Disparagement doesn’t cause TM confusion (and a covid-related claim)

Dupart v. Roussell, 2020
WL 6308339, No. 20-1406 (E.D. La. Oct. 28, 2020)

Plaintiffs (Dupart
and Harris) alleged that Roussell’s YouTube videos and Instagram posts discuss their
personal lives and Dupart’s cosmetics brand, Kaleidoscope, which competes with Roussell’s
Sip Cosmetics. Dupart alleged that she had rights in the Kaleidoscope logo and
word marks, and Harris alleged rights in Da Brat/her social-media handle, @sosobrat.

Roussell allegedly
posted a YouTube video claiming that plaintiffs are in a same-sex relationship,
and later added negative comments that Kaleidoscope products are made with
“canola oil,” are “laced with cayenne pepper,” are “Chinese concoctions,” and
“brought Corona over [to the United States].”

Plaintiffs sued for trademark
infringement and false advertising under the Lanham Act, as well as defamation
and coordinate state law claims.

The court ruled that
they failed to state a claim for trademark infringement. There were no plausible
allegations that Roussell’s use of the marks caused likely confusion. “To the
contrary, plaintiffs’ factual allegations suggest just the opposite—defendant
uses plaintiffs’ marks in a manner that differentiates his products from
plaintiffs’ marks, mostly by making negative comments about Kaleidoscope or
Dupart and Harris personally.”

Harris didn’t state
a false advertising/false designation of geographic origin claim, but Dupart
did. The complaint didn’t allege that Harris provided any goods or services at
all, or engaged in commercial activity (despite owning trademarks). [Assume she
offers entertainment services and properly alleges this. Should the result
differ?]

But Dupart had Lexmark
standing because of the disparagement of Kaleidoscope products. Indeed, Dupart
alleged that Roussell said: “So [Dupart is] basically saying that I used her to
sell products…my response to that is, she’s one-hundred percent right. Let’s
just get that off the table. I used her to sell products. I used her to sell
products.”

Was Roussell engaged
in commercial advertising or promotion? The court joins the overwhelming weight
of authority that Lexmark
modified the classic Gordon &
Breach
test, which has been adopted by the Fifth Circuit but not yet
readdressed by that circuit post-Lexmark. Lexmark reasoned that “nothing in the statute’s text required a
competitive relationship between plaintiffs and defendants,” and the statute
doesn’t even use the word “competition” in 15 U.S.C. § 1125(a)(1)(B). And “it
would be inconsistent with Lexmark’s holding to say that a class of
plaintiffs—those who are not in competition with defendants—may bring suit for
false advertising, yet those same plaintiffs could never prevail on their
claims.”

The only circuit to hold
otherwise merely pointed to the fact that Lexmark said it wasn’t
expressing a view on the meaning of “commercial advertising or promotion.”

Strauss v. Angie’s List, Inc., 951 F.3d
1263 (10th Cir. 2020). But [setting aside that the question of whether the
threat letters in that case constituted advertising/promotion is very different
than that addressed here], the reasoning of the case logically bears on the
meaning of “commercial advertising or promotion.” McCarthy agrees that “[t]he
Tenth Circuit misreads the Lexmark precedent….[T]he Supreme Court’s
conclusion [in Lexmark was] that the Lanham Act provides a remedy to anyone,
competitor or noncompetitor, with a commercial injury due to false advertising
or false disparagement” J. Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition § 27:94 (5th ed. 2020).

Thus, the test asks
whether Roussell’s conduct amounts to (1) commercial speech, (2) made for the
purpose of influencing consumers to buy his goods or services, (3) disseminated
sufficiently to the relevant purchasing public to constitute “advertising” or
“promotion” within that industry. Each part was sufficiently alleged.

Commercial speech: Roussell
allegedly admitted that the purpose of his negative comments was to sell his
own Sip Cosmetic products. In an Instagram post attached to the complaint,
Roussell states: “All in all today was successful! While there is a definite
method to my madness and purpose to my petty it is paying off. Sip Cosmetics
got 854 orders for $10,000 in sales since launch,” which allegedly related to
his content about Dupart. Thus, his speech was plausibly economically motivated
and plausibly part of “advertisement[s]”— “widespread communication through
print or broadcast media,” here involving 81,500 followers on Instagram and
40,700 subscribers on YouTube, with over 716,089 views for the videos in which
he mentions Dupart or the Kaleidoscope brand. Roussell allegedly encourages his
viewers to purchase his own Sip Cosmetic products in the same videos. And he
referred to specific products or services.

For the same reasons,
the other elements of the test were met.

As for falsity: the
complaint plausibly alleged literal falsity as to both “characteristics” and “geographic
origin.” And in the Fifth Circuit, literally false statements are presumed both
deceptive and material.

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