sales show format and timing are functional, court finds

VBS Distribution, Inc. v. Nutrivita Laboratories, Inc., No. SACV
16-01553-CJC(DFM), 2018 WL 5274172 (C.D. Cal. Sept. 10, 2018)
The parties compete in the market for nutritional
supplements and television programs. VBS sued for Lanham Act and California state
unfair competition law violations, as well as other claims including trade
secret misappropriation.  None worked.
VBS alleged two unlawful schemes, the first involving false
advertising of a dietary supplement. The supplement defendants made and sold “Arthro-7,”
a dietary supplement for joint relief, with 60% of the market (perhaps among
elderly people/people of Vietnamese descent). VBS sold a competing dietary
supplement called JN-7 Best, with 10% of the market.  Defendants allegedly falsely advertised that Arthro-7
is “100% natural herbal,” that over 8 million bottles have been sold, and that
Arthro-7 has been “clinically tested” and is “Doctor Recommended.”
“100% natural herbal” was allegedly false because the
product contains animal products. The challenged ad contains the following
phrase in Vietnamese: “100% tu duoc thao thien nhien.” VBS argued that this
phrase translates to “100% natural herbal,” whereas defendants argued that the
correct translation of “duoc thao” was “dietary supplement,” not “herbal.” There
was a disputed issue of fact on the translation, but defendants still got
summary judgment for lack of evidence of harm from this one ad. Instead, the only
relevant evidence was that VBS suffered no lost profits between 2013 and 2014,
when the advertisement ran in the newspaper, because its sales of JN-7 Best
actually increased in that time period.
“Over 8 Million Bottles Sold!”  Defendants provided evidence that they had
sold this many bottles from 1998-2017, so it wasn’t false.
The Arthro-7 package states that Arthro-7 is “clinically
tested” and “Doctor Recommended,” and that “Positive results utilizing Arthro-7
have been supported by a UCLA researcher.” [See
xkcd on “clinically tested.”
] The packaging also has a picture of a man in
a doctor’s coat, identified as “Dr. John E. Hahn, Board certified foot
surgeon.” Plaintiffs argued that this was misleading because Dr. Hahn is a
Doctor of Podiatric Medicine, and not a medical doctor.  But defendants submitted an article on the
results of a 12-week clinical study in China; four of ten authors were from the
Department of Pathology and Laboratory Medicine at UCLA’s medical school. This
wasn’t misleading just because the studies took place in China; nothing on the package
indicated otherwise. Nor was the use of a podiatrist whose license had expired as
a “doctor” false—“Plaintiffs provide no admissible evidence showing that ‘doctor’
necessarily means one who is currently licensed or one who has a medical degree.”
The second general scheme involved the parties’ respective
television shows. VBS Television is “primarily aimed at the Vietnamese
community and is broadcast primarily in the Vietnamese language.” It produces a
show named “DAU GIA TREN TRUYEN HINH” (“Fight Price on Television”), a live
auction program which primarily auctions diamonds. In 2012, Defendant Tram Ho
became a host of the show.  In 2016, VBS
discovered that Ho was appearing on a rival television show called “Diamond at
a Surprise Low Price.” The two shows allegedly have the same hostess, some of
the same vendors, the same technician, the same time slot of 5:00 p.m. to 7:00
p.m., “the least to most expensive format,” “the same auctioning of
approximately 30 items each show,” and the same product price range from $300
to $3,000.
Plaintiffs alleged trade dress infringement based on a trade
dress comprised of:
a) the unique style and format of
the show, b) its time slot and date selection, each week on alternate weekdays,
from 5 to 7 p.m., on Tuesdays and Thursdays, c) the price range for its auctioned
items, ranging from about $300 to $3000, d) its “least to most expensive”
format in which the least expensive items are sold first, ascending to the most
expensive items at the end of the show, e) the length of the show, 2 hours, f)
its focus on live TV auctions of jewelry, particularly diamonds, g) its
carefully selected vendors, who appear on the show with the show’s host, h)
unique and proprietary camera angle and special lighting techniques developed
by Plaintiffs using an Apple ipad tablet, i) the number and selection of items
sold, usually about 30 items.
VBS failed to show that the claimed trade dress had
nonfunctional features or a nonfunctional arrangement of those features. VBS’s
own CEO and Chairman explained in his deposition that the lighting techniques
and camera angles function to make the diamonds on the television show
“sparkle” and appear brighter and that the lighting techniques are common in
jewelry stores, “which demonstrates that the techniques are intrinsic to the
sale of jewelry.” He testified that the show times and dates were chosen as
times that would maximize viewership and auction purchases; that the show sells
thirty products per episode because it is the optimal amount to sell during a
two-hour long show; and that the products are priced between $300 to $3000
because the range is what the average target consumer can afford. Finally, he
testified that the products are shown in the order of lowest to highest price to
maximize sales, because more viewers tune in towards the end of the show. That’s
all functional.
(Some other claims failed because Ho didn’t
quit or breach her contract because of any outside interference—she left because
the CEO/Chairman “grabbed [her] boobs, put his hands on [her] butt and then put
his hands into [her] groin area.”)

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