hashtags are plausibly infringing; sales claims plausibly false based on P’s own history of sales

Automated Pet Care Prods., LLC v. Purlife Brands, Inc., 2023
WL 3046592, No. 22-cv-04261-VC (N.D. Cal. Apr. 21, 2023)

In two opinions on the same day, the court dealt with various
IP/false advertising claims brought by one litter box seller against another.
The first considered various trademark claims, including claims based on use of
a hashtag on social media, where we are apparently going through everything we
went through with domain names and search terms/metatags, yay.

Plaintiff (dba Whisker) sued defendant (dba Smarty Pear),
its competitor in the market for automated, self-cleaning litter boxes. “Whisker
is the pioneer of this technology while Smarty Pear is the newcomer.”

Whisker’s flagship Litter-Robot consists of a rotating
chamber that automatically sifts cat waste after each use into a waste drawer
beneath the chamber, thus keeping the litter box perpetually clean and
eliminating the need for manual scooping. It has registrations for the word
marks “Litter-Robot,” “Litter-Robot 3,” “Litter-Robot 3 Connect,” and
“Litter-Robot Pinch Detect.” Smarty Pear allegedly used confidential information
to inject the market with a new—and virtually identical—automated litter box:
the Leo’s Loo. Its social media posts featured photos of the Leo’s Loo
products, but those posts were tagged, at least in part, with #litterrobot,
#LitterRobot, and #litterrobot3.

Using the old “Internet troika,” the three most important
factors were (1) the similarity of the marks, (2) the relatedness of the goods
or services, and (3) the simultaneous use of the Web as a marketing channel,
all of which weighed heavily in plaintiff’s favor.

Defendant claimed that plaintiff lacked valid rights over the
phrase “Litter Robot” (that is, with a space instead of a hyphen) and the
hashtag “#litterrobot,” given the previous refusal of registration for “Litter
Robot” as merely descriptive; in subsequent applications, Whisker “disclaimed”
exclusive rights to the “Litter Robot” word mark, “meaning it acknowledged that
it lacks a valid trademark over those words.” The PTO also declined to register
“#litterrobot” on the Principal Register, because adding a hashtag to an
otherwise descriptive mark did not alone make the mark suggestive.

If Whisker were pursuing claims
based on [“Litter Robot” and “#litterrobot”]—say, if it were arguing that those
marks have attained secondary meaning since the time they were rejected—then
Smarty Pear’s disclaimer arguments would have merit. Whisker’s recent
disclaimers would constitute admissions that the marks are not yet protectable.

But Whisker is not advancing
trademark infringement claims based on those disclaimed marks. It neither
disputes that it has disclaimed them nor argues that they’ve attained secondary
meaning. … The key question here is whether Smarty Pear’s hashtags are
confusingly similar to the marks over which Whisker has rights; focusing on
whether they are also similar to marks over which Whisker does not have rights
is not helpful.

This is the classic problem of scope v. validity, which modern
trademark doctrine generally resolves by promising to appropriately limit scope
in the infringement analysis, though that promise is often unrealized. The
court commented:

To be sure, there is something
unintuitive about the idea that Smarty Pear could be held liable for using
marks that are nearly identical to marks the Trademark Office has determined
are not protected. … But there is a place in the analysis to account for this
peculiarity: the first of the Sleekcraft factors, the “strength of the mark.” …
The resemblance between the marks that the Trademark Office has determined are
merely descriptive and those it has agreed to register suggests that Whisker’s marks—while
valid—are weak.

But plaintiff also alleged “significant marketing efforts
over the course of 22 years, widespread publicity and write-ups, and rave
customer reviews ranging in the tens of thousands. These allegations suggest
the marks have been strengthened over time.” Anyway, “weak mark[s] entitled to
a restricted range of protection,” infringement may still be found where, as
here, “the marks are quite similar, and the goods closely related.”

The real issue here isn’t validity or strength, but whether
the hashtags functioned as comparative advertising, and here the court tilts
heavily against defendant: “For one, Smarty Pear’s intent is transparent: Not
only are the products themselves virtually identical, but the strategic use of
the number three and the upper-case letters in its hashtags evinces an intent
to capitalize on Whisker’s goodwill.” The court didn’t discuss whether the rest
of the post contained anything equivalent to the labeling that the 9th Circuit
has considered relevant for sponsored ads.

Likely expansion also favored plaintiff. And plaintiff alleged
actual confusion: “when Smarty Pear offered consumers free accessories to
incentivize reviews of the Leo’s Loo, several consumers emailed Whisker’s
customer support to claim their accessories, such that Whisker’s product
specialists had to explain that the Leo’s Loo was not Whisker’s product.” And purchaser
care was hard to assess: “These automated litter boxes aren’t exactly cars
costing tens of thousands of dollars, but they’re not insubstantial purchases
either. They sell for nearly $500 each. Most consumers would pause to reflect
before spending that much on a product.”

Motion to dismiss denied as to trademark infringement, false
designation of origin, and unfair competition claims based on the use of Smarty
Pear’s hashtags.

Automated Pet Care Prods., LLC v. Purlife Brands, Inc., 2023
WL 3049106, No. 22-cv-04261-VC (N.D. Cal. Apr. 21, 2023)

After dismissing patent claims because infringement wasn’t
plausibly pled, the court declined to dismiss some false advertising
claims.  Statements like “[w]e’ve packed
the Leo’s Loo with features that make it one of the most convenient
self-cleaning litter boxes available” and “[w]e designed Leo’s Loo with kitty
safety in mind … so our feline friends are always safe when they step inside”
were classic, non-actionable puffery. The allegation that these statements were
likely to mislead consumers into believing that the product is made in
California when it is allegedly manufactured in China was “strained and

It was also puffery to label the Leo’s Loo Too as “the
smartest self-cleaning litter box.” Standing alone, that descriptor is classic puffery.
Plaintiff argued that, in context, the statement is actionable because the
video then goes on to identify several specific features, falsely implying that
competitor products lack those features.

If anything, the context here reinforces the conclusion that
the statement is not actionable. Immediately below the video is a bold header
that reads “Features You’ll Love,” followed by a second line of text which—in
reference to the features listed immediately below it—describes the Leo’s Loo
Too as “one of the most advanced … self-cleaning litter boxes available.” And
of the four features highlighted ever so briefly in the video itself, two are
the most basic functions of any automated litter box: the Leo’s Loo Too
“detects when kitties visit” and “cleans after they leave.” Under these
circumstances, no reasonable consumer could believe the video implies that no
other automated litter box can boast the identified features.

However, plaintiff adequately alleged false advertising
based on defendant’s claim that the Leo’s Loo Too is the “First-Ever
App-Connected Self-Cleaning Litter Box with Alexa and Google Voice Controls.”
Plaintiff alleged that its own product, released years earlier, had its own
smart app and can support Alexa and Google Voice, and that another Chinese
product that defendant allegedly knocked off featured this built-in
functionality long before the Leo’s Loo Too did.

Likewise, plaintiff plausibly alleged false advertising that
“[o]ver half a million cats and their owners have made the transition to a
litter-free life with Pear Family.” “This statement—conveying to consumers that
Smarty Pear has sold over 500,000 of its Leo’s Loo and/or Leo’s Loo Too
products—is a quantifiable claim capable of being proven false.”

Here’s the interesting bit: falsity was plausible because
plaintiff, which has been in business for over 22 years, has had 700,000 sales
in that time. “It thus seems implausible that Smarty Pear could have sold over
500,000 of its products in the one to two years it has been in the market.
Moreover, such a representation is material to consumers and likely to induce
reliance because it inspires confidence in the product.”

And the statement that defendant’s product’s UV rays are
99.9% effective at eliminating viruses and bacteria was also plausibly false
advertising. Plaintiff alleged the existence of FDA guidance advising that UV
rays are not effective at eliminating viruses or bacteria when they are
“covered by dust or soil, embedded in porous surface or on the underside of a surface.”
“Because bacteria or viruses within the Leo’s Loo Too are likely to be buried
in litter, Whisker has adequately alleged that Smarty Pear’s boast of 99.9%
effectiveness is false. And the complaint adequately alleges that such a
representation is material and likely to induce consumer reliance given the
premium placed on odor reduction in the market for litter boxes.”

from Blogger http://tushnet.blogspot.com/2023/04/hashtags-are-plausibly-infringing-sales.html

This entry was posted in Uncategorized and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s