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Morton Grove Pharmaceuticals, Inc. v. National Pediculosis Association

June 18, 2007


The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge


Defendant the National Pediculosis Association, Inc. ("NPA") has brought a motion to dismiss the complaint brought by plaintiff Morton Grove Pharmaceuticals, Inc., ("MGP") for failure to state a claim under FED. R. CIV. P. 12(b)(6). For the following reasons, the motion to dismiss is granted in part and denied in part.


MGP is a pharmaceutical company that manufactures Lindane Lotion and Lindane Shampoo ("collectively Lindane"), which are FDA-approved medications for the treatment of lice and scabies. These products are named after their active ingredient -- lindane.*fn1 Presently, MGP is the only United States manufacturer and distributor of Lindane. (Compl. at ¶¶ 1, 4.)

NPA is a non-profit, tax exempt organization "dedicated to protecting children from the misuse and abuse of potentially harmful lice and scabies pesticidal treatments." (Compl. at ¶ 2.) NPA sells the LiceMeister comb, which the complaint alleges is a competing product of Lindane's.

MGP has filed claims for a violation of the Lanham Act, 15 U.S.C. ¶ 1125(a) (Count I); defamation (Count II); trade disparagement (Count III); and violations of the Illinois Uniform Deceptive Trade Practices Act ("UPTPA"), 815 ILCS 510/2 et. seq. (Count IV) against NPA based on alleged false statements made by NPA.


In assessing defendant's motion to dismiss under FED. R. CIV. P. 12(b)(6), I must accept all well-pleaded facts in the complaint as true. Moranski v. Gen. Motors Corp., 433 F.3d 537, 539 (7th Cir. 2005). Documents attached to the complaint are considered part of the complaint. Id. (citing FED. R. CIV. P. 10(c)). I must view the allegations in the light most favorable to plaintiff. Id. However, "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. - -, 127 S.Ct. 1955, 1965 (May 21, 2007).

A. Count I: Lanham Act

Defendant moves to dismiss the Lanham Act ("the Act") claim on the grounds that MGP lacks standing to sue under the Act and that NPA's statements are not advertisements. "To establish a claim under the false or deceptive advertising prong of § 43(a) of the [] Act, a plaintiff must prove: (1) a false statement of fact by the defendant in a commercial advertisement about its own or another's product; (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to defendant or by a loss of goodwill associated with its products." Hot Wax, Inc. v. Turtle Wax, 191 F.3d 813, 819 (7th Cir. 1999) (citation omitted). In order to have standing to bring a false advertisement claim, a plaintiff must have "a discernible competitive injury." L.S. Heath & Son, Inc. v. AT&T Info. Sys., Inc., 9 F.3d 561, 575 (7th Cir. 1993); Gail Green Licensing & Design Ltd. v. Accord, Inc., No. 05 C 5303, 2006 WL 2873202, at *5 (N.D. Ill. Oct. 5, 2006) (St. Eve, J.). A party must have "'a reasonable interest to be protected against conduct violating the Act.'" Johnny Blastoff, Inc. v. Los Angeles Rams Football Co., 188 F.3d 427, 438 (7th Cir. 1999) (quoting Dovenmuehle v. Gilldorn Mortgage Midwest Corp., 871 F.2d 697, 700 (7th Cir. 1989)).

In this case, the complaint alleges that the parties' products, Lindane and LiceMeister, are in competition. (See Compl. at ¶¶ 2, 23, 30, 32.) Although NPA may be a non-profit organization, the complaint does allege that LiceMeister accounted for 97% of NPA's revenues in 2003 and that it has profited from the sales of such a product. (Compl. at ¶¶ 2, 10.) Meanwhile, "[a]s a result of [d]efendant's[sic] statements, Lindane sales have decreased approximately 23%, with a total loss of more than $9.3 million between January and November 2006." (Compl. at ¶ 37.) Taken as true, these allegations sufficiently set forth MGP's alleged discernable competitive injury. Accordingly, on the face of the complaint, MGP has standing under the Act.

Similarly, the complaint alleges that "NPA has launched an attack campaign against Lindane in the hopes that it can increase sales of the LiceMeister[] comb" and that this is a "for-profit" campaign. (Compl. at ¶ 23.) Some of the identified statements forming the basis of MGP's claims specifically promote LiceMeister as a product. (See Compl. at ¶ 32; Exh. A.) Defendant takes issue with whether this is "mere puffery" as opposed to advertisement; taken in the best light to plaintiff, however, the complaint sufficiently sets forth that some of NPA's statements are commercial advertisement. Accordingly, the motion to dismiss count I is denied.

B. Count II: Defamation

Defendant next argues that plaintiff has failed to state a claim for defamation. Under Illinois law, a statement is considered defamatory if it "tends to cause such harm to the reputation of another that it lowers that person in the eyes of the community or deters third persons from associating with him." Kolegal v. Heftel Broad. Corp., 154 Ill.2d 1, 10, 607 N.E.2d 201, 206 (Ill. 1992) (citation omitted). To establish a claim of defamation under Illinois law a plaintiff must show (1) the defendant made a false statement concerning the plaintiff; (2) there was an unprivileged publication of the defamatory statement to a third party by defendant; and (3) the plaintiff was damaged. Dubinski v. United Airlines Master Executive Council, 303 Ill. App. 3d 317, 323, 708 N.E.2d 441, 446-47 (Ill. App. Ct. 1999) (citation omitted). An Illinois defamation action can either state a claim for defamation per se, which involves statements so harmful to ...

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