Intellectual Property News and Reports

Plaintiff-Appellant Enigma Software Group USA LLC (“Enigma”), a computer security software provider, sued a competitor, Defendant-Appellee Malwarebytes, Inc. (“Malwarebytes”), for designating its products as “malicious,” “threats,” and “potentially unwanted programs” (“PUPs”). Enigma’s operative complaint alleged a false advertising claim under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), and tort claims under New York law.

Malwarebytes moved to dismiss under Federal Rule of Civil Procedure 12(b)(6). The district court granted the motion, concluding that all of Enigma’s claims were insufficient as a matter of law. It primarily based the dismissal on its conclusion that Malwarebytes’s designations of Enigma’s products were “non-actionable statements of opinion.” As we explain in more detail below, we disagree with that assessment. In the context of this case, we conclude that when a company in the computer security business describes a competitor’s software as “malicious” and a “threat” to a customer’s computer, that is more a statement of objective fact than a non-actionable opinion. It is potentially actionable under the Lanham Act provided Enigma plausibly alleges the other elements of a false advertising claim.

The district court also held that the tort claims under New York law failed because Malwarebytes was not properly subject to personal jurisdiction in New York. That meant Enigma’s claim for relief under New York General Business Law (“NYGBL”) § 349 failed because that statute did not apply to the alleged misconduct. We disagree and conclude that Malwarebytes is subject to personal jurisdiction in New York. As this action was initially filed in New York, the law of that state properly applies.

The common law claims for tortious interference with contractual relations and tortious interference with business relations were also dismissed by the district court. Those torts are recognized as actionable under California law, as they are under New York law, but the district court concluded that Enigma failed to allege essential elements for those claims under California law.

The contractual relations claim failed because Enigma did not identify a specific contractual obligation with which Malwarebytes interfered. The business relations claim was dismissed because that claim required an allegation of independently wrongful conduct, and that requirement was not satisfied following the dismissal of the Lanham Act and NYGBL § 349 claims. Because we hold that the Lanham Act and NYGBL § 349 claims should not have been dismissed, we conclude that the tortious interference with business relations claim should similarly not have been dismissed. We agree with the district court regarding dismissal of the claim for tortious interference with contractual relations, however, and affirm the dismissal of that claim.

In sum, we affirm in part, reverse in part, and remand for further proceedings.

Download ENIGMA SOFTWARE GROUP USA LLC V. MALWAREBYTES INC.