In the Western District case of Teragren, LLC v. Smith & Fong Co., the parties are competing bamboo floor paneling processors. Smith & Fong responded to Teragren’s complaint for patent infringement by asserting six counterclaims, including that Teragren was liable for making false statements that amounted to unfair competition prohibited by the Lanham Act.
Teragren moved to dismiss Smith & Fong’s counterclaims, including its unfair competition claim. In particular, Teragren argued:
“Defendant never asserts that Teragren’s descriptions or representations were made in promotions or advertising or that Teragren’s alleged ‘statements’ cause confusion, mistake, or deceive as to the affiliation, connection, association, origin, sponsorship, or approval of goods, services, or commercial activities. As such, defendant’s allegations never even suggest likelihood of confusion by the public, which is required to assert a claim under the Lanham Act.”
On March 17, Western District Judge Ronald Leighton agreed with Teragren’s argument, but allowed Smith & Fong to amend its counterclaim to correct the deficiency:
“To prove a false statement is actionable under Section [43(a)] of the Lanham Act, a person must show that the statement is 1) likely to cause confusion as to the affiliation or connection of the parties, or 2) is made in commercial advertising and promotion and misrepresents the nature, characteristics and qualities of another person’s goods.
“The Ninth Circuit has required a party to plead a claim under the Lanham Act with some particularity. In order to state a claim for false advertising under 43(a) of the Lanham Act, a party must allege 1) the opposing party made a false statement of fact in a commercial advertisement or promotion about his own or another’s product; 2) that the statement actually deceived or has the tendency to deceive a substantial segment of its audience; 3) that the deception is material, in that it is likely to influence the purchasing decision; 4) that the party caused its false statement to enter interstate commerce; and, 5) that there has been or will be injury as a result.
“The Defendant’s counterclaim does not allege allegations that the false representations of the Plaintiff are likely to cause confusion. Rather than dismissing the counterclaim, the Court will permit the Defendant to amend its Lanham Act counterclaim.”
The case cite is Teragren, LLC v. Smith & Fong Co., No. 07-5612, 2008 WL 725186 (W.D. Wash. March 17, 2008) (Leighton, J.).