Lanham Act requires less in the way of injury from competitors than California FAL/UCL

Eight Sleep Inc. v. Orion Longevity Inc., 2026 WL 1243359, No. 2:26-cv-02460-SB-KS (C.D. Cal. May 4, 2026)

Eight Sleep “developed and patented the Eight Sleep Pod, a ‘bio-tracking mattress cover’ that optimizes sleep by using biometric measurements to automatically adjust the temperature of the user’s bed.” Defendant Orion developed a competing temperature-regulating mattress cover with similar features. Eight Sleep sued for patent infringement, which I will not discuss (the patent claims survive), and false advertising, which I will.

Orion allegedly made false and misleading statements about the Orion Sleep System’s features and availability, including by representing, during development, capabilities not borne out in the product released to the market, in violation of the California UCL and FAL. Orion argued that there was no statutory standing.

Both statutes “require[ ] that a plaintiff have ‘lost money or property’ to have standing to sue,” which requires the plaintiff to “demonstrate some form of economic injury.” The economic injury must also be “ ‘as a result of’ the unfair competition or a violation of the false advertising law,” which requires the plaintiff to show “a causal connection or reliance on the alleged misrepresentation.”

Eight Sleep relied on the Ninth Circuit TrafficSchool case’s statement that courts have “generally presumed commercial injury” when the parties “are direct competitors and [the] defendant’s misrepresentation has a tendency to mislead consumers.” But that decision addressed the Lanham Act, which requires only likely injury. Under the UCL and FAL, actual monetary loss is required.

The complaint only conclusorily alleged that as a result of Orion’s false advertising, Eight Sleep’s goodwill was damaged, and it “lost sales because customers who would have otherwise purchased its products, instead purchased Orion.” That wasn’t enough: “First, the law is unsettled as to whether injury derived from a customer’s reliance on fraudulent advertisements may support a false-advertising claim by a competitor who did not rely on the fraud.” Federal district courts are increasingly accepting reliance by deceived consumers rather than the competitor-plaintiff, but, even under that more permissive approach, the complaint was insufficiently detailed. Similarly, allegations Orion “repeatedly approached investors with false claims” about the parties’ products and Eight Sleep’s profits and margins, and that Eight Sleep “lost investment opportunities that would otherwise have been available from investors who would have, but for Orion’s false statements to investors, invested in Eight Sleep” didn’t identify specific misrepresentations, even if it were clear that statements to investors are actionable as advertisements under the UCL and FAL.

What about Lanham Act claims?  At least one false statement was plausibly alleged: a chart purporting to compare the features offered by “Eight Sleep” and “Orion,” suggesting that Orion offered all 10 of the features listed while Eight Sleep offered only one (embedded sleep sensors). One of the features identified for Orion’s product was “5-Stage sleep tracker,” which the complaint alleges “never existed.” The false statement was posted on Orion’s during “some of the busiest shopping dates in the United States, including Black Friday.”