Advertiser’s self-voting on positive reviews as “helpful” may be false advertising

Vitamins Online, Inc. v. HeartWise, Inc., 2016 WL 5106990, No.
13-CV-982 (D. Utah Sept. 19, 2016)
Following
up on its previous opinion
, the court rules again about the possible
falsity of reviews posted in exchange for undisclosed gifts of the reviewed
product.
Vitamins Online sells dietary supplements online, including
on Amazon under the brand name NutriGold.  Defendant (NatureWise) does the same, selling
competing garcinia cambogia and green coffee supplements. Vitamins Online sold
its versions before 2010, but then Dr. Oz made them famous and caused competitors
to enter the market.  NatureWise had its
employees vote on the helpfulness of some of the reviews on its product pages,
promoting positive reviews and demoting negative reviews. NatureWise also
encouraged customers to post or repost their positive reviews on Amazon by
offering them free products or gifts cards; “NatureWise would review and, in
some cases, make minor edits to the reviews before asking the customers to post
them on Amazon.”  The number of positive Amazon
reviews a product receives affects that product’s position in Amazon search
results.
NatureWise argued that it didn’t make any false or
misleading statements, which led the court to a scholarly and thorough discussion
of omissions under the Lanham Act. 
Because the language of the Lanham Act bars “any word, term, name,
symbol, or device, or any combination thereof, or any false designation of
origin, false or misleading description of fact, or false or misleading
representation of fact” that constitute infringement or false advertising, false
advertising doesn’t “necessarily require a false or misleading description or
representation of fact.”  In other words,
“the statute unambiguously allows for a false advertising claim to be based on
the ‘any word, term, name, symbol, or device’ language as long as the use of
that conduct ‘in commercial advertising or promotion’ results in the unlawful
effect of ‘misrepresent[ing] the nature, characteristics, qualities, or
geographic origin of his or her or another person’s goods, services, or
commercial activities.’”
The court thought that NatureWise’s Amazon-related conduct
could fall under the concept of a “device.” 
Offering free products was a mechanism to increase positive reviews;
NatureWise also used a mechanism provided by Amazon “for the special purpose of
increasing the visibility of positive reviews and decreasing the visibility of
negative reviews.” 
NatureWise also argued that its conduct wasn’t “commercial
advertising or promotion” because it wasn’t the source of the statements at
issue (an argument already rejected above) and because there was no evidence
that the statements at issue were viewed by a sufficient number of the relevant
purchasing public.  The court rejected an
actual viewing standard, and held that “the test only requires a showing that
the information was sufficiently disseminated to the relevant purchasing
public.” The information at issue—the reviews and helpfulness votes—was available
on the NatureWise Amazon product pages. 
NatureWise only sells the products at issue on Amazon, so that
information was disseminated to all
of NatureWise’s actual or potential customers, which was enough to satisfy the
test.
But was there a misrepresentation?  Offering free products in exchange for
positive reviews wasn’t enough to show that that NatureWise’s conduct gave a
false or misleading representation of the nature, characteristics, or qualities
of NatureWise’s goods or commercial activities. Vitamins Online failed to show
that the reviews posted by the customers were not genuine.  But what about disclosing that they were in
exchange for free products? The FTC
thinks this disclosure is material to consumers to judge the credibility of the
review and therefore required
.  I
agree—I do give less weight to positive reviews with the required disclosure,
though I don’t discount them entirely. 
The court doesn’t discuss whether the reviews failed to disclose the
quid pro quo, just says that Vitamins Online didn’t show that the reviews were
false or misleading.
However, manipulating the prominence of the reviews block
voting on the helpfulness of the reviews could constitute a false or misleading
representation.  (Note that the reason
for this is essentially the same reason that quid-pro-quo reviews ought to be
disclosed!)  “The representation being
made by the placement of these reviews on the product page is that customers
wrote, posted, and rated the reviews and that the reviews that appear first in
the list are the ones that customers found to be most helpful.”  Distorted ranking of helpfulness could clearly
deceive consumers about which reviews were most helpful.
NatureWise argued that, to be actionable, an omission has to
relate to an affirmative claim, and that therefore there can be no liability
when it didn’t make any affirmative
claims.  But the court’s reasoning above
disposes of that argument (and NatureWise did make affirmative claims about
helpfulness/lack thereof of particular reviews to consumers).  “Because Vitamins Online has demonstrated
that the reality, that some customers and a block of employees of the
manufacturer voted on the helpfulness of some of the review, may be different
than the implied representation, that a certain number of customers voted on
the helpfulness of some of the reviews, the court concludes that genuine issues
of material fact exist as to whether the statements are false by necessary
implication.”
Section 43(a) is not a “federal codification of the overall
law of unfair competition,” but the court concluded by noting that, even under its
broad interpretation, several “causes of action related to unfair competition”
would still not be covered by the Act, including “trade secret violations,” “[c]ontractual
disputes,” and “false claims of trademark rights.”

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