Even a default can’t make false claims made to Amazon violate the Lanham Act

Wilco Trading LLC v. Shabat, 2021 WL 1146634, No.
8:20-cv-579-TPB-JSS (M.D. Fla. Mar. 8, 2021) (R&R)

Wilco is an online reseller, primarily on Amazon. It allegedly
sold authentic beauty products made or branded by defendant EL Sales, which
nonetheless filed complaints on Amazon claiming that Wilco was selling
counterfeit products, and also posted a warning on the webpage for the product warning
against purchasing “counterfeits” and telling consumers only to buy from the
authorized account. Amazon suspended Wilco as a result of the complaints, and
refused to reinstate it for several months.

Defendants defaulted. Despite this, the magistrate found
that there was no valid Lanham Act claim. False complaints to Amazon weren’t “commercial
advertising or promotion.”  

Defendants’ warning on their website regarding “unauthorized
dealers” arguably was “commercial advertising” under the Lanham Act. Wilco
alleged that the warning falsely stated “that all other products are not only
‘unauthorized,” but ‘counterfeit’ and therefore dangerous.” But the complaint
didn’t identify any literally false allegations that the products could only
be found through authorized dealers. The warning would only be literally false
if no unauthorized dealers sold counterfeit Predire Paris products, and
the complaint didn’t so allege. Thus, Wilco was required to offer some evidence
of consumer deception. Even with the default, it wasn’t enough to allege that
the website was “likely to deceive and confuse the public.” Nor did it
adequately allege materiality; its claims of injury also focused on the Amazon
suspension.

FDUTPA: Doesn’t allow for consequential damages, including
lost profits, so that went too.

Tortious interference and defamation per se (false
accusations of selling counterfeits) did work, though, resulting in damages over
$166,000 but no injunction or attorney’s fees.

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