video on company's YouTube channel was informational, not commercial speech

WatsonSeal Marketing LLC v. Crawlspace Ninja IP LLC, 2023 WL 2533061, No. 5:22-cv-649-LCB (N.D. Ala. Mar. 15, 2023)

When is informational material related to a for-profit company’s business commercial speech? Here, the court finds a YouTube video noncommercial despite some reasonably solid connections to profit-seeking.

WatsonSeal Marketing sued for false advertising under the Lanham Act, tortious interference with business relations under Alabama law, and unjust enrichment under Alabama law, but, having kicked out the Lanham Act claims, the court didn’t proceed any further with the state claims.

WatsonSeal is “in the business of crawl space and basement performance products.” It develops and manufactures “polymer lumber and concrete sealants” for basements and crawlspaces, including LumberKote, a subfloor and floor joist sealer designed “to protect structural framing and subfloor systems from excessive moisture absorption and rapid moisture uptake.” “Simply put, LumberKote dries out lumber while sealing it off from subsequent water intrusion and moisture. This means that lumber does not need to be dried before LumberKote is applied.”

Crawlspace Ninja “sells and distributes a variety of products designed to waterproof crawl spaces and remediate mold,” including Anabec x70, “a moisture barrier product designed for application to unfinished building surfaces.”

Crawlspace Ninja’s YouTube channel is dedicated to educating “homeowners about their crawl spaces and basements.” The channel and videos contain hyperlinks to Crawlspace Ninja’s website and online store. This case is about one video, “Do Wood Sealers Work at Preventing Mold in Crawl Space,” which was narrated by Crawl Space Ninja’s owner, Church:

… One of our inspectors down in Alabama went to a job that had a subfloor and floor joist sealer applied. And now it has mold growing on it. So I want to talk about this. Are these sealers effective? And how to properly install them.

… Church shows viewers a photo of the mold and specifies that the sealer in question is LumberKote. Id. at 4–5. He explains that LumberKote, like Anabec x70, is a mold preventative that should be applied only after lumber is dried. He then gives some straightforward advice: “If you’re going to install a preventative, if you’re going to install some kind of coating to your flooring, you’ve got to dry out the subfloor ... before you do that.” 

Throughout the video, Church emphasizes that he is not criticizing WatsonSeal or LumberKote. He stresses that LumberKote is not to blame for mold found at the Alabama jobsite, opining that whoever installed the LumberKote at the Alabama jobsite failed to first dry out the lumber. Church even describes LumberKote as “a fine product” that, “like everything” on the market, “is only as good as it’s installed.” At the end of the video, he cautions viewers not to “let some mold remediation crawlspace company come into your house and tell you that they can ... leave the wood wet and apply a LumberKote or an X70.”

WatsonSeal alleged that the YouTube video falsely “leads consumers to believe that both LumberKote and Anabec x70 require wood to be dried prior to application,” when in fact LumberKote has no such requirement.

The court reasoned that  core commercial speech means “speech that does no more than propose a commercial transaction,” while “[n]on-core commercial speech has no clear-cut definition.” Courts weigh three factors: (1) whether the material is “conceded to be” an advertisement; (2) whether the material contains a “reference to a specific product”; and (3) whether the speaker “has an economic motivation” for distributing the material. [Some versions of this look for advertising format in part 1.] No one factor, or combination of factors, is dispositive.

The accused YouTube video didn’t propose any commercial transaction, but merely advised that  

subfloor and floor joist sealers should be applied only to dry lumber. Nor was it concededly an ad. It made only a handful of references to the sealers, and didn’t promote one over the other. [Although the claims here indicate that’s the problem: it denied the existence of a competitor’s purported advantage.] “These limited references to specific products fall far short of bringing the video into the realm of commercial speech.” Finally,

Crawlspace Ninja’s economic motivation for distributing the video is, at most, incidental to the video’s central message. Crawlspace Ninja undoubtably has some economic motivation for uploading the video, given that the video provides the company with market exposure and includes hyperlinks to the company’s website and online store. But such an attenuated economic motivation is wholly insufficient to transform otherwise noncommercial speech into commercial speech.

Ultimately, “In sum, the video possesses many of the hallmarks of non-commercial speech. It communicates information, expresses opinion, recites the grievances of others, and encourages dialogue on matters of public concern.”

In addition, the video wasn’t plausibly made for the purpose of influencing customers to buy Crawlspace Ninja’s products. “Material created for the sole purpose of helping consumers make informed decisions is not commercial advertising subject to Lanham Act liability—even if the material is under-researched, inaccurate, or misleading.”