Marcia S. Krieger, Chief United States District Judge.
The Court briefly summarizes the pertinent facts here and elaborates as appropriate in its analysis.
According to the Amended Complaint
In June 2011, Mr. Chumley purchased the internet domain name generalsteelscam.com, and began hosting a website on it that, General contends, contained false and defamatory material directed at General and its employees. (The website is registered overseas through Defendants PRQ and its principal, Mr. Swartholm, although General contends that Mr. Chumley maintains control over it.) General filed a complaint with the international agency that oversees domain name disputes and was successful in securing a ruling that required Mr. Chumley to turn over the generalsteelscam.com site to General. Mr. Chumley then registered a new domain, steelbuildingcomplaints.com, which General contends repeats the defamatory content that the predecessor website did.
Mr. Chumley promotes steelbuildingcomplaints.com through a process known as "back-linking." In essence, he (or, more accurately, his agents) creates hundreds or thousands of placeholder websites that consist primarily of links containing variations on the name "General Steel," all of which link back to steelbuildingcomplaints.com or to web pages belonging to Armstrong. The practice of back-linking is designed to manipulate the page-ranking algorithms of search websites such as Google and Bing in order to increase the prominence that the steelbuildingcomplaints.com website will have in search results when a user searches using the terms "General Steel" or its variants. (The practice is also known as "Search Engine Optimization" or "SEO.") General contends that the prominent placement of steelbuildingcomplaints.com in search results for "General Steel" operates to discourage potential General customers. Mr. Chumley also allegedly purchases advertising space from search companies, so that user searches for "General Steel" or its variants result in the display of ads for Armstrong.
In December 2012, Mr. Chumley allegedly began calling General's customers, purporting to be an investigator with the Colorado Attorney General's Office, inviting the customers to file complaints against General. Mr. Chumley also allegedly sent letters to General's customers from the "Consumer Advocacy Alliance — General Steel Investigation Unit," a fictitious entity, inviting customers to file claims or complaints against General.
Based on these allegations, General asserts six claims: (i) false advertising under the Lanham Act, 15 U.S.C. § 1125(a)(1)(B) against the Defendants; (ii) violation of the Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d), against Armstrong, relating to the registration and use of the generalsteelscam.com website; (iii) common-law libel against Armstrong; (iv) unjust enrichment against Armstrong; (v) civil conspiracy against Armstrong; and (vi) misappropriation of trade secrets, in violation of C.R.S. § 7-4-101 et seq. against Armstrong, relating to these Defendants acquiring and using General's "valuable customer information" and "customer lists and/or databases."
Armstrong filed an Answer
Armstrong also alleges that General has misappropriated Armstrong's trademarked logo. In certain electronic brochures, General includes a modified version of Armstrong's logo, replacing the phrase "Armstrong Steel" with the phrase "Fraudulent Steel." Armstrong contends that General also uses Armstrong's mark on its various affiliated websites, such as in advertisements displaying Armstrong's logo and reading "buy an Armstrong Steel building!"; in actuality, these advertisements, when clicked, redirect the user to General's website. (Armstrong also alleges that it also holds a copyright on the logo, and that General's use of the logo also constitutes copyright infringement.)
Armstrong asserts two claims: (i) copyright infringement, in violation of 17 U.S.C. § 501 et seq., against both General and Mr. Knight; and (ii) false advertising, in violation of 15 U.S.C. § 1125(a)(1)(B), against both General and Mr. Knight.
General
The Court begins with Armstrong's Objections to the Magistrate Judge's ruling. At issue are three interrogatories posed by Armstrong to General: (i) "Interrogatory 2," a request for the "names, home address, and home telephone and cell number" of "all individuals employed by General Steel in an administrative or sales position" from 2009 to 2013; (ii) "Interrogatory 10," a request for the names, address, and telephone number of "every customer who complained about alleged misrepresentations and/or deceptive or fraudulent advertising or practices by General Steel" from 2009 to 2013; and (iii) "Interrogatory 1," a request that "with respect to the screen shots disclosed by [Armstrong]" in Armstrong's own production, that General state whether the "such screen shot was authored and/or posted on the internet either by General Steel or its agents," that it "state ... the identification of all letters, facsimiles, and emails between General Steel and its employees regarding such advertising, customer testimonials or blogs"; that it "state ... the identification" of the same information as between General and "third parties"; that it "state ... the identification of any false information or fabricated customer testimonials or blogs with regard to General Steel ..., General Steel's charitable contributions, industry awards given to General Steel, and the number or identity of General Steel's current or former customers"; and that it "state ... the identification of all reports" concerning "the traffic and/or
General refused to answer the interrogatory concerning its employees on grounds of relevance, produced certain records of customer complaints incident to a prior ruling of the Court but opposed producing the remainder as irrelevant and overly burdensome, and opposed the third interrogatory as vague, overbroad, unduly burdensome, and compound.
Armstrong moved to compel
Rulings on non-dispositive issues by a Magistrate Judge are reviewed by this Court pursuant to Fed. R. Civ. P. 72(a), and will be reversed only if they are "clearly erroneous or contrary to law."
The Court finds no clear error or incorrect application of law in the Magistrate Judge's ruling. It agrees with the Magistrate Judge that Armstrong's request in Interrogatory 2 for the names, addresses, and phone numbers of all of General's sales and administrative employees is indeed overbroad and a "fishing expedition." Armstrong argues that it "could contact former employees informally to determine whether they had any knowledge or information about" General's allegedly false statements, or that it could use the list of employees "to refresh a deponent's mind[ ] about whether there were other employees that might have knowledge about the topics above." Armstrong is free to inquire of General's witnesses about the identities of other employees at General who might have knowledge of particular statements by General, but a wholesale request for the
Interrogatory 10 presents a somewhat closer question. Armstrong requested information about customers who complained to General about "alleged misrepresentations and/or deceptive or fraudulent advertising or practices" by General over a certain time frame (along with certain subsidiary information relating to each complaint). Facially, this request might be pertinent to a claim by Armstrong that General has engaged in false advertising by representing on its website that it has a history of "100% customer satisfaction" and "zero unresolved customer issues." However Interrogatory 10 is limited to specific
The Court finds that the Magistrate Judge did not err in denying Armstrong's motion to compel the information requested in Interrogatory 10. Armstrong's request is predicated on General's advertising that it has a history of "100% customer satisfaction" and "zero unresolved customer issues." The most reasonable readings of those advertising messages is that General is asserting that its customers are completely satisfied with the
Finally, the Court agrees with the Magistrate Judge that no response to Interrogatory 1 was required. Besides being
Accordingly, the Court overrules Armstrong's Objections and affirms the Magistrate Judge's denial of its motions to compel.
Rule 56 of the Federal Rules of Civil Procedure facilitates the entry of a judgment only if no trial is necessary. See White v. York Intern. Corp., 45 F.3d 357, 360 (10th Cir.1995). Summary adjudication is authorized when there is no genuine dispute as to any material fact and a party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). Substantive law governs what facts are material and what issues must be determined. It also specifies the elements that must be proved for a given claim or defense, sets the standard of proof and identifies the party with the burden of proof. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Kaiser-Francis Oil Co. v. Producer's Gas Co., 870 F.2d 563, 565 (10th Cir.1989). A factual dispute is "genuine" and summary judgment is precluded if the evidence presented in support of and opposition to the motion is so contradictory that, if presented at trial, a judgment could enter for either party. See Anderson, 477 U.S. at 248, 106 S.Ct. 2505. When considering a summary judgment motion, a court views all evidence in the light most favorable to the non-moving party, thereby favoring the right to a trial. See Garrett v. Hewlett-Packard Co., 305 F.3d 1210, 1213 (10th Cir.2002).
If the movant has the burden of proof on a claim or defense, the movant must establish every element of its claim or defense by sufficient, competent evidence. See Fed. R. Civ. P. 56(c)(1)(A). Once the moving party has met its burden, to avoid summary judgment the responding party must present sufficient, competent, contradictory evidence to establish a genuine factual dispute. See Bacchus Indus., Inc. v. Arvin
If the moving party does not have the burden of proof at trial, it must point to an absence of sufficient evidence to establish the claim or defense that the non-movant is obligated to prove. If the respondent comes forward with sufficient competent evidence to establish a prima facie claim or defense, a trial is required. If the respondent fails to produce sufficient competent evidence to establish its claim or defense, then the movant is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
The Court begins with General's motion, which seeks summary judgment on Armstrong's counterclaims.
Armstrong's counterclaim against General for false advertising is asserted under the Lanham Act, 15 U.S.C. § 1125(a)(1)(B). That statute prohibits "any person who, on or in connection with any goods or services ... uses in commerce any ... false or misleading description of fact ... which in commercial advertising of promotion misrepresents the nature, characteristics, qualities or geographic origin of his or her or another person's goods, services, or commercial activities." Armstrong contends that General made numerous false representations of fact in numerous contexts: (i) that it made thousands of "blog posts" or published content on internet web sites falsely representing that it was a "manufacturer" of steel buildings, that it has been in existence for more than 50 years, that it supplied steel to the U.S. military during World War II, and so on; (ii) that it sponsored "pay-per-click" advertisements on search engines that stated that it was a manufacturer of steel buildings; (iii) that it created internet "directory listings" that identify it as a manufacturer of steel buildings; (iv) that it made various false statements on its own website to the effect that it had a "history of 100% customer satisfaction" and "zero unresolved customer issues" and published customer testimonials containing false material; (v) that it published an electronic "brochure" entitled "Fraudulent Steel" that....; and (vi) that its customer representatives made various false representations about General and Armstrong.
To establish a Lanham Act claim such as this, Armstrong must show: (i) that General made materially false or misleading representations of fact; (ii) in connection with its commercial advertising;
It is undisputed that the content comprising the allegedly false "blog posts" and "pay-per-click" ads were not created by General itself. Rather, General contracted with an entity called JEMSU (or sometimes "Denver SEO") by which JEMSU performed "search engine optimization" designed to heighten General's ranking in internet search engines like Google and Bing. "Search engine optimization" services generally involve creation of hundreds or thousands of websites, each containing numerous short pieces of written content, generally no more than a paragraph or two, that link back to the website being promoted. Here, JEMSU's employees (or contractors it hires) wrote the pieces, each containing one or more links that point back to General's website. The objective is for this network of websites to appear to the algorithms used by search engines to be legitimate, independent sources of content about General. In this case, it is undisputed that, among the thousands of articles published by JEMSU on General's behalf are many that make a variety of false statements about General — that it manufactures steel, steel buildings, and products like automobile rims (when, in actuality, it manufactures nothing and only serves as a seller of others' products), that it has storied history dating back more than 50 years (when, in fact, that history belongs to a different entity with a similar name), and so on.
General argues that JEMSU operated as an independent contractor, creating and publishing the content without any control or direction from General. Thus, General argues, it cannot be held liable for any false representations contained in content published by JEMSU.
As a general rule, a master is subject to liability for torts
Turning first to the question of control, General contends that it did not (and, more importantly, could not) attempt to control how JEMSU performed the creation and publication of the web content, nor that it had control over the contents of the material JEMSU published. General alleges that, beyond giving JEMSU instructions about not identifying General as a "manufacturer" in the written content, it deferred entirely to JEMSU's expertise and exercised no control over how JEMSU proceeded to perform the work. However, there is evidence that General had both the ability to exercise significant control over and direct JEMSU's activities, and that it actually did so. In a deposition, JEMSU's principal, Troy Olson, made it clear that if asked by General, JEMSU "could . . have put prohibitions on what [JEMSU] could publish about them." Presented with the hypothetical of General having instructed that "[when] you're creating content ... make sure you don't call us a manufacturer" and asked whether "that would have been something that you all would have then tried to follow," Mr. Olson said "Yes." Mr. Olson acknowledges that it currently submits the content it intends to post on General's behalf to General for approval prior to posting, and that General could have but did request such review previously. Mr. Olson also acknowledges that, after October 2013 (when Armstrong filed the counterclaims herein), General requested that JEMSU remove certain content it had posted on General's behalf and that JEMSU did so. The deposition of Travis McCain, an official of General, corroborates that General expressly directed the actions of JEMSU on at least one occasion: after General discovered that a JEMSU employee had written false content about General manufacturing "steel rims" for vehicles, Mr. McCain "told [JEMSU] that they needed to evaluate everything that [the JEMSU employee] had written. I told them that they needed to comb through all the content they've generated; and if they find anything like this, it needs to be rewritten to be content specific to the industry."
In many ways, JEMSU is analogous to the example of the full-time cook used in the example found in the Restatement. As with the master employing the cook, General hired JEMSU to achieve a certain goal (preparing food; raising General's search engine profile). General may not have dictated the moment-to-moment or day-to-day activities of JEMSU, just as the master may not have directed the day-to-day activities of the cook, but both the master and General retained the authority to direct the charge. Indeed, there is evidence that General gave specific directions to JEMSU as to content. Accordingly, there is a genuine dispute of fact as to whether JEMSU was acting as General's agent, rather than as an independent contractor, when publishing the false advertisements about General.
There is also a genuine dispute of fact as to whether General granted JEMSU the authority to publish the false content. General contends that, when it retained JEMSU, Mr. McCain told JEMSU that "you could write anything that's truthful, [I] told them they weren't allowed to refer to General Steel as a manufacturer or a fabricator of buildings in any way, shape, or form. But other than that, they were the experts and have at it." Sean Hakes, who helped found JEMSU but who had left and
Taken in the light most favorable to Armstrong, Mr. Olson's testimony suggests that General retained JEMSU to post content for General's benefit, that General had the ability to dictate what types of content would and would not be acceptable to post, but that General granted JEMSU broad authority to post content on its behalf without giving JEMSU any instructions or stating any limitations on what JEMSU could write — that General simply told JEMSU to "have at it." By authorizing JEMSU to post content about General without any boundaries or control, General effectively authorized JEMSU to publish whatever JEMSU desired. Thus, there is a genuine dispute of fact as to whether JEMSU's posting of false information about General was an act undertaken by JEMSU within the scope of the authority delegated to it by General.
Accordingly, General is not entitled to summary judgment based on lack of agency.
General argues that the false statements about it published by JEMSU cannot constitute "false advertising" under the Lanham Act because the content that was published was never intended to be read by humans.
To constitute "commercial advertising or promotion" under the Lanham Act, a factual representation must have four characteristics: (i) it must be "commercial speech"; (ii) it must be made by (or on behalf of) a defendant who is in commercial competition with the party asserting the Lanham Act violation; (iii) it must be "for the purposes of influencing consumers to buy defendant's goods or services" (whether part of a "classic advertising campaign" or in "more informal types of `promotion'"); and (iv) it must be disseminated sufficiently to the relevant purchasing public to constitute advertising or promotion within that industry. Proctor & Gamble Co. v. Haugen, 222 F.3d 1262, 1273-74 (10th Cir.2000).
General contends that the bits of content published by JEMSU fail to meet the third and fourth elements of the test. It argues that the content was not published "for the purpose of influencing customers" and was
The Court finds this argument unpersuasive. The content published by JEMSU is not arbitrary or utterly irrelevant to General's operations — for example, it does not consist of links to General's website embedded in randomly-generated sentences, paragraphs from "Moby Dick," or even portions of generic, neutrally-phrased encyclopedia articles about the history and manufacture of steel. The various examples in the record reveal, at least in most circumstances,
These articles typically promote General as a business and are designed to engender positive associations between its name and quality products and services discussed by the authors. Just because the articles were drafted to influence algorithms doesn't end the inquiry. The ultimate purpose of the testimonials was to influence the algorithms to reflect the quantity and quality of favorable comments for the benefit of the ultimate consumer. This is "promotional" information, albeit filtered by electronic means. Conceptually, it could be "advertising" sufficient to support a Lanham Act claim. The question becomes whether it reached the ultimate consumer.
This is a more difficult question. Is there evidence that the false promotional information was disseminated to the consuming public in sufficient degree that the industry would consider such information to be "advertising." Haugen, 222 F.3d at 1273-74. General asserts — and Armstrong does not dispute — that General/JEMSU never intended
General cites to Sports Unlimited, Inc. v. Lankford Enterprises, Inc., 275 F.3d 996, 1003-04 (10th Cir.2002). There, the plaintiff and defendant both sold and installed gym floors. The plaintiff installed a gym floor for a customer, but the customer became unsatisfied with the product and contacted the defendant with certain questions. At some point in time, the defendant created a document containing a list of some of the plaintiff's customers and (allegedly false) complaints by those customers. The defendant provided copies of the document to the contractor and architect on the project for the customer. The customer eventually terminated its contract with the plaintiff and retained the defendant to replace the floor. The plaintiff sued the defendant for false advertising under the Lanham Act, but the trial court granted summary judgment to the defendant, finding that the dissemination of the document to two individuals (or, arguably, as many as seven) was insufficient, as a matter of law, to constitute "advertising or promotion in the industry" under the Act, particularly when there was evidence that the plaintiff bid for as many as 150 jobs per year. Id. The 10
This Court finds Sports Unlimited instructive. It makes clear that to constitute an actionable advertising or promotional campaign, a dissemination of information must reach some numerically-significant quantity of actual or potential customers of the parties' products. This record is vague as to how many human beings might have encountered the material published by JEMSU. Mr. Olson describes that number as "incidental" and Armstrong does not clarify. Moreover, it is by no means clear that any of these "incidental" visitors were actual or potential customers of General's or Armstrong's products, or what information they actually reviewed. It is possible that the visitors reached the pages as a result of an internet search for information on steel buildings, but it is just as plausible that that they had no interest in steel buildings and arrived at the pages due to a coincidental search — say, for information about navy battleships or the whereabouts of a high school classmate with the same name as a JEMSU article's ostensible author — or due to a typographical error. Armstrong provides no additional insight into the nature or quantity of the traffic reaching the JEMSU pages and thus, any conclusions the Court could reach about those matters would be sheer speculation.
Armstrong approaches the problem from a different perspective: it argues that, when a false advertising plaintiff demonstrates that a defendant's advertisement is "literally false" (as opposed to falsely implying a fact), courts do not require the plaintiff to show that the advertisement has an actual or potentially-deceptive effect on the consuming public, instead presuming that deception has occurred. Citing Zoller Laboratories, LLC v. NBTY, Inc., 111 Fed.Appx. 978, 982 (10th Cir.2004), quoting Scotts Co. v. United Indus. Corp., 315 F.3d 264, 273 (4th Cir.2002). This is a generally-correct statement of the law, but it begs the question of whether the web content posted by JEMSU is "advertising". As cases like Sports Unlimited suggest, publication of information does not become "advertising" until it reaches an audience of sufficient size. Until that point, it is not "advertising" and it fruitless to discuss whether it has a deceptive effect. Because Armstrong has not come forward with evidence that shows that the material posted by JEMSU reached sufficient numbers of customers of steel buildings to permit the conclusion that it was "advertising," General is entitled to summary judgment on the false advertising claims premised on the JEMSU "blog posts."
In addition to hiring JEMSU to perform search engine optimization services, General also retained JEMSU to handle certain types of more direct advertising. Specifically, General, through JEMSU, purchased certain "pay-per-click" advertising from search providers. It appears that, when users entered certain search terms on certain search providers, an ad for General would appear along with the search results, reading "The #1 Steel Building Manufacturer! Call Toll Free: [phone number]." It is undisputed that General is not a "steel building manufacturer," meaning that this advertisement is false.
General argues only that it cannot be liable for the false pay-per-click advertisements because they were created by JEMSU without General's knowledge, control, or authorization. The Court need not repeat the analysis above; it is sufficient to observe that Mr. McCain's own deposition testimony seems to suggest that he, on
Although General may contend that Mr. McCain is mistaken or unclear or that this testimony by him contradicts other testimony he gives, the Court must construe it in the light most favorable to Armstrong. Thus, the Court finds that there is evidence in the record that Mr. McCain, on behalf of General, reviewed and approved the text of the pay-per-click advertisements that JEMSU was submitting on General's behalf, presumably including those that falsely identified General as a "manufacturer" of steel buildings. Accordingly, a Lanham Act false advertising claim premised on these ads may proceed.
In addition to JEMSU's efforts to market General, General promoted itself on its own website with content that Armstrong contends is false. Specifically, Armstrong cites to: (i) a graphic reading "Awarded Best in the Industry 2007 — present," when, in fact, no such award exists; (ii) a statement that General has a "customer service track record of zero unresolved customer issues since the company was established"; and (iii) a statement that "No other steel building company can compete with our company's history of 100% customer satisfaction." As to the latter two statements, Armstrong points out that General has been the subject of numerous complaints to the Better Business Bureau and has been sued by customers some 20 times.
General contends that these statements are either mere puffery or are so vague and non-specific that they cannot be considered "false" — in other words, without a generally-agreed upon definition of what "customer satisfaction" means or to whose satisfaction a customer complaint must be "resolved," one cannot affirmatively say that the representations are true or false.
"Puffery" consists of "exaggerated, blustering, and boasting statement[s] upon which no reasonable buyer would be justified in relying." Hall v. Bed Bath, and Beyond, Inc., 705 F.3d 1357, 1368 (Fed. Cir.2013). The distinction between non-actionable puffing and actionable false advertising is "whether a reasonably buyer would take the representation at face value." Id. On the other hand, "specific and measurable claims and claims that may be literally true or false" are not puffery and can be considered actionable. F.T.C. v. Direct Marketing Concepts, Inc., 624 F.3d 1, 11-12 (1st Cir.2010).
Here, the Court agrees with General that the boast "Awarded Best in the Industry" is mere puffery, as no reasonable consumer would rely on such an assertion without first inquiring further into the nature and credibility of the entity granting the award. See e.g. Hackett v. Feeney, 2011 WL 4007531 (D.Nev.2011) (a boast that a particular theatrical performance was "Voted #1 Best Show in Vegas," when no such "vote" ever occurred, was mere puffery).
But the Court agrees with Armstrong that the statements "zero unresolved customer issues" and "[a] history of 100% customer satisfaction" are specific, measurable claims that can be evaluated as
Because Armstrong has come forward with evidence that these statements are false — that certain customers never resolved their complaints with General and that many customers sued General over unresolved issues — the Court denies General's motion for summary judgment on the false advertising claim as it relates to these assertions.
Finally, General argues that Armstrong cannot show that any specific customers had their purchasing decisions influenced by any of General's false advertising. To establish the requisite element of causation and damages in a false advertising claim under the Lanham Act, a plaintiff must show that the false advertising caused consumers "to withhold trade from the plaintiff." Lexmark Inc. v. Static Control Components, Inc., ___ U.S. ___, 134 S.Ct. 1377, 1391, 188 L.Ed.2d 392 (2014).
Once again, Armstrong tacitly concedes that it cannot demonstrate any
Armstrong argues that the proposition enjoys a broader reach in the 10th Circuit. It quotes Hutchinson v. Pfeil, 211 F.3d 515 (10th Cir.2000), for the proposition that "the presumption is properly limited to circumstances in which injury would indeed likely flow from the defendant's objectionable statements, i.e., when the defendant has explicitly compared its product to the plaintiff's
Moreover, the proposition recited in Hutchinson is incomplete. The 10
This Court understands the proposition stated in dicta in Hutchinson — that a presumption of injury can be drawn if the plaintiff and defendant are direct competitors regarding the product in question — as allowing a plaintiff who directly competes with a defendant to show an injury to itself with some lesser quantum of proof than a
This Court rejects the notion urged by Armstrong that a Lanham Act plaintiff in direct competition with a defendant can rely entirely on a presumption of injury to obtain money damages, even when the advertising in question misrepresented only the defendant's product. Porous concisely explains why: in such a suit, the "plaintiff may be only one of many competitors, and without proof of causation and specific injury each competitor might receive a windfall unrelated to its own damage." 110 F.3d at 1336. To hold otherwise would permit
Because Armstrong relies exclusively on the presumption of injury, offering nothing more to demonstrate any non-speculative harm that it claims to have suffered, it is appropriate to grant summary judgment to General on Armstrong's Lanham Act counterclaim for false advertising to the extent it seeks money damages.
Compared to the sprawling false advertising claim, Armstrong's copyright infringement counterclaim is fairly narrow. Armstrong purports to hold the copyright on its logo, which consists of an image of a shield with the words "ARMSTRONG STEEL" emblazoned across it above a yellow-four-pointed
First, General's website contains a link to a document described by the parties as an "e-brochure." That document begins with the text" Are you working with the best? Or just another steel company?" and warns that "The internet is home to many companies offering a deal which is too good to be true," discussing certain unsavory tactics used by unspecified competitors of General. A column along the left hand side of the document reads "IS THIS THE OTHER STEEL COMPANY?" and shows an image of a laptop computer displaying a shield logo with the words "FRAUDULENT STEEL" emblazoned on it above a yellow four-pointed star, all on an orange background.
The second form of infringement Armstrong asserts consists of at least one instance where a JEMSU-created blog contained an advertisement reading "Buy an Armstrong Steel Building!," accompanied by the actual Armstrong "shield" logo, a photograph of a building, and box reading "click here for more information." It appears to be undisputed that a reader clicking on this advertisement would be taken to General's website, not Armstrong's. Armstrong contends that this use of its shield logo, in either its original or modified form, constitutes copyright infringement in violation of 17 U.S.C. § 501 et seq.
General first argues that, as a matter of law, Armstrong does not actually own the copyright to the logo. This argument, although convoluted, can be quickly summarized. In or about 2007, Armstrong retained a company called The Unleaded Group to assist it in creating a logo. Both parties agreed and understood that Armstrong would own the copyright to the finished logo, although the parties never reduced that understanding to writing. After the logo was completed, Armstrong, consistent with the parties' understanding, submitted the logo for copyright registration in the name of Armstrong, identifying it as a work created for hire. General argues that, for various reasons, copyright in the work vested in its author, The Unleaded Group, and not in Armstrong.
The Court need not attempt to unravel the complex web that is General's argument or the equally complex web that is Armstrong's response; instead, it cuts bluntly through both. Assuming, for the moment, that General is correct that The Unleaded Group's creation of the logo cannot be considered a "work for hire" under 17 U.S.C. § 101(1) or (2), ownership of the copyright in that logo would thus initially vest in its author, The Unleaded Group. 17 U.S.C. § 201(a). However, it is undisputed that Armstrong and The Unleaded Group shared a mutual intention, at the time the logo was created, that The Unleaded Group would assign any rights it had in the logo to Armstrong upon completion of the project and Armstrong paying The Unleaded Group for the work. As Nancy Clark, The Unleaded Group's principal explained, "our process [was] you engage me, I do this for you, you pay me, you own it, and I am done with it." It is undisputed that Armstrong paid The Unleaded Group the amount the parties agreed upon, and thus, there is no reason to believe that The Unleaded Group did not orally transfer the copyright to Armstrong.
Although that assignment was not officially memorialized in writing until recently (and only in response to General's motion), nothing in the Copyright Act requires that assignments of rights secured by that Act to be in written form. 17 U.S.C. § 204(a) provides that "a transfer of copyright ownership ... is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in
General argues that Armstrong cannot rely upon a theory that it acquired the copyright in the logo via assignment from The Unleaded Group when the Certificate of Registration for that logo indicates that Armstrong's rights were secured because the logo was a "work for hire." Errors in a Certificate of Registration do not invalidate the certificate or the rights secured in the certificated owner absent a showing of intent to defraud and prejudice. In re Napster Copyright Litigation, 191 F.Supp.2d 1087, 1099 (N.D.Ca. 2002). General does not attempt to make such a showing.
Accordingly, the Court rejects General's argument that Armstrong is not the proper owner of the copyright in the shield logo. Thus, the Court turns to General's remaining arguments.
General argues that its use of the "FRAUDULENT STEEL" logo is protected by the doctrine of "fair use," because General's use was for the purpose of "comment and criticism." 17 U.S.C. § 107. The "fair use" doctrine permits persons to make use of a copyrighted work "for purposes such as criticism, comment, news reporting, teaching ..., scholarship, or research." Id. To determine whether a party's use of a copyrighted work is a "fair use," the statute requires the Court to consider four factors: (i) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (ii) the nature of the copyrighted work; (iii) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (iv) the effect of the use upon the potential market value of the copyrighted work. Id.
The Court cannot find that, as a matter of law, that General's use of the "FRAUDULENT STEEL" mark is a fair use of Armstrong's logo. General used most of the elements of Armstrong's mark — the shape, color, and graphical elements are essentially identical between Armstrong logo and General's version of it, as is the use of the word "steel." Although General characterizes the purpose of its use of the logo as being for "comment and criticism," its use of the mark was not to comment or criticize
Finally, General argues that, with regard to the advertisement that used Armstrong's actual logo but pointed to General's website, that advertisement appeared on a website created by JEMSU and that General had no control over that advertisement. For the reasons discussed above, the Court declines to grant summary judgment to General based on an argument that it cannot be held liable for tortious acts committed on its behalf by JEMSU.
Accordingly, the Court denies General's motion for summary judgment on the copyright counterclaims against it.
Armstrong moves for summary judgment on all of the claims that General has asserted against it.
General asserts its own Lanham Act false advertising claim against Armstrong, stemming from Armstrong's alleged operation of the website www.steelbuilding complaints.com (hereafter, "the website").
Armstrong first argues that none of the content on the website is "false," either literally so or by implication. General's response to this contention focuses largely on proving that, contrary to the website's assertion that it is "by consumers," Mr. Chumley is the primary, if not exclusive, moving force behind the website and its contents. The Court will not recite or attempt to summarize the complex chain of evidence and inferences upon which General relies. It is sufficient to observe that there is ample evidence from which a reasonable factfinder could infer that Mr. Chumley is the author of much of the content of the website. From that conclusion, the factfinder could also infer that the various representations on the website that suggest that the website is created "by consumers" or that it is intended to be a resource for consumers is false.
The remainder of General's response to Armstrong's argument that the remaining contentions are not false or misleading is more awkward. With regard to many of the allegations, General cites to an affidavit by Mr. Knight that discusses content posted on a different website (www. generalsteelscam.com) that is not at issue in this lawsuit and the contents of which is different from those in www.steelbuilding complaints.com. When Mr. Knight's affidavit addresses specific content on steelbuildingcomplaints.com, it merely quotes from the website and asserts the bare conclusion that such material is "false and outrageous". The affidavit offers no explanation of what portion of the quoted statement is false or why. For example, the website states that "General Steel employees [have stated] that they too are growing tired of the lies. Daily sales meetings have been referred to as `daily indoctrination.'" This Mr. Knight states is "false and outrageous", but he is in no apparent position to assert that "General Steel employees have stated that they ... are growing tired of the lies" is false unless he has personal knowledge of every communication that every General employee (past and present, presumably) has had with third parties. Another example found in Mr. Knight's affidavit is that the statement that there have been "dozens and dozens of lawsuits involving transactions with General Steel" as is false. The affidavit does not state Mr. Knight's knowledge or the
Armstrong's second argument directed at the false advertising claim is that even if the material posted on the website was posted by Armstrong and was factually untrue, Armstrong can nevertheless not be held liable for it because the statements are not "advertising or promotion." Armstrong instead describes the content as being that of a "gripe site" or "complaint site" that is non-commercial speech. This argument might have merit if Armstrong were not a direct competitor of General; in such circumstances, Armstrong's criticism of General would be divorced from the goods and services it offered for sale and unmotivated by any commercial interest. Compare Utah Lighthouse Ministry v. Foundation for Apologetic Information and Research, 527 F.3d 1045, 1052-53 (10th Cir.2008) (non-commercial website that parodied plaintiff's website was not "advertising," even though parties were, to a limited degree, competitors in the same market). However, Armstrong's strong commercial interest in diverting customers away from General (in the hopes that some of them might instead purchase a similar product from Armstrong) and its specific reference to General's products in the website are sufficient to subject Armstrong to liability for false advertising for misrepresentations contained in the website.
This case is more akin to Haugen, in which an Amway distributor disseminated a message to other distributors that falsely accused the Proctor & Gamble Company — an Amway competitor — of being associated with Satanism and encouraged recipient to avoid Proctor & Gamble's products. A single sentence of the multi-paragraph message contained an oblique reference promoting Amway, stating merely that "it really makes you count your blessings to have available to all of us a business that allows us to buy all the products that we want from our own shelf." Proctor & Gamble sued Haugen for false advertising under the Lanham Act and Haugen argued, among other things, that the message was not commercial speech, but the 10
Armstrong also argues that General cannot show that the false representations on the website actually deceive customers or have a likelihood of doing so. The Court need not explore this argument deeply, as it is readily-apparent that, in the light most favorable to General, the content of the website could be likely to deceive customers. The website purports to be a collection of complaints posted by customers, when, in fact, it is posted by a competitor of General's for the purpose of discouraging putative customers from dealing with General. General asserts that the various complaints and other adverse representations on the site are false, which the Court generally credits for purposes of this argument. The contents of the website relate directly to the quality of services provided by General and unambiguously describe those services as a "scam," and customers treating those complaints as accurate would be very likely to avoid dealing with General as a consequence. This is not a circumstance where the false representations are orthogonal to the purpose for which customers would turn to the website for information, such that they would not be likely affect a purchasing decision, or a circumstance in which the representations are so inconsequential or hyperbolic that reasonable consumers would reflexively reject or ignore them.
Finally, Armstrong argues that General's false advertising claim is barred by the doctrine of res judicata. In 2010, General commenced suit against Armstrong in D.C. Colo. Civ. Case No. 10cv-1398-PAB-KLM. General's Amended Complaint in that action focused on Armstrong making unlawful use of General's name by using the term "general steel buildings" as keywords when purchasing pay-per-click and other types of online advertising, that Armstrong made false representations about its own business on its website (such as that it fabricated its own steel). Based on this conduct, General asserted various claims against Armstrong, including false advertising under the Lanham Act. Judge Brimmer conducted a bench trial in July 2012 and in May 2013, found in favor of General on its false advertising claims and awarded damages and a disgorgement remedy against Armstrong. Although none of General's claims involved either the generalsteelscam.com or steelbuildingcomplaints.com websites directly, General put on some evidence at trial concerning generalsteelscam.com and Judge Brimmer made certain findings with regard to that site. He found that Mr. Chumley denied operating the site but admitted to "submitting large amounts of content to it," that the evidence at trial "did not establish that [the site's content] was false," that Mr. Chumley's activities on the site indicated that "Mr. Chumley was committed to damaging the reputation of General Steel," that Mr. Chumley had authored and posted articles on the internet about the steel building industry that purported to have been written by a "Jeff Knight," "Jeffery Knight," or "Nathan Wright" (Mr. Knight and Mr. Wright being officers of General), and that the articles indicated that the Jeffrey Knight in question was the webmaster of generalsteelscam.com.
Res judicata precludes litigation of issues that were actually decided or could have been decided in a prior action. Santana v. City of Tulsa, 359 F.3d 1241, 1246 n. 3 (10th Cir.2004). It applies where:
Under this standard, the Court finds that false advertising contained in steelbuildingcomplaints.com cannot possibly have been part of the same transaction, event, or occurrence being litigated before Judge Brimmer. The claims before Judge Brimmer focused on Armstrong boasting of false accomplishments on its own website and falsely appropriating General's name in pay-per-click advertisements; those claims had no necessary connection to Armstrong making websites that falsely disparaged General. Moreover, it is clear that the steelbuildingcomplaints.com site only came into existence in or about March 2012, only months before the case was tried to Judge Brimmer, and long after the deadline for amending pleadings and adding claims. (Indeed, it is not even clear that the generalsteelscam.com site existed, much less that General was aware of it, prior to the deadline for joining claims in the Judge Brimmer suit.) Although General put on some evidence of the generalsteelscam.com website during trial, it was apparently for the purpose of collaterally demonstrating Mr. Chumley's intent to harm General, not because the existence or content of that website was essential to establishing one or more of General's claims in that suit. Under these circumstances, the Court finds that General's current false advertising claim is not barred by res judicata
Accordingly, the Court denies Armstrong's motion for summary judgment on the false advertising claim.
The Anti-cybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d)(1)(A), provides civil liability for a person who "registers, traffics in, or uses a domain name that is ... identical or confusingly similar to" a mark owned by another, if the person using that domain name "has a bad faith intent to profit from that mark." Thus, General must show that: (i) generalsteelscam.com is "confusingly similar" to General's trademark in the words GENERAL STEEL; (ii) that Armstrong registered in or used generalsteelscam.com; and (iii) that Armstrong did so with a bad faith intent to profit from that name. Armstrong argues that General cannot show that Armstrong (as opposed to PRQ and Mr. Swartholm) actually used the generalsteelscam.com domain name and cannot show that the domain name is confusingly similar to General's mark.
General responds that the World Intellectual Property Organization ("WIPO"), an international tribunal set up to resolve disputes over internet domain names, found to the contrary, ruling in General's favor in March 2012 and requiring that the generalsteelscam.com domain be tuned over to General. The WIPO panel explained that, in its view, affixing a disparaging suffix "does not serve sufficiently to diminish the confusing similarity between the trademark and the disputed domain name." At least one federal circuit has described WIPO proceedings as "adjudication lite" with "loose rules regarding applicable law" that "make [ ] no effort at unifying the law of trademarks among the nations served by the internet." Barcelona.com Inc. v. Excelentisimo Ayuntamiento De Barcelona, 330 F.3d 617, 624-25 (4th Cir.2003). As such, WIPO findings are "
Armstrong seeks summary judgment on this claim by incorporating arguments it has made above — i.e. that General cannot show any false statement, that it cannot show that Armstrong published such a statement, and that it is protected by the "safe harbor" of the Communications Decency Act. Because the Court has resolved each of those arguments against Armstrong above, it denies Armstrong's request for summary judgment on this claim.
Armstrong's motion offers only a perfunctory argument on this claim, stating simply that General cannot demonstrate "whether Armstrong received any benefit at General Steel's expense." It does not attempt to marshal the existing evidence or point to any specific allegations by General defining the contours of the claim. This is insufficient to carry Armstrong's initial burden, as a summary judgment movant alleging that a particular fact cannot be disputed, of "citing to particular parts of materials in the record" demonstrating that proposition. Fed. R. Civ. P. 56(c)(1). Accordingly, the Court will not consider this argument further.
Armstrong offers an equally abbreviated argument on this point, stating only that General cannot demonstrate "that there was a meeting of the minds between alleged co-conspirators Armstrong, PRQ, and Swartholm," nor any of the other elements of conspiracy. (It does assert that General "conducted extensive discovery of Mr. Chumley and Armstrong, including their bank accounts and email communications, which turned up no evidence whatsoever regarding a connection between the Swedish registrant and Armstrong or Mr.
The Court then turns to General's response. General offers only the assertion that Mr. Swartholm is a "notorious computer pirate" and is known to "host practically anyone[`s website]." That may be true, but it fails to suffice to satisfy General's obligation to demonstrate the existence of an agreement between Mr. Swartholm and Armstrong to accomplish some unlawful objective here. Absent a showing that Mr. Swartholm knew or should have known that the contents of steelbuildingcomplaints.com were false and defamatory towards General when he agreed to host it, General cannot show a meeting of culpable minds that is the central element of a claim of civil conspiracy. Accordingly, Armstrong is entitled to summary judgment on General's claim of civil conspiracy.
General contends that Mr. Chumley accessed computers belonging to one of General's suppliers, obtaining a copy of General's customer database. General hypothesizes that Lisa Chavez, a former General employee who left General to work for Armstrong, likely provided Mr. Chumley with the necessary login and password. However, the only evidence that General provides to support this contention is testimony form Mr. Knight and from David Rutherford, an official with General's supplier, both presenting that supposition. But supposition is not evidence. General does not purport to have evidence that, for example, a copy of the customer database was found on Mr. Chumley's computer or on a desk at Armstrong; that any witness has testified based on personal knowledge that they saw Mr. Chumley in actual possession of the database in some manner (or that Ms. Chavez confirmed assisting Mr. Chumley in the manner described); that customers of General have been contacted by Armstrong and told that Armstrong obtained their contact information from General's database; or any of the various ways that one would produce actual facts that would validate a mere supposition. Because General has not come forward with any meaningful proof of this claim, Armstrong is entitled to summary judgment on it.
Accordingly, Armstrong's motion for summary judgment is granted with regard to the Anti-cybersquatting Act, civil conspiracy, and misappropriation of trade secrets claims, and denied with regard to the false advertising, libel, and unjust enrichment claims.
General moves to have Exhibits 29 through 33 to its reply in support of its summary judgment motion
The Supreme Court acknowledged a common law right of access to judicial records in Nixon v. Warner Communications, Inc., 435 U.S. 589, 597, 98 S.Ct. 1306, 55 L.Ed.2d 570 (1978). This right is premised upon the recognition that public monitoring of the courts fosters important values such as respect for the legal system. See In re Providence Journal Co., 293 F.3d 1, 9 (1st Cir.2002). Judges have a responsibility to avoid secrecy in court proceedings because "secret court proceedings are anathema to a free society." M.M. v. Zavaras, 939 F.Supp. 799, 801 (D.Colo.1996). There is a presumption that documents essential to the judicial process are to be available to the public, but they may be sealed when the public's right of
D.C. Colo. L. Civ. R. 7.2(B) imposes specific showings that a party seeking to restrict public access to a filed document must make: (i) a showing that "the interest to be protected ... outweighs the presumption of public access"; (ii) identification of "a clearly defined and serious injury that would result if access is not restricted"; and (iii) an explanation why "no alternative to restricted access [such as redaction or summarization, among other things] will adequately protect the interest in question." In addition, the rule makes clear that "stipulations between the parties and stipulated protective orders with regard to discover, alone, are insufficient to justify restricted access." D.C. Colo. L. Civ. P. 7.2(B)(2).
Here, General seeks to restrict access to five exhibits to Docket # 507. Exhibit 29 is identified as JEMSU's contract with General for search engine optimization services, which has already been partially redacted. Exhibit 30 is a 13-page (substantive pages) excerpt from Mr. McCain's deposition. Exhibit 31 is a one-page excerpt from Mr. Knight's deposition. Exhibit 32 is a January 13, 2014 2-page letter on General's letterhead from Mr. McCain to Mr. Olson, instructing Mr. Olson to remove materials on JEMSU's websites. Exhibit 33 is a two-page excerpt from Mr. McCain's deposition.
As to the three deposition excerpts, General argues that restricted access is justified simply because these depositions were "previously designated [by General] as Attorney's Eyes Only and/or Confidential." As noted in Local Rule 7.2(B)(2), designation of an exhibit as confidential under a Protective Order is not, of itself, a sufficient basis for restricted access. General's motion does not elaborate on the reasons for that designation, identify the particular portions of the deposition that constitute sensitive material, explain that harm that could arise upon public disclosure, or explain what alternative means such as redaction or summarization could not substitute for restricted access. See Local Rule 7.2(B). The Court has independently reviewed each of the excerpts and sees nothing therein that would appear to warrant restricted access. Accordingly, the motion is denied with regard to these exhibits.
As to the JEMSU contract and the letter to Mr. Olson, General argues that these exhibits should be restricted "to preclude Armstrong from discerning details of [JEMSU's] advertising and marketing strategies for General Steel." (It acknowledges that General has since ceased working with JEMSU, but contends that the strategies reflected in the documents remain "proprietary" and posits that General may be using similar strategies with a different company.) General states that if Armstrong obtained the records "there would [be] nothing preventing Armstrong form retrieving the documents and manipulating them is some fashion to its benefit and General Steel's detriment," although it does not elaborate.
General's assertions notwithstanding, the JEMSU contract does not appear to reveal any meaningful confidential information. It reflects that, for a three-month period in 2012, JEMSU was providing three types of services for General: "on-going SEO," "Pay-per-click management," and "web development." None of these
For the foregoing reasons, Armstrong's Objections
Dispositive motions having been resolved, all that remains is to prepare the case for trial. The parties shall promptly begin preparation of a Proposed Pretrial Order in accordance with the Trial Preparation Order
In any event, were the Court to accept Armstrong's invitation to consider the motions to compel de novo, it would nevertheless reach the same conclusions as set forth herein.
The Court also disposes of any contentions relating to the directory listings. Although Armstrong contends that these listings represented that General is a "manufacturer" of steel buildings, the handful of citations to examples of these listings state merely that General offered "prefab steel buildings by leading steel building manufacturers," not that it was itself such a manufacturer.
General's response does not materially clarify matters. Rather than specifically and precisely itemizing each and every representation it relies upon — as a plaintiff should be able to do at the end of discovery — General simply takes Armstrong's lead and offers terse responses that often consist of little more than a citation to an affidavit that often addresses the alleged representation only obliquely. For example, in response to Armstrong's argument that General cannot prove that it falsely represented old complaints as current, the affidavit that General responds with merely states that a
