Ripple Labs Inc. v. YouTube LLC

CourtDistrict Court, N.D. California
DecidedNovember 20, 2020
Docket3:20-cv-02747
StatusUnknown

This text of Ripple Labs Inc. v. YouTube LLC (Ripple Labs Inc. v. YouTube LLC) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ripple Labs Inc. v. YouTube LLC, (N.D. Cal. 2020).

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 San Francisco Division 11 RIPPLE LABS INC., et al., Case No. 20-cv-02747-LB

12 Plaintiffs, ORDER GRANTING MOTION TO 13 v. DISMISS

14 YOUTUBE LLC, Re: ECF No. 26 15 Defendant. 16 17 INTRODUCTION 18 The plaintiffs, Ripple Labs and its CEO Bradley Garlinghouse (collectively, “Ripple”), 19 developed a cryptocurrency called XRP. Scammers impersonated Ripple on YouTube (in part by 20 using Ripple’s federally registered trademarks and publicly available content such as interviews 21 with Mr. Garlinghouse) to make it look like they were Ripple and thus perpetuated a fraudulent 22 “giveaway,” promising that if XRP owners sent 5,000 to one million XRP to a “cryptocurrency 23 wallet,” then the XRP owners would receive 25,000 to five million XRP. In fact, the XRP owners 24 who responded to the scam lost their XRP and received no XRP in return. The plaintiffs sued 25 defendant YouTube for not doing enough to address the scam (including by failing to respond to 26 multiple takedown notices), claiming the following: (1) contributory trademark infringement in 27 violation of the Lanham Act, 15 U.S.C. § 1114(1) (by allowing use — and therefore infringement 1 publicity, in violation of Cal. Civil Code § 3344 and California common law; and (3) a violation 2 of California’s unfair competition law (“UCL”), Cal. Bus. & Prof. Code § 17200, predicated on 3 the trademark and state-law claims.1 4 YouTube moved to dismiss (1) the Lanham Act claim in part on the ground that the plaintiffs 5 did not plausibly plead its knowledge of the trademark infringement, and (2) the state-law claims 6 on the ground that it is immune from liability under § 230(c)(1) of the Communications Decency 7 Act (“CDA”), 47 U.S.C. § 230(c)(1), because it is not a content provider.2 The court grants the 8 motion (with leave to amend). 9 STATEMENT 10 Ripple is an “enterprise blockchain company” that developed and manages the cryptocurrency 11 XRP, which can be used in place of traditional currencies to facilitate cross-border payments.3 12 Banks, corporations, and individuals buy XRP.4 13 YouTube is a video-sharing platform.5 14 Ripple and XRP owners were the target of a fraud — the XRP Giveaway Scam — whereby 15 the fraudsters hijacked other users’ channels on YouTube and used the channels to impersonate 16 Ripple and its CEO. (Fraudsters can hijack a legitimate YouTube channel through a spear- 17 phishing attack: the fraudsters send an email to the channel’s creator, and when the creator 18 responds, he inadvertently discloses his YouTube credentials, thereby allowing the fraudsters to 19 take over his channel and populate its content.) After hijacking the channels, the fraudsters 20 populated the channels with content that included Ripple’s trademarks (such as its logo and name), 21 Mr. Garlinghouse’s name and likeness, and publicly available content (such as interviews with 22 Mr. Garlinghouse or other members of Ripple’s leadership team). Masquerading as Ripple, the 23 24 1 Compl. – ECF No. 1 at 17–21 (¶¶ 61–99). Citations refer to material in the Electronic Case File 25 (“ECF”); pinpoint citations are to the ECF-generated page numbers at the top of documents. 26 2 Mot. – ECF No. 26. 3 Compl. – ECF No. 1 at 4 (¶¶ 12, 19), at 5 (¶¶ 20–21). 27 4 Id. at 4–5 (¶¶ 19–20). 1 fraudsters promised XRP owners that if they sent between 5,000 to one million XRP to a digital 2 wallet, then they would receive between 25,000 to five million XRP. After XRP owners sent XRP 3 to the digital wallet, the currency disappeared, and the XRP owners received nothing in return.6 4 Ripple and YouTube users alerted YouTube about the scam, but YouTube allegedly did not 5 respond by taking down the offending content in a reasonable time frame. A Forbes article in 6 November 2019 reported the scam, the hijacking of popular YouTube creator MarcoStyle’s 7 channel, the conversion of his channel to Mr. Garlinghouse’s profile, the hacker’s running of a 8 livestream promoting the scam, and the stealing of $15,000 from viewers’ Ripple wallets.7 9 MarcoStyle alerted YouTube, and YouTube acknowledged the issue that day but took a week to 10 resolve it.8 During this time, YouTube verified the hijacked channel as authentic (even though it 11 was masquerading as Mr. Garlinghouse’s account).9 12 After the Forbes article, Ripple alleges that it sent YouTube more than 350 takedown notices: 13 49 related directly to the scam and 305 related to accounts and channels that were impersonating 14 Mr. Garlinghouse or infringing on Ripple’s brand, likely to monetize the scam.10 Ripple alleges 15 that it sent multiple takedown notices for the same conduct because YouTube did not take down 16 the fraudulent channels for days, weeks, or months after notice.11 New instances of the scam 17 “continued to appear, often amassing thousands of views and creating more victims by the day.”12 18

19 6 Id. at 7–9 (¶ 35). 20 7 Id. at 10 (¶ 40); Paul Tassi, A YouTuber with 350,000 Subscribers Was Hacked, YouTube verified His Hacker, Forbes (Nov. 14, 2019), https://www.forbes.com/sites/paultassi/2019/11/14/a-youtuber-with- 21 350000-subscribers-was-hacked-youtube-verified-his-hacker/?sh=23bd01a76fe6, Ex. 8 to Compl. – ECF No. 1-1 at 141–42. The court considers the documents attached to the complaint under the 22 incorporation-by-reference doctrine. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989); see also Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). 23 8 Forbes Article, Ex. 8 to Compl. – ECF No. 1-1 at 142 24 9 Compl. – ECF No. 1 at 10 (¶ 40). 10 Id. at 12 (¶ 47). 25 11 Id. (¶ 48) (14 takedown notices (starting November 12, 2019) about hijacked channel purporting to 26 be Mr. Garlinghouse’s channel that resulted in a takedown months later, on February 19, 2020; January 2, 2020 takedown notice that took three weeks to resolve; nine takedown notices (starting 27 January 21, 2020) about channel promoting the scam that remained active until March 18, 2020; January 27, 2020 notice about hijacked channel promoting the scam resolved on February 3, 2020). 1 For example, on March 20, 2020, a YouTube user told YouTube about a channel using Ripple’s 2 marks and Mr. Garlinghouse’s image to promote the scam, YouTube did not take action, and by 3 the next day, 85,000 users viewed the fraudulent video.13 4 YouTube allegedly profited from the scam because it sold ads to the fraudsters that featured 5 Mr. Garlinghouse’s name, infringed on Ripple’s trademarks, and promoted the scam.14 6 According to its guidelines and policies, YouTube removes offending content when it learns 7 about it, including “scams and other deceptive practices.”15 8 The parties do not dispute that the court has federal-question jurisdiction over the Lanham Act 9 contributory trademark-infringement claim and supplemental jurisdiction over the state-law 10 claims.16 28 U.S.C. §§ 1331, 1367. All parties consented to magistrate jurisdiction.17 11 12 STANDARD OF REVIEW 13 A complaint must contain a “short and plain statement of the claim showing that the pleader is 14 entitled to relief” to give the defendant “fair notice” of what the claims are and the grounds upon 15 which they rest. Fed. R. Civ. P.

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Ripple Labs Inc. v. YouTube LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ripple-labs-inc-v-youtube-llc-cand-2020.