small competitor lacks standing against big one's nondisparaging advertising

HomeLight, Inc. v. Shkipin, --- F.Supp.3d ----, 2024 WL 940089 (N.D. Cal. Mar. 5, 2024)

Sometimes, courts are very generous to competitors in presuming Lanham Act standing—as with the recent Meta ruling—and sometimes they aren’t. I have yet to detect a real pattern across facts/circuits, but suggestions welcome.

Previous ruling. Shkipin’s amended false advertising counterclaim fails again. Although Shkipin alleged commercial injuries—“network effects and ad revenues, and also … goodwill value associated with its 100% free services to real estate agents and consumers” but there wasn’t sufficiently direct causation. None of HomeLight’s statements allegedly disparaged or even referred to Shkipin’s business.

To establish that HomeLight proximately caused HomeOpenly to suffer a loss of sales, Mr. Shkipin would need to show how deceptive statements about HomeLight directed at shoppers on HomeLight’s own website necessarily caused advertisers not to buy ads from HomeOpenly. Even assuming that there is a direct relationship between the number of shoppers who use or visit HomeOpenly and its ability to sell ads, and that HomeLight’s deceptive statements resulted in some reduction in the number of shoppers visiting HomeOpenly’s website, this connection is too attenuated to establish proximate cause. This is especially true given the countercomplaint’s other plausible explanation for why online home shoppers might find HomeLight’s website but not HomeOpenly’s: HomeLight’s heavy spending on various forms of online and TV advertising that Mr. Shkipin characterizes as “highly effective.”

These causation problems also defeated his state UCL claim. The allegedly unlawful/fraudulent conduct underlying the UCL claim—that HomeLight received illegal kickbacks in violation of RESPA—wasn’t sufficiently linked to the injuries Shkipin claimed.