To establish a false advertising claim under § 43(a) of the Lanham Act, 15 U.S.C.S. § 1125(a), the plaintiff must demonstrate that the statement in the challenged advertisement is false. Falsity may be established by proving that (1) the advertising is literally false as a factual matter, or (2) although the advertisement is literally true, it is likely to deceive or confuse customers. However, in addition to proving falsity, the plaintiff must also show that the defendants misrepresented an "inherent quality or characteristic" of the product.
Motorola manufactures and markets the SportsTrax paging device while STATS supplies the game information that is transmitted to the pagers. SportsTrax displays the following information on NBA games in progress: (i) the teams playing; (ii) score changes; (iii) the team in possession of the ball; (iv) whether the team is in the free-throw bonus; (v) the quarter of the game; and (vi) time remaining in the quarter. It relies on a "data feed" supplied by STATS reporters who watch the games on television or listen to them on the radio. Although the NBA's complaint concerned only the SportsTrax device, the NBA offered evidence at trial concerning STATS's America On-Line ("AOL") site. Starting in January, 1996, users who accessed STATS's AOL site, typically via a modem attached to a home computer, were provided with slightly more comprehensive and detailed real-time game information than is displayed on a SportsTrax pager.
The district court dismissed all of the NBA's claims except the first -- misappropriation under New York law. The court also dismissed Motorola's counterclaim. Motorola and STATS appeal from the injunction, while NBA cross-appeals from the district court's dismissal of its Lanham Act false-advertising claim.
Was the lower court correct in dismissing appellees' Lanham Act claim?
The district court found, "after viewing the complained-of statements in this action in their context," that "the statements as to the particular origin of game updates constitute nothing more than minutiae about SportsTrax." We agree with the district court that the statements in question are not material in the present factual context. The inaccuracy in the statements would not influence consumers at the present time, whose interest in obtaining updated game scores on pagers is served only by SportsTrax. Whether the data is taken from broadcasts instead of being observed first-hand is, therefore, simply irrelevant. However, we note that if the NBA were in the future to market a rival pager with a direct data-feed from the arenas -- perhaps with quicker updates than SportsTrax and official statistics -- then Motorola's statements regarding source might well be materially misleading. On the present facts, however, the complained-of statements are not material and do not misrepresent an inherent quality or characteristic of the product.