can investigating claims bind you to arbitration?

LegalForce RAPC Worldwide, P.C. v., Inc., 2018
WL 1738135, No. 17-cv-07194-MMC (N.D. Cal. Apr. 10, 2018)
LegalZoom, which advertises its ability to help people
register trademarks, allegedly makes “false comparisons to attorney led
services” and engages in the unauthorized practice of law. The court dismissed
Lanham Act false advertising claims because LegalForce (which offers “law firm
automation and free trademark search services through its website”) failed to allege any injury proximately caused by the
allegedly false advertising.  LegalForce even
alleged that it “makes no revenue from [the] preparation and filing [of] U.S.
trademark applications.” The same problem doomed the California state claims,
there under the heading of “lost money or property.”
LegalForce RAPC Worldwide, P.C. v., Inc., 2018
WL 1730333, No. 17-cv-07194-MMC (N.D. Cal. Apr. 10, 2018)
The court enforced LegalZoom’s arbitration clause against
LegalForce RAPC and an individual owner, though not against plaintiff/related
company LegalForce (see above), on various false advertising-type claims
because in the course of investigating LegalZoom’s conduct LegalForce RAPC
assented to its website TOS, which has a broad arbitration clause. 
LegalForce RAPC is a law firm that “practices patent and
trademark law before the USPTO [United States Patent and Trademark Office]” and
is the “sole provider of legal services through the website
with respect to trademark filings before the USPTO.”
LegalZoom allegedly “surreptitiously practices law,” as
demonstrated when plaintiffs filed two applications through its site and
“LegalZoom provided legal advice to [p]laintiffs by selecting [a trademark]
classification and modifying the goods and services description from [a]
template thereby applying specific fact to law.”  Further, with one application, “LegalZoom
provided legal advice as to which trademarks found in [a] search report may
conflict with [plaintiffs’ mark].” Plaintiffs also alleged that LegalZoom bought
law-related search terms such as “trademark attorney” and “trademark lawyer,”
and that the “advertising copy in the resulting advertisements is highly
misleading, causing a consumer to believe that he or she will be represented by
an attorney.”
Plaintiffs didn’t dispute that, in order for a customer to
use LegalZoom’s services on its website, the customer must agree to LegalZoom’s
TOS, whose arbitration agreement states:
LegalZoom and you agree to
arbitrate all disputes and claims between us before a single arbitrator. The
types of disputes and claims we agree to arbitrate are intended to be broadly
interpreted. It applies, without limitation, to:
· claims arising out of or relating
to any aspect of the relationship between us, whether based in contract, tort,
statute, fraud, misrepresentation, or any other legal theory;
· claims that arose before these or
any prior Terms (including, but not limited to, claims relating to
advertising); · claims that are currently the subject of purported class action
litigation in which you are not a member of a certified class; and
· claims that may arise after the
termination of these Terms.
It was undisputed that plaintiff Raj Abhyanker and LegalForce
RAPC employee Ryan Bethell assented to the terms, thus binding them both, even
if Ryan Bethell didn’t intend to bind LegalForce RAPC when he acted on its
behalf.  However, there was no showing
that LegalForce was an agent of Abhyanker or LegalForce RAPC as to the
transactions with LegalZoom, and thus LegalForce wasn’t bound.
The validity of the TOS was for the arbitrator; all the
claims were within the scope of the contract, including claims for declaratory
relief and the Lanham Act false advertising claim given the coverage of “claims
relating to advertising.”
So, it seems that doing online investigation of an alleged
infringement might send you to binding arbitration if the alleged infringer’s
site is set up properly.  Can this be
avoided by using an outside investigator? 
Courts will hold such investigators’ solicitation of copies to be
“unauthorized” when they’re sent by a copyright owner, but that doesn’t really
answer the question about agency; an independent contractor plausibly wouldn’t
bind the IP owner, but I wonder.

from Blogger

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