Malwarebytes: same result, new puzzles on remand for 230 immunity

Enigma Software Group USA, LLC v. Malwarebytes, Inc., —
F.3d —-, 2019 WL 7373959, No. 17-17351 (9th Cir. Dec. 31, 2019)
New opinion, same
result
; no rehearing en banc. Because the parties are competitors, §230
does not provide Malwarebytes with immunity for blocking Enigma’s software. As
the dissent notes, one may search in vain for this limit in the wording of the
statute itself, but there you go. The immunity for blocking content that is
“otherwise objectionable” “does not include software that the provider finds
objectionable for anticompetitive reasons.” 
The majority, however, did remove broad language from the initial
opinion saying that blocking couldn’t be based on the identity of the person
providing the content.
Since this is now the result in the 9th Circuit,
on remand the court will have to face some questions that are not unlike those
that have come up in cases about copyright misuse and the meaning of “unfair”
business practices under California law: what exactly does “anticompetitive
animus” mean here?  Does it require
something that is like an antitrust violation? 
If so, if Malwarebytes lacks market power, then can it behave in an
“anticompetitive” manner or with “anticompetitive” motivations at all?  Separately: Does it have to have malice to be
liable?  What if it’s wrong about whether
Enigma programs were unwanted by consumers, but reasonably so?  Or suppose Malwarebytes concluded, via
motivated reasoning, that Enigma programs were indeed unwanted—is self-serving
sincerity enough?  What is the objective
standard against which unwantedness should be judged?  It does seem that, according to the standard
announced, §230 will still preempt/preclude claims that have internal validity
as long as Malwarebytes did not have “anticompetitive animus.”
The majority heavily emphasizes what it considers to be the
special circumstance that the parties are allegedly direct competitors. E.g.,
Congress said it gave providers
discretion to identify objectionable content in large part to protect
competition, not suppress it. In other words, Congress wanted to encourage the
development of filtration technologies, not to enable software developers to
drive each other out of business….  Users
would not reasonably anticipate providers blocking valuable online content in
order to stifle competition. Immunizing anticompetitive blocking would,
therefore, be contrary to another of the statute’s express policies: “removing
disincentives for the utilization of blocking and filtering technologies.”
Spam, malware, and adware could still be “otherwise
objectionable.” But “if a provider’s basis for objecting to and seeking to
block materials is because those materials benefit a competitor, the objection
would not fall within any category listed in the statute and the immunity would
not apply.”  Malwarebytes argued that its
reasons were legitimate (Enigma’s programs use “deceptive tactics” to scare
users into downloading them to prevent infections), but that’s a matter that
can’t be resolved on the pleadings. [Suppose a factfinder concludes the parties don’t actually compete: does 230 immunity reappear?]
Separately, the court reaffirms that §230’s exception for IP
doesn’t include Lanham Act false advertising, which seems right to me (though that
creates an interesting potential for situations like Belmora where
§43(a)(1)(A) covers nontrademarks). 
Unlike Eric Goldman, I’m actually pretty open to the basic false
advertising claim that labeling Enigma’s programs could be false advertising
despite §230.  The Lanham Act’s
requirements may pose substantive barriers to the claim (e.g., is the reporting
at issue “commercial advertising or promotion”? (maybe?) Is “potentially
unwanted” falsifiable? (seems unlikely, though maybe implication could save the
claim)).  And, again, if the §230
objectionability standard is not strict liability, then Malwarebytes might
escape liability even if it was in fact false or misleading to label Enigma’s
programs “potentially unwanted.”
Relatedly, the allegation that gets Enigma past §230 is
likely to prove a mismatch with the underlying theories of liability.  In general, nonfactual disparagement—negative
puffery—is not actionable, even if motivated by an evil heart, whether under
the Lanham Act or state law.  I wonder if
Malwarebytes wouldn’t end up doing better focusing on
falsifiability/specificity of the message, though of course the extent to which
the determination is subjective also feeds into the question of whether it had
the requisite state of mind under the court’s view of §230.

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