The rest, and do note that Kuhns/Auntie was as clueless as ever:
The Webnode site constituted educational, not commercial speech: just like the FTC's use of a Web site for a fictitious company, the defendants' site was designed to show consumers how easily they could be taken in by investment offers on Web sites. As noted previously, the Web site was set up so that no one could actually send the fictitious company any money. More specifically, there was no address on the Web site to which people could have sent money, and no credit card information was collected. Neither FBN Associates nor any of the defendants received any money from investors trying to invest in Webnode. (Declaration of William Ulrich, Paragraph 4.)
Business Wire simply cannot show that it is probable that it will win this cause of action.
B. Federal Trademark Dilution Requires Both Dilution and Commercial
Use–And Neither is Present Here
Business Wire also presents a cause of action for dilution of a federal trademark–its name–under 15 U.S.C. Section 1125(c)(1). However, the defendants' use of the "Business Wire" byline cannot constitute a dilution or weakening of Business Wire's trademark for the simple reason that the defendants used it exactly the same way that thousands of other Business Wire customers use it. In fact, this is obviously a use that Business Wire intends, as it was the one that added its byline to the press release! (Declaration of William Ulrich, Paragraph 5.) Again, the byline correctly showed that Business Wire was the distributor of the press release.
Moreover, as with Section 1125(a), non-commercial use is expressly exempt from liability under 15 U.S.C. Section 1125(c)(1):
(1) The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark, and to obtain such other relief as is provided in this subsection.
...
(4) The following shall not be actionable under this section:
...
(B) Noncommercial use of a mark. [Emphasis added..]
As discussed in the previous section, the defendants' Web site–just like the FTC's Web site–was educational and not commercial. Business Wire cannot show that it is probable that it will win this cause of action.
C0 There Was No Federal Trademark Infringement Because Business Wire
Consented to the Use and Because There Is No Likelihood of Confusion.
Business Wire also alleges trademark infringement under 15 U.S.C. Section 1114. However, Section 1114 requires that the defendant's use of the trademark be both "without the consent of the registrant" and "likely to cause confusion, or to cause mistake, or to deceive".
As discussed above in the section titled "There Was No False Designation of Origin and No Likelihood of Confusion Between Business Wire and Webnode," it is not probable that a reasonable person would believe that Webnode was somehow connected with Business Wire simply because the "Business Wire" byline appears on that site. (New Kids on the Block v. News America Publishing, 971 F.2d 303, 307 (9th Cir. 1992).)
As mentioned in that same section, Business Wire itself placed the "Business Wire" byline on the press release (Declaration of William Ulrich, Paragraph 5). Nor can Business Wire successfully argue that the defendants' use of the press release on the Web site was without consent. The Web site that FBN created incorporated the press release as edited by Business Wire, including the byline. According to Business Wire itself, the contact person for the entity submitting the press release (and not Business Wire) controls copies that can be made of the press release:
Requests to copy, circulate or further distribute a single news release that has been previously distributed by Business Wire (other than copying for the limited purpose of an individual user's reference) should be submitted to the contact person identified in the release.
(See Business Wire's Web site at businesswire.com, and Paragraph 5 of the Declaration of William Ulrich.)
As before, Business Wire cannot show that it is probable that it will prevail on both the consent issue and the likelihood of confusion issue.
D0 There Was no California Trademark Dilution Because There Was No
Weakening Of the Mark or Commercial Use
Yet another cause of action brought by Business Wire is for violation of the California anti-dilution statute, Business & Professions Code Section 14330.
Just as with Business Wire's claim for federal trademark dilution, the defendants' use of the "Business Wire" byline cannot constitute a dilution or weakening of Business Wire's trademark for the simple reason that the defendants used it exactly the same way that thousands of other Business Wire customers use it. As mentioned previously, this is obviously a use that Business Wire intends, as it was the one that added its byline to the press release! (Declaration of William Ulrich, Paragraph 5.) Again, the byline correctly showed that Business Wire was the distributor of the press release. Moreover, First Amendment considerations limit state anti-dilution law to commercial speech. In L.L. Bean, Inc. v. Drake Publishers, Inc., et al., 811 F.2d 26 (1st Cir. 1987) the Court considered the Maine anti-dilution statute (Id. at 27.), which–at least with respect to the portion quoted by the Court--is identical to California's anti-dilution statute. In that case, High Society magazine had published a prurient parody of Bean's famous catalog. Said the Court:
The failure to distinguish between commercial and non-commercial speech "could invite dilution, simply by a leveling process, of the force of the" First "Amendment's guarantee with respect to the latter kind of speech." Id. at 563 n.5 (quoting Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447, 456, 56 L. Ed. 2d 444, 98 S. Ct. 1912 (1978)). If the anti-dilution statute were construed as permitting a trademark owner to enjoin the use of his mark in a noncommercial context found to be negative or offensive, then a corporation could shield itself from criticism by forbidding the use of its name in commentaries critical of its conduct. The legitimate aim of the anti-dilution statute is to prohibit the unauthorized use of another's trademark in order to market incompatible products or services. The Constitution does not, however, permit the range of the anti-dilution statute to encompass the unauthorized use of a trademark in a noncommercial setting such as an editorial or artistic context. [Id. at 32-33, emphasis added.]
As discussed earlier, the Webnode site constituted educational, not commercial speech: exactly like the FTC's use of a Web site for a fictitious company, the defendants' site was designed to show consumers how easily they could be taken in by investment offers on Web sites. At the risk of too much repetition, the Web site was set up so that no one could actually send the fictitious company any money. More specifically, there was no address on the Web site to which people could have sent money, and no credit card information was collected. Neither FBN Associates nor any of the defendants received any money from investors trying to invest in Webnode. (Declaration of William Ulrich, Paragraph 4.)
As a result, Business Wire cannot show that it is probable that it will prevail on this issue.
E0 There Simply Was No Breach of Contract at All
With regard to its breach of contract claim, Business Wire claims in its complaint that it requires, "as a condition of distributing any press release over its wire service and on its website, that the person or entity submitting the press release warrant the factual content in the materials submitted for distribution by Business Wire is true and accurate." (Complaint, p. 4, lines 5-8; see also p. 11, paragraph 55.)
However, that is not what the agreement states. Business Wire attached as Exhibit C what it states is a copy of the defendants' agreement with Business Wire. (Complaint, p. 4, lines 12-13.) Nowhere in the agreement, as alleged in the complaint, are the words "as a condition of distribution." Additionally, at no point did Business Wire verbally ask the defendants to warrant the factual content of the press release as a condition of distribution. What that agreement–which is a form agreement created by Business Wire--actually says, in pertinent part, is that "...I (we) warrant that I am (we are) solely responsible for the accuracy, originality and factual content of all material submitted to Business Wire for distribution." The agreement goes on to provide an indemnification in favor of Business Wire. Bill Ulrich has stated that he understood this to mean only that Business Wire was not taking responsibility for the content, not that the persons submitting the press release were warranting its accuracy to Business Wire. (Declaration of William Ulrich, Paragraph 9.)
Any ambiguity in that agreement, of course, must be construed against its author, Business Wire. (California Civil Code Section 1654.) Business Wire therefore cannot prove that it is probable that it will win this cause of action.
F0 Business Wire Was Not Defrauded Because the Defendants Made No
Representations Regarding the Press Release and Because Business Wire
Made No Reasonable Reliances
Business Wire also claims in its complaint that the defendants made "misrepresentations regarding the accuracy of the factual content of the press release" to Business Wire. (Complaint, p. 5, lines 12-13.) However, the defendants made no representations to Business Wire at all regarding the press release: the press release was merely given to Business Wire for distribution. (Declaration of William Ulrich, Paragraph 10.) Also as discussed above (in the section titled "There Simply Was No Breach of Contract at All"), the defendants did not make any warranties in the agreement with Business Wire. (Declaration of William Ulrich, Paragraph 9.)
And, of course, to prove fraud, Business Wire must show reasonable reliance. In this regard, an article that Bloomberg ran regarding this matter is instructive. A portion of that article quotes one of Business Wire's competitors about this matter:
At competitor PR Newswire, though, president Ian Capps has a different point of view about fighting back when a hoax is perpetrated. "It would not be appropriate for us, if we accepted the news release in the first place, to sue the person who paid us to put out that news release," he says. "It would be a shame on us to have let it through."
(See Declaration of William Ulrich, Paragraph 11, for details.)
Because the defendants made no representations and because Business Wire made no reasonable reliance, Business Wire is not going to be able to show that it is probable that it will prevail on this cause of action either.
G0 The Defamation Claim Cannot Stand Because There Is No Provably False
Factual Assertion and Because Truth Is an Absolute Defense
Although the Business Wire complaint alleges that the defendants published "statements asserting that Business Wire condones and/or knowingly participates in fraudulent activities" (Complaint, p. 6, line 26 through p. 7, line 1; p. 12, paragraph 67), Business Wire does not allege what these statements are. The only item that seems to come close is the final sentence ("To avoid any other potential dilution of the Business Wire trademark, we especially agree to forego the use of the phrase Parody Dilutes Our Trademark But Fraud Does Not. Thank You.") of the lengthy introduction that was added to the Webnode site to poke fun at Business Wire. (Later this sentence was changed to "Parody Dilutes Our Trademark As Much As Fraud.") The reason that FBN Associates made this statement is that, after thoroughly researching the matter, FBN has found no evidence that Business Wire has ever previously sued any entity for fraud, despite the fact that several companies have used Business Wire to distribute fraudulent information and at least one company has been the subject of an SEC investigation and halt order. (Declaration of William Uilrich, Paragraph 14.) In any case, this statement must be taken in context of the introduction that preceded it, which currently reads (with inconsequential changes from the original) as follows:
note: In an effort to comply with the wishes of Business Wire, and ensure that Business Wire fully understands our sincere intention to maintain a strong and healthy business relationship with Business Wire, thus fostering a more gentle environment for Business Wire to operate within, the reference to Business Wire which formerly occupied the blank space below:
[reference deleted]
¼has now been removed per Business Wire's request, as referenced by The Federal Lanham Act, 15 U.S.C. § 1051 and 15 U.S.C. §§ 1114, 1125 (c), cited by the Business Wire legal counsel. We sincerely regret any inconvenience this now-deleted reference to Business Wire has caused to Business Wire, and wish Business Wire to know that in the future, all further references to Business Wire, be they possible anticipated references to Business Wire, or actual references to Business Wire, shall be first referred to Business Wire with the intention of seeking the appropriate Business Wire permissions or Business Wire approvals from the interested parties at Business Wire, or the representatives of Business Wire that Business Wire deems appropriate or qualified to make judgements about the acceptability of such references to Business Wire, and/or any parties Business Wire should wish to hold responsible for said judgement about such references to Business Wire, which references include the aforementioned reference to Business Wire (which reference has now been deleted at the request of Business Wire), and further, we wish Business Wire to know that any other references to Business Wire that Business Wire may find relevant to Business Wire, or anything else in the known universe that may be of interest to Business Wire, or the representatives of Business Wire, or any other parties related in any way to Business Wire, will be immediately referred to Business Wire should we discover any such references relating to Business Wire, and that in the event a representative of Business Wire is not available, any such references to Business Wire shall be conveyed to any party that Business Wire should adjudicate as being appropriate for the transmission of any such references to or about Business Wire.
Webnode agrees to not corrupt, debase, degrade, defile or otherwise emasculate the trademarked phrase Business Wire in any way shape or form that may hurt the feelings of Business Wire. We also agree to cease, desist, and refrain from using either the word Business or Wire in any further Webnode press releases, as in No-Sense-Of-Humour-Wire, No-Monkey-Business Wire, or even Business Tuna, as these may still cause the misconception that we meant Business Wire.
Webnode further agrees to cogitate, contemplate, and deliberate before using other potentially objectionable, offensive or odious phrases like Big Fat Humourless Tuna in the slim, remote or distant chance they denote, connote, or otherwise imply a reference to Business Wire. It is possible that the word Rhubarb may not cause any misconceptions as a reference to Business Wire, but just to be safe, we won't use that either. To avoid any other potential dilution of the Business Wire trademark, we especially agree to forego the use of the phrase Parody Dilutes Our Trademark But Fraud Does Not. Thank You.
(Declaration of William Ulrich, Paragraph 14.)
1a There Is No Provably False Factual Assertion in the Statement Made
by the Defendants
The law is clear that opinion is always protected speech and, in order to find actionable libel, "a reasonable fact finder [must] conclude the published statements imply a provably false factual assertion. Thus, in Milkovich v. Lorain Journal Co. 497 U.S. 1, 17 (1990) the U.S. Supreme Court held that use of "loose, figurative or hyperbolic language" is protected as opinion. The Court pointed to three examples of such speech: Greenbelt Pub. Assn. v. Bresler 398 U.S. 6 (1970) (as a matter of constitutional law the word "blackmail" was not libel when reported in the News Review); Hustler Magazine v. Falwell 485 U.S. 46, 50 (1988) (precluding recovery for emotional distress for an ad parody describing Falwell as having engaged in a drunken incestuous rendezvous with his mother in an outhouse); and Letter Carriers v. Austin 418 U.S. 264, 284-286 (holding the use of the word "traitor" in a literary definition of a union "scab" was used "in a loose, figurative sense" and was "merely rhetorical hyperbole, a lusty and imaginative expression of the contempt felt by union members").
The phrase "parody dilutes our trademark but fraud does not" is loose, figurative or hyperbolic language within the meaning of Milkovich, supra.
Probably the best analogy to the facts here is the Moyer case, where high school students in the student newspaper printed certain statements about a teacher, such as "[plaintiff] is the worst teacher at the school" and "[plaintiff] is a babbler". The article also had a headline stating "Students terrorize [plaintiff]." (Moyer v. Amador Valley J. Union High School Dist., 225 Cal.App.3d 720 (1990).) The court found none of these statements to be actionable, holding that the "worst teacher" statement was one of opinion only, the "babbler" statement would not be taken as fact by an average reader, and that the headline was an example of rhetorical hyperbole, or loose, figurative speech. (Moyer, 225 Cal.App.3d at 726.)
Thus, the phrase "parody dilutes our trademark but fraud does not" is not a provably false factual assertion about Business Wire in that it is rhetorical hyperbole and, as such, protected speech. 2a The Gist of "Parody Dilutes Our Trademark But Fraud Does Not" Is
True With Respect to Business Wire
It is well settled that truth of the statements made is a complete defense against civil liability for defamation, regardless of bad faith or malicious purpose. See Gill v. Hughes 227 Cal.App.3d 1299, 1309 (1991); BAJI (8th ed.), 7.07. For a "truth" defense, not every word of the alleged defamatory statement need be proven true–it is sufficient if the substance of the charge is true, despite slight inaccuracies. Gantry Const. Co. v. American Pipe & Const. Co. 49 Cal.App.3d 186, 194 (1975). Put another way, "n order to establish the defense, the defendant need not prove the literal truth of the allegedly libelous accusation, so long as the imputation is substantially true so as to justify the "gist or sting" of the remark. Emde v. San Joaquin County etc. Council 23 Cal.2d 146, 160 (1943).
Here, nothing false was printed about Business Wire. Even if the statement "parody dilutes our trademark but fraud does not" is held to be a statement of fact about Business Wire, it appears to be a true statement to the extent that Business Wire has not alleged trademark dilution in connection with other companies' press releases which have involved actual fraud, but did so only in response to FBN's parody. In other words, FBN's message is not that Business Wire is engaged in fraud, but that Business Wire only has only claimed trademark dilution in connection with FBN's parody, not with actual fraudulent use of the Business Wire byline.
At least one company has used Business Wire for apparently truly fraudulent purposes. A press release concerning Mountain Energy was distributed via Business Wire–using the Business Wire byline. (Declaration of William Ulrich, Paragraph 15.) That press release was copied into part of a Web site, along with additional comments (though the press release itself was not altered). Subsequently, the SEC ordered a halt in trading of Mountain Energy stock, stating that:
The Commission ordered this trading suspension because of questions raised as to the adequacy and accuracy of publicly disseminated information concerning Mountain Energy. This information concerns, among other things, Mountain Energy's ownership of certain properties and the valuation of the mineral assets on those properties. The Commission determined that the public interest and the protection of investors requires a suspension of trading in Mountain Energy securities.
An MSNBC article ("Investor burned by advice on ‘Net") provides more detail. A true and accurate printout of this document may be found at msnbc.com on the Internet. (MSNBC is television network NBC's news outlet on the Internet.) (Declaration of William Ulrich, Paragraph 15.)
Similarly, Amazon Natural Treasures used Business Wire–and the Business Wire byline–to distribute a press release stating that Retail Entertainment Group would be distributing its products through Sweet Factory. The press release begins:
Businesslike, Monday, September 28, 1998 at 10:31
LAS VEGAS--(BUSINESS WIRE)--Sept. 28, 1998--Amazon Natural Treasures, Inc. (OTC:BB AZNT) today announced a second, non-exclusive distribution agreement consisting of 250 additional retail outlets which will distribute nutritional supplement "TOUCH OF NATURE(tm)". Retail Entertainment Group, Inc. (OTC:BB RETN) will market "TOUCH OF NATURE(tm)" through 250 Sweet Factory(R) stores. ...
However, when Janice Shell contacted Sweet Factory to inquire about this press release, she received the following reply from its president:
Dear Janice,
Thank you for your e-mail of November 11, 1998. The following is the information which you requested.
The product, Taste of Nature, is not sold in any of our Sweet Factory stores and we have no plans at this time to retail this product.
You also requested information regarding the status of a Mr. Kevin Vanderkelen. He is in no way involved with Sweet Factory.
Thank you for your inquiries and if I may be of further assistance please feel free to contact me.
Thank you.
Bob Bell
(Declaration of William Ulrich, Paragraph 16.)
However, despite researching the issue, FBN can find no evidence that Business Wire sued Mountain Energy or Amazon Natural Treasures–or any other company that may have distributed truly fraudulent press releases through Business Wire. (Declaration of William Ulrich, Paragraph 17.) Apparently Business Wire has targeted the defendants in this matter solely because it has been embarrassed by them.
As a result, the defendants have made no false statements of fact concerning Business Wire, and Business Wire cannot establish a probability that it will prevail on its defamation claims.
H0 The California Unfair Competition Claims Still Fail to Meet the First
Amendment Problems
Business Wire also alleges unfair competition under California Business & Professions Code Section 17200 et seq. (Complaint, page 13, paragraph 75.) However, Business Wire still cannot escape the First Amendment issues with respect to this cause of action.
As the California Supreme Court stated in Blatty v. New York Times Co., 42 Cal.3d 1033 (1986):
The fundamental reason that the various limitations rooted in the First Amendment are applicable to all injurious falsehood claims and not solely to those labeled "defamation" is plain: although such limitations happen to have arisen in defamation actions, they do not concern matters peculiar to such actions but broadly protect free-expression and free-press values. (See Reader's Digest Assn. v. Superior Court, supra, 37 Cal.3d at p. 265.) [Id. at 1043.]
...
Not only does logic compel the conclusion that First Amendment limitations are applicable to all claims, of whatever label, whose gravamen is the alleged injurious falsehood of a statement, but so too does a very pragmatic concern. If these limitations applied only to actions denominated "defamation," they would furnish little if any protection to free-speech and free-press values: plaintiffs suing press defendants might simply affix a label other than "defamation" to their injurious-falsehood claims -- a task that appears easy to accomplish as a general matter (see, e.g., Reader's Digest Assn. v. Superior Court, supra, 37 Cal.3d at p. 265 [injurious-falsehood claim asserted as causes of action for defamation, intentional infliction of emotional distress, "false light" invasion of privacy, and "intrusion" invasion of privacy]) -- and thereby avoid the operation of the limitations and frustrate their underlying purpose. [Id. at 1044-1045, emphasis added.]
In short, the same First Amendment limitations that apply to defamation causes of action apply to this cause of action for unfair competition. Business Wire, as discussed above, cannot show it is probable that it will win on the defamation cause of action, due to the lack of a provably false factual assertion and due to the fact that truth is an absolute defense. Business Wire therefore also cannot show it is probable that it will win on the unfair competition claim.
I0 The Civil Conspiracy Claim Fails Because Business Wire Cannot Prove It
Is Probable That It Will Prevail on the Underlying Tort Causes of Action
Finally, Business Wire alleges civil conspiracy. (Complaint, p. 14, paragraph 79.) Civil conspiracy is not an independent tort. Rather, civil conspiracy is a "legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration." (Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503, 510-511 (1994).) Accordingly, "the basis of a civil conspiracy is the formation of a group of two or more persons who have agreed to a common plan or design to commit a tortious act." Youst v. Longo 43 Cal.3d 64, 79 (1987).
Because Business Wire cannot prove that it is probable that it will win any of the underlying tort claims, its claim for civil conspiracy must necessarily fall as well.
VA THE DEFENDANTS SHOULD RECEIVE THEIR ATTORNEYS FEES BASED
ON THE CALIFORNIA ANTI-SLAPP STATUTE
Subsection (c) of the Anti-SLAPP statute (California Code of Civil Procedure Section 425.16) mandates that a defendant who prevails on a motion to strike the complaint receive attorneys fees:
(c) In any action subject to subdivision (b), a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney's fees and costs.
Assuming that the Defendants are successful in having some or all of Business Wire's causes of action stricken, the Defendants request that the Court order that the Defendants may present evidence of their attorneys' fees by declaration according to whichever procedure the Court deems best.
VIA CONCLUSION
If press-release providers like Business Wire are allowed to maintain lawsuits of the type brought here, then people like the defendants will be greatly hampered in trying to educate the public about Internet fraud by showing consumers how easily they may be taken in by a Web site and a press release. The defendants engaged in legitimate free-speech activities. Business Wire should not be allowed to retaliate against them via this lawsuit because it does not like the publicity surrounding the defendants' project or because the defendants have poked fun at it. The complaint should be stricken in its entirety and the defendants awarded their attorneys fees.
Dated June 17, 1999 METHVEN & ASSOCIATES
By: ________________________
Bruce E. Methven
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