WallStreetBets Creator Loses (Again) His Frivolous Lawsuit Against Reddit

You probably recall the subreddit WallStreetBets from the whole GameStonks! episode three years ago. Over the last year or so there's been a different legal issue related to that subreddit, though. Jaime Rogozinski, who created the WSB subreddit, ended up suing Reddit, after they shut down his account.

There were a few different issues at play, but it basically boiled down to two things which happened prior to the whole GameStonks episode. Rogozinski filed a trademark for the name WallStreetBets" (and wrote a book using that name in the title) and, in response, Reddit removed his moderating privileges, claiming he violated their rules by trying to monetize a subreddit. Also, Reddit itself sought the trademark on WallStreetBets.

Rogozinski sued, claiming trademark infringement and also that removing him from moderating WSB was a breach of contract and a variety of other semi-related issues. Last summer, the court threw out the case, and Prof. Eric Goldman has a good writeup of what happened. However, the court left it open for Rogozinski to file an amended complaint, and amend he did.

Still, the arguments seemed pretty much the same as before, and so the court has just dismissed the lawsuit yet again.

Again, the trademark claims are a clear loser for Rogozinski. The original trademark claims were a loser, in part, because Rogozinski basically admitted that Reddit is where the WSB name was first commercialized. In the amended complain, he tried to argue the name pre-dated Reddit. It doesn't go over well:

Rogozinski, citing newly added allegations concerning events occurring before the launch of the r/WallStreetBets subreddit, now argues those allegations establish his first use in commerce. As set forth below, the Court is not persuaded.

[....]

Although, as Rogozinski points out, trademark rights can vest even before any goods or services are actually sold if the totality of one's prior actions, taken together, can establish a right to use the trademark" (see Pl.'s Opp'n at 17:21-24 (quoting Brookfield Commc'ns, Inc. v. W. Coast Ent. Corp., 174 F.3d 1036, 1052)), Rogozinski fails to make the requisite factual showing. In particular, the mark must be use[d] in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark." See Brookfield Commc'ns, Inc. 174 F.3d at 1052 (internal quotation, citation, and alteration omitted).

Here, Rogozinski's new allegation, namely, that before the launch of the r/WallStreetBets subreddit, he spent several weeks creating the WALLSTREETBETS logo and developing the overall look, feel, and design of the site by using CSS to create code to modify Reddit's template page" (see FAC 27), is readily distinguishable from the circumstances deemed sufficient by the Ninth Circuit and other courts. See New West Corp. v. NYM Co. of Cal., 595 F.2d 1194, 1199 (9th Cir. 1979) (holding magazine title was mark used in commerce prior to sale of magazine where plaintiff mailed 430,000 solicitations to prospective customers" and also mailed mock-up issue[s] to advertisers . . . on which the [mark] was placed"); see, e.g., Marvel Comics Ltd. v. Defiant, a Div. of Enlightened Ent. Ltd., 837 F. Supp. 546, 548-49 (S.D.N.Y. 1993) (holding ownership rights established in comic book title through presale promotional activity," including announcement of mark to 13 million comic book readers).

Trademark claim dead.

As for the claims that Reddit violated his rights by removing his moderator privileges and temporarily banning his account. Section 230's got Reddit (mostly) covered:

Rogozinski cites no other authority in support of his argument, and, indeed, numerous courts have found breach of contract claims barred by section 230. See, e.g., King v. Facebook, Inc., 845 F. App'x 691, 692, 692 (9th Cir. 2021) (affirming dismissal under section 230 where plaintiff's breach of contract claim was based on defendant's removal of plaintiff's content and temporary suspension from social media website); Cross v. Facebook, Inc., 14 Cal. App. 5th 190, 206, 222 Cal. Rptr. 3d 250, 263 (2017) (holding section 230 barred breach of contract claim arising out of defendant's refusal to remove offensive content from website); Yuksel v. Twitter, Inc., No. 22-CV-05415-TSH, 2022 WL 16748612, at *5 (N.D. Cal. Nov. 7, 2022) (explaining section 230 does not provide any exception for contract claims").

He also tried to argue that the Roommates case (which said that pulldown menus created by Roommates were not protected by Section 230, since it was content created, in part, by Roommates) allowed him to bypass Section 230. This is a weird argument, given that there have been tons of post-Roommates cases that have tried to use Roommates to get around 230, and almost none of them work. It certainly doesn't work here.

Here, as to his claim alleging violation of the common law right of publicity, Rogozinski, citing Fair Housing Council of San Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157, 1162 (9th Cir. 2008), argues Reddit fails the third requirement for section 230 immunity because, according to Rogozinski, Reddit acted as a content provider, not merely as a publisher of another party's content. See id. at 1162 (explaining [a] website operator can be both a service provider and a content provider"). Here, by contrast, Rogozinski alleges that the WALLSTREETBETS forum changed after his ban" (see Pl.'s Opp'n at 12:25-26 (citing FAC 91-93)), that Reddit partnered with the postMr. Rogozinski moderators of WALLSTREETBETS to push the company's Avatars to WALLSTREETBETS users" (see FAC 81), and that WALLSTREETBETS' artwork and even its editorial agenda is under the influence of Reddit" (see Pl.'s Opp'n at 16:8-9 (citing FAC 82-83)).

Rogozinski's reliance on Fair Housing is misplaced. In Fair Housing, the Ninth Circuit held section 230 inapplicable where the defendant therein was an online roommate matching service, and, entirely [of] its doing," created questions and provided pre-populated answers" as a condition of accessing its services. See Fair Housing, 521 F.3d at 1165-66; see also Anthony v. Yahoo! Inc., 421 F. Supp. 2d 1257, 1262-63 (N.D.Cal. 2006) (finding defendant acted as content provider where it created dating profiles for its online dating service). Rogozinski, by contrast, does not allege Reddit had a hand in creating, even in part, any artwork or posts by users or moderators nor that Reddit required any content to be posted. See, e.g., Blumenthal v. Drudge, 992 F. Supp. 44, 51- 52 (D.D.C. 1998) (holding defendant immune under section 230 despite its having retained certain editorial rights with respect to the content provided by [gossip columnist]" and having affirmatively promoted [gossip columnist's]" report).

In the original dismissal, the judge did say that the unfair competition" claims weren't barred by Section 230, but were still tossed out because there was no evidence of any loss. In the amended complaint, Rogozinski tries again... and fails again.

In the FAC, the only new allegation as to injury is Rogozinski's assertion that he would have never spent more than eight years building an audience" on Reddit had he known it could be seized by Reddit at any moment." (See FAC 33.) An assertion one spent time one otherwise would not have spent does not suffice to plead the requisite element. See Bass v. Facebook, Inc., 394 F. Supp. 3d 1024, 1040 (N.D. Cal. 2019) (finding, where plaintiff alleged harm arising from . . . loss of time," plaintiff ha[d] not sufficiently alleged standing under [UCL]"); see also Sapan v. Auth. Tax Servs., LLC, No. 13CV2782 JAH (JLB), 2014 WL 12493282, at *4 (S.D. Cal. July 15, 2014) (explaining [l]ost time is insufficient to recover damages under a UCL claim").

Accordingly, Rogozinski's UCL claim, to the extent based on Reddit's engag[ing] in a practice of asserting trademark rights in the brand names of subreddits," is subject to dismissal.

And thus, case dismissed.

Of course, one doesn't create an entire community bragging about the stupidly risky gambling bets you make to give in after a few setbacks, so I fully expect Rogozinski to double down here, and see if he has any more luck in the 9th Circuit. And, given the 9th Circuit's occasional willingness to go wacky on 230, you never know what will happen. Still, this case seems like a pretty clear loser from the start and it seems likely that the appeals court is unlikely to buy what Rogozinski is selling regarding 230.