Comparison to former licensor’s products isn’t trademark infringement

Alpha Pro Tech, Inc. v. VWR Int’l, LLC, No. 12-1615, 2017 WL
3671264 (E.D. Pa. Aug. 23, 2017)
APT sued VWR, a competitor in the market for nonwoven,
disposable laboratory apparel for use in clean rooms and similar environments. VWR
formerly carried APT’s Critical Cover line of laboratory apparel products, but
transitioned to its own private line of products, prompting this lawsuit, which
survived a motion to dismiss but not summary judgment.
APT used a proprietary fabric coating method to produce its products.  For a time, the parties agreed
that VWR would be APT’s exclusive distributor of Critical Cover, and that VWR
had the exclusive license to use the Critical Cover trademark and promotional
literature.  APT began outsourcing components of Critical Cover products
in the early 2000s, using XXPC, a company that made lab apparel for other
competitors.  APT disclosed its resins
and recipe for the extrusion coating with XXPC, under an oral confidentiality
agreement.
VWR sought bids from suppliers in China to use as
comparators with the APT garments, and XXPC submitted a successful bid. APT ran tests and monitored the resins it sent to XXPC and concluded
that XXPC didn’t use APT’s materials to produce VWR’s products.
In 2010, VWR launched its private label line, branded Basic,
Advanced, and Maximum Protection. The marketing materials explained that it was
transitioning from the Critical Cover line to its new line and explained that
VWR “ha[d] not changed the manufacturer, manufacturing location, or the
manufacturing process for 95% of the products in [the] new line. For the
majority of the portfolio, only the brand name and part numbers w[ould] change.”
It also certified that some of the new private label products did not
experience a change in raw materials from the Critical Cover line. VWR referred
to a number of APT marks as points of comparison for VWR’s new Basic, Advanced,
and Maximum protection lines, including a comparison chart with specs and
drawings.
There were initial concerns about VWR’s shoe covers flaking
more than Critical Cover shoe covers, and XXPC produced a second generation of
shoe covers that addressed those issues. Independent testing established that
the performance specifications of VWR’s new line were superior to APT’s in some
respects and used a different combination of resins. VWR issued a correction
letter advising end users to conduct their own testing, as it could no longer
verify that the raw materials it used were exact.
The court found that APT couldn’t show misappropriation of
trade secrets, because its resin recipe could be reverse engineered, which
precludes trade secret protection in Pennsylvania.
Trademark infringement/false designation of origin: APT
argued that VWR’s representations caused customers to believe that VWR’s new
product line was comprised of Critical Cover products under a different brand
name, thereby falsely representing its origin/causing initial interest
confusion.  The court accepted the basic
theory to avoid a situation in which “a defendant could escape liability for
passing off simply by using another’s mark—a false designation of origin—to
establish the equivalency of the other’s mark and the defendant’s new mark, and
then shift to using only its new mark.” 
[Of course, that description is an overgeneralization: if the products
are equivalent, then an equivalence claim is not false; it’s just comparative
advertising.]
VWR argued that Dastar
barred this claim, but the court disagreed; the case could be analyzed as a
regular passing off case.  Still, on
summary judgment, APT didn’t raise a triable issue on likely confusion.  Customer care and attention “casts great
doubt on any likelihood of confusion,” given that the relevant purchasers were
experienced professionals buying apparel for use in clean room/controlled
environments, “where customers’ validating procedures tend to be thorough.”
Likewise, the evidence of actual confusion and the length of
time the mark was used without actual confusion weighed against a likelihood of
confusion. Three customers “engaged in conversation with APT about the
transition, asking APT for further explanation of the differences between VWR’s
new product line and the Critical Cover products.” This wasn’t trademark
confusion, but rather confusion about “whether a VWR-produced product they
purchased was equivalent to APT’s Critical Cover products.”  Other communications identified by APT didn’t
indicate any confusion.  For example, communications
noting problems with VWR’s first generation of shoe covers “might support that
the customers believed they were receiving an equivalent product that would
perform in the same manner as APT’s products,” that again wasn’t trademark
confusion. 
VWR’s intent also weighed against finding likely
confusion.  VWR knew that it could be
easier to proceed through certification and testing procedures if it
represented that was the same product that APT produced, but that’s different
from adopting a similar mark.  It didn’t “adopt”
a similar mark at all; it compared its products to those of APT.  (Again, “use as a mark” is a shortcut/an
explanation for why there’s no confusion.)

False advertising: This is a better theory, but it fares no
better in the end.  APT argued that VWR
falsely equated the parties’ products, causing customers to believe that VWR’s
products were Critical Cover products under a different brand name (because
they had the same components and processes). 
APT tried to rely on a presumption of causation and materiality based on
literal falsity, but those presumptions don’t apply when a plaintiff seeks only
monetary damages, not an injunction.  (I’d
think the customer complaints about the first generation might tend to show
materiality, even without a presumption. 
Separately, I haven’t seen this distinction articulated for actual
deception before—it seems to get rid of the literal falsity/misleadingness
distinction for money damages cases, requiring evidence of deception, probably
a consumer survey, no matter what the theory is—which doesn’t make a lot of
sense for a straight-up literal falsity case.) 
Even if some of VWR’s statements were literally false, APT failed to
show (1) actual deception or a tendency to deceive and (2) materiality. “These
requirements are not easily satisfied.” There was no non-hearsay customer
testimony that the statements misled customers or influenced their purchasing
decisions.  

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