Using IP to Prevent Negative UGC Comments

In March, Judge Paul A. Crotty of the Southern District of New York denied a motion to dismiss in the case of Lee v. Makhnevich, 11 Civ. 8665, NYLJ 1202595648235 (SDNY, decided March 27, 2013) writing '[t]his lawsuit about a toothache and a dentist's attempt to insulate herself from criticism by patients has turned into a headache.' Lee involves an effort by a dentist to use a 'standard' agreement (supplied by a company which has since withdrawn them) that prohibits her patients from ever posting a negative review online ' and to claim copyright in any such reviews if they are posted. (Prof. Eric Goldman's note on this case and the agreement contains excellent additional information and is available at http://bit.ly/12WEL1R.) Such agreements raise a variety of issues, including under state contract law, HIPAA and other patient protection laws as well as the intellectual property issues that were before Crotty. Although the procedural posture of the case was such that the court did not directly address the question of whether the agreement was enforceable, the court's opinion gives substantial guidance as to the ultimate outcome.

In October 2010, Robert Lee experienced severe toothache pain and sought treatment from Dr. Stacy Makhnevich of Aster Dental, a preferred provider accepted by his insurer. In order to receive treatment, Lee was required to sign what appeared to be the familiar barrage of new patient forms, among them a Mutual Agreement to Maintain Privacy. The agreement required that Lee 'refrain from directly or indirectly publishing ' commentary upon Dentist and his practice, expertise and/or treatment. If Patient does prepare commentary for publication about Dentist, the Patient exclusively assigns all Intellectual Property rights, including copyrights, to Dentist for any written, pictorial, and/or electronic commentary.' It further required that Lee 'not denigrate, defame, disparage, or cast aspersions upon the Dentist; and ' use all reasonable efforts to prevent any member of their immediate family or acquaintance from engaging in any such activity.' Crotty took a dim view of this agreement, writing: 'In return for this restraint on speech, Defendants made the disturbing promise not to do exactly what they are not supposed to do in the first instance. Defendants promised not to exploit loopholes in HIPPA that Defendants asserted allow them to pass along Lee's patient information to third party marketers.' Lee, at 2

Despite misgivings, Lee signed the agreement in order to get treatment. He was treated and billed $4,800, which he paid. In addition, according to the complaint, Aster Dental failed to submit a claim to Lee's insurer despite his repeated requests, and refused Lee's request for a copy of his dental records, instead referring him to a third party that requested an additional fee. On Aug. 24, 2011, Lee recounted his experience at Aster Dental on several websites, including Yelp and DoctorBase, criticizing defendants for overcharging him, refusing to submit his insurance claim, and refusing to provide him with his dental records. Defendants responded immediately, sending a letter to Lee threatening him with an action for breach of contract, defamation, and copyright infringement. The letter stated that defendants would seek $100,000 in damages and attached a draft complaint. On Oct. 24, 2011, Lee received another letter threatening litigation, this time from defendants' attorney, stating that 'all legal possible actions will be taken against you in which you will be responsible for any judgment made against you.'

In September 2011, defendants continued what the court called 'their aggressive and threatening conduct.' They sent DMCA (Digital Millennium Copyright Act) takedown notices to the websites where Lee had made comments about defendants, warning that if the commentary was not immediately removed, the websites would lose DMCA safe-harbor protection and defendants would 'consider coordinating with counsel to implement any and all remedies allowable by law.' Id.

Lee responded with a class action suit seeking, among other things, declarations that online publication of patient reviews does not constitute copyright infringement; that such publications are a protected 'fair use' under the Copyright Act; that such publications were truthful and thus not defamatory; that the agreement's provisions constituted breaches of fiduciary duty, violations of dental ethical standards and copyright misuse; that the agreement was void for lack of consideration, unconscionable under New York law and violative of NY GBL '349(a); and damages. Defendants moved to dismiss for lack of subject matter jurisdiction and failure to state a claim.

Decision in Lee

Crotty's opinion denying defendants' motion is largely focused on the narrow issues of whether the court has subject matter jurisdiction and whether the complaint states a claim. The tone of the opinion, however, makes it clear that Crotty takes an extremely dim view of the agreement and defendants' efforts to avoid negative publicity at the expense of their patients' rights.

Thus, the court first rejected defendants' challenges to its subject matter jurisdiction, noting the court's original and exclusive jurisdiction over copyright claims, the satisfaction of the amount in controversy requirement for diversity purposes by defendants' own claim that they had suffered damages on the order of $100,000, and that '[a] brief review of Defendants' conduct in response to Lee's exercise of basic rights shows how ridiculous their arguments are' that no actual controversy exists.

The court also summarily dispensed with defendants' argument that Lee's Copyright Act-based claims should fail because defendants' purported copyrights were not registered. The court noted that the registration requirement of 17 U.S.C. '411(a) applies only to civil actions for infringement, whereas Lee seeks 'relief from Defendants' assertion that Lee's comments about Defendants' hardly defensible practices are subject to copyright protection.' Id. at 5. Thus, the court held that registration is not a jurisdictional requirement for an action seeking declaratory judgment of non-infringement.

These are narrow holdings on a motion to dismiss, but any time a court refers to a defendants' arguments as 'ridiculous' and its conduct as 'hardly defensible,' it is not difficult to predict how things will turn out in the case.

Challenges to Similar Agreements

Crotty is not alone in his opinion of these practices, any more than Makhnevich is alone in her use of the agreement. Similar agreements have been used by other clients of Medical Justice, a company that purports to provide medical providers with, among other things 'reputation protection.' See, www.medicaljustice.com/services/protection-plans. But the trend is strongly against such agreements.

For example, one such agreement was declared invalid in a proceeding before the Office for Civil Rights of the U.S. Department of Health and Human Services, which found that a practitioners' 'obligation to comply with all requirements of the [HIPAA] Privacy Rule cannot be conditioned on the patient's silence.' See, 'Private Practice Ceases Conditioning of Compliance with the Privacy Rule,' HHS.gov. Relatedly, the day before Lee filed his complaint, the Center for Democracy and Technology (CDT) challenged the practices of Medical Justice in a complaint filed with the Federal Trade Commission and various state attorneys general. See, Justin Brookman, 'CDT Files FTC Complaint Against Medical Justice,' Nov. 29, 2011. CDT alleged that Medical Justice violated '5 of the Act '[b]y providing means to medical practices to suppress patient reviews' and by posting 'highly positive' reviews of its client health care providers 'under false identities' ' i.e., posing as patient reviewers.

The CDT complaint highlights the copyright and related issues raised by Medical Justice's agreements. First, CDT asserts that the agreements' purported prohibition on speech and assignment of copyright interests in speech are unlikely to withstand legal challenge given that courts do not favor agreements that categorically ban consumer reviews. Complaint '23. See also, e.g., New York v. Network Associates, 758 N.Y.S.2d 466 (Sup. Ct. N.Y. Co. 2003). Second, CDT notes that, even if the copyright assignment is valid, customer reviews, to the extent they use copyrighted material 'for purposes such as criticism [and] comment,' may constitute a protected 'fair use' under 17 U.S.C. '107. Complaint '24 n.39. Third, if the transfer of copyright ownership attempted by the agreement is ineffective, or the reviewer is not a patient party to the practitioner's agreement, health care providers sending takedown notices could be liable for money damages under 17 U.S.C. '512(f) for 'knowingly materially misrepresenting ' that material or activity is infringing.' Complaint ”36-39; see also, e.g., Online Policy Grp. v. Diebold, 337 F. Supp. 2d 1195, 1204-05 (N.D. Cal. 2004). Further, as Profs. Eric Goldman and Jason Schultz note, even if the assignment of copyright in these agreements is effective, a provider still risks liability under '512(f) if she issues a copyright takedown notice regarding a review whose author is not a patient that signed such an agreement (and thus is not someone whose copyrights were assigned to the provider) ' facts which may be difficult to confirm, for instance, if the review is posted anonymously or pseudonymously. See, 'Creating Legal and Ethical Risks,' Doctoredreviews.com.

The day after CDT filed its complaint, Medical Justice ceased providing agreements like that in Lee to its clients, and stated that it would instruct clients to stop using such forms. See, 'Medical Justice Terminates Illegal Doctor Review Contracts,' CDT.org, Dec. 2, 2011, .

Boarding School Review

Copyright is not the only branch of intellectual property pressed into unlikely service to try to shut down customer review sites. In Boarding School Review v. Delta Career Education Corporation, 11 Civ. 8921 (DAB) (S.D.N.Y. March 29, 2013), another case in the Southern District of New York, Judge Deborah Batts recently faced a similar challenge to online publications under trademark law.

Boarding School Review (BSR) operates a website that provides information about community colleges to prospective students, including schools owned and operated by Delta Career Education Corporation and Weston Educational (collectively, Delta). Delta asserted that BSR's site made unauthorized use of Delta's trademarks, YouTube videos and text from its schools' websites and provided inaccurate information about the schools. It filed a complaint asserting claims for trademark infringement, unfair competition, deceptive trade practices, trademark dilution and copyright infringement. BSR moved to dismiss for failure to state a claim. Id. at 3-4, 6-7.

Batts dismissed nearly all Delta's claims in a patient opinion that consistently reflected the lack of potential harm to consumers. The court rejected Delta's Lanham Act claims, finding little likelihood that consumers would be confused by BSR's use of Delta trademarks. The court noted that the prominent 'Community College Review' banner on BSR's site and its navigational links enabling users to request information from various schools 'clearly and quickly communicate to site visitors that BSR's website is an omnibus review site profiling community colleges, not a website affiliated with or sponsored by the schools profiled.' Id. at 13. The court also pointed to the sophistication of consumers seeking secondary school information and the fact that the parties operate in distinct industries. The court dismissed defendants' unfair competition claims on the same grounds.

Nor did the court find any basis for Delta's trademark dilution claims. The court found Delta's marks lacked sufficient 'value and secondary meaning among the consuming public' to warrant protection under the federal anti-dilution statute, and dismissed defendants' parallel state law anti-dilution claims, finding no indicia that BSR's use of Delta's trademarks would diminish the marks' ability to uniquely identify Delta's schools to consumers. Given Delta's consistent failure to allege likely harm to consumers ' let alone the heightened threat to the public interest required by N.Y. General Business Law '349 ' Delta's deceptive practices claim also failed.

Batts granted Delta leave to replead a narrow set of trademark claims based on allegations that certain links on BSR's pages might be misleading, and it reserved decision pending discovery on BSR's 'fair use' defense to Delta's copyright claims. But the opinion is generally extremely unsympathetic to the proposition that trademark law is an appropriate vehicle for restricting customer comments in public forums.

Conclusion

Review sites are a fact of life in the Internet age, and managing brand identity online is never going to be cheap or easy. The temptation to turn to the courts ' and to intellectual property law ' to exert some measure of control over user comments can be overwhelming. Certainly, copyright, trademark and trade secret law have a place in the regulation of online content, but they are not designed to address the average negative review or customer complaint. These recent decisions seem to indicate that the courts recognize the limits of the law in this area and are unlikely to extend it ' particularly in the absence of any direct harm to consumers at large.

Stephen M. Kramarsky, a member of Dewey Pegno & Kramarsky, focuses on complex intellectual property litigation. Kara Siegel, an associate, assisted with the preparation of this article.

Internet marketing has long been a double-edged sword. A successful viral advertisement can rocket a brand to social media stardom overnight, but those same tools enable unhappy customers to share their bad experiences with a wider audience than ever before. Smart companies understand that the power of user generated content (UGC) is that it is at least somewhat out of control. They craft their brand strategies accordingly, using social media to address customer concerns directly and publicly, rewarding social media influencers and picking their battles. But still, the courts remain full of litigants who do not seem to get the message.

In particular, some businesses continue to attempt to use intellectual property law to stop customers from sharing their experiences on the Internet. These are not cases involving the posting of trade secrets or confidential information, nor are they cases of defamation or trade libel. Rather, they are cases where a business attempts to systematically prohibit the posting of user-generated negative reviews to a website such as Yelp, whether or not those reviews are accurate, purportedly on the basis of some intellectual property right. In the absence of some extraordinary circumstance, courts have not responded favorably to this approach, as a few recent decisions from New York demonstrate.

Lee v. Makhnevich

In March, Judge Paul A. Crotty of the Southern District of New York denied a motion to dismiss in the case of Lee v. Makhnevich, 11 Civ. 8665, NYLJ 1202595648235 (SDNY, decided March 27, 2013) writing '[t]his lawsuit about a toothache and a dentist's attempt to insulate herself from criticism by patients has turned into a headache.' Lee involves an effort by a dentist to use a 'standard' agreement (supplied by a company which has since withdrawn them) that prohibits her patients from ever posting a negative review online ' and to claim copyright in any such reviews if they are posted. (Prof. Eric Goldman's note on this case and the agreement contains excellent additional information and is available at http://bit.ly/12WEL1R.) Such agreements raise a variety of issues, including under state contract law, HIPAA and other patient protection laws as well as the intellectual property issues that were before Crotty. Although the procedural posture of the case was such that the court did not directly address the question of whether the agreement was enforceable, the court's opinion gives substantial guidance as to the ultimate outcome.

In October 2010, Robert Lee experienced severe toothache pain and sought treatment from Dr. Stacy Makhnevich of Aster Dental, a preferred provider accepted by his insurer. In order to receive treatment, Lee was required to sign what appeared to be the familiar barrage of new patient forms, among them a Mutual Agreement to Maintain Privacy. The agreement required that Lee 'refrain from directly or indirectly publishing ' commentary upon Dentist and his practice, expertise and/or treatment. If Patient does prepare commentary for publication about Dentist, the Patient exclusively assigns all Intellectual Property rights, including copyrights, to Dentist for any written, pictorial, and/or electronic commentary.' It further required that Lee 'not denigrate, defame, disparage, or cast aspersions upon the Dentist; and ' use all reasonable efforts to prevent any member of their immediate family or acquaintance from engaging in any such activity.' Crotty took a dim view of this agreement, writing: 'In return for this restraint on speech, Defendants made the disturbing promise not to do exactly what they are not supposed to do in the first instance. Defendants promised not to exploit loopholes in HIPPA that Defendants asserted allow them to pass along Lee's patient information to third party marketers.' Lee, at 2

Despite misgivings, Lee signed the agreement in order to get treatment. He was treated and billed $4,800, which he paid. In addition, according to the complaint, Aster Dental failed to submit a claim to Lee's insurer despite his repeated requests, and refused Lee's request for a copy of his dental records, instead referring him to a third party that requested an additional fee. On Aug. 24, 2011, Lee recounted his experience at Aster Dental on several websites, including Yelp and DoctorBase, criticizing defendants for overcharging him, refusing to submit his insurance claim, and refusing to provide him with his dental records. Defendants responded immediately, sending a letter to Lee threatening him with an action for breach of contract, defamation, and copyright infringement. The letter stated that defendants would seek $100,000 in damages and attached a draft complaint. On Oct. 24, 2011, Lee received another letter threatening litigation, this time from defendants' attorney, stating that 'all legal possible actions will be taken against you in which you will be responsible for any judgment made against you.'

In September 2011, defendants continued what the court called 'their aggressive and threatening conduct.' They sent DMCA (Digital Millennium Copyright Act) takedown notices to the websites where Lee had made comments about defendants, warning that if the commentary was not immediately removed, the websites would lose DMCA safe-harbor protection and defendants would 'consider coordinating with counsel to implement any and all remedies allowable by law.' Id.

Lee responded with a class action suit seeking, among other things, declarations that online publication of patient reviews does not constitute copyright infringement; that such publications are a protected 'fair use' under the Copyright Act; that such publications were truthful and thus not defamatory; that the agreement's provisions constituted breaches of fiduciary duty, violations of dental ethical standards and copyright misuse; that the agreement was void for lack of consideration, unconscionable under New York law and violative of NY GBL '349(a); and damages. Defendants moved to dismiss for lack of subject matter jurisdiction and failure to state a claim.

Decision in Lee

Crotty's opinion denying defendants' motion is largely focused on the narrow issues of whether the court has subject matter jurisdiction and whether the complaint states a claim. The tone of the opinion, however, makes it clear that Crotty takes an extremely dim view of the agreement and defendants' efforts to avoid negative publicity at the expense of their patients' rights.

Thus, the court first rejected defendants' challenges to its subject matter jurisdiction, noting the court's original and exclusive jurisdiction over copyright claims, the satisfaction of the amount in controversy requirement for diversity purposes by defendants' own claim that they had suffered damages on the order of $100,000, and that '[a] brief review of Defendants' conduct in response to Lee's exercise of basic rights shows how ridiculous their arguments are' that no actual controversy exists.

The court also summarily dispensed with defendants' argument that Lee's Copyright Act-based claims should fail because defendants' purported copyrights were not registered. The court noted that the registration requirement of 17 U.S.C. '411(a) applies only to civil actions for infringement, whereas Lee seeks 'relief from Defendants' assertion that Lee's comments about Defendants' hardly defensible practices are subject to copyright protection.' Id. at 5. Thus, the court held that registration is not a jurisdictional requirement for an action seeking declaratory judgment of non-infringement.

These are narrow holdings on a motion to dismiss, but any time a court refers to a defendants' arguments as 'ridiculous' and its conduct as 'hardly defensible,' it is not difficult to predict how things will turn out in the case.

Challenges to Similar Agreements

Crotty is not alone in his opinion of these practices, any more than Makhnevich is alone in her use of the agreement. Similar agreements have been used by other clients of Medical Justice, a company that purports to provide medical providers with, among other things 'reputation protection.' See, www.medicaljustice.com/services/protection-plans. But the trend is strongly against such agreements.

For example, one such agreement was declared invalid in a proceeding before the Office for Civil Rights of the U.S. Department of Health and Human Services, which found that a practitioners' 'obligation to comply with all requirements of the [HIPAA] Privacy Rule cannot be conditioned on the patient's silence.' See, 'Private Practice Ceases Conditioning of Compliance with the Privacy Rule,' HHS.gov. Relatedly, the day before Lee filed his complaint, the Center for Democracy and Technology (CDT) challenged the practices of Medical Justice in a complaint filed with the Federal Trade Commission and various state attorneys general. See, Justin Brookman, 'CDT Files FTC Complaint Against Medical Justice,' Nov. 29, 2011. CDT alleged that Medical Justice violated '5 of the Act '[b]y providing means to medical practices to suppress patient reviews' and by posting 'highly positive' reviews of its client health care providers 'under false identities' ' i.e., posing as patient reviewers.

The CDT complaint highlights the copyright and related issues raised by Medical Justice's agreements. First, CDT asserts that the agreements' purported prohibition on speech and assignment of copyright interests in speech are unlikely to withstand legal challenge given that courts do not favor agreements that categorically ban consumer reviews. Complaint '23. See also , e.g. , New York v. Network Associates , 758 N.Y.S.2d 466 (Sup. Ct. N.Y. Co. 2003). Second, CDT notes that, even if the copyright assignment is valid, customer reviews, to the extent they use copyrighted material 'for purposes such as criticism [and] comment,' may constitute a protected 'fair use' under 17 U.S.C. '107. Complaint '24 n.39. Third, if the transfer of copyright ownership attempted by the agreement is ineffective, or the reviewer is not a patient party to the practitioner's agreement, health care providers sending takedown notices could be liable for money damages under 17 U.S.C. '512(f) for 'knowingly materially misrepresenting ' that material or activity is infringing.' Complaint ”36-39; see also , e.g. , Online Policy Grp. v. Diebold , 337 F. Supp. 2d 1195, 1204-05 (N.D. Cal. 2004). Further, as Profs. Eric Goldman and Jason Schultz note, even if the assignment of copyright in these agreements is effective, a provider still risks liability under '512(f) if she issues a copyright takedown notice regarding a review whose author is not a patient that signed such an agreement (and thus is not someone whose copyrights were assigned to the provider) ' facts which may be difficult to confirm, for instance, if the review is posted anonymously or pseudonymously. See, 'Creating Legal and Ethical Risks,' Doctoredreviews.com.

The day after CDT filed its complaint, Medical Justice ceased providing agreements like that in Lee to its clients, and stated that it would instruct clients to stop using such forms. See, 'Medical Justice Terminates Illegal Doctor Review Contracts,' CDT.org, Dec. 2, 2011, .

Boarding School Review

Copyright is not the only branch of intellectual property pressed into unlikely service to try to shut down customer review sites. In Boarding School Review v. Delta Career Education Corporation, 11 Civ. 8921 (DAB) (S.D.N.Y. March 29, 2013), another case in the Southern District of New York, Judge Deborah Batts recently faced a similar challenge to online publications under trademark law.

Boarding School Review (BSR) operates a website that provides information about community colleges to prospective students, including schools owned and operated by Delta Career Education Corporation and Weston Educational (collectively, Delta). Delta asserted that BSR's site made unauthorized use of Delta's trademarks, YouTube videos and text from its schools' websites and provided inaccurate information about the schools. It filed a complaint asserting claims for trademark infringement, unfair competition, deceptive trade practices, trademark dilution and copyright infringement. BSR moved to dismiss for failure to state a claim. Id. at 3-4, 6-7.

Batts dismissed nearly all Delta's claims in a patient opinion that consistently reflected the lack of potential harm to consumers. The court rejected Delta's Lanham Act claims, finding little likelihood that consumers would be confused by BSR's use of Delta trademarks. The court noted that the prominent 'Community College Review' banner on BSR's site and its navigational links enabling users to request information from various schools 'clearly and quickly communicate to site visitors that BSR's website is an omnibus review site profiling community colleges, not a website affiliated with or sponsored by the schools profiled.' Id. at 13. The court also pointed to the sophistication of consumers seeking secondary school information and the fact that the parties operate in distinct industries. The court dismissed defendants' unfair competition claims on the same grounds.

Nor did the court find any basis for Delta's trademark dilution claims. The court found Delta's marks lacked sufficient 'value and secondary meaning among the consuming public' to warrant protection under the federal anti-dilution statute, and dismissed defendants' parallel state law anti-dilution claims, finding no indicia that BSR's use of Delta's trademarks would diminish the marks' ability to uniquely identify Delta's schools to consumers. Given Delta's consistent failure to allege likely harm to consumers ' let alone the heightened threat to the public interest required by N.Y. General Business Law '349 ' Delta's deceptive practices claim also failed.

Batts granted Delta leave to replead a narrow set of trademark claims based on allegations that certain links on BSR's pages might be misleading, and it reserved decision pending discovery on BSR's 'fair use' defense to Delta's copyright claims. But the opinion is generally extremely unsympathetic to the proposition that trademark law is an appropriate vehicle for restricting customer comments in public forums.

Conclusion

Review sites are a fact of life in the Internet age, and managing brand identity online is never going to be cheap or easy. The temptation to turn to the courts ' and to intellectual property law ' to exert some measure of control over user comments can be overwhelming. Certainly, copyright, trademark and trade secret law have a place in the regulation of online content, but they are not designed to address the average negative review or customer complaint. These recent decisions seem to indicate that the courts recognize the limits of the law in this area and are unlikely to extend it ' particularly in the absence of any direct harm to consumers at large.

Stephen M. Kramarsky, a member of Dewey Pegno & Kramarsky, focuses on complex intellectual property litigation. Kara Siegel, an associate, assisted with the preparation of this article.