Jilted consultant's false endorsement claim fails for want of standing

Ott v. Ingenix, Inc., 2008 WL 4459411 (E.D. Wash.)

Ingenix helps state agencies develop fee schedules. At one point, Ingenix employed Ott as its Director of Research and Database. Ott left amicably and served as a paid consultant. While he was consulting for Ingenix, the company submitted bids to several agencies, listing Ott as a consultant. Ott alleged that he allowed his name to be included in the bids only on the condition that he be hired when the bids were successful. Montana awarded a project to Ingenix, but Ingenix didn’t hire Ott for it.

Ott sued for false representation of sponsorship or approval under §43(a)(1)(A). Ingenix challenged his standing, invoking decisions on prudential standing from other circuits. But Ott wasn’t using §43(a)(1)(B) to allege a competitive injury; he was alleging false association. Thus, he needed only to allege commercial injury based on the deceptive use of a trademark or its equivalent, a less demanding standard. However, Ott failed even that standard, because he disclaimed any allegation that his professional identity was equivalent to a trademark or that there had been any harm to his reputation. Thus, he lacked standing.

Interestingly, this rationale suggests that parties alleging initial interest confusion lack standing unless they actually compete: the court reasoned that Ott wasn’t alleging actual harm to his reputation, quoting the Restatement (Third) of Unfair Competition for the proposition that false association can harm reputation or good will when a purchaser is dissatisfied with the advertiser’s goods or services. There couldn’t be actual harm because Ott didn’t participate in delivering the services, so dissatisfaction couldn’t hurt his reputation. Similarly, if confusion dissipates before purchase, a plaintiff’s goodwill couldn’t be at risk. Standing is now such a powerful weapon for defendants that I expect to see it migrate more aggressively into §43(a)(1)(A). If false advertising plaintiffs have to allege specific, concrete stories of harm, then reflexive invocation of harm by trademark plaintiffs seeking to apply virtually identical statutory language shouldn’t suffice either.