Yelp Inc. v. Reviewvio Inc.

Background

Yelp sued ReviewVio, which also does business as Dandy, over alleged use of Yelp’s trademarks and alleged review-management practices. Yelp asserted federal claims for unfair competition, trademark infringement, and trademark dilution, plus California claims for unfair competition, false advertising, and breach of contract.

Yelp alleged that ReviewVio marketed services as integrated with Yelp, helped businesses collect feedback while posting only positive feedback to review sites, and offered to remove negative Yelp reviews. Yelp also alleged that ReviewVio used Yelp accounts, submitted tens of thousands of review-removal requests, continued marketing an integration with Yelp after Yelp revoked its access, and then operated under the name Dandy.

Motion to Dismiss

The court applied the rule for dismissing a claim that does not contain enough factual allegations to make relief plausible. It also applied the heightened pleading rule for claims involving fraud, which requires specific details about the alleged misconduct.

Federal Unfair Competition

The court held that Yelp adequately alleged commercial injury caused by ReviewVio’s alleged misrepresentations. The alleged injuries included harm to Yelp’s reputation, increased costs, and possible lost advertising and service revenue. The court rejected ReviewVio’s argument that Yelp could not sue because the companies did not compete directly, explaining that the allegations plausibly showed that the services could compete for revenue from the same businesses.

The court found that Yelp adequately pleaded both theories under the federal unfair-competition statute: false advertising and false association. Yelp sufficiently alleged that ReviewVio made factual claims about integrating with Yelp and removing critical reviews, that those claims could deceive customers and influence purchasing decisions, that the claims entered interstate commerce, and that Yelp could suffer economic and reputational injury. Yelp also pleaded the alleged misrepresentations with sufficient detail.

The court denied the motion to dismiss these federal unfair-competition claims, subject to the limitations discussed later in the order.

Trademark Infringement

The court held that Yelp adequately alleged trademark infringement because ReviewVio allegedly used Yelp’s registered marks in advertising and the complaint plausibly alleged a likelihood of consumer confusion. The court considered both the usual factors for assessing confusion and the factors governing a descriptive or nominative use of another company’s mark.

The complaint alleged that ReviewVio used Yelp’s name and logos while describing an “integration” with Yelp. The court found those allegations plausibly suggested sponsorship or endorsement by Yelp and plausibly showed that ReviewVio used more of Yelp’s marks than reasonably necessary. The motion to dismiss the federal infringement claims was denied, subject to the order’s later limitations.

Trademark Dilution

The court held that Yelp adequately pleaded dilution. The complaint alleged that Yelp’s marks were famous and distinctive, that ReviewVio used them commercially after they became famous, and that ReviewVio’s marketing could associate Yelp with a service that promoted or removed only selected reviews. The court found those allegations sufficient to plausibly claim that ReviewVio’s use could blur Yelp’s marks or harm their reputation.

The motion to dismiss the federal dilution claims was denied.

California Unfair Competition and False Advertising

The court held that Yelp had standing under California’s unfair-competition law because it alleged economic injury caused by ReviewVio’s practices. For fraud-based allegations, the court accepted the theory that reliance by Yelp’s potential business customers could support Yelp’s claim. The court also found standing based on alleged non-fraudulent harms, including costs Yelp incurred to combat review gating.

The court found that Yelp adequately alleged fraudulent, unlawful, and unfair business practices. The alleged federal trademark violations supplied an unlawful-practice theory, and the alleged conduct and its connection to policies reflected in regulatory enforcement actions supplied a plausible unfairness theory. Because Yelp adequately pleaded its federal false-advertising claim, it also adequately pleaded the parallel California false-advertising claim.

The court denied the motions to dismiss the California unfair-competition and false-advertising claims, subject to the limitations discussed in the order.

Breach of Contract

Yelp alleged that ReviewVio agreed to Yelp’s Terms of Service by logging into Yelp accounts and that ReviewVio breached those terms by accessing Yelp after being banned, helping others suppress reviews, using Yelp to promote its own business, using Yelp’s marks without permission, and using automated devices to scrape Yelp’s service.

The court found that the complaint plausibly alleged a contract, Yelp’s performance, breaches by ReviewVio, and resulting damages. The court found the alleged employee costs and sales injuries sufficient at the pleading stage. However, the complaint did not plausibly allege damages flowing specifically from scraping that were separate from damages caused by the other alleged breaches.

The motion to dismiss the contract claim was denied, subject to the limitation concerning scraping damages.

Limitations on Consumer Misrepresentation Theories

The court granted the motion to dismiss to the extent any claim sought damages and relied on fraudulent misrepresentations that ReviewVio allegedly made directly to individual consumers rather than to business customers. The complaint did not provide the required specific details about such consumer-directed statements, including who made them, what was said, when and where it was said, and how it caused injury.

The court said this limitation applied to damages theories involving federal false advertising and false association, willful trademark infringement, and the California unfair-competition and false-advertising claims. It did not apply in the same way to requests for an injunction barring misrepresentations to consumers.

Motion to Strike

ReviewVio asked the court to strike eight groups of allegations as immaterial or irrelevant. The court denied that motion because ReviewVio did not show that the challenged material could have no possible bearing on the litigation. The court concluded that the allegations could relate to confusion, trademark dilution, Yelp’s economic injury, regulatory guidance, or the practical costs Yelp allegedly incurred.

Disposition

The court granted in part and denied in part the motion to dismiss. It granted the motion as to claims seeking damages based on fraudulent misrepresentations made directly to individual consumers and denied it otherwise. The ruling covered Yelp’s federal unfair-competition, trademark-infringement, and dilution claims and its California unfair-competition, false-advertising, and breach-of-contract claims. The court denied the motion to strike. ReviewVio’s answer was due within fourteen days, and Yelp could move for permission to amend its complaint within fourteen days.