Tag Archives: misrepresentation

Yelp successful in defamation and deceptive acts and practices case

Reit v. Yelp, Inc., — N.Y.S.2d —, 2010 WL 3490167 (September 2, 2010)

Section 230 of Communications Decency Act shielded site as interactive computer service; assertions regarding manipulation of reviews was not consumer oriented and therefore not actionable.

As I am sure you know, Yelp! is an interactive website designed to allow the general public to write, post, and view reviews about businesses, including professional ones, as well as restaurants and other establishments.

Lots of people and businesses that are the subject of negative reviews on sites like this get riled up and often end up filing lawsuits. Suits against website operators in cases like this are almost always unsuccessful. The case of Reit v. Yelp from a New York state court was no exception.

Plaintiff dentist sued Yelp and an unknown reviewer for defamation. He also sued Yelp under New York state law for “deceptive acts and practices”. Yelp moved to dismiss both claims. The court granted the motion.

Defamation claim – protection under Section 230

Interactive computer service providers are immunized from liability (i.e., they cannot be held responsible) for content that is provided by third parties. So long as the website is not an “information content provider” itself, any claim made against the website will be preempted by the Communications Decency Act, at 47 U.S.C. 230.

In this case, plaintiff claimed that Yelp selectively removed positive reviews of his dentistry practice after he contacted Yelp to complain about a negative reivew. He argued that this action made Yelp an information content provider (doing more than “simply selecting material for publication”) and therefore outside the scope of Section 230′s immunity. The court rejected this argument.

It likened the case to an earlier New York decision called Shiamili v. Real Estate Group of New York. In that case, like this one, an allegation that a website operator may keep and promote bad content did not raise an inference that it becomes an information content provider. The postings do not cease to be data provided by a third party merely because the construct and operation of the website might have some influence on the content of the postings.

So the court dismissed the defamation claim on grounds of Section 230 immunity.

Alleged deceptive acts and practices were not consumer oriented

The other claim against Yelp — for deceptive acts and practices — was intriguing, though the court did not let it stand. Plaintiff alleged that Yelp’s Business Owner’s Guide says that once a business signs up for advertsing with Yelp, an “entirely automated” system screens out reviews that are written by less established users.

The problem with this, plaintiff claimed, was that the process was not automated with the help of algorithms, but was done by humans at Yelp. That divergence between what the Business Owner’s Guide said and Yelps actual practices, plaintiff claimed, was consumer-oriented conduct that was materially misleading, in violation of New York’s General Business Law Section 349(a).

This claim failed, however, because the court found that the statements made by Yelp in the Business Owner’s Guide were not consumer-oriented, but were addressed to business owners like plaintiff. Without being a consumer-oriented statement, it did not violate the statute.

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Sender of DMCA takedown notice should consider fair use

Lenz v. Universal Music Corp., No. 07-3783 (N.D. Cal. August 20, 2008). [Download the opinion]

Hat tip to Joe Gratz for breaking this story.

One of the things that a person sending a takedown notice under the Digital Millennium Copyright Act (DMCA) has to swear to is that he or she “has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law.” 17 U.S.C. §512(c)(3)(A) (emphasis added). If the sender of the takedown notice makes a knowingly material misrepresentation as to whether the law authorizes the use of the material, the party whose content is taken down can sue under 17 U.S.C. §512(f). This serves as a backstop against DMCA takedown abuses.

Suppose that the complained-of work may be protected by fair use. If the sender is deliberately ignorant of that possibility, can that result in a misrepresentation that runs afoul of 512(f)? That question had not been answered before today, when the U.S. District Court for the Northern District of California said “yes.”

The case is Lenz v. Universal Music Corp., No. 07-3783. You may have heard of this case before, as it’s the one where the mom filmed her daughter dancing to Prince’s “Let’s Go Crazy” and uploaded that to YouTube, only to have it removed after a Universal DMCA takedown notice. Lenz sued under §512(f) and Universal moved to dismiss.

In its motion to dismiss, Universal contended that copyright owners cannot be required to evaluate the question of fair use prior to sending a takedown notice because fair use is merely an excused infringement of a copyright rather than a use authorized by the copyright owner or by law.

But the court disagreed. “[T]he fact remains that fair use is a lawful use of a copyright. Accordingly, in order for a copyright owner to proceed under the DMCA with ‘a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law,’ the owner must evaluate whether the material makes fair use of the copyright.” The court went on to say that “[a]n allegation that a copyright owner acted in bad faith by issuing a takedown notice without proper consideration of the fair use doctrine thus is sufficient to state a misrepresentation claim pursuant to Section 512(f) of the DMCA.”

Because Lenz’s complaint contained allegations of this nature, it was detailed enough to pass Twombly muster [Bell Atlantic Corp. v. Twombly, --- U.S. ----, 127 S. Ct. 1955, 1964-65 (2007)], and the case moves forward.

The practical effect of this decision is that one sending a DMCA takedown notice without considering whether the person who posted the content is making a fair use, does so at his or her peril. Let’s be clear — the decision does not mean that sending a takedown notice in a situation where it turns out to be a fair use will automatically result in a finding of §512(f) misrepresentation. But it does add another implicit item on the checklist of the takedown notice sender.

Online purchaser not entitled to $1 hard drives

Perez v. Luu, — S.W.3d —-, (Tex. App. November 1, 2007).

Perez sued Luu in Texas state court after Luu refused to fulfill Perez’s order of 100 hard drives that Perez ordered from Luu online. Luu’s website mistakenly listed the price of the hard drives as $1 each, when in reality Luu charged closer to $1,200 apiece.

The matter proceeded to trial and the court entered judgement in favor of Luu. Perez appealed, and the appellate court affirmed. It held that Perez failed to establish a violation of the Texas Deceptive Trade Practices Act.

The court determined that the relevant portions of the statute [Tex. Bus. & Com. Code Sec. 17.41 et seq.] required a showing of intent to misrepresent the price of goods being offered for sale. Luu introduced evidence showing that the $1 pricing was merely a mistake — the website was new and the developer had previously used a $1 quantity for testing purposes. Moreover, there was language on Luu’s website which gave him the right to correct any errors in pricing.

Beaded jewelry website tussle turns into lawsuit alleging bogus DMCA takedown notice

Does a hosting provider breach the contract with its customer when it responds to a DMCA takedown notice concerning its customer’s content? The plaintiff in this case would have you believe that. [Download the Complaint]

Jades Creations, LLC v. White, No. 07-50225 (N.D. Ill., Filed November 16, 2007)

Rockford, Illinois-based Jades Creations, LLC has filed suit in federal court against its competitor in the beaded jewelry industry over what Jades claims were unmeritorious takedown notices sent to Earthlink under the Digital Millennium Copyright Act.

Back in October, SW Creations sent a DMCA takedown notice to Earthlink, the host of Jades Creations’ Web site, claiming that material located thereupon infringed SW Creations’ copyright and trademark rights. (Never mind the DMCA does not apply to trademarks.) Jades, of course, disputed the fact that there was infringing content on its site, and successfully had access to its site restored after sending Earthlink a counternotification.

But Jades didn’t stop there. Obviously perturbed by what it believed to be an unwarranted takedown notice that caused it to lose business, it filed a lawsuit in the Northern District of Illinois, asking for a declaration of non-infringement and asserting various tort claims for the takedown notice.

One of the claims is for tortious interference with the contract between Jades and her hosting provider Earthlink. This is intriguing, but it looks like there could be a bit of a hurdle here.

Under Illinois law, a successful plaintiff in a tortious interference with contract action has to prove, among other things, that an actual breach of contract occurred because of the defendant’s conduct. Belden Corp. v. InterNorth, Inc., 413 N.E.2d 98 (Ill. App. 1st Dist. 1980). Did Earthlink breach the contract with its hosting customer when it obeyed the demands of a third party DMCA takedown notice?

Jades alleges that this was a breach (see paragraph 60 of the complaint). Do you agree?

Earthlink’s terms of service can be found here. And remember, 17 U.S.C. 512(g) provides that “a service provider shall not be liable to any person for any claim based on the service provider’s good faith disabling of access to, or removal of, material or activity claimed to be infringing or based on facts or circumstances from which infringing activity is apparent, regardless of whether the material or activity is ultimately determined to be infringing.”