Summary Judgment Granted in BidZirk v. Smith

I blogged about Orthomom's victory on Friday. Here's another big win for a blogger recently. Last Monday, the United States District Court for the District of South Carolina granted summary judgment to Philip Smith in the lawsuit brought against him by BidZirk, LLC, Daniel Schmidt, and Jill Patterson. The decision contains a handful of rulings that could be helpful to bloggers faced with lawsuits in the future. Most significantly, the court held that Smith's blogging activity fit the "news reporting and news commentary" statutory defense to trademark dilution liability under 15 U.S.C. § 1125(c)(4)(C).

In January 2006, Smith published a four-part article, entitled "Special Report: You Gotta Be Berserk To Use An eBay Listing Company! The Whole Story." In the post, Smith depicted his negative experience with BidZirk and his interactions with the company's president, Daniel Schmidt. In the course of this discussion, Smith reproduced BidZirk's logo and made snarky comments about it. He also discussed more generally the positive and negative aspects of using an eBay listing company, such as BidZirk, and provided a checklist for readers to consult in deciding whether to do so. Additionally, he linked to an article on another website that discussed Schmidt and Patterson's upcoming wedding and contained a photograph of them.

BidZirk, Schmidt and Patterson sued Smith in federal court in South Carolina for violations of the Lanham Act (BidZirk only), defamation (Schmidt only), and invasion of privacy (Schmidt and Patterson). Smith represented himself in the lawsuit. Early on, BidZirk moved for a preliminary injunction barring Smith's use of its trademark. The district court denied the motion, and the Fourth Circuit Court of Appeals affirmed that decision in March of this year.

On Smith's motion for summary judgment, the court ruled that BidZirk's Lanham Act claims were barred by 15 U.S.C. § 1125(c)(4)(C), which exempts "[a]ll forms of news reporting and news commentary" from liability under § 1125(c), the trademark dilution provision. In deciding whether Smith's article fit within the statutory defense, the court applied a "functional analysis, which examines the content of the material, not the format, to determine whether it is journalism." Bidzirk v. Smith, No. 6:06-109, slip op. at 11 (D.S.C. Oct. 22, 2007). The court gave weight to Smith's engagement in background research, his inclusion of a checklist for readers to use in selecting a listing company, and his intent to "report what he believed was a newsworthy story for consumers." Id. at 12-13. The court emphasized that "[t]he fact that Smith reports negatively about his experience with BidZirk does not dictate that the article's function or intent was not news reporting or news commentary." Id. at 12. For the court, Smith's being a "blogger" was not dispositive: "The court agrees that not all bloggers are journalists. However, some bloggers are without question journalists." Id. at 11.

Interestingly, the court appeared to believe that its analysis under § 1125(c)(4)(C) was sufficient to dispose of BidZirk's false advertising claim under 15 U.S.C. § 1125(a)(1)(B). From a technical point of view, this is wrong because the statutory defenses found in § 1125(c)(4) only apply to trademark dilution claims. From a substantive point of view, however, this conclusion is reasonable enough -- the court's decision on the "news reporting" question probably made it impossible for BidZirk to show that Smith's use of the mark was "in commercial advertising or promotion," as required for a false advertising claim. Nevertheless, one wishes the court had connected the dots, if only to avoid a frivolous appeal on what is probably the weaker of the two Lanham Act claims.

With regard to Schmidt and Patterson's privacy claim, the court held that South Carolina law does not recognizes the tort of false light invasion of privacy and that, even if it did, Smith had done nothing to cast them in a false light. Further, the court determined that the misappropriation of likeness claim could not survive because Smith had not posted Schmidt and Patterson's photograph to his website, but merely linked from his blog to another website, where the photograph appeared with their consent.

With regard to Schmidt's defamation claim, the court determined that Smith's statement that Schmidt was a "yes man" was a statement of opinion that could not be verified as true or false. In the alternative, the court held that this statement was not susceptible of a defamatory meaning, noting that, immiediately after calling Schmidt a "yes man," Smith had acknowledged that eBay is a "yes man paradise," where "[m]any sellers over promise and under deliver." Id. at 7.

Finally, the court sanctioned the plaintiffs' attorney $1000 for filing a "lis pendis" on Smith's condominium. Under South Carolina law, a plaintiff in an "action affecting the title to real property" can file a notice of the pendency of the action in the county where the real property is located. This notice is called a "lis pendis," and it puts a cloud on the title to the property and prevents the owner from freely disposing of it before the litigation is resolved. The court sanctioned the plaintiffs' attorney for filing a lis pendis under the circumstances because there was no colorable argument that the lawsuit was an "action affecting the title to real property."

This is a great victory for Smith, a pro se litigant who has defended himself admirably. As Eric Goldman wrote about this case yesterday:

[I]t takes a lot of courage to blog, and it takes even more courage for bloggers to stand behind their words when challenged, but we have a responsibility to make sure we can't be bullied on either front. On behalf of bloggers everywhere, we applaud Philip Smith's courage and determination to defeat this case.

The district court's decision is also a helpful trademark precedent. While I disagree with the way the court applied the various subsections of § 1125, the overall thrust of the opinion is right. The federal trademark laws are meant to protect consumers and discourage a narrow set of unfair competitive practices. They are not meant to be a catch-all mechanism for companies to silence criticism of their goods or services.

Last updated on October 31st, 2007

BidZirk made no claim for

BidZirk made no claim for false advertising under 15 U.S.C. 1125(a)(1)(B); the only Lanham Act claim asserted was under the Federal Trademark Dilution Act, 15 U.S.C. 1125(c).

BidZirk made no claim for

 

Thanks for your feedback, but please see paragraphs 15-18 of the complaint.  In particular, paragraph 18 says "BidZirk is entitled to damages from Smith for Smith's use of BidZirk's trademark, pursuant to 15 U.S.C. §§ 1125(a)(1)(B) and 1117(a)."  You'll agree that 15 U.S.C. § 1125(a)(1)(B) is the false advertising provision of the Lanham Act.  Further, in its order on the motion for summary judgment at page 10, the court sets the stage for its Lanham Act discussion by quoting the entire text of the false advertising provision, and indicating that BidZirk is seeking damages under § 1117(a).  I agree that the court gave prominence to the dilution claim (and note that the earlier Fourth Circuit opinion re the preliminary injunction only addressed the dilution claim - why? I don't know), but I don't agree that BidZirk "made no claim" for false advertising.  If you have a document showing that BidZirk withdrew the claim set out in paragraphs 15-18 of the complaint, could you send it to me so that I can update the post and our database entry on this case?  Thanks again. 

Commercial website claim

Bidzirk wanted a claim that my website was a commercial entity. I wasn't able to get the claim dismissed at the Magistrate level, but the District Judge understood that A) I did not write the story for the sole intent to get hits and therefore ad revenue - I wrote it with the intent of consumer advocacy. B) My website could easily be considered a hobby and not a business - I earn less than $2000 a year from it. I could easily make it a 5013C if I cared to.

Furthermore, in the last two years since this has been dragging through the court, the eBay Dropoff business has all but collapsed. There are class action lawsuits being filed almost daily against the franchise owners such as iSoldit.

   
 
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