facially plausible false advertising claim can be added to TM complaint

In case you’re looking for a roadmap for leave to amend: 

Ideavillage Products Corp. v. Copper Compression Brands LLC,
2021 WL 5013799, No. 20 Civ. 4604 (KPF) (S.D.N.Y. Oct. 27, 2021)

Ideavillage sued CCB for trademark infringement and false
designation of origin related to Ideavillage’s “Copper Fit” line of
copper-infused compression garments. Here, the court granted leave to amend to
add a false advertising claim.

Ideavillage uses the “As Seen on TV” model to sell its
stuff, as well as its own website/Amazon. One of its  most popular products is a line of copper-infused
compression clothing, marketed under the trademark “Copper Fit,” allegedly
designed to alleviate muscle and joint soreness and pain. Defendants also
market and sell copper-infused compression products online, including on their
own website/Amazon. They allegedly advertise their products using the term
“copper” in close proximity to the term “fit” “and have deliberately caused
searches for Copper Fit products to yield results for Defendants’ products”
[the horror!].

The deadline for amended pleadings was in January 2021, with
fact and expert discovery currently set to close in November 2021, and January 2022,
respectively, after several extensions. In May 2021, plaintiffs moved for leave
to file a second amended complaint to add a false advertising claim based on statements
on CCB’s website. A “court should freely give leave when justice so requires,” but
when a scheduling order is in effect, deadlines for amendment of pleadings “may
be modified only for good cause and with the judge’s consent.” The “primary
consideration” in determining whether good cause exists “is whether the moving
party can demonstrate diligence.” The standard is typically not met “when the
proposed amendment rests on information that the party knew, or should have
known, in advance of the deadline.”

Plaintiffs alleged that they only recently discovered that
certain website statements were (allegedly) false and misleading after they initiated
a test buy of certain of defendants’ products “[i]n or about late January
2021,” and performed tests on samples of these products. This allegedly
revealed the falsity of representations that Copper Compression products have
the “highest copper content, [g]uaranteed” and that their products are
constructed with “85% copper-infused nylon[.]”

Defendants argued that plaintiffs should have investigated
sooner. “While the Court agrees with Defendants that Plaintiffs likely could
have initiated test buys of and performed tests on Defendants’ publicly
available compression products earlier, Plaintiffs have nevertheless presented
acceptable justification for their delay.” Plaintiffs argued that, despite
their general awareness of the relevant statements, it was only through
discovery that they “recently [became] aware of the extent to which Defendants
prominently, and repeatedly use these claims in connection with” their
advertising. Materials revealed in discovery can support a finding of good
cause.

Though plaintiffs weren’t wholly unable to investigate
sooner, they weren’t dilatory once they became aware of the key facts. They initiated
test buys in or about late January 2021, received the products in or about
mid-February 2021, and received preliminary testing results in or about
mid-April 2021. “Within a matter of weeks,” they informed defendants of their
intent to add a claim and then in mid-May filed notice of the motion to amend. “At
this relatively early stage in the proceedings, with fact discovery still open
and prior to any dispositive motion practice, the Court does not find that
Plaintiffs’ failure to investigate Defendants’ advertising claims at an earlier
time, when it had no basis to suspect their falsity, constitutes a lack of
diligence that would negate a showing of good cause.”

There was no reason to “conflate Plaintiffs’ knowledge of
certain of Defendants’ advertising with knowledge of the existence of a viable
claim for false advertising.” Using ads that have been on defendants’ website
since the inception of this case didn’t defeat a finding of good cause, because
“[a party] need not prove that they uncovered new facts or law in order for
this Court to grant leave to amend.”

Moreover, permitting the amended complaint wouldn’t be
prejudicial in any legally relevant respect. “[M]ere allegations that an
amendment will require the expenditure of additional time, effort, or money do
not constitute ‘undue prejudice.’ ” Though it would expand the scope of
discovery somewhat, it would not alter “the focus of the entire case,” or cover
new products. In addition, defendants apparently already conducted their own
testing, which they paid for before the formal institution of a false
advertising claim. Also, “as discovery is ongoing and ample time remains before
trial, allowing the amendment would not significantly delay the resolution of
the dispute.”

Nor would amendment be futile.   Plaintiffs specified at least two allegedly
deceptive statements: (i) that defendants’ products “contain the highest amount
of copper,” and (ii) “that all of Defendants’ Products are made with 85%
copper-infused nylon.” They alleged materiality and deception as well as injury
to them as direct competitors. It wasn’t important that they failed to specify
which lab they used or to attach the test results to the complaint, or to
allege that none of defendants’ products contained 85% copper.

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