69 F.4th 665
9th Cir.2023Background
- Enigma Software (Florida) and Malwarebytes (Delaware/CA) are competing anti‑malware vendors; in Oct 2016 Malwarebytes began labeling Enigma’s products/domains as “malicious,” “threats,” and “PUPs,” and its software quarantined/blocked Enigma products and sites.
- Enigma alleges the labeling and blocking were retaliatory/anticompetitive (tied to prior litigation involving a Malwarebytes affiliate) and caused customer loss.
- Procedural history: suit filed in SDNY (transferred to N.D. Cal.); district court dismissed on Rule 12(b)(6) grounds (statements were non‑actionable opinion) and held New York lacked personal jurisdiction; this Court previously reversed a §230 dismissal and on this appeal reviews the sufficiency of the pleadings and jurisdiction.
- The complaint asserts (1) Lanham Act § 43(a) false advertising, (2) NY Gen. Bus. Law § 349, (3) tortious interference with contractual relations, and (4) tortious interference with business relations.
- The Ninth Circuit panel holds that in the cybersecurity commercial context labeling a competitor’s software as a “malicious” “threat” can be a verifiable statement of fact (so Lanham Act plausibly alleged), finds New York personal jurisdiction over Malwarebytes (so New York law applies to NY‑based transactions), reinstates the NYGBL § 349 claim and the tortious‑interference with business relations claim, but affirms dismissal of interference with contractual relations for failure to allege an induced breach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Malwarebytes’ labels (“malicious,” “threat,” “PUPs”) are actionable false statements under the Lanham Act | Labels were factual, verifiable assertions about product security that misrepresented Enigma’s software and deceived consumers | Labels are subjective opinions/puffery in cybersecurity and thus non‑actionable; alternatively not commercial speech or not deceptive to a substantial segment | “Malicious” and “threat” can be statements of objective fact in this commercial cybersecurity context and survive dismissal; “potentially unwanted program” is too vague to be actionable; remaining defenses (commerciality, deception) remanded for district court to address |
| Falsity standard and whether plaintiff pleaded falsity sufficiently | Enigma pleaded that labels were factually false and that Malwarebytes’ defaults treated detections as malware, producing consumer confusion | Malwarebytes says Enigma failed to plead objectively falsifiable criteria; labels are inherently subjective | At pleading stage Enigma’s allegations suffice to plausibly allege falsity for “malicious”/“threat”; plaintiff must ultimately prove falsity at trial |
| Whether New York courts had personal jurisdiction over Malwarebytes (choice‑of‑law) | Enigma argued Malwarebytes transacted business via an interactive website and sales to NY customers; claims arise from those transactions so New York law should apply | Malwarebytes argued lack of New York contacts; if no NY jurisdiction then California law governs | Court reverses district court: New York specific jurisdiction exists for Malwarebytes’ sales to NY customers via its interactive site; Van Dusen/Ferens choice‑of‑law rule applies (NY law governs claims tied to NY transactions) |
| Viability of state tort claims (NYGBL § 349; interference torts) | NYGBL § 349 and tortious interference claims arise from same alleged misleading conduct; interference with business relations pleaded with customer specifics | District court said those claims fail with Lanham Act failure; also contended lack of independent wrongful act for interference | NYGBL § 349 reinstated (because Lanham Act claim survives and NY law applies); tortious interference with business relations sufficiently pled under NY law (no independent‑wrongful‑act requirement); interference with contractual relations affirmed dismissed for failure to allege an induced breach |
Key Cases Cited
- Newcal Indus., Inc. v. Ikon Off. Sol., 513 F.3d 1038 (9th Cir. 2008) (actionable commercial speech is specific, measurable, and capable of being proved false)
- Ariix, LLC v. NutriSearch Corp., 985 F.3d 1107 (9th Cir. 2021) (distinguishing nonactionable opinion/puffery from binary, falsifiable certifications)
- Underwager v. Channel 9 Australia, 69 F.3d 361 (9th Cir. 1995) (context/“core of objective evidence” needed for verifiability)
- Partington v. Bugliosi, 56 F.3d 1147 (9th Cir. 1995) (terms admitting multiple interpretations are nonactionable absent context)
- Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134 (9th Cir. 1997) (Lanham Act falsity and deception elements)
- Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co., 173 F.3d 725 (9th Cir. 1999) (statement literally true but likely to mislead standard)
- POM Wonderful LLC v. Coca‑Cola Co., 573 U.S. 102 (2014) (background on Lanham Act protection against misleading commercial claims)
- Van Dusen v. Barrack, 376 U.S. 612 (1964) (transferee court applies transferor state law after § 1404 transfer)
- Ferens v. John Deere Co., 494 U.S. 516 (1990) (same principle applied to plaintiff‑requested transfer)
- Kirch v. Liberty Media Corp., 449 F.3d 388 (2d Cir. 2006) (elements for New York tortious interference claims)
- NBT Bancorp Inc. v. Fleet/Norstar Fin. Grp., Inc., 664 N.E.2d 492 (N.Y. 1996) (New York requires actual breach to state interference with contractual relations)