Consumers can’t bring the claim that Pom could against Minute Maid

Posted on August 21, 2015 by rtushnet
Stansfield v. Minute Maid Co., 2015 WL 4873685, No.
4:14cv290 (N.D. Fla. Aug. 13, 2015)
 
The court kicked out consumer protection claims based on the
same falsity alleged in Pom Wonderful v.
Coca-Cola, on the ground that they were preempted by the FDCA.  Minute Maid’s “pomegranate and blueberry
flavored blend of five juices” is 99.4% apple and grape juices, 0.3%
pomegranate juice, 0.2% blueberry juice, and 0.1% raspberry juice.  Plaintiffs alleged that the principal display
panel was misleading. They alleged that they paid a price premium because they
believed the product had sufficient pomegranate and blueberry juice to provide
the associated benefits, and didn’t know it was mostly apple and grape juice.
 

The FDCA expressly preempts state laws that aren’t identical
with its requirements.  Under the FDCA, a
food is misbranded if its label does not bear “the common or usual name of the
food, if any there be,” or if information required to appear on its label “is
not prominently placed thereon with such conspicuousness (as compared with
other words, statements, designs, or devices, in the labeling) and in such terms
as to render it likely to be read and understood by the ordinary individual
under customary conditions of purchase and use.” In addition, a food is misbranded
if its labeling is “false or misleading in any particular.” If a food violates
an implementing regulation, and so is misbranded under § 343, plaintiffs may bring
a parallel claim under state law to impose an identical requirement.  But Minute Maid argued that the challenged
aspects of the label were authorized.
 
Plaintiffs’ first theory was that the label didn’t bear the
“common or usual name of the food.”  FDA
regulations require the name to “accurately identify or describe, in as simple
and direct terms as possible, the basic nature of the food or its
characterizing properties or ingredients.” Moreover, if the proportion of a
characterizing ingredient “has a material bearing on price or consumer
acceptance or when the labeling or the appearance of the food may otherwise
create an erroneous impression that such ingredient[ ] … is present in an
amount greater than is actually the case,” the regulation presumes that the
percentage of that ingredient will be declared unless a more specific rule says
otherwise.  However, there’s a more specific
regulation for multiple-juice beverages. 
“[W]here the named juice is not the predominant juice, the common or
usual name for the product shall … [i]ndicate that the named juice is present
as a flavor or flavoring.”
 

Plaintiffs didn’t argue that the product didn’t taste like
pomegranate and blueberry juice. Instead, they said that, because there is so
little pomegranate and blueberry juice in the beverage, as a causal matter the
juice was not getting a pomegranate and blueberry flavor from those juices, but
rather from “other natural flavors.” The FDA explained that it believed the use
of “flavor” would inform consumers that the juice was present “in an amount
sufficient to flavor the beverage” but wouldn’t “imply that the content of that
juice is greater than is actually the case.” Thus, under plaintiffs’
interpretation of the regulation, “if a named minority juice actually flavors
the beverage, then the label may say as much.”
 
The court disagreed: the regulation said that
non-predominant but named juices should be indicated with the words “flavor” or
“flavoring”; there was no requirement of “gustatory causation.”  On the facts alleged, the product complied with
the regulation.
 
Plaintiffs then argued that the NLEA didn’t block challenges
to the label “as a whole” or “in a respect not specifically required or
authorized by a federal preemptive regulation.” Aspects of labels that are
required or permitted by a more specific provision “by definition, are not considered
‘false or misleading’ under federal law.”  But the rest of the label must still comply
with the law and not be “false or misleading in any particular.”   In Pom
Wonderful, the government argued that “compliance with FDA’s juice-naming
regulations does make the juice’s name nonmisleading,” and that the FDA “could
not (and would not) bring an enforcement action against a manufacturer … for
naming its product ‘Raspcranberry; raspberry and cranberry flavored juice
drink,’ if raspberry and cranberry juices were present as flavors, even if the
drink was primarily white grape juice.”
 
So, to escape preemption, plaintiffs had to identify some aspect
of the label that wasn’t required or permitted by the regulations which a
reasonable jury could find made the label false or misleading.  Plaintiffs pointed to the depiction of fruit
on the label; the placement, lettering, type-size, and spacing of the juice
name; and other labeling statements.
 
As to the name, the regulations say that when a product
doesn’t have enough of an ingredient to “independently characterize” the food,
the word “flavored” has to be used in letters at least half as big as those of
the characterizing ingredient.  It was
the appropriate size here.  In addition,
the juices not named in the product’s name were appropriately represented in “BLEND
OF 5 JUICES.”
 

Fruit vignette: The use of a vignette triggers the
requirement that the characterizing flavors— blueberry and pomegranate—be
“followed by the word ‘flavored’ in letters not less than one-half the height
of the letters in the name of the characterizing flavor.” Minute Maid complied.  Plaintiffs nonetheless argued that the
vignette was misleading because “it displays oversized pomegranate and
blueberries at least as prominently as an apple and grapes, even though there
is virtually no pomegranate or blueberry juice in this product.” The FDA hasn’t
issued formal regulations about the content of fruit vignettes, though it did
discuss them in the preamble to the juice labeling regulation, which was
entitled to Skidmore deference.  The preamble stated that a vignette didn’t
need to include each juice source, as long as the written label was appropriate,
so “a vignette depicting raspberries would not necessarily be misleading if the
statement of identity were ‘raspberry juice in a blend’….”  Nor did the FDA impose a specific size
requirement because the size and shape of juice sources vary, and it didn’t determine
that there were useful ways to display quantitative relationships.  However, ultimately the vignette couldn’t
contradict the other label statements—a determination the agency said it would
make on a case by case basis.
 
Under this guidance, Minute Maid “did precisely what the FDA
said to do,” even though it could have had pomegranate and blueberry in the
vignette.  There were no other arguments
that the vignette was misleading for other reasons, such as taste or including
a juice source that wasn’t really in the product.
 
Finally, plaintiffs argued that they could challenge the
label “as a whole.”  But the regulations
required or permitted certain aspects, and the label tracked the FDA’s guidance
on misleading use.  The court wouldn’t
allow the whole to be more misleading than the sum of its parts.

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Court finds misleading omissions can deprive ISP of 230 protection

Posted on August 21, 2015 by rtushnet
General Steel Domestic Sales, LLC v. Chumley, No.
14-cv-01932, 2015 WL 4911585 (D. Colo. Aug. 18, 2015)
 
General Steel sued Chumley and Atlantic Building, of which
he was CEO, for false advertising, libel, and intentional interference with
prospective business advantage (plus civil conspiracy).  It alleged that defendants used the internet
to harm General Steel and get business by running ads in response to searches
for the words “General Steel,” “General Steel Buildings,” “steel buildings,”
and “metal buildings.” Many of these ads allegedly contain derogatory
information about General Steel and contain links to a portion of the Armstrong
Steel Corporation website which does the same.
 
There were twenty statements on the Armstrong Steel website
at issue.  One part of the website was
called “Industry Related Legal Matters” (IRLM), created by Chumley; it had 37
posts, 20 of which were alleged to be unlawful. 
Each post contains a “read more” button that links to third-party
website; each post also contains an excerpt from the document which can be seen
in full when the “Read More” button is pushed. 
For example, one post’s heading was “Class Action Complaint – Heinbaugh
et al v. General Steel Domestic Sales, LLC.” Its first paragraph was a quotation
from courthousenews.com describing a class action lawsuit filed against General
Steel, with the words “U.S. District Court of Colorado” added before the
quotation, which read: “General Steel Corp. and its CEO Jeffrey Knight ‘infamous’
telemarketers of steel-buildings, systematically defrauded their customers, in
defiance of court orders, by, among other things, taking nonrefundable deposits
and then refusing to deliver buildings for the price advertised, a class-action
complaint claims in Federal Court.”
 
Other posts included “Attorney General Madrid Warns New
Mexico Churches About Colorado Metal Building Company” and “General Steel
Domestic Sales, LLC v. Chumley,” the latter of which described the claims and
counterclaims in a 2010 case, but didn’t mention the dismissal of certain
counterclaims.  Another post, “Rock Limo
Service v. General Steel Domestic Sales,” included quotations from a court case
describing a contract and ending with this sentence: “Petitioners demanded
return of their deposit, but General Steel refused to pay it.” The “Read More”
link led to the full text, affirming an arbitrator’s award finding that General
Steel properly retained the deposit because Rock Limo breached the relevant
contract.  The IRLM Page contains a
general disclaimer: “These external hyperlinks represent allegations made by
parties (which may or may not ultimately be adopted by a judge/jury) and
findings of fact and law by judges/arbitrators. Some of the cases mentioned
here may be ongoing, dismissed, settled and/or may not be final.”
 
As for defendants’ search ads, they included:
 
Don’t Send Them A Deposit – ArmstrongSteelBuildings.com Ad
http://ift.tt/1b8Fhxt
Until You’ve Seen These Lawsuits. Read This Before It’s Too
Late!
 
Before You Send a Deposit – Do Your Research First Ad
http://ift.tt/1b8Fhxt (855) 882-6555 Read This Before It’s Too Late!
View Gallery – Virtual Building – Design It Online –
1.800.345.4610
 
Steel Building *Lawsuits* – ArmstrongSteelBuildings.com
http://ift.tt/1b8Fhxt +1 800-345-4610 4.8 rating for
armstrongsteelbuildings.com
Rock Limo Lost $125,383 in Deposits *Beware* Research Before
You Buy! Court Rulings · Lawsuits · Buyer Beware · Complaints
 
‘General Told Her ‘We Will Keep You In Court Until We Break
You’ ‘
Court Rulings · Lawsuits · Buyer Beware · Complaints
 
General Steel argued that defendants “collected old
documents from long-resolved General Steel litigation and wholly created a
website conveying facts that are false as to General Steel’s current
operations. In addition, the title of the IRLM Page, “Industry Related Legal
Matters,” was allegedly misleading because it appeared to be an objective site
disclosing industry lawsuits, but actually is a page targeting General Steel. 
 
Defendants argued that the CDA gave them immunity.  General Steel responded that they wholly or
partially developed the information at issue, and thus didn’t qualify.  To be responsible, a service provider must “in
some way specifically encourage[] development of what is offensive about the
content,” which is to say what is unlawful or legally actionable.  (Interpreting the Accusearch case, which some worried represented an expansion of ISP
liability—as with Roommates, it may
be that the case actually sets a limit that preserves most ISPs’ immunity.)  Merely inviting or encouraging third parties
to post content isn’t development of that content.  Even ratifying or adopting third party content,
including through the posting of commentary, isn’t development.  Nor is minor editing, as long as the changes don’t
contribute to the false, misleading, or otherwise unlawful nature of the
underlying information.
 
General Steel pointed out that the posts weren’t submitted
by third parties, but rather created by Chumley.  However, “nothing in § 230 or the relevant
case law limits § 230 immunity to information submitted directly to a website
by a third party.”  Here, everything came
from the internet, so cases finding that §230 didn’t cover publication of material
submitted to an ISP that was not intended for public distribution were
irrelevant.  Thus, the links received §
230 immunity, and so did the summaries, because the addition of “U.S. District
Court” was inconsequential.  General
Steel claimed that the excerpts highlighted inflammatory and disparaging parts
of the documents.  (With respect to the
arbitration, a false light-like theory of responsibility for development would
make sense to me—it’s kind of like editing out the “not” in an otherwise
nondefamatory statement.) 
 
At many points, the defendants created their own summaries
of allegations made by others. 
Defendants also didn’t post a court order finding them liable for willful false advertising targeting General Steel.  Still, General Steel didn’t claim that the
links went to inaccurate versions of the documents, or that the page contained
inaccurate quotations.  Ultimately, the
court found that defendants developed some of the information:
 
To the extent the defendants chose
certain summaries and quotations describing the referenced court proceedings,
failed to accurately describe the proceedings as a whole, and posted those
quotations and summaries on the IRLM Page, the defendants developed the
information they posted on that page. These editorial choices can be seen as a
choice to emphasize unflattering allegations made against General Steel without
summarizing or quoting information which reflects the nature and outcome of the
court proceeding described…. Highlighting the unflattering allegations without
providing other relevant information reasonably can be seen as contributing to
the allegedly defamatory or otherwise actionable nature of the underlying
information. Such actions specifically encourage development of what is
allegedly unlawful or legally actionable about the content and, thus,
constitutes development of the information for the purpose of § 230 immunity.
 
However, certain summaries and quotations were “reasonably
accurate” summaries of the underlying information developed by third parties,
and thus covered by §230. “By organizing, quoting, and summarizing this
information, the defendants did nothing to specifically encourage the
development of what General Steel claims is unlawful or legally actionable
about the underlying content.”  By
contrast, other posts highlighted content that was allegedly
unlawful/actionable.
 
The search ads also weren’t subject to §230 immunity, since
the defendants created and developed their content.
 
General Steel argued that Lanham Act claims were exempt from
§230 immunity because of §230’s IP exclusion.  The court ruled that General Steel’s claim was
brought under §43(a)(1)(A), but then called it a “false advertising claim,”
which it is—and thus mistakenly held that General Steel’s Lanham Act claims
weren’t subject to §230: “Particularly given this [statutory placement of false
advertising language in a trademark law], a false advertising claim under §
1125 implicates trademark law, an ilk of intellectual property law.”  Sigh (though it’s not clear this matters to
the outcome, since the court seemed to focus its analysis on the content it
found defendants to have created).
 
For similar reasons, the court found the fair report
privilege applicable to some of the posts, not others.
 
Truth: defendants argued that “Rock Limo Lost $125,383 in
Deposits” was true.  But this created a
material issue of fact about whether the statement clearly implied that the loss
resulted from wrongful behavior by General Steel.  The court found that disputed issues of
material fact about the ads precluded summary judgment on the grounds of truth
for the Lanham Act/tortious interference claims.
 
Defendants argued that General Steel failed to present
evidence of customer confusion.  Given
General Steel’s theory of intentional deception, no extrinsic evidence of
confusion would be required.  Likewise,
General Steel’s experts provided sufficient evidence of the loss of one or more
contracts to take the tortious interference claim to trial.

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Copyright infringement is channeled into (c), not state or Lanham Act claims

Posted on August 19, 2015 by rtushnet
Quadratec, Inc. v. Turn 5, Inc., 2015 WL 4876314, No.
13–6384 (E.D. Pa. Aug. 13, 2015)
 
The parties compete to sell removable soft tops and other
aftermarket parts and accessories for Jeep vehicles. Quadratec alleged that it
invests substantial resources in the advertising of its products by “creating
tens of thousands of unique photographs” and writing descriptions of the
photographs, which “differentiate it from all of its competitors in the
automotive market.” Except for Turn 5, which allegedly engaged in extensive
copying of its images and descriptions (including a Quadratec photo with a
superimposed Turn 5 logo on it), despite Quadratec’s demands that it stop.  (Why no 1202 CMI claim?  Although it seems unlikely to have concealed copyright infringement, so quite probably futile, though that doesn’t distinguish it from various other claims asserted.)  Further, Quadratec alleged that Turn 5 falsely
advertised its Baricade Soft Top products by falsely claiming that they exceeded
original equipment manufacturer standards and are made from Black diamond
sailcloth material (though this allegation isn’t addressed in this
ruling).  Quadratec registered its images
and sued.
 
Copyright infringement: though the complaint alleged that
images other than those specifically identified might have been infringed, it
also provided sufficient notice about particular registered images, and
Quadratec wouldn’t be allowed to base claims on unidentified images. However,
statutory damages/attorneys’ fees claims were dismissed because in all cases
the infringements began before the registrations; allegations that Take 5 began
infringing new parts of the
registered work post-registration were insufficient because statutory damages
go on a work by work basis.
 
§43(a)(1)(A): Dastar
barred this claim. There was no misrepresentation of the origin of the goods
for sale.  Quadratec argued that it was
claiming false designation of the origin of the services at issue, here providing catalog services. That is, Take 5’s
use of the product presentations was likely to confuse Quadratec’s customers
into believing that “identical product presentations in both Plaintiff’s and
Defendant’s catalogs” means that the “catalog sources are the same or otherwise
affiliated.”
 
But Dastar
precludes this argument.  Neither party
is in the business of selling catalog services, only aftermarket Jeep
products.  There could be no confusion as
to the origin of those goods.  The Lanham
Act doesn’t create a cause of action for plagiarism of marketing.
 
§43(a)(1)(B): Again, this failed because there was no
alleged misrepresentation about the
products for sale, rather than about the source of the marketing materials
used to sell them.
 
Misappropriation: preempted by the Copyright Act.  The alleged deceit involved was not an extra
element because it occurred only by way of reverse passing off, which meant that
there was nothing fundamentally different from a copyright infringement claim.
 
Unjust enrichment: Ditto. 
Quadratec alleged that Take 5 received benefits beyond the mere intrinsic
value of the Quadratec materials, because it diverted profits and goodwill from
Quadratec and saved money on advertising that it could use to lower its prices
in competition with Quadratec.  The
alleged financial benefit in the form of reduced overhead didn’t make the
unjust enrichment claim qualitatively different than the copyright infringement
claim.

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Connecticut taxi companies’ claims against Uber fail

Posted on August 18, 2015 by rtushnet
Greenwich Taxi, Inc. v. Uber Technologies, Inc., 2015 WL
4774989, No. 14cv733 (D. Conn. Aug. 13, 2015
 
Plaintiffs sued Uber for violating the Lanham Act, the
Connecticut Unfair Trade Practices Act (CUTPA), and RICO, as well as for
intentional interference with contractual relationships. The court dismissed
the amended complaint with leave to amend.
 
Plaintiffs alleged that Uber began taxicab and/or livery
operations in Connecticut without complying with state laws and regulations.  Uber allegedly partners with plaintiffs’ drivers,
each of “who[m] make[s] an illegal side deal with Uber to take its customers
while simultaneously working a normal shift with his or her authorized
company.”  Uber allegedly “misrepresents
to customers its compliance with Connecticut laws and regulations,
misrepresents its insurance coverage, misrepresents the safety of its drivers,
misrepresents its affiliation with lawfully operating taxicab and livery
companies, and misrepresents its fares.”
 
False advertising: the court noted that the pleading
standard applicable is Rule 8, not Rule 9(b). 
See John P. Villano Inc. v. CBS, Inc., 176 F.R.D. 130, 131
(S.D.N.Y.1997) (“No matter how parsed, a claim of false advertising under the
Lanham Act … is not identical to a claim of fraud. Fraud requires, not just
the making of a statement known to be false, but also, inter alia, a specific
intent to harm the victim and defraud him of his money or property…. By
contrast, no fraudulent intent … is required under 15 U.S.C. § 1125.”).
 
Under Dial A Car, Inc. v. Transp., Inc., 82 F.3d 484 (D.C.Cir.1996),
violations of Connecticut transportation laws and regulations aren’t actionable
as false advertising; given that it wasn’t clear whether state transportation
laws applied to Uber, Uber’s representations that it complied with the law
couldn’t be false or misleading.
 
As for other representations, they weren’t adequately pled to
be false or misleading.  For example, the
complaint didn’t sufficiently allege that Uber claimed to be a “ridesharing”
service. Plaintiffs alleged that Uber falsely claimed to have “partner”
drivers, but they didn’t plead what it meant to be a “partner” and what would
make that claim false or misleading. 
They further alleged that Uber does not regularly recheck insurance, but
they didn’t allege that Uber represented to customers that it does so. Likewise,
they pleaded that it is nearly impossible to collect on Uber’s liability
insurance and that the Connecticut Insurance Department issued a consumer alert
stating that Uber’s drivers may not be covered by their personal automobile
insurance. But they didn’t plead that Uber represented to customers that Uber’s
drivers are covered by their commercial or personal insurance.  Further, allegations that Uber’s user
agreement allows it to use “surge” pricing when demand becomes “high” or
“intense” and that “[t]he mechanism for determining [‘surge’ pricing] appears
arbitrary and unpredictable, made solely at the discretion of [Uber]” didn’t
support an inference that Uber made a representation to customers that its
pricing was simple.
 
False association under §43(a): Plaintiffs failed to allege
that they had recognizable trademarks on the cars driven by Uber “partners.”
 
RICO claims: dismissed.
 
CUTPA: Plaintiffs’ unfairness claims required some sort of
violation of public policy, but it hadn’t yet been established that Uber’s services
violated Connecticut law, and plaintiffs didn’t sufficiently allege
anticompetitive, immoral, or otherwise unfair conduct.
 
Tortious interference with contractual relationships: This requires
wrongful conduct such as
fraud, misrepresentation, intimidation or molestation.  Plaintiffs didn’t plead that Uber’s
interference with the contractual relationships between the plaintiffs and
their taxicab and livery drivers and between the plaintiffs and credit card
processing companies was tortious. Wooing the drivers wasn’t inherently
wrongful.
 

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No winner in Cablevision v. Verizon

Posted on August 17, 2015 by rtushnet
Cablevision Systems Corp. v. Verizon New York Inc., —
F.Supp.3d —-, 2015 WL 4758072, No. 15–CV–456 (E.D.N.Y. Aug. 7, 2015)
(magistrate judge)
 
Cablevision and Verizon sought to enjoin each other’s comparative
ads; the court denied both cross-motions for preliminary injunction. 
 
Verizon’s top three tiers, 150/150 upload/download Mbps,
300/300 Mbps, and 500/500 Mbps, all provide faster download speeds than
Cablevision’s fastest plan, and all five FiOS plans offer faster upload speeds
than any of Cablevision’s offerings, though a very small proportion of Verizon
customers subscribe to the top three speed plans.  The customer’s router constrains wireless
internet speed, like the nozzle on the end of a garden hose.  Verizon offers, at additional cost, the FiOS
Quantum Gateway router, which can support “throughput” speeds up to the fastest
FiOS tier (500/500Mbps). Thus, it advertises that FiOS provides the “fastest
WiFi available from any provider.”
 
Initially, it predicated its claim on a 2014 router study
that tested the FiOS router against another of other competing devices, but
“notably” not Cablevision’s router.  In a
second study, Verizon’s router outperformed Cablevision, “though in certain
instances by a narrow margin.”  However,
comparative router speed, standing alone, had little meaning.  After the second study, Verizon continued to
advertise “Fastest WiFi,” but based the claim on “Verizon’s combination of the
FiOS 500/500 Mbps Internet service tier with the FiOS Quantum Gateway router.”
 
FiOS did offer a faster connection once the router was
connected, especially with its more expensive plans.  Cablevision contended that WiFi speed,
technically speaking, “is the speed of that communication from a router to a
device such as a laptop or tablet.” But internet connection “is a common, if not
preeminent, WiFi application,” and may be used as a shortcut not only refer to
the WiFi itself but also to a wired connection to the internet accessed via
WiFi.  Verizon rejoined that consumers
understand the term primarily in the context of a wireless connection to the
internet, with evidence that included Cablevision’s own FAQ.
 
The judge found that, regardless of the technical
definition, consumers commonly understand WiFi to mean a wireless connection to
the internet. “[C]onsumers paying for WiFi are likely to be more concerned with
the speed provided by their Internet Service Provider, which permits them to
download music, movies, games and the like, rather than the theoretical
capability of the supplied router under laboratory conditions.”  Thus, there was no likely success on the
merits at this stage. 
 
Cablevision argued that Verizon’s earlier use of a router
study to support its claims meant that Verizon had picked its definition of
router speed and couldn’t change that definition in subsequent ads.  But the court saw these ads as distinct from
the older ads, and Verizon had discontiuned the ads with an “erroneous”
definition of speed, making relief as to them moot.
 
Meanwhile, Cablevision promoted that it offers subscribers
access to a network of “1.1 million hotspots.” What this meant was 65,000
outdoor public routers, about 100,000 routers located in small and medium
businesses, and roughly 1 million routers located in the homes of its
residential customers. Each “smart” router installed by Cablevision includes a
second channel—a “dual SSID”—which provides a public access point for all Cablevision
customers, unless it’s disabled. These routers provide WiFi service at distances
of 135’ or more.

Verizon argued that these hotspots weren’t truly public, because they came from
private homes, and numerous ads suggested that they were in public places.  Cablevision’s website contained a claim that
it maintained hotspots at “1 million public locations like train stations,
restaurants, cafes and parks,” which would clearly be misleading.  Cablevision agreed to discontinue making this
claim, absent a change of circumstances, “which change would presumably involve
the construction of 900,000 or so hotspots in public locations.”
 
Cablevision also claimed to offer a “better data network”
than Verizon, and stated that Verizon “two-times” it customers by charging for
cellular data usage from customers that have already paid for WiFi access at
home. It was undisputed that, when connected to WiFi, mobile devices can access
data faster than when connected via cellular towers. But it was also beyond
dispute that Verizon’s cellular towers provided far broader geographic coverage
than Cablevision’s WiFi network. And Verizon did impose separate data charges
on its customers, under certain circumstances, for data obtained via cellular
towers.
 
In addition, Cablevision recently launched the Freewheel, an
all-WiFi communication device. Freewheel is a Motorola Moto–G model smartphone
configured to function only using WiFi connections rather than traditional
cellular telephone towers. This is a relatively low-cost mobile device that
can, where WiFi is available, make and receive phone calls, text and surf the
Internet.  Verizon argued that references
to the device as a “phone” and comparisons to cellphones and smartphones were
misleading. Internal Cablevision marketing research—focus group studies of
preliminary Freewheel ads—suggested that certain viewers could be confused
about the nature of the device and the extent of the “coverage” of the Cablevision
WiFi network.
 
The court turned to images to show the “gestalt” of the ads,
which characterized Freewheel “as something new and different from a cellular
phone.”
 

Cablevision argued that Verizon delayed too long to get a
preliminary injunction.  The judge agreed
that Verizon’s “inordinate” delay of more than six months as to all the
non-Freewheel ads weighed “heavily” against a finding of irreparable harm.
 
1.1 million hotspots: Verizon argued literal falsity based
on Cablevision’s failure to disclose that 87% of the hotspots emanate from
residential locations.  But the ability
to use the WiFi at distances of 135′ or more meant that “signals from
residential routers can be accessed from the street or sidewalk,” which are
public places.  Thus the judge found
neither express nor implicit falsity.
 
“Better data network”: “better” did not necessarily mean
geographic coverage.  A WiFi-connected
consumer would get faster downloads than she’d get from a cell tower.  The multiplicity of meanings made “better”
puffery.
 
Freewheel: Verizon argued that, to the extent that
Cablevision called the Freewheel a “phone” or “smartphone,” those statements
were literally false.  However, the
Freewheel actually was a “Motorola Moto–G model smartphone.” The fact that it
was configured only to work on WiFi didn’t change its “essence” as a telephone,
just as “phone” can mean cell phones, “historical” (ouch!) landline telephones
or cordless handsets. So there was no literal falsity.
 
The main argument was that consumers would think they were
getting cellular phone service from the Freewheel.  This was an implied falsehood claim, though,
and Verizon didn’t have evidence of deception. 
(Claims that Freewheel was “better than cellular” were mere
puffery.)  The Cablevision focus groups
weren’t enough, even though the company conducting the work for Cablevision
warned that “[c]omparisons to cellular in messaging exposed during the groups
helped create the perception that Freewheel service (including talk/text) will
be ubiquitous given respondents’ near universal coverage experience with cell
service for talk/text/data[.]”  While focus
group information isn’t always reliable, especially when it favors the party
who conducted it, the judge didn’t need to decide here because the ads shown to
the focus groups were preliminary drafts, to which substantial changes were
made. 

 
Those changes included specific
qualifications of the text to make clear that “it’s a WiFi phone” rather than a
“cell phone,” and a checklist indicating people for whom the phone might be
appropriate.  Thus, the focus groups
didn’t show that the ads actually run were deceptive.

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Reading list: Kate Crawford and Tarleton Gillespie

Posted on August 14, 2015 by rtushnet

Rebecca Tushnet, What is a Theorist For? The Recruitment of Users into Online Governance, JOTWELL (August 14, 2015) (reviewing Kate Crawford & Tarleton Gillespie, What is a flag for? Social media reporting tools and the vocabulary of complaint, New Media & Society (2014), available at SSRN)

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Reading list: Kate Crawford and Tarleton Gillespie

Posted on August 14, 2015 by rtushnet

Rebecca Tushnet, What is a Theorist For? The Recruitment of Users into Online Governance, JOTWELL (August 14, 2015) (reviewing Kate Crawford & Tarleton Gillespie, What is a flag for? Social media reporting tools and the vocabulary of complaint, New Media & Society (2014), available at SSRN)

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Pure mourning: Pom fails to get preliminary injunction again

Posted on August 12, 2015 by rtushnet
Pom Wonderful LLC v. 
Pur Beverages LLC, No. 13-cv-06917 (C.D. Cal. Aug. 6, 2015) 
 
Pom fares no better its second time around. Although the
court of appeals previously found likely confusion between its marks and
defendant’s “pūr pŏm” energy drink (which allegedly contains no pomegranate
juice at all) and remanded for a re-analysis of the remaining preliminary injunction
factors, Pom was unable to show irreparable harm distinct from its showing on
likely confusion. 
 
The harm at issue must not merely be irreparable; it must
also be imminent. “Speculative injury does not constitute irreparable injury
sufficient to warrant granting a preliminary injunction.” Thus, unsupported and
conclusory statements about harm are insufficient. Herb Reed.  A finding of
reputational harm “may not be based on ‘pronouncements [that] are grounded in
platitudes rather than evidence.’”
 
Pom argued three varieties of irreparable harm: (1) the POM
mark would lose distinctiveness and potentially become generic; (2) it would lose
its return on its investment in its mark; and (3) its reputation and goodwill
would be harmed.
 
As for loss of distinctiveness, Pom offered the declaration
of Fernando Torres, the Chief Economist at IPmetrics LLC, an intellectual
property consulting firm.  Torres stated
that the problem with free riders like Pur is that infringement “will
eventually destroy the value of the reputational investment embodied in the
trademark.” He opined that, because Pom Wonderful has cultivated a distinctive
brand using the POM mark, “allowing a third party to make a confusing use of
‘pom’ under the guise of a generic abbreviation for the ingredient pomegranate
would help push the valuable POM trademarks toward generic use.” Such a “loss
of distinctiveness” couldn’t be quantified in terms of lost sales or lost
profits.  The court was unimpressed.  “Although Torres cites economic theory to
supports his opinions, the opinions are not tied to actual evidence, and
constitute little more than assertions grounded in ‘platitudes rather than
evidence’” (quoting Herb Reed).  His conclusions “would apply in any trademark
infringement case where the plaintiff owns a distinctive trademark.” A risk isn’t
a likelihood of irreparable harm.
 
There was no evidence that the “distinctiveness” or
perceived value of Pom’s mark would likely be affected negatively by Hubbard’s
use of “pūr pŏm,” including no evidence that consumers’ association of the POM
mark with Pom Wonderful had weakened since pūr pŏm entered the market or that
other companies had attempted to market pomegranate beverages under “pom” in
the more than two years since Pur began doing done so. “Such evidence might
make irreparable harm likely, as opposed to just merely possible.” But Torres
merely assumed that others would, in the future, begin using the POM mark on
their products after observing Hubbard do so. That was mere speculation on this
record.  Plus, Torres said it takes time
for genericide to occur, and didn’t opine that this period could run during the
pendency of the trial.  Ultimately, the
court found, his opinions were “little more than speculative statements
regarding the type of harm that can arise in any trademark infringement case.”  His evidence was non-specific to Pom Wonderful
“and equally applicable to any trademark infringement case. Consequently, it is
not sufficient to show a likelihood of irreparable harm.”
 
Pom quoted defendant Hubbard’s statement to the press in
response to the question, “Would you consider changing your drink’s name, and
why or why not?”
 
I will prove that pom means
pomegranate.  When I do, it will make
their standard word trademark of ‘POM,’ that is currently incontestable,
invalid. They will lose their registration of the mark under the theory of
genericness. Although it may be true that when they initially got the standard
word mark of ‘POM’ it had no meaning at the time. They, and numerous other
makers of pomegranate flavored products, have widely used the term pom to
describe pomegranate flavoring. Just like I do with my product.  The term has now become generic, and thus,
not deserving of Federal Trademark Registration. . . . Mark my words: I will be
the company that makes Pom Wonderful lose their trademark ‘POM.’ I will then
allow the consumer packaged goods industry to use the properly used, and widely
known term ‘pom’ to describe its pomegranate flavored products, without the
threat of a bully company suing every person or company that utters those three
letters in sequence.
 
Pom argued that this was an admission that “part of his
reason for using ‘pŏm,’ as part of his energy drink’s name, is to pave the way
for others to use POM as a flavor descriptor, turning this incontestable mark
into a non-protectable generic word.” 
But the court found that these statements weren’t about this case, but
rather about ongoing cancellation proceedings before the TTAB, wherein Pur
argued that Pom abandoned its word mark by using “P♥M” rather than “POM.” Risks
connected to the cancellation petition weren’t connected to the purported
infringement, and didn’t adequately demonstrate likely irreparable harm from
that infringement.
 
Plus, even attributing this statement to the current
infringement, that didn’t show irreparable harm, just because it might become
generic “over time” if third parties begin to use it in a descriptive and/or
generic sense.  Pom actively polices its
trademark and this hypothesized use has yet to begin.  Again, this was merely speculative.
 
Loss of return on investment by preventing Pom from fully
exploiting its reputation: Pom argued that Pur’s use “limit[s] Pom’s ability to
control the reputation of its recognized brand and the perception of Pom’s
premium quality products.” This was again speculative and not supported by
evidence. Torres claimed that post-infringement, the value the trademark lost
due to the infringing activity is never recouped, but the testimony offered
wasn’t specific to Pom.  Since it would be
true in every infringement case, this claim couldn’t be “squared with the rule
that a plaintiff must adduce evidence of likely irreparable harm to obtain an
injunction.”
 
Harm to reputation and goodwill: Pom argued that (1) the
infringement damaged its ability to communicate a consistent brand message; (2)
Pom’s reputation as a seller of healthy beverages conflicted directly with
consumers’ perception of energy drinks; and (3) Pom lacked control over the
quality of Pur’s products.
 
As for the brand message claim, Pom argued that it focused on
communicating that it uses only 100% pure pomegranate juice in its products.
Pom has expended substantial resources marketing products that contain only
100% pomegranate juice and litigating against companies that market their
products as “pomegranate juice” when the products are predominantly cheaper
“filler juices.” Because Pur’s product contained no pomegranate juice, any
association between Pom and Pur would harm Pom’s brand. Likewise, while Pom “prides
itself [on] advertising that is sophisticated, smart and witty,” Pur’s ads are
often “low-brow and tasteless.”  But
there was no evidence of harm to Pom’s goodwill.  Though Pur had been selling its products for more
than two years, there was no evidence Pom’s customers were aware of Pur’s
product or that they had a negative reaction to it or to Pur’s
advertising.  It was certainly “possible”
that Pom’s reputation and/or goodwill could be damaged by having less control
over its brand messaging, but it didn’t show that such harm was likely.
 
There is a distinction between a likelihood of irreparable
harm and a showing of actual harm.  But
one way to show likely irreparable harm is to show actual confusion or harm
right now.  Post-Herb Reed cases have therefore, when granting injunctive relief,
often relied on “some evidence of actual confusion or actual harm,” including
confusion surveys.  (NB: Confusion is not
harm; harm is harm.  Also, a survey doesn’t
necessarily show actual confusion of plaintiff’s
customers, unless the parties compete directly, so it doesn’t inherently show
the damage that the court said it was looking for.)  Among other cases, the court cited OTR Wheel
Engineering, Inc. v. West Worldwide Services, Inc., 602 Fed. Appx. 669 (9th
Cir. Mar. 18, 2015), which affirmed a preliminary injunction and found that
there was some evidence of irreparable harm where the infringing product was
sold to the plaintiff’s major customer, which led to a dispute between the
plaintiff and its customer—“a nonquantifiable injury to the goodwill it had
created with its customer.”  In Life
Alert Emergency Response, Inc. v. LifeWatch, Inc., 601 Fed. Appx. 469 (9th Cir.
Feb. 4, 2015), there was a declaration “reporting numerous and persistent
complaints from would-be customers who received robo-calls for what they believed
were Life Alert products,” as well as emails and social media posts
substantiating the threat to Life Alert’s reputation and goodwill.
 
Negative association with energy drinks: Pom noted that
energy drinks have been associated with 224 adverse event reports to the FDA
between Jan. 2012-Nov. 2014.  But that
didn’t go far enough to show that Pur was a disreputable product, or that Pom’s
customers associated Pur’s product with Pom or saw energy drinks as
disreputable. Again, absent evidence about Pom’s consumers, this was merely
conclusory and speculative.
 
The court distinguished and disagreed with E&J Gallo
Winery v. Grenade Beverage, LLC, No. 1:13-cv-00770- AWI-SAB, 2014 WL 4073241,
*1 (E.D. Cal. Aug. 15, 2014), report and recommendation adopted, 2014 WL
5489076, *1 (E.D. Cal. Sept. 8, 2014), which had accepted a similar theory of
harm involving Gallo wine v. EL GALLO for energy drinks.  Gallo said it didn’t want to be associated with
energy drinks because it believed that mixing alcohol and energy drinks
promoted irresponsible behavior.  The
court reasoned: “While Plaintiff may not have introduced admissible evidence to
support the proposition that energy drinks are associated with irresponsible
drinking or that an association with energy drinks would be harmful to
Plaintiff’s reputation, it is enough that Plaintiff has introduced evidence of
loss of control over their own business reputation.”
 
Not only is this case on appeal, it’s directly at odds with Titaness
Light Shop, in which the 9th Circuit rejected a plaintiff’s
speculative theory that its customers wouldn’t want to be associated with
defendant’s product, which was sold on “a website that supposedly catered to
marijuana growers.” “[A]ssertions by a representative of the plaintiff that its
goodwill and reputation would be harmed if consumers associated its product
with an item that did not fit the plaintiff’s brand image” were not sufficient.
The Ninth Circuit in Titaness observed
that the plaintiff did not show that its “customers [were] aware of the
website, [that they] would associate the products on the site with    marijuana, or [that they] would stop
purchasing Sunlight products if they mistakenly believed that Sunlight was
marketing to marijuana growers.”  
 
Basically, the Ninth Circuit ruled that “it was not
sufficient for a movant to assert that it had developed a particular brand
image and that any association with a product inconsistent with that image
would harm its reputation.”  But that’s
what Gallo accepted and what Pom
asked the court to accept here.  More
fundamentally, Gallo essentially
presumed irreparable harm without evidence other than its likely success on the
merits.  “If a conclusory assertion that
a third party has used the plaintiff’s mark in a way that is ‘directly contrary
to [plaintiff’s] philosophy,’ or that plaintiff does ‘not want to associate
itself or its [ ] trademark’ with the third party or its business were
sufficient to satisfy a plaintiff’s burden, it is likely that irreparable harm
would be found in any case where plaintiff was able to demonstrate a likelihood
of success on the merits.”
 
Evidence that customers have a negative perception of energy
drinks in general or of pūr pŏm in particular would probably have sufficed to
show irreparable harm, but that wasn’t present. 
“It would be reasonable to infer likely harm to a plaintiff’s reputation
or goodwill if it could demonstrate that the consuming public has a negative
perception of defendant’s product, a product that is sold under a confusingly
similar mark.”  (Note the structural
similarity here with showing materiality in false advertising—courts generally
don’t require successful plaintiffs to show that the false claim is material to
the exact same people who receive the false message, according to the plaintiff’s
survey; showing that it is the kind of claim that is material in the relevant
context suffices.  At long last, and at
the remedy stage, irreparable harm is being used to reintroduce a materiality
standard to trademark.)
 
Lack of control over the quality of Pur’s products: Pom
argued that it was at risk if even “a single incident of poor quality control
or a single consumer getting ill from drinking pūr pŏm” was reported. Again,
this would be true in every trademark infringement case. There was no evidence
that pūr pŏm had caused illness, or facts allowing a reasonable inference that
this would occur in the future.
 
Pom argued that the danger to it was great because Pur’s
principal was Hubbard, “a litigious and shifty business owner with a checkered
past.” Pom proffered evidence that Hubbard has been charged with theft,
criminal trespass, assault, and attempting to elude the police, and that he had
routinely been “vengeful” in previous litigation to which he has been a party.  As Pom noted, Hubbard had filed a cancellation
petition.  But Hubbard explained that he
did so based on research indicating that Pom Wonderful has never used POM as a
trademark without the “o” in the shape of a heart. Thus, he asserts, Pom was
improperly granted a trademark and/or that it abandoned the word mark by not
using “POM” in commerce. The court would not impute bad faith to Hubbard based
on the fact that he exercised his legal right to file such a petition; plus,
that’s unrelated to irreparable harm from continued infringement.
 
Pur said that all its remaining inventory was pūr pŏm as
opposed to other products; Pom argued that this made clear that Pur was relying
on confusion to stay in business.  That
might be true, or maybe he hadn’t been successful in selling pūr pŏm, which
would cut against finding irreparable harm.

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11th Circuit recognizes contributory false advertising theory

Posted on August 12, 2015 by rtushnet
Duty Free Americas, Inc. v. Estee Lauder Companies, Inc.,
— F.3d —- (2015), 2015 WL 4709573, No. 14–11853 (11th Cir. Aug. 7, 2015)
 
Plaintiff DFA operates duty free stores in many
international airports nationwide.  It
sued Estée Lauder, arguing that Estée Lauder’s refusal to do business with DFA,
and its communication of that fact to airport authorities evaluating whether to
offer rental space to DFA, violated federal and state law, alleging attempted
monopolization in violation of § 2 of the Sherman Act; contributory false
advertising, in violation of § 43(a) of the Lanham Act; and tortious
interference with a prospective business relationship, in violation of Florida
law. The court of appeals affirmed the dismissal of these claims.
 
DFA is one of about ten major operators of duty free stores
in the US, with leases in 13 international airports in eleven cities. “It
competes with other duty free operators for the limited rental space available
in U.S. airports servicing international flights.” Leases generally last from
5-10 years.  Interested duty free
operators bid for space, explaining what they’d carry and how much they’d
pay.  There’s a minimum annual guarantee
plus a percentage of sales revenue. Beauty products are a substantial component
of duty free stores’ products, and Estée Lauder is the “largest manufacturer of
beauty products sold in duty-free stores in U.S. airports.” In 2010, Estée
Lauder’s market share of cosmetics sold in duty free stores was approximately
45.71%, while its market share for skin care products was over 50%.  Newcomers to the duty free beauty products
market are apparently rare.
 
DFA bought Estée Lauder beauty products to sell in its duty
free stores until June 2008, during which time Estée Lauder set two different
prices for each product—a suggested domestic retail price and a lower suggested
travel retail price.  Duty free operators
could buy at wholesale travel prices that were lower than wholesale domestic
prices, set by discounting the suggested travel retail prices—for most of the
time, the suggested travel retail price for beauty products offered customers a
10% discount off of the suggested domestic retail price.  Estée Lauder required operators to carry the
full line of products within a particular brand and carry the company’s
less-popular fragrances if they wanted to sell cosmetics. “Estée Lauder also
mandated that operators reserve display space of a certain size and quality for
its products and that they keep excess inventory in stock, and routinely
threatened to cut off all product supply when duty free operators resisted
these conditions.”
 
Then Estée Lauder announced plans to eliminate the
differences between its suggested domestic retail prices and suggested travel
retail prices, which would increase the prices DFA paid for Estée Lauder
products and eliminate the discount that DFA’s customers gained by shopping at
duty free stores. As a result, DFA ended its business dealings with Estée
Lauder; DFA sought to revive the relationship, but Estée Lauder refused.  This caused DFA trouble in subsequent bidding
for retail space at four international airports.
 
For example, when Newark’s Liberty International Airport
issued a request for proposals, Estée Lauder’s President of Travel Retailing
Worldwide sent a letter to the leasing agent responsible for administering
Newark’s bidding. The letter included a list of duty free operators that sold
Estée Lauder products—the three other bidders, but not DFA.  It said: “We are confident that each of these
authorized retailers brings the expected quality of in-store execution and
required operational excellence necessary to represent our brands and service
your valued passengers.” DFA lost the bid; it ranked second to last, with the
explanation being “Duty Free Americas does not have the rights to sell Est[é]e
Lauder brands.”  Other bidders, in other
bids, emphasized their ability to sell Estée Lauder.
 
The Sherman Act claims failed, of course.
 
On the false advertising claim, DFA alleged that Estée
Lauder was subject to contributory liability for DFA’s competitors’ false
advertising.  Estée Lauder argued that
the Lanham Act doesn’t recognize contributory liability for false advertising,
but the court of appeals disagreed.
 
In trademark, contributory liability is well-recognized, and
for the same reasons, contributory false advertising should be as well.  §43(a), after all, contains both trademark
and false advertising provisions, sharing the same introductory clause.  That suggests that “the two causes of action
should be interpreted to have the same scope,” especially since they have the
unitary purpose of protecting commercial actors against unfair competition.  “It would be odd indeed for us to narrow the
scope of the false advertising provision—a cause of action plainly intended to
encompass a broader spectrum of protection—and hold that it could be enforced
only against a smaller class of defendants.”

In order to state a claim for contributory false advertising claim, “[f]irst,
the plaintiff must show that a third party in fact directly engaged in false
advertising that injured the plaintiff. Second, the plaintiff must allege that
the defendant contributed to that conduct either by knowingly inducing or
causing the conduct, or by materially participating in it.”  This participation requires that “the
defendant actively and materially furthered the unlawful conduct—either by
inducing it, causing it, or in some other way working to bring it about.”  Participation could include direct control or
monitoring of a third party’s false advertising.  “It is also conceivable that there could be
circumstances under which the provision of a necessary product or service,
without which the false advertising would not be possible, could support a
theory of contributory liability.”
 
In order to adequately plead contributory false advertising,
the court asked whether the complaint suggests a plausible inference of knowing
or intentional participation, examining “the nature and extent of the
communication” between the third party and the defendant regarding the false
advertising; “whether or not the [defendant] explicitly or implicitly
encouraged” the false advertising; whether the false advertising “is serious
and widespread,” making it more likely that the defendant “kn[ew] about and
condone[d] the acts”; and whether the defendant engaged in “bad faith refusal
to exercise a clear contractual power to halt” the false advertising.
 
The complaint identified five allegedly false claims.  One duty free bidder said: “Given that Estée
Lauder brands account for 20% of cosmetic and fragrance sales, at least in
Orlando, and cosmetic and fragrance sales constitute one of the largest sources
of revenue for duty free stores, a lack of access to Estée Lauder brands would
cast doubt on the validity of DFA’s projected revenue streams.” Two other
statements were to the same effect, and a fourth was that “DFA sales
project[ions] are deemed to be unreasonable and not sustainable in light of the
history.” Finally, one bidder said that “DFA may have made misrepresentations
about its ability to carry Estée Lauder brands.”
 
However, the complaint didn’t adequately allege that Estée
Lauder contributed to any of the statements. 
Alleging that Estée Lauder had knowledge of the false claims but
continued to supply the duty free operators was not enough: mere sale of Estée
Lauder products was no basis for holding Estée Lauder liable “for any
disparaging statements its customers make in the course of their own separate
business relations.” Estée Lauder sales were “too unrelated to the making of
the allegedly false or misleading statements to form a basis for
liability—under either an inducement or participation theory.”  And no facts in the complaint suggested the
existence of coordinated action or encouragement, or inducement, between Estée
Lauder and the operators on the decision to make the disputed claims to airport
authorities. There was no allegation that Estée Lauder monitored, controlled,
or participated in duty free operators’ bids, either here or in general.
 
Finally, DFA tortious interference claim failed, for similar
reasons.  DFA didn’t allege that Estée
Lauder ever expressed its opinions about DFA to airport officials.  The letter vouching for the quality of other
duty free operators could not be read to implicitly disparage the quality of
all other unmentioned entities in the same industry. Adequately alleged
inducement of misrepresentations might qualify as tortious interference under
Florida law, but see above.

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Pure mourning: Pom fails to get preliminary injunction again

Posted on August 12, 2015 by rtushnet
Pom Wonderful LLC v.  Pur Beverages LLC, No. 13-cv-06917 (C.D. Cal. Aug. 6, 2015) 
 
Pom fares no better its second time around. Although the court of appeals previously found likely confusion between its marks and defendant’s “pūr pŏm” energy drink (which allegedly contains no pomegranate juice at all) and remanded for a re-analysis of the remaining preliminary injunction factors, Pom was unable to show irreparable harm distinct from its showing on likely confusion. 
 
The harm at issue must not merely be irreparable; it must also be imminent. “Speculative injury does not constitute irreparable injury sufficient to warrant granting a preliminary injunction.” Thus, unsupported and conclusory statements about harm are insufficient. Herb Reed.  A finding of reputational harm “may not be based on ‘pronouncements [that] are grounded in platitudes rather than evidence.’”
 
Pom argued three varieties of irreparable harm: (1) the POM mark would lose distinctiveness and potentially become generic; (2) it would lose its return on its investment in its mark; and (3) its reputation and goodwill would be harmed.
 
As for loss of distinctiveness, Pom offered the declaration of Fernando Torres, the Chief Economist at IPmetrics LLC, an intellectual property consulting firm.  Torres stated that the problem with free riders like Pur is that infringement “will eventually destroy the value of the reputational investment embodied in the trademark.” He opined that, because Pom Wonderful has cultivated a distinctive brand using the POM mark, “allowing a third party to make a confusing use of ‘pom’ under the guise of a generic abbreviation for the ingredient pomegranate would help push the valuable POM trademarks toward generic use.” Such a “loss of distinctiveness” couldn’t be quantified in terms of lost sales or lost profits.  The court was unimpressed.  “Although Torres cites economic theory to supports his opinions, the opinions are not tied to actual evidence, and constitute little more than assertions grounded in ‘platitudes rather than evidence’” (quoting Herb Reed).  His conclusions “would apply in any trademark infringement case where the plaintiff owns a distinctive trademark.” A risk isn’t a likelihood of irreparable harm.
 
There was no evidence that the “distinctiveness” or perceived value of Pom’s mark would likely be affected negatively by Hubbard’s use of “pūr pŏm,” including no evidence that consumers’ association of the POM mark with Pom Wonderful had weakened since pūr pŏm entered the market or that other companies had attempted to market pomegranate beverages under “pom” in the more than two years since Pur began doing done so. “Such evidence might make irreparable harm likely, as opposed to just merely possible.” But Torres merely assumed that others would, in the future, begin using the POM mark on their products after observing Hubbard do so. That was mere speculation on this record.  Plus, Torres said it takes time for genericide to occur, and didn’t opine that this period could run during the pendency of the trial.  Ultimately, the court found, his opinions were “little more than speculative statements regarding the type of harm that can arise in any trademark infringement case.”  His evidence was non-specific to Pom Wonderful “and equally applicable to any trademark infringement case. Consequently, it is not sufficient to show a likelihood of irreparable harm.”
 
Pom quoted defendant Hubbard’s statement to the press in response to the question, “Would you consider changing your drink’s name, and why or why not?”
 
I will prove that pom means pomegranate.  When I do, it will make their standard word trademark of ‘POM,’ that is currently incontestable, invalid. They will lose their registration of the mark under the theory of genericness. Although it may be true that when they initially got the standard word mark of ‘POM’ it had no meaning at the time. They, and numerous other makers of pomegranate flavored products, have widely used the term pom to describe pomegranate flavoring. Just like I do with my product.  The term has now become generic, and thus, not deserving of Federal Trademark Registration. . . . Mark my words: I will be the company that makes Pom Wonderful lose their trademark ‘POM.’ I will then allow the consumer packaged goods industry to use the properly used, and widely known term ‘pom’ to describe its pomegranate flavored products, without the threat of a bully company suing every person or company that utters those three letters in sequence.
 
Pom argued that this was an admission that “part of his reason for using ‘pŏm,’ as part of his energy drink’s name, is to pave the way for others to use POM as a flavor descriptor, turning this incontestable mark into a non-protectable generic word.”  But the court found that these statements weren’t about this case, but rather about ongoing cancellation proceedings before the TTAB, wherein Pur argued that Pom abandoned its word mark by using “P♥M” rather than “POM.” Risks connected to the cancellation petition weren’t connected to the purported infringement, and didn’t adequately demonstrate likely irreparable harm from that infringement.
 
Plus, even attributing this statement to the current infringement, that didn’t show irreparable harm, just because it might become generic “over time” if third parties begin to use it in a descriptive and/or generic sense.  Pom actively polices its trademark and this hypothesized use has yet to begin.  Again, this was merely speculative.
 
Loss of return on investment by preventing Pom from fully exploiting its reputation: Pom argued that Pur’s use “limit[s] Pom’s ability to control the reputation of its recognized brand and the perception of Pom’s premium quality products.” This was again speculative and not supported by evidence. Torres claimed that post-infringement, the value the trademark lost due to the infringing activity is never recouped, but the testimony offered wasn’t specific to Pom.  Since it would be true in every infringement case, this claim couldn’t be “squared with the rule that a plaintiff must adduce evidence of likely irreparable harm to obtain an injunction.”
 
Harm to reputation and goodwill: Pom argued that (1) the infringement damaged its ability to communicate a consistent brand message; (2) Pom’s reputation as a seller of healthy beverages conflicted directly with consumers’ perception of energy drinks; and (3) Pom lacked control over the quality of Pur’s products.
 
As for the brand message claim, Pom argued that it focused on communicating that it uses only 100% pure pomegranate juice in its products. Pom has expended substantial resources marketing products that contain only 100% pomegranate juice and litigating against companies that market their products as “pomegranate juice” when the products are predominantly cheaper “filler juices.” Because Pur’s product contained no pomegranate juice, any association between Pom and Pur would harm Pom’s brand. Likewise, while Pom “prides itself [on] advertising that is sophisticated, smart and witty,” Pur’s ads are often “low-brow and tasteless.”  But there was no evidence of harm to Pom’s goodwill.  Though Pur had been selling its products for more than two years, there was no evidence Pom’s customers were aware of Pur’s product or that they had a negative reaction to it or to Pur’s advertising.  It was certainly “possible” that Pom’s reputation and/or goodwill could be damaged by having less control over its brand messaging, but it didn’t show that such harm was likely.
 
There is a distinction between a likelihood of irreparable harm and a showing of actual harm.  But one way to show likely irreparable harm is to show actual confusion or harm right now.  Post-Herb Reed cases have therefore, when granting injunctive relief, often relied on “some evidence of actual confusion or actual harm,” including confusion surveys.  (NB: Confusion is not harm; harm is harm.  Also, a survey doesn’t necessarily show actual confusion of plaintiff’s customers, unless the parties compete directly, so it doesn’t inherently show the damage that the court said it was looking for.)  Among other cases, the court cited OTR Wheel Engineering, Inc. v. West Worldwide Services, Inc., 602 Fed. Appx. 669 (9th Cir. Mar. 18, 2015), which affirmed a preliminary injunction and found that there was some evidence of irreparable harm where the infringing product was sold to the plaintiff’s major customer, which led to a dispute between the plaintiff and its customer—“a nonquantifiable injury to the goodwill it had created with its customer.”  In Life Alert Emergency Response, Inc. v. LifeWatch, Inc., 601 Fed. Appx. 469 (9th Cir. Feb. 4, 2015), there was a declaration “reporting numerous and persistent complaints from would-be customers who received robo-calls for what they believed were Life Alert products,” as well as emails and social media posts substantiating the threat to Life Alert’s reputation and goodwill.
 
Negative association with energy drinks: Pom noted that energy drinks have been associated with 224 adverse event reports to the FDA between Jan. 2012-Nov. 2014.  But that didn’t go far enough to show that Pur was a disreputable product, or that Pom’s customers associated Pur’s product with Pom or saw energy drinks as disreputable. Again, absent evidence about Pom’s consumers, this was merely conclusory and speculative.
 
The court distinguished and disagreed with E&J Gallo Winery v. Grenade Beverage, LLC, No. 1:13-cv-00770- AWI-SAB, 2014 WL 4073241, *1 (E.D. Cal. Aug. 15, 2014), report and recommendation adopted, 2014 WL 5489076, *1 (E.D. Cal. Sept. 8, 2014), which had accepted a similar theory of harm involving Gallo wine v. EL GALLO for energy drinks.  Gallo said it didn’t want to be associated with energy drinks because it believed that mixing alcohol and energy drinks promoted irresponsible behavior.  The court reasoned: “While Plaintiff may not have introduced admissible evidence to support the proposition that energy drinks are associated with irresponsible drinking or that an association with energy drinks would be harmful to Plaintiff’s reputation, it is enough that Plaintiff has introduced evidence of loss of control over their own business reputation.”
 
Not only is this case on appeal, it’s directly at odds with Titaness Light Shop, in which the 9th Circuit rejected a plaintiff’s speculative theory that its customers wouldn’t want to be associated with defendant’s product, which was sold on “a website that supposedly catered to marijuana growers.” “[A]ssertions by a representative of the plaintiff that its goodwill and reputation would be harmed if consumers associated its product with an item that did not fit the plaintiff’s brand image” were not sufficient. The Ninth Circuit in Titaness observed that the plaintiff did not show that its “customers [were] aware of the website, [that they] would associate the products on the site with    marijuana, or [that they] would stop purchasing Sunlight products if they mistakenly believed that Sunlight was marketing to marijuana growers.”  
 
Basically, the Ninth Circuit ruled that “it was not sufficient for a movant to assert that it had developed a particular brand image and that any association with a product inconsistent with that image would harm its reputation.”  But that’s what Gallo accepted and what Pom asked the court to accept here.  More fundamentally, Gallo essentially presumed irreparable harm without evidence other than its likely success on the merits.  “If a conclusory assertion that a third party has used the plaintiff’s mark in a way that is ‘directly contrary to [plaintiff’s] philosophy,’ or that plaintiff does ‘not want to associate itself or its [ ] trademark’ with the third party or its business were sufficient to satisfy a plaintiff’s burden, it is likely that irreparable harm would be found in any case where plaintiff was able to demonstrate a likelihood of success on the merits.”
 
Evidence that customers have a negative perception of energy drinks in general or of pūr pŏm in particular would probably have sufficed to show irreparable harm, but that wasn’t present.  “It would be reasonable to infer likely harm to a plaintiff’s reputation or goodwill if it could demonstrate that the consuming public has a negative perception of defendant’s product, a product that is sold under a confusingly similar mark.”  (Note the structural similarity here with showing materiality in false advertising—courts generally don’t require successful plaintiffs to show that the false claim is material to the exact same people who receive the false message, according to the plaintiff’s survey; showing that it is the kind of claim that is material in the relevant context suffices.  At long last, and at the remedy stage, irreparable harm is being used to reintroduce a materiality standard to trademark.)
 
Lack of control over the quality of Pur’s products: Pom argued that it was at risk if even “a single incident of poor quality control or a single consumer getting ill from drinking pūr pŏm” was reported. Again, this would be true in every trademark infringement case. There was no evidence that pūr pŏm had caused illness, or facts allowing a reasonable inference that this would occur in the future.
 
Pom argued that the danger to it was great because Pur’s principal was Hubbard, “a litigious and shifty business owner with a checkered past.” Pom proffered evidence that Hubbard has been charged with theft, criminal trespass, assault, and attempting to elude the police, and that he had routinely been “vengeful” in previous litigation to which he has been a party.  As Pom noted, Hubbard had filed a cancellation petition.  But Hubbard explained that he did so based on research indicating that Pom Wonderful has never used POM as a trademark without the “o” in the shape of a heart. Thus, he asserts, Pom was improperly granted a trademark and/or that it abandoned the word mark by not using “POM” in commerce. The court would not impute bad faith to Hubbard based on the fact that he exercised his legal right to file such a petition; plus, that’s unrelated to irreparable harm from continued infringement.
 
Pur said that all its remaining inventory was pūr pŏm as opposed to other products; Pom argued that this made clear that Pur was relying on confusion to stay in business.  That might be true, or maybe he hadn’t been successful in selling pūr pŏm, which would cut against finding irreparable harm.
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