Friday, November 30, 2018

Copying others' claims without substantiation for one's own services can be false

TRUSTID, Inc. v. Next Caller, Inc., No. 18-172-LPS, 2018 WL 6242493 (D. Del. Nov. 26, 2018) (report and recommendation)

The magistrate addressed trade secret and false advertising claims, though there are also patent claims in the case. The relevant facts for the false advertising bit: TRUSTID alleged that it “invested significant time and millions of dollars to test, measure, and validate the performance of its [own anti-spoofing and caller-authentication] technologies[,]” and that such “technologies can [only] be reliably tested ... in real-world situations[.]” It was thus allegedly able to advertise truthfully that it (i) saved customers $0.50 per call, (ii) achieved a 10% increase in IVR [interactive voice response, meaning that human customers talk to an automated menu] containment, and (iii) saved 30 seconds per call. Last Caller allegedly claimed the same capabilities for its own caller-authentication system: “‘increase 10% IVR Containment Rate,’ ‘[s]ave $0.50 per call,’ and ‘save 30 secs handle time.’ ” TRUSTID alleged that these statements must be false because Last Caller did nothing to substantiate these claims but merely copied TRUSTID’s own assertions. Without citing the Third Circuit Novartis case holding that complete lack of substantiation can be literal falsity, the magistrate reached the same result: though this only barely crossed the line to plausibility, “[i]t seems likely that a party who makes claims about its own product’s attributes—without ever taking any steps to confirm whether those claims are true, and instead simply parroting assertions that its competitor made about the competitor’s own products—is making false statements about its product.”  

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