We had a successful result for a defendant in a pretty interesting case.

Can a take-down notice sent to an ecommerce site such as eBay or Amazon expose the IP rights-owner to a defamation suit? Yes (or No), says a New York federal judge (in two different cases). The two decisions (Unlimited Cellular v. Red Point Software and CDC Newburgh v. STM Bags) taken together suggest how to fine-tune takedown notices.

In both disputes, agents of trademark owners submitted takedown notices (to eBay in Unlimited Cellular and to Amazon in CC Newburgh), asserting that an unauthorized seller’s goods were counterfeit.

Rather than respond to the ecommerce site’s takedown procedure, the sellers filed lawsuits against the agents (and the trademark owner as well in CDC Newburgh), alleging that the takedown notices were defamatory because, according to the complaints, the goods were not counterfeit.  The plaintiffs also alleged various business torts such as tortious interference). The plaintiffs in the two suits were represented by the same counsel (and the defendants alleged that the plaintiffs were related entities).

Defendants moved to dismiss in both actions. In Unlimited Cellular, Judge Roman of the SDNY allowed the defamation action to proceed. However in CDC Newburgh, Judge Roman dismissed the defamation action (and granted defendant’s motion to dismiss in its entirety).

The reason is the difference between a declarative statement upon which the speaker intends the recipient to rely, and an opinion where the speaker discloses the basis for the opinion. A false statement of fact is potentially actionable if defamatory. An opinion can be wrong, but its not actionable.

Judge Roman, applying New York state law, held that the statement to eBay consisted of little else than the assertion that the goods were counterfeit. The takedown notice to Amazon allowed for comments in which the defendant noted that the seller was not an authorized re-seller, nor did the trademark owner have records that it had sold anything to this seller, and “therefore we can safely assume” (or “therefore we conclude”) that the goods are counterfeit (the defendant used both of those phrases in its takedown notices. Accordingly, the Court held that the alleged statements were in the form of “a proferred hypothesis that is offered after a full recitation of the facts on which it is based . . .readily understood by the audience as conjecture.”

Takedown notices, as a class of communication, may be subject to various qualified privileges. For example, New York recognizes the common interest privilege, covering statements made between parties pursuing a common interest (such as a trademark owner and an ecommerce site policing the site for infringements). However qualified privileges ordinarily require some fact-finding, and a court is reluctant to dismiss a defamation cause at the early motion-to-dismiss phase – in contrast to absolute defenses, such as the opinion privilege, which can be evaluated on the face of the pleading.

Not speaking to the other issues raised by these decisions (including a discussion of whether a federal court can enforce New Yorks Anti-Slapp statute (short answer – no), where do these decisions leave the trademark owner? When sending a takedown notice (or other forms of demand letters sent to third parties), take care that the notice contains more than conclusory claims, but contain a “full recitation of the facts on which the [claim] is based.”

Leason Ellis represented co-defendant in CDC Newburgh v STM Bags.