Disparaging an unauthorized reseller could violate the Lanham Act

Posted on October 31, 2016 by rtushnet
Dentsply Int’l Inc. v. Dental Brands for Less LLC, No. 15
Civ. 8775, 2016 WL 6310777 (S.D.N.Y. Oct. 27, 2016)
Dentsply sued Dental Brands over Dental Brands’ resale of
Dentsply’s dental products without Dentsply’s authorization. Dental Brands buys
Dentsply’s products overseas, where they’re sold at 20-65% below the prices in
the US, and then resells them domestically.  Dental Brands counterclaimed for antitrust and
false advertising violations. Along with filing suit against unauthorized
resellers, Dentsply allegedly falsely claimed that Dental Brands’ products (1) were
“materially different” and “inferior” to Dentsply’s products sold by its
authorized distributors, (2) have been “mishandled” and (3) present an
“immediate safety and health risk to their patients and puts dentists at risk
of liability to patients.”
The court dismissed the antitrust claims because Dental Brands
lacked antitrust standing, but the false advertising counterclaim survived.  The counterclaim alleged that Dental Brands
“stores and ships” the Dentsply’s products “following the same directions” that
Dentsply provides to its authorized distributors; that Dental Brands “does not
sell dental product less than twelve months before its expiration date”; and that
the Dentsply products Dental Brands offers are not any different in quality,
composition or formulation from the Dentsply products sold by authorized
distributors. Thus, Dental Brands plausibly alleged false advertising.
However, New York commercial disparagement and defamation
claims were dismissed.  Disparagement and
defamation are different claims, and “New York courts have taken a relatively
strict approach” such that if “the statements concern products or services at
all, it is rare for a court to find that a claim for commercial defamation
lies.” The issue here was only product disparagement.  That matters because “injury is conclusively
presumed” for defamation, but a plaintiff alleging product disparagement must
plead and ultimately prove “malice and special damages.” New York law that
special damages be pled with more than round dollar amounts; this “particularity
requirement is strictly applied.” 
Dental Brands didn’t plead special damages.  Dental Brands invoked the Restatement
(Second) of Torts, arguing that it could use a “lost sales” theory of special
damages because it could show “with reasonable certainty” that a “[w]idely disseminated”
misrepresentation caused “serious and genuine pecuniary loss by affecting the
conduct of a number of persons whom the plaintiff is unable to identify and so
depriving him of a market that he would otherwise have found.” But New York
hasn’t adopted this theory, and even if it applied, a plaintiff must do more
than estimate damages.

from Blogger http://ift.tt/2f9puXS

Posted in Uncategorized | Tagged , , | Leave a comment

Study’s co-author disclaiming its use creates material issue on falsity

Posted on October 31, 2016 by rtushnet
Ferring Pharmaceuticals, Inc. v. Braintree Laboratories,
Inc., 2016 WL 6275156, No. 13-12553 (D. Mass. Oct. 25, 2016)
Previous
opinion discussed here. The parties compete in the market for products used
for bowel preparation before colonoscopies. Ferring alleged false advertising
in violation of federal and state law and dilution of its mark, Prepopik.
Braintree counterclaimed for false advertising and unfair trade practices.  The court denied summary judgment on the false
advertising claims.
First: In addition to Prepopik, Ferring produces a
chemically-identical treatment called “Pico-Salax” which is sold in other
countries. After the FDA approved Prepopik, Ferring issued a press release
stating that “Ferring has a long history in the international gastroenterology
market, where PREPOPIK is available in Canada (marketed under the name
PICO-SALAX).”  However, there are several
differences: Pico-Salax is OTC, while Prepopik is prescription; the
instructions direct users to consume different amounts of fluid; and Prepopik
is only approved for adult colonoscopy preparation, whereas Pico-Salax is
approved for children and adults in preparation for x-rays, surgeries and
colonoscopies.  The Canadian government
published an article about Pico-Salax in January, 2013, in the Canadian Adverse
Reaction Newsletter, stating that “The diarrhea produced by [Pico-Salax] can
lead to dehydration and loss of electrolytes, particularly sodium which may
result in hyponatremia and convulsions …. As of June 30, 2012, Health Canada
received 11 reports of convulsions suspected of being associated with
Pico-Salax.”
The court found that there was a genuine issue of material
fact about whether Braintree’s use of the Canadian Newsletter to raise safety
concerns was literally false or misleading because the letter concerned a
different treatment and didn’t indicate that Pico-Salax was dangerous.  (There was conflicting evidence about whether
the letter was used to “highlight potential safety concerns” or to support
misleading claims that Prepopik was “deadly” and “kills people.”)  Braintree pointed out that Ferring’s own
statements equated Prepopik and Pico-Salax, but the court found conflicting
evidence about whether the two were equivalent.
Braintree also distributed an FDA-approved comparison
detailer, “What’s NOT New About Prepopik?” It listed the formula, the
acceptability of use for patients with severely reduced renal function and the
effect of antibiotics on efficacy. The flyer also compared the price of
Prepopik with other treatments, including Braintree’s.  Ferring argued that efficacy percentages
associated with the detailer were unreliable establishment claims, but only
found two instances of percentage claims: 1) a handwritten annotation on a
flyer that stated percentages and 2) a sales log entry did the same. These were
inadequate to show “commercial advertising or promotion” of percentage
claims.  Ferring didn’t claim literal
falsity for the detailer itself, but rather omission of material information as
to Suprep’s safety and lack of fair balance. 
Ferring argued that Braintree’s own study showed that the detailer was
misleading about safety, but this was contested.
Ferring also challenged an ad, “Clean Freak,” which claimed
that Braintree’s product “achieved ‘excellent’ bowel cleansing in patients
based on investigator grading … Significantly more patients had ‘excellent’
preps with SUPREP Bowel Prep Kit compared to MoviPrep[.]”  Braintree won summary judgment because
Ferring wasn’t within the protected zone of interests.  The ad compared Suprep to a third party’s
treatment.  Though Braintree employees
referred to the ad in five instances in sales conversations that also addressed
Prepopik’s efficacy, those were insufficient to show “any financial or
reputational harm as a direct result of Braintree’s advertising.” Thus, Ferring
lacked standing; and independently, five isolated instances weren’t commercial
advertising or promotion.
State dilution: MGL, Chapter 110H provides a claim for “[l]ikelihood
of injury to business reputation or of dilution of the distinctive quality of a
mark ….” This requires the plaintiff to show distinctiveness and that “the
defendant’s use of a similar mark creates a possibility of dilution.” The court
doesn’t explicitly disavow its earlier weird trademark argument; in fact, it
rejects the dilution claim on a ground that doesn’t deal with the total
senselessness of the claim.  Ferring
argued that Braintree diluted its trademark “by comparing Prepopik to another
Ferring product, Pico-Salax.”  Of course,
this can’t possibly be “the defendant’s use of a similar mark” as required for
Massachusetts dilution, but the court instead granted summary judgment because
Ferring itself equated the two products, and even combined their names on its
website. 

The court also denied summary judgment on Braintree’s unclean hands defense
because Ferring’s own equation of the two products, allegedly false claim of
superior cleansing efficacy, and alleged off-label promotion created a genuine
issue of material fact about whether the equitable relations of the parties
were affected by Ferring’s own misconduct.
Braintree’s counterclaims fared basically the same.
Braintree challenged Ferring’s statement that Prepopik has the “lowest volume
of active ingredient.” There was a genuine issue about literal falsity—a fact
finder could interpret this claim as involving a comparison to the entire
market of bowel preparation treatments, including tablets which have a lower
volume than Prepopik. Moreover, emails from Ferring employees, internal Ferring
documents and Ferring’s own expert all acknowledged that additional hydration was
needed, including hydration with liquids containing electrolytes, in order for
Prepopik to work effectively. Thus, a fact finder could find the claim to be
literally false.  This was also material
because it was an essential characteristic and because Ferring “aggressively
marketed Prepopik as being low volume.”

Likewise, summary judgment was denied on Braintree’s
challenge to Ferring’s “Superior Cleansing Efficacy” claim because the study on
which Ferring based the claim might or might not be reliable, based on a
declaration from one of the study’s co-authors that said that the study and the
article he co-authored about it “do not reliably support a marketing claim of
Prepopik’s superior cleansing ….”

from Blogger http://ift.tt/2f4sRkb

Posted in Uncategorized | Tagged , | Leave a comment

Direct, secondary liability under Lanham Act for statements targeted at foreign markets

Posted on October 31, 2016 by rtushnet
Operation Technology, Inc. v. Cyme International T & D
Inc., No. SACV 14-00999,  2016 WL 6246806
(C.D. Cal. Mar. 31, 2016)
Plaintiff (ETAP) alleged that defendants (CYME, IPET-CO, and
Amir Aslani) violated the Lanham Act via pseudononymous, disparaging remarks
made about its software.  The question
here was whether a reasonable jury could find that CYME caused a false
statement to enter interstate commerce. 
ETAP argued for direct and vicarious liability, and the court found a
genuine issue of triable fact.
Direct liability: ETAP’s evidence was that the campaign of
disparaging communications against ETAP began, or expanded, during the Summer
of 2013. Just before the relevant communications were sent to two customers, CYME
employees received in their inbox, from the alleged originator of the
disparaging communications, “what appear to be prior draft versions.” Aslani
sent one to a CYME regional technical manager with the text, “I will be there
in 20 min. just have a look at attached files. 20 hours working results of
evaluating ETAP.” There was no “direct evidence” that CYME employees responded
to these emails with encouragement, or edits, though there was evidence that
CYME employees reviewed, edited, or contributed to other marketing materials
from Aslani, which was relevant circumstantial evidence that CYME oversaw his
communications.  “[T]he timing of the
emails, and the lack of record evidence of Aslani being immediately reprimanded
for these materials, permits the reasonable and justifiable inference in ETAP’s
favor that at least one of the three CYME employees who received these
communications had a role in shaping them.”
The then-director of CYME testified that he investigated the
source of these emails, and asked Aslani whether he was behind the email and told
him that “we don’t run a business like that.” However, the director only emailed
his direct employees to tell them to “make sure that these things doesn’t [sic]
go out of our office,” actually removing Aslani from an email chain when giving
this warning. Aslani also remained CYME’s sole authorized retailer for his
region for at least the subsequent eighteen months. A reasonable jury could
therefore find that CYME employees were participants in the initiation of
Aslani’s purported campaign of disparaging communication, making CYME directly
liable.
Vicarious liability: ETAP presented sufficient evidence for
a jury to find that Aslani was an agent of CYME for purposes of Lanham Act
liability. The labels used by the purported agent and principal aren’t
dispositive.  There was a material issue
on agency because (1) Aslani and CYME agreed to make Aslani the sole authorized
sales representative for the area he worked in; (2) CYME retained certain
controls over the scope of Aslani’s work as the sales representative; and (3)
Aslani was largely insulated from the risk of purchasing CYME’s software
without a resale customer.  Even if
Aslani was an agent, he wouldn’t necessarily create Lanham Act liability for
CYME for conduct that was not authorized and was outside of the scope of
Aslani’s authority to act on behalf of CYME.
A reasonable jury could find that CYME ratified Aslani’s
conduct, because CYME was on notice of the likelihood that Aslani was behind
the initial disparaging comments and similar disparaging comments made in subsequent
months. A CYME representative accepted Aslani’s denials of responsibility “without
significant further inquiry,” even though two CYME employees guessed that he
was behind the communications. “[B]ecause Aslani suffered no repercussions for
his behavior, … a reasonable inference is that he would have considered his
activities authorized by CYME.”  Moreover,
the parties’ agreement restricted Aslani’s conduct, and communication between them
was frequent. “A jury could reasonably find that Aslani was in a much closer,
more tightly controlled relationship than a simple reseller of software.” There
was no evidence that Aslani considered his own acts unauthorized. 
CYME also argued that the case involved an impermissible
extraterritorial application of the Lanham Act. 
However, the disparaging communications took place, at least in part,
within interstate commerce.  A US
customer of ETAP received a disparaging email from a CYME Sales Manager for
North America as part of CYME’s efforts to solicit that customer’s business.  Although it was retracted, the Lanham Act
could be applied “when there is evidence showing a CYME employee affirmatively
steered a disparaging communication into the United States, an act of interstate
commerce.”
Further, the Lanham Act could be applied based on the
foreign acts alone. The Ninth Circuit’s test: “[F]irst, there must be some
effect on American foreign commerce; second, the effect must be sufficiently
great to present a cognizable injury to plaintiffs under the federal statute;
and third, the interests of and links to American foreign commerce must be
sufficiently strong in relation to those of other nations to justify an
assertion of extraterritorial authority.”  First, ETAP is an American company that sells
to customers in the U.S. and abroad, and ETAP showed a genuine factual issue on
harm.

The final factor required balancing multiple factors.  (1) The degree of conflict with foreign law
or policy: there was no evidence that applying the Lanham Act would cause any
conflict. (2) The nationality or allegiance of the parties and the locations or
principal places of business of any corporations involved: ETAP is US-based and
CYME is a Canadian based subsidiary of a multinational company that has
operational headquarters in the US, making it related to a company with “substantial
ties” to the US. (3) The extent to which an order by a U.S. court can be
expected to achieve compliance with the Lanham Act: the court could order CYME
to stop and to remove the incentive for disparaging communications. (4) The
relative significance of effects on the United States as compared with those
elsewhere: ETAP felt the effects in the US, thoug there was little other
evidence of the disparaging communications entering the US market. (5) The
extent to which there is an explicit purpose to harm or affect U.S. commerce:
none shown; the apparent purpose was to affect competition in the Middle East, where
Aslani was directly competing.  (6) The
foreseeability of such effect: “the disparaging communications were put into
the stream of international communication channels” and “received by entities
as far apart as Australia and Bulgaria.” Other disparaging communications were
posted to YouTube, viewable worldwide. (7) The relative importance to the
violations charged of conduct that occurred within the United States as
compared with conduct abroad: only one communication occurred within the US,
and didn’t affed the potential customer’s decision before it was retracted.  Balancing the factors, the found that
extraterritorial application of the Lanham Act was appropriate.

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

Posted in Uncategorized | Tagged , , | Leave a comment

Inapplicable studies and lost market share equal literal falsity and irreparable harm

Posted on October 31, 2016 by rtushnet
OrthoAccel Technologies, Inc. v. Propel Orthodontics, LLC,
No. 4:16-CV-350, 2016 WL 6248711 (E.D. Tex. Oct. 26, 2016)
OrthoAccel is a medical device company that makes dental
appliances, including the AcceleDent, a hands-free dental device that uses
gentle vibrations to accelerate tooth movement when used with orthodontic
treatment. It has two main functional components: (1) a “Mouthpiece” and (2) an
“Activator,” a small extraoral component that generates a vibrational force when
the patient lightly bites down on it to accelerate tooth movement during
orthodontic treatment.  It received
510(k) clearance in 2011, which requires a showing that the device is as safe
and effective as a legally marketed device that is not subject to premarket
approval.  In 2013, OrthoAccel launched
its second-generation product, the Aura, which was cleared for use with braces
and in 2016 for use with clear aligners.
Propel is an OrthoAccel competitor.  It released the VPro5, which costs
significantly less than the Aura.  Propel
markets the Vpro5 through its sales force, promoting it as a quicker, cheaper
alternative to the Aura that offers “5 Clinical Benefits”: (1) more efficient
aligner seating, (2) relieves orthodontic pain, (3) accelerates tooth movement,
(4) fast tracks retention, and (5) stimulates bone growth and remodeling.
OrthoAccel argued that the burden of avoiding a finding of
falsity should shift to Propel under Novartis v. Johnson & Johnson-Merck
Consumer Pharm. Co., 290 F.3d 578 (3d Cir. 2002), because its claims were “completely
unsubstantiated.”  But the Fifth Circuit
hasn’t adopted this rule, and anyway Propel’s claims weren’t “completely”
unsubstantiated.
However, the court did find several Propel claims to be
literally false.  For example, a document
for the sales force said that, “We have many research studies that show the
benefits of high frequency vibration. Let me detail some of them with you.” Another
claim was that there are “significant clinical findings that support the
VPro5’s ability to increase bone formation and accelerate tooth movement.” But
no such studies existed. Propel also claimed that the frequency of the VPro5’s
vibration was clinically optimal, also completely unsubstantiated.  OrthoAccel also showed falsity by disproving
Propel’s establishment claims; the literature and studies on which Propel
relied weren’t reliable enough to support its claims, mainly because they didn’t
test the VPro5 or just offered hypotheses. 
One article summarized a single patient’s positive experience with the
VPro5, but that didn’t support the “Clinical Benefits” claims.
OrthoAccel also showed actual deception, though it didn’t
need to because of the literal falsity, by showing that dentists’ websites had
copied the 5 Clinical Benefits to tout the devices.  One doctor’s declaration also indicated that
he “would expect the VPro5 to have scientific support, similar to AcceleDent.”  Materiality was a given.  OrthoAccel also showed injury: a sharp
decline in sales following the launch of the VPro5.
Irreparable injury:  “It
is well established that loss of market share due to false advertising
constitutes irreparable harm.”  (Quoting
a case involving “a competitive industry where consumers are brand loyal”
without discussing whether that’s true of orthodontic devices.)  While OrthoAccel’s annual operating plan and
actual revenues varied by 7% in 2014 and 2% in 2015, the variance measured 57% after
the launch of the VPro5.  Thus,
OrthoAccel showed irreparable harm. 
“Propel can still claim that the VPro5 aids in aligner
seating. It will only enjoin Propel from disseminating claims of the VPro5’s 5 Clinical
Benefits, which are false and misleading.”

Propel argued that OrthoAccel had unclean hands, based on
statements made by OrthoAccel that allegedly misrepresented Propel’s FDA
status. Without explaining its reasoning, the court found these arguments
preempted, but regardless, such statements weren’t enough to “shock[s] the
moral sensibilities of the judge, or…[be] offensive to the dictates of
natural justice.” 

from Blogger http://ift.tt/2eM3zZO

Posted in Uncategorized | Tagged , | Leave a comment

Republication of online articles was commercial speech and not protected by CDA

Posted on October 26, 2016 by rtushnet
Western Sugar Coop. v. Archer-Daniels-Midland Co., 2015 WL
12683192, No. CV 11-3473 (C.D. Cal. Aug. 21, 2015)
More belated blogging. 
The sugar industry and the corn refining industry accused each other of
falsely advertising  high-fructose corn
syrup (HFCS).  Plaintiffs were manufacturers,
trade groups, and associations active in the sugar industry; defendants ditto
for the corn and HFCS industry. Plaintiffs alleged three types of false and/or
misleading representations about HFCS in the Campaign: (1) use of the term
“corn sugar;” (2) statements that HFCS is a “natural” product; and (3)
representations that “sugar is sugar” and that “your body can’t tell the
difference” between sugar and HFCS. The counterclaim alleged that plaintiff Sugar
Association falsely represented that HFCS causes obesity, cancer, and cirrhosis
of the liver, among other things, when in fact, HFCS and sugar are
nutritionally equivalent.
The court found that, even if defendants’ statements that HFCS
is “natural” were in accordance with policies and guidance promulgated by the FDA,
that didn’t preclude a Lanham Act falsity/misleadingness claim under Pom Wonderful.  There were genuine issues of material fact on
falsity as to the claims and counterclaim.
Plaintiffs argued that they were entitled to a presumption
of injury because this was a false comparative advertising case.  By contrast, recovery of damages in a false non-comparative
advertising case requires “actual evidence of some injury resulting from the
deception is an essential element of the plaintiff’s case.”  Defendants argued that the challenged campaign
didn’t directly compare HFCS to any particular sugar product or brand.  However, the campaign directly compared defendants’
sweetener product, HFCS, to plaintiffs’ competing sweetener product, sugar.  According to defendants’ own evidence, the
creative messaging strategy was to “directly compare HFCS and sugar.”  From 2008 to 2011, key campaign messages
included that HFCS is “nutritionally the same as sugar,” and the “facts prove
there is no difference between HFCS and other sugars.”  This was not a case where defendants merely
emphasized the positive aspects of their own products; they specifically
claimed that HFCS was equivalent to and the same as sugar.  The aim was to stop consumers from switching
from using HFCS to using sugar, and thereby to stop plaintiffs from gaining
market share.  “Thus, while the instant
case is not a typical comparative false advertising case in that it does not
involve comparisons between name-brand products, the Court finds that the
presumption of causation and injury applies because the products are in
head-to-head competition and Defendants’ Campaign directly targets Plaintiffs’
competing product.”
The court also addressed defendants’ argument that the Noerr-Pennington doctrine precluded
liability for First Amendment-protected petitioning conduct, which can include
“concerted efforts to influence … government [ ] through direct lobbying,
publicity campaigns, and other traditional avenues of political expression,” as
well as litigation. Private petitioning conduct “incidental to a valid effort
to influence government action” can’t be the foundation of liability.  Defendant CRA filed a “Citizens Petition”
with the FDA on September 14, 2010, seeking to allow food and beverage
manufacturers the option of using the name “corn sugar” to identify HFCS on
ingredient labels, and the court found that certain challenged materials were
incidental to the Citizens Petition and protected under Noerr-Pennington.  By
contrast, statements challenged in the counterclaim weren’t “incidental to
valid efforts to influence” the FDA or the prosecution of the instant lawsuit.
Counterclaim defendant SAI argued that its reposting and
dissemination of articles wasn’t actionable commercial advertising or promotion
under the Lanham Act.  The counterclaim
challenged, inter alia, statements in articles authored by non-parties, Dr. John
McElligott and Linda Bonvie: “Dr. John McElligott weighs in on the high
fructose corn syrup debate in Land Line Magazine,” and Bonvie’s blog post, “The
Corn Processors ‘get their way’ with UCLA, or do they?” SAI republished the articles
on its website and distributed them in its electronic monthly newsletter, “The
Sugar Packet.”  (Cute!)  SAI argued that reposting didn’t transform otherwise
protected, non-commercial articles into “commercial speech” because SAI didn’t
alter or incorporate the articles into traditional advertising, or distribute
them to targeted potential customers, with a commercial motive.
The articles, as noted, were available on SAI’s website, and
the Sugar Packet was distributed to approximately 3,500 recipients, including
approximately 1,750 individual consumers and members of the media. “SAI had a
clear economic motive for distributing the Articles—to promote the consumption
(and thereby sales) of sugar.” The Sugar Packet itself stated, in the same
issue that disseminated the McElligott article, that  SAI is “on a mission to educate consumers and
promote the consumption of sugar through sound scientific principles.”  Citing Gordon
& Breach, the court concluded that SAI’s republication promoted its own
business and was commercial in nature.

SAI also raised a CDA defense.  Under Batzel v. Smith, 333 F.3d 1018, 1032
(9th Cir. 2003), the question of whether SAI was an “interactive computer
service” for these purposes is whether under the circumstances, “a reasonable
person … would conclude that the information was sent [to them] for internet
publication.”  The court found that SAI
hadn’t shown that its website or electronic distribution service qualified as a
“provider[ ] or user[ ] of an interactive computer service” within the meaning
of the CDA.  Moreover, “[i]f information
is provided to [SAI] in a capacity unrelated to [its] function as a provider or
user of interactive computer services, then there is no reason to protect [it]
with the special statutory immunity.” SAI showed that it obtained permission to
republish the articles.  That was not evidence that SAI “passively
displayed Articles from third parties who actively provided them to SAI in its
capacity as a user or provider of interactive computer services.”  Thus, SAI wasn’t entitled to CDA immunity.

from Blogger http://ift.tt/2eLET21

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

Third party lacked standing to challenge allegedly misleading use of abandoned mark

Posted on October 24, 2016 by rtushnet
578539 B.C., Ltd. v. Kortz, 2014 WL 12572679, No. CV
14-04375 (C.D. Cal. Oct. 16, 2014)
Westlaw is doing something to surface all sorts of old cases,
but this one covers an issue about abandoned marks that often comes up in my
class on abandonment, so here goes.
Plaintiff, trading as Canadian Maico, filed a trademark
infringement claim against Kortz, d/b/a SoCal Maico.  Maicowerk A.G. was a popular German
motorcycle manufacturer founded in 1926; it went out of business in the
1980’s.  Plaintiff was founded in 1996
with the goal of rebuilding Maicowerk’s business by restoring and selling
genuine Maicowerk motorcycles, as well as parts that could be used by others to
restore and maintain Maicowerk motorcycles. Canadian Maico now serves Maicowerk
motorcycle enthusiasts in the US and Canada, as well as internationally.  It had registrations for the word Maico and a
large “M” superimposed over a shield (the “Maico marks”) for relevant goods.
Plaintiff alleged that Kortz observed its success and
decided to copy it under the name SoCal Maico. In 2014, Kortz sought to register
MAICO in connection with “on-line retail store services featuring new and used
Maico motorcycle parts” and his website http://www.socalmaico.com. Kortz’s logo
allegedly incorporated Maico’s federally registered trademarks; Kortz
petitioned to have the USPTO cancel Maico’s registration.  Kortz also allegedly made false and damaging
statements about Maico and its goods to potential customers.
Kortz alleged, in his counterclaims, that Maico registered
Maicowerk’s abandoned trademarks despite the fact that it had not received an
assignment of any of Maicowerk’s rights, reputation or goodwill, even though
that reputation and goodwill persists. 
He alleged that Maico traded on Maicowerk’s goodwill and caused consumer
confusion as to the source or origin of its goods and services.
The court found that Kortz lacked Article III standing to
bring his counterclaims.  He lacked
allegations of injury to himself that was “concrete and particularized” and
“actual or imminent” in order to satisfy the injury in fact requirement of
Article III standing. Kortz wasn’t Maicowork’s successor in interest:
Because Kortz admittedly has no
protectable legal interest in Maicowerk’s purported goodwill and reputation, he
cannot assert injury based on damage to that goodwill and reputation. Because
he sues as a competitor, and not as a member of the public confused by Maico’s
use of the Maico marks, he cannot assert injury to consumers as a basis for his
claims.
H didn’t plead that Maico’s customers would otherwise do
business with him or that its use of the marks otherwise injured him in his
business.  Lexmark analysis would reason likewise.
Later, the court commented that the fact of Maicowerks’
persistent goodwill would not, in itself, make Maico’s adoption of the Maicowerks
marks invalid, quoting McCarthy: “Once abandoned, a mark may be seized
immediately and the person doing so may build up rights against the whole
world.” “After abandonment, those who then adopt the mark must turn to the
basic rules of trademark priority to determine priority of use and ownership.”  True, parties who adopt an abandoned mark “must
take steps to avoid a likelihood of confusion arising from an association with
the former owner,” but that’s the former owner’s business, and even the former
owner won’t win without use that fraudulently trades on its reputation.

from Blogger http://ift.tt/2e3EF4M

Posted in Uncategorized | Tagged | Leave a comment

Press release constituted commercial advertising or promotion

Posted on October 24, 2016 by rtushnet
Engineered Arresting Sys. Corp. v. Runway Safe LLC, No.
1:15-CV-546, 2016 WL 6087906 (W.D. Tex. Sept. 19, 2016)
Engineered materials arrestor systems (EMAS) are installed
at the end of airport runways in order to safely stop an aircraft that fails to
stop before the end of the runway by absorbing the energy of the aircraft. For
over 15 years, plaintiff ESCO was the only supplier of EMAS for US airports,
but Runway Safe entered the market in 2014. 
ESCO sued for direct and indirect patent infringement; Runway Safe
brought various counterclaims, including a false advertising counterclaim based
on ESCO’s press release announcing this lawsuit.  (Including: “As a new and untested entrant
into the marketplace, Runway Safe apparently hopes to capitalize on the
goodwill and reputation of [ESCO] by misappropriating [ESCO’s] valuable
intellectual property ….”) 
The court declined to dismiss that counterclaim, adding to
the small but reasonably consistent jurisprudence on press releases: at least
when the target market is small enough that press releases are a good way to
communicate with consumers, they can constitute advertising or promotion. The
press release, which also says that “[c]ustomers desiring the aircraft
arresting system that provides proven safety records with successful
arrestments should ensure that they are purchasing the EMASMAX® manufactured
only by [ESCO],” directly targets EMAS customers and encourages them to buy
from ESCO.  It was published on ESCO’s
website where any potential purchaser of an EMAS would be able to view it.  Thus, Runway Safe properly pled commercial
advertising or promotion.
Likewise, Runway Safe properly alleged that statements such
as that Runway Safe has copied features of ESCO’s EMAS and that Runway Safe is
an “untested entrant into the marketplace,” were false and misleading.

Runway Safe also alleged that this conduct was likely to
cause “confusion, mistake, or deception as to the origin, sponsorship or
approval of the nature of the services offered by Runway Safe.”  Hello, Dastar.  Here, the court reasoned that §43(a)(1)(A)
required statements about the speaker’s own goods, not statements about someone
else’s goods, which are covered by §43(a)(1)(B).

from Blogger http://ift.tt/2f8CjW8

Posted in Uncategorized | Tagged | Leave a comment

At the USPTO Trademark Expo

Posted on October 21, 2016 by rtushnet
Well, here I am at the National Trademark Expo

Here is a giant registration symbol character costume

Musical pairing, which seems really really functional to be at a TM expo, but emphasizes its patents, copyrights, and word marks

Metrorail Map and Logo usage guidelines

USAF: An Emblem of Power & Protection

Did you know that sounds can be trademarks?

DC Rollergirls, for Dave Fagundes

Velcro: There is only one.  I asked the rep, “One what?” and she said “it’s the original hook and loop fastener.”

Velcro mascot with kids throwing balls at its chest

The power of the Navy brand

How to report a Coke bottle lookalike (it’s right side up on my computer, sorry)

NOT AUTHORIZED versions of bottles Coke finds unacceptable

More on the DC Rollergirls, for Dave Fagundes

Did you know that color can be a trademark?

Benefits of federal registration

Here I am. Considering making this my new profile picture.

Swag: UPS plane, Idaho stuffed potato (get it?), Velcro branded Velcro, sunscreen from the Global IP Protection Council (protect yourself)!

I heart IP and IP in heart tattoos–I got a few extra if anyone must have them
Modern Velcro usage guidelines

from Blogger http://ift.tt/2e8qM6K

Posted in Uncategorized | Tagged | Leave a comment

A transformative purpose fair use finding

Posted on October 20, 2016 by rtushnet
Wong v. Village Green Owners Association, No. CV 14-03803, 2015
WL 12672092 (C.D. Cal. Mar. 20, 2015)
This transformative fair use case just showed up in my
Westclip search.  Wong, who owned a unit
in Village Green, prepared a National Historic Landmark nomination on behalf of
VGOA, a homeowners association, which subsequently posted the nomination on its
website. Wong sued for copyright infringement, and the court found fair use.
Wong prepared the NHL nomination on her own initiative,
knowing that VGOA wouldn’t pay her, because she believed that, “[f]rom a moral
viewpoint, [she] had no choice.” The nomination consists of a 78-page form and
38 pages of photographs. It contains “purely factual information, such as
information about the property’s location, the structures on the property, the
materials used to build the property, and its architecture, history, and impact
and legacy on the community.” The Village Green became a certified National
Historic Landmark in 2001.
Since 2005, Wong has made the nomination available for free
to the general public through her website. Another copy is also available for
free to the general public through the National Park Service’s website, and Wong
understood that the general public would eventually have access to the document
for free while she was preparing it.
The court found that VGOA’s use of the nomination as an “Important
Document[]” on its website was transformative. Wong’s purpose in making the
work was to obtain a NHL certification on behalf of the Village Green, which
was granted.  VGOA’s purpose in posting
the document was “so the Village Green community and the general public may
have access to the document as an information and educational resource.” This
substantially different purpose weighed heavily in favor of fair use.
VGOA’s use was also entirely noncommercial: VGOA neither
charged for nor received profits from or revenues from the use.  The tax benefits VGOA received from the
certification decision were irrelevant. Anyway, even counting those benefits
wouldn’t render VGOA’s use of the nomination commercial, in the sense of
“unfair[ly] exploit [ing] the monopoly privilege that belongs to the owner of
the copyright.” Village Green, as a National Historic Landmark, was eligible
for a tax break, but Wong, as an individual, was not.
Nature of the work: highly factual, favoring fair use. Amount
used: the whole thing, which was reasonable in relation to the purpose of the
copying, so this factor didn’t weigh in favor of either party.

Market effect: there was none because the nomination had no
market value and Wong already made it available for free, as did the NPS.  Although someone had to pay for the work’s
preparation, the fourth fair use factor “has nothing to do with the cost of preparing
the copyrighted work.”

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

Posted in Uncategorized | Tagged , | Leave a comment

Package size can be false advertising

Posted on October 20, 2016 by rtushnet
In Re: Mccormick & Company, Inc., Pepper Products
Marketing & Sales Practices Litigation, 2016 WL 6078250, No. 15-cv-2188 (D.D.C.
Oct. 17, 2016)
Watkins, which produces black pepper, alleges that its
largest competitor, defendant McCormick (which has 70% of domestic black pepper
sales), deceptively “slack-filled” its black pepper containers, confusing
consumers and causing a loss in Watkins’ pepper sales. Consumers can’t see
inside McCormick’s containers before they buy. In early 2015, McCormick allegedly
reduced the amount of actual pepper in each of its pepper tins by 25% but
“misleadingly continued to use the same traditional-sized tins” and reduced the
quantity of peppercorns in its grinders from 1.24 ounces to 1 ounces, again
without changing the size of the containers. McCormick did print the reduced
quantity on the containers. Watkins also alleged that McCormick kept the price
the same, though it didn’t specify wholesale or retail price.  Under 21 C.F.R. § 100.100, “A container that
does not allow the consumer to fully view its contents shall be considered to
be filled as to be misleading if it contains nonfunctional slack-fill.
Slack-fill is the difference between the actual capacity of a container and the
volume of product contained therein.” 
McCormick challenged Watkins’ Article III standing. In a
false advertising suit, a plaintiff can demonstrate injury by showing that “
‘some consumers who bought the defendant’s product under a mistaken belief’
fostered by the defendant ‘would have otherwise bought the plaintiff’s
product.’ ” The court here quoted Judge Bazelon’s statement that “all claims of
competitive injury are to some extent speculative, since they are predicated on
the independent decisions of third parties; i.e., customers. However, … it is
the stuff of the most elementary economic texts that if two firms are offering
a similar product for different prices, the firm offering the lower price will
draw away customers from its competitor.” Given the purpose of the Lanham Act
to protect producers against unfair competition, the court adopted the Ninth
Circuit rule that “[a] plaintiff who can’t produce lost sales data may …
establish an injury by creating a chain of inferences showing how defendant’s
false advertising could harm plaintiff’s business.”  That’s what happened here.  Watkins alleged that consumers bought
containers that looked like they delivered more bang for the buck and wouldn’t
have done so if they’d known the truth; that was an adequate allegation of
injury fairly traceable to McCormick’s conduct.
Statutory standing: Lexmark
allowed Watkins standing. Lexmark
noted that “potential difficulty in ascertaining and apportioning damages is
not … an independent basis for denying standing where it is adequately
alleged that a defendant’s conduct has proximately injured an interest of the
plaintiff’s that the statute protects.”  Sales diversion from a direct competitor was a
“paradigmatic” direct injury for Lanham Act purposes.
On the merits, Watkins also stated a claim.  McCormick argued that slack-fill packaging wasn’t
“commercial advertising or promotion.”  “McCormick’s
insistence that the size of its containers does not constitute advertising or
promotion defies common sense and the law.” 
McCormick argued that the size of its containers didn’t propose a
commercial transaction.  But “advertising
includes statements about the product to be sold, not merely a proposal to
sell.” Moreover, “[t]he size of a package signals to the consumer vital
information about a product and is as influential in affecting a customer’s
choices as an explicit message on its surface.” As Watkins argued, “[t]he size
of McCormick’s containers is exactly what makes them misleading, because consumers
cannot see the amount of their contents.” (We might more properly call
McCormick’s actions communicative conduct, but that hardly helps its argument.  Compare this wrongly decided case about how color and price aren’t falsifiable claims.) 
Watkins properly alleged falsity, given federal law about
nonfunctional slack fill.  “[T]he
slack-fill regulations do not include an exception for containers which
accurately state the product amount.” The court articulated the reason for this
rule:
An accurate statement of weight
does not necessarily correct a consumer’s misimpression of product quantity
based on the size of a container, because consumers are accustomed to seeing
how much space a product occupies but may not know how that relates to its
weight. Moreover, as plaintiff has alleged, the history and iconic,
recognizable size of the McCormick containers creates a misleading impression.
McCormick argued that Watkins needed to plead “facts showing
that identifiable consumers were actually confused.”  But Watkins could rely on the allegations in
the parallel consumer class actions against McCormick, and anyway, the
regulations consider nonfunctional slack fill to be deceptive as a matter of
law, “ so there is nothing implausible about allegations of actual, widespread
deception among McCormick’s customers.”

State law claims under various deceptive trade practices
laws also survived.

from Blogger http://ift.tt/2ebf276

Posted in Uncategorized | Tagged | 1 Comment