Direct Sales and MLM

Gripe Sites: Trademark issues when someone trashes your name online

By
Kevin Thompson

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Story of Mark Trader

Mark Trader makes the investment to protect his company name and logo. He retains an attorney in his local area, he spends a few bucks and soon becomes the owner the mark: "EZ BREEZY." EZ Breezy is a company he started that specializes in selling unique outdoor gear for men. They sell camping gear, hunting and fishing equipment and all things manly outside. It's sort of like a Man Cave meets Pampered Chef concept. He launches his business and within two months, one of his distributors calls, seemingly out of breath, and says, "There's a site that says we're a SCAM! When our prospects google 'EZ BREEZY' after our presentations, the number one result is EZBREEZYSCAM.com and the owner of the site is trashing us! What are we going to do!?"Mark Trader reassures his distributor and says, "Let your trusted leader handle this! I'm going to push a button and make that site disappear!" Mark calls his lawyer, Larry, and says, "Larry, I want the EZBREEZYSCAM site down. They're infringing on our trademark and it's killing my business! That's my name in the domain!"

Gripe Sites

This is a very common fact pattern that's circulating throughout the internet, especially with network marketing companies. Consumers take their frustrations to the internet, sometimes on an anonymous basis, and voice their concerns while casting a warning to prospective customers. The EZBREEZYSCAM.com site is commonly referred to as a "Gripe Site." So in Mark Trader's case, the question is whether the scam site constitutes trademark infringement. It depends...If the gripe site truly serves no commercial purpose, it'll likely be protected as Free Speech. However, if the gripe site is designed to criticize a business WHILE recruiting people for something else, it'll lead to an entirely different outcome. If someone creates a gripe site and you want it down, consider the following questions:

Is there a commercial purpose?

If the purpose of the site is strictly to warn consumers, it'll likely be protected as free speech, regardless if your trademarked name is in the URL. This is commonly referred to as "Nominative Use." If there's a "bad faith" intent on profiting from the mark, it's another story.

Is there a likelihood of confusion?

If there's no commercial purpose for the site, the "likelihood of confusion" standard is moot and disregarded. But, assuming there's a commercial purpose, the Lanham Act prohibits anyone from using a mark that "is likely to cause confusion . . . or to deceive as to the affiliation . . . or approval of his or her . . . commercial activities by another person." In other words, if there's an appearance that the mark owner ENDORSES the site, there's a likelihood of confusion. The Lanham Act seeks to prevent consumer confusion that enables a seller to pass “off his goods as the goods of another.” By inserting the word "scam" in the URL, it would certainly provide a strong argument that it's not an endorsed site. Also, if there's a disclaimer from the author somewhere on the site that explains a lack of affiliation between the site and the trademark owner, this element is nearly impossible to prove. In summary, this is a hard one to win.

Is the content actionable?

Technically, a site can be "non-commercial" and still contain actionable content that's not protected as Free Speech. False and slanderous statements are never protected as free speech. I wrote a brief summary on "Blogging and the First Amendment" two years ago. If the author crosses the line and publishes actionable content, there are other options to get the site taken down. But be careful…Truth is an absolute defense to a defamation case. If the author is writing truthfully, the litigation gun can kick harder than it shoots.If you're interested in reading a more thorough analysis of this issue, check out a court decision that was published in February of 2010 (Career Agents Network v. CareerAgentsNetwork.biz). It has facts similar to the Mark Trader hypothetical above; however, the legal analysis is very thorough.

What are your thoughts on Gripe Sites? Should there be more protections for Trademark owners?

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