A recent decision from a federal judge in Detroit holds out hope of providing better protection for the owners of Internet gripe sites who face groundless lawsuits intended to make them pay a high price for standing up for their free speech.
Lawrence White created a simple, anonymous web site at careeragentsnetwork.biz to warn prospective small business owners to check carefully before investing their savings in a the “health care employee recruiting business” opportunity offered by a company called “Career Agents Network.” Career Agents Network sued in the U.S. District Court for the Eastern District of Michigan, claiming that the domain name infringed its trademark and constituted cybersquatting. Even though Sixth Circuit precedent foreclosed both causes of action, plaintiff moved ex parte for a temporary restraining order and obtained relief compelling the identification of White, and freezing the domain name, by concealing the controlling authorities from the Court. The defendant got summary judgment (represented by private counsel) by citing the controlling cases; but it cost the defendant nearly $20,000 to defend his rights.
Judge Robert Cleland agreed that White should be awarded his fees, and his opinion provides hopeful signs of a possible evolution of the Sixth Circuit standard. The judge expressed his amazement – and perhaps admiration – for White’s having rejected the financially sensible advice of the first lawyer he consulted after learning that he had been sued; he was advised to give in, and even to pay some damages, given what the litigation was going to cost him. Judge Cleland adopted the analysis of a Judge Posner opinion, holding that, as in the copyright context, trademark defendants who do not stand to recover damages need the prospect of attorney fees as a financial incentive, counterbalancing the financial incentive that the prospect of a damages award gives IP plaintiffs, to stand up for their rights to make truthful use of trademarked words to communicate with the public. He also considered the need to deter the misuse of trademark law to suppress free speech (one of plaintiff’s principals was careless enough to explain the lawsuit to her other customers as being needed, not to protect against confusion, but to punish criticism which, she said, might hurt her customers as well as her own company). The court also took note of the fact that it had been misled into granting preliminary relief through the filing of an ex parte motion that omitted controlling authority. The court concluded:
This suggestion that “oppressiveness” is a factor to be balanced with the objective merits of the case, with consideration to deterrence as well, is perhaps the most encouraging aspect of the opinion.
An objective inquiry into the suit’s foundation supports granting attorney fees to Defendant, while a subjective inquiry into Plaintiff’s conduct during the litigation only marginally supports the same conclusion. Considerations of deterrence tip the balance in favor of awarding fees.