A Lanham Act suit brought by a competitor over a company's efforts to minimize negative consumer reviews will move forward, a Utah federal court judge has ruled.
Vitamins Online sued NatureWise, a competing manufacturer of dietary supplements that contain an extract of garcinia cambogia and an extract of green coffee. Both companies sell their products on Amazon, where the site lists reviews using a complex algorithm that takes into account the helpfulness of the review based on voting by users of the site.
According to Vitamins Online, NatureWise had a practice of having its employees vote that positive reviews of its products were helpful and negative reviews were unhelpful, which increased the likelihood that potential customers would see positive reviews of its products first and negative reviews last. NatureWise also encouraged its customers to post or repost their positive reviews on Amazon by offering free products or gift cards, the plaintiff alleged, in the hopes of increasing the position of their products in search results.
NatureWise moved for summary judgment, arguing that its actions did not qualify as false advertising under the Lanham Act because it did not make any false and misleading statements in commerce and it did not "misrepresent" the nature, characteristics, or qualities of its products.
U.S. District Court Judge Dale A. Kimball disagreed. She rejected NatureWise's argument that instructing employees to engage in block voting did not constitute a statement in commerce.
"[T]o fall within the text of the Lanham Act, a defendant does not need to make a statement but only needs to use a statement or other form of conduct specific in the Act," the court said. "[E]ither form of conduct performed by NatureWise could qualify as the use of a device in commerce as described by Section 43(a)(1) of the Lanham Act. By offering free products in exchange for the posting of positive reviews on its Amazon product pages, NatureWise was using a mechanism for the special purpose of increasing the number of positive reviews for its products. Similarly, NatureWise used a mechanism provided by Amazon for customers to rate the helpfulness of reviews for the special purpose of increasing the visibility of positive reviews and decreasing the visibility of negative reviews."
The court considered whether the conduct had the effect of "misrepresent[ing]" the nature, characteristics, or qualities of the defendant's goods or commercial activities.
Judge Kimball answered in the affirmative for the block voting, but sided with the defendant with regard to the incentives to repost positive reviews, as the plaintiff failed to demonstrate that the incentivized reviews were counter to the actual experience of the customers.
"Vitamins Online has not shown that the reviews posted by the customers were not genuine," the court wrote. "In other words, although the free products encouraged the customers to post their reviews on Amazon, Vitamins Online has not shown that the free products were used to encourage the customers to post false or misleading reviews on Amazon."
The block voting remained a problem, however. "Amazon provides a platform for customers to review NatureWise's products and to vote on others' reviews of NatureWise's products," the judge said. "Potential customers turn to those reviews to assess customers' reactions to the product and to assist them in their purchasing decisions. By having its employees use the device provided by Amazon to block vote on the helpfulness of Amazon reviews, NatureWise may be misleading potential customers into believing that a certain number of customers found a review to be helpful when, in reality, NatureWise employees made up a block of those votes."
Judge Kimball granted summary judgment for NatureWise with respect to the claim based on the offering of free products but denied the motion on the block voting claim.
To read the memorandum decision and order in Vitamins Online, Inc. v. HeartWise, Inc., click here.
Why it matters: The court noted that both the Lanham Act itself and judicial interpretations of the statute have expanded over the years. "Although it is unlikely that Congress was contemplating the type of false advertising described in this case when it wrote and amended Section 43(a) of the Lanham Act, the broad language in the Act is sufficient to cover novel methods of false advertising such as this," Judge Kimball wrote. "The broad language of Section 43(a) of the Lanham Act should serve as a warning to online retailers that they should leave customer reviews to customers."