Friday, March 14, 2014

Competitor that operates review website not protected by 230

Moving & Storage, Inc. v. Panayotov, No. 12–12262, 2014 WL 949830 (D. Mass. Mar. 12, 2014)

Here’s one of the §230 situations that fascinates me.  Defendants operate a moving company review website, … and their own moving company.  The plaintiffs provide moving services, and alleged that defendants deleted positive reviews of the plaintiffs and negative reviews of the defendant moving company in order to gain market share, while touting the website as neutral.  Plaintiffs also alleged copyright and trademark infringement from defendants’ use of content and logo designs from plaintiffs’ website.

Defendants moved to dismiss on §230 grounds. The court agreed that plaintiffs’ claims weren’t based on information provided by another information content provider—the third-party reviews. (Though there were also allegations of fake reviews created by defendants, not subject to §230 dismissal.)  “The plaintiffs’ claims do not arise from the content of the reviews, whether they be disparaging, laudatory, or neither, but instead, the defendants’ alleged ill-intentioned deletion of positive reviews of the plaintiffs’ moving companies and deletion of negative reviews of their own company, coupled with various representations—that the website offers ‘accurate’ data, that it is ‘serious about reviews quality,’ and that readers ‘see the most accurate and up to date rating information to base your decision on.’”  (Query: puffery?  I’m inclined to say no in this context, but I suspect that there’d at least be a fight.)  The court identified the liability-producing conduct as “[t]he manner in which the information is presented, or withheld, … as well as the allegedly misleading ratings which result from such alleged manipulations.”  Given that, the complaint alleged that defendants were the developers of the challenged misinformation, not just facilitators thereof. 

As for the §230(c)(2) filtering defense—a rare ruling!—that section provides immunity for “any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.”  But plaintiffs alleged bad faith, so the issue would have to await factual development.

The false advertising and unfair competition claims under federal and state law were otherwise adequately pled. For tortious interference, plaintiffs failed to allege with specificity any “business relationship or contemplated contract of economic benefit.” Where the class of potential customers is not defined but could include anyone in need of moving services, it wasn’t reasonable to infer that the defendants knew of the potential business relationships at issue.

Defendants fared better on trademark infringement, as they should.  Plaintiffs Moving and Storage (d/b/a Neighbors Moving and Storage) and American Van Lines allege that the defendants infringed the marks “Neighbors Moving & Storage” and “American Van Lines” by using these marks without permission on their website and in metatags.  Likely confusion isn’t a theoretical possibility of confusion, and the allegations here failed to support any inference of likely confusion. The website “is very clearly a review website, and it is implausible that any reasonably prudent purchaser exercising ordinary care would be confused by the use of the plaintiffs’ marks.”  The plaintiffs alleged initial interest confusion from the defendants’ use of metatags to divert consumers searching for plaintiffs online to defendants’ site.  But even if the First Circuit had recognized this theory, which it hasn’t, mere diversion wouldn’t be enough.

The complaint’s allegations of consumer confusion were merely legal conclusions couched as factual allegations. At best the complaint supported the inference that consumers were misled into believing allegedly inaccurate ratings, not that they were misled about source, endorsement, or affiliation. As the First Circuit held in Swarovski Aktiengesellschaft v. Bldg. No. 19, Inc., 704 F.3d 44, 52 (1st Cir. 2013), “a trademark holder has no right to police ‘unnecessary’ use of its mark. Whether necessary or not, a defendant’s use of a mark must be confusing in the relevant statutory sense for a plaintiff to raise a viable infringement claim.”

Copyright infringement: Plaintiff Father & Son Moving and Storage alleged that defendants copied text from its website:

Father & Son means QUALITY LOW COST MOVING! We are a family-owned business, dedicated to providing professional and personal service. Father & Son specialized in local, statewide, long distance moving, Office relocation, truck rentals, small moves, self services movers, and more. All moves are performed by our quality trained professionals, who handle your moving needs from start to finish. [address and contact info]

The registration hadn’t been issued when the complaint was filed, but it had been now, so the complaint wouldn’t be dismissed. (Ugh, why not just do fair use as a matter of law?) 

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