Arandell Corp. v. Walker, 2015 WL 7308649, No. 14-C-1279 (E.D. Wisc. Nov. 19, 2015)
This case illustrates that lawyering matters a lot; courts don’t always know the most recent circuit precedent. Here, the only purported federal claim was false advertising under the Lanham Act. But the court found the claim “insubstantial in the sense that ‘prior decisions inescapably render the claim[ ] frivolous.’” The reason was that “the purported false statements were made in person-to-person communications to specific customers, rather than in promotional materials disseminated to anonymous recipients.” And, in First Health Group Corp. v. BCE Emergis Corp., 269 F.3d 800, 803–04 (7th Cir. 2001), the Seventh Circuit “held” that only the latter form of communication was “commercial advertising or promotion.” Then, Sanderson v. Culligan International Co., 415 F.3d 620, 624 (7th Cir. 2005), “described as frivolous an argument that a person-to-person communication is actionable under § 43(a)(1)(B).”
However, neither the plaintiff nor the court apparently considered Neuros Co., Ltd. v. KTurbo, Inc., 698 F.3d 514 (7th Cir. 2012), in which the Seventh Circuit fixed this outlier holding (if holding it was):
[First Health and Sanderson] do not hold that “advertising or promotion” is always limited to published or broadcast materials—an interpretation that would put us at odds with all seven other federal courts of appeals to have considered the issue. … The cases from the other circuits are not inconsistent with the holding in Sanderson that three person-to-person communications at trade shows do not add up to commercial advertising or promotion or the holding in ISI Int'l that letters threatening suit for patent infringement are not commercial advertising or promotion; and in First Health the Lanham Act was held applicable.
A classic advertising campaign is not the only form of marketing embraced by the statutory term “commercial advertising or promotion.” Podiatrist Ass'n required merely “some medium or means through which the defendant disseminated information to a particular class of consumers.” And the most recent case, LidoChem, explained that “the required level of dissemination to the relevant purchasing public ‘will vary according to the specifics of the industry.’ ”
If “advertising or promotion” just meant “advertising,” then “promotion” would do no work in the statute. More important (because of the frequency of redundant language in statutes), there are industries in which promotion—a systematic communicative endeavor to persuade possible customers to buy the seller's product—takes a form other than publishing or broadcasting.
KTurbo held that a “road show” involving multiple presentations to individual customers was sufficient “advertising or promotion” to trigger the Lanham Act. Without further attention to the allegations of the complaint, it’s hard to tell whether this is a KTurbo situation. Since the plaintiff only argued that “advertising or promotion” was a jury question, the court didn’t have the chance to consider the issue—though I think failure to do so probably justifies reconsideration, if the allegations are appropriate.