Allegedly false statements on package/instructions didn’t plausibly harm competitors, court rules

Telebrands Corp. v. Everstar Merchandise Co., No. 17-2878, 2018
WL 585765 (D.N.J. Jan. 29, 2018) (magistrate judge)

Telebrands sells novelty stuff; Everstar, a competitor, allegedly copied its
stuff in unlawful ways.  Relevant to this
blog, Telebrands alleged that Everstar engaged in false advertising under
§43(a) by printing false information on the packaging of its GALAXY LASER and
NORTHERN LIGHTS LASER products, as well as within the operating instructions
for those products.  The statements
allegedly understated the maximum power output of the lasers (whose output was
actually in excess of that allowed by the FDA), misleading consumers into
thinking the lasers would be safe to use. 
Rather than dealing with this as a matter of “commercial advertising or
promotion,” as I would have guessed, the court used Lexmark and proximate cause.

First, the court reasoned, Telebrands didn’t allege that
Everstar characterized the statements on the packaging in any way that
indicated safety.  [Necessary implication
much?]   Nor were there any alleged comparisons or
references to Telebrands products, nor were there any allegations about how consumers
“might have acted differently had the packaging information been accurate, or,
alternatively, if the packaging did not include any representations regarding
power output.” Thus, there were no allegations about how the misstatements
persuaded consumers to purchase Everstar’s products.  Likewise, Telebrands didn’t allege that the
safety instructions were available to consumers before purchase, so they couldn’t
affect purchasing decisions.  Telebrands
suggested in its argument that “[t]he dangerous nature of Defendants’ products
will harm Telebrands’ sales and may ultimately destroy the market for decorative
holiday laser lighting products,” but this wasn’t in the complaint, which
referenced sales diversion.  “If
Plaintiffs intend to plead injuries suffered as a result of harm to the
industry in general, they must add allegations making that clear.”

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