Dastar bars false marking claims brought under Lanham Act (dubitante)

Urban Dollz LLC v. Lashify, Inc., 2023 WL 8292459, No. CV 23-1427-GW-AFMx (C.D. Cal. Oct. 17, 2023)

Super-interesting holding that, while there’s no patent field preemption against bringing false patent marking claims under the Lanham Act, Dastar (as expansively interpreted to cover false advertising claims) does preclude such claims, possibly only because of party argument.

Urban Doll sued Lashify for Lanham Act false advertising and false patent marking, alleging that Lashify made false statements on social media that certain of its products were patented and innovative.

A party pleading false marking claim under 35 U.S.C. § 292 must show: (1) an unpatented article; (2) an intent to deceive the public; and (3) a competitive injury. The court found that, to satisfy Rule 9(b), Urban Doll needed to allege competitive injury in more detail, and dismissed with leave to amend. (The element of knowledge of falsity was satisfied by pleading, among other things, that defendants asserted their patent rights many times; that defendants claimed that defendant Lotti was the inventor, and that they have posted on social media that “falsely claiming patents or patent pending is illegal and false marketing.” “These factual allegations support Plaintiff’s allegation that Defendants are sophisticated, which in turn supports alleged intent to deceive.”)

A competitive injury is an injury that: (1) “results from competition,” and (2) is “caused by the alleged false marking.” It wasn’t enough to allege lost sales without alleging specific facts to support the claim that it was the false statements that led to the lost sales. Defendants argued that all but one of the allegations on which Plaintiff relies “predate[s] Urban Doll’s founding,” or was made “shortly thereafter.” The court agreed that Urban Doll needed to plead either that it was a current competitor in the same market at the relevant time, or that it was a potential competitor with both the intent and action of entering the market.

Likewise, Urban Doll needed more specific instances of competitive injury such as lost sales or deterred market entry causally traceable to the false marketing.  It wasn’t enough to allege that defendants “repeatedly labeled its competitors as “infringers, copycats, and counterfeits,” “with the express purpose of driving sales away from those competitors,” and that “Defendants’ customers believe and rely on Defendants’ representation when deciding what products to purchase.” Dismissed with leave to amend.

False advertising: First, the Patent Act can’t “preempt” the Lanham Act, but to harmonize them, courts have required Lanham Act claims based on false advertising of a patent to allege bad faith, which isn’t usually required. (Honestly, it sounds like disparagement could be a better false advertising claim here, depending on what exactly was said.)

But, though no one has noticed it before, even bad faith isn’t enough because of Dastar. In Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137 (9th Cir. 2008), “to avoid overlap between the Lanham and Copyright Acts,” the court interpreted “the nature, characteristics, and qualities of karaoke recordings under the Lanham Act ... to mean characteristics of the good itself, such as the original song and artist of the karaoke recording, and the quality of its audio and visual effects.” Misrepresentations about licensing status/compliance with copyright were not, therefore, actionable. Baden Sports, Inc. v. Molten USA, Inc., 556 F.3d 1300 (Fed. Cir. 2009), applied Sybersound to an alleged misrepresentation of inventorship. So, “authorship, like licensing status, is not a nature, characteristic, or quality, as those terms are used in Section 43(a)(1)(B) of the Lanham Act.” And that also applied to inventorship (or at least the plaintiff didn’t seem to dispute that claims only based on inventorship were barred).

The court noted that Baden wasn’t binding on it and was not immune from critique. One could read Sybersound to be about barring circumvention of patent/copyright rules by bringing a Lanham Act claim (e.g., expired patent, non-owner of IP right), not that one could never bring suit over statements about the IP status of a good. Here, at least with a bad faith add-in, the two statutes didn’t clash—the court doesn’t say this, but the logical extension is to say that the Lanham Act is precluded in false marking claims only to the extent that it’s strict liability.  

Claims about physical qualities, like “lashes are so light they literally stick to your lashes and melt within your lash line,” were not actually pled as false advertising, though the court granted leave to amend to make non-inventorship false advertising claims. Ad claims to use a “revolutionary method,” or to be the “worlds [sic] only” or “worlds [sic] first DIY lash extension system” “could reasonably be construed as being about the nature of the goods themselves (e.g., that they employed a new or unique technique or one that is superior to other products),” so the court wouldn’t construe them as only about inventorship. But the court cautioned that some of this was puffery.