Ariix, LLC v. NutriSearch Corp., No. 19-55343 (9th Cir. 2021)
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The Ninth Circuit reversed the district court's dismissal of a false advertising claim under the Lanham Act, remanding for further proceedings. At issue is whether the First Amendment shields a publisher of supposedly independent product reviews if it has secretly rigged the ratings to favor one company in exchange for compensation. The panel ruled that this speech qualifies as commercial speech only, and that a nonfavored company may potentially sue the publisher for misrepresentation under the Lanham Act.
In this case, Ariix alleges that NutriSearch rigged its ratings to favor Usana under a hidden financial arrangement. The panel held that Ariix plausibly alleges that the nutritional supplement guide is commercial speech, is sufficiently disseminated, and contains actionable statements of fact. However, the panel remanded for the district court to consider the "purpose of influencing" element under the Lanham Act.
Court Description: Lanham Act. The panel reversed the district court’s dismissal of a false advertising claim under the Lanham Act and remanded for further proceedings. Addressing whether the First Amendment shields a publisher of supposedly independent product reviews if it has secretly rigged the ratings in favor of one company in exchange for compensation, the panel held that this speech qualifies as commercial speech. Accordingly, a non-favored company may potentially sue the publisher for misrepresentation under the Lanham Act, which prohibits any person from misrepresenting her or another person’s goods or services in “commercial advertising or promotion.” Addressing whether the defendant made misrepresentations in advertising or promotion, the panel concluded that the plaintiff plausibly alleged that the defendant’s publication was commercial speech, was sufficiently disseminated, and contained actionable statements of fact. The panel left for the district court to decide, on remand, whether defendant’s publication was “for the purpose of influencing consumers to buy defendant’s goods or services.” Dissenting, Judge Collins wrote that the plaintiff failed to plead sufficient facts to show that it had an actionable ARIIX V. NUTRISEARCH 3 claim for false advertising under the Lanham Act. He wrote that, in his view, it was unnecessary to reach the question whether the defendant’s publication amounted to commercial speech for First-Amendment purposes because the Lanham Act applies only to a subset of commercial speech, and defendant’s publication did not fall within the statute’s textual limitations.
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