Opinion
No. 02-0400 CW
March 22, 2002
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S APPLICATION FOR A PRELIMINARY INJUNCTION
Plaintiff J.K. Harris Company, LLC moves for a preliminary injunction enjoining Defendants from 1) using the trade name "J.K. Harris" on Defendants' "taxes.com" website; 2) publishing defamatory, untrue or misleading information about Plaintiff; 3) using HTML code and computer programming techniques to divert Internet users looking for Plaintiff's website to Defendants' website; and 4) using any editorial position at Internet directories to promote Defendants' business and interfere with Plaintiff's business.
The Court issued a temporary restraining order on February 6, 2002 and set a hearing date for February 15, 2002. By stipulation of the parties, that date was extended. The matter was heard on March 15, 2002. Having considered all of the papers filed by the parties and oral argument on the motion, the Court grants in part Plaintiff's motion for a preliminary injunction and denies it in part.
BACKGROUND
A. The Parties
Plaintiff claims to be the largest tax representation and negotiation company in the United States. It specializes in negotiating with the IRS to eliminate or reduce assessed tax liability and to work out favorable payment terms. Declaration of Monica Linder (Linder Dec.), ¶ 4. Defendants are direct competitors with Plaintiff in the business of tax representation. Id. ¶ 5.
B. Facts Relevant to False Representation Claims
Both Plaintiff and Defendants advertise their services on the Internet. Plaintiff's universal resource locator (URL) is www.jkharris.com. Defendants' URL is www.taxes.com. Defendants have published on their website unfavorable information about Plaintiff. Prior to the issuance of the TRO in this case, Defendants' website contained a page entitled "JK Harris Employees Tell of Wrongdoing While Complaints Pile Up." On this page, Defendants describe a federal investigation of Plaintiff, criticize Plaintiff's business practices, and republish anonymous statements about Plaintiff from individuals identified as former customers or former employees of Plaintiff. Defendants also solicit information critical of Plaintiff for publication on their website. Plaintiff contends that numerous statements attributable both to Defendants and to those anonymously contributing to Defendants' website are false and misleading.
C. Facts Relevant to Consumer Confusion Claim
Many consumers looking for services on the Internet use a "search engine" to identify the URL of the company they are seeking. When a user enters a name into a search engine, the search engine provides a list of websites that contain that name and, presumably, the information sought by the user. Plaintiff alleges that Defendants have manipulated the website architecture of taxes.com so that when a consumer searches for Plaintiff's website, Defendants' website is among those websites displayed. Specifically, Plaintiff contends that this was done by a) "creating keyword density" using Plaintiff's trade name and permutations thereof; b) creating "header Tags" and "underline Tags" around sentences that use Plaintiff's trade name; c) using Plaintiff's trade name as a "keyword" in numerous areas of the website; d) using various "hot links" to websites with information about Plaintiff. Declaration of Tony D. Spencer (Spencer Dec.) ¶ 5; Supplemental Declaration of Tony D. Spencer (Spencer Supp. Dec.) ¶ 4.
On October 23 and 24, 2001, Plaintiff conducted a series of searches for the name "JK Harris" on eleven different Internet search engines. In one of eleven searches, Defendants' website was the first one listed. On most of the searches, a link to Defendants' website under the title "Complaints about JK Harris Pile Up" was listed among the first ten links. On March 11, 2002, Plaintiff conducted an identical search. Defendants' website appeared among the first ten websites listed on all eleven search engines.
D. Editor Position
Defendant Kassel is an editor of the Open Directory Project (ODP). The ODP produces a comprehensive directory of web sites by relying on numerous volunteer editors who rank and decide which web sites are useful resources for the web public.
LEGAL STANDARD
"The basis for injunctive relief in the federal courts has always been irreparable injury and the inadequacy of legal remedies." Weinberger v. Romero-Barcelo, 456 U.S. 305, 312 (1982). To establish entitlement to a preliminary injunction, a moving party must demonstrate either:
(1) a combination of probable success on the merits and the possibility of irreparable harm, or
(2) that there exist serious questions regarding the merits and the balance of hardships tips sharply in its favor.
Rodeo Collection, Ltd. v. West Seventh, 812 F.2d 1215, 1217 (9th Cir. 1987); California Cooler, Inc. v. Loretto Winery, Ltd., 774 F.2d 1451, 1455 (9th Cir. 1985); see also William Inglis Sons Baking Co. v. ITT Continental Baking Co., 526 F.2d 86, 88 (9th Cir. 1975); County of Alameda v. Weinberger, 520 F.2d 344, 349 (9th Cir. 1975). The test is a "continuum in which the required showing of harm varies inversely with the required showing of meritoriousness." Rodeo Collection, 812 F.2d at 1217 (quoting San Diego Comm. Against Registration and the Draft v. Governing Bd. of Grossmont Union High Sch. Dist., 790 F.2d 1471, 1473 n. 3 (9th Cir. 1986)). To overcome a weak showing of merit, a plaintiff seeking a preliminary injunction must make a very strong showing that the balance of hardships is in its favor. Rodeo Collection, 812 F.2d at 1217.
DISCUSSION
Plaintiff seeks injunctive relief under several distinct legal theories. Plaintiff asserts a claim under the Lanham Act both because Defendants' conduct creates "initial interest confusion" among consumers looking for Plaintiff's services and because, Plaintiff contends, Defendants have published false and misleading representations of fact on their website. 15 U.S.C. § 1125(a).
Plaintiff also bases its request for injunctive relief on alleged violations of State laws prohibiting unfair competition and false and misleading advertising. See Cal. Bus. Prof. Code §§ 17200, 17500.
Lastly, Plaintiff brings a claim for defamation, contending that the false statements published on Defendants' website are injurious to Plaintiff's reputation.
D. Lanham Act
Section 43 of the Lanham Act provides:
Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol or device, or any combination thereof, of any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which (A) is likely to cause confusion or to cause mistake or to deceive as to the affiliation, connection or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person . . . shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.15 U.S.C. § 1125.
1. Initial Interest Confusion
The Ninth Circuit has held that "initial interest confusion" is actionable under section 43 of the Lanham Act. Initial interest confusion "occurs when a consumer is lured to a product by its similarity to a known mark, even though the consumer realizes the true identity and origin of the product before consummating a purchase." Eli Lilly Co. v. Natural Answers, Inc., 233 F.3d 456, 464 (7th Cir. 2000); see also Brookfield Communications, Inc. v. West Coast Entm't Corp., 174 F.3d 1036, 1062 (9th Cir. 1999).
In Brookfield Communications, the court held that the plaintiff Brookfield was the senior user of the trademark "MovieBuff." The court enjoined the defendant West Coast from using the URL "moviebuff.com" because such use was likely to cause confusion among consumers as to the source of the defendant's services. 174 F.3d at 1053-1061 (applying eight factor test enunciated in AMF Inc. v. Sleekcraft, 599 F.2d 341 (9th Cir. 1979)).
The court also enjoined the defendant from using the plaintiff's trademarked term in its HTML code. Although HTML code is not visible to consumers and, therefore, is not likely to cause consumer confusion, the use of trademarked terms in a website's hidden code "will still result in what is known as initial interest confusion." Brookfield Communications, 174 F.3d at 1062. The court reasoned that
The Brookfield Communications court used the term "metatags" to refer to "HTML code not visible to Web users but used by search engines in determining which sites correspond to the keywords entered by a Web user." 174 F.3d at 1061-1062 n. 23.
Web surfers looking for Brookfield's "MovieBuff" products who are taken by a search engine to "westcoastvideo.com" will find a database similar enough to "MovieBuff" such that a sizeable number of consumers who were originally looking for Brookfield's product will simply decide to utilize West Coast's offerings instead. Although there is no source confusion in the sense that consumers know they are patronizing West Coast rather than Brookfield, there is nevertheless initial interest confusion in the sense that, by using "moviebuff.com" or "MovieBuff" to divert people looking for "MovieBuff" to its web site, West Coast improperly benefits from the goodwill that Brookfield developed in its mark.
Defendants' argument that initial interest confusion is only actionable when combined with a separate trademark infringement claim is unpersuasive. The above-quoted rationale from Brookfield makes clear that initial interest confusion is a distinct harm, separately actionable under the Lanham Act.
Plaintiff here alleges that Defendants have constructed the taxes.com website so that web surfers searching for Plaintiff's website will be referred to Defendants' website as well. Plaintiff alleges that Defendants have accomplished this purpose by applying a "strategic combination of computer programming techniques," including excessive uses of Plaintiff's trade name, the use of "header tags" and "underline tags" around sentences containing Plaintiff's trade name, and the use of larger fonts and strategic placement of sentences containing Plaintiff's trade name on Defendants' website.
The alleged result of Defendants' conduct is that web users who search for Plaintiff's trade name are simultaneously given an opportunity to visit Defendants' website by clicking on a link that stated, prior to the issuance of the TRO in this action, "Complaints about JK Harris Pile Up." A reasonable consumer would not believe that Plaintiff is the sponsor of this negative publicity, but might choose to investigate these charges by visiting Defendants' website before securing Plaintiff's tax representation services. Once at www.taxes.com, potential consumers are provided with what Plaintiff alleges are false and misleading comments about Plaintiff's services. Web users might then decide that because of the negative comments about Plaintiff they should secure tax representation services from Defendants, or, they might simply decide that the services offered by Plaintiff and Defendants are sufficiently similar that "it is not worth the trouble" of returning to Plaintiff's website. Id. at 1064.
In this way, Plaintiff alleges that its potential customers may be diverted to Defendants' services. As was the case in Brookfield Communications, consumers will immediately realize that they are not patronizing Plaintiff. Nevertheless, the alleged use of Plaintiff's trademark in the HTML code and in the content of Defendants' website allows Defendants initially to
Defendants contend that their intent is not to confuse customers, but to warn them about business practices which Defendants contend are harmful to consumers. Defendants argue that their use of Plaintiff's trademark for this purpose is "nominative" use and, therefore, permissible.
Nominative use occurs when "the only word reasonably available to describe a particular thing is pressed into service." New Kids on the Block, 971 F.2d at 308. divert Plaintiff's potential consumers to its website.
In New Kids on the Block v. News Am. Publ'g, Inc., 971 F.2d 302, 308 (9th Cir. 1992), the Ninth Circuit articulated a three part test for determining when an unauthorized use of an undisputed trademark is permissible. The court stated
where the defendant uses a trademark to describe the plaintiff's product, rather than its own, we hold that a commercial user is entitled to a nominative fair use defense provided he meets the following three requirements: First, the product or service in question must be one not readily identifiable without use of the trademark; second, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and third, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.971 F.2d at 308. In a footnote elaborating on this standard for "nominative fair use," the court stated, "Thus, a soft drink competitor would be entitled to compare its product to Coca-Cola or Coke, but would not be entitled to use Coca-Cola's distinctive lettering." Id. n. 7.
In Playboy Enters., Inc. (PEI) v. Welles, 279 F.3d 796 (9th Cir. 2002), the court applied the New Kids on the Block three part test to the request of the plaintiff PEI to enjoin the defendant Welles from using PEI's trademark in the metatags in Welles' website. In that case, the court held that Welles could continue to use Playboy's trade names in her metatags because those trademarks actually described the services provided by Welles. "There is no other way that Ms. Welles can identify or describe herself and her services. . . ." Welles, 279 F.3d at 802. Although the facts of Welles are inapposite here (Defendants need not use Plaintiff's trade name to identify Defendants' own products), the Ninth Circuit noted that its holding was intended to protect those who criticize the holder of a well-known trademark as well as those, like Welles, whose notoriety is tied to it. "Similarly, someone searching for critiques of Playboy on the Internet would have a difficult time if Internet sites could not list the object of their critique in their metatags." Id. at 804.
Plaintiff's request for an order enjoining Defendants from using the trade name "J.K. Harris" on their website or in the HTML code for their website must be evaluated pursuant to the New Kids on the Block three part test.
In cases in which the defendant raises a nominative use defense, the above three-factor test should be applied instead of the test for likelihood of confusion set forth in Sleekcraft. . . . When a defendant uses a trademark nominally, the trademark will be identical to the plaintiff's mark, at least in terms of the words in question. Thus, application of the Sleekcraft test, which focuses on the similarity of the mark used by the plaintiff and the defendant, would lead to the incorrect conclusion that virtually all nominative uses are confusing.
Welles, 279 F.3d at 801. In this case, unlike Brookfield Communications, Defendants are using Plaintiff's mark "to describe the plaintiff's products." New Kids on the Block, 971 F.2d at 308. Thus, if their use satisfies the three prongs of the New Kids on the Block test, it is permissible.
In Brookfield Communications, on the other hand, the defendant used the plaintiff's trade name without referring to the true owner of the mark. 174 F.3d at 1066. The defendant's use was consequently analyzed pursuant to Sleekcraft and the court enjoined the continued use of the plaintiff's trade name.
Under the three part New Kids on the Block test, Plaintiff's request to enjoin all uses of the trade name J.K Harris by Defendants is overly broad. Defendants' use of Plaintiff's trade name in links to other web pages and when disseminating truthful factual information is nominative fair use. New Kids on the Block, 971 F.2d at 307 (competitors may use a rival's trademark in advertising and other channels of communication if the use is not false or misleading) (citing Smith v. Chanel, Inc., 402 F.2d 562 (9th Cir. 1968)).
In a later portion of this order, the Court addresses Plaintiff's allegation that Defendants have published false information about Plaintiff on their website. Here, however, the Court is only addressing Plaintiff's request to enjoin Defendants from all uses of the name "J.K. Harris" as proscribed by the Lanham Act.
In fact, all uses of Plaintiff's trade name by Defendants satisfy the first and the third prongs of the nominative use test. The first prong is met because, like the singing group New Kids on the Block and the company Playboy Enterprises, the tax representation service J.K. Harris is simply "not readily identifiable without use of the mark." New Kids on the Block, 971 F.2d at 308. The third prong is met because it is clear from the context of Defendants' website that Plaintiff has not sponsored or endorsed the information provided there.
However, the second prong of the New Kids on the Block test requires that "only so much of the mark or marks be used as is reasonably necessary to identify the product or services." 971 F.2d at 308. Some of the computer programming techniques that Defendants are alleged to be using may not satisfy this requirement. In Welles, for example, the court noted that its determination that the nominative use doctrine protected Welles' use of PEI's trademark was fact-specific. That "decision might differ if the metatags listed the trademarked term so repeatedly that Welles' site would regularly appear above PEI's in searches for one of the trademarked terms." 279 F.3d at 804.
The Ninth Circuit did not hold that this is the only way to show that the use of a protected trademark does not meet the second prong of the New Kids on the Block test. Rather, a trademark holder may use other evidence to show that a defendant has used the trademark more than was necessary to identify the product.
In order reasonably to identify its competitor, J.K. Harris, Defendants need not use "header Tags" or "underline Tags" around sentences containing Plaintiff's trade name. Defendants also do not need to use Plaintiff's trade name and permutations of Plaintiff's trade name as keywords seventy-five separate times, or increase the font size and underline the sentences containing Plaintiff's trade name, or place sentences containing Plaintiff's trade name at the top of Defendants' web pages. See Spencer Dec. ¶ 5.
Because some of Defendants' uses of Plaintiff's trade name are not nominative, they may be enjoined if Plaintiff shows that it is likely to succeed on its claim that the impermissible uses of its trade name are likely to cause initial interest confusion among consumers. Plaintiff argues that the declaration of its expert establishes a likelihood of succeeding on this claim. That declaration states that Defendants have constructed the website architecture of www.taxes.com in such a way as to create initial interest confusion among consumers. Defendants, on the other hand, have submitted a declaration from Defendant Kassel which states that "taxes.com does not utilize initial interest confusion or any other improper means to divert customers or potential customers from J.K. Harris' website to its own." Kassel Dec. ¶ 8.
Under the Lanham Act, courts generally look to a number of factors to determine if confusion is likely. These factors include whether the products are competitive, the intent of the individual accused of the trademark violation and the degree of care used by consumers in searching for the trademarked goods. See Checkpoint Systems, Inc. v. Check Point Software Technologies, Inc., 269 F.3d 270, 297-98 (3d Cir. 2001). These factors all suggest that Defendants' excessive use of Plaintiff's trade name is likely to cause initial interest confusion. Consequently, Plaintiff's evidence that Defendants' website was designed in a manner to induce consumer confusion is sufficient to show a likelihood of success on its initial interest confusion claim.
Under the Lanham Act, "[o]nce the plaintiff has demonstrated a likelihood of confusion, it is ordinarily presumed that the plaintiff will suffer irreparable harm if injunctive relief is not granted." Metro Pub., Ltd. v. San Jose Mercury News, 987 F.2d 637, 640 (9th Cir. 1993). Defendants have submitted evidence intended to rebut this presumption. Specifically, Defendants submit two reports from "hitbox.com" that purport to list in order of popularity the keywords used to reach the taxes.com website. These reports, if admissible and accurate, suggest that only a small percentage of the web users who have visited Defendants' site have done so after searching for the words "JK Harris" or "J K Harris." The evidence submitted by Defendants, however, has not been authenticated and, therefore, lacks the persuasive force necessary to rebut the presumption of irreparable harm.
Consequently, Plaintiff has shown a likelihood of success on its initial interest confusion claim and, under the Lanham Act, irreparable injury may be presumed. Brookfield Communications, 174 F.3d at 1066. Although Plaintiff is entitled to injunctive relief on this claim, that relief is limited to prohibiting Defendants from using Plaintiff's trade name more than is necessary to identify Plaintiff's product. See Brookfield, 174 F.3d at 1066.
The "hot links" on Defendants' website connecting users to Plaintiff's website, two Wall Street Journal articles, a Newswire article, and a St. Petersburg Times article appear to constitute fair use and are not enjoined.
2. False and Misleading Advertising
Plaintiff has also moved to enjoin any "statement concerning plaintiff J.K. Harris . . . that is defamatory, untrue, or misleading and that is known, or by the exercise of reasonable care should be known, to be defamatory, untrue or misleading." Whether any of the content on Defendants' website may be enjoined as false and misleading is separate and distinct from the question of whether Plaintiff is likely to succeed on its claim that Defendants' use of Plaintiff's trade name causes initial interest confusion among consumers.
Defendants argue that this Court may not enjoin any of the content on their website because such an order would constitute a prior restraint on speech in violation of the First Amendment. Organization for a Better Austin v. Keefe, 402 U.S. 415, 419 (1971) (an injunction is a "prior restraint on expression [that] comes to this Court with a `heavy presumption' against its constitutional validity") (citing Carroll v. President and Comm'rs of Princess Anne, 393 U.S. 175, 181 (1968); Bantam Books, Inc. v. Sullivan, 372 U.S. 58, 70 (1963)).
Plaintiff, on the other hand, contends that the presumption against prior restraints is inapplicable because the speech in question here is commercial speech and the Supreme Court has made clear that false or misleading commercial speech "is not protected by the First Amendment at all." City of Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 434 (1993); see also Central Hudson Gas Electric Corp. v. Public Service Comm., 447 U.S. 557, 566 (1980) (misleading commercial speech is beyond the reach of the First Amendment).
It is true that false or misleading commercial speech may be prohibited entirely. In re R.M.J., 455 U.S. 191, 203 (1982). It is also true that the Lanham Act specifically proscribes false statements made in a commercial advertisement that have a tendency to deceive a substantial segment of the audience. Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997). A party who has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to another or by a lessening of the goodwill associated with its products, may seek an injunction. See id.; U-Haul Int'l, Inc. v. Jartran, Inc., 793 F.2d 1034, 1042 (9th Cir. 1986). However, these principles do not resolve the permissible breadth of any injunction entered pursuant to this section of the Lanham Act.
In U-Haul Int'l, for example, the Ninth Circuit upheld a permanent injunction against advertisements "found to be false and deceptive," under the Lanham Act. 793 F.2d at 1042. However, the Ninth Circuit modified the injunction to avoid First Amendment concerns. The court noted that the injunction, as it was written, could have been read to proscribe truthful, as well as deceptive, speech. Id. The court, therefore, narrowed the injunction to assure its limitation to representations specifically "found to be false and deceptive in this proceeding" by the district court. Id. at 1042-1043.
Similarly, in Castrol v. Pennzoil Co., 987 F.2d 939 (3d Cir. 1993), the court upheld a permanent injunction prohibiting publication of false commercial speech. The statements that were enjoined, however, were the specific statements "which the court found to be literally false." Id. at 949.
Both U-Haul Int'l and Castrol indicate that although false commercial speech may be enjoined, any such injunction must be limited to those statements likely to be in violation of the Lanham Act. Plaintiff here seeks a broad injunction against "defamatory, untrue, or misleading" statements. Such an injunction is overbroad because it would reach more than the specific statements claimed to be in violation of the Lanham Act. See Castrol, 987 F.2d at 949. Consequently, the Court will not extend the temporary restraining order prohibiting the publication of "any statement concerning Plaintiff J.K Harris that is false or defamatory and that is known, or by the exercise of reasonable care should be known, to be false or defamatory."
Notwithstanding the broad language of Plaintiff's application for injunctive relief, it identifies specific statements previously published on Defendants' website that Plaintiff contends are false, as follows:
a) "The [J.K. Harris] sales force is not trained for the job of helping clear up the IRS debt, but to sell the client on peace of mind. . . ."
b) "[O]nce most clients are on board at J.K. Harris they are simply ignored. . . ."
c) "The taxpayer was being mislead as to what could be accomplished and in what time frame."
d) "I retained the services of J.K. Harris Co to represent me before the IRS and nothing has been done. Meanwhile the problems continue."
e) "The JK Harris Co. . . . scammed us with no results and no refund after initial retainer."
f) "The [J.K. Harris] co. is fraudulent and a scam and needs to be uncovered. They are worthless."
g) "The sales force is largely high pressure salesmen whose only job is to get your name on a contract and pick up a check."
h) "It is highly unlikely that you will speak with a licensed tax pro . . . until long after you have paid JK Harris."
i) "I have spoken to hundreds of current and former JK Harris clients who have never even spoken with a licensed tax pro despite having paid thousands of dollars."
j) "John Klintworth Harris was a CPA licensed in both North Carolina and South Carolina. After being faced with disciplinary proceedings he opted to turn in his licenses to practice in both states, perhaps sensing they would take them away if he didn't act first."
k) "Do you want to work with a company run by a man who can't even keep his CPA licenses????"
l) "I have spoken to numerous tax professionals all of whom have said it is extremely rare for any CPA to ever turn in his/her license. All stated that the only reason a CPA would ever do that is to avoid having the license taken away involuntarily."
m) "If you are a current client of JK Harris . . . [y]ou are in for a long wait and nothing getting done with your case."
n) "They [J.K. Harris] have to farm out their tax returns because they don't have the man power to process what they already have."
o) "There are consultants working for that company right now that will sell you an [Offer In Compromise] whether you qualify or not."
Each of these representations may be susceptible to being found "literally false, either on its face or by necessary implication, or . . . literally true but likely to mislead or confuse consumers." Southland Sod Farms, 108 F.3d at 1139.
Each of these statements, therefore, may be actionable under the Lanham Act. Plaintiff has submitted a declaration sworn under penalty of perjury that these statements are, in fact, false.
In response, Defendant Kassel has submitted a declaration stating that the information "I myself gathered . . . is publically available and factually correct." Declaration of Steven H. Kassel (Kassel Dec.), ¶ 2. As to the remainder of the information about Plaintiff on Defendants' website, Kassel declares only that he is "informed by the persons submitting this information that it is factually true." Id.
The Court will not enjoin those statements Defendant Kassel has declared, based on personal knowledge, to be factually accurate. Plaintiff cannot show a likelihood of success in proving that these statements are proscribed by the Lanham Act because the declarations from the parties are of equal weight and directly contradictory. Plaintiff has shown a serious question going to the merits of whether Defendants have violated section 43 of the Lanham Act by publishing false representations of fact misleading to the public. However, because enjoining these statements prior to an adjudication of their truth or falsity would suppress arguably protected speech, the Court concludes that the balance of hardships does not tip decidedly in Plaintiff's favor.
Statements g), h), i), j), k), and l) above were posted by Defendants. Defendant Kassel cannot have personal knowledge of the truth or falsity of statements i) and l) because the truth or falsity of those statements depends on whether the "numerous tax professionals" and "hundreds of current and former JK Harris clients" with whom Defendant Kassel allegedly spoke were truthful. Therefore, Defendant Kassel's declaration is sufficient to rebut the alleged falsity of statements g), h), j), and k). Those four statements are not enjoined at this time.
Those statements that Plaintiff has declared to be false that were submitted to Defendants by third parties are enjoined. The only evidence in the record indicates that these statements are false and misleading and prohibited by the Lanham Act.
Statements a) through f), m), n) and o) were submitted by third parties. There is no admissible evidence that these statements are true. These statements are therefore enjoined.
These statements, moreover, are harmful to the business reputation and good will of Plaintiff. Plaintiff has shown both a serious question as to whether these statements are false and that the balance of hardships tips in its favor. Because Defendants have submitted no admissible evidence that these statements are true or, for some other reason, constitutionally protected, they suffer no hardship in having these statements enjoined.
Therefore, Plaintiff is entitled to an injunction prohibiting the dissemination of all of the statements listed above with the exception of statements g), h), j) and k).
Plaintiff's request for injunctive relief pursuant to California's prohibition on false and misleading advertising is duplicative of its request under section 43 of the Lanham Act. Under Cal. Bus. Prof. Code § 17500, Plaintiff is entitled to the same relief enjoining specific allegedly false and misleading statements to which it is entitled under the Lanham Act. Similarly, Plaintiff also alleges that several of the statements detailed above are defamatory. Plaintiff's request to enjoin defamatory statements by Defendants is also rendered moot by the Court's holding on the Lanham Act claim.
B. California Statutory Claims
Plaintiff's causes of action under California Business and Professions Code sections 17200 and 17500 largely restate its claims under the Lanham Act. Plaintiff contends that Defendants have engaged in "unfair" business practices within the meaning of § 17200 because they purposely constructed their website to create "initial interest confusion" and because Defendant Kassel has used his editorial position at Internet directories to promote Defendants' business and interfere with Plaintiff's business.
The first contention has been addressed above. The second contention is unpersuasive. Plaintiff has submitted a declaration that states that Defendant Kassel is one of "numerous volunteer editors who rank and decide which websites are useful resources for the web public." Spencer Dec., ¶ 6.
Plaintiff contends that this position imposes a duty on Defendant Kassel to edit submissions to the ODP in an impartial manner. Plaintiff further contends that Defendant Kassel breached this duty by failing to move Plaintiff's tax representation service to the proper category after Plaintiff had failed to submit it properly. Plaintiff's declaration asserts that this conduct has resulted in "completely eliminating J.K. Harris' web site from the Tax Negotiation and Representation and Tax Preparation directories." Id.
Plaintiff also contends that Defendant Kassel breached his alleged duty as an ODP editor by adding news articles critical of Plaintiff to the Tax Negotiation and Representation category. This accusation is unsubstantiated.
Plaintiff's allegation that Defendant Kassel has misused his editorial position does not justify injunctive relief. Plaintiff has failed to submit sufficient evidence to create a serious question concerning Defendant Kassel's alleged breach of his alleged duty as an ODP editor. Nor has Plaintiff shown how the alleged breach damaged Plaintiff. Plaintiff has submitted no evidence substantiating its claim of "complete elimination" from the appropriate directories.
CONCLUSION
For the foregoing reasons, the temporary restraining order issued by this Court on February 6, 2002 is vacated.
Plaintiff's application for a preliminary injunction is granted in part and denied in part.
It is ORDERED that, pursuant to the Lanham Act § 43, 15 U.S.C. § 1125(a), Defendants, and their agents, servants, employees, successors and assigns, and all other persons acting in concert with or in conspiracy with or affiliated with Defendants, are enjoined and restrained from:
a) using more of Plaintiff's trade name than is reasonably necessary to identify that it is Plaintiff's services being described, including using "J.K. Harris" or any permutation thereof as a keyword for the taxes.com website more often than is necessary to identify the content of the website; using "header Tags" and "underline Tags" around sentences including Plaintiff's trade name on Defendants' website (www.taxes.com); and increasing the prominence and font size of sentences which include Plaintiff's trade name.
b) using on or in Defendants' website (www.taxes.com) or making, disseminating, or causing to be made or disseminated to the public, through Defendants' website, or in any newspaper, other publication, or advertising device, by public outcry or proclamation, or in any other manner whatever, the allegedly false statements listed on pages seventeen and eighteen of this Order, with the exception of statements g), h), j) and k).