Allegedly outdated comparison not enough to justify TRO in sophisticated industry

NEXTracker, Inc. v. Array Technologies, Inc., 2017 WL
5625926, No. 17-cv-06582 (N.D. Cal. Nov. 22, 2017)
The parties (NX and ATI) compete in the market for solar
tracking devices, which “adjust the positioning of solar panels…to increase
the efficiency of their solar power capture.” In September 2017, TUV, “which
appears to be a non-governmental testing and assessment organization,” issued a
report comparing the operational costs of two different solar tracking
architectures and concluding that “Architecture 1” — a tracker “driven by a
single motor linked by a rotating driveline to multiple tracker rows” — is
associated with lower lifetime operational costs than “Architecture 2” — “a
system where each row operates as a self-contained unit with…dedicated
tracker system components.” NX alleged that “Architecture 1” is ATI’s
technology and that “Architecture 2” shows an NX product.
Apparently in response to NX’s objections, TUV retracted the
report, but NX alleged that ATI widely disseminated the report both before and
after the retraction.  NX sought a TRO
based on its false advertising, trade libel, and defamation claims, which the
court denied.
First, NX didn’t show falsity or misleadingness; the TUV
report didn’t mention NX or its products by name, and though it showed an NX
product, NX didn’t provide evidence that the relevant claimed trade dress (NX’s
“signature gold-colored paint” and “distinctive curve-shaped tube”) had
acquired secondary meaning such that consumers would perceive a reference to NX
systems in particular, rather than “Architecture 2” systems in general.  
Even assuming that the association existed, NX still failed
to show likely success on the merits.  NX
argued that the report was false or misleading because “Architecture 2” was a
three-year-old NX design, whereas the system described as “Architecture 1” was
ATI’s latest tracker.  But the report
didn’t purport to compare systems of the same generation or age, and it wasn’t
false or misleading just because it compared systems of two different
vintages.  “Such a comparison may even be
useful in the solar industry because, as NX itself argues, ‘Solar trackers are
a long-term investment — they can remain operational for many decades.’ It
also seems possible that solar industry participants savvy enough to identify ‘Architecture
2’ as an NX system might also recognize that the featured device was not
necessarily the latest model.”  Nor did
the record justify a finding that the report falsely described the NX system,
as NX alleged. NX claimed that the report made false statements about its
gears, its positioning of solar modules, and its use of struts, but never
clarified whether those statements were false only as to current NX products or
as to the prior ones too.  ATI argued in
opposition that the statements were true for the tested NX products, which was uncontested
in NX’s reply brief.
Although TUV retracted the report, the evidence showed that
NX’s objections, rather than independent concerns about the veracity of the
report, drove the retraction, stating that TUV  “did not subjectively entertain any serious
doubt about the truth of the statements in the report,” but still believed that
it was “in the best interest of all parties to retract the Report and conduct a
diligent investigation of NEXTracker’s allegations about the Report.”

The court also declined to find irreparable harm likely;
much of the harm alleged by NX likely already occurred because of the report’s
alleged wide dissemination.  Although NX
argued that a TRO could help at the margins, NX “fail[ed] to quantify the
reputational injuries it will suffer if ATI continues to distribute the report”
and thus failed to show irreparable injury.

from Blogger

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