Copying others’ claims without substantiation for one’s own services can be false

TRUSTID, Inc. v. Next Caller, Inc., No. 18-172-LPS, 2018 WL
6242493 (D. Del. Nov. 26, 2018) (report and recommendation)
The magistrate addressed trade secret and false advertising
claims, though there are also patent claims in the case. The relevant facts for
the false advertising bit: TRUSTID alleged that it “invested significant time
and millions of dollars to test, measure, and validate the performance of its
[own anti-spoofing and caller-authentication] technologies[,]” and that such
“technologies can [only] be reliably tested … in real-world situations[.]” It
was thus allegedly able to advertise truthfully that it (i) saved customers
$0.50 per call, (ii) achieved a 10% increase in IVR [interactive voice
response, meaning that human customers talk to an automated menu] containment,
and (iii) saved 30 seconds per call. Last Caller allegedly claimed the same
capabilities for its own caller-authentication system: “‘increase 10% IVR
Containment Rate,’ ‘[s]ave $0.50 per call,’ and ‘save 30 secs handle time.’ ”
TRUSTID alleged that these statements must be false because Last Caller did
nothing to substantiate these claims but merely copied TRUSTID’s own
assertions. Without citing the Third Circuit Novartis case holding that
complete lack of substantiation can be literal falsity, the magistrate reached
the same result: though this only barely crossed the line to plausibility, “[i]t
seems likely that a party who makes claims about its own product’s
attributes—without ever taking any steps to confirm whether those claims are
true, and instead simply parroting assertions that its competitor made about
the competitor’s own products—is making false statements about its product.”  

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