Antitrust Law Daily Wrap Up, ADVERTISING—W.D. Tex.: Order allowing oxygenated water maker to purse trade disparagement claims not reconsidered, (Nov 2, 2015)

By Linda O’Brien, J.D., LL.M.

In an action by the manufacturer of oxygenated water against a distributor and its owner for allegedly publishing false and disparaging information about its product, the federal district court in San Antonio has declined to reconsider its denial of the defendant owner’s motion to dismiss (Liquid Manna, LLC v. GLN Global Light Network, LLC, October 29, 2015, Ezra, D.).

In 2004 Fred Neal developed and began selling a product described as “supersaturated oxygen” water, under the name “Liquid Manna.” Neal marketed the water as having health benefits and sold it directly or through distributors. Neal also used the terms “Royal” and “Regal” in marketing his product. In May 2013, Neal obtained a trademark for the “Liquid Manna” mark. Neal collaborated with David Dartez, owner of the largest distributor of Liquid Manna products GLN Global Light Networks, LLC , to develop Liquid Manna gel pads, an oxygen-enhanced gel made using Neal’s proprietary technology.

Neal died in June 2014 and his estate assigned the trademark registration for Liquid Manna to Liquid Manna, LLC. In December 2014, Liquid Manna, LLC filed suit against GLN and Dartez, alleging claims under the Lanham Act for false advertising, false association, trademark dilution, and trademark infringement. The plaintiff asserted that the defendants represented that Liquid Manna would no longer be sold and that GLN could produce Liquid Manna products using Neal’s proprietary technology. The defendants also allegedly continued to sell Liquid Manna products, employing the plaintiff’s “Liquid Manna” mark, “Regal,” and “Royal” in connection with products made by the defendants.

In May 2015, the court denied Dartez’s motion to dismiss and he subsequently filed a motion for reconsideration.

The court found that Dartez failed to identify any plain and indisputable error of law or fact in its order denying the motion to dismiss. Dartez’s argument that the defendants’ use of “Regal” and “Royal” did not infringe on the plaintiff’s “Liquid Manna” mark was rejected as without merit. The court noted that the plaintiff’s trademark dilution and trademark infringement claims were based on the defendants’ use of the “Liquid Manna” mark and not on its claimed common law marks. The plaintiff’s allegations that the defendants, without authorization or license, continued to use the trademarked Liquid Manna logo on the website in connection with products that were deceptively similar to those made and distributed by the plaintiff were sufficient to plausibly allege that the defendants used the plaintiff’s registered mark without authorization in marketing their products.

Additionally, the plaintiff sufficiently stated plausible claims for false advertising, business disparagement, and defamation. The plaintiff alleged that, upon Neal’s death, the defendants circulated in newspapers that Liquid Manna would no longer be sold by anyone, Neal had taught the defendants how to manufacture the products and the defendants were capable of reproducing them, and there was a limited amount of Liquid Manna stock left to sell in the world. According to the court, a cause of action under the Lanham Act did not require that the defendant knew the statement was false. The disparaging nature of the alleged statements was clear in that they implied that the plaintiff was going out of business and the defendants were prepared to take the plaintiff’s place in the market. Furthermore, the plaintiff’s allegation—that the defendants compete with the plaintiff, were familiar with the plaintiff’s business, and published false statements to unfairly gain a competitive advantage and intentionally interfere with the plaintiff’s business interests—established plausible claims for business disparagement and defamation, the court concluded.

The case is No. 5:14-cv-01123-DAE.

Attorneys: Jeffrey Scott Taylor (Law Office of Jeffrey Taylor) for Liquid Manna, LLC. David Dartez, pro se.

Companies: Liquid Manna, LLC; GLN Global Light Network, LLC

Cases: Advertising TexasNews