Restraining order entered against website that encouraged contacting children of plaintiff’s employees

Plaintiff sued defendant (who was an unhappy customer of plaintiff) under the Lanham Act (for trademark infringement) and for defamation. Defendant had registered a domain name using plaintiff’s company name and had set up a website that, among other things, he used to impersonate plaintiff’s employees and provide information about employees’ family members, some of whom were minors.

Plaintiff moved for a temporary restraining order and the court granted the motion.

The Website

The website was structured and designed in a way that made it appear as though it was affiliated with plaintiff. For example, it included a copyright notice identifying plaintiff as the owner. It also included allegedly false statements about plaintiff. For example, it included the following quotation, which was attributed to plaintiff’s CEO:

Well of course we engage in bad faith tactics like delaying and denying our policy holders [sic] valid claims. How do you think me [sic], my key executive officers, and my board members stay so damn rich. [sic]

The court found that plaintiff had shown a likelihood of success on the merits of its claims.

Lanham Act Claim

It found that defendant used plaintiff’s marks for the purpose of confusing the public by creating a website that looked as though it was a part of plaintiff’s business operations. This was evidenced by, for example, the inclusion of a copyright notice on the website.

Defamation

On the defamation claim, the court found that the nature of the statements about plaintiff, plaintiff’s assertion that they were false, and the allegation that the statements were posted on the internet sufficed to satisfy the first two elements of a defamation claim, namely, that they were false and defamatory statements pertaining to the plaintiff and were unprivileged publications to a third party. The allegations in the complaint were also sufficient to indicate that defendant “negligently disregarded the falsity of the statements.”

Furthermore, the statements on the website concerned the way that plaintiff processed its insurance claims, which related to the business of the company and the profession of plaintiff’s employees who handled the processing of claims. Therefore, the final element was also satisfied.

First Amendment Limitations

The court’s limitation in the TRO is interesting to note. To the extent that plaintiff sought injunctive relief directed at defendant’s speech encouraging others to contact the company and its employees with complaints about the business, whether at the workplace or at home, or at public “ad hominem” comments, the court would not grant the emergency relief that was sought.

The court also would not prohibit defendant from publishing allegations that plaintiff had engaged in fraudulent or improper business practices, or from publishing the personally identifying information of plaintiff’s employees, officers, agents, and directors. Plaintiff’s submission failed to demonstrate to the court’s satisfaction how such injunctive relief would not unlawfully impair defendant’s First Amendment rights.

The did, however, enjoin defendant from encouraging others to contact the children and other family members of employees about plaintiff’s business practices because contact of that nature had the potential to cause irreparable emotional harm to those family members, who have no employment or professional relationship with defendant.

Symetra Life Ins. Co. v. Emerson, 2018 WL 6338723(D. Maine, Dec. 4, 2018)

Facebook did not violate HIPAA by using data showing users browsed healthcare-related websites

Plaintiffs sued Facebook and other entities, including the American Cancer Society, alleging that Facebook violated numerous federal and state laws by collecting and using plaintiffs’ browsing data from various healthcare-related websites. The district court dismissed the action and plaintiffs sought review with the Ninth Circuit. On appeal, the court affirmed the dismissal.

The appellate court held that the district court properly determined that plaintiffs consented to Facebook’s data tracking and collection practices.

Plaintiffs consented to Facebook’s terms

It noted that in determining consent, courts consider whether the circumstances, considered as a whole, demonstrate that a reasonable person understood that an action would be carried out so that their acquiescence demonstrates knowing authorization.

In this case, plaintiffs did not dispute that their acceptance of Facebook’s Terms and Policies constituted a valid contract. Those Terms and Policies contained numerous disclosures related to information collection on third-party websites, including:

  • “We collect information when you visit or use third-party websites and apps that use our Services …. This includes information about the websites and apps you visit, your use of our Services on those websites and apps, as well as information the developer or publisher of the app or website provides to you or us,” and
  • “[W]e use all of the information we have about you to show you relevant ads.”

The court found that a reasonable person viewing those disclosures would understand that Facebook maintained the practices of (a) collecting its users’ data from third-party sites and (b) later using the data for advertising purposes. This was “knowing authorization”.

“But it’s health-related data”

The court rejected plaintiffs claim that—though they gave general consent to Facebook’s data tracking and collection practices—they did not consent to the collection of health-related data due to its “qualitatively different” and “sensitive” nature.

The court did not agree that the collected data was so different or sensitive. The data showed only that plaintiffs searched and viewed publicly available health information that could not, in and of itself, reveal details of an individual’s health status or medical history.

This notion supported the court’s conclusion that the use of the information did not violate the Health Information Portability and Accountability Act of 1996 (“HIPAA”) and its California counterpart.

The court held that information available on publicly accessible websites stands in stark contrast to the personally identifiable patient records and medical histories protected by HIPAA and other statutes — information that unequivocally provides a window into an individual’s personal medical history.

Smith v. Facebook, Inc., 2018 WL 6432974 (9th Cir. Dec. 6, 2018)

Willie Nelson meme on Facebook was not clearly fair use

Plaintiff photographer sued website publisher (who also maintained a Facebook page to go with the website) for copyright infringement. Plaintiff claimed defendant infringed plaintiff’s copyright in a photo plaintiff took of Willie Nelson when defendant posted the photo on Facebook with a cultural message superimposed over the photo in the form of a meme.

Defendant moved to dismiss for failure to state a claim, on the basis of fair use. The court denied the motion, applying the fair use test set forth in 17 USC 109.

The court’s holding turned essentially on the idea that there were not yet enough facts in the record to support a finding of fair use, and that such a determination should be made later in the case, e.g., at summary judgment. For example, plaintiff had argued that defendant’s purpose was not transformative, and that it was in fact the same purpose plaintiff had for publishing the photo, namely, to identify Willie Nelson.

Philpot v. Alternet Media, Inc., 2018 WL 6267876 (N.D. Cal. Nov. 30, 2018)

Attorney-client privilege protected defendants’ lawyers’ communications with PR firm hired to combat negative online treatment

In defending intellectual property claims over video games, defendants’ law firm hired a public relations firm to assist it with “input on legal strategy, including regarding initial pleadings and communications about the case to counteract [plaintiff’s] false and negative statement.” Defendants were allegedly being targeted by negative online attacks by the plaintiff.

During discovery, plaintiff served a subpoena on the hired PR firm, seeking, among other things, all documents relating to the communciations between the PR firm and defendants’ counsel.

Defendants sought to quash the subpoena, arguing the information was protected from disclosure under the attorney-client privilege. The court quashed the subpoena.

It found that because defendants’ counsel (and not defendants themselves) hired the PR firm to provide PR counseling specifically for the purposes of litigation strategy, the attorney-client privilege extended to the communications between the PR firm and defendants’ counsel pertaining to “giving and receiving legal advice about the appropriate response to the lawsuit and making related public statements.”

Specifically, these communications were

  • confidential communications made
  • between lawyers and public relation consultants
  • hired by the lawyers to assist them in dealing with the media in cases or litigation
  • that were made for the purpose of giving or receiving advice
  • directed at handling the client’s legal problems that were undeniably protected by the attorney client privilege.

The court similarly found that the attorney work product doctrine extended to the communications exchanged between the PR firm and defendants’ counsel. As could be seen by the privilege log, documents such as a “draft Answer and Counterclaim” and a “draft press release” would contain “the mental impressions, conclusions, opinions, or legal theories of a party’s attorney or other representative concerning the litigation.” Moreover, documents such as a “draft Answer and Counterclaim” and a “draft press release” were “prepared in anticipation of litigation or for trial.” Defendants’ counsel also did not waive their work-product protection when they shared otherwise valid work product (e.g. draft Answers or Counterclaims) with the PR firm for assistance because the communications were intended to be confidential.

Stardock Systems, Inc. v. Reiche, 2018 WL 6259536 (N.D.Cal. Nov. 30, 2018)

See also: Emails sent through Yahoo account using work computer protected under attorney-client privilege

Bittorrent copyright plaintiff got much gentler treatment in New York federal court

Less than a week after a federal judge in Washington D.C. lambasted serial copyright plaintiff Strike 3 Holdings, calling it a “troll” and characterizing its tactics as “smacking of extortion,” another federal judge – this time in New York – gave Strike 3 much gentler treatment, finding that “there is no evidence to support Defendant’s conclusory claims that Plaintiff is engaging in copyright troll litigation tactics in the instant lawsuit”.

In the case of Strike 3 Holdings, LLC v. Doe, — F.Supp.3d —, 2018 WL 6166873 (W.D.N.Y, Nov. 26, 2018), the court denied the John Doe defendant’s motion to quash a subpoena sent to Doe’s ISP seeking to discover his identity so that plaintiff could serve him with the complaint.

The court did, however, include a nod to Doe’s privacy interests in ordering that he be permitted to proceed anonymously in the lawsuit. It modified the protective order to provide that the defendant not be referred to using his initials, but instead as “John Doe subscriber assigned IP address 69.204.6.161” in any public filings.

Strike 3 Holdings, LLC v. Doe, — F.Supp.3d —, 2018 WL 6166873 (W.D.N.Y, Nov. 26, 2018)

Evan Brown is a Chicago attorney helping clients in matters dealing with copyright, technology, the internet and new media. Call him at (630) 362-7237, send email to ebrown [at] internetcases dot com, or follow him on Twitter @internetcases

Summary judgment awarded to luxury brand against cybersquatter under ACPA

Plaintiff (the luxury brand Chanel) sued defendant under the Anti-Cybersquatting Consumer Protection Act (15 U.S.C. 1125(d)) (“ACPA”) over defendant’s registration and use of the disputed domain name <chanelgraffiti.com>. Plaintiff moved for summary judgment on its ACPA claim. The court granted the motion.

Distinctiveness of plaintiff’s mark

Defendant did not contest that plaintiff’s CHANEL mark was distinctive at the time the disputed domain name was registered. Plaintiff had put forth evidence that it owned registered trademarks for the mark CHANEL, and the court noted that registered trademarks are presumed to be distinctive.

Confusing similarity

The court found that the disputed domain name was confusingly similar to plaintiff’s mark. Citing 5 McCarthy on Trademarks § 25:78 (4th ed. 2002), the court held that “[i]n the cybersquatting context, ‘confusingly similar’ must simply mean that the plaintiff’s mark and the defendant’s domain name are so similar in sight, sound, or meaning that they could be confused.” The court found that defendant offered no admissible evidence to suggest that chanelgraffiti.com was not confusingly similar to the mark CHANEL.

Even with the additional word “graffiti” appearing within the disputed domain name, the court found that the similarities between the CHANEL mark and the disputed domain name were “instantly apparent because of the inclusion of the word” CHANEL in the disputed domain name. Moreover, defendant did not claim that the term “chanel” was meant to reference anything other than the luxury brand. Similarly, the court found that the including of the term “graffiti” did not self-evidently connote a type of criticism or disregard for the brand that rises to a meaningful level of distinction.

Bad faith intent

The court also found that there was no reasonable dispute that defendant had a bad faith intent to profit from the CHANEL mark. It found that bad faith could be inferred from defendant’s intent to divert consumers from plaintiff’s online location to a site accessible under the disputed domain name that could harm the goodwill represented by plaintiff’s mark, either for commercial gain or with the intent to tarnish or disparage plaintiff’s mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site.

The court found that the disputed domain name unquestionably advertised products containing plaintiff’s mark and had product descriptions that read “CHANEL inspired graffiti bags.” Defendant disputed that he had any control over the content of the site, stating that he did not operate the website and had no connection to the disputed domain name outside of registering it.

Whether and to what extent the site was used or operated by defendant, however, was beside the point under ACPA. Defendant did not dispute that his registration of the disputed domain name, regardless of the content of the site, would divert customers from plaintiff’s website by creating a likelihood of confusion as to the affiliation of defendant’s site, which was a “quintessential example of bad faith within the meaning of ACPA.”

Chanel, Inc. v. Richardson, 2018 WL 6097865 (S.D.N.Y. November 20, 2018)

Video game elements did not infringe copyright

Plaintiff sued defendant claiming that certain visual elements of defendant’s digital video slot machine game infringed the copyright in elements of plaintiff’s game. Defendant moved for summary judgment on the copyright infringement claims. The court granted the motion.

It held that no reasonable factfinder could find the images in defendant’s games to be substantially similar to the protectible expression in plaintiff’s copyrighted material.

It found that the games were similar only at the conceptual level. Both games had 3 rows and 5 columns of spinning squares, and both included among the spinning squares images that corresponded to high-value playing cards (A, K, Q, J, and 10). But those were common elements in slot machine games. The court found they would likely qualify as scènes à faire and, one way or the other, were not protectible elements.

And both games used images of cats. That, however, according to the court, was where the similarities ended. In the court’s view, the cats in defendant’s game looked nothing like those in plaintiff’s images. Plaintiff’s cats were shown as full bodies, in active or playful poses. Some were partly outside the square frame. They moved when they were part of a winning combination. Perhaps most importantly, the court found, they were somewhat cartoon-like, and they had outsized eyes.

Defendant’s cats, by contrast, were shown in headshots only on the main game screens (with the exception of some bonus images), and they were fully contained within the square frame. The cats were dour and serious and were not engaged in any apparent activity, and they were more realistic images of cats. And there were other equally significant differences between the two sets of images.

GC2 Inc. v. International Game Technology, 2018 WL 5921315 (N.D.Ill. November 12, 2018)

UDRP Panel found no bad faith, but gave the Complainant additional opportunity to prove its case

[This post originally appeared on UDRP Tracker.]

The Complainant established its business beginning in March 2018 and sought to acquire the disputed domain name <zoyo.com> through communications with the Respondent facilitated by the registrar. After the Respondent demanded $10,000 for the disputed domain name – which was the same amount the Respondent claimed to have paid for the disputed domain name “a few years ago” – the Complainant sought relief from a single-member WIPO Panel under the UDRP.

The Panel denied the Complaint, finding that the Complainant failed to show bad faith use and registration under the UDRP.

The evidence on this point was controverted. The Respondent claimed (not in a formal response but through the above-noted negotiations) that he acquired the disputed domain name years ago, and the WhoIs data showed it was first registered in 2002. But the Complainant – looking to the “last updated” field in the WhoIs data, claimed that the Respondent acquired it in April 2018.

The Panel found that “failed to establish that the Respondent’s statement in response to the Complainant’s enquiry that it acquired the disputed domain name ‘some years ago’ [was] false.”

It further noted that the Complainant stated that it required the disputed domain name for use as part of the expansion and development of its business. The Panel surmised that this could indicate that the Complaint was filed as a part of the Complainant’s business expansion plan and perhaps indicated that the Complainant did not fully understand the nature and purpose of the UDRP.

So the Panel’s decision left open the possibility of further action if the facts would support them. The Panel determined that if the Complainant could prove that the Respondent did not acquire the disputed domain name until April 2018, at a time when there was considerable activity and perhaps publicity in relation to the establishment of the Complainant’s group, that might paint a different picture. Accordingly, on the basis of the evidence before the Panel on the present record, the Panel denied the Complaint but without prejudice to the filing of a new Complaint should evidence become available to support the Complainant’s contentions concerning the Respondent’s identity and acquisition of the disputed domain name.

Zoyo Capital Limited v. A. Zoyo, WIPO Case No. D2018-2234

Anonymous online trademark infringer can be identified through subpoena to domain registrar

Plaintiff trademark owner noticed that an unknown party was using plaintiff’s mark to sell email templates online without plaintiff’s authorization. After the unknown infringer’s domain name registrar (the case does not say whether it was also the web host) refused to take down the allegedly infringing content, plaintiff filed suit against the “John Doe” defendant. Since it needed to learn the identity of the defendant to move the case forward, plaintiff asked the court for early discovery that would permit plaintiff to send a subpoena to the registrar that would compel the registrar to identify its customer.

The court granted the motion for leave to take early discovery. It applied the standard set out in OpenMind Solutions, Inc. v. Does 1-39, 2011 WL 4715200 (N.D. Cal. Oct. 7, 2011) (citing Columbia Ins. Co. v. seescandy.com, 185 F.R.D. 578-80 (N.D. Cal. 1999)), which requires that prior to early discovery being permitted, a plaintiff must show:

  • Plaintiff can identify the missing party with sufficient specificity such that the court can determine that defendant is a real person or entity who could be sued in federal court;
  • Plaintiff has identified all previous steps taken to locate the elusive defendant;
  • Plaintiff’s suit against defendant could withstand a motion to dismiss; and
  • Plaintiff has demonstrated that there is a reasonable likelihood of being able to identify defendant through discovery such that service of process would be possible.

On the first factor, plaintiff had alleged that the Doe defendant owned or was using the specified domain name associated with the offending website to sell email templates using plaintiff’s trademark.

As for the second factor, plaintiff had contacted the domain name registrar, and asked that the information be taken down, but the registrar refused to do so. The domain name alone was not sufficient for plaintiff to identify the Doe defendant, and plaintiff had no other means to identify the Doe defendant besides the registrar’s record which it refused to provide without a subpoena.

Regarding the third factor, plaintiff made the required showing by alleging that it holds a valid trademark for its mark that the Doe defendant used to sell products on the offending website.

And concerning the fourth factor, the plaintiff had alleged that the registrar was the registrar for the domain name associated with the offending website and that it had stated it would pass the complaint information on to the website owner. The court found that plaintiff had thus demonstrated that a subpoena to the registrar should reveal the identity of the Doe defendant.

One should note this court’s willingness to permit early discovery as being in contrast to another court’s recent apparent disdain for a copyright troll plaintiff seeking the identity of an anonymous online infringer.

Marketo, Inc. v. Doe, 2018 WL 6046464 (N.D.Cal. Nov. 19, 2018)

Facebook and iOS game developer’s browsewrap terms of service were not enforceable

Plaintiffs sued defendant game developer in court alleging defendant’s game (Available on Facebook and via an iOS app) constituted illegal gambling in violation of Washington state law, and that they should get back the money they spent on virtual chips bought in-game.

Defendant moved to compel arbitration. The court denied the motion. It held that the game did not present its terms of service in a manner that would place users on notice of the provisions. Since the plaintiffs never effectively agreed to resolve their claims through arbitration, it was proper to allow the case to stay in court.

The court noted a number of problems with the game’s “browsewrap” agreement.

When a user would first access the Facebook app, the “App Terms” link on the initial pop-up window was located far below the “Continue” button in small grey text. The court found that the pop-up window’s main purpose was to gain permission for data sharing between Facebook and defendant, and was not a point traditionally associated with binding terms unrelated to the data sharing itself.

When a user would first download the iPhone app, the app page contained a link to the “License Agreement” that could only be viewed after significant scrolling. Compounding the problem was the fact that a user could download the app directly from the search results list within the App Store without ever accessing the particular app page. So neither the initial link on Facebook or on the mobile app was coupled with a notification informing a user that downloading or playing defendant’s game created a binding agreement.

The hyperlinks within the game itself also did not put a user on inquiry notice.

On Facebook, the “Terms of Use” hyperlink was located at the very bottom of the gameplay screen in small font next to several other links, and was not visible unless a user would scroll down.

On the mobile app, the link to the Terms of Use was located within a settings menu that a player might never have even needed to access. Furthermore, links that were available only via the settings menu were not “temporally coupled” with a discrete act of manifesting assent, such as downloading an app or making a purchase, and were thus less likely to put a reasonable user on inquiry notice.

Benson v. Double Down Interactive, LLC, 2018 WL 5921062 (W.D.Wa. Nov. 13, 2018)

See also: