Summary Judgment Affirmed for Defendant in Lanham Act Challenge to Statements Concerning Popularity of Advertiser’s Product, Scarcity of Challenger’s Product:
Verisign, Inc. v. XYZ.COM LLC, 848 F.3d 292 (4th Cir. 2017)
Plaintiff Verisign, “the exclusive operator of the .com and .net internet domain names,” brought a Lanham Act false advertising suit against competitor XYZ.com challenging statements “touting the popularity of the .xyz domain,” and statements “warning of a scarcity of desirable .com domain names.” Verisign alleged, among other things, that XYZ’s advertising touting high registration numbers was false or misleading because these figures included “375,000 .xyz registrations given away for free,” and thus “misrepresented actual consumer demand” for .xyz domain names. Verisign also challenged XYZ’s statements that “[w]ith over 120 million .coms registered today, it’s impossible to find the domain name that you want,” and that when it comes to .com domain names, “All of the good real estate is taken.”
The district court granted summary judgment for XYZ and the Fourth Circuit affirmed. First, the district court properly held that Verisign had failed to adduce evidence that the statements concerning XYZ’s popularity directly diverted sales from Verisign to XYZ, rejecting, under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), the analysis of Verisign’s expert, which “assume[d] rather than demonstrate[d] that every .xyz registration during the relevant time period was the result of XYZ’s allegedly false statements.” Second, the district court correctly concluded that statements about the scarcity of .com names were “either statements of opinion or harmless ‘puffery,’ or exaggeration, neither of which is actionable under the Lanham Act.” View the decision.
District Court Adopts Report and Recommendation, Denies Judgment on the Pleadings, in Lanham Act Suit Challenging ‘Same Quality’ Claim:
Univ. Loft Co. v. Blue Furniture Solutions, LLC, No. A-15-cv-826, 2017 WL 876312 (W.D. Tex. Mar. 3, 2017), ECF Nos. 47, 54
In a Lanham Act False Advertising suit between rival furniture manufacturers, Plaintiff University Loft Company challenged defendant Blue Furniture Solutions’ claims that Blue offers “high quality” Chinese products “made exactly as ‘Made in U.S.A.’ products” are made and that “the only difference between Blue Furniture’s products and the same products made in the U.S. is the price.” University Loft also challenged the statement that Blue Furniture “is able to achieve low prices and fast delivery on such high quality products . . . because of the intimate relationship between the manufacturer and Blue’s president Jeff Zeng, and Blue’s understanding of how the local government in China operates.” In truth, University argued, Blue’s furniture is of inferior quality and Blue achieves its low prices not through its connections and business experience, but by intentionally mislabeling its products to evade U.S. customs duties. A magistrate judge in the Western District of Texas recommended that Blue’s motion for judgment on the pleadings be denied. The magistrate judge rejected Blue’s arguments that the statements amounted to mere puffery or opinion, concluding both statements were actionable as false statements under the Lanham Act because they made more than “ambiguous suggestions” as to the quality of Blue’s products, and could “be proven to be literally false.” On March 23, the district court adopted the report and recommendation. View the decision.
Reputational Injury Arising From Unauthorized Use of Likeness May Support Lanham Act Liability:
Krupa v. Platinum Plus, LLC, No. 8:16-cv-3189-T-33MAP, 2017 WL 1050222 (M.D. Fla. Mar. 20, 2017)
Plaintiffs, two California-based models, sued Platinum Plus, a Florida LLC that operates several strip clubs, alleging false advertising and false association under the Lanham Act arising from Platinum Plus’ alleged unauthorized use of their likenesses. Platinum Plus moved to dismiss, arguing plaintiffs had failed to allege that they compete with it in the same marketplace or that they had “suffered a competitive injury.” The court disagreed, holding that plaintiffs had plausibly alleged that “at least in some aspects of their careers,” plaintiffs “compete for the same dollars of the same target audience as Platinum Plus.” The court likewise rejected Platinum Plus’ argument that plaintiffs had “failed to introduce evidence of injury.” Noting that this argument was “more appropriately raised at summary judgment,” the court held that plaintiffs’ allegations of reputational harm — “damage to their respective brands, which in turn negatively affects future earning capacity” — plausibly alleged a competitive injury. View the decision.
Court Rejects Lanham Act Claim Premised on Future Advertising by Nonparties:
Acad. of Doctors of Audiology v. Int'l Hearing Soc'y, No. 16 Civ. 13839, 2017 WL 679354 (E.D. Mich. Feb. 21, 2017)
ADA, a medical nonprofit, sued to enjoin IHS, a nonprofit trade organization of hearing aid dealers, from offering a “Tinnitus Care Provider Certificate” to persons who completed IHS’ training program on tinnitus care, arguing that the certificate would falsely communicate that hearing aid dealers were medical doctors or audiologists and were thus legally competent to “provide tinnitus care.” IHS moved to dismiss, claiming ADA lacked Article III standing and that it could not establish the elements of a Lanham Act false advertising case. The court agreed with IHS as to both of its contentions and granted the motion to dismiss. In particular, IHS argued — and the court agreed — that ADA could not satisfy the “proximate cause” test announced by the Supreme Court in Lexmark International Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014), because ADA’s theory was that “IHS [would] issue certificates to nonparties who [would] then use them to ‘advertise’ the nonparties’ business interests.” The court agreed this was “not an injury ‘flowing directly from deception wrought by the defendant’s advertising’ under Lexmark.” View the decision.