Friday, May 19, 2023

courts continue to jack up materiality requirements; the Lanham Act and the death of common sense?

Delta T LLC v. MacroAir Technologies, Inc., No. EDCV 20-1489-GW-JPRx, 2022 WL 19827572 (C.D. Cal. Nov. 18, 2022)

MacroAir asserted – among other things – a counterclaim for false advertising under the Lanham Act. Of potential note: Plaintiff aka BAF (Big Ass Fans) argued that MacroAir needed consumer testimony, consumer surveys, or expert testimony to establish materiality. The court stated—contrary to actual practice—that “materiality in false advertising cases is ‘typically’ proven through consumer surveys,” but immediately qualified this claim: “that type of evidence is not required.” Still, “[w]hile surveys are not required, a party advancing a false advertisement claim still must have some basis for demonstrating a triable issue of fact on the subject, when-challenged.” This is an example of courts cranking up the liability standard over time, in the inverse of what they’ve done in trademark cases where they’ve accepted ever broader theories of liability. Historically, materiality was usually a matter of common sense; it still should be in appropriate cases.

The court rejected MacroAir’s attempt to presume materiality from (alleged) literal falsity. It surveyed the caselaw in the Ninth Circuit, which was not consistent. Even though materiality is itself not provided for in the statute—it developed from the injury requirement—the court reasoned that, in the absence of any statutory guidance, “the elements of a false advertising claim under the Lanham Act should be treated like the elements of any other claim which a plaintiff must prove in order to prevail – MacroAir must come forward with evidence to demonstrate a triable issue of fact on the question.” Moreover, “it is not the type of advertisement or communication in question in general that must be material, but the deception itself.”

The court rejected MacroAir’s evidence as insufficient because of this. Its expert apparently opined on the materiality of “manufacturers’ claims about warranty, performance, reliability, [ ] safety, and perceived differences between manufacturers’ offerings in these areas,” but “that evidence is too broadly-drawn for the false advertising element of materiality.” Summary judgment dismissing the claim.

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