Golo, LLC v. Highya, LLC

Citation: 310 F. Supp. 3d 499Docket: Civil Action No. 17–2714

Court: District Court, E.D. Pennsylvania; May 4, 2018; Federal District Court

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Gerald Austin McHugh, United States District Judge, addresses the application of the Lanham Act in the context of online review websites. Plaintiff GOLO, Inc. operates a weight loss program, while Defendants HighYa, LLC, and BrightReviews, LLC are consumer review sites that evaluate products without selling their own. GOLO alleges that the reviews posted by the Defendants were unfair and inaccurate, leading to injuries during the time the reviews were available. Despite Defendants removing one review and revising another, GOLO pursues claims of unfair competition and trade libel under the Lanham Act and state law.

The court concludes that the Defendants’ reviews do not qualify as commercial speech, resulting in a failure to state a claim for unfair competition. Additionally, the trade libel claim is deemed deficient for lacking essential elements. Consequently, the court dismisses the case without prejudice.

Relevant facts include that both Defendants aim to provide unbiased reviews and generate revenue primarily through advertisements, not product sales. They offer editorial reviews and allow third-party comments, maintaining guidelines for truthful reporting while retaining the right to remove non-compliant reviews. GOLO had engaged with Defendants' business profile program and contested two editorial reviews it viewed as negative.

The GOLO program includes a meal plan, a 'Release Supplement,' a booklet, and various behavioral tools, marketed exclusively through Plaintiff's website and customer service, utilizing multiple media channels. Customers often find the program after online searches and reviews. Plaintiff's website features a program description supported by research claims. Defendants published editorial reviews critiquing this description, with Defendant HighYa's review in March 2016 generating numerous negative user comments and an average rating of 2.8 stars. GOLO representatives contacted HighYa to address alleged inaccuracies, including a misleading title and reliance on outdated information, as well as mischaracterization of the program's focus. Although HighYa eventually removed the disputed content, Plaintiff claims damages from the review's year-long presence.

In January 2017, BrightReviews published a similarly negative article with an average rating of 2 stars, featuring user comments that included severe criticism of the program. Plaintiff asserts that BrightReviews' editorial review contained false claims regarding the 2010 study's subject group and the peer-reviewed status of related studies. Although the BrightReviews review was taken down in June 2017, Plaintiff argues that both Defendants benefited from a 'sham review' business model, presenting themselves as trustworthy consumer review sites while allegedly being connected to GOLO's competitors.

Plaintiff claims false advertising and trademark infringement under the Lanham Act, alongside state law claims for trade libel and unfair competition. Defendants seek dismissal, arguing that Plaintiff has not sufficiently established claims under federal and state unfair competition laws. Under Rule 12(b)(6), the court must assess if the factual allegations raise a plausible right to relief, requiring more than speculative claims or legal conclusions presented as facts. The court can consider documents related to the complaint when evaluating these claims.

The court finds that Plaintiff fails to state a claim under the Lanham Act and Pennsylvania Unfair Competition law. The Act delineates two types of unfair competition: false advertising (Section 1125(a)(1)(B)) and trademark infringement (Section 1125(a)(1)(A)). Defendants argue for dismissal based on four points: (1) their reviews do not constitute commercial speech; (2) Plaintiff has not shown direct commercial injuries; (3) Plaintiff has not alleged any false statements about their products; and (4) the reviews do not likely cause consumer confusion regarding Plaintiff's name.

The court concludes that the reviews do not qualify as commercial speech, which is a prerequisite for Lanham Act claims. The Third Circuit's criteria for commercial speech demand that it be an advertisement, refer to a specific product or service, and involve economic motivation. While the reviews reference GOLO's dieting program, they do not promote a competing product or propose a commercial transaction, merely analyzing GOLO's offering without making specific consumer recommendations. Thus, the reviews fall outside the scope of Lanham Act liability.

In Tobinick v. Novella, the Eleventh Circuit addressed a case involving a physician who promoted an unapproved use of a generic drug for various medical conditions, while a Yale-affiliated neurologist published critical articles about him online. Despite the articles generating revenue through ads and subscriptions, the court ruled that they did not constitute commercial speech because they did not propose any commercial transactions and the defendant gained no direct financial benefit from the articles influencing readers' patient decisions. The court highlighted that the articles provided information and expressed opinions aimed at helping consumers make informed choices about controversial medical claims.

The core of the plaintiff's grievance centered on the content of the reviews, specifically claiming they were outdated and inaccurately represented his program. However, the revised reviews reflected a more rigorous assessment, including interviews with the defendant. Although the plaintiff alleged inaccuracies and misleading statements, the reviews were framed with qualifying language based on the plaintiff's own website, lacking the characteristics of advertisements.

The plaintiff argued that the reviews were commercial speech intended to influence purchasing decisions and generate financial benefit for the defendants. Nevertheless, the Eleventh Circuit's reasoning in Tobinick suggested that any financial gain was incidental. The court recognized that liability under the Lanham Act could arise if the reviews were a facade for disparaging a competitor's product while pretending to offer neutral assessments. Ultimately, it found that the plaintiff's initial complaint lacked sufficient allegations to support this claim, and the amended complaint did not convincingly assert that the defendants' review sites were deceptive schemes.

District courts must apply the plausibility standard cautiously, especially prior to discovery, as plaintiffs may struggle to substantiate their claims. In this case, the Plaintiff's allegations are found insufficient for three main reasons. First, although the proceedings are under Rule 12, the court can consider the content of Defendants' websites, which reveal that Defendants amended their reviews in response to Plaintiff's objections and clarified that changes were based on new information from GOLO. This undermines any inference that the reviews were intended to advantage competing products. Second, Defendants openly disclose a commercial relationship with the Bowflex Max Trainer, which contradicts Plaintiff's assertion of covert competition; if Defendants were secretly competing, there would be no reason to disclose such relationships. Third, since Plaintiff acknowledges that Defendants' revenues stem from web traffic, the nature of the reviews—whether positive or negative—would equally drive traffic, as favorable reviews could lead to increased referrals to their site. The specific connection between HighYa's review of GOLO and the unrelated mention of Bowflex does not support a claim of direct competition or injury under the Lanham Act. Additionally, while direct competition is not a strict requirement for a Lanham Act claim, the reviews in question do not constitute commercial speech, leading to the dismissal of both the Lanham Act claims and the state law unfair competition claim. Furthermore, Plaintiff's claim for trade libel under Pennsylvania law fails because it does not adequately plead the necessary elements: a false statement intended to cause pecuniary loss, actual pecuniary loss, and actual malice.

Pennsylvania's statute of limitations for trade libel claims is one year from the date of first publication. Defendants assert that Plaintiff's claims regarding a review on HighYa are time-barred, as the review was published in March 2016, and the case was filed on June 16, 2017. Plaintiff acknowledges the late filing but contends it is valid due to a revised article published within the limitations period and claims that HighYa re-published the original review via social media. However, the referenced social media post is over a year old, and Plaintiff does not contest any specifics of the revised article. Therefore, Plaintiff's trade libel claims against HighYa are dismissed as time-barred.

Regarding BrightReviews, Defendants argue that Plaintiff has not sufficiently claimed the falsity of statements, actual malice, or resulting pecuniary loss. The court finds it unnecessary to address pecuniary loss or malice, concluding that Plaintiff has not adequately alleged falsity. The contested statements are framed as observations based on information from GOLO's website, and Plaintiff fails to show that these statements could not reasonably be made. Plaintiff's assertion that the reviews imply GOLO's product is a scam is unpersuasive, as the context does not suggest illegal fraud but rather questions the effectiveness of the weight loss product. Consequently, the claims against BrightReviews are also dismissed.

In conclusion, Plaintiff's failure to adequately allege that the reviews constitute commercial speech and to establish claims for false advertising, trademark infringement, and trade libel results in the granting of Defendants' Motion to Dismiss in full. This dismissal extends to claims involving Casper Mattress and InvenTel's HD Mirror Cam. HighYa's compensation structure for affiliate links is explained, and it concedes responsibility for the specific wording of the link that has since been removed.

The term 'scam' is not exclusively associated with GOLO, as Defendants' websites aim to address whether certain entities are scams or legitimate. Count I specifically cites 15 U.S.C. § 1125(a)(1)(B), while Count II, sharing a similar title, does not reference this statute. However, the Defendants interpret the allegations as a claim under § 1125(a)(1)(A) for false association, an interpretation the Plaintiff has not contested. The Pennsylvania common law claim for unfair competition mirrors Lanham Act claims, excluding the requirement for federal interstate commerce.

Defendants' claim to have gathered information from diverse sources is questioned, yet this does not automatically invoke the Lanham Act. The case of Tobinick is mentioned, where minimal research was conducted by a defendant based solely on a newspaper article. The Plaintiff alleges that the Defendants' business profiles are deceptive and imply that their reviews are scientifically valid, presenting generalized claims that suggest a fake review operation. Additionally, the Plaintiff claims that the reviews may be manipulated to solicit payments from negatively reviewed companies; however, this assertion is weakened as a review was altered without any payment request.

The dispute includes whether user comments support the Plaintiff's trade libel claim, with the Plaintiff asserting that it only needs to allege that HighYa is the source of those comments based on belief. However, the Plaintiff has not identified any specific false comments that resulted in financial loss or were made with actual malice. The court finds the Plaintiff's broad allegations of the websites being fraudulent implausible and does not find credible the claim that third-party reviewers and commenters do not exist. While the issue of malice is not addressed, the precise wording of the reviews undermines the Plaintiff's malice allegations in the Amended Complaint.