Friday, August 05, 2022

Statements in Insider article were plausibly commercial advertising or promotion

Glamour Dolls Inc. v. Lisa Frank Inc., No. CV-21-00228-TUC-SHR, 2022 WL 3098042 (D. Ariz. Aug. 4, 2022)

Frequent IP claimant Lisa Frank is in court this time over a failed deal with a vegan cosmetics company, whose contract aspects I will ignore. The parties initially entered into a cobranding deal: GDI would make cobranded cosmetics in return for, inter alia, a guaranteed minimum royalty. Things fell apart as LFI demanded money but allegedly refused to approve the cosmetics, allegedly also communicating with other makeup companies during this period. LFI allegedly used the “concepts, designs and ideas” from GDI’s samples to launch a new line of products with a larger cosmetics company, Morphe. Insider Inc. published an article about LFI’s collaboration with Morphe; LFI’s statements therein are the subject of Lanham Act claims.

In the article, LFI’s representative said: “Unfortunately, Glamour Dolls completely failed to live up to our agreement, which includes their obligations within the Kickstarter campaign, failing to manufacture and deliver the products that our fans rightfully deserved,” the representative said:

The Lisa Frank Company knows how you feel, as we did not receive what Glamour Dolls promised us either. After many months of pushing Glamour Dolls to live up to its contractual obligations and deliver products—to our fans and retailers that ordered products—Lisa Frank Inc. reached the point of exasperation, terminated the agreement with Glamour Dolls, and contacted the Federal Government. To say we are disappointed by the events that transpired as a result of this license is an understatement.

By contrast, LFI was “excited about the upcoming collection” with its “trusted partners at Morphe” and it knew Lisa Frank fans would “love these quality cosmetics that bring the joy of Lisa Frank to life.”

Defamation per se: The statements in the article could reasonably bear a defamatory meaning.

Lanham Act false advertising: Were the statements “commercial advertising or promotion” even though not in a conventional ad? GDI plausibly pled commercial speech: “The statements in question … reference the Kickstarter products that never were made and seemingly promote LFI’s new line of products with Morphe. LFI’s representative also appears to have an economic motivation to promote the economic and financial success of Defendants, improve Defendants’ image, and create more exposure for Defendants’ new products with Morphe.”

What about puffery?  “Ultimately, the difference between a statement of fact and mere puffery rests in the specificity or generality of the claim.” The statements here weren’t “subjective claims about a product, nor are they a form of exaggerated advertising, blustering, or boasting upon which no reasonable buyer would rely.” LFI’s statements “might induce consumers to avoid Plaintiff’s products, as the statements depict the Plaintiff as a company that ‘completely fails’ to deliver products and abide by its promises. This is a quantifiable claim concerning Plaintiff’s undelivered products.”

Trade libel: Also sufficiently pled. GDI identified specific third parties “with which [it] had previously dealt and/or which had expressed interest in collaborating with [it] prior to the article’s publication” who “abruptly backed out and refused to speak or even communicate with [it]” afterwards.

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