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Lepton Labs, LLC v. Walker

United States District Court, C.D. California

September 23, 2014

LEPTON LABS, LLC; FOCUS MARKETING LLC, Plaintiffs,
v.
JASON DURANT WALKER; RACHEL LASSEFF; GULF RAYZ MEDIA, LLC; ANDREW JENSEN; STRATIX HEALTH, LLC; W4, LLC; DOES 1-10, inclusive, Defendants

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[Copyrighted Material Omitted]

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For Lepton Labs, LLC, a Nevada limited liability company, Focus Marketing LLC, a Nevada limited liability company, Plaintiffs: Justin Ross Trauben, Michael Alan Trauben, LEAD ATTORNEYS, Singh Singh and Trauben LLP, Beverly Hills, CA.

For Stratix Health, LLC, a Nevada limited liability company, Defendant: Claire Y Dossier, LEAD ATTORNEY, Mitchell Barlow and Mansfield PC, Salt Lake City, UT.

For W4, LLC, a Delawar limited liability company, Defendant: Ari Nicholas Rothman, LEAD ATTORNEY, Venable LLP, Washington, DC; Melissa Caren Rose McLaughlin, Witt W Chang, LEAD ATTORNEYS, Venable LLP, Los Angeles, CA.

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ORDER DENYING DEFENDANT'S MOTION TO DISMISS [22]

OTIS D. WRIGHT, II, UNITED STATES DISTRICT JUDGE.

I. INTRODUCTION

Can a website's design constitute protectable trade dress under the Lanham Act? If so, under what circumstances? The Court must squarely confront these issues and others in this Motion to Dismiss filed by Defendant W4, LLC.

This action arises out of W4's alleged misappropriation of Plaintiff Lepton Labs, LLC's trade-secret and trade-dress information

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relating to AllDaySlim, a dietary supplement sold by Plaintiffs. Plaintiffs allege that W4 disclosed this confidential information to Defendants Gulf Rayz Media, LLC and Andrew Jensen for their use in developing a nearly identical website for SlimBlastFast--a competing product--notwithstanding W4's exclusive marketing agreement with Lepton Labs. The Court finds that Plaintiffs may allege protectable trade dress in their website design and that they have also stated actionable claims for contributory trade-dress infringement, unfair competition, and fraud. The Court thus DENIES W4's Motion to Dismiss.[1] (ECF No. 22.)

II. FACTUAL BACKGROUND

Lepton Labs specializes in dietary supplements and has created the supplement called AllDaySlim. (FAC ¶ 3.) Plaintiffs Focus Marketing, a promotion and marketing company, teamed up with Lepton Labs to market and sell AllDaySlim. ( Id. ¶ ¶ 4-5.)

In the fourth quarter of 2011, Lepton Labs and Focus Marketing (collectively, " Lepton Labs" or " Plaintiffs" ) entered into a written advertising agreement with W4--an online performance marketing company. ( Id. ¶ ¶ 6, 40, 49, Ex. A.) W4 agreed to direct traffic and generate leads for Lepton Labs's website www.alldayslim.com, which Plaintiffs use to sell AllDaySlim. ( Id. ¶ 49.) In the agreement, W4 agreed not to " disclose or use the other party's confidential information for any purpose other than the purposes contemplated by [the] agreement." ( Id. ¶ 53, Ex. A.)

In the second quarter of 2012, W4 became Lepton Labs's exclusive advertising and marketing agent for AllDaySlim. ( Id. ¶ 55, Ex. B.) Lepton Labs alleges that W4 promised enhanced conversions but omitted the fact that at the same time, W4 was " proactively and maliciously appropriating Plaintiffs' confidential and trade secret information by disclosing such information to a direct competitor of Plaintiffs." ( Id. ¶ 56.) W4 also employed an alleged comprehensive online tracking system, which allowed Lepton Labs to view the status of its online advertising campaigns. ( Id. ¶ 57.)

To market AllDaySlim, Lepton Labs provided W4 with its trade-secret information relating to the production, advertising, marketing, sale, and distribution of AllDaySlim. ( Id. ¶ 59.) W4 received access to this information via email and access to Lepton Labs's online MediaPlex account, which tracked Lepton Labs's advertising campaigns' performance. ( Id. ¶ 60.) Through these avenues, Lepton Labs alleges that W4 gained access to trade-secret information, including Plaintiffs' customers' identities and preferences, product-pricing information, and Plaintiffs' strategy and plans for advertising, marketing, and distributing AllDaySlim. ( Id. ¶ 61.)

In addition, through extensive tracking and refinement, Lepton Labs was able to develop a particular pattern of messages, photographs, and information, which constituted the most effective advertising creative for promoting AllDaySlim. ( Id. ¶ ¶ 62-64.) Lepton Labs's most critical creative component is its landing page, i.e., the first webpage potential customers would visit after clicking an advertising link. ( Id. ¶ 65.) The landing page includes a refined selection of logos, slogans, motivational content, scientific content, audio-visual

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content, testimonials, active-ingredient lists, product price, and overall look and feel. ( Id. ¶ 66.) Lepton Labs maintains the secrecy of this information through various means, including requiring agents to sign confidentiality agreements, communicating the confidentiality of information to employees and sales agents, and disclosing trade-secret information on a need-to-know basis. ( Id. ¶ 70.)

After acquiring Lepton Labs's confidential AllDaySlim information, W4 began working with Defendant Gulf Rayz to market Gulf Rayz's competing dietary supplement, SlimBlastFast. ( Id. ¶ 73.) Plaintiffs contend that Gulf Rayz is a shell company directed by Defendant Andrew Jensen. ( Id. ¶ ¶ 22-28.)

In the first quarter of 2012, former defendant Rachel Lasseff, W4's Vice President of Business Development, contacted Jensen to convince Gulf Rayz to steal Lepton Labs's trade secrets to use in marketing SlimBlastFast. ( Id. ¶ ¶ 42, 76.) On January 18, 2012, Lasseff then sent Jensen an email titled " All Day Slim Creatives" in response to Jensen's request to send " 1-2 top email creatives for All Day Slim." ( Id. ¶ 77, Ex. C.) W4 thus disclosed to Gulf Rayz Lepton Labs's most effective creative materials. ( Id. ¶ 79.)

W4 and Gulf Rayz subsequently entered into their own exclusive marketing relationship for SlimBlastFast. ( Id. ¶ 82; see also Ex. D.) In marketing SlimBlastFast, Lepton Labs alleges that W4 exploited AllDaySlim's advertising, trade dress, trade secrets, product design, and packaging. ( Id. ¶ 84.) Lepton Labs contends that W4 employed this confidential information on SlimBlastFast's website by copying various features, including the format, background and text colors, photographs, comparisons, quotations, satisfaction guarantee, text, active-ingredient section, style, and trial offer. ( Id. ¶ 86; see also Ex. E.) Figures 1 through 3 depict side-by-side comparisons of the two websites as reflected in Exhibit E. The alleged copying was so extensive that W4 and Gulf Rayz forgot to remove Lepton Labs's customer-service telephone number, which resulted in W4's customers actually calling Lepton Labs. ( Id. ¶ 88.) These erroneous telephone calls are what led Lepton Labs to investigate W4. ( Id. ¶ ¶ 89-91.) Gulf Rayz also linked images on its site from Lepton Labs's website so that when a user visited the SlimBlastFast website, the site would pull the images from the AllDaySlim site. ( Id. ¶ ¶ 93-95; see also Ex. F.)

Figure 1

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Figure 2

Figure 3

W4 represented to its clients that they could use its online tracking system to view a particular customer's own campaigns as well as all campaigns W4 was running for other customers. ( Id. ¶ ¶ 100-01.) But Lepton Labs alleges that W4 concealed its SlimBlastFast campaign from the tracking system, thus preventing ...


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