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Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

GTX Global Corp. v. Left

2007 WL 1300065 (Cal. Crt. App., 2d Dist., My 4, 2007)

California’s Anti-SLAPP Statute Mandates Dismissal Of Plaintiff’s Defamation Claims

Granting defendant’s motion pursuant to California’s anti-SLAPP statute, Cal. Code Civ. Pro. Section 425.16, the court affirms the dismissal of plaintiff GTX Global Corp.’s (“GTX”) complaint, and awards defendant Andrew Left (“Left”) attorneys fees expended both in defending this suit and plaintiff’s appeal from the decision of the court below.  SLAPP is an acronym that stands for “Strategic Lawsuits Against Public Participation.”  GTX had sued Left, who runs the website, for publishing statements critical of GTX.  GTX charged that these statements were defamatory, and asserted claims of trade libel, interference with prospective economic advantage, and securities fraud against Left arising out of their publication.

The court found that Left’s statements were subject to the protections afforded by the anti-SLAPP statutes, because they addressed matter of public interest.  Finding that GTX had failed to submit any evidence that defendant’s challenged statements were false or defamatory, the court accordingly dismissed the suit. Publishes Statements Critical Of GTX

Plaintiff GTX is a publicly traded corporation that provides technology that facilitates multimedia communications.
Defendant Andrew Left (“Left”) publishes the weblog on which he publishes information and opinion about stocks he describes as ‘lemons.’  Claiming Left posted defamatory statements on his website about GTX in an effort to drive down the price of its stock, and thereby profit on ‘short positions,’ GTX commenced this suit,  asserting claims of trade libel, interference with prospective economic advantage, and securities fraud.

Left moved to dismiss pursuant to California’s anti-SLAPP statute, Cal. Civ. Code Section 425.16.  The trial court granted Left’s motion, and both dismissed plaintiff’s suit and awarded Left the attorney’s fees expended in its defense.  On appeal, an intermediate California appellate court affirmed.

Statements At Issue Address Matter Of Public Interest Protected By Anti-SLAPP

To determine whether a movant is entitled to relief under California’s anti-SLAPP statute, the Court engages in a two part inquiry.  First, the movant must establish that the claim asserted against him arise “from any act of [the movant] in furtherance of the person’s right of petition or free speech …”.  Among other things, both statements “made in a place open to the public or a public forum in connection with an issue of public interest” 425.16(e)(3) and “conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest, “are acts in furtherance of a person’s right of petition or free speech and accordingly subject to the protections of the Act.

The Court found that Left was engaged in speech connected with an issue of public interest – namely whether the public should invest in GTX stock – and accordingly held he was entitled to the protection of the statute.  Said the Court:
Consumer information … at least when it affects a large number of persons, also generally is viewed as information concerning a matter of public interest.”  Left’s statements on amounted to the same type consumer interest information found to be protected in Wilbanks.  Left suggested reasons why consumers should be wary of investing in TGX.  As such, the statements were directly connected to an issue of public concern.

The court also held that Left made his statements in a public forum, within the meaning of the anti-SLAPP statute, by posting them on his weblog.  Said the Court:

It appears that GTX concedes the website where the alleged defamatory statements were initially posted was a public forum for purposes of the anit-SLAPP statute.  The concession is well taken.

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Web sites that are accessible free of charge to any member of the public where members of the public may read the views and information posted, and post their own opinions, meet the definition of a public forum for purposes of [code of civil procedure] section 425.16.”  (Ampex, supra, 128 Cal. App. 4th at p. 1576, citing ComputerXpress, supra, 93 Cal. App. 4th at p. 1007.)  Indeed, as our Supreme Court has recognized “Web sites accessible to the public … are ‘public forums’ for purposes of the anit-SLAPP statute. [citations.]” (Barrett v. Rosenthal (2006) 40th Cal. 4th 33, 41, fn.)

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The fact that Left exercised editorial control over the postings did not, by itself, deprive the w3ebsite of its public forum status.  The essential factor is “whether the means of communicating the statement permits open debate.”

Notably, according to the court, the statute protects speech, whether made in a public forum or in private, so long as it concerns a public issue.  Said the court:  “Code of Civil Procedure Section 425.16 therefore, governs even private communications, so long as they concern a public issue.”

GTX Failed To Submit Evidence Sufficient To Establish A Prima Facie Case

Once a movant establishes its conduct falls within the protections of the statute, the burden under the anti-SLAPP statute shifts to the plaintiff to “state and substantiate a legally sufficient claim” by presenting evidence sufficient to establish the existence of a prima facie case.

The Appellate Court affirmed the trial court’s determination that GTX failed to meet this burden, which mandated dismissal of its complaint.  The Trial Court held that plaintiff had failed to establish that Left had made any of the defamatory statements he was alleged to have made in the complaint.  Moreover, on appeal, the appellate court held that:

GTX cannot identify a single piece of evidence to support its allegations that defendants’ challenged statements were false or otherwise defamatory.

The Appellate Court accordingly affirmed the dismissal of plaintiff’s complaint, as well as the Trial Court’s award to defendant of the attorney’s fees expended both in defense of the action, and on appeal.

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