CA Court Holds Discontinuation of Free App is Not Unfair Competition

Darren Handy v. LogMeIn, Inc.

Facts:

  • Defendant offered a free app that allowed users to access a remote desktop computer via a virtual private network.
  • Sometime thereafter, LogMeln announced that it would no longer offer this free product and all users could use the paid product.
  • Plaintiff filed a class action lawsuit.

Holding:

  • Defendant didn't know at the time it sold the free app that it would discontinue it and there was no obligation to tell prospective purchasers about the life of the free app,
  • Failure to read terms doesn't mean he isn't bound—onus on website owner is only to put users on notice of terms.
  • Not unfair competition or false advertising.

Court Hears Case Over Incentivized Reviews

Vitamins Online, Inc. v. Heartwise, Inc.

Allegations: Defendant offered freebies for customers who reposted favorable reviews.

Defense:

  • Plaintiff has not shown that the reviews are counter to the actual user experience, so they are not literally false.

Holding:

  • Lanham Act is broad enough to cover voting on and incentivizing, online reviews.
  • Summary judgment denied as plaintiff has not yet proven actual consumer deception.
  • Because not comparative advertising and not a two- player market, court declined to presume injury.

Trademark Infringement Battle Nets $10.6 Million Damages Award For 5-hour Energy

Facts: NVE Pharmaceuticals Inc. sold "6 Hour Power" for almost 10 years. They were sued by maker of the popular "5-Hour Energy" shot drink.

Holding: Jury awarded $10.6 million in damages.

Also: Jurors also found separately that NVE derived an $11.5 million profit and the plaintiff sought to disgorge those profits.


FTC Brings Another “Failure to Disclose Material Connection” Claim

In the Matter of Carrot Neurotechnology, Inc.

Advertising Claims: Studies, including those conducted by Aaron Seitz, prove that an app, Ultimeyes, works to improve your vision.

Allegations:

  • Company failed to disclose, or has failed to disclose adequately, that Seitz co-owns and is the Chief Scientist of Carrot.
  • These facts would be material to consumers in their purchase or use decisions regarding Ultimeyes.
  • The failure to disclose is a deceptive act or practice.

Resolution: $150,000 Settlement for all charges, which also included failure to substantiate ad claims.