Andreessen Horowitz backed firm, Labelbox, appears to threaten Federal Court to pre-seed upstart Diffgram.

On April 23 I posted this article on the best data annotation for machine learning. Their response?

They sent an inflammatory letter from their law firm, that implies the threat of legal action under the Lanham Act, which is Federal Court.

“I caution you that knowingly making false statements of this sort can give rise to liability for defamation and for violations of section 43(a) of the Lanham Act. Given the seriousness…” —Labelbox law firm from letter

To us — Diffgram. A self funded, pre-seed startup. So why are they doing it? What threat could our small team be?

Well I think the high level reason is pretty simple — Diffgram is better software and it’s open source.

Labelbox often mentions their backers — so I’ll repeat it here: B Capital Group, Andreessen Horowitz, Gradient Ventures, Kleiner Perkins.

Now I know these are reputable firms and I am hopefully that they have no knowledge of this letter. To the leaders at those firms, I’m more then happy to discuss this, further adjust the article, and come to a mature fair solution — you already have my email. Ok back to what happened.

Example of increase in Diffgram star history — one metric among many.

Diffgram recently went open source, as a result Diffgram has seen over a ~8x increase in github activity and over ~3x new user signups and ~4x enterprise sales requests on diffgram.com.

This is really just the start — we recently published some big updates to the user interface and have more coming!

We are working hard to help students, teachers, and businesses of all sizes leverage AI through better and open annotation tooling. I believe everyone should have access to this technology which is why we made it open source.

Here is a detailed breakdown of each item they alleged was inaccurate. It’s pretty boring but I wanted to take the time to make sure I was being accurate within the scope of the article. Their upset letter is reproduced in full at the bottom of that same document.

One example

I had originally said “Labelbox is one of the lowest glassdoor rated companies.” (Clearly referring to companies in this competitive set).

Upon further research, Labelbox is the lowest glassdoor rated company in the competitive set (of companies that have ratings). I have updated the article to be more accurately reflect this.

Clearly saying “one of the lowest” was too generous. While I say this slightly tongue-in-cheek I think the point is clear: Despite their claims, some of the statements were actually in their favor more then the bare facts.

Left: Ratings of firms as per glassdoor, Center: Labelbox, Right: Diffgram Folder with proof

A late stage startup like Labelbox (Series C) essentially threatening to attack a “pre-seed” stage startup, in Federal Court, as a first real response, is about as disproportionate as I can think of.

While their letter was full of inflammatory statements — my original text was not to the same degree. The content — the truth and my opinon — may not be favorable to labelbox — but there was no real malice in my tone or my intent. In fact — this was essentially the first time after years of work I had truly come out like this and publicly said my opinon that “Diffgram is the best”.

It’s like a 800 lb gorilla madly attacking us because we discovered a better way to peel bananas. This is how bigger companies try to swallow rising companies and crush free speech.

The simple truth is that Diffgram is now a similar product and it’s open source!

Our code, the real full application, is public on github. We are selling enterprise and hosted versions.

We publish community technical articles, for example recently 3 years of vue js has over 7,000 views — I mean it isn’t even a cat video! — and was ranked by VueJS Devs as the #1 “Must read article” of the week.

We come in peace.

If you want to help Diffgram fight this bully please upvote or share this post, star the repo, or share the code!

If you are a current labelbox user or customer, know there are now many alternatives such as Diffgram that are at a similar level of technical ability and have a growing community of support.

We are a mature team and will always let the cooler heads prevail — we will never jump to serious legal threats to someone a small fraction of our size because they say something we don’t like.

Our Vision at Diffgram is published on our public readme, and I’ll included it here:

  1. Application: Support all popular media types for raw data; all popular schema, label, and attribute needs; and all annotation assist speed up approaches
  2. Support all popular training data management and organizational needs
  3. Integrate with all popular 3rd party applications and related offerings
  4. Support modification of source code
  5. Run on any hardware, any cloud, and anywhere

We would love to get your support.

Please share the code, upvote this, or try it online.

Best,

Anthony

Email

I received another email from them that mentioned nothing about any of the points being false, or about upcoming legal action, etc. Only that I allegedly used “…harsh words” and they seemed confused. I was given no opportunity to even take a second look or make any corrections before the heavy handed legal notice arrived.

Federal Court

Their letter states, among other allegations:

“I caution you that knowingly making false statements of this sort can give rise to liability for defamation and for violations of section 43(a) of the Lanham Act.

This is the act they mention and the fact that it requires “(4) in interstate commerce;”, it’s federal court. Given the angry language in the rest of the letter and accusations they make it comes across as a threat.

41 U.S.C. § 1125(a)(1). The Lanham Act Elements

To prevail on a false-advertising claim under the Lanham Act, a plaintiff must satisfy the following elements: (1) a false or misleading statement of fact; that is (2) used in a commercial advertisement or promotion; that (3) deceives or is likely to deceive in a material way; (4) in interstate commerce; and (5) has caused or is likely to cause competitive or commercial injury to the plaintiff.

By the way if you are a legal expert please contact me. We are exploring options like anti-SLAPP and other anti harassment options given they have so much money (~$79,000,000) and we don’t yet!