Friday, July 13, 2012

Plaintiff allegedly shut out of market lacks standing to sue for false advertising v. United Business Media LLC, 838 F. Supp. 2d 1316 (S.D. Fla. 2011)
CareerFairs alleged that it met with defendant O’Brien seeking investment capital to launch a virtual college career fair featuring an interactive online interview format.   O’Brien said he wasn’t interested in investing in’s idea, but then his company launched its own virtual college career fair website.  CareerFair alleged that’s Nov. 2010 interactive career fair for students attending 16 universities and colleges in the Big East was identical to its business idea.  The court declined to dismiss the claims related to breach of an alleged confidentiality agreement/trade secret misappropriation.  It dismissed the conversion claim, since the only converted property was the intangible idea and the parties’ relationship was governed by a contract.
The court also dismissed the Lanham Act claim because CareerFairs hasn’t been able to enter the market, allegedly because of defendants’ behaviors.  Thus, CareerFairs lacked standing under the Phoenix of Broward test.  “Each of the Phoenix Factors hinges on the directness of the competition between the parties.”   Defendants argued that only active competitors have standing.  CareerFairs argued, futilely, that the court should use the Ninth Circuit’s standing test instead, since the Eleventh Circuit has rejected this test (and anyway, the court held, the Ninth Circuit requires actual or direct competition, so unlaunched competitors still wouldn’t have standing in that circuit).  “[D]irect competition is essential to a finding of standing to bring a false advertising claim under the Lanham Act in the Eleventh Circuit.”  Comment: The formal promise of Conte Bros./Phoenix of Broward was that direct competition wouldn’t be necessary for standing, so that it was possible to characterize the test as more expansive than the 9th Circuit version.  From “not necessary,” though, the practical result became “not sufficient.”  It is interesting to see a court read this standing test as requiring the opposite of what its stated goal was.
Anyway, though Phoenix of Broward doesn’t expressly require the plaintiff to have a product in the market, it’s an indicator of direct competition.
The state-law claims survived for misappropriation, though not for false advertising because lack of standing to bring a false advertising claim under the Lanham Act somehow translated into lack of standing to bring a false advertising claim under the FDUTPA, even though the court also found that the plaintiff “comes within the protection” of the latter law, but apparently only for purposes of asserting a misappropriation claim where the defendant deceptively caused harm to the plaintiff.  I didn’t really get it.

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