The UCL Practitioner
Wednesday, September 29, 2004
Another recent federal decision: Hull v. D&J Sports, Inc.
In Hull v. D&J Sports, Inc., 2004 WL 1771572 (N.D. Cal. Aug. 6, 2004), Judge Alsup partially dismissed a 17200 claim based on alleged patent infringement. The "fraudulent" prong claim failed because the complaint did not allege that "members of the public [were] likely to be deceived" by the defendant's conduct. Id. at *2 (quoting Committee on Children's Television, Inc. v. General Foods Corp., 35 Cal.3d 197, 211 (1983)). The "unlawful" and "unfair" prong claims survived, however, because the defendant's motion to dismiss did not separately address them. "Section 17200 has three distinct theories under which a claim of unfair competition may proceed. In order to successfully dismiss a Section 17200 claim, defendant must argue separately against all three theories using the relevant standards. Defendant has failed to do this." Id. at *3; see also id. at *2 ("This order notes that defendant has not moved to dismiss under the theory of unlawful business practices." (emphasis added)).

What's even more interesting is the court's holding that Podolsky v. First Heathcare Corp., 50 Cal.App.4th 632 (1996) and the pre-Cel-Tech formulation of "unfair" would apply. Hull, 2004 WL 1771572 at *2. So far, most cases agree that the pre-Cel-Tech formulation of "unfair" still applies in consumer actions. A handful of cases, like this one, draw an even finer distinction between competitor actions and non-competitor business disputes. The pre-Cel-Tech formulation still governs the latter, as Judge Alsup's order seems to recognize. See also, e.g., Pegasus Satellite Tel., Inc. v. DirecTV, Inc., 318 F.Supp.2d 968, 978 (C.D. Cal. 2004) ("The test enunciated in Cel-Tech, however, applies only to cases between direct competitors, not all 'commercial' cases.") (citing Watson Labs., Inc. v. Rhone-Poulenc Rorer, Inc., 178 F.Supp.2d 1099, 1118 n.13 (C.D. Cal. 2001)).
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