Antitrust Law Daily Wrap Up, ADVERTISING—D.P.R.: Ecotourism website images and press release were Lanham Act false advertising, corporate disparagement, (Oct 15, 2013)

By Tobias J. Gillett, J.D., LL.M.

The operator of an ecotourism company committed false advertising and product disparagement for Lanham Act purposes by posting images of a competitor’s property on her company’s website and Facebook page and by issuing a press release claiming that the competitor had violated environmental laws, operated without a business license, and failed to pay taxes, the federal district court in San Juan, Puerto Rico has ruled (Veve v. Corporan, Ocober 11, 2013, Gelpi, G.).

Jorge Perez Veve has operated an ecotourism business in Puerto Rico under the name BateyZipline Adventure, Inc. since January 2008. In 2010, Julissa Corporan started an ecotourism business in Puerto Rico under the name Atabey Eco Tours Corp. According to Perez, Corporan used images on Atabey’s website and Facebook page of Perez’s property, even though Perez had told her she could not enter his property without permission and could not use photos of the property to advertise her business. Corporan issued a press release claiming that she had contacted the Natural Resources Department of Puerto Rico over Perez’s purported actions in cutting down an endemic plant species, actions Perez denied taking. Corporan offered no support for this claim. She also falsely stated that Batey operated without a business license and did not pay taxes.

Perez and Batey filed suit against Corporan and Atabey, asserting claims for trademark infringement, trade dress infringement, false advertising, and product disparagement under the Lanham Act, as well as claims for trademark and trade dress infringement, illegal trespass, and defamation under Puerto Rico law. The plaintiffs’ motion for summary judgment on the claims was unopposed. The court warned the defendants to appear, granted them numerous extensions of time, and entertained various default motions, which the defendants ignored. In addition, an entry of default and other correspondence was sent to the defendants, but the mail was returned as undeliverable.

False advertising. The court granted relief to the plaintiffs on the Lanham Act false advertising claim. The defendants made a false statement of fact by posting the images of Perez’s properties on their web pages because, although they did not explicitly state that the properties were “part of the Atabey experience, the necessary implication presented by the pictures is that they comprise part of it.” This representation was material because it depicted “attractive elements of the eco-tour experience” that would likely influence consumers’ purchasing decisions. Moreover, the representation was literally false, allowing the court to grant relief without considering consumer reaction. Since the defendants had placed the pictures on the Internet, and had thus gained clients from all over the world, the plaintiffs had been “injured through a direct diversion of sales from Batey to Atabey.” The court reached the same conclusion with respect to the defendants’ unsupported claim that they were “the only certified sustainable operation endorsed by the Puerto Rico Tourism Company in the region.”

Commercial disparagement. The court also found that the defendants engaged in commercial disparagement for Lanham Act purposes by publishing the press release claiming that Perez violated environmental laws and operated without paying taxes or obtaining necessary government permits or business liability insurance. The statements constituted commercial speech because they were “made with the intent to influence potential customers”; the press release was published on the Atabey website and Facebook page; the statements attacked essential aspects of the quality of the services Batey offered—their safety and commitment to environmental protection; Atabey and Batey were competitors; and the statements were published as a press release, thus constituting advertising.

The court also found in favor of Perez on his trademark infringement, defamation, and trespass claims, although not on his claim of trade dress infringement. The court also permanently enjoined the defendants from engaging in their unlawful activity and from conducting business under the name “Atabey Eco Tours.”

The case is Civil No. 12-1073 (GAG).

Attorneys: Rafael A. Aponte-Garcia for Jorge Perez-Veve and BateyZipline Adventure, Inc.

Companies: BateyZipline Adventure, Inc.; Atabey Eco Tours Corp.

Cases: Advertising PuertoRicoNews