A New Retail Twist On Copyright Defenses

Attorney Mark D. Rasch is the former head of the U.S. Justice Department's computer crime unit and today is a lawyer in Bethesda, Md., specializing in privacy and security law.

Part of any retailer’s effective brand protection strategy has to include an "Open Source Monitoring" program – you know, monitoring social media and webpages for anything that could impact your good name, from defamatory comments about your CEO to photographs of employees taking a bath in the sink. If defamatory or other materials are found, an affected retailer’s recourse is usually to either negotiate for the defamatory materials to be taken down by the poster or hoster (usually under Terms of Service) or sue to get a court to order that the materials be removed. But a recent lawsuit filed in Massachusetts introduces a novel way to get defamatory materials removed – copyright law.

There are lots of "bad things" people can do to impact a brand online. They say nasty things about a product, service, or brand. Some of these are protected speech and mere opinion (e.g., Pizza Hut pizzas taste like cardboard or the service at Denny’s is slow) and some may be defamatory because it is both false and not protected opinion. While courts typically give wide latitude to protected speech, a false claim for example to have found a finger in a Wendy’s Chili (or worse, a true claim when you put the finger there) can give rise to litigation.

Other bad things people can do online include trademark infringement or dilution (e.g., putting up a website advertising Veeagra), trade secret violations (publishing the secret formula for Coke Zero), and copyright infringement. Each of these "bad acts" invokes a separate body of law with a separate set of remedies. For example, Section 230 of the Communications Decency Act gives retailers broad immunity for things other people post on their website, providing "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." So if someone posts something defamatory about your company or personnel on a website, the CDA immunizes the website operator from liability even if they refuse to take the defamatory materials down.

But copyright law is different. Under the takedown provisions of the Digital Millennium Copyright Act (DMCA), if you suspect that materials being hosted by an Online Service Provider (including an ISP) violates a copyright, you can notify them of the infringement, and they must either remove the infringing materials, get an assurance from whomever posted them that they do not infringe, or face liability themselves for copyright infringement.

Got it?

If the materials are defamatory, the ISP has no liability. If infringing, they must take it down or they do have liability. So copyright infringement allegations are much easier for the retailer to take care of. Why? Because copyright holders (e.g., movie and record companies, software vendors and others) have more powerful lobbyists than people who might be defamed, probably.

Therefore, is there an easy way to turn a Defamation into an Infringement? If somebody says something defamatory (or otherwise actionable) against you, and the website refuses to take it down, how can you use copyright law to remove it? This was the problem faced by Boston Attorney Richard Goren. An Arizona entity called XCentric Ventures runs a website called "Ripoff Report" where they invite people to post dirt about people, companies or anything. Needless to say, with a name like "Ripoff Report," it is unlikely that the materials posted will be complimentary to the subjects. The problem is, relying at least in part on Section 230 of the Communications Decency Act, XCentric refuses to remove any posted content no matter what. It is up there permanently. Well, not exactly "no matter what," according to both the lawsuit and published reports. XCentric will remove these materials as part of the "Corporate Advocacy Program." In other words, if you don’t want to be defamed, you have to pay them.

This is similar to problems many retailers face with entities like Yelp, Angie’s List, or other consumer rating services. It is almost impossible to get bad reviews removed, even if the reviews are false and defamatory.This is similar to problems many retailers face with entities like Yelp, Angie’s List, or other consumer rating services. It is almost impossible to get bad reviews removed, even if the reviews are false and defamatory. The Ripoff report is worse because, at least according to the lawsuit, the Corporate Advocacy Program is little more than an extortion attempt. At least that’s what they claim.

But the Ripoff Report is protected by the CDA and has immunity. So what does Attorney Goren do when the report posts information that he "routinely seizes assets from the elderly" and "routinely perjures himself to State authorities" and "has serious problems coping with his own sexuality, .. violent temper,… [and] addiction to illicit substances…"? The person posting these materials went by the handle "Arabiannights" and, of course, couldn’t be reached by Goren. But the Ripoff report refused, under the CDA, to remove the offending materials. The trick? Turn the offending materials into a copyright infringement.

What Goren apparently did was to sue "Arabiannights" in a "John Doe" lawsuit, and seek as a remedy assignment to the copyright of the "Goren has problems coping with his sexuality" posting. Of course, Arabiannights never showed up in court, and Goren gets a default judgment against him (or her.) Then, armed with the copyright in the offending posting, Goren sues under the DMCA to get Arabiannights to remove the offending materials as a copyright infringement. Guess what else? No need to prove actual damages or harm to reputation. It gets you into federal court, too. And, if you register the copyright, you can get statutory damages. The miracles of copyright law and copyright lobbyists.

There is no guarantee that the strategy will be successful. Ripoff Report could argue that Arabiannights assigned all or part of the copyright to them when he or she posted it, and therefore Goren obtained the copyright subject to the express or implied license. But you gotta give them credit for trying. In fact, suing in state court to get "assignment" of a copyright is not only novel, but may violate federal law.

Federal copyright law, 17 USC 201(e) essentially says that "no action by any governmental body ... purporting to seize, expropriate, transfer, or exercise rights of ownership with respect to the copyright, or any of the exclusive rights under a copyright, shall be given effect under this title." What that means is that the state court’s seizing of the poster’s copyrighted defamatory posting probably was ineffective, and so when Goren asserts that he is the "owner" of the copyright (for the purposes of the DMCA) he is probably committing perjury. Add that to the list of things on the Ripoff Report.

If you disagree with me, I'll see you in court, buddy. If you agree with me, however, I would love to hear from you.