False origin claims applicable to services as well as goods

In M Arthur Gensler Jr & Associates Inc v Strabala (Case No 12-2256, August 21 2014), clarifying prior Lanham Act case law related to false designation of origin, the US Court of Appeals for the Seventh Circuit has vacated a district court’s dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure, holding that §43(a) of the Lanham Act can reach claims alleging false designation as to the origin of services as well as goods. 

Jay Marshall Strabala was employed as a design director at the Gensler architectural design firm for nearly four years. During this time, Strabala participated in the design of several major projects. After leaving Gensler to set up his own competing architectural design company, Strabala set up two websites on which he claimed to have designed several of the projects for which Gensler was the architect of record, including the Shanghai Tower, the Hess Tower and the Houston Ballet Center. Gensler sued Strabala to prevent him from claiming to be the origin of the designs of these buildings. Gensler argued that the projects were designed by teams of Gensler employees, not by Strabala alone.

In the district court, Strabala filed a motion to dismiss Gensler’s complaint, arguing that the Supreme Court decision in Dastar v Twentieth Century Fox precludes Lanham Act claims alleging false claims of origin to the idea, concept or communication embodied in goods and not the origin of the goods themselves. In that case, the defendant copied and sold videos containing movies that had entered the public domain. The Dastar court held that since the defendant had correctly identified itself as the origin of the video tapes, but had not falsely claimed to be the origin of the content of the tapes, there was no false claim of origin of the goods under the Lanham Act. Applying Dastar, the district court held that since Strabala did not make any false claims as to the origins of the buildings themselves, but only the design services embodied in them, the Lanham Act claim must be dismissed. Gensler appealed.

The Seventh Circuit disagreed with the district court, explaining that the holding in Dastar was focused on the false designation of goods’ origins because the suit only involved goods. The Supreme Court did not, however, read the word 'services' out of the Lanham Act or limit application of §43(a) to false designation of origins. In this case, Gensler alleges that Strabala made a false or misleading representation of fact that would tend to deceive clients as to a continuing connection between Strabala and Gensler, as well as to deceive clients regarding the origin of the design of the named buildings. As the Seventh Circuit explained, such allegations fall within the bounds of §43(a). The Seventh Circuit found it immaterial that Strabala was claiming to have been the origin of the design services rather than of the buildings themselves.

Bryan James, McDermott Will & Emery LLP, Silicon Valley