When Is Good Legal Advice Bad Business Advice?
One of my firm's goals is to give our clients both the legal ansnwer and our view of how our legal answer meshes with real world business practices. I Occasionally the right legal answer is the wrong business answer. It is not uncommon for us to advise a client that they have the legal right to do something, and to explain why they may not want to do it anyway. Unfortunately, attorneys often give the client only legal advice and fail to raise the potential negatives. They may even potentially exacerbate the negatives by their own actions.
One such situation appears in the current tiff with DIRECTBUY. DIRECTBUY claims to offer a deal on home furnishings and household appliances by buying direct from the manufacturer. (As a disclaimer, I have never used DIRECTBUY and know nothing more about them than their radio adds. This post has nothing to do with whether they are the best thing since sliced bread or a company to be avoided).
It appears, however, that some of its customers are not happy. Some of them even posted to infomercialscams.com that the company is a "scam" and a "nightmare." Contrary to some commentators, I think that calling a business a "scam" is potentially actionable as defamation or trade libel. While the term nightmare is clearly opinion, the term scam clearly suggests dishonest business practices. So legally, you have a reasonable basis for sending a cease and desist letter. The business question is - should you? The problem with making a big legal issue over such statements is that you may bring more attention to the disparaging statements.
Such was the case with DIRECTBUY. DIRECTBUY's attorneys, Dozier Internet Law not only sent a cease and desist letter to informercialscams.com, they apparently even threatened that posting the cease and desist letter violated copyright law.
The first question is whether it was wise to send the cease and desist letter. Now thousands of people who would have never heard of the negative posts calling DIRECTBUY have heard the scam/nightmare accusations.
The second question is whether it was wise to threaten that posting the cease and desist letter would constitute copyright infringement. The assertion makes the attorneys appear to be overreaching and lessens the credibility of the underlying threat. (It also gives fodder to those who hate all attorneys). Furthermore, it will now spread the underlying allegedly defamatory statements as everyone explains the background behind the arguably outrageous effort to keep cease and desist letters confidential.
Public CItizen has taken on the matter. Here is their response to the cease and desist letter. DIRECTBUY gets a +1 for exercising its legal rights against those who accuse it of dishonesty and a -3 for the PR fiasco. Legal advice should not be mistaken for business advice.
P.S. Dozier Internet Law, DIRECTBUY's counsel, gives a link on their website entitled "Court finds that attorney letter protected by copyright and publication to gain an advantage in litigation is not fair use." On its face, this appears to support the copyright threat. A little context might be helpful.
First the decision is from the Royal Courts of Justice in London. England has somewhat different copyright laws than the U.S.
Second, the decision involves a confidential internal letter discussing potential settlement that somehow made its way to the opposing party who then published it. A significantly different fact scenario than a cease and desist letter sent to an opposing party. The Court appreciated the distinction and noted:
"Indeed, Buxton LJ suggested that it might well be wise to consider in future whether, when a person causes his solicitor to write a letter of this sort, he is not giving an implied consent to its publication by the recipient that goes more widely than the narrow limits recognised by the law of copyright. No such considerations apply in this case."
One such situation appears in the current tiff with DIRECTBUY. DIRECTBUY claims to offer a deal on home furnishings and household appliances by buying direct from the manufacturer. (As a disclaimer, I have never used DIRECTBUY and know nothing more about them than their radio adds. This post has nothing to do with whether they are the best thing since sliced bread or a company to be avoided).
It appears, however, that some of its customers are not happy. Some of them even posted to infomercialscams.com that the company is a "scam" and a "nightmare." Contrary to some commentators, I think that calling a business a "scam" is potentially actionable as defamation or trade libel. While the term nightmare is clearly opinion, the term scam clearly suggests dishonest business practices. So legally, you have a reasonable basis for sending a cease and desist letter. The business question is - should you? The problem with making a big legal issue over such statements is that you may bring more attention to the disparaging statements.
Such was the case with DIRECTBUY. DIRECTBUY's attorneys, Dozier Internet Law not only sent a cease and desist letter to informercialscams.com, they apparently even threatened that posting the cease and desist letter violated copyright law.
The first question is whether it was wise to send the cease and desist letter. Now thousands of people who would have never heard of the negative posts calling DIRECTBUY have heard the scam/nightmare accusations.
The second question is whether it was wise to threaten that posting the cease and desist letter would constitute copyright infringement. The assertion makes the attorneys appear to be overreaching and lessens the credibility of the underlying threat. (It also gives fodder to those who hate all attorneys). Furthermore, it will now spread the underlying allegedly defamatory statements as everyone explains the background behind the arguably outrageous effort to keep cease and desist letters confidential.
Public CItizen has taken on the matter. Here is their response to the cease and desist letter. DIRECTBUY gets a +1 for exercising its legal rights against those who accuse it of dishonesty and a -3 for the PR fiasco. Legal advice should not be mistaken for business advice.
P.S. Dozier Internet Law, DIRECTBUY's counsel, gives a link on their website entitled "Court finds that attorney letter protected by copyright and publication to gain an advantage in litigation is not fair use." On its face, this appears to support the copyright threat. A little context might be helpful.
First the decision is from the Royal Courts of Justice in London. England has somewhat different copyright laws than the U.S.
Second, the decision involves a confidential internal letter discussing potential settlement that somehow made its way to the opposing party who then published it. A significantly different fact scenario than a cease and desist letter sent to an opposing party. The Court appreciated the distinction and noted:
"Indeed, Buxton LJ suggested that it might well be wise to consider in future whether, when a person causes his solicitor to write a letter of this sort, he is not giving an implied consent to its publication by the recipient that goes more widely than the narrow limits recognised by the law of copyright. No such considerations apply in this case."
Sites like this are looking for publicity and traffic which Directbuy is giving them. What they should be doing is fixing the customer complaints, which is likely cheaper than the lawyer's fees.
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http://edumacation.com/DirectBuy
is a website that has been tracking the [alleged]* Direct Buy scam for what looks like a while now.
It has lawsuits, news articles, blogs, and even the membership agreement
* per moderator
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