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Source: http://www.law.com/jsp/article.jsp?id=1101738481523

Trademark Lawsuits: The Price of Online Griping Companies sue to close 'gripe sites' Tresa Baldas The National Law Journal December 2, 2004

Scores of disgruntled customers who criticize businesses on Internet "gripe sites" are finding themselves entangled in costly court battles with companies charging trademark infringement. But the courts aren't buying the trademark argument, and have consistently upheld the free speech rights of people who vent about companies on the Internet. Critics charge that companies are merely attempting to wear down defendants through costly litigation.

"Trademark law is being used improperly, in our view, to suppress perfectly legitimate, noncommercial speech, which we think is just beyond the purview of the trademark laws," asserted attorney Paul Levy of the Public Citizen Litigation Group, which is currently handling five gripe-site lawsuits. Trademark attorney Virginia Richard, who advises many companies on the subject of gripe-site suits, disagrees. "It's the obligation of the trademark owner to protect its mark and in my view these cases are filed in good faith," said Richard, who heads Winston & Strawn's intellectual property department in New York. "They're not trying to bully or otherwise," she said. According to a Web site called www.Webgripesites.com, there are currently more than 70 gripe sites on the Internet criticizing everything from car makers to hair-transplant providers to insurance firms. Of those, 25 have been involved in litigation in recent years, while just two have been shut down. Currently, about a dozen gripe-site lawsuits are pending across the country. Lawyers tracking such suits allege that the trademark violation claims are bogus; they argue that companies are merely trying to bully defendants into backing down and shutting down their Web sites. "They know that they're not going to win, but do it hoping that they're going to intimidate people," said attorney David Arkush, also of the Washington-based Public Citizen Litigation Group, who is handling a gripe-site lawsuit in North Carolina. "Companies that initiate this litigation know they probably won't win but do it in hopes of silencing their critics anyway because, obviously, it's very expensive to defend a case like this," Arkush said. While Richard strongly defends a company's right to protect its trademark, she also noted that she does not recommend that her clients -- who have been hit with gripe sites -- file trademark violation suits. They're hard to win, she said, and they can create a public relations nightmare. "The impact [of gripe sites] overall is minimal, whereas the publicity that may arise from a lawsuit could do more damage than the site itself," Richard said. "And if you look at the precedent it's not encouraging." THE BAD LAWN JOB There have been several court rulings in recent years that uphold a person's right to criticize companies on the Internet. Most recently, the 5th U.S. Circuit Court of Appeals ruled in favor of a man who set up a Web site to complain about how he was treated during a home purchase. TMI v. Joe Maxwell, 368 F.3d 433 (5th Cir.). Another big win for gripe-site advocates came out of the 6th Circuit, which in March upheld a woman's right to create a noncommercial Web site on which she criticized a landscaping company for an allegedly botched lawn job. The Web site bore the company's name as the domain name. Lucas Nursery and Landscaping v. Grosse, 2004 WL 403213 (6th Cir.). In Lucas Nursery, the landscaping company had successfully convinced the woman, Michelle Grosse, to take down the Web site, but persisted in suing her for $100,000 damages, alleging that she had tried to hurt the company's business through the site. But a trial judge ruled in the woman's favor, and the 6th Circuit affirmed. In its opinion, the appellate court wrote: "Perhaps most important to our conclusion are Grosse's actions, which seem to have been undertaken in the spirit of informing fellow consumers about the practices of a landscaping company that she believed had performed inferior work on her yard." IP expert Jeremy D. Bisdorf, who represented the defendant in Lucas Nursery, sees the court ruling as a word of caution to companies considering similar litigation. "I think it's an eye-opener for businesses to know that the courts aren't just going to roll over because you're the bigger party," said Bisdorf of Raymond & Prokop in Southfield, Mich. Lucas sued Grosse under the 1999 Anticybersquatting Consumer Protection Act, a federal law that gives trademark and service mark owners legal remedies against defendants who obtain domain names "in bad faith," or that are identical or confusingly similar to a trademark. To win a cybersquatting case, a plaintiff must prove that the defendant has a bad-faith intent to profit from that mark. Attorney Kevin Bennett, who represented the nursery, was discouraged by the appellate ruling. He said that while Grosse did not financially profit through her gripe site, she profited in another way: She gained satisfaction by airing her grievances, which in turn hurt the company, he said. "This is not a free speech issue like a lot of attorneys are trying to say," said Bennett of Hemming, Polaczyk, Cronin, Smith & Witthoff in Plymouth, Mich. "Our position was that she can't use another person's service mark as a Web domain to air her grievances." In the last two years, the nonprofit Public Citizen Litigation Group has handled scores of gripe-site lawsuits that involve a variety of free speech controversies. Among the current lawsuits are: a man arguing for the right to run a Web site criticizing Jerry Falwell's views on homosexuality; a California man upset with a hair transplant who wants to report problems with the medical provider on a Web site; and a couple being sued for launching a Web site to gripe about a spray-on siding product used on their home. The latter is the most recent case to hit the courts. On Sept. 17, Alvis Coatings of Charlotte, N.C., sued Alan and Linda Townsend for trademark infringement and are seeking $75,000 in damages. The company was upset about a Web site at www.spraysiding.com in which the Townsends criticize the company's product and run testimonials of other dissatisfied customers. Alvis Coatings Inc. v. Alan and Linda Townsend, No. 304 CV482K (W.D.N.C.). Arkush, the Townsends' lawyer, sees no merit to the trademark claim, saying "it's ludicrous to think that this Web site is affiliated with Alvis or that the Townsends are trying to make money on the Alvis marks." He accused Alvis of abusing the law to quash criticism. "The First Amendment protects consumer criticism and they can't try to use the courts to silence the criticisms," Arkush said. "The message hasn't gotten through yet [to businesses] and that's why it's important to keep litigating these cases and winning these cases." Alvis Coatings' lawyer, Jason Sneed, of Atlanta-based Alston & Bird's Charlotte, N.C., office, did not return calls seeking comment. Attorney Ronald L. Burdge, who is representing an Ohio man who started a gripe Web site about American Suzuki Motor Corp., agrees, alleging that Suzuki is using the law to intimidate his client. "They're trying to bully him, pure and simple," alleged Burdge of the Burdge Law Office in Dayton, Ohio. Burdge's client, Eric Wiedemer, is involved in a lemon-law lawsuit with Suzuki over a car he bought. Eric Wiedemer v. American Suzuki Motor Corp., No. A0409386 (Hamilton Co., Ohio, Municipal Ct.). Wiedemer started a Web site called www.MySuzukiLemon.com, in which he criticizes the company over its handling of an allegedly defective car he bought. According to Burdge, Suzuki has agreed to buy back the car, but has refused to pay Wiedemer's attorney fees, and has demanded he remove his gripe site as a precondition for buying back the car. Wiedemer refused, and filed a lawsuit against Suzuki on Nov. 19 in Ohio's Hamilton County Municipal Court. "I think he has absolutely every single right to complain about not just a product that was bad, but about a company trying to bully him," Burdge said. "If people had the Internet and had launched gripe sites long ago, companies would have built products a lot better ... long ago." Suzuki's lawyer, H. Toby Schisler of Dinsmore & Shohl in Cincinnati, declined to comment because the case is pending. Law professor David Johnson, who teaches Internet law at New York Law School, said it is unclear why companies continue to sue over gripe sites on the ground of trademark infringement. "I suppose companies really don't like to be criticized," he guessed. But Johnson, like others, believes that companies see court as a scare tactic, hoping to discourage people from running critical Web sites because they can't afford a lawyer. "It is unfortunate that in some cases law can be used as a blunt weapon, partly by imposing costs on individuals who don't have the resources to fight back," he said. ONLY LOGICAL MOVE? But sometimes court is the only logical place to go for companies struggling to deal with gripe sites, said trademark attorney Joseph Berghammer of Banner & Witcoff in Chicago. "When you sue them, now you're in a realm where a corporation is very comfortable," Berghammer said. "When it gets serious enough, corporations bring it back into a field that they understand. I have seen that individuals [who are sued] will become a little shier about just shooting off with whatever they want to say." Berghammer went on to say: "In many cases, filing a lawsuit is a way to ratchet up the professionalism of the dispute rather than dealing with the Wild West of the Internet." He said that in the last year, about a half-dozen times clients have complained to him about being criticized on gripe sites. Berghammer has not recommended suing because the criticisms don't merit a lawsuit, he said. However, Berghammer said, he understands why some companies pursue litigation despite the long odds. Some believe their cases are different from the ones that have lost. Some may try to argue that the gripe site is "diluting" their trademark, a relatively new argument in the trademark arena. And some just simply feel their trademark is in danger, he said. "They may think, 'What else can I do? The law tells me I need to enforce my mark. This is disparaging my mark, and I want this potential individual to know that we take this very seriously,'" Berghammer said. Copyright 2007 ALM Properties, Inc.