Thursday, July 19, 2012

False Ad Claims Based on Letter, E-Mail Proceed

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

Organ Recovery Systems (ORS), a manufacturer of organ preservation solutions, stated a claim of false advertising under the Lanham Act and Illinois consumer protection statutes by asserting injury from an allegedly misleading letter sent by Preservation Solutions, Inc. (PSI) to organ procurement organizations (OPOs), the federal district court in Chicago has ruled.

ORS also stated a claim of false advertising under the Lanham Act and Illinois consumer protection statutes against BTL Solutions for allegedly sending to organ procurement professionals a broadcast e-mail falsely stating that BTL enabled FDA approval of a label change for the room-temperature storage of ORS’s UW solution.

Commercial Advertising or Promotion

PSI contended that “actionable advertising must be anonymous” and ORS alleged only person-to-person statements by PSI. However, PSI’s letter allegedly was received by potential ORS customers throughout the country, the court observed. The fact that the letter was addressed “Dear OPO Administrator” rather than to a named individual or business supported ORS’s suggestion that it was a mass unsolicited communication.

Even if the letter was specifically targeted to OPOs known by PSI, ORS alleged that the letters were a generalized solicitation rather than an individualized communication. For this reason, ORS’s allegations satisfied the “commercial advertising or promotion” element of a Lanham Act false advertising claim, the court determined. ORS’s claims that three OPO employees expressed confusion about the letters could support a finding that ORS was likely to be injured by allegedly misleading statements in the letters.

BTL’s statements could constitute commercial speech, and its e-mail was an anonymous communication to a large group that would satisfy the Lanham Act’s test for commercial advertising or promotion, the court added. Contrary to BTL’s contention that ORS failed to allege a significant connection between the conduct at issue and Illinois, which both the Illinois Uniform Deceptive Trade Practices Act and Consumer Fraud Act required, it was likely that the disputed communications originated in Illinois and that ORS felt harm in Illinois.


BTL could pursue a Lanham Act false advertising counterclaim against ORS for posting on its website allegedly false statements that it had FDA approval to sell its SPS-1 solution with a label indicating that the solution does not need to be filtered before use, the court also decided. ORS presented documents consistent with its assertion that the FDA had approved the practices at issue.

Even were these documents to be considered on a motion to dismiss, however, neither the counterclaim nor these documents contained sufficient details about FDA practice for the court to say that the letter constituted “approval” for purposes of the false advertising claim, according to the court.

PSI failed to state a claim of “passing off,” under the Lanham Act and Illinois consumer protection statutes, by making conclusory allegations that ORS led customers to believe that ORS-sold solution was PSI’s product, the court concluded.

The decision is Organ Recovery Systems, Inc. v. Preservation Solutions, Inc., CCH Advertising Law Guide ¶64,733.

Further details regarding CCH Advertising Law Guide appear here.

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