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

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

Investment Bank Says Criticism Is Trademark Infringement; Gets Misplaced Injunction Against Web Forum

from the not-good dept

So many companies (and individuals) get up in arms over a bit of criticism, assuming that anything they don't like must be illegal. On top of that, they regularly blame the owners of the websites where that criticism occurs, rather than whoever actually created the criticism. Usually the courts see through this stuff, but sometimes companies are able to get around all of that with some quick lawyering. In a particularly egregious example, the investment bank Houlihan Smith got upset at the websites 800notes.com and Whocallsme.com, both run by Julia Forte as forums where people can discuss telemarketing practices (we've pointed out how Forte has been fighting other misguided legal attacks in the past as well). As with many companies that find people criticizing themselves on Forte's website, Houlihan Smith demanded that she remove comments. She responded by pointing out that company representatives are free to respond to the complaints in the comments.

Instead, it appears that Houlihan Smith went straight to court... and got a temporary restraining order against Forte that prohibits people from posting comments -- even if they're factual -- about Houlihan Smith to Forte's websites. So how did they get such a temporary restraining order when pretty much all case law notes that Forte is protected by Section 230? Well, it looks like they're claiming that the critical comments (and there were lots of them) weren't just defamatory (the usual claim) but were trademark infringement -- which, by way of judicial accident is not covered by Section 230. But people posting their opinions or factual information about a company cannot be trademark infringement. The company also claims a violation of the "right of publicity," because some employees are named. Of course, "right of publicity" is supposed to be used to prevent you from using someone's name or likeness in an advertising context. Someone accurately claiming that "so-and-so called me" is not a violation of anyone's right of publicity. Furthermore, the company apparently only gave Forte 90 minutes of notice via email that it was going to court (800 miles from where she lives) to get the restraining order.

Totally blocking a website from allowing people to express their opinions and criticisms of a company's telemarketing practices seems like a blatant violation of the First Amendment.

Either way, it seems like Houlihan Smith and its lawyers haven't realized a basic fact about the internet: if you try to stifle free speech that you don't like, it only draws a hell of a lot more attention to that speech. Perhaps Houlihan Smith would have been better off responding to the criticism, rather than using questionable legal claims to try to silence an entire forum.

Filed Under: defamation, forums, free speech, trademark
Companies: 800notes.com, houlihan smith