Tuesday, March 19, 2019

mere market participation insufficient to allege standing in noncomparative advertising case

AAVN, Inc. v. Westpoint Home, Inc., 2019 WL 1168102, No. 17-CV-8329 (N.D. Ill. Mar. 13, 2019)

AAVN sells woven textile fabrics, including fabrics made from a cotton-polyester blend. AAVN’s president owns patents that teach a method of manufacturing a cotton-polyester blended textile to successfully achieve high thread counts. WestPoint sells bed sheets it advertises as 1,200 thread count sheets, but that allegedly have a 257 or 236 thread count according to a third-party laboratory test of two samples.

The court found that AAVN lacked standing.  AAVN didn’t allege that it markets or sells high thread count sheets, and it didn’t connect how the alleged false advertising on WestPoint’s sheet packaging harms AAVN. Nor did it allege how deception of WestPoint customers would harm AAVN’s reputation for purposes of proximate cause.  [Lexmark has the potential to contract standing in non-concentrated markets, which this may well be.]  Even if AAVN had a subsidiary selling high thread count textiles, that didn’t conver standing on the parent corporation, and even if it could sue on behalf of a subsidiary, there was still no link alleged between WestPoint’s alleged false advertising and its own sales or reputation. “Although under some circumstances a plaintiff may present a viable complaint without alleging specific damages, AAVN’s failure to allege how influence of WestPoint’s customers actually impacts AAVN’s business proves fatal.”

Then, and quite unnecessarily, the court said that AAVN “fails to assert any specifics regarding the process by which Vartest determined that WestPoint’s sheets had a lower thread count than advertised.” That doesn't seem required by Twiqbal.

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