These days, we're all finding ways to do things online that we've done in person in the past. One of those things, apparently, is golf lessons.
RotarySwing Golf, a subscription golf instruction site, sued a competitor, Axys Golf, alleging false advertising and other claims under the Lanham Act and Colorado law. It's a messy lawsuit -- involving what the court called "online mudslinging."
Without getting into all of the dirty details, in a recent decision denying the plaintiff's motion for a TRO and a preliminary injunction, and denying the defendant's motion to dismiss, there was an interesting discussion about the importance of demonstrating materiality when asserting a Lanham Act claim.
RotarySwing sued Axys for false advertising over claims made on RotaryTruth.com. In order to succeed on a Lanham Act claim, the plaintiff was required to show: (1) that the defendant made material false or misleading representations of fact in connection with the commercial advertising or promotion of its product; (2) in commerce; (3) that are either likely to cause confusion or mistake as to the origin, association or approval of the product with or by another or the characteristics of the goods or services; and (4) injury.
One of the flaws in the plaintiff's case, however, at least according to the federal court in Colorado, was that the plaintiff failed to demonstrate that some of the defendant's allegedly false statements were, in fact, material -- in other words, that the misrepresentations were "likely to influence purchasing decisions." For example, Rotary Swing alleged that the defendant made a false claim that the plaintiff sold snowboards before starting a golf instruction company. While the court accepted that this claim was false, the court held that it could not be the basis for a Lanham Act claim because Rotary Swing "has not established that such a false statement is in any way material, or put differently, that it is likely to influence a consumer's purchasing decision."
Establishing materiality is a critical component of a claim under Section 5 of the FTC Act as well. As the FTC said in its Policy Statement on Deception, "a representation, omission or practice must be a material one for deception to occur." For a statement to be material under the FTC Act, it must be one that is important to consumers -- "one which is likely to affect a consumer's choice of or conduct regarding a product."
While I'm certainly not advocating here that you should start make false claims that don't matter, this case is an important reminder that, before suing for false advertising, you'd better make sure that your competitors' false claims matter to consumers.
Originally published by Frankfurt Kurnit, July 2020
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