court allows false advertising claim based on manipulation of Amazon's "variation" system

Corsair Gaming, Inc. v. Choice Electronics Inc., 2025 WL 2822691, No. 5:25-cv-00045-BLF (N.D. Cal. Oct. 3, 2025)

Corsair sued Choice for alleged infringement by selling used, unauthorized, or counterfeit Corsair computer/gaming products. This opinion deals with Choice’s counterclaims. The false advertising part of those counterclaims rests on Amazon’s “variation” system.

The court declined to dismiss counterclaims for declaratory judgment of noninfringement and cancellation of Corsair’s mark for naked licensing. Although use by a related company (here, a different Corsair entity than the owner of record) counts as use, the allegations here were that the entity that used the mark wasn’t supervised at all by the owner of record and thus didn’t qualify as “related.” The Lanham Act specifically defines “related company” as “any person whose use of a mark is controlled by the owner of the mark with respect to the nature and quality of the goods or services on or in connection with which the mark is used.”

False advertising: Vendors and third-party sellers can create “variation” relationships between substantially similar products that differ only in specific, narrow ways. Such products will appear on the same product detail page, with each variation, e.g., color, size, or count, selectable. Because of variations’ close similarity, the product detail page displays the total number of ratings and the average star rating for all products in a given variation relationship. Amazon’s  “variation policy” prohibits vendors from grouping together fundamentally different products within the same variation relationship.

Choice alleged that Corsair “knowingly manipulates Amazon listings in order to show inflated and unwarranted reviews for its products by misleadingly listing new products as ‘variations’ of pre-existing products, instead of creating new listings for new products,” causing consumers to be “deceived and confused into believing that Corsair Products have amassed significant amounts of positive reviews and high ratings, when, in fact, such reviews and ratings merely relate to a prior product.” The court agreed that this stated a claim.

First, Choice plausibly alleged competitive harm enough to satisfy both Article III and the Lanham Act. And, even assuming that Rule 9(b) applied, the counterclaims adequately pled with specificity how Corsair allegedly created a variation relationship between three different computer monitors despite substantial technological differences. Choice wasn’t required under Rule 9(b) to catalogue every single instance in which Corsair improperly created a variation listing.

Related state law claims also survived, except for counterclaims about the Corsair warranty, which was allegedly misleading to consumers but not causally connected to harm to Choice. The warranty allegedly was unenforceable under state law precluding sales-channel restrictions on warranties, but allegedly misled consumers by creating the false impression that Corsair Products purchased through Choice’s Amazon storefront were not subject to the same protections and thus “discouraged and dissuaded consumers from purchasing genuine Corsair Products from Choice Electronics.” But these allegations were “conclusory and wholly speculative.” [Could a survey have fixed this?] Similarly, Choice couldn’t sue based on the alleged legal violation under an “unlawfulness” theory under California or New York law because it lacked sufficient injury.