Use of Unregistered Marks in Posts On Consumer Watch-Dog Type Website Did Not Constitute Defamation and Trademark Infringement

Case: Whitney Information Network, Inc. v. Xcentric Ventures, LLC, No. 2:04-cv-47-FtM-33SPC (M.D. Fla. 7/14/05)

The One Sentence Summary: The district court granted Defendants’ motion to dismiss claims for defamation and trademark infringement finding that (1) Defendants were immune from liability under § 230(c)(1) of the Communications Decency Act for merely publishing on their website complaints written by consumers; and (2) there was no likelihood of confusion among consumers accessing Defendants’ websites regarding Plaintiffs’ product and service offerings.

What They Were Fighting About: Defendants Xcentric Ventures, LLC, badbusinessbureau.org and Ed Magedson publish the websites http://www.ripoffreport.com/ and http://www.ripoffrevenge.com/. Consumers that feel they have been defrauded by companies or individuals can post complaints about those that have “ripped them off” on http://www.ripoffreport.com/ and can purchase services and do-it-yourself kits to help win their money back on the website http://www.ripoffrevenge.com/. Plaintiffs claimed that Defendants do not verify the complaints posted on http://www.ripoffreport.com/ and that they recklessly published false stories about Plaintiffs. Defendants responded that they did not engage in any wrongful conduct by merely providing a forum for consumers to publish their grievances.

District Court Findings:

• Defamation Per Se of Business Reputation – Plaintiffs alleged that the publication of false stories about Plaintiffs on http://www.ripoffreport.com/ defamed Plaintiffs and resulted in harm to Plaintiffs’ business reputation. Plaintiffs claimed their business reputation was harmed because consumers using Plaintiffs’ marks in a search engine would get Defendants’ websites as a result option and could be directed to Defendants’ websites. Defendants argued that the Communications Decency Act barred Plaintiffs’ defamation claim because Defendants do not write the messages posted by consumers and merely provide a forum for consumers to post complaints. The district agreed with Defendants concluding that as service providers that merely publish information written by others, Defendants were immune from liability by virtue of § 230(c)(1) of the Communications Decency Act.
• Federal Trademark Infringement under 15 U.S.C. § 1114 – To state a claim for trademark infringement under 15 U.S.C. § 1114(1)(a), a plaintiff must show that the defendant “use[d] in commerce any reproduction . . . of a registered mark.” Plaintiffs, however, did not have registered federal trademarks for their marks (the service mark applications for “Russ Whitney” and “Whitney” were pending in the USPTO at the time of the decision). Therefore, the district court summarily rejected this claim noting that actions for unregistered trademark infringement are restricted to 15 U.S.C. § 1125.
• False Designation of Origin, False Description and False Representation under 15 U.S.C. § 1125 – The essential element in sustaining a claim under the Lanham Act is that the alleged infringement “creates a likelihood of confusion on the part of consumers as to the source of goods.” In order to determine if likelihood of confusion exists, the 11th Circuit has set forth several factors that must be examined: (1) type of mark; (2) similarity of mark; (3) similarity of products the marks represent; (4) similarity of the parties’ retail outlets and customers; (5) similarity of advertising media; (6) defendant’s intent; and (7) actual confusion. The district court explained that while Defendants did use Plaintiffs’ unregistered marks by posting consumer complaints about Plaintiffs on their websites, there was no likelihood of confusion on the part of consumers because the service and product offerings of the parties were not similar at all. While Plaintiffs primarily sell real estate investment education courses, Defendants sell advertising space and a service and do-it-yourself kit that helps consumers recoup money lost on bad products or services. Plaintiffs and Defendants also do not target the same type of customer – Plaintiffs seek customers interested in purchasing real estate education courses and similar products, while Defendants target consumers who feel they have been defrauded and are looking for an outlet to share their story. The district concluded there was no likelihood of confusion among consumers regarding the parties’ respective products and services and thus no trademark infringement by Defendants.
• The district court also dismissed Plaintiffs’ false advertising claim finding that Defendants’ website did not contain false advertising about Plaintiffs. In fact, in addition to consumer gripes, Defendants’ website also contained favorable comments about Plaintiffs’ products and services.
• The Plaintiffs’ claim for unfair competition also failed because the “consumer watchdog” website maintained by Defendants did not try to pass off Defendants’ good or services as being the same as those offered by Plaintiffs.
• Common Law Trademark Infringement – To state a valid common law claim for common law trademark infringement, the plaintiff must show that: (1) the mark has priority; and (2) that the defendant’s mark is likely to cause consumer confusion. Although Plaintiffs could demonstrate that their marks had priority, there was no likelihood of confusion among consumers regarding the products sold by Defendants and those sold by Plaintiffs.