Competitor can’t challenge compliance w/certification standards

Board-Tech Electronic Co. v. Eaton Electric Holdings LCC, 2017
WL 4990659, No. 17-cv-5028 (S.D.N.Y. Oct. 31, 2017)
Board-Tech accused its competitor in the light switch
market, Eaton, of false advertising because, while Eaton was authorized to
apply the “UL” certification mark to certain products (as Board-Tech was),
those Eaton products allegedly didn’t comply with the requisite safety
standards. For the parties’ light switches, the prevailing standard is UL 20, required
by the National Electric Code for new buildings; the NEC is state or local law
in all 50 states, and even where its use is voluntary, consumers rely on UL 20
labeling for safety information; many retailers also require UL 20 labeling
before they’ll sell a switch.
The UL certification mark, “certifies that representative
samplings of the goods conform to the requirements” of Underwriters
Laboratory.  Authorization requires a
manufacturer to provide six sets of representative samples of switches they
want certified, which must then pass a series of tests.  The testing can’t guarantee that the products
actually sold comply with applicable safety requirements, merely that a
purportedly representative sample did. 
However, Board-Tech alleged (plausibly, to me) that consumers rely on
the certification mark or listing, and base their purchases on the belief that
every product containing a mark or that is listed actually complies with the
applicable written safety standards. According to UL, “it is the responsibility
of the manufacturer to ensure that all of the products it sells bearing the UL
mark actually comply with the standards tested for, not just the samples that
were tested.”
Board-Tech alleged that tested samples of UL 20-labeled
switches sold by Eaton from the 7500, 7600, and 7700 series, and that all eight
sets of six light swiches, 48 in total, failed the UL 20 standards.  However, the court dismissed the complaint
for failing to specify the precise products at issue from the relevant
series.  Board-Tech alleged that it had
sufficiently alleged testing of a sample, but the court disagreed, because
Board-Tech failed to specify what it had sampled.  Nor had it explained why it was plausible to
extrapolate from a few non-specific switches to entire product lines—more than
125 of them.  Failure to provide any
allegations as to which product(s) within a broader product line failed was
also necessary in order for defendants to investigate the claim and prepare a
defense. “If allowed to proceed in such a broad manner, plaintiff would no
doubt seek access to the internal design of competitive products as well as
highly sensitive technical data. Damages discovery would involve all of
defendants’ sales of this series of products.” 
The court wasn’t willing to let that happen without more specifics.
Separately, the court didn’t think Board-Tech could bring
claims based on failure to meet the UL’s standards when the UL certification
concededly existed.  “[P]laintiff’s claim
is that even if defendants are authorized to use the mark, they are deceiving
customers by using it.”  But Board-Tech
didn’t allege there had been post-certification changes to the product, or that
the UL had found Eaton non-compliant. 
The authorized use of the mark was not “capable of being a deceptive use.”  The mark was limited by the scope of its
registration, and it certified merely that (manufacturer-designated)
representative samples conformed to UL’s safety requirements.  [Do consumers know this?  Why would they?]  Board-Tech conceded that Eaton’s switches had
been through that process.  “[I]f
defendants are authorized to apply the mark (which plaintiff concedes they
are), then plaintiff is simply policing the mark. It is up to United
Laboratories to police the mark.” 
Board-Tech could only challenge UL’s policing by seeking to cancel the
mark for failure to police. 

The court was unwilling to allow a competitor to police the
use of a certification mark by a competitor, because “[p]rivate testing of a
product against standards could be used to commence a lawsuit that could expose
competitive design and information to precisely the entity that should not have
it. While there are many cases in which competitors are proper plaintiffs – and
do obtain discovery – one should not open the floodgates to such litigation
without careful consideration.” Comment: Compare to the cases finding that
claims requiring interpretation of FDA rules, or policing of compliance with
the “organic” standard, can’t be brought under the Lanham Act because the
enforcement of those rules has been delegated to an entity other than the
court.

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