Wednesday, September 06, 2023

claims about legality of insurance service are falsifable

Route App, Inc. v. Heuberger, 2023 WL 5334192, No. 2:22-cv-00291-TS-JCB (D. Utah Aug. 18, 2023) (magistrate)

Route is a package tracking company that provides shipping insurance to e-commerce merchants. Heuberger was a Route customer who then launched a competitor, Navidium. Route sued for breach of contract, commercial disparagement and defamation per se, intentional tortious interference with contractual relations, false advertising, and contributory trademark infringement.

The breach of contract claim survived.

Commercial disparagement/trade libel/injurious falsehood/defamation per se: The challenged statements were opinion. Even potentially verifiable facts—such as whether claims are “more often than not denied,” whether Route requires a police report to be filed for a lost package, or whether Route commits a “serious breach of customer data”—“when read in the statement’s full context, would be understood as hyperbolic or figurative and clearly representing an opinion.”

Route also alleged that Heuberger tortiously interfered with valid contracts between Route and third-party merchant partners by: using confidential information to develop Navidium; engaging in commercial disparagement; making fraudulent misrepresentations about Route and Navidium; inducing Route’s merchant partners to use Navidium; and engaging in unlawful activity, including collecting a fee without proper insurance licenses or permits. Route alleged that Heuberger stated in online posts and messages that he “created Navidium to ‘screw with’ and ‘tak[e] down’ Route, because he ‘hate[s] Route.’ ” Route argued that Heuberger misled Route’s then-clients by portraying Navidium as a “technology that facilitates the lawful sale [of] shipping insurance” despite such services being “illegal.” The court wasn’t sure whether Route could show causation, though Route alleged that an increasing number of merchants who discontinue Route’s services appear to cite “the false statements made in Heuberger and Navidium’s solicitations.” Whether these acts were justified was fact-intensive and couldn’t yet be resolved.

False advertising:  The comments about Route were opinion and not actionable under the Lanham Act. But Route’s allegations that Navidium misrepresented or implied that merchants can lawfully offer shipping insurance or shipping protection without obtaining insurance licenses or permits and that Navidium is a shipping insurance company or technology “are straightforwardly factual assertions the veracity of which may be determined” by a review of the applicable law and an investigation of Heuberger’s marketing of Navidium. Other cases say that legality claims are usually opinion unless offered by someone with legal expertise, but the court doesn't discuss the issue.

Contributory trademark infringement: Defendants allegedly knowingly facilitated infringement of Route’s trademarks by installing versions of the Navidium widget under the names “Route Plus” and “Route Pro,” infringing its registered “Route” mark for shipping protection/e-commerce tracking. Defendants responded that Navidium is fully merchant-run after installation, and that Heuberger did not know and had no reason to know that merchants were replacing the Navidium name. Route counters that “[b]ecause Navidium has no product offerings that do not include expert installation, Heuberger or another Navidium representative modifies the Navidium widget code to include the name and/or text chosen by the merchant every time the white-labeled Navidium widget is installed.” This was sufficiently pled. Not clear to me: does anyone but the merchant internally see the widget? If not, what confusion could there be?


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