Friday, November 09, 2012

Section 43 isn't subject to Rule 9(b) standards

Tempur-Pedic Intern. Inc. v. Angel Beds LLC, --- F. Supp. 2d ----, 2012 WL 5395825 (S.D. Tex.)

Angel Beds and Tempur-Pedic compete in the bedding market, which is probably not as sexy as it sounds.  Tempur-Pedic, which makes its products from a proprietary foam, objected to Angel Beds’ comparative advertising.  It prohibits authorized retailers from selling its products online.  Angel Beds allegedly operates multiple websites, including,, and Tempur-Pedic claimed that these sites misused Tempur-Pedic’s marks, causing initial and actual confusion, including by use of product names confusingly similar to Tempur-Pedic’s product names.  The parties previously settled an earlier lawsuit in which Angel Beds agreed to discontinue use of URL, stop using “tempur-pedic” and similar variations in keyword and description metatags, and stop using “tempur-pedic” etc. in title tags except for “Compare Angelbeds Mattresses to Tempur–Pedic Mattresses” or substantially similar phrases.  Angel Beds agreed not to use Tempur-Pedic’s marks except in truthful, comparative advertising.

Tempur-Pedic objected to Angel Beds’ 2008 use of, which redirected to, and its use of Tempur-Pedic marks in a “link block” on its website.  Although Angel Beds made some changes to its sites, Tempur-Pedic wasn’t satisfied and sued for trademark infringement, unfair competition, trademark dilution, cybersquatting, and breach of contract.

Angel Beds moved to dismiss for failure to state a claim of federal unfair competition and breach of contract, and for failure to sufficiently specify the marks at issue.  The first question was whether the unfair competition claim was subject to Rule 9(b)’s heightened pleading requirements because it alleged that consumers were misled.  But, since this was a trademark claim and not a false advertising claim, the court couldn’t find any 5th Circuit case law indicating that the complaint sounded in fraud, and it declined to apply any such requirement; notably, it considered §43 in its entirety, rather than explicitly segregating trademark from false advertising.  On its face, the statute bars false or misleading representations, without mentioning intent to deceive or defraud.  This is not fraud, and Rule 9(b) “is often reserved for claims predicated on statutes or common law that requires some showing of scienter.”  A number of district court cases in the circuit have applied Rule 8 even to false advertising claims under §43, though courts elsewhere are split.  The weight of the law supported Rule 8 treatment.  And even if a plaintiff avers fraud in a claim in which fraud is not an element, the proper procedure is to disregard averments of fraud that don’t satisfy Rule 9(b) and see if a claim has still been stated.

With that out of the way, the court examined whether Tempur-Pedic stated a claim for false advertising (the only part of the Lanham Act claim that Angel Beds was challenging on this ground).  The court noted that the complaint alleged that specific marks were used in the “link block” and that was a confusingly similar domain name used to present misleading and confusing ads that redirected to  Tempur-Pedic plausibly alleged misleadingness, likely deceptiveness, materiality, and injury.  It also plausibly alleged a breach of contract.

Angel Beds also argued that Tempur-Pedic didn’t sufficiently identify which marks it claimed had been diluted (federally and under Texas law).  The test for whether a complaint requires a more definite statement is whether the complaint is so vague or ambiguous that the defendant cannot reasonably prepare a response. Discovery is ordinarily the place to clarify claims.  The complaint here identified 15 registered marks and 7 unregistered marks that were allegedly diluted. (Can there seriously be an Iqbal/Twombly-passing allegation of federal fame for all of these? What about an Iqbal/Twombly-passing allegation that this wasn’t in the course of comparative advertising?  The answer to the latter might well be “yes,” but that would be parasitic on the trademark infringement claim; there is no way that I can see for Tempur-Pedic to lose its infringement claim and win its dilution claim.)  Identifying the marks and alleging how Angel Beds used them, allegedly dilutively, was enough for the complaint stage.

No comments: