Antitrust Law Daily Wrap Up, ADVERTISING—D.N.J.: Flood vent maker’s false ads didn’t constitute unfair competition, (Jun 29, 2016)

By Thomas Long, J.D.

Although a foundational vent manufacturer falsely advertised that its vents were certified as compliant by the Federal Emergency Management Agency, a competitor failed to demonstrate actual deception or a tendency to deceive consumers, materiality, and likelihood of injury. The federal district court in Camden, New Jersey, consequently denied summary judgment on the competitor’s unfair competition claims brought under the Lanham Act and New Jersey law (Smart Vent, Inc. v. USA Floodair Vents, Ltd., June 27, 2016, Simandle, J.).

Smart Vent asserted that USA Floodair engaged in unfair competition by falsely advertising that its products were certified as compliant by the Federal Emergency Management Agency (FEMA), the International Code Council (ICC), and the National Flood Insurance Program (NFIP).

The court determined that because the regulations of the NFIP required nothing more than a certification, the only advertising statements that supported Smart Vent’s unfair competition claims were those directed at FEMA compliance. USA Floodair argued that the engineering certificates associated with its products plainly complied with the relevant FEMA technical bulletin (TB-1).

TB-1 provided further detail and guidance concerning the certification process contemplated by the NFIP regulations, and it stated that "engineered openings," such as the foundational flood vents involved in this case, may be certified through an "individual certification" or an evaluation report issued by the ICC. USA Floodair’s products had not met the certification requirements of TB-1, the court said. Therefore, USA Floodair’s ads made a false statement. In addition, it was undisputed that the accused goods traveled in interstate commerce. Smart Vent was entitled to summary judgment on these two elements of its unfair competition claim.

However, there was not enough evidence with respect to the remaining elements—actual deception or a tendency to deceive consumers, materiality, and likelihood of injury to Smart Vent—for the court to grant summary judgment on the overall unfair competition claim. Smart Vent provided little more than attorney argument and speculation with respect to the harm and materiality elements, and no evidence as to deception.

The case is No. 1:10-cv-00168-JBS-KMW.

Attorneys: Anthony J. DiMarino, III, and Emmett S. Collazo (A.J. DiMarino, III, PC) for Smart Vent, Inc. Robert Mahoney (Norris, McLaughlin & Marcus, PC) and Daniel P. Burke (Daniel P. Burke & Associates, PLLC) for USA Floodair Vents, Ltd.

Companies: Smart Vent, Inc.; USA Floodair Vents, Ltd.

Cases: Advertising StateUnfairTradePractices NewJerseyNews