Malwarebytes: same result, new puzzles on remand for 230 immunity

Enigma Software Group USA, LLC v. Malwarebytes, Inc., —
F.3d —-, 2019 WL 7373959, No. 17-17351 (9th Cir. Dec. 31, 2019)
New opinion, same
result
; no rehearing en banc. Because the parties are competitors, §230
does not provide Malwarebytes with immunity for blocking Enigma’s software. As
the dissent notes, one may search in vain for this limit in the wording of the
statute itself, but there you go. The immunity for blocking content that is
“otherwise objectionable” “does not include software that the provider finds
objectionable for anticompetitive reasons.” 
The majority, however, did remove broad language from the initial
opinion saying that blocking couldn’t be based on the identity of the person
providing the content.
Since this is now the result in the 9th Circuit,
on remand the court will have to face some questions that are not unlike those
that have come up in cases about copyright misuse and the meaning of “unfair”
business practices under California law: what exactly does “anticompetitive
animus” mean here?  Does it require
something that is like an antitrust violation? 
If so, if Malwarebytes lacks market power, then can it behave in an
“anticompetitive” manner or with “anticompetitive” motivations at all?  Separately: Does it have to have malice to be
liable?  What if it’s wrong about whether
Enigma programs were unwanted by consumers, but reasonably so?  Or suppose Malwarebytes concluded, via
motivated reasoning, that Enigma programs were indeed unwanted—is self-serving
sincerity enough?  What is the objective
standard against which unwantedness should be judged?  It does seem that, according to the standard
announced, §230 will still preempt/preclude claims that have internal validity
as long as Malwarebytes did not have “anticompetitive animus.”
The majority heavily emphasizes what it considers to be the
special circumstance that the parties are allegedly direct competitors. E.g.,
Congress said it gave providers
discretion to identify objectionable content in large part to protect
competition, not suppress it. In other words, Congress wanted to encourage the
development of filtration technologies, not to enable software developers to
drive each other out of business….  Users
would not reasonably anticipate providers blocking valuable online content in
order to stifle competition. Immunizing anticompetitive blocking would,
therefore, be contrary to another of the statute’s express policies: “removing
disincentives for the utilization of blocking and filtering technologies.”
Spam, malware, and adware could still be “otherwise
objectionable.” But “if a provider’s basis for objecting to and seeking to
block materials is because those materials benefit a competitor, the objection
would not fall within any category listed in the statute and the immunity would
not apply.”  Malwarebytes argued that its
reasons were legitimate (Enigma’s programs use “deceptive tactics” to scare
users into downloading them to prevent infections), but that’s a matter that
can’t be resolved on the pleadings. [Suppose a factfinder concludes the parties don’t actually compete: does 230 immunity reappear?]
Separately, the court reaffirms that §230’s exception for IP
doesn’t include Lanham Act false advertising, which seems right to me (though that
creates an interesting potential for situations like Belmora where
§43(a)(1)(A) covers nontrademarks). 
Unlike Eric Goldman, I’m actually pretty open to the basic false
advertising claim that labeling Enigma’s programs could be false advertising
despite §230.  The Lanham Act’s
requirements may pose substantive barriers to the claim (e.g., is the reporting
at issue “commercial advertising or promotion”? (maybe?) Is “potentially
unwanted” falsifiable? (seems unlikely, though maybe implication could save the
claim)).  And, again, if the §230
objectionability standard is not strict liability, then Malwarebytes might
escape liability even if it was in fact false or misleading to label Enigma’s
programs “potentially unwanted.”
Relatedly, the allegation that gets Enigma past §230 is
likely to prove a mismatch with the underlying theories of liability.  In general, nonfactual disparagement—negative
puffery—is not actionable, even if motivated by an evil heart, whether under
the Lanham Act or state law.  I wonder if
Malwarebytes wouldn’t end up doing better focusing on
falsifiability/specificity of the message, though of course the extent to which
the determination is subjective also feeds into the question of whether it had
the requisite state of mind under the court’s view of §230.

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another timeshare exit company can be sued under state law, but not Lanham Act

Orange Lake Country Club, Inc. v. Reed Hein & Assoc.,
LLC, 2019 WL 7423517, No: 6:17-cv-1542-Orl-78DCI (M.D. Fla. Oct. 4, 2019)
Another timeshare case, this one kicking out Lanham Act
claims but not FDUTPA deceptive practices claims on proximate cause. Defendant
TET
allegedly puts out false and
misleading advertisements, leading owners to believe that it can relieve them
of their timeshares. Those owners then contact TET, which induces them to,
inter alia, stop paying on their timeshare contracts and hire TET. Once hired,
TET outsources the owners’ cases to “vendor attorneys” like Defendant Mitchell
Reed Sussman (“Sussman”), who allegedly engage in fruitless “negotiation” with
timeshare companies before employing one of his three deceptive and unlawful
methods to “exit” owners from their timeshare contracts. As a result,
Plaintiffs claim that the owners who contractually agreed to pay them have
defaulted on their obligations, causing harm to Plaintiffs.
The advertising allegedly “create[s] the impression that TET
can legally and permanently get owners out of the timeshare contracts for any
reason.” It used to claim a “100% success rate,” eventually changed to “highest
success rate in the industry.” It also “guarantee[d]” exit, and advertised a
“100% money back guarantee,” which deposition testimony indicated was not true.
The ads described TET’s process as finding illegal tactics in the underlying
timeshare sale and using them to get an exit. Dave Ramsey also served as a paid
endorser. Sales reps allegedly advised owners to cease all communication with
their timeshare developers, and (at least until 2016 and allegedly later) advised
owners to stop making payments under their timeshare agreements. 
Over 95% of TET’s cases went to outside vendors. When
accounts went to attorneys, TET allegedly prohibited account coordinators from
disclosing the attorney’s contact information to the client, and the attorneys were
prohibited from communicating directly with TET clients. [This can’t be ok
under Florida’s ethical rules for lawyers, can it? But then again given what
Florida lawyers did with foreclosures, why would anyone have noticed?]  TET allegedly requires account coordinators
to report that the case is proceeding according to a predetermined timeline,
even if untrue, to deceive customers into thinking things are going well.
Defendant Sussman, a vendor attorney, allegedly also treated
these cases the same regardless of circumstance, accusing developers of fraud
and instructing them not to contact the owners. When a developer thus sends
billing statements to Sussman, he throws them away. Sussman employs allegedly
ineffective methods to exit the timeshare; Orange Lake rejects his cancellation
methods, but Sussman continues to use them and tells owners they’re no longer
“responsible for future fees in connection” with the timeshares, leaving them
in foreclosure without their knowledge. 
“In 2014, TET’s general counsel vocally opposed Sussman’s methods, but
Sussman ran amok until April 2016, when TET supposedly terminated its
relationship with him. Even then, TET still had approximately 6,000 open files
with Sussman, 700 of which remained open as of September 2018.”
One Orange Lake owner hired TET, which told her to stop
payment. The rep assured her that TET had an attorney that would “fix” any
issues that arose from cessation. She discovered who was working on her case
and left a voicemail, but only got a brief letter claiming he was representing
her; all he did was send a C&D to Orange Lake. Ultimately, Orange Lake
“voluntarily” accepted a deed in lieu of foreclosure [ed. note: which actually
sounds like a relatively good result, but the anxiety and possible credit
damage have to be factored in, though the court’s summary doesn’t make clear
whether she could have instead afforded to pay forever].  The client demanded a refund from TET, while
TET refused and claimed that it helped, even though a month after her release, TET
claimed to still be working on an “exit” and claimed Orange Lake was delaying
the process.
Other Orange Lake owners who started out current on payments
and became delinquent due to TET’s instructions paid late fees to Orange Lake
and also paid TET for ineffective services; one hired a different attorney who
communicated with Orange Lake, at which point Orange Lake accepted a deed in
lieu of foreclosure. TET allegedly took credit for that exit and denied her a
refund. Other Orange Lake owners also had frustrating relationships with TET,
though interestingly Orange Lake did release some of them (allegedly outside
the TET connection). In one case, TET allegedly abandoned clients when they
received a foreclosure notice (they ended up with a deed in lieu of
foreclosure).
Lanham Act: The damages suffered by Orange Lake—nonpayment
of fees—were not proximately caused by the ads. Orange Lake did not allege that
its reputation was affected by the ads. The ads accused “Plaintiffs and all
timeshare companies generally [the ads don’t seem to have named Orange Lake, so
that’s a stretch] of engaging in deceitful, manipulative, or otherwise
imprudent behavior,” and Orange Lake’s expert testified that TET’s website “reflect
negatively on the timeshare industry and make Website viewers less likely to
purchase a timeshare.” This could create a question of fact on reputational
harm, but Orange Lake’s complaint didn’t rely on reputational harm, but only on
loss of sales.  Because none of the
advertisements directed owners to cease paying timeshare obligations, Orange
Lake couldn’t show proximate cause. The but-for causation—if not for the ads,
clients wouldn’t have hired TET and been instructed not to pay—was too remote.
Summary judgment for defendants.
Tortious interference did survive; although predisposition
to breach is a defense and the owners wanted to exit their relationships, there
was evidence that at least some owners were not predisposed to do so via breach
(stopping payment of fees).
FDUTPA: Requires “(1) a deceptive act or unfair trade
practice; (2) causation; and (3) actual damages.” Orange Lake argued that TET
violated FDUTPA by (1) soliciting Orange Lake owners through false and
misleading advertising; and (2) fraudulently inducing Orange Lake owners into
retaining TET based on TET’s advertised 100 percent guarantees of exiting timeshares
when TET cannot actually fulfill the guarantee. 
TET argued that some of its statements were accurate, and others mere
opinion/puffery. A reasonable jury could find some of the statements false or
misleading. “For example, the evidence reflects that TET’s ‘100% money back
guarantee’ is riddled with non-apparent conditions and not honored in many
cases. TET tacitly admits this by stating that it has procured exists for half
of its 28,000 customers but issued only 800 refunds.” There was also evidence
from deposed clients that they were deceived. “TET’s failure to deliver on its
advertised promises is sufficient evidence of consumer deception to create a
genuine issue of material fact.”

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“most experienced” is puffery, but misrepresenting degree of responsibility for projects could be false

Cypress Advisors, Inc. v. Davis, 2019 WL 7290948, No.
17-cv-01219-MSK-KLM (D. Colo. Aug. 28, 2019)
Cypress provides financial advice to clients in the
franchise restaurant industry. Defendant Kent Davis used to work there, but he
left and started a competing business, C2. 
I’ll focus on the false advertising claims.
First, the allegedly false statements were on C2’s website,
but the parties didn’t produce a copy of the website itself, which limited the
court’s analysis.
C2’s claim that it was “the most experienced and
multi-skilled industry advisory firm” was allegedly false because C2 had only
been operating a short time and has had few clients in that time, while Cypress
has been operating since 1991 and has had “hundreds of engagements.” However,
“most experienced” is puffery—it might be defined by different customers in
different ways, including by counting the experience of principals.  Except at the margins—the extreme case where
the only employee had been in the business for only a few months and the
competitor has been around for decades—this was a matter of opinion. This was
not a marginal case, because Davis, and other C2 employees, had many years of
experience in the field, making distinctions “more nebulous” and opinion-based.
C2 also claimed that when Davis joined Cypress, it was a “fledgling” investment
bank; this was allegedly false because Cypress had been operating for 10 years
already. For the same reasons, “fledgling” lacked sufficient factuality to be
falsifiable.
C2 also allegedly misrepresented Davis’s level of
involvement with Wendy’s and TGI Friday’s refranchising projects, claiming that
he “secure[d] and manage[d] a 340-unit refranchising initiative … followed by
a 540-unit follow-up refranchising project” with Wendy’s and “originated and
managed the TGI Friday’s refranchising project.” He did work on these projects
while at Cypress, but the parties disputed the nature and extent of Mr. Davis’
work. Whether he was responsible for “originat[ing],” “manag[ing]” or “secur[ing]”
them could be sufficiently factual in nature as to proven true or false. [In
the Seventh Circuit, a reverse passing off claim might also work.]
C2 also allegedly misrepresented “Representative
Transactions” in the form of 44 “deal tombstones” (icons denoting individual
deals) that suggested that C2 had been involved with the listed deals. C2, as
an entity, was not involved in any of those deals, but Davis was, albeit as an
employee of Cypress at the time. So, would a reasonable consumer believe that
C2 was involved, or that its principals did? Neither side offered consumer
perception evidence, so the court determined that a factfinder should resolve
the issue at trial (implicitly holding that the representation could be
literally false). Relatedly, a specific testimonial/tombstone for one
particular transaction, as to which the endorser allegedly denied having made
the endorsement, could also go to trial.
Other alleged misrepresentations weren’t enough: C2
represented that one person was a “partner” and that two others were members of
the “team.”  Cypress argued that the
first was only an independent contractor and that, of the “team” members, one
was a provider of occasional services to C2 and who agreed to be listed as a
member of the “team” to make it “look like the company had a little more depth
to it”; and the other was an independent contractor. “The Court finds that
terms like ‘team’ and ‘partner’ as used in this respect have no particular
meaning, other than to convey some degree of business association and agreement
to work together,” and that much was true.
Injury: C2 argued that there was no evidence of injury.
Cypress’s damages expert opined that “the cost of a robust corrective
advertising campaign … as a result of the Defendants’ alleged false
advertising and false statements would range from $75,000 to $150,000 according
to an analysis performed by [the expert’s] public relations consulting
practice.” That created a triable issue of fact.  [Not every court would agree without evidence
of injury resulting in a need to correctively advertise.]
Cypress also argued that two statements were libelous: the
“fledgling” statement and claiming credit for Wendy’s/TGIF. The latter didn’t
defame Cypress; at most it might defame Cypress’s principal, who isn’t a party.
For purposes of defamation law, “fledgling” was not defamatory; it commonly
means “young, new, or inexperienced” or “a person or organization that is
immature, inexperienced, or underdeveloped,” but that’s “a necessarily
subjective statement of opinion.” 
Anyway, even if it had factuality, it was about 2000 Cypress, and the
coutt couldn’t see how that would harm 2019 Cypress.

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“diet” isn’t misleading for soda even if surveys say it is

Becerra v. Dr Pepper/Seven Up, Inc., 2019 WL 7287554, No.
18-16721 (9th Cir. Dec. 30, 2019)
Becerra alleged that Dr Pepper violated the usual California
consumer-fraud laws by branding Diet Dr Pepper using the word “diet.” She cited
dictionary definitions to support her allegation that reasonable consumers
understand the word “diet” to promise assistance in weight loss. She included references
to print and television advertisements and online articles from the American
Beverage Association as further support of the allegation that consumers
understand “diet” soft drinks to offer certain health benefits. And she
summarized the results of a survey of California and national consumers that
allegedly supported her claim.
“The district court found that no reasonable consumer would
believe that the word ‘diet’ in a soft drink’s brand name promises weight loss
or healthy weight management and, even if a reasonable consumer would believe
that, Becerra had not sufficiently alleged that any such promise was false
because of insufficient allegations that aspartame consumption causes weight
gain.” The court of appeals affirmed on the first ground and didn’t reach the
second.
Dictionary definitions: focused on the meaning of “diet” as
verb or noun, not as adjective/proper noun, and Dr Pepper’s use of the word as the
latter “puts the word in a different light.” Adjective definitions work
differently, e.g., Merriam Webster defines the adjective as “reduced in or free
from calories[—]a diet soft drink.” In context, “no reasonable consumer would
assume that Diet Dr Pepper’s use of the term ‘diet’ promises weight loss or
management” but instead the term “is understood as a relative claim about the
calorie content of that soft drink compared to the same brand’s ‘regular’
(full-caloric) option.” [The problem is really one of implication—like “low tar”
for cigarettes.  The point of
having fewer calories is to help with weight control; no one cares about
calories in the abstract.  Interesting
that courts in tobacco cases fully recognize this but courts in diet cases don’t.]
So too with the proper noun version: “In common usage, consumers know that Diet
Dr Pepper is a different product from Dr Pepper—different not only in name, but
in packaging and, importantly, taste.”
Becerra argued that she alleged a plausible misunderstanding
of the word, but any such misunderstanding was unreasonable. “Diet soft drinks
are common in the marketplace and the prevalent understanding of the term in
that context is that the ‘diet’ version of a soft drink has fewer calories than
its ‘regular’ counterpart. Just because some consumers may unreasonably
interpret the term differently does not render the use of ‘diet’ in a soda’s
brand name false or deceptive.”
Nor did the ads, articles, or survey help. The ads didn’t
directly promise weight loss or other health benefits. The use of attractive,
fit models in the ads couldn’t reasonably be understood to convey any specific
meaning. The ABA blog posts also emphasized “that other lifestyle changes
beyond merely drinking diet soft drinks are necessary to see weight-loss
results.”  And the survey wasn’t
well-described by the complaint, but it appears to have asked four questions to
gauge consumer expectations of diet soft drinks related to one’s weight. “Of
the California consumers, only 12.5 percent expected diet soft drinks to help
them lose weight (compared to 15 percent nationwide), while 63.3 percent
expected diet soft drinks to help maintain/not affect their weight (compared to
62 percent nationwide).”  Even accepting
these allegations as true, “a reasonable consumer would still understand ‘diet’
in this context to be a relative claim about the calorie or sugar content of
the product. The survey does not address this understanding or the equally
reasonable understanding that consuming low-calorie products will impact one’s
weight only to the extent that weight loss relies on consuming fewer calories
overall.”
This is just a refusal to go beyond the literal to the
implied: of course consumers are likely to understand “fewer calories.” But the
question we usually ask with surveys is: what does the literal meaning of the challenged statement mean
to them? Here, the court just ignores implication (and seems to declare
more than 2/3 of consumers unreasonable). Without at least some other
principle, like cost-benefit analysis (the term might convey useful information
as well as deceptive information and it might be too hard to reduce deception)
I think this is a mistake. If Congress could rely on studies about
misunderstandings of low-tar representations to regulate tobacco, why is this survey result not relevant to the implications of “diet” for soda?
Anyway, this reasoning also doomed Becerra’s deceptive omission
theory: “Because she has failed to sufficiently allege a weight-loss promise
from Dr Pepper, there was nothing deceptive about Dr Pepper not disclosing to
consumers the alleged possibility of weight gain.”

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Competitor’s Google review accusing P of “scam” was nondefamatory opinion

Creditors Relief LLC v. United Debt Settlement LLC, 2019 WL
7288978, No. 17-7474 (D.N.J. Dec. 30, 2019)
Plaintiff CR is a New Jersey-based debt settlement company that
has allegedly “received significant publicity and an A+ rating from the Better
Business Bureau.” Defendant Marcel Bluvstein, a New York resident, is a
principal of New York-based Defendant United Settlement and New Jersey-based
Defendant EIIS. He contacted CR, stating that he was looking for debt relief
services, and received a standard client agreement. This call was allegedly a
sham – intended only to learn about Plaintiff’s business and gain access to this
Creditors Relief Agreement. Shortly thereafter, Bluvstein allegedly founded
United Settlement as a competing debt relief services business and allegedly
copied content from the CR website, including a “Recent Results” graphic showing
results obtained by CR. It also allegedly misrepresented statistics regarding
the total and average savings obtained by its clients.
After CR’s attorneys sent a letter to United Settlement and
Bluvstein alleging copyright infringement and false advertising, defendants
allegedly attacked CR online, e.g., with a Google review stating, “Beware of
this company! I called them to get advice on my business debt, after speaking
with my creditor I decided to deal with the matter myself. After the company
learned 1 settled my own debt they sent me a cease and desist and threatened to
sue.” Also: “This company is a scam! Read the reviews on the CEO Michael
Lupolover. Beware collects ridiculous fees and does NOT get the job done!” A
similar review on the BBB’s website allegedly caused Plaintiff’s BBB rating to
slip below A+. Initially posted by a “Marcel B.,” the poster’s name allegedly later
changed to “Ruth A.”

After finding that it couldn’t exercise personal jurisdiction over Bluvstein or
United Settlement, the court dismissed the remaining claims against EIIS.
First, competitor plaintiffs who didn’t suffer injury as
consumers don’t have standing under the New Jersey Consumer Fraud Act. There
aren’t definitive state cases, but the DNJ has come to this conclusion; here
the court rejects the specious argument that Citizens United bars such
discrimination against the corporate form, which isn’t even relevant because
corporations who are consumers of falsely advertised products/services
have standing under the NJCFA.
Defamation: Nothing defamatory here, just opinion. [The
court does not have to deal with the allegedly false pretense of being a
consumer, rather than a competitor. It is not opinion to say that “I called
them to get advice on my business debt”—it still might be a nondefamatory falsehood,
but defamation is not required for Lanham Act liability.] The BBB review:
Beware of this company, they are
un-American! I contacted Plaintiff in search for help with my business cash
advance loan. After getting the contract emailed to me … [I] did not sign the
contract …. When Michael L[upolover, member of Plaintiff] learned I opened my
own company and settled my own debt he sent me cease and desist letter and is
now threatening to sue. This company is un-American and feels entitled. Just
because I spoke to them they feel they own me and I have no rights, think again
Michael L[upolover]! This company is greedy and unfair …. Beware of this company!!
In the first statement above, the only plausibly defamatory
part was: “Beware of this company!” That’s opinion. In the second statement, “This
company is a scam!”; “Beware collects ridiculous fees”; and “does NOT get the
job done,” were possibilities. In the context of an online review, “scam” was
opinion, and the words surrounding the “scam” epithet were non-factual: “Read
the reviews on the CEO Michael Lupolover. Beware collects ridiculous fees and
does NOT get the job done!” “This does not imply fraud, which is provably true
or false, but instead suggests the speaker’s opinion as to the value of
Plaintiff’s services.” A reasonable reader would not understand an accusation
of crime or fraud, but would see name-calling and hyperbole. The third
statement: “Beware of this company, they are un-American!”; “This company is
un-American and feels entitled”; and “This company is greedy and unfair” were
also non-actionable opinions.
Tortious interference: failed for want of identification of
specific lost contracts/opportunities.
Lanham Act and copyright claims: failed because not alleged
against the remaining defendant, EIIS. Only Bluvstein and United Settlement allegedly
copied the Creditors Relief agreement and website.

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Amicus brief in 4th Circuit Lanham Act case on the meaning of literal falsity

Brian Wolfman filed this amicus, which I drafted, on behalf of a number of Lanham Act professors. It involves a false advertising case with a number of moving parts; the amicus addresses only the court’s opportunity to correct the mistaken reasoning of In re GNC, a consumer protection case that the district court misunderstood as a Lanham Act case (in fairness, this was basically invited error, because the GNC panel cited only Lanham Act cases, and not state consumer protection law cases, in inventing its new standard that had never been applied in either kind of case: that literal falsity only occurs when all reasonable scientists would agree that a claim is false). Since defendant-appellants did not consent (they wanted more space in their brief from appellees in return for consent; appellees understandably did not agree), the court will decide whether to accept the amicus.

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3d Circuit gets descriptiveness right: it’s a matter of both the term and the goods/services

Engage
Healthcare Communications, L.L.C. v. Intellisphere, L.L.C., — Fed.Appx. —-,
2019 WL 6170825, No. 19-1017 (3d Cir. Nov. 20, 2019)
Panels
in the Second and Ninth Circuits, which really ought to know better, have
occasionally reasoned that a term is not descriptive unless you can figure out
what the goods/services are just by looking at the term.  This is nonsense, and it’s nice to have an
appellate opinion, even unpublished, saying so outright. The proper inquiry, as
the PTO has long insisted, is whether, knowing the term and the goods/services,
some leap is required to figure out their relation; when the relation is obvious,
the term is at best descriptive.
Anyhow,
this is a trademark case between “strikingly similar” companies owned by two
brothers. The court of appeals affirmed a finding of noninfringement, though on
slightly different grounds with respect to the most interesting term, PEER-SPECTIVES.
Here
are the marks at issue

With the exception of PEER-SPECTIVES, they are all descriptive without any need
for further discussion, both asserted as service marks (for advertising) and
for the underlying publications etc. The
court of appeals agreed that “advertising service marks must be sufficiently
separate from the subject of the advertising, and must be used to identify
advertising services, not merely to identify the subject of the advertising,
and “an advertising service mark that merely describes the subject of its
advertising is a descriptive mark not entitled to service mark protection.”
Indeed, the assertion of the same marks as trademarks for the underlying industry
could be regarded as an admission of descriptiveness.
There
was not enough evidence to show that the alleged marks had achieved secondary
meaning either for advertising or for the underlying goods, which were online/print
publications in the fields of hematology and oncology. Plaintiffs argued that
the district court erred in finding the marks had not achieved secondary meaning
at the time of defendants’ alleged infringement, because there was no
definitive date in the record when the alleged infringement began.  But here “the operative issue is not when
defendants infringed its marks, but whether the alleged marks had achieved
secondary meaning at all, whether it be on the date of infringement, the date
of summary judgment, or even today.” There was not sufficient evidence that
they had done so. Courts use multiple factors to establish secondary meaning.
Here, plaintiffs could offer evidence only on six of the Third Circuit’s eleven
factors: “(1) the extent of sale and advertising utilizing Engage’s trademarks;
(2) length of use of Engage’s trademarks; (3) exclusivity of use of Engage’s
trademarks; (4) copying of Engage’s trademarks by Intellisphere; (5) the number
and amount of sale involving Engage’s trademarks; and (6) the number of
consumers privy to Engage’s trademarks through the use of those marks in
commerce.”
Vitally,
there was no evidence of consumer perception. Given that void, the alleged
extensive use and alleged copying by the defendants “do not alleviate their
burden of showing how consumers identify these marks as being synonymous with
the origin of their products, nor is the circumstantial evidence presented so
overwhelming as to imply consumer association.” It has to matter that the
plaintiffs were asserting such a smorgasbord of marks—if there’d been just one,
maybe it would have been more plausible that lots of advertising had worked,
but it’s just not convincing that all those descriptive terms served as marks
for plaintiffs, and thus it’s not convincing that any given one out of the
plethora stood out. But the degree of descriptiveness also played a big role:
By way of comparison, the court believed that “at least some producer can
readily make a strong showing on the six factors plaintiffs identified, through
its sale of ‘Belgian chocolates,’ but surely that producer would not be
entitled to trademark protection for that label no matter how long or pervasive
its use of that label; consumers will never be in danger of associating that
label with the producer.”
The
court treated Peer-Spectives differently because the district court deemed it suggestive.
The court of appeals disagreed, making several important and persuasive points:
The district court had reasoned that “a ‘mental leap’ is required to tie
PEER-SPECTIVES to online and in-person continuing medical education classes for
physicians. Absent this explanation, any link between the words and the
healthcare industry would not have been immediately apparent, a clear
indication that the mark is [ ] suggestive.” 
It’s
true that the line can be difficult to draw, but fortunately the Canfield
Third Circuit case resolved the issue: “chocolate fudge” was descriptive for
soda, and that’s the same kind of term that Peer-Spectives is. “It would be
readily apparent to the average consumer that ‘Peer-Spectives’ stands for ‘Peer
Perspectives.’ Indeed, defendants’ use of the phrase ‘Peers & Perspectives’
is the very phrase plaintiffs assert infringed on their alleged mark.” This is a vitally important point about validity’s interaction with scope! Deeming too
many terms suggestive eases monopolization of terms that convey useful information
to consumers, without proof that there is a corresponding benefit to consumers
in the form of protecting them from confusion. As the court explained, “[p]eer
perspective is a concept that most consumers immediately would recognize as a
generally descriptive term that can be used to describe many products and
applicable across a multitude of industries and markets, as is the term ‘chocolate
fudge.’” “Chocolate fudge” standing alone doesn’t create an immediate association
with diet soda, but that isn’t the test. 
It takes no “mental leap” for consumers to recognize its relevance
for diet sodas, once they see it applied thereto.
A
descriptive term need not be “tied to any particular industry or market.” If we
didn’t use that rule, “ ‘very creamy ice cream’ would be found to be clearly
descriptive, but ‘very creamy,’ because its link to ice cream would not be
immediately apparent, could nevertheless be trademarked by an ice cream maker.
Of course, it is reasonable to believe that such ice cream maker would then
attempt to enforce its trademark against every other ice cream maker who uses
the term ‘very creamy ice cream’ on its products, the very term that was deemed
clearly descriptive in the first place.”
Likewise,
extensive use of a generally applicable term in other markets supported
descriptiveness. “[I]ndeed, if the ‘mental leap’ required can be made in many
markets, perhaps it is not much of a leap at all…. Unsurprisingly, a Google
search of the term ‘peerspective’ returned over 12,000 results, with a slew of
examples of its use across many industries.”
There
was no better evidence of secondary meaning here than for any other term at
issue. Thus, the district court was affirmed not because the defendants didn’t
infringe, but because there was no enforceable mark.

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