You can read a full account of the events along with the post that started it all over at Boing Boing, but the ordeal boils down to this:
Boing Boing posted about MagicJack's "terms of service-which include the right to analyze customers' calls-and various iffy characteristics of its website" in April of 2008. According to Robert Beschizza:
The post was titled "MagicJack's EULA says it will spy on you and force you into arbitration." This EULA, or End-User Licensing Agreement, concerns what subscribers must agree to in order to use the service. I wrote that MagicJack's allows it to target ads at users based on their calls, was not linked to from its homepage or at sign-up, and has its users waive the right to sue in court. I also wrote that that MagicJack's website contained a visitor counter that incremented automatically; and that the website claimed to be able to detect MagicJacks, reporting that "Your MagicJack is functioning properly" even when none are present.
He also notes that "the post didn't criticize the service or the gadget itself, which works very well."
In March 2009, Boing Boing was notified that MagicJack was filing suit because "these statements were false, misleading, and had irreparably harmed MagicJack's reputation by exposing it to 'hate, ridicule and obloquy.'"
A great deal of back-and-forth followed until the suit was finally dismissed and MagicJack was ordered to pay Boing Boing "more than $50,000 in legal costs."
We may think that all's well that ends well and that the truth prevailed, but it took a great deal of time and legal costs. Perhaps a site smaller than Boing Boing could not have handled the effects of a defamation suit like this—justified or not—and would've given in to a company's demands. And that's more terrifying than some wonky EULA. [Boing Boing]
