Jonathan Stempel
(Reuters) – Yelp could file a lawsuit accusing the reputation management company of fraudulently advertising its ability to remove “bad” reviews from the business review website.
In a ruling late Thursday, U.S. District Judge William Allsup in San Francisco said Screech (NYSE:) may file a trademark infringement and unfair competition lawsuit against ReviewVio, which operates as Dandy.
Yelp said ReviewVio’s advertising, which included the Yelp logo, damaged the company’s reputation by suggesting that businesses could pay for artificially inflated star ratings.
This allegedly undermined the integrity of businesses that do not pay to remove negative reviews and undermined the usefulness of Yelp’s website to consumers.
Yelp also said it lost advertising revenue from companies that paid for “benchmarking,” which the company prohibits, or mistakenly believed Yelp approved of the practice.
The Federal Trade Commission urges companies not to require only positive reviews and not to discourage negative reviews.
In his 27-page decision, Alsup said Yelp sufficiently argued that ReviewVio’s conduct was likely to cause confusion between the companies.
“The allegations make it plausible that ReviewVio’s alleged marketing influences (businesses’) choices to buy Yelp’s advertising services, ReviewVio’s review management services, or not use the services at all to promote themselves – believing the game is rigged,” he wrote.
Alsup said Yelp can seek damages for ReviewVio’s alleged misrepresentations to businesses, but not to consumers.
In its motion to dismiss, ReviewVio said there was no evidence that the company “engaged in any immoral or unethical conduct.”
Jennifer Wallis, a lawyer for ReviewVio, said the consumer damages exclusion “substantially limits Yelp’s claims for damages. ReviewVio maintains that Yelp’s lawsuit is without merit and will continue to aggressively fight this case.”
James Dare, Yelp’s deputy director of legal affairs, said the San Francisco-based company is pleased with the decision.
“The court recognized the harm caused by practices like review restriction, which deceptively cultivate positive reviews on public platforms and redirect criticism to private channels,” he said.
The case is Yelp Inc v. ReviewVio Inc, U.S. District Court, Northern District of California, No. 23-06508.