Smokeless, no fire: tobacco advertising & TM claims dismissed

VMR Products, LLC v. V2H ApS, 2016 WL 1177834, No.
2:13–cv–7719 (C.D. Cal. Mar. 18, 2016)
 
VMR makes electronic cigarettes under the federally
registered trademarks V2CIGS and V2. V2H ApS is a Danish tobacco company that makes
a smokeless tobacco product called “snus” under the name V2TOBACCO, and V2
Tobacco A/S is its wholly owned distributor subsidiary. The parties have
litigated cases in Denmark, Sweden, and the Southern District of Florida, and
have opposed each other’s applications to register their trademarks in both the
United States and Europe.
 
VMR alleged that defendants infringed its marks with their
V2TOBACCO product through advertising on http://www.v2tobacco.com; there was no
evidence that defendants’ snus purchased from US stores bore the mark
V2TOBACCO, but US consumers could buy the snus through third-party online
stores, which were accessible by clicking on links available on the website,
and this snus bore the mark V2TOBACCO “[a]t the bottom of [the] tin.”  This sufficed as use in commerce.
 
The court dismissed likely confusion claims based on VMR’s
V2CIGS mark.  VMR previously sought a
declaratory judgment that its V2CIGS didn’t infringe V2 TOBACCO, alleging in
its complaint that there was no likelihood of confusion; that the marks were
different; and that the products were different.  VMR was therefore estopped from arguing to
the contrary; the court also applied the Sleekcraft
factors.
 
Strength: There was no evidence that V2CIGS had been
registered without a showing of secondary meaning, so there was no presumption
of inherent distinctiveness; there was also no evidence about inherent
distinctiveness or descriptiveness either way, so strength was neutral;
likewise there was no evidence about defendants’ intent.  VMR was estopped from arguing that the goods
and the marks were similar; it submitted no admissible evidence of actual
confusion; the parties both advertise on websites, but Network Automation says that’s not important; there was no evidence
that any of the parties’ products are sold in the same or even similar stores; there
was no evidence that either party had plans to expand into the other’s market; and
defendants offered evidence that tobacco products are legally required to be
maintained by retailers under lock and key, and argued that therefore consumers
exercise a degree of care in purchasing tobacco products.  Confusion was not likely with respect to the
V2CIGS mark.
 
VMR also argued that defendants made “illegal, literally
false and/or misleading” statements that the raw material in their snus product
is selected on the basis of a “low level of Nitrosamines” on their website and
in their product catalog. The Tobacco Control Act precludes the introduction
into interstate commerce of any modified risk tobacco product unless the FDA
has issued an order that the product may be commercially marketed.  VMR contended that the “low” levels of nitrosamines
claim advertised snus as a modified risk tobacco product without FDA approval.
 
First, the court found that V2H could be held liable for the
website statements: it was the registrant and owner of http://www.v2tobacco.com; had
previously removed content from the website; and was the “parent company” of V2
Tobacco.
 
Second, the court addressed standing: Under Lexmark, a plaintiff’s claim must fall within
the “zone of interest” of the statute, and the plaintiff must have experienced
“economic or reputational injury” that is proximately caused by the defendant’s
deceptive advertising.  VMR showed that
the parties were competitors in the tobacco market, but offered no evidence of injury
proximately caused by the allegedly false statements. VMR argued that it would
be harmed if an adult smoker, who wanted to purchase a smokeless nicotine
product, relied on defendants’ alleged false advertising to buy snus instead of
VMR’s electronic cigarettes.  However,
there was no requirement that a plaintiff prove injury if it sought only
injunctive relief.  (Something feels
weird about this, but ok.)  Thus, VMR had
standing to pursue its claims, but not standing to seek “additional ancillary
relief that would require proof of injury” such as damages for lost sales.
 
VMR argued that defendants’ statements that their snus
contains low levels of nitrosamines were “literally false” because (1) the statements
 equated to advertising the snus as a
“modified risk tobacco product” under the Act; (2) the Tobacco Control Act
defines “modified risk tobacco products” as those tobacco products that are
used to reduce the harm or risk of tobacco-related diseases associated with
commercially marketed tobacco products; (3) the FDA has not approved the snus
as a “modified risk tobacco product”; and therefore, (4) defendants’
advertisements violate the Tobacco Control Act.  (This doesn’t seem very “literal” to me, given
the chain of inferences required.  It
also seems like a preclusion problem, given the interpretation necessary to
make this into an issue of falsity instead of a violation of the Tobacco
Control Act itself.)  The court found
that this was not a literally false claim given that the FDA hadn’t yet
approved [hunh?] the use of “low” to describe the level of nitrosamines in the
product.
 
Defendants offered evidence that their snus did, in fact,
have low levels of nitrosamines.  VMR
offered no evidence of misleadingness, or of materiality.  Nor would the court presume injury given the
absence of comparative advertising here: “the alleged injury accrues equally to
all competitors.”  Summary judgment for
defendants.

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