"commercial advertising or promotion" requires more than a call and an email

Navatar Group, Inc. v. DealCloud, Inc., 2023 WL 1797266, No. 21-cv-1255 (SHS) (S.D.N.Y. Feb. 7, 2023)

Navatar sued for state and federal false advertising, as well as commercial defamation, injurious falsehoods, unfair competition. The court dismissed the Lanham Act claim and declined to exercise subject matter jurisdiction over the remaining claims.

Navatar provides cloud-based customer relations management software services to global financial customers. DealCloud allegedly repeatedly engaged in false advertising campaigns against Navatar, with claims such as “Navatar is running into some trouble”; “Navatar charges ‘3 times as much’ as DealCloud”; “Navatar is in jeopardy of going bankrupt”; and “Navatar closed 2 deals in 2020 to DealCloud’s 200 deals.”

The standard for identifying “commercial advertising or promotion” under §43(a)(1)(B) requires “(1) commercial speech; ... (2) for the purpose of influencing consumers to buy defendant’s goods or services; and (3) although representations less formal than those made as part of a classic advertising campaign may suffice, they must be disseminated sufficiently to the relevant purchasing public.” The “touchstone” is “that the contested representations are part of an organized campaign to penetrate the relevant market. Proof of widespread dissemination within the relevant industry is a normal concomitant of meeting this requirement. Thus, businesses harmed by isolated disparaging statements do not have redress under the Lanham Act; they must seek redress under state-law causes of action.”

The complaint didn’t clear that bar. In its original complaint, Navatar had listed ten former and current clients who had been contacted by DealCloud and the court had orally advised, “[a]mong these 10, you must have specifics: So and so received the following statement on or about X date and they are false for the following reasons. That would really firm up what you’re missing [in the original complaint].”

But other than adding in statements from a declaration by a Navatar principal about an email to one customer, “Navatar provided just one additional example of alleged false advertising by DealCloud, a phone call between an unnamed DealCloud employee and an unnamed customer that occurred in April of 2021, after this action had commenced and after the Court granted defendant’s motion to dismiss the original complaint.”

This amounted to “two discrete instances of DealCloud making false or misleading statements, and both appear to have been directed at just one customer each.” That wasn’t enough, given that

Navatar claims to have close to 100,000 potential users.