Ripple Labs Files Opposition to YouTube’s Motion to Dismiss

On Tuesday, plaintiff Ripple Labs Inc. (Ripple) and its CEO, Bradley Garlinghouse, filed an opposition to defendant YouTube LLC’s motion to dismiss its complaint claiming that YouTube “contributorily infringed Ripple’s trademarks, violated Mr. Garlinghouse’s right of publicity, and engaged in unlawful, unfair, and fraudulent business practices under California law.” The lawsuit concerns a 2019 fraud scheme, commonly referred to as “the XRP Giveaway Scam,” that the plaintiffs accuse YouTube of failing to cut off.  

Ripple is a “leading enterprise blockchain company,” with its stated mission to “create the Internet of Value, where money can move as quickly and securely as information,” according to the opposition. Garlinghouse is Ripple’s CEO and “the public face of the company.”  The filing asserts that he is also a “trusted voice and thought leader on financial technology and digital assets.”

The defendant, YouTube, “is a video-sharing platform that generates $15 billion in annual revenue… [it] moderates its platform through a combination of people and technology,” the opposition explains. YouTube’s guidelines supposedly prohibit “scams” and “other deceptive practices” dangerous to users, including “content offering cash gifts, ‘get rich quick’ schemes, or pyramid schemes,” the filing contends.

According to Ripple’s opposition, the scam was perpetrated by unknown individuals who used YouTube accounts to impersonate the company and its CEO, including using Garlinghouse’s name, image, and likeness. The imposters would then “trick unsuspecting people into handing over XRP (a virtual currency) on the false promise they will receive a windfall in return.” The filing provides photographic evidence of the fake channel and advertisements for it, including ones that feature Garlinghouse’s likeness and Ripple statements.

The opposition claims that “[b]y using the hacked channels to impersonate the ‘official’ channels of Ripple and Mr. Garlinghouse, the YouTube accounts infringe upon Ripple’s protected trademarks, including its logo and name. Likewise, these accounts misappropriate Mr. Garlinghouse’s image, name, and likeness.” The plaintiffs claim that YouTube’s motion to dismiss “asks the Court to ignore the allegations in the Complaint and to set aside common sense.” It takes on each of YouTube’s three arguments in turn.

As to its contributory trademark infringement claim, the plaintiffs contend that YouTube’s single challenge, that it “supposedly lacks ‘knowledge’ of a widespread and pervasive Scam occurring on its platform,” is unfounded. This position, the plaintiffs argue disregards more than 350 takedown notices Ripple sent YouTube, warnings from its own users, and widespread media coverage of “the XRP Giveaway Scam.”

Next, Ripple addressed YouTube’s assertion that it deserves immunity from Ripple’s state law claims. Under Section 230 of the Communications Decency Act, YouTube claims it “is merely an interactive computer service,” the plaintiffs aver. They contend that “the Court should reject YouTube’s attempt to transform Section 230’s limited protection into an all-encompassing get-out-of-jail-free card,” citing concerns that immunity would “permit YouTube to, quite literally, do nothing, even when it knows of a pervasive fraud, actively develops content to render the fraud more deceptive, and has the tools to stop it.”

Finally, Ripple argues that YouTube “overstates the law and misunderstands Ripple’s allegations,” through its contention that Ripple’s state law claims suffer pleading flaws. The filing contends that YouTube takes issue with the accusation that it “used” protected trademarks and Garlinghouse’s name, image, and likeness. Ripple avers that YouTube’s verifications of hacked accounts and its sale of ads that used infringing material are sufficient to show YouTube “directly participated in the fraud.”

At a minimum, the opposition contends, YouTube’s motion to dismiss raises triable questions of fact that are “best resolved after discovery and a trial on the merits.” “Any other result,” the plaintiffs warned, “will only encourage YouTube to continue its misconduct and will inevitably lead to more victims and greater harm to Ripple and Mr. Garlinghouse.”

The plaintiffs are represented by Boies Schiller & Flexner, and the defendant by Wilson Sonsini Goodrich & Rosati.