asterisk alone makes front of package claims ambiguous

Posted on March 17, 2025 by rtushnet

Wong v. Iovate Health Sciences U.S.A. Inc., 2025 WL 821451, No.
2:24-cv-00901-DAD-CKD

(E.D. Cal. Mar. 14, 2025)

Is an asterisk on the front of a package a
get-out-of-jail-free card for false advertising? If the disclosure doesn’t
flatly contradict the claim, at least, maybe it is. (I would think that
evidence of what reasonable consumers thought they might learn from the
asterisk is quite relevant for that—if they didn’t realize they needed to
consult the qualification, then they could still be deceived—but that’s not
what this court holds, even though there are allegations that other marketplace
participants advertise differently and less deceptively.)

front and back panels from complaint

Wong bought “100% Mass Gainer,” a dietary supplement in the
form of a protein powder, which stated that the supplement provided 60 grams of
protein per serving. But, without adding milk, the supplement contained only 44
grams of protein per serving rather than 60 grams. The rest of the product line
also has fewer grams of protein in a serving than what is stated on the front
label of the packaging because they all require the consumer to add some
quantity of milk. “Other protein powders not produced by defendant have
packaging that prominently advertises the amount of protein contained within a
serving of the powder, but only include the protein content from the powder
itself.”

There’s a disclaimer that the protein content assumes the
addition of milk, “though those disclaimers and the associated asterisk symbols
appear in small font on the front of the packaging.” [NB: I think only the
asterisks appear on the front, according to the rest of the opinion and to the
images.] On the back, “the protein content is reduced below the advertised
amount appearing on the front of the packaging when the powders are mixed with
water instead.” Wong brought the usual
California statutory claims.

The court dismissed claims for injunctive relief, but not
equitable relief under the FAL and UCL. The court accepted the idea that the
pleading standard for seeking equitable relief is “minimal.” “[I]f a plaintiff
pleads that she lacks an adequate legal remedy, Sonner will rarely (if
ever) require more this early in the case.” Wong alleged that equitable relief
is more “prompt and certain and in other ways efficient” than an award of
damages, given that “equitable restitution can justify an award of greater
relief than damages and is governed by a different standard of proof that
allows the award of restitution even if a plaintiff cannot adduce evidence to
support an award of damages.” That was enough.

Still, a reasonable consumer would not have been deceived,
despite the large font size representation of the products’ protein content.
The asterisk itself made the protein claim “ambiguous” to a reasonable
consumer, which ambiguity could then be cleared up by reading the back label. “Even
before reading the back label, the presence of an asterisk alone puts a
consumer on notice that there are qualifications or caveats ….” This strikes me
as a license to cheat.

from Blogger http://tushnet.blogspot.com/2025/03/asterisk-alone-makes-front-of-package.html

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discovery rule applies to false “reference price” allegations at outlet stores

Posted on March 17, 2025 by rtushnet

Clark v. Eddie Bauer LLC, — F.Supp.3d —-, 2025 WL 814924,
No. 2:20-cv-01106-RAJ (W.D. Wash. Mar. 12, 2025)

A good choice for publication given that the opinion
addresses (and rejects) some arguments I haven’t seen before. Clark sued Eddie Bauer under
Oregon’s Unlawful Trade Practices Act for using purportedly false and
misleading tagged list prices, aka reference prices, on the garments sold at
Eddie Bauer’s outlet stores. A previous district court decision found the claim
time-barred, even though Eddie Bauer’s policy change of using the phrase
“comparable value” on its sales tags for garments as opposed to a reference
price based on the garment’s claimed fictitious full retail price violated the
UTPA, “as Eddie Bauer must provide the origin of any such reference price.” On
appeal, the Ninth Circuit certified a question to the Oregon Supreme Court:
whether a consumer suffers an ascertainable loss under the UTPA when the
consumer purchased a product that she would not have purchased at that price
but for a violation of the UTPA if the violation arises “from a representation
about the product’s price, comparative price, or price history, but not about
the character or quality of the product itself.” That court said yes, recognizing
Clark’s “purchase price theory,” holding that “when a person acts in response
to the deception by spending money that the person would not otherwise have
spent, the person has been injured to the extent of the purchase price as a
result of that deception.” Clark v. Eddie Bauer, LLC, 532 P.3d 880 (2023).

The Ninth Circuit subsequently accepted Clark’s standing and
ruled that she could seek injunctive relief against Eddie Bauer’s ongoing
falsely discounted prices, despite the new use of the term “comparable value.”
It also held that monetary damages for past harms was not an adequate legal
remedy for Clark’s future harm and granted Clark leave to amend her complaint
is appropriate so she can explain the circumstances associated with her
discovery of Eddie Bauer’s advertising scheme. The amended complaint described
Clark’s “unearthing of the advertising scheme in 2020 after finding the law
firm’s website describing Eddie Bauer’s unlawful practices.” (In a footnote,
the court declined Eddie Bauer’s invitation to impute counsel’s knowledge of
the scheme to Clark herself.)

The court agreed that, for purposes of a motion to dismiss,
Clark had pled that the discovery rule applied to toll her claim. Oregon’s UTPA
provides that a party must commence a lawsuit “within one year after the
discovery of the unlawful method, act, or practice.” The statute of limitations
begins to run when the plaintiff “knows or should have known of the allegedly
unlawful conduct.” And it is an objective standard: “how a reasonable person of
ordinary prudence would have acted in the same or a similar situation.”

In Oregon, a plaintiff must have had sufficient knowledge to
“excite attention and put a party upon his guard or call for an inquiry
notice.” In addition, “it must also appear that a reasonably diligent inquiry
would disclose the fraud.” “Application of the discovery rule presents a
factual question for determination by a jury unless the only conclusion that a
jury could reach is that the plaintiff knew or should have known the critical
facts at a specified time and did not file suit within the requisite time
thereafter.”

Eddie Bauer argued that Clark knew or should have known of
her case well over one year before she sued in July 2020 because “her
experience using the products that she bought … provided enough information
for her to conclude before July 2019 that she had been misled as to the value
of the items she purchased.” They also posit that when she bought the items,
she knew the reference prices, and she “apparently used the products
sufficiently to gauge their quality and value.”

The court found this to be nonsense: As Clark argued, “[t]he
only way for a person to know that Eddie Bauer’s advertised discounts were
false is for the person to know Eddie Bauer’s true historical selling prices
for the products he or she purchased.” “The Court struggles to find a
correlation between a consumer wearing an item of clothing and the same
consumer somehow knowing the item’s regular selling price or worth merely
because she wears it.” It is not the case that, “when a reasonable consumer
wears an item, she learns facts that trigger suspicion of a discrepancy between
a garment’s ticketed price and its regular selling price.”

Nor did it appear from the face of the complaint that Clark
had a duty to conduct an investigation. She had no obligation to uncover a
pricing scheme “by talking to her fellow consumers, to whom she has no
relation.” Nor did the court accept that she could simply have asked Eddie
Bauer for price information:

First, Plaintiff had no idea Eddie
Bauer was engaging in an unfair trade practice at the time. Second, there is no
evidence to show that its employees would know or have access to this
information. These two considerations also do not factor in the employee’s
state of mind, as an employee might be suspicious of such questions and feel
obligated to protect her employer.

A person sometimes cannot discover a false advertising
scheme “because, by design, its very nature is hidden and impossible for an
ordinary consumer to discover.”

What about the argument that “Comparable Value” in an outlet
context isn’t deceptive? It was plausibly reasonable for consumers to interpret
that to mean “Eddie Bauer’s price for the identical item.” “Under Oregon’s
UTPA, Eddie Bauer has an obligation to provide the origin of a reference price.
It has not done so.”

As for standing to seek injunctive relief, the Ninth Circuit
explained that Clark “will be harmed if, in the future, she is left to guess as
to whether Eddie Bauer is providing a legitimate sale or not, and whether
products are actually worth the amount that Eddie Bauer is representing.”

from Blogger http://tushnet.blogspot.com/2025/03/discovery-rule-applies-to-false.html

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false claims of buying and “rebranding” a festival lead to disclosure/correction remedies

Posted on March 14, 2025 by rtushnet

Nantucket Wine & Food Festival, LLC v. Gordon Companies,
Inc., — F.Supp.3d —-, No. 24-11640-LTS, 2024 WL 5442374 (D. Mass. Dec. 12,
2024)

Wild facts here.

Plaintiff NWF runs an annual, multi-day event on Nantucket
called the Nantucket Wine & Food Festival “The Festival has been held
annually—with the exception of a hiatus during the COVID-19 pandemic—since its
founding as the Nantucket Wine Festival in 1997.” Recently, it’s been held over
the course of five days encompassing the weekend in May between Mother’s Day
and Memorial Day. NWF solicits “Luminaries”—experts and high-level presenters—and
“Invitees”—other exhibitors, wineries, distributors, importers, and sponsors.
The remaining attendees are “Guests,” who either purchase tickets to the
various events or are invited by, for example, a sponsor. NWF works on the
Festival year-round, with ticket sales typically commencing in November. Nancy
Bean, with a partner, owns the rights to the Festival and is one of two
permanent staffers; she’s the majority owner.

David Gordon is the president and chief executive officer of
the Gordon Companies, a regional liquor-and-wine retail-and-distribution
business based in Waltham, Massachusetts. He approached Bean about potentially
investing in NWF in 2021. Discussions continued over two years, and Gordon
provided logistical, financial, and other assistance to Bean. “Principally,
Gordon furnished Bean with an attorney, defendant Todd Goldberg, who had
previously done work for the Gordon Companies, to help Bean buy out her
original partner,” a transaction completed in 2022, though a small percentage is
still owned by a third party. The Gordon Companies also extended to NWF a loan
of approximately $55,000, and Gordon gained access to financial and other
sensitive information relating to NWF.

NWF and the White Elephant resort agreed that White Elephant
would be the exclusive “Host Hotel” of the 2024 Festival, reserving to NWF the
exclusive rights to its name and logo. But, as the 2024 Festival approached,
Bean broke off negotiations for a Gordon Companies investment in NWF. Gordon
and Bean executed a release agreeing that NWF’s $55,000 debt to the Gordon
Companies would be paid off via sponsorship rights at the 2024 Festival. The Festival
occurred as planned, and Bean posted on NWF’s website a save-the-date for the
2025 Festival, marking the same weekend, May 14 to May 18, 2025, as well as a
similar Instagram post.

Then, mid-June, 2024, the Gordon Companies issued statements
announcing the Gordon Companies’ plans for the 2025 Nantucket Food and Wine
Experience. An email announcement sent to “a cultivated list of industry
professionals, including wine vendors, chefs and restaurant owners” stated, in
relevant part: “The Gordon Companies is thrilled to announce that we have
partnered with White Elephant Resorts to present the newly branded Nantucket
Food And Wine Experience. Under new guidance, this rebranded event will take
place on Nantucket from Wednesday, May 14th through Sunday, May 18, 2025. This
extraordinary celebration will offer a revitalized experience featuring the
world’s top vineyards, distilleries, and culinary minds.”

Another email went to the Gordon Companies’ customer list:
“The Gordon Companies Purchases Nantucket Food and Wine Experience.” It read in
relevant part: “The Gordon Companies have partnered with the iconic White
Elephant Resorts to present the newly branded Nantucket Food And Wine
Experience. Under this new partnership, one of the nation’s longest-running
food and wine events will take place on Nantucket from Wednesday, May 14th
through Sunday, May 18, 2025.”

The Gordon Companies also sent a press release to at least
fifteen media outlets, including the Boston Globe, Boston Common Magazine, Wine
Spectator, and Forbes: “The Gordon Companies Partner with The White Elephant to
Present a Newly Branded Nantucket Food & Wine Experience.” A subhead read:
“One of the nation’s longest running food and wine events returns to Nantucket
on May 14–18, 2025.” Relevant bits included:

The Gordon Companies … and White
Elephant Resorts are thrilled to announce their partnership for a newly branded
Nantucket Food & Wine Experience in 2025…. David Gordon, CEO of The
Gordon Companies, notes, “We are excited to introduce the newly rebranded
Nantucket Food & Wine Experience to the loyal guests who have enjoyed this
celebratory time on the island for many years.” … Khaled Hashem, President of
White Elephant Resorts, adds, “We are honored that our harborside hotel will
continue to serve as the official host for this dynamic partnership with The
Gordon Companies. We look forward to carrying on the tradition of providing
food and wine excellence for locals and visitors alike on beautiful Nantucket.”

A similar press release went to industry media outlets such
as BevNet/Nosh, Wine Industry Advisor, Kane’s Beverage News Daily, Beverage
Dynamics, and Wine Business: “Prominent New England Wine and Spirits Retailer
Purchases Nantucket Food & Wine Experience.” Its subhead was: “Gordon’s
Fine Wine Acquires Ownership Stake in One of the Nation’s Longest-Running Food
and Wine Events.” In relevant part, it said:

The Gordon Companies … have
acquired the ownership rights to the Nantucket Food & Wine Experience
(previously known as the Nantucket Wine & Food Festival), one of the
longest running food and wine events in the U.S. The rebranded event … will
take place on the island from Wednesday, May 14 through Sunday, May 18, 2025 ….
“This longstanding event is an important part of Nantucket’s rich history, not
to mention a significant annual driver of tourism and local pride,” says David
Gordon, CEO of The Gordon Companies. “We’re excited to introduce the newly
rebranded Nantucket Food & Wine Experience, and we’re especially honored to
be one of the only fine wine and spirits retailers in the country to own and
present a festival of this size and prominence.”

Both Gordon and White Elephant had issues with Bean—the former
believing that Bean would never bring him on as a co-owner as he’d hoped, the
latter because of Bean’s “organization and planning and time management.” Thus,
they’d planned a new event for a couple of months, including
nantucketfoodandwine.com. The person who sold them that domain name offered
Gordon a list of domains including the word “festival” or “fest,” but Gordon
replied, “[w]e need to use experience not festival (for now).”

After the four statements went out, Gordon quickly realized
that there was a bit of a problem, and emailed “[t]he subject of our email that
went out said Purchases Nantucket Food and Wine, if we can I’d like to stick
with ‘The Gordon Companies Partner with The White Elephant to Present a Newly
Branded Nantucket Food & Wine Experience.” Meanwhile, Bean’s contemporaneous
reaction was: “I am inundated with texts and calls—everyone thinks I sold NWF
to him for $$$$$$$.” NWF also received “frantic inquiries from Boston Common
Magazine regarding the sale and their astonishment of it given they had just
been with us on-site and were in the midst of writing all of our post-festival
acclaims and reviews and pieces.”

The next day, the Gordon Companies sent out a clarification
to its industry email (“Gordons has not purchased any festival. We have
partnered with the White Elephant in a multiyear deal to produce a new event.
In no way are we affiliated with any other event or festival on Nantucket.
Sorry for any confusion this may have caused.”) and contacted industry
publications to remove from the Industry Release the statement that the
Experience had been “previously known as the Nantucket Wine & Food
Festival.” But they didn’t send out corrective emails to the other recipients
of the statements. Even after Gordon’s instruction not to use the word “purchase,”
he responded to “[c]ongratulations to your purchase of the Nantucket Food and
Wine Festival” without a correction.

Amy Baxter, Licensing Administrator at the Nantucket Police
Department, met with Gordon and subsequently emailed a third party about “a
change in ownership and management of the Wine Fest.” She then emailed Gordon:
“[j]ust to confirm I should not be expecting Nancy to come at us to try and
secure that weekend since you have a contract with White Elephant correct? I
know that to be the case and I will be general in my answer but just
reconfirming.” She then told a reporter from a local newspaper, “I do not
anticipate competing festivals.”

Three days after the initial announcement, and two days
after first contact from NWF’s lawyer, the Gordon Companies sent a correction
to its customer list: “Gordon’s has not purchased, acquired, or rebranded the
previously existing Nantucket Food & Wine Festival which has been operated
by a still operating entity which is not affiliated with The Gordon Companies
in any way. The Nantucket Food and Wine Experience is also not affiliated with
the Nantucket Food & Wine Festival.” The Gordon parties succeeded in
getting several industry publications to remove the parenthetical stating that
the Experience was “previously known as the Nantucket Wine & Food Festival,”
but didn’t send corrections to the general media release.

“In response to questions from several chefs regarding
whether a sale had happened, Bean emailed all chefs who had participated in the
2024 Festival clarifying the situation and asking for their support.” She also
contacted sommeliers, wine importers, and other constituents. The Boston Globe,
the Newport Buzz, and the Nantucket Current all ran articles about the Festival
and the Experience with quotes by Bean. Nonetheless, Bean testified, “many
people remain under the impression that I either tried to sell the genuine
festival or will sell the genuine festival” because they “find it hard to
believe someone would lie so blatantly about purchasing a company unless there
had been some agreement that I reneged or that belatedly fell apart.”

The Nantucket Select Board received applications from both
sides for events during the same time and announced that tickets for these
events should not be sold until the applications had been evaluated; the
applications were pending as of the court’s decision.

Right before the PI hearing, plaintiffs dismissed White
Elephant from the case, and White Elephant agreed that it wouldn’t host an
event with the Gordon parties on the relevant weekend for the next two years. The
Gordon Parties represented that they were in the process of withdrawing the
permit applications they had filed to the Nantucket Select Board. So the Experience
wasn’t going to happen in 2025, at least not on Nantucket. Thus, plaintiffs
narrowed their request for preliminary relief, but still wanted defendants to be
enjoined from disparagement and to be required to make corrective disclosures
including a statement that their earlier statements were “false.” They also
wanted prominent links on defendants’ websites to NWF’s own site. The court
granted the corrective disclosure and website remedies, but not a general
prohibition against disparagement.

The court relied on Massachusetts General Laws Chapter 93A and
did not analyze the claims as Lanham Act false advertising. Chapter 93A grants
a private right of action to any business harmed by another business’s “unfair
methods of competition and unfair or deceptive acts or practices in the conduct
of any trade or commerce.”

The court found that defendants’ statements constituted
commercial disparagement, which requires proof that a defendant: (1) published
a false statement to a person other than the plaintiff; (2) “of and concerning”
the plaintiff’s products or services; (3) with knowledge of the statement’s
falsity or with reckless disregard of its truth or falsity; (4) where pecuniary
harm to the plaintiff’s interests was intended or foreseeable; and (5) such
publication resulted in special damages in the form of pecuniary loss.

The court found that at least three of the widely
disseminated messages were false, implying that that the Gordon Companies had
purchased and the long-running Festival and was “rebranding” it as the
Experience. (Although this probably counts as falsity by necessary implication,
relying on 93A avoids any need to nitpick about explicitly false v. implicitly
false claims under the Lanham Act, since state laws generally don’t have the
same doctrinal distinctions.) The statements were plainly of and concerning
plaintiffs, and they were made with knowledge/recklessness as to their falsity.

Harm intended or foreseeable: “Stating that a competitor no
longer operates independently could foreseeably cause that competitor to lose
business.” “[W]here a false statement has been ‘widely disseminated,’ and it
would be impossible to identify particular customers who chose not to purchase
a plaintiff’s goods or services,” a plaintiff can show special damages “by
circumstantial evidence showing that the loss [of the market] has in fact
occurred, and eliminating other causes.” That was also sufficiently shown with
evidence of confusion, including among the Nantucket town government, preventing
plaintiffs from selling tickets to the 2025 Festival starting in November, as
they normally would.

Plaintiffs also showed irreparable harm to their goodwill
and reputation. “By its very nature injury to goodwill and reputation is not
easily measured or fully compensable in damages. Accordingly, this kind of harm
is often held to be irreparable.”

The existing corrective efforts were inadequate: they “did
not admit or explain the falsity of the original statement.” Indeed, the court
found their language obfuscatory, with the potential to leave readers believing
that the NWF no longer existed: “Gordon’s has not purchased, acquired, or
rebranded the previously existing Nantucket Food & Wine Festival which has
been operated by a still operating entity which is not affiliated with The
Gordon Companies in any way.” Plus, “while the original Customer Email went out
as its own message, the corrections went out in small print above ads for the
Gordon Companies.”

Defendants argued that confusion had already dissipated due
to plaintiffs’ efforts.  “However, just
because some locals and insiders now know that the Gordon Parties did not
purchase the Festival, that does not mean that all confusion has dissipated.
Many Festival devotees may still find it difficult to trust Bean, as she has
avowed. Other, more casual participants may not be so plugged in and so may,
having seen one of the Gordon Parties’ statements, still believe the Festival
is no more.”

Still, plaintiffs couldn’t identify any actionable, false
statements made by the Gordon Parties after July 1. Thus, the court denied
their requires for an injunction against “false disparaging statements about
either of the Plaintiffs, the ownership of the Nantucket Wine & Food
Festival, or its operations.”

However, additional corrective disclosures, including prominent
placement on defendant’s nantucketfoodandwine.com website with links to
plaintiffs’ site, were justified. The disclosure is not the kind of thing you
want to have to send out:

Pursuant to an Order of the U.S.
District Court …, the Gordon Companies hereby discloses that, in June of this
year, the Gordon Companies sent out false press releases and emails stating
that Gordon Companies had acquired and rebranded the Nantucket Wine & Food
Festival under new management. There was never any acquisition, rebranding, or
new management of the Nantucket Wine & Food Festival. The Gordon Companies
is not planning any festival for May 2025. The long-running Nantucket Wine
& Food Festival continues to operate. As previously announced by the Nantucket
Wine & Food Festival, the annual tradition will continue May 14 – 18, 2025,
under the leadership of its longtime Executive Director Nancy Bean. For more
information, please visit https://ift.tt/DjRev2S.

Defendants had to post the disclosure in large bold font on
the home page of the website at nantucketfoodandwine.com and
foodandwinenantucket.com, with no other text or links on the page, but with the
reference to https://ift.tt/DjRev2S at the end of the disclosure
hyperlinked.

from Blogger http://tushnet.blogspot.com/2025/03/false-claims-of-buying-and-rebranding.html

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“natural” products can be produced in factories

Posted on March 13, 2025 by rtushnet

Karabas v. TC Heartland LLC, 2025 WL 777001, No. 24-CV-2722
(AMD) (VMS) (E.D.N.Y. Mar. 11, 2025)

Karabas alleged that Heartland deceptively marketed its
stevia-based sweetener as “100% Natural” when the sweetener’s two ingredients —
stevia leaf extract and erythritol — are synthetic because of the process
through which the defendant produced the ingredients, which were allegedly not
natural. The court granted the motion to dismiss.

There were no allegations that the chemicals used in
production were added to the product:

No reasonable consumer would
conclude that a product contains artificial ingredients merely because it is
produced “in industrial factories” using “synthetic processes.” Indeed, that is
the way most consumer goods are produced. “A reasonable consumer would not
think that a compound found in nature is artificial even if it is produced in a
different way than nature produces it, if the way it is produced is that it is
derived from a natural product and does not contain anything synthetic.”

Moreover, the package included a description of the process
by which the stevia was extracted — that the stevia leaves are steeped in
water, the “sweet parts of the leaf” are extracted, the extract is separated,
filtered, and purified, and the erythritol is fermented. That was sufficient to
clear up any ambiguities, given that the product was a “niche, specialty
product” whose purchasers “are undoubtedly more likely to exhibit a higher
standard of care.”

from Blogger http://tushnet.blogspot.com/2025/03/natural-products-can-be-produced-in.html

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court once again reduces false advertising statutory damages award to 10% of request on constitutional grounds

Posted on March 12, 2025 by rtushnet

Montera v. Premier Nutrition Corp., 2025 WL 751542, No.
16-cv-06980-RS (N.D. Cal. Mar. 10, 2025)

I just taught this case!—The court once
again, after remand,
reduces a statutory damages award based on NY consumer protection law from $83
million to $8.3 million on substantive due process grounds (funny how that
never works in copyright). (At least plaintiffs got their fees for the appeal.)

A jury found Premier liable to a class of New York
purchasers for deceptive advertisement of Joint Juice under GBL Sections 349
and 350, which impose statutory damages of $50 and $500, respectively, or
actual damages, whichever is greater. Wakefield v. ViSalus, Inc., 51 F.4th 1109
(9th Cir. 2022), subsequently held that statutory damages awards could be unconstutionally
excessive as a matter of substantive due process (gone for women! Here for
corporations!). The 9th Circuit told the district court to apply Wakefield
on remand.

Montera asked this time for $83,124,500, or $500 per
violation under GBL § 350, based on sales of 166,249 units of Joint Juice in
New York during the class period; the court determined instead that the award
should be reduced to $50 per unit sold—the amount available under GBL § 349
only.

Possibly a key factor here is that New York law provides
that statutory damages are not an available remedy in class actions under §§349-350,
but that rule doesn’t apply in federal court because the Supreme Court said
that the New York rule was procedural, not substantive. Actual damages for the
class—all that would be available in state court—would be $1.4 million.

Wakefield instructed courts to consider whether
“aggregation [of statutory damages] has resulted in extraordinarily large
awards wholly disproportionate to the goals of the statute” and whether the
award “greatly outmatch[es] any statutory compensation and deterrence goals.” The
case also pointed to the factors articulated in Six (6) Mexican Workers v Ariz.
Citrus Growers, 904 F.2d 1301 (9th Cir. 1990), for “further guidance” in
determining whether statutory damages are disproportionately punitive in the
aggregate: “1) the amount of award to each plaintiff, 2) the total award, 3)
the nature and persistence of the violations, 4) the extent of the defendant’s
culpability, 5) damage awards in similar cases, 6) the substantive or technical
nature of the violations, and 7) the circumstances of each case.”  The “public importance and deterrence goals” to
be considered are: “(i) the public interest; (ii) the opportunities for
committing the offense; and (iii) the need for securing uniform adherence to
the statute.” But, the court noted, “there is a dearth of appellate authority
on how to reduce aggregated statutory damages awards once a constitutional
issue is identified.”

Premier sought to get the court to reject any award of
statutory damages at all.

Wakefield began with the proposition that “[o]nly
very rarely will an aggregated statutory damages award … exceed constitutional
limitations where the per-violation amount does not.”

Although the statute’s language was clear, this was the
uncommon case where the constitution must limit damages “so severe and
oppressive’ as to no longer bear any reasonable or proportioned relationship to
the ‘offense.’ ”

Montera argued that the NY state provision that didn’t allow
statutory damages in class actions was irrelevant because it was merely
procedural and thus inapplicable in federal cases.  But the Ninth Circuit, in remanding, said that
“the relevant statutory goals for the district court to consider on remand
include the Legislature’s compensation and deterrence goals in enacting GBL §§
349 and 350—the statutes that authorized the statutory damages at issue.” “Therefore,
the New York legislature’s explicit concern about the punitive nature of
aggregated statutory damages does some work to differentiate this case” from
others. On the other hand, rejecting statutory damages entirely because of the
NY state rules would be an “end run” around the Supreme Court determination
that the rule was procedural.

So what are the relevant goals? The private right of action was
added when the legislature recognized “the limited ability of the New York
State Attorney General adequately to police false advertising and deceptive
trade practices.” The legislature authorized statutory damages to “encourage
private enforcement” and to “add a strong deterrent against deceptive business
practices,” and increased those amounts in 2007, because “[c]urrent limits
[were] too low to be effective.”

Thus, the statute’s legislative history and text indicated
that the goals were “to compensate injured consumers and deter future
wrongdoing.” The legislature also didn’t reject punitiveness, because there was
no damages range.  “Even a predominantly
punitive award is not necessarily constitutionally unsound.”

Nonetheless, “Premier persuasively argues Montera’s
requested award is disproportionate to the goals of the statute, particularly
in light of the conduct at issue. The $83 million requested by Montera is so
large as to become entirely untethered from the statutory goals.” It was far in
excess of compensation; what about deterrence and punitiveness? Premier argued
that actual damages and attorneys’ fees (nearly $7 million, plus $1 million in
costs) sufficed for deterrence.

And, on deterrence grounds, “while there are important
public interest concerns in protecting New York consumers, the opportunities
for committing this offense are not unlimited. In this matter, Premier has
ceased to sell Joint Juice.” Thus, “an $83 million award would be largely
punitive”—so punitive as to raise constitutional concerns.

In terms of the Six Mexican Workers factors, it was
hard to evaluate whether the award to each individual class member (over $1100)
was really out of bounds because there aren’t many comparable cases. Premier’s
culpability was “mixed”: it made the choice to continue marketing its product
as containing joint health benefits. “Despite the arrival of numerous studies
pointing to a lack of benefits from glucosamine and chondroitin in the dosage
at issue, Premier Nutrition continued to market its product not just to people
seeking joint health benefits, but more specifically to people seeking joint
pain and arthritis relief.” And Montera offered evidence that Premier “was
aware of the changing tide in the science yet continued its marketing.” The
violations here were “substantive, not merely technical.”

On the other hand, the harm to consumers was economic and
not physical. On the other other hand: “Class members based reasonable hopes on
Joint Juice’s promises. And while Premier may not have targeted people with
financial vulnerability, it did target people suffering from joint issues
seeking relief. Taken with Premier’s culpability, these economic and intangible
harms again lead to a mixed result on Premier’s overall reprehensibility.”

As noted above, there weren’t really comparable cases. So,
on balance, the Six Mexican Workers factors “support the conclusion
there is a due process issue with Montera’s $83 million requested award.”
(Which factors favored Premier?)

So, how to go about reducing the award? Measuring by actual
damages had no real justification:

Wakefield’s warning against
overstepping the role of the judiciary looms large at this stage. When a
legislature codifies minimum damages in statutory text, courts “are constrained
by a statute’s language and interpret statutes with awareness that [the
legislature] could have enacted limits as to damages, including in large class
action litigation, provided discretion to courts to award damages within a
given range, or limited liability in any number of ways.”

So, the court chose the clear minimum set by § 349 alone, or
$50 per violation. That “more closely hews to the compensatory, deterrence, and
punitive goals of the statutes.” It was compensatory, and enough to deter.  

 

from Blogger http://tushnet.blogspot.com/2025/03/court-once-again-reduces-false.html

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comparative advertising isn’t confusing

Posted on March 10, 2025 by rtushnet

Windmar PV Energy, Inc. v. Solar Now Puerto Rico, LLC, 2025
WL 725078, NO. 24-1570 (RAM) (D.P.R. Mar. 6, 2025)

A frivolous lawsuit against comparative advertising; the
court gets the right result at least. Windmar and Solar now compete in the Puerto
Rico market for the sale and installation of solar energy equipment. Windmar
has registrations with various elements including: the silhouette of the sun’s
corona; the words “WINDMAR” or “WINDMAR HOME”; a combination of the colors
orange, blue, black, and grey; and a stylized image of a windmill replacing the
“I” in “WINDMAR.” The typical logo shows the words “WINDMAR HOME” written in
blue and grey, with the “I” replaced by a blue windmill logo; the words are
placed under and within an orange outline of a sunburst or corona. Windmar
alleged that it was the “number one” company in the “solar energy industry in
Puerto Rico.”

Solar Now’s marketing campaign featured ads and billboards that
showed a salesman pointing to a form listing three different options for solar
companies: a colored logo of Solar Now and two greyscale logos that feature the
profile of a sun and its corona, one titled “PAQUITO SOLAR” and the other
“MOLINITO.” Windmar alleged that “MOLINITO” (which translates to “little
windmill”), when used in conjunction with the sun-related imagery, alludes to
Windmar’s logo. Solar Now’s logo is next to a “X” mark of approval while the
two greyscale logos are placed further down the form, allegedly implying that
they are inferior options to Solar Now.

billboard

social media post

This just didn’t plausibly allege likely confusion, although
the court relied way too heavily on the dissimilarity of the Windmar marks from
what Solar Now actually used, as opposed to the obvious comparative advertising
context. At least the court noted that most of the Pignons factors
favoring Windmar (similarity of goods, channels of trade, advertising, and prospective
consumers) “could be true for any two companies competing in the same market
and geographic area, and do not weigh as heavily in the Court’s analysis.” The
court declined to rely on nominative use because the First Circuit hasn’t
adopted a specific test.

Nor did Windmar successfully plead fame for dilution. Even
if the marks were famous, the comparative advertising and parody exclusions
applied. “[W]hen viewed in the light most favorable to Plaintiff, the purpose
of billboards and social media posts at issue is clear to a reasonable
consumer: humorous comparative advertising showing Solar Now should be chosen
over its (fictional or real) competitors.” Separately, the parody exclusion
also applied, because “MOLINITO” “is not a particularly flattering phrase,
mocking Plaintiff’s logo and reputation by referencing it as a tiny windmill.”
It did not plausibly serve as a source-indicator for Solar Now. “It is
abundantly clear that Plaintiff is the subject of Solar Now’s joke.”

Although the court misunderstood descriptive fair use to be
limited to personal names, that didn’t matter.

from Blogger http://tushnet.blogspot.com/2025/03/comparative-advertising-isnt-confusing.html

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“natural” claims proceed because reasonable consumers can know little about pet food

Posted on March 6, 2025 by rtushnet

Goetz v. Ainsworth Pet Nutrition, LLC, 2025 WL 692426, No. 24-CV-04799
(JPO) (S.D.N.Y. Mar. 3, 2025)

Plaintiffs alleged violations of Sections 349 and 350 of the
New York General Business Law and breach of warranty based on defendants’
allegedly false claims that their products were “natural” rather than
synthetic. The court denied a motion to dismiss.

Defendants’ products use the label “natural food” in varying
formats and sizes, alongside the phrase “with added vitamins, minerals &
taurine.” Plaintiffs identified forty-seven products so labeled yet containing
ingredients classified as synthetic by the FDA. The labels disclose “added
vitamins, minerals & taurine,” but plaintiffs alleged that “an ordinary
person would understand [this] claim to mean that the added vitamins, minerals
and/or taurine are natural as well.”

The court applied the reasonable consumer standard, noting
that determining reasonableness as a matter of law is appropriate only where a
plaintiff’s claims are “patently implausible or unrealistic.” The requirement
used by the Second Circuit that a “significant portion” of consumers be likely
to be deceived “does not impose a particularly onerous burden on Plaintiffs.”
The court quoted the Second Circuit’s 2008 affirmation that New York’s consumer
protection laws are “meant to take into account the impact of allegedly
deceptive statements on the ‘vast multitude which the statutes were enacted to
safeguard—including the ignorant, the unthinking and the credulous who, in
making purchases, do not stop to analyze but are governed by appearances and
general impressions.’ ” City of New York v. Smokes-Spirits.com, Inc., 541 F.3d
425 (2d Cir. 2008), rev’d on other grounds sub nom. Hemi Grp., LLC v. City of
New York, 559 U.S. 1 (2010) (quoting Guggenheimer v. Ginzburg, 43 N.Y.2d 268,
273 (1977). Reasonable consumers can be “less astute than average.”

“It is not unreasonable as a matter of law for a consumer to
expect that a product labeled ‘natural’ to contain only natural, and not
synthetic ingredients.” That was true even though product labels said only
“natural” and not “100%,” “solely,” “exclusively,” or “only” “natural.”

Defendants also argued that plaintiffs failed to plead that
the ingredients were actually synthetic.

But the complaint identified at least some “synthetic
ingredients,” including glycerin, xanthan gum, and menadione sodium bisulfate
complex. Although FDA definitions of “synthetic” are not binding, they were “persuasive
evidence” of what a reasonable consumer might consider to be “synthetic” as
opposed to “natural.” Cases involving ingredients with both natural and
synthetic forms were inapposite. “[A]t least some of the ingredients in
Defendants’ products are named in their synthetic forms—for example, ‘menadione
sodium bisulfate complex’ rather than the more generic ‘vitamin K.’” True, some
of the other ingredients can occur naturally, and it was not enough to allege
that “citric acid” must be synthetic simply because “[m]ore than 90 percent of
commercially produced citric acid … is manufactured through a processed
derivative of black mold.” However, given the allegations of unequivocally
synthetic ingredients, “it is not too far a leap to infer that, because
Defendants are willing to use synthetic forms of some vitamins and minerals,
they are more likely to use the synthetic forms of others, particularly in
light of widespread commercial practice.”

Nor did the many possible meanings of “natural” defeat the
claim. “[T]he mere fact that ‘the term’s use is confusing to consumers’ does
not prevent it from being used deceptively.” Also, defendants didn’t offer a
single definition of “natural” that their products did satisfy. “The one
definition they provide— ‘occurring in conformity with the ordinary course of
nature’—is at least plausibly violated by the inclusion of synthetic,
lab-created vitamin and mineral analogues.” The court commented that “it is
unclear what purpose including ‘natural’ on their packaging would serve if not
to indicate a lack of unnatural ingredients or components.”

Nor was it unreasonable for any consumer to believe that pet
food could truly be “natural,” despite defendants’ argument that packaged pet
food has to be processed. “[I]t is not clear why pet food—like some
shelf-stable human food—cannot be made without the addition of synthetic (as
opposed to naturally occurring) vitamins. It is also far from clear that the
ordinary reasonable consumer is intimately familiar with the nature of the pet
food industry and its processing norms.”

Likewise, the court rejected defendants’ argument that any
ambiguity could be cleared up by the ingredient panel. “The Court is
unpersuaded that all reasonable consumers should know what ‘menadione sodium
bisulfate complex’ (synthetic vitamin K) is, for example. This is especially
true given that the naturally occurring forms of the same vitamins and minerals
have similarly difficult-to-pronounce names, like ‘phylloquinone’ (one of two
forms of naturally occurring vitamin K).” Moreover, even if the list of
ingredients were intelligible to an ordinary shopper, “a reasonable consumer
should not be expected to consult the Nutrition Facts panel on the side of the
box to correct misleading information set forth in large bold type on the front
of the box.”

The express warranty claim also survived, for the same
reason. And the court declined to dismiss claims as to unpurchased goods, since
the products that plaintiffs did buy were sufficiently similar to those SKUs. “All
are types of wet and dry pet food that are labeled ‘natural,’ and each contains
a mix of synthetic ingredients. That is enough.” Variations in the prominence of
“natural” and its corresponding potential to mislead created fact issues for
discovery.

 

from Blogger http://tushnet.blogspot.com/2025/03/natural-claims-proceed-because.html

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job postings aren’t “commercial advertising or promotion” for hiring party’s goods/services

Posted on March 4, 2025 by rtushnet

Sun Nong Dan Foods, Inc. v. Kangnam1957, Inc., 2024 WL
5440252, No. 2:23-cv-09779-WLH-RAO (C.D. Cal. Nov. 19, 2024)

Not a surprise, but fills a gap in the caselaw: employment
ads aren’t “commercial advertising and promotion” for the business trying to
hire.

SND alleged that defendants stole SND’s recipe for its
“flagship” dish “galbi jjim” and opened a “counterfeit” restaurant offering the
same dish.

SND alleged that “two job posts and the employee training in
2019 which involves the dissemination of false statements, constitute false
commercial adverting.” A customer allegedly posted the following in a review on
Yelp: “We asked a few questions [of employees] since this a new spot, and we
learned the head Chef of [defendant] Daeho was from KTown in LA.” Daeho also
allegedly published job posts to SF Korean and go20.com:

We are looking for servers and
kitchen staff to join our upcoming Korean food restaurant opening in early
February in San Francisco’s Japantown neighborhood.

Former head chef of Sun Nong Dan in
Los Angeles is preparing to open a new restaurant in San Francisco’s Japantown.

The main menu will be tang (hot
pot), and we’ll be serving up some of the best hot pot and other dishes you’ve
never had in San Francisco, like BBQ, galbi jjim, and galbi tang.

Open 7 days a week, starting at
7am, part-time and full-time positions available.

If you’re interested in food, want
to make money, or want to learn the restaurant business, we want to hear from
you….

SF Korean was allegedly the “most well-known media platform
within the Korean community in the San Francisco Bay Area.” Allegedly, “[f]or
the Korean restaurants, recognition within the Korean Community is crucial for
success.” And the representation about having the former head chef was allegedly
false.

Instead, defendant C. Park allegedly sought employment at
SND with the intent of stealing trade secrets which he then misappropriated,
specifically recipes, such that defendants’ “galbi jjim and three side dishes
have identical or nearly identical tastes and flavors to those of Sun Nong Dan,
as noted by numerous Yelp reviewers.” Daeho allegedly “misappropriated Sun Nong
Dan’s confidential galbi preparation method, which has the benefit of the meat
easily falling off the bone.” And it allegedly misappropriated SND’s “confidential
culinary processes and business operations designed to efficiently handle a
large volume of orders for galbi jjim, including order-taking, cooking, the use
of specialized cooking equipment, and serving methods tailored for quick
handling of large-scale orders which preserving the deep flavors of galbi jjim.”

The court granted defendants’ motion to dismiss the state
and federal false advertising claims, though other claims remain.  

SND alleged that the employee training in 2019, where one
defendant allegedly instructed Daeho employees to make false statements about
Daheo Kalbijjim’s relationship with SND, constituted false commercial
advertising. But the Yelp review didn’t reflect that any employee made a false
statement as part of a “commercial advertisement about [defendant’s] own or
another’s product.” “Instead, the allegation indicates that an employee
answered a customer’s questions with an undisputed fact—that the chef had
worked in Koreatown in Los Angeles.”

As for the job postings, which can be commercial speech,
they still weren’t plausibly published with “the purpose of influencing
consumers to buy defendant’s goods or services.” It didn’t even include the
restaurant’s name. (Note that California law doesn’t have the same “commercial advertising or promotion” language–but when competitor-plaintiffs sue, courts usually interpret the relevant state false advertising laws as covering the same conduct.)

However, the complaint sufficiently alleged misappropriation
of SND’s galbi jjim recipe and cooking method. But SND’s order-taking method,
“which involves accepting pre-orders before seating customers,” was not
plausibly a trade secret. By virtue of visiting the restaurant, any patron
could see the method.

 

from Blogger http://tushnet.blogspot.com/2025/03/job-postings-arent-commercial.html

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Rogers v. Grimaldi lives on, at least for work content

Posted on February 28, 2025 by rtushnet

Of note because the lawsuit was brought at all, suggesting that trademark owners are willing to try to roll back any First Amendment protections for noncommercial speech.

Pepperdine University v. Netflix, Inc., No. 2:25-cv-01429-CV
(ADSx), 2025 WL 632983 (C.D. Cal. Feb. 26, 2025)Pepperdine sued Netflix for Lanham
Act trademark infringement, contributory infringement, dilution, false
advertising, and coordinate state claims based on Netflix’s Running Point
series, which depicts a team known as the Waves. The court denies a TRO because
Rogers is still good law, at least for things that aren’t titles.

Pepperdine’s athletic teams have been known as the “Waves”
since the University’s founding in 1937, and it has registrations for WAVES marks. 

examples from complaint

Running Point was scheduled for release yesterday. It’s
an “original comedic television series” created by Mindy Kaling and Warner
Bros. about a “very dysfunctional family” who owns and manages a “high-profile,
multi-billion-dollar basketball franchise and arguably the most famous
professional team in all of sports, the Los Angeles Waves.” Pepperdine alleged
that the fictional Los Angeles Waves team uses the word “WAVES” with a
“strikingly similar font” and similar colors. An image in the Running Point
trailer allegedly includes a framed jersey with the number “37,” similar to
that worn by Pepperdine’s mascot and denoting Pepperdine’s founding year. Pepperdine
also alleged that the story depicted in Running Point does not align with
Pepperdine’s values.

comparisons from complaint

Jack Daniels cited Mattel, Inc. v. MCA Records, Inc.,
296 F.3d 894 (2002) (Barbie Girl) and University of Ala. Bd. of Trustees v. New
Life Art, Inc., 683 F.3d 1266 (2012) (sports art), and Louis Vuitton Malletier
S. A. v. Warner Bros. Entertainment Inc., 868 F. Supp. 2d 172 (S.D.N.Y. 2012)
(use of “Louis Vuitton” to describe luggage in movie) with approval as
non-trademark uses.  

Post-Jack Daniels cases have also applied Rogers to
non-title uses. Haas Automation, Inc. v. Steiner, No. 24-CV-03682-AB-JC, 2024
WL 4440914 (C.D. Cal. Sept. 25, 2024) (use of mark on book’s front cover, back
cover, and on several pages, but mark was “not used to tell the consumer who
published the book or the source of the book”; mark told the consumer what the
book was about and who the author worked for); JTH Tax LLC d/b/a Liberty Tax v.
AMC Networks Inc., 694 F. Supp. 3d 315 (S.D.N.Y. 2023) (use of fictional tax
preparation business name in Better Call Saul).

Photos, including on back cover, from Guenther Steiner’s book 

Surviving to Drive: A Year Inside Formula 1, recounting his experiences as Team Principal of the Haas F1 Team 

This is distinct from cases like Punchbowl, which
involved use in a business name, or Mar Vista Entertainment, LLC v. THQ Nordic
AB, No. 2:23-cv-06924-MEMF (SSC), 2024 WL 3468933 (C.D. Cal. July 8, 2024) (rejecting
application of Rogers in a dispute between the owner of the rights to
the Alone in the Dark videogame franchise, and entities who released a horror
film titled Alone in the Dark).

The court found no use of “Waves” or related indicia as source
indicator. The “product” at issue was Running Point, the series, and
defendants didn’t suggest Pepperdine was the source. The title cards confirmed
that Netflix, Warner Bros., and Mindy Kaling are responsible for the series.
They didn’t use Waves in the title (sigh), and, there was an express statement
that the series is a fictional work, and “[a]ny similarity to any actual
persons … events, firms and institutions or other entities, is coincidental
and unintentional.” “Ultimately, on this record, there is no evidence that any
viewer would be misled regarding the source of the series.” (That is not a
precondition for Rogers applying, though the court treats it as such; any
such precondition makes Rogers irrelevant, at least to source
confusion.)

complaint’s social media “evidence”

The use of Waves was artistically relevant: it “was chosen
as a nod to the real-life Lakers, whose team name also alludes to a body of
water.” It also evokes the Los Angeles area and the “Southern California
‘vibe,’ associated with beaches, sun, surfing, and waves.” Nor was there any
explicit misleadingness about source. “Neither Pepperdine nor the Waves Marks
appear in the title cards for the series. There is therefore no implicit, let
alone explicit statement that misleads the consumer as to the source of the
series.”

Of note, not all is lost for Rogers for titles: Down
to Earth Organics, LLC v. Efron, No. 22-CV-06218 (NSR), 2024 WL 1376532
(S.D.N.Y. Mar. 31, 2024), applied Rogers to the use Netflix and Zac
Efron of the phrase “Down to Earth” for the documentary series entitled Down to
Earth with Zac Efron. That court found that the defendants were “undoubtedly
using ‘Down to Earth’ simply to identify the subject matter and tone of the
Series.”

from Blogger http://tushnet.blogspot.com/2025/02/rogers-v-grimaldi-lives-on-at-least-for.html

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5th Circuit discounts confusion caused by overlap in commonly used arbitrary word

Posted on February 28, 2025 by rtushnet

Rampart Resources, Inc. v. Rampart/Wurth Holding, Inc., No.
24-30111, 2025 WL 586820 (5th Cir. Feb. 24, 2025)

District court’s denial of preliminary injunction discussed
here. Rampart Resources) provides real estate and property management
services in Louisiana, Texas, Arkansas, Mississippi, Alabama, West Virginia,
and Ohio. Its services relate to right-of-way acquisition, servitudes, real
estate brokerage, permitting, and property management—across several
industries, including utilities, oil and gas, renewable energy, and public
works. It has a 2018 registration for those services for “the stylized wording
‘RAMPART RESOURCES’ to the right of a graphic image of a road going into the
horizon, with a road curving off to the right and left of the main road.” “To
be clear, Rampart Resources does not have a trademark for the word ‘Rampart’ or
‘Rampart Resources.’”

Rampart/Wurth offers commercial and residential property
management services throughout Louisiana, Texas, Mississippi, and Alabama. Its
services cover multifamily, single-family, office, retail, and receiver/keeper
properties; it uses different logos to refer to Rampart Multifamily Management
and Rampart Commercial Management.

Rampart Resources found out about Rampart/Wurth’s recent
adoption of that name change in September 2023 when a FedEx driver told its
president that “another Rampart” had just opened in Baton Rouge and that she
had confused the two businesses.

Rampart Resources received at least
seven telephone calls in September and October 2023 from individuals inquiring
about rent collection, leasing units, Section 8 housing vouchers, lease
payments, and refunding deposits. After being told they must have the wrong
number, customers responded, “this is the home office of Rampart, correct?” and
“this is the number I got for Rampart.”

On appeal, the standard was abuse of discretion. “As to each
element of the district court’s preliminary-injunction analysis … the
district court’s findings of fact are subject to a clearly-erroneous standard
of review, while conclusions of law are subject to broad review and will be
reversed if incorrect.” Here, the appeal failed on likely success on the
merits.

The district court found that the type of mark/mark
strength, similarity of products/services, and evidence of actual confusion
weighed in favor of likely confusion; similarity of marks, consumer overlap,
and degree of care of potential purchasers weighed against; and advertising
media/defendant’s intent were neutral.

Rampart Resources argued that mark strength should weigh
heavily in its favor, not just slightly as the district court held. Although
the mark was arbitrary, and although Rampart Resources had used it for 34
years, Rampart/Wurth provided evidence of widespread use of the key portion
(Rampart). This was not clear error.

Mark similarity: “It is visually apparent that all aspects
of the marks (font, color, design, etc.) are different except the use of the
singular word ‘Rampart.’ The common use of the word ‘Rampart’ does not make the
marks similar when considering ‘the total effect of designation.’”

Similarity of services: the district court found only a
minor overlap and didn’t weigh it heavily in Rampart Resources’ favor. “The
district court correctly concluded that while both parties operate broadly in
the real estate industry, there is not substantial overlap between the services
offered.”

But, when there isn’t direct competition, “the confusion at
issue is one of sponsorship, affiliation, or connection.” The critical question,
the court of appeals said, is “whether the consuming public would believe that
the natural tendency of [Rampart Resources]” would be “to expand into the
[property management industry].” “Here, the district court found that it would
be reasonable for a customer of Rampart Resources to believe it was making a
foray into property management, since they have offered property management
services in the past and represent that they are still capable of doing so.” Weighing
this factor in favor of a likelihood of confusion, but only somewhat, not
heavily, was plausible based on the record.

Advertising media: “Both parties stated that word of mouth
advertising is perhaps their strongest form of advertising…. Although both
parties represented they use face-to-face communications and website
advertising, the district court is correct that the evidence presented for this
digit is scant.” Finding the factor neutral was not an abuse of discretion.

Actual confusion: While swayed purchases are not necessary,
“more is required when the confusion did not or cannot sway purchases.”  “[N]ot all confusion counts: evidence of
actual confusion must show ‘more than a fleeting mix-up of names’; rather it
must show that ‘[t]he confusion was caused by the trademarks employed and it
swayed consumer purchases.’ ” Here, seven misdirected phone calls and the FedEx
driver’s confusion was not weighty when evaluated in light of “the high volume
of business conducted by the parties and the fact that there was no evidence
that any of Rampart Resources’ customers had erroneously contacted
Rampart/Wurth.” The court of appeals agreed.

Interestingly, the court found it “[m]ost important[]” that

there is no evidence that any of
the eight incidents of actual confusion were related to Rampart/Wurth’s logo or
conduct. None of Rampart Resources’ anecdotal evidence shows that parties were
confused by the trademarks at issue in this case. Rampart Resources does not
have a trademark on the word “Rampart.” Our court has rejected strictly
anecdotal evidence where “the proponent did not show that ‘a misleading
representation by [the defendant], as opposed to some other source, caused a
likelihood of confusion.’ ”

[This is a covert way of saying that, if the confusion was
caused by the overlap in “Rampart,” too bad for plaintiff—a purely empirical
vision of trademark would say that if the confusion was caused by the overlap,
then plaintiff’s rights would extend past its registration to other uses. But
there is never a purely empirical account of trademark, much as courts often
pretend otherwise. Also: How insulted do you think the Fifth Circuit would be to hear that this is a very European way of looking at it?]

Still, it wasn’t abuse of discretion to weigh actual
confusion slightly in the plaintiff’s favor, even though the only
evidence showed a “fleeting mix-up of names,” and not that any party was
“actual[ly] confus[ed] about the origin of the parties’ products.”

There was no clear error in weighing the factors.  The district court found that the
dissimilarity of the marks, as well as the sophistication of the clients
weighed most heavily against a finding of likelihood of confusion. Given that
each digit “may weigh differently from case to case,” that wasn’t clear error.

 

 

 

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