Investment Bank Fails In Attempt To Quash Discussion Of Its Telemarketing Efforts

from the calling-streisand dept

As courts across the country have endorsed the rule that, under section 230 of the Telecommunications Act of 1996, 47 U.S.C. § 230, the hosts of blogs and message boards are immune from suit for content that others post to their sites, companies that want an easy way to suppress such criticisms have struggled to find ways to bring suit anyway.  Especially among commercial litigators with limited exposure to intellectual property law, the trendy way to evade section 230 is to allege that criticism using the name of a company “tarnishes” its trademark, or that criticism using the name of an individual violates the right of publicity.  Another popular way to evade section 230 is to charge the web host with being an “information content provider.”

In its recent attempt to enjoin Julia Forte, the operator of 800Notes.com and whocallsme.com, from carrying posts that criticized its telemarketing techniques as well as it s business model, Houlihan Smith & Company tried both tacks — it claimed tarnishment and right of publicity violations, and it pointed to Google search results that included negative statements about it in the search snippets for the two web sites and alleged that Forte must be putting its name, and derogatory words such as “fraud” and “scam,” into her title tags and description meta tags.  Houlihan actually got a temporary restraining order (TRO) at first, by coming into court without any notice and bamboozling the state court judge with a long sworn complaint and supporting affidavits.  But when Forte found a lawyer (me) and removed to federal court, the judge quickly saw through Houlihan’s bluster and refused to give an injunction.  But how it lost is of particular interest.    (I discuss the oral opinion and the plaintiffs’ arguments in greater detail on the Consumer Law and Policy Blog, with links to the relevant documents from both sides)

In part, Houlihan lost because the federal judge, Virginia Kendall, could actually read the HTML code and could see that the complaint was based on lies.  (Not one of those judges who “don’t know technology” as Mike recently discussed).   As she remarked at the outset of the preliminary injunction hearing, one of her specialties as federal prosecutor was child pornography, and because porn purveyors are champions at manipulating code, she had to learn about it.  So, although Forte had supplied an affidavit explaining how to read the HTML code, Judge Kendall just pulled up the code herself and read it, told plaintiffs’ counsel that she couldn’t see any trademarks or defamatory words in the code that was before her, and asked if they had any other proof.  They didn’t.

On the trademark claims, Judge Kendall also rejected the motion for a preliminary injunction, but interestingly she did it without mentioning the First Amendment or the doctrine of prior restraint.  She first noted that under trademark law, just as a trademark may be used by a reseller to truthfully identify the name of the product that is being sold, so a critic may use the name of the trademark holder to truthfully identify the name of the company being criticized.  And as defined by the federal trademark “dilution” statute, dilution law only forbids uses of trademarks that injure the reputation of the trademark; it does not apply to uses that injure the reputation of the business.  Otherwise, any plaintiff could evade section 230 immunity just by changing the label of a defamation claim and calling it a trademark claim.

Representing Forte, we were sorry not to have won on First Amendment and prior restraint grounds, but Judge Kendall’s ruling may actually have a broader impact, protecting other hosts of interactive discussion sites, for her discussion of trademark law.  At this point, Judge Kendall has only given an opinion from the bench, explaining why she was not granting a preliminary injunction (we have ordered the transcript).  But she indicated that she would be issuing a written opinion.  It could be worth waiting for.

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Did Video Professor Spend Too Much On Lawyers And Not Enough On Its Product?

from the try-my-product... dept

Video Professor, a company well-known in these pages for its penchant for suing both its critics and message boards that hosted its critics, not to speak of trying to suppress competition by misusing trademark law, has apparently hit hard times, a TV station in Denver is reporting:

A person with knowledge of the situation told the 9Wants to Know investigators that Video Professor's approximately 50 employees were called to a meeting Monday and told they were being placed on unpaid furlough.

Phones at Video Professor's corporate office and customer service center were answered Thursday by an automated message notifying callers the offices were closed for the day and to call back at a later time.

A call to Video Professor's CEO and pitchman, John Scherer, drew a return call from a company spokesman who would not answer questions or elaborate beyond a one-sentence statement: "The company is going through a reorganization that involves some temporary furloughs."

Of course, every time it filed one of these cases it just drew more attention to consumer complaints about its sales practices, and stimulated journalists to look into the company. Video Professor rarely found such attention flattering, even in his hometown media.

Is there a lesson here? Did Video Professor spend so much on legal fees that it couldn't improve its product sufficiently to satisfy the market?

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Has the New York Times Run Afoul of the FTC's Endorsement Guides?

from the ethics,-ethics dept

Terry Heaton and Jeff Jarvis have commented recently on the conflicts of interest implicated by the adulatory coverage of the iPad in the New York Times and other media companies. They point first to the expectation that widespread adoption of the iPad will foster consumer adoption of a platform where media giants can show their content for a fee — thus enabling them to move more easily to a paywall revenue model.

Dan Gillmor shares these concerns, but notes an even more concrete conflict of interest — Apple’s advertising of the iPad consistently features a screenshot of the New York Times app, including of course the Times’ logo. Although Apple no doubt hopes to show that its device can be used to read the Times, surely attractive content to many of its target consumers, the image is also terrific advertising for the New York Times. Gillmor indicates that he has no doubt that Times’ reviewers truly believe the contents of their swooning coverage of the iPad, but argues that the benefit that the Times is receiving is a conflict of interest that ought to be overtly acknowledged and discussed by Times management. Yet, he reports, nobody from the Times has been willing to respond to his questions about the issue, such as whether the Times has received any compensation for the display of its logo on the iPad as shown in the ads. Gillmor raised these concerns a week ago, and the Times has yet to address publicly the possible conflict.

One may well wonder whether Apple or the Times has violated the Federal Trade Commission’s Guides Concerning the Use of Endorsements and Testimonials in Advertising. The placement of the Times’ logo in Apple’s ads is surely a thing of great value, and readers of the Times’ reviews might well want to take the provision of free advertising to the Times into account in deciding whether to give full credence to the objectivity of the Times’ news reports and reviews of the product. The benefit of having such advertising could well be a “material connection” that has to be disclosed both by Apple and by the Times under section 255.5 of the FTC Guides, as illustrated by Example 7.

Surely, what’s good for bloggers who praise products ought to be good for the New York Times and professional journalists.

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