Mislabeled image of competitor’s LED screen as LG’s gets LG in trouble

Sansi North America,
LLC v. LG Electronics USA, Inc., 2019 WL 8168069, No. CV 18-3541 PSG (SKx)
(C.D. Cal. Nov. 14, 2019)
LG used a picture of
Sansi’s LED displays in an article for a trade publication and accidentally
labeled it as LG displays. This lawsuit followed.
LG is currently the
only manufacturerer of OLED displays, “a specific, advanced, version of LEDs
that allow for flexibility and superior viewing angles to standard LED
technology.” In 2017, LG hired Robin Dugan to create an eBook about
developments in the digital signage industry, with a focus on LG OLED displays.
“The eBook included pictures of non-LG displays, including a featured
photograph of a display at Salesforce’s San Francisco headquarters, which was
produced by Plaintiff Sansi; the caption did not mention Defendant LG or OLED.”
LG did ask if it had permission to use all of the images. Roughly a year later,
LG hired NewBay Media to prepare a similar article for a magazine, Digital
Signage Magazine, with about 11,000 subscribers. NewBay based some of its work
on the eBook, and believed that the Salesforce display was OLED. It mistakenly
captioned the picture of the display as an OLED screen, and mistakenly updated
the caption to read “LG OLED.”  
The text then said: “The
Salesforce San Francisco office has a custom-built LG OLED screen in their
lobby that is 12K resolution, with over 7 million pixels, and measures close to
107 feet long. The content ranges from amazing waterfall visuals to
California’s Redwood National Park and is synced with the local weather to play
content that matches the weather.”
Initial book, which just said Salesforce had a custom-built screen:

Second version with wrong attribution:

Downloadable eBook
version with wrong attribution:

A few months later,
Sansi informed LG and NewBay of the problem; NewBay took down the online
version of the article, and LG agreed to take steps to correct the mistake,
including asking NewBay to remove the publications, working with NewBay to
draft a correction, and advising marketing staff of the error and to correct
any misidentifications of the project. Sansi nonetheless sued for false
designation of origin, false advertising, trade dress infringement, trade libel,
and unfair competition.
The court treated
false designation, trade dress infringement, and unfair competition as the same
claim with different names.  “[C]laiming
another’s accomplishments and history as one’s own” can be false designation of
origin (or false advertising). LG argued that no claim for reverse passing off
could succeed because no product was sold.  Sansi argued that no physical removal of a
name from a physical product was required, particularly where the plaintiff
sells a service. The court agreed that Sansi’s claim was tenable because LG published
an article containing an image of Sansi’s service [???] and labeled it as its
own. “Other courts have upheld claims under § 1125(a) where the defendant has
taken credit for and represented as its own the service or accomplishments of
the plaintiff.” [The court does not discuss Dastar, though I think this
does constitute an explicit misrepresentation of the origin of the item depicted
in the picture, as opposed to anything about the picture itself.]
Was confusion
likely? Sansi identified four clients and four industry contacts who indicated
confusion about the caption. Anyway, actual confusion isn’t required [for (a)(1)(A)].
False advertising:
The caption was a false statement of fact, and the evidence of some consumers’
confusion plus literal falsity allowed a presumption of actual deception and
materiality. There was a genuine dispute of fact on materiality and deception.
Trade dress: LG
argued that all aspects of the Salesforce display were utilitarian in that was
a video screen; according to LG the only way to tell who designed the display
would be to pull off the panel, or ask someone, and that the emitting of light was
the display’s only function. In addition, Sanci didn’t own the shape of the
display and content displayed.
Sansi argued that its
display had elements that, combined, could be “distinctive and aesthetic”
[sigh, very much not the same things; consider how many of the adjectives in
the description mean “works better”]:
Sansi’s Salesforce display consists of a unique arrangement of numerous
elements intended to make it more spectacular, attention-grabbing, striking,
and unusual, all of which are hallmarks of Sansi’s unique designs and high
quality products. For example, it is 107 feet long, when it could have just as
easily been shorter. It has a 4 millimeter pixel pitch, when it could have used
a different pixel pitch. It has approximately 8 million pixels, when it could
have had less (or more). It has a hundred layers of processing to give it a
three-dimensional effect, which is unique and not essential to the function of
a digital wall display. Its shape follows the architecture of the building in
which it is installed and surrounds the elevator bank entrances, when it could
have simply been a rectangular shape above the elevator banks. Numerous other
elements of the design were subjective choices by Sansi in order to make this a
standout design, such as the selection of PCB board widths, product supply
widths, the pitch distinction between product, the streamlined assimilation of
the display design with the building architecture, and countless other design
elements.
So many problems. None
of this indicates distinctiveness in the trademark sense, and it definitely
doesn’t mean distinctiveness for Sansi instead of for Salesforce, any more
than an ad agency has trademark rights in the successful campaigns it does for
others. Nonetheless, the court decided that “the Salesforce display including
its size, pixel pitch, number of pixels, layers of processing, unique shape,
and other elements of its design, taken together,” could be found by a jury to
be “aesthetic and not entirely functional.” 
LG did at least get
monetary remedies kicked out of the case (at least pending Romag). In the
Ninth Circuit, disgorgement requires willful infringement. LG provided evidence
that the caption was a mistake, and that LG took action as soon as it was
discovered. Sansi didn’t provide any evidence to the contrary.  And Sansi couldn’t show actual damages in the
form of lost profits or otherwise. “[C]ompensatory damages are appropriate only
where a plaintiff has shown that in fact it has been injured; it still must
present non-speculative evidence that goodwill and reputation—that is, the
value of its mark—was damaged in some way.” Sansi was unable to show lost customers,
sales, or other injury. Sansi doesn’t sell OLED products, so it can’t claim to
have missed out on any OLED sales. And none of the companies whose people
downloaded the NewBay feature placed an order for an LG LED display; only one bought
an OLED, and that company had been an LG customer for years. Sansi asked its
dealers why they weren’t giving more business to Sansi, and none mentioned LG
as the reason.
Sansi argued that it
had shown instances of confusion, and a sales decrease concurrent with the
article’s publication, which an expert calculated as $6.88 million in losses,
which it argued should be enough to get to a jury. However, Sansi didn’t
disclose any damages calculations to LG during discovery or before the
dispositive motion deadline.  Thus, the
court declined to rely on the expert report now.   Given how generous it was to Sansi’s theory
of the case, one wonders if the court would have looked favorably even on a
fairly implausible damages calculation if it had been properly disclosed.
Trade libel:
requires actual malice; none shown.

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