Bait-And-Switch Trademark Case Defines Limits Of Initial Interest Confusion

MrSteamIn its recent decision in Sussman-Automatic v. Spa World, the Eastern District of New York dismissed a plaintiff’s trademark infringement claims, while allowing its claims for false advertising based on the same conduct to survive.  The decision explores the boundaries between a false advertising “bait-and-switch” scheme and the “initial interest confusion” theory in Lanham Act cases.

The Mr. Steam Bait-and-Switch

The plaintiff, Sussman-Automatic (“Mr. Steam”), is the maker of the “Mr. Steam” brand of shower and spa products.  According to the complaint, Spa World ran a website which advertised the sale of Mr. Steam products.  However, Spa World didn’t actually sell Mr. Steam products. Instead, when a customer ordered a Mr. Steam product, customer would be told that it was “temporarily out of stock,” and then offered a Spa World branded product at the same price. In the course of these transactions, Spa World allegedly maligned Mr. Steam, while claiming that its own products were made in the U.S.A. and UL certified.

Mr. Steam brought claims for trademark infringement and false advertising. The complaint asserted that Spa World had lied because (1) nothing was “temporarily out of stock” since Spa World never sold Mr. Steam products in the first place; (2) Spa World products were neither made in the United States nor UL certified; and (3) Spa World products were in fact of inferior quality.

Limiting Initial Interest Confusion

Mr. Steam’s trademark infringement claim was based on a theory of “initial interest confusion” which, according to the Court, “occurs where potential consumers initially are attracted to the junior user’s mark by virtue of its similarity to the senior user’s mark, even though these consumers are not actually confused at the time of purchase.”  In other words, Mr. Steam claimed that Spa World attracted customers with the Mr. Steam mark, but then “converted” them into Spa World customers.

Spa World filed a motion to dismiss, arguing that no claim for trademark infringement had been stated.  According to Spa World, an initial interest confusion trademark plaintiff must allege both unauthorized use of a trademark and a similarity between the parties’ respective marks.  Here, there was no allegation that the parties’ marks were similar, only that Spa World had lied about whether it stocked Mr. Steam products.

The Court agreed with the defendant. Even if Spa World used Mr. Steam’s mark to attract customers in a confusing manner, that confusion was caused by the allegedly false statements about Spa World’s inventory, not by confusingly similar trademarks. In fact, Spa World’s alleged disparaging statements to customers about Mr. Steam, even if false, served further to differentiate the brands and thus “render[] implausible any inference that there could be confusion about the source of the product.”

As to Mr. Steam’s false advertising claims, the Court held that Mr. Steam had failed to adequately define or allege in its complaint the “relevant market” at issue. However, the Court granted Mr. Steam leave to file an amended complaint to cure this defect.

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