Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Ill.: PVC pipe developer states valid Lanham Act claims against competitor’s spokesperson, (Sep 24, 2014)

By Greg Hammond, J.D.

Underground Solutions, Inc.—a company that sells and develops fusible polyvinyl chloride (PVC) pipes—was given the go ahead to pursue its Lanham Act claims against a competitor’s paid spokesperson, who allegedly presented false and misleading information at industry conferences. In partially denying the spokesperson’s motion to dismiss, the federal district court in Chicago determined that his presentations to large groups of industry members amounted to “advertising or promotion” under the Lanham Act (Underground Solutions, Inc. v. Palermo, September 22, 2014, Kennelly, M.).

Background. Underground Solutions is the sole supplier of thermally buttfused PVC pipe in the United States. Eugene Palermo, a hired spokesperson for Underground’s competitor Performance Pipe, allegedly presented false and misleading information at numerous industry conferences regarding the “quality, characteristics, and reliability” of Underground’s Fusible PVC pipe and thermally butt-fused PVC joints. He also allegedly published false and misleading information regarding the products on his website. Underground claims that it suffered damages from the alleged misrepresentations, as existing and prospective customers have been deterred from buying its products. Consequently, Underground filed suit against Palermo, alleging—in part—violations of the Lanham Act. Palermo moved to dismiss.

Statute of Limitations. The parties agreed that a three-year statute of limitations period applies to Underground’s Lanham Act claims. However, Palermo argued that Underground’s claims accrued in October 2010, and were thus time-barred because he filed his complaint on November 21, 2013. The court, however, determined that the majority of the presentations at issue took place after November 21, 2010. Although neither party invoked the continuing violation doctrine, which allows a plaintiff to pursue relief for a time-barred act by linking it with an act that is within the limitations period, the court noted that the doctrine could apply to Underground’s Lanham Act claim. Consequently, the court denied Palermo’s motion to dismiss, as it related to the statute of limitations, finding that it could not determine at the current stage of litigation whether the continuing violation doctrine did not apply.

Failure to state a claim. Palermo also argued that the Lanham Act claim should be dismissed because he did not engage in “commercial advertising or promotion” as required under section 43(a) of the Lanham Act. However, the court concluded that “because an activity is promotional if it involves dissemination to anonymous members of the purchasing public, Palermo’s presentations to a large group of industry members for the purpose of directing customers to select Performance Pipe’s products amount to ‘advertising or promotion’ under the Lanham Act.” In addition, the court found that the materials Palermo published on his website were also promotional. Palermo’s motion to dismiss the Lanham Act claim was therefore denied.

The case number is 13 C 8407.

Attorneys: Christopher T. Sheean (Swanson, Martin & Bell LLP) for Underground Solutions, Inc. John David Fitzpatrick (Mandell Menkes LLC) for Eugene Palermo.

Companies: Underground Solutions, Inc.

Cases: Advertising IllinoisNews