Yelp can sue reputation company for promising to suppress bad reviews (updated)

Yelp

07/06/2024 19:31

(Adds comment from defendant's lawyer, Federal Trade Commission
guidance, paragraphs 6, 11)
    By Jonathan Stempel
       June 7 (Reuters) - Yelp  YELP.N  can pursue a lawsuit
accusing a reputation management company of fraudulently
advertising its ability to remove "bad" reviews from the
business review website.
    In a decision late Thursday night, U.S. District Judge
William Alsup in San Francisco said Yelp can pursue trademark
infringement and unfair competition claims against ReviewVio,
which operates as Dandy.
    Yelp said ReviewVio's ads, which include the Yelp logo,
harmed its reputation by suggesting that businesses could pay
for artificially inflated star ratings.
    This allegedly undercut honest businesses that will not pay
to remove negative reviews, and undermined the usefulness of
Yelp's website to consumers.
    Yelp also said it lost ad revenue from businesses that paid
for "review gating," which the company prohibits, or incorrectly
believed that Yelp endorsed the practice.
    The Federal Trade Commission encourages companies not to
solicit only positive reviews, or discourage negative reviews.
    In a 27-page decision, Alsup said Yelp sufficiently alleged
that ReviewVio's conduct could cause confusion about the
companies' relationship.
    "The allegations make plausible that ReviewVio's alleged
marketing influences (businesses') choice to purchase Yelp's ad
services, ReviewVio's review management services or no services
to promote themselves at all - believing the game rigged," he
wrote.
    Alsup said Yelp can seek damages for ReviewVio's alleged
misrepresentations to businesses, but not to consumers.
    In seeking a dismissal, ReviewVio said there was no evidence
it "partook in any sort of immoral or unethical behavior."
    Jenifer Wallis, a lawyer for ReviewVio, said excluding harm
to consumers "substantially limits Yelp's damage claims.
ReviewVio maintains that Yelp's suit is without merit and will
continue to aggressively litigate this case."
        James Daire, associate legal director at Yelp, said the
San Francisco-based company was pleased with the decision.
    "The court has recognized the harm caused by practices like
review gating, which deceptively cultivates positive reviews on
public platforms and diverts criticisms to private channels," he
said
    The case is Yelp Inc v ReviewVio Inc, U.S. District Court,
Northern District of California, No. 23-06508.    

 (Reporting by Jonathan Stempel in New York; Editing by Richard
Chang and Chizu Nomiyama)
 ((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))