Is LivingSocial living on the edge? Cincinnati Office Managing Attorney Daniel J. Donnellon continues his "Litigation Lesson" video series with details surrounding Judge William Hayes issuing an order denying a motion to dismiss filed by LivingSocial Inc., the operator of the website of the same name that offers discounts and vouchers. The case involves a convergence of Communications Decency Act (CDA) and trademark issues. Watch his latest update video for free here.

Case Background

A.T. Your Service Cleaning and Janitorial (Plaintiff) partnered with LivingSocial to offer vouchers and discounts from March-April 2012. (LivingSocial describes themselves as a “strategic business marketing partner, creating online promotions” on their website.) Immediately thereafter, from May-July 2012, the other defendants in the case At Your Service Housekeeping partnered with LivingSocial to market their company through discounts and vouchers.

Unfortunately, At Your Service Housekeeping allegedly failed to fulfill virtually all of its LivingSocial voucher obligations. This caused outraged and confused consumers to call A.T. Your Service Cleaning and Janitorial and lodge complaints; they posted negative reviews on websites like Yelp.com and Google+. These negative reviews and complaints allegedly caused a loss of revenue and a tarnished business reputation for A.T. Your Service Cleaning and Janitorial.

In the subsequent lawsuit, A.T. Your Service Cleaning and Janitorial claimed unfair competition and trademark infringement under state law and the Federal Lanham Act. LivingSocial tried to escape the claims under the CDA, which provides broad immunity provisions for internet computer services that offer online content.

Judge Hayes denied the application of the CDA. Judge Hayes found that it was plausible that LivingSocial, by marketing itself as a “strategic business partner,” was doing more than simply relaying the illegal content generated by third parties that it does not control and allowed the case to proceed.

The Communications Decency Act and trademark law converge

But what about the trademark issues involved in the sponsorship of confusing information by LivingSocial with two businesses side-by-side in the same timeframe marketing in the same business?

Ordinarily, an “innocent infringer” or “innocent violator” is not subject to money damages; they can be subject to injunctive relief to stop the content. An “innocent infringer” must be “ignorant of another person’s superior right to the mark,” and since LivingSocial was clearly aware of the existence of A.T. Your Service Cleaning and Janitorial and made the decision to partner with them, and then immediately thereafter partner with another company in the same industry with a very similar-sounding name, can it really claim that it was ignorant of the superior right to the mark? That’s the question that will need to be litigated.

With a plethora of online applications of websites offering deals to consumers, when a business targeting that consumer simply fills out a form online and pays with a credit card for the website’s services, the importance of this case becomes a litigation lesson in trademark law. The takeaways are simple; if you’re a business looking to start out and offer a clever-sounding name, consult with a trademark attorney first before you find yourself in the middle of an infringement action. If you are a provider of services on the internet, consult with your attorney about the limitations and protections of the CDA in order to position yourself best to take advantage of those immunities.

Watch “Litigation Lesson: LivingSocial Inc. and the Communications Decency Act" 

Click here to view the video.