Antitrust Law Daily Wrap Up, ADVERTISING—W.D. Wash.: “Improvement” claims non-actionable puffery, (Oct 22, 2014)

By Jody Coultas, J.D.

A.H. Lundberg Associates, Inc. could not state Lanham Act false advertising claims against competitor TSI, Inc. for falsely misrepresenting that its products were improved because the statements at issue were mere puffery, the federal district court in Seattle has held. The court also held that the false advertising claim failed to meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b) (A.H. Lundburg Associates, Inc. v. TSI, Inc., October 20, 2014, Robart, J.).

Both companies engineer and supply equipment to various processing industries. After a Lundberg employee with knowledge of Lundberg’s pollution compliance products, left Lundberg to work for TSI, Lundberg alleged that TSI began offering pollution compliance products that were copied from Lundberg’s designs. Specifically, Lundberg alleged that TSI was reverse passing off Lundberg’s equipment and innovations, falsely claimed to have created the products, and falsely described and misrepresented its products in a press release and its website in violation of the Lanham Act.

The court dismissed Lundberg’s false advertising claim because the statement at issue was mere puffery. Lundberg alleged that TSI falsely described and misrepresented its products by claiming that those products included improvements to Lundberg’s design without stating what these improvements were. General, subjective statements that are extremely unlikely to induce consumer reliance are non-actionable puffery. Therefore, Lundberg was required to show that the misrepresentation was one of quantifiable fact that made claims as to the specific or absolute characteristics of the product. TSI’s claim that its products were “improved” was too general and subjective to be actionable. The claim did not implicate “specific or absolute characteristics of the product.”

Also, the heightened pleading standard applied to the Lanham Act because it relied on factual allegations that necessarily constituted fraud. Lundberg failed to identify which specific statements of fact contained in TSI’s press release or website were false and misleading and specifically how those statements were false and misleading.

Although the court was skeptical that Lundberg could persuasively argue that a false statement of improvements to the construction and gas flow of TSI’s product constituted a Lanham Act violation, the court could not conclude that the pleading could not be cured by the allegation of other facts.

The court also dismissed Lundberg’s false designation of origin and false designation of authorship claims. Granting leave to amend those claims would be futile because the claims were barred.

The case is No. C14-1160JLR.

Attorneys: Randall Paul Beighle (Lane Powell PC) for A.H. Lundberg Associates, Inc. Emilia L. Sweeney (Carney Badley Spellman) for TSI, Inc.

Companies: A.H. Lundburg Associates, Inc.; TSI, Inc.

Cases: Advertising WashingtonNews