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Designer Skin LLC v. S & L Vitamins, Inc., et al.
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...

Sundance Image Technology Inc., et al. v Cone Editions Press Ltd., et al.

Case No. 02 CV 2258 JM (AJB) (S.D. Ca. March 7, 2007)

Court holds that the statute of limitations bars plaintiffs from proceeding with libel claims arising out of allegedly defamatory statements posted on the Internet over one year prior to the commencement of plaintiff’s libel action.  Under the single publication rule, the statute of limitations begins to run from the date the defamatory statement is first posted on the Internet.  As that occurred over one year prior to the commencement of this litigation, the libel claims arising therefrom were dismissed.

In reaching this result, the Court held that posting links on a website to allegedly defamatory statements, or sending such links in an email, does not constitute a republication of the defamatory statements that gives rise to a separate defamation claim, or commence anew the statute of limitations.

The Court held that such a republication may occur when the header information on the webpage containing the allegedly defamatory statement is changed.  Here, however, that did not save plaintiffs’ libel claim from dismissal, because such republication occurred over one year prior to the commencement of this action.

Finally, the Court permitted plaintiffs to proceed with trade libel claims arising out of the publication of the statements at issue.  The Court find that plaintiffs had submitted sufficient evidence that the publication of such statements had caused it injury to survive defendants’ motion for summary judgment.

This action arises out of a failed business venture between the parties.  Plaintiffs entered into ‘private label’ agreements with defendants pursuant to which defendants were to market plaintiffs’ software and ink products under defendants’ brand names.  At some point, the parties’ business relationship deteriorated and the parties terminated their agreements.

Thereafter, defendants posted allegedly defamatory statements concerning plaintiffs and their business dealings on defendant’s website, in an internal company email and in internet chat rooms.

Plaintiffs commenced this suit, charging defendant with libel, trade libel and unfair trade practices in violation of California Business & Professions Code Section 17200 and the Lanham Act.

Defendants moved for summary judgment dismissing the libel claims on the grounds that the online statements in question were not made in a writing or fixed representation, a prerequisite to a libel claim.  Relying on Traditional Cat Ass’n, Inc. v. Laura Gilbreath, 118 Cal. App. 4th 392 (2004), the Court rejected this claim, holding that a statement made online is a statement made in a writing for the purposes of commencing a libel action.

Defendants also moved for summary judgment dismissing the libel claims as time barred.  The Court agreed, and dismissed plaintiffs’ libel claims, holding them barred by the applicable one year statute of limitations.

In reaching this result, the Court, relying on Traditional Cat Ass’n., supra, held that the single publication rule applies to web page publications.  Under the single publication rule, “any single edition of a newspaper or book gives rise to only one cause of action for any defamatory statement contained therein, regardless of how many copies of the newspaper or the book were distributed.  The statute of limitations begins to run once the defamatory statement is published, which in the case of mass media occurs on the ‘first general distribution of the publication to the public.’” 

Republication of the defamatory statement, however, gives rise to a new cause of action, and a new limitations period.  Such occurs, by way of example, when a new edition of a book containing an allegedly defamatory statement occurs. 

As such, the one year statute of limitations applicable to plaintiffs’ libel claim commenced when the statements in question were first published on the Internet.  As this occurred more than one year prior to the commencement of the instant action, the Court held plaintiffs’ claims time barred.

In reaching this result, the Court rejected plaintiffs’ claim that defendants republished the defamatory statements at issue by posting links to them on its website, and in an email, which republication commenced anew the limitations period.  Said the Court:

Plaintiff cites no authority holding that providing links to statements already published on the Web, without more, republishes those statements.  Rather, the court finds that such linking is more reasonably akin to the publication of additional copies of the same edition of a book, which is a situation that does not trigger the republication rule.

The Court held that ‘a rational trier of fact could find that’ changing the header information of a webpage which contained allegedly defamatory statements was in fact a republication of those statements that triggered a new limitations period.  However, because plaintiffs failed to offer sufficient evidence to establish that such republication occurred within one year of the commencement of the instant action, this claim too was time barred.

Finally, the Court allowed plaintiffs to proceed with trade libel claims arising out of online posting of the statements at issue.  Defendants had sought to dismiss these claims on the ground that plaintiffs had failed to advance sufficient evidence that they had sustained injury as a result of making of these statements.  The Court held that, based on the evidence plaintiffs submitted, a rational trier of fact could conclude that consumers and distributors were deterred from doing business with plaintiffs as a result of having read these statements, which caused plaintiffs to lose revenues.  The evidence plaintiffs submitted included deposition testimony of both a consumer and distributor who confirmed that reading the allegedly defamatory statements harmed their business relationships with plaintiffs, evidence that plaintiffs’ gross revenues declined after the statements were posted, and evidence of the extensive reach of the website on which the allegedly defamatory statements were found.

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