New verse, same as the first in Sony/Michael Jackson case

Serova v. Sony Music Entertainment, 2018 WL 4356891, — Cal.Rptr.3d
—-, No. B280526 (Ct. App. 2018)
The court amends its opinion finding that Sony’s advertising
that Michael Jackson was the performer of all the songs on the posthumous
Jackson album Sony released wasn’t commercial speech, but the amendment doesn’t make things any
better.  This provides an interesting
contrast to the other day’s One A Day opinion. 
The court here adds a footnote arguing that it didn’t matter whether
consumers would have understood Sony’s advertising to make factual claims about
the singer’s identity. What mattered instead was Sony’s lack of personal
involvement in creating the recordings [pretending that “Sony” is the kind of
entity that can have personal involvement]. It’s not that Sony’s statement is
opinion (in which case consumer understanding of what claim was being made
would be relevant), it’s that Sony’s lack of personal knowledge of its own
business operations makes the speech noncommercial.
Obviously, this creates pretty bad incentives for
corporations, but I think it’s worth reiterating that this is also inconsistent
with Kasky, on which the court of appeals purportedly relies, since Nike was
making statements about its subcontractors’ practices that the California
Supreme Court concluded were commercial speech. [Nike’s defenders even argued
that, precisely because it was talking about its subcontractors, the argument
that commercial speech has greater verifiability than other kinds of speech
shouldn’t apply.]  Nike’s statements were
the kinds of factual claims, including claims about Nike’s outsourcing
practices and their results, that it was in a better position to verify than
consumers. Consumers were also likely to rely on Nike’s expertise and greater
relative access to knowledge, as the Bayer court observed with respect to
Bayer.  To the extent that Nike may have
lacked “actual” knowledge, that was (1) a creation of Nike’s own choices to
subcontract rather than to do the work itself, for which it was responsible
(the analogy between that and the situation here is fairly strong), and (2) a reason that
Nike should have verified its statements rather than just saying them. [In the
actual situation involved in Nike, Nike maintained that it took steps to
substantiate its advertising claims—it simply took the position in the
California and US Supreme Courts that it didn’t have to do so and should be
able to win dismissal even assuming it had made those claims without knowing if
they were true.]

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New verse, same as the first in Sony/Michael Jackson case

Serova v. Sony Music Entertainment, 2018 WL 4356891, — Cal.Rptr.3d
—-, No. B280526 (Ct. App. 2018)
The court amends its opinion finding that Sony’s advertising
that Michael Jackson was the performer of all the songs on the posthumous
Jackson album Sony released wasn’t commercial speech, but the amendment doesn’t make things any
better.  This provides an interesting
contrast to the other day’s One A Day opinion. 
The court here adds a footnote arguing that it didn’t matter whether
consumers would have understood Sony’s advertising to make factual claims about
the singer’s identity. What mattered instead was Sony’s lack of personal
involvement in creating the recordings [pretending that “Sony” is the kind of
entity that can have personal involvement]. It’s not that Sony’s statement is
opinion (in which case consumer understanding of what claim was being made
would be relevant), it’s that Sony’s lack of personal knowledge of its own
business operations makes the speech noncommercial.
Obviously, this creates pretty bad incentives for
corporations, but I think it’s worth reiterating that this is also inconsistent
with Kasky, on which the court of appeals purportedly relies, since Nike was
making statements about its subcontractors’ practices that the California
Supreme Court concluded were commercial speech. [Nike’s defenders even argued
that, precisely because it was talking about its subcontractors, the argument
that commercial speech has greater verifiability than other kinds of speech
shouldn’t apply.]  Nike’s statements were
the kinds of factual claims, including claims about Nike’s outsourcing
practices and their results, that it was in a better position to verify than
consumers. Consumers were also likely to rely on Nike’s expertise and greater
relative access to knowledge, as the Bayer court observed with respect to
Bayer.  To the extent that Nike may have
lacked “actual” knowledge, that was (1) a creation of Nike’s own choices to
subcontract rather than to do the work itself, for which it was responsible
(the analogy between that and the situation here is fairly strong), and (2) a reason that
Nike should have verified its statements rather than just saying them. [In the
actual situation involved in Nike, Nike maintained that it took steps to
substantiate its advertising claims—it simply took the position in the
California and US Supreme Courts that it didn’t have to do so and should be
able to win dismissal even assuming it had made those claims without knowing if
they were true.]

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2 week difference leads to $10 million in damages in pregnancy estimator case

Church & Dwight Co. v. SPD Swiss Precision Diagnostics
GmbH, No. 14-CV-585 (AJN), 2018 WL 4253181 (S.D.N.Y. Sept. 5, 2018)
Church & Dwight won an injunction, affirmed by the Second
Circuit, against SPD’s advertising of its “Clearblue Advanced Pregnancy Test
with Weeks Estimator,” and the court here awarded nearly $1 million in damages,
but not fees, SPD’s profits, or treble damages/punitive damages under state law.
While “causation must first be established,” a court may
engage in “some degree of speculation” in determining the amount of damages.
“[T]he district court may take into account the difficulty of proving an exact
amount of damages from false advertising, as well as the maxim that ‘the
wrongdoer shall bear the risk of the uncertainty which his own wrong has
created.’ ”  Thus, the plaintiff’s burden
is to show
 “that its damages
calculation is a ‘fair and reasonable approximation’ of its lost profits.”
“C&D’s leading home pregnancy test brand, First
Response, has been the market leader for many years, and SPD’s leading brand,
Clearblue, has been First Response’s primary competitor.” C&D’s damages
expert used all of SPD’s sales of the accused product to estimate damages, then
calculated lost profits by using C&D’s market share to estimate how many of
SPD’s sales would have gone to C&D had the Weeks Estimator not been sold,
and multiplying that by C&D’s per-test stick incremental profit margin, resulting
in an estimate of $9,955,018.
SPD’s expert agreed that market share allocation was an
appropriate approach, but calculated lost profits of only [redacted, which is
annoying but not dispositive because his calculation was ultimately
rejected].  The “large” difference
between the two calculations came from SPD’s expert’s use of the consumer
reaction survey as a proxy for loss causation and his use of a lower per-stick
profit margin.
C&D’s expert assumed that all of the sales of the Weeks
Estimator were connected to the false advertising of the product’s key
differentiating feature, despite his admission that he cannot be sure that
every person who bought the Weeks Estimator bought it because of the
advertising or because they were deceived by the advertising.  C&D argued that this assumption was
warranted because: (1) Every consumer who bought the Weeks Estimator was
exposed to at least part of SPD’s marketing campaign, and weeks estimation was
both SPD’s key message and the key feature differentiating the product, which
was more expensive than C&D’s competing Clearblue product.  (2) Retailers’ decisions about whether to
stock the Weeks Estimator, how much shelf space to give it, and where to place it
on store shelves likely were influenced by false advertising, affecting
purchasers.  C&D’s expert assumed
that, but for that false advertising, the launch of the Weeks Estimator SKU “would
not have had an incremental effect on [SPD’s] First Response stick sales.”
The court found C&D’s expert’s assumptions to be
reasonable: “this is a competitive market in which the parties own the top two
brands; and there is one key distinguishing feature between the Product and
similar test sticks—a feature that was the subject of false advertising
directed at both consumers and retailers.” Also, evidence suggesting that some
subset of consumers were unaffected by the advertising wasn’t persuasive.
SPD offered a survey in which prospective pregnancy test
buyers were asked about their willingness to purchase two product concepts,
which found that 81% of respondents would “definitely purchase” the product
estimating pregnancy from the last menstrual period, and 84% of respondents
would “definitely purchase” the product that estimates pregnancy from
ovulation, which they understood to be different from a doctor’s estimate. Thus,
SPD argued, the key differentiating feature—the test’s ability to estimate the
number of weeks since ovulation—would still induce purchases even in the
absence of false advertising. But that survey used statements describing how
pregnancy duration was measured, not how that duration was expressed, which was
the key problem with Weeks Estimator. Also, the survey offered only two
extremes—would definitely purchase, and would not purchase—and showed each
participant only one product description, unlike the real world offering
options for comparison.  It isn’t
surprising that both descriptions were popular, compared to nothing else.
SPD also argued that international versions of the same
product were successful absent the false advertising, and that C&D understood
even without looking at the ads that the Weeks Estimator would take business
from it regardless of the false advertising. 
As for the different international marketing, “the absence of a formal
finding of falsity by a court does not necessarily mean that the international
advertising was not false or misleading.” While some international versions had
more descriptive names—principally, “Clearblue Digital Pregnancy Test with
Conception Indicator”—and/or contained a chart on the packaging that compared
the product’s measure of weeks since ovulation to a doctor’s estimate, other
foreign ads touted the product as being “As Accurate as a Doctor’s Test” and
featured language and imagery similar to those found misleading in the US.  As for the impact of the innovative nature of
the product itself, C&D argued that its documents and internal discussions
reflected its fear of the commercial strength of the product with attendant
misleading advertising. The court agreed.
Finally, SPD tried to use C&D’s survey, conducted by Hal
Poret, which C&D used to show an actionable level of consumer confusion, as
a measurement of how many sales were attributable to the at-issue advertising
or at least as evidence that not all sales of the product were attributable to
false advertising. But given that every purchaser and retailer was exposed to
intentionally misleading advertising about the key differentiating feature of
the product, and that the evidence about other reasons for purchase was
speculative, considering all the sales was not just reasonable, it was the most reasonable assumption.
The Poret survey wasn’t intended as a proxy for tying the
false advertising to the lost profits. It found roughly 20% net deception,
defining deception as answering both that the product estimates the number of
weeks a woman is pregnant and that the product’s estimate is the same as a
doctor’s estimate of weeks pregnant.  Poret had never taken the position that the
results of a study like this could be used to predict the percentage of actual
purchasers who were deceived.  He
contended that you can’t treat prospective purchasers as if they were actual
purchasers; it is even possible, though unlikely, that 100% of the actual
purchasers could have fallen within the subset of prospective purchasers who
were misled. He further testified that his survey didn’t account for the impact
of non-package advertising, and that survey likely understates the degree of
deception among respondents. For example, the control package he used still
identified the product as the “Clearblue Advanced Pregnancy Test with Weeks
Estimator,” which might have led some in the control group to make the same
mistake as confused people in the test cell. 
It is possible to use survey results as a proxy for damages causation,
but C&D’s market share was a better proxy in this litigation.
SPD also argued that the Weeks Estimator disproportionately
cannibalized Clearblue products rather than harming C&D’s products in
proportion to its market share.  C&D
offered a regression analysis reaching the opposite conclusion. SPD’s
criticisms were “atmospherically compelling in that they lay bare some of the
difficulties in finding a way to calculate the effect of the unlawful
activity—SPD’s false advertising—while controlling for all other forces
affecting market share.” But these criticisms were undermined by its own expert’s
reliance on a market share allocation methodology, which “inherently accounts
for a range of market factors.”  In any
event, C&D’s expert’s conclusions, backed by his regression, were
reasonable.
“While it is likely that some consumers bought the Weeks
Estimators for reasons disconnected from the false advertising, SPD has not
supported any one of these alternative reasons, or even the totality of these
other reasons, with evidence sufficient to overcome the evidence of the
reasonableness of [C&D]’s core market share assumption. SPD pervasively
falsely advertised the Product from its launch, never advertised it in a
truthful manner, and has not affirmatively offered any of its own data
regarding the number of purchasers who were not deceived ….” Most crucially,
the false advertising was about the key feature differentiating the Weeks
Estimator from other products, making this methodology and core assumptions that
much more reasonable.
The court denied disgorgement in addition to lost profits, because
that would be overcompensatory. Nor did the court treble the award under the
Lanham Act, even assuming that the false advertising was willful (at the
liability stage the court found that SPD knew that consumers would misunderstand
the weeks estimation claim).  “Whatever
the ‘intangible’ harm caused by SPD’s false advertising, the Court finds that
its award of nearly $10 million is both adequate compensation to C&D for
all harm done and adequate deterrence against any future false advertising by
SPD.” Punitive damages under N.Y. Gen. Bus. Law § 349 likewise require “clear,
unequivocal and convincing evidence that [the defendant’s] conduct was gross,
involved high moral culpability, and was aimed at the general public,” and SPD’s
conduct wasn’t sufficiently egregious. Nor was this an exceptional case for fee
purposes. SPD’s litigation positions were reasonable and the court previously
rejected C&D’s attempt to get sanctions for disobeying the injunction.

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In plagiarism/false attribution case, use was de minimis, fair, and protected by 1A

Israel v. Strassberg, 2018 WL 4290394, No. 2:15-CV-741 (D.
Utah. Sept. 7, 2018)
Israel entered the Ph.D. Psychology program at the
University of Utah, which required a master’s thesis, and Strassberg was her advisor.
Israel’s master’s thesis turned on the concept of relying on viewing time to
measure a subject’s sexual interest. To carry out a study for her thesis,
Israel selected and arranged a set of images, wrote instructions and survey
questions, and created the syntax necessary for the study to be administered by
a computer program.  Strassberg felt that
her work was important to the field of study and, after the thesis was approved,
Strassberg submitted it for publication in an academic journal with his name
included as second author. Their relationship eventually became strained.
Strassberg was also defendant Rullo’s advisor, and he
allegedly shared Israel’s work with Rullo without authorization.  Rullo’s subsequent master’s thesis used
Israel’s study materials and methods, building on it by examining gay and
lesbian populations where Israel had only looked at heterosexuals.  Strassberg likewise submitted this thesis for
publication, where it included Strassberg as second author and Israel as third
author, allegedly without her consent.
Israel “left the University on contentious terms without
completing her Ph.D. program.” But Strassberg’s graduate students continued to
build on her original research.
Copyright infringement: Israel registered: (1) the
arrangement and compilation of the images used in the viewing time study; (2)
the written instructions and surveys included in the viewing time study; and
(3) the computer syntax, which allowed her to administer the study via
computer. Baker v. Selden instructs: “[W]hilst
no one has a right to print or publish his book, or any material part thereof,
as a book intended to convey instruction in the art, any person may practice
and use the art itself which he has described and illustrated therein.”  This was Baker
redux. Israel’s ideas—“the use of images of attractive individuals and scenery,
tracking viewing time as a measure of sexual interest, asking participants to
rate images on a scale, inquiring as to participants’ sexual orientation and/or
sexual interests and comfort levels, and other elements related to the process
and method of the study”—were free for all to use.
What about Israel’s specific expression of the ideas?  Rullo’s thesis allegedly copied the “substance”
of Israel’s literature review; explained the same stimulus and procedure as
Israel did; used her data; copied her methods; and recited her original ideas,
all while citing her numerous times.  None
of this constituted infringement of protectable elements.  There was direct copying of three sentences
from the registered works:
We would like you to rate each of
the following pictures in terms of how sexually appealing you find the picture
to be. Please make your ratings on a scale of 1-7 where 1 is “not at all
sexually appealing” and 7 is “extremely sexually appealing.” We are interested
in your rating of each picture, not how you believe others might rate the
picture.
This copying was not significant enough to qualify as infringement,
and even if it had been, it would be fair use. 
[Yay!  Separate analysis of the
two reasons!]  Fair use: (1) nonprofit
educational purpose; (2) the original was highly factual, not highly expressive;
(3) only a minimal amount was copied word for word and the qualitative
significance was low because the copying “merely explains a process used in
conducting the study”; and (4) unrestricted copying of the type Rullo engaged
in would not have a substantially adverse impact on the potential market for
the original.  Rather, “[a]cademic
studies and publications often flow from previous studies and publications.
Overlap and building upon research materials is critical to the advancement of
science.”  Even if Israel had registered
more of her work and could thereby claim more copying as infringement, that
copying too would be insufficient to infringe and also fair.
The same rationales also protected the published articles and
Rullo’s dissertation; specifically, the dissertation simply said that “the
stimuli and procedures in the present study were identical to those used with
the heterosexual” and cited Israel.  “A
description of the copyrighted materials” couldn’t create a factual issue on
substantial similarity, nor could use of Israel’s materials in conducting the
studies underlying the findings contained in other documents/publications.
Lanham Act: Israel argued that defendants falsely attributed
authorship to her in presentations and papers and failed to appropriately
attribute her authorship in [possibly other?] presentations and publications. Rather
than pointing to Dastar, the court
ruled that her name wasn’t used “in commerce” because the articles and presentations
at issue weren’t “commercial” but rather scientific and educational. “Academic
publications fall outside of the purview of congressional reach under the
commerce clause because they include non-commercial speech, which is entitled
to the highest levels of protection by the First Amendment.”  Even if the publications had paying subscribers,
that didn’t make individual articles into commercial speech subject to the
Lanham Act.  Plus, her name wasn’t
used/misused “in commerce” because including or excluding her name didn’t
provide any commercial benefit to defendants or to the publications.  [This is really “use as a mark,” but ok.]  Israel also provided no evidence that she
suffered a loss as a result.  Summary
judgment granted.
There was a state law false advertising claim, over which
the court declined to exercise its supplemental jurisdiction, though given the
First Amendment rationale of the Lanham Act result I might’ve gone a different
direction with that.

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In plagiarism/false attribution case, use was de minimis, fair, and protected by 1A

Israel v. Strassberg, 2018 WL 4290394, No. 2:15-CV-741 (D.
Utah. Sept. 7, 2018)
Israel entered the Ph.D. Psychology program at the
University of Utah, which required a master’s thesis, and Strassberg was her advisor.
Israel’s master’s thesis turned on the concept of relying on viewing time to
measure a subject’s sexual interest. To carry out a study for her thesis,
Israel selected and arranged a set of images, wrote instructions and survey
questions, and created the syntax necessary for the study to be administered by
a computer program.  Strassberg felt that
her work was important to the field of study and, after the thesis was approved,
Strassberg submitted it for publication in an academic journal with his name
included as second author. Their relationship eventually became strained.
Strassberg was also defendant Rullo’s advisor, and he
allegedly shared Israel’s work with Rullo without authorization.  Rullo’s subsequent master’s thesis used
Israel’s study materials and methods, building on it by examining gay and
lesbian populations where Israel had only looked at heterosexuals.  Strassberg likewise submitted this thesis for
publication, where it included Strassberg as second author and Israel as third
author, allegedly without her consent.
Israel “left the University on contentious terms without
completing her Ph.D. program.” But Strassberg’s graduate students continued to
build on her original research.
Copyright infringement: Israel registered: (1) the
arrangement and compilation of the images used in the viewing time study; (2)
the written instructions and surveys included in the viewing time study; and
(3) the computer syntax, which allowed her to administer the study via
computer. Baker v. Selden instructs: “[W]hilst
no one has a right to print or publish his book, or any material part thereof,
as a book intended to convey instruction in the art, any person may practice
and use the art itself which he has described and illustrated therein.”  This was Baker
redux. Israel’s ideas—“the use of images of attractive individuals and scenery,
tracking viewing time as a measure of sexual interest, asking participants to
rate images on a scale, inquiring as to participants’ sexual orientation and/or
sexual interests and comfort levels, and other elements related to the process
and method of the study”—were free for all to use.
What about Israel’s specific expression of the ideas?  Rullo’s thesis allegedly copied the “substance”
of Israel’s literature review; explained the same stimulus and procedure as
Israel did; used her data; copied her methods; and recited her original ideas,
all while citing her numerous times.  None
of this constituted infringement of protectable elements.  There was direct copying of three sentences
from the registered works:
We would like you to rate each of
the following pictures in terms of how sexually appealing you find the picture
to be. Please make your ratings on a scale of 1-7 where 1 is “not at all
sexually appealing” and 7 is “extremely sexually appealing.” We are interested
in your rating of each picture, not how you believe others might rate the
picture.
This copying was not significant enough to qualify as infringement,
and even if it had been, it would be fair use. 
[Yay!  Separate analysis of the
two reasons!]  Fair use: (1) nonprofit
educational purpose; (2) the original was highly factual, not highly expressive;
(3) only a minimal amount was copied word for word and the qualitative
significance was low because the copying “merely explains a process used in
conducting the study”; and (4) unrestricted copying of the type Rullo engaged
in would not have a substantially adverse impact on the potential market for
the original.  Rather, “[a]cademic
studies and publications often flow from previous studies and publications.
Overlap and building upon research materials is critical to the advancement of
science.”  Even if Israel had registered
more of her work and could thereby claim more copying as infringement, that
copying too would be insufficient to infringe and also fair.
The same rationales also protected the published articles and
Rullo’s dissertation; specifically, the dissertation simply said that “the
stimuli and procedures in the present study were identical to those used with
the heterosexual” and cited Israel.  “A
description of the copyrighted materials” couldn’t create a factual issue on
substantial similarity, nor could use of Israel’s materials in conducting the
studies underlying the findings contained in other documents/publications.
Lanham Act: Israel argued that defendants falsely attributed
authorship to her in presentations and papers and failed to appropriately
attribute her authorship in [possibly other?] presentations and publications. Rather
than pointing to Dastar, the court
ruled that her name wasn’t used “in commerce” because the articles and presentations
at issue weren’t “commercial” but rather scientific and educational. “Academic
publications fall outside of the purview of congressional reach under the
commerce clause because they include non-commercial speech, which is entitled
to the highest levels of protection by the First Amendment.”  Even if the publications had paying subscribers,
that didn’t make individual articles into commercial speech subject to the
Lanham Act.  Plus, her name wasn’t
used/misused “in commerce” because including or excluding her name didn’t
provide any commercial benefit to defendants or to the publications.  [This is really “use as a mark,” but ok.]  Israel also provided no evidence that she
suffered a loss as a result.  Summary
judgment granted.
There was a state law false advertising claim, over which
the court declined to exercise its supplemental jurisdiction, though given the
First Amendment rationale of the Lanham Act result I might’ve gone a different
direction with that.

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“One A Day” conveys that consumers need take only one a day, Cal. court holds

Brady v. Bayer Corp., G053847, 2018 WL 4275356, —
Cal.Rptr.3d —- (Ct. App. Sept. 7, 2018)
Judge Bedsworth was not pulling any punches in this opinion.
I’ll probably quote too much but outraged rhetoric can be fun.  To summarize:
[W]hen consumers find a reputable
company offering them vitamins – a company with 75 years of brand recognition,
now owned by an international pharmaceutical company respected all over the
world – they can be expected to adhere to that company’s advice. And when that
company suggests, as it has with its products since 1949, that one vitamin pill
a day is sufficient, it cannot then rely upon individual consumers reading the
small – indeed miniscule – print on the back of its label to learn that instead
of ONE A DAY, they should be taking two.
There are two federal district court decisions that hold to
the contrary, but they don’t care as much about consumers as California courts
do.  I mean, they accepted “an untenable
proposition: that the market for vitamins is undifferentiated; that the
hypothetical ‘reasonable consumer’ would, as a matter of law, examine the
makeup of a daily vitamin supplement; that such a consumer would not rely upon
the expertise of pharmacologists and doctors but would instead analyze the
various concentrations of vitamins and minerals in each brand and draw a
personal conclusion about which ingredients he/she needed in a daily vitamin supplement.”
Despite the One A Day brand name, “Vitacraves Adult
Multivitamin” gummies require a daily dosage of two gummies to get the
recommended daily values; the plaintiff thus brought the usual California
claims. Here’s the bottle:

“While we cannot provide photos large enough to enable the reader to make it out, the line above the words ‘Supplement Facts’ (the listing of vitamins and­ minerals provided by each gummie) says – in the smallest lettering on the bottle, an ocular challenge even when the bottle is full-sized and held in good light – ‘Directions: Adults and children 4 years of age and above. Chew two gummies daily.’” That disclosure wasn’t enough to grant (the state law­ equivalent of) Bayer’s motion to dismiss.

The factual problem with Bayer’s reasonable consumer
argument was that it was reasonable to conclude that consumers rely on “the
expertise of One A Day.” One A Day’s marketing tells consumers “You will never
know as much about vitamins as we do, but you can rely on us,” and that may
well be true—except for the idea that “one a day” will provide the optimum amounts.  “And it appears the consumers of California
have concluded that One A Day is a company they can trust: You don’t hang
around for 75 years if people don’t buy your product.”  But Bayer was arguing that reasonable
consumers don’t trust it, but instead carefully read and analyze the amounts
shown on the labels.  
Even if the court were willing to buy that argument—and it
was skeptical—it could not do so on a demurrer/California equivalent of
12(b)(6). “Not all reasonable vitamin buyers can be said to be alike as a
matter of law…. [O]ther reasonable consumers will consider the daily dosages
recommended by Bayer and the FDA to be just fine – they might even consider
those numbers a safe way to avoid against any danger of ingesting too much –
and will rely upon the name they have come to trust.” As a matter of common
sense, “[i]f the label prominently displays the words ‘One A Day’ there is an
implication that the daily intake should be one per day.” In context, that statement
was literally false.
Sometimes the back of the package can help a defendant avoid
a falsity claim, but not here. Williams v. Gerber Prods. Co. (9th Cir. 2008)
552 F.3d 934, offered an “exceptionally perceptive” view of Califonria law,
reasoning that ingredient lists on the back can confirm material implied
representations on the front, but can’t lawfully contradict them. “[B]rand
names by themselves can be misleading in the context of the product being
marketed. That’s not surprising given that … marketing theory emphasizes the
use of descriptive brand names” that require little thought on consumers’ part
and little demand for explanation on producers’.
Bayer argued that consumers would have to look at the back
of the bottle because that was the only place to learn the serving side, the vitamins
at issue, or the amount in each gummy. But the product wasn’t called
Gazorninplat Gummies or Every Day Gummies. “The front label fairly shouts that
one per day will be sufficient.”  Bayer’s
idea that a reasonable consumer would ascertain precise amounts [and make the
requisite calculations] couldn’t be accepted as a matter of law.  It wouldn’t be “wishful thinking” for a
reasonable consumer to think that, in this day and age, a full day’s supply of
vitamins could come in one gummy.  Perhaps
the very sophisticated—judges and lawyers, for example—would do so, but “other
consumers – knowing they have very little scientific background – would rely
upon the representation of a known brand with 70 years of goodwill and
credibility behind it. We think it likely they would consider that known brand
– presumed to be the employer of doctors, biologists, and pharmacologists – to
be a better judge of what vitamins and minerals should be taken than they are.”  It was safe to assume that the market for
vitamins was at least heterogenous in this regard. And the very name of One A
Day was Bayer’s invitation for consumers to outsource their decisions about
which vitamins and how much to take. 
Bayer didn’t seem to target sophisticated consumers:
Not only are two different kinds of
sugars (glucose syrup and sucrose) listed as the most prominent ingredients,
but each gummie – depending upon flavor – contains one of three kinds of
artificial dye. That is not the sort of ingredient list that is likely to
appeal to skeptical consumers scrutinizing labels in a health food market.
These are mass-market products.
Nothing on the front of the label revoked the implicit
misrepresentation—the court imagined, for example, a front label stating: “One
A Day Brand Gummies: Get your classic one a day by chewing just two gummies.”
The court refused to assume that “the illegible little dot off to the bottom of
‘One A Day’ on the label – the ‘®’” was sufficient, as a matter of law, to warn
consumers that “One A Day” didn’t mean what it said; “[e]ven sophisticated
consumers who might recognize the trademark symbol as indicating a brand name
qua brand name still might take the brand name as indicating a promise about
the product’s content,” as with a brand using “Organics” in its name.
Similar reasoning rescued the warranty claim; the front of
the bottle implied a warranty that its contents were fit to last 100 days.

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“One A Day” conveys that consumers need take only one a day, Cal. court holds

Brady v. Bayer Corp., G053847, 2018 WL 4275356, —
Cal.Rptr.3d —- (Ct. App. Sept. 7, 2018)
Judge Bedsworth was not pulling any punches in this opinion.
I’ll probably quote too much but outraged rhetoric can be fun.  To summarize:
[W]hen consumers find a reputable
company offering them vitamins – a company with 75 years of brand recognition,
now owned by an international pharmaceutical company respected all over the
world – they can be expected to adhere to that company’s advice. And when that
company suggests, as it has with its products since 1949, that one vitamin pill
a day is sufficient, it cannot then rely upon individual consumers reading the
small – indeed miniscule – print on the back of its label to learn that instead
of ONE A DAY, they should be taking two.
There are two federal district court decisions that hold to
the contrary, but they don’t care as much about consumers as California courts
do.  I mean, they accepted “an untenable
proposition: that the market for vitamins is undifferentiated; that the
hypothetical ‘reasonable consumer’ would, as a matter of law, examine the
makeup of a daily vitamin supplement; that such a consumer would not rely upon
the expertise of pharmacologists and doctors but would instead analyze the
various concentrations of vitamins and minerals in each brand and draw a
personal conclusion about which ingredients he/she needed in a daily vitamin supplement.”
Despite the One A Day brand name, “Vitacraves Adult
Multivitamin” gummies require a daily dosage of two gummies to get the
recommended daily values; the plaintiff thus brought the usual California
claims. Here’s the bottle:

“While we cannot provide photos large enough to enable the reader to make it out, the line above the words ‘Supplement Facts’ (the listing of vitamins and­ minerals provided by each gummie) says – in the smallest lettering on the bottle, an ocular challenge even when the bottle is full-sized and held in good light – ‘Directions: Adults and children 4 years of age and above. Chew two gummies daily.’” That disclosure wasn’t enough to grant (the state law­ equivalent of) Bayer’s motion to dismiss.

The factual problem with Bayer’s reasonable consumer
argument was that it was reasonable to conclude that consumers rely on “the
expertise of One A Day.” One A Day’s marketing tells consumers “You will never
know as much about vitamins as we do, but you can rely on us,” and that may
well be true—except for the idea that “one a day” will provide the optimum amounts.  “And it appears the consumers of California
have concluded that One A Day is a company they can trust: You don’t hang
around for 75 years if people don’t buy your product.”  But Bayer was arguing that reasonable
consumers don’t trust it, but instead carefully read and analyze the amounts
shown on the labels.  
Even if the court were willing to buy that argument—and it
was skeptical—it could not do so on a demurrer/California equivalent of
12(b)(6). “Not all reasonable vitamin buyers can be said to be alike as a
matter of law…. [O]ther reasonable consumers will consider the daily dosages
recommended by Bayer and the FDA to be just fine – they might even consider
those numbers a safe way to avoid against any danger of ingesting too much –
and will rely upon the name they have come to trust.” As a matter of common
sense, “[i]f the label prominently displays the words ‘One A Day’ there is an
implication that the daily intake should be one per day.” In context, that statement
was literally false.
Sometimes the back of the package can help a defendant avoid
a falsity claim, but not here. Williams v. Gerber Prods. Co. (9th Cir. 2008)
552 F.3d 934, offered an “exceptionally perceptive” view of Califonria law,
reasoning that ingredient lists on the back can confirm material implied
representations on the front, but can’t lawfully contradict them. “[B]rand
names by themselves can be misleading in the context of the product being
marketed. That’s not surprising given that … marketing theory emphasizes the
use of descriptive brand names” that require little thought on consumers’ part
and little demand for explanation on producers’.
Bayer argued that consumers would have to look at the back
of the bottle because that was the only place to learn the serving side, the vitamins
at issue, or the amount in each gummy. But the product wasn’t called
Gazorninplat Gummies or Every Day Gummies. “The front label fairly shouts that
one per day will be sufficient.”  Bayer’s
idea that a reasonable consumer would ascertain precise amounts [and make the
requisite calculations] couldn’t be accepted as a matter of law.  It wouldn’t be “wishful thinking” for a
reasonable consumer to think that, in this day and age, a full day’s supply of
vitamins could come in one gummy.  Perhaps
the very sophisticated—judges and lawyers, for example—would do so, but “other
consumers – knowing they have very little scientific background – would rely
upon the representation of a known brand with 70 years of goodwill and
credibility behind it. We think it likely they would consider that known brand
– presumed to be the employer of doctors, biologists, and pharmacologists – to
be a better judge of what vitamins and minerals should be taken than they are.”  It was safe to assume that the market for
vitamins was at least heterogenous in this regard. And the very name of One A
Day was Bayer’s invitation for consumers to outsource their decisions about
which vitamins and how much to take. 
Bayer didn’t seem to target sophisticated consumers:
Not only are two different kinds of
sugars (glucose syrup and sucrose) listed as the most prominent ingredients,
but each gummie – depending upon flavor – contains one of three kinds of
artificial dye. That is not the sort of ingredient list that is likely to
appeal to skeptical consumers scrutinizing labels in a health food market.
These are mass-market products.
Nothing on the front of the label revoked the implicit
misrepresentation—the court imagined, for example, a front label stating: “One
A Day Brand Gummies: Get your classic one a day by chewing just two gummies.”
The court refused to assume that “the illegible little dot off to the bottom of
‘One A Day’ on the label – the ‘®’” was sufficient, as a matter of law, to warn
consumers that “One A Day” didn’t mean what it said; “[e]ven sophisticated
consumers who might recognize the trademark symbol as indicating a brand name
qua brand name still might take the brand name as indicating a promise about
the product’s content,” as with a brand using “Organics” in its name.
Similar reasoning rescued the warranty claim; the front of
the bottle implied a warranty that its contents were fit to last 100 days.

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