Judge Throws Out Half Of Maxava’s Lawsuit Against Vision

August 5, 2013 Alex Woodie

A federal judge has dismissed two of the four claims that Maxava brought against Vision Solutions and Sirius Computer Solutions. The judge threw out Maxava’s Lanham Act and trade libel claims, and left in place the claims related to violations of California’s unfair competition and false advertising laws. The start of the trial has also been pushed back to late October.

On May 13, Judge George Wu granted the summary motion requests of Vision, Sirius, and Eva Succi to dismiss some or all of Maxava’s claims against them. Judge Wu elected to grant partial summary judgment in favor of the defendants, and in so doing, tossed out two of the four claims, specifically the accusations that the defendants violated the Lanham Act against trademark infringement and committed trade libel.

In its lawsuit, which Maximum Availability originally filed in 2009, the company (which has since changed its name to Maxava) claims that the defendants damaged the company between 2006 and 2008 by distributing marketing materials to potential customers that disparaged its company and the functioning of its high availability software for IBM i servers. In late 2010, Maxava amended its original compliant to include accusations of trade libel, interfering with prospective economic advantage, and anti-competitive, monopolistic behavior in violation of the Sherman Act. The company is seeking a jury trial. It also succeeded in adding Sirius to the suit.

Both the plaintiff and the defendants had been waiting a year and a half for Judge Wu to issue rulings on several requests for full or partial summary judgments. In April, the plaintiff and the defendants submitted a joint request to Judge Wu to issue rulings “as soon as practical” to enable the two sides to prepare for a July 15 pre-trial conference and for the trial itself, which was slated to start August 6.

As it turns out, neither side will be in court those days. That’s because the pre-trial conference has been pushed out to September 23, and the trial is now set for October 22. Thanks to multiple delays and thousands of pages of paperwork, the case will have taken the better part of four years to complete–if in fact it ends this year.

Federal Charges Dismissed

It is not entirely surprising that Judge Wu would throw out Maxava’s claims of violations federal laws, including the Lanham Act anti-trust law and laws governing trade libel. In 2012, the judge tentatively ruled for the defendants. While the ruling was not the end of the matter (Maxava wants a jury trial), it demonstrated that Maxava had a ways to go before it the judge would allow it to make the arguments before jury.

The heart of Maxava’s lawsuit is that Vision made (and Sirius distributed) various claims about its business and its *noMAX IBM i high availability software that were untrue. The claims included:

80 customers have replaced *noMAX with Vision’s software
Maxava has a limited support staff in New Zealand and an immature partner network
Maxava doesn’t offer 24/7 global support
*noMAX takes more than 30 minutes to manage every day
*noMax requires custom coding
*noMax is built for small and midsize businesses, and not enterprises
*noMax takes more than 30 days to install
More than half of *noMax customers don’t know if they are ready for a role swap
More than 80 percent of customers have never done a role swap test

In 2012, Judge Wu wrote that, to prove a Lanham Act violation, the burden is on the plaintiff to prove that the misrepresentations in commercial advertising or promotion denigrate “the nature, characters, qualities, or geographic origin” of the plaintiff’s products or services. To meet this burden of proof, Maxava needed to present evidence beyond just a number of customers who may have switched from its products to Vision’s products.

For example, Judge Wu did not particularly care for Maxava’s claim that Vision’s marketing statements–that “Maxava has a limited number of support staff in New Zealand and an immature partner network, so support is inconsistent and limited”–damaged Maxava’s business, calling the marketing just “puffery” and “opinion” and not actionable as a matter of law.

However, Judge Wu appeared to side with Maxava when he wrote that Vision’s claim that Maxava offers “little or no 24×7 support (only available in New Zealand)” is “problematic.” As for the claim that *noMAX took more than 30 minutes per day to manage, Judge Wu wrote in 2012 that Maxava hadn’t met the burden of disproving Vision’s statement.

State Charges Remain

With the federal charges thrown out, Maxava is still pursuing the alleged state violations against Vision, Sirius, and Succi (a former Vision employee).

On June 25, the defendants’ attorneys asked the court to throw out the remaining allegations of violations of California’s Unfair Competition Law (UCL) and False Advertising Law (FAL).

“The UCL and FAL, however, provide for only two forms of relief: restitution and an injunction; damages are not recoverable,” the defendants’ attorneys wrote. “Because neither restitution nor injunctive relief is available to Maximum in this case, the Court should dismiss its remaining claims.”

Maxava’s attorney responded on June 26 by saying the defendant’s had already tried that line of reasoning in court the year earlier, and had failed.

“This statement is nothing more than an argumentative trial brief which attempts to reargue legal issues already raised and rejected,” the plaintiff’s attorneys write. “The Court ruled on the parties’ cross-motions for summary judgment, and specifically found there are triable issues of fact on plaintiff’s state law claims for false advertising and unfair competition.”

The case is being tried in Judge Wu’s courtroom in the U.S. District Court Central District of California Western Division, which is based in Los Angeles.