Yelp! survives complaint of extortion

Does a web site’s manipulation of publicly available positive and negative reviews rise to the level of extortion?  In a September 2, 2014 opinion, the Ninth Circuit said not necessarily.  In affirming the district court’s dismissal, the Ninth Circuit in Levitt v Yelp, No. 11-17676, stated that “unless a person has a preexisting right to be free of the threatened economic harm, threatening economic harm to induce a person to pay for a legitimate service is not extortion.”  Id. at 13.

Plaintiffs—all small business owners—filed suit under California’s Unfair Competition Law, alleging that Yelp! actively pushed negative reviews to the top of the results queue for businesses that did not advertise with Yelp!.  In addition, plaintiffs alleged that Yelp! would remove positive reviews altogether to give the businesses an overall lower “star” rating.  Finally, plaintiffs alleged that Yelp! itself wrote negative reviews of the businesses.  If the business owners were to advertise with Yelp!, the complaint stated, Yelp! would massage the reviews to improve the “star” rating and ensure potential customers would see more favorable reviews.  Yelp! moved to dismiss arguing that the allegations in the complaints, even if true, could not support a cause of action.

The Ninth Circuit only considered plaintiffs’ Unfair Competition Law claim, which required a showing of acts or practices that are unlawful, unfair, or fraudulent.  Extortion, as the court stated, is the obtaining of property from another induced by wrongful means, but according to the court, threats of economic harm are not generally considered harmful.  Slip op. at 13.  Because the business owners had no right to be free from negative reviews, no extortion existed under the Unfair Competition Law.

All may not be lost for business owners plagued by this issue, however.  The Ninth Circuit, on several occasions in the opinion, hinted that there may be additional causes of action available to the plaintiffs, such as trade libel law, breach of contract, tort of civil extortion, and the Communications Decency Act (“CDA”).  In addition, the Ninth Circuit pointed out that the plaintiffs brought forth no evidence of directly threatened economic harm (page 19) such as reputational harm (page 20).  In short, plaintiffs failed to allege enough factual content.

In the past, Yelp! has successfully invoked the CDA’s safe harbor clause against charges of negative reviews.  But at least one court has held that manipulation of third party content effectively ascribes authorship, at least in part, to the manipulator.  See Doctor’s Assocs., Inc. v. QIP Holder LLC, Civ. No. 3:06-cv-1710 (VLB) (D. Conn. Feb. 19, 2010) (denying motion for summary judgment that Quiznos’ solicitation of disparaging videos about Subway were protected under CDA’s safe harbor).

As a side note, the California Governor recently signed into law California Assembly Bill 2365, legislation nicknamed the “Yelp bill,” which will prohibit businesses from including “no disparagement” clauses in their consumer contracts.  The new law takes effect on January 1, 2015.

Seth Jaffe (seth.jaffe@nortonrosefulbright.com / +1 713 651 5370) is an associate in Norton Rose Fulbright’s Intellectual Property Practice Group.

Facebook “Likes” Found to Be Protected Activity

On August 22, 2014, in Three D. LLC d/b/a Triple Play Sports Bar and Grille, the National Labor Relations Board (NLRB) held that an employer violated the National Labor Relations Act (NLRA) after terminating employees for commenting on and “Liking” a former employee’s Facebook post.

In January 2011, a former Triple Play employee complained on her Facebook page that Triple Play Sports Bar had failed to deduct the correct amount of state income tax from her paycheck. Two current employees “Liked” the comment and responded with similar complaints.  When they arrived for their shift the following day, the owner of Triple Play questioned them about the meaning of the “Like” selection and whether other employees participated in the discussion.  Following the interrogation, Triple Play terminated the employees.

The NLRB interpreted the “Like” as an expression of approval of the initial post and thus could qualify as protectable, concerted activity.  In their brief to the NLRB, Triple Play conceded that the string of Facebook posts constituted concerted activity about wages and income tax withholdings.  Triple Play, however, argued that the Facebook posts and “Like” lost the protections of the NLRA because they were disparaging and intended to undermine the owner’s authority in the workplace. The NLRA does not protect comments that are disloyal or defamatory.

The NLRB disagreed with Triple Play, finding that the posts were not intended to disparage its business to the general public.  Rather, the Facebook comments were more akin to a private conversation than a public declaration because they were made on a “personal” Facebook page.  The NLRB also found that the posts were not defamatory because there was no evidence that the employees’ complaints about incorrect income tax deductions were untrue.

The NLRB also determined that Triple Play’s social media policy violated the NLRA.  The policy prohibited employees from “engaging in inappropriate discussions about the company, management, and/or co-workers.”  Because the employer was the arbiter of what constituted an “inappropriate” discussion under the policy, the NLRB found that employees would reasonably understand the policy to mean they were precluded from making the type of comments about wages and withholdings at issue in the case.  If you’re looking for more information about how to craft a social media policy that is designed to meet the NLRB requirements, see our previous posts:

 


Heather Sherrod (heather.sherrod@nortonrosefulbright.com / +1 713 651 5163) is a lawyer in the US employment and labor practice.

Social Media Accounts After Death – Delaware’s New Law

After January 1, 2015, individuals whose wills are governed by Delaware law can have their digital assets and digital accounts accessed and controlled by their personal representatives of their estates, courtesy of a new Delaware law.  Modeled on the uniform model Fiduciary Access to Digital Assets Act, the Delaware law vests the decedent’s personal representative with the same authority as the owner of the digital assets.  Upon request of the personal representative for access to, transfer of, copy of, or destruction of the digital asset, the online service provider/web site has 60 days to respond to such a request.  If there is no response, the personal representative is authorized to obtain a court order.

This procedure differs from current procedures that social media sites have adopted, as we have previously written. The Delaware law may also raise issues under the Stored Communications Act portion of the Electronic Communications Privacy Act.  In general, the Stored Communications Act does not permit service providers to release accounts in civil dispute matters without the owner’s consent.  Note that the Delaware law provides an indemnity to service providers that comply with the state law.

With respect to companies, the Delaware law excludes those accounts:  “Digital assets and digital accounts of an employer regularly used by an employee in the usual course of business are not subject to the provisions of this chapter.”

How does your company handle its digital accounts when the persons running them are no longer employed, for whatever reason?


Sue Ross (susan.ross@nortonrosefulbright.com / +1 212 318 3280) is a lawyer in Norton Rose Fulbright’s US intellectual property practice.

Facebook de-friends FriendBook

A trade mark application for ‘FriendBook’ has been refused by the Australian Trade Marks Office, following a successful opposition from Facebook.

Australian company Northsword Pty Ltd filed an application on 19 February 2012 for the word mark ‘FriendBook’ in respect of Class 45 services for:

Consultancy services relating to social planning; dating and social introduction services provided via online personal advertisements; escort agencies (social); providing information, including online, about personal and social services meeting the needs of individuals; social escort agency services; social escorting; social work services.

Facebook opposed this application under Australia’s Trade Marks Act 1995  under Section 60, which allows opposition to a proposed registration of a trade mark on the grounds that:

  1. another trade mark had, before the priority date for the registration of the first-mentioned trade mark in respect of those goods or services, acquired a reputation in Australia; and
  2. because of the reputation of that other trade mark, the use of the first-mentioned trade mark would be likely to deceive or cause confusion.

To satisfy the first part of the above test, Facebook relied on the reputation of seven different marks. Facebook has a large portfolio of trade marks in Australia, which offer protection for its brand across a number of classes of goods and services. The first limb of that test was easily satisfied.

The second limb was also satisfied. Australian trade mark law, generally speaking, assesses the following factors when deciding whether a mark is likely to deceive or cause confusion:

  • the nature of the goods/services claimed;
  • the way in which the marks are used;
  • the comparison of the marks – including any stylistic elements used;
  • the class of customer to which the mark is directed;  and
  • whether the goods/services are cheap items or expensive items (for example, customers purchasing luxury or expensive items are thought to exercise more caution).

In assessing the confusion, the Trade Marks Hearing Officer considered that:

  • the two trade marks are not the same when you consider the trade marks as a whole;
  • however, the respective trade marks share the same structure of a single syllable word beginning with the letter “F” preceding the highly unusual word BOOK when you consider they are being applied to online social networking services; and
  • the word “book” does not appear to have any descriptive meaning when applied to such services and is therefore a striking term that consumers are likely to recognize and remember.

She concluded that, overall:

given the reputation evidenced by the opponent in its FACEBOOK trade mark both overseas and in Australia, a significant number of consumers would at the very least experience a reasonable doubt as to the existence of some sort of connection between the FACEBOOK trade mark and the applicant’s FRIENDBOOK trade mark, particularly when these trade marks are applied to the same social networking services.

The success of Facebook’s opposition is interesting, as opposition to a mark based on reputation in Australian trade mark law can be a ‘double-edged sword’. An evolving principle in Australia is the notion that if a registered trade mark’s reputation is overwhelming that can be taken into account in the assessment of whether an opposed mark is likely to deceive or cause confusion.  For Ian Thorpe, the Olympic swimmer, his trade mark Thorpedo was found to be so synonymous with him that it reduced the risk that consumers would be confused by similar marks.  That argument does not appear to have been raised by Northsword.

An appeal (and in some instances an application for an order for review) may be made to the Federal Court or the Federal Circuit Court in Australia. At the time of this blog post, it still remains to be seen whether Australians will be browsing their ‘Friendbooks’ any time soon.


Luke Hawthorne (Luke.Hawthorne@nortonrosefulbright.com / +61 2 9330 8736) is a lawyer in Norton Rose Fulbright’s Australia IP practice.

A new addition to Norton Rose Fulbright’s blog network – Regulation Tomorrow

Our readers are probably familiar with our various blogs, which are listed at the bottom of this page.

We are pleased to announce that the Financial Services:  Regulation Tomorrow blog has just gone international.

Readers from Australia, Canada, the EU and UK, and the US will find financial services postings specific to their countries as well as postings of general interest, including this posting on social media.


Sue Ross (susan.ross@nortonrosefulbright.com / +1 212 318 3280) is a lawyer in Norton Rose Fulbright’s US intellectual property practice.

 

Social media: What happens to your account when you die?

Will you instruct your executor to memorialise or close your Facebook account or will you sign up to DeadSocial to post goodbye messages posthumously? The US government has created guidelines for dealing with your digital afterlife. It also provides a template social media will. The US government’s first guideline is to read the terms and privacy policies of the various social media websites. Let us break it down for you…

Twitter:

  • Will deactivate a deceased’s account on request by a person authorised to act on behalf of the estate or by a verified immediate family member.
  • Requires the following information to be sent by fax or post to its head office in San Francisco in order to process the request:
    • Deceased’s username (for example, @fake_username);
    • Death certificate;
    • Deceased’s identity document; and
    • A signed statement from the requester which includes:
      • First and last name;
      • Email address;
      • Contact information;
      • Relationship to the deceased;
      • Action required (i.e. “Please deactivate Twitter account”);
      • Evidence that the account belongs to the deceased (if the name of the account does not match the name on the death certificate); and
      • A link to an online obituary or a copy of a newspaper obituary (optional).
  • May contact the requester via email if further information is required.
  • Also accepts requests from immediate family members and other authorised individuals for the removal of images or videos of deceased individuals from when critical injury occurs to the moments before or after death. Requests to remove images or video can be sent to privacy@twitter.com. Twitter considers public interest factors when reviewing such requests (such as newsworthiness of content) and may not be able to honour every request.
  • May also deactivate inactive accounts after six months.

Facebook:

  • May memorialise (i.e. the deceased’s timeline is kept on Facebook but access and some features are limited) the account of a deceased person. Anyone can make the request to memorialise the profile, it does not have to be a family member or executor.
  • Requires the following information in order to memorialise an account:
    • Full name of deceased person as it is listed on the account;
    • A link to the Timeline for Facebook to investigate to ensure that it does not memorialise the account of someone with the same name;
    • Email addresses listed on the account;
    • Requester’s relationship to the deceased person;
    • Date of death;
    • Proof of death (for example, a link to an obituary or news article);
    • Requested action (i.e. to memorialise account); and
    • Requester’s contact email.
  • May process certain special requests, including requests to close an account, on receipt of a formal request from a verified family member or an executor of the deceased’s estate. Closing an account will completely remove the deceased’s profile and all associated content from Facebook so that no-one can view it.
  • Requires verification that the requester for special requests is an immediate family member or executor and will not process the request if they are unable to verify the requester’s relationship to the deceased person. Verification includes:
    • Providing the deceased’s persons birth certificate;
    • Providing the deceased’s persons death certificate;
    • Providing proof under local law that the requester is the lawful representative of the deceased person or their estate.
  • Will not provide anyone with login information to the deceased’s account.

LinkedIn:

  • May close a deceased persons account and remove their profile on receipt of a request (anyone can make the request to remove the profile, it does not have to be a family member or executor).  To do this the requester needs to answer some questions about the deceased by filling in a form via DocuSign. The form requires the following information:
    • Deceased’s name;
    • The company the deceased worked for;
    • The requester’s relationship to the deceased;
    • Link to the deceased’s profile; and
    • Deceased’s email address (if possible).
  • May, in closing an account, remove content associated with that account, for example, recommendations posted by the deceased on other profiles. There is no option to “memorialise” an account.
  • If the account is not closed the deceased’s LinkedIn connections will continue to receive notifications to endorse the deceased or to congratulate the deceased on a work anniversary or birthday. Users have reported that even profiles of closed accounts of deceased persons continue to be displayed in the “people you may know” notifications.

[Terms as at 27 August 2014]

No Secret in Brazil

The popular social networking app “Secret” has reportedly been temporarily enjoined in Brazil. A civil court in Brazil ordered both Google and Apple to remove Secret from their respective app stores, and to pull the apps from the phones of their users.

In its opinion, the Brazilian court raised concerns that Secret’s anonymity feature can become an instrument of cyberbullying. Indeed, the case was brought by a young marketing consultant who complained of intimate photos of himself being shared anonymously, leaving him no legal recourse.

Brazil is not the only jurisdiction dealing with anonymity issues related to social media. In the United States, companies have run into problems bringing anti-defamation suits against authors of anonymous postings. But in at least one case, a Virginia court has pierced the anonymity of Yelp reviews, forcing Yelp to identify the names of users that posted negative reviews of the plaintiff.

Read other Social Media Law Bulletin posts on anonymous postings.

 

Seth Jaffe (seth.jaffe@nortonrosefulbright.com / +1 713 651 5370) is an associate in Norton Rose Fulbright’s Intellectual Property Practice Group.

Social media ads and physical injury

Can social media ads lead a court to hold a business responsible for a physical assault that occurred after the customer left the business’ premises?  On July 9, 2014, a federal trial court in Pennsylvania ruled in Paynton v Spuds that the restaurant’s marketing and ads on Facebook were a “significant” factor in denying the business’ motion for summary judgment.

The case involved a restaurant located in a college town  The restaurant, Spuds, did not serve alcohol, but was located near several establishments that did.  The restaurant, like many businesses, chose to advertise around local events.  For example, the restaurant advertised on Facebook:  “Don’t forget to come get some Spuds after dollar drinks tonight!  We are open until 3 AM!”

One late night during college homecoming, the plaintiff and his companions were subjected to abusive behavior by several defendants in the restaurant.  The trial court found that the videotape surveillance was inconclusive as to whether the Spuds staff condoned this behavior.  The plaintiff claimed he feared for his safety and left the restaurant.  He was attacked two storefronts away, resulting in a traumatic brain injury and permanent damage to his right eye.

In this civil action, defendant Spuds moved for summary judgment based on the general principle that a business is not responsible for conduct that takes place off its property.  The court denied the motion, stating that the assault “might credibly be related to events occurring inside Spuds.”  Moreover, “I place significant weight on the nature of Spuds’ business, that is, marketing itself as a destination for young people after a night of consuming alcohol at nearby bars.”

Does your business advertise in connection with events where alcohol can be served or other potentially dangerous conduct can occur?  Have you reviewed your social media ads lately?

 

Sue Ross (susan.ross@nortonrosefulbright.com / +1 212 318 3280) is a lawyer in Norton Rose Fulbright’s US intellectual property practice.

Introducing our social media Glossary of law

Norton Rose Fulbright’s Social Media Bulletin is proud to offer a Glossary of Law describing various statutes involved in social media issues. The Glossary includes links to our respective blog posts on the statutes.

Take a look at our Glossary Section for more information and a list of these statutes.


Seth Jaffe (seth.jaffe@nortonrosefulbright.com / +1 713 651 5370) is an associate in Norton Rose Fulbright’s Intellectual Property Practice Group.

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