Using the Lanham Act to Combat Misleading Online Reviews
Mon. July 1, 2019 \ by Gregory W. Herbert, Esq.\ Articles, News
Intellectual Property Committee // “Using the Lanham Act to Combat Misleading Online Reviews?” by Gregory W. Herbert, Esq. // The Briefs, July 2019 Vol. 87 No. 6. //
Businesses are often frustrated by negative reviews on purported “consumer review” websites that appear to be neutral but, in reality, might be biased and influenced by the site owners’ direct or indirect financial ties to competitors. Similarly, many consumer product companies believe they have been treated unfairly by the growing consumer “certification” organizations that purport to offer neutral testing and certifications for various products, for a fee. In the wake of the Supreme Court’s Lexmark1 decision, some businesses are using federal trademark and unfair competition law (the Lanham Act) to combat such consumer review-type sites, with some success. This new line of cases represents a fairly dramatic shift in Lanham Act law and opens a new avenue of attack for businesses aggrieved by unfair online attacks.
Obstacles for Combatting False/Misleading Online Speech
Traditional legal claims to seek redress for false or misleading statements about a business, including by competitors, are: defamation; trade libel; common law unfair competition; false advertising; and claims under DUTPA-type statutes (Deceptive and Unfair Trade Practices Act).
Defamation claims, however, face many legal, practical, PR-related, and other obstacles. This is particularly true with claims regarding online speech. Defamation claims are generally not available against speech deemed to constitute opinion or rhetorical hyperbole. Injunctions to remove or correct content are rarely granted. Further, Anti-SLAPP laws (state statutes that generally prohibit “strategic lawsuits against public participation” in matters of public concern) might apply to any such claims, which bring with them a risk of attorneys’ fees against plaintiffs. Further, §230 of the Communications Decency Act generally provides immunity for website owners who publish content authored by a third party, such as a consumer. Further, the dynamics of online behavior present risks to any business perceived as seeking to censor or “bully” online critics, and many attempts have backfired spectacularly.
Thus, many businesses who have faced false, misleading, and unfair criticism online have been extremely frustrated in obtaining legal relief, particularly if the business believes the disparagement was made or sponsored by one of its competitors. Recent developments in the law under the Lanham Act provide new avenues of relief for businesses aggrieved in this manner.
Lexmark Expands Lanham Act False Advertising Claims
Lanham Act claims for “false advertising” arise under 15 U.S.C. § 1125(a)(1)(B). Section 1125(a)(1)(B) provides, in relevant part (emphasis added):
Any person who … uses in commerce any … false or misleading description of fact, or false or misleading representation of fact, which … in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods … shall be liable ….
In Lexmark,2 the Supreme Court expanded the scope of Lanham Act false advertising claims, ruling that even parties who were not direct competitors, but who compete at different levels of the relevant distribution chain indirectly, have standing to bring such claims. Prior to Lexmark, case law generally required plaintiff and defendant be direct competitors. Lexmark held that a plaintiff need not be a competitor of the defendant, as long as the plaintiff alleges “economic or reputational injury flowing directly from the deception wrought by the defendant’s advertising.”3 Lexmark greatly expanded the ability of parties to pursue Lanham Act false advertising claims against others with only indirect business or competitive relationships.
Several recent cases have addressed the viability of Lanham Act false advertising claims based on disparaging statements published by parties who do not directly compete with the plaintiff, but rather claim to be “consumer review”- or “consumer advocate”-type organizations.4 Because the defendants in these cases, which purport to be consumer advocacy or consumer review-type websites, are generally not in “direct competition” with the plaintiff’s goods or services they critique, these cases have tended to focus on the “commercial speech” and “indirect competitive relationship” and causation hurdles under the Lanham Act.
Handsome Brook Case: Consumer Goods “Certification”
In Handsome Brook Farm, LLC v. Humane Farm Animal Care, Inc., plaintiff, an egg wholesaler, pursued Lanham Act claims against a non-profit organization, HFAC, that offers a certification program to certify to consumers the humane and “ethical sourcing” of eggs.5 HFAC conducted an inspection of one of plaintiff’s packaging plants, erroneously concluded that plaintiff was deceptively labeling its eggs, and emailed retail grocery chains urging retailers to consider changing egg suppliers.6 HFAC defended on the grounds that its email was not “commercial speech” under applicable Lanham Act case law. HFAC claimed to be a mere “public interest organization like [PETA] or a consumer product reviewer like Consumer Reports.”7
The court thoroughly examined the nature of HFAC’s “pay-to-play”-type certification program, the numerous fees HFAC charges to egg producers (“application fee,” “annual inspection fee,” and “licensing fee” for use of its logo), and thus dismantled HFAC’s position, noting, “HFAC’s mission is to promote humane animal treatment, but HFAC pursues that objective through distinctly commercial means.”8 The court emphasized the “economic reality” of HFAC’s certification program, noting that it “has an economic interest in promoting the communicative value of [its] license so as to incentivize more producers to enter into its certification program and to drive consumer demand toward current licensees, all of which will lead to more fees for HFAC.”9 The court thus found the email blast to be “commercial speech” made for “a promotional purpose.”10 The court also found the parties’ relationship to be sufficiently “competitive” under the Lanham Act.11 The court focused on the fact that plaintiff’s competitors participated in HFAC’s certification program, and thus HFAC had an economic incentive to drive consumer demand to plaintiff’s competitors.12
Consumer Review/Advice Sites: Casper, Enigma
Similarly, in Casper Sleep, Inc. v. Mitcham, the court denied a motion to dismiss a Lanham Act false advertising claim based on purported “consumer reviews” of plaintiff’s mattresses.13 Plaintiff, an online mattress seller, sued a mattress review site, alleging the “unbiased” reviews, favoring plaintiff’s competitors, were misleading because the site owners collected affiliate marketing commissions for sales to plaintiff’s competitors through the site (plaintiff was not an affiliate and paid the site no commissions).14 The court upheld the Lanham Act claims to the extent those claims were based on misleading statements on the review site that could lead consumers to believe, falsely, that all of plaintiff’s competitors paid affiliate advertising commissions to the site, and that therefore the site would be viewed more as neutral and unbiased than it really was.15 The court also found that plaintiff had plausibly alleged harm proximately caused by the false and misleading product reviews and affiliate disclosure statements. Because the “consumer reviews” always recommend plaintiff’s competitors over plaintiff, it was plausible that the alleged deception caused plaintiff to lose business.
Likewise, the court in Enigma Software Group USA, LLC v. Bleeping Computers LLC, reached a similar conclusion, upholding the Lanham Act and defamation claims against a computer software review and advice site that published disparaging comments criticizing plaintiff’s software.16
Defendant-Favorable Case: Tobinick
Despite the expansion of Lanham Act claims noted above, several courts have rejected Lanham Act false advertising claims in similar factual contexts on the grounds that the plaintiff failed to show harm caused by the disparaging statements, or that the statements qualified as “commercial speech.”17 Many of these cases involve statements made by academic, or otherwise genuinely independent nonprofit groups, with a primarily informational or advocacy goal, as opposed to a revenue-generating goal, despite incidental economic gain. Courts’ distinctions between “commercial” and “noncommercial” speech in this context can turn on a subjective assessment of the defendant’s true aims. In Tobinick, for example, the court rejected Lanham Act claims by a physician, based on statements on another’s physician blog that questioned plaintiff’s unconventional approach to the use of a certain drug.18 The court found that the blog posts were not “commercial speech” because, for example, they did not propose any commercial transactions.19
Additional Strategic Considerations
In addition to a high burden of proof and numerous defenses, defamation actions pose additional risks, legal and non-legal. Perhaps foremost among these is the public relations risk of drawing widespread attention and publicity to the derogatory statements, which might otherwise enjoy limited dissemination. Defamation suits can backfire on a plaintiff whose primary goal is to clear its good name. A lawsuit seeking to correct or remove false or private information from the public domain can have the opposite effect, sometimes referred to as the “Streisand Effect.”20
For a business that believes it has been damaged by online consumer reviews, recent developments in Lanham Act law might provide relief, particularly if the website on which the reviews appear accepts affiliate advertising commissions from its competitors. Such claims still pose legal hurdles and risks, however. Thus, any business seeking legal relief from online disparagement should carefully consult with experienced legal and public relations professionals.
Gregory W. Herbert, Esq., Board Certified in intellectual property law, serves as the co-chair of the Litigation Department for the Orlando office of international law firm Greenberg Traurig, P.A. He has been a member of the OCBA since 1987.
1 Lexmark Intern, Inc. v. Static Control Components, Inc., 572 U.S. 118, 134 S. Ct. 1377, 1385 (2014).
3 34 S.Ct. at 1391.
4 See, e.g., Handsome Brook Farm, LLC v. Humane Farm Animal Care, Inc., 193 F. Supp. 3d 556, 570 (E.D. Va. 2016), aff’d, 700 F. App’x 251 (4th Cir. 2017) (statements by nonprofit “ethical-sourcing” egg certification organization); Enigma Software Group USA, LLC v. Bleeping Computers LLC, 194 F. Supp. 3d 263 (S.D.N.Y. 2016) (software blog featuring consumer reviews and advice); Casper Sleep, Inc. v. Mitcham, 204 F. Supp. 3d 632 (S.D.N.Y. 2016) (mattress review site); Purple Innovation, LLC v. Honest Reviews, 2018 WL 840035 (D. Utah Feb. 12, 2018) (mattress review site); Tobinick v. Novella, 848 F. 3d 935 (11th Cir. 2017) (doctor’s blog); Golo, LLC v. HighYa, LLC, 2018 WL 2086733 (E.D. Pa. May 4, 2018) (consumer review dieting site).
5193 F.Supp.3d 556, 570 (E.D. Va. 2016), aff’d, 700 F. App’x 251 (4th Cir. 2017).
6 Id. at 564-65.
7 Id. at 569.
8 Id. (emphasis added).
9 Id. at 572.
11 Id. at 570.
12 Id. at 571.
13 204 F.Supp.3d 632 (S.D.N.Y. 2016).
14 Id. at 635-36.
15 Id. at 641.
16 194 F.Supp.3d 263 (S.D.N.Y. 2016).
17 See, e.g., Tobinick v. Novella, 848 F.3d 935 (11th Cir. 2017); Golo, LLC v. HighYa, LLC, 2018 WL 2086733 (E.D. Pa. May 4, 2018).
18 848 F.3d at 940-41.
19 Id. at 951-53.
20 Barbara Streisand filed a suit seeking to remove an aerial photo of her Malibu home from a website, which resulted in millions more individuals viewing the photo.
To see the of July 2019 The Briefs: https://issuu.com/orangecobarassociationorlando/docs/ocba_the_briefs_july_2019_online