Lanham Act False Advertising Cases Vol. 1, No. 2

Fifth Circuit Latest to Redefine "Exceptional Case" Test for Attorney's Fees Recovery Under Lanham Act.  

_{Baker v. DeShong, --- F.3d ---, No. 14–11157, 2016 WL 2342963 (5th Cir. May 3, 2016)}   

The Lanham Act allows a court to award attorney's fees to a prevailing party “in exceptional cases.” 15 U.S.C. § 1117(a). Until recently, the Fifth Circuit — like many other courts of appeal — required a showing that a case had been brought in bad faith in order to deem it “exceptional.” But this month in Baker v. DeShong, the Fifth Circuit joined the Third and Fourth Circuits in adopting the more flexible standard announced by the Supreme Court in the patent context in Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014). There, the Supreme Court considered the identically worded fees provision of the Patent Act, 35 U.S.C. § 285, which the Federal Circuit previously had interpreted to require either (i) misconduct in the course of the litigation or in securing the patent, or (ii) a showing that the litigation was both brought in bad faith and was “objectively baseless.” Rejecting this “rigid and mechanical formulation,” the Supreme Court held that “an ‘exceptional’ case is simply one that stands out from the others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” In Baker, the Fifth Circuit “merge[d] Octane Fitness ’s definition of ‘exceptional’ into [its] interpretation of § 1117(a)” of the Lanham Act “and construe[d] its meaning as follows: an exceptional case is one where (1) in considering both governing law and the facts of the case, the case stands out from others with respect to the substantive strength of a party’s litigating position; or (2) the unsuccessful party has litigated the case in an ‘unreasonable manner.’” View the decisions for Baker v. DeShong and Octane Fitness, LLC v. Icon Health & Fitness, Inc. 

Owner of Foreign Trademark Can Sue for False Advertising Under Lanham Act 

Belmora LLC v. Bayer Consumer Care AG, --- F.3d ---, No. 15-1335, 2016 WL 1135518 (4th Cir. Mar. 23, 2016) 

The Fourth Circuit held that Bayer, the owner of the foreign trademark FLANAX (used for the sale of naproxen sodium in Latin America) may sue Belmora (which sells naproxen sodium as FLANAX in the U.S.) for false advertising and false association under the Lanham Act even though Bayer did not use the FLANAX mark in U.S. commerce. The court found that the plain language of Lanham Act § 43(a) contains no requirement that a plaintiff possess or use a trademark in U.S. commerce. The court explained that “[S]ection 43(a) stands in sharp contrast to Lanham Act § 32, which is titled as and expressly addresses ‘infringement’” and requires the “use in commerce” of “any reproduction, counterfeit, copy, or colorable imitation of a registered mark.” In contrast, “[u]nder § 43(a), it is the defendant’s use in commerce ... that creates the injury under the terms of the statute.” (Emphasis added.) The court then moved through the Supreme Court’s Lexmarkanalysis and determined that Bayer had plausibly alleged causes of action for false advertising and false association.  View the decision. 

Fake Online Reviews May Be Actionable as False Advertising

Romeo & Juliette Laser Hair Removal, Inc. v. Assara I LLC;No. 08 CV 442 (DLC), 2016 WL 815205 (S.D.N.Y. Feb. 29, 2016)

Plaintiff Romeo & Juliette and defendant Assara are competing laser hair-removal businesses. Beginning in early 2006, negative online reviews about Romeo & Juliette began appearing on websites such as Yelp.com, CitySearch.com, HairTell.com and ConsumerBeware.com, including many reviews that promoted Assara’s services after disparaging Romeo & Juliette’s. Evidence linked these disparaging reviews to an Internet protocol address associated with Assara’s place of business, and many were attributed to Yelp and HairTell usernames registered to Assara employees. In denying Assara’s motion for summary judgment, the court held that Assara’s “anonymous comments ... constitute[d] commercial advertising or promotion” under the Lanham Act. “In pursuit of their commercial interests, the defendants repeatedly posted disparaging comments to public fora used by consumers to select laser hair-removal services. By anonymously disparaging the plaintiff’s business and simultaneously promoting Assara, the defendants acted in pursuit of their economic interests.” And because many of the reviews “described persons who were not Romeo & Juliette customers and experiences with the plaintiff’s services that those fictitious customers did not have,” the reviews were literally false. The court did grant summary judgment to a handful of Assara employees whose disparaging comments were limited to statements that could not be proven true or false, such as that Romeo & Juliette’s “service was slow” or that its “employees were rude,” finding that these statements were “largely matters of opinion” and without more were not “actionable as false statements of fact.”  View the decision. 

Comedy Can Be Puffery — Sometimes

Tempur Seal Int’l, Inc. v. WonderGel, LLC, No. 5:16-cv-83, 2016 WL 1305155 (E.D. Ky. Apr. 1, 2016)

A Kentucky federal court issued a temporary restraining order and preliminary injunction against mattress manufacturer WonderGel, finding that its “Goldilocks” online commercial for its Purple mattress included statements that were “likely false or misleading” under the Lanham Act. In the commercial, the Goldilocks character disparages an unnamed mattress (one of plaintiff’s Tempur-Contour mattresses) as a “hard” mattress and a “prison bed.” The court rejected WonderGel’s puffery defense, concluding that the “statements regarding potential negative health effects” of rival mattresses “clearly cross[ed] the line beyond what is permissible advertising.” The court similarly rejected the argument that the commercial was “obviously in jest,” stating that it was “unaware of any ‘humor exception’ that would make literally false statements acceptable under the Lanham Act.” Finding that plaintiff demonstrated a strong likelihood of success on the merits, the court presumed irreparable harm. View the decision.

Martin v. Living Essentials, LLC, --- F. Supp. 3d ---, No. 15 C 01647, 2016 WL 374142 (N.D. Ill. Feb. 1, 2016)

An Illinois federal court dismissed the Lanham Act false advertising claims of Johannes “Ted” Martin, the holder of the Hacky Sack “world record for most consecutive kicks,” against Living Essentials, the manufacturer of 5-hour ENERGY drink, finding (among other reasons) that the advertiser’s television commercial was “clearly a comedic farce” — “an obvious joke that employ[ed] hyperbole and exaggeration for comedic effect” — and was therefore nonactionable puffery. In the commercial, an actor claims to have “disprove[n] the theory of relativity, master[ed] origami while beating ‘the record’ for Hacky Sack, sw[a]m the English Channel and back, and f[ou]nd Bigfoot all within the span of five hours . . . .” Martin alleged that the commercial falsely represented one could “beat[] ‘the record’ for Hacky Sack” by drinking 5-hour ENERGY. Finding the commercial to be “so grossly exaggerated that no reasonable buyer would take it at face value,” the court concluded that it did not matter that the commercial conveyed the literally false message that drinking 5-hour ENERGY would enable one to break the “Hacky Sack record (while mastering origami, no less).” As a result, there was “no danger of consumer deception and hence, no basis for a false advertising claim.” View the decision.