Topic: Legal

Legal side of Reputation Management

Another Censorious Copyright Case Results In a Big Fee Shift–Inglewood v. Teixeira 0

buttsI recently wrote about Katz v. Chevaldina, where a real estate tycoon didn’t like a candid photo taken of him, so he bought the copyrights to the photo and sued a blogger to suppress the photo. The courts had no problem seeing the censorious overreach of the lawsuit, and a federal appellate court found decisively that the blogger qualified for fair use. Separately, the district court awarded the defendant over $150k of attorneys fees pursuant to copyright’s fee-shifting provision (17 USC 505). Though the plaintiff can surely afford it, the court’s message is clear: censoriously abusing copyright law doesn’t pay.

A different court delivered the same message to the City of Inglewood, but instead of the fee award coming of a billionaire’s pockets, local taxpayers will bear the cost. UGH.

A critic of the Inglewood mayor remixed videos from city council meetings to make his critical points and posted the remixed videos to YouTube. As we know, federal government works aren’t copyrightable, but state and local government works retain the theoretical possibility of being copyrighted even though the odds of getting a court to agree are exceedingly low. Most government actors know better than to test this precarious copyright possibility, but thin-skinned mayors don’t always make the most rational decisions.

The court’s condemnation of Inglewood’s ill-advised lawsuit was emphatic and remorseless. The court rejects the video’s copyrightability, but the harshest words come in the fair use discussion:

the Court can scarcely conceive of works that are more appropriately protected by the fair use doctrine and § 107 than the Teixeira Videos. He is engaged in core First Amendment speech commenting on political affairs and matters of public concern. To do so, he has taken carefully selected and short portions of significantly longer works, and embellished them with commentary and political criticism through music, his voice, and written subtitles. Even if California law allowed the City to assert a copyright claim, Teixeira’s activities plainly fall within the protections of fair use.

Not. Even. Close.

With such a decisive opinion, a fee shift seemed inevitable, and the court has now granted it to the tune of $117k. In its ruling, the court continues to berate the city for such a dumb lawsuit:

* “Defendant achieved a complete victory on the merits”
* “Defendant’s videos are textbook examples of fair use works”
* “The Court’s view is consistent with, although in no way influenced by, the universal condemnation the lawsuit received from legal academics and other experts in copyright, First Amendment, and public records law.”
* “the City’s most plausible purpose was to stifle Defendant’s political speech after he harshly criticized the City’s elected officials.”
* “a fee award is necessary to deter future meritless litigations of this kind….a reasonable award of fees will serve to deter other entities, whether public or private, that contemplate bringing unreasonable suits to pressure an individual into abandoning protected activity.”
* “this lawsuit posed a serious threat to critical political expression, and the successful defense against the City’s claims successfully maintained the boundaries of liability under the Copyright Act”

U-G-L-Y.

Now, the real question is: will future copyright plaintiffs be deterred from bringing censorious lawsuits knowing that the 505 fee-shift is part of the deal? Sadly, the answer is no. Censors gonna censor, and copyright law is just too alluring a censorial tool not to risk it.

Case citation: City of Inglewood v. Teixeira, 2:15-cv-01815-MWF-MRW (C.D. Cal. Oct. 8, 2015)


Source: Goldman Legal

FTC Sues Company Seeking to Prevent Customers’ Negative Online Reviews 0

Last month, the Federal Trade Commission (FTC) filed suit in the Middle District of Florida against two companies and their principals over a “gag” clause aimed at preventing negative reviews.

On September 24, 2015, the FTC filed a complaint for permanent injunction and other equitable relief against Roca Labs, Inc., Roca Labs Nutraceutical USA, Inc., Don Juravin and George C. Whiting (hereinafter referred to, collectively, as Roca Labs).

FTC Sues for Negative ReviewsThe FTC has accused Roca Labs of attempting to dissuade customers from publishing negative feedback, in addition to allegations of baseless claims about their products (powder and gel-based weight loss supplements, geared towards those seeking to lose significant weight loss as an alternative to gastric bypass surgery).

In what is reportedly the first ever lawsuit brought by the agency over a non-disparagement clause – noting that the FTC only files complaints when there is “reason to believe” a law has been violated and that it is in the public interest – the FTC is clearly attempting to warn businesses against attempting to stifle negative customer feedback.

“Not only did they make false or unsubstantiated weight-loss claims, they also attempted to intimidate their own customers from sharing truthful – and truly negative – reviews of their products,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.

Roca Labs’ non-disparagement clauses

Roca Labs, keenly aware of the significance of being surrounded by positive content and publicity (including favorable online reviews), seems to have overdone it in terms of attempting to control their reputations.

Not only did they promote their products through “success videos” – including offering discounts to customers that provided such positive publicity – but Roca Labs also “post[ed], or cause to be posted” testimonials or other favorable information from third-party websites, without disclosing any affiliations with Roca Labs, the FTC’s complaint alleged.

And then, of course, there were the non-disparagement clauses – or gag clauses, as they are referred to in the complaint.

Via product package inserts, Roca Labs warned their customers that they agreed not to publish negative reviews about Roca Labs or the products; doing so resulted in what essentially amounted to a large fine.

As seen in the complaint, Roca Labs even used some language stating that the intent of the non-disparagement clause was to protect the companies and their products “from the harm of libelous or slanderous content.” Violations of that provision would result in legal remedies if, upon notice, the content was not removed within 72 hours.

According to the FTC complaint, Roca Labs has both issued threats and actually followed through with filing lawsuits against certain customers who wrote about their negative experiences. And, clearly, that is not okay with the FTC.

The FTC’s position is that Roca Labs’ actions and practices – barring customers form sharing actual negative commentary – harm prospective purchasers who might purchase Roca Labs products that they otherwise might not if given the opportunity to read honest negative assessments. According to the FTC, this violates Section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices.”

“We believe that it’s really important for truthful information about products to be out in the information marketplace,” said Mary Engle, associate director of the FTC’s Division of Advertising Practices.

Takeaways

In many instances, FTC punishments are simply a public reprimand (a slap on the wrist, essentially) or perhaps a fine. The fact that the FTC filed a federal lawsuit against Roca Labs, however, shows how serious the FTC is treating Roca Labs’ actions and alleged violations.

Roca Labs is not alone in being worried about negative feedback. However, trying trying to silence potential critics through non-disparagement clauses is increasingly being frowned upon, and with greater consequences too. California prohibits such clauses, while other businesses – including hotels and apartment complexes – have experienced major backlashes from similar policies. Even if not illegal, the PR risks are too great.

This will be an interesting case to track – in particular the potential consequences for Roca Labs. At the very least, the companies and their products are already receiving negative publicity greater than what Roca Labs feared from customers themselves.

In short, companies should not try to suppress negative content, as negative speech is protected as long as it is not defamatory. If anything, they should (lawfully) seek to generate more positive or neutral publicity that can drown out negative content. Besides, if a product is worthy of a significant number of bad reviews, then perhaps it is a flawed product.

For more information, contact Whitney Gibson at 855.542.9192 or wcgibson@vorys.com. Read more about the practice at http://www.defamationremovalattorneys.com and follow @WhitneyCGibson on Twitter.


Source: Vorys

Why Attorneys Dislike Consumer Reviews (Reviewing an Article by Cassandra Burke Robertson) 0

robertson_cassandraI recently read an article by Prof. Cassandra Burke Robertson (Case Law) entitled “Online Reputation Management in Attorney Regulation.” This article discusses two of my favorite topics: (1) why do professional service providers struggle with online reviews more than other marketplace vendors?, and (2) can we build a well-functioning ODR to extra-judicially redress problematic online reviews? If you’re interested in online reviews, Section 230, the regulation of lawyers or ODR–and let’s face it, if you read this blog, you probably are–I recommend this article to you.

Professional Service Providers and Online Reviews

I’ve repeatedly written and spoken about the medical community’s battles against patient reviews, such as this essay that inventories some factors explaining why doctors seem uniquely opposed to patient reviews. Prof. Robertson addresses the same basic question, except for lawyers instead of doctors, and she provides a psychology-based explanation. She points to three main factors:

* reviews change the power balance between attorney and client, i.e., clients have new-found leverage over attorneys
* challenge to the attorney’s identity, i.e., attorneys always think they do a great job for their clients, so negative reviews are shocking. However, because of the changing power balance, even positive reviews undercut the lawyer’s self-assessment of their power over clients. The article concludes “This threat to the attorney’s identity structure makes it nearly impossible for the attorney to respond rationally to the client’s criticism.”
* ego threat and cognitive distortion. “[A]ttorneys facing online reviews are more likely to engage in a ‘defensive cognitive distortion’ that refuses to acknowledge any merit to the review, and instead lays blame entirely with the client, who may be seen as vengeful or unethical; essentially, the lawyer is unconsciously ‘seek[ing] an external perpetrator to buffer a potential blow to the ego.’” Plus, a negative review threatens the attorney’s finances.

She also discusses in some detail the confidentiality restrictions on attorneys responding to client reviews. I’ve always viewed this as a red herring, because confidentiality obligations do not prohibit professional service providers from discussing their general protocols without disclosing or discussing a client’s specific facts (or even acknowledging they were a client); and that’s assuming the professional makes the risky and often ill-advised choice to respond to client reviews substantively, which can easily exacerbate the situation.

So what should we do about false client reviews of lawyers? Approaching the topic from her legal ethics background, Prof. Robertson suggests:

I recommend that state regulatory bodies work with online intermediaries to weed out reviews that can be proven to be false and misleading. Such a process would protect attorneys by removing reviews that unjustifiably harm their reputation online, and it would also protect clients—both former clients, by preserving their right to offer critical‐but‐truthful evaluations, and potential clients, by improving the overall accuracy of the review sites.

I have a draft paper I wrote in 2011, and revised in 2013, that extolled the virtues ODR for consumer reviews, so I’m 100% on board with this approach (maybe someday I’ll even finish the paper). At the time, I was doing some consulting work for Modria, and I became convinced that ODR has a lot to offer review websites and the review ecosystem. However, ODR has several structural challenges, and ODR by bar organizations may have difficulties overcoming those. Most obviously, who will foot the bill for the ODR? Running a proper ODR requires expertise and money. Someone has to pay, and it seems unlikely bar associations have enough surplus funds to do this right. Also, there’s an institutional competence question. Bar organizations are in the business of disciplining attorneys, so will their prosecutorial mindset affect how they assess critical reviews? At the same time, bar organizations are captured by the lawyers they regulate, so will an ODR by bar associations swing wildly pro-attorney? I don’t know which way these forces cut, but these conflicting dynamics make me wonder if bar associations are the best ODR providers. An independent service like Modria would have some advantages as the ODR provider, but then the cost issue becomes even more of a barrier.

I’ve written numerous papers that overlap with the topics addressed in Prof. Robertson’s paper. A few highlights:

* Patients’ Online Reviews of Physicians
* The Regulation of Reputational Information
* Regulation of Lawyers’ Use of Competitive Keyword Advertising
* Online Word of Mouth and its Implications for Trademark Law


Source: Goldman Legal