Customer's Lanham Act claim proceeds

Lufthansa Systems Infratec GMBH v. Wi-SKY Inflight, Inc., 2011 WL 862314 (E.D. Va.)

A noncompetitor can maintain a Lanham Act false advertising claim against a potential supplier—at least as long as the supplier doesn’t make the right argument. Here, Wi-SKY claims rights in a technology for internet service for airline passengers. It began negotiations with Lufthansa, a potential buyer. Then two individuals who also claim rights in the technology allegedly broke their agreement with Wi-SKY and began negotiating with Lufthansa on their own. As the threats escalated and Wi-SKY sued the individuals and relevant financiers in Georgia. Lufthansa then sued and included Lanham Act claims because Wi-SKY posted the complaint against those parties on its website, allegedly in an attempt to sabotage a deal with Lufthansa. Lufthansa sought a preliminary injunction to compel the removal of the complaint from Wi-SKY’s website, but the parties then agreed that Wi-SKY would remove “certain information” from the website. (I would think that the usual doctrines making it harder to sustain a Lanham Act claim against an accurate report that a lawsuit has been filed would apply, but the court doesn’t seem interested, at least at this stage; it doesn’t end up holding Lufthansa to a requirement of pleading that the suit was frivolous/in bad faith, for example.)

Wi-SKY argued that Lufthansa failed to plead that the statements were made in commercial advertising or promotion, that it made a misrepresentation by posting information regarding the Georgia lawsuit on its website, that the statements would influence a consumer’s purchasing decision, or that the posting occurred “in commerce.” The court disagreed. The complaint stated that Wi-SKY “made false statements and representations on the investor relations section of its public website concerning a business relationship between itself and Lufthansa.” The complaint then alleged that this generated confusion and deception, resulting in injury to Lufthansa’s commercial interests. “Further details concerning the nature of Wi-SKY's misrepresentations or the extent of Lufthansa's injuries are unnecessary.”

Frankly, I’m surprised that the court didn’t take the “commercial advertising or promotion” part more seriously, even if Wi-SKY didn’t raise standing separately. The test used by basically every court highlights that the Lanham Act targets only speech by a competitor. I see no competition here.