Tuesday, January 30, 2018

Pure disparagement by competitor is commercial speech even without invitation to buy

Monat Global Corp. v. Kavanaugh , 2018 WL 501616, No. 17-cv-1666 (M.D. Fla. Jan. 22, 2018)

The parties sell competing hair products. Kavanaugh allegedly orchestrated an “[I]nternet smear campaign” by posting false comments on Facebook about Monat’s products and marketing tactics, e.g., that Monat’s products duplicate the formula of non-party Wen’s products, which the FDA reportedly investigated after receiving 1,300 complaints about balding and scalp irritation. At least 5,000 people, including many “salon owners, stylists, or [others] in the hair[-]care industry,” allegedly view Kavanaugh’s Facebook posts. [Wonder how many that drops to given Facebook’s algorithms.]

Defendants argued that none of Kavanaugh’s statements constitutes “commercial” advertising subject to the Lanham Act because they didn’t tout the defendants’ products or encourage a prospective customer to patronize the defendants. Instead, the statements attempted to discourage a transaction with someone else. “Even a statement that expressly proposes no transaction might constitute commercial speech if included in an advertisement that mentions a particular product and if profit motivates the statement.” Given that the statements specifically mentioned Monat’s products and that Monat alleged a profit motive for the statements, plaintiff adequately alleged that the statements were commercial speech.

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