Antitrust Law Daily Wrap Up, FALSE ADVERTISING—SDNY: Cosmetics Seller’s Claims of History, Composition of Products Did Not Violate New York Law, (Jan 15, 2013)

By Jody Coultas, J.D.

Beauty products manufacturers and sellers could not state New York state false advertising law claims against Borghese Trademarks, Inc. (BTI) based on advertisements concerning its products history and ingredients, according to the federal district court in New York City (Borghese Trademarks, Inc. v. Borghese, January 14, 2013, Oetken, J.).

BTI markets and sells cosmetics, skin, hair, and nail care products, and other consumer goods under the Borghese name trademark. BTI alleged that Francesco Borghese, Amanda Borghese, Scipione Borghese, Lorenzo Borghese, Katie Borghese, Multimedia Exposure, Inc. (“MME”), GT Partners Limited, Perlier, Inc., EBPD, LLC, Orlane, Inc., and HSN, Inc. (“HSN”) used the Borghese trademark to sell their beauty products in violation of the New York consumer protection statute.

BTI allegedly advertised that its products were “[b]uilt on a heritage that dates back to the 14th century”; “made in Italy or are largely comprised [sic] of ingredients from Italy”; and “made from a primary ingredient other than water.” The defendants counterclaimed under the New York statute for false advertising.

The defendants lacked standing to assert the false advertising counterclaims, according to the court. To have standing, the defendants were required to show a reasonable interest to be protected against the advertiser’s false or misleading claims and a reasonable basis for believing that this interest is likely to be damaged by the false or misleading advertising. There was no evidence that the defendants lost sales or suffered some other concrete harm as a result of the advertising. Injuries under the statute cannot be based on the potential for reputational harm, as argued by the defendants.

BTI’s trademark infringement claims were barred by the doctrine of laches, according to the court. Defendants were able to show that BTI knew of the use of its marks, inexcusably delayed in taking action, and that the defendant would be prejudiced by permitting BTI to assert its rights at this time.

The case is No. 10 Civ. 5552 (JPO) (AJP).

Attorneys: Jessica Sarah Parise (Fulbright & Jaworski L.L.P.) for Borghese Trademarks, Inc. Byron Leroy Pickard (Sterne, Kessler, Goldstein & Fox PLLC) for Francesco Borghese.

Companies: Borghese Trademarks, Inc.; Borghese Inc.; Borghese International Limited; Multimedia Exposure, Inc.; GT Partners Limited; Perlier, Inc.; EBPD, LLC; Orlane, Inc.; HSN, Inc.

Cases: Advertising NewYorkNews