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ThermoLife International LLC v. American Fitness Wholesalers LLC

United States District Court, D. Arizona

January 10, 2020

ThermoLife International LLC, Plaintiff,
v.
American Fitness Wholesalers LLC, Defendant.

          ORDER

          JAMES A. TEILBORG SENIOR UNITED STATES DISTRICT JUDGE.

         Pending before the Court is American Fitness Wholesalers LLC's (“Defendant”) Motion to Dismiss (Doc. 31) the Amended Complaint (Doc. 29). The Motion has been fully briefed. (Docs. 31, 32, 33). The Court now rules on the Motion (Doc. 31).

         I. BACKGROUND

         Plaintiff ThermoLife International LLC (“Plaintiff”) asserts that Defendant is liable for false advertising in violation of the Lanham Act, 15 U.S.C. § 1125, common law unfair competition, and false marking in violation of 35 U.S.C. § 292.

         The following facts are either undisputed or recounted in the light most favorable to the non-moving party. See Wyler Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). Plaintiff “currently holds 23 separate and distinct patents that protect its innovative development and use of ingredients in Dietary Supplements and food products.”[1] (Doc. 29 at 84). Plaintiff “sells millions of dollars of patented Dietary Supplements ingredients every single year to some of the largest Dietary Supplement companies in the industry.” (Id. at 2). Plaintiff “licenses its technology to Dietary Supplement companies who use nitrates in their formulations in the pre-workout, pump, and performance categories of the sports nutrition market.” (Id.). “With few exceptions, anytime an amino acid is combined with nitrate(s) and sold and marketed to consumers in a Dietary Supplement[, ] the product relies on [Plaintiff]'s patented technology.” (Id.). Plaintiff refers to these products as “ThermoLife Component Products.” (Id.). Plaintiff also licenses and sells its patented creatine nitrate. (Id. at 11-12).

         Defendant sells dietary supplements to consumers on its website. (Id. at 19). There, Defendant advertises each product it sells. (Id. at 19-20). Plaintiff contends that Defendant falsely advertised certain products on its website as dietary supplements. (See Id. at 30). More specifically, Plaintiff appears to claim that consumers believe dietary supplements are coextensive with the definition of “dietary supplement” under 21 U.S.C. § 331(ff) and that the term dietary supplement connotes that the product is “safe, natural, and legal.” (Id. at 26-30). Plaintiff contends that certain products that were sold on Defendant's website were unsafe, not natural, and illegal, which it asserts constitutes false advertising. (Id. at 30). Plaintiff also alleges that Defendant sells creatine nitrate products that have no licensing connection with Plaintiff, including APS Nutrition's creatine nitrate product, which is advertised as “a vastly superior patented creatine.” (Id. at 20-21). For this reason, Plaintiff asserts a false marking claim under 35 U.S.C. § 292. (See Id. at 84-85).

         On August 15, 2019, the Court dismissed Plaintiff's original complaint in its entirety but granted leave to amend. (Doc. 25). Specifically, the Court dismissed Plaintiff's false advertising claim under the Lanham Act, 15 U.S.C. § 1125, common law unfair competition claim, and false marking claim under 35 U.S.C. § 292, as well as a civil conspiracy claim. (Doc. 25). Plaintiff timely filed the Amended Complaint and realleged its original claims sans the civil conspiracy claim. (Doc. 29). Defendant then filed its Motion to Dismiss the Amended Complaint. (Doc. 31).

         II. DISCUSSION

         Defendant moves to dismiss each of the Amended Complaint's three claims. (Doc. 31). The Court evaluates each claim in turn.

         a. False Advertising Claim

         Defendant first argues that Plaintiff has not adequately stated a false advertising claim under the Lanham Act, 15 U.S.C. § 1125. (Doc. 31 at 4-11). To establish a prima facie case for false advertising, a plaintiff must show:

(1) the defendant made a false statement either about the plaintiff's or its own product; (2) the statement was made in commercial advertisement or promotion; (3) the statement actually deceived or had the tendency to deceive a substantial segment of its audience; (4) the deception is material; (5) the defendant caused its false statement to enter interstate commerce; and (6) the plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to the defendant, or by a lessening of goodwill associated with the plaintiff's product.

Newcal Indus., Inc. v. Ikon Office Sols., 513 F.3d 1038, 1052 (9th Cir. 2008) (citation omitted).

         The Supreme Court has determined that a plaintiff asserting a false advertising claim must show that the injury is within the “zone of interests” that the Lanham Act protects and that the injury was proximately caused by a violation of the Lanham Act. Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 127-30 (2014). First, “to come within the zone of interests in a suit for false advertising under § 1125(a), a plaintiff must allege an injury to a commercial interest in reputation or sales.” Id. at 131-32. Second, to show proximate cause, “a plaintiff suing under § 1125(a) ordinarily must show economic or reputational injury flowing directly from the deception wrought by the defendant's advertising; and that occurs when deception of consumers causes them to withhold trade from the plaintiff.” Id. at 133-34; TrafficSchool.com v. Edriver Inc., 653 F.3d 820, 825 (9th Cir. 2011) (stating a plaintiff establishes a cognizable injury under the Lanham Act “if some consumers who bought the defendant's product under a mistaken belief[, ] fostered by the defendant[, ] would have otherwise bought the plaintiff's product” (internal quotations marks, alterations, and citations omitted).[2]

         The showing required by Lexmark “is generally not made when the deception produces injuries to a fellow commercial actor that in turn affect the plaintiff.” Lexmark, 572 U.S. at 133-34. Rather, a plaintiff must show, inter alia, “that the injury is ‘competitive,' or harmful to the plaintiff's ability to compete with the defendant.” Jack Russell Terrier Network of N. Cal. v. Am. Kennel Club, Inc., 407 F.3d 1027, 1037 (9th Cir. 2005). Typically, a plaintiff must allege an inferential chain showing how the defendant's alleged false advertising harmed or could harm the plaintiff's business. TrafficSchool.com, 653 F.3d at 825-28. Thus, survey data or other information about consumer behavior is important to establishing a Lanham Act claim for false advertising. Id. at 825, 828 (noting that survey data showed that defendants' false advertising was “an important factor[] in consumers' choice” between plaintiffs' product and defendants', which showed defendants could have “capture[d] a larger share of the referral market-to plaintiffs' detriment . . . [by] mislead[ing] consumers”).

         Plaintiff's central allegation is that “[e]very single sale that [Defendant] made of an illegal product should have been a sale of a legal product that competed with the illegal products sold on [Defendant]'s website.” (Doc. 29 at 23-24). From there, Plaintiff alleges that its sales had been going up year after year for five years, until 2016, when its sales dipped. (Id. at 24-25). Plaintiff also claims that the term “dietary supplement” “leads ...


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