VERISIGN, INC. v. XYZ.COM LLC
US Court of Appeals for the Fourth Circuit, Harris, Feb. 8, 2017,
Lanham Act – Advertising claims made by “.xyz” TLD, even if potentially misleading, did not satisfy Lanham Act where “.com” TLD did not prove that it was harmed
Because the Lanham Act’s all the rage these days
Facts: .xyz (Negari et co) made various claims about .com (held by Verisign)
Lanham Act- 15 USC 1125(a)(1)(B) states that anyone who “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, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.”
Lanham Act- A single statement must satisfy all of the following elements (no mixing and matching):
(1) the defendant made a false or misleading description of fact or representation of fact in a commercial advertisement about his own or another’s product;
(2) the misrepresentation is material, in that it is likely to influence the purchasing decision;
(3) the misrepresentation actually deceives or has the tendency to deceive a substantial segment of its audience;
(4) the defendant placed the false or misleading statement in interstate commerce; and
(5) the plaintiff has been or is likely to be injured as a result of the misrepresentation, either by direct diversion of sales or by a lessening of goodwill associated with its products.
Injury/Causation- Mere decline in profits while competitor shows an increase in profits is insufficient to show damages under Lanham Act
Falsity- A Lanham Act claim must be shown to be objectively false and material (likely to influence consumer decision), not mere “puffery”
Falsity- A claim of falsity can rely on literal falsehood or that it is true but misleading
Falsity- To show that it is misleading, the plaintiff must present “extrinsic evidence of consumer confusion.”
From the case:
Finally, there are XYZ’s statistics: the claim that “99% of all registrar searches today result in a ‘domain taken’ page,” J.A. 628, repeated by Negari on a local radio show in a slightly different form, J.A. 666 (“nine out of ten .com searches show up as unavailable”). The district court agreed with Verisign that these statements qualify as statements of verifiable fact; the problem for Verisign, the district court held, is that they are verifiably true. As the district court explained, Verisign’s own data shows that out of approximately two billion requests it receives each month to register a .com name, fewer than three million – less than one percent – actually are registered. And indeed, Verisign’s expert on domain name availability conceded the accuracy of the data behind the 99 percent statistic.