PharmacyChecker.com LLC v. National Association of Boards of Pharmacy

Background

PharmacyChecker.com LLC sued the National Association of Boards of Pharmacy (NABP), the Alliance for Safe Online Pharmacies, the Center for Safe Internet Pharmacies Ltd., and the Partnership for Safe Medicines. PharmacyChecker.com alleged that the defendants conspired to restrain trade in violation of Section 1 of the Sherman Act and that NABP made false advertising or promotional statements under Section 43(a) of the Lanham Act.

NABP filed counterclaims against PharmacyChecker.com under Section 43(a) of the Lanham Act, Sections 349 and 350 of the New York General Business Law, and the District of Columbia Consumer Protection Procedures Act. NABP alleged that PharmacyChecker.com misled consumers about the legality, safety, pricing, origin, and regulatory status of foreign prescription drugs and the pharmacies listed on its website. NABP also alleged that PharmacyChecker.com attacked NABP’s reputation through blog posts and other statements. NABP claimed that it had to spend staff time and other resources responding to those statements and correcting what it considered misinformation.

PharmacyChecker.com moved to dismiss NABP’s counterclaims under Federal Rule of Civil Procedure 12(b)(6). At this stage, the court accepted the counterclaims’ factual allegations as true but required them to contain enough factual detail to make the asserted claims legally plausible.

Lanham Act Counterclaim

The court dismissed NABP’s false-advertising counterclaim under the Lanham Act. A plaintiff bringing this type of claim must allege an injury to a commercial interest in reputation or sales and must connect that injury directly to the challenged advertising.

The court concluded that NABP could not rely on a presumption of injury because NABP alleged that it and PharmacyChecker.com were not competitors and did not identify a materially false comparison between specific competing products or services. The court further held that NABP did not allege that it was a market participant selling a particular product or service, or that it earned revenue from its pharmacy-accreditation program or another program. NABP’s alleged reputational harm and diversion of resources therefore did not establish the commercial injury and direct causation required by the Lanham Act.

New York Claims

The court also dismissed NABP’s claims under New York General Business Law Sections 349 and 350. Those provisions address deceptive business practices and false advertising and require a plaintiff to allege consumer-oriented conduct, material deception, and actual injury.

The court found that NABP alleged only an indirect injury. According to the court, NABP’s expenditures to respond to PharmacyChecker.com’s statements depended on alleged harm to consumers and were not a direct injury to NABP. The court therefore dismissed both New York claims.

District of Columbia Consumer-Protection Claim

The court dismissed NABP’s claim under the District of Columbia Consumer Protection Procedures Act because NABP did not allege a sufficient connection between PharmacyChecker.com’s conduct and the District of Columbia. The statute protects consumers regarding goods and services purchased or received in the District.

The court rejected NABP’s reliance on allegations that one of its member organizations was the District of Columbia pharmacy board, that NABP sued on behalf of District consumers, and that PharmacyChecker.com’s internet statements could reach District consumers. The court held that these were conclusory allegations and did not establish that a District consumer actually purchased or received a good or service from PharmacyChecker.com.

Disposition

Judge Karas granted PharmacyChecker.com’s motion to dismiss all of NABP’s counterclaims. Because this was the first adjudication of those counterclaims, the court dismissed them without prejudice. The court allowed NABP 30 days to file amended counterclaims if it had a good-faith basis for doing so. The court stated that failure to amend properly and on time would result in dismissal with prejudice without further notice.