9th Circuit is sour on sugar-sweetened beverage disclosure

American Beverage Association v. City and County of San
Francisco, No. 16-16072 (9th Cir. Sept. 19, 2017)
Plaintiffs challenged a SF ordinance requiring warnings
about the health effects of certain sugar-sweetened beverages (SSBs) on certain
fixed advertising (e.g., billboards) in the city. The court of appeals reversed
the district court’s refusal to preliminarily enjoin the ordinance, on the
grounds that the required disclosure was controversial/misleading and unduly
burdensome.
The ordinance required ads to contain this warning: “WARNING:
Drinking beverages with added sugar(s) contributes to obesity, diabetes, and
tooth decay. This is a message from the City and County of San Francisco.”  Covered ads excluded, inter alia, ads in
periodicals, television, electronic media, SSB containers or packaging, menus,
shelf tags, vehicles, or logos that occupied an area less than thirty-six
square inches.  SSBs were defined to
include soda and other non-alcoholic beverages that contain one or more added
sweeteners and more than twenty-five calories per twelve fluid ounces of
beverage, but not milk, milk alternatives primarily consisting of plant-based
ingredients, 100% natural fruit juice, natural vegetable juice, infant formula,
medical food, supplements, and certain other products.  The warning had to occupy 20 percent of a
covered ad and be set off with a rectangular border. San Francisco’s purposes
included the desire to “inform the public of the presence of added sugars and
thus promote informed consumer choice that may result in reduced caloric intake
and improved diet and health, thereby reducing illnesses to which
[sugar-sweetened beverages] contribute and associated economic burdens.”
Zauderer applies
to mandatory disclosures, whether or not they are designed to remedy deception.
 A “purely factual and uncontroversial
disclosure that is not unduly burdensome will withstand First Amendment
scrutiny so long as it is reasonably related to a substantial government
interest.” The government has the burden of showing that a disclosure is purely
factual and uncontroversial, not unduly burdensome, and reasonably related to a
substantial government interest.  “[U]ncontroversial”
here “refers to the factual accuracy of the compelled disclosure, not to its
subjective impact on the audience,” and a “literally true but nonetheless
misleading and, in that sense, untrue” disclosure is not purely factual under Zauderer.
The majority concluded that “the factual accuracy of the
warning is, at a minimum, controversial.” he unqualified statement that
“[d]rinking beverages with added sugar(s) contributes to obesity, diabetes, and
tooth decay” “conveys the message that sugar-sweetened beverages contribute to
these health conditions regardless of the quantity consumed or other lifestyle
choices.” This message contradicted FDA statements that added sugars are
“generally recognized as safe,” and “can be a part of a healthy dietary pattern
when not consumed in excess amounts.” SF’s experts concluded that “there is a
clear scientific consensus” that sugar-sweetened beverages contribute to
obesity and diabetes through “excessive caloric intake” and “by adding extra
calories to the diet,” but didn’t directly challenge the conclusion of the plaintiffs’
expert that “when consumed as part of a diet that balances caloric intake with
energy output, consuming beverages with added sugar does not contribute to
obesity or diabetes.” Because SF’s warning wasn’t about overconsumption, and it
said “contributes” instead of “may contribute,” “the accuracy of the warning is
in reasonable dispute.”
Furhtermore, the warning was “misleading and, in that sense,
untrue.” By focusing on a single product and not on others with an equal or
greater amount of added sugars and calories, “the warning conveys the message
that sugar-sweetened beverages are less healthy than other sources of added
sugars and calories and are more likely to contribute to obesity, diabetes, and
tooth decay than other foods.”  Borrowing
an example from plaintiffs, the court reasoned that “If car dealers were
required to post a warning only on Toyota vehicles that said: ‘WARNING: Toyotas
contribute to roll-over crashes,’ the common-sense conclusion would be that
Toyotas are more likely to cause rollovers than other vehicles.”
[Note: not all courts will apply this interpretive standard,
which relies on the ordinary rules of implicature, to false advertising cases.
They should.  Second note: under false
advertising precedents, misleadingness is a matter of extrinsic evidence, not
simple reading.  If the government’s
burden is to show that the disclosure is nonmisleading, should it have to
provide expert or survey evidence of this? 
If the government does provide such evidence of nonmisleadingness, can
it rebut the court’s conclusions about the meaning of the disclosure?  I have my own conclusions about this, but
more overarchingly I believe that judicial reasoning about how consumers react
to information should be consistent across cases, adjusting appropriately for
who has the burden of proof.]
The current state of research on this issue indicated that
this message was deceptive. According to the FDA, “added sugars, including
sugar-sweetened beverages, are no more likely to cause weight gain in adults
than any other source of energy.” The American Dental Association likewise
cautioned against the “growing popularity of singling-out sugar-sweetened
beverages” because “ the evidence is not yet sufficient to single out any one
food or beverage product as a key driver of dental caries.” SF argued that an
underinclusive warning is okay because it was entitled “to attack problems
piecemeal.” But the problem was that the warning was potentially misleading,
not because it “does not get at all facets of the problem it is designed to
ameliorate.”
SF argued that people were more likely to over-consume
sugar-sweetened beverages than other foods. “But even if it were undisputed
that consumption of sugar-sweetened beverages gives rise to unique behavioral
risks, the warning does not communicate that information”—it didn’t mention
behavioral risks, “and thus clearly implies that there is something inherent
about sugar-sweetened beverages that contributes to these health risks in a way
that other sugar-sweetened products do not, regardless of consumer behavior.”  [This is an example of how “inherent” is
usually an unhelpful concept when people are involved.]   The
district court erred in finding that it would be unreasonable to interpret the
warning to mean that sugar-sweetened beverages are uniquely or inherently unhealthy.
Separately, the warning imposed an undue burden because it
required a black box, bold warning covering 20 percent of the ads, making it
impractical to advertise on covered media.  The court of appeals agreed that “the black
box warning overwhelms other visual elements in the advertisement,” thus
imposing an undue burden.  Although the
district court reasoned that a commercial speaker could use the remaining 80
percent of its advertising space to engage in counter-speech, that wasn’t
enough—the speaker was being forced “to tailor its speech to an opponent’s
agenda,” and to respond to a one-sided and misleading message when it would
“prefer to be silent” (which sounds like it’s going back to point one).  “[C]ountering San Francisco’s misleading
message would leave them little room to communicate their intended message.
This would defeat the purpose of the advertisement, turning it into a vehicle
for a debate about the health effects of sugar-sweetened beverages.”
 

sample ad submitted by plaintiffs
Plaintiffs submitted unrefuted declarations from major
companies manufacturing sugar-sweetened beverages stating that they’d remove
advertising from covered media if San Francisco’s ordinance went into effect. Effectively
ruling out advertising in a particular medium was evidence of undue burden
(consider the effect of this holding on FTC/FDA disclosure rules and Twitter
ads).   The district court erred in rejecting this
evidence because the declarations were “self-serving,” which alone isn’t enough
reason to disregard an affidavit.  The
district court also reasoned that tobacco and pharmaceutical companies
continued to advertise despite being compelled to provide similar warnings. But
SSBs don’t have “the same physiologically addictive qualities as tobacco, nor
are they prescribed by doctors to treat health conditions like pharmaceutical
products. There is no evidence in the record that advertisers have continued
advertising products analogous to sugar-sweetened beverages in the face of
compelled disclosures of the sort required here.”  
[While I understand why the payoff from addiction might be
enough to get tobacco companies to continue to advertise despite the warnings, I
don’t get the second distinction.  If
anything, the availability of an alternate means to get to the
consumer—advertising to doctors who prescribe drugs—makes it even clearer that
the benefits of advertising directly to consumers induce pharmacos to continue
to advertise despite onerous disclosure requirements, thus not chilling their
speech.  Is the distinction one of care
exercised by consumers in choosing?  The
profit margin on drugs/payoff per ad dollar, on which no factual findings have
been made?  That’s all I can come up with
at the moment.]
Though SF had a substantial government interest in the
health of its citizens, it failed to meet its burden for these reasons, though
the court commented in a footnote that SF might not even be able to establish
that providing misleading information through an unduly burdensome disclosure was
reasonably related to its substantial interest in the health of its citizens.
Indeed, San Francisco “has no legitimate reason to force retailers to affix
false information on their products.”

Judge Nelson
concurred in the judgment because of the warning’s size.  “[T]he City has not carried its burden in
demonstrating that the twenty percent requirement at issue here would not deter
certain entities from advertising in their medium of choice.” She wouldn’t have
ruled on the “tenuous” ground that the disclosure was misleading.

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“Herbal” doesn’t include animal products

VBS Distribution, Inc. v. Nutrivita Laboratories, Inc., — Fed.Appx.
—-, 2017 WL 4118381, No. 17-55198 (9th Cir. Sept. 15, 2017)
VBS makes a commercial television live auction show named
“DAU GIA TREN TRUYEN HINH” (“Fight Price on Television”). It primarily auctions
jewelry, particularly diamonds. VBS claimed a unique trade dress made of: a)
the unique style and format of the show, b) its time slot and date selection,
each week on alternate weekdays, from 5 to 7 p.m., on Tuesdays and Thursdays,
c) the price range for its auctioned items, ranging from about $300 to $3000,
d) its ‘least to most expensive’ format in which the least expensive items are
sold first, ascending to the most expensive items at the end of the show, e)
the length of the show, 2 hours, f) its focus on live TV auctions of jewelry,
particularly diamonds, g) its carefully selected vendors, who appear on the
show with the show’s host, h) unique and proprietary camera angle and special
lighting techniques developed by Plaintiffs using an Apple ipad tablet, [and]
i) the number and selection of items sold, usually about 30 items.”
VBS sued over a co-host’s activities advertising on KVLA, VBS’ competitor, for a show entitled “Diamond at a Surprise Low Price,” using
the same hostess, some of the same vendors, the same style as provided by the
same technician, the same time slot of 5:00 pm–7:00 pm, but on Mondays,
Wednesdays and Friday instead of Tuesdays and Thursdays, the least to most
expensive format, the same auctioning of approximately 30 items each show, the
content is virtually identical, and the price range of products is virtually
identical ($300–$3,000). KVLA also advertises a supplement, Arthro–7, on its
show.
The court of appeals reversed and remanded the denial of a
preliminary injunction in this trademark infringement, trade secret, and false
advertising case.  TM: Although the overall
configuration of VBS’s live auction television show was functional, it could
still claim protectable trade dress in its “overall look and feel of VBS’s live
auction show, regardless whether individual elements that constitute part of
the claimed trade dress are functional.” (Looking at the initial decision, it appears to me that the real problem is the failure to describe the trade dress with reasonable specificity–I don’t think anyone could have a TM on the idea of a two-hour timeslot with products presented in order of increasing price; it’s possible that other elements in the show might, maybe, be protectable in the presence of secondary meaning, but saying that there are unique camera angles doesn’t give enough information about what those angles are to see, not just whether all the claimed aspects are functional, but also if there’s a real trade dress at issue, and not just a set of unprotectable ideas.  I think this one might be ripe for re-dismissal with more explanation on remand, though the “same hostess” thing is very interesting–query whether the public policy favoring free job mobility should affect the scope of any rights VBS might have.)
Trade secret: VBS’s customer list contains identifying
information that wasn’t readily accessible to the public or to other
businesses, including purchase histories, methods of payment, and amounts of payment.
Because VBS had the names of people who had already expressed an interest in
purchasing jewelry from an auction television show, the customer list had
independent economic value o VBS’s competitors. Thus, the district court shouldn’t
have rejected trade secret misappropriation claim on the ground that VBS failed
to show that a reasonably diligent competitor couldn’t readily get the
information in the customer list.
False advertising: The district court erred in failing to
find literal falsity for two statements.  Nutrivita advertised that Arthro-7 was “100%
herbal,” but its own ingredient list includes animal products, and animals aren’t
made of herbs.  (The reasoning below was that both sides just asserted: Ps that herbal isn’t animal products, and Ds that the industry accepts animal products as herbal.  At some point, we have to figure out what words mean, and the court of appeals seems right on this point: without anything but the dictionary, you can identify literal falsity.)  Nutrivita’s CEO also
admitted that there was no basis for its claim “8 Million Bottles Sold,” making
it literally false, though “Doctor Recommended” was not literally false and VBS
didn’t put in evidence of misleadingness.  (On the 8 million bottles, the reasoning below was that falsity was plausible but there wasn’t evidence of likely success on the merits, which appears to have been too opaque for the court of appeals and is for me as well.)
Remanded for further consideration of the remaining PI
elements.

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Adding clickbait title isn’t false advertising or fraud on author

Dankovich v. Keller, 2017 WL 4081852, No. 16-13395 (E.D.
Mich. Sept. 15, 2017)
Interesting dispute: the pro se litigant didn’t like the
editing of his essay, including the clickbaity headline added by the editors,
and sued for various fraud/false advertising claims. The magistrate judge
recommended denial of leave to amend/dismissal of various claims, and the
district judge agreed.
Dankovich wrote an essay about his experience as a young
prisoner in solitary confinement.  He
sent a draft to defendant Eli Hager, an editor at defendant The Marshall
Project, a non-profit news organization that focuses on the criminal justice
system. He called the essay The Riving, which dealt with “how quickly solitary
confinement can institutionalize and mess with the mind of an adolescent.” Hager
requested a few alterations and stated “[j]ust like last time, my higher-up
editor will have the final say, so I don’t want to make any promises. But I
definitely CAN promise that if you keep working on these pieces and future
submissions, you will definitely be published here.” He responded, and then
Hager sent him “the latest” version and said that it had moved to the top of
the queue for publication. The Marshall Project, in collaboration with
defendant VICE, published the essay under the title I’m Losing My Mind after
Refusing to Plead Insanity for Murdering My Mom. Dankovich also alleged other
changes to the text of his essay, including that he pleaded no contest to the
murder of his mother when he pleaded guilty, and that “around”—not “on” — his
eleventh birthday he was taken to the hospital for physical abuse by his
mother.  (The plea information was
apparently later corrected.)  Dankovich
objected to the published version but Hager told him that VICE Media wrote the
headlines and wouldn’t be changing this one.
Dankovich sued for copyright infringement (not addressed
here) and Lanham Act violations, and tried to amend the complaint to add fraud
claims.  The court agreed that Dankovich
couldn’t adequately plead fraud based on Hager’s statements to Dankovich about
the essay: none of Hager’s statements contained a representation that the essay
was returned to Dankovich in final version, and thus Dankovich couldn’t allege
reliance on a false statement.  The
statement, “My editor just informed me that she liked your piece (‘The Riving’)
so much that she’s moving it to the top of our production queue,” wasn’t a
statement that the piece would be published as submitted, nor was the statement
that “[a]ll of the different parts are still yours, but they’ve shifted around
a lot of lines to make things pack more of a punch” false in context, which
included Hager’s statements that he wanted Dankovich to see the edits “since
it’s your piece” but that “this kind of editing happens with all of our pieces.”
The statement “[a]ll of the different parts are still yours” was thus, in
context, not a representation about the published version would be “all his.”  Dankovich’s subjective interpretation was
wrong, but that didn’t make out a fraud claim.

Lanham Act claim: Initially, Dankovich only pled
§43(a)(1)(A) claims, but wanted to argue false advertising: “Defendants
continue to advertise a completely false statement which Plaintiff has never
written or uttered with Plaintiff’s name online, advertisement which furthers
The Marshall Project’s business and political goals.”  The initial complaint argued that the
headline was falsely attributed to him. 
Considered as false advertising, this fell short: there were no facts
alleging that any false statements were made in “commercial advertising or promotion.”
Even assuming implied falsehood, he didn’t allege facts showing that a
“substantial portion” of the 100,000 people who read the essay were deceived by
the title, other parts of the essay, or defendants’ attribution of the essay to
him, or facts showing materiality to a purchasing decision.  Also, Dastar
prevented any “origin”-based claim—an interesting entry into the trend of using
Dastar to resolve issues that also
might be Rogers v. Grimaldi type
cases of affirmative (alleged) misrepresentations of authorship.

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Reading list: consequences of 1A protections for off-label promotion

Patricia J. Zettler, The Indirect Consequences of Expanded Off-Label Promotion, Ohio State Law Journal, Forthcoming 

The U.S. Food and Drug Administration’s (FDA) policies have been a battleground for litigation about First Amendment protections for commercial speech. In the last five years, the FDA’s position that “off-label” promotion of approved prescription drugs—when a manufacturer promotes a drug for a use for which the FDA has not approved it—leads to violations of the Federal Food, Drug, and Cosmetic Act has been subject to successful legal challenges. Although the merits of these off-label promotion decisions are well traversed in the literature, this Article explores the potential indirect consequences of recently-recognized protections for off-label promotion. This Article demonstrates that—as suggested in the dissenting opinion in United States v. Caronia, a high-profile 2012 case regarding off-label promotion—protections for off-label promotion might affect the FDA’s decision-making in areas other than drug promotion, and analyzes precisely what those effects could be in light of the FDA’s current statutory authority.

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Reading list: the consumer in TM law

Kimberlee G. Weatherall, The Consumer as the Empirical Measure of Trade Mark Law, The Modern Law Review, Vol. 80, No. 1, pp. 57-87, 2017


Although consumer responses to signs and symbols lie at the heart of trade mark law, courts blow hot and cold on the relevance of empirical evidence – such as surveys and experiments – to establish how consumers respond to alleged infringing marks. This ambivalence is related to deeper rifts between trade mark doctrine and the science around consumer decision‐making. This article engages with an approach in ‘Law and Science’ literature: looking at how cognitive psychology and related disciplines conceptualise consumer decision‐making, and how counterintuitive lawyers’ approaches appear from this perspective. It demonstrates how, especially when proving confusion, decision‐makers in trade mark demand the impossible of empiricists and are simultaneously blind to the weaknesses of other sources of proof. A principled divergence, without seeking to collapse the gaps between legal and scientific approaches, but taking certain small steps, could reduce current problems of proof and contribute to better‐informed, more empirically grounded decisions.

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Right of publicity question of the day

Restaurant: Thelonious Monkfish

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SPIRE-inspired TM suit fails to enjoin noncompetitor

Spire, Inc. v. Cellular South, Inc., 2017 WL 3995759, No.
17-00266 (S.D. Ala. Sept. 11, 2017)
Spire, a provider of natural gas fueling services, sought a
declaratory judgment against Cellular South, d/b/a C SPIRE, a wireless
telecommunications provider that also provides television and internet services,
for noninfringement/nondilution, and Cellular South sought a TRO/PI in
return. 
Cellular South began doing business as C SPIRE in late 2011.  In late 2012, the entity now known as Spire
chose the Spire mark and began using it for its natural gas stations, displayed
in a combination of gray, blue and white. 
In 2013, LXE and Cellular South entered into a coexistence agreement;
LXE used “Spire” for antennas for infrastructure, not sold to ordinary
consumers.  In 2014, now-Spire’s
rebranding as Spire spread, and Spire was registered for fueling stations and
used on a national website.  In a 2015
trademark search, now-Spire identified C SPIRE as one of the results in 596
pages of results; now-Spire considered it irrelevant because it wasn’t in the
same business.  There were over 150 active
registrations for Spire, including 15 in Alabama.  In 2016, Spire began rebranding most of its
operations under the Spire brand name, including for promoting, offering and
rendering natural gas marketing/fueling in Alabama, Mississippi, Missouri, and South
Carolina.  Cellular South then sent a
C&D and opposed Spire’s pending trademark registration.  Spire’s rebranding continued; as of August
2017, employees were wearing Spire hats and ID badges but had yet to get new
uniforms, and vehicles were being updated.
Cellular south cited 2016 and 2017 market surveys for
Mississippi indicating C SPIRE has a “high brand preference” and the general
health of the brand is “very strong,” with 88% brand awareness in that state.  The court found that the mark was at least
“well known” in Mississippi, but evidence didn’t support strength claims for
other states.  Spire submitted
significant evidence of competing uses in many states, rendering the term “heavily
diluted nationwide.” “Cellular South has not established a substantial
likelihood of showing that its mark is arbitrary and thus entitled to the
highest protection.” [Yes, this conflates conceptual with marketplace strength,
but it doesn’t seem to make a difference.]
Mark similarity: 
Cellular South’s witness testified that Cellular South’s logo will be
confused with Spire’s logo because “the average consumer driving down the road
at 55 miles per hour seeing a billboard will likely think Cellular South
altered its logo and changed its color to orange.” The court found that the
marks differed somewhat: Spire’s mark is orange, with block lettering in a
specific font, and has a symbol after the lettering (two staggered
semi-circles, representing a handshake). Cellular South’s mark is blue, with
rounded lettering in a different font, and has a symbol before the lettering (a
“c” with beams of varying lengths surrounding it). They were pronounced
differently: one versus two syllables, and one using “c” while the other didn’t.
Cellular South also made prior representations to the USPTO (in the Honeywell
agreement) that its use of the letter “c” in its logo sufficiently
distinguished it from another “spire” mark. 
The context was distinguishable (businesses involved in infrastructure,
not common consumers) but that argument was still relevant.  Overall, the colors differed, the fonts
differed slightly, the spacing differed slightly, and the art differed, making
the overall impression distinguishable. Similarity weighed slightly in Cellular
South’s favor.

Product/service similarity:  Cellular South argued that local and long
distance transmission of telecommunications was similar to Spire’s  “local and long distance transmission of gas”:
Cellular South has 7,000 miles of fiber cable underground and Spire supplies
natural gas through underground pipelines.  Also, “someone may move into a new home or
office and need to set up phone, internet, television and gas. In that case, he
or she could call C Spire for the first three and Spire for the last.”  Cellular South planned to expand into lighting
controls, thermostats, CO2 detectors, etc. for the household, and argued that
Cellular South was a utility like Spire.
The court disagreed. 
“Spire’s natural gas energy services are distinct and unrelated to Cellular
South’s telecommunication goods and services.” They don’t compete, and, as
Cellular South told the USPTO, its buyers sign up for phone or computer
services not “by mistake” nor “without full knowledge as to the source of those
services.”  
There was also no evidence of actual confusion.  Jacob Jacoby did a survey and concluded that
“it is highly unlikely that any consumers seeking telecommunications services
would call a natural gas company for such services, or think that one is linked
with the other – noting only 2.7% of consumers may think the businesses could
be associated.” The lack of relation between the parties’ services made
confusion less likely.  Most interesting
citation: General Motors Corp. v. Cadillac Marine & Boat Co., 226 F. Supp.
716 (W.D. Mich. 1964) (rejecting plaintiff’s theory that “public confusion
automatically follows the use of the trademark ‘Cadillac’ upon any other
product, no matter how unrelated it may be to Cadillac automobiles” and holding
“[w]hile Cadillac cars and defendant’s Cadillac boats are means for
transportation….they do not possess the same descriptive properties….This
differential makes them void of inherent confusing characteristics.”….).
Indeed, the court, continued, “[c]ase law also suggests that
direct or actual competition with the same or similar goods/services is
required for an infringement claim to survive.” 
V. interesting!  The court pointed
to dilution as the appropriate cause of action for unrelated
goods/services.  In terms of Cellular South’s
claim to its “zone of natural expansion” in services, “the senior user of a
mark cannot monopolize markets that neither his trade nor his reputation has
reached.”  Being utilities delivered
undergraound wasn’t sufficient similarity to weigh in Cellular South’s favor.
Similarity of customers and sales outlets between the
entities: Cellular South argued that it used all types of advertising you can
think of and sold to the general public, leading to inevitable overlap.  Spire responded that it didn’t use retail
stores (consumers have to call Spire or use its website to sign up) and that
the public couldn’t select from a long list of competing natural gas providers
as it can for telecom providers.  “Cellular
South’s advertising and sales argument is based on a faulty premise — that
Cellular South and Spire are using the same available channels of advertising
to compete against one another…. Further, apart from stating its customers are
homeowners and businesses, Cellular South has not shown how a cell phone or
internet customer is similar to a natural gas customer.”  [Well, they probably often are the same
person, but they could be thinking about different things for different
purchases.]
Similarity of advertising methods: the court found this
factor neutral, given Spire’s arguments that the content of its ads were very different, despite the similar
media.  “[W]hile both companies may use
the same or similar advertising methods and styles, because the companies are
not competitors in the telecom industry, they are necessarily communicating
distinct and different advertising messages to different audiences.”
Intent: Cellular South didn’t show that Spire had a
conscious intent to capitalize on its reputation/goodwill, was intentionally
blind, or otherwise manifested improper intent in adopting its mark.
Actual confusion: Cellular South’s confusion arguments were
linked to its future plans to “own the home” – it recently applied to register
its marks for home automation and security services (alarm services – alarm
systems, CO2 detectors, thermostats, garage door openers, lights, AC, door
locks, lighting controls, etc). But Spire has no plans to go into the telecom
and internet business.  And Cellular
South couldn’t show actual confusion; there were no instances of both companies
advertising in Alabama and Mississippi. 
Its survey found that, after viewing the company’s logos, “just shy of
37%” of consumers were confused, thinking Spire was affiliated with Cellular
South.  Spire criticized showing only the
bare logos to participants, which the surveyor justified by arguing that Spire
wasn’t yet in the marketplace and that isolated logos are common (e.g., on a
headset or jumbotron). The surveyor also testified that there might be
confusion and inconvenience with customer call centers, and that a Spire
catastrophe could affect the image of Cellular South.  Jacoby responded that Cellular South’s expert
used the wrong universe (testing Spire’s customer base, not Cellular South’s),
wrong stimuli (logos without context), and wrong protocols (no control group!).
The court found no evidence of actual confusion, just conjecture
and speculation by Cellular South. “At most, the evidence, per Dr. Jacoby,
indicates that 15.3% of consumers thought a telecommunications business and a
natural gas business could be associated. Association, however, is not de facto
confusion.” On balance, there was no likely success on the merits.
Alabama and Mississippi Trademark dilution: 15 U.S.C. §
1125(c)(6) states that “[t]he ownership by a person of a valid registration …
on the principal register under this chapter shall be a complete bar to” a
state law dilution claim.  But Cellular
South is challenging the Spire registration. 
While that was pending, the court wouldn’t dismiss the state-law
dilution claims as preempted.
Both states protect marks that are “famous and
distinctive.”  Fame meaans “widely
recognized by the general consuming public of this state or a significant[ ] geographic
area in this state as a designation of source of the goods or services or the
business[ ] of the mark’s owner.”  For
Alabama, there was no evidence that the C SPIRE was “famous” in Alabama before
Spire’s first use of the “spire” mark in December 2013. For Mississippi, the
evidence of fame was from 2016, years after Spire’s first use of a version of
the “spire” mark in December 2013. However, since Spire used other versions of
the mark in 2016, there was “some” evidence of C SPIRE’s fame at that time.  “[E]ven assuming arguendo that the C SPIRE
mark was famous in Mississippi as of March 2016, Cellular South still has to
submit evidence showing that the public associates (or will likely associate)
the same mark with both Cellular South and Spire, and that such association
infringes on Cellular’ South’s rights ‘by preventing the mark to serve as a
unique identifier of the senior user alone.’” While it was a close case, the
court found that Cellular South hadn’t shown a substantial likelihood of
success on the merits.  (Could it be
a close case overall if the Spire registration might be valid?)
Irreparable harm: eBay
applied to trademark cases. Cellular South argued that the threat of lost
control over its reputation was irreparable harm.  But “Cellular South and Spire do not
produce/sell (or associate with) the same goods/services such that one would
logically (or necessarily) ‘be at the mercy’ of the nature and quality of the
goods/services of the other.”  Cellular
South’s evidence was speculative: e.g., “risk of a gas leak,” theoretical
“negative customer experiences,” “negative social posts” incorrectly linked to,
or associated with, Cellular South. But Cellular South also emphasized the
hundreds of millions of dollars and thousands of hours it has invested to to
create trust in its brand. Here’s a good quote for defendants in non-competing
goods cases: “The Court finds it incongruous for Cellular South to argue how
famous and well known its name is and how vested it is with its customers and
communities as a trusted brand, yet to simultaneously ask the Court to conclude
that Spire’s use of a mark – in a different industry, with a different
business, selling/providing different goods/services – is on the verge of
causing the imminent loss or destruction of all of those dollars and work hours
unless an immediate injunction issues.” 
Plus, Cellular South’s delay in seeking injunctive relief
argued against irreparable injury; it knew of Spire’s rebranding plans at the
latest in March 2016, when it sent a C&D. 
Then Spire sued for declaratory relief in June 2017.  Cellular South only moved for injunctive
relief in August 2017.  The potential for
a slow rollout of Spire’s rebranding didn’t justify disregarding the March 2016
letter, which “indicates that Cellular South thought the harm or injury was
actual or imminent at that time, not prospective, potential or possible, yet
failed to seek injunctive relief.” And in February 2017, Spire notified
Cellular South that it was already rebranding and that the process would finish
by the end of 2017.  Whether Cellular
South’s delay was a few months or 18 months, it undercut any urgency.
The balance of harms weighed in favor of Spire, given that
it had already started operating under that mark and it had invested substantially
in rebranding since 2016. Nor, of course, did the public interest favor an
injunction.

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