Public Allegation of Copyright InfringementLeads to $300K Defamation Verdict

If you think a competitor is doing something illegal, like infringing your copyright, it’s usually best not to complain to customers about it. If it turns out you’re wrong about the alleged illegality, you could be liable for defamation. A Web site operator named Boats.com recently learned a $300,000 lesson on that subject in a Florida federal district court.

The “student,” now $300K poorer — plus legal expenses, of course — is a company called Boats.com. It has a Web site, Yachtworld.com, where subscribing yacht brokers can post listings of yachts for sale. The “teacher” is another company, Nautical Solutions Marketing (NSM), which started a competing Web site, Yachtbroker.com.

NSM’s competing Web site apparently was an “aggregator”; it used a “spider” program called Boat Rover to harvest factual data from other yacht-brokerage Web sites, including the Yachtworld Web site of Boats.com. NSM employees also copied and pasted other data from the Yachtworld Web site.

Boats.com didn’t especially like having data copied from its Web site to a competing site. According to a report published by the Bureau of National Affairs in one of its printed weeklies (not available on-line), Boats.com sent out letters to yacht brokers and others, claiming that NSM’s data-harvesting was illegal.

In response, NSM filed a lawsuit accusing Boats.com of defamation and asking the court to declare that its data-harvesting activities were legal. In November 2003, the jury awarded NSM $250,000 in damages for defamation, plus $50,000 in punitive damages. And then earlier this month, the judge issued findings of fact and conclusions of law that pretty much gave NSM the declaration it had asked for.

References: The Associated Press story was carried in USAToday. The district court’s findings of fact and conclusions of law on the copyright issue are here.