Hy Cite v. badbusinessbureau.com

Citation: Hy Cite Corp. v. badbusinessbureau.com, L.L.C., 418 F.Supp.2d 1142 (D. Ariz. 2005).

Factual Background
Plaintiff sold dinnerware and cookware under the mark ROYAL PRESTIGE. Defendants operated and managed a website known as the “Rip-off Report” at the domain names “ripoffreport.com” and “badbusinessbureau.com.” Defendants claimed to operate a consumer protection site where consumers could file reports about companies that have “ripped them off.” Plaintiff contacted defendants regarding complaints about plaintiff on defendants’ website, alleging that defendants were posting false and defamatory statements and misusing plaintiff’s trademark. In response, defendants offered a “mediation” program to help plaintiff resolve the complaints in return for payments of $50,000 dollars plus a monthly retainer of $1500.

Trial Court Proceedings
Plaintiffs filed suit for threatened extortion and wire fraud under the Racketeering Influence and Corrupt Organizations Act (RICO); unfair competition, false advertising, and disparagement under the Lanham Act; and common law trademark infringement and unfair competition. Defendants moved to dismiss all claims.

Regarding plaintiff’s Lanham Act claims, because defendants did not offer a competing product or service, the court held that the Lanham Act did not apply. Plaintiff argued that because the defendants used the statements about plaintiff on its website to promote their website and consumer reports services, defendants’ actions constituted competition. The court rejected this argument, finding that the plaintiff’s alleged injuries from the website would not constitute competitive injuries because defendants’ actions could in no way divert sales of dinnerware or cookware into sales of defendants’ book or consumer-protection services.

The court stated that this case was analogous to cases like Bosley Medical v. Kremer, in which the court held that the defendant there could use the plaintiff’s mark in a domain name for a website used to criticize the plaintiff. According to the court, “The criticism of Plaintiff’s business appearing on Defendants’ website is not a competitive injury actionable under the Lanham Act.”

The court thus dismissed plaintiff’s Lanham Act claims. However, the court held that plaintiff successfully pleaded common law unfair competition because the common law was “broader than the Lanham Act.”

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