TM claimant may add false advertising claims as direct competitor

Entrepreneur Media, Inc. v. Roach, 2021 WL 4134836, No. 8:20-cv-01690-JVS-AD (C.D. Cal. Jul. 1, 2021)

Entrepreneur, a frequent trademark claimant, sought to amend its complaint and add new parties to the TM claims here. Entrepreneur has 15 federal registrations that include the word “entrepreneur.” Roach, meanwhile, makes frequent use of the phrase “The Unstoppable Entrepreneur” and applied to register the phrase for “Business consultancy; Business marketing consulting services.” Entrepreneur’s opposition remains pending.

Of note: In the discussion of adding another defendant, the court noted defendants’ argument that this was being done to harass: Defendants alleged that “Entrepreneur’s counsel stated that Entrepreneur’s allegations were likely to be highly publicized, and that he intended to refer Defendants’ dissatisfied customers to plaintiffs’ lawyers,” which they interpreted as a threat. This “inference of intention to harass” was reasonable, but not inevitable. “Entrepreneur’s desire to bring forth a claim for false advertising against a competitor in a similar market is not unusual behavior.”

Along with adding a defendant, Entrepreneur might eventually be allowed to add a false advertising claim, based on facts that were allegedly discovered only during Roach’s deposition. Roach’s webinar slide deck allegedly contained false statements to potential customers that Roach’s program is the “only” program guaranteed to double someone’s revenue in twelve months. The deck allegedly also referred to “9 Free Bonuses,” that a reasonable consumer would allegedly conclude are sold separately. And, in deposition, Entrepreneur allegedly learned for the first time that some of the customers in defendants’ advertised “Unstoppable Entrepreneur Success Stories” never enrolled in the Unstoppable Entrepreneur Program. (Defendants rejoined that they came from defendants’ pre-rebranding coaching program, but that factual dispute doesn’t matter at this stage.)

However, there was not good cause to challenge the words “flexible” and “risk free” on defendants’ website when a consumer attempts to purchase the Unstoppable Entrepreneur Program. Entrepreneur allegeed that it learned only after deposition that “this information is potentially misleading to consumers because the purchase of the plan is locked in, and a consumer must pay full price for the program.” But the website displaying two payment plans along with specific information regarding the payment methods was publicly available prior to the deposition, and the contract contained the specific payment terms, which Entrepreneur acknowledged. “What Entrepreneur learned in the Roach deposition was the same information that could be uncovered by reading Defendants’ standard contract: that Defendants expected signing consumers to continue contractual payment regardless of whether the consumer wanted to leave the program midway through.”

Nor would amendment for the other statements necessarily be futile, though further allegations would be required. Entrepreneur fell within the statute’s zone of interests—alleged lost sales and reputational injury. And Entrepreneur alleged that “but for” defendants’ false advertising, consumers would not have been misled and diverted away from Entrepreneur. Although some courts might well agree that this was merely conclusory, this court found that sufficient. The parties could be considered “fellow commercial actor[s]” “because both offer the same goods and services including coaching services consulting, books, and podcasts,” and thus diversion from falsity was plausible.

In addition, Entrepreneur successfully alleged falsity under Rule 9(b) by identifying the alleged falsehoods in the webinar slide deck. Entrepreneur alleged that the Unstoppable Entrepreneur Program was not guaranteed to double someone’s revenue in twelve months because many consumers enrolled in the Unstoppable Entrepreneur Program did not achieve that result, and that other programs could do so. And it was plausible that a consumer viewing the “free bonuses” might reasonably conclude that they are able to be purchased separately.

However, there were missing details that were required: Entrepreneur didn’t state with particularity “when” the slide deck was presented (even a date range), how often it was presented, how it was presented, or by which defendant.

As to the allegedly false testimonials, likewise Entrepreneur alleged the “what” (false testimonials) and the “how” (testimonies provided by people who were not allegedly enrolled in the Unstoppable Entrepreneur Program), but not the where and when. “Although Entrepreneur’s Reply contends that the success stories are currently available on Defendants’ website, the proposed FAC fails to mention where the testimonials appear or have appeared.” So the motion to add a false advertising claim was denied without prejudice.