Friday, March 20, 2015

And another commercial advertising or promotion case, no competition required

Educational Impact, Inc. v. Danielson, No. 14–937, 2015 WL 381332 (D.N.J. Jan. 28, 2015)
EI sued Charlotte Danielson and other entities for breach of contract, violations of the Lanham Act, unfair competition, tortious interference, and unjust enrichment.  Per the complaint: Danielson wrote a rubric to evaluate teacher performance, the “Framework for Teaching,” with iterations in 1996, 2007, 2011, and 2013. This rubric has been widely adopted.  EI makes professional development programs and services, and it contracted with one Danielson-run defendant to create a program based on the Framework for Teaching. The contract had an exclusivity/non-compete provision, which defendants allegedly breached by working with defendant Teachscape, a direct competitor of EI. 
Danielson allegedly initially maintained that the “psychometric assessment tool” she was working on with Teachscape would not compete with EI’s Framework for Teaching Online Program, but then she began working exclusively with Teachscape and allegedly created a directly competing program using the same rubric. In 2012, Teachscape began to represent that it was the “exclusive digital provider,” for Danielson’s new versions of the Framework for Teaching Evaluation Instrument, e.g., claiming that Teachscape’s products “are the only software products authorized for use with the 2011 and 2013 Editions.” Another defendant website similarly stated that only Teachscape could incorporate the 2011 and 2013 Framework for Teaching Evaluation Instruments in its software products.  EI allegedly discovered that Danielson had directed one defendant’s employees and contractors to download EI videos and use them in seminars and training programs. (Related copyright infringement suits against several school districts that were Teachscape customers were stayed given their dependence on the issues in this case.)
I won’t talk about the contract-based claims; suffice it to say that they remain alive.
As to the Lanham Act/unfair competition claims, they were based on statements that Teachscape’s products “are the only software products authorized for use with the 2011 and 2013 Editions” and “only Teachscape can incorporate the content of the Framework for Teaching Evaluation Instrument (2011 and 2013) in its software products.” Defendants argued, among other things, that their statements were true as applied to software programs (as opposed to online videos) and that the statements weren’t made in commercial advertising or promotion.
The court turned to the Gordon & Breach test for commercial advertising or promotion but, explicitly dealing with an outstanding issue from Lexmark, held that Gordon & Breach’s competition requirement no longer applies. “Here, although [one defendant] is not in direct competition with EI, the claims made on its website, if shown to be false, likely have the effect of limiting EI’s sales. Under current law, this allegation is sufficient to state a claim under the Lanham Act.”
The issues around falsity and exclusive rights couldn’t be resolved on a motion to dismiss. Among other things, “software” might include a program that uses online videos and PDF handouts, as EI’s program did. The complaint therefore stated a claim.
Some parts of the tortious interference claims survived too.

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