InCompass IT, Inc. v. Dell, Inc., 2012 WL 383960 (D. Minn.)
There are some misappropriation/trade secret claims here,
but I’m just covering the false advertising bit. InCompass tried to negotiate a deal with Dell
to be a sales partner, selling Dell products, but the deal went bad. The court held that InCompass failed to state
a Lanham Act claim. The complaint
alleged that Dell made false statements about its partner program to
prospective resellers like InCompass, that InCompass shared confidential client
information with Dell in reliance on those statements, and that Dell’s direct
sales team then stole that information.
That’s not a Lanham Act claim, though it might well give rise to other
tort liability if proven. InCompass didn’t
allege a competitive injury—an injury in competing for consumers caused by
false statements to those consumers. The
Lanham Act was not designed to protect consumers (which was InCompass’s role in
receiving the allegedly false statements here), but rather to protect
sellers.
The parties did compete in the sale of computers; the court
specifically rejected Dell’s argument to the contrary. Though Dell sells Dell products directly to
consumers and InCompass is a reseller, they are in competition to sell Dell
computers to the same customers; many manufacturers sell directly to consumers
online and also use resellers, and they’re obviously in competition for the end
users. But the allegedly false ads weren’t
promoting computers; rather, they promoted the partner program, and InCompass doesn’t
compete with Dell to offer such programs.
Separately, InCompass didn’t identify any factual statements
in the ads that were specific and measurable and capable of being falsified. The statements were vague, such as “We'll
support your sales opportunities so that you can protect your business” and “We're
there when and where you need us.”
The Minnesota Deceptive Trade Practices Act claim also
failed, because it provides for injunctive relief to those “likely to be
damaged.” This means plaintiffs must allege future irreparable harm. The complaint provided no reason to believe
that InCompass would be harmed by the deceptive trade practices in the future,
since InCompass knows better now and won’t be fooled again.
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