Tresona Multimedia v. ClicknClear

District court grants music rights technology company ClicknClear’s motion to dismiss false advertising claims brought by competitor, holding that statements about what music rights are needed for performing arts and choreographed sports groups are non-actionable opinions of law.

ClicknClear is a music licensing and technology company that issues licenses for musical works and sound recordings to groups who perform choreographed routines with music, including figure skating, gymnastics and cheerleading groups. ClicknClear also offers a License Verification System (LVS) that helps performing groups determine whether their licenses contain a grant of all required rights. Tresona Multimedia LLC is a competing music licensing agency that issues licenses for musical works and sound recordings to performing arts groups such as vocal ensembles and marching bands.

Tresona brought false advertising and consumer deception claims under the U.S. Lanham Act and Section 349 and Section 350-a of the New York General Business Law against ClicknClear and its officers Chantal Epp and David Walsh, asserting that various statements on ClicknClear’s website and in presentations about what rights are needed by performance groups—including the right to practice using sheet music, to set choreography to music and to publicly perform music with a choreographed routine—were both literally and impliedly false, because the rights ClicknClear mentioned were “illusory” rights that consumers do not need in all situations. Tresona’s claims also targeted ClicknClear’s LVS, which returned a “green,” “yellow” or “red” result depending on whether the user’s license contained the necessary rights, as well as a number of statements that ClicknClear allegedly made about Tresona itself.

Defendants moved to dismiss the complaint, and the district court granted the motion. The court first addressed ClicknClear’s statements about music rights that are needed by performance groups. It held that those “necessary rights” statements amounted to non-actionable opinions of law. Both sides agreed that the necessity of these rights involved unsettled areas of copyright law. The court therefore held that ClicknClear was “expressing an opinion on an inconclusive question of law” and not making a statement of fact that could be proven true or false.

The court also held that even assuming ClicknClear’s “necessary rights” statements were of fact and not opinion, they could not be literally false. Tresona would have to plead that there is no instance in which the rights ClicknClear mentioned were required. Yet Tresona admitted that the necessity of such rights turned on a “fact-specific and individualized inquiry,” demonstrating that there are at least some instances where the rights are required. The court also held that Tresona failed to allege that ClicknClear’s “necessary rights” statements falsely implied that the rights were “always” required, as Tresona did not allege any evidence of consumer confusion or that the statements were deliberately deceptive or egregious.

Turning to ClicknClear’s LVS, the court found that it is a subjective rating system that depends on which factors ClicknClear believes to be important in evaluating a license. Such subjective statements cannot be proven true or false and are therefore not actionable under the Lanham Act. As with the “necessary rights” statements, the court found that, even assuming information provided by LVS could be impliedly false, Tresona failed to offer any non-conclusory allegations that any consumers had been misled or confused. The court also rejected Tresona’s claim that ClicknClear’s operation of LVS amounted to unauthorized practice of law, as that is not a basis for liability under the Lanham Act.

ClicknClear’s alleged statements about Tresona included: (i) ClicknClear’s products and services are better and its licenses are “stronger,” (ii) a “suggestion” that Tresona does not offer a full license but only a certificate and that Tresona does not use a “pre-cleared model” while ClicknClear does, (iii) Tresona has a “very bad reputation” and cannot offer the required “licensing solution,” and (iv) that ClicknClear was “in a really strong position to do a lot of harm to [Tresona].” The court found that either these statements constituted non-actionable puffery or Tresona failed to allege how the statements misled the public or affected Tresona’s sales. It also found that these statements resembled “isolated disparaging statements” rather than widespread “commercial advertising or promotion” of the kind that can give rise to a Lanham Act claim.

While the court declined to address Tresona’s claims under New York state law, it noted that if it were to address them, it would find that Tresona failed to allege how customers were misled or confused by ClicknClear’s statements. Nevertheless, the court granted Tresona leave to amend its Lanham Act and New York state law claims.

Summary prepared by Tal Dickstein and Alex Loh