SAN DIEGO (CN) - LivingSocial mostly lost its bid to dismiss a lawsuit from a former advertiser that claims its trademark was violated and its cleaning business harmed by the online advertiser.
U.S. District Judge William Hayes dismissed without prejudice a Lanham Act claim against LivingSocial from a San Diego-area cleaning service. But he denied the motion to dismiss all other claims against LivingSocial.
Plaintiffs Tory Faegin and Ana Marquez own A.T. Your Service Cleaning and Janitorial in San Diego County.
Faegin says they partnered with LivingSocial from March through April 2012 to offer discount service vouchers.
He claims that from May until July 2012 co-defendants Deontee' Hickerson, David Thornton and Tiffany Harris, owners of At Your Service Housekeeping, also partnered with LivingSocial to offer vouchers for discount cleaning services in San Diego County.
Because of the similar business names, Faegin says, consumers were foreseeably caused to be confused about the identity of the two companies, and continue to be confused.
Compounding the confusion, Faegin says, is that the vouchers for competing At Your Service Housekeeping did not contain contact information, which forced consumers to search online for its phone number and mistake that business for Faegin's.
Making matters worse, Faegin says, is that "defendants Hickerson, Harris, and Thornton ... failed almost uniformly to fulfill and honor vouchers" sold for their business on LivingSocial.
The result, Faegin says, was that he lost business, and angry consumers, whose vouchers the defendants did not honor, took to social media to blast his business on websites such as Yelp, Google+ and Facebook.
Faegin accused LivingSocial, At Your Service Housekeeping and its owners of fraud, trademark infringement, false advertising and unfair business practices.
LivingSocial sought dismissal of all, saying the Communications Decency Act gives it immunity against trademark infringement claims.
LivingSocial says the Lanham Act's safe harbor provision protects online advertisers against trademark and false advertising claims. It also says Faegin inadequately presented facts to support willful infringement and other claims.
Judge Hayes found that Faegin did not demonstrate that his cleaning service is "'widely recognized'" by consumers throughout the United States, and dismissed the Lanham Act claim against LivingSocial.
In denying LivingSocial's remaining motion to dismiss, Hayes said LivingSocial is at least partly responsible for creating and offering the offending vouchers sold through its site and is not entitled to immunity against other claims.
Because LivingSocial worked with Faegin's business before partnering with At Your Service Housecleaning, Hayes said, the online advertiser was aware of Faegin's business and does not qualify as an "innocent infringer" of Faegin's trademark.
Hayes found Faegin's complaint sufficiently argues that LivingSocial willfully infringed on his business trademark in promoting At Your Service Housecleaning's competing service on its website.
Hayes found that Faegin also offered sufficient factual support to deny LivingSocial's motion to dismiss his claims of fraud and unfair business practices against LivingSocial.
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