Antitrust Law Daily Wrap Up, ADVERTISING—N.D.W. Va.: Genuine dispute of falsity of statements precluded summary judgment, (Dec 23, 2014)

By Jody Coultas, J.D.

A.Hak Industrial Services BV was denied summary judgment of its Lanham Act false advertising claims filed against competitor TechCorr USA, LLC based on disputed facts regarding the literal falsity of the statements at issue, the federal district court in Martinsburg, West Virginia has held (A.Hak Industrial Services BV v. TechCorr USA, LLC, December 19, 2014, Groh, G.).

After Berkeley Springs Instruments, LLC (BSI) sold the intellectual property (IP) rights to robotic tank inspection and cleaning technology—including the trademarks InTANK®, OTIS®, and SCAVENGER®—to A.Hak BV, A.Hak BV received a letter asserting that TechCorr had a right of first refusal on the IP and demanded that A.Hak BV and BSI cease and desist all actions concerning the transaction. TechCorr admitted that it did not acquire the IP related to the tank inspection, but argued BSI gave TechCorr a right of first refusal regarding any future sale of the IP by BSI.

A.Hak’s filed Lanham Act claims for trademark infringement, false designation of origin, and false advertising based on allegations concerning TechCorr’s use of the trademarks. TechCorr responded with a suit against A.Hak for breach of contract, tortious interference, and promissory estoppel.

To state a claim, A.Hak was required to show that (1) TechCorr made a false or misleading description of fact or representation of fact in a commercial advertisement about his own or another’s product in interstate commerce; (2) the misrepresentation was material; (3) the misrepresentation actually deceives or has the tendency to deceive; and (4) A.Hak was injured by the misrepresentation.

A.Hak alleged that TechCorr made false statements of ownership of the trademarks based on how TechCorr used the trademarks on its website, in a customer proposal, and in a press release; false assertions that TechCorr owned the trademarks and all associated assets; and false statements that TechCorr had an intrinsically safe OTIS® robot.

A genuine issue of material fact existed as to whether TechCorr’s statements regarding ownership of the trademarks were literally false because of the questions regarding the scope of TechCorr’s license. If the statements fell within the scope of the license, they could not be literally false.

Whether the statements asserting that TechCorr purchased the marks and all associated assets were false hinged on an interpretation of what constituted “the whole InTANK operation” and “the In Tank company.” A.Hak argued the statements go to the full IP and not just the physical assets purchased, while TechCorr argued the statements only referred to the physical assets. The dispute was best left to a jury.

Whether the claim of an intrinsically safe robot was literally false could not be determined at this stage, according to the court. A.Hak argued TechCorr never had an operational intrinsically safe OTIS robot. TechCorr suggested a reasonable interpretation of the statement that would be truthful: each separate component was separately certified as intrinsically safe. Therefore, a genuine issue of material fact precluded summary judgment.

The court granted A.Hak’s motion for summary judgment of TechCorr’s Lanham Act false advertising claim. A.Hak’s website states: “Our third-generation OTIS inspection robots can be found nowhere else in this world.” A.Hak argued the statement was not actionable because it was not a statement of fact concerning the OTIS® robot. For a statement to be actionable, it must be a ‘specific and measurable claim, capable of being proved false or of being reasonably interpreted as a statement of objective fact.’” TechCorr failed to show how “third-generation” or any other portion of the statement was one of fact. A statement by a BSI employee could not support a claim because A.Hak did not make it.

The case is No. 3:11-CV-74.

Attorneys: Adam S. Ennis (Steptoe & Johnson PLLC), Michael T. Smith (Birch Stewart Kolasch & Birch, LLP), and Sesha S. Kalapatapu (Law Office of Sesha Kalapatapu) for A. Hak Industrial Services BV, and A.Hak Intank Services, LLC. Brad C. Bedwell (Welsh LdBlanc LLP), Gwyneth A. Campbell (Chapoton Sanders LLP), and James F. Companion (Schrader, Byrd & Companion, PLLC) for TechCorr U.S.A., LLC.

Companies: A.Hak Industrial Services BV; TechCorr USA, LLC

Cases: Advertising WestVirginiaNews