Industries Represented – Conkle, Kremer & Engel, PLC

Turning an Agreement for Use of Public Information into a Trade Secret Misappropriation Case

A recent New Jersey case is an example of how claims of misappropriation of trade secrets can arise in unexpected ways, and of the importance of the terms used in agreements for use of information. The case shows that trade secret misappropriation can occur even when the information is “public” and the recipient was authorized to have the information.

In Events Media Network, Inc. v. The Weather Channel, Events Media had collected and compiled information about public events into a database. Events Media then licensed the compilation to The Weather Channel to list events on The Weather Channel’s website. Events Media claimed that The Weather Channel used the database for purposes other than listing events on its website. Events Media sued The Weather Channel, but not just for a breach of the licensing agreement – Events Media also sued for trade secret misappropriation.

Although trade secrets are generally thought of as valuable information that no one else knows (of course, that is why it is secret), compilations of information that is available to the public, such as the Events Media database, can receive trade secret protection.

Events Media serves as a demonstration of how important the license agreement terms can be to whether a misappropriation of trade secrets claim can be pursued. In finding that the Events Media database could be a protectable trade secret, the New Jersey court relied in part on the licensing agreement itself. The court concluded that Events Media’s database was valuable – why else would The Weather Channel agree to pay for it? The court also found the compilation was “secret,” because it was provided under a license agreement that affirmed its confidentiality and limited its use and disclosure, and because the data compilation was not known to others even though individual items of data were public.

Events Media further shows that trade secret misappropriation can occur even where a party has rightfully acquired the information under an agreement. All that is required is unauthorized “use or disclosure” of the secret information, which can be shown by demonstrating that the use or disclosure was not permitted under the terms of a limited licensing agreement.

Finally, the case demonstrates that trade secrets need not be revealed to a third person in order to have misappropriation. Trade secrets cases frequently involve a person who has impermissibly disclosed trade secrets to another, such as an employee who takes trade secrets from a former employer to a new employer. But Events Media claimed only that The Weather Channel misappropriated trade secrets just by using the information for purposes not authorized by its licensing agreement.

In short, the ability to assert trade secret misappropriation can be based in large part on the terms of agreement between the parties. As this case demonstrates, trade secrets laws protect a broad array of information, from customer lists to product formulas, and misappropriation can occur in circumstances that few would imagine. CK&E’s lawyers have decades of experience in drafting agreements to protect and use trade secrets, as well as litigating trade secrets cases for both plaintiffs and defendants. We always stand ready to provide clients with forward-thinking legal representation on these matters.

27
JUL

Industries Represented, Intellectual Property, Trade Secret Misappropriation

Contracts, Licensing Agreements, Trade Secrets

Proposition 65 Bounty Hunters Target Titanium Dioxide in Personal Care Products

Posted by: H. Kim Sim

Titanium dioxide (TiO2) is commonly used in personal care products. It can be found in cosmetics, skincare products, and sunscreens. Products that may contain titanium dioxide include nail acrylic powders, eye shadows, loose and pressed face powder, powder foundation, bronzers, blushes and spray-on sunscreens.

Titanium dioxide was added to the list of Proposition 65 chemicals in September 2011, and warning requirements took effect in September 2012. The addition of titanium dioxide (airborne, unbound particles of respirable size) to the Office of Environmental Health Hazard Assessment (OEHHA)’s list of chemicals subject to regulation under Proposition 65 has caused professional Prop 65 plaintiffs to send out a number of “Notices of Violation” to manufacturers and distributors in the personal care products industry. They do this because the law requires that a Notice of Violation be served before a private party may commence a Prop 65 lawsuit.

Prop 65 plaintiffs – motivated by the potential to recover civil penalties and attorney’s fees – have seized on the new listing to go after numerous companies, including those in the beauty products business, for failing to provide a warning that titanium dioxide is known to the State of California to cause cancer. Often, such Prop 65 Notices of Violation are motivated more by a desire for a quick settlement than for a long dispute.

Since its listing, titanium dioxide has been the subject of four Notice of Violations – two by the Center for Environmental Health, and two by the Public Interest Alliance. The Center for Environmental Health is a well known Prop 65 plaintiff represented by Mark N. Todzo of Lexington Law Group in San Francisco. Its Notices of Violation with respect to titanium dioxide have attacked manufacturers and distributors of spray-on sunscreens.

The Public Interest Alliance is new to the group of Prop 65 plaintiffs and is represented by Jeffrey M. Judd of Judd Law Group in San Francisco. It has only sent out two Notices of Violation since it appeared on the Prop 65 scene, but both have been over titanium dioxide, and the two Notices combined attack more than 100 companies.

Manufacturers and distributors of personal care products should carefully review the contents of products that may contain titanium dioxide. CK&E has helped clients with personal care products businesses understand and comply with the requirements of Prop 65, to avoid being one of those who receive a Notice of Violation. If a Notice of Violation is received, CK&E works aggressively to help clients resolve the claims as quickly and economically as possible, without being held captive to the bounty hunters’ demands.

14
JUL

Beauty Industry, Personal Care Products, Proposition 65

Lead in Baby Food? Failure to Warn Leads to Unusual Prop 65 Trial

Posted by: Eric S. Engel

Proposition 65 actions are notoriously expensive and difficult to defend. For that reason, most Prop 65 cases settle. But a rare case involving allegedly high levels of lead in baby food, packaged fruits and juices is in trial in the Alameda Superior Court.

In September 2011, the Environmental Law Foundation (one of a handful of organizations in California that files Prop 65 actions in the name of the public interest) brought a lawsuit against food companies Beech-Nut Nutrition, Dole, Gerber, Del Monte Foods, and many others. ELF claimed that the manufacturers made and sold baby and children’s food containing lead, without a warning as required by Prop 65, California’s Safe Drinking Water and Toxic Enforcement Act.

What is at stake in the Prop 65 action is whether baby food and children’s food such as carrot and potato baby food, grape juice and fruit cocktail must include a warning that the foods contain a chemical known to the state of California to cause cancer or reproductive harm. Naturally, the food manufacturers do not wish to be forced to warn potential consumers that their foods contain harmful chemicals.

The food companies’ defenses are being tried to Superior Court Judge Steven A. Brick. The food companies claim that their products contain only trace levels of lead that are below the level required for a Prop 65 warning. They also claim that the lead is “naturally occurring” in the foods and therefore no duty to warn is required under the “naturally occurring” exposure defense to Prop 65. Finally, the food companies have argued that Prop 65’s warning requirements are preempted by the Food, Drug and Cosmetic Act and the Nutrition Labeling and Education Act. They contend that the FDA has determined that the baby food and children’s food in question do not pose unacceptable risks to health, so a Prop 65 warning requirement would create a conflict between federal and state law.

This will be a closely-watched case, because the Court’s ruling on these defenses is likely to have a significant impact on the defenses available to businesses faced with Prop 65 actions in the future. Regardless of the outcome, CK&E’s lawyers will continue to work with businesses to help them develop a plan of compliance so that they can achieve their goal of minimizing the risk of being named as a defendant in a Prop 65 lawsuit. If a lawsuit is threatened or filed, CK&E’s lawyers apply can create and implement effective and cost-efficient defense strategies to minimize its impact.

25
APR

Food, Craft Beer and Nutrition, Proposition 65, Regulatory Compliance, Unfair Competition

Bounty Hunters, Notice of Violation, OEHHA, Warning Letter

Kirtsaeng Holds Copyright First Sale Doctrine Trumps Importation Rights

Posted by: Mark Kremer

The Copyright Act gives a copyright owner the exclusive right to sell copies of the copyrighted work. But once a genuine copy is sold, a lawful owner of that particular copy can resell or transfer what he bought without infringing the copyright – the copyright owner can no longer use the copyright to control the resale of that particular copy. This copyright limitation has become known as the “First Sale Doctrine.”

A quirk in copyright law arose because the Copyright Act has a provision that prevents importation of a copyrighted work into the U.S. without the copyright owner’s permission. (17 U.S.C. 602(a)(1)). This ability of the copyright owner to prohibit importation seemed to conflict with the First Sale Doctrine when a copy is first sold outside of the United States.

In the 1998 decision Quality King Distributors, Inc. v. L’Anza Research, Int’l, Inc., the Supreme Court held that a copyrighted product manufactured in the U.S., but first sold in a foreign country, was subject to the First Sale Doctrine. The result was that the copyright owner could not prohibit importation of the copyrighted product into the U.S. But the question remained whether the First Sale Doctrine also applied to copyrighted works that were both manufactured and first sold outside the U.S.

In March 2013 the Supreme Court answered the question by applying the First Sale Doctrine regardless of where the copyrighted work is manufactured or first sold. In Kirtsaeng dba Bluechristine99 v. John Wiley & Sons, Inc., the products involved were textbooks manufactured and first sold in Thailand by the copyright owner, then later imported into the U.S. for resale without the copyright owner’s permission. In a split decision, the Supreme Court held that the Copyright Act requires that the First Sale Doctrine applies to authentic, unaltered products that were lawfully manufactured and first sold by the copyright owner in a foreign country as well as in the U.S.

The Kirtsaeng decision provides no protection for sale of modified, adulterated, pirated or counterfeit copies, regardless of where they were made or sold. Nor does it insulate parties from participation in fraud, breach of contract, unfair competition or other wrongful acts that are independent of copyright protections. Conkle, Kremer & Engel has long recommended that its clients take a multi-faceted approach to preventing and remedying product diversion and counterfeiting, so they are able to effectively address the problem no matter where and how the misconduct occurs.

9
APR

Beauty Industry, Brand Protection, Copyrights, Fashion, Food, Craft Beer and Nutrition, Intellectual Property, International Trade, Manufacturing, Personal Care Products, Sales, Technology, Trademarks, Unfair Competition

First Sale Doctrine, Importation, Kirtsaeng, L'Anza, Quality King

Starting a Fire: "Tris" Listing Increases Risks of Prop 65 Claims

Posted by: H. Kim Sim

Tris / TDCPP is a common flame retardant additive used in the manufacture of polyurethane foam, resins, plastics, textile coatings and rubber. Tris / TDCPP is found in a wide variety of common products such as upholstered furniture and padding. California’s Office of Environmental Health Hazard Assessment (OEHHA) recently added the chemical Tris(1,3-dichloro-2-propyl) phosphate (chlorinated Tris or TDCPP) to its ever-growing list of chemicals “known to the State of California to cause cancer or reproductive toxicity.” As a result, Tris / TDCPP is now subject to Proposition 65, California’s Safe Drinking Water and Toxic Enforcement Act of 1986.

Prop 65 has a well-earned reputation as a “bounty hunter” statute, and is presently the subject of reform legislation, AB 227. This notorious “right to know” law does not ban any particular chemical from being used in products. In most cases it simply requires a generic warning label if a product contains chemicals found on the OEHHA’s Prop 65 list.

Because of the recent addition of Tris / TDCPP, products containing that chemical now must have a warning label in order to comply with Prop 65. Manufacturers and distributors who use outdated labeling and inadvertently fail to include the required warning are likely to be targeted by lawyers and claimants looking for violations on which they can capitalize. The penalties imposed by Prop 65 include fines as well as liability for the plaintiff’s attorney’s fees and costs.

Prospective Prop 65 plaintiffs are required to serve a “Notice of Violation” and wait at least 60 days before they can file a lawsuit. (California Health and Safety Code section 25249.7(d)) A review of the 159 Notices of Violation with respect to Tris / TDCPP served in the past 6 months reveals that just two law firms are actually behind the onslaught of Prop 65 notices regarding Tris / TDCPP:

The Chanler Group of Berkeley, California, through attorney Josh Voorhees and the firm’s “usual plaintiffs” (Peter Englander, Laurence Vinocur, Russell Brimer and John Moore) – 146 of the 159 Notices (92%).
Lexington Law Group of San Francisco, California, through attorney Mark N. Todzo and the firm’s plaintiff, Center for Environmental Health – 13 of the 159 Notices (8%).

The products identified in these notices have included foam-cushioned upholstered furniture, such as chairs, ottomans, stools and benches, foam-cushioned mattress toppers, back and seat cushions, car seats, and foam mats and pads for children and infants.

Manufacturers and distributors should promptly assess whether their products contain Tris / TDCPP. CK&E’s lawyers are experienced in helping clients take action to protect themselves from Prop 65 liability, and to help put out the fire if a Notice of Violation is delivered.

2
APR

Advertising and Labeling, Fashion, Manufacturing, Proposition 65, Regulatory Compliance

Lawyers, Notice of Violation, OEHHA, TDCPP, Tris, Warning Letter

Deal done? Maybe Not, if it’s a Copyright Sale

Posted by: Eric S. Engel

Copyright ownership sales are generally controlled by ordinary state contract laws, but there are some limits when dealing with an agent of the copyright owner. In the recent case of MVP Entertainment v. Frost, a film producer offered to purchase the movie rights to author Mark Frost’s book, “The Match: The Day the Game of Golf Changed Forever.” The purchaser dealt with the attorney for the owner. In response to an email by the purchaser offering purchase terms, the attorney replied by email, “done . . . thanks!” Under many state laws that might have been enough to transfer ownership, but not so under copyright law.

The Copyright Act (17 U.S.C. § 204(a)) says that “transfer of copyright ownership . . . is not valid unless . . . a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.” An attorney is an agent, so the attorney’s email saying the deal is “done” should be enough, shouldn’t it? Not quite, said the California Court of Appeal in MVP, because the owner disputed that his attorney had the owner’s actual authority to sell the copyright. In other words, the attorney was not the “owner’s duly authorized agent” for that purpose.

But the purchaser claimed it was led to believe that the attorney had authority, which is a theory known as “ostensible agency.” Under California law, a property owner can be bound by the acts of another person (the “ostensible agent”) whom the owner “intentionally or by want of ordinary care, causes or allows” another (the purchaser) to believe had the owner’s authority. Contracts can be created by “ostensible agents” in many circumstances. But the MVP decision held that copyright transfers cannot be done by “ostensible agents.” Copyright law requires that the purchaser deal directly with the owner, or with an agent expressly and “duly authorized” to act on behalf of the owner, with the goal that copyright interests are not inadvertently given and there is no uncertainty about what rights were transferred.

The takeaway from MVP is, when buying copyrights it’s wise to get the owner’s signature. CK&E lawyers routinely guide clients through transfers and licensing of intellectual property including copyrights, trademarks and patent rights. As well, when a client’s rights in intellectual property are threatened, CK&E lawyers respond with effective enforcement.

30
MAR

Beauty Industry, Contracts, Contracts, Business and Finance, Copyrights, Fashion, Intellectual Property, Manufacturing, Technology

Agency, Agents, Copyright Act, Lawyers, Sales, Transfers

Closing the Door to Class Actions for False Advertising Claims

Posted by: Conklelaw

Advertising claims are often the subject of lawsuits in California. Ads, slogans, packaging or even product images are claimed to be “false or misleading.” Plaintiffs make claims under a variety of consumer protection laws, such as California’s Unfair Competition Law (UCL), Business and Professions Code section 17200; False Advertising Law (FAL), Business and Professions Code section 17500; and the Consumer Legal Remedies Act (CLRA), Civil Code section 1750.

But an individual who wants to sue has a problem, because a single person who claims to have been misled into purchasing a product will usually only have purchased one product and therefore has just a few dollars (or sometimes only pennies) of “out of pocket” money damages. It’s usually not realistic for a lawsuit to be pursued for just a few dollars. As a result, plaintiffs’ lawyers sometimes try to make a “class action” claim to join together many people who can each claim a few dollars of damages, which can add up to a great deal of money. In a class action, the plaintiff can assert that similar injuries happened under similar circumstances to a large number of people, and the plaintiff should be allowed to make a claim for all of the damages to that group of people. Further, the lawyers for the class action can make claims for attorneys’ fees that are much larger than they would otherwise be permitted for representing an individual claimant.

To proceed with a class action lawsuit, the plaintiff must show the court that the proposed “class” meets the rules for “certification.” That is a big hurdle in many cases, because it requires that the plaintiff show that all of the proposed class members have similar claims and issues. A recent ruling from the United States District Court, Central District of California shows how hard it can be to prove that there are such common claims and issues. In Mara Chow v. Neutrogena Corp., Case No. CV 12-04624, the plaintiff claimed that Neutrogena had made false and misleading labels and advertising for its “anti-aging” skincare products, including that the products are “clinically proven,” can cause a person to look younger, and can prevent and repair signs of aging within one week. The plaintiff tried to show that she had a proper class action because all of the class members had similar claims. But District Judge Manuel L. Real refused to certify a class.

Judge Real found that too many individual questions existed as to whether the Neutrogena product had worked as advertised for each individual class member. In other words, each member would have to individually show whether the claims were false as to that member. Further, some of the claims required that each class member would have to show that she “relied” on the false advertising when she purchased the Neutrogena product, which also could only be proved individually and not on a class-wide basis. But the news wasn’t all bad for plaintiff – the individual plaintiff was allowed to continue asserting her own individual claim for a few dollars in damages. No one will be surprised when the case is dismissed, because it isn’t worth pursuing.

CK&E’s lawyers have experience handling all aspects of claims of false or misleading advertising under the UCL, FAL and CLRA. CK&E’s lawyers are particularly well-versed in developing methods to reduce the risk of such lawsuits before they are filed. If a claim does arise, it often comes first to a business in the form of a demand letter, and CK&E attorneys are skilled at responding to such demand letters in ways that eliminate or minimize the claim and can lead to a quick and cost-effective resolution.

Update: The plaintiff filed a petition for permission to appeal the District Court’s Order denying class certification. On April 23, 2013, the Ninth Circuit Court of Appeals denied the petition for permission to appeal. The lawsuit was subsequently settled and dismissed with prejudice on June 10, 2013.

26
MAR

Beauty Industry, Class Actions, Food, Craft Beer and Nutrition, Litigation, Arbitration and Mediation, Unfair Competition

Advertising, Class Actions, CLRA, FAL, False Advertising, Misleading Advertising, UCL, Unfair Business Practices

Facebook Status Update: I’ve Been Served

Posted by: Eric S. Engel

Social media is entering a new legal realm: At least one court has recognized that a Facebook message can be used to serve a defendant with documents in litigation. Historically, service of process has been most often accomplished by serving papers in person, or sometimes by U.S. Mail, to assure the court that a party has received due notice and an opportunity to respond to the legal proceedings. But service of process is not always accomplished by such old fashioned means. In a new twist, in Federal Trade Commission v. PCCARE247 Inc., United States District Court, Southern District of New York, Case No. 12 Civ. 7189 (PAE), Judge Paul A. Engelmayer ruled that the FTC could serve legal papers on defendants who were located in India by a combination of email and Facebook messages. Service by email has been recognized in limited circumstances by other courts, and Judge Engelmayer emphasized that service of process by Facebook message would not be appropriate in every circumstance. The court noted that the FTC had shown that the particular email and Facebook accounts were actively used by the defendants, and the defendants had already appeared in the litigation through counsel that had since withdrawn from representing them.

The rapidly expanding legal importance of social media is illustrated by the fact that less than a year earlier, in Fortunato v. Chase Bank USA, another USDC case in the Southern District of New York, Case No. 11 Civ. 6608, Judge John F. Keenan refused to accept Facebook as a means of service of process on a party. Observing that “[s]ervice by Facebook is unorthodox to say the least,” Judge Keenan found that Facebook service would violate constitutional due process requirements, in large part because the court had not been shown to reasonable certainty that the Facebook profile actually belonged to the defendant who was being served.

Legislatures have also noticed the increasing legal importance of social media. In February 2013, Texas State Representative Jeff Leach introduced a bill that would allow substituted service through social media websites. If enacted, H.B. No. 1989 would allow Texas courts to prescribe as a method of service an electronic communication sent to the defendant through a social media website if the court finds: (1) the defendant maintains a social media page on that website; (2) the profile on the social media page is the profile of the defendant; (3) the defendant regularly accesses the social media page account; and (4) the defendant could reasonably be expected to receive actual notice if the electronic communication were sent to the defendant’s account. The Texas bill is the first of its kind, and it is likely that other states will consider similar legislation.

It seems safe to say that email and Facebook messages will not be the only technological methods by which service of process will be permitted in the future. As Judge Engelmayer observed, “history teaches that, as technology advances and modes of communication progress, courts must be open to considering requests to authorize service via technological means of then-recent vintage, rather than dismissing them out of hand as novel.” While people may not feel ready to be informed they are being sued by messages on Facebook, Twitter or LinkedIn, that day may not be far off. The cautionary lesson is that email and other electronic means of communication need to be monitored for legal demands, notices or court filings, because a prompt legal response may be required.

19
MAR

Litigation, Arbitration and Mediation, Technology

Email, Facebook, LinkedIn, Service of Process, Social Media, Twitter

Prop. 65 Reform — Is a Safe Harbor from Bounty Hunters on the Horizon?

Posted by: Conklelaw

California’s now-infamous Proposition 65 (Prop. 65, Cal. Health & Safety Code § 25249.5) allows a private citizen to file a lawsuit against any business that fails to post adequate warnings about the presence of chemicals known to cause cancer or reproductive harm. The private enforcer may seek an injunction, penalties of up to $2500 per violation, per day, and an award of attorneys’ fees.

Assembly Member Mike Gatto (43rd District of California) recently proposed legislation, Assembly Bill 227, that would reform Prop. 65 by providing a “safe harbor” in the form of a 14-day period for businesses to correct alleged violations. If enacted as proposed, a business who receives a demand under Prop. 65 would have a brief opportunity to demonstrate its compliance with Prop. 65 requirements to the California State Attorney General, or the responsible city attorney or district attorney. If the business takes advantage of that “safe harbor” then the claimant would be barred from filing a lawsuit against that business.

While the purpose of Prop. 65’s private enforcement provision is to allow private citizens to act on behalf of the public to ensure warnings are properly posted, supporters of AB 227 criticize Prop. 65 as a “bounty hunter” statute that primarily benefits plaintiff’s attorneys. In 2011, businesses paid a total of nearly $16 million to settle lawsuits brought by private citizens, of which almost $12 million was paid to the plaintiffs’ attorneys. In fact, nearly half of the attorneys’ fees were paid to a single firm: The Chanler Group.

AB 227 would give businesses the opportunity to come into compliance with Prop. 65 warning requirements without paying exorbitant settlement fees to prevent costly litigation. But businesses would have to take swift action. As CK&E attorneys John A. Conkle, Amy Burke and Mark Riedel discussed in their November 2012 presentation to the Personal Care Products Council, What’s Your Game Plan?, it is important for businesses to develop strategies for ensuring regulatory compliance and for handling notices of violation quickly and efficiently. AB 227, if signed into law, would be another reason that businesses should prepare contingency plans for the day that they receive a notice of violation from plaintiffs seeking to take advantage of Prop. 65 — a business could avoid being sued at all if it responds quickly and correctly to take advantage of the safe harbor. CK&E advises clients in regulatory compliance, responding to warning and demand letters, and developing an individualized game plan to suit each client’s needs.

18
MAR

Beauty Industry, Food, Craft Beer and Nutrition, Manufacturing, Proposition 65, Regulatory Compliance, Sales, Technology, Unfair Competition

AB 227, Assembly Member Mike Gatto, Bounty Hunters, Injunctions, Injunctive Relief, Lawyers, Notice of Violation, Prop 65 Reform, Proposition 65 Reform, Warning Letter

Keeping "Competition" in California’s Unfair Competition Law

Posted by: Eric S. Engel

California’s Unfair Competition Law (UCL) provides broad protections to both consumers and businesses, prohibiting any form of conduct that can be found to be an “unlawful, unfair or fraudulent business act or practice.” (California Business & Professions Code § 17200) The UCL is particularly powerful because it can reach conduct that is not specifically illegal under any other law, and can also provide a remedy for any acts or omissions that are prohibited under other state or federal laws even if those laws do not allow private citizens to sue when they are violated. A recent example is the case of Law Offices of Mathew Higbee v. Expungement Assistance Services, in which a lawyer used the UCL to sue a credit repair service that was not licensed to practice law. The lawyer alleged that he too was in the credit repair business and, as a result of the defendant’s violations of California’s attorney licensing requirements, the competing lawyer was required to lower his prices and spend more money on advertising, lost clients and revenue, and the value of his law firm had diminished. Ordinarily, the statutes requiring a license to practice law cannot be enforced by private citizens. But here, the UCL was held to “borrow” the statutory violation to show an “unlawful business act or practice” that gave the plaintiff a claim.

Those already familiar with UCL know that it was modified by Proposition 64 in 2004, tightening the standing requirements so that an action could only be brought by a “person who has suffered injury in fact and has lost money or property” as a result of the alleged unfair competition. (B&PC section 17204) Some courts had struggled with this new requirement, at times suggesting that the plaintiff would have to show that the defendant had directly taken money from the plaintiff as a result of the unfair competition. Such a requirement would effectively eliminate “competition” out of the Unfair Competition Law: It is rare that a business competitor could show that it gave money or property directly to a competitor as a result of unfair competition – and if it did happen, the plaintiff would probably have a breach of contract or fraud claim and probably would not need to use the UCL.

But over time it has become clear that Prop 64 did not not eliminate unfair competition claims between competitors. In the Law Offices of Mathew Higbee case, the Court of Appeal in Orange County held that the UCL does not require that the parties have had direct dealings with each other in order to succeed “in alleging at least an identifiable trifle of injury as necessary for standing under UCL.” The Court surveyed the law before and after Prop 64, and found the cases supportive of a rule that permitted business competitors to make unfair competition claims. The standing requirement does not require in every instance that the parties have had direct dealings with each other. The Court emphasized that, provided that the “identifiable trifle of injury” resulting from the acts of unfair competition can be shown, “the UCL does not leave the court hamstrung, unable to even consider an action seeking injunctive relief just because the defendant engages in its purportedly unlawful activity via the Internet and has not had any direct business dealings with the plaintiff.”

18
MAR

Banking and Finance, Beauty Industry, Contracts, Business and Finance, Fashion, Food, Craft Beer and Nutrition, Manufacturing, Real Estate & Construction, Sales, Technology, Unfair Competition

Competitors, Disgorgement of Profits, Injunctions, Injunctive Relief, Lawyers, UCL, Unfair Business Practices

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