In case against Reddit alleging trademark and state law claims, district court grants defendant’s motion to dismiss, holding that plaintiff had not shown his first use in commerce of trademark WALLSTREETBETS and that Reddit’s actions, including suspending plaintiff’s account, were protected conduct under Section 230 of Communications Decency Act.
Plaintiff is the creator of a subreddit called “r/WallStreetBets,” a forum where people shared stock and other financial advice and that eventually gained over 1 million subscribers and attention from the financial press. Plaintiff published a book that he advertised for sale on the subreddit and later filed an application with the United States Patent and Trademark Office (USPTO) to register the marks WALLSTREETBETS and WSB, the short form of WALLSTREETBETS. Reddit took issue with plaintiff monetizing a Reddit community and suspended his account, banned plaintiff from moderating any further subreddits, filed its own application to register WALLSTREETBETS and initiated legal action with the USPTO to block plaintiff from asserting ownership of WALLSTREETBETS. The USPTO ultimately rejected plaintiff’s application to register WALLSTREETBETS but accepted the application to register WSB.
Plaintiff filed suit, asserting claims seeking a declaratory judgment that he, and not Reddit, owned WALLSTREETBETS; trademark infringement and trademark dilution by tarnishment in violation of the Lanham Act; and state law claims including (1) violation of plaintiff’s right of publicity resulting from continued operation of the subreddit without him as moderator, (2) breach of contract and violation of the duty of good faith and fair dealing for suspending and not reinstating plaintiff’s account, and (3) unfair competition. Reddit moved to dismiss the complaint, which motion the court granted with leave to amend.
First, the court held that plaintiff had failed to establish his priority of use of the WALLSTREETBETS mark in commerce and therefore was not the owner of the mark. Plaintiff had argued, essentially, that because many people attributed WALLSTREETBETS to him and identified him as its creator, he therefore owned the mark. But the court held it was not sufficient to show that plaintiff invented the mark, as “rights in a trademark are determined by the date of the mark’s first use in commerce, and, the party who first uses a mark in commerce is said to have priority over other users.” Rather, it was Reddit that first used the mark in commerce by hosting or operating the r/WallStreetBets subreddit. The court therefore found that plaintiff had not sufficiently stated a claim for ownership of the mark and dismissed plaintiff’s claim for declaratory relief, as well as his claim for infringement against Reddit.
The court likewise dismissed plaintiff’s cause of action for infringement against Reddit for its use of his registered WSB mark, finding that any alleged infringement had occurred before plaintiff had registered the mark and before the date he listed as the mark’s first use in commerce on the trademark application. In other words, plaintiff had alleged that Reddit had infringed the mark before he had any legal rights in it, so his claim failed as a matter of law.
The court also held that plaintiff had failed to establish the level of fame necessary to bring a successful trademark dilution claim against Reddit. Though the r/WallStreetBets subreddit attracted media attention and over a million subscribers, this did not rise to the required level of fame, as trademark dilution claims are limited to truly famous marks like Budweiser beer, Camel cigarettes and Barbie dolls.
Reddit argued that plaintiff’s state law claims were barred by Section 230 of the Communications Decency Act (CDA), which provides immunity to websites that publish content provided by third parties. As the court noted, in order to establish a Section 230 defense, a defendant must establish that they are “(1) a provider or user of an interactive computer service (2) whom a plaintiff seeks to treat, under a state law cause of action, as a publisher or speaker (3) of information provided by another information content provider.” It was undisputed that Reddit operated an interactive computer service and that much of Reddit’s website contains information provided by third parties. The issue was therefore whether plaintiff’s state law claims sought to treat Reddit as a publisher or speaker.
Reddit argued that all of plaintiff’s state law claims sought to hold it liable as a publisher, i.e., by making decisions about what types of content and which users are permitted on the site. The court agreed, holding that plaintiff’s state law claims “seek to hold Reddit liable for publisher conduct, specifically, for either suspending Rogozinski from the r/WallStreetBets subreddit, banning him, and/or allowing the subreddit to continue to operate without him.” Accordingly, state law claims grounded in this conduct were barred by Section 230.
The one exception was plaintiff’s unfair competition claim, which was brought on the grounds that Reddit is engaged in a practice of asserting trademark rights in the brand names of subreddits and that Reddit blocked plaintiff from controlling his brands. The court held that the second ground was barred by Section 230 but the first was not, as the alleged practice of asserting trademark rights in the brand names of subreddits did not derive from Reddit’s status or conduct as a publisher or speaker.
The court ultimately dismissed plaintiff’s unfair competition claim for lack of standing, however. Plaintiff had asserted that he suffered economic injury in lost book sales and a lost contract for an e-sports trading competition in Texas. The court held that the lost book sales constituted lost business opportunities, lost anticipated profits or injury to goodwill, which were insufficient to establish standing under the California Unfair Competition Law. Further, the court held that either the lost contract was prospective in nature or the loss of the contract was not clearly connected to Reddit’s alleged “practice of asserting trademark rights in the brand names of subreddits” but rather to Reddit banning plaintiff from the subreddit, which was conduct protected by Section 230. Accordingly, the court dismissed plaintiff’s unfair competition claim.
Summary prepared by David Grossman and Erin Shields