Transcom, a VoIP provider, alleged that Qwest falsely accused it of masking toll calls as local calls to avoid paying Qwest access charges. When a customer uses Transcom’s services to place a call, Transcom changes the form and content of the call and sends it for transmission to a competitive local exchange carrier, which sends it on either to the recipient or to an incumbent local exchange carrier for the recipient. Transcom alleges that it is properly deemed an “end user” customer and thus required to pay only end user charges to connect to the public switched network, whereas providers of telecommunications services, including providers of toll services, must pay access charges.
Qwest is a local exchange carrier, as is Electric Lightwave, another relevant party. Transcom must maintain relationships with local exchange carriers because, as a noncarrier, it can’t directly deliver a call on the public switched network. In 2005, Transcom and Electric Lightwave entered into an agreement by which Transcom would deliver calls for termination in Electric Lightwave’s coverage area. Electric Lightwave, in turn, had a relationship with Qwest for delivering calls.
Transcom learned in 2006 that Qwest was “spreading allegations in the telecom industry” that it was masking toll calls and otherwise avoiding paying access charges through fraudulent conduct. Qwest accused Transcom of attempting to avoid over $1.4 million in access charges. Transcom responded by providing “copies of rulings from a court of competent jurisdiction” determining that it was a service provider exempt from paying access charges. Shortly thereafter, Electric Lightwave informed Transcom that it was in default and intended to disconnect its service, as Electric Lightwave had learned from Qwest that Transcom was avoiding payment of access charges. Electric Lightwave had received bills from Qwest for unpaid access charges of $3 million, 70% of which was attributable to Transcom. Electric Lightwave then decided to exit the business and Transcom was then rebuffed in efforts to establish a customer relationship with its successor in interest because of the previous accusations. Qwest also sued a number of defendants, including Transcom, in the Western District of Washington, accusing them of fraud to mask toll calls; Transcom was eventually dismissed for lack of personal jurisdiction.
Transcom then sued for libel, slander, tortious interference, violations of the Communications Act, and false advertising under the Lanham Act. Here, Qwest won dismissal of the Lanham Act claims on the grounds that the statements to Electric Lightwave at issue were not advertising or promotion. Specifically they weren’t for the purpose of influencing consumers to buy Qwest’s goods or services. They were for the purpose of enforcing Qwest’s legal rights, rather than a marketing or sales pitch. Nor could Transcom logically allege a sales pitch, since the complaint alleges that Transcom was Electric Lightwave’s customer, not the other way around.
Transcom responded with arguments about why and how Qwest was attempting to eliminate it as a competitor in the VoIP market. The problem was that the complaint contained none of these factual allegations. Nor do they show how any of Qwest’s communications were made to persuade any consumer to purchase Qwest’s goods and services. (Though I would think offering a consumer a good reason to avoid a competitor would also be a marketing/sales pitch, since the necessary implication is that one ought to choose a different source.)
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