Something smells: new product makes competitor’s claims instantly literally false

Playtex Prods., LLC v. Munchkin, Inc., 2016 WL 1276450, No.
14-cv-1308 (S.D.N.Y. Mar. 29, 2016)
 
Playtex makes a diaper pail, the Diaper Genie, with three
current varieties: Diaper Genie Elite, Diaper Genie Essentials, and Diaper
Genie Mini. Soiled diapers are contained in a large expandable film bag, refills
for which are needed many times in the life of the pail. Playtex sells refills
for the Diaper Genie, and so does Munchkin. 
Munchkin’s packaging said that its refills “fit [ ]” certain models of
the Diaper Genie and that its refills “compare to” Playtex’s refills, and its
website made similar “fit[ ]” or “work [ ] with” claims. Munchkin also told
retailers the same thing.
 

Munchkin refill with “compare/fits” claims
Munchkin’s website prominently displayed a chart comparing
the thickness of the two brands and stated that its refills contained “7-layer
film on bags,” while the Playtex refills had only a “5-layer film on bags” Munchkin
also claimed that its refills had a “thicker, seven-layer film to keep
everything contained.”   
 

Comparison chart
Before launching redesigned Diaper Genies, Playtex notified
Munchkin that its refills would not fit the redesigned products. Around March 2014,
Playtex began selling the redesigned versions.  Munchkin told Playtex that, beginning on March
17, 2014, it would place on its Nursery Fresh Refills packaging an orange
sticker that stated:
 
FIT GUARANTEED: Guaranteed to fit
all Diaper Genie® II and Diaper Genie® II Elite pails, and guaranteed to fill
all Diaper Genie® Essentials and Diaper Genie® Elite pails purchased prior to
March 1, 2014. New and improved Nursery Fresh™ refills will be coming out soon
to fit the new Diaper Genie® Essentials and Elite pails.
 

Stickered version
Munchkin said that it would ask retailers to place the same
sticker on the packaging of products currently in inventory; revised its
website to make the same limited guarantee; and directed retailers to revise
their online product descriptions to contain the same language. Then, in
December, Munchkin began selling redesigned Nursery Fresh refills that indisputably
fit all Diaper Genies, and claimed to do so.
 

New version
The court found that, between March 1 and March 17, 2014, Munchkin’s
fit claims were literally false because they failed to disclose that the
refills wouldn’t fit the newly released redesigned Diaper Genies.  The fit claims were also material and caused
harm to Playtex, so Playtex won summary judgment as to Munchkin’s liability for
this period.  Query: what, if anything, could Munchkin have done to avoid this result on liability?  Pulled the product entirely?  Pre-stickered with an open-ended date, which might be more confusing?  Limited its guarantee to pails sold before 2014, even though it could indeed guarantee fit for pails sold in the first three months of 2014?  I understand the result on literal falsity–after all, the Lanham Act is strict liability–but it’s hard to see why equitable considerations shouldn’t strongly influence the remedy here.  Just in terms of damages calculations: even assuming that many people buy a set of refills when they buy their first Diaper Genie, and assuming that the Diaper Genie is in use for only two years, it’s hard to imagine that many of the Munchkin refill sales during that 17 day period would be attributable to the new Diaper Genies.
 
Munchkin won summary
judgment for the period starting in December when its redesigned refills came
on the market. 
 
Thus, the contested
period was in the middle, when the “fit disclaimer” was in use.  First, the court found that the disclaimer
made the packaging not literally false, but at worst ambiguous.  Though it would not be unreasonable for the
consumer to read the disclaimer as not acknowledging the lack of fit between the refills and the new Diaper Genies, a more
plausible reading of the disclaimer is that the refills wouldn’t fit the new Diaper Genies. 
That inference flowed naturally from the time-limited fit claim, especially
when contrasted with the very next statement that “[n]ew and improved Nursery
Fresh™ refills will be coming out soon to fit all the new Diaper Genie®
Essentials and Elite Pails.”  Even
Playtex’s survey expert recognized the ambiguity there.
 
On implicit falsity, the court refused to presume deception
because the evidence didn’t support Playtex’s argument that Munchkin “intentionally
set out to deceive the public” through “deliberate” and “egregious” conduct. Instead,
Munchkin took several steps to clarify the allegedly false fit claims (not to
mention that, with a repeat-purchase product like this, Munchkin had limited
incentive to fool people into buying a nonfitting product once and giving up on
the brand in disgust forever).  No
rational jury could conclude that Munchkin acted intentionally, much less “egregiously,”
to deceive the public, so no presumption of consumer deception applied.  
 
Playtex also submitted a consumer survey in support of its
claims.  The survey involved 406 women who
currently owned a Diaper Genie or planned to purchase one in the next six
months. The test group was shown Nursery Fresh Refills packaging with the fit claims
and fit disclaimer. In the control group, the phrase “FIT GUARANTEED” on the disclaimer
was replaced with the phrase “Only Fits Diaper Genie Pails Purchased Before
March 1, 2014,” and the word “Fits” in the fits claim was replaced with the
phrase “Only fits Diaper Genie pails purchased before March 1, 2014.”
 
Respondents were asked, among other things, whether the
packaging conveyed anything about whether the refills would or would not fit in
the Diaper Genie purchased before or after a particular date. Excluding
respondents who answered “don’t know” or “no opinion,” 41.4% of the test group
said that the packaging does not communicate anything about whether the refills
would or would not fit Diaper Genies purchased before or after a specific date,
while only 20.1% of the control group gave the same answer. Including
respondents who stated “don’t know” or “no opinion,” only 36.7% of the test group
answered yes to whether the packaging communicated whether the refills would or
would not fit into the Diaper Genie purchased before or after a particular
date, while 57.7% of the control group answered yes to this question.
 
The court agreed with Munchkin that the survey asked the
wrong questions.  Playtex contended that
consumers were misled into thinking that the Munchkin refills would fit Diaper
Genies sold after March 1, 2014.  But the
survey didn’t ask whether consumers received this message.  By phrasing its questions in terms of “a
specific date,” “the survey only evaluated the percentage of respondents who
took away the message that there is a date restriction on the fit of the
Nursery Fresh Refills without providing any information about consumers who
might take away the false message that the Nursery Fresh Refills would fit
pails purchased after March 1, 2014, which is the relevant issue in this case.”  At most, the survey showed that the control
group’s disclaimer was better than the fit disclaimer, but the point of the
survey wasn’t to propose a better disclaimer but to figure out whether the
message conveyed was false.  The Playtex
survey simply didn’t show whether test group respondents received the false
message that the Munchkin refills would fit Diaper Genies bought after March 1,
2014.  Thus, without any other evidence,
Munchkin won summary judgment for the period after March 17, 2014.
 
Playtex fared better on the thickness claims. These claims
were material: Munchkin chose to highlight the number of layers, “obviously in
the hope that the advertisements would encourage consumers to purchase the
Nursery Fresh Refills instead of the Playtex ones.”
 
Playtex argued that Munchkin’s claims that its refills were “thicker”
than Playtex refills were literally false, based on (i) an analytical test,
performed in the fall of 2013, which determined that the average thickness of
the Munchkin refills was 0.89 thousandths of an inch, while the average
thickness of the Playtex refills was 1.15 thousandths of an inch, and (ii) a
June 24, 2014 test, which determined that the Munchkin refills were thinner
than the Playtex refills.  Munchkin’s
only counterevidence was the statement of a third-party witness that he “would
be cautious in outright stating that one [refill] is thicker than another,” but
this was conclusory and Munchkin offered no evidence to explain the basis for
this witness’s caution. The witness even admitted that “from the data, if I just
look strictly … at the data, then … there is one that appears to be thicker
than the others.” Thus, there was no factual dispute on the falsity of the “thicker”
claim.
 
Munchkin argued that Playtex hadn’t shown any damages, but injury
could be presumed given the literal falsity of the “thicker” claim.
 
As for the comparison chart, Playtex argued that, starting
in the fall of 2013, the Playtex refills had more than five layers. But the
record revealed genuine disputes of material fact over whether, and when,
Playtex transitioned to seven-layer film. Playtex’s own witness testified that
“[t]he actual change as to when we stopped using five layers can only be known
by the manufacturers of the film. They didn’t even tell us when they stopped
…. When we transitioned to seven, I don’t know.” Even as late as July 2015, Playtex
still had advertisements stating that its refills had only five layers.
 
Playtex also argued that the comparison chart falsely
conveyed a “thicker” claim by necessary implication. The court found that the
chart was ambiguous in its reference to layers, rather than thickness
directly.  Though some consumers might
receive a thicker message, they might also conclude that the additional layers made
the Playtex refills stronger or better at containing odors, and there was no
evidence that such claims would be false. Playtex pointed to testing that shows
that Playtex refills allowed less oxygen or water through the film, which “is
believed” to correlate with odor retention, “Playtex’s own witnesses were
unable to explain this correlation.”

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