The federal district court in Chicago has vacated a previous ruling dismissing with prejudice an electric light manufacturer’s Illinois Uniform Deceptive Trade Practices Act (UDTPA) and Consumer Fraud and Deceptive Business Practices Act (CFA), because, contrary to its prior ruling and to claims under the Lanham Act, the UDTPA and CFA do not require the plaintiff to be in competition with the defendant (Marvellous Day Electric (S.Z.) Co . v. Ace Hardware Corp., May 28, 2013, Tharp, J.).
Marvellous Day Electric (S.Z.) Co., Ltd. filed separate lawsuits against Ace Hardware Corp. and Holiday Bright Lights, Inc. and its owner, alleging that the defendants infringed its patent on certain ornamental LED string lights, and that the defendants violated the Lanham Act, the UDTPA, and the CFA by advertising their lights as “always lit” and “patented.” The court granted the defendants’ motion to dismiss with respect to the claims other than the patent infringement claims, finding that Marvellous Day did not state a claim under the Lanham Act because the defendants did not compete with it, and that, since “UDTPA and CFA claims require the same factual elements as Lanham Act claims,” the UDTPA and CFA claims also failed.
Marvellous Day filed a motion for reconsideration, asserting for the first time that it could state UDTPA and CFA claims, even if it did not compete with the defendants. Although the court observed that arguments raised for the first time in a motion for reconsideration are generally considered to have been waived, the court chose to exercise its discretion to consider the argument, noting that the defendants would not be prejudiced, that Marvellous Day had amended its complaint to add new claims for violations of the UDTPA and CFA and therefore a ruling here would apply to the new claims as well, and that Marvellous Day’s argument was “persuasive.”
The court explained that the UDTPA states that “[i]n order to prevail in an action under this Act, a plaintiff need not prove competition between the parties,” and that courts that had interpreted that language had concluded that “it mean[s] precisely what it says: Illinois UDTPA actions are not limited to lawsuits among competitors.” The court also noted that “many courts have allowed CFA actions to proceed where the plaintiff is not a competitor of the defendant.”
The court observed that cases the defendants cited and on which the court relied in making its initial ruling that held that UDTPA claims require the same showing as Lanham Act claims did not “specifically discuss whether competition between the parties is required under the UDTPA, and if so, how that requirement is compatible with the plain language of” the UDTPA. Although UDTPA and CFA claims often succeed or fail in conjunction with Lanham Act claims, the court noted, “that does not mean that the test for UDTPA and CFA claims exactly mirrors the test for Lanham Act claims, nor that UDTPA and CFA claims can never survive when Lanham Act claims fail.”
The court rejected the defendants’ argument that a plaintiff would only have standing to bring UDTPA or CFA claims if the plaintiff was a competitor, a consumer, or at the same level of the distribution chain of a type of product or service. As Marvellous Day claimed to be harmed by the defendants’ conduct, and the defendants did not present “any compelling argument” for limiting standing, the court vacated its dismissal of Marvellous Day’s UDTPA and CFA claims on the ground that it was not a competitor of the defendants.
However, the court noted that Marvellous Day had not pled facts that would demonstrate that the defendants’ conduct was material or had caused it any damage. Therefore, the court dismissed the claims without prejudice on that ground, but granted Marvellous Day leave to file amended complaints to reinstate its UDTPA and CFA claims and amend them to address the flaws the court identified.
The cases are Nos. 11 C 8756 and 11 C 8768.