TM claimant may add false advertising claims as direct competitor

Entrepreneur Media, Inc. v. Roach, 2021 WL 4134836, No.
8:20-cv-01690-JVS-AD (C.D. Cal. Jul. 1, 2021)

Entrepreneur, a frequent trademark claimant, sought to amend
its complaint and add new parties to the TM claims here. Entrepreneur has 15
federal registrations that include the word “entrepreneur.” Roach, meanwhile, makes
frequent use of the phrase “The Unstoppable Entrepreneur” and applied to
register the phrase for “Business consultancy; Business marketing consulting
services.” Entrepreneur’s opposition remains pending.

Of note: In the discussion of adding another defendant, the
court noted defendants’ argument that this was being done to harass: Defendants
alleged that “Entrepreneur’s counsel stated that Entrepreneur’s allegations
were likely to be highly publicized, and that he intended to refer Defendants’
dissatisfied customers to plaintiffs’ lawyers,” which they interpreted as a
threat. This “inference of intention to harass” was reasonable, but not
inevitable. “Entrepreneur’s desire to bring forth a claim for false advertising
against a competitor in a similar market is not unusual behavior.”

Along with adding a defendant, Entrepreneur might eventually
be allowed to add a false advertising claim, based on facts that were allegedly
discovered only during Roach’s deposition. Roach’s webinar slide deck allegedly
contained false statements to potential customers that Roach’s program is the
“only” program guaranteed to double someone’s revenue in twelve months. The
deck allegedly also referred to “9 Free Bonuses,” that a reasonable consumer
would allegedly conclude are sold separately. And, in deposition, Entrepreneur
allegedly learned for the first time that some of the customers in defendants’
advertised “Unstoppable Entrepreneur Success Stories” never enrolled in the
Unstoppable Entrepreneur Program. (Defendants rejoined that they came from
defendants’ pre-rebranding coaching program, but that factual dispute doesn’t
matter at this stage.)

However, there was not good cause to challenge the words
“flexible” and “risk free” on defendants’ website when a consumer attempts to
purchase the Unstoppable Entrepreneur Program. Entrepreneur allegeed that it
learned only after deposition that “this information is potentially misleading
to consumers because the purchase of the plan is locked in, and a consumer must
pay full price for the program.” But the website displaying two payment plans
along with specific information regarding the payment methods was publicly
available prior to the deposition, and the contract contained the specific
payment terms, which Entrepreneur acknowledged. “What Entrepreneur learned in
the Roach deposition was the same information that could be uncovered by
reading Defendants’ standard contract: that Defendants expected signing
consumers to continue contractual payment regardless of whether the consumer
wanted to leave the program midway through.”

Nor would amendment for the other statements necessarily be
futile, though further allegations would be required. Entrepreneur fell within
the statute’s zone of interests—alleged lost sales and reputational injury. And
Entrepreneur alleged that “but for” defendants’ false advertising, consumers
would not have been misled and diverted away from Entrepreneur. Although some
courts might well agree that this was merely conclusory, this court found that
sufficient. The parties could be considered “fellow commercial actor[s]” “because
both offer the same goods and services including coaching services consulting,
books, and podcasts,” and thus diversion from falsity was plausible.

In addition, Entrepreneur successfully alleged falsity under
Rule 9(b) by identifying the alleged falsehoods in the webinar slide deck.
Entrepreneur alleged that the Unstoppable Entrepreneur Program was not
guaranteed to double someone’s revenue in twelve months because many consumers
enrolled in the Unstoppable Entrepreneur Program did not achieve that result,
and that other programs could do so. And it was plausible that a consumer
viewing the “free bonuses” might reasonably conclude that they are able to be
purchased separately.

However, there were missing details that were required: Entrepreneur
didn’t state with particularity “when” the slide deck was presented (even a
date range), how often it was presented, how it was presented, or by which

As to the allegedly false testimonials, likewise
Entrepreneur alleged the “what” (false testimonials) and the “how” (testimonies
provided by people who were not allegedly enrolled in the Unstoppable
Entrepreneur Program), but not the where and when. “Although Entrepreneur’s
Reply contends that the success stories are currently available on Defendants’
website, the proposed FAC fails to mention where the testimonials appear or
have appeared.” So the motion to add a false advertising claim was denied
without prejudice.

from Blogger

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