Friday, May 04, 2012

Minimal call logs can't be used to infer widespread advertising/promotion

eMove Inc. v. SMD Software Inc., 2012 WL 1379063 (D. Ariz.)

SMD’s employees, Markus Hecker and others, allegedly said false things about eMove and its software WebSelfStorage. eMove, a U-Haul subsidiary, and SMD compete to sell software to owners and managers of self-storage facilities; SMD’s product is SiteLink, sold in PC-based and web-enabled forms.
eMove also markets the eMove Storage Affiliate Program, which it describes as “an alliance of independent self-storage operators who connect to the world's largest storage network.” The basic level is free, providing “reservations from the world's largest moving and storage reservation network, along with visibility on and” The premier level encludes enhanced services, including WebSelfStorage. Any self-storage business can list itself on, registered by U-Haul. Each affiliate has its own page there.
eMove alleged that the defendants disparaged it and WebSelfStorage in telephone conversations and emails, on Internet forums (, where Hecker commented and answered questions), and at trade shows. An eMove marketing manager alleged that, at a trade show, Hecker walked up to him when he was with a U-Haul area manager, several vendors, and a representative from an insurance company, and said “F*ck U–Haul.” (I wonder how he pronounced the star.) Another eMove employee alleged that, at a different trade show, Hecker made a presentation to self-storage facility owners and managers, referring to eMove as U-Haul and telling them that when a customer is searching for a specific non-U-Haul affiliated member, the website displays U–Haul owned self-storage facilities.
Additionally, in 2010, Lorton Self Storage asked a consultant, Sean Magoon, to prepare talking points about the differences between WebSelfStorage and SiteLink. Among the people he spoke with to do so was Hecker, though Hecker doesn’t recall the conversation. The resulting fax contained a list of “Important differences” favoring SiteLink. When Lorton’s property manager received this, she sent it to eMove, dismissing it as “foolishness.” Shortly thereafter, Lorton switched from SMD’s SiteLink to eMove’s WebSelfStorage. Defendants argued that the Lorton fax wasn’t attributable to them, since Magoon couldn’t remember where his information came from; the court found it unnecessary to resolve the issue since there was no genuine issue of material fact as to whether these statements could be commercial advertising or promotion (and there was no state law claim because eMove disclaimed any damages from this incident).
eMove contended that defendants’ disparagement slowed eMove’s growth rate and damaged its goodwill. The court found it unnecessary to resolve the Daubert challenge to eMove’s expert.

The problem was advertising or promotion: eMove’s evidence of dissemination was “strikingly” free of testimony from customers who said that defendants made any of the allegedly false statements to them. eMove’s evidence came from defendants’ call log where one allegedly false statement was only recorded once and two others were in two or three places. By contrast, the relevant purchasing public was large—between 52,000 and 54,000 self-storage facilities in the US. eMove argued that many didn’t use self-storage software, but didn’t propose an alternative definition of the market, which must at least be several thousand, given that eMove alone had 2,207 Premier Affiliates who pay for access to WebSelfStorage. Dissemination to a “tiny fraction” of the market was insufficient to constitute commercial advertising or promotion.
eMove argued that the statements were actually repeated many more times. eMove was mentioned over 50 times in the call log to at least 35 customers/potential customers. Emails indicated that representatives were discussing differences between the services and that customers had comparative questions, especially on pricing. Thus, eMove argued, because there was evidence that defendants said the allegedly false statements 1-3 times, a trier of fact could conclude that defendants said them many more times. This was not a justifiable inference from the evidence.
eMove also argued that a 2008 post by Hecker falsely compared the parties’ products: Hecker said SiteLink was better than a U-Haul referral program offering referrals from other dealers because SiteLink optimized advertising from any web search (and that one could sign up for U-Haul and SiteLink both, so “Join UHAUL just the same, still get their referrals, but why limit exposure to a closed network vs. the entire web by not using SiteLink Web Edition?”). Defendants argued that this made a specific comparison of SiteLink’s SEO program to U-Haul’s referral program. eMove failed to raise a genuine issue of fact on falsity: it didn’t dispute that U-Haul’s referral program was only available to U-Haul dealers and premier affiliates, and was distinct from the online pages provided to affiliates at eMove argued that Hecker was claiming that eMove was closed in that it was not open to/indexed by search engines, when it fact it was.
In context, however, the court disagreed, given the reference to referrals. “Nothing in the post suggests that Mr. Hecker is asserting that eMove's affiliate sites are not accessible through Internet search engines. In addition, it seems unlikely that the defendants would suggest that itself is closed, because this assertion can be tested and proven false so easily.” Thus, no reasonable trier of fact could read the post that way; and even if it were ambiguous, eMove produced no extrinsic evidence of consumer reception.
Defendants also won summary judgment on eMove’s claims for intentional interference with a business relationship and injurious falsehood. eMove didn’t identify which alleged interferences caused which specific business relationships or expectancies to be disrupted, as required. On injurious falsehood, the court considered three allegedly false statements based on the trade show statements and call logs. But eMove didn’t present testimony from any alleged recipients of these statements. Even assuming the expert report on damages to be admissible, it didn’t connect any statement by defendants with alleged resulting pecuniary loss.

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