Heartbrand beefs with Yahoo!

United States of America
In Heartbrand Beef Inc v Lobel’s of New York (Case V-08-62, February 5 2009), the US District Court for the Southern District of Texas has granted Yahoo! Inc’s motion to dismiss Heartbrand Beef Inc's claims of false designation of origin and false advertising under the Lanham Act.
Heartbrand is the sole provider of purebred Akaushi beef (originally from Japan) in the United States. The beef produced by Akaushi cattle is renowned for its tenderness and high marbling content, producing one of the most flavoursome and expensive varieties of steak available. Notably, Heartbrand does not own a US trademark registration for the mark AKAUSHI.
Heartbrand’s claims stemmed from Yahoo!’s sale of the keyword 'Akaushi' to drive traffic to the website of a competitor and co-defendant, Lobel’s of New York. While Lobel’s sells a wide range of meat products through both its New York retail store and its website, it does not sell any Akaushi beef.
In its complaint, Heartbrand alleged that in selling advertising space associated with the keyword 'Akaushi' to Lobel’s, Yahoo! had violated both Sections 43(a)(1)(A) and 43(a)(1)(B) of the act. Section 43(a)(1)(A) provides for a cause of action for false designation of origin (essentially trademark infringement of unregistered marks), while Section 43(a)(1)(B) provides for a cause of action for false advertising. 
In reviewing a motion to dismiss, the court must accept the allegations in the complaint as true, viewing all facts and reasonable inferences in the light most favourable to the plaintiff. As a first step, the court listed a five-element test that Heartbrand had to satisfy to prevail under either Section 43(a)(1)(A) and/or Section 43(a)(1)(B): 
  • Yahoo! had made a false or misleading statement of fact about its products or services;
  • The statement had either deceived or had the capacity to deceive a substantial segment of potential consumers;
  • The deception was material, in that it was likely to influence consumers’ purchasing decisions;
  • The products or services were in interstate commerce; and
  • Heartland had been or was likely to be injured as a result of the statement at issue.
Based on this test, the court quickly dismissed both Lanham Act claims against Yahoo! on the grounds that Heartbrand had not identified in its complaint any actual "statement" made by Yahoo! and, therefore, could not fulfil even the first element to prove its claims. The court further stated that even if Yahoo! had made a "statement" in placing the advertisement of another as a result of a keyword sale, Heartbrand had not alleged that Yahoo! had made a statement about Yahoo!’s products or services. The claims thus failed on that basis as well. Accordingly, the court dismissed both Lanham Act claims against Yahoo!.
However, the court’s reasoning appears to be highly problematic. First, it is questionable whether the use of the same five-element test to evaluate both the false designation of origin allegation under Section 43(a)(1)(A) and the false advertising claim under Section 43(a)(1)(B) was appropriate. These are distinct causes of action. 
Notably, Section 43(a)(1)(A) of the act does not require that a "statement" be made, and is triggered by the use of:

"[any] word, term, name, symbol or device, [...] or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which [...] is likely to cause confusion [...] as to the origin, sponsorship or approval of [...] goods [...] by another person."

Thus, although the five-element test might be appropriate for false advertising claims under Section 43(a)(1)(B), the fact that the court conflated these causes of action and applied the same test to evaluate the false designation of origin claim under Section 43(a)(1)(A) was especially problematic. 
Second, the court stated that even if a "statement" were found to have been made by Yahoo!, Heartbrand had failed to make out a Section 43 claim because the "statement" did not concern Yahoo!’s products or services. However, even under Section 43(a)(1)(B), it is clear that - contrary to the court’s determination - the statute does provide for a cause of action for the commercial use of:
"[any] word, term, name, symbol or device, [...] or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which [...] in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services or commercial activities."

Accordingly, the court’s contention that the required "statement" be in reference to Yahoo!’s goods or services was also questionable. 
Five days after the court dismissed Heartbrand’s Lanham Act claims against Yahoo!, Heartbrand voluntarily dismissed its remaining claims against Yahoo! and the case is no longer pending.
Susan M Natland and Jeffrey H Larson, Knobbe Martens Olson & Bear LLP, Irvine

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