post-complaint changes prevent finding of irreparable harm

Pegasystems, Inc. v. Appian Corp., 2020 WL 137301, No. 19-11461-PBS (D. Mass. Jan. 13, 2020)

Following on its denial
of a motion to dismiss
, the court denied a motion for preliminary
injunction in this false advertising case. Because the alleged falsity depended
on a supposedly independent review being paid for and on overstating the number
of responses to the survey, the motion had to be evaluated “in light of the
post-complaint changes Appian has made to the challenged statements.”
Specifically, Appian removed the phrase “Through approximately 500 responses”
and added language regarding the Report’s sample size. Appian also added text
on both pages of its website reading, “While all projects are different, we
encourage you to read the report and assess what relevance [the surveyed]
businesses’ experiences may have for your business” and acknowledged that
“Appian commissioned BPM.com” to conduct the survey contained in the Report. A
“Preface from Appian” was inserted as the first page of the Report disclosing
Appian’s commission.
Although the delightfully named Pegasystems alleged that
other parts of the report were false or misleading, including flaws in methodology,
the court didn’t find likely success on those other allegations. Appian admitted
that it “reviewed and provided input on drafts” of the Report, but denied that
the results were manipulated to favor Appian. Factual issues remained to be resolved.

Because of the post-report
changes, Pegasystems couldn’t show continuing harm from the initial misrepresentations
of independence and sample size.

No irreparable harm/likely success, no injunction.

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labeling grandfathered drug in standard format doesn’t misrepresent it as FDA-approved

Belcher Pharms., LLC v. Hospira, Inc., — F. Supp. 3d –,
No. 8:17-cv-2353-T-30AAS, 2020 WL 102744 (M.D. Fla. Jan. 7, 2020)
“Epinephrine—a drug that is a medical necessity—has been in
short supply on and off for nearly a decade.” Hospira has made epinephrine since
before 1938, so Hospira is “arguably” grandfathered under the FDCA and has
never received FDA approval.  Regardless,
“the FDA asked Hospira to ramp up manufacturing to manage the epinephrine
shortage in 2010, which Hospira did.”   
Belcher launched an FDA-approved epinephrine ampule (it does
not sell a prefilled syringe, as Hospira does), in 2015. By early 2017, there
was no longer a shortage of epinephrine ampules, so the FDA asked Hospira to
discontinue its unapproved ampule, but to continue manufacturing its
still-scarce prefilled epinephrine syringe. Hospira complied, and Belcher saw
an increase in the sales of its epinephrine ampule.  After this, the FDA asked Hospira about
extending the expiration dates of the prefilled syringe, and the FDA then told
healthcare providers that the expiration dates were extended by 9 months past
the earlier 21-month expiration date.  
Becker sued Hospira for false advertising and for common law
unfair competition, for allegedly marketing its epinephrine products—both the
ampule and prefilled syringe—as FDA-approved. 
The court granted Hospira, “which did everything the FDA requested to
manage a severe shortage of a medically necessary drug,” summary judgment.    After the FDA told Hospira to discontinue its
epinephrine ampules, the FDA asked Hospira about extending the expiration dates
of its prefilled syringe. Hospira sent the FDA its shelf-life analysis, and
shortly thereafter the FDA told healthcare providers that the expiration dates
for Hospira’s prefilled syringe were extended for 9 months past their 21-month
expiration date. Hospira’s ampules had a 24-month expiration date, while
Belcher’s ampule had an expiration date of 12 months, which the FDA later
extended to 17 months.   Belcher alleged the following as false
advertising:  
1. Hospira’s product labels, which include as indications
for use that the epinephrine products (a) can treat cardiac arrest, (b) can be
administered intravenously, and (c) can prolong the effects of anesthesia; 2.
Hospira’s misleading advertisements as to its epinephrine products’ shelf life
on its packaging; and 3. Hospira’s comparison of its epinephrine products to [FDA-approved]
Adrenalin, which conveyed the message that its products were generic Adrenalin.
The court found that placing the products on the market with
indications for use and shelf life on product labels and packaging, in standard
format for FDA-approved drugs, could not, in itself, be a misleading claim of
FDA approval. It was too great a stretch to argue that presence on the market
in this was a representation of FDA approval. 
 
That left the comparison claim: Hospira compared its
products to FDA-approved Adrenalin, thus allegedly implying that it was a
FDA-approved generic.
First, internal Pfizer emails and an email response to a
drug distributor who inquired if Hospira was marketing the generic version of
Adrenalin were not “commercial advertising or promotion.”   An
Injectables Product Availability Report on its website did qualify, but
couldn’t be shown to be material. Even if the court assumed it was misleading,
that didn’t connect up to Belcher’s evidence that consumers believed Hospira’s
epinephrine products were a generic version of Adrenalin approved by the FDA. “Belcher
has not shown that a single consumer ever viewed the Injectables Product
Availability Report or was misled by it. Without evidence that a consumer
viewed the Injectables Product Availability Report, Belcher cannot show that
the misleading statements had a material effect on purchasing decisions.”   

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Reading list: Pam Samuelson on legal writing

From the archives: Excellent short piece on legal writing, for students and other
legal writers of all kinds.  In itself,
interesting to see how a groundbreaking female academic framed things in 1984,
including the advice not to use “she” as the generic third person singular
pronoun; it was “too cute.”

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confusion is not irreparable harm in false advertising case

AMETEK CTS US, Inc. v. Advanced Test Equipment Corp., No.19-cv-02348-H-AHG,
2020 WL 133888 (S.D. Cal. Jan. 13, 2020)
The parties operate in the market for “sophisticated
electronic instruments in the automotive, telecommunications, energy,
aerospace, power, research, medical and industrial markets.” AMETEK sells
directly to consumers and also distributes its products through commercial
partners, while defendant ATEC has been a distributor of AMETEK’s products. In
late 2019, AMETEK informed ATEC that it would have to “decline the opportunity
for non-warranty service requests on behalf of ATEC going forward.” “Defendant
responded negatively to this development.” ATEC issued a press release titled
“AMETEK CTS No Longer Calibrating or Repairing Equipment After The Warranty
Expires,” disseminated through its website, social media, and email. AMETEK
began to receive inquiries about this from various customers and distributors. Although
ATEC offered to publish a retraction prepared by AMETEK, AMETEK instead sued
and sought a TRO, which the court here denied. ATEC represented to the Court
that “the press release with the allegedly false statements at issue in the
complaint had been taken down from ATEC’s website and that ATEC would not
disseminate similar statements” during the course of this litigation.
The court held that AMETEK failed to show both irreparable
harm and likely success on the merits. “Although loss of goodwill may
constitute irreparable injury, the loss must be based on factual allegations
and not be purely speculative.” Here, the evidence offered by AMETEK showed, “at
most, that some consumers were confused by ATEC’s press release. However, the
Ninth Circuit has explained that customer confusion is not the same thing as
irreparable harm.” None of the customers stated that they now had a negative
impression of AMETEK or that they’d refuse to deal with it in the future—these weren’t
like “numerous and persistent complaints from would-be customers” or actual
product complaints as a result of the disputed conduct.  Likewise, a VP’s declaration asserting that “AMETEK’s
reputation in the marketplace has been harmed by ATEC’s false statements” and
that “AMETEK expects to lose future sales” as result of ATEC’s conduct was too
conclusory.
Success on the merits: AMETEK argued that ATEC’s statements
about the scope of AMETEK’s post-service warranty were literally false, because
“AMETEK CTS No Longer Calibrating Or Repairing Equipment After The Warranty
Expires” indicated that it was no longer calibrating or repairing equipment
after the warranty for any purchaser. The body of the press release said that
“AMETEK CTS has notified [ATEC] that they would no longer be supporting their
products after the warranty period has expired.” In fact, AMETEK argued, it was
still supporting these product lines after warranty as long as the relevant
machines were not purchased by ATEC. ATEC argued that its contested statements were
true in the context of the entire press release.  The court found numerous disputed issues of
fact precluding a finding of likely success—both parties’ arguments were reasonable.
The argument that the subject line was misleading was “not without merit,” but
ATEC’s reference to the context of the full release was “also compelling.”
However, the case was not moot simply because ATEC removed
the offending statements from public view. ATEC made no argument that its
behavior “could not reasonably be expected to recur.”

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Amicus brief in Booking.com

Joined by a number of able trademark scholars, I filed this amicus brief in Booking.com in support of neither party, arguing that (1) genericness standards need to take into account the risks of overassertion/overprotection, and (2) unfair competition doctrine provides relief for deceptive uses of even generic terms, but does not allow a ban on the use of such terms–the remedies have to focus on proper additional labeling.  EFF and AIPLA also filed amicus briefs, available here.

One note about the AIPLA brief (in support of neither party), which contends:

… gTLD composite marks should nevertheless be limited to the applicant’s use of the specific terms in combination. For example, the PTO should require the owner of “TOYS.COM” (if it has acquired distinctiveness and is otherwise protectable) to disclaim any right to use “TOYS” or “.COM” apart from the proposed mark as shown. This would potentially allow the trademark owner to argue that a competitor using “TOYZ.COM” is likely to confuse, but should not preclude the use of the generic term “toys” with another gTLD (e.g., “TOYS.BIZ”).  

The first two sentences make sense if TOYS.COM is to be allowed at all, but I have no idea how they expect to get to the last one without committing judges to casual empiricism, which would help preserve competition but which is in deep tension with the idea of the multifactor confusion test as an empirical inquiry. Even if TOYS.COM is supposed to be limited to the combination, it would almost certainly survive a motion to dismiss if they sued either TOYZ.COM or TOYS.BIZ, because the degree of mark similarity is only one factor in the confusion test and both hypotheticals diverge in some respects from TOYS.COM.  Implicitly, AIPLA wants the Court to think that there’s some rule that the gTLD is more useful to distinguish between businesses than the spelling of the second-level domain name, at least for second-level domains that are generic on their own (as both TOYS and TOYZ would be).  There is currently no such rule; ACPA cases and UDRP precedent are both decidedly to the contrary (at least for things that are distinctive and not generic terms). See, e.g., Omega S.A. v. Omega Eng’g, Inc., 228 F. Supp. 2d 112, 126 n. 36 (D. Conn. 2002) (“When evaluating whether a domain name is confusingly similar to a trademark, a district court disregards the top-level domain name (e.g. ‘.com’, ‘.org’, ‘.net’ etc.).”). And if your survey expert couldn’t get confusion results for TOYS.BIZ at least as extensive as those for TOYZ.COM, you have the wrong survey expert.

Underneath, perhaps, is an intuition about what we talk about in our brief: unfair competition as distinct from trademark as a basis for avoiding consumer deception. If TOYS.BIZ is definitely to be allowed, it is because “toys” is generic on its own, and therefore no amount of consumer confusion should justify TOYS.COM being the only provider allowed to use “TOYS” on its own as a second-level domain name.  But why that is different from TOYZ.COM is a mystery to me–for both, the appropriate answer is to use unfair competition to prevent either registrant from taking other actions that confuse consumers, like imitating the layout of TOYS.COM or otherwise failing to label itself.

A side note for any practitioner readers: I will often seriously consider filing an amicus in a case that raises an interesting legal issue, assuming I can make it work with my schedule. Please feel free to reach out if you think you have a case that would benefit from amicus attention–though of course I can’t promise I’ll be on your side!

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Amicus brief in Google v. Oracle

Like everyone else, I filed an amicus, this one on behalf of copyright scholars, focused on fair use. Other currently submitted briefs are here.

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Reading list: disclosures as compelled commercial speech

Reading list: Aaron Stenz, Note:
The Controversial Demise of Zauderer: Revitalizing Zauderer Post-NIFLA
, 104
Minn. L. Rev. 553 (2019).
The First Amendment broadly stands
for the idea that government attempts to curtail the right of the American
people to both speak and not speak should be viewed with the utmost skepticism.
In the context of compelled commercial speech, however, that scrutiny is lessened.
Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio (Zauderer)
established that where the government attempts to compel commercial speakers to
make disclosures of purely factual and uncontroversial information about
products or services, courts will consider such regulations more deferentially.
Zauderer recognized that commercial speakers have a minimally protected
interest in notdisclosing such information, while the government has a vital
interest in protecting consumers against deceptive practices.
Zauderer has been interpreted in a
myriad of ways, with courts diverging on when Zauderer deference should be
applied, culminating in the Supreme Court’s 2018 decision in National Institute
of Family and Life Advocates v. Becerra (NIFLA). The NIFLA majority reasoned
that Zauderer deference was not applicable to a California disclosure
requirement in part because the underlying topic—abortion—was controversial.
This Note argues that the use of
the “purely factual and uncontroversial” standard as a threshold requirement
for Zauderer deference to be applied has always been problematic, but that
NIFLA is the straw that broke the camel’s back, mandating a fundamental
reconsideration of Zauderer deference. The “purely factual and uncontroversial”
standard has become the mutated product of an inconsistent body of law, and,
following NIFLA, is both prone to judicial bias and is fundamentally divorced
from the consumer protection interests. This Note concludes that, in order to
remedy these fatal flaws, Zauderer’s “unjustified or unduly burdensome”
standard should replace the “purely factual and uncontroversial” standard for
the application of Zauderer deference.
Comprehensive and thoughtful. Kudos to the author.

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