by Paul Alan Levy
This week the United States District Court for the Eastern District of New York issued an excellent decision rejecting a series of bogus trademark claims and hence a motion for a preliminary injunction brought by Ascentive, a software maker, against Opinion Corp., whose PissedConsumer web site provides a forum for consumers to post complaints (or praise). Opinion Corp. hosts about a hundred messages about an Ascentive product that purports to enable home computer users to check for problems and increase a computer’s speed. (There are actually two separate plaintiffs, because two suits were consolidated, but for brevity’s sake I discuss only one of the plaintiffs here).
Opinion Corp. hypes the reviews on its web sites, and it hypes them like Ripoff Report on steroids — it creates a third-level domain for complaints about the company so that its name shows up in the domain name and not just the path; it loads the substance of reviews into the title tag and the keyword and description meta-tags; and more generally it uses sophisticated search engine optimization techniques (“SEO”) so that complaints about each company show up prominently in searches for a given company or product name. Ascentive’s suit claims that the use of its trademark to draw consumer eyes to Opinion Corp.’s web pages, where they would see not only criticism but advertising, is a commercial use that infringes its trademark.
The Bogus Nature of the Trademark Claims
The trademark claims were reminiscent of those put forward by investment bankers Houlihan Smith against Julia Forte’s 800Notes.com. The cases are different, though, because the allegation that Forte engaged SEO techniques to ensure high placement in searches for particular companies was a bald-faced lie. Indeed, Forte never put the plaintiff’s marks on her site at all. But unlike Houlihan Smith v. Forte, where we had only an oral opinion denying the motion for a preliminary injunction, in Ascentive the court laid out its analysis in detail, in an opinion that will be cited for years. We can be grateful both to Senior District Judge I. Leo Glasser and to Opinion’s counsel, prominent trademark blogger and commercial litigator Ron Coleman, for this important precedent. (Disclosure — Coleman has been my pro bono local counsel in other litigation.)
Judge Glasser ran through the “likelihood of confusion” factors (opinion pages 13 to 16) as has become de rigeur in all trademark cases even though they are ill-suited to deciding cases where the real issue is fair use (and despite Barton Beebe’s demonstration of the ways in which courts manipulate the test to justify pre-determined outcomes). But the more important part of the opinion is its focus on whether a reasonable consumer, seeing the web pages at issue, would have any doubt about whether the pages they were reviewing were sponsored by Ascentive – and even a moron in a hurry would not be so confused (pages 16 to 20). Ultimately, then, the issue comes down to a claim of initial interest confusion, but Judge Glasser rejected that argument (pages 20 to 28). Initial interest confusion is unlikely even on its own terms, both because PissedConsumer.com is not in competition with Ascentive’s web sites, and because search engines generally do not take keyword meta tags into account. Moreover, the meta tags and title tags are used accurately in this case – they lead to pages that are about Ascentive’s products, albeit unflattering ones. Judge Glasser also embraced later decisions that have questioned the very premises of the Ninth Circuit’s decision in its once-seminal Brookfield Communications decision, and have noted that the “harm” created by a misleading meta tag — being taken to a web site that the searcher finds unrelated to his actual search objectives — is easily remedied by clicking back to the search engine results. Finally, Judge Glasser expressed impatience with the notion that trademark law should provide a remedy for unethical and excessive search engine optimization tactics — the search engines themselves take a dim view of being gamed, he noted, and their remedies can be much more effective than a court's. In this instance, however, it is hard to see any impropriety in Opinion Corp.’s SEO techniques, because the complaints about Ascentive’s products are just what the average consumer might want to see when searching online for information to help decide whether to risk entrusting her credit card number to Ascentive’s billing department and her computer to Ascentive’s software.
Judge Glasser also rejected Ascentive’s contention that the display of advertising by its competitors adjacent to the critical comments violated its trademark rights (pages 28 to 32). As on most advertising-supported web sites, advertising is placed at the discretion of the advertising service to which the space has been rented, so if Ascentive has a cause of action it would be against the advertising service. Of course, it did not sue that service because the remedy it seeks is the removal of critical comments, and the service cannot do that.
In the end, this case seems to me to be a defamation action parading in trademark garb. Oddly enough, this perception finds confirmation on the web page of Ascentive lawyer Alexis Arena. (Disclosure – I have had occasion to oppose her abusive misuse of trademark law in other litigation.) Although the text on this page describes her specialty as intellectual property litigation, the title tag touts her as a “Reputation Management Attorney.” But as the First Circuit reminded us in Universal Communications v. Lycos, injury to reputation is not trademark injury, and the use of trademark law to protect the reputation of the business is a misuse of trademark law that offends First Amendment rights.
Ascentive’s Effort to Evade the Communications Decency Act
As in Houlihan v. Forte, Ascentive also argued that Opinion Corp. lost its immunity from suit over the negative postings because it was involved in the creation of the negative comments themselves. Judge Glasser rejected this line of argument (pages 36 to 41). In one respect the contention was rejected for lack of proof – Ascentive alleged that Opinion actually writes the negative comments. Ascentive offered no proof, and as a dispassionate observer, it seems to me that Ascentive's allegation is highly unlikely to be true: there are plenty of negative opinions posted about Ascentive in a variety of online locations, so it would likely be a waste of good money to pay somebody to write more. Moreover, Opinion Corp. reports that tens of thousands of companies are criticized on its site. Does Ascentive really imagine that Opinion Corp. writes about each of these companies, too? If not, why does Ascentive hypothesize that it was singled out for the creation of negative posts? We’ll see what discovery produces, but this allegation strikes me as bad faith at worst, and at best typical trademark owner hubris (“my product is so wonderful that any criticism must be a shakedown”).
But Ascentive also contended that Opinion Corp. was an information content provider because its site encourages negative complaints, because Opinion Corp. plays them up once received, and because Opinion Corp. refused to remove negative comments without being paid (more on this in a moment). Judge Glasser properly rejected this argument as a matter of law. As the Tenth Circuit said in FTC v. Accusearch, a provider of interactive computer services becomes liable for information content “only if it in some way specifically encourages development of what is offensive about the content.”
The Litigation Focuses Our Attention on the Sleazy Nature of Both Parties
In my experience, cases like this are often brought by sleazy plaintiffs who hope to use the litigation to suppress commentary on the problems with their products. They hope to suppress the publication of specific adverse comments, and then to be able to point to their successful litigation as a way of demonstrating that their products must be good because negative comments were enjoined (or removed in settlement of the case). They also hope to chill the free speech of other would-be critics — if you don’t take down your posts, this kind of litigation could happen to you, too.
That was apparently what Houlihan Smith hoped to do with its litigation against 800Notes. Sometimes that strategy can backfire – not only did Houlihan Smith have its preliminary injunction denied, and then dismiss the lawsuit after we threatened to seek Rule 11 sanctions, but it spent over $125,000 on its own attorneys, and then had to pay $35,000 to settle Public Citizen’s motion for attorney fees (we rejected its demand for confidentiality of the fee settlement). During the course of the attorney fee litigation, its lawyers asserted that Houlihan Smith had gone out of business as a result of losing the lawsuit (this was, in part, an argument against having to pay fees because Houlihan Smith had "suffered enough" and could no longer afford fees for the litigation). Sometimes, a lawyer could better serve her client by telling her up front not to bother with abusive litigation, instead of offering to be paid for a suit that is just going to end up harming their own client.
Ascentive Appears to Be a Sleazy Plaintiff
Although Ascentive has apparently engaged in its own SEO efforts to suppress attention to criticism of its products by creating a welter of web sites praising itself, the Internet is littered with professional and consumer criticism of Ascentive’s Finally Fast or ActiveSpeed products (for example, here, here, and here). Several examples were identified in Opinion Corp.’s opposition to the motion for a preliminary injunction, and Ascentive has faced both a class action and an enforcement action by the Washington Attorney General’s office over consumer abuses. But Ascentive’s papers represent that its products have been praised in prestigious publications like Forbes and the Wall Street Journal, and Arena personally repeated this line when I contacted her in preparation for writing this blog post and suggested that her client’s litigation represented an effort to sanitize its reputation undeservedly.
I gave Arena the chance to persuade me otherwise, but her response simply confirmed my suspicion. She sent me several PDF's and a list of links, but these sources were entirely unresponsive to the criticism. Many of the articles simply identified the CEO of Ascentive as an up-and-coming entrepreneur and praised his enterprise without evaluating the company’s actual products. A handful of the articles were actually about a different Ascentive product than the one at issue in the litigation against Opinion Corp. Indeed, the product was not sold to individual consumers, and hence discussion of the product was irrelevant to one theme of the published criticisms -- that once Ascentive gets your credit card number it makes excessive charges. The product-specific articles she cited generally pertained to Ascentive’s “BeAware” product, which is sold to companies to help them track how their staff are using company equipment, but almost every one of the critical reviews on PissedConsumer.com was about Finally Fast and similar products, and about Ascentive’s cheating consumers by tacking charges onto buyers’ credit cards. (A couple of the links she provided me did not lead to anything, and one led to a story for which registration was required.) So I conclude that Ascentive has no valid response to the criticism of its product that is hosted on PissedConsumer and that the litigation really is intended to divert attention from the product’s failings.
Although Arena promotes herself as a “Reputation Management Attorney,” she has a bit to learn about that line of work.
PissedConsumer Also Appears to Be a Sleazy Operator
There is one more claim in the Ascentive case that I did not discuss above — Ascentive’s RICO claim based on an extortion theory. The papers in the case suggest that PissedConsumer may well be Ripoff Report on steroids, running an egregious shakedown system directed at companies that are willing to pay to have negative information removed from review sites. In a past blog post, I criticized the Xcentric Ventures “Corporate Advocacy Program," under which companies that have been criticized on Ripoff Report can pay to have the criticisms buried under a mountain of praise. (See also footnote 2 in this amicus brief I filed supporting Xcentric in an appeal raising section 230 issues.) But Xcentric, at least, describes the Corporate Advocacy Program openly on its web site. And I have had a number of detailed conversations with Xcentric’s staff about its program, as I have struggled to understand it and to assess the bona fides of Xcentric’s claim that it is really trying to help consumers by reforming corporate practices.
Opinion Corp., by contrast, has a “Reputation Management Program” that operates largely in secret. PissedConsumer.com has a link in very small type for “business solutions” that leads to this page. On that page appears a vague description of two alternative programs and a form to enable companies to pursue involvement in the programs. Ascentive’s complaint asserts that its staff looked into this program and was required to sign a non-disclosure agreement in order to have a conversation about the details. After agreeing to non-disclosure, Ascentive claims to have been informed that, for a payment of $120,000, it could get existing negative complaints removed or converted into positive reviews, that future complaints would be shared with Ascentive so that they could be resolved instead of published, and that users posting complaints would be identified to Ascentive or, if a user was unwilling to be identified, Opinion Corp. would treat the complaint as "inappropriate" and for that reason keep it off the site. An affidavit from the Ascentive official who had these conversations with Opinion Corp. repeated these allegations. Such promises were also, according to Ascentive, repeated in a written “Service Offering” that was liberally quoted and characterized in one of Ascentive’s briefs.
But the Service Offering is also covered by the non-disclosure agreement, and although the document was submitted to the court as a trial exhibit, Opinion Corp. has designated the document as confidential and hence subject to a protective order. Indeed, although Opinion Corp.’s answer contains vague denials of Ascentive’s characterizations of its Reputation Management Program, it has also sued Ascentive (in a counterclaim) for publicly describing the reputation management services that Opinion Corp. offered. To my mind, this course of conduct implies that Ascentive’s descriptions of its conversations with Opinion Corp. were accurate. The very secrecy about the program tends to suggest that Opinion Corp. has much to hide.
As I did with respect to Ascentive, I offered Opinion Corp.’s counsel an opportunity to provide evidence that would contradict my reading of the situation. Coleman forwarded to me an unsworn “statement” full of self-serving generalities about their motives and their modus operandi. In theory, such a program could be operated in an entirely ethical and indeed pro-consumer manner, but given the large amounts of money at stake there are, at the very least, strong temptations to trade money for reputation enhancement, and the consumer be damned. So the devil is in the details.
But when I asked for specifics, Opinion Corp. told me it would be unethical to be specific and that giving details would forfeit Opinion Corp.’s "bargained-for" in confidentiality. For example, I asked, Opinion Corp. has issued very general denials of the allegations in Ascentive’s complaint about its program; so I asked, which specific statements does it deny, and which does it admit? I asked, if there are standards for accepting companies, how many companies get turned down, and why, and who were they, how many companies get kicked out of the program for noncompliance, and why, and who were they? Opinion Corp. insists that it doesn’t remove negative posts, although it changes their “visual appearance” — OK, tell me what companies are in the program so I can assess what Opinion Corp. does about them. But Opinion Corp. insists that providing such information would be unethical. It also claimed that it could not release information about its prices or services because that would create competitive injury, so I asked – who are the competitors? That, it claims, is itself a competitive secret.
I don’t buy it. This all strikes me as a smokescreen for avoiding public scrutiny. Even if the names of companies are confidential, the statistical data could be revealed without violating any non-disclosure agreement, and such things as the reasons why companies were rejected or ejected (if any were), and the standards that are applied, could similarly be revealed. The statement makes clear that Opinion Corp. is worried about its reputation as “a credible source for consumers who have concerns,” and that the charge of taking down complaints for money could “undermine our credibility.” At this point, however, it seems to me that Ascentive has raised a credible claim, using first-person testimony based on personal knowledge, that this is exactly what Opinion Corp. does, and Opinion Corp. is going to have to respond with specifics and not just generalities. Revealing the “Service Offering” that it sent Ascentive, and providing a detailed public response to Ascentive’s affidavit about the conversations, would be a good start.
Opinion Corp. did tell me that it was open to the idea of a neutral academic audit of the bona fides of its program, which is more than Ripoff Report has been willing to consider. I’ll continue to pursue this possibility with its representatives and will report further on whether openness to an audit is genuine, or simply a response to the prospect of my blog post.
Is the Apparent Sleaze Actionable?
Although there is good reason for consumers to be concerned about the conflict of interest inherent in a consumer review site that sells reputation management services to the target of its reviews, it is not at all clear that Ascentive has any viable cause of action based on these allegations. In his opinion denying the motion for a preliminary injunction, Judge Glasser held that “plaintiffs have not sufficiently alleged, let alone established, . . . the alleged RICO predicate acts of commercial bribery or extortion” (pages 42-44). His analysis seems to me sound.
But I also asked Arena about the relief she thought she could obtain even if she had valid claims. Regardless of Opinion Corp.’s motives for hosting the site, the specific criticisms have been made by Ascentive’s unhappy customers; why should they lose the ability to have their criticism heard, I asked. Although the complaint seeks injunctive relief against maintenance of the site, Arena acknowledged that her extortion theory was not a proper basis for removal of the criticisms that Opinion Corp. allegedly wanted to be paid to take down.
By the same token, it is hard to see a claim for damages based on those statements. If Ascentive wants to get damages for injury to its reputation and for its costs in responding to criticism, it has to meet the standards of New York Times v. Sullivan and other First Amendment protections for critical speech. Moreover, under section 230 those claims need to be brought against the customers, not the hosting web site. So, is the remedy damages for feelings injured by having been asked for money? Is the hope to get a large award of punitive damages? Without substantial actual damages, however, punitive damages would likely violate due process.
During my conversation with Arena, I speculated that her real hope was to get a large damages award, or at least to raise the credible specter of a large award, and then trade the money for the removal of criticisms. I found her silence on this angle telling. But I am having trouble seeing a valid claim for damages.
This litigation will be worth following.
Coleman reports in his own blog (which includes a nice compendium of other posts about the case) that Ascentive is now trying to litigate its way out of the case, having moved for dismissal without prejudice. Have its attorneys lost their taste for future litigation against PissedConsumer (which they threatened in a press release when they filed suit)?