Tuesday, March 22, 2011

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.


Taa said...

what does that mean? who "won" in this process?

RT said...

The judge refused to dismiss the complaint, which means that the case continues. The parties can now engage in discovery and perhaps proceed to summary judgment, in which one or both argue that the evidence is so clearly in its favor that no full trial is needed.