Rebecca Tushnet

WIPIP, UNLV: TM Protectability

Posted on January 31, 2025 by rtushnet

Jeanne Fromer (with Beebe and Stein), An Empirical Picture of
Trademark Law

We are running out of competitively effective word marks.
What about images? Word marks dominate consistently over time, but numbers have
increased in every category. Our definitions: images include image only,
text+image, and stylized word marks. Live image marks over time keeps
increasing, with a lot of text+image and a growing number of others.

Inadequacy of TM law: visual depletion and congestion;
difficulty handling visual similarity in confusion analysis; difficulty
handling visual distinctiveness in the sense of source identification.

Empirical questions: are we running out of visual marks?
What are changes over time in classes? Applicant behavior?

2003-2023: image only, 200K office actions, image+text, 500K
office actions. 79.1% of case files contain images.

Design search codes: 3 level taxonomy of 29 top level
categories such as human beings, foodstuff, supernatural and other beings, and
furniture; 157 second level categories, such as trees/bushes, cutlery, and
bells; 1400 third-level categories, such as Dutch women. Shades of “those
belonging to the Emperor.” All sorts of weird racial categories. (I wonder
if this will be purged by the new administration.) Design search codes can be
added by the PTO or suggested to be added/changed by applicants. Need to find
more about the process, which seems quite informal.

In class 25, apparel, for all 2023 live marks, only 50 of the
1400 noncolor design search code categories are not claimed (e.g., Scotch
women). Geometric figures & solids is pretty crowded, same with animals. 32
marks with images of a dove in class 25. When a word is taken, it’s taken; are
these all different doves capable of coexistence? Also, image+text with image
of dove is 74, and 16 word only marks.

Visual complexity: is number of design search codes per mark
increasing over time? Is resort to geometric marks increasing or decreasing?
Can we measure complexity with an AI model?

Likely confusion: McCarthy says there’s little in the way of
guidelines to determine degree of visual similarity that causes LOC; no point
in launching into long analysis, only thing to say is I know it when I see it;
court case agrees.

Increasing 2(d) refusals over time—but that seems possibly
to be based on text, not on the images, b/c examiners have difficulty finding
similar images based on tools they have (her hypothesis)

Distinctiveness: Abercrombie for word marks, Seabrook for
non-word marks. 2d Circuit continues to try to shove non-word marks into
Abercrombie, but most other circuits use Seabrook. Abercrombie focuses on
distinctiveness of source. Seabrook looks at distinctiveness from other
marks or ornamentation—differential distinctiveness. Suggestion: we should look
for both! Consider things that are generic/descriptive for the classes for
which they have design codes (e.g., a carpet design code for carpets).

Jake Linford: Thinks of both Abercrombie and Seabrook as
asking the same question of sending the consumer a signal of branding.

A: that may be a proxy, but they aren’t necessarily the same
thing. Flowers have nothing semantically to do with apparel, but are used in
fashion.

Deborah Gerhardt: it can do both, like red for strawberry
flavor.

A: yes, absolutely. Just reads Seabrook differently.

Felix Wu: psychology literature on images and how much
distance between images we should require—can that tell us anything?

RT: holistic v. sequential perception of images v. words.

Rachael Dixon: People do try to game the system all the time—claiming
a cannabis leaf was a maple leaf, for example. There are no design codes for
poop emojis.

Sari Mazzuco: There might be a lot of space for congestion
if there’s a lot of thin protection, like a thinly protected stylized “O.”

A: yes, that might be a difference from words, like a bunch
of text+image marks with a name + image of a rug for rugs. (I wonder if the rug
image should then be disclaimed.)

Grynberg, The Paranoid Brand in American Politics

Misinformation and trust. Can marketing tell us anything
useful? Not interested in specific sources like NYT, but in mindsets. Institutional
trust v. cynicism. Faith in liberal institutional structures with self-correction
mechanisms v. cynicism about information as power.

Marketing framework: How Brands Grow, influential book
w/contested theses—brands grow by improving their mental and physical
availability—does the brand come to mind when purchase is possible?
Distinctivess in their model matters more than differentiation. True
differentiation is hard absent IP which can create faux differentiation;
consumers don’t care nearly as much about brands as marketers do. Thus
distinctive brand assets, like brand names, logos, jingles etc. around which
memory structures may form, are more important than actual product features. Important:
category entry points—moment that product category is relevant, opportunity for
brand to come to mind—marketer can target these entry points. E.g., people
might eat candy when taking a break from work. Kit Kat marketing is built
around “take a break.”

Any worthwhile application to information problems? Ideas as
brands: “Government can’t do anything right.” What views are mentally available
if there’s a line at the DMV?

Branding trust v. cynicism: “trust the science” v. “do your
own research”

If differentiation isn’t so important: Both can fill the need
of explaining the moment, framing read of a news source, providing a course of
action, entertaining, etc. We “shop” from both mindsets. Institutions often act
in a non-trustworthy way, meaning the paranoid view is sometimes correct.

Structural advantages for cynical brand: building reach is
cheap: flooding the zone with shit; ease of tailoring to audience, emotion/outrage;
ease of tailoring to whatever is happening; institutional supports. Decline of
reported journalism and expense of real journalism. Suitability for short,
high-volume consumption like social networks. Decline of gatekeepers.

What can the trust brand do? Targeting entertainment, education/civics,
smoothing contacts with government like pre-filling tax forms as an
anti-disinformation measure; understanding the need for volume/reach. Problem:
Nuance complicates mental availability.

Does this perspective yield anything that is interesting or
distinct from what’s in the ether?

Branding and the anti-democratic moment? Democratic systems
are open to multiple sources of information and strong self-correction
mechanisms. Populist view is that everything is about power. Closed systems are
dictatorial. Populist branding activities are also organizing/control
activities in an attention economy.

Q: maybe trust/cynicism isn’t the right dichotomy. Positive
v. negative claims—reliability v. they’re bad is also in the marketing
literature. Where is the position of rational ignorance for a consumer? Maybe
now we start in a position of distrust and people look for reasons for trust,
which is why Trump has fewer problems than Dukakis.

Dickson, X Doesn’t Mark the Spot: When Name Changes Fail

89% of marketing emails in July 2024 still called it
Twitter. Some of the most visited English language news sites in the world
still use Twitter in their reporting. Other rejected name changes: The Willis
Tower is still the Sears Tower; the Mario Cuomo Bridge is still the Tappan Zee;
the Ronald Reagan National Airport is still National. Stadium name change
rejections are also common. People are still mad about Macy’s buying Marshall
Field’s and changing the name to Macy’s in 2006—protests continued to 2012 and
beyond.

Why do companies change names? (1) bankruptcy/going out of
business; (2) mark super racist; (3) merged/bought out; (4) poisoned/killed
people; (5) terrorist group is using name of our company like mobile payment system
ISIS.

Why resist? Neuroscience: stickiness, anchoring bias;
nostalgia; local pride, fears of encroaching outside forces; sense of
community; disapproval of person or entity related to name change.

Could companies actually retain rights to marks they haven’t
been using in years based on consumers’ continuing use of these names? Public
use doctrine for nicknames like Coke might help them, as in Coca-Cola v. Koke,
even though Coca-Cola discouraged used of the name at the time due to cocaine connotations.
Bud for Budweiser, VW Beetle got rights in Bug. Yankees got to stop “Baseball’s
Evil Empire.” Even public use of VDS to refer to VCDS.

Can the public use doctrine overcome abandonment? Even when
companies have actively discouraged use?

Many companies that have rebranded have managed to keep
their registrations alive for years after abandonment with really sketchy/bad
specimens: Twitter’s renewed in 2024; Washington football team renewed its old
name with a specimen article about its past use. Marshall Field’s renewed with a
picture of a sign on a building that didn’t even match the claimed mark; so too
with National Airport.

Q: another reason/explanation: resentment of participating
in someone else’s marketing campaign—especially if the stadium name changes
every 3 years. (Also defends renewal of Washington team mark to prevent other
people selling merchandise.)

RT: This set of examples is a really good illustration of Jessica
Litman’s insight that we participated in creating value of TMs too. Indianapolis
Colts case would say that when there’s no continuity b/t old and new marks,
there’s no interest for the new owner to assert—today, I think we would
consider that also in the register of Article III standing.

Linford: thinks that courts would find standing based on the
idea that consumers would punish the old owner b/c the connection remains.

Irene Calboli: it’s different with X because reporters say
(formerly Twitter) and that’s different from having people still carrying around
Chanel bags in Russia even though Chanel no longer sells in Russia—those are
different kinds of contexts that have to be recognized.

Q: contrast: what are the characteristics of name changes
that do stick? How long do the changes take to stick?

from Blogger http://tushnet.blogspot.com/2025/01/wipip-unlv-tm-protectability.html

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

NYC loses greenwashing case against Exxon and pals

Posted on January 23, 2025 by rtushnet

City of New York v. Exxon Mobil Corp., — N.Y.S.3d —-, 2025
WL 209843, No. 451071/2021 (N.Y.S. Ct. Jan. 14, 2025)

Probably not the last we’ll hear about this, but the court
dismissed the City’s two consumer protection claims against defendants for: (1)
misrepresenting the purported environmental benefit of their fossil fuel
products, and failing to disclose the attendant climate change risks of these
products, and (2) engaging in false and misleading greenwashing campaigns. Previously,
the courts dismissed public nuisance, private nuisance, and trespass claims as
preempted. See City of New York v. BP P.L.C. et al., 325 F. Supp. 3d 466 (S.D.
NY 2018), aff’d City of New York v. Chevron Corp., 993 F.3d 81 (2d Cir. 2021). The
court summarized its key holdings:

First, the City’s allegations that
NYC consumers are climate conscious, yet are being misled by Defendants’
failure to disclose that fossil fuels cause climate change is not sustainable
because the City propounds that the connection between fossil fuels and climate
change is publicly known information. Second, the City has not sufficiently
pled that Defendants’ alleged greenwashing campaigns, involving statements
about clean energy and alternative energy sources, are “made in connection with
the sale” of a consumer good (i.e., fossil fuel products) in NYC, as required
under the CPL. The Court further determines that claims for statements that
predate April 22, 2018 are time-barred.

The greenwashing allegations related to: (1) “product
greenwashing” statements intended to mislead consumers as to the climate
benefits of specific gasoline products without disclosing the adverse impacts
of those products on the climate, and (2) “corporate greenwashing” statements
intended to present Defendants as climate-friendly thereby inducing consumers
to purchase their fossil fuel products. As an example of product greenwashing, BP
advertises Invigorate, “an additive that BP describes on its website as better
than ‘ordinary fuels’ that have problems like ‘increased emissions’.” Shell
advertises the Shell Nitrogen Enriched Cleaning System and a line for its
premium grade of fuel called V-Power Nitro+ Premium as “produc[ing] fewer
emissions.” Exxon advertises that Synergy Diesel Efficient fuel is the “latest
breakthrough technology” that helps consumers “[r]educe emissions and burn
cleaner,” and “was created to let you drive cleaner, smarter and longer.” And lots
more. The City argued that these statements were misleading “by emphasizing the
climate-friendly benefits of the product without disclosing the material fact
that the product still causes climate change despite the claims of reduced
emissions.”

“New York courts have determined that where the plaintiff
does not plead facts that the defendant alone possessed the purported material
information, a reasonable consumer cannot have been misled.” The fossil
fuel/climate change link is public, so consumers can’t have been duped by
defendants’ failure to disclose.

Also, some of the alleged product greenwashing statements (I
didn’t list them all) were puffery or not misleading in context, referring to keeping
an engine cleaner, not the environment.

As for the corporate greenwashing statements, they weren’t
sufficiently alleged to be “made in connection with the sale … or …
offering for sale … of consumer goods or services.” The court thought that
accepting the City’s interpretation—where brand advertising that makes consumers
feel good about a seller counts—would render the “made in connection”
requirement meaningless. Thus, “statements as to investments in clean energy
resources, such as wind and solar, and alternative energy sources, such as LNG,
hydrogen fuel cells, and biofuels,” weren’t actionable.

The court thus didn’t reach defendants’ arguments that their
statements were protected by the First Amendment. It did hold that government
enforcement actions weren’t covered by the anti-SLAPP law.

from Blogger http://tushnet.blogspot.com/2025/01/nyc-loses-greenwashing-case-against.html

Posted in Uncategorized | Tagged consumer protection, false advertising | Leave a comment

GIGO? literal falsity and a remedy mismatch

Posted on January 22, 2025 by rtushnet

InSinkErator LLC v. Joneca Co., No. 8:24-cv-02600-JVS-ADS, 2025
WL 250032 (C.D. Cal. Jan. 10, 2025)

InSinkErator, allegedly the world’s largest manufacturer of
garbage disposals for home and commercial use (and to its shame, an
entity that sued a TV show for dilution for showing a garbage disposal being
used unsafely), sued its competitor Joneca for falsely advertising the
horsepower of its garbage disposals and secured a preliminary injunction.

Joneca prominently claims that its garbage disposals are
rated at 1/2, 3/4, 1, and 1 1/4 horsepower on its product packaging, as well as
its promotional materials online and in brick-and-mortar retail stores
nationwide. These garbage disposals tend to match the same horsepower
advertised by InSinkErator on its disposals, but at a cheaper price. InSinkErator’s
testing revealed results approximately 39% below the claimed 1 1/4 horsepower
disposal, and 24% below the claimed 1 horsepower disposal; none of Joneca’s
products allegedly produced the claimed horsepower.

Joneca didn’t deny the test findings, but argued that the
recognized standard for garbage disposals looks only at input horsepower and
not the output horsepower measured by InSinkErator. Thus, it argued that there
was no falsity, because all of the tested samples met or exceeded the
input-based horsepower rating.

The key question, then, was whether “horsepower” was unambiguous.
If the court construed the question to be “what do consumers think ‘horsepower’
means?” maybe it would have required a consumer survey. But the court didn’t;
it accepted testimony about industry standards, and thus finds literal falsity.
Joneca’s expert relied on the Underwriter Laboratories compliance standard UL
430 Waste Disposers, which establishes a method for rating horsepower of
garbage disposals on an input basis. But that was a safety standard, not meant
to be used to measure horsepower, as confirmed by engineers at UL. The court
was more persuaded by InSinkErator’s expert and sources such as the National
Electrical Manufacturers Association (and others), which requires claims of
horsepower on motors to be derived from the torque output by the motor. Ultimately,
a court may determine literal falsity “based on its own common sense and logic
interpreting the message.” See Edminston v. Jordan, 98 Civ. 3298 (DLC), 1999 WL
1072492, at *9 (S.D.N.Y. Nov. 24, 1999). “The general consensus among
engineers, even if not specific to the garbage disposal industry, appears to be
that horsepower is determined by mechanical output.”

InSinkErator also provided market research to show that
consumers ranked horsepower as one of the top purchasing considerations for
garbage disposals, as well as “retailer perspective” indicating that horsepower
was “a key differentiating factor”—Lowe’s and Home Depot organize and advertise
them by horsepower. “This signals that horsepower is an important—if not
primary—distinction used by retailers to market to consumers.” That bolstered “the
common sense impression that more horsepower means more efficiency.” Home Depot
characterized higher horsepower disposals as “Heavy Duty,” and lower as “Light
Duty” and said that “[t]he higher the HP, the better the disposal will run.
Food waste will be ground into finer particles and you’ll have fewer jams,” while
Lowe’s said that “models with higher HP motors have better sound insulation and
run more quietly than basic models.”

And then, in the remedy, the court imposes only a disclaimer
remedy that seems quite unlikely to work, and won’t actually correct for the
misimpressions given how—as it has already explained—garbage disposals are
marketed.

In setting out the injunction, the court states that “Joneca
would be free to explain during retailer bids and sales presentations that its
products have a certain horsepower input, or alternatively, to explain that
InSinkErator’s AC induction motor design requires more output horsepower to
provide the same level of performance as Joneca’s PMDC motor. Such is not a
hardship, but rather the truth, as Joneca has described it.” But will it need
to do so given the actual injunction?

The injunction bars “false and deceptive horsepower claims,”
then says that “Any horsepower-related communications to retailers,
wholesalers, or other third parties for the purposes of obtaining contracts for
the sale of Joneca-made garbage disposal products will include a clear and
conspicuous disclaimer stating: ‘Horsepower claimed on package does not
indicate motor output or motor power applied for processing.’” But they’ll
still be shelved in stores as 1 HP motors next to InSinkErator’s 1 HP motors,
if I understand this correctly. (The order says Joneca can’t assist, etc. the
continued display of false and deceptive claims in stores—are the general statements
about HP on Lowe’s and Home Depot’s sites, or the stocking of the parties’
products side by side, encompassed in that?) Even if the sticker is conspicuous, it seems at
best contradictory with the store placement; will consumers then think that’s
also true of InSinkErators? Making matters worse, if the motors on the parties’
products work differently, then they aren’t actually fully comparable just on
horsepower, are they? What exactly is a consumer supposed to make of all this?

I’m left wondering: why not at least explain why the court didn’t
require Joneca to label its product with what the court had just held was the
only truthful measure of HP with respect to motors in this context—output?

from Blogger http://tushnet.blogspot.com/2025/01/gigo-literal-falsity-and-remedy-mismatch.html

Posted in Uncategorized | Tagged disclosures, false advertising, remedies | Leave a comment

annoyingly redacted opinion finds Block falsely advertised versus TurboTax

Posted on January 20, 2025 by rtushnet

Intuit Inc. v. HRB Tax Gp., Inc., 2024 WL 5320392, No.
5:24-cv-00253-BLF (N.D. Cal. Dec. 3, 2024)

Intuit, which makes TurboTax and
has had some advertising
troubles of its own (hey, check out the IRS Free
File program, for taxpayers with AGI of $84,000 or less and with many fillable
forms for those with more), sued HRB (Block) for its advertising of a competing
tax product, and succeeded in part.

TurboTax has three tiers: TT Do-it-yourself (DIY), Live
Assisted, and Live Full Service. Live Assisted, the focus of this case, allows
customers to prepare their tax returns largely independently, but it also
provides “unlimited access to tax experts to help them with any questions that
they may have,” among other features. (Live Full Service, by contrast, involves
actually turning over all the taxpayer’s documents to a tax professional to
prepare the return.)

Within TT Live Assisted, there are multiple individual
products that a customer may select based “upon the level of tax complexity” of
their situation. TT Live Assisted Basic might apply to a consumer with just a
W-2 and no additional schedules. TT Live Assisted Deluxe is for a “slightly
more complex” tax situation, e.g. “additional deductions and credits” or
“mortgage interest.” Live Assisted Premium, “essentially includes all tax forms
[and] schedules.” But all have tax expert assistance including “expert final
review,” following a prompt asking whether the consumer wants to connect with
an expert about their tax return.

Block has two tiers: Do-It-Yourself (DIY) and “File with a
Tax Pro.” Within DIY, there are a further four tiers, including Free Online,
Deluxe, Premium, and Self-Employed. DIY Free Online is geared toward simple tax
returns and is free. DIY Deluxe is for consumers with more complex tax
situations, such as those seeking to “maximiz[e] deduction and credits,” so it
includes more tax forms. DIY Premium allows reporting of investment or rental
income. DIY Self-Employed is for self-employed taxpayers who need to file a
Schedule C.

DIY Deluxe had live expert help, artificial intelligence
assistance, an automated accuracy review or error check, year-round support,
and various guarantees, among other features. Separately, Block offers “Tax Pro
Review” as an add-on, which allows “a DIY consumer, after they have filled out
their taxes, the ability to send their tax return to a tax expert” along with
their source documents, so that the tax expert can review, sign, and file the
return.

Intuit challenged five of Block’s ad claims: (1) claims that
Block’s products with expert and AI assistance features start at a lower price
than Intuit’s products with similar features; (2) claims that Block’s paid DIY
products are comparable to TurboTax Live Assisted; (3) claims that Block’s products
with AI and expert assistance cost “[a]t least $54 less than TurboTax Live”; (4)
claims that Intuit’s Live Full Service product “starts at” $169; and (5) claims
suggesting that “5 million ‘TurboTired’ TurboTax consumers ‘switched’ to Block
in 2023.”

For example, Block advertised: “Fed up with hidden fees?
Make the switch to H&R Block with upfront transparent pricing.” TT
challenged the middle tile’s claim that Block offered “expert help” “[s]tarting
at $35” when Intuit’s “starting at” price for the same “expert help” was $0.

comparative ad

Also, relevant to claim (2), the ad compared a TurboTax Live
Assisted product—Live Assisted Deluxe—with Block’s paid DIY products that don’t
include a final expert review, which Intuit alleged was a material difference. TT
Live and Live Assisted included guarantees that Block didn’t for its paid DIY
products. Finally, Intuit, argued that Block’s products used chatbots to make
it “incredibly difficult, if not impossible, to actually engage with an
expert,” whereas TT didn’t.

For claim (4), Intuit dropped the price of Live Full Service
to many customers at a starting price of $89, although in prior years the
starting price had been $169; until it was contacted by Intuit regarding the
inaccuracy, Block ran ads stating that the starting price for Intuit’s Live
Full Service product was $169.

For (5), Intuit pointed to an email: “It’s Better with Block”
that also included “TurboTired? Switch and save with Block” and concluded:
“Join the 5 million+ who switched to Block last year.”

TurboTired/join the 5+million who switched ad

Intuit offered Professor Joel Steckel of the New York
University Stern School of Business as an expert who conducted several surveys.
He testified that respondents looking at Block’s home page—which displayed an
advertisement similar to the challenged ads—believed that “there were at least
as many features in the Block website and that the Block product costs less.” Based
on another study, in combination with a review of academic literature, Dr.
Steckel concluded that “Block’s conduct, which resulted in the perception of an
equal or superior product at a lower price, could cause negative feelings
regarding the pricing of TurboTax products and harm the TurboTax brand.” And a
third study looking at the TurboTired ad led him to conclude that claims that
“5 million+” people switched to using Block products “likely did influence …
consumers to switch to Block” because those consumers “would have understood
that … the 5 million-plus who switched to Block had all switched there from
TurboTax.”

Block’s own expert, Hal Poret, critiqued these surveys and
the related testimony, including use of controls.

Claims about expert/AI help: Intuit argued that Block
“falsely claim[s] that its paid DIY products offering ‘expert’ and ‘AI’
assistance ‘starting at’ $35 were cheaper than Intuit’s product with expert and
AI help.” These challenged ads were “literally false,” according to Intuit,
because TurboTax Live Assisted Basic—which is free for certain
customers—includes expert and AI assistance. Block responded that the point of
the ad was not to compare the starting price for expert/AI assistance in any
circumstance, but rather to compare Block’s DIY Deluxe product with Intuit’s
TurboTax Live Assisted Deluxe product, and that the prices listed were
literally true insofar as those were the products being compared.

The court found that Intuit’s reading of the ad was correct
and that the ad was literally false by necessary implication. Block’s own witness
testified that the bullet points listed on the relevant advertising tile
pertained to various Block products, not just Block’s DIY Deluxe product: the
tile mentions “[o]ptions for deductions, investors, and self-employed,” a
statement that alludes to Block’s DIY Premium and DIY Self-Employed products.

Thus, it wasn’t credible that the ad was supposed to compare
TurboTax Live Assisted Deluxe with Block DIY Deluxe based on “the tax
situations that th[ose] product[s] cover” and “the tax forms that are
available” in those products. The advertising tile clearly emphasized the
availability of expert assistance—other than the $35 price, the most prominent
text on the tile states “File your taxes with expert help.” And it said nothing
about the specific tax forms available through Block’s DIY Deluxe product;
instead, it alluded to multiple different Block products. “Block could easily
have emphasized certain specific tax forms if indeed that was the basis for the
price comparison, but it did not do so. Instead, it told customers about the
starting price for Block’s products that include expert help. A viewer of this
ad would readily recognize the ‘necessary implication’ that the TurboTax
product it listed as a comparison was the lowest-priced TurboTax product with
expert assistance.” The court therefore presumed actual deception as well.

The court also found likely success on materiality. (Here’s
where harm causation gets tricky—since Intuit doesn’t directly benefit from
anyone who uses the free product with expert assistance, and people who pay for
TT because they mistakenly thought they’d get to use the free product are more
accurately characterized as victims of false advertising rather than as beneficiaries,
the “value” that Intuit gets here is actually at most “brand value” rather than
the value of a truthful claim. We’re in a world where that’s enough, I guess.)

Steckel’s study of the ad at issue concluded that
“respondents thought that there were at least as many features in the Block
website and that the Block product costs less.” He also found that “price [was]
extremely important,” and he also found that approximately one-third of survey
respondents identified availability of tax expert assistance as important. He
also summarized academic literature showing that “price comparisons …
increase[ ] the purchase likelihood of the brand making the comparison and
reduce[ ] consumers’ intent to search for more information.” “In combination,
Dr. Steckel’s findings support his conclusion that claims that tax expert
assistance is available starting at a lower price through Block’s products are
likely to affect consumer purchasing decisions, since a significant number of
consumers are interested in expert assistance and a significant number of
consumers also care strongly about the price of the product they select.”

Block’s critiques were insufficient; Poret primarily
challenged the lack of a proper control group, which went primarily went to
misleadingness/deception. And even without a proper control, the court wasn’t “persuaded
that it should ignore Dr. Steckel’s finding that 25 percent of respondents who
viewed the original advertisement thought it showed that Block’s products
included comparable or more features than the comparator product.”

The court also found likely injury to Intuit, applying a
presumption of injury when there’s direct competition and a tendency to mislead,
as well as testimony of Intuit’s Director of Marketing Strategy of her
belief that the ads “absolutely were
harmful” to Intuit, in the form of both reputational harm and economic harm and
Steckel’s testimony that “Block’s conduct, which resulted in the perception of
an equal or superior product at a lower price, could cause negative feelings
regarding the pricing of TurboTax products and harm the TurboTax brand” and
conclusions from the academic literature that “price comparisons … increase[
] the purchase likelihood of the brand making the comparison and reduce[ ]
consumers’ intent to search for more information.”

To the extent Block was enjoined from claiming that expert
and AI assistance “starts at” a lower price with Block than with Intuit, Block would
likewise be barred from claiming that expert and AI assistance costs at least
$54 less with Block than with Intuit, given that Intuit provides expert and AI
assistance for free through TurboTax Live Assisted Basic, so such assistance is
actually available for less with Intuit than with Block.

What about the claims comparing Block’s paid DIY products
with TT Live Assisted? Intuit identified several putative material differences:
(1) although both companies’ products offer “as-you-go” expert assistance, only
TurboTax Live Assisted has the additional “expert final review” feature without
additional cost; (2) this also allows a free upgrade for an expert to prepare,
sign, and file the review; (3) TurboTax Live Assisted includes a guarantee that
consumers will be reimbursed for any penalties assessed due to errors made by
the tax expert who assisted the Live Assisted consumer; (4) TT’s access to live
experts is easier.

Block argued that comparing the two was not misleading and
that these putative differences were marketing gimmicks that weren’t significantly
different; the vast majority of TT Live Assisted consumers, it said, didn’t get
an expert final review, since they must take proactive steps to prompt the
review process.

Lanham Act case law accepts an apples-to-oranges theory of
falsity for comparative advertising when an ad “omits differences which would
have been material to recipients.” The court found that Intuit’s feature was
genuinely different from Block’s on expert final review, citing some redacted
evidence. Its tools “enable Intuit’s experts to proactively identify any
overarching concerns about consumers’ prepared returns.” Although both
companies’ products permit unlimited question-and-answer with live experts, at
the end of the process, an Intuit customer can request a final review in which
the expert conducting the review proactively looks for issues and uses unique
tools to help target any such issues. Block doesn’t have that “proactive”
feature for its paid DIY products.

In addition, TT Live Assisted permits a tax expert to
“complete, sign, and file” a consumer’s return on their behalf, while a Block
consumer looking for a similar sign-and-file service must “pay the add-on fee
for Tax Pro Review.” Although this free upgrade occurs in only a “tiny fraction”
of cases (again, redacted), the court found that this was also a genuine
difference. However, the argued ease of
access to expert assistance was not shown to be a genuine difference. Both
products included “as-you-go” assistance from experts that can be reached using
a “help button” from virtually any page of the tax preparation software
experience. Both had live help via web chat, phone call, or screen share. Although
Block’s web chat uses an “AI Assistant” to ask an initial set of questions
before connecting a consumer to a live expert, the court was persuaded Block’s
evidence and arguments showing that the exchange with the AI assistant was
quite brief. And although some Block experts are located in India, they receive
the same training and interact with consumers the same way regardless of their
location.

Finally, Intuit’s argument that the parties’ guarantees were
meaningfully different was mistaken.

So, were expert final review and/or free sign-and-file used
in a “tiny fraction” of cases material? The court indicated that materiality
could be assessed in two ways: whether the omitted information was “ ‘likely to
influence the purchasing decision’ of consumers,” generally demonstrated
through use of consumer surveys, or whether “the defendants misrepresented an
inherent quality or characteristic of the product.” While the “inherent
qualit[ies] or characteristic[s]” of a product may sometimes be
self-explanatory, any doubts as to what counts as “the very nature” of the
product “must be addressed by evidence of why a consumer sought out a given
product—i.e., the primary purpose(s) that drove their consumption activity.”

Expert final review was neither an “inherent quality or
characteristic” of Live Assisted nor a “key product feature” going to “the very
nature” of an online tax preparation product, unlike the way that “the amount
of beef in a burger is an inherent quality or characteristic of a burger.” Evidence
that a redacted percentage of Live Assisted consumers take advantage of the
expert final review feature didn’t help. [Hmph.] “The Court is skeptical that a
feature that must be affirmatively invoked—and if not invoked, is not
experienced by the consumer—counts as part of ‘the very nature’ of a product.”
There was no other evidence that the prospect of such review drove consumption.
Evidence that consumers who used expert final review really liked it did not
mean it was material to a purchase decision. Nor did Steckel study expert final
review specifically. “[I]t is possible that consumers do not see a difference
in value between the type of expert final review offered by Intuit and the
as-you-go expert assistance offered by a live expert through either party’s
products.” For the extraordinary remedy of a preliminary injunction, this was
insufficient.

Similar problems hampered Intuit’s showing on the materiality
of the free sign and file service, especially since Intuit doesn’t widely
advertise this service, which requires “dig[ging] deep enough” online to even
know that such an upgrade is available and “the fraction of individuals who are
upgraded in this way is vanishingly slim.”

Claims that over five million consumers switched to Block,
when only redacted [ugh!] did: Intuit argued that 5 million was the total
number of new Block customers. Block added a disclaimer to that effect on its
website after Intuit filed suit, but Intuit argued that it was insufficient.
Block also argued that it discontinued any combination of this claim with the “TurboTax
switcher” message so the claim was moot. The court disagreed, because voluntary
cessation doesn’t moot a claim unless there’s no reasonable expectation that
the wrong will be repeated. Here, Block only added a disclosure after the TRO
hearing and that was just an asterisk linked to small text at the bottom of the
page, not directly below the claim.

The court found likely success on falsity. The ad at issue
necessarily implied that over 5 million people switched from Intuit to Block. The
phrases “TurboTired? Switch and save with Block,” “Switch from TurboTax® now,”
and “Join the 5 million+ who switched to Block last year” all appeared in the
same content box within the email. Plus, even if it weren’t false by necessary implication,
Steckel’s survey showed likely deception in more than 50% of respondents; even
with the disclaimer language in the body of the email, Steckel found that 47
percent of respondents still came to the same conclusion.

Poret critiqued the survey by arguing that TurboTax and
H&R Block are the “dominant names” in the field of online tax preparation,
so people would just guess they’d switched from TT. But “Block has offered no
case law supporting Mr. Poret’s conclusion that a net deception measurement of ‘10
to 20 percent or higher’ is necessary to show ‘enough evidence that an ad is
misleading.’” Then there are redactions that make the discussion hard to
comprehend, but seem to have something to do with Block’s intent. “In other
words, Block itself has created relevant ‘noise’ that may lead respondents to
believe the ‘5 million+’ switched language refers to people switching from
TurboTax specifically, regardless of whether the specific iteration of the
advertisement the respondents review says anything about TurboTax.”

Anyway, the court found that the ad was false, without need
of a “net deception baseline (or a specific quantitative value thereof),” as
informed by the court’s own “experience and understanding of human nature.” While
the materiality burden was high, for a preliminary injunction, “Intuit has a
slightly more forgiving burden for proving actual or likely deception.” Steckel’s
testimony met this burden. “That a large portion of respondents were also
confused by Dr. Steckel’s control version of the email does not change the fact
that many viewers of Block’s advertising claim came away from it with the wrong
conclusion.” [It just means the control also was deceptive!]

Materiality/injury: Block’s own redacted internal materials
supported materiality. [What were they????] “Block clearly believes that
advertising about switching to Block has in past years successfully encouraged
consumers to make such a switch.”

Claims that TT Live Full Service started at $169: Intuit
argued that Full Service was available at $89 to a redacted [!!] percentage of
customers as “test pricing.” Block argued that its pricing team checked TT’s
website and saw the $169 price and had no reason to believe that Intuit would
change its prices in January. Block contended that it couldn’t be held liable “if
Intuit is posting two different prices online” without disclosing that prices
may differ in certain test markets.

Although false advertising is nominally strict liability,
and although the strength of this argument as a matter of consumer protection
is very hard to evaluate given the redaction (if the test pricing was available
to 2% I’d feel very differently than if it was available to 75% of customers),
the court was attracted to the mootness argument here to avoid the issue. Block’s
witness testified that a Block manager checked Intuit’s website every day to
validate the $169 comparison price. When Block was contacted by Intuit’s team
about the $89 price, Block “put a process in place to update that content and
correct the mistake on [Block’s] site,” and Block represented that it does not
plan to run ads using an inaccurate starting price for TurboTax Live Full
Service in the future. There were no circumstances “raising the specter of
gamesmanship” here; this was just a mistake that had been addressed, and the
court denied the request for an injunction as moot.

For the claims that survived the other factors, there was a
presumption of irreparable harm, which Block didn’t rebut, and “[e]vidence of
threatened loss of prospective customers or goodwill certainly supports a
finding of the possibility of irreparable harm.” Plus there was Steckel’s
testimony that “Block’s conduct, which resulted in the perception of an equal
or superior product at a lower price, could cause negative feelings regarding
the pricing of TurboTax products and harm the TurboTax brand” and could
“influence … consumers to switch to Block.” Thus, Intuit was entitled to an
injunction against Block ads (1) suggesting that the “starting” price for
expert and artificial intelligence assistance is lower with Block’s products
than with Intuit’s products, and (2) placing language about “5 million+” people
having switched to Block in proximity to language about switching from TurboTax
or other language inviting the inference that all 5 million+ people switched to
Block’s products from Intuit’s products.

from Blogger http://tushnet.blogspot.com/2025/01/annoyingly-redacted-opinion-finds-block.html

Posted in Uncategorized | Tagged false advertising, surveys | Leave a comment

materiality survey is in–even with 20 industry employees as respondents

Posted on January 17, 2025 by rtushnet

Multiple Energy Technologies, LLC v. Under Armour, INC., 2025
WL 82336, No. 2:20-CV-664-NR (W.D. Pa. Jan. 13, 2025)

MET sued Under Armour for multiple things, including false
advertising, and here MET sought to exclude the testimony of Under Armour’s
consumer survey expert Hal Poret, but the court allowed it to rebut MET’s
survey expert Thomas J. Maronick and “to design and conduct a survey to test
whether the relevant FDA claims influence consumer decisions to purchase Under
Armour’s products that contain Celliant.” Poret would testify that his “survey
utilized a classic experimental design consisting of a Test Group and a Control
Group, each consisting of 300 unique respondents.” Participants assigned to
both groups viewed three Under Armour web pages. The first two pages were
identical between the groups. On the third page, however, the test group saw
“Products powered by Celliant have been determined by the FDA to increase
localized circulation, leading to faster recovery[,]” while the control saw
“Products powered by Celliant can lead to faster recovery.”

test image: determined by the FDA to increase localized circulation, leading to faster recovery

control image: can lead to faster recovery

Respondents were then asked: “Based on the webpage you just reviewed, how likely or unlikely would you be to purchase apparel from the advertised product line?” They were offered eight options from “extremely likely” to “extremely unlikely[,]” and ending with “don’t know[,]” (order flipped for half). Then they were asked an open-ended question: “Please tell us all the reasons why you would be __________ to purchase the product we showed you?” Poret concluded that the FDA claim had no statistically significant influence on consumer purchase decisions.

The court found that the report and testimony were relevant and “fit” the case. It didn’t matter that he didn’t test for deception, since his opinion went to materiality, which was also at issue. He used Under Armour ads, changing only the allegedly false FDA claim, making it connected to the question at issue, and so his testimony would help the jury. “Any lingering issues with Mr. Poret’s survey design—like the fact that what influenced survey participants could have been a reference to ‘recovery[,]’—are not grounds for exclusion but fodder for cross-examination.” Alleged flaws in the survey design went to weight rather than admissibility.

MET argued that the control language, “Products powered by Celliant can lead to faster recovery[,]” was improper because it “removed the majority of the language contained in the FDA Claim”—including any reference to the FDA—“and substituted in a word not included in the original FDA Claim.” But it was the statement “that the FDA found the Celliant product benefitted the wearer” that was at issue here, so it wasn’t improper to remove the reference to the FDA. And the deletion of “to increase localized circulation” was defensible, as that language—stating what the FDA determined—was tied to the FDA claim in the test stimulus. Using “can lead to faster recovery” rather than “leading to faster recovery” wasn’t a material wording change; it went to weight rather than admissibility, as did Poret’s decision not to use funneling questions to confirm that participants reviewed the FDA claim language. “In fact, the open-ended question revealed that at least three respondents viewed the FDA claim and found that it impacted their likelihood of purchase.”

The court was also untroubled by his failure to exclude 20 survey respondents who were employees of companies making athletic apparel (including 5 of Under Armour), which does seem a bit dodgy, but that went only to weight. “MET and its expert can certainly explain MET’s issues with Mr. Poret’s analysis and why its survey expert’s opinion is better.”

from Blogger http://tushnet.blogspot.com/2025/01/materiality-survey-is-in-even-with-20.html

Posted in Uncategorized | Tagged false advertising, surveys | Leave a comment

statements about market conditions aren’t about “nature, characteristics, or qualities” under 43(b)

Posted on January 17, 2025 by rtushnet

Nexus Pharmaceuticals, LLC v. Long Grove Pharmaceuticals,
LLC, 2025 WL 81877, No. 24-10444-MJJ (D. Mass. Jan. 13, 2025)

Nexus sued its competitor Long Grove under the Lanham Act,
alleging that Long Grove made false statements about a shortage of fluorescein,
a drug, which allegedly diverted consumers from buying Nexus’s fluorescein
product and preventing Nexus from converting customers. In a rare
interpretation of the “nature, characteristics, or qualities” language of
§43(a)(1)(B), the court found that “market conditions” were not encompassed in
that language, and thus Nexus failed to state a claim.

The FDA sometimes exercises “regulatory flexibility and
discretion” to “help[ ] to alleviate a drug shortage and to ensure access to
treatment options for patients in critical need.” Manufacturers authorized to
sell an unapproved drug in shortage may normally continue doing so for a grace
period after the shortage ends.

Fluorescein is a drug product used as part of a diagnostic
angiography or angioscopy of the retina and iris vasculature, which enables
X-ray-like images of veins. In early 2023, due to the previous manufacturer’s
bankruptcy, the nationwide supply of fluorescein sodium injection became low.
Long Grove bought the NDA and the remaining inventory from bankruptcy. Given
the shortage, the FDA exercised its enforcement discretion to permit Long Grove
to sell the old stock, and also required Long Grove to disseminate a “Dear
Healthcare Professional” Letter, which the FDA also posted on its website, about
the situation.

Later in 2023, Nexus received FDA approval for a generic
version, and the FDA declared the shortage resolved. Nonetheless, Long Grove continued to
distribute and advertise its product with statements that a fluorescein
shortage existed, despite Nexus’s protests.

The court declined to reach Long Grove’s FDCA preemption
argument, because the challenged statement didn’t relate to either party’s
product. Nexus didn’t like Long Grove discounting the price of its old product
given its shorter expiration date, but Nexus didn’t allege that Long Grove made
a false or misleading statement about the actual age of the fluorescein drug or
the quality of the fluorescein drug itself. Statements about shortages relate to
“supply and demand phenomena,” and “market conditions surrounding fluorescein
that led FDA to exercise its enforcement discretion” rather than “any inherent
quality or characteristic of either party’s fluorescein drug product.” Indeed, “[e]ven
if Long Grove had stated … that fluorescein was ‘only available at Long Grove’ or
‘exclusively available at Long Grove,’ those more direct statements would still
be insufficient because they do not relate to the inherent quality or
characteristic of the product, as opposed to the market conditions (i.e., the
existence or non-existence) of the product.’” [I’m not sure I’d go that far!]
The court analogized to other cases holding that statements relating to a “marketing
method” are unrelated to actual qualities or characteristics of products, e.g.,
“exclusive T.V. offer” made “for the first time on T.V.,” false use of the ®
symbol, and false claims of legal entitlement to market a product.

from Blogger http://tushnet.blogspot.com/2025/01/statements-about-market-conditions.html

Posted in Uncategorized | Tagged false advertising | Leave a comment

are certificates of analysis and other technical specs commercial speech?

Posted on January 13, 2025 by rtushnet

Sweegen, Inc. v. Manus Bio Inc., No. 8:24-cv-01757-JVS-DFM, 2024
WL 5317280 (C.D. Cal. Dec. 19, 2024)

Sweegen is one of the largest suppliers of non-GMO
Rebaudioside M or “Reb M” sweetener, manufactured through bioconversion from
stevia leaves. Its competitor makes NutraSweetM Reb M. Sweegen alleged that Manus
falsely told its customers, mostly consumer packaged goods (CPG) companies,
that its NutraSweet M was made through extraction or bioconversion from stevia,
but Sweegen allegedly commissioned independent tests that show that Manus’s
sweetener is not produced by bioconversion. Although Manus argued this was a
typographical error, Manus allegedly continued to mislabel its product as
stevia leaf extract on its promotional materials and product description
statements.

Sweegen sued for violations of the Lanham Act and coordinate
state law. Reasoning, dubiously to me, that Manus wasn’t engaged in commercial
speech, the court grants the motion to dismiss.

Sweegen identified five types of documents: the Certificate
of Analysis supplied to customers; an order confirmation describing NutraSweetM
as stevia extract; Manus’s “Technical Specification”; the GRAS (Generally
Recognized as Safe) Notification submitted to the FDA; and the Confirmation of
non-GMO Ingredient Certificate; all of which stated that Manus’s NutraSweetM is
“stevia extract” or made through bioconversion.

Under Ariix, LLC v. NutriSearch Corp., 985 F.3d 1107 (9th
Cir. 2021), “commercial speech analysis is fact-driven,” and courts must “try
to give effect to a common-sense distinction between commercial speech and
other varieties of speech.”

Manus argued that these documents weren’t commercial speech because
there was no economic motivation to induce purchases through them; they were “solely
technical and procedural”—things like “a Certificate of Analysis or order
confirmations are routine documents used in the ordinary course of business,
provided after the purchase.”

Sweegen responded that these were still promotional in that they
were used to convince CPG companies to purchase Reb M, “who in turn make the
same misrepresentations to end-user consumers. The written materials are
directly used by CPG manufacturers to claim that their product is non-GMO or
made from stevia extract.” Although that would persuade me (except as to
materials submitted to the FDA), Manus persuaded the court. [Note that even
after Lexmark, Sweegen might have difficulty showing standing to sue the
CPG manufacturers who are repeating the false claims on their own ingredient
lists, even though that’s definitely advertising, given its reasoning on
causation below—so the court’s reasoning may allow false advertising
arbitrage.]

Ignoring that purchasers wouldn’t buy things that didn’t
meet their standards, the court reasoned:

Common sense suggests that
technical specifications, confirmation orders, and certificates are routine and
informational. The “primary purpose” of a Certificate of Analysis is to confirm
the contents of an order. Manus provides Technical Specifications primarily to
inform buyers of acceptable labels for NutraSweetM. … The argument that
Manus’s CPG customers use the information from Manus’s materials to promote its
Reb M as stevia extra is one step removed from finding that Manus provided the
documents with the primary purpose of reaping economic benefit.

Anyway, even if these materials were commercial speech, the
court wasn’t convinced that the purpose of the speech was to influence
consumers to buy Manus’s Reb M or that it was sufficiently disseminated to the
relevant purchasing public. Although the documents were integral to the sales,
the court reasoned that Manus’s documents were not created to influence
consumers to buy the product. And, though the facts seem to suggest a coordinated
campaign, the court didn’t think they were sufficiently disseminated if they
were only sent after purchase. (Although apparently the non-GMO certificate was
a “one-off”, as was the GRAS notification to the FDA, which I agree deserves
different treatment.) Perhaps this could be corrected by amendment: “The
required level of circulation to meet this element may vary by industry but no
additional facts are alleged to support that Manus’s materials were
sufficiently disseminated. Furthermore, the Complaint does not mention who the ‘relevant
purchasing public’ is and whether it includes the end-product users or just the
CPG companies.” Plus, I would think that the certificates etc. would be
important to potential repeat customers.

Sweegen did plead proximate causation since they compete for
the same CPG clients.

from Blogger http://tushnet.blogspot.com/2025/01/are-certificates-of-analysis-and-other.html

Posted in Uncategorized | Tagged commercial speech, false advertising | Leave a comment

Call for Papers: Harvard/Yale/Stanford Junior Faculty Forum, June 2-3, 2025

Posted on January 13, 2025 by rtushnet

Request for Submissions

Harvard/Stanford/Yale Junior Faculty Forum

June 2-3, 2025, Harvard Law School

Harvard, Stanford, and Yale Law Schools are soliciting
submissions for the 2025 Harvard/Stanford/Yale Junior Faculty Forum, to be held
at Harvard Law School on June 2-3, 2025. Twelve to twenty junior scholars (with
one to seven years in teaching) will be chosen, through a double-blind
selection process, to present their work at the Forum. A senior scholar will
comment on each paper. The audience will include the participating junior
faculty, senior faculty from the host institutions, and invited guests. The
goal of the Forum is to promote in-depth discussion about particular papers and
more general reflections on broader methodological issues, as well as to foster
a stronger sense of community among American legal scholars, particularly by
strengthening ties between new and veteran professors.

TOPICS: Each year the Forum invites submissions on selected
topics in public and private law, legal theory, and law and humanities topics,
alternating loosely between public law and humanities subjects in one year, and
private law and dispute resolution in the next. For the upcoming 2025 meeting,
the topics will cover these areas of the law:

Administrative Law

Antidiscrimination Law and Theory

Constitutional Law—theoretical foundations

Constitutional Law—historical foundations

Criminal Law

Critical Legal Studies

Environmental Law

Family Law

Jurisprudence and Philosophy

Law and Humanities

Legislation and Statutory Interpretation

Public International Law

Workplace Law and Social Welfare Policy

A jury of accomplished scholars will choose the papers to be
presented. There is no publication commitment. Harvard Law School will pay
presenters’ travel expenses, though international flights may be only partially
reimbursed.

QUALIFICATIONS: Authors who teach law in the U.S. in a
tenured or tenure-track position as of the submission deadline (February 28,
2025) and have not been teaching at either of those ranks for a total of more
than seven years are eligible to submit their work. American citizens or
permanent residents teaching abroad are also eligible provided that they have
held a faculty position or the equivalent, including positions comparable to
junior faculty positions in research institutions, for less than seven years
and that they earned their last degree after 2015. We accept jointly authored
submissions, but each of the coauthors must be individually eligible to
participate in the Forum. Papers that will be published prior to the Forum are
not eligible. There is no limit on the number of submissions by any individual
author. Faculty from Harvard, Stanford, and Yale Law Schools are not eligible.

PAPER SUBMISSION PROCEDURE: Electronic submissions should be
sent to Rebecca Tushnet at rtushnet@law.harvard.edu with the subject line
“Junior Faculty Forum.” The deadline for submissions is February 28, 2025.
Remove all references to the author(s) in the paper. Please include in the text
of the email your name, the title of your paper, your contact email and address
through June 2025, and under which topic your paper falls. Each paper may only
be considered under one topic. Any questions about the submission procedure
should be directed to Rebecca Tushnet.

FURTHER INFORMATION: Inquiries concerning the Forum should
be sent to Christine Jolls (christine.jolls@yale.edu)
or Yair Listokin (yair.listokin@yale.edu) at Yale Law School, Rebecca Tushnet
(rtushnet@law.harvard.edu) at Harvard Law School, or Norman Spaulding
(nspaulding@stanford.law.edu) at Stanford Law School.

Christine Jolls

Yair Listokin

Rebecca Tushnet

Norman Spaulding

from Blogger http://tushnet.blogspot.com/2025/01/call-for-papers-harvardyalestanford.html

Posted in Uncategorized | Tagged cfps | Leave a comment

literal falsity might not matter with sufficiently sophisticated customers

Posted on January 10, 2025 by rtushnet

G. W. Aru, LLC v. W. R. Grace & Co.-Conn., No.
JKB-22-2636, 2025 WL 45827 (D. Md. Jan. 7, 2025)

I’m skipping most of the patent parts, though they are very much
present in the case and interact with a falsity issue. The parties, GWA and
Grace, compete in the manufacture and sale of carbon monoxide (CO)-carbon
dioxide (CO2) combustion promoters, which are products used in the petroleum
refining process. GWA alleged that Grace copied GWA’s patented combustion
promoter technology and mounted a marketing campaign denigrating GWA’s products
to customers.

A combustion promoter is a small particle used in fluid
catalytic cracking (FCC), a process for refining crude oil into higher value
products such as gasoline. Combustion promoters help convert CO into CO2, which
is desirable because too much CO in an FCC unit can cause damage to FCC
equipment (“afterburn”). CO to CO2 combustion promoters consist of a porous
support particle, often made of alumina, impregnated with Group VIII noble
metals (typically platinum or palladium). The noble metals are the active component
in promoting the conversion of CO to CO2. GWA’s patent claims a combustion
promoter that requires less noble metal to achieve the same level of CO
combustion, using an “eggshell” distribution of noble metals instead of the
traditional homogenous distribution. This is allegedly beneficial because noble
metals are “very expensive,” and because it results in reduced emissions of
nitrogen oxides (NOx), heavily regulated pollutants.

The challenged claims were made in a trade magazine for the
petroleum industry; on a blog post on Grace’s website; and, sometimes with
greater elaboration, in direct outreach to certain customers. There were (1)
comparative performance claims; (2) lower NOx emissions claims; and (3) claims
about noble metal on the outer surface of the combustion promoter particles.

For the comparative performance claims, there was no genuine
dispute that the ads were literally false, and deception was presumed as a
matter of law, but there were still disputes about materiality and injury, so a
jury would have to decide liability. On the others, falsity and deception were
also in dispute.

Comparative performance claims: Grace claimed that a
customer trial showed that the usage rate for Grace’s product decreased by
62%64% compared to GWA’s (Grace told multiple customers that GWA was the
comparator). Unfortunately for Grace, this was a “tests prove” claim, and the
tests at issue undisputedly didn’t prove that. There were no data on afterburn.
(I guess I’m the sole holdout treating data as plural.) And at most, the claims
of 62/64% improvement were 52%/30%, respectively.

“Questions of who prepared the underlying data, what caused
the errors, and whether a defendant knew the statements were false at the time,
are of no moment to the question of falsity.” Grace cited Ony, Inc. v.
Cornerstone Therapeutics, Inc., 720 F.3d 490 (2d Cir. 2013), for the
proposition that “in a false advertising claim, it is relevant whether the
alleged statements are fabricated or fraudulently created,” but that was
inapposite. Ony involved “a peer-reviewed scientific journal and
concerned an area of legitimate ongoing scientific debate.” “But here, there is
no contention that the analysis of the data on which Grace relied for the
comparative performance claims is the subject of legitimate scientific debate;
on the contrary, it seems that the analysis is fairly straightforward for
someone with the relevant technical knowledge. Moreover, Grace’s analysis was
not published in a peer-reviewed scientific journal, but rather in a trade
magazine and on its own website.”

NOx claims: Grace advertised that:

The greater the percentage of
either palladium or platinum at the surface of the particle, the more
accessible the metals are to provide an effective activity response. By
incorporating a modified alumina, Grace’s optimised CO promoters (both platinum
and palladium based technologies) can provide the same CO promotion activity at
a lower metals level, with an additional benefit of lower NOx emissions. Based
on this new technology, Grace has commercialized Optimized CPP, a low-NOx CO
promoter that contains lower palladium levels while maintaining CO promotion
activity.

GWA argued that these statements were literally false
because Grace had no data supporting these claims. The court found a genuine
dispute of fact on literal falsity. There was no express reference to testing;
a reasonable jury could find that it wasn’t an establishment claim. It was not
enough for GWA to argue that the data on which Grace relied were insufficient;
anyway, there was a genuine issue of fact even on that. Grace argued that its
“Optimized CPP” product uses less palladium and that its testing showed that
decreasing the palladium level on the CPP additive resulted in lower NOx
emissions. Even if that testing was over ten years old, that could still be
supportive evidence.

Finally, the court noted that Grace did make more detailed,
“tests prove”–style claims in follow-up email communication to certain
customers. But the court wasn’t sure that such supplemental outreach
constituted “commercial advertising or promotion”; there was a factual question
on that for a jury.

Outer surface claims: Grace advertised:

The process Grace uses to
incorporate palladium and platinum onto the combustion promoter naturally leads
to a particle where the majority of the metals are located at the surface.
However, the advanced alumina used for the optimised CO promoters results in an
even higher proportion of the metals residing on the outer surface of the
particle.

The advertisement then goes on to tout the advantages of that.
In arguing literal falsity, GWA relied heavily on Grace’s statement in its
amended answer that Grace “admits that its CP® CO to CO: combustion promoter is
intended to have a uniform distribution of noble metal throughout the
promoter.” At the preliminary injunction stage, the court found that Grace’s
admission in its pleading supported a finding that the outer surface claims
were likely to be literally false. But that wasn’t binding at the summary
judgment stage:

If this case were simply a false
advertising action, then Grace’s admission would conclusively establish the
literal falsity of the “outer surface” claims. But GWA’s own claim for patent
infringement complicates the matter. To prevail on its patent infringement
claim, GWA must prove that Grace’s combustion promoter particle has a higher
concentration of noble metals in the outer region of the particle as compared
to the center. To prevail on the false advertisement claim, however, GWA must
prove something that is close to the exact opposite—that Grace’s particles do
not have a higher concentration of noble metals on the particle’s “outer
surface.” There is nothing wrong with pleading in the alternative, but the very
fact that GWA is intent on pursuing both theories suggests that summary
judgment on the question of the distribution of noble metals in Grace’s
products is premature.

To win its patent infringement claims, GWA argued that its
testing showed that there was a higher concentration of noble metals in the
“outer region” of Optimized CPP as compared to the center. But if that was true,
“then there is at least some basis for believing that there is also a higher
concentration of noble metals in the ‘outer surface’ of the particle. GWA argued
that there was a meaningful difference between “outer surface” and “outer
region,” but there was no clear explanation of “how one could distinguish the
outer surface of a microsphere from the outer region.” “[A]lthough testing by
GWA’s putative expert purports to show that there was no noble metal detected
on the outer surface of the accused product, a reasonable jury could find that
the testing is not conclusive, because the depth chosen to measure the ‘outer
surface’ was somewhat arbitrary.” Given a crucial disputed issue in the
case—whether Grace’s accused products have the kind of “eggshell” design
claimed in GWA’s patent—it would be premature to resolve the issue in the false
advertising part of the case.

What about materiality? There’s a circuit split on whether
literal falsity also carries a presumption of materiality; the Fourth Circuit
hasn’t weighed in, and the court assumed that materiality must still separately
be shown. At the preliminary injunction stage, the court found that “cost
efficiency” was likely to be material, and GWA provided testimony from industry
professionals that all three claims were material. “A reasonable jury may well
find this evidence convincing. But, Grace has produced countervailing evidence
that tends to show that the relevant customers are sophisticated industrial
firms that would likely do their own testing before implementing a new product.
In short, whether Grace’s challenged statements were likely to influence the
purchasing decision of the relevant consumers is a disputed factual question
that the Court cannot resolve now.”

Nonetheless, because literal falsity doesn’t require
evidence of deception, no further evidence that the ads deceived consumers
would be required, which strikes me as logically inconsistent with the
reasoning immediately prior; the whole literal/implicit falsity apparatus +
materiality has developed into a formalism that is probably at this point more
harmful than helpful to reaching just results.

from Blogger http://tushnet.blogspot.com/2025/01/literal-falsity-might-not-matter-with.html

Posted in Uncategorized | Tagged false advertising, patent | Leave a comment

“Target Clean” might certify specific qualities to reasonable consumers

Posted on January 2, 2025 by rtushnet

Boyd v. Target Corp., — F.Supp.3d —-, 2024 WL 4287669, No.
23-CV-02668 (KMM/DJF) (D. Minn. Sept. 25, 2024)

This interesting lawsuit relies on Target’s curatorial
reputation for the false advertising claim. Target is headquartered in
Minnesota and plaintiffs sought to represent a putative nationwide class over
certain products labeled “Target Clean.” Target allegedly represents that the
labeled products are “clean” because they are “free from ‘commonly unwanted’
chemicals or ingredients” and “ ‘formulated without ingredients [consumers] may
not want.’ ” The labeling is allegedly independent of manufacturer claims, and at
least some Target Clean products are not labeled or marked with a similar claim
or description by the manufacturer.

example of Target Clean store sign

Target allegedly uses a bright green hexagon within which is
Target’s typical “bullseye” logo and the word “clean.” Sometimes it’s on
individual shelf labels associated with particular products, and also on larger
display signs that offer a short explanation of the Target Clean program
including a brief explanation of Target’s criteria, as well as on a website. It
has identified 13 ingredients as being “banned” from Target Clean Beauty
Products. The complaint has details about the alleged harms of these
ingredients; generally, they allegedly have “known impacts on human health and
the environment.”

Target allegedly designed and describes the Target Clean
program as a shopping assistant for health-conscious consumers. A Target
merchandise executive allegedly described the program as “tak[ing] the
complications out of finding better-for-you product options,” conveying to the
consumer that Target has done that work for them. However, plaintiffs alleged
that some products do contain the banned ingredients, and that others contain
ingredients that are equally or more harmful to humans than the banned
ingredients.

Plaintiffs alleged common law breach of warranty, express
and implied; common law fraud; negligent misrepresentation; violations of the
Minnesota Consumer Fraud Act and Minnesota Uniform Deceptive Trade Practices
Act; and violations of Alabama, Arizona, California, Colorado, Florida,
Illinois, Indiana, Michigan, New Hampshire, New York, Oklahoma, and Washington
consumer fraud and protection statutes (on behalf of putative state
subclasses).

Notes of interest: Target argued that exact purchase dates, not
just year and month, were required to plead fraud with particularity; the court
disagreed:

While the Court can certainly
envision a scenario in which specific-date allegations are key to providing
notice, this is not such a case. For one, the Court is unpersuaded that
individual purchase dates are the relevant “when” in this matter, at all. Plaintiffs
do not allege discrete acts of deceit or fraud where Target’s purported
misrepresentations were unique to individual purchases on different dates.
Instead, Plaintiffs allege that Target Clean has induced sales through
misleading claims throughout the program’s entire existence. The fact that this
allegation is broad does not mean that it fails to provide notice to Target as
to “when” the fraud allegedly occurred. Moreover, as alleged in the Complaint,
the period in which Target made its misrepresentations is not particularly
long. According to the Complaint, the Target Clean program was launched in 2019
and continues to this day. This provides a “when” window of no more than four
years at the time of the filing of the Complaint.

The real issue of interest is the reasonable consumer
standard. Although the court was somewhat dubious, the early stage of the case
allowed the claim to proceed. Certainly the allegation that at least one
product literally contained an ingredient on the banned ingredients list had to
be accepted.

The court was more sympathetic to Target’s arguments that
“reasonable consumers would view Target’s posted definitions” to better inform
themselves about what the program does and does not claim and that “clean”
lacks any “accepted meaning [and] is too subjective and vague and wholly
dependent on an individual’s interpretation, and lacks an empirical benchmark
to provide any indicia of measurability to create a basis for a lawsuit …
based on reasonable consumer confusion.” But factual development was still
required. “Clean” was something of a moving target—plaintiffs alleged meanings
related to health; Target argued that Target Clean was a “proprietary” term and
therefore meaningless puffery, “embodying only its own exact terms and
conditions and communicating nothing more.”

At this stage, the court would not resolve the issue in
Target’s favor. “Target’s own case law suggests that ‘clean’ is being used in
cosmetics sales widely, and has at least some kind of consistent meaning apart
from whatever proprietary meaning Target wishes to assign to it.” Moreover, “Target’s
dependence on an idealized scenario of clear explanation and disclosure about
its own definition of Target Clean ignores Plaintiffs’ second-order assertions
about the Target Clean program—namely, that the program’s definitions about
itself are confusing and inconsistent.” Finally, “Target’s position requires
far too much assumption about what a Target Clean consumer would have
reasonably encountered or been told about this program at the time of their
purchases.”

The court noted that the last point made this case “unique” compared
to other facially similar cases:

Many of the cases cited by Target
dismissing consumer fraud actions can be fairly characterized as “product
cases,” meaning that a plaintiff has sued the manufacturer of a product for the
representations made about (and often literally on) that product. In this
relatively closed universe—featuring a directly proprietary representation
about a product, typically capable of being immediately verified or at least
scrutinized by the consumer—it makes more sense for a court to render early
legal conclusions about who the reasonable consumer is and what they have
perceived. But the situation presented in this case is much murkier because
this is not a typical products case. This is a case about a well-known national
retailer alleged to have independently curated a selection of products and then
presented those products to the consumer as being “Target Clean” through at
least several variations of representations. The central allegation presented
is that the Target Clean program itself is inherently deceptive, not merely any
one claim about any one product. In other words, by representing Target Clean
as a neutral tool to help consumers, Target is alleged to have used an
imprimatur of authority, as a retailer, to point health-conscious consumers
toward purchasing certain products.

Given this “broader Target marketing landscape,” plaintiffs
were entitled to more expansive inferences about reasonable consumers. “[W]hile
all of these positive representations about products communicate to the
consumer that someone would like to sell them something, only Target’s
representation that a product is ‘Target Clean’ suggests that Target has done
some work on their behalf”:

The independent curation also
effectively removes another key basis on which consumer deception cases are
dismissed under Rule 12: that a reasonable consumer understands the concept of
commercial puffery and knows they must verify the claims made about products.
This caveat emptor logic does not squarely apply here. It is one thing to
assume that a consumer expects a shampoo manufacturer to promote its own
products by any means necessary, and therefore require that consumer, as a
matter of law, to verify package labeling for abject dishonesty before claiming
to have been deceived. But it is another thing to assume what a consumer
reasonably expects when Target positions itself between the manufacturer’s
label and the consumer, promoting certain products on its shelves over others
as embodying certain standards. Here, the typical sales motivations are
altered, and indeed, at this stage the Court can imagine that a consumer might
reasonably assume that Target had independently made an assessment that some of
its products are cleaner than others in a way that is meaningful to its customers.
What follows from such an assumption (e.g., whether a reasonable consumer would
feel that Target had relieved them of the need to verify claims or whether the
reasonable consumer would view Target’s independent representations as being no
more trustworthy than those of the shampoo maker) remains opaque to the Court.
But assuming as true Plaintiffs’ well-pleaded allegation that Target Clean
products are not actually “cleaner” than others, that opacity forecloses a
quick dismissal on the merits of Plaintiffs’ fraud-based claims.

What about the next step in the chain of logic—that the
Target Clean program allows ingredients that are just as harmful as the “banned
ingredients”? “Plaintiffs implicitly suggest that a reasonable consumer would
understand the representation as identifying banned ingredients by kind rather
than with literal specificity.” That is, that “propylparaben is a banned
ingredient because it is a harmful endocrine disruptor, and not merely that
propylparaben is a banned ingredient.” Target argued that “the list of banned
ingredients speaks for itself and cannot impart any representation other than
its own, plain terms.” The court found this to be Target’s strongest argument,
but not on a motion to dismiss. (FWIW, I think it’s an incredibly weak argument—the
basic rules of implicature suggest that these ingredients are banned for a reason,
and the reason is that they’re bad for you; banning ingredients that are bad
for you while allowing others that are just as bad for you for the very same
reasons that the banned ones are bad for you is silly and counterintuitive.)

[T]he difference between the
representations and expectations alleged in the Complaint is not one of apples
and oranges. Furthermore, as discussed above, Target is alleged to have made
statements about the Target Clean program that arguably encourage broader expectations
than Target is willing to concede can arise out of the fine print. Indeed,
there is a fairly straight line between the alleged representation that Target
Clean products are “formulated without a group of commonly unwanted chemicals” or
“formulated without ingredients they may not want” and Plaintiffs’ assertion
that a reasonable consumer broadly expects Target Clean products to “be safe
and good for humans.”

The court also found the reasonableness of plaintiffs
position strengthened by the reference to the FTC’s Guides for the Use of
Environmental Marketing Claims (Green Guides), which state that “a truthful
claim that a product, package, or service is free of, or does not contain or
use, a substance may nevertheless be deceptive if: [ ] the product, package, or
service contains or uses substances that pose the same or similar environmental
risks as the substance that is not present.”

I won’t mention most of the other claim-specific issues, but
Target sought to strike class allegations arising under Alabama’s Deceptive
Trade Practice’s Act (ADTPA) because of a limitation written into the statute
by the Alabama legislature that purports to ban the formation of class actions:

A consumer or other person bringing
an action under this chapter may not bring an action on behalf of a class. The
limitation in this subsection is a substantive limitation and allowing a
consumer or other person to bring a class action or other representative action
for a violation of this chapter would abridge, enlarge, or modify the
substantive rights created by this chapter.

But Rule 23 governs the formation of classes in federal
litigation. Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 559
U.S. 393 (2010), as applied by the Eleventh Circuit to Alabama’s law, Lisk v.
Lumber One Wood Preserving, LLC, 792 F.3d 1331 (11th Cir. 2015), rejected the
claim that Alabama’s statutory ban on class action formation under the ADPTA
implicated any substantive right (against deceptive conduct) as a matter of
federal law. “The State of Alabama may organize consumer lawsuits in its own
courts differently, but cannot impose those preferences on the federal courts. …
[T]he nuanced analysis required under the Rules Enabling Act, as guided by Shady
Grove, does not hinge on whether a state simply says that a given law does
or does not implicate a substantive right.”]

from Blogger http://tushnet.blogspot.com/2025/01/target-clean-might-certify-specific.html

Posted in Uncategorized | Tagged class actions, consumer protection, false advertising | Leave a comment

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Rebecca Tushnet

WIPIP, UNLV: TM Protectability

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literal falsity might not matter with sufficiently sophisticated customers

“Target Clean” might certify specific qualities to reasonable consumers

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