Consumer Law & Policy Blog

Win for Ticketmaster, Loss for Consumers

by Greg Beck

In Ticketmaster LLC v. RMG Technologies, 2007 WL 2988403 (C.D. Cal. Oct. 16, 2007), the Central District of California granted Ticketmaster's motion for a preliminary injunction against a company offering software that could quickly buy large quantities of tickets from Ticketmaster's website. The court held that the defendant was bound by the website's "Terms of Use," which prohibited commercial use of the site and limited the number of tickets that could be purchased at one time. The court concluded that, by merely browsing Ticketmaster's website in violation of these terms, RMG had infringed Ticketmaster's copyright in the site.

Although it's difficult to feel sorry for this defendant, who was basically allowing people to cut in Ticketmaster's virtual ticket line, the case raises troubling implications for consumers. The case gives more ammunition to companies that claim to bind consumers with contractual terms placed on a website. Moreover, the case assumes that merely viewing a website in an unauthorized manner can be copyright infringement. Reading a website, however, shouldn't be considered copyright infringement any more than reading a book is. Even though the website is copied into the computer's memory before it is displayed on the screen, the copy in memory is purely incidental to the process of reading the website, disappears when the user navigates to a different site, and has no adverse commercial effect on the copyright owner. Even if this is technically a "copy" under the Copyright Act, it seems like an easy example of fair use.

At the Technology & Marketing Law Blog, Eric Goldman concludes that the decision is "anything but consumer-friendly."

Article on Standard Form Contracting on the Web

Shmuel I. Becher of the Peres Academic Center and Tal Zarsky of the University of Haifa - Faculty of Law have co-authored an article, "E-Contract Doctrine 2.0: Standard Form Contracting in the Age of Online User Participation." Here's the abstract:

The growing popularity of e-commerce transactions
revives the perennial question of consumer contract law: should
non-salient provisions of consumer standard form contracts be
enforced? With the focus presently on an ex-ante analysis,
scholars debate whether consumers can and should read
standardized terms at the time of contracting.

In today's information age, such a focus might be misguided...

All Criticism of This Website Is Hereby Forbidden

by Greg Beck

Inventor-link is a company that promises to help inventors get their inventions to the marketplace. A link at the bottom of the company's home page leads to the site's "Privacy and User Agreement," which includes the the following terms:

By using this site you agree and understand that the HTML code, look, feel, content, company name, logo, text, and any likeness or derivative of such content is the sole property of Inventor-Link LLC and may not be used in any manner without the expressed written permission of Inventor-Link LLC. Furthermore, we strictly prohibit any links and or other unauthorized references to our web site without our permission.

With these terms, Inventor-link purports to prohibit visitors to the site from using the company's name, linking to the site, or even "refer[ring]" to it without permission. Although the enforceability of these terms is extremely dubious, the company is nevertheless invoking them in an attempt to stop criticism of the company that appears on InventorEd.org, a website that provides information about invention promotion businesses and scams.

Inventor-link is represented by Dozier Internet Law -- the same law firm that threatened to sue for copyright infringement if one of its demand letters were posted on the Internet. Once again, Dozier sent a strongly worded demand letter identifying a bunch of statements that it alleged to be defamatory, most of which appear to be statements of opinion. The letter goes on to invoke the website's user agreement:

Another Company Sues Its Anonymous Online Critics

by Greg Beck

First it was Video Professor, now Quixtar (an affiliate of Amway) is suing anonymous Internet posters who made disparaging remarks about the company online. Hopefully, the judge will ensure that the anonymous posters have notice and an opportunity to respond before their identities are revealed.

Update: commenter ibofightback pointed out that Quixtar is supposedly going after a specific group of former employees who are under court order not to disparage the company. These former employees were apparently subject to a non-disparagement contract. According to the company's blog:

[W]e are seeking to support the legal system – and not attack First Amendment speech. Tough line to walk, but we’ll walk it. Because we believe in both principles.

It could very well be that some of these sites truly are spontaneous, just angry citizens independently voicing their opinions without direction from anyone else. We have no problem with those folks. We don’t want their money, we regret wasting their time and we will even offer to reimburse their costs.

The offer to reimburse costs of innocent defendants is certainly praiseworthy (assuming that it includes attorneys' fees), but reimbursing the formerly anonymous speakers cannot make up for their loss of anonymity. If Quixtar can sue to discover the identities of anonymous critics just to find out whether they may be violating a court order, it would create a serious chilling effect on further criticism. Moreover, the court order that is supposedly being violated appears to affect only four people. I would be interested in knowing why the company cannot pursue more limited discovery into whether those four people are violating the order without digging into the identities of other anonymous critics. I'd also be curious to know what measures will be taken to inform the anonymous critics of the subpoenas and give them an opportunity to object.

Those who receive subpoenas or notice from their ISP that they have been subpoenaed may want to consider contacting Public Citizen, the Electronic Frontier Foundation, or another lawyer who would consider defending the speaker's anonymity on a pro bono basis.

Update #2:  The complaint (available here) does not mention the court order. Instead, it targets bloggers and YouTube posters who "disaparag[ed] Quixtar, its products and prices" or who encouraged Quixtar's members (Quixtar calls them "Independent Business Owners," or "IBOs") to leave the Quixtar program. The complaint speculates  that these bloggers may have an interest in a competing multi-level marketing program. It alleges that the bloggers' disparagement tortiously interferes with the company's contracts with its existing IBOs and constitutes unfair competition.

However, some of the criticisms may be true or statements of opinion and thus may be protected First Amendment speech. The speech may be protected even if made by a competitor and, in any case, the company's blog appears to concede that some non-competitors may be swept up in the dragnet ("It could very well be that some of these sites truly are spontaneous").

[original story via Techdirt]

Dozier Reponds

Our post about Dozier Internet Law's cease-and-desist letter to a consumer-review site, which threatened a copyright infringement claim if the letter were posted on the Internet, generated a lot of commentary on this blog and around the blogosphere (see for example here, here, here, here, and here). John W. Dozier, the founder of the firm, has now posted a letter on his website responding to the controversy. The letter graciously grants the Internet permission to link to it ("Yes, you can link to this page."). 

How to Use the DMCA to Squelch Consumer Criticism

by Greg Beck

Public Citizen is currently defending the anonymous operator of the website PowermarkHomesSucks.com against a lawsuit by Powermark Homes, an Ohio homebuilding company that is criticized on the site. But although Powermark Homes's motion for an order to shut the site down is still pending in an Ohio court, the company has already succeeded in getting the site taken offline thanks to the Digital Millennium Copyright Act. The case serves as an unfortunate example of how companies can use the DMCA to squelch unwanted consumer criticism on the Internet.

Times Reports on Spam, Telemarketing, Credit Discrimination, Credit Card Legislation, and More

I've fallen behind on my reading of the Times, but here's an attempt to make up for that.  Today's "What's Online" column has several pieces relevant to consumer law.  The column opens  by noting that Symantec's monthly State of Spam report observed an increase in spam in September. The increase is due in part to spam offering loans and homes in response to the Fed's rate cut.  So much for CAN-SPAM.  The column goes on to describe something reported on consumerist.com (which occasionally picks up our postings and is listed on our blog roll at left): DirecTV claims the right to make "informational calls" to consumers on its Do-Not-Call list to give consumers "an opportunity to change [their] do-not-call preference."  Finally, according to Geoff Williams of Entrepreneur.com, telemarketing is among ten industries likely to die in the next decade.  That contrasts with earlier reports that telemarketing has grown since adoption of the Do-Not-Call rule.

In other recent stories, the Times reported here that the N.A.A.C.P. has filed suit against eleven mortgage lenders for steering African-Americans to subprime loans even though they could have qualified for prime rates.  The suit is founded on ECOA and the Fair Housing Act, and the plaintiffs are seeking to have it certified as a class action.  An editorial in yesterday's issue, titled "Common Sense and Credit Cards" praises bills that would outlaw universal default and limit credit card marketing to college students.  It calls for Congress to look at school-themed credit cards offered by alumni associations.  Finally, just to prove that identity thieves spare no one, here's a report on the victimization of the billionaire Mayor Bloomberg.

Don't Post This Cease-and-Desist Letter, Or Else

by Greg Beck

DirectBuy is a company that claims to offer a deal on furniture and home supplies by letting consumers buy directly from the manufacturer. Apparently, the company doesn't want you to hear from customers who don't think the deal is such a good one. The company's law firm, Dozier Internet Law (which specializes, among other things, in using copyright law to "get websites pulled down without notice") sent a strongly worded demand letter to the owner of InfomercialScams.com, claiming that consumer complaints on the website are defamatory because they refer to the company's direct-buy plan as a "scam" and a "nightmare."

NYPIRG Launches Website To Protect Consumers From Online Scams

The New York Public Interest Research Group (NYPIRG) has launched CyberStreetSmart.org -- a website aimed at protecting consumers from on-line scams.  It advises consumers on how to protect themselves against phishing, on-line shopping and auction scams, and the hazards of on-line dating and social networking.  It also  provides information on how to report on-line scams to relevant governmental authorities.  Check it out.

Ninth Circuit: No Cause of Action for Disparaging a Company's Trademark

by Greg Beck

In Freecycle Network v. Oey, the Ninth Circuit yesterday reversed a district court’s preliminary injunction prohibiting the defendant "from making any comments that could be construed as to disparage upon [Freecycle's] possible trademark and logo" and requiring that he "remove all postings from the [I]nternet and any other public forums that he has previously made that disparage [Freecycle's] possible trademark and logo."

Freecycle is a nonprofit corporation that hosts forums where users can give and receive free stuff online. The defendant, Tim Oey, is a former Freecycle member who had posted his opinion online that the word “freecycle” is a generic term in which the company has no trademark rights. Freecycle sued Oey, claiming that his Internet posts infringed and disparaged the company’s trademark. The district court agreed and entered the preliminary injunction. The Volokh Conspiracy has the district court's order.

On appeal, the Ninth Circuit held that Oey’s Internet posts did not infringe Freecycle’s trademark because he did not use the trademark in commerce and because his use of the trademark was not likely to confuse any consumers, two required elements of a trademark infringement claim under the Lanham Act. The court further held that there is no claim for “trademark disparagement” under the Lanham Act.

Presumably because the court held that Freecycle had no cause of action, it did not reach the question of whether the district court’s injunction violated the First Amendment. However, it’s hard to imagine how a prohibition against any speech that “could be construed as to disparage” Freecycle’s trademark could survive First Amendment scrutiny, especially where, as here, the speech is totally noncommercial. Consumers have a right to truthfully give their opinions about companies and products. Just because the opinions amount to "disparagement" doesn't give a company the right to stop it.

Nevertheless, companies unhappy about online criticism often claim that consumer disparagement of their trademarks gives rise to a cause of action under the Lanham Act. See, for example, Video Professor's case against 100 anonymous critics.