Topic: Legal

Legal side of Reputation Management

Google Gets Big Ninth Circuit Win That Its Eponymous Trademark Isn’t Generic–Elliott v. Google 0

The Ninth Circuit ruled that “Google” isn’t a generic trademark. This isn’t a surprise because a district court already reached this conclusion in 2014. See my prior blog post, “Google Successfully Defends Its Most Valuable Asset In Court.” Still, the Ninth Circuit’s ruling hands Google–and other well-known brand owners–a powerful and emphatic win.

The court’s opinion delves deeply into genericide geekery, but the top-line conclusion is unambiguous. The court says plainly that “verb use does not automatically constitute generic use.” This eviscerates the plaintiff’s case because, as Judge Watford says in a concurrence, “the plaintiffs produced thousands of pages of largely irrelevant evidence showing merely that ‘google’ is sometimes used as a verb.”

To reach its conclusion, the court says that “we now recognize that an internet user might use the verb “google” in an indiscriminate sense, with no particular search engine in mind; or in a discriminate sense, with the Google search engine in mind.” The court gives an example:

Elliott purports to offer an example of generic use by T-Pain, a popular rap music artist. But we will not assume that T-Pain is using the word “google” in a generic sense simply because he tells listeners to “google [his] name.” T-Pain, Bottlez, on rEVOLVEr (RCA Records 2011). Without further evidence
regarding T-Pain’s inner thought process, we cannot tell whether he is using “google” in a discriminate or indiscriminate sense.

This “discriminate”/”indiscriminate” distinction is a win for other very popular trademarks. For example, the court analogizes the oft-used Kleenex example:

We acknowledge that if a trademark is used as an adjective, it will typically be easier to prove that the trademark is performing a source-identifying function. If a speaker asks for “a Kleenex tissue,” it is quite clear that the speaker has a particular brand in mind. But we will not assume that a speaker has no brand in mind simply because he or she uses the trademark as a noun and asks for “a Kleenex.”

Want to say “Do you Yahoo?” Go for it!

Most of Elliott’s evidence failed because it was designed to show widespread consumer use of Google as a verb, rather than the required showing “that the primary significance of the word ‘google’ to the relevant public is as a name for internet search engines generally and not as a mark identifying the Google search engine in particular.” As a result, the court disregards:

* evidence that Google used its own mark as a verb (adding that lower-case usage is just “grammatical formalism”).
* evidence that “Google” is listed in dictionaries because (A) the dictionaries’ first definition referenced it as a brand, and (B) the secondary definition just reinforced the plaintiff’s basic point that some consumers use “Google” as a verb for searching. “Elliott argues that these dictionaries only refer to the GOOGLE trademark because Google threatened to take legal action if the companies refused to acknowledge its registration. Contrary to Elliott’s assumption, Google’s policing activities weigh against finding genericide.” Yay for trademark bullying of dictionary publishers!
* the lack of good synonyms. “Because not a single competitor calls its search engine ‘a google,’ and because members of the consuming public recognize and refer to different ‘internet search engines,’ Elliott has not shown that there is no available substitute for the word ‘google’ as a generic term.”
* casual press references to Google as a verb:

Documented examples of generic use might support a claim of genericide if they reveal a prevailing public consensus regarding the primary significance of a registered trademark….However, if the parties offer competing examples of both generic and trademark use, this source of evidence is typically insufficient to prove genericide.

Implications

Big Win for Big Trademark Owners. The Google brand is one of the most valuable on earth. The court emphatically endorsed all of its practices (and the significant dollars Google spent preparing this case). I’m sure Google will face other genericide challenges in the future, but this ruling will make such challenges difficult or impossible. Other big brands whose trademarks are often used as verbs or nouns also have a lot of reason to cheer this ruling.

Implications for Keyword Advertising Cases? Though the case doesn’t directly discuss competitive keyword advertising, its ruling may affect those cases. The court makes an interesting distinction between “discriminate” and “indiscriminate” trademark usage by consumers. The former means the consumer is searching for the brand; the latter means that the consumer is thinking about the class of goods that includes the trademark without thinking of any brand in particular. Extrapolated to the competitive keyword advertising context, that’s exactly what happens when consumers use a trademark as a keyword. Some consumers want the trademark owner and no one else; while other consumers are seeking the class of goods and not really thinking about the trademark owner. The Ninth Circuit’s framework can be invoked by competitive keyword advertising defendants to highlight that there is a class of consumers who refer to the trademark but don’t intend to find just the trademark owner. Depending on how much courts value that consumer cohort, it could be fatal to a plaintiff’s case.

Case citation: Elliott v. Google, Inc., No. 15-15809 (9th Cir. May 16, 2017)


Source: Eric Goldman Legal

Esports Contracts: Avoid Getting Bamboozled 0

esports contractsWhat do professional gamers need to consider when negotiating esports contracts? To avoid disputes, make sure everything is spelled out to the letter. And when we say everything, we mean everything — from equipment quality to pay schedules to break times.

Bottom Line: A good contract is one that’s easy to understand, yet detailed, so both parties know exactly what to expect from one another.

Esports Contracts: Things To Consider

So, what should professional gamers watch for when negotiating agreements?

  • Payment Schedule: Being a professional gamer means getting paid to master video games. The operative word being “paid.” Make sure all compensation details — from price to payment schedule — are clearly delineated in any contract you sign.
  • Equipment Stipulations: It happens! A team signs you. Then, on your first day, you discover that you’re expected to practice on a Commodore 128. (Hey, it could happen.) So, make sure equipment stipulations are part of your esports contract.
  • League / Team Rules: Before you enter into a partnership with a brand or team, make sure they clearly outline what is expected of you, on both behavioral, performance, and even ethical grounds.
  • Insurance: Are there insurance implications of which you should be aware? Find out and get any stipulations in writing. Moreover, consider medical insurance. Will the organization be providing it, in whole or in part? Does it include dental and vision? Does it come out of your salary?
  • Non-Compete: Are you allowed to participate on other teams? What about individual streaming channels — can you continue making residual income on platforms like Twitch? Find out the answers before you agree to anything.
  • Term Length: Before scribbling your John Hancock on the dotted line, make sure you’re comfortable with the duration of the contract terms. The industry is blowing up; things are rapidly evolving; so, ask yourself: Do I really want to stay with a team or sponsor for more than a year? Now, you very well may want to — just make sure you give it thought.

Esports Is Still Evolving…And So Is Esports Law

From the way fans watch matches to the types of injuries players sustain “on the field,” there are still many practical and legal esports issues with which the industry must grapple.

At this juncture, the best thing players can do is be fastidious about what types of contracts and agreements they sign. After all, you want to be fairly compensated for your skills and profit potential, right? Well, the first step in making sure that happens is a rock-solid contract.

Kelly / Warner consults with esports athletes on everything from contract negotiations to team disputes. Get in touch today to begin the conversation.

The post Esports Contracts: Avoid Getting Bamboozled appeared first on Kelly / Warner Law | Defamation Law, Internet Law, Business Law.


Source: Kelly Warner Law

1-800 Contacts Charges Higher Prices Than Its Online Competitors, But They Are OK With That–FTC v. 1-800 Contacts 0

As you recall, the FTC has taken the position that 1-800 Contacts’ agreement with competitors, via settlement agreements, not to bid on each other trademarks as keywords violates antitrust laws. Prior blog posts:

* FTC Sues 1-800 Contacts For Restricting Competitive Keyword Advertising
* FTC Explains Why It Thinks 1-800 Contacts’ Keyword Ad Settlements Were Anti-Competitive–FTC v. 1-800 Contacts

This post catches up on some highlights since my prior post:

1-800 Contacts’ Pretrial Brief

The FTC’s pretrial brief was 90 pages. 1-800 Contacts takes 120 pages to respond. The FTC listed 14 lawyers on its caption. 1-800 Contacts lists 10 lawyers of its own. This is a seriously lawyered-up case.

* Poor widdle 1-800 Contacts. Although it says it’s spent a half-billion dollars building its reputation, “1-800 Contacts remains a small player, accounting for only 10% of sales, in a market dominated by ECPs who possess inherent market advantages (e.g., they write the prescriptions required for purchase).”

* 1-800 Contacts admits its prices are higher than its online-only competitors. One of the standout allegations from the FTC’s brief: “1-800 Contacts is consistently the highest-priced seller on the internet, and consumers do not know it.” 1-800 Contacts doesn’t directly respond to this allegation but it tacitly admits it: (1) “1-800 Contacts does not try to compete solely on price with the lowest-priced discount retailers, like Costco and various online-only retailers”, (2) “1-800 Contacts makes substantial investments in customer service and the purchasing experience,” and (3) 1-800 Contacts spends a lot on TV advertising. If you’re a 1-800 Contacts customer, did you know you were paying a price premium? For more on 1-800 Contacts’ higher prices, see the exhibits to this filing.

* Unclear hands. Many keyword advertising plaintiffs have engaged in competitive keyword advertising themselves, trapping them in duplicitous positions. 1-800 Contacts is no exception. Nevertheless, the brief claims that “1-800 Contacts’ consistent policy has been not to bid on its competitors’ trademarks.” Later, the brief says “1-800 Contacts, as a policy, did not select other party’s trademarks as keywords.” Just like Trump’s taxable revenues aren’t from Russia “with few exceptions,” a footnote qualifies this: “On very rare occasions, 1-800 Contacts’ advertisements inadvertently appeared in response to searches for a competitor’s trademark.”

via GIPHY

O rly? I’m feeling gaslighted. I remember when the Second Circuit said:

We think it noteworthy that prior to filing its lawsuit against WhenU, 1-800 entered into agreements with WhenU competitors Gator and Yahoo! to have its own pop-up and banner ads delivered to C-users in response to the C-users’ input of particular website addresses and keywords that were specified by 1-800. Included in the list 1-800 provided to Gator, for instance, were the website addresses for several of 1-800’s competitors, including defendant-appellee Vision Direct, Coastal Contacts, and Lens Express.

* Bidding on your own trademarks. 1-800 Contacts makes a big point that trademark owners get higher ROIs from bidding on their own trademarks, e.g. “the other contact lens retailers experienced significantly higher returns on investment on searches triggered by their own trademark keywords than they did for searches triggered by 1-800 Contacts’ trademark keywords….it was significantly less efficient for the other retailers to bid on 1-800 Contacts’ trademark keywords than it was for them to bid on their own trademark keywords.” Is this somehow surprising? Yet it doesn’t remotely prove that someone searching for a trademark ONLY wants the trademark owner.

* Trademark settlements are good things (?). “as settlements of litigation that protect trademark rights, the agreements that Complaint Counsel have challenged in this case are procompetitive twice over.”

Later, the brief says “there is little risk that a trademark owner will try to settle trademark disputes to divide monopoly profits….” But that’s exactly what the FTC say 1-800 Contacts did. The brief adds “the fact that so many online retailers chose to settle with 1-800 Contacts using standard non-use agreements strongly suggests that the settlements here are ‘supported by traditional settlement considerations.’” But elsewhere 1-800 Contacts made a big point about how small competitive keyword ads are in the overall ad puzzle. Everyone seems to agree that the competitors settled to avoid the cost of litigation.

* The “Everyone is doing it” Argument. “1-800 Contacts’ settlements were standard non-use agreements whereby a party agreed not to use the other’s trademark….This form of settlement has frequently been used to settle disputes regarding the use of trademarks in paid search advertising.” (listing 6 cases). The brief also says “courts across the country have issued similar injunctions barring entities from using another’s trademark in the specific context of keyword searches.” (listing 11 cases plus a cf.)

Interestingly, the brief spends virtually no time trying to show that competitive keyword advertising actually constitutes trademark infringement. Nevertheless, this battle is being fought among the experts. More on that in a moment.

* Competitive keyword ads increase search costs (?). “Evidence that most consumers who search for 1-800 Contacts’ trademarks intend to navigate to 1-800 Contacts’ website means that advertisements presented by other companies have the potential to increase search costs and cause confusion for many consumers.”

* A swipe at Dr. Jacoby. Dr. Jacob Jacoby of NYU is one of the FTC’s experts. I believe he has done hundreds of trademark surveys. The brief says “Complaint Counsel retained Professor Jacoby despite the fact that his studies have been entirely excluded in at least four cases, and have been severely criticized or given little to no weight in nearly twenty other cases.” If you do as many trademark surveys as Dr. Jacoby, you’re going to have a bottom X%. I suspect the FTC will respond by showing how he has been deemed a credible expert and praised by judges in hundreds of other cases.

* Is the online contact lens market competitive? “Some of the nation’s largest retailers have entered the online contact lens business….Similarly, with the exception of one unsuccessful online marketer, the settling parties themselves have grown while the agreements were in place.”

Howard Hogan Expert Report

To my knowledge, the expert reports have not been publicized released as a group. Nevertheless, the FTC attached the Hogan and Landes reports as exhibits to its arguments about why Prof. Tushnet could testify in rebuttal on legal matters. Whatever the reason for the FTC sharing the reports, it’s a worth a look.

* It cost HOW much? “1-800 Contacts is paying Gibson, Dunn & Crutcher LLP for my time, at a rate of $1,095 an hour and the time of research staff working on this matter.” This is a 128 page report with over 400 footnotes. You do the math.

* The (Phantom) Policing Duty. The expert report discusses the “policing duty” of trademark owners (paragraphs 27-31), suggesting that 1-800 Contacts had to police against the keyword advertisers or suffer adverse consequences. As I’ve discussed repeatedly on the blog, the policing “duty” is routinely overstated by trademark counsel and sometimes trademark clients as a justification for spending more money even though it usually takes a fair amount of neglect before there are any consequences. Also, the report doesn’t mention the STK v. Backrack case, which said “respondent’s failure to pursue purchasers of “backrack” as a keyword is not evidence of failure to police its mark.” So there’s a significant chance that the policing “duty” is overstated in the competitive keyword advertising context.

* Paragraph 47 invokes the atrocious Brookfield billboard analogy. My 2005 debunking of the analogy. Every time anyone invokes the billboard analogy non-mockingly, another puppy has a bad day (and a law professor makes fun of the invoker).

Also, the report doesn’t mention that the initial interest confusion doctrine has been waning in courts for the past decade.

* Paragraph 48 quotes the risk of searcher confusion from Bihari v. Gross–an opinion from *2000.* Hmm, I wonder if search engine behavior has changed in the intervening 17 years.

* Dilution. “courts agree that trademark dilution claims are viable in the keyword advertising context, and that such claims often cannot be resolved on the pleadings, or even at summary judgment.” Ugh. From FN 31 of this article:

The trademark dilution doctrine does not require consumer confusion, but defendants have routinely defeated dilution claims for competitive keyword advertising. See Allied Interstate LLC v. Kimmel & Silverman P.C., No. 12 Civ. 4204, 2013 WL 4245987 (S.D.N.Y. Aug. 12, 2013) (referential/fair use of trademark); Designer Skin, LLC v. S & L Vitamins, Inc., 560 F. Supp. 2d 811 (D. Ariz. 2008) (nominative use); see also Nautilus Group, Inc. v. Icon Health & Fitness, Inc., No. C02-2420RSM, 2006 WL 3761367 (W.D. Wa. Dec. 21, 2006) (relying on pre-Trademark Dilution Revision Act provisions); Edina Realty, Inc. v. TheMLSonline.com, No. Civ. 04-4371JRTFLN, 2006 WL 737064 (D. Minn. Mar. 20, 2006) (same). But see Scooter Store, Inc. v. SpinLife.com, LLC, No. 2:10–cv–18, 2011 WL 6415516 (S.D. Ohio Dec. 21, 2011) (bizarrely finding potential dilution in a generic term).

Several competitive keyword advertising dilution claims have failed because the trademark lacked the requisite fame, defined as “widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark’s owner.” 15 U.S.C. § 1125(c)(2)(A) (2012); see Parts.com v. Yahoo, 996 F. Supp. 2d 933 (S.D. Cal. 2013); Jurin v. Google, Inc., No. 2:09–cv–03065–MCE– CKD, 2012 WL 5011007 (E.D. Cal. Oct. 17, 2012); S & L Vitamins, Inc. v. Austl. Gold, Inc., 521 F. Supp. 2d 188 (E.D.N.Y. 2007); Google, Inc. v. Am. Blinds & Wallpaper Factory, Inc., No. C 03-5340 JF, 2007 WL 1159950 (N.D. Cal. Apr. 18, 2007).

* “Some of Bing’s own internal documents also seem to indicate that a significant percentage of consumers have been confused by Bing’s keyword advertising program. According to these Bing reports, when trademark owners do not bid on their own mark for keyword advertising—thereby placing sponsored links to other companies as the top search result—40% of users click on the non-owner advertiser’s link. If the trademark owner does bid on its own mark for keyword advertising—and thus competes with other advertisers to be placed as the top search result—only 9% of user click on the non-owner advertiser’s link. This evidence appears to indicate that as much as 31% of Internet users who search for a particular brand can be induced to instead click on a link for a competing advertiser simply because the search engine is paid to place that advertiser in the top spot.” But is any of this relevant to harms protected by trademark law? Or is this just fair competition where consumers are researching alternatives?

Dr. William Landes Expert Report

I don’t have many comments on this report. It’s a fairly typical economist’s exposition on trademarks and search costs. The thing that stood out most to me was Landes’ rate: $1,500/hour. Whoa. At least his report was shorter than Hogan’s.

Prof. Rebecca Tushnet Slides

This slide speaks for itself:

Tushnet Slide

Dr. Evans’ Slides

A few snippets of his report are included in the slides.


Source: Eric Goldman Legal

College Esports: 21st Century Scholarship Opportunities 0

college esportsCurrently, 34 U.S. colleges support varsity esports programs, compared to only 7 a year ago.  That number will most likely double — if not triple — over the next couple of years as schools scramble to find a seat on the college esports train.

Varsity Esports

In the United States, varsity esports is new. As such, there’s no go-to blueprint for creating and managing clubs.  Some esports teams are run by athletic departments, some by academic departments, and others by the office of student affairs.

That said, collegiate esports squads operate similarly to traditional teams: outstanding players earn scholarships, clubs pay coaches, and corporate sponsorship deals help supplement programs.

“Most of these are small schools,” said Kurt Melcher, who developed the first college esports program at Robert Morris University Illinois in 2014. “But I can promise you that somewhere on Notre Dame’s campus, somewhere on Northwestern’s campus, they’re asking how they can get involved.”

Move Over NCAA, Esports Has Its Own Collegiate Association

Until recently, college-level esports didn’t have a governing body and the NCAA wasn’t interested. So, last year, interested parties created the nonprofit National Association of Collegiate Esports (NACE).  Currently, 31 U.S. college esports teams are members of NACE. That figure is likely to grow now that NCAA Division I schools are making room for esports programs.

The most recent member to join NACE is Stephens College, an all-women’s school in Missouri.  They will have a 12 player squad, run by the IT department, set to compete in a collegiate Overwatch league.  Additionally, all the players will receive partial scholarships.

College Esports Scholarships

Analysts estimate that the annual esports scholarship pool will rise to $7 million by 2018.  From an academic standpoint, this is great for schools because the majority of cyber athletes focus on sciences, engineering, and math. In other words, by attracting gamers, they’re attracting brainy students.

NBA and NFL franchises are developing esports rosters as well, which raises the question: As leagues become more established, will gamers be drafted from colleges and universities, just like traditional athletes?

“The evolution of esports on college campuses is squarely on our radar,” said IMG College President Tim Pernetti. “There is a very real similarity in the passions that college sports fans and esports enthusiasts have for their schools.”

Got Questions For An Esports Consultant? We’ve Got Answers.

Kelly / Warner maintains an esports law division. Our team helps professional gamers with everything from contract negotiations to team disputes. Get in touch today to begin the conversation.

The post College Esports: 21st Century Scholarship Opportunities appeared first on Kelly / Warner Law | Defamation Law, Internet Law, Business Law.


Source: Kelly Warner Law

Lawsuit Against Ripoff Report Dropped After Discovery–Vision Security v. Xcentric (Guest Blog Post) 0

By guest bloggers Jeffrey J. Hunt and Rachel Lassig Wertheimer

[Eric’s introduction: this post is written by lawyers who represented Ripoff Report in one of their multitudinous lawsuits. Because the authors were also advocates in this case, you might assume this writeup is just another piece of advocacy. Even so, I’ve decided this post is worthwhile for two reasons. First, it helpfully recaps the complicated denouement to one of the more troubling recent rulings against Ripoff Report. Second, and more importantly to me, the denouement offers valuable insights into the wisdom of suing Ripoff Report. The way I interpret things, Vision Security got a favorable Section 230 ruling that enabled discovery. However, after discovery, Vision Security effectively abandoned its case. So what kind of message might this send to other plaintiffs thinking about suing Ripoff Report? You’re likely to lose on Section 230 grounds; but if you’re lucky enough to overcome that, you’ll spend a fair amount of money on discovery to possibly realize that the case still isn’t worth it. So although the denouement in this case isn’t a citable opinion, I think it’s useful “precedent” nonetheless.]

Last year, a Utah federal court dismissed a defamation case brought against the popular consumer-review website www.ripoffreport.com (“Ripoff Report”) after the plaintiff conceded that Ripoff Report was entitled to immunity from suit under the federal Communications Decency Act.

The impetus for the case was a post on Ripoff Report authored by a former sales representative (“sales rep”) of Vision Security, LLC, which marketed home security systems to consumers.  The sales rep claimed that Vision Security did not treat its employees fairly and engaged in deceptive sales practices.  Rather than sue the sales rep, Vision Security sued Xcentric Ventures, LLC (“Xcentric”), the company that operates Ripoff Report, for defamation and related claims, based upon the sales rep’s post.

Xcentric subsequently moved to dismiss the suit, citing Section 230 of the federal Communications Decency Act (“Section 230”), 47 U.S.C. § 230, which provides website providers like Xcentric immunity from suit for material posted on their websites by third-parties.  The United States District Court for the District of Utah, however, denied Xcentric’s motion.  The court noted that, under Tenth Circuit law, website providers may be held liable for content posted by a third-party if the provider “in some way specifically encourages development of what is offensive about the content.”  F.T.C. v. Accusearch Inc., 570 F.3d 1199 (10th Cir. 2009).  (The court’s ruling on the motion to dismiss was the subject of a previous article published on this blog: Eric Goldman, Another Tough Section 230 Ruling for Ripoff Report – Vision Security v. Xcentric, Tech. and Marketing L. Blog (Sep. 20, 2015).)

The court then determined that, assuming the truth of Vision Security’s allegations — as required at the motion to dismiss stage — there was a reasonable inference that Ripoff Report encouraged negative content, and therefore, Xcentric may not be entitled to Section 230 immunity.

First, the court pointed to some of the taglines on Ripoff Report, including “By Consumers, for consumers,” “Don’t let them get away with it.  Let the truth be known,” and “Complaints Reviews Scams Lawsuits Frauds Reported, File your review.  Consumers educating consumers.”  Second, Vision Security had alleged that the sales rep told Xcentric that the statements in his post were false and asked that the post be removed.  Third, Vision Security had alleged that Xcentric’s webmaster told Vision Security that positive posts about a company are not allowed and that under no circumstances will postings be removed from Ripoff Report.  Finally, the court pointed to allegations regarding Xcentric’s Corporate Advocacy Program where, allegedly for “a large fee,” a company with negative postings like Vision Security could “find a satisfactory solution” to offensive content posted about them on Ripoff Report.  In the court’s view, these allegations supported a reasonable inference that Xcentric “had an interest in, and encouraged, negative content” in order to promote its Corporate Advocacy Program.

After the court’s ruling, however, the parties engaged in discovery and Xcentric filed a Motion for Summary Judgment, asserting that there were no genuine issues of material fact that prevented the application of Section 230 Immunity.  The crux of Xcentric’s argument was that under Accusearch, a website provider only loses its Section 230 immunity for content posted by third-parties if the provider “in some way specifically encourages development of what is offensive about the content,” 570 F.3d at 1199 (emphasis added), what Vision Security alleged was offensive about the content of the sales rep’s post was that it was false and defamatory, and there was no evidence that Xcentric in any way encouraged the sales rep (or other third-party users) to post false and defamatory statements on Ripoff Report.

In Accusearch, the offending content at issue was the confidential personal information of several individuals, including their telephone records, obtained from third parties and posted by Accusearch on its website.  See id. at 1199.  The court held that Accusearch was liable —stripped of its Section 230 immunity — because it “solicited requests for confidential information protected by law, paid researchers to find it, knew that the researchers were likely to use improper methods [to obtain the confidential information], and charged customers who wished the information to be disclosed.”  Id. at 1199, 1201.

In contrast, in its previous decision in Ben Ezra, Weinstein, & Co., Inc. v. Am. Online Inc., 206 F.3d 980, 983 (10th Cir. 2000), the court upheld America Online’s Section 230 immunity after it was sued for posting incorrect information regarding the plaintiff’s stock price and share volume purchased from a third-party vendor.  The “offending content” at issue in Ben Ezra was the inaccuracies in the stock price and share volume quotations, and, unlike in Accusearch, “America Online did not solicit the errors; indeed it sent the vendor emails requesting that it ‘correct the allegedly inaccurate information.’”  Accusearch, 570 F.3d at 1199 (quoting Ben Ezra, 206 F.3d at 985)).  In other words, “America Online had done nothing to encourage what made the content offensive—its alleged inaccuracy…[and] was therefore not responsible for the offensive content.”  Accusearch, 570 F.3d at 1199-1200.

Xcentric’s summary judgment motion argued that, as in Ben Ezra and unlike in Accusearch, there was no evidence that Xcentric in any way encouraged the sales rep to post false or defamatory statements on Ripoff Report and, therefore, Xcentric was not responsible for the “offending content” at issue.  Instead, the uncontroverted evidence showed the opposite—that Xcentric makes every effort to ensure that third-party content posted on Ripoff Report is not false and defamatory.  Among other things, Xcentric requires users to agree — two separate times before posting a report — to post only information that is truthful and accurate.

Further, Vision Security’s allegations that Xcentric’s webmaster told Vision Security that positive posts about a company are not allowed and that Vision Security’s only option for addressing a negative report like the sales rep’s post was to pay a “large fee” to join the Corporate Advocacy Program were not true.  Email exchanges between Xcentric and Vision Security, uncovered during discovery, showed that Xcentric made it clear to Vision Security on multiple occasions, and prior to the filing of the complaint in this case, that positive posts about or from a business are not only allowed, but encouraged and free of charge.  And Xcentric’s owner specifically encouraged Vision Security to post a free rebuttal to the sale rep’s post, but Vision Security chose not to do so.

Likewise, Vision Security’s allegation that its only option for addressing a negative report like the sales rep’s post is to pay a “large fee” to join Xcentric’s Corporate Advocacy Program was also untrue.  The uncontroverted evidence submitted on summary judgment demonstrated that businesses have several options for addressing negative reports, including posting a positive (and free) rebuttal, suing the author of the report, and using Xcentric’s VIP Arbitration program.  If a company sues the author directly, they may attach any court findings or judgment as a rebuttal to a negative report (again, at no charge).  And where a court makes considered findings based on evidence, Xcentric may redact false statements from the report.

Under Xcentric’s VIP Arbitration program, for a minimal fee used largely to pay for expenses, an arbitrator reviews evidence provided by both parties and, if the arbitrator determines the report contains false statements of fact, Xcentric will redact those portions of the report.  Finally, Xcentric’s Corporate Advocacy Program (“CAP”) is also available for businesses who need and wish to fully rehabilitate their online reputation.  With Xcentric’s help, CAP members commit to resolve each and every complaint on Ripoff Report to the customer’s satisfaction, undergo an investigative review of their business operations to help them detect the potential source of complaints, and provide an explanation to Xcentric of the changes the business has made to its operations to avoid future complaints.

As for Ripoff Report’s taglines, Xcentric argued that, contrary to Vision Security’s allegations, they do not encourage third-party users to post false and defamatory content on Ripoff Report.  Instead, they discourage it. One of Ripoff Report’s taglines states “Don’t let them get away with it. Let the truth be known” — an obvious invitation to post truthful content — and another states “Consumers educating consumers,” indicating that only statements that will serve to educate other consumers, i.e., true and accurate statements, are welcome.

Finally, Xcentric’s summary judgment motion argued that its refusal to remove negative reports is not evidence it encouraged the sales rep (or any other third-party user) to post false and defamatory content on Ripoff Report.  As an initial matter, Vision Security failed to adduce any evidence supporting its claim that the sales rep contacted Xcentric and requested that his post be removed from Ripoff Report.  More importantly, however, Xcentric’s policy of refusing to remove negative reports — which also applies to CAP members — ensures that consumers are not bullied, threatened, coerced, or bribed into recanting and also ensures that consumers reviewing reports on Ripoff Report are able to review both negative reports and positive rebuttals and make their own determinations as to a business’s conduct and commitment to customer service.  (Additionally, the clear weight of authority, including Tenth Circuit law, holds that a website provider’s failure or refusal to remove content, even at the request of the author and even if the content is potentially defamatory, is the exercise of a traditional editorial function and does not strip the provider of is immunity under Section 230.  See, e.g., Shrader v. Beann, 503 F. Appx. 650 (10th Cir. 2012).)

In conclusion, Xcentric argued that not only were several of Vision Security’s allegations demonstrably false — as demonstrated by the uncontroverted evidence submitted on summary judgment — there was no evidence that Xcentric in any way encouraged the sales rep to post false or defamatory statements on Ripoff Report and, therefore, Xcentric was entitled to Section 230 immunity.

After Xcentric filed its summary judgment motion, Vision Security conceded in a stipulation filed by the parties that it “is not aware of any genuine issues of material fact that would prevent the application of Section 230 Immunity to Vision Security’s claims, thus requiring dismissal of such claims” and that “Xcentric is entitled to judgment as a matter of law.”

Subsequently, the Utah District Court entered an Order Granting Stipulated Motion for Summary Judgment, in which it stated:

Defendant filed a separate motion for summary judgment . . . which argued for dismissal of all Plaintiffs’ claims because they were barred by the immunity granted to providers of interactive computer services under 47 U.S.C. § 230.  Upon review of the motion, Plaintiffs concluded that there existed no genuine disputes of material fact pertaining to the application of this immunity, and therefore determined to stipulate to the entry of summary judgment.  (Docket No. 89 at 2).  Thus, Defendant is entitled to summary judgment under Fed. R. Civ. P. 56(a).

Accordingly, the court granted summary judgment for Xcentric on all of Vision Security’s claims and dismissed the case with prejudice.

At the end of the day, Ripoff Report and websites like it fulfill an important societal function by allowing individual consumers with few resources to have a voice and cast light on questionable business practices.  As previous courts have observed, that is precisely why Congress enacted Section 230 to provide such website operators immunity from suit.

Jeffrey J. Hunt and Rachel Lassig Wertheimer are shareholders at Parr Brown Gee & Loveless, Salt Lake City, Utah, and, along with Maria Crimi Speth at Jaburg Wilk, Phoenix, Arizona, represented Xcentric Ventures, LLC.


Source: Eric Goldman Legal