Doctor's Data, Inc. v. Barrett et al

Filing 82

MEMORANDUM Opinion and Order Signed by the Honorable Edmond E. Chang on 11/22/2011. Mailed notice.(srb,)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
DOCTOR’S DATA, INC.,

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Plaintiff,
v.
STEPHEN J. BARRETT, M.D.,
NATIONAL COUNCIL AGAINST
HEALTH FRAUD, INC., and
QUACKWATCH, INC.,
Defendants.

Case No. 10 C 03795
Judge Edmond E. Chang

MEMORANDUM OPINION AND ORDER
Plaintiff Doctor’s Data, Inc. alleges that Defendants Stephen J. Barrett, M.D.,
the National Council Against Health Fraud, Inc., and Quackwatch, Inc. publish false
and defamatory information about Doctor’s Data on various websites owned and
operated by Barrett. Doctor’s Data alleges that Barrett’s conduct violates Section 43
of the Lanham Act, 15 U.S.C. § 1125, as well as several Illinois state laws.1 Defendants
move to dismiss [R. 38] all of the counts. For the following reasons, Defendants’ motion
is granted in part and denied in part.
I.
In evaluating a motion to dismiss, the Court must accept as true the complaint’s
factual allegations. Doctor’s Data is a scientific and medical laboratory in the business
of analyzing blood, tissue, and other samples for health care practitioners. R. 24
(Compl.) ¶ 1. Some of Doctor’s Data’s clients practice traditional or “mainstream”
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The Court has subject matter jurisdiction under 28 U.S.C. §§ 1331 and 1332.

medicine, while others would be considered practitioners of “alternative” medicine. Id.
¶ 34. Defendant Barrett is a retired physician who resides in, and is a citizen of, North
Carolina. Id. ¶¶ 7-8. Barrett is the president of the National Council Against Health
Fraud, Inc. (NCAHF), a named defendant in this case. Id. ¶ 15. Barrett operates
NCAHF’s website and edits Consumer Health Digest, a weekly electronic newsletter
published on the site. Id. ¶ 16. Barrett is also the owner and operator of
www.quackwatch.com. Id. ¶ 9. Defendant Quackwatch, Inc. dissolved in April 2009,
but Plaintiffs allege that Barrett continues to do business under the name
“Quackwatch.” Id. ¶¶ 10-13.
Doctor’s Data claims that Barrett uses his websites to disseminate false and
misleading information about Doctor’s Data and other medical laboratories. Doctor’s
Data attached seven articles to the complaint. See R. 24-1 – 24-7. Doctor’s Data claims
that these articles exemplify Barrett’s efforts to damage Doctor’s Data’s reputation and
harm its business. Compl. ¶ 54. For example, one of the articles authored by Barrett
states that Doctor’s Data defrauds patients by processing urine tests that are
misleading and are then “used to persuade patients they are toxic when they are not.”
R. 24-1 (Pl.’s Exh. A) at 5. In another posting, Barrett writes that a patient sued
Doctor’s Data alleging that he was incorrectly diagnosed “and the test used to diagnose
[the patient] – Doctor’s Data’s urine toxic metals test – is a fraud.” R. 24-3 (Pl.’s Exh.
C) at 1. Doctor’s Data seeks a permanent injunction prohibiting Barrett from
publishing disparaging statements on the internet as well as monetary damages.

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II.
Barrett first argues that Doctor’s Data’s claims were filed as part of a so-called
“strategic lawsuit against public participation” (SLAPP) and should be dismissed
pursuant to Illinois’ anti-SLAPP statute, known as the Illinois Citizen Participation
Act (ICPA), 735 ILCS 110/1, et seq. R. 40-1 (Defs.’ Br.) ¶¶ 2-27. The ICPA, which
became effective in 2007, immunizes acts undertaken “in furtherance of the
constitutional rights to petition, speech, association, and participation in government
. . . regardless of intent or purpose, except when not genuinely aimed at procuring
favorable government action, result, or outcome.” 735 ILCS 110/15. The ICPA “applies
to any motion to dispose of a claim in a judicial proceeding on the grounds that the
claim is based on, relates to, or is in response to any act or acts of the moving party in
furtherance of the moving party’s rights of petition, speech, association, or to otherwise
participate in government.” Id.
The ICPA requires a court to dismiss claims to which it applies unless the
plaintiff produces “clear and convincing evidence that the acts of the moving party are
not immunized from, or are not in furtherance of acts immunized from, liability by this
Act.” 735 ILCS 110/20(c). In other words, the ICPA’s immunity “will apply where: (1)
the defendant’s acts were in furtherance of his rights to petition, speak, associate, or
otherwise participate in government to obtain favorable government action; (2) the
plaintiff’s claim is based on, related to, or in response to the defendant’s ‘acts in
furtherance’; and (3) the plaintiff fails to produce clear and convincing evidence that

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the defendant’s acts were not genuinely aimed at procuring favorable government
action.” Sandholm v. Kuecker, 942 N.E.2d 544, 564 (Ill. App. Ct. 2010).
Although Barrett argues that the entire complaint should be dismissed pursuant
to the ICPA, only the state law claims are potentially covered by the Act. The ICPA
does not apply to Doctor’s Data’s federal claims under the Lanham Act because such
application would frustrate substantive federal rights. See, e.g., Hilton v. Hallmark
Cards, 599 F.3d 894, 900-01 (9th Cir. 2010) (noting that California’s anti-SLAPP
statute gives no protection against a federal Lanham Act claim). The ICPA is a
substantive law, see Chi v. Loyola University Medical Center,787 F. Supp. 2d 797, 808
(N.D. Ill. 2011); thus, applying it to federal claims would permit state law to affect and
alter the substance of federal claims in violation of the Supremacy Clause of the
Constitution. See Martinez v. State of California, 444 U.S. 277, 284 n.8 (1980).
Moreover, applying the ICPA (and other state anti-SLAPP laws) to federal claims
would frustrate uniformity in applying federal law by altering the scope of the Lanham
Act from state-to-state. The ICPA applies to the state law claims only.
In any event, Doctor’s Data argues that the ICPA does not apply at all in this
case because North Carolina law governs whether or not Barrett is immune from
liability for the state law claims asserted against him (the anti-SLAPP issue).2 R. 70

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This argument was not raised in the first round of briefing on Defendants’ motion to
dismiss. Rather, the Court granted Doctor’s Data leave [R. 72] to file a supplemental brief in
opposition to Defendants’ motion to dismiss in light of a recent ICPA decision issued in this
district: Chi v. Loyola Univ. Med. Ctr.,787 F. Supp. 2d 797, 808 (N.D. Ill. 2011). Defendants
filed a supplemental response [R. 73] to Doctor’s Data’s supplement, and Doctor’s Data replied
[R. 77].

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¶¶ 15-19. Barrett maintains that Illinois law governs this issue and, therefore, the
ICPA applies. R. 73 ¶ 3.
The Court applies the choice-of-law rules of Illinois, the forum state. AutoOwners Ins. Co. v. Websolv Computing, Inc., 580 F.3d 543, 547 (7th Cir. 2009). In
Illinois, a choice-of-law determination is only necessary when there is a conflict of laws
and the difference will affect the outcome of the case. Townsend v. Sears, Roebuck &
Co., 879 N.E.2d 893, 898-99 (Ill. 2007). Doctor’s Data has identified a conflict between
North Carolina and Illinois law, and the difference is clearly decisive. North Carolina
does not have an anti-SLAPP statute. Thus, if North Carolina law applies, Barrett
cannot assert an anti-SLAPP defense. On the other hand, if Illinois law applies,
Barrett may invoke the ICPA, which “provid[es] a new, qualified privilege for any
defamatory statements communicated in furtherance of one’s right to petition, speak,
assemble, or otherwise participate in government.” Sandholm, 942 N.E.2d at 559-60.
Then, if Doctor’s Data is unable to produce clear and convincing evidence that Barrett’s
statements were not genuinely aimed at procuring favorable government action, the
ICPA states that all of the state law claims against Barrett must be dismissed. Id. at
564, 570.
Illinois courts have adopted the approach of the Second Restatement of Conflict
of Laws in making a choice-of-law determination. Townsend, 879 N.E.2d at 903. Under
the Second Restatement approach, the objective is to apply the law of the state with
the most significant relationship to the dispute and the parties, as defined by the
issues raised. Barbara’s Sales, Inc. v. Intel Corp., 879 N.E.2d 910, 919-20 (Ill. 2007);
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Townsend, 879 N.E.2d at 901 (Illinois follows the doctrine of depecage, “which refers
to the process of cutting up a case into individual issues, each subject to a separate
choice-of-law analysis.”).
Doctor’s Data’s action is grounded in tort. The complaint sets forth ten causes
of action under Illinois law, all of which are based on the allegedly defamatory
statements published on Barrett’s websites. In his defense, Barrett asserts that the
ICPA applies to the statements made on his websites and, thus, immunizes him from
any claims based on this speech. Under the doctrine of depecage, the issue of whether
a statement is defamatory is distinct from the issue of whether that statement is
privileged. See Chi, 787 F. Supp. 2d at 803; Global Relief Found. v. New York Times
Co., 2002 WL 31045394, at *10 (N.D. Ill. Sept. 11, 2002) (applying Illinois choice of law
to find that Illinois law applied to defamation action, but that defenses to defamation,
namely anti-SLAPP, should be considered under California law); Wilkow v. Forbes,
Inc., 2000 WL 631344, at *5 (N.D. Ill. May 15, 2000), aff’d, 241 F.3d 552 (7th Cir.
2001); Vantassell-Matin v. Nelson, 741 F. Supp. 698, 704 (N.D. Ill. 1990) (noting in
choice-of-law context that “the threshold question [of defamation] and the defenses are
different issues and call for different analyses”). The parties agree that Illinois law
governs the alleged torts in this case. The conflict-of-law dispute is limited to whether
Barrett’s statements are potentially protected under Illinois law (as Barrett contends),
or whether he is restricted to defenses recognized in North Carolina (as Doctor’s Data
contends).

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The following factors are considered in deciding which state has the more
significant relationship to this issue: (1) the place of the injury; (2) the place where the
injury-causing conduct occurred; (3) the parties’ domiciles; and (4) the place where the
relationship between the parties is centered. Restatement (Second) of Conflicts of Laws
§ 145(2). In tort cases, the place of injury is a central factor in determining which
state’s law governs. However, as Chi recognized, this factor is less important in the
anti-SLAPP context:
The purpose behind an anti-SLAPP law is to encourage the exercise of free
speech—indeed, Illinois’s stated policy in enacting the ICPA was to “encourage
[ ] and safeguard[ ] with great diligence” the “constitutional rights of citizens
and organizations to be involved and participate freely in the process of
government.” 735 ILCS 110/5. In light of this policy goal, the place where the
allegedly tortious speech took place and the domicile of the speaker are central
to the choice-of-law analysis on this issue. A state has a strong interest in
having its own anti-SLAPP law applied to the speech of its own citizens, at least
when, as in this case, the speech initiated within the state's borders.
787 F. Supp. 2d at 803.
Of course, this case is different from Chi because Barrett, a citizen and resident
of North Carolina, argues that his speech is protected under Illinois’ anti-SLAPP
statute. Barrett does not adequately explain why Illinois would have a significant
interest in having its law applied to non-Illinois speakers. Nor does Barrett argue that
the speech originated in Illinois, which would make the second factor (where the
injury-causing conduct occurred) weigh in favor of applying Illinois law to Barrett’s
anti-SLAPP defense. In contrast, North Carolina has a significant interest in
determining how much protection to give North Carolina speakers. See Chi, 787 F.

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Supp. 2d at 803; Global Relief, 2002 WL 31045394, at *11. For these reasons, the Court
concludes that North Carolina law governs. The ICPA does not apply to this action.
Even if the ICPA applied, the Court would not dismiss the state law claims at
this early stage. Although “the Act’s clear objective as an anti-SLAPP statute is to
provide citizens with an immediate way to dispose of such lawsuits,” Sandholm, 942
N.E.2d at 550, the parties would be entitled to engage in limited discovery on, at the
least, whether the ICPA protects Barrett’s statements, and specifically whether there
is clear and convincing evidence that the statements were not genuinely aimed at
procuring government action.
III.
Under Federal Rule of Civil Procedure 8(a)(2), a complaint generally need only
include “a short and plain statement of the claim showing that the pleader is entitled
to relief.” Fed. R. Civ. P. 8(a)(2). A “complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.
Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic v. Twombly, 550
U.S. 544, 570 (2007)).
“A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state
a claim upon which relief may be granted.” Hallinan v. Fraternal Order of Police
Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). When ruling on a defendant's
motion to dismiss, the Court must accept the plaintiff’s allegations as true and draw
reasonable inferences in the plaintiff’s favor. Erickson v. Pardus, 551 U.S. 89, 94
(2007); McGowan v. Hulick, 612 F.3d 636, 637 (7th Cir. 2010).
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A.
Doctor’s Data claims that the statements on Barrett’s websites violate the
Lanham Act because they are false representations of fact that confuse and deceive the
public about Doctor’s Data’s business and services. Compl. at 1, 16-19.3 Barrett argues
that Doctor’s Data’s false advertising claim under the Lanham Act must be dismissed
because Doctor’s Data fails to allege that: (1) Barrett is one of Doctor’s Data’s
commercial competitors; and (2) Barrett’s statements were made in a commercial
advertising or promotion. Def.’s Br. at 14-19. Doctor’s Data responds that the Lanham
Act does not require the parties to be direct competitors, and the allegations in the
complaint are sufficient to state a claim at this stage. R. 56 (Pl.’s Resp.) at 4-10.
Under Section 43, unfair competition claims can be can be divided into four
broad categories: (1) cases involving the question of confusion or likelihood of confusion
as to source, sponsorship, or association between plaintiff’s and defendant’s goods and
services; (2) misrepresentations or false statements made in connection with the
advertising and marketing of goods or the provision of services; (3) misappropriation
of the efforts of others; and (4) cases seeking relief under Section 43(c) for dilution of
famous marks. See 1 CHARLES E. MCKENNEY & GEORGE F. LONG, III, FEDERAL UNFAIR
COMPETITION: LANHAM ACT § 43(a) § 2:25 (2011). Here, it is clear that Doctor’s Data

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For the remainder of the opinion, the Court will cite to page numbers in the complaint,
R. 24. Although the allegations in the complaint are organized by paragraphs, starting on page
16, the paragraph numbers repeat for each count – e.g., Count 1 is at paragraphs 59-65; Count
2 is at paragraphs 59-64; Count 3 is at paragraphs 59-69. Thus, going forward, page numbers
will be used for the Court’s citations to the complaint.

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claims that Barrett is liable under the second category, otherwise known as “false
advertising.” See Compl. at 16-17; L.S. Heath & Son v. AT&T Info. Sys., 9 F.3d 561,
575 (7th Cir. 1993). Doctor’s Data also makes a few allegations that relate to the
dilution of its mark in violation of the Lanham Act. Compl. at 18. And although
Doctor’s Data uses the term “confusion” when it alleges that Barrett’s “past and
present acts and threatened future acts . . . have caused and are likely to continue to
cause confusion to the public and to health care practitioners as to whether to employ
Doctor’s Data for samples and testing analysis, or to employ a laboratory approved by
[Barrett],” id., these allegations are not directed at stating a claim for the conduct
described in category one.4 Rather, this allegation relates to Doctor’s Data’s claim for
trademark dilution.
1.

4

Indeed, the first category of § 43(a) cases represent traditional trademark infringement
claims. In those cases, “the harm to be remedied is the possible deception of consumers through
the use of similar or identical trademarks. The paradigmatic trademark infringement claim
arises when consumers seeking to obtain goods or services from one source – that is, the owner
of a particular trademark – instead obtain them from another source while thinking the goods
or services are from the first source due to confusingly similar trademarks. In other words,
trademark infringement claims protect against a harm akin to fraud.” Facebook v.
Teachbook.com, – F. Supp. 2d –, 2011 WL 4449686, at *17 (N.D. Ill. Sept. 26, 2011) (citing
MCCARTHY ON TRADEMARKS § 24:72). “The purpose of trademark law (setting to one side
dilution cases) is to prevent confusion by consumers concerning the sources of the products
they buy.” Peaceable Planet, Inc. v. Ty, Inc., 362 F.3d 986, 993 (7th Cir. 2004). Here, Doctor’s
Data does not allege that Barrett is passing off his business and services as those of Doctor’s
Data’s. For instance, Doctor’s Data is not alleging that Barrett’s use of the trademark “Doctor’s
Data” is for the purpose of influencing practitioners to send samples to Barrett for testing.
Doctor’s Data does not allege that Barrett is in the business of testing medical samples; rather,
it claims that Barrett is telling practitioners not to use Doctor’s Data, and this is the manner
in which Doctor’s Data and its trademark are being harmed.

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First, under the “false advertising” prong of the Lanham Act, a plaintiff must
show that (1) the defendant made a false statement of fact about its product or
another’s product in a commercial advertisement, (2) the statement has a tendency to
deceive or actually deceived a substantial segment of its audience, (3) the deception is
material, that is, it is likely to influence purchasing decisions, (4) the defendant caused
its false statement to enter interstate commerce, and (5) the plaintiff has been or is
likely to be injured as a result, either by direct diversion of sales from itself to
defendant or by a loss of good will that is associated with its products. Hot Wax, Inc.
v. Turtle Wax, Inc., 191 F.3d 813, 819 (7th Cir. 1999). Barrett argues that Doctor’s Data
does not have standing to sue him for false advertising under the Lanham Act because
they are not competitors.
The Seventh Circuit has held that a party bringing a lawsuit under the false
advertising prong of the Lanham Act must assert “a discernable competitive injury.”
L.S. Heath & Son, 9 F.3d at 575. In L.S. Heath, the plaintiff (a manufacturer of
chocolate products, including the Heath bar) retained AT&T to install a new computer
system for Heath’s business, and permitted AT&T to use Heath’s endorsement in a
national advertising campaign. 9 F.3d at 565. After their business relationship soured,
Heath filed a lawsuit against AT&T alleging, among other things, that AT&T’s ad
violated the Lanham Act because it portrayed Heath in a false light. Id. at 575. The
Seventh Circuit held that, “[i]n order to have standing to allege a false advertising
claim, . . . the plaintiff must assert a discernible competitive injury. Because Heath is
not in the computer business and thus is not a competitor of AT&T, Heath does not
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have standing to raise the false advertising claim.” Id.; see also Johnny Blastoff, Inc.
v. Los Angeles Rams Football Co., 188 F.3d 427, 438 (7th Cir. 1999) (corporation that
created and marketed cartoon characters lacked standing to bring Lanham Act
deceptive advertising claim against professional football league and owner of St. Louis
Rams franchise where corporation “has never been part of the NFL in any manner,
shape, or form”). To support the requirement that the plaintiff allege competitive
injury in false advertising cases, L.S. Heath cited Waits v. Frito-Lay, 978 F.2d 1093,
1108 (9th Cir. 1992), which in turn cited the more substantial explanation for the
competitive-injury requirement in Halicki v. United Artists Communications, 812 F.2d
1213, 1214 (9th Cir. 1987). Halicki relied on the Lanham Act’s definitional section, 15
U.S.C. § 1127, which in relevant part states that the intent of the Act is to protect
“against unfair competition.” (Emphasis added.) In other words, the Act does not create
a general, free-floating “tort of misrepresentation,” 812 F.2d at 1215, unanchored to
unfair competition.
District courts within the Seventh Circuit have repeatedly interpreted L.S.
Heath as having adopted a categorical approach to the standing requirement in
Lanham Act cases. See Emerging Material Techs. v. Rubicon Tech., 2009 WL 5064349,
at *3 (N.D. Ill. Dec. 14, 2009) (to assert a “discernible competitive injury,” the plaintiff
must be the defendant’s “direct competitor;” the plaintiff must compete “at the same
level of business as the defendant”); Zang v. Alliance Fin. Servs. of Ill., 2009 WL
1285531, at *3-4 (N.D. Ill. May 7, 2009) (plaintiff, an individual interested in
purchasing a company, failed to allege “competitive” injury because he did not compete
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with defendants, who were in the business of providing consulting and accounting
services to assist individuals in locating businesses for purchase); Platinumtel
Commc’ns v. Sefcom, 2008 WL 5423606, at *5-7 (N.D. Ill. Dec. 30, 2008) (recognizing
other judges in the district have required plaintiff and defendant to be direct
competitors); Medallion Prods. v. McAlister, 2008 WL 5046055, at *4 (N.D. Ill. Nov. 20,
2008) (supplier of pet stain removal products to distributors lacked standing to sue
companies that sell similar products to consumers, suppliers, and retailers); Gail Green
Licensing & Design v. Accord, 2006 WL 2873202, at *5 (N.D. Ill. Oct. 5, 2006) (designer
of pet clothing lacked standing to sue retailers and manufacturers of clothing and
accessories for pets); see also Thermal Design, Inc. v. Am. Soc’y of Heating,
Refrigerating & Air-Conditioning Eng’rs, Inc., 775 F. Supp. 2d 1082, 1091-92 (E.D. Wis.
2011); Conrad v. Isthmus Pub., Inc., 2009 WL 3254024, at *3 (W.D. Wis. Oct. 5, 2009)
(to have standing to allege a false advertising claim under the Lanham Act, plaintiff
must be a competitor of defendant).
In its response, Doctor’s Data does not argue that Barrett is one of its
competitors. Instead, relying mostly on case law from other circuits, Doctor’s Data
argues that the parties do not need to be direct competitors for Doctor’s Data to have
standing under the Lanham Act. Pl.’s Resp. at 4-6. The one relevant Seventh Circuit
case cited by Doctor’s Data, Muzikowski v. Paramount Pictures Corp., 477 F.3d 899
(7th Cir. 2007), actually supports Barrett’s position. In Muzikowski, the plaintiff
appealed the district court’s grant of summary judgment in favor of the defendant, as
well as the court’s sanctions order. See 477 F.3d at 910. However, before the plaintiff
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filed his appeal with the Seventh Circuit, the district court made an express finding
that the parties were competitors and concluded that the plaintiff’s false advertising
claim under the Lanham Act survived the defendant’s motion to dismiss. See
Muzikowski v. Paramount Pictures Corp., 2003 WL 22872117, at *6 (N.D. Ill. Dec. 3,
2003) (“[W]e cannot agree with Paramount’s contention that the Second Amended
Complaint does not contain sufficient allegations that the two parties are competitors.
Rather, it is apparent from the face of the complaint that Muzikowski claims that he
and Paramount are competitors in marketing the goodwill he has accumulated with
his philanthropic efforts.”). The issue of whether the Lanham Act requires the plaintiff
to be a competitor of the defendant was not an issue on appeal and the Seventh Circuit
did not address it in Muzikowski, 477 F.3d at 907-08.
In this case, Doctor’s Data does not allege that the parties are business
competitors, and thus Doctor’s Data cannot assert “a discernable competitive injury,”
which is required for a false advertising claim. See L.S. Heath, 9 F.3d at 757. Doctor’s
Data’s false advertising claim under the Lanham Act is dismissed.5
2.
Doctor’s Data also claims that Barrett is liable for “tradename dilution under
[the] Lanham Act,” but the allegations in support of this claim (as stated in Count 1)

5

Because Doctor’s Data’s lack of standing disposes of the false advertising claim, the
Court does not address Barrett’s second argument regarding the nature of the alleged false
statements at length. It is sufficient to note that, at this stage of the litigation, dismissal on
this basis would not have been warranted. The complaint adequately alleges that Barrett’s
statements were made in a “commercial advertising or promotion” as required by the statute,
15 U.S.C. § 1125(a)(1)(B). See infra at 16.

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are scarce. Compl. at 16. In his motion to dismiss, Barrett makes arguments relating
to Doctor’s Data’s claim for trademark dilution under the Illinois Trademark
Registration and Protection Act, 765 ILCS 1036/65(a) (Count 2), but does not expressly
address trademark dilution under the Lanham Act, 15 U.S.C. § 1125(c). Def.’s Br. ¶¶
49-56. In any event, the Court will consider all of Barrett’s arguments in the context
of both the federal and state dilution claims.
Section 43 of the Lanham Act was amended in 1995 “to provide a remedy for the
‘dilution of famous marks.’” Moseley v. V. Secret Catalogue, Inc., 537 U.S. 418, 420
(2003) (quoting 109 Stat. 985-986). To prove dilution under 15 U.S.C. § 1125(c) (or
amended Section 43(c) of the Lanham Act), Doctor’s Data must show (1) its mark is
famous; (2) Barrett used the mark after the mark became famous; (3) Barrett’s use of
the mark caused dilution of the mark; and (4) Barrett’s use of the mark was
commercial and in commerce. See Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d
456, 466 (7th Cir. 2000). The term “dilution” means “the lessening of the capacity of a
famous mark to identify and distinguish goods or services,” regardless of the presence
or absence of: (1) competition between the owner of the famous mark and other parties;
or (2) likelihood of confusion, mistake or deception. Moseley, 537 U.S. at 429 (quoting
15 U.S.C. § 1125(c)(1)); AM Gen. Corp. v. DaimlerChrysler Corp., 311 F.3d 796, 812
(7th Cir. 2002) (citing 15 U.S.C. § 1127).
“Doctor’s Data” is a registered and active trade name and trademark. Compl. at
19. Doctor’s Data claims that Barrett’s use of the mark on his websites damages
Doctor’s Data’s name and business, and misrepresents the nature of Doctor’s Data’s
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services to the public. Id. at 20. Barrett argues that his use of the mark is not
“commercial.” Def.’s Br. ¶¶ 41-46. Rather, Barrett states that he uses the mark in
“media” and his websites report and opine on events and issues of public debate. Id. ¶¶
43-44. Still, the complaint alleges that Barrett “solicits donations and contributions”
on the websites. Compl. at 17. Those who visit the site can purchase products from
Barrett’s advertisers and are enticed “to visit hot-linked entities that pay referral fees”
to Barrett. Id. In light of these allegations, the complaint sufficiently alleges that
Barrett uses the mark in commerce. See Steele v. Bulova Watch Co., 344 U.S. 280, 283
(1952) (courts must construe the phrase “in commerce” liberally, because the Lanham
Act “confers broad jurisdictional powers upon the courts of the United States”); Kraft
Foods Holdings, Inc. v. Helm, 205 F. Supp.2d 942, 947 (N.D. Ill. 2002).
Barrett also argues that his use of Doctor’s Data’s trademark could not possibly
tarnish or blur the mark and, therefore, Doctor’s Data cannot state a claim for dilution.
Def.’s Br. at 21; see Eli Lilly, 233 F.3d at 466 (dilution may occur by either “blurring”
or “tarnishing”). “Dilution by blurring . . . occurs when consumers see the plaintiff’s
mark used on a plethora of different goods and services . . . raising the possibility that
the mark will lose the ability to serve as a unique identifier of the plaintiff’s product.”
Eli Lilly, 233 F.3d at 466 (quotations omitted). Doctor’s Data alleges that Barrett’s
actions dilute the qualities of Doctor’s Data’s mark. Compl. at 19. Doctor’s Data alleges
that Barrett posts articles about “shady” labs and “quack” physicians who defraud
patients in association with the “Doctor’s Data” mark. At this stage, Doctor’s Data’s
allegations are sufficient to put Barrett on notice of Doctor’s Data’s claim of dilution.
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Whether Doctor’s Data can prove actual dilution must be the subject of further
litigation beyond the motion-to-dismiss stage.
Accordingly, Doctor’s Data has stated claims for trademark dilution under the
Lanham Act and the Illinois Trademark Registration and Protection Act. The Court
grants Barrett’s motion to dismiss Count 1 in part (false advertising), but denies the
motion with respect to trademark dilution under the Lanham Act and the ITRPA
(Count 2).
B.
In Counts 3 and 4, Doctor’s Data alleges that Barrett’s conduct also violates
state unfair competition law: the Illinois Consumer Fraud and Deceptive Business
Practices Act, 815 ILCS 505/2 (ICFA), and the Illinois Uniform Deceptive Trade
Practices Act, 815 ILCS 510/2 (IUDTPA). Because the Court has dismissed Doctor’s
Data’s claim for false advertising under the Lanham Act, Barrett argues that Doctor’s
Data’s claims under the ICFA and the IUDTPA must also be dismissed. Def.’s Br. ¶ 48.
In more than one case, the Seventh Circuit has “assumed without deciding, that
[the Lanham Act] analysis also applies to Illinois false advertising claims.”
Muzikowski, 477 F.3d at 907; Peaceable Planet, 362 F.3d at 994. In Muzikowski, for
example, the Seventh Circuit concluded that the defendant was entitled to summary
judgment on the Lanham Act false advertising claim and, as such, summary judgment
was appropriate for the ICFA and IUDTPA claims as well. Id. at 907-08; see
Muzikowski, No. 01 C 6721 (R. 143-2 at 24 n.5), 2005 WL 1520800 (N.D. Ill. June 10,
2005) (“the legal inquiries required to assess a Lanham Act claim are identical to those
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pertinent to the [ICFA and IUDTPA]”). Many district courts in this jurisdiction employ
this approach. See, e.g., Platinumtel, 2008 WL 5423606, at *8 (because plaintiff lacked
standing to bring a false advertising claim under the Lanham Act, its ICFA and
IUDTPA claims must also be dismissed); MJ & Partners Rest. Ltd. v. Zadikoff, 10 F.
Supp. 2d 922, 929 (N.D. Ill. 1998) (ICFA and IUDTPA claims “must rise or fall based
on the Lanham Act”). In all of these cases, the courts held that “[c]laims for unfair
competition and deceptive business practices brought under Illinois statutes are to be
resolved according to the principles set forth under the Lanham Act.” Spex, Inc. v. Joy
of Spex, Inc., 847 F. Supp. 567, 579 (N.D. Ill. 1994) (citing Gimix, Inc. v. JS & A Group,
Inc., 699 F.2d 901, 908 (7th Cir. 1983)) (plaintiff did not have a protectable [WP doesn’t
recognize “protectable” but when I typed in “protectible” on MS Word, it autochanged
to “protectable.”] trade name under the Lanham Act and, therefore, could not prevail
on its claims under the ICFA or IUDTPA).
Doctor’s Data does not argue that a different approach is warranted here. The
Court grants Barrett’s motion to dismiss the ICFA and IUDTPA claims. The surviving
Lanham Act claim for trademark dilution does not affect this result.6

6

The ICFA and IUDTPA protect the same interests as those outlined in § 43(a) of the
Lanham Act. Trademark dilution is a separate theory of recovery that does not require
confusion, competition, or actual economic injury. See § 43(c).

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C.
Doctor’s Data claims that the false statements on Barrett’s websites are
defamatory per se (Count 5). Compl. at 29-30. “To prove defamation, a plaintiff must
show that the defendant made a false statement about him, that there was an
unprivileged publication to a third party with fault by the defendant, and that the
publication damaged plaintiff.” Vickers v. Abbott Labs., 719 N.E.2d 1101, 1107 (Ill.
App. Ct. 1999). In Illinois, statements “that impute a person lacks ability or otherwise
prejudices that person in her or his profession” are considered defamatory per se.
Solaia Tech., LLC v. Specialty Publ’g Co., 852 N.E.2d 825, 839 (Ill. 2006).
Barrett argues that the statements identified in the complaint are not actionable
because they are either substantially true, capable of an innocent construction, an
expression of an opinion, or time-barred by the one-year limitations period. Def.’s Br.
¶¶ 73, 75. But at this stage of the litigation, these defenses do not require dismissal
because the complaint’s allegations must be accepted as true (so the alleged
defamatory statements must be deemed, for now, to be false), nor do the alleged
statements constitute mere opinion or subject to an innocent construction. Thus, at
best, Barrett must await discovery and obtain or offer hard evidence before challenging
the defamation claim based on those defenses. And Doctor’s Data alleges that various
statements were published within one year of filing this action, and thus the
limitations period is satisfied, at least on the face of the complaint. See Hukic v. Aurora
Loan Servs., 588 F.3d 420, 435 (7th Cir. 2009) (Illinois defamation actions have a one-

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year statute of limitations, which begins to run on the date of publication of the
defamatory material). The motion to dismiss Count 5 is denied.
In the alternative to defamation per se, Doctor’s Data claims that Barrett’s
statements are defamatory per quod (Count 6). Loosely translated, per quod means
“with explanation.” Heerey v. Berke, 544 N.E.2d 1037, 1041 (Ill. App. Ct. 1989). “For
defamatory per quod statements, extrinsic facts are required to explain their
defamatory meaning. The innocent construction rule does not apply because the whole
point of a per quod defamation action is to establish the defamatory character of a
statement otherwise innocent on its face.” Quinn v. Jewel Food Stores, Inc., 658 N.E.2d
1225, 1232 (Ill. App. Ct. 1995). Also, in a defamation per quod action, damage to the
plaintiff's reputation is not presumed. Rather, the plaintiff must plead and prove
special damages to recover. Bryson v. News Am. Publ’ns, Inc., 672 N.E.2d 1207, 1229
(Ill. 1996).
Here, Doctor’s Data’s defamatory per quod claim must be dismissed for failure
to plead special damages. “It is well settled that, in order to prevail on a claim for
defamation per quod, a plaintiff must allege special damages with particularity.”
Becker v. Zellner, 684 N.E.2d 1378, 1387 (Ill. App. Ct. 1997). The damages alleged in
Doctor’s Data’s complaint are too general and, even if proven, would not entitle them
to relief for defamation per quod. See id. For instance, although Doctor’s Data alleges
that Barrett’s statements have and will cause damage to its business, Doctor’s Data
fails to allege that it has actually lost customers. See Downers Grove Volkswagen v.
Wigglesworth Imports, 546 N.E.2d 33, 38 (Ill. App. Ct. 1989) (alleging that a customer
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“intended” to no longer do business with plaintiff does not allege special damages). And
although Doctor’s Data contends that its reputation was harmed, there is no indication
in the complaint that this ever translated into actual damages of a pecuniary nature.
See Imperial Apparel v. Cosmo’s Designer Direct, 882 N.E.2d 1011, 1017-18 (Ill. 2008);
Tuite v. Corbitt, 866 N.E.2d 114, 121 (Ill. 2006) (in per quod action, damage to
plaintiff’s reputation is not presumed); Maag v. Ill. Coalition for Jobs, Growth &
Prosperity, 858 N.E.2d 967, 975-76 (Ill. App. Ct. 2006).
For these reasons, the Court denies Barrett’s motion to dismiss the claim for
defamation per se (Count 5), but grants the motion with respect to the alleged
defamatory per quod claim (Count 6).
D.
Doctor’s Data claims that the false information published on Barrett’s websites
interferes with Doctor’s Data’s existing contracts with its current clients, as well as
contracts with prospective clients. Compl. at 31-33. “Interference with contract and
interference with business relations (sometimes called prospective economic
advantage) are related torts.” Int’l Mktg., Ltd. v. Archer-Daniels-Midland Co., 192 F.3d
724, 731 (7th Cir. 1999).
First, a plaintiff can recover for interference with existing contractual rights by
proving “(1) the existence of a valid and enforceable contract between the plaintiff and
another; (2) the defendant’s awareness of this contractual relation; (3) the defendant’s
intentional and unjustified inducement of a breach of the contract; (4) a subsequent
breach by the other, caused by the defendant’s wrongful conduct; and (5) damages.”
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HPI Health Care Servs. v. Mt. Vernon Hosp., 545 N.E.2d 672, 676 (Ill. 1989). Barrett
argues that Doctor’s Data’s allegations fall short because, among other deficiencies, it
has not pointed to a “valid and enforceable contract.” Def.’s Br. ¶¶ 102-03. At this stage
of the litigation, however, Doctor’s Data need only allege factual allegations that allow
the Court to draw the reasonable inference that Barrett interfered with an existing
client contract. See McCauley v. City of Chicago, – F.3d –, 2011 WL 4975644, at *3 (7th
Cir. 2011). The allegations in Doctor’s Data’s complaint meet this standard. For
instance, Doctor’s Data alleges that Barrett posted information on his websites for the
purpose of inducing physicians who “[r]ely on Doctor’s Data and its services in their
medical practices and in the treatment of their patients” to halt referrals to Doctor’s
Data and employ other labs instead. Compl. at 5. Viewing this allegation in the light
most favorable to Doctor’s Data, it is plausible that Doctor’s Data has, or had, valid
agreements (whether oral or written) with physicians who use its testing services. The
motion to dismiss this claim is denied.
To state a claim for tortious interference with a prospective business
relationship under Illinois law, a plaintiff must allege: “(1) [its] reasonable expectation
of entering into a valid business relationship; (2) the defendant’s knowledge of the
plaintiff's expectancy; (3) purposeful interference by the defendant that prevents the
plaintiff’s legitimate expectancy from ripening into a valid business relationship; and
(4) damages to the plaintiff resulting from such interference.” Int’l Mktg., 192 F.3d at
731 (quoting Dowd & Dowd, Ltd. v. Gleason, 693 N.E.2d 358, 370 (Ill. 1998)).
Purposeful interference exists only if the defendant “acted with the aim of interfering”
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with the plaintiff’s expectancy. Atanus v. Am. Airlines, 932 N.E.2d 1044, 1048 (Ill. App.
Ct. 2010). Barrett argues that he cannot be held liable for disseminating truthful
information to others. Def.’s Br. ¶ 107. Once again, however, this factual argument
must be reserved for later in the litigation, when the allegations are no longer accepted
as true. For now, Doctor’s Data’s allegations in Count 7 are sufficient.
E.
Doctor’s Data alleges that Barrett’s publication of false and defamatory material
amounts to fraud (Count 8). Compl. at 33-34. This count must be pled with
particularity under Federal Rule of Civil Procedure 9(b). To state a claim for fraudulent
misrepresentation, a plaintiff must establish the following elements: “(1) a false
statement of material fact; (2) known or believed to be false by the person making it;
(3) an intent to induce the plaintiff to act; (4) action by the plaintiff in justifiable
reliance on the truth of the statement; and (5) damage to the plaintiff resulting from
such reliance.” Doe v. Dilling, 888 N.E.2d 24, 35-36 (Ill. 2008). Barrett argues that
although Doctor’s Data has identified allegedly false statements made by Barrett, it
fails to plead the remaining elements: intent to induce, justifiable reliance, and
damages. Def.’s Br. ¶¶ 110-15.
Doctor’s Data fails to allege that it was fraudulently induced by Barrett’s alleged
misrepresentations. Doctor’s Data claims that Barrett’s fraudulent statements were
made with the intention and expectation that readers of the websites would believe and
rely on them. Compl. at 33. Doctor’s Data cites one district court decision in support
of its argument that it may state a claim for fraud by alleging that a third-party’s
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reliance on fraudulent statements caused damage to Doctor’s Data. Pl.’s Resp. at 30
(citing Blair v. Supportkids, Inc., 222 F. Supp. 2d 1038, 1042-43 (N.D. Ill. 2002)).
However, in evaluating fraud claims, Illinois courts hold that, in order to state a claim,
the defendant’s false statement must have been made “for the purpose of inducing the
plaintiff to act.” Janowiak v. Tiesi, 932 N.E.2d 569, 579 (Ill. App. Ct. 2010) (emphasis
added).
The Court is not aware of – and Doctor’s Data has not offered – any Illinois case
law or other binding authority stating that a plaintiff can state a claim for fraudulent
misrepresentation, even though the plaintiff knew the statement was false and did not
rely on it. In fact, Illinois courts have found that the law requires quite the opposite in
the context of statutory fraud. Recently, the Illinois Supreme Court considered the
issue of “indirect deception” under the Illinois Consumer Fraud Act. De Bouse v. Bayer,
922 N.E.2d 309, 316-17 (Ill. 2009). The state Supreme Court did confirm that
“indirect” deception can establish an ICFA fraud claim, but the defendant’s intent must
still be to influence the plaintiff: “an alleged deception need not always be direct
between the defendant and the plaintiff. Instead, ‘it is enough that the statements by
the defendant be made with the intention that it reach the plaintiff and influence his
action and that it does reach him and that he does rely upon it, to his damage.’” Id.
(quoting Shannon v. Boise Cascade Corp., 805 N.E.2d 213, 218 (Ill. 2004)). Although
De Bouse and Shannon dealt with fraud claims under the ICFA, the Illinois Supreme
Court “cited with unqualified approval [the] requirement of actual deception in
common-law fraud cases as well.” Vill. of Bensenville v. City of Chicago, 906 N.E.2d
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556, 591 (Ill. App. Ct. 2009). Thus, in order to plead fraud in Illinois, plaintiffs must
allege that the claimed misrepresentations “flowed to plaintiffs and influenced their
actions.” Id. Other common law claims – such as tortious interference with contracts
– supply the remedies for conduct directed to third-parties which result in injury to the
plaintiff; the elements of fraud remain the same. In this case, Doctor’s Data alleges no
reliance of their own and their fraud claim must be dismissed. See id.; Premier Elec.
Constr. Co. v. Morse/Diesel, Inc., 628 N.E.2d 1090, (Ill. 1993) (“a common law fraud
claim requires actual reliance which means that the misrepresentations must reach
the plaintiff who must reasonably rely on them”). Accordingly, Count 8 is dismissed for
failure to state a claim.
F.
Count 9 alleges that Barrett conspired with others to commit fraud, defame
Doctor’s Data, and interfere with Doctor’s Data’s existing and future business
contracts. Compl. at 34-36. In Illinois, the elements of civil conspiracy are: “(1) a
combination of two or more persons, (2) for the purpose of accomplishing by some
concerted action either an unlawful purpose or a lawful purpose by unlawful means,
(3) in the furtherance of which one of the conspirators committed an overt tortious or
unlawful act.” Fritz v. Johnston, 807 N.E.2d 461, 470 (Ill. 2004).
Doctor’s Data fails to state a claim for common law fraud; therefore, its
conspiracy claim must be based on either defamation per se or tortious interference
with existing contracts or prospective business relations. See Thomas v. Fuerst, 803
N.E.2d 619, 625-26 (Ill. App. Ct. 2004) (conspiracy is not an independent tort). Doctor’s
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Data alleges that Barrett conspired with David J. Wilzig, an attorney “who is well
known for filing lawsuits promoting Barrett’s causes.” Compl. at 35. Doctor’s Data
claims that Barrett and Wilzig work together to intentionally harm Doctor’s Data’s
reputation and business by disseminating defamatory information on the internet and
inducing Doctor’s Data’s clients to file frivolous lawsuits against Doctor’s Data. Id.
These allegations are sufficient to raise a plausible claim for Doctor’s Data’s right to
relief for civil conspiracy to commit defamation and interfere with Doctor’s Data’s
existing and prospective business relations. Barrett’s motion to dismiss Count 9 is
denied.
G.
Finally, Doctor’s Data alleges that Barrett continues to conduct business on
behalf of Quackwatch, Inc. even though the business dissolved in April 2009. Compl.
at 36-38. Under Illinois law, a director of a corporation is personally liable for the
improper acts of that corporation after its dissolution. 805 ILCS 5/8.65(3) (“The
directors of a corporation that carries on its business after the filing by the Secretary
of State of articles of dissolution, otherwise than so far as may be necessary for the
winding up thereof, shall be jointly and severally liable to the creditors of such
corporation for all debts and liabilities of the corporation incurred in so carrying on its
business.”).
Here, Doctor’s Data claims that Quackwatch, Inc. never properly wound up its
business, and Barrett continues to act on its behalf, asserting corporate powers for

26

which he has no authority. Compl. at 37. The allegations in the complaint are sufficient
at this stage. Barrett’s motion to dismiss Count 10 is denied.
IV.
To summarize, the Court grants Defendants’ motion to dismiss [R. 38] Counts
3, 4, 6, and 8. Doctor’s Data’s claim for false advertising under Count 1 is dismissed as
well. The Court denies Defendants’ motion with respect to Counts 2, 5, 7, 9, and 10.
Again, the Lanham Act claim survives solely with respect to the trademark dilution
claim under § 43(c). Finally, Doctor’s Data’s separate claim for injunctive relief (Count
11) is dismissed. Injunctive relief is a remedy, not an independent cause of action.

ENTERED:

/s/ Edmond E. Chang
Honorable Edmond E. Chang
United States District Judge
DATE: November 22, 2011

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