Antitrust Law Daily Wrap Up, ADVERTISING—D. Colo.: Prefabricated building seller’s Lanham Act claims remain intact, (Aug 20, 2015)

By Greg Hammond, J.D.

A prefabricated steel building seller was not entitled to summary judgment against Lanham Act claims alleging the company published false, misleading, and defamatory search engine ads concerning a competitor. The federal district court in Denver determined that the Lanham Act claims were not immune under the Communications Decency Act (CDA) and the competitor raised issues of material fact for resolution on whether the defendants made false or misleading representations in their commercial advertising (General Steel Domestic Sales, LLC v. Chumley, August 18, 2015, Blackburn, R.).

General Steel Domestic Sales, LLC filed suit against Atlantic Building Systems, LLC and Atlantic Building’s Chief Executive Officer, Ethan Chumley, alleging that the defendants used the Internet to retaliate against General Steel by publishing false and misleading search engine ads. Atlantic Building and Chumley moved for summary judgment, arguing, in part, that it was immune from the Lanham Act claims based on Section 230 of the CDA; none of the statements were literally false; and General Steel failed to present evidence of customer confusion.

Immunity. The CDA’s Section 230 immunity cannot limit or expand any law pertaining to intellectual property. General Steel brought its false advertising claim under Section 1125 of the Lanham Act, which is part of Chapter 22 of Title 15 of the United States Code. Chapter 22, according to the court, generally concerns trademarks, a type of intellectual property law. The false advertising claim in the instant action consequently implicated intellectual property law, the court concluded, finding that the claim could not fall within the ambit of Section 230 immunity.

Truth. Atlantic Building next raised the defense of truth, claiming that the statements made in the Internet advertisements were true and could therefore did not violate the Lanham Act. The advertisements claimed “Rock Limo Lost $125,383 in Deposits” and “General Told Her ‘We Will Keep You In Court Until We Break You.’” However, General Steel cited a court opinion that Rock Limo breached their contract with General Steel and General Steel was entitled to retain the deposits it received. In addition, the issue raised in the latter advertisement was settled and General Steel fully refunded the deposit to the customer. According to the court, the evidence presented disputed issues of material fact for resolution by a jury.

Confusion. Finally, Atlantic Building argued that the false advertising claim failed because the plaintiffs did not present evidence of customer confusion caused by the challenged statements. The court noted, however, that General Steel relied on a theory of intentional deception in pursuing its claim under the Lanham Act, for which the defendants did not seek summary judgment. Further, a Lanham Act claim that is based on a theory of intentional deception does not require proof of consumer confusion. Consequently, the motion for summary judgment was denied.

The case number is 14-cv-01932-REB-CBS.

Attorneys: David Samuel Fein for General Steel Domestic Sales, LLC. Craig Ruvel May (Wheeler Trigg O'Donnell, LLP) for Ethan Daniel Chumley and Atlantic Building Systems, LLC.

Companies: General Steel Domestic Sales, LLC; Atlantic Building Systems, LLC

Cases: Advertising ColoradoNews