Monday, July 29, 2013

Headscratcher of the day: Court finds speech noncommercial because it's disparaging

SB Diversified Products, Inc. v. Murchinson, 2013 WL 3831315 (S.D. Cal. July 23, 2013)

The parties compete in the squirrel trap market.  Murchinson, an inventor who makes his own Black Fox product, allegedly disparaged SB’s Squirrelinator trap.  He began emailing SB’s customers and distributors negative commentary about the Squirrelinator, asserting it was inferior to the Black Fox and infrined Murchinson’s patent and sending videos purporting to show the Squirrelinator malfunctioning.  He also posted similarly disparaging comments on websites including Amazon and eBay.

The court found that SB failed to state a Lanham Act claim because Murchinson wasn’t engaging in commercial speech.  Ignoring the context (though the definition of commercial speech is supposed to be context-sensitive), the court found that disparaging a competitor did more than propose a commercial transaction, and commercial speech’s core is speech that does “no more than propose a commercial transaction.” Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002 (9th Cir. 2004).  Speech that does more than propose a transaction is noncommercial, so criticizing SB’s products made Murchinson’s speech noncommercial. 

Comment: Wow. Nissan, of course, is a case about noncompetitors; when a noncompetitor says nasty things about a producer, yes, that’s likely to be noncommercial speech.  But the point of saying nasty things about a competitor is to make purchases from it less likely and therefore purchases from you more likely.  Under this “the semantic content isn’t solely an invitation to purchase” logic, Pepsi’s ads showing people enjoying Pepsi or even advertising no-purchase-necessary contests aren’t “commercial speech”—after all, they do more than ask people to buy a product—and are entitled to full First Amendment protection.  That isn’t the law, as the many, many cases about commercial disparagement under the Lanham Act—amended in 1988 precisely to confirm that saying nasty things about the competition was actionable—reflect.

However, since amendment wouldn’t necessarily be futile, the claim was dismissed without prejudice, as was a similar UCL claim for failure to allege lost money or property.  (Hunh? What is missing from these pleadings?  If Murchinson said so much that his speech was noncommercial, how could that be pled around?  I think the court at some level understands that Murchinson’s statements are, in fact, likely to be commercial.

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