context matters: “mineral-based” sunscreen with chemical-based active ingredients is plausibly deceptive

Prescott v. Bayer Healthcare LLC, 2020 WL 4430958, No.
20-cv-00102-NC (N.D. Cal. Jun. 31, 2020) (magistrate)

Plaintiffs alleged that defendants deceived consumers by
labeling their sunscreens as “mineral-based” when the sunscreens contain active
chemical ingredients. As the court explains,  

“Mineral-based” sunscreens are
distinguished from “chemical-based” sunscreens through the compounds used to
absorb or deflect ultraviolet (“UV”) radiation. Some compounds commonly used as
active ingredients in sunscreens, such as zinc oxide and titanium dioxide, are
considered inorganic minerals. Other common compounds commonly used as active
ingredients in sunscreens, such as octisalate and octocrylene, are considered
chemicals. Each of the four challenged products contain both mineral active
ingredients and chemical active ingredients.

Plaintiffs alleged that they were concerned about potential
adverse health effects of chemical active ingredients and thus sought out
“mineral-based” sunscreens. They brought the usual California claims.

The court rejected Bayer’s express FDCA preemption argument.
There are various FDA requirements for OTC sunscreens as well as a general prohibition
on “claims that would be false and/or misleading on sunscreen products.” But
the FDA neither specifically mandates nor prohibits the use of “mineral-based”
claims, and doesn’t preempt state law that allows consumers to sue for
violations of federal standards. If the suit ultimately requires the removal of
“mineral-based” from the labels, there’d be no conflict.

Primary jurisdiction arguments also failed. Turns out, there
was a directive to the FDA in the Coronavirus Aid, Relief, and Economic Security
Act (CARES Act), and the FDA is also supposedly considering further regulations
regarding ingredient disclosures. Nonetheless: “false advertising suits like
this one are squarely within the conventional experiences of judges and courts.”
And “this lawsuit does not involve technical or policy considerations within
the FDA’s field of expertise,” such as whether the active ingredients were
harmful or safe. Though the details of chemical active ingredients are part of
the suit, its crux is whether the label is misleading.  The parties even appeared to agree which
active ingredients are “minerals” or “chemicals.” (Citing POM Wonderful LLC v.
Coca-Cola Co., 573 U.S. 102 (2014) (noting that the FDA does not have the
expertise to evaluate nor authority to enforce false advertising claims).)

The FDA’s consideration of whether to introduce a labeling
requirement that all active ingredients be disclosed on a sunscreen product’s
principal display panel didn’t change anything. If plaintiffs were right about
the average consumer’s understanding of “mineral-based,” defendants’ use of the
phrase would be misleading or inaccurate regardless whether all active
ingredients were disclosed on the products’ principal display panel. Also, that
regulation was proposed in February 26, 2019, and the public comment period
concluded on May 28, 2019; its proposed effective date was originally November
26, 2019. Under the Ninth Circuit’s guidance that “[t]he deciding factor should
be efficiency,” “it makes little sense to halt this lawsuit because of a
proposed rule that was under consideration over a year ago.” So too for the
CARES Act, for which the FDA is required to propose an order by September 2021.
“Dismissing or staying this case for over a year is not efficient. This is
particularly true here, when the Act’s mandate is fairly vague and does not
require the FDA to regulate the specific issue in this case”—it just required
the FDA to “amend and revise the final administrative order concerning
nonprescription sunscreen.”

Plaintiffs also had standing for products they hadn’t
purchased that allegedly were misleadingly labeled in the same way. And, under
the Ninth Circuit standard, they had standing to sue for injunctive relief.
Defendants argued that from now on they could just look at the back labels. “But
it is not clear why the burden to avoid future misunderstanding lies with
Plaintiffs and not Defendants when it is Defendants’ actions that are allegedly
unlawful.” Also, even if they know now, “it is plausible that they would forget
to do so or instead choose to rely on Defendants’ principal representations.” And
as the Ninth Circuit has said, “the threat of future harm may be the consumer’s
plausible allegations that she will be unable to rely on the product’s
advertising or labeling in the future….” And even reviewing the label might
not help, since plaintiffs might not know which active ingredients are
“minerals” and which are “chemicals.” “[A]bsent an encyclopedic knowledge of
sunscreen active ingredients, Plaintiffs may not be able to truly know whether
a sunscreen is truly ‘mineral-based.’”

Misleadingness: Defendants argued that “mineral-based”
simply means that mineral active ingredients play the “supporting or carrying”
role or is “the fundamental part of something.” Plaintiffs argued that
reasonable consumers would interpret the phrase to mean that the product
contains no chemical active ingredients. Plaintiffs alleged that “nearly all
other sunscreens on the market (other than Defendants’) that are advertised as
mineral or mineral-based contain only mineral active ingredients.” On a motion
to dismiss, that was enough to create a question of fact.

The dictionary definition of “base” wasn’t sufficient to
protect defendants. “Base” can also mean “a main ingredient,” but in some of
the challenged products, chemical active ingredients made up a larger
percentage of the ingredients than mineral active ingredients. As the court perceptively
noted—and recognizing the reality missed by the “white”/chocolate cases—context
matters. “For example, a ‘plant-based meal’ is generally understood to contain
only plants and no meat.”

Defendants argued
that “mineral-based” was nevertheless not misleading because in each of their
products, the largest single active ingredient by percentage is a mineral
active ingredient. “But the challenged statement is ‘mineral-based’ not, for
example, ‘zinc oxide-based.’” A reasonable consumer could receive the message
that mineral active ingredients in the aggregate were the “main ingredients,” but
in the challenged products, mineral active ingredients made up a roughly equal
proportion of the active ingredients as chemical active ingredients (e.g, mineral
active ingredients constituted 9.7% of all ingredients and chemical active
ingredients constituted 12% of all ingredients in defendants’ Sports Lotion). And
the ingredients list didn’t fix the problem, under Ninth Circuit law, where the
list arguably contradicted rather than explaining the label. 

from Blogger https://ift.tt/2DGGSEM

Posted in Uncategorized | Tagged , , , , | Leave a comment

No contributory liability for athlete union’s endorsement of supplement

DNA Sports Performance Lab, Inc. v. Major League Baseball, 2020
WL 4430793, No. C 20-00546 WHA (N.D. Cal. Aug. 1, 2020) 

Courts seem to perceive people affiliated with TM/(c) infringers as more blameworthy than people affiliated with false advertisers. One could argue that this reflects underlying reality, but it remains the case that, for example, vicarious liability is broader in copyright than in many other situations. Similarly, contributory liability claims against retailers for false advertising fail when the retailers would be treated as direct infringers of a similar TM claim. Anyway, here the court finds that an endorsement isn’t sufficient participation in allegedly false advertising about the underlying supplement, without more involvement.

Plaintiffs sell health supplements “extracted from the shed
tissue of elk antlers,” which contain a “naturally occurring, bio-identical
form of IGF-1,” a performance-enhancing substance. They sued MLB and the MLB
Players Association, which banned both natural and synthetic IGF-1 under their
Joint Drug Prevention and Treatment Program, for false advertising and unfair
competition. The court dismissed the claims and heavily suggested that
sanctions would be imposed if they tried and failed to successfully amend the
complaint. 

There is a lot of litigation before this; the court gives a
limited history: In February 2014, plaintiffs sued MLB and several of its
employees in Florida state court, challenging its investigation into “the
illegal sale of performance-enhancing drugs to players” as unfair and
discriminatory. This case was dismissed for failure to prosecute. A later suit
against the Office of the Commissioner of Baseball and several league employees
alleging tortious interference with prospective economic advantage, based on
the investigation, was voluntarily dismissed. Then, DNA Sports sued MLB, the
Office of the Commissioner of Baseball, and several league employees for
hacking plaintiffs’ social media accounts, tortious interference with economic
advantage, and defamation of plaintiff/DNA Sports owner Nix, again in the
course of the investigation. Defendants removed to federal district court based
on the hacking claim, which plaintiffs voluntarily dismissed. The New York
state court then dismissed the complaint as res judicata, barred by statute of
limitations, and for failure to state a claim. The state court then denied DNA
Sports’ motion to reargue the dismissal as frivolous and imposed sanctions. 

DNA Sports also sued ESPN, the Associated Press, and USA
Today in federal court in Florida, alleging that they defamed plaintiffs by
publishing or republishing a statement from the league that DNA Sports’ July
2016 tortious interference lawsuit “admits Nix and his company used
bioidentical insulin-like growth factor (IGF-1), which is derived from elk
antlers and is on baseball’s list of banned substances.” The defamation theory
was that the statement didn’t differentiate between natural and synthetic
IGF-1, giving readers the impression that DNA Sports had engaged in illegal or
legal-but-banned drug sales. The court held that the statement at issue was
substantially correct and the omission did not render the report untrue, thus
it was not defamatory; the decision was affirmed on appeal by the Eleventh
Circuit. 

Apparently related to that last suit, in July 2018, DNA
Sports and its new counsel contacted the players union seeking a sworn
statement corroborating an alleged July 2016 phone call between DNA Sports’
counsel and the union’s in-house counsel, who had allegedly informed plaintiffs
that deer antler “was not and has never been banned in baseball and that no
animal products are banned.” But the union reaffirmed the position eventually accepted
by the Eleventh Circuit: the Joint Drug Prevention and Treatment Program banned
both natural and other sources of IGF-1 as a performance enhancing substance. 

After the Eleventh Circuit ruled, DNA Sports and their lawyer
contacted the union requesting their “factual position [on] the presence of
IGF-1” in a union-licensed product, Klean Athlete. The union refused to provide
their “factual position with respect to the presence of IGF-1 in the accused
products.” The suit hear concerns the union’s former licensing agreement with
Klean Athlete and the league’s licensing agreement with Gatorade “Recover” whey
protein bars, Muscle Milk protein shakes, and Eyepromise nutritional
supplements. 

Lanham Act claim: Plaintiffs alleged that the union
misrepresented Klean Athlete as free from banned substances by endorsing the
product. By allowing Klean Athlete to use its logo and announce a partnership
in Klean Athlete’s promotional press release, the union allegedly necessarily implied
that the product was free of any substances banned by the league, which was
false because Klean Athlete allegedly contained animal protein and, thus,
IGF-1. 

First, plaintiffs didn’t pick the right defendant: “typically
those who made the allegedly false or misleading statement at issue.” While
contributory liability is theoretically possible, it requires that (1) a third
party engaged in false advertising that injured the plaintiff; and (2) the
named defendant contributed to this false advertising by knowingly inducing or
causing the conduct or materially participating in it. But the complaint didn’t
allege any facts about the union’s specific licensing agreement with Klean
Athlete; “the union neither made the accused statement nor conducted Klean
Athlete’s product testing.” There were no facts pled about the union’s
knowledge or material participation in the falsity. 

“Second, the complaint alleges no economic or reputational
harm.” Though lost sales and damage to business reputation would count, “these
typical injuries still require sufficiently detailed allegations.” Allegations
of “lost revenue and market share, reduced asset value[,] increased advertising
costs, [and] damage to its business, reputation, and goodwill” have been deemed
conclusory without a relevant timeframe or facts to defendant’s causation. “So
too here.” Although it was plausible that Klean Athlete’s press release
constituted commercial advertising, the complaint didn’t explain how that press
release caused sales diversion or lost contracts. 

Third, the April 2016 press release was outside California’s
three-year statute of limitations for fraud, which the Ninth Circuit borrows
for §43(a)(1)(B) claims. 

State false advertising under the FAL, California Business
and Professions Code § 17500: likewise failed to identify the union’s
participation in the alleged false advertising. Under state law, liability
requires a defendant’s personal “participation in the unlawful practices” and
“unbridled control” over the practices violating § 17500; vicarious liability
isn’t enough. The Ninth Circuit dismissed a false advertising claim against a
defendant who allowed violating merchants to use the defendant’s logo because
“there is no duty to investigate the truth of statements made by others.”
Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788 (9th Cir. 2007). Plaintiffs
didn’t allege any facts relating to how the union knew or should have known
Klean Athlete products contained banned substances (if it did), or how the
union exerted control over Klean Athlete’s “certified for sport” determination. 

Unfair competition: same, plus there were no available
remedies. Unfair competition claims under § 17200 are limited to restitution
and injunctive relief, which requires ongoing injury. DNA Sports never
conducted business with the union, so there was no restitution possible. And injunctive
relief was unvailable because the union’s licensing agreement with Klean
Athlete was over and would likely not be repeated. 

Before ruling on the union’s motion for sanctions, the court
offered plaintiffs an opportunity to amend, though “their better course might
be to walk away.” If they did, they needed to address not only the problems
identified by the opinion, but the union’s other criticisms.

from Blogger https://ift.tt/3gDBb96

Posted in Uncategorized | Tagged , | Leave a comment

selling w/in another distributor’s exclusive territory isn’t plausibly false advertising of authorization

Northern Bottling Co. v. Henry’s Foods, Inc., No.
1:19-cv-021, 2020 WL 4208526 (D.N.D. Jul. 22, 2020) 

Northern is a PepsiCo bottler/distributor; it has some Exclusive
Bottling Appointments that appoint Northern as PepsiCo’s “exclusive bottler, to
bottle and distribute” a specific PepsiCo soft drink, such as Pepsi-Cola or
Mountain Dew, in a designated geographic territory. “PepsiCo produces the
concentrate—the flavor base for the beverages—and sells it to independent
bottlers. The independent bottlers, such as Northern, manufacture, sell, and
deliver the finished soft drinks to retailers in their geographic territory,
who, in turn, sell the products directly to the consuming public. The EBAs
provide that PepsiCo is the owner of the beverage trademarks and Northern does
not have ‘any right or interest’ in the trademarks.” 

Henry’s sells food and beverages, including Pepsi products,
to retail sales outlets, including gas and convenience stores. It is allegedly
a “third-party transshipper” of PepsiCo products, to wit, someone who sells in
a bottler’s exclusive territory other than the licensed bottler itself. Henry’s
allegedly transshipped PepsiCo products to six gas stations or convenience
stores located within the geographic territory established in the
Northern-PepsiCo EBAs. 

Henry’s allegedly implicitly (but never explicitly) misrepresented
that: Henry’s was licensed or authorized to manufacture, sell, and distribute
PepsiCo products; Henry’s’ sales were conducted in association with, or with
the approval of, PepsiCo and/or Northern; Henry’s’ products were of the same
quality or freshness as Northern’s; Henry’s’ “pricing was legitimate”; and
Henry’s’ “poor customer service” was caused or condoned by Northern. It
allegedly made these implicit representations by: “calling on [Northern’s]
exclusive customer base,” selling PepsiCo brand soft drinks to Northern’s
customers, “using and handling” PepsiCo trademarks, and listing PepsiCo soft
drinks for sale in promotional brochures. 

Northern sued for tortious interference with business
expectancy, violation of the Lanham Act, and declaratory relief. The court
dismissed the complaint. 

Tortious interference: requires “an independently tortious
or otherwise unlawful act of interference by the interferer.” Northern alleged:
(1) deceit, (2) false advertising, and (3) the consumer sales fraud prevention
statute. Rule 9(b) applied.

Under North Dakota law, deceit means that “[o]ne who
willfully deceives another with intent to induce that person to alter that
person’s position to that person’s injury or risk is liable for any damage
which that person thereby suffers.” Northern didn’t plead fraud with the
requisite specificity, failing to identify by name a single gas station or
convenience store that Henry’s allegedly deceived or any dates. It also didn’t
allege any express representation. Matrix Essentials, Inc. v. Emporium Drug
Mart, Inc., 988 F.2d 587 (5th Cir. 1993), held that a seller’s offering to sell
products and stocking shelves with those products did not amount to a misleading
representation that the seller was “authorized” to sell those products. Scott
Fetzer Co. v. House of Vacuums Inc., 381 F.3d 477 (5th Cir. 2004), held that a
mere truthful reference to selling a marked product didn’t suggest affiliation. 

Here, it wasn’t enough to allege that Henry’s misrepresented
itself as authorized by calling on Northern’s “exclusive customer base.” Thus,
even if there had been more detail, the court was skeptical that Henry’s’
alleged actions—“offering to sell, displaying the product for sale in a
brochure, and selling PepsiCo soft drinks—absent more, amount to a misleading representation.”  Northern didn’t plead any other potential deceit—misrepresentations
that Henry’s was authorized and that its pricing was “legitimate”—with the requisite
specificity. Northern didn’t explain what “legitimate” pricing even was. Alleged
misrepresentations that Henry’s products had the “high-caliber characteristics,
quality controls, and freshness associated with Northern’s products” were also
not specifically identified. 

False advertising/consumer fraud under state law: Same
problems. 

Lanham Act: Statutory standing was an issue: did Northern
have any interest in asserting harm when PepsiCo owns the relevant trademarks?
Under Lexmark, the answer was yes: Northern alleged “an injury to a
commercial interest in reputation or sales” and proximate causation in that
customers switched. 

The court also considered in detail the split over applying
Rule 9(b) to the Lanham Act claim, since some courts hold that proof of fraud
or mistake isn’t required for §43(a)(1)(B) false advertising liability. But this
court disagreed, based on other Eighth Circuit cases, the language of the
statute, and the allegations here. Given that holding, the same flaws doomed
the federal claim.

from Blogger https://ift.tt/3kaLJin

Posted in Uncategorized | Tagged , | Leave a comment

IPSC, Trademark

IPSC – Trademark Law I

Moderator: Mark McKenna 

Trademark Depletion in a Global, Multilingual Economy: Evidence
from the European Union (abstract)

Jeanne Fromer and Barton Beebe, NYU School of Law 

Notes on the EU system: runs in parallel with national
systems. Must be protectable in all EU nations (in theory); if generic in one nation,
unregistrable via EU. Also, EU does not review applications for relative
grounds for refusal (confusion). They generally remove diacritical marks for purposes
of generating similarity reports. Translational similarity matters: same
meaning in different language could bar registration. Not use-based as US is. 5
year grace period. Germany is biggest user of EU system, followed by US. Over
60% of applications contain English words—it’s the dominant language
commercially. 

Datasets: EUIPO applications, registrations; gathered
opposition data. Compared to corpora in English, French, German, Italian, and
Spanish, and translated words into those languages as well as looking for
positive/negative meanings. 

Results: nearly all good terms carrying positive affect are
already registered. 1000 most frequently used words are 65% registered as
single-word marks, covering 69.4% of all word usage, and of the most 20,000
frequently used words, 77.3% of all word usage is a word registered as a
single-word marks. Of the unclaimed marks, they’re not great: worst, problem,
than, thank, their, said, problems, worse, worry, etc. Some classes like apparel
are very crowded; if you look at similarity (small edit distance) then it gets
close to 90% coverage. Character, word, and number of word lengths are
increasing in applications, suggesting increasing resort to longer/less “shorthandy”
marks that may function less well as marks. Trends got really bad about 10
years ago. In other languages: About 95% of French usage is currently claimed.
Very high proportions of multi-language words are registered: of the top 1000
English words, 55 are highly intelligible in the other languages, and 54 are
registered (not REPUBLICAN). 

Opposition rates are declining, not increasing! 2017: 1 in
10. But those who bother to oppose increasingly win. 70% based on confusing similarity
resulted in a refusal either in whole or in part in 2017. 

EUIPO system is very different from US: allowing enormous TM
crowding, where lots of similar marks are registered at the same time.
Registration rate initially declines w/# of entities opposing the application.
Where no opposition, 92% registration. When # of opposers increases to 8 or
more, though, the rate increases again: the EUIPO just says: everyone gets a
registration; the field is already so crowded that there’s no problem. 

Compare to US: “all or nothing” rule may make it harder to
find marks. Is it a good system to have third parties doing the opposing/have
no examination on relative grounds? Businesses are arguably in the best
position to know what is detrimental. But also businesses might need a sense of
what’s potentially confusing, and EUIPO may not give it. Search reports of
EUIPO to ping third party businesses are really thin. CREMOLAIT triggered
nothing—they appear to identically match whole words in the registration. 

Jeremy Sheff: Disclaimer practice? Does that happen at all
where common word is disclaimed?  

Fromer: in the US, disclaimers are everything: if you
disclaim, you get your registration. Not clear what’s going on in EUIPO.

Irene Calboli: Applicants (except for largest) are usually
just looking at 2-3 countries. With enforcement still country by country, similar
rights in other nations aren’t much of a problem. Difficult to factor that in
looking just at EUIPO. Licensing/coexistence agreements may also be in place. 

Lisa Ramsey: if European companies aren’t worrying about
crowding, should we? Maybe rights should just be very narrow. Companies may
think that they can distinguish themselves with packaging etc. 

Beebe: tests our basic assumptions about TM law. Crowding may
not cause much consumer confusion; we will probably argue that European example
shows that narrow rights are generally fine; businesses aren’t very worried
about that when they have to express their preferences by paying. 

Fromer: want to be sure we’re covering large businesses v.
small businesses with less sophistication that may not know what’s actually
available. Multinationals in the US seem worried about TM depletion as a
problem, but not in the EU; legal differences or differences on the ground may
matter. 

Endorsing After Death, Andrew Gilden, Willamette University
College of Law

Exclusive rights to control post-death endorsements given to
families/heirs. While “it’s hard to argue wit h a straight face that a dead
person is endorsing a product,” we see Elvis face coverings, Marilyn Monroe
perfume, Muhammad Ali quotes selling Gatorade. Ordinarily an individual
endorsement involves voluntary association/approval; post-death endorsements
don’t fit that model, but TM increasingly supports the idea of posthumous
endorsement. Project identifies this trend and identifies serious problems.
Proposes narrower framework to better represent interests of decedents, fans,
and survivors. 

False endorsement claims: estate/heirs claim that something
will cause confusion about whether the decedent or the estate endorsed the product.
Registered “selfmarks.” Lanham Act 2(a): false association: ability to block
other registrations, gives estate leg up in establishing priority. Verified
accounts on Instagram: can get a check mark as authentic presence of a global brand
represented by a public figure. Allows estates to post and speak as if they are
the decedent. Project brackets the right of publicity, which raises different
concerns. 

First major concern: continuity problems. Fails to meaningfully
distinguish b/t decedent and successor in interest: courts require plaintiffs
to demonstrate confusion over endorsement from decedent or estate. But estate
can be practically anyone: estate of Marilyn Monroe is an entity Authentic
Brands Group that bought the rights to the Monroe IP from the wife of her acting
coach. Endorsement by Monroe means something v. different from endorsement by ABG
but courts have refused to distinguish those things. 

Second: autonomy/agency of the deceased. Endorsement signals
some desired connection b/t endorser and endorsed. Conscripting the deceased
into activities they may not have supported. Marilyn Monroe, Elvis, and
Muhammad Ali all “participated” in #blackoutuesday, but did that reflect their
views? 

Third: discursive problems: controlling cultural meanings of
the celebrity. Official account frames her as “Paris Hilton” of her day, downplaying
other issues around addiction and femininity; so too w/Whitney Houston.
Pernicious b/c posthumous endorsement gives “official voice” to the estate. 

Might still want to recognize some rights b/c they are
material to consumers. Purchasing endorsed products can be a way of mourning/processing
a celebrity’s death; may also want to support surviving family members/causes
the celebrity cared about. Posthumous endorsements can also push back against
exploitation—merchandise sold w/names & images of George Floyd and other
victims of police violence. Misrepresentations of official endorsement can be
bad. This can also happen politically—Reagan Foundation sent a C&D to the Trump
campaign for selling Reagan/Trump merchandise. 

What to do? Proposal: recognize endorsement rights not just
on the chain of title (as courts currently do) but require privity and power: a
meaningful connection b/t rightsholder & decedent. Should be empowered to
make legal decisions on behalf of the decedent—personal representative, trustee—w/corresponding
duty to their interests. Consistent with HIPAA, Stored Communications Act, attorney-client privilege. 

Finally, where there’s no entity w/legal authority to act on
behalf of the decedent but a risk of deception, false advertising law can pick
up the slack. 

Ramsey: Monroe used a different perfume than the one
proposed to endorse—should that matter? Literature on compelled speech. 

RT: different perfume example suggests that privity/power is
quite complex: (1) naked licensing/assignment in gross issue: what would it
even mean for “Monroe” to endorse a perfume; (2) conflating materiality of
decedent’s endorsement while alive w/estate’s endorsement—courts make it way
too easy by allowing conflation; (3) compelled speech arguments in this context
make me nervous b/c they are usually deployed against people who have speech interests of their own. 

A: family endorsements can sometimes be material but in a
different way—need analysis. [And of course “family” is not the same thing as “estate.”]
Would like law to disaggregate these situations. 

Mark McKenna: really stuck on the label “endorsement” for a
dead person. Consumers can’t possibly think that’s happened if they know the
person is dead. Many of these examples are more about association or dilution
than confusion—this person stood for X and is being used for Y. Where the heir
is standing in for the person, there’s an extreme level of circularity—only if
heirs have the right to license do consumers think it’s the heirs doing the
endorsing. 

Jeremy Sheff: unpleasant flashbacks to NY ROP debate. Once
you start dealing w/postmortem rights, you get into complex issues of trust
& estates & tax law, which your privity requirement brings to the
front. The idea of this being an asset passed from one generation to the next
is something those bodies of law have things to say about—taxing on its
distribution depends on its worth, which depends on its use before death, which
might be different from use after death. Or you could do an objective valuation
which would be potentially inconsistent w/decedent’s own desires and/or desires
of family. How will you engage w/ those bodies of law—Eva Subotnik has been
doing related work in © context. 

A: definitely a goal is to bring TM into dialogue with
T&E. Even weirder than ROP and © b/c it’s unclear what needs to be assigned
to bring endorsement rights. Nebraska courts say ROP is inalienable so there’s
no transferable endorsement right; NY courts said that even though there was no
post-ROP there’s still an endorsement right. 

Calboli: compare theories on moral rights postmortem. 

Trademarking “Covid,” “Covid-19” and “Coronavirus”: An
Empirical Review and Considerations of a Larger Pandemic, Irene Calboli, Texas
A&M University School of Law

Also looking at “social distancing” and “six feet apart”—using
these as a measure/example of certain issues in the system. More than 600
applications for these in less than 3 months. Looking at a sample: Medical-related
(124), unrelated existing businesses like baby clothes (64), merchandising
products/promotional goods (135), slurs (also merchandising, 7).  A considerable number disclaim “COVID” etc.
and are combination or design marks. Some could in theory be inherently
distinctive given the unrelatedness of the goods. Although she’s ok with the
merchandising right for established businesses like Mercedes cars, here there
are a bunch of clear examples of failure to function. 

Is there a problem? What are the costs for the PTO given that
vast majority will be rejected? Time invested by examiners, including possible office
actions/appeals. Costs minus fees generated: hard to determine. 

Cost to possible legitimate business from being cut off from
using descriptive terms? Costs from possible litigation—C&Ds?  There’s a backlog in the system—too many
applications? A lot of waste to sift through. 

RT: Carol Rose talks about how a property system is in some
ways a commons of its own; overuse can impose unexpected costs/externalize
harms. Here, one possible immediate result is elevating failure to function as
a free floating reason to reject registrations (or even recognition as marks).
As with slurs, even when the result might be inherently distinctive according to
our usual tools for identifying what is functioning as a mark, the non TM meaning
overwhelms the usual signals of what constitutes a mark such as placement on
the product. (This breakdown in old standards for what counts as a TM is also
happening on the other end of the Abercrombie spectrum with Booking.com telling
us that consumer perception is all.) I don’t think that Corona Legal Services
is going to work as a mark! The corrosive effect of overclaiming on our usual
tools for identifying trademark function is itself a problem, and it also
raises the question of what comes next to identify TM function. Crystals &
Mud in Property Law offers some ways of thinking about how property systems
might react to overuse. 

Ramsey: do other national systems have a similar problem?

Beebe: costs on the system are a real question. PTO
examiners might like these b/c they’re so easy to reject—helps their numbers!
Saw it as a revenue making thing, but there aren’t that many of these; still,
on balance assumed that PTO was making money off of these. Finally, people can
waste their money if they want to apply for registrations that won’t succeed—not
sure what we could do to stem the flow of these (given right to petition!). 

Alexandra Roberts: consider whether these are deceptive
marks too—grabbing attention at a desperate time is not good. Consumer health
& safety are also relevant. 

Headaches and Handbags: A Fragility Theory of Trademark
Functionality, Matthew Sipe, University of Baltimore School of Law 

Placebo effect is powerful & often mediated by TM.
Subjects who took marked Nurofen experienced much more relief than unmarked;
subjects who took Nurofen-branded sugar pills even did better than people who
took unbranded actual Nurofen. Pink is associated with soothing/care in Western
cultures, so pink Pepto-Bismol will work better than red or green. Traffix
says that a product feature is functional if it’s essential to use/purpose or if
it effects the cost/quality. If so, no need to proceed further. TM names of
drugs clearly affect quality, as do the color of drugs. We do have cases
finding color functional on these grounds, but not the names. 

Traffix language can’t mean what it says, b/c any TM
affects costs by reducing search costs and any TM affects quality by increasing
the incentives to preserve quality. So lower courts have added de jure/de
facto, aesthetic/utilitarian distinctions. But TM has fumbled towards a
consensus on functionality. 

Three themes: (1) preference for bright line heuristics; (2)
intentional focus on welfare maximization; (3) conceptual unity b/t marks and
dress. 

But Nike golf clubs improve consumer performance versus
unbranded or irrelevant branded clubs; 3M branded earplugs improve performance
on a math test in a noisy space; Red Bull improves performance on cognitive
tests v. Sprite. 

There is also social functionality: conspicuous consumption,
conspicuous giving. Organizational functionality: a certification mark allows
product manufacturers to avoid costs in warranties, demos, etc. Credibly
certifying place of origin allows producers to compel buy in for advertising,
research, etc. that would be dissipated by free riding.  And design functionality: granting protection
to one shape allows producer to introduce variation w/o losing recognizability
and brand prominence: Zippo lighter shape and Funko pop general configuration.
Also allows them to avoid tags or other marks. Interlocking functionality:
makes other products from the same producers higher quality b/c of match/fit: Lego
shapes, or Tiffany blue earrings as only match for Tiffany necklace, or John
Deere green accessories being only match for John Deere tractor. 

All these functions are fragile: the use/purpose would be
destroyed through unchecked copying. Only nonfragile functionality truly
prevents TM eligibility in practice. Pepto pink still soothes even if other
producers use pink. But the word mark Pepto-Bismol only works if exclusive and would
eventually dissipate if freely used. His proposal: any use, purpose or effect
dependent on TM exclusivity itself doesn’t count. But any time there’s a mix of
exclusivity-dependent and non-dependent functionality, secondary meaning
(fragile functionality) won’t save the matter from ineligibility.  Allows us to dispense with aesthetic
functionality b/c test no longer needs it. 

Application: overlapping TM & © protection. Fragility model:
overlapping protection shouldn’t be allowed in vast majority of cases. Traffix
tells us patented subject matter is only nonfunctional when it’s an arbitrary
embellishment. If it’s being used for its innovation, that affects cost/quality.
So too w/©. Unless © subject matter is being used for reasons unrelated to
creative expression, will affect product in impermissible ways. Of course a
Batman backpack is being used for its creativity. Dastar thus follows. 

By contrast, dilution and post-sale confusion: to prevent
unwinding of signal, have to protect exclusivity. 

Protecting fragility is welfare-enhancing. Benefits that can
be shared are, benefits that can’t be shared aren’t. Leaves space/incentives
for branding. But there are distributionally regressive outcomes: healthcare,
athletic/academic performance. Inferior products to those who can’t afford
them. Potentially anticompetitive. 

Barton Beebe: Metaphysically convoluted. Is SCt approach as
expressed in reputation-related functionality v. non reputation related
functionality already what you’re getting at? Samara Bros. does seem to
get at the distinction you’re making. How is fragility different? 

Different dichotomy: exclusivity related functionality
versus non exclusivity related functionality? Not just the high fashion brands
that advertise into our heads; all consumer goods participate in economy of
exclusivity to some extent, including K-Mart. TM law just talks about the high
end brands as a matter of class. Other things to consider: (1) Easterbrook’s
approach to functionality: a design that produces a benefit other than source
identification is functional. Bright line! (2) Consider definition of useful
article in © and recent struggles with that. Similar vibe. 

A: For “non-reputation-related”: two problems. (1) They tell
us we don’t ever hit that test if you trigger Inwood first. You can
dance around this a little w/a gloss on whether this is a two-step test. (2) It
doesn’t deal with all these functionalities. The word “significant” is
precisely what starts to look like an antitrust rule of reason. 

Fromer: lots of literature about functionality, including
Lunney, Litman, McKenna; grapple explicitly how what you say differs from or
works with what they say. 

RT: From the paper: “All trademarks affect cost and quality.
Full stop. Trademarks reduce search costs for consumers by providing a
“consistent signal,”

–assumes the existence of secondary meaning; b/c search
costs aren’t reduced w/o that, this description assumes a de facto functionality
that may not exist in mere TM function

–framing elides one of the hardest Qs in functionality: it
is good to have a mark, or to have a shape, but does that mean that every mark
or every shape is functional? No! That’s just de facto functionality.  (Can see that most clearly in the possible
response to my first point: even having an unknown TM signals that “this isn’t
the TM you know,” thus reducing search costs in some sense, but of course the
actual content of the TM is completely irrelevant to that message. The relevant
information is that the product/service is “not-known.”) Some of the paper
reads like semantic games: you’ve labeled the credence benefits of trademarks
as functional, but I think it doesn’t work without a better account of the
level of generality at which you are analyzing functionality. 

I wish I thought this reformulation worked, but because of
the level of generality issue I don’t think it does any better than current
doctrine. Consider the Apple logo or the design of a Rolex watch: they are
beautiful designs; certainly under your view of what constitutes an effect on
quality they at least marginally increase the quality of the products simply because
of their beauty: even on first exposure with no secondary meaning, they are
nice designs. I don’t see how your test helps us with the issue that has
confounded every attempt to reformulate functionality doctrine: When does that
marginal effect, which rests on generalized features of human perception like
our preference for curves, override the effect of the specific trademark
meaning?  This is why some courts ask for
a substantial non reputation related benefit in the aesthetic
functionality test. 

Defense of dilution lacks engagement w/empirical literature
where that doesn’t actually seem to happen: maybe the things you say are
fragile aren’t actually fragile. 

[[Things I didn’t have time to say: Your argument depends in part on the placebo effect being
fragile. [Similar to what McKenna is about to say.] Why not hypothesize that
the effect an effect of familiarity and allowing the brand name to become
generic would continue that familiarity, as with Pepto pink? My take:
Especially likely to persist w/pharmaceuticals b/c those are credence goods; I
understand why spitting out the generic Diet Coke in disgust would make me
distrust labels on experience goods, but the placebo effect works best on
credence goods. Might even work for Nike clubs! 

You try to deal with the placebo effect by looking at the
research on counterfeits labeled as counterfeits. But telling the consumer
they’re using a counterfeit is different than just putting the label Nurofen on
it and saying no more—among other things, the effect of telling someone they’re
using counterfeits might well be related to a generalized surprise or distrust—see
Sprigman et al on dilution: you might also find that performance using a Bic
pen also goes down after experience with a labeled-counterfeit Parker pen b/c consumers
are just more suspicious generally. Also, as far as I recall the research isn’t
conducted on the set of consumers who prefer to buy (fashion) counterfeits—hard
to test, but someone who chose counterfeits because they’re cheaper might have
a different reaction. 

Similar Q: if we could empirically show, say by looking at
China, that widespread counterfeiting and copying does not diminish the
perceived value of brands in certain categories, which is to say that
exclusivity remained somehow perhaps through subtler quality signals, would
your argument have to change? 

[Again echoing what McKenna says] The charitable signalling
& certification mark bits seem to be about false advertising: if the law
enforced a rule that everyone using the Toms mark donated a pair of shoes to
people in need, the relevant signal would continue; it would just be converted
to a certification mark, which is related to the reason that certification
marks theoretically need nondiscrimination provisions.]]

Jeremy Sheff: does fragility differ from the economic
concepts of congestion or rivalrousness, and if so how? 

Jessica Litman: why fragility and what are the other
possible terms? The term is an uncomfortable fit for the phenomenon you’re describing. 

Mike Risch: Doesn’t read cost/quality the same way the paper
does. Thinks it’s mostly about cost of manufacture, quality of physical product
outside of placebo: if made in the way it’s supposed to be made, how does it
work. There is definitely uncertainty, but cost/quality isn’t anything that might
affect how good consumers think it is or how much they’re willing to pay for
it, or you swallow all TM. 

McKenna: you have to assume quality differences for Nurofen
to stop working if freed for all to use. We could make sure that everything
labeled Nurofen had the same pharmacological characteristics. It’s really the
quality differences that derive dissipation, not mere reproduction [at least
for those things that aren’t dependent on excluding the proles].  Separately, it’s at least implicit that it has
to affect cost/quality in a way unrelated to reputation. The function has to be
distinct from reputation, but can exist along with reputation. Courts just
struggle when people want the product for non-source reasons but also want it
for source reasons. 

Overlapping and Sequential IP Rights, Lolita Darden, Suffolk
University Law School

Patent/TM and ©/TM interface: functionality takes us a long
way toward weeding out those designs that might create perpetual monopoly. Trying
to expand functionality to be more comprehensive to protect those other
systems. Distinguish types of protection available for trademark/trade dress.
Using a piece of music whose © has expired as a TM. There may be a narrow opportunity
for these things to serve as TMs. Right to copy v. need to copy can be
distinguished; functionality test proposed is built on concept of need. 

RT: Paper coming at the end made me think that something
unites all these presentations: an increased interest in bright line rules and formalism:
most of the presentations seem to be coming if not from classic formalism then from
rule utilitarianism—the case by case analysis we have been doing in a lot of
these situations has become so costly as to lead us to seek alternatives. For
this project: what is the product or service at issue? For the airline example,
does it include the advertising (theme music for the airline)? If we
confidently say no, then drawing the distinction between protectable and
unprotectable uses of music becomes easier—but why then is the Batman backpack not
a member of the class of backpacks and Batman just part of its marketing? 

A: paper does discuss Wonder Woman merchandise—may be a hard
call. 

Calboli: overlaps of protection also raise issues of
overlaps of fair use/defenses. One possibility: redesign the system from
scratch and create a “brand right” that would just tell you what you could do.

Sheff: we’ve all gone crosseyed over this problem at one
point—previous framing was often one of boundaries. Problem in functionality is
that sometimes consumers want things for both reputation and non-reputation related
reasons. Ultimately we have to make a choice about what we value more, not
necessarily as a matter of grand theory but could be tied to particular cases
like the Wonder Woman lunchbox, its markets, and its consumers.

from Blogger https://ift.tt/2DjSZHI

Posted in Uncategorized | Tagged , , | Leave a comment

The McCarthy Series: U.S.P.T.O. v. Booking.com: What the Recent SCOTUS Ruling Means for Trademark Law

My notes are messed up because I had technical difficulties! But the McCarthy Institute will apparently publish video on its YouTube channel.

David Bernstein,
Debevoise & Plimpton: intro to case/overview.
 

Hal Poret: Used a Teflon
survey to educate consumers about difference between brand & common name,
including .com terms to show they could be either (staples.com = brand name;
officesupplies.com = generic term). Also used washingmachine.com to account for
bias towards considering .coms to be brand names.  Pattern of responses for booking.com and
wm.com: clear that booking.com & wm.com produced essentially opposite
results—heavily in favor of brand, and heavily in favor of common name
respectively. Booking.com’s results not just from bias in favor of considering
a .com to be a brand. Dissent/PTO misunderstands significance of control:
substantial noise doesn’t reflect a problem w/a survey but w/a real world bias
that the survey needed to grapple with.  Even if you remove the people who misclassified
wm.com, those who didn’t thought booking.com classified it as a brand by a 2:1
margin.
 

So this is perhaps
reflecting [de facto] secondary meaning and not lack of genericness. What are
possibilities for accounting for this? Could do additional education in the
survey training. Could include a .com in the mini-test respondents must pass. Could
make the entire survey about .com terms, so all the educational section and
examples would be about .com. Another possibility: change answer choices to
instead of asking about brand/common, could focus on distinguishing b/t
descriptiveness and genericness, which can be done. Could also look for
secondary meaning to look for respondents who are responding to previous
knowledge of the website versus those who weren’t previously familiar of the
term—to weed out influence of actual secondary meaning. Could also ask those
who were aware of the site questions to distinguish between whether they
thought it was descriptive or generic: is the primary meaning a description of
the products/services or is the primary meaning a type of product/service.
 

RT: Brief note: the
Poret report relied on the 74.8% total “brand name” response for booking.com as
the relevant number rather than treating the net 44.8% as the key when the 30%
who responded “brand name” for wm.com are taken into account as a control. This
matters if (but only if) one holds the opinion that a threshold over 50% in the
relevant consumer group is the correct threshold for showing that the primary
meaning of a term is as a trademark. But realistically, measuring brand
awareness is going to be hard in a Teflon survey, which is primarily directed
at a different question.
 

Given that the
majority explicitly says that it’s not reaching the survey criticisms because
of the PTO’s concessions, I think Mr. Poret’s suggestions for future surveys
are useful. A few specific comments: asking if people have heard of generic.com
suggests looking for secondary meaning; the interpretive question will be what
to make of people who say, as 1/3 seem to have done with wm.com, “I’ve never
heard of this particular generic.com but forced to choose between
generic/brand/not sure, I’ll go with brand.” If domain names are not
inherently distinctive by virtue of being domain names, it may be necessary to
offer a fourth option to make a Teflon survey work, something like “neither a
brand name nor a generic word.” Really interesting to see if people could be
trained on the Abercrombie spectrum!

Caveat: classifications
are legal matters and surveying on them may be a bad idea. Very few trademark
lawyers can predict the suggestive/distinctive line in a given dispute by
looking at prior cases. If we can’t get useful answers from five minutes of
training an ordinary consumer, we will have to look elsewhere. 

Another possibility:
use Likert scales where people give answers and then rate their degree of
certainty—using Likert scales can reveal a lot about where respondents are
basically guessing. Some empirical work by Sprigman et al on this forthcoming.

The larger problem
is the still uncertain issue of de facto secondary meaning: if the SCt opinion
means that there is no remaining doctrine of de facto secondary meaning, then
the survey as conducted in Booking is fine. If there is still such a doctrine,
then the survey shows that it may not be possible to ask consumers questions
they can reasonably be expected to answer. Respondents were (a) trained on the
brand/generic distinction, (b) classified screening examples correctly in order
to have their responses counted, and (c) uniformly got “supermarket” correct
and 398 out of 400 got “sporting goods” correct—if 30% of those people,
who clearly understood the task, still considered wm.com to be a brand name, when
everyone agrees that it lacks trademark function, then this type of survey may
simply not work for the relevant question. 

To put it another
way, post-decision, a Teflon survey will likely always produce the result “not
generic” for a generic.com. But “not generic” is not necessarily the same thing
as “a trademark,” and especially given the PTO’s increased and welcome
attention to trademark function, we may see much more attention to whether that
has been shown. Bold applicants may even argue that the Court majority at least
implicitly endorsed the district court’s reasoning that domain names are
usually inherently distinctive b/c everyone understands that they are exclusive—but
trademark function is a requirement even for matter that could in theory be
inherently distinctive, so we might see more attention to that point.
  

Bernstein: footnote
6 says other evidence might be better than surveys. Voice of the consumer
evidence.

Peter Golder, Prof. Marketing,
Dartmouth: Hearing the Voice of Consumer through Archival Evidence. Archival
evidence can avoid certain biases. Consumer perceptions can change over time:
Howard Johnson’s was once the most well known fast food chain, and quotes you
think are about McDonald’s were about it. Here: look at consumer perceptions
from tweets, referring to booking.com as one among several members of a class
like Travelocity.  Can also look at
prevalence of consumer serach. Can look at historical “name of class”—what did
competitor call itself? Example: Portable electronic camera was one early name;
took a while to converge on “digital camera.” Carefully designed studies can be
scientifically valid and persuasive in litigation. 

RT: Relevant, but
normative issues remain about interpreting things like usage versus
comprehension and whether de facto secondary meaning is a thing. Test suite: determine
what would this methodology have done for some of the key cases already
decided, “hog” for motorcycles, shredded wheat, etc. I don’t think that if
there’s a divergence b/t the results and the case law it’s fatal, because it
might be that the courts were wrong, but I do think it’s important to see what
kind of results you’d have gotten in such cases to see what the match is. More
overarchingly: still have the normative issue: is there such a thing as de
facto secondary meaning? If not—if de facto secondary meaning is de jure
secondary meaning—then this methodology is perfectly good in itself to answer
the relevant questions.
 

Q: competition issues?

Issues still to
come: if wm.com might be inherently distinctive, what about
washingmachines.com? Is that confusingly similar and how will we know? Consistent
with past Supreme Court decisions, questions about the scope of the mark have
all been deferred to the infringement inquiry: Freecycle example of how this
can allow overclaiming against people who are using only the generic portion. The
majority says that this risk attends any descriptive mark, but not all
descriptive terms are comprised of generic components: while one need not use “soft”
to sell one’s mattresses, one generally must use mattress to do so. Open
question: will courts use plausibility to put an early end to such cases? 

Related issue:
prosecution history estoppel, well known in patent but unknown in TM until
recently: Booking will likely increase both the PTO and the courts’ interest in
the concept. Two important examples pre-Booking: First, Bottega Veneta’s application
to register a specific width and angle of basket weave for shoes and bags,
which the PTO granted but with an explicit statement that the registered rights
did not extend past the width and angle of straps specifieds in the
registration; second, the Lettuce Turnip the Beet case in which a court said
that where the PTO found that a phrase failed to function as a mark when used
to decorate a T shirt but did function as a mark on a tag, the court would not
find liability for the defendant’s decorative use.
 

If other registrants
say something like what booking did—that it wasn’t going to assert its rights
against variations—courts and the PTO may see a competitive need to enforce
those concessions.
 

Golder: use of
generic.com hasn’t been key component of competitive advantage—market leaders don’t
have the generic term in their names in key industries.
 [As Christine Farley pointed out in comments, that was against a different background legal regime. Given the installed base, the real question is what happens in new industries or new forms of advertising. It’s not surprising that freecycle, a newly invented generic, is one place that problems have developed.]

Bernstein:
booking.com is looking to prevent confusing uses. Cars.com: a brick &
mortar dealer used a sign cars.com and was unaffiliated. Similarly w/UDRP
rights. But there will be recognized limits on the breadth b/c the TM is still
composed of highly descriptive if not generic components. Booking is a generic
term for booking things and .com is a generic tld. So the ability to prevent other
uses will depend on the totality of the facts: there’s a lot of mechanisms to
prevent against overenforcement: likely confusion; descriptive fair use.
 

Q: can this opinion
can be cabined as holding only that a generic.com domain name isn’t necessarily
generic?
 

RT: yes; the opinion
doesn’t preclude the idea that .coms are inherently distinctive because unique,
but nor does it embrace it. Depends on the cases that people bring whether the
doctrine develops in a way that protects users of generic terms from having to go through full
trials/at least develop a full summary judgment record for. Descriptive fair
use won’t be any help b/c using a term in the domain name will at least create
a fact issue on “use as a mark.”
 

Bernstein: if you
have a registration, UDRP panelists will usually defer to it and find confusing
similarity. If you don’t have a registration, you really need to show acquired
distinctiveness. UDRP doesn’t have access to discovery tools—would probably
have to be pretty overwhelming to persuade a panelist that the domain name is serving
as a mark. Booking.com was already registered in many countries around the
world; brings US into conformity; key takeaway goes beyond domain names, to
hashtags, addresses, combinations of marks, etc. Issue is not whether the term
is composed of terms that are generic but what is the perception of the term as
a whole.


Q: booking.com had so much secondary meaning—isn’t it difficult for a survey to
separate out that from what people think of the term in the abstract? Wouldn’t
the survey have had to be done years before to separate that out?
 

Poret: it’s a
recurring problem that often shows up. You can’t go back in time and measure it
back then. May be able to help people to distinguish between describing
characteristics and identifying a class.
 

Golder: archival
analysis can be a complement to these methods. Can estimate the life of a brand
even before it dies. Can find how terms were being used in archived materials.
Federal Circuit in Converse case raised issue of historical secondary meaning
being a challenge, but archive can serve as a time machine.

from Blogger https://ift.tt/3gcGH2v

Posted in Uncategorized | Tagged , , | Leave a comment

“graham cracker” is dead metaphor, implying nothing about graham flour content

Kennedy v. Mondelēz Global LLC, 2020 WL 4006197, No. 19-CV-302-ENV-SJB
(E.D.N.Y. Jul. 10, 2020) 

(R&R by someone I remember from my debate days, Sanket
Bulsara) 

Plaintiffs alleged that the terms “grahams” and “graham
crackers,” along with other statements and images, in Nabisco and Honey Maid’s
graham cracker products, violated NY consumer protection law by falsely implying
that the products contained predominantly graham flour—as opposed to white
flour—and more honey than sugar. The magistrate recommends dismissal. 

The Nabisco Grahams box contains the words “Nabisco
Grahams,” “Original,” and “made with 8g of whole grain per 31g serving,” and
pictures of a tan, khaki-colored, darkened-color, or “noticeably dark-tan hue”
cracker and a swaying, unrefined stalk of wheat. On the side: “No High Fructose
Corn Syrup,” “More than a century of great graham know-how,” “A sensible snack
with a satisfying hint of sweetness,” and “NABISCO Grahams – a tradition of
wholesome nutrition.” 

The Honey Maid label includes a similar picture of a tan,
khaki-colored cracker, as well as pictures of a bee and a honey dipper, with
the words “Honey Maid,” “Made with Real Honey, “No High Fructose Corn Syrup,”
and “8g of Whole Grain per 31g serving.” 

The dictionary definition of “graham crackers” is “a
slightly sweet cracker made of whole wheat flour” or “a semisweet cracker,
usually rectangular in shape, made chiefly of whole-wheat flour.” Graham flour
is a whole grain wheat flour (and calling the product “grahams” allegedly
represents that it’s all graham flour, since grahams is allegedly the common or
usual name for the flour). Plaintiffs alleged that reasonable consumers would
expect graham flour to predominate, but it doesn’t. Truthful suggested names:
“crackers made with graham flour,” “graham-flavored crackers,” or “crackers
with X% graham flour.” Plaintiffs also alleged that predominately graham flour
crackers are available, including as institutional versions of these very
products made for schools (since the ones sold in stores don’t meet nutritional
standards/the USDA’s grain crediting standards). 

Similarly, consumers allegedly expect that honey and
molasses are to be the predominant, but not necessarily the exclusive,
sweeteners for graham crackers as opposed to refined, white sugar. 

The recommendation: No. First, the word “graham” in
“grahams” or “graham crackers” “does not connote graham flour.” The predominant
meaning is “a slightly sweet, darker-colored, rectangular, and perforated
cracker … a type of cracker that is used in desserts like s’mores.” Reasonable
consumers wouldn’t think that graham means “graham flour,” and as a result
assume that graham flour is either the predominant ingredient in the product or
that graham flour predominates over other types of flour. As with the name Coca-Cola,
the descriptiveness has been lost. 

Plaintiffs pointed to dictionary definitions that said that
a graham cracker was “a slightly sweet cracker made of whole wheat flour,” or
“a semisweet cracker, usually rectangular in shape, made chiefly of whole-wheat
flour,” but the products indisputably contain graham flour. And the definitions
didn’t agree that graham flour had to predominate. [That strikes me as overreading.
“Made of” at least implies something like predominance, especially compared to “made
with,” and “chiefly” is pretty clearly about predominance.] “Such a variation
between ostensibly reasonable definitions suggests that Mondelez’s use is necessarily
not misleading or deceptive.” [No, it suggests that it’s not literally false,
which is not the same thing.] 

The fact that other graham crackers, including other
products with the same name sold to institutions, have more graham flour didn’t
matter. Putting the word “graham” before “cracker” still wouldn’t lead a
reasonable consumer to assume predominance. 

The result would be different if the label said “Crackers
Made with Graham Flour.” [Compare treatment of the dictionary definitions above
….] In Mantikas v. Kellogg Co., 910 F.3d 633 (2d Cir. 2018), the court found
that it was plausible that labelling of Cheez-It crackers as “whole grain” and
“made with whole grain” caused reasonable consumers to believe the grain in the
product was predominantly whole grain. [This distinction only makes sense if
you really believe—and I see why you might—that “graham cracker” has just become
detached from any relationship to graham flour in the same way that Coca-Cola
has become detached from a relationship to kola nuts.] Calling something a “graham
cracker” doesn’t say anything about the quantum of graham flour in the product.
[Presumably it could therefore have zero graham flour and still be a “graham cracker”—otherwise
the distinction from Mantikas really breaks down.] 

Anyway, the statement that there are “8g of whole grain per
31g serving” “remedies any ambiguity about how much whole grain is in the
product per serving.” 

Distinguishing the honey-related claims from Mantikas
was a heavier lift, but here we go: The crackers are in fact “made with real
honey.” And the products don’t state anywhere that honey is the only sweetener.
“Sweetening grahams with honey does not foreclose the use of other sweeteners
or make the representation deceptive.” Mantikas was no help because that
case distinguished claims to be misled “about the quantity of an ingredient
that obviously was not the products’ primary ingredient.” So while “reasonable
consumers are likely to understand that crackers are typically made
predominantly of grain, … [t]hat same consumer, confronted with the claim
that a cracker is ‘made with real vegetables,’ ” for example, “likely would not
likely conclude that the cracker was made predominantly of vegetables.” Here, reasonable
consumers wouldn’t think that “made with honey” means the grahams contain more
honey than sugar. Thus, “similar representations about non-dominant ingredients
are non-deceiving.” [Doesn’t exactly get at the precise question, where an
ingredient plays a particular function but isn’t actually the predominant
ingredient playing that function. The closest analogy is probably the juice
cases: if you say “made with real pomegranates” and show only a pomegranate on
the label, and in fact the juice is 95% grape and 5% pomegranate, is that deceptive?]

 

from Blogger https://ift.tt/32RvC2K

Posted in Uncategorized | Tagged , , | Leave a comment

confusion over confusion: court holds that disparagement can be infringing

Nutreance LLC v. Primark, LLC, 2020 WL 3892995, No.
4:18-cv-00098-SRC (E.D. Mo. Jul. 10, 2020)

“This is a trademark infringement/false advertising case involving
competitors in the nutritional-supplements market.” The court holds that
the alleged bad conduct is actionable, but unfortunately considers some of it
(disparaging the plaintiffs at a webpage reached using keywords) as possibly
trademark-infringing without actually setting out how consumers could be confused
about the link between the plaintiffs and the criticism or about the relationship of the two explicit
competitors. 

Plaintiffs alleged that defendants “orchestrate a scheme to
publish sham reviews of Plaintiffs’ products online, on websites purporting to
be independent and unbiased, but actually controlled by Defendants.” The sites
rank products, invariably ranking plaintiffs’ products as superior and
defendants’ competing products as the top choice. They allegedly buy keyword
ads using plaintiffs’ trademarks to steer potential customers to the fake
review sites. 

Some of the defendants (Admark) contracted with non-party
review site hosts to conduct “affiliate marketing.” Admark agreed to pay the hosts
a 20% commission on all sales of Admark products referred by the review websites,
which agreed to place banner ads for Admark products on their sites. The review
hosts disclose that they may receive a commission for product sales, but an
“Advertising Disclosure” states: “We are independently owned and the opinions
expressed herein are our own. All editorial content is written without
prejudice or bias, regardless of sponsor or affiliate associations.” This was
allegedly untrue: the review sites were actually controlled by various
defendants. The hosts allegedly 

paid third-party copywriters to
prepare the reviews with an appearance of objectivity, but always concluding
that the competitors’ products were inferior. Potential customers who entered
the name of competitors’ products into search engines would see results near
the top of the list using phrases like “shocking facts,” “exposed,” “scam,” or
“warning,” and urging customers to first review the Review Hosts’
purportedly-unbiased reviews before purchasing the competitor’s product.
Prospective customers who clicked on these links would see the Review Hosts’
sham review, including false and disparaging information about the competitor’s
product. 

Trademark infringement under §32: because plaintiffs conceded
they hadn’t shown source confusion, they were only claiming “affiliation,
connection, or association” confusion under §43(a), so the §32 claim was
dismissed. [Intriguing, given current doctrine that assimilates all confusion to 32, but wait for it.] 

False advertising: survived defendants’ motion for summary
judgment (except as to some specific defendants whose involvement wasn’t
supported by evidence). Plaintiffs offered evidence that certain defendants “exercised
considerable or complete control over the content” on the review sites, and
that those sites published false representations of independence and lack of
bias. There was also evidence that the reviews of plaintiffs’ products included
literally false statements, “including the false representation that no
clinical studies were done on any of Plaintiffs’ products.” Even without
evidence of consumer reaction, literal falsity allows a court to grant relief.  [Are all the alleged falsities literally
false?] 

A jury could also reasonably conclude that “sham reviews,
purporting to be unbiased, that consistently ranked Plaintiffs’ products as
inferior to Defendants’ competing products” were material. There were affidavits
from plaintiffs’ principals about quantifiable losses and expert testimony to
quantify those losses. 

§43(a) unfair competition: A jury could reasonably find
likelihood of confusion regarding, at least, “the affiliation, connection, or
association” of defendants with the Review Hosts [clearly yes] and Plaintiffs’
trademarks. [Clearly no. If the reviews are disparaging and suggest defendants’
products instead, it is hard to see how there could be confusion over either
the review sites’ affiliation with plaintiffs or plaintiffs’ affiliation with
defendants.] In so holding, the court gave “significant weight” to the evidence
that relevant defendants “deliberately concealed—and in fact materially
misrepresented—their affiliation” with the review hosts and websites. [That
suggests false advertising, not a false suggestion of affiliation with
plaintiffs
.] Also, defendants used plaintiffs’ marks marks as paid search
terms on search engines “to steer customers to the sham review pages hosted by
the Review Hosts and, in turn, to Defendants’ competing products.” The parties’
products directly competed, which favored plaintiffs in the multifactor
confusion test. A jury could reasonably find likelihood of confusion. [Yes, but
about what?] 

Commercial disparagement: “One who publishes a false statement
harmful to the interests of another is subject to liability for pecuniary loss
resulting to the other if (a) he intends for publication of the statement to
result in harm to interest of the other having a pecuniary value, or either
recognizes or should recognize that it is likely to do so, and (b) he knows
that the statement is false or acts in reckless disregard of its truth or
falsity.” A jury could find in plaintiffs’ favor based on the evidence above—even
without apparent evidence of specific people from whom sales were lost. So too
with defamation claims. [As with the Lanham Act claims, the court is not being
super careful about the distinction between defamation and product
disparagement; it doesn’t explain why “not clinically tested” would harm the
reputation of the seller, as opposed to the seller’s product.] 

On tortious interference, by contrast, there was no evidence
that defendants knew that the plaintiffs had an existing relationship with
customers that was disrupted. “[A] mere assertion of interference with
prospective customers fails to raise a right to relief above the speculative
level.”

from Blogger https://ift.tt/3jxlkuE

Posted in Uncategorized | Tagged , | Leave a comment

July 29 Webinar – The McCarthy Series: What the BOOKING.COM Ruling Means for Trademark Law

I’ll be part of the panel: 

On Wednesday, July 29th, at 12 noon Eastern Standard Time (9
AM PST), the McCarthy Institute will host a webinar to discuss the
ramifications of the Supreme Court’s decision in USPTO. v. Booking.com B.V.
Entitled “The McCarthy Series: U.S.P.T.O. v. Booking.com: What the Recent
SCOTUS Ruling Means for Trademark Law,” the webinar will present “the
survey expert whose survey played a prominent role in the briefing, the oral
argument, the Court’s decision, and Justice Breyer’s dissent, amici who
submitted briefs on both sides of the case, and co-counsel for
Booking.com.” Registration (here) is free. 

The panelists will explore what the BOOKING.COM ruling means
“for survey and other consumer perception evidence in the future, what is
the applicability of the case beyond domain names (and is there anything left
to the Supreme Court’s 1888 case finding that a generic term combined with the
generic corporate descriptor Company cannot serve as a trademark), and how can
brand owners, competitors and consumers navigate the anti-competitive concerns
raised by the USPTO and Justice Breyer in the post-Booking.com world.” 

Prof. David Franklyn, Director of the McCarthy Institute,
will serve as moderator. The four panelists are:

David Bernstein, Partner, Debevoise & Plimpton, LLP.

Prof. Rebecca Tushnet, Professor of First Amendment Law,
Harvard Law School

Peter Golder, Marketing Professor, Tuck Dartmouth.

Hal Poret, Hal Poret LLC, survey expert.

from Blogger https://ift.tt/2OMwKwr

Posted in Uncategorized | Tagged , | Leave a comment

Sue Bee beats suit: “pure” survey not good enough to show deception over trace pesticide amounts

Tran v. Sioux Honey Assoc., 2020 WL 3989444, No. 17-cv-00110-JLS-SS
(C.D. Cal. Jul. 13, 2020) 

Tran brought the usual California claims based on Sioux
Honey products labeled as “Pure” and “100% Pure,” arguing that the products
were mislabeled because they contain glyphosate, a synthetic chemical and
herbicide. Tran relied in part on testing carried out by the FDA in 2016 on a
Sioux Honey sample which identified the presence of Glyphosate in a concentration
of 41 parts per billion. A subsequent 2018 analysis commissioned by Tran’s
counsel, on three samples “returned varied results — there was no detectable
level of glyphosate in one sample; 30 parts per billion in a second sample, and
40 parts per billion in a third sample.” The parties agreed that glyphosate was
not an additive incorporated during the manufacturing process, but rather was a
byproduct of the honey’s natural production, when bees encounter the glyphosate
herbicide in nature. 

First, Tran could represent class members with claims
arising from the purchase of products labeled “100% Pure” even though she only
bought “Pure” labelled honey, as those claims were “reasonably co-extensive
with those arising” from the purchase of products labeled “Pure.” 

Second, Tran failed to produce evidence that would allow a
reasonable factfinder to find that the labels were deceptive to reasonable
consumers. Though the court had been unwilling to dismiss the claims at the
pleading stage, at this point Tran needed evidence that reasonable consumers
believed the word “Pure” on the label means that there will be no trace amounts
of pesticide in their honey. 

Tran relied on a survey. The expert (Thomas J. Maronick) surveyed
251 individuals over 18 who (1) lived in California, (2) were their household’s
primary food shopper or shared responsibilities for food shopping, and (3)
purchased or considered purchasing processed honey in the two months preceding
the Survey. After they saw a photo of a representative product, the 159
participants who responded that they saw the phrase “Pure Premium Honey” on the
label were asked two follow-up questions about the meaning of that term. 

First, they were asked the open-ended question, “[w]hat does
the word ‘Pure’ mean to you when you see it on a label for honey?” Second, they
were asked “[b]ased on what you saw on the label, which of the following, if
any, reflect your understanding of what ‘Pure’ means when you see it on a label
for honey?”: 

□ No additives □ Nothing artificial □ Made from pure bees □ Made with no chemicals □ Nothing but honey □ No chemical residues □ Other (specify) □ Don’t know/not sure 

In responding to the open-ended question, five participants
stated something to the effect that the term indicated the product contained no
chemicals, 19 stated that it meant the product contained nothing artificial, 52
stated that it meant that the product was “natural” or “just honey,” and 54 stated
that it meant that the honey contained no additives or substances added to it. In
response to the “closed-end” question as to what “pure” meant, 115 selected “no
additives,” 123 selected “nothing artificial,” 108 selected “no chemicals,” 114
selected “nothing but honey,” 100 selected “no chemical residues,” and 77
selected “made from pure bees.” [Are they made from real Girl
Scouts
?] 

But the theory of the case has always been about trace
amounts of glyphosate, and the survey “avoided the relevant question.” At his
deposition, Maronick acknowledged that he “wasn’t asked to focus on trace
amount[s].”

Tran argued that “a jury can determine whether advertising
is likely to mislead simply by comparing the challenged advertising to what was
actually delivered.” But in cases like this one, where “the allegedly false
word has no fixed meaning,” “even though not required, survey evidence can be
particularly helpful in determining whether a reasonable consumer would be
misled by accused labeling.” And even if a survey is not required, there must
be some evidence to satisfy the reasonable consumer test. [Could the named plaintiff’s
own testimony ever do this? If surveys aren’t required, something like that
must be allowed instead, I’d think.] Tran’s own personal view was only that pure
means “without added ingredients or chemicals,” and she offered “nothing to
show that her view of the labels equates to that of the reasonable consumer.” 

“Chemical residues” in the survey wasn’t enough to do the
trick. Nothing in the expert report suggested that “chemical residue” satisfies
as a stand-in for “trace” amounts, and “residue” and “trace” have different
dictionary definitions, with the latter indicating “a minute and often barely
detectable amount.” The court thought “[i]t would have been simple to present
the Survey participants with a question going to whether the participant viewed
a honey product containing trace amounts, or 41 parts per billion, of
glyphosate, as less than ‘Pure’ or ‘100% Pure.’”

from Blogger https://ift.tt/32EGpxc

Posted in Uncategorized | Tagged , , , | Leave a comment

expert can’t substitute for survey evidence (at least w/o experience w/consumer reactions)

Kurin, Inc. v. Magnolia Medical Technol., Inc., 2020 WL
4049977, No. 18-cv-1060-L-LL (S.D. Cal. Jul. 20, 2020) 

A lot going on here in this false advertising case about
blood collection devices (one called Steripath); I will omit a lot of the contested
claims at issue. The most broadly interesting thing: the court rejects an
attempt to use a subject matter expert’s testimony to replace consumer survey
evidence of deception, even though the product is specialized/bought by
sophisticated entities (a situation where this technique has occasionally
worked). 

The proposed expert opinion was about whether the relevant consumers,
though generally familiar with FDA regulations, would have understood that “FDA
registered and listed” does not mean the same thing as “FDA approved” given the
regime applied to medical devices.  The opinion
was based on the  proposed expert’s
experience as an attorney representing medical device manufacturers before the
FDA.

Kurin argued that his opinion was admissible because he “has
25 years of experience regarding FDA compliance.” But the proposed expert had no
experience or expertise in market research or marketing and did not review any
market surveys to form his opinion; he only infrequently interacted with
purchasers of medical devices, and thus his opinion could not reliably be based
on his experience. Nor did he review any literature on the topic of “medical
device purchasers’ perception of statements about FDA regulatory status.”
Instead, he relied on two references to Steripath’s regulatory status in an
article and a presentation, although he didn’t know whether their authors would
be involved in purchasing such a device. 
His opinion was not admissible. 

Other notes: While health-related claims are often held to a
high standard, the court here found that certain statements were puffery. In
particular, Magnolia advertised that Steripath eliminates or “virtually
eliminates” false positive results. The evidence indicated that Magnolia could
substantiate a false positive rate below 1%. Under the circumstances, “virtually
eliminates” was puffery, as was the claim that “Steripath will
‘…significantly improve specimen integrity and the accuracy, consistency, and
predictability of critical laboratory tests.’ ” 

By contrast, the statement that “Steripath is the ‘only
vein-to-bottle closed blood culture collection system that is proven to
virtually eliminate preventable error of blood culture contamination and
false-positive results for sepsis’ ” was not puffery to the extent that
Magnolia contested whether Steripath was a “closed system.” (The claim still
failed based on proximate cause/harm issues.)

from Blogger https://ift.tt/30ymXj1

Posted in Uncategorized | Tagged , | Leave a comment