B. Code Of Civil Procedure ' 425.16 Does Not Apply To Trademark Dilu-
tion And Related Acts That Did Not Address A Matter Of Public Interest
In A Pnblic Forum
A similar analysis defeats defendants' attempt to apply ' 425.16 to
Business Wire's remaining state trademark dilution and other state law
causes of actionfi The wrongful acts giving rise to these claims did
not occur in a "public forum" as defined by ' 425.16(e) but, as de-
fendants conceded, on a website and over a proprietary wire service,
Defs' MPA at 7, neither of which are public fora because the content
is privately controlled and members of the public cannot participate
in the discussion. See Zhao, 48 Cal. App. 4th at 1125; Lafayette
Morehouse, 37 Cai. App. 4th at 863 n.5. Moreover, the acts at issue
were not speech on a matter of public interest -~ indeed, they never
even mention Internet investment scams -- but rather were intended to
deceive Business Wire so that defendants could misuse the company's
trademark in order to give credibility to their sham investment oppor-
tunity. It was not until much later -- after they first sought to
capitalize commercially from their hoax -- that defendants claimed to
be acting in the public interest. As Wilcox shows, defendants cannot
commit tortions acts and then attempt to justify application of '
425.16 by pointing to some later speech on a matter of public interest
as the motive. 27 Cal. App. 4th at 820.
~-t Even if Code of Civil Procedure ' 425.16 could apply to Business
Wire's federal Lanham Act claims -- and, as shown above, it cannot --
the following analysis would prevent defendants from carrying their
threshold burden of showing ' 425.16 applied to those claims.
1. A Privately Controlled Area Where The Public Does Not Have General
Access To Speak, Such As Defendants' Website And Business Wire's
Distribution Service, Is Not A Public Forum
"[I]n First Amendment jurisprudence" and ' 425.16 analysis, "public
forum" has "a narrow definition ... which strictly limits the scope of
phrase." Zha~o, 48 Cai. App. 4th at 1126. "'The term 'public
forum' ... refers typically to those places historically associated
with First Amendment activities, such as streets, sidewalks, and
parks.'" Id. (quoting Prisoners .Union v. Department of Corrections,
135 Cal. App. 3d 930, 934-35 (1982)).
More specifically, public fora are places "traditionally recognized as
centers for the public communication of ideas" because members of the
public have historically been allowed to meet and discuss issues
there. United States v. Douglas, 579 F.2d 545,549 (gth Cir. 1978). "A
facility is a public forum only if it is designed to provide a general
public right of access to its use, or if such public access has his-
torically existed ...."Muir v. Alabama
Educ. Television Comm'n, 688 F.2d 1033, 1042 (5th Cir. 1982) (eh banc)
("public television stations ... are not public forums" because "It]he
general invitation extended to the public is not to schedule programs,
but to watch or decline to watch what is offered").
Applying these rules, it is obvious that defendants' website and
Business Wire's proprietary wire service are not public fora, as
defendants' erroneously claim. Defendants' website (which is still
posted at www.webnode.com on the World Wide Web) has no interactive
feature -- i.e., no forum where members of the public can post their
views or discuss defendants' website or any other subject. Like tele-
vision stations, the public's role is passively to watch, not partici-
pate. Similarly, Business Wire's proprietary wire services are not
open for public discussion, but rather members of the public are
passive recipients of information distributed over its services. Like
the newspapers found not to be a public forum because "none ... has
consented to unrestricted access by the general public to its adver-
tising columns or pages," any "access [to Business Wire's services] is
a matter of private contract" and therefore it is not a public forum.
Chicago Jr. Board v. Chicago Tribune Co.. 435 F.2d 470, 475 (7th Cir.
1970) ("sidewalks and streets ... bear little analogy" to newspapers).
Defendants' website and Business Wire's services are even less open to
the public than newspapers, which allow limited public access in the
Letters to the Editor and OpEd pages. Yet newspapers are not public
fora, as Chicago Tribune illustrates and as California courts have
also recognized in ' 425.16 cases. "[P]rivate newspaper publishing
falls outside of this concept of a public forum" under ' 425.16(e)(3).
Zhao, 48 Cal. App. 4th at 1126. "'No authorities have been cited to us
holding a newspaper ... is a "place open to the public or a public
forum." Newspaper editors or publishers customarily retain the final
authority on what their newspapers will publish .... resulting at
best in a controlled forum not an uninhibited "public forum."" Id.
(quoting Lafayette Morehouse, 37 Cal. App. 4th at 863 n.5).
Defendants' website allows no public input and Business Wire allows
use of its distribution services only by private contract. According-
ly, neither forum is public. Indeed, if a university's "computer and
Internet services do not constitute a public forum" because not "open
to the general public," then defendants' website and Business Wire's
proprietary press release distribution services cannot constitute
public fora. Loving v. Bore~a, 956 F. Supp. 953, 955 (W.D. Okla.
1997), aff'd, 133 F.3d 771 (10th Cir. 1998). Since, as defendants
concede, these were the locus of the acts giving rise to Business
Wires' lawsuit, its causes of action do not arise out of speech in a
public forum and are not within ' 425.16(e)(3).
2. Defendants' Subsequent Speech On A Matter of Public Interest Cannot
Be Used To Fit Trademark Infringement And Unfair Competition Under '
425.16 Where, As Here, The Wrongful Acts Did Not Themselves Involve
Speech On That Subject
As the Legislature made clear in the statute, it intended ' 425.16 to
protect "the valid exercise of the constitutional rights of freedom of
speech and petition" on a "public issue.' Cal. Code of Civ. Proc. '
425.16(a)-(b). The acts underlying Business Wire's trademark, unfair
competition and conspiracy claims do not involve speech on a public
issue, but rather involve the deceptive practices described in Section
II.A to gain access to Business Wire's trademark, and the misuse of
Business Wire's trademark without valid authorization. Comp., 46 31-
53, 75, 79. As discussed above, the-fraud and breach of contract that
constitute, in part, the unfair competition and conspiracy claims do
not involve protected speech activity or conduct for which defendants
may assert a First Amendment defense, and thus are not within the
scope of ' 425.16. As discussed in this section, the misuse of Busi-
ness Wire's trademark at issue in the Lanham Act and state dilution
claims -- and which constitute the remaining predicate acts in the
unfair competition and conspiracy claims -- involved no speech on a
matter of public interest and thus also fall far outside the ambit of
' 425.16. ~o
Defendants' argument to the contrary can be succinctly summarized.
They claim they were motivated by a desire to engage in unlawful
conduct in order to illustrate speech they would make later on a
matter of public interest (Internet investment seams) and that this
brings their prior unlawful conduct within the scope of ' 425.16 -
even though their unlawful acts giving rise to the trademark, unfair
competition and conspiracy claims involved no mention of the subject
of investment seams. See Ulrich Decl., 66 2-4.
The Business Wire mark that defendants posted to their website and had
distributed was not affixed to any discussion of investment scams, but
rather was attached to a false press release touting their phony
company, Webnode. See Comp., Exh. B. Defendants misused Business
Wire's trademark not in connection with speech warning of internet
investment scams, but to do just the opposite -- to convince skeptical
Internet users that their Internet hoax was a legitimate investment
opportunity. See, e.g., Sitkin Decl., Exh. 2 ("WebNode has a sophisti-
cated website. WebNode puts out BizWire press releases. Why do you
think WebNode is not, as you say, 'real'?") (April 1, 1999 e-mail from
defendant Janice Shell), Exh. 3 ("I think it's on the level. Did you
see the release: [linking to press release with Business Wire trade-
mark]") (April I, 1999 e-mail from defendant Bill Ulrich).
In short, defendants misused Business Wire's trademark to perpetrate a
hoax and a fraud on the public. When defendants subsequently revealed
they had deceived Business Wire and used its trademark to give cre-
dence to a bogus press release, they said nothing about engaging in
this conduct to educate the public about its susceptibility to invest-
ment seams (that
~_w The defamation claim stands on a slightly' different footing. It
is based on defendants' false accusations that Business Wire knowingly
allows or condones fraud. Comp., ~ 67. While the subject of Internet
investment seams may be a matter of public interest, these accusations
do not directly address that issue -- or even mention the Internet -
but instead insinuate that Business Wire intentionally profits off of
fraud. Moreover, defendants have not shown that these statements were
made in a public forum, as required by ' 425.16(e)(3).
came later, after they were looking for a way to avoid legal liabili-
ty). Instead, defendants at the time touted their clever "3rd annual
April Hoax" and used their phony website for the commercial purpose of
advertising Magnetic Diary Studios, which is the Website Design firm
of defendant Bill Ulrich. Se~e Ulrich Decl., Exh. F; see als~o Sitkin
DecI., Exh. 1.
However, even if defendants' original misdeeds were motivated by a
desire to bring attention to a matter of public interest, that does
not bring those acts -- which never mention the purported matter of
public interest -- within the purview of ' 425.16. As shown in Section
II.A, .Wilcox is clear on this point, 27 Cal. App. 4th at 820 ("if the
defendant's act was burning down the developer's office as a political
protest, the defendant's motion to strike could be summarily denied
[because it does not meet the requirements of ' 425.16(e)] without
putting the developer to the burden of establishing the probability of
success on the merits").
The limit on the scope of ' 425.16 recognized by Wilcox is in accord
with well established First Amendment principles. In Justice Holmes'
famous phrase, "It]he most stringent protection of free speech would
not protect a man in falsely shouting fire in a theatre and causing a
panic." Schenck v United States, 249 U.S. 47, 52 (1919). That same man
cannot bring his false exclamation within the scope of ' 425.16 by
claiming he was motivated to bring attention to the fact that the
theatre did not have sufficient fire exits, even if this safety issue
is a matter of public interest. Se~e Wilcox, 27 Cal. App. 4th at 820.
In the modern world, if someone wants to bring attention to this
issue, they can post an e-mail to an Internet message board or contact
the proper authorities. What they cannot do is use ' 425.16 to shield
them from liability to injured patrons if they engage in wrongful
conduct (such as shouting "Fire" in a crowded theater) that was not
itself protected speech on the issue of public interest.
Even if their motive was what they claim, defendants' acts were the
functional equivalent of shouting "Fire" to illustrate the threat of
inadequate safety precautions. They did not need to mislead Business
Wire and misuse Business Wire's trademarks to get their message out.
As their own evidence reveals, defendants had no difficulty getting
publicity for their views before this hoax. See, e...,~_, Ulrich
Decl., Exhs. B & C. As defendants also admit, the FTC created its own
phony website to bring attention to the issue of Internet investment
scares, yet the FTC did not need to deceive any company or misuse its
federally registered trademarks in order to educate the public about
this subject. Id., 6 19 & Exh. R_
Like falsely shouting "Fire," trademark infringement is not speech on
a matter of public interest. "The first amendment is not a license to
trammel on legally recognized rights in intellectual property." Dallas
Cowboys Cheerleaders, Inc_ v. Scoreboard Posters~ inc_._~., 600 F_2d
1184, 1188 (Sth Cir. 1979). Even if "defendants' [acts] may convey a
barely discernible message[, this] does not entitle them to appropri-
ate plaintiff's trademark in the process of conveying that message."
Da las Cowboys Cheerleaders, Inc. v. Pussycat Cinema~ Ltd., 604 F.2d
200, 206 (2d Cir. 1979). As the Ninth Circuit has said, "ecause
defendants here could have expressed their theme without copying
[Business Wire's] protected " the law "requires that their
First Amendment challenge be dismissed." Walt Disney Productions v.
Air Pirates, 581 F.2d 751,759 (gth Cir. 1978); accord Dallas Cowboys
Cheerleaders, 604 F.2d at 206 (applying Air Pirates to reject First
Amendment defense in trademark case "ecause there are numerous ways
in which defendants may comment on [a matter of public interest]
without infringing plaintiff's trademark"). Since Code of Civil Proce-
dure ' 425.16 is predicated on the existence of a valid First Amend-
ment exercise of speech, this analysis also requires that defendants'
attempt to invoke ' 425.16 be rejected.l~
CONCLUSION
As a matter of federal law, California Code of Civil Procedure '
425.16 cannot apply to Business Wire's federal Lanham Act causes of
action_ Nor does ' 425.16 apply to its state law claims. While the
statute is interpreted broadly, defendants overlook that "[d]espite
this expansive interpretation of section 425.16, the courts have
recognized that there are limits in its application." Ericsson GE
Mobile, 49 Cal. App. 4th at 1600; a~.cord Wilcox, 27 Cal.
g~ This applies to the unfair competition and conspiracy claims, as
well as all trademark claims. Other than the fraud and breach of
contract shown in Section II.A to be outside the scope of ' 425.16,
the predicate acts underlying the unfair competition and conspiracy
claims are the misrepresentations, dilution and infringement underly-
ing the trademark claims.
App. 4th at 819. Defendants essentially advocate an unlimited applica-
tion of ' 425.16 so that it would apply to unlawful conduct that did
not occur in a public forum and did not discuss a matter of public
interest. Such conduct cannot be and is not within the scope of '
425.16. To hold otherwise would subject virtually every fraud, breach
of contract, trademark, unfair competition and defamation claim to a
motion to strike under the anti-SLAPP statute.
For all the foregoing reasons, defendants have not carried their
threshold burden of showing that Code of Civil Procedure ' 425.16
applies to Business Wire's causes of action and therefore their motion
should be denied without "putting the plaintiff to the burden of
establishing probability of success on the merits." Wilcox, 27 Cal.
App. 4th at 819.
DATED: July 23, 1999
STEINHART & FALCONER LLP
ROGER R. MYERS
LISA M. SITKIN |
