Optimal Health Science and its subsidiary dazzlesmile have filed a lawsuit against performance marketing company Epic Advertising for allegedly creating "mass marketplace and consumer confusion and deception" regarding tooth whitening products sold online.
The lawsuit, filed this week in federal court in the central district of Utah, alleges that Epic helped other entities to sell counterfeits of dazzlesmile's whiteners. The fake products were allegedly marketed under names like "Dazzle Smile" and "Dazzle Smile Pro."
Optimal also sued Google, Yahoo and Microsoft for allegedly allowing the dazzlesmile name to trigger search ads for knock-offs. In addition, Optimal sued several other entities, including the Cyprus-registered Farend Services, for their part in the alleged scheme.
The lawsuit comes one month after Optimal publicly complained about alleged trademark infringement by Epic and the search engines.
Epic declined to comment on the lawsuit, as did the search companies. But last month, Chief Marketing Officer Michael Sprouse denied Optimal's allegations and said that Epic had asked Optimal to cease and desist accusing Epic of trademark infringement. "We've worked very, very hard to build up our compliance team," Sprouse said at the time. He added that the company had invested millions of dollars in technology and staff in an attempt to "make sure that there's no fraud running through our network."
Optimal alleges in its complaint that it tapped Epic earlier this year to advertise dazzlesmile's tooth whiteners on a cost-per-action basis. Optimal allegedly agreed to pay Epic $43 for each customer who signed up for the products, according to the complaint.
Epic began running ads for Optimal's dazzlesmile in May, but stopped at the end of June, according to the complaint. Optimal alleges that many of the orders received through the campaign in May were generated by a single Canadian publisher who had a "smash and grab mentality" that resulted in high cancellation rates.
Shortly after Optimal stopped using Epic, Epic allegedly began running ads for products with names like "Dazzle Smile" on behalf of Farend Services. "Epic had seamlessly switched from advertising legitimate dazzlesmile products to advertising other teeth whitening products that openly, deceptively and without authorization used the dazzlesmile mark and name," the lawsuit alleges.
Two years ago, Epic agreed to pay $1 million to settle an investigation by the Florida Attorney General into the company's marketing practices. That settlement stemmed from an investigation by the Florida Attorney General's Cyber Fraud Task Force into whether Epic's online ads offering "free" ringtones tricked consumers into signing up for paid ringtone subscriptions. Epic didn't admit to any wrongdoing as part of the settlement.
Regardless of what happens with the allegations against Epic, the allegations against the search engines aren't likely to get very far in their current form, says Eric Goldman, director of the High Tech Law Institute at Santa Clara University. "They're specious, the way they're pled," Goldman says. He says that's because Optimal alleged that the search companies engaged in "vicarious" trademark infringement, but didn't also allege that the advertisers were acting as agents of the search companies.