contributory liability possible for lawyers in timeshare exit cases

Posted on September 30, 2021 by rtushnet

Diamond
Resorts U.S. Collection Development, LLC v. Pandora Marketing, LLC, 2021 WL
1573073, CV 20-5486 DSF (ADSx) (C.D. Cal. Apr. 12, 2021)

Another
timeshare company v. timeshare exit company case. Here, Diamond sued both the
marketers who seek exit clients and also the lawyers who worked with them. The
marketers allegedly referred Diamond owners to the lawyer defendants, who
allegedly instructed owners to refrain from paying anything owed under their timeshare
contracts, and to change their address on file with Diamond to the address of a
lawyer, but had “no legal or viable method to assist the Diamond Owners in
exiting the Timeshare Contracts.”

The
lawyer defendants allegedly interfered with the timeshare contracts by (1)
participating in the marketing defendants’ false and misleading advertising;
(2) encouraging or directing the nonpayment of fees owed to Diamond; and (3)
keeping the owners in the dark regarding the adverse financial consequences
resulting from the nonpayment of fees. The lawyers allegedly added legitimacy
and effectiveness to the scheme because the marketing defendants advertise that
they work with a “team of professionals” and “attorney[s],” which helps “close
the deal” with new customers. The lawyers were allegedly aware of the false and
misleading nature of the advertisements before accepting referrals, and
allegedly encouraged the ads by corroborating their involvement on their own
websites. Diamond alleged that early discovery showed that owners wouldn’t have
engaged the exit company but for the assurances made about the lawyer
defendants’ involvement.

Contributory
false advertising under the Lanham Act: The Ninth Circuit has held that for
contributory liability, “a defendant must have (1) ‘intentionally induced’ the
primary infringer to infringe, or (2) continued to supply an infringing product
to an infringer with knowledge that the infringer is mislabeling the particular
product supplied.” The Eleventh Circuit has a slightly different standard: “[f]irst,
the plaintiff must show that a third party in fact directly engaged in false
advertising that injured the plaintiff,” and “[s]econd, the plaintiff must
allege that the defendant contributed to that conduct either by knowingly
inducing or causing the conduct, or by materially participating in it.” This
requires a culpable state of mind, either intent to participate or actual
knowledge. A court may consider: (1) “the nature and extent of the
communication between the third party and the defendant regarding the false
advertising;” (2) “whether or not the defendant explicitly or implicitly
encouraged the false advertising;” (3) “whether the false advertising is
serious and widespread, making it more likely that the defendant knew about and
condoned the acts;” and (4) “whether the defendant engaged in bad faith refusal
to exercise a clear contractual power to halt the false advertising.”

Regardless
of which standard applied, Diamond successfully alleged contributory false
advertising. The lawyers allegedly knew about the false advertising and “at
least implicitly induced it by including information about their timeshare
services on their websites, knowing the alleged false advertising relied on
promising lawyers, and continuing to accept referrals despite the allegedly
false nature of the advertisements.”

Tortious
interference with contractual relations/prospective economic relations: This
didn’t work as well against the lawyers, who weren’t directly advertising to
consumers. The main elements of the tort occurred after the lawyers had been
engaged, and they were then the owners’ agents when they told the owners to
stop paying; an agent cannot tortiously interfere with the contracts of the
principal simply by acting on the principal’s behalf and being paid by the
principal. It wasn’t enough to allege that they got an additional financial
advantage in the form of a stream of referrals from the scheme. “Undoubtedly
most lawyers hope their services for clients result in an increase in
referrals.” But they still only obtained the fees that the clients paid.

However,
Diamond did successfully allege that the lawyers aided and abetted tortious
interference before they became agents of the owners. (This seems a relatively
dangerous principle given the ways in which many lawyers find clients.) Given the
allegations, it was plausible that the lawyers knew of the scheme and gave
substantial assistance by agreeing to be the lawyers needed to carry out the
scheme.

UCL
claim: Diamond didn’t have to allege its own reliance if it lost money or
property as a result of the conduct.

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Survey flaws prevent it from saving vanilla false advertising claim

Posted on September 30, 2021 by rtushnet

Clark
v. Westbrae Natural, Inc., 2021 WL 1580827, No. 20-cv-03221-JSC (N.D. Cal. Apr.
22, 2021)

I find
the vanilla class actions fascinating because they are starting to reject
surveys, pushing this area of the law towards a normative vision of what’s
misleading to a reasonable consumer. I don’t have a very strong position on
whether misleadingness should be empirically or normatively assessed, but I do
think courts should be clear on what they’re doing and not bounce unpredictably
between the two concepts. We are definitely not there yet.

Anyway,
Clark alleged that a label describing soy milk as “vanilla” soymilk
misrepresented to reasonable consumers that the product’s vanilla flavor was
derived exclusively from the vanilla bean plant. The court found that not
plausibly misleading despite allegations that a survey showed 403 consumers a
picture of the product and asked “What does the term ‘Vanilla’ on the above
pictured product convey to you about the origin of the vanilla flavor?” Nearly
half, 49.6%, of the consumers surveyed selected the response that they
“believed that the term ‘Vanilla’ on the Product means that that the origin of
the Product’s vanilla flavor ‘comes exclusively from ingredients derived from
the vanilla plant, such as vanilla beans or vanilla extract.’ ”

But so
what? The survey presumes that the label conveys something about the source of
the flavor, and didn’t give participants the option of stating that they
believed that the label conveyed nothing about the origin of the vanilla taste.
“In any event, even without the survey’s flaws, the survey does not shift the
prevailing reasonable understanding of what reasonable consumers understand the
word vanilla to mean or make plausible the allegation that reasonable consumers
are misled by the term vanilla”  (cleaned
up). This is a remarkable statement: how does the court know what the
“prevailing” understanding of reasonable consumers is, without consumer
reaction evidence? Especially on a motion to dismiss? The suggestion is that
the court’s common sense couldn’t be refuted even with an impeccable survey,
because, presumably, the respondents wouldn’t be “reasonable” consumers.

It
just wasn’t plausible that a reasonable consumer would interpret a product
labeled as a “vanilla” product to mean that the vanilla flavor is derived
exclusively from the vanilla bean plant. “Such an inference is just too far a
reach.” This was true even though plaintiff alleged that there is a
competing vanilla soymilk product on the market with a similar price point that
obtains its vanilla flavor exclusively from the vanilla plant. Still, the
complaint didn’t allege that consumers knew that or that, if they did, they’d
make the same assumption about defendant’s product. (What counts as common
sense is quite variable. The truffle/manuka honey cases contrast with this
result in a “heads the marketer wins, tails the consumer loses” way: Here,
products that actually have the characteristics at issue don’t show that it’s
reasonable for consumers to think they would, while the absence of
similar-but-truthfully-advertised products is used against consumers in the
truffle/manuka cases.)

The
plaintiff also didn’t plausibly allege violation of federal regulations on
“characterizing flavors.”

 

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No organizational standing where advocacy campaigns didn’t change

Posted on September 30, 2021 by rtushnet

Friends
of the Earth v. Sanderson Farms, Inc., 992 F.3d 939 (9th Cir. 2021)

Although the animal/farm advocacy
organization plaintiffs won some early skirmishes, they faltered on lack of
organizational standing against a poultry producer to bring consumer protection
claims. The court of appeals affirmed their loss.

The
groups’ activities included informing consumers about the downsides of routine
antibiotic use and pressuring restaurants to stop sourcing meat from producers
that routinely use antibiotics. Sanderson continues to use and defend the use
of antibiotics, but advertised its chicken products as “100% Natural” and ran
advertisements stating that there were “[n]o antibiotics to worry about here.” The
groups sued under the UCL and FAL.”To establish organizational standing, the
Advocacy Groups needed to show that the challenged conduct frustrated their
organizational missions and that they diverted resources to combat that
conduct.” Only the latter was at issue.  Diversion of resources has been found when
organizations “expended additional resources that they would not otherwise have
expended, and in ways that they would not have expended them.” By contrast,
merely continuing ongoing activities does not satisfy this requirement.

The
groups didn’t learn of Sanderson’s alleged misrepresentations until August 1,
2016, so resources expended before that date weren’t pertinent. Nor were
activities after suit was filed in June 2017, such as expending resources on
the litigation and litigation publicity. The district court correctly found
that the groups’ activities were “business as usual” during the period, not a
diversion of resources. They were already fighting routine antibiotic use in
animal agriculture. During the relevant period, they didn’t “publish action
alerts or other advice to their members targeting the advertising; did not
address Sanderson’s advertising in any campaign, press release, blog post, or
other communication; did not petition Sanderson; and did not protest
Sanderson’s advertising.”  Internal
discussions about whether something should be done didn’t suffice.

 

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wrong images aren’t false if differences from actual product aren’t material

Posted on September 30, 2021 by rtushnet

Strong
Current Enters. Ltd. v. Affiliati Network, Inc. 2021 WL 1383368, No.
20-cv-23692-UU (S.D. Fla. Mar. 26, 2021)

The
parties compete to sell novelty consumer goods; defendant allegedly copied
plaintiff’s business model including its product launches, providing its
affiliates with Strong Current’s “marketing methods and materials, which
include, among other things, product depictions and graphics.” Affiliati’s
product offerings are allegedly “similar, but different” than those marketed by
Strong Current, and therefore the products sold to consumers “differ from those
depicted in the marketing materials.”

However,
the false advertising claims failed because they didn’t identify material
differences in the products. For example, Strong Current alleged that when
consumers purchase a portable air conditioner from defendants, “they do not
receive the air conditioners depicted in the misappropriated marketing materials,
rather, they receive an inferior portable air conditioner that is different
from the one depicted.” The ads allegedly lead consumers to expect to receive
units containing “(a) handles; (b) single-colored (gray) fronts; (c) fronts
with two gray sections; (d) round edges; and (e) bases and tops that are the
same size.” But “the delivered units do not have handles and have a different
overall look and feel from the advertised units.” However, the complaint didn’t
explain why consumers would care.

Similarly,
Strong Current alleged that consumer confusion existed where “[o]n multiple
occasions, consumers have purchased products from Profit Point, where the
products had been marketed using the misappropriated Strong Current methods and
materials …, and then contacted Strong Current (or its Marketing Affiliates)
about problems or issues with the orders, incorrectly believing that they (the
consumers) had purchased the products from Strong Current (or its Marketing
Affiliates).” It alleged that “when the consumers have issues or problems with
their orders and need to contact the seller and cannot recall where they
purchased the products, a generic internet search … leads them to Strong
Current’s (or its Marketing Affiliates’) websites.” But this was pure speculation;
it didn’t allow the reasonable inference that defendants’ use of allegedly
misappropriated marketing materials was likely to cause consumer confusion. There
were no allegations that defendants’ marketing materials referred to Strong
Current in any way. Indeed, the complaint explicitly alleged that defendants
market and advertise their products under a different brand.

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pandemic refund claim plausibly alleged

Posted on September 29, 2021 by rtushnet

Rothman
v. Equinox Holdings, Inc., 2021 WL 1627490, No. 2:20-cv-09760-CAS-MRWx (C.D.
Cal. Apr. 27, 2021)

Another
pandemic refund case. This one found a misrepresentation adequately pled with
respect to the refund provision of plaintiff’s membership contract with the
defendant, a gym company. The Membership Agreement allegedly said that: “Buyer
should be aware that if the Club closes, although the Club will remain legally
liable to Buyer for a refund, Buyer may risk losing his or her money if the
Club is unable to meet its financial obligations to Members.” This could have
misled a reasonable consumer to believe that the club would “provide a monetary
refund for any period during which their clubs are closed.” Equinox argued that
he hadn’t pled any representation that refunds would be automatic, and that the
contract statement was “a non-actionable statement of legal opinion.”

But
the statement was plausibly misleading and the agreement didn’t contain any
language requiring members to affirmatively request a refund. It plausibly
suggested that Equinox was required to issue a refund in the event of a club
closure, and it wasn’t a “mere prediction or opinion regarding uncertain future
events” but “a promise regarding the import of particular factual
circumstances, namely that when a club closes—as plaintiff alleges his
has—consumers will be entitled to receive a refund.”

Equinox
urged that it was implausible that a reasonable consumer would have anticipated
a global pandemic and public health orders closing the gym. But “[t]he relevant
question is not whether plaintiff could have anticipated that the club would
close due to a global pandemic. It is whether plaintiff reasonably attached
importance to the existence of a promise to refund his money in the event that
the club closed, for any reason.”

Equinox
sought dismissal of the equitable claims under Sonner. The court found
dismissal premature since there was no pending motion for injunctive relief
that would require the Court to determine the adequacy of plaintiff’s legal
remedies.  Anyway, the plaintiff couldn’t
necessarily “quantify [his] actual damages for future harm” with any certainty;
he cannot currently predict whether, when, or for how long Equinox may be
required to close the Equinox clubs in the future due to the ongoing pandemic. But
punitive damages claims were dismissed for want of an adequate basis.

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“natural” claims still going strong; scientific testing not required in pleading

Posted on September 29, 2021 by rtushnet

Barton
v. Pret A Manger (USA) Ltd., — F.Supp.3d —-, 2021 WL 1664319 1:20-cv-04815
GHW (S.D.N.Y. Apr. 27, 2021)

Plaintiff
plausibly alleged that the references to “natural ingredients” and “natural
food” on defendant’s products’ packaging were likely to lead a reasonable
consumer to wrongly believe that these products contain exclusively natural
(not synthetic) ingredients and that they are free of GMOs. Thus, consumer
protection claims under Sections 349 and 350 of the New York General Business
Law are adequately pleaded though other tort and warranty claims failed.

Of
note: plaintiff wasn’t required to plead the existence of scientific testing
that demonstrates that the products contained GMOs. “Defendant points to no
case law that supports its extraordinary argument that the Court should not
accept as true the pleaded facts unless they are supported by scientific
studies.” Prior cases are distinguishable because they alleged that most of the
X grown in the US was genetically modified, but didn’t allege that the
defendants in those cases used the genetically modified ingredients, as the complaint did here.

Pret
argued that no reasonable consumer could be deceived by Pret’s use of the word
“natural,” as “federal regulations permit foods labeled as ‘organic’ to contain
all but one of Plaintiff’s challenged substances.” But the court couldn’t find,
as a matter of law, that a reasonable consumer couldn’t reasonably “expect that
a product labeled ‘natural’ or ‘all natural’ contains only natural ingredients,”
 even if “foods labeled ‘organic’ may
lawfully contain some synthetic ingredients. There is no rigid hierarchy that
makes ‘natural’ a more permissive label than ‘organic’ in all respects as a
matter of law.”

 

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MLM on MLM action: tortious interference, trade secret, but not false advertising

Posted on September 29, 2021 by rtushnet

It
Works Marketing, Inc. v. Melaleuca, Inc., 2021 WL 1650266, No.
8:20-cv-1743-T-KKM-TGW (M.D. Fla. Apr. 27, 2021)

It
Works is a MLM company that sells health and beauty products that requires
distributors to sign a noncompete agreement and provides for arbitration (which
allows “any party” to sue in court for IP claims, practically meaning that It
Works can choose to sue if it wants). Melaleuca is a MLM competitor; individual
defendants were former It Works distributors, but Melaleuca was never a party
to the agreement.

The
claims are mostly the kind of trade secret/tortious interference claims you’d
expect from this setup, and I won’t say much about them, but there is also a
false advertising claim about alleged misrepresentations of distributors’
income with Melaleuca. “For example, Melaleuca endorses fake, high-amount
checks, which the Distributor Defendants then post on social media and message
to It Works distributors to entice them to leave It Works and join Melaleuca.”

In
Florida, a non-signatory can use equitable estoppel to compel a signatory to
arbitrate claims if (1) the non-signatory shows that the signatory is relying
on the agreement to assert its claims against the non-signatory and (2) the
scope of the arbitration provision covers the dispute. Here, It Works’ dispute
with Melaleuca fell outside the scope of the arbitration clause.

Thus,
the court proceeded to address the motion to dismiss, and found tortious
interference and trade secret claims properly pleaded.

False
advertising under the Lanham Act: Failed because It Works didn’t plead that
distributors were “consumers” under the Lanham Act. Solicitations directed to a
potential distributor or employee aren’t covered because they aren’t
“consumers.” (That isn’t actually an element, but this may be complicated by
the fact that MLM businesses have some special reasons to talk carefully about
whether their “distributors” are ordinary “consumers.”) Second, It Works relied
on allegedly false statements that Melaleuca distributors made, allegedly at
Melaleuca’s direction or encouragement, not on Melaleuca advertising. That was
a contributory false advertising claim, but It Works didn’t actually allege
contributory false advertising by Melaleuca.

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CA prohibition of insurance coverage for certain consumer protection cases is constitutional

Posted on September 29, 2021 by rtushnet

Adir Int’l,
LLC v. Starr Indemnity & Liability Co., 994 F.3d 1032 (9th Cir.
Apr. 15, 2021)

California’s
AG sued Adir for violating state consumer protection laws based on conduct at
its retail stores that allegedly exploited its mainly low-income,
Spanish-speaking customer base. Adir asked its insurance carrier to pay its
legal defense fees. Though the insurer agreed, the AG warned that the California
Insurance Code forbade it from providing coverage in certain consumer
protection cases brought by the state. The insurer reversed itself and Adir
challenged the law’s constitutionality, arguing that the state unfairly
stripped it of insurance defense coverage based on unproven allegations in the
complaint. This, the court of appeals held, didn’t facially violate Adir’s due
process right to retain counsel. “In civil cases, courts have recognized a
denial of due process only if the government actively thwarts a party from
obtaining a lawyer or prevents it from communicating with counsel. … While it
cannot tap into its insurance coverage, Adir has managed to obtain and
communicate with counsel.”

California’s
law provides:

(a)
No policy of insurance shall provide, or be construed to provide, any coverage
or indemnity for the payment of any fine, penalty, or restitution in any
criminal action or proceeding or in any action or proceeding brought pursuant
to [the UCL or FAL] by the Attorney General … notwithstanding whether the
exclusion or exception regarding this type of coverage or indemnity is
expressly stated in the policy.

(b)
No policy of insurance shall provide, or be construed to provide, any duty to
defend … any claim in any criminal action or proceeding or in any action or
proceeding brought pursuant to [the UCL or FAL] in which the recovery of a
fine, penalty, or restitution is sought by the Attorney General …
notwithstanding whether the exclusion or exception regarding the duty to defend
this type of claim is expressly stated in the policy.

True,
“California has stacked the deck against defendants facing these lawsuits filed
by the state: Although the Attorney General has yet to prove any of the
allegations in his lawsuit, he has invoked the power of the state to deny
insurance coverage that Adir paid for to defend itself.” But that wasn’t enough
of an interference to deny due process, especially given that there was no
allegation that Adir cannot afford competent counsel absent coverage under the
policy.  For comparison, “the right to
retain counsel does not require the release of frozen assets so that a civil
defendant can hire an attorney or otherwise defend his claim.” There was no “indirect
right to fund and retain the counsel through an insurance contract.”

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falsely advertising “proprietary” and “exclusive” material isn’t actionable under Dastar

Posted on September 28, 2021 by rtushnet

Crocs, Inc. v. Effervescent, Inc., 2021 WL 4170997, No.
06-cv-00605-PAB-KMT, No. 16-cv-02004-PAB-KMT (D. Colo. Sept. 14, 2021)

Dawgs alleged that Crocs falsely marketed its shoes in
violation of the Lanham Act by advertising Croslite, the foam material that
Crocs shoes are made from, as “patented,” “proprietary,” and “exclusive.” Dawgs
stated that it “received numerous inquiries from its customers and potential
customers regarding Dawgs’[s] foam material in comparison with Croslite” and
that these inquiries “have consistently revealed a concern that Croslite is
superior because it is held out as patented, exclusive[,] or proprietary such
that[,] in the mind of the customer, Crocs is perceived to have invented a
superior [ethyl vinyl acetate (“EVA”)] material that no other manufacturer can
match.” Crocs admits that its advertisements have “linked” such terms as
“patented,” “proprietary,” and “exclusive” to features, characteristics, and
qualities of the product material, and that Crocs’s goal in its Croslite
messaging was to imply that its products have “superior characteristics,
qualities, and features.” This allegedly misled “the public and consumers by
claiming that Crocs footwear is made of an exclusive and proprietary
closed-cell resin that they call ‘Croslite,’ when, in fact, ‘Croslite’ is
merely the common ethyl vinyl acetate used by many footwear companies around
the world.”

Nonetheless, the court found that Dastar barred the
§43(a)(1)(B) claims as well as the §43(a)(1)(A) claims. I think this is
wrong—the patented/proprietary/exclusive language here is not the same as
claiming authorship; it’s claiming uniqueness as a reason for consumers to
believe that Crocs possess superior product characteristics to those of
competitors’ products. To the extent that the claims lead consumers to believe
that Crocs are “made of a material ‘different than any other footwear,’” a
difference made credible to consumers by references to patents and/or
proprietary knowledge, that is a claim about the physical nature of specific
product components, not about authorship. When the Supreme Court left
§43(a)(1)(B) claims open in Dastar, this is the kind of thing that fits
well.

But the court here disagreed, relying on the Federal
Circuit’s Baden Sports decision.  “Baden,
a basketball manufacturer, argued that Molten had engaged in false advertising
when Molten claimed that its basketballs were ‘innovative,’ ‘exclusive,’ and ‘proprietary’
when its ‘innovative’ layer of padding beneath the cover was invented by Baden,
not Molten.” The Federal Circuit held that §43(a)(1)(B) did not bar the
statements because “[n]o physical or functional attributes of the basketballs
[were] implied by Molten’s advertisements.” The terms “innovative,”
“exclusive,” and “proprietary” involved a “false designation of authorship,”
but “authorship, like licensing status, is not a nature, characteristic, or
quality” under the Lanham Act.

Comment: Baden’s claim was different than Dawgs’ claim here:
Baden claimed it was falsely losing credit, which really does sound like Dastar.
Dawgs’ claim is that Crocs falsely claimed to have a unique material, which it
does not in fact use. It’s not about credit or source of the idea at all.
“Proprietary” may or may not imply inventorship, but even if that implication
is non-actionable, if “proprietary” implies “made of different materials than
other competitors,” none of the concerns behind Dastar are implicated
and many of the concerns of false advertising law are.

I would have accepted Dawgs’ argument that Dastar
doesn’t apply because “Crocs has falsely advertised Croslite as patented,
proprietary, and exclusive in order to create a false impression regarding
specific qualities and characteristics of its shoe material, including that its
shoes are superior to competitors’, that they are soft, comfortable, lightweight,
odor-resistant, and non-marking, which goes to the nature, characteristics, or
qualities of the products.” However, the court didn’t find that argument made
in the claim or counterclaim, which merely alleged “that Croslite is merely a variation
of ethyl vinyl acetate used by many footwear companies around the world and
that, by Crocs claiming to have invented Croslite, Crocs has implied that
Dawgs’s footwear is inferior.” Dawgs only mentioned lightweightness, etc.
later. In a footnote, the court also found that “unauthenticated screenshots
from online reviews of Crocs shoes” provided to show actual confusion weren’t
admissible for summary judgment purposes.

But the court here found Baden persuasive. “Falsely
claiming to have ‘patented’ something is akin to claiming to have ‘invented’
it, and to plagiarizing or reverse passing off, which Dastar held not to
be covered by the Lanham Act’s false advertising prohibition.” [I think this
highlights the logic flaw: this isn’t reverse passing off! There’s nothing
entailed here about Crocs falsely claiming credit for something someone else
did, as there was in Baden where the allegations did at least resemble
reverse passing off.]

The Sixth Circuit has likewise held that “a
misrepresentation about the source of the ideas embodied in a tangible object
… is not a misrepresentation about the nature, characteristics, or qualities
of the object.” The court here thus reasoned that, “even assuming that Crocs
misrepresented the source of the ethyl vinyl acetate as a proprietary and
exclusive foam, Croslite, … that is not enough for a Lanham Act false
advertising claim under § 1125(a)(1)(B).”

Neither “exclusive” nor “proprietary” is a statement about
the nature, characteristics, or qualities of the product. Moreover, the
allegations that these statements claimed superiority didn’t help because “a
claim of superiority is puffery, which is not actionable under the Lanham Act.”
[Sleight of hand here: the nature of the claim is generalized to a superiority
claim, and “superior” is puffery. But the claim itself was of uniqueness, which
is a reason that the shoes might be superior, and is not vague or unmeasurable
in the same way.]

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both being on an app store and not being on an app store make confusion likely

Posted on September 28, 2021 by rtushnet

Reflex Media, Inc. v. Luxy Ltd., 2021 WL 4134839, No.
2:20-cv-00423-RGK-KS (C.D. Cal. Jul. 13, 2021)

Eric
Goldman has highlighted the toxic assumptions about sex workers and their
clients that the court tosses off in its likely confusion analysis. Potential
purchasers of sex are deemed “more sophisticated and less likely to be confused
since they are successful individuals looking for relationships” (citation
needed). But potential sellers of sex/people interested in the receiving payment side of an “arrangement” are
deemed unsophisticated because, apparently, they are just looking to “hook up,”
and the risks of sex work to their bodies, minds, freedom, and legal records
would apparently not induce careful scrutiny of the forum. Paging Ann
Bartow!

Plaintiffs run online dating websites, Seeking
Arrangement.com and Seeking.com, along with a mobile application, Seeking,
which is not on the Apple App Store. Luxy operates a competing online dating
website, OnLuxy.com, and a mobile application, LuxyApp. Luxy allegedly used “Online
Arrangement” and plaintiffs’ trademark “Seeking Millionaire” as metatags on its
website, and other Seeking trademarks as search terms in the Apple Appstore and Google
Play Store to yield LuxyApp as a search result. Luxy also allegedly infringed
plaintiffs’ copyrights by copying their terms of use and privacy policy and by
using plaintiffs’ trademark “SA” in the description of its privacy policies.
[sigh]

In typical TM analysis fashion, the court concludes that
heads, plaintiffs win, and tails, defendants lose: because Seeking isn’t
on Apple’s app store, confusion is more likely when only Luxy’s app comes up in
response to a search since consumers will expect Apple to have everything.
[This seems like the rejected theory of liability in Amazon v. MTM, but clearly
I am not in tune with current keyword jurisprudence.] On the other hand,
because Seeking is on Google Play, confusion is also more likely
there because of the similarity of marketing channels.

“This situation is different from the websites in Network
Automation and Playboy, which were clearly distinguished with ad designations.
The search results here do not have those same disclaimers.” [Again, no mention
of MTM.] [The court also suggests that, because Seeking isn’t on Apple’s app
store, consumers couldn’t compare the parties’ apps and thus it might not be
possible for defendants to engage in truthful comparative advertising on the
Apple app store, which seems like a pretty bad rule.]

The court doesn’t even dismiss the counterfeiting claim,
despite finding the legal argument that keywords aren’t applied to the defendant’s
goods persuasive; it wanted more briefing at the summary judgment stage.

Perhaps unsurprisingly, the court doesn’t even discuss the
differences between false advertising and trademark, grouping it all into
§1125(a).

 

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