Court Grants YouTube’s Motion to Dismiss Ripple Labs Trademark Suit

On Friday, the Northern District of California granted defendant YouTube’s motion to dismiss a complaint filed by Ripple Labs, an “enterprise blockchain company,” and its CEO Bradley Garlinghouse. The complaint alleged trademark infringement, misappropriation of identity and publicity rights and unfair competition law claims against YouTube and was dismissed with leave to amend.

Initially, the plaintiffs filed a complaint in April against YouTube for allowing scammers to impersonate their CEO by using their registered trademarks and publicly available content of CEO Garlinghouse, including interviews, in order to make it look like the scammers were Ripple. The scammers then engaged in a fraudulent scheme involving the plaintiffs’ cryptocurrency called XRP.

The plaintiffs sued YouTube for allegedly not properly addressing the scam. They asserted contributory trademark infringement pursuant to the Lanham Act, misappropriation of Garlinghouse’s identity and his right of publicity in violation of California law, as well as violations of California’s Unfair Competition Law (UCL) based on the trademark and state law allegations. In September, Ripple Labs filed an opposition to YouTube’s motion to dismiss claiming that YouTube contributorily infringed and disregarded takedown notices that the plaintiffs filed.

Specifically, YouTube moved to dismiss “(1) the Lanham Act claim in part on the ground that the plaintiffs did not plausibly plead its knowledge of the trademark infringement, and (2) the state-law claims on the ground that it is immune from liability under § 230 (c)(1) of the Communications Decency Act (CDA)… because it is not a content provider.”

The court noted that the plaintiffs “allegedly notified YouTube of the trademark infringement through takedown notices and allege that YouTube ‘ignored or failed to address many of the[ir] takedown demands.’” Therefore, the court stated these claims “are about delay in taking down the offending channels (not a failure to do so altogether).” For example, the plaintiffs argued that YouTube took approximately two months to address some takedown notices, three weeks, and one week for others. Consequently, the court contended that “[t]he issue[,] thus[,] is whether the plaintiffs’ allegations about YouTube’s delay in taking down the scam and the hijacked channels – which used Ripple’s trademarked content – plausibly plead a claim for contributory trademark infringement.”

According to the order, “[t]o be liable for contributory trademark infringement, a defendant must have (1) intentionally induced the primary infringer to infringe, or (2) continued to supply an infringing product to an infringer with knowledge that the infringer is mislabeling the particular product supplied.” However, the court stated that “[u]nder these cases, the plaintiffs have not plausibly pleaded a claim for contributory trademark infringement.” Specifically, the first allegation that regarding contributory infringement and YouTube’s response to the takedown notices, but the purported misuse of Garlinghouse’s identity is not a claim of trademark infringement. The court stated that the plaintiffs’ “complaint lumps the two categories together. The plaintiffs must identify their complaints of trademark infringement (tethered to a specific YouTube user’s account) and YouTube’s failure to respond or delayed response to the specific complaints. Without a delineation between the two categories, the court cannot evaluate whether YouTube had contemporaneous knowledge of the infringing conduct and continued to supply its services.” Therefore, the court cannot reasonably infer that YouTube is liable for this alleged conduct. Moreover, the court added that the delays, including a week, a few weeks, and two months, “are shorter than the delays that courts generally have found actionable.” Additionally, the court stated that based on the information, YouTube was not required to preemptively address the scam. The court stated that because the plaintiffs do not sufficiently differentiate between the notices, they do not plausibly plead a claim because the court cannot determine if YouTube had constructive knowledge about the scam.

The court stated that YouTube is immune under Section 230 of the Communications Decency Act from the state claim, the misappropriation of Garlinghouse’s identity and his right of publicity and the violation of California’s UCL. Moreover, because there is no federal claim the court does not have supplemental jurisdiction over the state claims.

Ripple Labs is represented by Boies Schiller & Flexner. YouTube is represented by Wilson Sonsini Goodrich & Rosati.