Antitrust Law Daily Wrap Up, ADVERTISING—D.V.I.: Condo gripe website not commercial, could not support Lanham Act claim, (Aug 15, 2014)

By Greg Hammond, J.D.

After ten years of litigation, the Board of Directors of Sapphire Bay Condominiums West in the Virgin Islands has been denied injunctive relief and damages on its allegations that a condo owner’s “gripe” website—criticizing the board, its members, and its attorney—violated the Lanham Act. In granting judgment in favor of the condo owner, the federal district court in St. Thomas determined that the gripe site was not commercial in nature, as required of false advertising claims under the Lanham Act (The Board of Directors of Sapphire Bay Condominiums West v. Simpson, August 13, 2014, Sánchez, J.).

Background. George Simpson purchased a condominium at Sapphire Bay Condominiums West in 2003, and soon after requested that the board modify his condo windows. After the board did not respond to his request, Simpson made the modifications on his own. The board attempted to reverse the modifications by court order, but Simpson prevailed. In April 2004, Simpson created a website under the domain name “sapphirebaycondos.com,” purporting to be the official website of the condominiums and containing critical and inflammatory remarks about the board, its members, and its attorney. The board filed suit, alleging—in part—false advertising and trademark violation claims under the Lanham Act. The court granted preliminary injunction in August 2004, and Simpson took down the website and deregistered the domain name. However, he created a similar website under a new domain name (usvicondos.com), which is still in operation.

False advertising. According to the court, the threshold issue in this case was whether Simpson’s websites were or are “commercial,” which is required to bring a claim under the Lanham Act. There are three factors courts consider in determining whether speech is commercial: (1) whether the speech is an advertisement; (2) whether the speech refers to a specific product or service; and (3) whether the speaker has an economic motivation for the speech.

The court concluded that Simpson’s websites are not commercial speech, since they did not advertise any goods or services; they did not refer to a specific product or service, as they only contained sensationalized articles regarding alleged corruption schemes; and there was no evidence that the speech was motivated to economically benefit Simpson or a condominium competitor. Because the speech contained in the websites was therefore deemed noncommercial, the board’s Lanham Act claims failed.

Even if the speech were deemed commercial, the court found that the board’s false advertising and trademark violation claims would still be dismissed, concluding that the websites “could not possibly mislead or have misled consumers.”

The case number is 04-62.

Attorneys: Alan R. Feuerstein (Feuerstein & Smith, LLP) for Board of Directors of Sapphire Bay Condominiums West. George R. Simpson, pro se.

Companies: Board of Directors of Sapphire Bay Condominiums West

Cases: Advertising