lack of injury dooms false advertising claim based on patent invalidity

Bern Unlimited, Inc. v. Burton Corp., No. 11–12278, 2015 WL 1442456 (D. Mass. Mar. 31, 2015)
Bern, which makes sports helmets, sued six competitors for trade dress infringement of its allegedly unique design, with a small visor and rounded shape.  Defendants counterclaimed for false advertising of the Bern helmet as patented, when it knew the patent was invalid. The court here grants summary judgment to defendants based on lack of secondary meaning, and also summary judgment against defendants on the counterclaims. 

 Bern Baker helmet
Bern alleged that the “rounded profile of the helmet, which is designed to follow the shape of the wearer’s head,” and “the distinctive visor” were the elements of its trade dress.  Bern allegedly launched this line with the goal of creating a distinctive trade dress, and it was the first line with a rounded profile and distinctive visor.  “In January 2006, Seth Wescott of the United States won a gold medal in snowboarding at the Winter Olympics wearing a Bern Baker helmet. The day after Wescott’s performance, the number of visitors to Bern’s website was approximately 9,800, as compared to an average of 120 per day before.”
From 2006-2010, “Bern experienced compounded annual growth of approximately 45 [percent] in total revenues from all products, and approximately 46 [percent] compounded annual growth in revenues from brim-style helmets.” Bern’s sales-unit volume grew at a rate of 38% annually for brim-style helmets. Between its launch and March 2014, Bern sold over 700,000 brim-style helmets in 47 countries, for total revenues of $22 million. It spent more than $1 million on advertising, marketing, and promotion, including sponsoring at least 50 pro athletes who chose the helmets because of their distinctive style.  Articles published in mainstream and sports-specific outlets have “profiled Bern’s helmets” (no pun intended?).  Publicity also came from celebrities photographed using Bern helmets, use of the helmets in other companies’ promotional materials, and the helmets’ appearance in the film Premium Rush.
Bern submitted five customer declarations—three from retailers and two from consumers—in support of its claim that  customers have come to associate the distinctive appearance of the brimmed helmets with Bern.  It didn’t conduct a consumer survey.  Bern also argued that evidence of copying by the defendants showed secondary meaning; the defendants’ internal documents generally indicated that they looked at Bern’s helmets (and others in the market) when designing their own, and wanted to compete in the same market niche as Bern.

Berton Mutiny helmet

BRG Giro Surface helmet

K2 Rant helmet

Pro-tec Scandal helmet

Salomon Patrol helmet

Smith Gage helmet

Defendants commissioned Dr. Itamar Simonson to conduct a secondary meaning survey of prospective helmet purchasers in shopping malls.  The survey, conducted in 2014, showed participants either the Bern Baker helmet or the “control” Bern Brentwood helmet. In the test cell, 152 respondents were shown the Bern Baker helment, none of whom identified Bern as the source.
Defendants first moved to strike the five declarations as untimely.  The court agreed.  Bern knew that defendants had asserted a defense of lack of distinctiveness early on, and Bern always had the burden of showing secondary meaning because its claims were based on product design:
The witnesses in question are not percipient witnesses in the normal sense—there is no discrete event or activity that they perceived—nor are they expert witnesses. In theory, at least, anyone who ever saw or used a Bern helmet was a potential witness. But neither are those witnesses insignificant. Bern has had the burden of proving secondary meaning from the outset, and it has chosen not to rely on survey evidence. That means that Bern elected to rely on the evidence of testifying witnesses. It selected those five witnesses, and those witnesses alone, to give sworn statements in an effort to defeat summary judgment.
Nor did Bern show that admitting their testimony would be harmless. Bern submitted the declarations more than three months after the close of discovery; Bern chose not to use a survey and should have known that witnesses would be required; the weight of the evidence was limited, since the three retailers’ views weren’t probative of secondary meaning; and “evidence of two seemingly random (or, perhaps, not random) customers, without more, is very weak direct evidence.”  Defendants’ ability to respond was limited at best.  “Among other things, defendants have lost the opportunity to depose the witnesses, and to explore exactly how it was Bern came to select them as witnesses, and the factual basis of their statements.”
Bern moved to exclude the secondary meaning survey.  Secondary meaning needs to be shown at the time of infringement, and survey evidence is the best evidence of same. Bern said the survey was irrelevant because it was taken in 2014.  The court still admitted it: “Under Bern’s theory, a company would have to undertake a preemptive survey prior to the time they allegedly first infringe, or the survey evidence would not be admissible. Such a requirement would be absurd, and would make it nearly impossible for defendants ever to present the ‘preferred’ form of evidence.”  So courts routinely admit evidence like this, using the timing to determine its strength.
Onto the secondary meaning issue itself: “As a general matter, trade-dress claims are difficult to establish.”  Copying isn’t enough.  Without secondary meaning, it doesn’t matter that competitors’ designs “were clearly efforts to mimic or follow the style set by the plaintiff.”
Bern lacked direct evidence of secondary meaning, since it had no survey evidence or admissibleevidence from individual consumers.  Even if the court considered the excluded evidence, retailers’ views on distinctiveness weren’t probative of secondary meaning, and two consumers didn’t show that a significant portion of the consuming public connected the design exclusively with Bern. “The size of the helmet market is unclear from the record, but surely two individuals represent only a tiny fraction of that market, and there is nothing in the record to suggest that those two are in some way representative of the market as a whole.”
Bern also offered statements by two pro athletes who both declared: “I have chosen to wear Bern’s helmets because of their distinctive style, which is created by the profile of the helmet and the narrow visor or brim.” The declarations indicated a belief that the helmets had a distinctive style, but said nothing about connecting that style to the source of the product, which wasn’t enough under Wal-Mart.  Plus, these declarations were dated 2012, and Bern needed to prove secondary meaning before defendants’ sales of similar products began—in 2007.  And again, statements from two pro athletes didn’t show secondary meaning in a significant portion of the consuming public.  (Though some defendants didn’t start selling similar products until later, Bern lost its exclusive hold on the market in 2007, and anyway Bern didn’t show secondary meaning in any potentially relevant year.)  By contrast, Simonson’s 2014 survey, though not decisive, was probative of lack of secondary meaning.
As for circumstantial evidence, this could include [1] the length and manner of the use of the trade dress, [2] the nature and extent of advertising and promotion of the trade dress, [3] the efforts made to promote a conscious connection by the public between the trade dress and the product’s source, [4] the product’s ‘established place in the market’ and [5] proof of intentional copying.
Length and manner of exclusive use: Bern’s sales began in December 2005, and by January 2007, defendants K2 and Burton were selling similar helmets.  This was barely more than a year, and didn’t favor Bern.
Advertising, marketing, and product success: Bern’s claimed $1 million on promotion described spending 2005-2012, but it spent $10,397 in 2005, $24,532 in 2006,and  $96,369 in 2007—only 12% percent of that amount, about $131,000, had been spent before to the introduction of the first allegedly infringing products, and that doesn’t even show how much of Bern’s spending promoted the helmets embodying the claimed trade dress, or how much occurred after competition began in January 2007.
Bern argued that its ads focused on the distinctive profile of its helmets.  Dates were missing from many submitted ads, though the ads did include pictures of the helmet. Still, relevant advertising “specifically directs a consumer’s attention to a particular aspect of the product…. Merely ‘featuring’ the relevant aspect of the product in advertising is no more probative of secondary meaning than are strong sales.” The ads didn’t call attention to the short brim or the rounded shape.  Bern’s evidence that it sponsored pro athletes also didn’t indicate that this happened before 2007. 
As for market success, sales alone aren’t as probative of secondary meaning in a product design case, since market success may be attributable to the desirable product configuration rather than distinctiveness. Less than 82,000 brim-style helmets, grossing less than $1.4 million, had been sold by the end of 2007. “[A]bsent evidence connecting it to the desirability of the alleged Bern trade dress, that evidence is not particularly probative of secondary meaning. Also, due to the short time of exclusivity, those numbers do not prove that the design achieved secondary meaning by the time of the first alleged infringement.”
The evidence of unsolicited publicity was also mostly after January 2007, and only one article was from before that; this article merely mentioned the brim “in passing.”  The majority of articles Bern submitted focused on functional aspects or other features, and didn’t mention the allegedly distinctive features.  Comments from on-line reviewers and retailers concerning Bern’s unique style and efforts of competitors to copy it were all dated 2012 or later.
Evidence of intentional copying:  Intent plays a “particularly minor role” in product design cases, because copying may well be carried out to exploit a particularly desirable feature.  Any negative inference is even weaker when the copier takes conspicuous steps, such as in packaging or word marks, to distinguish its products. The relevant intent is intent to pass off, not intent to copy.  The evidence of intentional copying here showed “nothing more than typical—and legitimate—marketplace behavior. It is perfectly appropriate for companies to respond to competitive forces in the marketplace, including any sudden shifts in fashion triggered by a competitor’s introduction of a successful new product.” The court pointed out that “Bern itself analyzed a variety of sources when designing the Baker helmet, including other helmets in the market.”
There was no evidence of intentional copying, as opposed to consideration of Bern’s helmets as part of defendants’ design efforts.  On this record, defendants always included their own marks or names on their helmets. Thus, the copying evidence was not probative of secondary meaning.
Weighing the factors, Bern failed to show sufficient evidence to allow a jury to conclude it had secondary meaning in 2007. The court therefore didn’t have to address functionality, likely confusion, or any issue on Bern’s federal dilution (!) claim.  Though the Massachusetts anti-dilution statute was less stringent than the federal statute, it still required distinctiveness, so that claim failed too.
As for the counterclaims, Jonathan Baker designed the Baker helmet, and Bern began publicly soliciting sales for the Baker helmet in Sept. 2005, with first sales in December of that year. A design patent for the Baker helmet issued on July 8, 2008, from an application that was filed on January 19, 2007. Because of the then-applicable on-sale bar, the court said with some understatement, “the patent was not likely to withstand a legal challenge.”  Bern was aware of this problem, according to internal correspondence, including an email from a sales rep/investor who asked whether there was “any way to ‘modify’ our shipping records for the Baker to earn the patent?” Jonathan Baker assigned the patent to Bern in April 2014, purporting to be retroactive to 2007 (Bern contended there was a previous assignment ,but anyway Baker had always understood that IP rights in his design belonged to Bern). Bern then filed a statutory disclaimer of the patent, which was accepted in May.
Bern referred to the patent in marketing materials and on its website and at trade shows many times.  Catalogs included logos that stated “the original” above text that stated “visor shell patent # US D572,865S,” and one also included an actual excerpt from the patent. There were other claims, such as that Bern’s “patented hard visor shell shape has been imitated but never replicated. Almost every brand in the market now has a brim, but your customer wants the original.” Trade-show banners also included “the original” with the patent number below it.  Bern’s strategy, as indicated by internal documents, included allegations that competitors have “knocked off” Bern and that retailers should avoid stocking knock-off brands.

Bern catalog using image from design patent

Bern catalog using logo with design patent number

So, though the design was patented, Bern learned that the patent was “probably” invalid. First, were the relevant claims made in advertising or promotion?  The documents on marketing strategy were mostly internal, and there was no evidence that the ones that weren’t were targeted beyond certain individuals.
Were the actual ads literally false? They didn’t state outright that Bern owned the patent, but cited the patent number and used phrases such as “our patented hard visor shell shape,” “our patented visor shape,” “our patented integrated cap style visor and hard shell visor,” “the original visor patent,” or “the original visor shell patent.” One ad showed the actual patent, but indicated that the inventor was Jonathan Baker.  There was an issue of actual, technical ownership, but Bern was undisputedly authorized to make products under the patent. “The word ‘our,’ in reference to property, can refer to ownership (for example, a homeowner referring to the property as ‘our house’) or a legal right to use it (for example, a renter referring to an apartment as ‘our apartment’).”  Thus, the statements weren’t literally false.
However, if there was intentional deception, defendants still wouldn’t need evidence of actual consumer deception.  Defendants argued that the deception was intentional because Bern knew its patent was invalid by February 2011 but continued touting it, e.g., the sales rep/investor’s statement that “I have had an uneasy feeling since Dennis explained to me that we did not file a patent in time for the Visor shape that we invented. Not sure how this happened but it is probably Bern’s biggest mistake to date.”  This evidence was enough to create a genuine dispute of material fact on intentional deception leading to a presumption of consumer deception.
The court commented that a patent is presumed valid, and the design patent here was never formally challenged.  “Nonetheless, it seems clear that a claim of intentional deception could be made out based on the unenforceability of the patent, under the unusual factual circumstances presented here.”
But what of materiality? That was independent of intent.  (Though prominence in advertising might suggest that Bern believed that consumers would care.)  Defendants argued that the statement related to an “inherent quality or characteristic” of the product, making it material.  “Inherent” here means part of the “essential” character of a product.  Defendants had no survey or other direct evidence of material, but Bern’s Rule 30(b)(6) deposition witness stated that “[t]he intention was to help educate retailers about our patent and to try to get them to place their buy for visor lids with us and not our competitors.”  That was sufficient to “create the inference that Bern at least hoped and indeed intended that its advertising of the patent would affect purchasing decisions,” creating a genuine fact issue on materiality.
Then, injury.  In literal falsity cases, “only a slight likelihood of injury need be shown to warrant injunctive relief.” But misleadingness requires more.  Defendants had no evidence of actual or likely injury: no evidence of lost sales or consumer confusion, or harm to goodwill or reputation.  A presumption of harm from direct competition wasn’t enough; that made sense in a two-competitor market, but not here.  Even though defendants alleged that they comprised all the other major helmet manufacturers; defendants didn’t provide evidence that this was so and Bern disputed the issue. Nor was Bern’s fraudulent conduct enough to bypass the rule of actual harm.  Such a presumption “should be reserved for extraordinary cases,” and there wasn’t enough evidence that this was such a case.
With “no evidence of literal falsity, minimal evidence of deception, minimal evidence of materiality, and no evidence of causation and injury,” summary judgment for Bern was appropriate.  This disposed of coordinate state-law claims as well.
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