Tuesday, September 08, 2015

Another internal website search engine case survives motion to dismiss

Stiles v. Wal-Mart Stores, Inc., 2015 WL 5173060, No. 2:14–CV–2234 (E.D. Cal. Sept. 2, 2015) (magistrate judge)
Stiles allegedly patented the “Stiles Razor,” the only personal styling razor with a 1/8” blade and ergonomic handle allowing for safe and precise shaving (a design patent, with a utility patent pending, as well as some foreign patents). Wal–Mart allegedly made and sold an infringing competitive razor, the “Salon Perfect.”  The design patent infringement survived, showing once again the value of a design patent, even against Wal-Mart.
Trade dress: Stiles alleged a distinctive trade dress, but the description—“a razor with a tube shaped body with the razor blade on top, a grip in the center of the handle, packaging with each product individually viewable encased in clear plastic, and similar colorations and decorations of the product, including the Stiles’ signature pink-colored razor”—described the generic shape of a razor, except for the packaging/color. As for packaging/color, the claim was insufficient because Stiles didn’t allege any facts showing that her design had acquired secondary meaning in the market place. Nor was the conclusory statement that the trade dress was not functional sufficient given her description of functional features.  The magistrate recommended allowing her an opportunity to amend the complaint.
False association: Stiles alleged that Wal-Mart misleadingly advertised its Salon Perfect Micro Razor on the Walmart.com website because, when someone searches for “Stiles Razor,” the “Salon Perfect Micro Razor” showed up in the search results and the Stiles Razor was listed, but only as “out of stock.” She alleged that “out of stock” was misleading “because it leads a consumer to believe that Walmart will replenish the supply of the Stiles Razor, when in fact it terminated Stiles’ contract in bad faith and then illegally copie[d] her patented product.”  But “out of stock” was not literally false because, without a supply from Stiles, the Stiles Razor wasn’t in stock.  Stiles didn’t allege actual deception, so the complaint was insufficient.
Wal-Mart argued that a search for “Stiles Razor” didn’t produce the “Salon Perfect” result but rather the question “Did you mean ‘Scales Razor?’”  But this was a factual issue not resolvable on the pleadings (Wal-Mart withdrew its request for judicial notice of a printout of a search result), and thus Stiles stated a claim for false association.  Eric Goldman will not like this result; the magistrate doesn’t discuss Multi Time Machine, but clearly the issue would deserve more analysis in a more heavily litigated case.
The antitrust claims failed for want of allegations that Wal-Mart had market power to force Stiles to sell below average variable cost.
To the extent that the state law claims were based on patent infringement, they were preempted, but other state law unfair competition claims might survive; a further amended complaint could allow the court to take another look.

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