Avalos v. IAC/Interactive Corp., No. 13-CV-8351 (S.D.N.Y. Oct. 30, 2014)
Meltech, a web design and modeling company, sued defendants for allegedly unauthorized use of photos of models in fake online dating profiles on dating sites (e.g., Match.com, Chemistry.com, and OkCupid.com). Many fraudulent profiles allegedly used photos of its model Harrington. Using attractive images on fraudulent profiles allegedly enticed consumers “to join and pay subscription fees who would otherwise not” and generated “inflated advertising revenue.” This conduct allegedly caused Meltech to receive “thousands of complaints from American romance scam victims,” caused Meltech’s owner to be “threatened and harassed,” and led to a reduction in value of Meltech’s “intellectual property” itself, as its “photographs have been associated with ‘dating scams’ on the internet and in the public eye, turning a multi-million dollar celebrity brand into a notorious and infamous figure with little commercial value.”
Meltech withdrew its copyright infringement claims, apparently because it didn’t have registrations (and couldn’t secure them? bizarre, except the DMCA likely doomed any such claims anyway). And it withdrew its NY right of publicity claims, apparently because such claims are personal to the person holding the right. The court here addressed the remaining claims.
Lanham Act: Defendants allegedly violated §43(a)(1)(A) by “using [Meltech’s] photographs in [its] web site profiles and advertisements,” thus engaging in “reverse passing or palming off” of Meltech’s photographs. Nope. “In attempting to plead a Lanham Act claim based on Defendants’ unauthorized use of its photographs, for which Meltech does not own copyrights, Meltech attempts to achieve precisely what Dastar prohibits: an end run around copyright law.”
The complaint could also be read to allege false endorsement on the theory that the photos created the impression that the model was a user of defendants’ dating websites and approved the websites. This is an ok claim under the Lanham Act. (Paging Mark McKenna.) However, Meltech would have to own the model’s right of publicity, assuming it was transferable; Meltech didn’t claim to do so, and couldn’t if, as seemed from the allegations, its contract was governed by the laws of Nebraska, as Nebraska’s right of publicity is inalienable.
False advertising: Under Lexmark, “a plaintiff must plead (and ultimately prove) an injury to a commercial interest in sales or business reputation proximately caused by the defendant’s misrepresentations.” This requires “economic or reputational injury flowing directly from the deception wrought by the defendant’s advertising; and that that occurs when deception of consumers causes them to withhold trade from the plaintiff.” Judge Furman clarified that this wasn’t a question of “standing,” though most courts don’t much care.
Even assuming that the fake profiles were “advertising or promotion”— “a premise that the Court highly doubts, but need not reach” — Meltech didn’t adequately plead harm to its commercial interests proximately caused by defendants’ alleged misrepresentations. Meltech argued that defendants’ false designation of Harrington as a member of their sites resulted in the “devaluation” of Meltech’s IP. But there was no factual support in the complaint for that conclusory allegation. In fact, the alleged misrepresentations were more likely to harm defendants, not Meltech or Harrington. The exhibits showed complaints warning other consumers to “NEVER SUBSCRIBE [to Match.com]!” and a website, ScamDigger.com, telling consumers that fraudulent photographs on dating websites, including Harrington’s, are “STOLEN FROM INNOCENT THIRD PARTIES” and that “[p]eople on the pictures are not associated with scammers in any way, they are just victims of identity theft.” Even if Meltech could show harm, it failed to allege a plausible causal connection between the harm and defendants’ acts. Meltech needed to allege that the deceit led consumers to “withhold trade” from Meltech “by, for example, visiting its websites less often.” Meltech didn’t plausibly so allege, and even under Famous Horse’s “even more lenient” test, its speculative allegations of harm wouldn’t be enough.
Civil RICO: No.
State law claims of unjust enrichment, conversion, and aiding and abetting fraud: The court exercised its pendent jurisdiction, even though this was an early stage, because of preemption issues and because the law was well-settled, so there was no point in allowing a fruitless refiling in state court.
Most of the claims were clearly preempted. Photos are within the subject matter of copyright. Unjust enrichment was plainly preempted, as it was based solely on defendants’ allegedly unauthorized commercial use of the photos. So was the conversion claim, since Meltech was alleging unauthorized publication rather than physical appropriation. As to aiding and abetting fraud, “intentional deception” could be a required extra element (nooooo!), but the complaint failed to state a claim because a required element is reasonable reliance on the defendant’s misrepresentations. But Meltech didn’t rely on any misrepresentations, and third-party reliance isn’t sufficient for fraud. Thus the court didn’t need to reach the (obviously applicable) §230 defense.