April 26, 2007
Quiznos Sued for User-Created Ads--Subway v. Quiznos
By Eric Goldman
Doctor's Associates, Inc. v. QIP Holders, LLC, 2007 WL 1186026 (D. Conn. April 19, 2007)
Hey all you UGC evangelists, listen up! UGC is terrific, but there can be a dark side regarding legal liability. This case provides an example.
Quiznos did a nationwide call for user-generated videos comparing its Prime Rib Cheesesteak with a Subway sandwich. (As a vegetarian, I am kind of hoping Quiznos loses as punishment for its bad carnivore karma). To stimulate submissions, Quiznos posted 3 user-generated video examples. Subway complained that these examples contained false and misleading statements; ultimately, Subway sued Quiznos for false advertising under the Lanham Act.
Quiznos moves to dismiss the false advertising claim per 47 USC 230, saying that the statements in the ads were made by Quiznos' users, not Quiznos itself. In a highly technical ruling, the court says no because it views 230 as an affirmative defense that can't support a motion to dismiss. This is 100% wrong and completely inconsistent with the vast bulk of the cases that have, in fact, used 230 to dismiss lawsuits based solely on the complaint (see, e.g., the flagship Zeran case, which was a judgment on the pleadings). Indeed, in both the Doe v. Bates and the UCS v. Lycos cases, the courts granted 12(b)(6) motions to dismiss specifically to shut down fishing expeditions in discovery.
Even though Quiznos didn't knock out the false advertising claim now, it still can raise the defense later--though it's not clear it will qualify for the defense.
In a footnote, the court says that Subway can get discovery on whether Quiznos altered or was creatively involved in the users' videos. In general, 230 will still apply even if Quiznos altered and provided creative input into the videos, but 230 doesn't apply if Quiznos in fact authored the statements in question. See, e.g., here and here. We'll need more facts to resolve this.
Further, 230(e)(2) says that the 230 immunization isn't available for "intellectual property" claims. Is "false advertising" an IP claim? Ordinarily I would say no. See the 2004 district court ruling in Perfect 10 v. CCBill, which expressly held that a state false advertising claim was preempted by 230. So Quiznos should get 230 protection for user videos. However, Subway is bringing suit under the false advertising provision in the federal Lanham Act--the same act that governs trademark law generally. Given the language's location in the Lanham Act, sitting shoulder-to-shoulder with trademark infringement restrictions, I could see some courts viewing it as an IP law outside the scope of 230. We'll see.
On a personal note, if you want to check out the fun I had at Epinions with user-generated commercials waaay before they were hip, see my story and reviews/screenshots of the commercials (iMac, Tent, Minivan, Breast Pump, Alta, George Foreman Grill and Beer).
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