Antitrust Law Daily Wrap Up, ADVERTISING—D. Colo.: Lanham Act false advertising claim failed to state harm, (Apr 22, 2015)

By Michael Menzhuber, J.

An individual’s complaint alleging that a former business partner engaged in false advertising, in violation of the Lanham Act, and unfair competition dismissed by a federal district court in Denver for failure to state a claim. Thus, the complaint was dismissed without prejudice (Byler v. Elicit Life LLC, April 20, 2015, Martinez, W.).

Dustin Byler claimed to have developed a non-tobacco herbal chew, which he sold under the Elicit mark. Although he did not register the Elicit mark, he claimed that consumers associated Elicit with him and the herbal chew recipe. Byler later formed BB&G Enterprise (BB&G) with Michael Guess and Christopher Berry. BB&G did business as Elicit Herbal Chew and sold Byler’s herbal chew recipe. However, Byler never entered into any agreement with Guess or Berry to assign his common law rights in and to the Elicit mark. The BB&G website featured Byler’s statements regarding the product and, according to Byler, consumers continued to associate him with the Elicit mark.

After a failing out between the parties, Byler formed a new company, Triumph Tobacco Alternatives LLC, through which he began marketing his herbal chew recipe. Guess and Berry then formed Elicit Life but continued to do business as Elicit Herbal Chew. They also continued to sell a non-tobacco herbal chew and use Byler’s statements regarding the herbal chew product. However, their herbal chew had a different recipe than Byler’s herbal chew. A trademark for Elicit Herbal Chew was later issued by the U.S. Patent and Trademark Office to an LLC, Bangumbo Marketing Group, controlled by Guess and Berry.

Byler brought a complaint against Guess and Elicit Herbal Chew (defendants) under the Lanham Act for false advertising. His complaint also asserted a Colorado common law claim for unfair competition.

Lanham Act claim. The defendants moved to dismiss the Lanham Act false advertising claim on several grounds, including the failure of Byler to plead superior rights. The court disagreed with this argument because it determined that this was a factual dispute to be developed through discovery.

The defendants also argued that Byler’s claim was barred because of their federal trademark registration, pursuant to 15 U.S.C. § 1125. However, Byler pointed out, and the court agreed, that this section applies to claims for dilution and not for false advertising.

The defendants claimed that Byler did not plead sufficiently that consumers could associate him with Elicit and that goodwill had been established was also rejected by the court. The court determined that Byler’s allegations in support of consumer association, although problematic for their “information and belief” character, were sufficient for the purposes of pleading.

Unfair competition claim. The defendants argued that Byler did not adequately allege public deception or confusion in support of his Colorado common law claim for unfair competition. The court disagreed because Byler alleged that the defendants continued to use his statements while marketing their own products. However, the court found that Byler did not adequately allege that the defendants used or copied his products and dismissed the claim with leave to amend.

Failure to plead harm. In an argument directed at both the Lanham Act claim and the state law unfair competition claim, the defendants contended that Byler did not provide evidence of harm. The court noted that Byler’s allegation that he had been caused “irreparable harm and injury” was wholly conclusory. Since harm, or the likelihood of harm resulting from the defendants’ actions, was an essential element of his claims, the court dismissed Byler’s complaint.

The case is No. 14-cv-2103-WJM-NYW

Attorneys: John R. Posthumus (Sheridan Ross, PC) for Dustin L. Byler. John Allan Arsenault (Donelson Barry, LLC) for Elicit Life LLC.

Companies: Elicit Life LLC

Cases: Advertising ColoradoNews