Antitrust Law Daily Wrap Up, ADVERTISING—E.D. Cal.: App marketer fails to support California false advertising, UCL claims, (Jul 27, 2015)

By Greg Hammond, J.D.

A consumer of an app that allows users to remotely access their desktop computer via a virtual private network, could not move forward with claims that the app maker violated California’s False Advertising Law (FAL) and Unfair Competition Law (UCL). The federal district court in Bakersfield, California, granted the app maker’s motion to dismiss, finding that the consumer failed to provide sufficient factual detail to support his claims (Handy v. LogMeIn, Inc., July 24, 2015, Thurston, J.).

LogMeIn, Inc. marketed two products that allowed users to remotely access their desktop computer, including LogMeInFree and Ignition. Plaintiff Darren Handy previously obtained LogMeInFree and later purchased Ignition. He claims that when marketing Ignition, LogMeIn should have informed prospective purchasers that LogMeInFree could be eliminated in the future. He further alleges that LogMeIn later terminated LogMeInFree and released a third product, LogMeInPro. After attempting to log into his LogMeInFree account, he received a message that he no longer had access to his computers and in order to continue using remote access, he’ll need to purchase an account subscription for LogMeInPro. He later received an email stating that while his Ignition app will continue to work, the app will no longer receive updates and bug fixes.

Handy filed suit, alleging violations of the UCL and FAL. LogMeIn moved to dismiss for failure to meet the heightened pleading standard for fraud and for failure to state a claim.

Although Handy made reference to LogMeIn’s advertisements concerning Ignition, he failed to allege that he saw any of the ads before he purchased the Ignition app or that he relied upon them. This, according to the court, was fatal to his claim that the advertisements concerning Ignition failed to indicate that LogMeInFree could be discontinued in the future.

Second, the court found that LogMeIn Free posted information on its website that disclosed to users that LogMeInFree could be terminated, which undermined Handy’s argument that LogMeIn failed to inform prospective Ignition purchasers that LogMeInFree could be eliminated.

The allegation that LogMeIn failed to inform prospective purchasers of the Ignition app that it could stop providing updates and bug fixes in the future was also rejected. The court determined that Handy failed to provide any factual support that LogMeIn acted unfairly, fraudulently, or unlawfully at the time Handy purchased the Ignition app, and there were no factual allegations that LogMeIn knew it would discontinue the service of providing updates and bug fixes at some relevant future date.

Lastly, the court concluded that Handy failed to state a claim concerning LogMeIn’s failure to inform Ignition purchasers that they would have to pay more in the future for the services provided by both products. Specifically, Handy failed to allege any facts that LogMeIn knew at the time it sold the Ignition app to Handy that it would discontinue support for the app or that it would migrate its users to a subscription-only plan in the future. Further, there was no obligation to tell prospective purchasers anything about the intended “life” of LogMeInFree. The complaint was therefore dismissed.

The case number is 1:14-cv-01355-JLT.

Attorneys: Joshua Branden Swigart (Hyde and Swigart) for Darren Handy. Brian T. Glennon (Latham & Watkins, LLP) for LogMeIn, Inc.

Companies: LogMeIn, Inc.

Cases: Advertising CaliforniaNews