MCW v. badbusinessbureau.com

Citation: MCW v. badbusinessbureau.com, 2004 U.S. Dist. Lexis 6678 (N.D. Tex. Apr. 19, 2004).

Factual Background
Plaintiff offered clients job-hunting skills and career-counseling services under the marks HALDANE and BERNARD HALDANE. Defendants operated a consumer complaint forum website called “The Rip-Off Report” at the domain names “ripoffreport.com” and “badbusinessbureau.com.” At those sites, individuals could file reports alleging abuses by companies and, for various fees, the companies could rebut the complaints. Defendants also solicited donations, sold advertising space, assisted with and encouraged class-action lawsuits, and sold a “rip-off revenge” kit explaining how to “avenge” themselves against companies.

Trial Court Proceedings
Plaintiff sued for unfair competition and false advertising under the Lanham Act, as well as various Texas state-law claims based on use of the HALDANE marks on defendants’ websites in the publishing and posting of allegedly false, misleading, and disparaging statements about plaintiff and its products or services.

The court granted defendants’ motion to dismiss for failure to state a claim. Regarding the Lanham Act claims, the court first found that plaintiff lacked prudential standing to assert either unfair competition or false advertising, primarily because the parties were not competitors, plaintiff’s alleged reputational harm was not the type of harm addressed by the Lanham Act, and plaintiff could assert other claims such as disparagement. However, the court nevertheless analyzed the plaintiff’s Lanham Act claims. Although the court acknowledged that the key issue of likelihood of confusion for plaintiff’s unfair competition claim was a question of fact and generally should not be decided in a motion to dismiss, this case presented an “unusual” claim because the goods were unrelated and the parties were not direct competitors.

Relying on Bihari v. Gross, the court stated that “[it] fails to understand how any reasonable viewer of the defendants’ website would believe that the disparaging comments regarding [plaintiff’s] business are endorsed by [plaintiff].” Accordingly, the court found that there was “absolutely no evidence of a likelihood of confusion.” Nor was there a basis for finding a likelihood of initial-interest confusion because: (1) defendants did not own or operate a competing website and thus could not divert users from plaintiff, (2) defendants’ websites provided users with information about plaintiff instead of diverting them from plaintiff, (3) users were unlikely to believe that these sites belonged to plaintiff based on the domain names “ripoffreport.com” or “badbusinessbureau.com” or the disparaging text of the sites. In short, the use of plaintiff’s marks on defendants’ sites was not “a bad faith attempt to trick users into visiting their websites.” The court thus dismissed the Lanham Act unfair-competition claim and the corresponding state-law claims for unfair competition and trademark infringement.

Regarding the false-advertising claim, plaintiff argued that the use of its marks on defendants’ sites was commercial when used in conjunction with paid services and the collection of fees. The court disagreed, however, and dismissed the claim because the parties were not in commercial competition and defendants did not post messages to entice customers to buy their products rather than plaintiff’s.

Finally, although plaintiff did state a Texas business-disparagement claim, the court declined to exercise supplemental jurisdiction and dismissed it for lack of subject-matter jurisdiction.

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