LivingSocial Not Entitled to Immunity Under § 230 of the Communications Decency Act Where It Creates, Develops Content Available On Its Site

On March 16, 2015, the U.S. District Court for the Southern District of California held that LivingSocial may be liable to a former vendor-partner for state trademark, false advertising, and unlawful business practice claims stemming from its participatory role in creating a confusing marketing promotion that harmed its former vendor-partner. The campaign caused consumers to erroneously believe that poor performance by a third party was actually attributable to plaintiffs’ business. This led to unwarranted, disparaging reviews about plaintiffs’ business online. LivingSocial moved to dismiss plaintiffs’ state trademark, false advertising, and unlawful business practice claims on the ground that it was entitled to immunity under the Communications Decency Act of 1996 (“CDA”), 47 U.S.C. § 230(c)(1) as a provider of interactive computer services. CDA § 230 affords interactive computer service providers immunity from liability for allegedly improper and illegal content created by third parties. The Court rejected this argument, drawing a “reasonable inference” that LivingSocial was responsible for creating or developing content on its website – thus jeopardizing CDA § 230 immunity. LivingSocial also moved to dismiss plaintiffs’ federal trademark and false advertising claims on the ground that it was entitled to the Lanham Act’s safe harbor provision for online advertisers, which protects innocent infringers. However, the Court found no indication LivingSocial was entitled to the innocent infringer defense, since LivingSocial was aware of plaintiffs’ existence from a prior business relationship with plaintiffs. The Court dismissed the federal trademark claim, without prejudice, on procedural grounds.