Wednesday, January 31, 2018

Claims to "introduce" product to US not untrue just because of prior minimal sales

LuxSoma LLC v. Leg Resource, Inc., 2018 WL 583119, No. 15 Civ. 4838 (S.D.N.Y. Jan. 25, 2018)

LuxSoma sued defendant ORI for breach of an implied contract that allegedly granted it exclusive rights to distribute ORI legwear in the US, induced by defendants Leg Resource and its President.  The court granted summary judgment to Leg Resource on LuxSoma’s false advertising claim.

LuxSoma argued that the Leg Resource made material misstatements when it announced in 2012, that (1) it would introduce ORI products to the U.S. market and (2) it was ORI’s exclusive distributor.  An ad in Women’s Wear Daily also stated that ORI was “gearing up for a journey to North America” and that Leg was ORI’s exclusive distributor. LuxSoma alleged falsity because LuxSoma was ORI’s exclusive distributor and had previously sold ORI merchandise at kiosks in Dallas, Texas.

The court disagreed.  The “introducing” statement couldn’t have deceived a substantial portion of the intended audience.  “When the statement was made, LuxSoma’s sales were minimal and geographically confined to Dallas, Texas. As ORI stated, ‘the U.S. market was still open’ ‘because [LuxSoma’s] sales were so small,’ and ‘[t]he sales in the U.S. were so small there was no[t] really a presence of the product.’”  LuxSoma admitted that it had sold a “paltry” 500 to 1,000 pairs of ORI legwear in Dallas, sales that were “far too small and much too geographically concentrated to raise a triable dispute” on deceptiveness.  And the exclusive distributorship statement was true when made.

No comments: