to plaintiffs concerning defendant’s purchase of the keywords. The court denied the motion for protective order.

Defendant argued that it should not have to turn over the information because plaintiffs’ trademark claims based on those keywords were without merit, as the words are generic terms for the goods and services plaintiffs provide. Defendant also asserted a need to protect the commercially sensitive nature of information about its keyword purchases.

The court rejected defendant’s arguments, ordering that the discovery be allowed. It held that “whether or not [p]laintiffs’ claims involving these terms survive summary judgment [] has no bearing on whether the discovery [p]laintiffs seek is relevant, particularly viewed in light of a party’s broad rights to discovery under Rule 26.” As for protecting the sensitivity of the information, the court found that such interests could be protected through the process of designating the information confidential, and handled accordingly by the receiving party.