Friday, October 07, 2011

Plaintiff without product in the market lacks standing v. United Business Media LLC, 2011 WL 4527448 (S.D. Fla.)’s basic claim was that UBM used’s idea for an online career fair interview format despite the execution of a confidentiality and non-compete agreement.

Among its claims was a Lanham Act false advertising claim, because it was unable to compete with the defendants in the university market because UBM falsely advertised that it originated the virtual career fair. Despite the apparent Dastar problem, the court instead focused on standing, the current path of least resistance, because plaintiff didn’t allege it had a competing product on the market. Using the Phoenix of Broward factors, plaintiff lacked standing. The Eleventh Circuit has rejected plaintiff’s argument, taken from the Ninth Circuit’s standard, that harm to “ability to compete” suffices (and anyway the Ninth Circuit requires actual or direct competition, which plaintiff didn’t allege). “[D]irect competition is essential to a finding of standing to bring a false advertising claim under the Lanham Act in the Eleventh Circuit.” (Note that this is a complete reversal of the idea motivating Conte Bros., the Third Circuit case whose test was adopted by Phoenix of Broward. In theory, the Conte Bros. approach potentially expanded standing beyond direct competitors with a multifactor test in which direct competition was not a necessary element. In practice, it’s used to deny standing to direct competitors, as this court also recognized.)

The Phoenix of Broward factors don’t expressly require the plaintiff to have a product in the market, but that’s indicative of direct competition. In Natural Answers, Inc. v. SmithKline Beecham Corp., 529 F.3d 1325 (11th Cir. 2008), the court held that a plaintiff that had ceased selling its product seven months before the defendant's launch of its own competing product “did not qualify as a direct competitor and was therefore unable to satisfy any of the five Phoenix Factors.” The Lanham Act false advertising claim was dismissed with prejudice.

Claims for misappropriation of business idea and trade secrets, and a resulting Florida Deceptive and Unfair Trade Practices Act (FDUTPA) claim, did survive. Even though plaintiff isn’t a consumer, the statute is designed to protect legitimate businesses from unfair competition and deceptive acts (here misappropriation).

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