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BidZirk Case a Victory For Free Speech

It doesn’t get much better than this (If you like Free Speech) File this under “when will they learn?”

Philip J. Smith keeps a blog upon which he comments on tech issues (and occasionally sports). One of his articles discussed an Ebay auction listing company, BidZirk (with which I guess he had a bad experience). Smith discussed Bidzirk, his interactions with its president, Daniel Schmidt, and his negative opinions regarding all bid listing companies.

BidZirk decided to counter the negative publicity with that favorite tool of all petty little crybabies – the defamation suit. For good measure, BidZirk and Schmidt threw in a count for invasion of privacy – based upon the fact that Smith linked to an external website with a picture of Schmidt (and his fiancee Jill Patterson). BidZirk also sued for trademark infringement because Smith used the BidZirk name in his blog entry (yes, discussing BidZirk).

Round one – BidZirk Seeks a Preliminary Injunction / Prior Restraint

BidZirk managed to find an attorney willing to seek a prior restraint against Smith. The Magistrate determined that Smith was a cyber-journalist, while BidZirk claimed that Smith was just “cyber griping.” Either way, I’m not sure why a licensed attorney would be so misinformed as to seek a prior restraint for something like this. I wish that I could say that this kind of behavior is rare. It isn’t.

Upon review of the content of the article, the court finds that Smith’s use of the BidZirk mark in the article was in the context of news reporting or news commentary. The article posted by Smith concerning the Plaintiffs is written for the purpose of conveying information. In the four installments of the article, Smith describes his experience with BidZirk in great detail. In addition, Smith addresses the positive and negative aspects, in his opinion, of dealing with a an eBay listing company, such as BidZirk. Further, Smith provides a checklist for using an eBay listing company and tips for selling items on eBay. The fact that Smith reports negatively about his experience with BidZirk does not dictate that the article’s function was not news reporting or news commentary. (source)

Precisely. In other words, you can not use the Lanham Act to circumvent the First Amendment.

Round Two – TKO Smith – BidZirk’s Attorney Sanctioned

This one makes you ask “how dumb can you get?” Smith, pro se, managed to not only prevail on his motion for Summary Judgment, but got sanctions against BidZirk’s attorney!

The Defamation Claim

Apparently, the “actionable” statements on Smith’s blog were:

From the beginning . . . I could tell the owner was a yes man. Of course, I have to be honest . . . eBay is; in and of itself a yes man paradise. Many sellers over promise and under deliver.

Although the owner seemed like a yes man . . . I had done my home work . . . he had owned an ecommerce B2B company called ChannelLinx. Tech savvy? Possibly . . . (source)

The court naturally held that this was rhetorical hyperbole, incapable of a defamatory meaning.

“Under the First Amendment there is no such thing as a false idea. However pernicious an opinion may seem, we depend for its correction not on the conscience of judges and juries, but on the competition of other ideas. But there is no constitutional value in false statements of fact.” Gertz v. Robert Welch, Inc., 418 U.S. 323, 339-40 (1974).

An alleged defamatory statement “must be provable as false before there can be liability under state defamation law.” Milkovich v. Lorain Journal Co., 497 U.S. 1, 19 (1990).

“[O]pinion statements, defamatory or otherwise, are not actionable unless they contain provably true or false factual connotations.” Woodward v. Weiss, 932 F. Supp. 723, 726 (D.S.C. 1996) (alteration in original) (internal quotation marks omitted). The statement that “I could tell the owner was a yes man” is an opinion statement that cannot be characterized as true or false. The term “yes man” has different meanings to different people. See McCabe v. Rattiner, 814 F.2d 839, 842 (1st Cir. 1987) (finding that the term “scam” “means different things to different people . . . and there is not a single usage in common phraseology. While some connotations of the word may encompass criminal behavior, others do not. The lack of precision makes the assertion ‘X is a scam’ incapable of being proven true or false.” (Alteration in original)); Lauderback v. Am. Broad. Cos., Inc., 741 F.2d 193, 196 (8th Cir. 1984) (insurance agent referred to as a “crook”). “Clearly, if the statement was not capable of being verified as false, there could be no liability for defamation.” Woodward, 932 F. Supp. at 726. Based on the foregoing, calling Schmidt a “yes man” cannot give rise to liability for defamation.(source)

The Invasion of Privacy Claim

Smith apparently placed a link on his blog to another site where the Plaintiff’s photographs could be found. The Plaintiffs felt that this both placed them in a “false light” and was a wrongful appropriation of their likeness. Well, “false light” doesn’t exist as a cause of action in South Carolina so, whiff.

With respect to the misappropriation, the court held that this claim was “wholly without merit.”

Wrongful appropriation of personality involves the intentional, unconsented use of the plaintiff’s name, likeness, or identity by the defendant for his own benefit. The gist of the action is the violation of the plaintiff’s exclusive right at common law to publicize and profit from his name, likeness, and other aspects of personal identity.

This claim failed because Smith did not place Patterson and Schmidt’s picture on his blog, but rather placed a link to another website where that picture could be found. The Court did not even bother to ridicule the Plaintiffs for trying to claim that linking to an external website could establish liability, but relied upon the fact that the Plaintiffs consented to the circulation of the image.

Schmidt and Patterson consented to the circulation of the article and picture in the Community Journal to publicize the opening of BidZirk. See United States v. Gines-Perez, 214 F. Supp. 2d 205, 225 (D. Puerto Rico 2002) (“[P]lacing information on the
information superhighway necessarily makes said matter accessible to the public, no matter how many protectionist measures may be taken, or even when a web page is ‘under construction.’”

“[I]t strikes the Court as obvious that a claim to privacy is unavailable to someone who places information on an indisputably, public medium, such as the Internet, without taking any measures to protect the information.”), vacated on other grounds by, No. 02-2707, 2004 WL
528426 (1st Cir. Mar. 18, 2004). Smith did not transport the picture to his blog. Instead, Smith’s blog contained a link that readers could click on that takes the reader to the site where the article and picture are located, [here].

The court finds that “a person who places a photograph on the Internet precisely intends to forsake and renounce all privacy rights to such imagery, particularly under circumstances . . . where [Patterson and Schmidt] did not employ protective measures or devices that would have controlled access to the Web page or the photograph itself.” Gines-Perez, 214 F. Supp. 2d at 225. Further, there is no evidence that Smith’s link to the article containing the picture of Patterson and Schmidt was done to benefit Smith in any way. Based on the foregoing, the court finds that Schmidt and Patterson consented to the display of their picture on the internet.(source)

The Lanham Act Claim

BidZirk tried to claim that the commentary on Smith’s blog was somehow violative of BidZirk’s trademark rights to the term “BidZirk.” Looks like someone forgot to tell them what a trademark is – a means of designating the source or origin of goods or services — not a “word patent,” nor some kind of magic shield against criticism.

The Judge certainly could have ruled against BidZirk on many grounds, but the Judge found that Smith’s blog constituted “news and commentary.”

Under § 1125(c)(4)(C), no “forms of news reporting and news commentary” are actionable under § 1125. These terms are not defined in the Lanham Act. Further, there is no published case deciding whether a blogger is a journalist.(source)

The judge, upon reviewing the function of the blog determined that in this circumstance, Smith qualified as a “journalist.”

Un oh… Sanctions!

I have had plaintiffs threaten to file lis pendens against my clients’ property in defamation cases before. My reaction is always “go ahead, I dare you.” Here’s a case that I can cite next time some knucklehead tries that tactic.

The Plaintiffs’ attorney, Kevin Elwell (“Elwell”), filed a lis pendens against Smith’s condo on October 23, 2006. Smith moved to strike the lis pendens on October 26, 2006. After a status hearing on May 2, 2007, Magistrate Judge Catoe ordered Elwell to withdraw the lis pendens on May 7, 2007. During the May 2, 2007 hearing, Elwell argued that this action is an action “affecting title to real estate,” but had no law to support his point. At the status conference hearing on September 17, 2007, the court allowed Elwell to brief why the court should not issue sanctions against the Plaintiffs for filing the lis pendens. In the brief, the Plaintiffs allege that at the time the lis pendens was filed, they believed that they were entitled to judgment as a matter of law because Smith had failed to answer certain requests to admit. The Plaintiffs further allege that they were attempting to protect their ability to collect on a judgment. The Plaintiffs acknowledge that filing the lis pendens was wholly improper. (Pls.’ Mem. Regarding Sanctions 3.)(source)

The judge continues to lambaste attorney Elwell:

The court finds that the degree of Plaintiffs’ counsel’s culpability weighs heavily in favor of sanctioning the Plaintiffs’ counsel, Kevin Elwell (“Elwell”). Elwell is a competent attorney who knew or should have known with the most basic research that his actions were improper. In addition, after Smith moved to strike the lis pendens, Elwell argued in court that the lis pendens was proper. Elwell had no basis to support his position. (Mem. Regarding Sanctions 2.)(source)

And with that, Judge Herlong imposed the very charitable sanction of $1,000 to be paid by Attorney Elwell to the defendant.


I know what you’re thinking… well, if you know anything about the First Amendment, privacy, or trademark law you are thinking this… what was this guy thinking? Of course this suit was doomed to failure, and of course the judge threw it out. Eric Goldman describes the suit as “a flagship example of how a pernicious and misguided plaintiff with a thin skin can ruin a blogger’s life.” I say precisely. The free speech victory is all the sweeter because Smith defended himself pro se.

What lessons can be learned from this?

Well, anyone dumb enough to try and make these arguments isn’t going to be able to learn anything from my blog.

Nevertheless, what you can learn is that to practice law, you must master the art of client control. I have defended more than one case that was as patently frivolous as this one, and in each circumstance I have asked the other attorney “why are you doing this?” The only answer I have ever gotten was “my client told me to.”

That doesn’t fly.

As an attorney, you are supposed to exercise your independent judgment, exercise client control, and when all else fails — withdraw. Hopefully BidZirk’s attorney learned that lesson from this case.

Hat tips to Greg Herbert for bringing this to my attention, and to the Citizen Media Law project for hosting the case documents.

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