Tag Archives: tortious interference

Website drives off with Section 230 win over Chevy dealer

Nemet Chevrolet sued the website Consumeraffairs.com over some posts on that website which Nemet thought were defamatory and interfered with Nemet’s business expectancy. The website moved to dismiss the lawsuit, claiming that the Communications Decency Act at 47 U.S.C. 230 immunized the website from the lawsuit.

But when we're driving in my Malibu, it's easy to get right next to you. . . . "

The court dismissed the action on Section 230 grounds and Nemet sought review of the dismissal with the Fourth Circuit Court of Appeals. The appellate court affirmed the dismissal.

Section 230 precludes tort plaintiffs from holding interactive computer services (like website operators) liable for the publication of information created and developed by others. Most courts (like the Fourth Circuit) consider Section 230′s protection to be a form of immunity for website operators from lawsuits arising over third party content.

But that immunity disappears if the content giving rise to the dispute was actually created or developed by the operator and not by a third party. In those circumstances the operator also becomes an information content provider. And there is no Section 230 immunity for information content providers.

That’s where Nemet steered its argument. It alleged that the website was a non-immune information content provider that created and developed the offending content.

Nemet raised two general points in its argument. It claimed that the website’s structure and design elicited unlawful content, and that the site operator contacted individual posters to assist in revisions to the content. It also claimed that the site operator simply fabricated a number of the offending posts.

Applying the pleading standards on which the Supreme Court recently elaborated in Ashcroft v. Iqbal, the court found Nemet’s claims that the site operator was actually an information content provider to be implausible.

As for the structure and design argument, the court differentiated the present facts from the situation in Fair Housing Council of San Fernando Valley v. Roommates. com. In Roommates.com, the court found that the website was designed to elicit information that would violate the Fair Housing Act. In this case, however, there was nothing unlawful in inviting commentary on goods or services, even if it was for the purposes of drumming up business for plaintiffs’ class action lawyers.

As for the other arguments, the court simply found that the allegations did not nudge the claims “across the line from conceivable to plausible.” The court found the argument that the website fabricated the posts to be particularly not creditable, in that Nemet’s allegations relied mainly on an absence of information in its own records that would connect the post to an actual customer.

On balance, this decision from the Fourth Circuit shows that Section 230 immunity is as alive and well at the end of the “oughts” as it was a dozen years before when the Fourth Circuit became the first federal appellate court to consider the scope of the section’s immunity. That 1997 decision in the case of Zeran v. AOL remains a watershed pronouncement of Section 230′s immunity.

Congratulations to my friend and fellow blogger Jonathan Frieden’s impressive win in this case.

And Happy New Year to all the readers of Internet Cases. Thanks for your continued loyal support.

Chevy Malibu photo courtesy Flickr user bea-t under this Creative Commons license.

Pop-ups don’t amount to unfair competition in Utah case

Nor do they give rise to tortious interference.

Overstock.com, Inc. v. SmartBargains, Inc., — P.3d —-, 2008 WL 3835094 (Utah August 19, 2008)

In 2004, Overstock.com sued its competitor SmartBargains in Utah state court for violations of the state’s anti-spyware statute [Utah Code sections 13-40-101 et seq.], unfair competition and tortious interference with prospective business relations. Overstock accused SmartBargains’ of using a technology to cause SmartBargains pop-up ads to appear when one visited Overstock.com. The lower court granted summary judgment in favor of SmartBargains, holding the anti-spyware statute unconstitutional, and finding that Overstock had not presented a genuine issue of material fact on its unfair competition and tortious interference claims.

Overstock sought review of the lower court’s decision on the unfair competition and tortious interference claims with the Utah Supreme Court. On appeal, the court affirmed the grant of summary judgment.

The lower court had looked to the various WhenU cases, which deal with pop-up advertising to determine there was no triable issue as to unfair competition. (1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir.2005), Wells Fargo v. WhenU.com, Inc., 293 F.Supp.2d 734 (E.D.Mich.2003), and U-Haul Int’l, Inc. v. WhenU.com, Inc., 279 F.Supp.2d 723 (E.D.Va.2003)) But the Supreme Court found the cases to be of limited value, given that they interpreted federal statutory laws, not state common law.

The court declined to adopt a “per se rule holding that all pop-ups do not violate Utah unfair competition law.” Nonetheless, the court found that Overstock did not demonstrate specific facts beyond the pleadings showing that the pop-ups were deceptive, infringed a trademark or passed off SmartBargains’ goods as those of Overstock. After all, the pop-ups were labeled with SmartBargains’ logo and appeared in a separate window. Without something compelling like survey evidence, the court concluded there was no genuine issue for trial.

As for the tortious interference claim, the court similarly held that Overstock had not shown any evidence of improper purpose (competition was fully legitimate end) or improper means on the part of SmartBargains in causing the pop-ups to appear. Although the case doesn’t expressly say so, the dismissal of this claim was probably collateral damage to the unconstitutionality of the anti-spyware statute. Among the things included as “improper means” under Utah tortious interference law is violation of a statute. With no statue left to violate, no so-called improper means could subsist.

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.”