Archive for October, 2012

What Will The Big Mouse Do About Star Wars Fanfic?

Wednesday, October 31st, 2012

Now that George Lucas has announced he’s selling Lucasfilm, including Star Wars, to Disney, the big question in my mind is what will happen to Star Wars fan fiction?

Lucas has long been welcoming of fanfic adaptations of his Star Wars properties. The House of the Mouse, on the other hand, has long been the leader in pursuing ever larger copyright entitlements, dismissing issues of cultural and expressive freedom.

So, will the copyright stormtroopers be coming after camcorder-weilding Star Wars geeks?

Joe Mullin tackles the issue on Ars Technica: Disney owns Lucasfilm: will it have room for Star Wars fan movies?

Mullin’s post includes an embedded YouTube video with an awesome Cops spoof featuring stormtroopers. It’s so awesome, I’ll just embed it here, too.

You can’t tell me the world’s not a little bit better when Hollywood outsiders can create and distribute gems like this:

Former Mayor Must Pay $21,275 in Bloggers’ Legal Bills

Monday, October 29th, 2012

Aurora town logo(Image: Aurora, Ontario website, used without permission.)

A court in Ontario has ordered a former mayor to pay $21,275 in legal bills accumulated by bloggers defending themselves against a local politician’s attempt to silence online criticism.

In 2010, Phyllis Morris, then mayor of Aurora, Ontario, waged a litigation campaign against online critics while she was running for re-election. Notably, she got the town council to foot the bill for the lawsuit with taxpayer money. Months later, well after she lost the election, she voluntarily dismissed her lawsuit.

But defendants William Hogg, blog proprietor-moderator, and Richard Johnson, a blog contributor, kept the case file open to press the court for a money award to pay their defense bills.

Their push paid off.

According to the Toronto Star, in making the award, the Ontario Superior Court characterized Morris’ lawsuit as an attempt to hit her critics “quickly and hard,” in order to quiet her opponents “sooner rather than later in the weeks leading up to the October 2010 elections.”

Blogger Christopher Watts has more about the court’s award, plus a link to the court’s opinion, on his blog, Temporary Sanity.

Prior coverage on Blog Law Blog:

Coverage of the fee award:

Court treats degrading online postings as protected free-speech opinions

Friday, October 19th, 2012

From contributing blogger John S. Merculief II –

A California appellate court has affirmed a lower court’s ruling granting a woman’s anti-SLAPP motion against her daughter’s ex-husband regarding online postings the woman made about him.

The genesis of Darren Chaker’s lawsuit against Nicole Mateo and her mother, Wendy, was apparently a contentious custody battle in Texas courts regarding the former couple’s child. This battle appears to have helped prompt Wendy Mateo’s online comments, which in turn led to Chaker’s defamation suit.

In granting Wendy Mateo’s anti-SLAPP (“Strategic Lawsuit Against Public Participation”) motion to strike the defamation suit, the appellate court affirmed that she was merely exercising her First Amendment right to free speech in the matter.

Principally at issue in the case of Chaker v. Mateo, No. D058753, 2012 WL4711885 (Cal. Ct. App. Oct. 4, 2012) were the online postings of Wendy Mateo regarding ex-son-in-law Chaker’s business practices and moral character. Examples:
  • “This guy is … a deadbeat dad.”
  • “He may be taking steroids so who knows what could happen.”
  • “He uses people, is into illegal activities, etc.”
  • Varied accusations of fraud, deceit, picking up street walkers, and homeless drug addicts
The court found that the postings, while not on sites that were truly interactive, were at least on the internet, which functions as a worldwide bulletin board (read: public forum):
  • Something called “Ripoff Report,” which describes itself as “a worldwide consumer reporting Web site and publication, by consumers, for consumers, to file and document complaints about companies or individuals.”
  • A social networking site into which Chaker had inserted himself by posting a professional profile (the opinion styles him as working in “forensics”).
As such, the court found that the comments Wendy Mateo posted were of public interest, regarding each forum.
But the court went on to conclude that the statements were nonactionable opinions (or, in other words, free speech) rather than actionable statements of fact by considering the statements’ contexts – internet forums – as likely places for opinions rather than facts, and not so much their content: “In determining statements are nonactionable opinions, a number of recent cases have relied heavily on the fact that statements were made in Internet forums.”
In fact, in analogizing to a prior case it handled in which a defendant had posted nine claims against a bank and its CEO in an expletive-laced rant, the court said:
In finding the defendant’s statements were nonactionable opinions, the [prior] court relied in part on the fact they were posted on the Internet Craigslist “Rants and Raves” Web site and lacked “ ‘the formality and polish typically found in documents in which a reader would expect to find facts.’” Summit Bank v. Rogers, 206 Cal.App.4th 669, 696–701, 142 Cal.Rptr.3d 40 (2012).
Here’s a review of California’s anti-SLAPP statute (Cal Civ. Proc. Code § 425.16). According to the court’s opinion:
The statute, as subsequently amended, provides in part:
  • (b)(1) A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim. …
  • “ ‘(e) As used in this section, “act in furtherance of a person’s right of petition or free speech … in connection with a public issue” includes: … (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest. …
Note that the statute sets up a two-part test. In plain terms, first, the defendant must show that the statement that the plaintiff complains of qualifies as free speech in connection with a public issue.
If the defendant succeeds with Step One, the case is not necessarily resolved: The plaintiff must then show that he at least has a reasonable chance of prevailing if the case goes to trial, in order for the case to proceed from there.
Here, the court found that Wendy Mateo’s online postings fit the criteria for California’s anti-SLAPP statute.
Further, the court found that the postings were in online forums where people do not expect to read factual information.
As such, the court foreclosed on Chaker’s defamation suit by concluding that Wendy Mateo’s online postings are nonactionable opinions, i.e. free speech.
Left unanswered, though, is the question of what to do about the reality that many people treat online forums as sources of fact. More on this in a follow-up post, coming soon.

Trademark Infringement in the Presidential Election?

Wednesday, October 17th, 2012

Romney Believe in America - Get the DetailsI don’t want to spoil anything, so click here if you want to find out about the details of the Romney tax plan, including how he will cut $5 trillion in spending without increasing the deficit.

Cute, huh? (At least if you are a Democrat.) Now that you’ve seen that, let’s think about the legal implications. The website, romneytaxplan.com, is a product of the Democratic National Committee. Yet the website conspicuously carries the Romney campaign logo and uses the Romney campaign’s slogan and adopted typestyle. So, is there a trademark problem?

Yes and no.

This is a good example of why it is so important in evaluating intellectual property problems to not only apply the blackletter law, but to also ask the practical question: Would this plaintiff sue?

Trademark law should generously protect parody uses of trademarks. Yet it doesn’t always. Consider this parody ad that appeared in a humor magazine called Snickers:

One taste and you'll drink it oily. Michelob Oily.

The case was Anheuser-Busch, Inc. v. Balducci Publications, 28 F. 3d 769 (8th Cir. 1994). Anheuser-Busch, brewers of Michelob, sued for trademark infringement and trademark dilution. The federal district court dismssed the case, but the Eighth Circuit Court of Appeals reversed, holding that the brewery could continue on with its action. I seriously disagree with that case. And there several cases upholding dismissals in the realm of trademark parody. But the Anheuser-Busch case is still, regrettably, good law.

There’s also the case the U.S. Chamber of Commerce pursued against a prankster group, The Yes Men, who produced a faked Chamber of Commerce press release and website to go along with a fake press conference they held about support for climate change legislation.

The fact is, the Romney campaign can sue the DNC and the case would have some legs.

But will they?

No way.

There’s no way the Romney campaign is going to draw attention to the website and look humorless and loser-y by filing suit. Or even threatening. So it’s a good call by the DNC to ignore precedent that points to a potential for legal liability. Calculated risk-taking is often the right prescription when advising clients about IP liability concerns.

U.S. v. Michael Upholds Indictment for Facebook Threat to Police

Wednesday, October 17th, 2012

Venkat Balasubramani at Technology & Marketing Law Blog has a good analysis of U.S. v. Michael, (S.D. Ind., Oct. 9, 2012), a case which rejected a Facebooker’s attempt to dismiss an indictment for threatening posts directed at the DEA. (That’s “Drug Enforcement Agency” for our overseas readers). Read Balasubramani’s post for background. Here I want to add my opinion.

I agree with Balasubramani that there has been “a disturbing number of cases that involve criminal liability for these types of statements posted online.”

But I’m less troubled by the indictment in this particular case.

Here’s what Michael posted to Facebook, broken down:

These guys will get whats coming to them … My master assures me that the DEA will be exterminated and humiliated before the end is over …

No true threat there. It sounds like Michael is “threatening” the DEA with the a return of Christ. That’s not a real threat, and it should be protected speech. Next:

WE R COMING FOR YOUR PIG ASS. The only thing the DEA knows how to do is lie and deceive … Its time we answered there crimes with bloodshed and torture.

We are getting closer to a true threat here. But nonetheless, I think that this is sufficiently general that it should be protected speech. For most crazy anti-law-enforcement speech, including the above statements, I think the correct response – and the one the law ought to sanction – is to get a warrant and monitor the person. But then there’s this:

I’ll kill whoever I deem to be in the way of harmony to the human reace … Policeman all deserve to be tortured to death and videos made n sent to their families … BE WARNED IF U PULL LE OVER!! IM LIKE JASON VOORHEES WITH A BLOODLUST FOR PIG BLOOD.

This is where I think we have something that the government ought to be able to prosecute. Michael has indicated a desire to kill a law enforcement officer at a traffic stop. That is something that could happen instantly, without further warning. And while the feds might be monitoring Michael and thus would not be caught flatfooted, a local police officer might not be. Using threat laws prophylactically to take a person off the street under such circumstances seems to me a reasonable means to avoid a tragedy. Moreover, the speech value of this particular language is low.

Threats directed at the government ought to be accorded more tolerance than threats directed at a private person. For a private person, the threat itself can constitute a significant psychological harm. When it comes to threatening speech directed at the government, I am more comfortable if threat laws are used in a preventative capacity.

Admittedly, threat laws are not closely calibrated to a preventative role. Once the threat is dissipated, the conviction will remain. Threat laws punish speech. And that being the case, I continue to find them concerning. But their application in this circumstance, at least, seems appropriate to me.

By the way, I had to look up Jason Voorhees. He’s the hockey-mask wearing Jason from the Friday the 13th movies. I guess I’m out of it – at least when it comes to 1980s-spawned horror franchises – but I, personally, was thrown off by the use of his last name.

Professor Ludington on Loosening Jurisdictional Hurdles Against Bloggers

Saturday, October 13th, 2012
Headshot of Sarah H Ludington

Professor Ludington (Photo: Campbell U.)

Professor Sarah H. Ludington of Campbell University has just published Aiming at the Wrong Target: The ‘Audience Targeting’ Test for Personal Jurisdiction in Internet Defamation Cases in the Ohio State Law Journal (73 Ohio State L.J. 541). She takes issue with a blogger-friendly Fourth Circuit case that said someone publishing on the internet can’t be sued for defamation outside of their state unless they specifically targeted an audience in that state. Professor Ludington would prefer for bloggers to be able to be sued away from their home so long as they have “minimum contacts” with jurisdiction in which the lawsuit is being brought.

Here’s the abstract:

In Young v. New Haven Advocate, 315 F.3d 256 (4th Cir. 2002), the Fourth Circuit crafted a jurisdictional test for Internet defamation that requires the plaintiff to show that the defendant specifically targeted an audience in the forum state for the state to exercise jurisdiction. This test relies on the presumption that the Internet — which is accessible everywhere — is targeted nowhere; it strongly protects foreign libel defendants who have published on the Internet from being sued outside of their home states. Other courts, including the North Carolina Court of Appeals, have since adopted or applied the test. The jurisdictional safe harbor (ironically) provided by the veryn ubiquity of the Internet is no doubt welcomed by media defendants and frequent Internet publishers (e.g., bloggers) whose use of the Internet exposes them to potentially nationwide jurisdiction for defamation. But it may go too far in protecting libel defendants from facing the consequences of their false and injurious statements. For every libel defendant insulated from jurisdiction in a remote location, there is also a libel plaintiff who has potentially been denied an effective remedy in a convenient location. This article argues that the jurisdictional test created in Young is flawed and particularly should not be applied to libel defendants. It concludes with a simple suggestion: that the appropriate test for personal jurisdiction over libel defendants in cases of Internet defamation is the standard minimum contacts analysis.

Ha’p Media Law Prof Blog.

Pippen’s Self-Affirmation Lawsuit is Over

Wednesday, October 10th, 2012

(Photo from Scottie Pippen's Facebook page. Used without permission.)

A federal court in Illinois has dismissed a defamation case brought by Scottie Pippen against various websites for saying he was broke. The reason Pippen lost is because he failed to allege the actual malice hurdle required by the First Amendment for defamation cases brought by public figures.

This looks less like a win for the defendants and more like a withdrawal by Pippen. I’m not sure why Pippen couldn’t have kept going with this lawsuit – at least for a little while – by amending his complaint.

My guess is that Pippen probably had a lousy case he wasn’t going to win. So that begs the question, why did he file in the first place? Well, I think this is probably a typical celebrity-blowing-off-steam lawsuit. Throwing the lawyers around makes the celeb feel good and provides a way to try to blunt bad press with the news that the celeb is going to court. But, in this pattern, the case doesn’t go anywhere. The celeb  just gives up after a little while. It’s kind of an obnoxious use of the judicial system.

Ready to roll your eyes? Here’s the first paragraph of Pippen’s complaint:

It is a most foul libel indeed to be falsely accused of being bankrupt.

Oh, for crying out loud. Then look at the next paragraph:

That is what happened to Scottie, and the malicious libel was disseminated across the nation by the media.

Ooooh. I love the arm-over-shoulder cooing of his first name.

Then comes the third paragraph. It’s over 900 words and reads like a Wikipedia entry about Pippen that was written by his publicist. It starts by saying where he was born and then goes through his whole career, bestowing one accolade on the Pippen after another.

Then, at the end of the complaint, there is a prayer for relief asking for $1 million from each defendant.

Sometimes a complaint isn’t written for the court so much as it’s written for the media – what is sometimes called a “press release complaint.” Those are bad enough. But Pippen’s complaint appears to be the kind that is actually written for the client. Ugh. It’s lawyer-mediated self-affirmation. And it’s a colossal waste of time. Courts ought to feel more comfortable sanctioning this kind of thing.

At any rate, Pippen proved one thing in countering rumors of his insolvency: He at least has enough money that he can waste bags of it on a pointless lawsuit.

From a legal angle, the lawsuit is well-summed-up in the court’s minute order:

MINUTE entry before Honorable Sharon Johnson Coleman: In its order of 8/02/2012, the court dismissed plaintiff’s complaint, but allowed him to seek leave to file a complaint that made allegations that were legally sufficient under constitutional and defamation principles. The complaint that plaintiff now seeks leave to file alleges with more detail the recklessness of defendants’ publications regarding his financial status. However, as the court has observed, the malice required to establish liability for defamation of a public figure such as famed and well-respected athlete Scottie Pippen is greater than the mere failure to investigate, no matter how allegedly egregious that failure may be. The court concludes that plaintiff’s proposed amended complaint cannot be considered a sufficient allegation of defamation against a public figure. Plaintiff’s motion for leave to file that amended complaint is accordingly denied, and this action is dismissed with prejudice. Plaintiff’s motion for partial summary judgment is denied. Civil case terminated.

Some case documents for your reference:

  • Minute Order of September 26, 2012 dismissing lawsuit [pdf]
  • ORDER of August 2, 2012 granting motion to dismiss [pdf]
  • ARIZONA BOARD OF REGENTS’ INDEPENDENT MOTION TO DISMISS PLAINTIFF’S AMENDED COMPLAINT[pdf]>
  • COMPLAINT [pdf]

ZAGG v. Catanach – Extended Excerpt

Friday, October 5th, 2012

ZAGG logoFollowing up on this morning’s post, here is an extended excerpt from ZAGG, Inc. v. Catanach (E.D. Pa. Sept. 27, 2012), denying the motion to dismiss of bloggers / b-school professors Catanach and Ketz of the Grumpy Old Accountants blog. The full opinion is available from the court as a pdf.

ZAGG, Inc. (“Zagg”) has brought this action for defamation and false light under Utah state law1 against Anthony H. Catanach, Jr. (“Catanach”) and J. Edward Ketz (“Ketz”), two business school professors at universities in Pennsylvania. Zagg alleges that Catanach and Ketz published false and defamatory statements about it on a blog. Before the court is the motion of Catanach and Ketz to dismiss the complaint for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. …

Catanach and Ketz authored and caused to be published an article entitled “Don’t Gag on Zagg” on the Grumpy Old Accountants blog. In the article, they made a number of statements about Zagg’s accounting practices. Zagg alleges in its complaint that the following statements from the article are defamatory:

a. “The numbers are giving off so much smoke that we think management may have blinded both the auditors and investors.” b. “At worst, management may be ‘cooking the books.’”

c. “ZAGG’s balance sheet is littered with items prompting valuation and disclosure concerns.”

d. “The company includes accounts receivables from credit card processors in its reported cash balances. You know how we feel about this right? … Instead of the Company reporting positive cash flow for 2011, it really ‘burned’ cash.”

e. “[I]t is ironic and worrying that the ifrogz business segment is losing money right out of the gate.”

f. “Still not convinced that ZAGG management is massaging the numbers? Maybe the following will make the hairs on the back of your neck stand up.”

g. “This is a financial reporting debacle in the making.”

h. “It makes us grumpy when a firm overstates its cash by adding in some receivables, as note 1 explains. And why did ZAGG do this? In an attempt to fool investors about its cash flows!”

To state a claim for defamation under Utah law, plaintiff “must show that defendants published the statements concerning him, that the statements were false, defamatory, and not subject to any privilege, that the statements were published with the requisite degree of fault, and that their publication resulted in damage.” West v. Thomson Newspapers, 872 P.2d 999, 1007-08 (Utah 1994) …

The statements in issue by Catanach and Ketz on the Grumpy Old Accountants blog were not merely nettlesome or embarrassing but rather were capable of damaging Zagg’s reputation. They directly impeached Zagg’s honesty with statements such as “[t]he numbers are giving off so much smoke that we think management may have blinded both the auditors and investors” and others such as “Zagg’s balance sheet is littered with items prompting valuation and disclosure concerns,” and “[Zagg is] attempt[ing] to fool investors about its cash flows.” These statements imply dishonesty and even criminality and thus are capable of defamatory meaning.

Even when statements may otherwise be capable of defamatory meaning, the Utah Constitution protects expressions of opinion …

The defendants contend that their statements in the Grumpy Old Accountants blog were all expressions of opinion, as noted in a disclaimer at the end of the article stating, “[t]his essay reflects the opinion of the authors and not necessarily the opinions of the Pennsylvania State University, the American College, or Villanova University.” They also point out that a number of statements are preceded with the words, “we think.” These exculpatory words in and of themselves do not save the statements in issue from being defamatory. See Milkovich v. Lorain Journal Co., 497 US 1, 18 (1990). It would undermine the law of defamation if speakers or authors could simply employ a talismanic word formula to absolve themselves of slander or libel. See Id. at 18-19.

Although opinions are protected from defamation liability under the Utah Constitution, any facts implied by the opinion or underlying the opinion are not protected. West, 872 P.2d at 1015. The Supreme Court of Utah … relied specifically on “four factors as useful in distinguishing fact from opinion: (i) the common usage or meaning of the words used; (ii) whether the statement is capable of being objectively verified as true or false; (iii) the full context of the statement –- for example, the entire article or column –- in which the defamatory statement is made; and (iv) the broader setting in which the statement appears.” Id. (citing Ollman v. Evans, 750 F.2d 970, 979 (D.C. Cir. 1984) (en banc)).

We will address each factor in turn. The Ollman decision cited by West explained that the first factor, “common usage or meaning of the words used,” was relevant for “determining whether the statement has a precise core of meaning for which a consensus of understanding exists or, conversely, whether the statement is indefinite and ambiguous.” Ollman, 750 F.2d at 979 (citations omitted). The court reasoned that readers of the statements would be “considerably less likely to infer facts from an indefinite or ambiguous statement than one with a commonly understood meaning.” Id. Here, the statements by Catanach and Ketz have commonly understood meanings. For example, when a reader sees “[a]t worst, management may be ‘cooking the books’” or Zagg’s “attempt to fool investors about its cash flows,” he or she understands that the authors are implying false numbers in Zagg’s ledger amounting to at least potential criminality.

As for the second factor, the statements by Catanach and Ketz about Zagg are capable of being verified. Accountants are able to look at Zagg’s financial records and public filings to determine whether there were manipulations and irregularities giving rise to “valuation and disclosure concerns,” as accused.

Turning to the third factor, reading the full context of the blog posting would not lead a reader to believe that the statements were opinions and not steeped in fact. Even though the authors did include at the end of the article that the essay reflected their opinions and at times use the phrase “we think,” various statements in the article explained to the reader that the authors had read Zagg’s public filings and financial statements and were basing their statements on these factual disclosures. For example, the article states, “[o]ur review of the Company’s operating environment and the 2011 10-K leads us to conclude that at the very least, the Company’s reported amounts are suspect.” This statement is based on data from the 10-K. In sum, the full context of the article would not lead a reader to conclude it was mere opinion.

The fourth factor requires the court to consider “the broader setting in which the statement appears.” The Supreme Court of Utah explained that statements in newspaper editorials tend to be more exaggerated than “hard news,” and as a result readers are “less likely to form personal animus toward an individual based on statements made in an editorial.” Id. at 1009. This led the West court to determine that the statements at issue in that case, which were published in a newspaper editorial about a mayor of a town in Utah, were not capable of defamatory meaning. Similarly, here readers may be less likely to sell their stock in a company when they read about potential disclosure concerns on the Grumpy Old Accountants blog than, for example, on the front page of The Wall Street Journal. On the other hand, the defendants are professors at business schools, with apparently no political axe to grind. Readers are likely to take their statements about corporate finance seriously. …

In West the plaintiff was a public official, and the court explained that this factor was relevant to its finding that the statements were opinions not capable of defamatory meaning. Id. at 1009-10. The context of any statement is critical. Readers expect that public officials will be criticized in newspaper editorials and that these criticisms are opinions. Id. That is just the nature of politics. Here, in contrast, two business school professors are making statements about the dishonesty of a corporation. Public companies are not routinely accused of fraud by business professors, and any such accusations would not be presumed to be opinions. The statements of Catanach and Ketz about Zagg on their blog are therefore not protected opinions under Utah law because the meaning of the statements is clear, they are capable of being verified, and the context of the statements and the broader settings in which they appear do not signal to the reader that the statements are opinions and not facts.

Accordingly, we will deny the motion of the defendants to dismiss for failure to state a claim because the statements of these business school professors about Zagg on their blog are capable of defamatory meaning and are not protected as opinions. We, of course, make no determination of whether the statements are true or false. Whether defamation actually occurred will be for the fact-finder to decide.

ZAGG v. Catanach Reminder of What’s at Stake When You Click “Publish”

Friday, October 5th, 2012

Bloggers Anthony H. Catanach Jr. and J. Edward Ketz (Photos: Grumpy Old Accountants)

Two business school professors who author the Grumpy Old Accountants blog have lost a 12(b)(6) motion to dismiss against ZAGG, a publicly traded corporation selling mobile phone accessories.

 

The case is ZAGG, Inc. v. Catanach (E.D. Pa. Sept. 27, 2012). The full opinion is available as a pdf. I will publish an extended excerpt later today.

Though this is a federal court in Philadelphia, it applied Utah defamation law.

Eric Goldman analyzes the case on his Technology & Marketing Law Blog. He notes that the professors still might win in the long run. But, he says:

[T]his case is a potent reminder that we as bloggers are betting our house with each blog post we make – and where we disseminate “negative” information that gores someone’s ox, the wounded ox just might gore us back. It’s one of the reasons why, after 2,000+ blog posts over nearly 8 years, my fingers still tremble a bit when I hit “publish” on a blog post that trashes a real live company or person. You as the readers tend to enjoy the bloodsport, but it’s only fun and games until someone gets sued.