click tracking makes online false advertising harm reparable, preliminary injunction inappropriate

Carson Optical, Inc. v. Alista Corp., 2019 WL 3729460, No. 19-cv-1725
(SJF)(AKT) (E.D.N.Y. Aug. 8, 2019)
Carson sells three products on Amazon that have a magnifying
mirror: a folding compact lighted mirror, a round lighted mirror with suction
cup base, and a square lighted mirror with stand. According to defendant RQ’s
principal Zheng, before February 2019, Carson didn’t advertise a cosmetic
makeup mirror. RQ sells beauty products online, including the ten magnifying
mirrors. Both parties buy magnifying products “from factories overseas—mostly
in China—and brand them as their own for sale at wholesale (Carson) or
direct-to-consumers (RQ).”
Carson alleged that the RQ defendants falsely advertised
their products with “grossly overstated” magnifying powers. Though the
complaint didn’t explain how Carson was harmed by RQ’s statements on its own
website, RQ conceded that it predominantly “sell[s] mirrors and … advertises
on Amazon.” According to Zheng, “RQ received the magnification listed on its
mirror products directly from its glass suppliers[,] … simply uses the
magnification given to it by its manufacturers and/or displayed in catalogs
produced by the glass supplier for its manufacturer[,] … [and] had no input
on the magnification listed.” Defendant Alista sells the same mirrors as the RQ
defendants and allegedly used the same false advertising claims.
Carson argued that it was harmed because, when the
advertisements “are positioned on the product pages of Carson’s magnifying
mirror products on[,] … consumers are presented with the false
[sic] choice of buying Carson’s product or buying the … falsely advertised
product[,]”and (ii) they “falsely cause Carson’s products to appear technically
inferior and over-priced, when compared to Fancii’s products.”
Carson’s attempt to get a preliminary injunction on its
Lanham Act claims failed for want of irreparable harm. Under Salinger v.
, “the court must not adopt a ‘categorical’ or ‘general’ rule or
presume that the plaintiff will suffer irreparable harm (unless such a
‘departure from the long tradition of equity practice’ was intended by
Congress).” Salinger was a copyright case, but the Second Circuit found
that eBay applies unless the relevant statute instructs otherwise; the
Lanham Act does not, and indeed specifies that injunctions should be based on
the principles of equity, and “eBay strongly indicates that the
traditional principles of equity it employed are the presumptive standard for
injunctions in any context.”
Still, though “general historical practices in comparative
advertising cases do not necessarily entitle plaintiff to injunctive relief
based upon a presumption of injury, they may be ‘helpful and instructive’ in
discerning and applying the eBay standard for granting injunctive relief ‘when
the circumstances of a case bear substantial parallels to litigation the courts
have confronted before’” (citing Kennedy’s eBay concurrence). Although
often “[i]t is virtually impossible to prove that so much of one’s sales will
be lost or that one’s goodwill will be damaged as a direct result of a
competitor’s advertisement[,]” that’s not true here. Even assuming that there’s
way to track “the precise number of customers” within the Amazon marketplace
who ultimately elected to buy defendants’ product over plaintiff’s product
“after being confronted with the false … advertising on Carson’s product
pages[,]” when a consumer clicks on one of defendants’ challenged ads appearing
on the page listing Carson’s product, Amazon apparently does track at least the
number of clicks. That maximum number means that “plaintiff’s losses are
measurable and can be sufficiently remedied by an award of monetary damages.”
Carson’s “conclusory” assertions of irreparable harm to its
goodwill and the value of its products in the minds of the consumer, without
more, were insufficient. And its claim was further weakened “by the lack of any
apparent causal connection between the advertisements and its own sales
position,” since Carson only hired its optics expert because, three years ago,
it discovered that RQ’s magnifying glasses were being sold with overstated
magnifying power claims and it wanted to know whether the mirrors were doing
the same. Although the expert opined in January 2019, Carson waited more than
two months to sue, and sought injunctive relief a week later, suggesting a lack
of irreparable harm.

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