Ripple Labs Inc. v. YouTube LLC

Background

Ripple Labs and its CEO, Bradley Garlinghouse, sued YouTube LLC. Ripple had developed the XRP cryptocurrency. According to the complaint, scammers hijacked YouTube channels and used Ripple’s trademarks, Garlinghouse’s name and likeness, and publicly available interviews to impersonate Ripple and promote an XRP “giveaway” scam. The scammers promised that people who sent XRP to a digital wallet would receive more XRP, but the people who responded lost their XRP.

Ripple alleged that it and YouTube users sent YouTube more than 350 takedown notices, including 49 directly related to the scam and 305 related to impersonation of Garlinghouse or infringement of Ripple’s brand. Ripple alleged that YouTube often took days, weeks, or months to address the channels. It also alleged that YouTube profited by selling advertisements connected to the scam.

The complaint asserted three categories of claims: contributory trademark infringement under the federal Lanham Act; misuse of Garlinghouse’s identity and right of publicity under California law; and violation of California’s unfair-competition law based on the trademark and state-law theories. YouTube moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which asks whether a complaint adequately states a legal claim.

Contributory Trademark Infringement

The court held that Ripple did not plausibly plead contributory trademark infringement. A service provider may be liable for continuing to provide services to someone it knows or has reason to know is engaging in trademark infringement, but the plaintiff must connect the provider’s knowledge to specific infringement rather than rely on general awareness.

Ripple’s allegations combined complaints about trademark infringement with complaints about misuse of Garlinghouse’s identity. The court said Ripple needed to identify representative trademark complaints tied to specific YouTube accounts and identify YouTube’s failure or delay in responding to those particular complaints. The court emphasized that it was not requiring the heightened pleading standard associated with fraud claims; representative examples would be enough.

The court also found that the alleged delays—one week, several weeks, and approximately two months—were shorter than delays courts had generally found actionable, although the court noted that the reasons for YouTube’s delays could potentially create factual disputes. The court rejected Ripple’s theory that YouTube had a general duty to prevent the scam in advance based on constructive knowledge or willful blindness. It dismissed the contributory trademark claim with leave to amend.

Communications Decency Act Immunity

The court ruled that YouTube was immune under Section 230(c)(1) of the Communications Decency Act from the state-law claims. That provision generally protects an interactive computer service from liability for content supplied by another person, unless the service helped create or develop the information in a legally significant way.

The court found that YouTube was an interactive computer service and that the advertisements at issue were supplied by the scammers, not created by YouTube. The court further held that awarding a verification badge to a hijacked channel did not materially contribute to the content’s illegality. The alleged illegality came from the scammers’ hijacking of users’ content and their deception of viewers into sending XRP. Displaying the number of video views also did not amount to creating content.

The court stated that, even assuming a viable federal claim, Section 230 immunized YouTube from the state claims. It also noted that without a viable federal claim, the court would not have supplemental jurisdiction over those state claims.

Disposition

Judge Laurel Beeler granted YouTube’s motion to dismiss with leave to amend within 21 days. The order disposed of ECF No. 26.