Tuesday, January 19, 2016

Uniqueness claim can be falsifiable

Champion Laboratories, Inc. v. Central Illinois Manufacturing Co., 2016 WL 164364, No. 14 C 9754 (N.D. Ill. Jan. 14, 2016)
Fuel dispensing filters are designed to detect and remove water from fuel before fuel is dispensed into a vehicle. Champion and CIMCO are the leading competitors in the market for fuel dispensing filters in the United States. Champion sued CIMCO for false advertising, and CIMCO counterclaimed for false advertising.  Here, the court dismissed some counterclaims and allowed some to proceed.
The first challenged claim was on Champion’s website: “Only PetroClear filters are rigorously tested in the world’s most extensive dispenser-filter research-and-development facility.” CIMCO argued that no industry-recognized organization, group or association had confirmed this claim, while CIMCO’s filters “have been tested and recognized by an independent or third party facility, Underwriters Laboratories.”  Champion argued that its claim was puffery.  However, given the relevant market and the detail in the statement, the claim didn’t warrant dismissal.  Because UL does test filters, “purchasers might misunderstand Champion Laboratories’ statement … as trumpeting accolades it received from a third-party or independent organization for PetroClear filters.”
Second claim: Champion stated that an independent testing lab, Southwest Research Institute, found that PetroClear filters “stop” the flow of contaminated fuel when, CIMCO alleged, the lab only found that PetroClear filters “slow” the flow of contaminated fuel.  Champion made the statements in a video on its website, a May 2006 advertisement in National Petroleum News and, a 2009 presentation to the Petroleum Equipment Institute.  Borrowing the 3-year limitations period from the analogous state statute, the Illinois Consumer Fraud and Deceptive Business Practices Act, the court found that the continuing violation doctrine nonetheless rendered the claim actionable, at least on the present factual record.  The related laches defense was not amenable to resolution on a motion to dismiss.
Third claim: An email addressed to “Gilbarco and Wayne Authorized Distributors in Latin America,” repeated the “stop flow” statement and made other allegedly false claims. Champion argued that this email, directed to distributors in Latin America, didn’t trigger the Lanham Act or the Illinois Deceptive Trade Practices Act. (Under the Illinois Deceptive Trade Practices Act, the circumstances that relate to the disputed transaction must occur “primarily and substantially in Illinois.”)  The court granted the motion to dismiss because CIMCO didn’t show any effect on US commerce. There was no allegation that the allegedly false statement affected sales anywhere in the United States or its territories, or that CIMCO suffered injury in the United States market.

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