A sprawling legal dispute between two sports betting information services contains a pair of dangerous legal claims.

The first claim asserts that an online message board infringed another business's trademark by (1) encouraging users to post messages to the board, (2) with the knowledge that the users would mention the business's marks, and (3) the user's mentions of the marks "drove search engine results" to the message board's website.

The second dangerous claim involves Section 230 of the Communications Decency Act, 47 U.S.C. 230, the federal law that immunizes websites from state-law claims seeking to hold them liable as publishers of allegedly unlawful third-party content. The plaintiff argued here that the online message board is not entitled to CDA Section 230 immunity because, by having an official policy that allowed copyrighted content to be posted by users, the message board became a culpable developer of the allegedly unlawful user submissions.

The court rejected the trademark claim, but declined to give the message board CDA Section 230 immunity. The case is Stevo Design Inc. v. SBR Marketing Ltd., No. 11-cv-00304 (D. Nev., Aug. 30, 2013).

The attorney making these arguments is none other than Steven A. Gibson, a partner at Dickinson Wright PLLC in Las Vegas, and the chief executive officer of now-defunct copyright enforcer Righthaven LCC, a fertile source of dangerous legal arguments in the eyes of many.

The plaintiff's complaint against the online message board is a large, kitchen-sinky document, containing 55 separate causes of action, most of which arose from the following core facts. The plaintiff, Stevo Design Inc., sells sports betting reports. This is information that sports bettors can use to aid their wagering strategies. The defendant, SBR Marketing Ltd., appears to be in basically the same business, except that SBR Marketing also operates an online message board that allows users to post information about sports betting and handicapping.

In the lawsuit, Stevo Design alleges that SBR Marketing unlawfully published on the message board Stevo Design's highly valuable and proprietary (and copyrighted, and trademarked, and trade secret-protected etc.) sports betting information.

Nominative Fair Use

On the trademark claim, the court held that the message board's mention of Stevo Design's marks was a lawful, nominative fair use. The court noted that many of the objectionable mentions of Stevo Design's marks were criticisms of Stevo Design's betting analysts, and that none of them suggested that Stevo Design's was in any way sponsoring or authorizing the message board content.

Before leaving the trademark point, the court remarked that Stevo Design's theory of liability would, if accepted, sweep in a substantial amount of lawful commercial speech. "Such a theory imperils any website that encourages user participation and features user-generated content discussing trademarked products (think ebay.com, facebook.com, and many others)," the court wrote.

Message Board Not Entitled to CDA Immunity

At an earlier stage of the proceedings, this court ruled that the message board was entitled to immunity under CDA Section 230 for any state-law claims arising from its users postings of allegedly unlawful content. Stevo Design's argument at that time was that SBR Marketing's practice of awarding its users "loyalty points" based on the number of posts submitted did not make SBR Marketing a party responsible for the creation or development of the allegedly unlawful content. (SBR's loyalty points setup awarded a user two points for logging on, four points for contributing content to the website, and additional points for strong "original" content.)

This time around, Stevo Designs argued that an update to the message board's submission policy that explicitly forbade posts containing copyrighted information carried with it the implication that the message board had -- until the updated policy was issued -- in fact encouraged users to submit unlawful content.

The court's embrace of this argument confused me.

Here is the text of the updated message board policy:

Hi guys. For legal reasons must [sic] update our Forum Policy for Service Plays. What is allowed: [Capper Name] + play & odds. What is not allowed. *amount, write ups, $ amount, unit amount, etc. You can rank the plays, or say so and so really likes this play or that play, but please do not repost copyrighted written material.  

A "service play" refers to a recommendation or report from a sports betting service. Thus, this policy is specifically directed to the information that Stevo Designs argues cannot be copied or even mentioned by a competing service.

With this evidence in mind, the court remarked that the policy update forbidding copyrighted material in posts about service plays "invites the inference that, prior to this update, SBR's policy allowed the posting of copyrighted material."

Again, I had trouble following this reasoning. The court continued:

Taking all inferences in favor of Plaintiffs, then, they have alleged that SBR acted as a "developer" within the meaning of the CDA by promoting the publication of protected "service plays" and thereby contributing to the misappropriation of Plaintiff's trade secrets and commercial property.  

Did you see that? The court's initial suggestion that the message board "allowed" (by not explicitly forbidding) the publication of protected service plays was transformed -- without any further discussion -- into an inference that the policy "promoted" the publication of protected service plays. This is important because, according to the Ninth Circuit in Fair Housing Council of San Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157, 1168 (9th Cir. 2008), the reason why Roommates.com lost its CDA Section 230 immunity was because it promoted the publication of unlawful content via a questionnaire that solicited the submission of discriminatory criteria. A website that merely allowed users to submit roommate ads that contained discriminatory criteria would not have made Roommates.com a culpable developer of unlawful content under the Roommates.com court's analysis.

Maybe I am reading this one incorrectly. And it may be that, just as a handful of words that the message board's users likely didn't read got the message board into trouble here, all it will take for other websites to avoid the same fate is the publication of a handful of other words, such as "Please don't post anything unlawful. We prohibit that."

It will be interesting to see if the court's ruling on the CDA Section 230 point will survive on appeal. Though it may not get that far. The court's discussion of Stevo Design's state-law misappropriation claims suggested to me that the court is highly dubious of the merits of those claims.

Finally, it seemed like a copyright preemption argument should have been laid in the path of Stevo Design's misappropriation claims. The court noted that SBR Marketing has so far only raised the CDA Section 230 argument against them.

By Thomas O'Toole  

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