Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. Mass.: Alleged failure to show conduct occurred in state did not require dismissal, (Apr 2, 2015)

By Edward L. Puzzo, J.D.

A Massachusetts unfair trade practices claim that a web-based management system infringed copyrighted materials and made false and misleading statements about its capabilities should not be dismissed at the pleading stage for an alleged failure to show that the conduct occurred “primarily and substantially” in Massachusetts, the federal district court in Boston has ruled (iLab Solutions LLC v. Idea Elan, LLC, April 1, 2015, Burroughs, D.).

iLab Solutions brought claims—including unfair trade practices under Massachusetts’ unfair trade practices law (M.G.L. Chapter 93A)—against its competitor Idea Elan. iLab Solutions, a provider of web-based management services to academic research institutions, alleged that in October 2014, it discovered material substantially similar to that on its website on Idea Elan’s website. In addition, Idea Elan’s website allegedly contained false and misleading statements about its capabilities and experience, giving the marketplace a false impression of its experience, success and capabilities, causing iLabs to lose business. Idea Elan moved to dismiss the unfair trade practices count for allegedly failing to allege that the unfair conduct “primarily and substantially” occurred in Massachusetts, as required by Section 11 of M.G.L. Chapter 93A.

Under Section 11, the burden of proof is on the party claiming that the transactions and actions did not occur “primarily and substantially” in Massachusetts. The court found that Idea Elan did not meet this burden. iLabs is headquartered in Boston and the copyrighted materials on its website were created and are maintained in Massachusetts. Defendant Idea Elan is a Virginia company that conducts business in Massachusetts and targets Massachusetts customers.

Due to the fact-finding involved in evaluating the “primarily and substantially” requirement, this particular ground for challenging Chapter 93A claims normally cannot be met at the pleading stage, stated the court. Additionally, the court noted, iLabs’ pleadings went beyond what the statute requires by alleging that Idea Elan committed its infringing acts and false advertising in Massachusetts, that Idea Elan copied material from iLabs’ website onto Idea Elan’s website, and that Idea Elan uses its website to target Massachusetts customers. Thus the court was satisfied that the pleadings satisfied the liberal notice pleading requirements of the Federal Rules of Civil Procedure. Therefore the court denied defendant’s partial motion to dismiss.

The case is Civil Action No. 1:14-cv-14267-ADB.

Attorneys: Eric Benisek (Vasquez Benisek & Lindgren LLP), and Susan G.L. Glovsky (Hamilton Brook Smith Reynolds) for iLab Solutions LLC. Victor H. Polk, Jr. (Greenberg Traurig LLP) for Idea Elan, LLC.

Companies: iLab Solutions LLC; Idea Elan, LLC

Cases: StateUnfairTradePractices MassachusettsNews