lack of safety/higher failure rates plausibly meant products weren’t “compatible”

Posted on December 30, 2019 by rtushnet

Straumann USA, LLC v. TruAbutment Inc., No.
8:19-cv-00878-JLS-DFM, 2019 WL 6887173 (C.D. Cal. Oct. 1, 2019)
The parties compete in the market for dental implants, which
are medical devices surgically implanted into the patient’s jaw bone to replace
natural teeth and function as artificial tooth roots. A connector, called an
abutment, is placed on the inside; it holds
and supports dental restorations, such as crowns or bridges. TruAbutment markets abutments as
“compatible” with implants produced by various manufacturers, including Straumann’s. I’ll
ignore the patent claims.
Abutments for use in dental implants are classified as Class
II medical devices, “medium to moderate risk.” 510(k) preclearance is required, but Straumann alleged
that TruAbutment hadn’t obtained 510(k) clearance for many of its abutments,
including for dozens of devices marketed as Straumann-compatible. Straumann further
alleged that TruAbutment products fail at an unusually high rate and that
non-adherence to the exact specifications of the original product or use of
different materials increase the chance that some combination of the implant,
abutment, or connecting screw will break. Device failure “typically requires
emergency surgery.” The failure of a non-Straumann abutment would allegedly unfairly
cast doubt on the reliability and safety of the implant with which it was
coupled.
The court found the Lanham Act claim sufficiently pled.
Although the FDCA provides no private right of action, the Lanham Act claim was
not dependent on lack of preclearance. Straumann alleged false statements about
compatibility, which could succeed without litigating any alleged underlying
FDCA violation. The complaint also satisfied Rule 9(b) by alleging that TruAbutment’s
products weren’t actually Straumann-compatible because they are unsafe and fail
at an unacceptably high rate, along with other allegations about the other
elements, including, for harm, that dental labs are likely to select and supply
cheaper third-party abutments to dentists if they are falsely advertised as
equivalent to Straumann’s. The California UCL claim therefore also survived.

from Blogger https://ift.tt/2Qyj5d2

Posted in Uncategorized | Tagged | Leave a comment

calling business duration into question could actionably disparage its honesty

Posted on December 27, 2019 by rtushnet

Giannone v. Giannone, 2019 WL 6910151, No. 16-cv-911 (E.D.
Pa. Dec. 18, 2019)
“A lamentable father-son conflict over a family plumbing
business provides the backdrop for this Lanham Act case.” Joseph Giannone,
Senior, failed to get summary judgment on his Lanham Act trademark infringement
and unfair competition claims against his son, Joseph Giannone, Junior.
Although Senior registered the descriptive terms at issue (JOSEPH GIANNONE,
JOSEPH GIANNONE PLUMBING & HEATING, and a stylized JOSEPH GIANNONE PLUMBING
& HEATING mark with a pipe and wrench logo), Junior timely contested their
validity and Senior failed to show secondary meaning sufficiently to win
summary judgment.
 

Senior’s word + design marks
Junior once worked as Senior’s employee. In 2008, Junior
founded his own business—Joseph Giannone Heating & Air
Conditioning—operated out of Senior’s Philadelphia business office. Initially,
Junior’s business was confined to HVAC work and didn’t compete with Senior’s
plumbing business. They shared telephone lines, shop space, repair trucks, and
even employees. Both businesses used Senior’s marks. In 2013, after some
conflicts with Senior, Junior moved out, expanded into plumbing services that
competed with Senior’s business, and advertised using this logo:
 

Junior’s mark

Junior advertised heavily within the same Philadelphia zip
codes served by Senior’s plumbing business using that logo, and even put it on
the side of a building half a mile from Senior’s business. This lawsuit
followed.
Of possible interest: Senior argued that his JOSEPH GIANNONE
PLUMBING & HEATING and stylized marks were inherently distinctive because
of their additional elements. The court found these additions insufficient to
confer inherent distinctiveness. As to the standard character mark, “plumbing
and heating” were merely descriptive (and, though the court doesn’t mention it,
disclaimed in both this and the design plus word mark). (The court also didn’t
mention that the PTO apparently didn’t require any evidence of secondary
meaning for any of these registrations, which seems weird.) As to the design + word mark,
the pipe and wrench logo was also descriptive, especially since “other plumbers
in the industry have used the same exact pipe and wrench logo in their
marketing.”
Junior’s false advertising counterclaim survived summary
judgment based on one statement. Senior sent a letter stating that Junior’s
business had only been established for 5 years (2010) when it in fact had been
established in 2008, which cast doubt on Junior’s honesty. Senior argued that
this was de minimis, but “[a] reasonable jury could find that Senior’s false
statement in the letter not only strips Junior’s business of two years of
experience, but more importantly implies that Junior’s business misrepresents
itself. This false statement could reasonably cause a household consumer of
plumbing services to choose a different service provider, thereby causing
Junior to lose sales.” Also possible evidence of false advertising: Senior’s
website incorrectly states that (1) Joseph Giannone Plumbing & Heating was
founded in 1929; (2) Senior took over his father’s business in 1978; (3) and
the business has served the Philadelphia region for more than 85 years. Senior admitted
that he founded his business in 1983 (not 1929) and so all these statements
regarding Senior’s plumbing business were facially false. “A reasonable jury
could find that these statements were intended to deceive the consumer public
into believing that Senior’s business was more established than it was. A
reasonable jury could also find that such a belief could likely influence purchasing
decisions, including away from Junior’s more recently established business.”

from Blogger https://ift.tt/2Zvl99I

Posted in Uncategorized | Tagged , | Leave a comment

false claims about duration of business could be actionable

Posted on December 27, 2019 by rtushnet

SPS Technologies, LLC v. Briles Aerospace, Inc., 2019 WL
6841992, No. CV 18-9536-MWF (ASx) (C.D. Cal. Oct. 30, 2019)
The parties compete in the market for high-strength aerospace
fasteners. SPS, using information that is allegedly confidential/proprietary to
it, makes the SLEEVbolt, which uses a tapered bolt and sleeve system that
allegedly offers significant benefits over competing aerospace fasteners.
Boeing is the primary SLEEVbolt customer—for more than forty years. In 2011,
SPS bought the assets of Paul R. Briles, Inc. (PB Fasteners), which included
the proprietary information and trade secrets necessary to make the SLEEVbolt.
Before then, Robert Briles was the President of PB Fasteners, and Michael
Briles worked as its Director of Sales and Marketing. Robert and Michael Briles
also allegedly entered into agreements with SPS about keeping confidential
information confidential, but, you will not be surprised to read at this point,
allegedly disclosed PB Fasteners’ proprietary information to Briles Aerospace,
which was founded shortly after the SPS acquisition. Briles Aerospace allegedly
agreed to sell more than 10% of Boeing’s SLEEVbolt requirements for Boeing’s
787 aircraft, contrary to Boeing’s contractual obligations to SPS, of which
Briles Aerospace knew. Boeing qualified Briles Aerospace and Lisi Aerospace as
additional manufacturers of the SLEEVbolt; allegedly, neither could have
obtained the necessary qualifications without misappropriating PB Fasteners’
proprietary information.
SPS also alleged that Briles falsely advertised on its
website and elsewhere by claiming: “Briles companies have been valued
Manufacturers of High Strength Aerospace Fasteners for over half a century” when
Briles Aerospace was founded in May 2012, allegedly misappropriating the
reputation and goodwill of PB Fasteners. These ads are allegedly likely to
influence the purchasing decision of customers in the aerospace fastener market
because they will believe that Briles Aerospace has extensive engineering
expertise and industry know-how, and Boeing and other customers allegedly relied
on such statements in choosing to do business with Briles Aerospace rather than
PB Fasteners.
Standing under California UCL: A business plaintiff claiming
injury by a competitor doesn’t have to allege that it relied on the
false advertising, so SPS had standing. Unlike the plaintiffs whose abuses
spurred the passage of Proposition 64 tightening UCL standing requirements, competitor-plaintiffs
actually do suffer an injury from false advertising that diverts consumers’
business, thus satisfying the injury requirement. Imposing a direct reliance
requirement would be inconsistent with the point of competitor false
advertising claims.
SPS also had a sufficient commercial interest under the
Lanham Act. (Somewhat oddly, SPS asserted that it only wanted a false
advertising claim; false association would have eased its burdens in terms of
commercial advertising/promotion and materiality, both of which might present
some issues here, and false association is not obviously a terrible claim on
these facts.)
Defendants argued that “Briles companies have been valued
Manufacturers of High Strength Aerospace Fasteners for over half a century” was
truthful, but didn’t explain why and also that didn’t deal with the allegation
that the statement misleadingly suggested that defendants had more than 50
years of experience manufacturing high-strength aerospace fasteners and that
Briles Aerospace had significant engineering expertise in the aerospace
fasteners industry. Nor could the court conclude that this was puffery as a
matter of law. While “valued” was opinion or puffery, the assertion that the
companies have been manufacturing the aerospace fasteners for “over half a
century” was “quantifiable” and “verifiably true or false.” [Interesting trade secret interaction: what if the advertising claim is true, but only because they took information that, according to the other allegations in the complaint, they had no right to take?]
Defendants argued that the allegations of reliance or consumer
deception were conclusory and unsupported by any actual facts. Not every court
would agree, especially in the context of a sophisticated customer base as
here, but the court concluded that no further evidence was required on a motion
to dismiss. Likewise, on materiality, defendants argued “that it is simply not
plausible that a highly sophisticated company like Boeing would rely on one
statement … in choosing to source critical parts for commercial airplanes.”
Discovery might reveal this to be true, and other allegations in the complaint
suggested that Boeing relied on other information and statements, but the
allegedly misleading statement need not be the only reason to work with
defendants as long as it contributed to the decision. [I mean, presumably Boeing knew it was contracting with a new company other than the one that had been its exclusive supplier for 40 years, so …]
Other claims also survived.

from Blogger https://ift.tt/2Zu3NtF

Posted in Uncategorized | Tagged , | Leave a comment

you can’t plead false advertising to get around Dastar

Posted on December 27, 2019 by rtushnet

Focal Point Films, LLC v. Sandhu, 2019 WL 7020209, No.
19-cv-02898-JCS (N.D. Cal. Dec. 20, 2019) (magistrate, by consent)
Focal Point/Gibel sought a declaratory judgment that Gibel was
the sole author of a documentary film called Sign My Name to Freedom
about “a 94-year old African American woman who entered the public spotlight
when she became the oldest National Park Ranger serving in the United States.” Defendant
Arjot Sandhu, who met Gibel at a documentary filmmaker workshop and asked to
assist with the project, also worked on the film. Sandhu counterclaimed for a
declaratory judgment that she was a co-author and related counterclaims.
Gibel alleged that Sandhu worked “as an extra camera
operator during a handful of shoots, always under Gibel’s supervision and with
the understanding that Sandhu would be compensated on partially deferred basis.”
She also helped with fundraising. Gibel allegedly offered Sandhu an “Associate
Producer” credit for this work, but the parties were unable to reach agreement
on a written contract setting forth their arrangement. Sandhu allegedly snuck
unauthorized co-director and co-editor credits for herself into a “pitch deck”
for the film, and even after Gibel told Sandhu he was terminating her services
she allegedly continued to hold herself out as an authorized representative of
the film.
Sandhu disputed Gibel’s account and alleged that her
authorship included, among other things, “conception, creative direction,
content selection, directing scenes, overseeing the Film’s production,
supervising the work of editors, filming scenes, editing footage, pitching the
Film at film festivals, and collaborating on all other aspects of the Film’s
creation and promotion, including the overall arc and direction of the Film.” Gibel
allegedly publicly represented that she was a coequal partner in correspondence
with third parties and promotional materials until the fall of 2018, when Gibel
blocked her access to the film’s social media, to key documents, and to grant
funds jointly raised and awarded to the project. Sandhu counterclaimed for declaratory
judgment of authorship, unjust enrichment, intentional interference with
prospective economic advantage, and false advertising and unfair competition
under the Lanham Act and the UCL.
Under Dastar and Sybersound Records, Inc. v. UAV Corp.,
517 F.3d 1137 (9th Cir. 2008), the Lanham Act claims failed. Dastar
barred a reverse passing off claim, and Sybersound said that
misrepresentations about authorship aren’t actionable under §43(a)(1)(B).
Sandhu argued that §43(a)(1)(B) claims are still available when they’re based
on something more than failure to provide credit, and that her ownership of the
film by virtue of “sweat equity” was an actionable “characteristic” of the
relevant good, the film. She argued that Sybersound held merely that the
licensing status of a work wasn’t a “characteristic” for these purposes, and
that statements Gibel made to potential funders of the film about Sandhu
damaged her reputation in the Bay Area documentary filmmaking community. None
of that helped: this was a claim based on an alleged failure to give her
appropriate credit. Authorship, like licensing status, is not a
“characteristic” of a good.
Nor could Sandhu state a claim based on alleged injury to
her reputation under Lexmark. The specific facts she alleged made clear
that the alleged harm was the result of [both explicit and implicit]
representations by Gibel about her role as a coauthor of the film. “While it
may be possible to amend this claim to allege injury to a commercial interest
in reputation that is not a result of representations about Sandhu’s authorship
of the Film, she has not done so.” 
Note that this holding, while stemming
rather naturally from existing cases, also hits on a pressure point in Dastar,
which was about reverse passing off rather than passing off. When the defendant
does mention the plaintiff—what in trademark would be passing off, and
in false advertising would be a falsely negative statement about the plaintiff
as opposed to a falsely positive statement about the defendant—matters are
arguably different enough to demand different treatment. On the other hand, and
as the court recognized here, often enough there is no coherent way to
distinguish explicit from implicit statements about the plaintiff, especially
when the defendant is describing its own product (here, the film). The
situation for trademark can be the same, where the defendant has the right to,
e.g., reproduce a work in the public domain but the plaintiff claims trademark
rights in aspects of the public domain work such as the characters. To be
effective, Dastar sometimes has to be indifferent to whether the alleged
falsehood is explicit or implicit.
The UCL claim also failed. The “unlawful” claim failed to
the extent it was based on alleged Lanham Act violations; state law unfair
competition is “substantially congruent” to the Lanham Act. And as for
“unfair,” Sandhu didn’t allege any “incipient violation of an antitrust law, or
[conduct that] violates the spirit or policy of those laws because its effects
are comparable to or the same as a violation of the law, or otherwise
significantly threatens or harms competition.’ ” It was not enough to allege
that Gibel’s conduct has “misled…potential investors in the Film and members
of the documentary filmmaking community.”
Sandhu also failed to state a claim as to the counterclaim
for intentional interference with prospective economic relations because she
couldn’t identify an independent wrong other than the above.

from Blogger https://ift.tt/376Kids

Posted in Uncategorized | Tagged , | Leave a comment

statutory Lanham Act standing exists when advertiser is advertising but not yet selling

Posted on December 27, 2019 by rtushnet

CareDx, Inc. v. Natera, Inc., 2019 WL 7037799, No.
19-662-CFC-CJB (D. Del. Dec. 20, 2019) (magistrate)
A nicely reasoned opinion about impending competition as
sufficient to find likely harm from false advertising.
CareDx makes AlloSure, a patented kidney transplant
surveillance diagnostic test that allegedly detects active kidney rejection in
kidney transplant patients using cell-free DNA detection.  CareDx’s clinical trial allegedly
demonstrated that AlloSure “markedly outperformed” the current standard of care
for detecting kidney transplant rejection (serum creatinine testing). Natera
allegedly developed a competing cell-free DNA kidney transplant rejection test,
Prospera. It had allegedly “begun significant marketing efforts,” such as by
making the test available for use in clinical trials and marketing it to major
clinical centers and sponsoring a clinical study. The study allegedly involved
“retrospectively select[ing] samples that had been collected for unrelated
purposes by a single clinical center and archived.” The results were published
in the December 23, 2018 issue of the Journal of Clinical Medicine.
Natera made statements comparing the parties’ studies’
results, e.g. “compares favorably against competition,” particularly in sensitivity,
citing the CareDX study. CareDx alleged that because the two studies did not
involve “head-to-head clinical trials comparing the two [companies’]
products[,]” and because the Natera Study suffers from “substantial material
flaws[,]” Natera’s statements comparing Prospera’s performance to AlloSure’s
performance were “literally false and entirely misleading.”
Natera argued that since its product hadn’t yet launched, it
couldn’t proximately cause harm. First, proximate harm is a 12(b)(6) issue and
not a subject matter jurisdiction issue, per Lexmark. Natera argued that
since it had never sold a competing product, it was impossible for consumers to
have been deceived and to have withheld business from CareDx.
Under these circumstances, CareDx pled proximate cause. Past
harm due to lost sales is not required; the language of the law protects any
person “who believes that he or she is or is likely to be damaged” by
the defendant’s false advertising. In a footnote, the court elaborated: the
statutory language “aligns with how ‘unfair competition’ claims were
historically viewed, as being concerned ‘with injuries to business reputation
and present and future sales’” (citing Lexmark).  It is not required to allege that “the
defendant’s statements have already caused consumers to buy defendant’s product
instead of the plaintiff’s product,” even if that is the ordinary path.  Thus, “if a plaintiff pleads facts plausibly
indicating that a defendant’s statements about the plaintiff’s product will
likely cause the plaintiff economic harm in the future (or that it has or will
otherwise cause the plaintiff reputational harm), that could well satisfy the
proximate cause requirement, even if there has been no sales yet lost to the
defendant’s product.”
Par Sterile Prods., LLC v. Fresenius Kabi USA LLC, No. 14 C
3349, 2015 WL 1263041 (N.D. Ill. Mar. 17, 2015), reached the same conclusion
where it was the plaintiff’s product that was FDA-approved and ready for market
but not yet being sold and the defendant’s that was already marketed, allegedly
misrepresenting that it was FDA-approved. In Par, the plaintiff’s
product was a “concrete competing product to compare with” the defendant’s
product, and the same was true here. Although proximate causation is usually
thought of in past tense, it can be—and, according to the language of the
Lanham Act, must be—considered in the future as well. What are required are
allegations showing that the likelihood of harm is concrete and imminent. It
sufficed to allege that Prospera was mid-launch, that Natera was actively advertising
and seeking Medicare coverage for Prospera, and that Natera had begun
significant marketing efforts for Prospera, including by making it available
for use in clinical trials and marketing it to major clinical centers for such
use.”  According to the complaint, “Prospera
is not some speculative, who-knows-if-it-will-ever-be-developed product,”
contrasted to other cases in which alleged harm was “remote, speculative and
ill-defined.”
Natera also challenged the sufficiency of the falsity
allegations. CareDx didn’t allege that the study data were falsely reported,
and Natera argued that scientific disagreement wasn’t enough for a false
advertising claim. CareDx argued that the challenged statements were
establishment claims, and that it successfully alleged that “the tests referred
to in the advertisement were not sufficiently reliable to permit one to
conclude with reasonable certainty that they established the proposition for
which they were cited.”  “Critically, the
Complaint also includes detailed allegations as to why CareDx believes the Natera
Study to be flawed and unreliable,” including use of unrepresentative samples, inclusion
of “suspicious” results, improperly mixed population sets and violations of
well-known criteria for the diagnosis of kidney rejections. The complaint also
alleged how its own study was robust and reliable. Taken together, this was
sufficient to plausibly allege falsity.
Natera implausibly argued that there was no express
comparison of “Prospera” and “AlloSure,” but only of study results not naming “AlloSure.”  [Someone in this process had a misconception
about whether you can avoid a problem by not naming the product you’re very
clearly talking about: you can’t.]  The
challenged statements expressly compared the assays directly tied to each
product.  It was thus likely that the
audience would link them to the parties’ respective tests [indeed, on these
alleged facts, no reasonable person could fail to make the link].
Natera relied on ONY, Inc. v. Cornerstone Therapeutics,
Inc., 720 F.3d 490 (2d Cir. 2013) and Johnson & Johnson Vision Care, Inc.
v. 1-800 Contacts, Inc., 299 F.3d 1242 (11th Cir. 2002), to argue that a false
advertising claim cannot be premised on matters about which there is legitimate
ongoing “scientific disagreement.”  But
whatever the merits of ONY, CareDx wasn’t challenging the Natera’s study
publication itself, as ONY did, but rather challenging statements made in
Natera’s press releases and other advertising materials that compared the
results of the studies (which, among other things, meant that full disclosure
of the data and its limitations wasn’t present). “Advertisements are not immune
from Lanham Act protection just because their claims may have some relation to
areas of scientific debate” (citing Eastman Chem. Co. v. Plastipure, Inc., 775
F.3d 230 (5th Cir. 2014)). Likewise, in the J&J case, the plaintiff
didn’t contest the reliability of the surveys cited in the challenged ad,
whereas unreliability was CareDx’s entire claim.
Deception and materiality: also sufficiently alleged.  The complaint alleged that “Natera’s false
and misleading statements likely have (and, unless stopped, will continue to)
deceive healthcare providers, insurance companies, patients, and the general
public about the capabilities and accuracy of AlloSure…. Natera’s false and misleading statements are material and
will affect the purchasing and investment decisions of healthcare providers,
patients, and insurance companies.”  CareDx also argued that, since it alleged
literal falsity, it was entitled to a presumption of deception.
Natera responded that literal falsity was a misnomer since
CareDx didn’t allege that Natera “misstated the published findings” of its
study. While “the line between literal falsity and misleading statements can
seem a fine one,” courts in establishment claim cases have repeatedly held that
“when a defendant makes comparative statements based on testing that is flawed
and unreliable, those statements … are appropriately viewed as literally false
statements.” At this stage, the court would not reject a literal falsity claim.
Materiality: Natera again tried to argue that, with no
sales, there could be no materiality, but that doesn’t make sense. “Indeed,
courts generally do not require that a plaintiff demonstrate an actual effect
on purchasing decisions; rather, a ‘likely’ effect on consumer choice is
sufficient.” It was plausible that the allegedly false claims would affect
future purchasing decisions, since correctly detecting kidney rejection is the
reason consumers would use one of the tests.
Delaware common law unfair competition claims require “a
reasonable expectancy of entering a valid business relationship, with which the
defendant wrongly interferes, and thereby defeats the plaintiff’s legitimate
expectancy and causes him harm.” This was also sufficiently pled.
Delaware Unfair or Deceptive Trade Practices Act: This was
insufficiently pled, not only because CareDx didn’t specifically identify the
relevant statutory subsections, but also because the allegations of that count
were too bare-bones. E.g., it alleged that Natera made “false and misleading
statements [that] represent that Prospera has uses or benefits that it does not
have.” But it wasn’t clear what those “uses or benefits” were or what
“statements” CareDx meant.  [Sounds like
the count tracked the language of some statutory subsections but didn’t hook
them back up to the allegations above, which probably would fit.] Dismissed
with leave to amend.

from Blogger https://ift.tt/2ZvKgJi

Posted in Uncategorized | Tagged , | Leave a comment

don’t bring a chef to a food class action

Posted on December 16, 2019 by rtushnet

Marotto v. Kellogg Co., No. 18 Civ. 3545 (AKH), 2019 WL
6798290, — F.Supp.3d —- (S.D.N.Y. Dec. 5, 2019)
Here, the plaintiff’s status as a highly trained chef makes
his class claims against Pringles dubious, but the class certification ultimately
falters on predominance because Kellogg changed the labels a bunch and it’s
hard to say that everyone saw the same allegedly deceptive “no artificial
flabors” promise.
Marotto is a chef with training in molecular gastronomy who
loved Pringles Salt and Vinegar crisps. 
He testified “at some length … about the importance to him of purchasing
only natural, high-quality ingredients,” and that “[p]rice isn’t really a
concern” to him. He testified that he never buys packaged food of any kind, and
“even make[s] [his] own pasta.” Between April 2012 and the present, Pringles
were sold under twenty different labels, four of which included “No Artificial
Flavors.” Every version of the label listed all ingredients.
In early March 2018, Marotto learned from his wife—an
attorney at one of the law firms seeking to represent the putative class—that
Pringles contain artificial flavors despite the label saying “No Artificial
Flavors.” These are “sodium diacetate” and “malic acid,” which make up “2% or
less” of Pringles. Marotto sued for violation of NY state consumer protection
law.
 
The court found Marotto’s arguments for typicality and
adequacy “at best, dubious,” based on his special expertise and price
indifference. Adequacy was also questionable, as Marotto was “uniquely
susceptible to questions as to whether this suit is brought for his own
benefit, or for that of his wife’s firm.”
But it was lack of predominance that was key here. While
common issues may predominate if a product and its labeling “remain[ ] constant
and [are] uniform between customers,” this is not so when “it is not
demonstrated that all members of the class saw the same advertisements … and
not all the advertisements contained the alleged misrepresentations.” Only four
of the twenty different versions of Pringles labels contained the accused
language during the class period. Finding the subset that in fact saw the “No
Artificial Flavors” label would likely be impossible, and the court wasn’t
willing to accept self-certification. Even if they bought the can, the court
thought that it would be required to confirm that class members “in fact looked
at the miniscule back-of-the-can lettering,” which is not generally the law and
which is a far more restrictive standard than “the advertising directed at
consumers was consistent.”
Second, and also broadly helpful to defendants, the court
thought an individualized inquiry into consumers’ motivation to buy Pringles
and/or to pay a price premium would be required, defeating predominance.
“Common sense dictates that a purchaser who does not care whether Pringles
contain artificial flavors and instead is only interested in, e.g., taste,
cannot make out a claim for fraud, misrepresentation, or breach of express
warranty.” And there was no evidence that a price premium actually existed.

from Blogger https://ift.tt/34uBts2

Posted in Uncategorized | Tagged , , | Leave a comment

court enjoins bar on “fake meat” labels; implications for FDA standards of identity?

Posted on December 16, 2019 by rtushnet

Turtle Island Foods SPC v. Soman, No. 4:19-cv-00514-KGB
(E.D. Ark. Dec. 11, 2019)
Unsurprisingly, the court here enjoins provisions of
Arkansas law that tried to restrict the use of “meat” terms for meatless
alternatives. The worrying part is that the breadth of the decision throws into
doubt FDA’s general ability to set standards of identity for food products,
though there are also ways to distinguish at least some of the reasoning. The big
looming issue, as with the skim milk case relied on by the court here, is what
should happen when consumers don’t actually understand the characteristics of
the food at issue: (how) can the government protect them from mistaken beliefs
that could harm them in those circumstances? 
Where we think there’s a relatively robust consumer understanding, e.g.
that almond milk is not dairy milk, then perhaps we can be less worried—though I
will note that I haven’t seen good evidence about what consumers think about
the comparability between almond and dairy milk on measures of nutrition as
opposed to taste/function in a beverage.
Anyhow, plaintiff Tofurkey uses traditional meat-based terms
like “chorizo,” “ham roast,” and “hot dogs,” alongside qualifiers like “all
vegan,” “plant based,” “vegetarian,” and “veggie.” Tofurky alleged and the
court accepted that Tofurkey’s products “comply with federal food labeling
regulations as well as numerous state and federal laws that prohibit false and
deceptive labeling and marketing for food products and consumer products more
generally,” though see below for a possible qualification.
Arkansas law relevantly provides:
A person shall not misbrand or
misrepresent an agricultural product that is edible by humans, including
without limitation, by:. . .
(2)       Selling
the agricultural product under the name of another food;. . .
(5)       Representing
the agricultural product as a food for which a definition and standard of
identity has been provided by regulations under § 20-56-219 or by the Federal
Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., as it existed on January
1, 2019, unless:
(A)       The
agricultural product conforms to the definition and standard; and
(B)       The
label of the agricultural product bears the name of the food specified in the
definition and standard and includes the common names of optional ingredients
other than spices, flavoring, and coloring present in the food as regulations
require;
(6)       Representing
the agricultural product as meat or a meat product when the agricultural
product is not derived from harvested livestock, poultry, or cervids [a mammal
of the deer family];. . .
(8)       Representing
the agricultural product as beef or a beef product when the agricultural
product is not derived from a domesticated bovine;
(9)       Representing
the agricultural product as pork or a pork product when the agricultural
product is not derived from a domesticated swine;
(10)     Utilizing a term that is the same as or similar to a term that
has been used or defined historically in reference to a specific agricultural
product. . . .
[As you can see, the successful as-applied challenge to (5)
does directly implicate FDA’s power, although there is no indication in this
record that FDA considers Tofurkey to be in violation.]
The stated legislative purpose of the law was to protect
consumers from being misled or confused by false or misleading labeling of
agricultural products that are edible by humans.  As applied, it barred Tofurky from using
words like “meat,” “beef,” “chorizo,” “sausage,” and “roast” to describe its
plant-based meat products, since there was no exception for plant-based meat
producers that clearly identify their products as being vegetarian, vegan, or
made from plants.  Each violation was punishable
by a civil penalty of up to $1,000. Although the relevant agency didn’t intend
to begin enforcement of the subsections challenged by Tofurky until this
dispute was resolved, the parties have not entered into a non-prosecution
agreement, and the State didn’t contend that Tofurky would not face retroactive
liability. Unsurprisingly, the court found that Tofurkey had standing and that
it should not abstain.
Tofurkey brought both facial and as-applied challenges;
facial challenges are hard to win, especially since the overbreadth doctrine
doesn’t apply to commercial speech. Thus, the court confined its analysis to Tofurkey’s
as-applied challenge.
On to Central Hudson: Arkansas argued that Tofurkey’s
labels were inherently misleading because they use the names and descriptors of
traditional meat items but do not actually include the product they invoke,
including terms like “chorizo,” “hot dogs,” “sausage,” and “ham roast.” Moreover,
Tofurky designs its food products to approximate the texture, flavor, and
appearance of meat derived from slaughtered animals, which would further the
misleadingness. 
Tofurkey responded that words such as “meat,” “burger,” and
“steak” have been used for decades—and in some cases centuries—to describe
foods that are not made from slaughtered animals, and that its labels clearly
identified its products “all vegan,” “plant based,” “vegetarian,” “veggie,” and
“made with pasture raised plants” on the front of the packages.  On this record, Tofurkey’s speech wasn’t
inherently misleading. “[T]he simple use of a word frequently used in relation
to animal-based meats does not make use of that word in a different context
inherently misleading,” especially given the label disclosures. For example,
the “Veggie Burger” label used “veggie” to motify “burger” and included the
words “all vegan” in the middle of the and “white quinoa” next to a picture of
the burger. Tofurky was likely to prevail on its argument that the labels’
repeated indications that its packages contain no animal-based meat dispelled
consumer confusion and rendered the speech not inherently misleading. “[T]his
is not a case of key information in minuscule type buried deep among many
ingredients.”  Reasonable consumers would
not disregard all those other words, any more than they’d think that “flourless
chocolate cake contains flour, or that e-books are made out of paper.”  Nor was there evidence that consumers or
potential consumers had been misled by the packaging, labeling, or marketing.
The court analogized to Ocheesee Creamery LLC v. Putnam, 851
F.3d 1228 (11th Cir. 2017), which helt that plaintiffs’ use of the term skim
milk wasn’t inherently misleading just because it conflicted with the State’s
definition of “skim milk,” according to which skim milk had to include
replenished vitamin A. While “[i]t is undoubtedly true that a state can propose
a definition for a given term …, it does not follow that once a state has done
so, any use of the term inconsistent with the state’s preferred definition is
inherently misleading.”
Because the speech wasn’t false or inherently misleading,
the court moved to the rest of Central Hudson’s test.  The court assumed without deciding [!] that
the state had a substantial interest in “protect[ing] consumers from being
misled or confused by false or misleading labeling of agricultural products
that are edible by humans.”  But the law
didn’t, as required, “directly and materially” advance that interest, because
Tofurkey’s speech was neither false nor misleading. And the challenged
provisions were likely “more extensive than necessary to serve the State’s
interest.” Although the state isn’t required to show that its restriction is
the least restrictive means possible, the “blanket” restriction in the Arkansas
law was “far more extensive than necessary, and Arkansas “disregard[ed] far
less restrictive and precise means” for achieving its stated purpose, such as
laws directed at prohibiting deceptive labeling and marketing of food products,
and consumer products more generally. “There also is no convincing argument as
to why each of these laws is ineffective at policing the alleged deceptive or
confusing practices the State purports to target.” In addition, if it was still
worried about “fake meat” in general, the state “could require more prominent
disclosures of the vegan nature of plant-based products, create a symbol to go
on the labeling and packaging of plant-based products indicating their vegan
composition, or require a disclaimer that the products do not contain meat.”
Because of this analysis, the court declined to consider
whether the real purpose of the law was to benefit the meat industry against a
competitor.
So, the court held that requiring
producers to comply with FDA standards of identity is unconstitutional without
evidence of producer deceptiveness (provision (5) of the challenged law).  Suppose I want to put random red dye into my
food products and list it as FD&C Red Dye No. 3: it is beyond dispute that
the average consumer has no idea what’s in No. 3.  Can there be any deception given that
incomprehension? Will courts accept the idea that the government can
legitimately bootstrap an understanding into existence? (E.g., I don’t know
what’s in Red Dye No. 3, but I believe that when Producer A uses the term it
will be identical to Producer B’s use, making variant uses deceptive.)

from Blogger https://ift.tt/2EkFqoC

Posted in Uncategorized | Tagged , , , | Leave a comment

Content Moderation in an Age of Extremes

Posted on December 10, 2019 by rtushnet

Belatedly, here is a link to the written version of a talk I gave last year, Content Moderation in an Age of Extremes, in which I note that the digital millennium lasted ten years, that strange apps handing out badges is no basis for a system of governance, and that it is hard to love in the time of content moderation.

from Blogger https://ift.tt/2Pvu9He

Posted in Uncategorized | Tagged , , | Leave a comment

Court fixes mistake: Rogers applies to nonfiction titles

Posted on December 9, 2019 by rtushnet

IOW, LLC v. Breus, 2019 WL 6603948, No. CV18-1649-PHX-DGC
(D. Ariz. Dec. 2, 2019)
The court quite properly grants a motion for reconsideration
of part of its earlier
opinion, correctly applying Rogers v. Grimaldi/Empire to
protect the title of a nonfiction work. 
Breus is a clinical psychologist, board certified in clinical psychology
and sleep disorders, who studies how his patients’ chronobiologies effect their
treatment, and has written extensively about chronobiology and circadian
rhythms. IOW claims rights in various “WHEN”-related marks; the issue here is Dr.
Breus’s third book, The Power of When; IOW claimed rights in that phrase.
Under Rogers, courts “apply the [Lanham] Act to an
expressive work only if the defendant’s use of the mark (1) is not artistically
relevant to the work or (2) explicitly misleads consumers as to the source or
the content of the work.”  IOW argued
that The Power of When “is a non-fiction, self-help book that is not an
artistically expressive fictional work.” But nonfiction can be expressive.
Under Gordon v. Drape, an expressive work “evinces an intent to convey a
particularized message, and in the surrounding circumstances the likelihood was
great that the message would be understood by those who viewed it.” The Power
of When qualified.  It discussed
“chronotypes” that supposedly explain when during the day it would be best to
tackle specific tasks, based on a person’s particular chronotype.  “Given Dr. Breus’s creativity in developing
and expressing his theories, categorizing and naming the chronotypes, and
organizing the book, The Power of When is an expressive work worthy of First
Amendment protection.” The court explicitly recognized that Empire
rejected any requirement that an alleged mark have cultural significance before
Rogers could come into play.
So, was there “artistic relevance”? The level must merely be
nonzero. “The Power of When” [not the mark, but the phrase, despite some
confusion in the court’s discussion] was “certainly relevant” to the book.  And was the use explicitly misleading? “The
Ninth Circuit has been clear that the use of a mark in the title of a work,
divorced from other explicitly misleading actions, is not enough to bar First
Amendment protection.”  Plaintiffs
alleged that customers had been confused, and that one of IOM’s team members “immediately
contacted [an IOM principal] when she saw the book and asked if this was the
same ‘sleep doctor’ who [they] had been working with[.]” That showed only
confusion, not explicit misleadingness. “To be relevant, evidence must relate
to the nature of the behavior of the identifying material’s user, not the
impact of the use.” Without “an ‘explicit indication,’ ‘overt claim,’ or
‘explicit misstatement’ ” that The Power of When was affiliated with IOM, there
was no triable issue.
The court noted that defendants’ promotional activities for
the book were thus also protected by the First Amendment as an extension of
their protected use of the Power of When mark. The Ninth Circuit has held that
while “promotional efforts technically fall outside the title or body of an
expressive work, it requires only a minor logical extension of the reasoning of
Rogers to hold that works protected under its test may be advertised and
marketed by name.”
Rogers/Empire also applied to the Arizona
common law unfair competition claims.

from Blogger https://ift.tt/2PvSQTU

Posted in Uncategorized | Tagged , | Leave a comment

Touting a paid-for report as if it were independent could be false advertising; public webpage was “advertising”

Posted on December 9, 2019 by rtushnet

Pegasystems, Inc. v. Appian Corp., — F.Supp.3d —-, 2019
WL 6560120, No. 19-11461-PBS (D. Mass. Dec. 5, 3019)
Undisclosed sponsorship of a critical report from an
apparently neutral source leads to a Lanham Act/state false advertising claim,
which the court here refuses to dismiss. [Side note: I am unduly charmed by the
business name Pegasystems. Well done, namers!] Also, just as you don’t have to show how many people watched an ad on national TV to show that it was “commercial advertising or promotion,” so too with a public page on the advertiser’s own site.
In May 2019, defendant BPM.com published a report, “Market
Report: Analysis of Process Automation Investments and Total Cost of Ownership
(TCO): Appian, IBM, and Pega.” Those three compete to make “business process
management” software that helps create custom apps for business processes. BPM.com
holds itself out as “the leading destination for research, white papers and
community forums on BPM and process automation.” Appian commissioned BPM.com to
publish the accused report, though this wasn’t disclosed to the public, and
Appian highlighted the results on its website.
The Report provides its methodology on the first page: BPM.com
sent out an online survey and received 500 responses. It then “eliminated any
non-compliant entries, such as those from organizations deemed too small or
from firms engaged in the sale, development, or specific services involved with
this type of software.” It conducted follow up interviews to ensure that the
surveyed customers were “verified end user organizations,” leaving 104
“verified projects,” of which 17% used Appian and 10% used Pega. Omitting some
specifics, the Report concluded “Appian was distinguished as the clear leader”
based on its low total cost of ownership combined with faster time to market.
Appian’s website allowed users to get the report, which it
categorized as a “Whitepaper.” It summarized the Report as follows: “Through
approximately 500 responses, BPM.com found that on average: • Appian customers build complete enterprise solutions 5
times faster • Appian customers use 79% fewer resources • Appian has more than
2x customers who’ve reached ROI in 2 years.” 
It also created a webpage, “Appian vs Pega: Discover Why Enterprises
Choose Appian,” with similar claims and linked to the report with a hyperlink
labeled “READ THE 2019 BPM.COM REPORT.”
Without deciding that Rule 9(b) applied to Lanham Act false
advertising claims, the court found that Rule 9(b) was satisfied.
Appian/BPM.com were the who; the survey results and associated statements were
the what; the Report/webpages were the where; and the when was “continuously.”
False advertising: Appian argued that Pega failed to plead
sufficient dissemination to be commercial advertising or promotion.  Widening a smallish split on this issue—in
the right direction, I think—the court found that it was enough to “target a
class or category of purchasers or potential purchasers, not merely particular
individuals.” “When Appian posted the Report’s findings on its website, it ‘target[ed]
a class … of purchasers.’”
Falsity/misleadingness: There were two misrepresentations:
(1) failure to disclose the material relationship between Appian and BPM while presenting
the Report as a neutral “white paper”; (2) presenting results as market
averages without reflecting Pegasystems’ actual performance in the marketplace.
Appian argued that the Report disclosed its methodology and didn’t claim to
offer “generally applicable” comparisons between Pegasystems and Appian, thus
wasn’t false or misleading.
First, it was plausible that the omission of the
relationship between Appian and BPM.com rendered the representations in the
Report and on Appian’s website false or misleading. Even without an explicit
statement that the Report had been independently developed, that was the
necessary implication of the presentation. Appian identified BPM.com as the
Report’s author and then described BPM.com as “a leading market research
group.” BPM.com states in the Report that its purpose was to “understand how
automation software is being used.” “Nowhere in the Report or Appian’s
statements promoting it would a reader learn that Appian was involved in the
Report’s production — they would likely be left with the opposite impression.
The allegation that the Report and website, when viewed in their entirety, are
at the very least misleading is plausible because their description conveys
neutrality.”
In addition, it was plausible that Appian made a literally
false statement when it wrote that BPM.com reached the Report’s results “Through
approximately 500 responses.” Only 104 were verified and analyzed and, of
those, only 27% of respondents used either Pegasystems or Appian. The website claim
about sample size was literally false.
If this was just misleading, Pega would need to show that “a
substantial segment of [the Report’s] audience” was actually deceived. However,
a plaintiff does not need to “identify the particular consumer survey that will
be used to support its allegations to survive a motion to dismiss.” And it had
plausibly alleged actual confusion. It alleged that “[c]ustomers have informed
Pegasystems that Appian has distributed or drawn their attention to the Report.
These customers have been confused or deceived by the false and misleading
conclusions of the Report[.]” That was enough for Twiqbal.
Injury: Pegasystems alleged that defendants’ statements had
been disseminated to “major customers for which Appian and Pegasystems
compete,” representing “prospective revenue streams in the millions of
dollars.” It was plausible that an explicit unfavorable comparison between
Appian and Pegasystems was likely to divert those customers from Pegasystems to
Appian.
False advertising under Mass. Gen. Laws ch. 93A survived
too. Appian argued that the challenged conduct did not occur “primarily and
substantially” in Massachusetts, as required by state law. Appian argued that,
“where the relevant deceptive conduct involves communications between a
defendant and third parties, courts have said that the ‘center of gravity’ lies
in the state in which the communications occurred (i.e., were ‘published’).” This
was an issue not suited for resolution on a motion to dismiss. It was enoguh to
allege that the plaintiff was based in Massachusetts, the injury occurred in
Massachusetts, one of the defendants is in Massachusetts and another has an
office there, and the document at issue was created there.
However, the complaint didn’t state a claim for
Massachusetts common law false advertising or unfair competition. Common law
false advertising requires fraud upon which a plaintiff relied to its
detriment; Pega was the wrong plaintiff for that claim. Likewise, unfair
competition is about consumer confusion as to source, which wasn’t alleged
here.
Commercial disparagement/injurious falsehood claims survived,
even though commercial disparagement covers only falsity and not misleadingness
and also requires actual malice (but not that the statement be made in
commercial advertising/promotion).  It
was plausible that there was falsity here. Although a representation in a study
is not false simply because the study’s “design … was flawed” where the
disputed “article plainly acknowledged possible flaws and limitations with the
methodology that was used” and the plaintiff did not allege that the author
“inaccurately interpreted or reported the collected data,” the situation was
different here.  Pegasystems alleged that
BPM.com “manipulated its selection of responses and projects in order to create
a sample favorable to Appian and detrimental to Pegasystems.” If so, it was
reasonable to infer that the Report’s unfavorable statements about Pegasystems
were based on skewed or inaccurate data and so were false. That would also
satisfy the actual malice requirement.
Footnote: BPM.com might have separate defenses but did not
assert them here.

from Blogger https://ift.tt/36nNmBD

Posted in Uncategorized | Tagged , | Leave a comment