As 2013 was winding down, the law firm of Dewey, Cheatum & Howe also known as www.BestLawfirmEver.com was calculating its partners’ year end distributions. Before the ink was dry, Dewey announced he was leaving, taking an associate AND the law firm website www.BestLawfirmEver.com. Cheatum and Howe were convinced that the domain name and the website stayed with them and the other lawyers at the firm because their client was the web designer Dee Sine. Who wins?
Billy Bob Cooter is spending a Sunday doing what he loves most – attending a NASCAR race to watch his favorite driver Ricky Bobby pilot the #26 Wonder Bread car. It’s a close and exciting race as the drivers begin the final lap towards the checkered flag. With Ricky Bobby in contention, Cooter decides to video the race’s final seconds. As the car rounds the final turn, Ricky Bobby and another driver “trade paint.” The collision sends the #26 car violently into the wall which showers the crowd in debris and seriously injures several spectators. Cooter catches the entire incident on his iPhone and then proceeds to post the graphic video on YouTube, which immediately receives thousands of views. NASCAR executives see the video on YouTube and have it removed on copyright grounds. They argue that posting the video violates the limited license granted to Cooter (and all attendees) on the back of his ticket because NASCAR owns the intellectual property of the race and all of its associated images. Is Cooter within his right to post the video?
Yes. While NASCAR owns the portion of the video dealing with the race, “facts” and “news” are not subject to copyright protection. This issue was addressed in 1997 when the Second Circuit Court of Appeals ruled that the NBA could not prevent Motorola from broadcasting scores and stats from a game, because while the broadcast was protected, facts and news were not. While NASCAR could argue that the broadcast of the race was their property, at some point the race changed from a copyrighted event to a non-copyrighted “news” event when the accident occurred.
Earlier this year, Tyler Anderson, a high school student, posted his 1 minute, 16 second video of a horrific NASCAR crash on YouTube. It was initially reported that NASCAR believed the video infringed on its copyrights and YouTube removed the video stating “This video contains content from NASCAR, who has blocked it on copyright grounds.” However, NASCAR later maintained that the request was made out of respect to the dozens of injured spectators. Subsequently, YouTube reposted the video stating “Our partners and users do not have the right to take down videos from YouTube unless they contain content which is copyright infringing, which is why we have reinstated the video.”
As observed by John McQuaid in his blog for Forbes Magazine:
There are inescapable contradictions between asserting a legal claim over recording everything that happens in a certain place, and then filling that place with tens of thousands of people with the capacity to shoot video and instantly upload it to the Internet, especially when something newsworthy happens, and when your organization is already managing a strong social media effort that depends on interaction with fans. This is where the privatization and monetization of everything meets with the democratization of the digital age.
If they’re smart, the NASCARs of the world will make just enough allowances for news events, while doing what they can to keep a tight lid on video sharing and other forms of fan reporting, from photos to tweets, when nothing out of the ordinary is going on.
But even this safety valve approach is probably untenable as devices get smaller and sharing becomes more a seamless part of life. You cannot contain that urge. You cannot shut down thousands of devices, or paralyze thousands of tweeting thumbs. The notion that no information except the official kind can escape the legal-gravitational black hole of the Daytona Speedway is absurd. It’s not like everyone doesn’t already know that.
Anderson’s video raises all sorts of interesting legal issues and highlights the difficulty of preventing the dissemination of images and video in this age of ubiquitous iPhones and social media. The issue is particularly interesting given the way NASCAR and other sports have embraced the internet and the posting of fan videos on social media.
Local dermatologist Dr. Nomo Ackney’s former patient Idgy Skinn is posting derogatory comments and inferior ratings on HealthGrades.com, Rate MDs.com, Vitals.com, AngiesList.com, TopIx.com and Ackney’s Google Places. He is even calling out and speaking ill of Ackney’s family members and posting Ackney’s home address on Facebook. The complaints detail Ackney’s treatment and allege she is an incompetent doctor, that she committed malpractice and that she got away with it. Does Dr. Ackney have a claim? Who can she sue?
Defamation on the Internet
Yes, Ackney has a claim – for some of the comments – against Idgy Skinn. Saying that Ackney committed malpractice is actionable. Opining that Ackney is incompetent or that she did a bad job probably is not actionable.
Libel. Written defamation (libel) is a catch-all term for any statement that hurts someone’s reputation. Just like plain ‘ole gossip, it must be false, “published” to someone else (like on the internet) and damaging to your business or reputation. In addition, it must cross over the line from protected free speech where you may freely speak your opinion (even if it’s wrong) into the realm of “gone too far.” Some examples of communications that cross the line are those that:
- Suggest a serious crime involving moral turpitude or a felony was committed
- Expose Dr. Ackney to hatred
- Reflect negatively on Dr. Ackney’s character, morality or integrity
- Suggest that Dr. Ackney suffers from a physical or mental defect that would cause others to not associate with her
Idgy Skinn Can Be Sued, But NOT the Internet Site
Many websites permit anonymous postings making it extremely difficult to know who to stop. Knowing that the offender is Idgy Skinn overcomes Ackney’s first obstacle. The 1996 Communications Decency Act, originally intended to slow pornography, also protects any Internet Service Provider from libelous posting damages.
Texas Cases on Internet Libel
Two Texas cases awarded damages for internet libel. Mark and Rhonda Lesher of Clarksville were awarded more than $13 million (later overturned by the Tarrant County trial court judge) for writing anonymous online comments on Topix.com about an alleged sexual assault at their Texas ranch. The second was a $12.5 million jury verdict in favor of Orix Capital Markets, LLC in a complicated defamation case involving statements published on the defendants cleverly named “gripe site” Predatorix.com. The case was settled after the judgment for undisclosed terms.
Tilting the Scales in Your Favor
Consider carefully your options and the time and expense that are likely to be related to each. As the saying goes, “you can sue someone for just about anything.” There are other options before you pull the pin on the litigation hand grenade. Consider –
- Be Proactive – consider releasing your side of negative information first. If it is reasonable, it will be believed. “Nip it in the bud.”
- Be Upfront – consider contacting and offering to meet with the online poster if the negative comments have already been posted. Be conciliatory.
- Apologize if Necessary – consider ‘fessing up to your mistakes. A quick apology is less painful and costly than years of litigation, and is likely to put you in a better light as one who owns up rather than appearing to be clueless and defiant.
- Negotiate to Get the Post Down – consider the cost to get it down. Words are forgotten. Even newsprint fades. The permanence of the web creates a major branding challenge.
- Own Your SEO (Search Engine Optimization) – consider creating your own content and drive the bad stuff down in search engine rankings. Only your worst enemy will look for dirt on you past the first Google search page. See Reputation Repair below.
Managing your internet reputation is not a new idea. In fact Looper Reed regularly works with some of our clients on crisis communications and dealing with damaging or misinformation on the internet. There are also internet service providers and websites like Reputation Changer, Reputation Management Consultants, Integrity Defenders,and Online Reputation Management that promote their ability to clear negative search results arising from an internet search engine.
Dirty Dick’s Crab House is in a dither. Dirty Dick’s owners Pierce Lipp and Gimmy Amira just learned that late last year a completely new domain name – XXX domains – became available. They hear that all sorts of big companies and universities have jumped on the rush to protect themselves from some off color group grabbing their restaurant’s name for prurient purposes. What should Pierce and Gimmy do?First approved by the ICANN in September, open season on the new XXX domains was unveiled to the public late last year. Universities and countless other schools and business rushed to prevent their good names from falling into the hands of the pornography industry. Fearing that they might be exploited by the adult entertainment business, tens of thousands of “.xxx” website names were snapped up. The University of Kansas bought up http://www.kugirls.xxx/ and http://www.kunurses.xxx/ to avoid the clutches of “some unscrupulous entrepreneur.” Kansas University spent nearly $3,000 to protect the names and do nothing with them. Is it a good idea to buy the .xxx suffix domain name to protect your brand?
Tilting the Scales in Your Favor. Many like last Wednesday’s Dallas Morning News columnist Cheryl Hall think that “Triple X Websites Can Cause Super-size Headaches.” They promote protecting your business trademark / trade name. No doubt, that’s the safest advice.
We say, “not necessarily.” You don’t have to buy the domain names to protect your trademark or trade name says our local Looper Reed trademark expert Carol Wilhelm. Like Ms. Hall both Carol and our internet expert Travis Crabtree suggest that there are those who might benefit from purchasing the Triple X sites – Fortune 500 companies, those with unique brand names, churches, schools and other not for profit institutions.
Some businesses complain they are being forced to buy domain names unnecessarily to protect their brand. The cost to protect the name for several decades is less than the $5,000 average cost to litigate with the World Intellectual Property Association the release of a domain name registered by someone other than the trademark owner. The complainers argue that GoDaddy’s “Defensive Registrations” are costing them thousands per year to protect their trademarks against domain squatters. The only winners of this new domain idea, they contend, are the domain registrars who demand $80 to $125 per year for a Triple X domain name.
Practically speaking, unlike “.org” or “.net” it is not likely that someone seeking your website would mistakenly type “.XXX.” And, if someone truly wants to spoof your brand name to create an adult website, they wouldn’t need to buy an “.XXX” domain name. They could find other ways to do so. Curiously, the ones complaining the loudest are the sex sites. They neither would choose to run a live XXX domain website nor do they wish to be forced to use them. Why? Because businesses and parents can block all access to XXX domains, and these companies often get noticed by a slip of the typing finger or a misspelled word.
As is often the case, the legal risk assessment is the relative value of the cost of protection versus the risk and resulting cost from having to later protect your good name. You make the call.
Xavier Breath goes to his local barbershop, the Best Little Hairhouse in Texas, looking for a cut and a new hairstyle to replace his tired comb over. His young stylist recommends a “Justin Bieber” cut, which she says is very popular. Xavier does not know who Justin Bieber is, but agrees to try it out. After an hour in the chair, Xavier looks in the mirror and is very, very unhappy with his $45 haircut. He complains to the owner and demands a refund, but the owner tells Xavier that her stylist did the best she could with the little hair that she had to work with. Xavier leaves the salon in a rage and immediately gets on Zelp.com (an online website where users can leave reviews of various local businesses) and posts a scathing and exaggerated review of the Best Little Hairhouse in Texas. The owner sees the nasty post and brings suit against Xavier for defamation claiming that the untruthful review was hurting business. Will the owner prevail?
Maybe. As the popularity of websites such as Yelp, Angie’s List and Facebook continue to soar, so too have lawsuits brought by companies against those who leave critical comments online. First Amendment activists argue that these lawsuits, often referred to as SLAPP lawsuits (Strategic Lawsuits Against Public Participation), can have a chilling effect on free speech. Nearly 30 states, including Texas, have passed anti-SLAPP laws which work to support Xavier’s defense of freedom of speech. Whether Xavier will be liable will depend largely upon whether his critical review of the Best Little Hairhouse in Texas was truthful.
Tilting the Scales in Your Favor:
For businesses, lawsuits are certainly one avenue to deal with false postings. Sometimes, however, this can lead to further bad publicity. Some businesses manage their online reputation by quickly responding to negative posts. Groups such as Medical Justice seek to protect physicians from internet defamation by having patients sign agreements that give physicians increased control over what patients post online while at the same time fostering a more useful and honest rating system. There are also companies (Looper Reed being one of them) that offer consulting and/or services on how bury the negative review with positive reviews and information. This is particularly effective with Google rankings. For more information on this service, check out http://www.emedialaw.com.
For those leaving an online review, tell the truth. Angry reviewers are prone to seeking revenge by exaggerating the facts and their false statements will serve as a basis for defamation or business disparagement claims.
Gunter Ongway lives in a suburb of Dallas and does not have a car. In preparation for his fantasy football draft (which is to take place at a local restaurant), Gunter uses Google Maps to find walking directions to the restaurant. Directions in hand, Gunter sets out on his journey across town following Google’s directions carefully. However those directions lead Gunter to walk along a narrow six lane highway (without sidewalks) where he is struck by the side mirror of a passing vehicle. Gunter is injured badly and sues Google alleging that his injuries were caused by Google negligently providing him with unsafe directions. Does Gunter have a case?
Probably not. To prove a case for negligence in Texas, Gunter must first show that Google owed him a legal duty. In determining whether a duty exists, courts will look at many factors including the legal relationship between the parties, the foreseeability of injury, the likelihood of injury and other public policy concerns. In all likelihood, a court would find that no special relationship existed between Gunter and Google so as to impose a legal duty. As Google provides directions to Gunter as well as countless other users, the relationship between Google and Gunter is too attenuated to impose any duty on Google. Furthermore, even if Gunter was able to clear the duty “hurdle,” it is quite possible that a jury would find that his recovery was barred by his own negligence. In Texas, Gunter would be barred from a negligence-based recovery, if a jury found that his negligence (and failure to use common sense by avoiding a six lane highway without sidewalks) contributed to more than 50% of the accident.
A lawsuit similar to the fact pattern above was filed last year in a Utah district court by Lauren Rosenberg against Google and Patrick Howard, the driver who hit her. A copy of the complaint can be found at justia.com.
For Amarillo Slim, April 15th this year was much more than “Tax Day,” it was Black Friday when the Justice Department charged the owners of his favorite online poker sites PokerStars, Full Tilt, Absolute Poker and Ultimate Bet, with bank fraud and money laundering and shut them down. In addition to shutting down the websites, the US Attorney General froze Slim’s gaming bank accounts and upwards of $500 million in online poker accounts held by other US online poker players. This morning Amarillo realized that the Justice Department would likely get access to his gambling activities representing significant unreported tax dollars. Will the government likely try to go after Amarillo Slim for undeclared gambling winnings? Maybe so.
Gambling in the United States. The 2006 Unlawful Internet Gambling Enforcement Act prohibits gambling businesses from knowingly accepting bets over the Internet and prohibits banks from processing credit card payments and wire transfers related to gambling. Not surprisingly, banks were also a target on Black Friday because they purportedly enabled the gambling sites to launder money and sidestep the federal gambling laws.
What about Amarillo Slim and the IRS? IRS website Topic 419 – Gambling Income and Losses reminds that all gambling winnings must be reported. Moreover, it is likely that any US Attorney plea deal will require a “cooperation” agreement requiring Full Tilt and the other online sites to disclose its player lists with deposits, withdrawals and balances by year so that the IRS can confirm if all winnings were reported. If not, other issues might possibly include civil fraud penalties, willful failure to file, willful failure to pay, criminal tax evasion, civil penalties of up to 75%, plus interest, time in custody, and if Foreign Bank Account Reports were required and not paid, possible civil and criminal penalties under the Bank Secrecy Act.
Gambling in Texas. Online gambling may not be a crime expressly prohibited in Texas under the Texas Penal Code because there is an exception for gambling in a “private place,” like on your computer in the privacy of your home. If you are in an internet bar or other public place in Texas, it may well be a violation of Texas law in addition to the likely federal law violations mentioned above.
Tilting the Scales in Your Favor. If you were an online gambler, you may want to speak with your attorney or tax preparer to determine whether you are at risk and a response appropriate for your circumstances.
Popeye Church, a budding chef, wanted to revive “country cooking,” with fried chicken as his signature dish. However after many tries, he failed to create a great recipe and became obsessed with cracking the code of the best-kept culinary secret in the fried chicken industry – the inimitable 11 herbs and spices of Pennsylvania Fried Chicken. Popeye tried bribing PFC employees for the receipt and even hired a chemist to unlock the secret ingredients. At wit’s end, Popeye went undercover as a janitor of PFC. Late one night he discovered the secret safe open and snatched a copy of the recipe. However, Popeye’s plans for “country cooking” stardom ran afoul when his investors would not fund his restaurant since his signature dish was stolen from a competitor. Frustrated, Popeye explained to a friend how he got the recipe. Eager to make some money, his friend offered to publish the recipe in his upcoming book, “Original Clone Recipes of America’s Favorite Foods.” Does PFC have a claim against Popeye or his friend who published the book?
“Trade Secrets.” In Texas and most states, if the owner of a “trade secret,” takes reasonable steps to preserve its secrecy, and a third party uses or discloses the trade secret (i) in violation of a confidential or contractual relationship with the owner, (ii) after acquiring it by improper means, or (iii) after acquiring it with notice that the disclosure was improper, then the owner can protect his “trade secret” by injunction and for damages suffered. Popeye, like any other ambitious cook, was free to hire a chemist and to experiment at will to duplicate the secret herbs and spices. When Popeye became an employee of PFC, his search for the recipe crossed the line. PFC has a legal claim against Popeye and his friend.
Wiki Leaks. The parallels between government “trade” secrets released by Julian Assange and his company WikiLeaks, with PFC’s trade secrets are many. In both, their protected information is confidential or “secret;” the “trade secret” owner took reasonable steps to preserve secrecy, and a third party disclosed the secrets. Popeye wanted “country cooking” fame and money; probable leaky source Pfc. Bradley Manning undoubtedly sought something other than money. Both are answerable to their boss. Popeye faces a civil court; Manning may well be facing the Uniform Code of Military Justice. Assange probably violated the Espionage Act of 1917. [See http://lrmlawblog.com/emedialaw/wikileaks-disclosure-of-diplomatic-cables-is-that-legal/] The readers, in both cases, are free to read and use the information as they please. Once published to the world, the “secrecy” is gone.
Tilting the Scales in Your Favor. If you have a trade secret, identify it specifically, in writing, with a confidentiality, nondisclosure or other similar agreement. Beware of using a “boilerplate” form off the internet because only certain kinds of information and subject matter qualify for protection. Overly broad or insufficient language describing the proprietary information can make the agreement unenforceable.
Three may keep a secret, if two of them are dead. Benjamin Franklin (1706-1790).
Experiencing a malaise from mold, allergy-ridden Jayda Byrd believed that her apartment was infested with the filthy fungus. Unfortunately, Jayda’s landlord Sylvester ignored her pleas for deliverance from the mold. At her wit’s end, Jayda twitted her twenty twitter compatriots. The tweet read, “Who said sleeping in a moldy apartment was bad for you? Sylvester thinks it’s okay.” All atwitter, eight days later Sylvester filed a lawsuit claiming that Jayda “maliciously and wrongfully published the false and defamatory tweet on Twitter, thereby allowing the tweet to be distributed throughout the world.” Sylvester, who owns over 1500 apartments, demanded damages “in excess of $50,000.”
When asked why he filed the lawsuit, Sylvester fanned the flames by declaring that he was a “sue first, ask questions later kind of guy.” Not surprisingly, the blogosphere exploded. Responding to the online outrage, Sylvester quickly issued a news release, and described his “sue first” comment as “tongue in cheek” and offering lengthy details to explain his conduct.
Tilting the Scales Your Way.
When does gossip cross the legal line to become defamation that damages a person’s reputation? Believe it or not, the story of Sylvester and Jayda is true (though the names have been changed). Whether it is written (libel) or verbal (slander), a plaintiff generally must first show that the defamatory statement was published (yes, email and tweets count), that it was false, and that it caused injury. Often, the greatest risk associated with a defamation lawsuit is the cost to respond to the litigation, which may well be what Sylvester intended under these circumstances. Nevertheless, his litigation strategy most certainly backfired!
Do you think that the blogosphere cares to read Sylvester’s detailed news release attempting to justify his conduct? Was it worth it for Sylvester to appear to throw his weight around by suing Jayda? Does any businessman or company want to have the moniker, “Sue first, ask questions later?” Perhaps the “tilting the scales” advice is obvious this month. Sylvester is not the first to find himself in public relations hot water for stray comments that find their way to the public through the internet. While the question for the state court and judge may be whether these facts amount to evidence of defamation, Sylvester has already been tried and found guilty in the court of public opinion. While we as trial lawyers would love to think otherwise, “Sue first and ask questions later,” may need some rethinking.
Related Stories & Resources
For Jayda’s lawsuit, check out Horizon Group Management, LLC v. Amanda Bonnen, filed in the Circuit Court of Cook County, Illinois on July 20, 2009.
Bonnen is not the first to be sued for defamatory tweets. Courtney Love, a Celebritweet, had a tweezure and unloaded on her clothing designer who responded with litigation, Dawn Simorangkir, aka Dawn Younger-Smith, aka Boudoir Queen v. Courtney Michelle Love, filed in the Superior Court of the State of California for the County of Los Angeles on May 26, 2009.
Even T.O. made the blogosphere when he tweeted his disappointment that his Buffalo leasing agent provided details about his favorite new house prospect to the media.
In response to our “You’ve Got MAIL, AND a Contract?!” blog posting in May, one of our favorite Tilting readers asked for any tips on avoiding an e-mail signature that creates a written agreement.
Disclaiming Signatures. The Tilting team is not aware of any authoritative recommendation for language disclaiming the creation of an enforceable contract by the exchange of e-mails. In fact, the general intent of relatively recent electronic communications statutes is to facilitate business transactions by permitting enforceable electronic contracts, not to hinder them. Having said that, businesses may wish to avoid creating an enforceable contract unless one is expressly intended. Probably the most simple response is just to say that in a disclaimer or signature at the bottom of each e-mail.
For example, the following might suffice:
No Binding Agreement. This e-mail, taken by itself or with others, is neither an offer nor an acceptance of any terms or conditions that might become an agreement. Only written terms and conditions on paper and executed in ink by hand and by an authorized person, may become a binding agreement, notwithstanding any electronic communications or transactions statutes that may suggest otherwise.
However, if the parties do wish to transact by e-mail communications, it would be prudent to eliminate the following language from any e-mail intending to cement an enforceable agreement.
OUR OWN DISCLAIMER! No Surprise, Right? As far as we know, no Texas court has written on this issue, nor is there a specific Texas statute. These are practical business thoughts only and definitely ARE NOT LEGAL ADVICE.