Investment Bank Fails In Attempt To Quash Discussion Of Its Telemarketing Efforts

News

from the calling-streisand dept

As courts across the country have endorsed the rule that, under section 230 of the Telecommunications Act of 1996, 47 U.S.C. § 230, the hosts of blogs and message boards are immune from suit for content that others post to their sites, companies that want an easy way to suppress such criticisms have struggled to find ways to bring suit anyway.  Especially among commercial litigators with limited exposure to intellectual property law, the trendy way to evade section 230 is to allege that criticism using the name of a company “tarnishes” its trademark, or that criticism using the name of an individual violates the right of publicity.  Another popular way to evade section 230 is to charge the web host with being an “information content provider.”

In its recent attempt to enjoin Julia Forte, the operator of 800Notes.com and whocallsme.com, from carrying posts that criticized its telemarketing techniques as well as it s business model, Houlihan Smith & Company tried both tacks — it claimed tarnishment and right of publicity violations, and it pointed to Google search results that included negative statements about it in the search snippets for the two web sites and alleged that Forte must be putting its name, and derogatory words such as “fraud” and “scam,” into her title tags and description meta tags.  Houlihan actually got a temporary restraining order (TRO) at first, by coming into court without any notice and bamboozling the state court judge with a long sworn complaint and supporting affidavits.  But when Forte found a lawyer (me) and removed to federal court, the judge quickly saw through Houlihan’s bluster and refused to give an injunction.  But how it lost is of particular interest.    (I discuss the oral opinion and the plaintiffs’ arguments in greater detail on the Consumer Law and Policy Blog, with links to the relevant documents from both sides)

In part, Houlihan lost because the federal judge, Virginia Kendall, could actually read the HTML code and could see that the complaint was based on lies.  (Not one of those judges who “don’t know technology” as Mike recently discussed).   As she remarked at the outset of the preliminary injunction hearing, one of her specialties as federal prosecutor was child pornography, and because porn purveyors are champions at manipulating code, she had to learn about it.  So, although Forte had supplied an affidavit explaining how to read the HTML code, Judge Kendall just pulled up the code herself and read it, told plaintiffs’ counsel that she couldn’t see any trademarks or defamatory words in the code that was before her, and asked if they had any other proof.  They didn’t.

On the trademark claims, Judge Kendall also rejected the motion for a preliminary injunction, but interestingly she did it without mentioning the First Amendment or the doctrine of prior restraint.  She first noted that under trademark law, just as a trademark may be used by a reseller to truthfully identify the name of the product that is being sold, so a critic may use the name of the trademark holder to truthfully identify the name of the company being criticized.  And as defined by the federal trademark “dilution” statute, dilution law only forbids uses of trademarks that injure the reputation of the trademark; it does not apply to uses that injure the reputation of the business.  Otherwise, any plaintiff could evade section 230 immunity just by changing the label of a defamation claim and calling it a trademark claim.

Representing Forte, we were sorry not to have won on First Amendment and prior restraint grounds, but Judge Kendall’s ruling may actually have a broader impact, protecting other hosts of interactive discussion sites, for her discussion of trademark law.  At this point, Judge Kendall has only given an opinion from the bench, explaining why she was not granting a preliminary injunction (we have ordered the transcript).  But she indicated that she would be issuing a written opinion.  It could be worth waiting for.

Filed Under: free speech, section 230, telemarketing
Companies: 800notes.com, houlihan smith