Internet & Social Media Law Blog
Even freed from bricks and mortar, online retailers and service providers are realizing that market share is not infinite. A complaint recently filed by Angie’s List Inc. against Amazon Local LLC for its newly launched online home services network can be viewed as the inevitable result of what will happen as internet giants eye each other’s customer bases. Angie’s List Inc. provides consumers with online reviews of home improvement service providers (e.g., handymen, gardeners, electricians, etc.) from other consumers in their area. Although competitors have tried to challenge Angie’s List, the platform has remained the dominant player in the industry. The company largely credits the stable of reliable home service professionals it has built over the past twenty years for its market stability.
Last fall, Amazon got into the home services procurement market with the launch of Amazon Local Services. According to Angie’s List, Amazon solved the problem of building a stable of home professionals by borrowing the network that Angie’s List already constructed. And Angie’s List was not happy about it. Now Angie’s List is suing Amazon Local LLC and several employees for allegedly wrongly accessing the Angie’s List network to locate and connect with home improvement service providers. In a lawsuit filed on June 19, 2015, in U.S. District Court in Indianapolis, Angie’s List contends Amazon stole proprietary information to establish a competing home services business. (See Angie’s List, Inc. v. Amazon Local, LLC, et al., Case No. 1:15-cv-968-JMS-DML.)
The Angie’s List complaint alleges eleven claims: breach of contract, misappropriation of trade secrets, computer trespass, theft, conversion, unfair competition, violation of the Stored Communications Act, civil conspiracy, violations of the Computer Fraud & Abuse Act, tortious interference with contract, and injunction. The complaint names Amazon Local LLC as well as 20 employees individually. According to the complaint, Angie’s List restricts access to members who consent to the Membership Agreement. The Membership Agreement “prohibits the use of Angie’s List accounts for anything other than personal purchasing purposes. The Membership Agreement explicitly prohibits the use of Angie’s List accounts and information for commercial use.”
The Complaint goes on to allege that dozens of Amazon employees purchased Angie’s List memberships to identify and recruit highly rated service providers. The Angie’s List complaint cites examples of Amazon employees signing up for accounts and then using them to search for hundreds of home service professionals in locations outside of their state of residence over short time periods. In many cases, the Amazon employees then solicited Angie’s List professionals to sign up with Amazon. Under Angie’s List’s theory, using personal Angie’s List memberships for a commercial purpose (recruiting professionals to Amazon’s site) breached the Membership Agreement and violated the statutes and state laws at issue in the case.
Angie’s List seeks an unspecified amount of damages and injunctive relief to prevent Amazon from using the data it allegedly took from Angie’s List. Shortly after filing the complaint, Angie’s List moved for a preliminary injunction and for leave to conduct limited discovery. The parties stipulated to a protective order and initiated mutual limited discovery. The Court set a hearing for the preliminary injunction on October 13, 2015.
Amazon has not yet opposed the Motion for Preliminary Injunction, but based on the discovery disputes described in the Joint Report on Discovery and Scheduling, it appears that one of Amazon’s defenses will be that its conduct was not unfair or illegal but rather constituted the common industry practice of sourcing information from other deal providers. Amazon explained that this common industry practice evidence is relevant to Angie’s List’s tortious interference, trade secrets and unfair competition claims. Amazon sought discovery from Angie’s List to show that Angie’s List even engaged in this practice. Specifically, Amazon sought documents and information “regarding the extent to which Angie’s List has allegedly obtained and used information from other non-party Deal Providers (a term defined to include Groupon, Living Social, Yelp, Gilt, 8 Coupon, Porch, and Home Advisor)”. Amazon argued that Angie’s List engaged in exactly the same kind of competitive deal sourcing it now seeks to prevent Amazon from completing. Angie’s List objected to producing such records.
As businesses that only exist online challenge each other for market share, further showdowns between competitors are inevitable. The Angie’s List v. Amazon Local case may be an example of what goes around comes around.