Opinion ID: 1730180
Heading Depth: 1
Heading Rank: 5

Heading: The Unfair Competition Claim.

Text: In count V of its petition, CTI alleged the defendants engaged in unfair competition by palm[ing] off the products and services sold by them to the public as derivatives of Cemen Tech, which . . . caused a likelihood or probability of confusion as to the source of Defendants' products and services. The district court concluded that a genuine issue of material fact existed as to whether Three D, Longnecker, Enos, and the employee defendants engaged in unfair competition by palming off CTI's products and services as their own. However, the district court ruled that CTI could not pursue a claim of reverse palming off because it had not pled that theory in its petition. Palming off occurs when a defendant sells its product under the plaintiff's name. Walker Mfg., Inc. v. Hoffmann, Inc., 261 F.Supp.2d 1054, 1069 (N.D.Iowa 2003). On the other hand, reverse palming off occurs when a defendant sells the plaintiff's product under the defendant's name. Id. Both are legal theories a plaintiff may assert to prove unfair competition. Basic Chems., Inc., 251 N.W.2d at 231-32. The court granted Yelton's motion for summary judgment on the palming-off claim, concluding that CTI failed to present any evidence that Yelton was an owner or employee of Three D or that he participated in the engineering, design, or manufacture of the Three D machine. However, any shortcomings in the evidence regarding Yelton's status as an owner or employee do not preclude his liability for improper actions in the representations of the machine to potential buyers. Viewing the evidence in the light most favorable to CTI, we believe a jury could find that Yelton was involved in the marketing of Three D's machine and made representations about the relative qualities of the competing machines. We believe it was error for the trial court to sustain Yelton's summary-judgment motion on this issue. On appeal, CTI contends the district court erred in refusing to allow it to argue reverse palming off as a basis for its unfair-competition claim. Under our rules of civil procedure, a party need not conform to technical forms of pleading. Rather, [e]ach averment of a pleading shall be simple, concise, and direct. Iowa R. Civ. P. 1.402(2)(a). In Iowa, notice pleading is all that is required. Under notice pleading, a petition need only give notice of the incident giving rise to the claim and the general nature of the claim. Roush v. Mahaska State Bank, 605 N.W.2d 6, 10 (Iowa 2000). A plaintiff is not required to set forth specific legal theories for recovery. Id. at 9. We conclude the district court erred in refusing to allow CTI to pursue its claim of reverse palming off. CTI's claim in general was that the defendants wrongfully marketed their machine in unfair competition with CTI by fraudulently representing the pedigree of the machines. CTI was not required to identify a particular variety of fraud-palming off or reverse palming off. If CTI's evidence at trial supports both theories, presumably it would be allowed to amend its pleadings to conform to the proof. We reverse the district court's ruling on this issue insofar as it sustained Yelton's motion for summary judgment and the court's refusal to allow a claim of reverse palming off.