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American Society of Home Inspectors, Inc. v. International Association of Certified Home Inspectors.

No. 21-1087. D.Colo. Judge Tymkovich. Lanham Act False Advertising Claims—Summary Judgment—Requirement to Show Harm.

June 14, 2022

Plaintiff American Society of Home Inspectors (ASHI) and defendant International Association of Certified Home Inspectors (InterNACHI) are the only two national home inspector associations. The organizations offer similar benefits to home inspector members, such as online advertising, online education and resources, and free logo designs, and members pay dues to maintain active membership. ASHI has three membership classes: (1) associate, (2) inspector, and (3) certified inspector. ASHI requires no formal professional qualifications to join as an associate, but to attain inspector and certified inspector level status, members must meet certain requirements, including exam passage and conducting a minimum number of home inspections. All ASHI members who have held their membership for one year or more are also required to complete continuing education requirements to maintain good standing. ASHI advertises all of its members as home inspectors through its Find-an-Inspector website tool. The tool allows prospective home buyers to search for an inspector by location and to view the inspector’s qualifications, membership level, and contact information. InterNACHI’s membership benefits are similar to ASHI’s, but it does not promote novice home inspectors on its website.

ASHI sued InterNACHI and its founder for defamation, and that case was consolidated with a similar defamation suit brought by the Examination Board of Professional Home Inspectors. InterNACHI then filed a counterclaim under section 43(a) of the Lanham Act, alleging that ASHI’s tagline “Educated. Tested. Verified. Certified.” constituted false advertising and deceived potential home buyers because not every ASHI inspector is educated, tested, verified, or certified. Following cross-motions for summary judgment, the district court granted summary judgment to ASHI on the Lanham Act counterclaim.

On appeal, InterNACHI contended that the district court incorrectly concluded that no reasonable jury could find that it was harmed by ASHI’s tagline. To invoke the Lanham Act’s cause of action for false advertising, a plaintiff must plead and ultimately prove an injury to a commercial interest in sales or business reputation proximately caused by the defendant’s misrepresentations. Here, InterNACHI failed to demonstrate such injury  because (1) the consumer survey results it relied on shed no light on whether home inspectors were more likely to join ASHI due to the tagline, (2) the fact that ASHI’s associated membership doubled in size in the five years after it began using the tagline did not demonstrate that InterNACHI’s own membership levels were affected, and (3) the unsupported and conclusory assertion about harm in an affidavit from InterNACHI’s president was insufficient to establish injury.

InterNACHI also argued that the district court erred in refusing to apply it a presumption of harm, because it directly competes with ASHI for home inspector memberships. However, the fact that the two organizations are competitors is insufficient on its own to apply a presumption of harm. Additionally, home inspectors are free to join both associations, and a gain in ASHI’s membership due to alleged false advertising was not presumptively InterNACHI’s loss. Accordingly, a rational jury could not find that InterNACHI suffered or is likely to suffer a commercial or reputational injury because of ASHI’s tagline, and the district court did not err.

The grant of summary judgment in favor of ASHI was affirmed.

Official US Court of Appeals for the Tenth Circuit proceedings can be found at the US Court of Appeals for the Tenth Circuit website.

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