Intellectual Property Law

Western District Denies Priceline.com's Motion to Dismiss False Advertising Claim

By Michael Atkins

STL readers may recall that Expedia, Inc., and Hotels.com, L.P., this summer sued Priceline.com in the Western District for false advertising.

Expedia and Hotels.com allege that Priceline’s advertisements mislead customers into believing that they can achieve a 50% savings on any hotel reservation made on the Priceline Web site when the advertised savings are available, if at all, only with Priceline’s “name your own price” feature.

Priceline moved to dismiss, arguing that plaintiffs’ request for a ban on comparative advertising is not available under the Lanham Act, and that the Lanham Act does not impose a duty to disclose.

On Nov. 23, Judge Robert Lasnik denied the motion. (The court also denied a request for a stay and granted dismissal of plaintiffs’ common law false advertising claim.)

The court found:

“Defendant’s first challenge to plaintiff’s Lanham Act claim does not take issue with the sufficiency of the allegations. Instead, defendant focuses on one of plaintiff’s requests for relief and argues that such relief is unavailable under the Lanham Act. Plaintiffs also have asserted claims under the common law and the Washington Consumer Protection Act. Whether the requested ban on comparative advertising could be an appropriate form of relief under those causes of action has not been addressed. Nor has defendant shown that the Lanham Act claim, or any separable part thereof, should be dismissed simply because one form of relief requested in the complaint may be unavailable.

“Defendant also argues that the Lanham Act fails as a matter of law because the act does not impose an affirmative duty to disclose. A simple failure to disclose is not a violation of the Lanham Act because ‘[t]he absence of any statement is neither ‘false’ nor a ‘representation.’ Plaintiffs allege that defendant’s advertising blurs the distinction between its fixed-price and blind-bidding services, thereby creating the false impression that plaintiff’s fixed-price services are more costly than the same services offered by defendants. Plaintiffs demand that Priceline disclose the differences between its fixed-price and ‘name-your-own-price’ services. The nature and scope of the desired disclosures are not delineated, however, and it is not clear what ‘false representation’ defendant is accused of making or whether the comparative inference plaintiffs draw from the advertisements is reasonable. Nevertheless, in the context of this motion to dismiss, the allegations of the complaint must be construed in the light most favorable to plaintiffs. The Court will therefore assume that plaintiffs have properly alleged a false or misleading representation of fact, namely that Priceline’s advertisements falsely claim that consumers can attain a 50% cost savings by using its fixed-price service when compared with plaintiffs’ fixed-price service. Based on that understanding, the allegations of the complaint suffice to state a cause of action under the Lanham Act.”

The case cite is Expedia, Inc. v. Priceline.com Inc., No. 09-712 (W.D. Wash. Nov. 23, 2009).

Full post as published by Seattle Trademark Lawyer on November 25, 2009 (boomark / email).