In Goodman v. Does, plaintiff Todd Goodman alleged various defamation and federal unfair competition (Lanham Act) claims stemming from postings on the website localdirtags.com, a blog, which was run by the defendant Linda Lagoy. Goodman v. Does 1–10, No. 4:13–CV–139, 2014 WL 1310310 (E.D.N.C. Mar. 28, 2014). The court noted that Goodman, who was a licensed auto mechanic and owner of an automotive and transmission repair shop in Raleigh, North Carolina, was the target of an “extraordinarily aggressive smear campaign” on the website. In addition to articles regarding Goodman’s alleged criminal record, the website included articles and comments on those articles that alleged that Goodman cheated his customers, refused to fix substandard work without additional payment, and generally overcharged his customers. Goodman alleged that Lagoy, who admitted that she was the website creator and author of many of the articles, posted most of the comments on articles that were posted on the blog. Further, Goodman alleged that any comments that reflected positively on his business were immediately deleted.
Lagoy, who represented herself pro se, moved to dismiss the Lanham Act claim for failing to state a claim upon which relief could be granted. The court agreed and granted the motion.
A Lanham Act claim for false advertising may only proceed when a plaintiff sufficiently alleges that (1) the defendant made a false or misleading description of fact or representation of fact in a commercial advertisement about his own or another’s product; (2) the misrepresentation is material, in that it is likely to influence the purchasing decision; (3) the misrepresentation actually deceives or has the tendency to deceive a substantial segment of its audience; (4) the defendant placed the false or misleading statement in interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the misrepresentation, either by direct diversion of sales or by a lessening of goodwill associated with its products. PBM Prods. LLC v. Mead Johnson & Co., 639 F.3d 111, 120 (4th Cir. 2011).
The issue in this case was the first element: did the blog postings and comments constitute “commercial advertisements”? The court stated that a particular statement is only “commercial advertisement or promotion” where it is: “(1) commercial speech; (2) by a defendant who is in commercial competition with plaintiff; (3) for the purpose of influencing consumers to buy defendant’s goods or services; (4) disseminated sufficiently to the relevant purchasing public.” The legislative history of the amendment adding the false advertising cause of action to the Lanham Act notes states that “[C]onsumer or editorial comment” that might be disparaging is excluded.
Because Goodman alleged that Lagoy’s commercial interest in the case was driving traffic to her website, not diverting business from Goodman to his competitors, the court held that Goodman had failed to sufficiently allege that the internet postings constituted “commercial speech.” Further, the court noted that while the statements may support a claim for defamation, they did not constitute commercial speech because none of the statements proposed a commercial transaction or competitor solicitation.
Furthermore, the complaint did not adequately allege that any of the allegedly defamatory statements came from any of Goodman’s competitors, who would have had an economic interest in disparaging Goodman’s business. The court noted that while, a “pure competition” requirement was “somewhat in question” after the Supreme Court’s decision in Lexmark International v. Static Control Components, the Lexmark decision did not eliminate the commerciality requirement. No. 12-873, 572 U.S. ___ (Mar. 25, 2014).; for information about the Lexmark decision, see the Norton Rose Fulbright summary, “Supreme Court decision resolves circuit split on prudential standing in Lanham Act disputes,” March 2014.
The Goodman court stated that it could not reasonably infer that the blog posts and comments were commercial competitors’ statements, because on their face, the tone of the statements reflected consumer reviews by consumers that would have no commercial interest in the postings themselves. The court acknowledged that this “issue was complicated by the fact that Goodman did not know the identities of the defendants at this stage in the proceedings.” The court stated that if the plaintiff had a good faith belief that the anonymous postings were made by competitors, it would have been open to allowing the claim to proceed and that nothing in the ruling would preclude Goodman from later asserting a Lanham Act claim should he become aware of facts that would lead him to that good faith belief.
As this case shows, prior to bringing a false advertising cause of action based on blog postings and comments, individuals and companies should assess whether the defendant has a commercial interest in the postings and whether the company or individual has a good faith basis to believe that the postings were made by competitors. As has been described elsewhere on this blog, identifying anonymous commenters can be difficult. See “Identifying anonymous reviews.”