A recent opinion from the Western District of Virginia sets forth a useful framework for analyzing a variety of Lanham Act claims based on false commercial speech uttered in social media.
In October 2012, “Jim Chung” created a LinkedIn profile for himself. Chung identified himself as a 2010 graduate of Tsinghua University, a resident of Xinjiang, China, and a Software Engineer for the U.S. company AvePoint, Inc. Chung used his LinkedIn profile to connect with customers, software professional groups and fellow AvePoint employees. As with any LinkedIn profile, other users were invited to send messages to Chung under one of LinkedIn’s pre-programmed category headings, which include “business deal,” “new venture,” “consulting offer” and “job inquiry.”
There was only one problem: Jim Chung doesn’t exist.
AvePoint alleges that Michael Burns, a sales executive at AvePoint’s competitor Power Tools Inc., created the fake profile in furtherance of a scheme to trick customers into thinking that AvePoint was a Chinese company and to poach AvePoint’s business. Apparently, Burns went so far as to tweet about fictitious meetings with Chung at software conferences (e.g., “Just ran into jim chung from avePoint Good Guy”). Other tweets allegedly emanating from Power Tools included hash tags hinting that AvePoint was a Chinese company (e.g., “No better way to end a Thursday than a HILARIOUS e-mail from the competition . . . #desperation # SinkingREDship #MadeinChina”).
In January 2013, AvePoint filed suit against Burns and Power Tools, alleging several state and federal counts, including four theories of liability under the Lanham Act. Power Tools filed an omnibus motion to dismiss and, on November 7, 2013, Judge Glen E. Conrad denied the motion in its entirety.
AvePoint’s first Lanham Act claim was for trademark infringement pursuant to Section 32 of the Act, codified at 15 USC § 1114(1)(a). This section imposes liability on a party who has used someone else’s mark “in commerce” and “in connection with the sale, offering for sale, distribution, or advertising” of goods or services, such that the use is likely to confuse consumers.
Power Tools argued that the Chung profile was not a use “in commerce” or “in connection” with the sale of goods or services because it was nothing more than a resumé. However, the Court held that AvePoint’s allegation that LinkedIn “is a website commonly used for advertising and promotion in the software industry” was sufficient, if proven, to make the use “in commerce.” Additionally, the Chung profile was plausibly “in connection” with the offering or advertising of goods and services, including because the LinkedIn account structure encouraged users to contact Chung regarding “business deals,” “new ventures” and the like.
As to likelihood of confusion, the court examined the allegations of the fake profile’s “connections” with other LinkedIn users who were AvePoint employees and customers. Power Tools argued that these connections were not evidence of confusion as to the source of any goods or services, but only confusion as to the identity of Jim Chung. The court disagreed and held that it was a factual issue whether these users were deceived into connecting with Chung because they believed they were contacting a duly authorized representative of AvePoint.
AvePoint further alleged that the Chung profile created a false designation of the source or origin of goods or services pursuant to Lanham Act Section 43(a)(1)(A). The Court held that because the elements of this claim were identical to those for trademark infringement, the same analysis applied.
False Association or False Endorsement
AvePoint alleged that the fake LinkedIn profile also was a false endorsement or association under Section 43(a)(1) of the Lanham Act, codified at 15 USC § 1125(a)(1), in that it created the impression that AvePoint sponsored or approved of the profile and activities conducted through it. The defendants argued that Chung’s profile contained no statement telling users that AvePoint endorsed it, but the court held that no such express endorsement was required, and that Chung’s listing of AvePoint as his employer (accompanied by the allegation that this created confusion) was sufficient to state a claim.
Finally, AvePoint also brought a claim pursuant to Section 43(a)(1)(B) of the Lanham Act, which prohibits misrepresentations in commercial advertising about the nature, characteristics or geographic origin of goods. AvePoint alleged that the false LinkedIn profile, as well as the defendants’ xenophobic tweets, created a false impression of AvePoint’s geographic origin, specifically that it was a Chinese company. The Court acknowledged that what constituted “commercial advertising” was not entirely settled, but held that AvePoint had sufficiently alleged that the social media activities of the defendants, especially the twitter hash tags, plausibly consisted of false commercial speech about AvePoint.
Interestingly, AvePoint also brought a defamation count based on the same geographic allegations. The court expressed some doubt that calling a company “Chinese” could be defamatory, but allowed the claim to survive because AvePoint alleged that many of its U.S. government customers prefer domestically manufactured products.
The parties are currently engaged in discovery. According to its website, AvePoint is based in New Jersey, with operational centers around the world, including China.