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15-Second Advertising Law Alert: Twombly-Iqbal Challenges Come to Lanham Act Advertising Cases

Date: Jan 19, 2012

A Lanham Act advertising case was challenged recently under the heightened pleading standard required in all civil cases by the Supreme Court's Twombly and Iqbal opinions.[1] An apparent intent of this standard is to give defendants a better chance to rid themselves of questionable litigation before the door to expensive discovery opens.


BACKGROUND

The parties compete in testing urine for drugs. The primary challenged claims were in a billing letter that Defendant sent to physicians who bought its testing services and to the Medicare patients of those doctors.

The letter informed patients that they were not responsible for co-pay or deductible charges. Plaintiff alleged that statement was misleading, because it implied, falsely, that Medicare patients were subject to such charges.

On two Lanham Act elements, the complaint alleged merely that the representations in the billing letter (1) are "likely to deceive a substantial portion of the targeted customers" and (2) had "already, and will continue to, influence materially purchasing decisions to the extent that customers choose [Defendant's] services instead of [Plaintiff's]."

Defendant moved to dismiss the complaint for failure to state an actionable claim.

DECISION

Defendant's motion was granted, without prejudice to amend. Some of the court's key findings based on the Twombly-Iqbal standard were:

  • The complaint must allege sufficient facts to state a plausible (not merely possible) claim for relief.
  • The naked assertion of a likelihood to deceive was insufficient. (The court implies by silence that extrinsic evidence, such as a survey, is needed.
  • The allegation that the claim was material to purchase decisions is insufficient because it is a mere legal conclusion without facts.


For more information on this and other Advertising Law matters, please contact Dick Leighton at 202.434.4220 or at leighton@khlaw.com.


[1] Ameritox, LTD. v. Millennium Laboratory, Inc., 2012 WL 33155 (.D. Fla. Jan 6, 2012), relying primarily on Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955 (2007) and Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009).