A Blog About Intellectual Property Litigation and the District of Delaware

Entries for tag: Lanham Act

Today's case is a bit outside our normal ambit here at IP/DE, dealing with the patent-adjacent field of false advertising under the Lanham Act. Since you often see such claims brought alongside patent claims, I think its fair game. Also, you're not the boss of me and none of you can stop me.

THE POWER, THE ABSOLUTE POWER! AI-Generated, displayed with permission

Except any judges who may read this, you are frequently the boss of me.


Our case today is one of those where the Lanham Act claims were brought together with the patent infringement claims, in the charmingly named North Atlantic Imports, LLC v. LoCo Crazy Good Cookers, Inc., C.A. No. 23-999-GBW-SRF (D. Del. Jan. 23, 2024). In fact, the claims were oddly intertwined given that one of the alleged false statements was that the defendant stated that its LoCo Crazy (!) grills contained "patented SmartTemp Technology." Apparently, there is no such patent.

Aside from being hilarious, the interesting facet of this opinion was that the Court found that statements about this made-up patent and some other puffery about LoCo Crazy (!!) innovations, might actually induce buyers to make purchasing decisions - at least enough to survive a motion to dismiss:

the complaint contains fact-based allegations featuring Defendant's actual advertisements to show how those ads highlight Defendant's "patented SmartTemp™" technology to sway customers. The complaint further alleges that Plaintiff and Defendant are direct competitors who sell their products at the same stores, including Lowes and Home Depot. (Id at ,r 29) Construing these allegations in the light most favorable to Plaintiff, it is reasonable to infer that customers would consider Defendant's false advertisements material to their purchasing decisions when faced with two similar, directly competing products. Defendant's position that Plaintiff must plead customer reliance at the time of the purchasing decision is supported by post-judgment case law, as opposed to cases addressing a motion to dismiss the pleading.

Id. at 5

Lesson for Crazy LoCo (!!!!) small business owners out there. Try not to make up patents. A good grill sells itself.

Judge Connolly issued a post-trial opinion in a false advertising case this week that contained another interesting bit of damages arcana under the Lanham Act.

AI-Generated, displayed with permission

The trial in CareDx, Inc. v. Natera, Inc., C.A. No. 19-662 (D. Del. July 17, 2023), seemed to go great for the plaintiff with the jury finding 9/10 of the defendant's advertisements were false and awarding $21.2 Million in compensatory damages and $23.7 Million in punitive damages. As we say in Delaware, "that's a lotta crabs"*

It all went tails up in post-trial briefing however, when the defendant moved for JMOL of no damages. The court began by summarizing the elements of a Lanham Act claim in the Third Circuit

1) that the defendant has made false or misleading statements as to his own product [or another's]; 2) that there is actual deception or at least a tendency to deceive a substantial portion of the intended audience; 3) that the deception is material in that it is likely to influence 3 purchasing decisions; 4) that the advertised goods traveled in interstate commerce; and 5) that there is a likelihood of injury to the plaintiff in terms of declining sales, loss of good will, etc.

CareDX, at 3-4 (emphasis added) (quoting Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., 653 F.3d 241,248 (3d Cir. 2011))

The highlighted factor is the interesting one. You see, actual deception is ...

These are not Pelotons.
These are not Pelotons. Jonathan Petit, Unsplash

In competitor cases, parties sometimes include Lanham Act claims alongside patent claims. That's what happened in Peloton Interactive, Inc. v. Icon Health & Fitness, Inc., C.A. No. 20-662-RGA (D. Del.), where both sides brought patent and Lanham Act claims or counterclaims.

Peloton moved to dismiss defendant Icon's Lanham Act counterclaims, which alleged that Peloton had made various false and misleading statements concerning things like whether the Peloton bike was the "first of its kind" and unique among its market, along with statements about Peloton music offerings.

Peloton argued that Lanham Act claims are subject to a higher pleading standard, relying on an old E.D. Pa. case from long before the Supreme Court's decisions on this issue in Twombly / Iqbal:

Peloton urges the Court to apply an “intermediate” standard that first appeared in Max Daetwyler Corp. v. Input Graphics Inc, 608 F. Supp. 1549, 1556 (E.D. Pa. 1985). The Court held, “[i]n litigation in which one party is charged with making false statements, it is important that the party charged be provided with sufficiently detailed allegations regarding the nature of the alleged falsehoods to allow him to make a proper defense.” . . . ICON argues that the standard articulated in Max Daetwyler is inappropriate because it was decided before Twombly and Iqbal. . . . Additionally, there is disagreement within district courts in the Third Circuit as to its applicability. . . .

Judge Andrews declined to apply the heightened standard, quoting

In a recent Daubert ruling in CareDx, Inc. v. Natera, Inc., C.A. No. 19-662-CFC-CJB, Judge Connolly excluded the opinion of the plaintiff's expert regarding "corrective advertising damages," in part because it was based on "vague, undocumented, and back-of-the-envelope . . . estimates" by the plaintiff's CEO. The Judge granted the defendant's motion to exclude the expert's testimony under both Rule 702 and Rule 403, indicating that not only did the expert's opinion fail to satisfy the Daubert hallmarks for admissible expert testimony, it would also confuse the jury and be prejudicial because it "would essentially place the imprimatur of an expert on [the CEO] Maag's undocumented and dubious damages calculation."