TocMail Lacked Standing to Sue Microsoft for False Ads, Says 11th Circuit

TocMail’s failure to back up with “actual evidence” its allegation that Microsoft misled the public into believing its Safe Links product offered protection from IP evasion cost TocMail billions in lost profits from its own IP evasion protection product (see 2212150030), said the 11th U.S. Circuit Appeals Court’s opinion Tuesday (docket 22-10223).

There’s no evidence that TocMail “suffered any injury at all,” and so it lacks standing to sue, said the opinion. “This means that we don’t have jurisdiction to entertain this appeal.” TocMail asked the 11th Circuit to set aside the district court’s granting of summary judgment in Microsoft’s favor.

The case started with allegations in TocMail’s complaint of millions of lost customers and billions in lost sales, said the opinion. “Perhaps this was enough to survive a motion to dismiss. At summary judgment, though, a plaintiff needs evidence of Article III standing.” But TocMail’s allegations “never found support in the record,” it said. Without standing, “the federal courts are powerless to hear a case,” it said. In the opinion, the 11th Circuit vacated the district court’s summary judgment and remanded the case to the district court “with instructions to dismiss this case without prejudice for lack of standing,” it said.

TocMail had more than a year to do discovery leading up to summary judgment, said the opinion. “All TocMail needed was some evidence that it suffered an injury: some testimony, some survey, some report,” it said. “But TocMail has none. Instead, TocMail has given us nothing but conclusory (and unsupported) claims of billions of dollars in damages and speculation about what consumers may or may not have done absent Microsoft’s advertising that those consumers may or may not have seen.”

TocMail “hasn’t done much to market” its IP evasion product, said the opinion. In bringing its product to market, “TocMail has issued two press releases, sent some emails to potential investors, and spent a few thousand dollars on digital advertising,” it said. “That’s essentially it. TocMail hasn’t made any sales.” TocMail admits more than 33,000 people have visited its website, but it hasn’t made a single sale and has zero revenue, it said. “There’s no evidence that TocMail has achieved any reputation in the marketplace.”

TocMail estimated there were about 100 million subscriptions to Microsoft’s Safe Links service, and it alleged Microsoft’s deception caused these 100 million users to withhold trade from TocMail, said the opinion. In its summary judgment motion, Microsoft challenged each element of TocMail’s false advertising claim, it said: “What matters for our purposes is that Microsoft argued that no reasonable jury could find that TocMail suffered any injury.”

TocMail, in response, “relied on the presumption of injury that some courts have held arises in a two-player market,” said the opinion. TocMail argued it and Microsoft are the only cybersecurity vendors that promote their cloud-based, time-of-click services as effective protection against IP evasion,” it said. Because only two companies purported to offer this protection, argued TocMail, “the district court could presume that at least some consumers would’ve turned to TocMail if not for Microsoft’s false advertising.”

But the district court granted summary judgment for Microsoft on another element of TocMail’s Lanham Act claim, said the opinion. It explained that to prove false advertising, a plaintiff must show the advertising is literally false or true but misleading, it said. “The district court concluded that TocMail failed under both,” it said. “Because no reasonable jury could find that Microsoft’s advertising was false or misleading, the district court entered summary judgment for Microsoft.”

To establish an injury in fact, a plaintiff must show an invasion of a legally protected interest that’s concrete and particularized; and actual or imminent, not conjectural or hypothetical, said the opinion. TocMail “failed to meet this standard,” it said. “That’s because TocMail has offered no evidence from which a reasonable jury could find that it suffered any injury.”

TocMail’s theory is that Microsoft’s false advertising campaign, in which Microsoft allegedly promised protection from IP evasion, caused consumers to withhold trade from TocMail, it said. “But TocMail didn’t offer testimony from any witness saying that he or she would have purchased TocMail’s product if not for Microsoft’s advertising,” it said. TocMail also failed to offer any expert testimony “calculating TocMail’s lost sales from consumers who went with Microsoft,” it said. It didn’t produce a survey showing consumers had any interest in buying TocMail’s product, it said: “There’s no evidence, in other words, that TocMail would have ever sold anything to any consumer -- even putting Microsoft’s advertising to the side.”

The evidence, in fact, “suggests that TocMail wasn’t harmed at all,” said the opinion. “For starters, TocMail sued Microsoft the day after it got its patent,” it said. “There’s more evidence that TocMail hasn’t lost out on any sales because of Microsoft’s advertising,” it said. “All we’re really left with, then, is speculation,” it said. “We’ve combed the record for any evidence of an injury in fact and have come up empty.”