KEARNEY, District Judge.
A television network advertising a show purporting to describe the "true" story of disputed historical events must be careful to not misrepresent the specifics of its show so as to mislead the consumer concerning its product. Summarizing an argument or opinion offered within the show is different than a statement made about a show as a product such as its length, characters or producers. When the advertisement represents the show as the "true story" of disputed historical events as specifically stated in the show and is motivated by significant economic benefits, it is commercial speech subject to the Lanham Act. The viewer can agree or disagree with the speaker's theories after viewing the show. But we cannot find the advertisement summarizing a theory expressed in the show is false and misleading advertising violating the Lanham Act. We grant the television networks' and producer's
Eighteen year old Efraim Diveroli owned a defense contracting business, AEY, Inc. specializing in arms, ammunition trading, and bidding on small United States defense contracts.
In 2008, the United States suspended AEY's contracts believing AEY violated arms embargos by obtaining ammunition from China.
While incarcerated, Mr. Diveroli wrote a memoir entitled "Once a Gun Runner ..." describing his experience as a "gun runner."
In August 2016, Warner Bros. Pictures released, distributed, and promoted a film entitled War Dogs. Warner Bros. promoted the War Dogs film as being based on Mr. Diveroli's life story, specifically Mr. Diveroli's experience as a government contractor supplying weapons and munitions to the United States. It allegedly did very well in ticket sales.
Beginning in December 2016, Incarcerated discussed producing and distributing a documentary based on Mr. Diveroli's life story in his memoir.
In January 2017, in its made-for-television crime series American Greed, CNBC broadcasted an episode entitled "The Real `War Dogs'" which similarly focused on Mr. Diveroli's experience as a government contractor.
CNBC also broadcasted a video advertisement for the "The Real `War Dogs'" American Greed episode.
Incarcerated sues CNBC, Kurtis Productions, NBCUniversal Media, LLC, Hulu, LLC, Google, LLC, Apple, Inc., and Amazon.com, Inc. under the Copyright Act of 1976 and the Lanham Act. While the Lanham Act focuses on protecting the general public by prohibiting the deceptive and misleading use of trademarks, the Act reaches beyond trademark infringement.
Today we focus on Incarcerated's claims CNBC, Kurtis, and NBCUniversal violated the Lanham Act by making false statements in their advertisements for the American Greed episode "The Real `War Dogs.'"
CNBC, Kurtis, and NBCUniversal move to dismiss Incarcerated's unfair competition claim under the Act.
Incarcerated responds the advertisement representing American Greed presents Mr. Diveroli's true story is false. Incarcerated claims Mr. Diveroli's memoir presents Mr. Diveroli's true story. As an example of a false representation in American Greed about Mr. Diveroli's life story, Incarcerated cites to a statement in an advertisement about Mr. Diveroli selling "bad ammunition" to the United States. Incarcerated asserts Mr. Diveroli did not sell bad ammunition to the United States. Incarcerated claims consumers who want to learn Mr. Diveroli's true story are likely to watch American Greed, instead of purchasing Mr. Diveroli's memoir. Incarcerated concedes if the advertisement claimed the American Greed episode is "based on a true story," its claim under the Act would not be viable. But Incarcerated argues the affirmative representation the episode presents the true story of Mr. Diveroli brings its claim within the Act's reach.
In the false advertising context, the Act applies to "commercial advertising or promotion."
CNBC, Kurtis, and NBCUniversal argue the statement American Greed presents "true stories" is not commercial speech and therefore not subject to the Act. They argue the statement is pulled directly from the television show, which they categorize as an expressive work. They argue the advertisements should be afforded the same constitutional protections under the First Amendment as the underlying expressive work. Incarcerated argues the statement describing the television show as depicting Mr. Diveroli's true story is commercial speech.
Our court of appeals provides substantial guidance on the parameters of commercial speech.
The district court in Gordon & Breach Sci. Publishers v. Am. Inst. of Physics examined speech characterized as involving mixed commercial and noncommercial speech.
The court granted in part and denied in part the defendants' motion to dismiss claims brought under the Act.
But the district court in Gordon & Breach found dissemination of the articles — promotional uses of the protected speech — constituted commercial speech.
The court examined the Supreme Court's precedent on commercial speech, finding it treated different situations involving mixed commercial and noncommercial speech in different ways, looking to the "essential nature of the speech in question."
Incarcerated pleads the statement of Mr. Diveroli's "true" story is commercial speech. The promotional statement on CNBC's website is an advertisement. CNBC, Kurtis, and NBCUniversal refer to it as such in their briefing. The promotional statement refers to a specific product, the American Greed television show. CNBC, Kurtis, and NBCUniversal created the promotional statement to convince viewers to watch American Greed, including the "The Real `War Dogs'" episode. It is hard to imagine a purpose other than economic motivation to promote to potential viewers they can learn the "true" story behind a "based on a true" War Dogs film by watching the American Greed episode. The title of the American Greed episode specifically referencing the film War Dogs further supports this view. The Defendants' choice of wording in the title implies the War Dogs film did not provide Mr. Diveroli's true story, but the American Greed episode will present the true story. Capturing the potential viewers' attention and capitalizing on the popularity of the film War Dogs, the advertisement attempted to attract viewers to CNBC for economic gain by telling them "The Real `War Dogs'" depicted Mr. Diveroli's "true" story.
Citing the video advertisement for "The Real `War Dogs'" episode incorporating video clips from the American Greed episode, CNBC, Kurtis, and NBCUniversal argue the "bad ammunition" statement is afforded First Amendment protection because the underlying episode is an expressive work. They argue the protection exists as long as the advertisement does not misrepresent the underlying work. They argue the use of Mr. Diveroli's name, likeliness and story in the advertisement is protected incidental use of constitutionally protected noncommercial speech.
This argument fails. We are addressing a limited representation in the advertisement. In its briefing, Incarcerated narrows its claim to the advertisement's statement the television show depicts Mr. Diveroli's "true" story. Incarcerated does not raise a Lanham Act claim based upon the advertisement's use of Mr. Diveroli's name, likeliness and story. Incarcerated cites the "bad ammunition" statement as an example of how the "The Real `War Dogs'" episode does not actually present Mr. Diveroli's true story, but does not cite the statement as actionable under the Act.
Incarcerated pleads the statement "true story" is commercial speech. CNBC, Kurtis, and NBCUniversal do not challenge Incarcerated's complaint under the remaining elements of the Gordon & Breach test. Incarcerated pleads the statement American Greed presents Mr. Diveroli's true story is "commercial advertising or promotion."
The Act governs commercial speech. The question is whether advertising the show as a "true story" violates the Act.
CNBC, Kurtis, and NBCUniversal argue Incarcerated failed to plead a false or misleading statement under the Act because the advertisement accurately presents what the American Greed episode purports to be, Mr. Diveroli's true story. They argue the statement the episode presents Mr. Diveroli's true story is
Congress enacted the Act to regulate consumer and commercial interests.
To plead an unfair competition claim based on false advertising, a plaintiff must allege (1) the defendant made false or misleading statements as to its own product or another's; (2) the statements actually deceive or "at least [have] a tendency to deceive a substantial portion of the intended audience;" (3) "the deception is material in that it is likely to influence purchasing decisions;" (4) "the advertised goods traveled in interstate commerce;" and (5) "there is a likelihood of injury to the plaintiff in terms of declining sales, loss of good will, etc."
In Groden v. Random House, Inc., a book author sued another author under the Act alleging an advertisement for the book contained a false or misleading statement.
The plaintiff author sued under the Act arguing the "guilty of misleading" and the "inescapable conclusion" statements are both false. The court explained the Act "does not prohibit false statements generally. It prohibits only false or misleading descriptions or false or misleading representations of fact made about one's own or another's goods or services."
The court found the "guilty of misleading statement" to be an opinion statement not actionable under the Act.
This same reasoning applies to the advertisement describing the content of the American Greed episode as the true story. The advertisement tells potential viewers the show will present the "true" story of Mr. Diveroli. Incarcerated cites to a statement in the advertisement excerpted from the episode claiming Mr. Diveroli sold "bad" ammunition to the United States. Incarcerated alleges this statement is false and the presentation of the fact Mr. Diveroli sold bad ammunition to the United States is one example of how the American
Citing Groden, CNBC, Kurtis, and NBCUniversal argues the statement the episode presents Mr. Diveroli's true story is not false or misleading because in the opening of the episode a narrator tells viewers the show presents Mr. Diveroli's real story. They argue the true story statement presents an argument within the episode similar to the "inescapable conclusion" statement in Groden. They argue Incarcerated's challenge to the factual accuracy of the bad ammunition statement is no different than the plaintiff's failed challenge to the "ONE MAN. ONE GUN. ONE INESCAPABLE CONCLUSION." statement in Groden.
The statement the episode presents a true story is a summarization of an argument or opinion within the episode. Similar to the competing theories whether a single person or group of persons conspired to assassinate President Kennedy presented by different authors in Groden, whether Mr. Diveroli sold "bad" ammunition to the United States is a matter of argument, to be accepted or rejected by the viewer of American Greed. The true story statement is not a statement about the episode as a product. For example, the statement does not represent the duration of the episode, the episode's date of production or the narrators in the episode. These are verifiable statements of fact. Also similar to the unimportance "of what the true facts might be concerning the Kennedy assassination" in determining whether the advertisement included a false statement about the author's book in Groden, whether Mr. Diveroli sold bad ammunition to the United States does not render the statements in the advertisement false or misleading. Incarcerated fails to allege the American Greed episode does not present itself to viewers as telling them Mr. Diveroli's true story. The advertisement tells potential viewers the episode presents the real story, which includes Mr. Diveroli selling "bad" ammunition to the United States. Whether Mr. Diveroli sold bad ammunition to the United States is a matter of argument which a viewer may reject or accept after viewing the episode. Incarcerated fails to plead a false or misleading statement in the advertisement.
Allowing Incarcerated to proceed on the merits of its claim under the Act as pleaded would require we review at summary judgment or a jury determine at trial the merits of whether Mr. Diveroli sold bad ammunition to the United States over ten years ago. The Lanham Act claim presented today would quickly turn into a fraud and conspiracy trial surrounding Mr. Diveroli's dealings with the United States which may have already been addressed in the criminal matter leading to Mr. Diveroli's incarceration. We will not allow Incarcerated to re-litigate the merits of Mr. Diveroli's criminal plea. We dismiss Incarcerated's claim under the Act without prejudice in the event Incarcerated can, under Rule 11, plead facts supporting a false advertising claim.
Incarcerated fails to plead a false advertising claim under the Act based on the representation in the advertisement the American Greed episode presents Mr. Diveroli's true story. In the accompanying Order, we grant CNBC, Kurtis, and NBCUniversal's partial motion to dismiss. We dismiss Incarcerated's Lanham Act claim without prejudice should it be able, under Rule 11 and consistent with this Memorandum, to plead facts to support its false advertisement claim.
Our case is different from Warner Bros. CNBC, Kurtis, and NBCUniversal have not ignored the relevant question. Incarcerated fails to allege the American Greed episode does not claim to present Mr. Diveroli's true story. Incarcerated did not dispute CNBC, Kurtis, and NBCUniversal's representation the episode tells viewers in the opening of the show it depicts Mr. Diveroli's real story. Incarcerated does not want to litigate a Lanham Act case. Rather, Incarcerated wants to re-litigate the merits of whether Mr. Diveroli, while a teenager, sold "bad" ammunition to the United States. The Lanham Act does not provide Incarcerated the legal basis to do so.