Internet surveys are admissible (but may raise IRB concerns)

Bimbo Bakeries USA, Inc. v. Sycamore, No. 13-cv-00749, 2017 WL 1377991 (D. Utah Mar. 2, 2017)

Bimbo charged that defendants misappropriated its trade secret for making Grandma Sycamore’s Home-Maid bread, and infringed on its trade dress related to the packaging of its bread. Here, the court resolved challenges to experts, as relevant here in favor of admission.

Defendant U.S. Bakery sought to exclude the expert testimony of Dr. Glenn L. Christensen; the court found him qualified to testify to quantitative surveys, of which he had prepared three. He conducted his surveys over the Internet using pre-screened panels of respondents provided by a third-party vendor, using digital images of the parties’ respective products. The court held that the internet was a proper method for conducting surveys, despite defendant’s argument that they didn’t effectively recreate the consumer experience of buying bread and screened out responses from those who buy bread, but who do not use the internet.  Defendant didn’t cite authority holding internet surveys unreliable. It was true that most consumers don’t buy bread online, so online surveys might not the best way to simulate the bread buying experience. But defendant merely speculated that the results might be different if the surveys were conducted in person or among people who buy bread but don’t use the internet.  Where the overall look of the product was at issue, online surveys could be relevant; other arguments could be addressed to the jury.  “To prove that a survey technique is unreliable the party must do more than speculate that there may have been a better way of completing the survey.”

The surveys also chose a representative enough sample for the jury to weigh them.  The survey looked for respondents in Utah and southern Idaho, the area Bimbo’s trade dress allegedly had secondary meaning, so that was okay. Using online panels was okay; defendant failed to explain how people who participate in surveys on a regular basis may skew the results. Screening out people who completed the survey on a smartphone was also okay because of the smaller screen size shrinking the visual stimuli.

Defendant also challenged the survey questions, arguing that the survey showed respondents the trade dress of Grandma Sycamore’s bread with the words “Grandma Sycamore’s removed,” but didn’t remove the unique spelling of the words “HomeMaid” from the image, thus making the package identifiable by means other than the trade dress.  But defendants didn’t explain how that made the results unreliable, though the jury could weigh it.  Defendant also challenged two surveys because only respondents who answered the questions in a particular way were asked follow-up questions, and that the surveyor also would repeat the respondents’ answer back to the respondent when asking them to substantiate their answer, which increased the likelihood of confirmation bias. Furthermore, Dr. Christensen screened out respondents who completed the surveys too quickly. None of these were fatal; defendant didn’t show how the questions rendered the underlying method unreliable, since the questions themselves were open-ended and not leading. Defendant also didn’t show that screening of results of those who answered too quickly had a disparate impact on those respondents who answered a particular way; if it did so, then exclusion of the survey might have been proper.

Finally, defendant argued that failure to ask whether the respondents would have bought the bread if it wasn’t made locally made the survey unreliable.  Defendant used the tagline “Fresh. Local. Quality.” Dr. Christensen attempted to test whether these advertisements created a false or misleading impression that these were local products and whether this impression was material to whether the respondent purchased bread. But he didn’t ask “Would you have bought the bread if it wasn’t made locally?”  That didn’t make the preceding questions unreliable.
The court also refused to exclude defendant’s survey expert Himanshu Mishra, offered in rebuttal to Dr. Christensen’s surveys.  It didn’t matter that he didn’t conduct surveys of his own.  “Rebuttal experts need not produce extrinsic evidence to be able to testify to perceived surveying flaws…. Dr. Mishra’s testimony is more speculative and theoretical than Dr. Christensen’s actual surveys because Dr. Mishra did not produce surveys of his own. But the rule does not require the exclusion of expert testimony that lacks one hundred percent certainty.”

Also, Bimbo argued that Dr. Mishra shouldn’t be allowed to testify that Dr. Christensen’s failure to secure Institutional Review Board approval prior to conducting his surveys violates the law.  The court held that neither party had adequately briefed the law on the issue.  “If lack of approval does not violate the law then Dr. Mishra cannot testify that it does.”

My final expert note: defendant offered Larry Soter as an expert in the “baking industry”to testify that Bimbo’s ingredients that are used to manufacture Grandma Sycamore’s Home Maid Bread didn’t constitute trade secrets.  Bimbo argued that it would be improper for Mr. Soter to testify that each individual element didn’t comprise a trade secret because the alleged trade secret is the combination of all the steps and ingredients. “[A] trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which, in unique combination, affords a competitive advantage and is a protectable secret.” However, this rule does not mean that analyzing the individual processes is irrelevant. Finding that some of the components are secret may aid the fact finder in determining whether the combination of the individual processes is a trade secret, and it may be relevant to know how common the individual components of the claimed trade secret are.  Mr. Soter wouldn’t be allowed to claim that the combination of individually publicly known components was not protectable because such a statement would be informing the jury of the wrong legal standard, but there was no indication he would so testify.

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4th Cir. affirms dismissal where P didn’t allege specific lost consumers or quantify lost sales

Wall & Associates, Inc. v. Better Business Bureau of
Central Virginia, Inc., — Fed.Appx. —-, 2017 WL 1437215, No. 16-1819 (4th
Cir. Apr. 24, 2017)
The court of appeals affirmed the dismissal of Wall’s complaint
for false advertising based on statements by the BBB.  Lexmark
requires a plaintiff to show not only false or misleading advertising but also
that such statements caused it actual damages. 
Wall didn’t properly allege causation. 
The false advertising alleged in the complaint was that the BBB falsely
advertised and promoted a system for assigning letter grade ratings to
businesses as “national, uniform, unbiased, and objective” when in reality the
system was implemented based on “subjective, biased, and personal criteria.” Wall
alleged that it was damaged by receiving received a letter grade rating
resulting from “subjective, biased, and arbitrary decisions” when consumers
believed that it had been subjected to a review process that is “national,
uniform, unbiased, and objective” in nature.
Wall’s complaint, however, does not
identify a single consumer who withheld or cancelled business with it or
pointed to a particular quantum of diverted sales or loss of goodwill and
reputation resulting directly from reliance on any false or misleading
representations by Defendants of the letter grade rating system as objective
and unbiased. Given the absence of such fact allegations, Wall did not
adequately allege the necessary proximate cause between its alleged injury and
Defendants’ allegedly violative conduct.

Does that mean that every plaintiff should identify consumers
or allege quantified losses, or will more general allegations suffice when the
harm is more direct/the advertising claim being challenged is more central to
the decision?

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My IP collection widens

Today: Lardashe jeans–it’s quite possible they’d even fit me:

Jordache Enters. v. Hogg Wyld (10th Cir. 1987)

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Reading list: empirical evidence about FTC’s substantiation standard

Sungho Cho &Yongjae Kim, Empirical Rationalization of
Prior Substantiation Doctrine: Federal Trade Commission v. Reebok &
Sketchers, 29 Loy. Consumer L. Rev. 55 (2016) (not apparently available online—update
that website, Loyola Consumer Law Review!)
ABSTRACT

Companies frequently make efficacy claims in advertisements
to introduce new products featuring innovative technology. When such claims are
supported by information obtained from scientific research or expert
testimonials, they are subject to the doctrine of prior substantiation. Under
the doctrine, an advertisement claim based on seemingly credible authorities
must be substantiated by a reasonable basis before it is released to the
general public. Otherwise, the advertisement will be in violation of Section
5(a) of the Federal Trade Commission Act that prohibits “unfair or deceptive
acts affecting commerce.” This study investigates the rationale of the legal
rule in light of consumer behavior theories. While the doctrine has been
normatively rationalized, it has not been empirically examined. Given the
paucity of relevant research, this study will test consumer attitudes and
cognitive reactions toward different types of advertisement messages, such as,
one with establishment claims and the other without such cognitive contents.
The study administered real advertising video clips used by Reebok and
Sketchers, disputed in two settled cases where the Federal Trade Commission
alleged that the defendants failed to satisfy the legal standard of the
substantiation rule. The findings of this study support the rationale of the
rule on the ground that the Reebok advertisement clip delivering expressive
establishment claims about its product efficacy would likely have more of an
immediate impact on consumers’ purchasing intention than Sketchers’ ad without
such cognitive information. Implications and future research along with limitations
are also discussed.

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TM/(c) questions of the day

Which, if any, raise any TM or copyright concerns?

matchboxes with book covers

“phone app sticky notes”

Scented erasers with possibly recognizable trade dresses

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Dastar bars TM claim based on unlicensed copying of footage

Fioranelli v. CBS Broadcasting Inc., No. 15-CV-952, 2017 WL
1400119, — F. Supp. 3d – (S.D.N.Y.  Jan.
19, 2017)
Fioranelli, a photojournalist who was one of four reporters
allowed to enter the World Trade Center site on September 11, 2001, sued for
copyright infringement and related claims. 
In 2014, he registered copyrights on both his own commercially available
documentary of the events, as well as raw footage of the photographs he took
that day.  In 2002, he settled a previous
lawsuit with CBS and granted a limited, nonexclusive license to CBS to use his
work “in all regularly-scheduled and breaking news programming and all news
magazine programs … and in the advertising, publicity and promotions therefor,
produced by CBS owned television stations and CBS News.”  In 2005-2006, allegedly in violation of the
License Agreement, CBS allegedly sublicensed some or all of the 9/11 Material
to at least fifteen companies.
The court first found that Fioranelli stated a claim for
copyright infringement, not just breach of a license agreement, given that the
acts alleged went outside the license. “[I]f ‘a license is limited in scope and
the licensee acts outside the scope, the licensor can bring an action for
copyright infringement.’ ”  The
allegations here were “wholly outside the scope of the License Agreement.” Inducement
claims against many of the defendants were, however, dismissed for want of
specifics.
The court also got rid of Fioranelli’s Lanham Act and
state-law claims on Dastar and
preemption grounds.  Fioranelli argued
that he was allowed to bring a Lanham Act claim “to address the activity of
Defendants that directly affected his business and not just his copyright
rights,” that he had a registration and the plaintiff in Dastar didn’t, and that he produced a tangible good—his footage—not
just an idea.
Dastar applies to
copyrighted and public domain material alike. 
The allegations that “CBS has engaged in false designation of origin and
false descriptions of fact regarding Plaintiff and his work” and that the other
defendants “individually published [the 9/11 Material] as part of their own
media products,” and thereby “have caused or are likely to cause confusion, to
cause mistake, or to deceive as to the origin of Plaintiff’s Work among the
public” stated “the exact type of claim that the holding in Dastar prohibits.”
Consumers who viewed the 9/11 Material as part of
defendants’ programs were “not falsely informed about the origins of the
[material] because [Defendants] did in fact produce” it. Just like the creator
of the footage in Dastar, Fioranelli
was the originator, not the “producer of tangible goods” protected by the
Lanham Act.

The state-law claims fared similarly. The only extra element Fioranelli could
identify was that his claims were based on “damage to his business,” but he
didn’t explain how the alleged damage to his business was the result of
anything other than defendants’ unauthorized copying.

Because the infringing acts alleged commenced before
Fioranelli secured copyright registrations, he was not entitled to statutory
damages or attorney’s fees (though the court declined to address at this time
the argument that the court’s inherent supervisory power allowed it to award
attorney’s fees regardless). 

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“Australian for [American] beer” isn’t deceptive, court rules

Nelson v. MillerCoors, LLC, 15-CV-7082, 2017 WL 1403343, —
F. Supp. 3d – (E.D.N.Y. Mar. 31, 2017)
The court dismissed Nelson’s complaint, invoking lots of
different consumer protection laws, based on Miller’s allegedly misleading
marketing of Foster’s Beer, “an Australian-style beer brand.”  Foster’s began exporting to the US in 1972,
and its can labels sported “multiple references to Australian culture and
symbols,” namely “an image of a Red Kangaroo, the national symbol of Australia,
and the Southern Cross constellation,” which is “a main component on the
Australian national flag.” In 2011, all Foster’s Beer sold in the United States
became domestically brewed. MillerCoors allegedly tricked consumers “into
believing they are purchasing the same [imported] product as they had in the
past precisely because it has maintained the same packaging for Foster’s over
time, despite the fact that the Foster’s sold in the United States is also
brewed domestically.  Nelson also pointed
to MillerCoors’s “overall marketing campaign, online and in advertisements,”
including: (1) the brand slogan “Foster’s Australian for Beer”; (2) the “How to
Speak Australian” television ads “depict[ing] Foster’s as being a product from
Australia by using Australian accents and scenery”; and (3) the official
website for Foster’s Beer, which, as of December 2015:
• Noted Foster’s Beer is made out
of hops that are only grown in three locations in Australia, and that “[t]hese
hops and an exclusive Foster’s yeast are what give Foster’s its bold refreshing
taste. The secret yeast doesn’t produce sulfur harshness that other beers can
exhibit, which means that Foster’s taste is never skunky and always
Australian,”
• Advertised, ‘ “Foster’s is
available in more than 150 countries, making it the largest-selling Australian
beer brand in the world,” ’ and
• Displayed “an outline of the
country of Australia, references to [the beer’s] roots and history in
Australia, and use of Australian symbols and phrases including ‘How to Speak
Australian,’ ‘Foster’s — Australian for Beer,’ and a video screen with images
of rugby players.”
This allegedly exploited consumers’ willingness “to pay a
premium for high quality, imported beer.”

The court found no reasonable consumer would be
deceived.  The label clearly discloses
the brewing location and isn’t hidden or in small text. “The idea that
consumers purchase products based on certain of a label’s statements or images
(e.g., pictures of a constellation and a kangaroo) but are blind to others
(e.g., a statement in plain English of where Foster’s Beer is brewed) in close
proximity on that label strains credibility.” 
Disclaimers fail to cure allegedly misleading representations on the
front of packaging “only where the alleged misrepresentation is clearly stated
and the disclaimer is exceedingly vague or requires consumers to make
inferences.”  The disclaimer here was
explicit: “BREWED AND PACKAGED UNDER THE SUPERVISION OF FOSTER’S AUSTRALIA LTD,
MELBOURNE, AUSTRALIA BY OIL CAN BREWERIES, ALBANY GA AND FORT WORTH TX.”
[Really? The first geographical words the consumer encounters is “Australia,”
twice.] Likewise, “© Oil Can Breweries, Fort Worth, TX” is displayed on the
Foster’s webpage, which was “inarguably clear as to the brewing location.” 

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