Yourproductsucks.com: Internet gripe sites at the crossroads of trademarks and free speech.

Rymsza, Leonard ; Saunders, Kurt M.

CASE DESCRIPTION

The primary subject matter of this case concerns trademark law. Secondary issues examine trademark infringement, dilution, cybersquatting, commercial disparagement, and freedom of expression.

The case has a difficulty of level four, appropriate for senior level courses. The case is designed to be taught in three class hours and is expected to require a minimum of six hours of outside preparation. The case may be used as an in-class or take home assignment. Also, the case may be assigned as an individual student or student team project.

CASE SYNOPSIS

The Internet has made possible another forum by which dissatisfied consumers can vent their complaints about poor service or purchases of substandard products. In the typical scenario, a disgruntled consumer purchases a domain name and sets up a website, known as a "gripesite," on which to publicize their complaints and criticism about the merchant. In turn, merchants have responded with litigation to protect their trademark rights and silence the consumer. Recent cases arising from this strategy of creating gripesites have pitted the merchant's trademarks and protection of its goodwill against the dissemination of critical information about the merchant and the consumer's freedom of speech.

This case study presents a multifaceted factual setting that raises numerous issues relating to trademark infringement, dilution, cybersquatting, commercial disparagement, and freedom of expression. Consumer decided to have new carpet installed in her living and dining room. She telephoned a nationally recognized home improvement--home furnishing company. Consumer scheduled an appointment for a salesperson to come to her home to measure the floors and provide her with carpet samples. The salesperson did not keep the initial appointment and did not contact consumer to let her know that the appointment would not be kept. Consumer was unhappy with this behavior but she, nevertheless, scheduled another appointment. The salesperson kept this second appointment but was approximately one hour late. Consumer was frustrated with the appointment mishaps but decided that since the salesperson was at her home she may as well have the rooms measured and look at the carpet samples. Consumer found a sample that was the perfect color and nap. The cost estimate for the carpet was also comparable to estimates that consumer had received from other retailers. Consumer ordered the carpet and made arrangements to have the carpet installed the next day.

The installation of the carpet went smoothly except that a silver runner was installed instead of a gold runner as specified in the work order. Consumer paid for the carpet and installation with installers promise to return the next day and install the proper runner. The installer failed to return the next day as promised. Within a few days of the installation, consumer noticed several seams in the carpet had become visible and that un-even surfaces had begun to appear. Following several frustrating attempts to schedule the return of an installer and failed attempts to correct the problems, consumer sent a letter rescinding the carpet contract and requesting the return of the $3,000 she had paid for the carpet. Consumer's request was denied and attempts to settle the matter proved fruitless.

Consumer decided to take several courses of action. One strategy resulted in consumer registering seven different internet domain names. The domain names included the name of the home improvement company in varying forms. Consumer began using one of the internet sites. The site contained a statement summarizing consumer's entire dealings with the improvement company and her dissatisfaction with the company's actions. Consumer was contacted several times by legal representatives of the improvement company and was asked that she cease and desist from using the company's name in any domain names. Consumer refused to discuss the matter and the improvement company eventually brought suit against consumer alleging, trademark infringement, dilution, false designation, unfair competition, cybersquatting, various state law claims, and libel. Consumer countered that she was merely exercising her first amendment right of free speech.

This case study explores the intersection of electronic commerce, trademark law, and freedom of speech. As a pedagogical tool, the case can facilitate student appreciation and understanding of the complexity of arguments presented for the protection of trademarks and domain names while at the same time considering the right of consumers to freely express their opinions and views. Moreover, the case can serve as a means to promote awareness of legal risk in business decisions and to enhance the development of legal reasoning skills in business law students.

The first part of the case requires students to evaluate trademark infringement, trademark dilution, cybersquatting, and commercial disparagement claims. The second part of the case requires students to evaluate the improvement company's claims in light of consumer's freedom of speech rights.

YOURPRODUCTSUCKS.COM

Wahl to Wahl Today, LLC (Wahl) is a nationally recognized home improvement and home furnishing company. Wahl's has been in business for over fifty years. Wahl was founded by twin brothers, Bric and Stone Wahl. The small family business was very successful and over the span of many years expanded to a company with over 1,000 employees providing services to over 25 major metropolitan cities in the United States and Canada. It is also the owner of two federally registered trademarks, "Wahl to Wahl Today" and "Wahl to Wahl."

In its early business days, Wahl specialized in the sale of carpeting. Over the years, Wahl expanded from carpet service to flooring and window treatments, exterior rain gutters, interior bath liners, custom windows and vinyl siding. Wahl has become widely know within that last several years because of its extensive radio and TV advertising campaigns. The advertising has focused on convenient shop-at-home service (carpet samples being brought right to the consumer's home), immediate installation, and low warehouse direct pricing. Wahl's advertising developed a catchy Wahl jingle associated with its toll free 877 telephone number. The jingle has resulted in Wahl's telephone number being among the 5 most recognized telephone numbers in the country.

On Wednesday, January 11th, Ms. Flora Behr called the toll free number and requested an appointment to have her living and dining room floors measured and look at some carpet samples. The appointment was set for Friday, January 13th between 4:00 pm and 6:00 pm. No representative from Wahl showed for the appointment. In addition, no one called Flora to inform her that the appointment would not be kept. The following day, Flora called the toll free number to inquire as to what had happened. Flora was told that the salesman had had a problem with his car and was unable to keep any of his Friday appointments. She was informed that, if she wished, she could reschedule for Monday, January 16th during the same time frame as the original appointment. Although Flora was reluctant to re-schedule because she had not been informed of the problems on Friday and because of what she felt was a "poor attitude" on the part of Wahl's customer service employee, she, nevertheless, rescheduled the appointment.

On Monday evening, as time was approaching 6:30pm, it appeared to Flora that no representative from Wahl was going to keep the appointment. Frustrated, she called Wahl's toll free number and after a series of transfers from one representative to another she was told that the salesman was delayed because his appointments were running longer than expected. Flora was assured that someone from Wahl would be at her home by 7:30pm. Flora consented to the change in time but was becoming frustrated with Wahl's lack of good business practices. At 7:15pm, Wahl's salesman appeared at Flora's front door. Frustrated with the appointment mishaps, Flora was tempted to cancel the appointment. However, since the sales representative was there, she decided to have her living and dining rooms measured for the carpet and look at the carpet samples that he had brought with him. Flora chose a carpet that was similar to samples she had at her home from other carpet vendors. She was given an immediate quote that was $300 less than the quotes of $3,300 she had received from two other companies. After considerable deliberation, Flora decided to purchase the carpet from Wahl, primarily based upon the salesman's promise that the carpet would be installed the very next day. Flora signed a contract, paid a deposit of $1,000, and set the installation time for 11:00 am the following morning.

The following morning, the installers arrived on time and installed the carpet. All went well except a silver runner was installed instead of the gold runner that Flora had specified. She pointed out the mistake to the installer who indicated that he was out of gold runner and would return the next day to replace the silver runner with the specified gold runner. Flora agreed and paid by check the balance due on the carpet. Much to Flora's disappointment, the installer did not return the next day to replace the runner as promised. She telephoned Wahl's customer service department. She was told that the installer had forgotten to return to complete the job and that his schedule would prevent him from returning to her home for two weeks. Flora was not happy with this information but felt that she had no other choice but to agree to the delay. She attempted to set a date and time for the work to be completed but was informed that, since installer's schedule was not entirely certain, a Wahl representative would telephone her in about a week to schedule an appointment.

Within the next several days, Flora noticed that several seams in her carpet had become visible and that un-even surfaces began to appear. She called Wahl's customer service and informed a representative of the problems she had discovered in the carpet. She was told that the installer would correct the problems when he returned to replace the runner. Flora, once again inquired as to when the installer would be able to return to her home. Again, she was told that she would be contacted once installer's schedule was finalized.

Two weeks passed and Flora had not heard from any representative from Wahl's. Becoming more frustrated with the entire matter, Flora again called Wahl's customer service department and asked to speak to the customer service manager. She retold her entire saga to the manager who guaranteed her that the installer would be at her home the next day. To her surprise, the installer came to her home the next day and replaced the runner and attempted to correct the seam and uneven surface problems with the carpet. Unfortunately, the installer was unable to correct the problems. Subsequent to the initial attempt to resolve the problems, two more attempts to make things right were performed by other Wahl installers. The problems with the carpet remained.

On April 1st, disgusted with the entire matter, Flora sent a letter to Wahl that stated that she was rescinding the contract, instructed Wahl to send someone to remove the carpet from her home and requested that Wahl refund her the $3,000 she had paid for the carpet. A copy of Flora's letter follows.

Ms. Flora Behr

6414 Wysteria Lane

Hometown, Grace 22044 U.S.A.

April 1

Wahl to Wahl Today, LLC

c/o Mr. Stone Wahl, President

1237 W. 64 th Street

Hometown, Grace 22045

Dear Mr. Wahl:

This letter is notice to you of my rescission of a contract that I entered into with your company on January 16th. Under the terms of that contract, a copy which is attached to this letter, I was to pay a total of $3,000 for carpet and installation of carpet in the living and dining rooms of my home. I have paid the full $3,000 to your company as required under the terms of the contract. However, as a result of several factors, primarily your installers' inability to correct seam imperfections and un-even surfaces in the carpet, I request that your company remove the carpet from my home and refund to me the amount of $3,000.

Sincerely,

/s/ Flora Behr

Ms. Flora Behr

On May 5, Flora received a reply to her letter of April 1. A copy of that letter follows.

Wahl to Wahl Today, LLC

Customer Issue Resolution Center

9801 Carpet Center Drive

Hometown, Grace 22006 U.S.A.

On the Web at:www.wahl-to-wahl-today.com

Email at: wahl@throw.biz

May 1

Ms. Flora Behr

6414 Wysteria Lane

Hometown, Grace 22044

Dear Ms. Behr:

Your April 1 letter to Mr. Wahl has been referred to Wahl's Customer Issue Resolution Center. Wahl to Wahl Today, LLC takes pride in serving its customers and ensuring that all of its customers have a satisfactory experience with Wahl to Wahl Today, LLC.

I am sorry that you feel that you have had an unsatisfactory experience with the installation of carpet in your home. However, I have spoken to the installers who have been to your home in an attempt to correct the problems with the carpet installation. The installers have indicated to me that they have done all that can be done to resolve this matter. They have further indicated to me that the problem with the carpet seams is caused by the Doric XR2006 Vacuum Cleaner that you use to vacuum your carpet. In addition, I have been told that the sub-floor in your living and dinning room is warped. This warping is the cause of the un-even surface appearance of the carpet.

Wahl to Wahl Today, LLC has done all that can be done under the circumstances.

If you have further questions, you may contact me at the following toll free number: 877-RESOLVE

Sincerely,

/s/ Clarence Shagg

Clarence Shagg

Supervising Manager

Customer Issue Resolution Center

Wahl to Wahl Today, LLC

Dissatisfied with Shagg's letter, Flora carefully considered the next steps that she would take. Her first action was to file a complaint with the Better Business Bureau of Hometown. Subsequent to filing the complaint, Flora registered the following domain names: www.wahltowahl.com; www.whaltowhaltoday.com; www.walltowall.com; www.walltowalltoday.com; www.wahltowahltodaysucks.com; www.wahl-to-wahl-sucks.com; and www.wahl-to-wahl-today-sucks.com. Two weeks after registering the domain names, Flora went to Wahl's Hometown office and left a three-page letter for the Wahl brothers, Bric and Stone. In part the first page of the letter read:

If you would like to discuss this matter, let me know. News spreads fast on the Internet. Once the ball starts rolling it will be too late to do anything. I can be reached by telephone at 555-382-5968.

P.S.--I am known as a person who keeps her promises

The second page of the letter was entitled "List of Complaints Against Wahl to Wahl Today, LLC." The third page of the letter was entitled: "Actions Taken Against Wahl to Wahl Today, LLC" and listed eight items. The first item on the list was the following: "1. Internet web sites that disclose the truth about how Wahl really operates." The letter did not mention domain names or make any references to the Internet other than indicated above.

Flora began using www.wahltowahltoday.com several months after registering the domain name. The site contained a statement summarizing Flora's entire dealings with Wahl. The site did not generate any revenue. In addition, no goods or services were sold on the website. Flora was contacted several times by representatives from Wahl's legal department requesting that she cease and desist from using www.whalltowahltoday.com or any other variation of the Wahl name. Flora steadfastly refused to discuss the mater with Wahl's representatives. Wahl to Wahl, Today, LLC eventually brought suit against Flora alleging, trademark infringement, dilution, false designation, unfair competition, cybersquatting, various state law claims, and libel.

Case A Questions--Trademark Infringement--Trademark Dilution--Cybersquatting Commercial Disparagement

1. Can Wahl assert prima facie claims for trademark infringement and dilution against Flora on the basis of the domain names she registered or her "gripesite"?

2. Has Flora violated the provisions of the Anticybersquatting Consumer Protection Act by registering the domain names?

3. Does Wahl have a tort claim for commercial disparagement against Flora?

4. For each of the claims discussed above, what defenses or counterarguments might be available to Flora?

Case B Questions--First Amendment Free Speech

5. If Flora claims that her site is merely a vehicle by which she is exercising her First Amendment free speech rights, how will a court rule?

6. Assume that Flora's free speech argument is successful. Would any of the following additions to her website lead a court to reach a different conclusion?

a. A warning statement that the site is not the official site of Wahl with a link to Wahl's website.

b. A link to a Wahl competitor or other commercial website.

c. A link to commercial websites from which Flora receives a fee each time the link is clicked on by a user.

d. A link to www.complaints.com a website where consumers can post complaints about goods or services they have received.

e. A link to www.wahltowahltodaysucks.com or to the www.sucks.com website.

f. A solicitation on Flora's website seeking donations for the "fight" against Wahl.

g. An offer to sell an anti-Wahl t-shirt featuring an anti-Wahl slogan, or an offer to provide a "free" anti-Wahl t-shirt with a charge for shipping and handling.

Leonard Rymsza, California State University, Northridge

Kurt M. Saunders, California State University, Northridge