Antitrust Law Daily Wrap Up, ADVERTISING—C.D. Cal.: Gold dealers’ false advertising claim did not require self-promotion allegation, (Jul 21, 2014)

By Edward L. Puzzo, J.D.

False advertising claims made by a precious metals dealer against its competitor were well pleaded, even without an allegation that the defendant’s statements promoted its own products, the federal district court in Los Angeles has ruled (American Bullion, Inc. v. Regal Assets, LLC, July 15, 2014, Pregerson, D.).

American Bullion and Regal Assets were competitors in the business of selling gold and other precious metals as IRA investments. American Bullion alleged that Regal Assets operated ostensibly independent websites, which used purportedly independent customer reviews to disparage and falsely advertise American Bullion. For instance, the websites operated by Regal Assets allegedly claimed that American Bullion had “run a precious metals scam” and a “Ponzi-like scheme” and had been found guilty of fraud and sued by the Commodities Futures Trading Commission, when in fact the party in that fraud lawsuit was a business with a similar name, not American Bullion.

American Bullion brought a number of claims against Regal Assets, including false and misleading advertising under the Lanham Act. Regal Assets moved to dismiss.

Lanham Act. Regal Assets first alleged that the Lanham Act claim should be dismissed because American Bullion had not alleged ownership of a trademark. The court rejected that ground for dismissal because American Bullion was making a Lanham Act false advertising claim, not a trademark claim.

Promotion of own products not required element. Next, Regal Assets alleged that the Lanham Act claim should be dismissed because the complained-of statements encouraged consumers to refrain from contracting with American Bullion, but did not promote Regal Assets’ products. This distinction was irrelevant, the court found, because a Lanham Act claim for false advertising requires a false statement in a commercial advertisement about its own or another’s product.

Furthermore, the complained-of statements encouraged consumers to buy Regal Assets’ products by promoting those products and directing consumers to Regal Assets’ other website. Thus, the court ruled, the Lanham Act claims were adequately pleaded and should not be dismissed.

The case is Civil Action No. 2:14-cv-01873-DDP-AS.

Attorneys: Aaron Michael Wais (Mitchell Silberberg & Knupp LLP) for American Bullion, Inc. Frank J. Lizarraga, Jr. (Lizarraga Law Firm, APC) for Regal Assets, LLC.

Companies: American Bullion, Inc.; Regal Assets, LLC.

Cases: Advertising CaliforniaNews