The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge
MEMORANDUM OPINION AND ORDER
For the following reasons, the Court denies Defendant Hearthware Home Products, Inc.'s ("Hearthware") Motion to Dismiss for Failure to State a Claim ("Motion to Dismiss").
Plaintiff Moringware, Inc. ("Morningware") filed its complaint against Hearthware on July 20, 2009 ("Complaint"). Plaintiff's Complaint alleges five causes of action: (i) unfair competition in violation of 15 U.S.C. § 1125(a); (ii) product disparagement in violation of 15 U.S.C. § 1125(a)(1)(B); (iii) deceptive trade practices in violation of 815 ILCS 510/2; (iv) common law unfair competition; and (v) commercial disparagement. (R. 1-1, Complaint.)
According to the Complaint, Morningware is a corporation that sells consumer products including counter-top electric ovens. Id. at ¶ 6. Morningware has employed the MORNINGWARE mark since 2002 in connection with its counter-top ovens. Id. at ¶ 7. Morningware sells its ovens in retail locations and promotes them through a website, www.morningware.com. Id. at ¶¶ 8-9. The MORNINGWARE mark has become associated with Morningware and identifies Morningware as the source of goods and services associated with the mark. Id. at ¶ 3.
Hearthware is Morningware's nearest competitor in the counter-top electric oven market. Id. at ¶ 17. Hearthware operates a website, www.mynuwaveover.com. Id. at ¶ 3. Hearthware participates in "pay-per-click" advertising offered by a variety of internet search engines, including Google, Yahoo, AOL and MSN. Id. at ¶¶ 1, 22. Internet search engines allow internet users to locate websites that correspond with keywords entered as search terms by users. Id. at ¶¶ 4, 22. An internet user enters a search term corresponding with the item in which they are interested and the search engine provider displays links related to that search term to the user in order of decreasing relevance as determined by the search engine provider. Id. at ¶¶ 22-23. As a result of this capability, search engines obtain a large percentage of their revenue from the sale of "contextual advertising" which permits companies to place their advertisements in front of consumers based on the search terms they enter. Id. at ¶ 23.
By way of example, Google offers a keyword-triggered program, "AdWords." Id. at ¶ 24. When an internet user enters a search term into Google's search engine, in addition to the typical search results provided to the user, the search engine also generates links to advertisers who have "purchased" or "bid on" the search term entered by the user. Id. Search engines refer to these links as "Sponsored Links" and they appear on the top and margins of the search result pages. Id. Morningware's Complaint further alleges that "the search result pages are designed so that the 'Sponsored Link' display is inconspicuous, confusing and ambiguous so it is not apparent who 'sponsors' these links and whether a sponsor of the link is associated in any way with the company that is the subject of the search." Id. Google's trademark policy states that "the advertisers themselves are responsible for the keywords and ad content that they choose to use," and Morningware therefore alleges that "Hearthware remains liable for its decision to use [Morningware]'s trademark as a keyword in Google's AdWords program." Id. at ¶ 26.
Hearthware has used Morningware's trademark, or variations of Morningware's trademark, as a keyword in Google's AdWords program. Id. at ¶ 27. If an internet user enters the term "Morningware" as a search term in Google, Hearthware's advertisement link appears before a link to Morningware's website. Id. The content of the link to Hearthware's website, www.mynuwaveoven.com, states, "The Real NuWave ® Oven Pro Why Buy an Imitation? 90 Day Gty." Id. at Ex. A. Morningware alleges that the topmost placement of Hearthware's advertisement on the search results page coupled with the "Why Buy an Imitation?" statement demonstrates a false claim of product superiority over Morningware's products, and that this misleads and/or confuses consumers into "believing that [Morningware]'s products are inferior to Hearthware's because they are 'Imitations,' and thus fakes, of Hearthware's products, which they are not." Id. at ¶ 30.
Morningware also alleges that through the use of Morningware's trademarks, Hearthware seeks to "exploit the hard-earned goodwill of [Morningware] and its products and services." Id. at ¶ 31. Specifically, Hearthware's use of Morningware's trademarks coupled with its "Imitation" advertisement reflects Hearthware's intention to divert consumers from Morningware's website to Hearthware's website. Id. Hearthware's actions mislead and/or confuse consumers into falsely believing that Morningware sponsors Hearthware's own website and potential customers have visited Hearthware's website after entering the search term "Morningware" believing that Moringware counter-top electric ovens are available from Hearthware. Id. at ¶¶ 33-34. Hearthware's actions have damaged Morningware. Id. at ¶ 27.
On September 21, 2009, Hearthware filed its Motion to Dismiss requesting the Court to dismiss each of Morningware's five causes of action against Hearthware. (R. 42-1, Motion to Dismiss; R. 43-1, Memorandum of Law in Support of Motion to Dismiss ("Memorandum").)
"A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted." Hallinan v. Fraternal Order of Police of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). Pursuant to Rule 8(a)(2), a complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). As the Seventh Circuit recently explained, this "[r]ule reflects a liberal notice pleading regime, which is intended to 'focus litigation on the merits of a claim' rather than on technicalities that might keep plaintiffs out of court." Brooks v. Ross, 578 F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002)). This short and plain statement must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atlantic v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).
Under the federal notice pleading standards, a plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Put differently, a "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570); see also Limestone Dev. Corp. v. Village of Lemont, Ill., 520 F.3d 797, 803 (7th Cir. 2008) (amount of factual allegations required to state a plausible claim for relief depends on complexity of legal theory). "[W]hen ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007).
I. Lanham Act - False Designation of Origin
"In order to succeed on [its] Lanham Act claim, Plaintiff must establish: (1) that [Plaintiff] owns a protectible trademark, and (2) that use of this mark by [Defendant] is likely to cause confusion among consumers." Segal v. Geisha NYC LLC, 517 F.3d 501, 506 ...