Tag Archives: fraud

Court rules against woman accused of fraudulent misrepresentation for creating fake internet boyfriend

Bonhomme v. St. James, — N.E.2d —, (Ill.App. 2 Dist March 10, 2011.)

Perhaps the most famous legal case about someone creating a false persona online and using that to dupe someone is the sad case of Megan Meier, which resulted in the (unsuccessful) prosecution of Lori Drew. The facts of that case were hard to believe — a woman created the identity of a teenage boy from scratch by setting up a bogus MySpace profile, then engaged in sustained communications with young Megan, leading her to believe the two of them had a real relationship. After the “boy” broke that relationship off, Megan committed suicide.

Here’s a case that has not seen quite as much tragedy, but the extent and the nature of the alleged deception is just as incredible, if not more so, than that undertaken by Lori Drew.

The appellate court of Illinois has held that a woman who was allegedly the victim of an elaborate ruse, perpetrated in large part over the internet, can move forward with her fraudulent misrepresentation claim against the woman who created the fake persona of a “man” who became her “boyfriend”. The story should satisfy your daily requirement of schadenfreude.

Plaintiff first got to know defendant Janna St. James back in 2005 in an online forum for fans of the HBO show Deadwood. A couple months after they first began talking online, defendant set up another username on the Deadwood site, posing as a man named “Jesse”. Plaintiff and this “Jesse” (which was actually defendant) struck up an online romance which apparently got pretty intense.

To add detail to the ploy, defendant invented no less than 20 fictitious identities — all of whom were purportedly in “Jesse’s” social or family circle — which she used to communicate with plaintiff.

The interactions which took place, both online and through other media and forms of communication (e.g., phone calls using a voice disguiser) were extensive. “Jesse” and plaintiff planned to meet up in person once, but “Jesse” cancelled. Plaintiff sent $10,000 worth of gifts to “Jesse” and to the other avatars of defendant. It even went so far as “Jesse” and plaintiff planning to move to live with one another in Colorado. But before that could happen, defendant pulled the plug on “Jesse” — he “died” of liver cancer.

Some time after that, defendant (as herself) flew from Illinois to California to visit plaintiff. During this trip, some of plaintiff’s real friends discovered the complex facade. Plaintiff sued.

The trial court dismissed plaintiff’s fraudulent misrepresentation claim. Plaintiff sought appellate review. On appeal, the court reversed, sending the case for fraudulent misrepresentation back to the trial court.

The court said some interesting things about whether the facts that plaintiff alleged supported her claim for fraudulent misrepresentation. A plaintiff suing for fraudulent misrepresentation under Illinois law must show: (1) a false statement of material fact; (2) knowledge or belief of the falsity by the party making it; (3) intention to induce the plaintiff to act; (4) action by the plaintiff in justifiable reliance on the truth of the statement; and (5) damage to the plaintiff resulting from that reliance.

Defendant made a strange kind of circular argument as to the first element — falsity of a material fact. She asserted that plaintiff’s claim was based more on the fiction that defendant pursued rather than specific representations. And the concepts of “falsity” and “material fact,” defendant argued, should not apply in the context of fiction, which does not purport to represent actuality. So defendant essentially argued that so long as she knew the masquerade was fiction, there could be no misrepresentation. The court recognized how invalid this argument was. The logic would shift the element of reliance on the truth of the statement from the injured party to the utterer.

Though the appellate court ruled in favor of plaintiff, the judges disagreed on the question of whether plaintiff was justified in relying on the truth of what defendant (as “Jesse,” as the other created characters, and herself) had told plaintiff. One judge dissented, observing that “[t]he reality of the Internet age is that an online individual may not always be — and indeed frequently is not — who or what he or she purports to be.” The dissenting judge thought it simply was not justifiable for plaintiff to spend $10,000 on people she had not met, and to plan on moving in with a man sight-unseen. (In so many words, the judge seemed to be saying that plaintiff was too gullible to have the benefit of this legal claim.)

The majority opinion, on the other hand, found the question of justifiable reliance to be more properly determined by the finder of fact in the trial court. For the motion to dismiss stage, plaintiff had alleged sufficient facts as to justifiable reliance.

(Congratulations to my friend Daliah Saper for her good lawyering in this case on behalf of plaintiff.)

State law spam claim in federal court not pled with required particularity

Hypertouch, Inc. v. Azoogle.com, Inc., 2010 WL 2712217 (9th Cir. July 9, 2010)

Pleading in federal court is generally a straightforward matter. Federal Rule of Civil Procedure 8 requires only that the plaintiff set forth a short and plain statement as to why that party is entitled to relief. But in cases involving fraud, there is a heightened pleading standard imposed by Rule 9.

In the case of Hypertouch, Inc. v. Azoogle.com, Inc., the plaintiff sued the defendants in federal court over almost 400,000 allegedly spam email messages. Hypertouch brought claims under California law (California Business and Professions Code § 17529.5(a)) but did not meet the heightened pleading standard of Rule 9. So the district court dismissed the case.

Plaintiff appealed to the Ninth Circuit. On review, the appellate court affirmed. It found that not only does the California statute speak in terms of commercial e-mail advertisements that contain “falsified,” “misrepresented,” “forged,” or misleading information — terms common to fraud allegations — but the complaint repeatedly described the advertisements and their content as “fraudulent.” The court held that plaintiff could not circumvent the requirements of the Rules by arguing that it did not plead all of the allegations sufficiently to set forth a claim of fraud.

It’s important to note that the court made clear, despite its holding, that it was not articulating a standard for pleading under this California statute. It merely found that in the circumstances of this case, the claim was not pled with the requisite particularity.

UDRP loser did not commit fraud on USPTO by saying it was exclusive user of mark

Salu, Inc. v. Original Skin Store, Slip Copy, 2010 WL 1444617 (E.D.Cal. April 12, 2010)

This is kind of a wonky trademark/domain name case. So if that’s not in your wheelhouse, don’t strain yourself.

Plaintiff sued defendant for infringement of plaintiff’s registered trademark. Defendant moved for summary judgment, claiming that the asserted trademark registration was obtained by fraud on the United States Patent and Trademark Office. Specifically, defendant argued that plaintiff misrepresented when it told the USPTO that its SKINSTORE mark had “acquired distinctiveness” (i.e., was not merely descriptive of the goods and servcies) by means of “substantially exclusive” use in commerce.

The court denied the motion for summary judgment.

Defendant had argued that plaintiff committed fraud by saying its use was exclusive. It pointed to a case under the Uniform Domain Name Dispute Resolution Policy (UDRP) that the plaintiff had brought against the user of the domain name eskinstore.com. The WIPO panel in that case refused to find a clear case of cybersquatting.

In this case, defendant argued that plaintiff’s earlier unsuccessful UDRP challenge to a similar mark showed there were third parties using the mark and therefore the claim of exclusivity was fraudulent.

The court rejected this argument, noting that the plaintiff had undertaken significant efforts to protect its exclusive rights in the trademark. (It had sent out an astounding 300 cease and desist letters in the past couple of years alone!)

Moreover, and more importantly, the court noted that the WIPO panel hearing the UDRP complaint specifically declined to determine cybersquatting had occurred, finding it to be a question of infringement better addressed by the United States courts.

Apple vs. the Big Apple charity over apple-shaped logos

Apple, Inc. is seeing red over New York City’s attempts to register a trademark for green-friendly services, and the dispute challenges one of Apple’s trademark registrations for its ubiquitous logo.

Apple comparison

Apple has filed an Opposition (No. 91/181,984) with the United States Patent and Trademark Office’s Trademark Trial and Appeal Board against NYC & Company, Inc.’s attempts to register the “Infinite Loop Apple” design mark (shown above at left). Apple asserts that use of NYC’s mark would likely cause confusion with Apple’s famous logo (shown at right) especially given the presence of Apple’s flagship Manhattan retail location.

NYC’s application states the mark is to be used for, among other things, promoting “education on environmentally friendly policies and practices of the City of New York” (See Application Nos. 77/179,942 and 77/179,968). Apple claims that confusion would be likely because of the similarities in appearance and commercial impression between the marks, and because certain of the goods and services recited by NYC are identical or highly related to goods and services offered under the Apple mark.

NYC answered the Notice of Opposition and filed a Counterclaim seeking to cancel Apple’s registration for the logo as used in connection with “mugs, dishes, drinking glasses, and wine glasses.” NYC claims that Apple procured the registration through fraud, because it knowingly misrepresented that it was using the mark in connection with those goods on its Declaration of Use and Renewal Application under sections 8 & 9 of the Trademark Act, when it fact no such use was being made. If the Board finds such fraud, Apple faces cancellation of its entire registration for those goods. Fraud has been a recurring issue before the TTAB of late, as evidenced by this recent post from John Welch’s TTABlog.

Apple, of course, denies the allegations of fraud. In any event, if the cancellation is successful, Apple’s most important marks (i.e., for computer hardware) would remain intact.

Time will tell whether Apple’s efforts to protect its mark will bear fruit. The company probably feels even more incentive to keep others from trading on its reputation and goodwill after hearing about this recent study, which found that people who see the Apple logo may feel more creative.