CONGOO, LLC v. REVCONTENT LLC
3:16-cv-00401
D.N.J.Nov 3, 2017Background
- Adblade (Congoo, LLC) is an online advertising aggregator that places native and direct-response ads on publisher websites; Revcontent is a competing aggregator.
- Adblade alleges Revcontent displayed false or misleading consumer-product ads (diet, muscle, skin cream offers with undisclosed rebills), which produced higher CPM/CTR, generated greater advertiser revenue, and allowed Revcontent to pay publishers higher rates.
- Adblade claims Revcontent’s conduct induced at least 58 publishers to leave Adblade, causing lost revenue and goodwill.
- Defendants moved for partial summary judgment seeking dismissal of Adblade’s Lanham Act § 43(a) false advertising claims and related New Jersey common-law unfair competition claims insofar as they concern consumer products.
- The key legal question is whether Adblade has statutory standing under Lexmark — i.e., whether its asserted commercial injuries were proximately caused by defendants’ alleged false advertising.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Adblade have standing under § 43(a) (Lexmark zone-of-interests and proximate-cause test)? | Adblade says Lexmark does not confine proximate causation to direct competitors; its loss of publishers flows directly from Revcontent’s use of deceptive consumer-product ads that generated higher revenue. | Defendants concede zone-of-interests but argue the causal chain is too attenuated: harm to Adblade is indirect (publisher switching driven by advertiser revenue), not the sort of close, near-1:1 causal link Lexmark required. | Court: Granted partial SJ. Adblade lacks the requisite proximate causation under Lexmark; causal chain is too attenuated. |
| Are Adblade's state common-law unfair competition claims (re consumer products) distinct from Lanham Act claims? | Adblade contends common-law claim is broader, including fraudulent statements to publishers and competitive harm beyond Lanham elements. | Defendants argue New Jersey common law test aligns with § 43(a), so the Lanham analysis controls. | Court: Treats the claims as substantively the same for consumer-product allegations and grants partial SJ for those claims; non-consumer-product allegations may survive. |
| Whether record evidence creates a triable dispute on proximate causation at summary judgment | Adblade points to industry reports, expert declaration (Dr. Nashed), and testimony tying deceptive ads → higher advertiser revenue → higher payments to Revcontent → publisher defections → Adblade injury. | Defendants maintain even with that record the multiple intervening steps produce an attenuated causal chain susceptible to alternative explanations. | Court: Finds record insufficient to show the close causal nexus required by Lexmark; summary judgment appropriate as matter of law. |
| Can Cosentino’s preliminary-injunction testimony and expert affidavit supply proximate-cause evidence? | Adblade argues the testimony and expert declaration support its theory of direct harm. | Defendants rely on that same testimony to show the chain is multi-step and therefore attenuated; dispute over characterization does not create the necessary proximate link. | Court: Considers the testimony part of the record and finds it confirms the multi-step causal chain; does not create the required proximate causation. |
Key Cases Cited
- Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014) (establishes zone-of-interests and proximate-causation test for § 43(a) standing)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary-judgment standard and material-fact/genuine-dispute guidance)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (movant’s initial burden on summary judgment)
- Am. Tel. & Tel. Co. v. Winback & Conserve Program, Inc., 42 F.3d 1421 (3d Cir. 1994) (Lanham Act and New Jersey common-law unfair competition elements analyzed similarly)