Friday, March 09, 2018

Pod save the claim: "sportspods" competition leads to false advertising, TM claims

Anthem Sports, LLC v. Under the Weather, LLC, 2018 WL 1175406, No. 17cv596 (D. Conn. Mar. 6, 2018)

Anthem and UTW compete in the market for “sportspods,” small tents for viewing outdoor sporting events during inclement weather. I won’t discuss the claims for declaratory relief against potential violations of UTW patents.

Anthem initially distributed UTW products online under an exclusive distribution agreement, until the relationship collapsed and UTW turned to Dick’s Sporting Goods for distribution. “Anthem subsequently located a different manufacturer and “began offering all weather personal enclosure products under the trade names UnderCover™ and SportPod™, including SoloPod™, Action Pod™, TeamPod™, and BugPod™.” UTW then allegedly began using “the mark ‘Sportspod’ to refer to multiple goods” that it offered for sale.  UTW also allegedly threatened Anthem, its supplier, and customers with patent infringement claims.

On Facebook, when customers leave comments indicating a desire to purchase Anthem Pods on Anthem’s Facebook page, UTW’s representatives allegedly respond (i) that the “only place to get [Anthem Pods] is,”; (ii) that the Anthem Pods “are illegal knockoffs and very poor quality,” and that the “legal ones are only available at”; and (iii) that the Anthem Pods were “[Pescovitz’s] idea and patent”; (iv) and that the Anthem Pods are “complete knock offs.” (Couldn’t UTW's reps just be blocked?)

Based on this conduct, Anthem brought a false designation of origin claim, a false advertising claim, and a trademark infringement claim. Guess which survived!

For false designation of origin, the court found that Anthem hadn’t properly alleged a reverse passing off claim.  Misrepresentations of inventorship aren’t actionable under Dastar.  The alleged claims that Anthem pods could only be bought from UTW were really statements that the Anthem pods were are “knockoffs” or of “inferior quality,” and that the only place to get legal “pods” was from UTW’s website. These comments couldn’t plausibly be interpreted to suggest that UTW sold Anthem Pods but rather presents UTW as an alternative.

False advertising: The “knockoff” and “poor quality” statements were mere statements of opinion, not fact.  The “illegal” and “patent infringing” statements were also nonactionable layperson statements of legal opinion.  “Complete knockoffs” was both opinion and puffery via subjective hyperbole.

Trademark: claims based on UTW’s use of SportsPod and Anthem’s claimed SportPod mark survived.  [Since the judge in this case identified the products at issue as “sportpods,” I foresee a problem with this term as a mark for the products.]

Anthem also sufficiently alleged tortious interference (and common law unfair competition) from UTW’s allegedly disparaging statements on FB, including an allegation that UTW made these comments with full knowledge of the lack of “any legitimate basis” for them and in “bad faith to unlawfully stifle competition.”  Instead of identifying specific lost customers, what was required was facts demonstrating “that, except for the tortious interference of the defendant, there was a reasonable probability that the plaintiff would have entered into a contract or made a profit.” The complaint alleged that various potential customers have expressed interest in purchasing Anthem Pods on Anthem’s Facebook page, and the majority of the disparaging comments were aimed at customers who had expressed enthusiasm for Anthem’s products.  Targeting “enthusiastic potential customers” made it plausible that some of them didn’t buy Anthem pods due to UTW’s statements.

Connecticut’s unfair trade practices law, CUTPA, also allowed a state coordinate trademark infringement claim, but not a false advertising claim for the reason discussed above.  Anthem also alleged that UTW violated CUTPA by “inducing Anthem to invest significant resources and efforts in marketing and selling the UTW Personal Enclosures by promising Anthem that it would be the exclusive distributor for such products other than UTW and then selling the UTW Personal Enclosures to Dick’s Sporting Goods for resale.”  UTW argued that, even if accepted as fact, these allegations established little more than breach of contract.  However, “although “a simple breach of contract would not be within the criteria for a CUTPA claim, substantial aggravating circumstances attending the breach would sustain such a claim,” and Anthem alleged sufficient aggravating circumstances by adding to the alleged breach trademark infringement and baseless infringement threats against Anthem when the company attempted to sell its own products in lieu of those from UTW.

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