Wednesday, January 31, 2018

Allegedly false statements on package/instructions didn't plausibly harm competitors, court rules

Telebrands Corp. v. Everstar Merchandise Co., No. 17-2878, 2018 WL 585765 (D.N.J. Jan. 29, 2018) (magistrate judge)

Telebrands sells novelty stuff; Everstar, a competitor, allegedly copied its stuff in unlawful ways.  Relevant to this blog, Telebrands alleged that Everstar engaged in false advertising under §43(a) by printing false information on the packaging of its GALAXY LASER and NORTHERN LIGHTS LASER products, as well as within the operating instructions for those products.  The statements allegedly understated the maximum power output of the lasers (whose output was actually in excess of that allowed by the FDA), misleading consumers into thinking the lasers would be safe to use.  Rather than dealing with this as a matter of “commercial advertising or promotion,” as I would have guessed, the court used Lexmark and proximate cause.

First, the court reasoned, Telebrands didn’t allege that Everstar characterized the statements on the packaging in any way that indicated safety.  [Necessary implication much?]   Nor were there any alleged comparisons or references to Telebrands products, nor were there any allegations about how consumers “might have acted differently had the packaging information been accurate, or, alternatively, if the packaging did not include any representations regarding power output.” Thus, there were no allegations about how the misstatements persuaded consumers to purchase Everstar’s products.  Likewise, Telebrands didn’t allege that the safety instructions were available to consumers before purchase, so they couldn’t affect purchasing decisions.  Telebrands suggested in its argument that “[t]he dangerous nature of Defendants’ products will harm Telebrands’ sales and may ultimately destroy the market for decorative holiday laser lighting products,” but this wasn’t in the complaint, which referenced sales diversion.  “If Plaintiffs intend to plead injuries suffered as a result of harm to the industry in general, they must add allegations making that clear.”

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