Who registers the watchmen? court needs more info in (c) case

Posted on April 17, 2017 by rtushnet
Sara Designs, Inc. v. A Classic Time Watch Co., —
F.Supp.3d —-, 2017 WL 627461, No. 16CV03638 (S.D.N.Y. Feb. 15, 2017)
Sara sued for copyright infringement, trade dress
infringement, state trademark infringement and dilution, unfair trade practices,
and deceptive practices and false advertising under New York General Business
Law §§ 349 and 350. The court granted a motion to dismiss and denied a motion
for a preliminary injunction.
Sara sells a highly successful series of wrap watches,
including several styles of wrap watches using gradient chains, leather
strands, adjustable links that include a lobster claw closure connected to the
gradient chains with a ring, and an extension chain with a Sara Designs
leaf-shaped logo connected to the watch. A representative from NY & Co. allegedly
visited Sara’s booth at a trade show to ask whether it would lower prices or
produce their product with lower-end materials under the NY & Co. brand. Sara
declined, and NY & Co. allegedly had A Classic Time copy several of Sara’s
watches. 
Bonus question: after Varsity
Brands, are these watches protectable?
The copyright aspects had a problem: the complaint included certificates
of copyright registration for several watches, “and numerous images of what
appear to be internet screenshots of various iterations of Plaintiff’s watches
and Defendants’ allegedly infringing watches.” But each of the submitted
certificates of registration were text-only, and none were accompanied by any
corresponding images of the work it purported to cover nor any specific
descriptions of the work, other than the title of the work. The internet images
of the allegedly infringed watches weren’t alleged to correspond to any
particular registration number.
[Scroll down for more]
 

from complaint

More allegedly infringing watches

The court ordered Sara to file a supplemental submission “clarifying
the scope of the copyright application and grant covering the allegedly
infringed watches.” The resulting declaration didn’t provide further evidence
to show that the certificates of registration corresponded to the images of the
various watches submitted with the complaint. For example, although Sara alleged
that “the W03 All Chain Wrap Watch” was infringed, it didn’t submit a
certificate of registration referencing any “W03” watch, nor did it allege a
plausible basis for a determination that any of the certificates covered that
watch. “The declaration proffers, without explanation, multiple and seemingly
different watches as being covered by single certificates of registration, and
refers to watch titles that differ from the titles in the certificates and the
Complaint.” There was no plausible factual basis from which to infer that a
valid copyright registration covered any of the specific watches shown in the
screenshots.  The complaint was dismissed
with leave to amend.
The trade dress claims were conclusory and
insufficient.  The complaint failed to
identify the “precise nature of the trade dress” allegedly at issuse, “and
merely contains a high level description of features of several watches, such
as ‘gradient chain,’ ‘lobster claw closure,’ and ‘leaf-shaped logo,’ without
allegations as to whether and how those features are distinctive.” Sara also
didn’t properly allege secondary meaning, merely “asserting in a conclusory
manner” that Sara was “known primarily for its unique and famous Wrap Style
Watches,” and that its trade dress was “widely recognized by consumers as being
associated with Plaintiff and has developed secondary meaning in the
marketplace.” The complaint didn’t plead facts about advertising expenditures,
consumer surveys, marketing coverage or prior attempts to plagiarize Sara’s
trade dress that would support a proper inference of secondary meaning.
State dilution claims require a plaintiff to show “(1) that
it possesses a strong mark, one which has a distinctive quality or has acquired
a secondary meaning such that the trade name has become so associated in the
public’s mind with the plaintiff that it identifies goods sold by that entity
as distinguished from goods sold by others, and (2) a likelihood of dilution by
either blurring or tarnishment.” The allegedly infringing watches were marked with
“NY & Co.” or “New York & Company” logos. If Sara ought to claim that
the term “wrap style watch” or the appearance of its watches constituted
protectable marks, it didn’t allege sufficient facts or legal theories to make
infringement or dilution claims plausible.
Sara’s unjust enrichment claim was preempted by the
Copyright Act, like the unfair competition claim to the extent that it was also
based on misappropriation of copyright. The claims similar to the Lanham Act
claim were dismissed for the reasons above, and for the additional reason that
the complaint didn’t adequately allege bad faith. The deceptive practices/false
advertising claims under GBL §§ 349-350 were dismissed for want of alleged
facts supporting an inference of harm to the public interest or consumers
outside of harm to Sara’s own products and its related property rights.

from Blogger http://ift.tt/2oDMbJz

Posted in Uncategorized | Tagged , | Leave a comment

Lack of damages dooms false marking, advertising claims

Posted on April 14, 2017 by rtushnet
Gravelle v. Kaba Ilco Corp., 2017 WL 1349278, No. 2016-2318
(Fed. Cir. Apr. 12, 2017)
Gravelle sued his competitor Kaba for falsely marking its
key-cutting machines as “patent pending” for a time, as Kaba eventually
admitted, and sought monetary relief under the Patent Act, the Lanham Act, and
North Carolina’s Unfair and Deceptive Practices Act.
In April 2015, Gravelle sold the rights to his key-cutting
machine to Hudson Lock LLC which sold “between 50 and 85” RapidKey 7000
machines over a year and spent “probably … $30,000 in advertising.” Kaba’s
competing machine had two features, “automatic blade detection” and “automatic
calibration,” marked as “patent pending,” although no patent application for
those features was ever filed. Kaba sold 687 EZ Code machines between 2008 and
2015, continuing to use the false marking through at least September 10, 2013.
In order to sue under the false marking statute, a plaintiff
must have “suffered a competitive injury as a result of a violation” of the marking
statute. The court of appeals found that the district court correctly concluded
that Gravelle did not put forth sufficient evidence to connect the decline in his
sales to Kaba’s false marking of its machine as “patent pending.”  Gravelle claimed that he was “forced” to sell his
rights to Hudson for $20,000, representing a loss of the value in the absence
of Kaba’s false marking. Again, his evidence—his own estimate—was too speculative.
 “Gravelle has advanced no evidence that
he was deterred from introducing or continuing to market a product similar to
Kaba’s falsely marked one or from engaging in innovation in the field of Kaba’s
product, or that he incurred costs in designing around the features Kaba marked
as subject to a pending patent.”  Gravelle
claimed that the features “automatic blade detection” and “automatic
calibration” were “highly desirable within the small locksmith community, at
large, to the extent that same could readily influence a buyer[’]s purchasing
decision.” But that was “too speculative and unexplained an assertion to
support the causal proposition, which is anything but obvious, that buyers
actually purchased the ‘patent pending’ machines over Gravelle’s machines.”  Further, no reasonable juror could find that
Gravelle’s testimony was sufficient to show that the reason Hudson spent
$30,000 advertising for a product it believed would generate $2 million in
annual profits was that the expenditure was necessary to overcome Kaba’s false
marking.
This same problem prevented success on Lanham Act false
advertising claims.  Gravelle didn’t
argue for a presumption of injury due to direct competition in the district
court, and anyway this case didn’t involve a two-player market.  Though disgorgement is an available remedy
under the Lanham Act, liability still depends on showing proximately caused
harm.  So too with the state-law claim.

The court of appeals remanded for further fact-finding on
the award of fees to Kaba.  The district
court found that Gravelle’s case for injury causation was frivolous. Though no
reasonable jury could find sufficient evidence of injury, “the question of
whether the evidence crossed the triable-issue threshold was a closer one than
the district court concluded. It is not implausible that in some markets a
number of potential customers, choosing between two similar machines, one
marked ‘patent pending’ and the other not, will buy the marked one because they
think that buying the unmarked one exposes them to the risk of later infringing
a patent of the seller of the marked one.” 
Gravelle didn’t point to enough evidence that this would actually occur
for this particular market.  But
frivolousness focuses on “what a litigant could reasonably believe would
constitute sufficient evidence to allow a reasonable inference of harm caused
by the false marking.”  On this question,
more findings were required than the district court provided.  Gravelle, a pro se plaintiff, was deeply
involved in the relevant market, and he offered his own opinion that customers
“could” be influenced by a “patent pending” marking. “[I]t is not clear that a
person in Gravelle’s position should be charged with understanding that merely
possible influence (‘could’) is inadequate and that ‘influence’ cannot be
asserted in a wholly general manner, but must be supported by evidence, whether
from customers or others, concretely showing how customers would have been
influenced by a marking in the specific market.” The district court was thus
ordered to reconsider the fee award.

from Blogger http://ift.tt/2ovnxKV

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

Lack of damages dooms false marking, advertising claims

Posted on April 14, 2017 by rtushnet
Gravelle v. Kaba Ilco Corp., 2017 WL 1349278, No. 2016-2318
(Fed. Cir. Apr. 12, 2017)
Gravelle sued his competitor Kaba for falsely marking its
key-cutting machines as “patent pending” for a time, as Kaba eventually
admitted, and sought monetary relief under the Patent Act, the Lanham Act, and
North Carolina’s Unfair and Deceptive Practices Act.
In April 2015, Gravelle sold the rights to his key-cutting
machine to Hudson Lock LLC which sold “between 50 and 85” RapidKey 7000
machines over a year and spent “probably … $30,000 in advertising.” Kaba’s
competing machine had two features, “automatic blade detection” and “automatic
calibration,” marked as “patent pending,” although no patent application for
those features was ever filed. Kaba sold 687 EZ Code machines between 2008 and
2015, continuing to use the false marking through at least September 10, 2013.
In order to sue under the false marking statute, a plaintiff
must have “suffered a competitive injury as a result of a violation” of the marking
statute. The court of appeals found that the district court correctly concluded
that Gravelle did not put forth sufficient evidence to connect the decline in his
sales to Kaba’s false marking of its machine as “patent pending.”  Gravelle claimed that he was “forced” to sell his
rights to Hudson for $20,000, representing a loss of the value in the absence
of Kaba’s false marking. Again, his evidence—his own estimate—was too speculative.
 “Gravelle has advanced no evidence that
he was deterred from introducing or continuing to market a product similar to
Kaba’s falsely marked one or from engaging in innovation in the field of Kaba’s
product, or that he incurred costs in designing around the features Kaba marked
as subject to a pending patent.”  Gravelle
claimed that the features “automatic blade detection” and “automatic
calibration” were “highly desirable within the small locksmith community, at
large, to the extent that same could readily influence a buyer[’]s purchasing
decision.” But that was “too speculative and unexplained an assertion to
support the causal proposition, which is anything but obvious, that buyers
actually purchased the ‘patent pending’ machines over Gravelle’s machines.”  Further, no reasonable juror could find that
Gravelle’s testimony was sufficient to show that the reason Hudson spent
$30,000 advertising for a product it believed would generate $2 million in
annual profits was that the expenditure was necessary to overcome Kaba’s false
marking.
This same problem prevented success on Lanham Act false
advertising claims.  Gravelle didn’t
argue for a presumption of injury due to direct competition in the district
court, and anyway this case didn’t involve a two-player market.  Though disgorgement is an available remedy
under the Lanham Act, liability still depends on showing proximately caused
harm.  So too with the state-law claim.

The court of appeals remanded for further fact-finding on
the award of fees to Kaba.  The district
court found that Gravelle’s case for injury causation was frivolous. Though no
reasonable jury could find sufficient evidence of injury, “the question of
whether the evidence crossed the triable-issue threshold was a closer one than
the district court concluded. It is not implausible that in some markets a
number of potential customers, choosing between two similar machines, one
marked ‘patent pending’ and the other not, will buy the marked one because they
think that buying the unmarked one exposes them to the risk of later infringing
a patent of the seller of the marked one.” 
Gravelle didn’t point to enough evidence that this would actually occur
for this particular market.  But
frivolousness focuses on “what a litigant could reasonably believe would
constitute sufficient evidence to allow a reasonable inference of harm caused
by the false marking.”  On this question,
more findings were required than the district court provided.  Gravelle, a pro se plaintiff, was deeply
involved in the relevant market, and he offered his own opinion that customers
“could” be influenced by a “patent pending” marking. “[I]t is not clear that a
person in Gravelle’s position should be charged with understanding that merely
possible influence (‘could’) is inadequate and that ‘influence’ cannot be
asserted in a wholly general manner, but must be supported by evidence, whether
from customers or others, concretely showing how customers would have been
influenced by a marking in the specific market.” The district court was thus
ordered to reconsider the fee award.

from Blogger http://ift.tt/2ovnxKV

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

Ordinary false advertising isn’t disparagement for insurance purposes

Posted on April 13, 2017 by rtushnet
Vitamin Health, Inc. v. Hartford Casualty Ins. Co., —
Fed.Appx. —-, 2017 WL 1325263, No. 16-1724
 (6th Cir.
Apr. 11, 2017)

Vitamin Health makes products intended to reduce the risk of developing
age-related macular degeneration, advertising that its products contain the combination
of vitamins recommended by the second Age-Related Eye Disease Study, a 2013
study conducted by the National Eye Institute for the National Institutes of
Health.  Bausch & Lomb, a competitor,
sued Vitamin Health for patent infringement and false advertising, alleging
that that Vitamin Health’s product contained less zinc than what the AREDS 2
study recommended.  Because of the false
advertising claim, Vitamin Health asked its insurer Hartford to defend it, and
Hartford declined.  Here, the court upholds
the district court’s finding that Hartford had no duty to defend.
Vitamin Health argued that the false advertising claim fell
within the policy’s definition of “personal and advertising injury,” which
covers, among other things, “Oral, written or electronic publication of
material that slanders or libels a person or organization or disparages a
person’s or organization’s goods, products or services.”  Vitamin Health argues that allegedly
disparaged Bausch & Lomb by implication. But there can be no disparagement
when the alleged misrepresentation was of the policy holder’s own product. Under
Michigan law, “a disparagement claim requires a company to make false,
derogatory, or disparaging communications about a competitor’s product.”  

Vitamin Health argued a theory of “implied disparagement,”
which allegedly existed whenever one company claims its products are superior
to all other products. But it wasn’t clear that Michigan law recognizes claims
of disparagement by implication, and even if it did, Vitamin Health didn’t make
claims about its own superiority; Bausch & Lomb was the one that claimed
that its product was the only one that complied with the AREDS 2 formula.

from Blogger http://ift.tt/2nJURRp

Posted in Uncategorized | Tagged , | Leave a comment

Don’t try to make a Lanham Act case out of a copyright case

Posted on April 13, 2017 by rtushnet
Lieb v. Korangy Pub’g, Inc., 2016 WL 8711195, No. 15-CV-40 (E.D.N.Y.
Sept. 30, 2016)
The Second Circuit isn’t a good place to try to plead around
Dastar.  Lieb sued Korangy for copyright infringement
and deceptive business practices based on alleged infringement of the article “10
Surprises When Inheriting Real Estate.” Lieb, a HuffPo blogger, alleged that
Korangy infringed by copying and promoting its contents in a separate article,
“Watch for These 10 Surprises When Inheriting Real Estate,” published on
therealdeal.com, and engaged in unlawful business practices by advertising the
infringing work on the Real Deal, social media websites, and other outlets.  Korangy allegedly harmed consumers by linking
to the infringing work “which, in turn, distorts information contained in the
Copyrighted Work and thereby misleads and consequently harms consumers.” The
fact that the infringing work linked to the original work allegedly “wrongfully
suggests … that the Infringing Work was published with the apparent authority
to hold itself out as of equal value to the Copyrighted Work” and that “the
Infringing Work was published with the authorization of Plaintiff.”  Korangy’s ads for the article were allegedly
deceptive because the infringing work “was falsely advertised as a wholly
original work and it was falsely advertised to have been authored by a
non-party.” Korangy allegedly did this with lots of different articles online.
Lieb sought to amend his complaint to add Lanham Act claims,
alleging that “Defendant engaged in the systematic practice of misappropriating
others’ articles and altering them so that they are no longer representative of
the authors’ works, while simultaneously attributing them to the original
authors[.]”  The proposed complaint also
alleged false advertising “by copying and/or summarizing and/or removing
information from the Copyrighted Work, thereby distorting the intended meaning
of the Copyrighted Work.”
At this point in the case, an amended complaint required a
showing of good cause under Rule 16(b), which requires that a movant have
exercised diligence but still failed to meet the Court’s deadline despite such
efforts.  The court found that Lieb had
not done so; allegedly newly discovered evidence of Korangy’s “systematic
practice” of summarizing articles as Lieb’s had been summarized could and
should have been known before; indeed, the opearative complaint alleged
“numerous” examples of such articles. 
Anyway, nothing about Lieb’s own Lanham Act claim required evidence of
intent to deceive, which was what Lieb contended he’d newly unearthed in the
deposition testimony of Korangy employees.

Also, even with good cause, amendment would be futile
because of Dastar.  Allegedly falsely designating the infringing
work as having been authored by someone else is not actionable, nor was
allegedly passing off the infringing work as having been authored by Lieb.  As for the false advertising claim, Dastar’s interpretation of “origin” “necessarily
implies that the words ‘nature, characteristics, and qualities’ in 43(a)(1)(B)
cannot be read to refer to authorship.” Thus, “a failure to attribute
authorship to Plaintiff does not amount to misrepresentation of ‘the nature,
characteristics, qualities, or geographic origin of … Defendant’s goods.’ ” 

from Blogger http://ift.tt/2ow8Too

Posted in Uncategorized | Tagged , , | Leave a comment

Flea market case on secondary (and tertiary) liability for counterfeiting

Posted on April 13, 2017 by rtushnet
Luxottica Gp., S.P.A. v. Greenbriar Marketplace II, LLC, —
F.Supp.3d —-, 2016 WL 5859023, No. 15-cv-01382 (N.D. Ga. Sept. 30, 2016)
Luxottica sought to hold Greenbriar and Albert Ashkouti
liable for contributory trademark infringement based on sales of counterfeit
goods by some vendors at the Greenbriar Discount Mall, including “knock-off”
Ray-Ban and Oakley sunglasses (Luxottica brands).  In December 2013, DHS and the Atlanta PD
raided the mall and adjacent Greenbriar Strip Plaza and seized thousands of
counterfeit products, including counterfeit Ray-Ban and Oakley merchandise.
Luxottica’s investigators observed sales of fake Ray-Bans and Oakleys and were
able to purchase several pairs of counterfeit sunglasses on multiple undercover
trips to the flea market from October, 2014 to April, 2015. Luxottica sent a C&D
letter about this addressed to the “Owner/Manager” of the “Greenbrier Strip
Plaza Warehouse” in January 2015.
Liability for contributory infringement depends upon whether
the alleged contributing defendant “intended to participate” in the
infringement or “actually knew about” the infringement. “The extent and nature
of the violations being committed may be relevant in making this determination.”
 The defendant also needs to have “actively
and materially furthered the unlawful conduct,” which can include “bad faith
refusal to exercise a clear contractual power to halt the infringing
activities.”  Corporate officers can be
held personally liable for contributory trademark infringement if they “actively
participated as a moving force in the decision to engage in the infringing
acts, or otherwise caused the infringement as a whole to occur.”
For purposes of this motion, defendants didn’t dispute knowledge
of the alleged widespread sale of counterfeit merchandise at the discount
mall/flea market and focused on their control over operations.
Greenbriar Marketplace is the owner of the real property on
which the Discount Mall is located. Greenbriar Marketplace leases the anchor
store space and the adjoining parking lot areas to defendant 2925 Properties,
LLC, for the operation of the Greenbriar Discount Mall (flea market).
Greenbriar Marketplace’s only income is rent from tenants of the shopping
center, including 2925 Properties. 
Greenbriar Marketplace has two owners: Tabas Two, LLLP and
Kimberly Swindall. 2925 Properties sublets spaces to vendor/tenants in the flea
market. Kimberly Swindall is also the sole member/owner of 2925 Properties:

organization chart

2925 Properties also owns and operates an adjacent property
and shopping center, as outlined on the map:
The utility of photos in opinions

Defendant Albert Ashkouti owns 67% of Tabas Holdings, which
in turn owns 1% (and is the general partner) of Tabas Two. Ashkouti is also a
limited partner of Tabas Two, and “a member of the general partner of
Greenbriar Marketplace’s majority member.” He’s listed with the Georgia
Secretary of State’s office as the “registered agent” and identified himself as
a “member/manager” for Greenbriar Marketplace, although he in fact is not
personally a “member” of the LLC:
Ashkouti chart

Kimberly Swindall was aware of the December 2013, law
enforcement raid on the Greenbriar Discount Mall and adjacent Greenbriar Strip
Plaza and acknowledged the seizure of counterfeit merchandise at both shopping
centers. That raid “was not the first run-in with counterfeiting by Greenbriar
and 2925 Properties, nor was it their last.” Swindall’s efforts to combat the
prevalent sale of counterfeit merchandise at the flea market were “unsuccessful
in ridding the flea market of all counterfeit sales.”  Greenbriar Marketplace, as landlord, has
certain rights if its tenant 2925 Properties doesn’t comply with the lease
terms, including the right to terminate the lease; the lease requires 2925
Properties to obey the law.  The lease
also barred the sale of alcohol, obscene, erotic or pornographic materials.
Greenbriar Marketplace argued that its tenant was solely
responsible for the use of the property and that it had no right of control
over tenants under the lease.  But
liability for contributory trademark infringement can attach to a landlord who
continues to lease space to a tenant whom it knows or has reason to know is
engaging in trademark infringement even without direct control over the
infringing conduct. Swindall’s dual status as half-owner of Greenbriar
Marketplace—the property owner and landlord—and as sole owner of 2925
Properties which operates the flea market was also highly relevant, as was her
general awareness of the widespread counterfeiting problem at the flea
market.  A reasonable jury could find
that Swindall could have acted on behalf of Greenbriar Marketplace but refused
to do so, or it could conclude that she took reasonable efforts to flush out
infringing sales of counterfeit merchandise at the flea market.
Ashkouti was not individually liable for contributory
infringement. “Mr. Ashkouti’s savvy business structuring of his family’s
investment companies was clearly done to avoid opening him up to personal
liability for his financial real estate dealings.”  The record showed that he maintained an active
management role in Greenbriar Marketplace, and was its agent.  He dealt with the money and never went inside
the shopping center, instead employing his own property management company to
manage it. “For all practical purposes, Mr. Ashkouti delegated all issues
involving the flea market and complaints regarding counterfeiting to Patrick
and Kimberly Swindall.” Whenever he received complaints, “he wrote a responsive
letter to the complainant, referred the matter to the Swindalls, and relied on
them to deal with it.” He met with representatives of Homeland Security once
and “complained that the department was harassing him, trying to put him out of
business, and that he didn’t have any rights over the flea market vendors that
the department had failed to arrest or take any other action against.”

The lease agreement didn’t give Ashkouti the personal right
to take action against 2925 Properties. Although he gave “evasive and conflicting
deposition testimony,” that wasn’t enough to show sufficent involvement.  He could potentially have exercised control
over 2925 Properties, which might be a contributory infringer.  “But control over a contributory infringer in
this way (not the actual infringer)—without evidence of more extensive
intermingling of Ashkouti and Greenbriar with 2925 Properties’
management/direction of the flea market …—does not provide an adequate basis
for Ashkouti’s individual liability.” A reasonable jury couldn’t find that he
oversaw, facilitated, or “actively participated as a moving force in
contributing to the flea market’s operation.”

from Blogger http://ift.tt/2ow76zC

Posted in Uncategorized | Tagged , | Leave a comment

Law360 article on my ICE suit by Bill Donahue

Posted on April 13, 2017 by rtushnet

Read it here.

from Blogger http://ift.tt/2ow6Dh9

Posted in Uncategorized | Tagged , | Leave a comment

No evidence of harm means no disgorgement in false advertising case

Posted on April 11, 2017 by rtushnet
MB Imports, Inc. v. T&M Imports, LLC, No. 10-3445, 2016
WL 8674609 (D.N.J. Dec. 23, 2016)
MB Imports imported and sold Sicilia brand lemon and lime
juice products, and sold them to Safeway from 2001-2003; for many years, they were
the only squeezable lemon and lime juices sold in Safeway’s produce department.
Safeway discontinued Sicilia in favor of Tantillo juices offered by T&M after
a 2009 meeting in which Safeway’s representatives didn’t recall receiving a
proposed label for the juices. “Safeway representatives stated that Safeway was interested
in selling the Tantillo juices because of the name-brand recognition, price,
and Defendants’ willingness to engage in product promotions (and not due to any
representations about the product’s quality, country of origin, or anything
relating to their labels).”
The front label of Tantillo’s lemon juice stated “Product of
Italy,” “Sicilian Lemon Juice,” “Not from Concentrate,” and “All Natural.” The
back label listed ingredients, including “Lemon Juice (99.97%)” and “Potassium
Metabisulfites (Antioxidant E224).” The lime juice was similar. Laboratory
tests commissioned by MB indicated that Tantillo lemon juice contained added
water, added non-fruit citric acid, and were not dervived from lemons of
Italian or Sicilian descent, and MB concluded that the lime juice could not be
“Sicilian” because there was no commercial lime juice exportation from Italy.  Despite getting this report, Safeway continued
to sell the juices.
After a bit of litigation, MB was left with Lanham Act and
coordinate New Jersey Unfair Competition Statute claims, with “disputed issues
of fact regarding whether a consumer would consider the alleged
misrepresentations material to his or her purchase; whether the current lemon
juice label and previous lime juice labels still being used in advertising are
false or misleading;” and “whether, if false and misleading, the
representations at issue are material to consumers.”
Here, the court found that defendants were entitled to summary
judgment on MB’s request for disgorgement. The Third Circuit has provided six
non-exhaustive factors to evaluate whether disgorgement is appropriate: “(1)
whether the defendant had the intent to confuse or deceive, (2) whether sales
have been diverted, (3) the adequacy of other remedies, (4) any unreasonable
delay by the plaintiff in asserting his rights, (5) the public interest in
making the misconduct unprofitable, and (6) whether it is a case of palming
off.”
Previously, the court found that “no reasonable factfinder
could find that Safeway relied on Defendants’ alleged misrepresentations in
deciding to sell Tantillo lemon and lime juice products.”  Moreover, MB failed to show that the false
advertising caused MB any harm.  Without “at
least some evidence of harm,” no award of profits or damages was appropriate.  For damages purposes, the court wouldn’t presume
that any of defendants’ sales would have gone to MB but-for the false
advertisement.

The court declined to address the appropriateness of
attorneys’ fees at this stage. An award of attorney’s fees doesn’t require
intentionally false advertising, or the existence of damages.  The court could potentially find culpable
conduct if defendants were still using their original ad on the internet, and
other claims related to be litigated. It was too early to decide that this wasn’t
an exceptional case.

from Blogger http://ift.tt/2nBpYPe

Posted in Uncategorized | Tagged , | Leave a comment

false advertising dispute based on study in medical journal should proceed, judge recommends

Posted on April 11, 2017 by rtushnet
Theodosakis v. Clegg, 2017 WL 1294529, No. CV-14-02445 (D.
Ariz. Jan. 30, 2017) (magistrate judge)
Theodosakis and Supplement Testing Institute sued defendants
for defamation, commercial disparagement, tortious interference with business
expectancy, false advertising and unfair competition under the Lanham Act, and
violation of Arizona’s Consumer Fraud Act, based on their alleged participation
in a study and the subsequent report that was published in New England Journal
of Medicine, that plaintiffs claimed contained false and misleading statements.
STI sells glucosamine and chondroitin dietary supplements,
including Avosoy Complete. Theodosakis wrote “The Arthritis Cure” (1997), which
allegedly first reported that osteoarthritis could be successfully treated
through a nine-step treatment program that included two supplements,
glucosamine and chondroitin. This was a best-seller and Theodosakis wrote a
follow-up. Sales of the supplements allegedly “skyrocketed,” including STI’s.  In 1998, NIAMS, the arthritis division of the
National Institute of Health, commissioned a grant to perform human clinical
research specifically on the supplements, the GAIT Glucosamine/Chondroitin
Intervention Trial.  GAIT included the
use of an active comparator, celecoxib (Celebrex).
The NEJM published the study results, with defendants as the
lead authors. “The Report stated that Celebrex® passed the two primary
outcomes, and that glucosamine and chondroitin, alone and in combination, were
not significantly better than a placebo in reducing knee pain from osteoarthritis
and do not effectively reduce knee pain from osteoarthritis.” This allegedly
soured millions on the supplements, and “[a]s a direct result of publication of
the Study and Report, Plaintiff Dr. Theodosakis’ consulting contracts with
Rexall and Pharmavite were not renewed.” 
The complaint alleged that “[i]f the active comparator [in a
study] underperforms as compared to the bulk of its prior studies, there is a
high probability that the effects of treatment groups will be understated and
could lead to a false-negative result.” 
It further alleged that they’d been told that the raw data showed that
celecoxib actually failed the two primary outcomes, though they didn’t have
access to the raw data.  When the report
was published, Dr. Clegg and Dr. Sawitzke were allegedly financially involved
with commercial entities that were in direct market competition with the supplements,
including plaintiffs’ products.
Dr. Clegg and Dr. Sawitzke argued that they had Eleventh
Amendment immunity as members of the faculty of the University of Utah School
of Medicine and employees of the University of Utah.  Plaintiffs filed a motion to amend the complaint
to clarify that they were suing Dr. Clegg and Dr. Sawitzke in their individual
capacities only, and defendants didn’t show that the relief sought would come
from the state coffers, interfere with the public administration, or compel the
State of Utah to act or restrain from acting. 
Thus, defendants failed to meet their burden to show that the complaint
should be dismissed on this ground.
Defamation: Defendants argued that “[a]side from
acknowledging [Dr. Theodosakis] as a participating investigator and member of
the GAIT study steering committee, the report does not mention Dr.
Theodosakis.” Also, the “reported findings concern[ed] glucosamine and
chondroitin, generic compounds naturally made in humans.”  A corporation, like STI, “has no personal
reputation and may be libeled only by imputation about its financial soundness
or business ethics.” The statements at issue didn’t implicate STI, so it didn’t
state a claim. 
Defamatory statements “must be published in such a manner
that they reasonably relate to specific individuals.” Dr. Theodosakis had the
burden of showing that the publication was “of and concerning” him.  Statements in the report included: “The
dietary supplements of glucosamine and chondroitin sulfate have been advocated,
especially in the lay media, as safe and effective options for the management
of symptoms of osteoarthritis.”   The
report also said, “Studies have demonstrated substantial variation between the
content listed on the labels of these products and the actual content. Because
our study was conducted under pharmaceutical rather than dietary-supplement
regulations, agents identical to the ones we used may not be commercially
available.”
Given that “[t]he popular press … published numerous
articles …” not only about Dr. Theodosakis’ book, but also about the
supplements as well, “any alleged defamation occurred with regard to a group.”
“When a group of persons are defamed, the statements must reasonably relate to
a certain individual member or members…. If the group is so large, or the
statements so indefinite, that the objects of the defamatory statements cannot
readily be ascertained, the statements are not actionable.”  However, the complaint plausibly alleged that
Theodosakis was uniquely identified with the supplements because he “publicly
and on a nationwide scale staked his reputation on his position that
glucosamine and chondroitin play a major role in treating osteoarthritis.”
Commercial disparagement:  The report was clear that the glucosamine and
chondroitin utilized for the Study was conducted under pharmaceutical
regulations, so they wouldn’t be identical to readily available supplements. Even
though it questioned the effectiveness of the supplements specifically used in
the study, the allegations weren’t enough to reasonably conclude that the
statements concerned plaintiffs’ products in particular.
Defendants claimed qualified privilege under the First
Amendment as to the remaining defamation claims. The judge agreed that a report
in NEJM, published for educational purposes, qualified for the common interest
privilege given that “ ‘scholarly activity generally fits within the common
interest privilege.’ ”  Thus, plaintiffs
had to allege abuse of privilege by showing either excessive publication or
actual malice.  Plaintiffs alleged that
the raw data didn’t support the published findings, and that the doctors were
financially involved with Celebrex’s maker. 
These reasonably supported the inference of abuse of the privilege with
actual malice.  Also, plaintiffs were
prepared to allege extensive republication of the claims “in interviews,
journals and magazines,” including in a prepared statement from Dr. Clegg concerning
the GAIT Study.
Tortious interference:  There was no factual basis alleged to plausibly
support the claim that defendants were aware of plaintiffs’ alleged business
relationships.
False advertising: A scientific article published in the
NEJM isn’t commercial speech and thus can’t be commercial advertising or
promotion.  The article didn’t advocate
the purchase of one particular product over another.  Drs. Clegg and Sawitzke’s alleged financial
interest in Celebrex’s manufacturer as well as an interest in other competitors
of glucosamine and chondroitin didn’t change anything; they were only two of
more than twenty authors. The publication’s purpose was to assess the efficacy
of glucosamine and chondroitin for the treatment of osteoarthritis of the knee,
“not as a means to sell Celebrex.”
However, plaintiffs argue that defendants’ republication of
the statements allowed Lanham Act liability, since courts have distinguished
between the defendant’s initial publication of the article and its continued
distribution of reprints or republication. But plaintiffs didn’t specifically
allege any particular secondary publication or other means; that wasn’t enough.  They wanted to amend the complaint to add
allegations about “interviews, journals and magazines,” Dr. Clegg’s prepared
statement, and Dr. Sawitzke’s article published in Arthritis & Rheumatism
2008.” I would have said that none of those were commercial advertising or
promotion, for the exact same reasons—Gordon
& Breach and similar cases allowing republication claims to continue
involved a change in form, when the republication was used as part of a sales pitch.  But the court found that, once defendants
were no longer two of twenty authors and each allegedly had a financial
interest in Celebrex, making statements “arguably aimed at the medical field,
who makes treatment decisions, and the general public touting the Study’s
results in favor of Celebrex” were enough to state a claim under the Lanham
Act, justifying leave to amend.

The Arizona Consumer Fraud Act claim was dismissed because
only consumers can sue under it. 

from Blogger http://ift.tt/2owgrb9

Posted in Uncategorized | Tagged , , | Leave a comment

lack of substantiation isn’t actionable, but claims of 100% satisfaction are

Posted on April 11, 2017 by rtushnet
Moorer v. Stemgenex Medical Group, Inc., 2017 WL 1281882, No.
16-cv-02816 (S.D. Cal. Apr. 6, 2017)
Plaintiffs brought the usual California claims (plus RICO
and California’s Health and Safety Code section 24170, et seq., (Human
Experimentation) (!), and Financial Elder Abuse), based on allegedly false
advertising of “stem cell treatments” to consumers who are often “sick or
disabled, suffering from incurable diseases and a dearth of hope.” Defendants
allegedly falsely represented to consumers that “100% of its prior consumers
are satisfied with its service.”
The court first found that claims based on lack of
substantiation weren’t sustainable. 
Plaintiffs undamentally alleged omission of the material information
that no data or reasonable basis supported the efficacy of the stem cell
treatments. “False-advertising claims based on a lack of substantiation, rather
than provable falsehood, are not cognizable under the California
consumer-protection laws.”  The closest
the plaintiffs got to alleging falsity was “the generally accepted scientific
consensus is that there is no treatment for degenerative diseases, or any
disease, with a person’s own adult adipose stem cells, that has been proven ‘effective’
at any level.” But is that true because the treatment has been “tested and
disproven, or rather, is it because no study regarding its efficacy has been
conducted yet, and thus, scientific literature is devoid of a conclusion?”  Plaintiffs didn’t plead the existence of any
scientific study that purported to prove that the stem cell procedure didn’t
work.
However, claims about misrepresentation of patient
satisfaction ratings survived. Defendants represented that their patient
satisfaction ratings were monitored and updated on a monthly basis, but
plaintiffs alleged that the publicized ratings remained at 100% even after
complaints from customers.
However, the claim for financial elder abuse failed to
satisfy Rule 9(b).  Also, “an elder
prospective customer viewing the website on his or her own volition is not
enough to constitute ‘undue influence,’” one of the elements.  Plaintiffs also argued that defendants engaged
in human experimentation without informed consent because defendants referred to
their treatments as “studies” and claimed to be a “pioneer in research.” To
qualify as a “medical experiment,” the use of a device must be “in the practice
or research of medicine in a manner not reasonably related to maintaining or
improving the health of the subject or otherwise directly benefiting the
subject.” Thus, the stem cell treatments fell outside the ambit of “pure
research.”  The innovative nature of the
treatment didn’t rise to the level of requiring informed consent.  [This seems like a pretty big loophole.  What about malpractice?]


The RICO claim failed because it was a RICO claim, but with leave to amend. 

from Blogger http://ift.tt/2p40zuo

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