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Vertical Web Media, LLC v. Etailinsights, Inc.

United States District Court, N.D. Illinois, Eastern Division

June 24, 2014

VERTICAL WEB MEDIA, L.L.C., a/k/a INTERNET RETAILER, Plaintiff,
v.
ETAILINSIGHTS, INC., Defendant.

MEMORANDUM OPINION & ORDER

JOAN B. GOTTSCHALL, District Judge.

Plaintiff Internet Retailer sued one of its competitors, Etailinsights, Inc., alleging false advertising under the Lanham Act, 15 U.S.C. § 1125(a), and similar claims under state law. Etailinsights moves to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), or alternatively, for a more definite statement pursuant to Rule 12(e). For the reasons explained below, the motion is granted in part and denied in part.

I. FACTS

Internet Retailer sells a product called the "Top 500 Guide, " which ranks the largest online retailers in North America. The guide is available in print and digital formats and contains information regarding online retailers' sales, web traffic, and social-networking affiliations. In connection with the Guide, Internet Retailer compiles a contact list of key executives of major online retailers. The contact list includes, among other things, the executives' titles, e-mail addresses, and phone numbers. Internet Retailer does not sell this information to third parties.

Internet Retailer uses a company called Bronto Software to send marketing e-mails to its contacts, including the online retail executives on its contact list. In 2011, a group of Bronto employees left the company to start a new company, Etailinsights. Etailinsights competes with Internet Retailer. It also sells a guide, the "eCommerce Prospect Database Solution, " which includes information about online retailers similar to the information contained in Internet Retailer's "Top 500 Guide."

The complaint alleges that Etailinsights misused Internet Retailer's proprietary information in two ways. First, it alleges that a member of Etailinsights's management team purchased Internet Retailer's products using a fake address. It further alleges, on information and belief, that Etailinsights used the research products it purchased to create a portion of its "eCommerce Prospect Database Solution" without permission. Internet Retailer contends that this violates the terms and conditions governing the use of its data.

Second, the complaint alleges that Etailinsights's employees stole Internet Retailer's contact list while they were working at Bronto. It alleges, on information and belief, that Etailinsights sold the contact list to vendors who use the information for marketing purposes. Internet Retailer contends that this violates a confidentiality agreement between Bronto and Internet Retailer.

The complaint also alleges that Etailinsights made false and misleading representations on its website. These allegations are contained in paragraphs 21-24 of the complaint, which the court recites verbatim:

21. On information and belief, many of the privately held retailers listed in the Database have not disclosed their web sales numbers to Etailinsights despite its false and misleading representation that "our company records are refreshed and phone verified by our research team every 90 days to ensure that our data is accurate and timely." Etailinsights' aforementioned claim is unsubstantiated and thus literally false. A copy of Etailinsights' website is attached hereto as Exhibit C.
22. On information and belief, although Etailinsights claimed on February 12, 2014 that 2013 data related to web sales numbers was available to subscribers to its monthly membership, no 2013 data was available to subscribers. Etailinsights' aforementioned claim is literally false.
23. On or around March 11, 2014, several privately held online retailers featured in the Guide informed Internet Retailer that despite the fact that Etailinsights publishes its web sales, the privately held online retailers had never heard of Etailinsights and had only disclosed their web sales data to Internet Retailer.
24. The web sales numbers Etailinsights is currently publishing in the Database could only come from Internet Retailer's Guide, as several privately held online retailers have confirmed they never disclose their web sales data to any organization other than Internet Retailer.

(Compl. ¶¶ 21-24, ECF No. 1.)

Internet Retailer claims that these allegedly false and misleading representations constitute false advertising under the Lanham Act, 15 U.S.C. § 1125(a). It alleges that Etailinsights's actions in this regard are ...


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