bad influence: claims against vodka producer proceed, including failure to disclose endorser payments

Posted on June 27, 2024 by rtushnet

Sava v. 21st Century Spirits, LLC, 2024 WL
3161625, No. 22 C 6083 (N.D. Ill. Jun. 25, 2024)

21st Century sells Blue Ice Vodka and uses influencers
to promote it. Plaintiffs brought claims under the state consumer protection
statutes of Florida, Illinois, and California, as well as unjust enrichment,
negligent misrepresentation, and breach of express warranty. Some of their
claims survive.

Plaintiffs challenged representations that Blue Ice is
“handcrafted,” is manufactured in a distillery owned by 21st Century, is
filtered four or five times, “tastes better than other vodkas,” has between 52
and 57 calories per ounce, and is “fit-friendly” and has “health benefits,”
including that it helps with personal fitness and weight management. In
addition, they challenged failure to disclose 21st Century’s
relationships with influencers, one of whom stated that she makes Blue Ice
cocktails that have fewer calories than an apple, allegedly implying that Blue
Ice “is the healthier alternative.” Plaintiffs alleged that Blue Ice (1) is not
“handcrafted” but is, rather, “industrially manufactured” by machines without
the “constant supervision of a human,” (2) is not filtered multiple times but
is, rather, filtered only once, (3) is not better tasting than other vodkas but
is, rather, “inferior,” “generic,” “substandard,” and “low quality,” (4) is not
a “healthy product” that helps with personal fitness and weight management but
is a product that “poses significant health risks,” and (5) is not manufactured
in a distillery owned by 21st Century but is, rather, manufactured as a
“private label” for 21st Century at a distillery owned by Distilled Resources
Inc. Despite that, to give the impression that Blue Ice is manufactured in a
distillery owned by 21st Century and dedicated only to the production of Blue
Ice, 21st Century allegedly includes on the Blue Ice website a doctored
photograph of the Distilled Resources distillery, digitally placing the Blue
Ice logo over the distillery’s actual sign.

allegedly altered sign

actual industrial production facility, as alleged

They further alleged that Blue Ice does not, as alleged,
have either 52 or 57 calories per ounce but has, instead, no fewer than 64
calories per ounce. Nor does Blue Ice have only 52 calories per serving;
rather, Blue Ice has at least 96 calories per serving.

Skipping a lot of procedural stuff: While plaintiffs’
allegation that one influencer “compares vodka with an apple, suggesting that
vodka is the healthier alternative” paraphrased the actual statement (“I make
fit-friendly cocktails that have fewer calories than an apple.”), “it is not
for the court to decide on a motion to dismiss whether a consumer might or
might not reasonably understand the Influencer’s actual representation to
suggest.” Also, whether “handcrafted” may be deceptive in a particular case
depends, at least in part, on the size of the brand holding its products out as
“handcrafted,” and plaintiffs sufficiently alleged that Blue Ice was not a mass
seller, so reasonable consumers could believe it “handcrafted” its vodka.

However, “best tasting” was puffery in the context of the
statement “We are handcrafted and American made with a singular goal – to
create the best tasting vodka. Because taste is everything.”

Disclosure of material connections: The court reasoned that,
although the states had adopted FTC rules and guides as their own, the guides
remained only guides, not the source of per se violations of statutes like
FDUTPA (Florida’s law). Nonetheless, Florida had still instructed that “due
consideration and great weight shall be given to the interpretations of the
Federal Trade Commission and the federal courts relating to [Section] 5(a)(1)
of the Federal Trade Commission Act” when courts are construing “unfair or
deceptive acts or practices in the conduct of any trade or commerce.”

Plaintiffs alleged both representations and omissions that
could meet the relevant standard. “[T]he court finds it nearly frivolous to
argue that a reasonable consumer might not be deceived by defendants’
representations that Blue Ice is filtered multiple times or has as few as 52
calories per serving. These representations are specific and unambiguous and
simply cannot be given to ‘fanciful interpretation.’ Put another way, these
representations are the antithesis of puffery.” Likewise, “it is difficult to
comprehend how a reasonable consumer could not be deceived by 21st Century’s
representation on the Blue Ice website, where 21st Century has allegedly
doctored a photograph of the distillery by placing its own logo over the logo
of the actual distillery.” And, as to claims that the vodka had health benefits
that may help with personal fitness and weight management, the Alcohol and
Tobacco Tax and Trade Bureau (TTB) views such representations as “mislead[ing]
consumers by presenting incomplete information about the health effects and
nutritional content of alcohol beverages.” This didn’t control the outcome, but
it “strongly suggests that a reasonable consumer might be misled.”

Defendants also argued that “there is no allegation of an
endorsement,” and “a photograph [of an Influencer] holding Blue Ice or
mentioning [that] a cocktail was made with Blue Ice … is not an endorsement
or advertisement within the meaning of Section 255.5 [of the FTC Endorsement
Guides].” The court gave this argument way more weight than it deserved, noting
that many of the posts involved far more than holding/mentioning. The court
pointed to posts like, “There’s nothing better than relaxing with a smooth
@blueicevodkausa cocktail in hand after a long day. With only 52 calories a
serving, no sugar added and gluten free, Blue Ice can definitely help you stay
fit during quarantine. Have a bottle delivered to your door … .
#fitfriendlyvodka #ketofriendly #potatovodka #vodka.” Anyway, the FTC considers
“testimonials” interchangeable with endorsements, meaning “any advertising
message … that consumers are likely to believe reflects the opinions,
beliefs, findings, or experiences of a party other than the sponsoring
advertiser.” “Drawing all reasonable inferences in plaintiffs’ favor, at least
a significant majority of these posts qualify.”

21st Century argued that reasonable consumers
would know that the influencers were paid and thus didn’t need disclosure.
Plaintiffs specifically alleged that they took the influencers to be offering
“honest advice” about Blue Ice and “would not have purchased [Blue Ice]
products if they knew that the Influencers were paid” to promote it. And disclosure
“might materially affect the weight or credibility of the [Influencers’]
endorsements.”

Florida’s safe harbor didn’t apply because, although the TTB
approved the Blue Ice label, the alleged misrepresentations appeared only on
the secondary label and bottle collar, as well as the website/social media,
none of which were approved by the TTB.

So too with Illinois law, despite defendants’ arguments that
their conduct wasn’t in Illinois: “[W]here an Illinois consumer purchases a
product in Illinois that a company has marketed to Illinois and distributed for
sale in Illinois, the transaction has occurred ‘primarily and substantially’ in
Illinois.” Unjust enrichment under Illinois law survived, but not under Florida
law because of an unanswered argument that Florida law requires that any
benefit must be directly conferred on the defendant by the plaintiff. Express
warranty claims failed for want of privity.

 

from Blogger http://tushnet.blogspot.com/2024/06/bad-influence-claims-against-vodka.html

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Initial thoughts on Elster

Posted on June 17, 2024 by rtushnet

In part so as not to repudiate big chunks of Tam/Brunetti,
the Court instead delivers a major rebuke to Reed v. Town of Gilbert, 576 U.S.
155 (2015) (content-based regulation triggers strict scrutiny), except it
doesn’t tell us the scope of the change. The Court seems to rely on the idea
that we aren’t really worried that the registration system is government
suppression of specific ideas. If so, why did the sign regulations of a city
trigger that worry? And, trademark-specific question, does that mean that
trademark infringement claims are also not worrisome, or does the
difference between denying the benefits of registration and the full
suppression/punishment of infringement (and sign ordinances) matter? The swing away from Reed, which less than ten years ago was a major innovation that seemed highly deregulatory, is another example of how the weight of Trump-appointed judges is quickly changing the “conservative” approach to First Amendment free speech doctrine in ways that create divisions among conservatives, as even this relatively unimportant issue demonstrates. (My article with Mark Lemley doesn’t cover Elster, but it talks a bit about this dynamic.)

Justice Thomas’s project of dismantling modern defamation
law is the undercurrent of his insistence that history and tradition answers
the question here. Trademark, conveniently for him, even uses the word
“reputation”! Justice Barrett does a good job of showing that history and
tradition doesn’t give anything like an answer without also picking a level of
generality according to some other principle—since modern registration doesn’t
have a history and tradition until the 1940s. This leads her to a surprisingly
Breyer-like place of balancing interests.

Under Thomas’s approach, we learn that it just doesn’t
matter how tailored the rule is to the underlying interest in protecting
against fraud/false connections with people/free riding on their reputations,
because 2(c) is enough like previous doctrines reserving rights in names to
people who have those names. That reads like a jump away from strict scrutiny
right down to rational basis scrutiny, which is concerning, especially since we
don’t know what “enough like” means. Next up in registration: flags? Special
protections for wines and spirits?

Dilution: tarnishment’s obvious viewpoint-discrimination
problem remains untouched by this decision. Some parts of the opinions suggest
openness to blurring, whatever the hell blurring is: Defenders of blurring will
point to the opinions’ discussions of protecting “reputation” and deterring
free riding as legitimate justifications for trademark registration bars,
without inquiry into the contours of those concepts or the difference between
registration bars and infringement, as well as Thomas’s discussion of the Gay
Olympics case, S.F. Arts & Athletics, Inc. v. USOC, 483 U.S. 522 (1987). (Ah
yes, the grand history & tradition of making USOC-specific laws.) On the
other side, the lack of historical precedent for blurring seems like a problem
for some number of Justices (even if a free-riding-based cause of action might
be ok). Uncertainties are multiplied by the explicit “good for this day and
train only” statements in Thomas’s opinion, as against Barrett’s call for an
actual rule of general applicability. For example, I think it would clearly be
a mistake to read this opinion as holding that personality interests could
justify prohibiting Elster from selling shirts that say TRUMP TOO SMALL,
despite the lack of much explicit discussion in the opinions. But that just
takes us back to the question of S.F. Arts & Athletics.

from Blogger http://tushnet.blogspot.com/2024/06/initial-thoughts-on-elster.html

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Is a free trial version “commercial speech”?

Posted on June 11, 2024 by rtushnet

Enigma Software Gp. USA LLC v. Malwarebytes Inc., 2024 WL
2883671, No. 17-cv-02915-EJD (N.D. Cal. Jun. 6, 2024)

This is the latest decision in long-running litigation over
Malwarebytes’ characterization of Enigma’s competing cybersecurity and
anti-malware software as “malicious,” a “threat,” and as a Potentially Unwanted
Program (“PUP”). The court refuses to dismiss Malwarebyte’s claims for violations
of the Lanham Act; violations of New York General Business Law § 349; and
tortious interference with business (the last on the ground that the 9th
Circuit already said it was sufficiently pled).

Malwarebytes argued that its characterizations of Enigma’s
products as “malicious” and a “threat” didn’t occur in commercial advertising
or promotion but rather as part of the operation of its products. The court
characterized this as a fact-driven question (raising the issue of whether the jury
will be asked to decide it).

screenshot of Malwarebytes characterizing Enigma programs as threats; green “upgrade now” button at top of screen

There’s no categorical rule that in-product statements are
immune from Lanham Act claims. Here, the allegations sufficiently stated a
marketing context. (It’s not clear to me, but it’s possible that the court is holding
that this is true only to the extent that they were presented with the free
version with an upselling invitation. I think that, as to the free trial version, this is difficult–Eric Goldman doesn’t–it seems to me distinguishable from the database ROP cases where people get truthful information about other people during a free trial and also an invitation to access further/more entries in the database, because Malwarebytes is offering a non-informational service–removing programs–in the upsell, not additional noncommercial speech content. But it does seem like an edge case.)

Were the statements in an advertisement? The court reasoned
that, although the words at issue—“malicious” and “threat”—were not themselves
advertisements, “Enigma has alleged facts permitting an inference in its favor
that Malwarebytes makes the speech in an advertising context.” Specifically, it
alleged that the words appeared “during a free trial period designed to
showcase Malwarebytes’s product capabilities,” so that the users experience “a
marketing mechanism for Malwarebytes to entice users to ultimately purchase the
Malwarebytes products.” Enigma alleged that Malwarebytes displays the
challenged speech directly alongside buttons with phrases such as “Upgrade
Now.” See SAC ¶¶ 118–19 (depicting scan results with “threats” near “Upgrade
Now” button). This was plausibly an advertisement for purportedly superior
products.

Other relevant factors—whether the speech refers to a
particular product and whether the speaker has an economic motivation—also
weighed in favor of characterizing this as commercial speech. (The court also
cited the competition between the parties as relevant to satisfying the Gordon
& Breach test for commercial advertising or promotion, even though Lexmark
should probably be understood as removing that requirement.)

Enigma also sufficiently alleged that the statements were
made to encourage people to buy Malwarebytes’ products and were sufficiently
disseminated to the relevant purchasing public, even though only existing Malwarebytes
customers saw the designations, because Enigma alleged that the majority of
Malwarebytes users are free users and not paying customers, and that
Malwarebytes’s sales model relies on its free programs to function as
advertisements to induce users to upgrade to paid products. Malwarebytes allegedly
displays the challenged designations to all consumers who seek to
simultaneously deploy both Malwarebytes and Enigma products.

Material deception: Malwarebytes argued that it sufficiently
disclosed to consumers its definitions for “threat” and “malicious,” as well as
the specific criteria used to reach those designations, so that a reasonable
consumer would understand that the challenged designations did not identify
Enigma’s software as malware. In addition, it argued, because the Ninth Circuit
held that the “PUP” classification was not an actionable statement of fact
under the Lanham Act, the challenged designations were not materially deceptive
because they were a disclosed result of the PUP classification and specifically
were not statements that Enigma’s products were malware.

The court disagreed. Enigma alleged that it received
hundreds of complaints from users of its products who had viewed Malwarebytes’s
designations, and that the complaints included statements indicating that the
users understood the designations to identify Enigma’s products as malware. Customers
allegedly canceled orders for Enigma’s software and requested refunds, which
allowed the court to infer that the statements influenced users’ purchasing
decisions. The disclosures weren’t dispositive at the motion to dismiss stage.

The NYGBL claim survived for the same reasons.

from Blogger http://tushnet.blogspot.com/2024/06/is-free-trial-version-commercial-speech.html

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where ingredients list can’t clarify ambiguity, “manage blood sugar” claim is plausibly misleading

Posted on June 10, 2024 by rtushnet

Prescott v. Abbott Laboratories, — F.Supp.3d —-, 2024 WL
2843092, No. 23-cv-04348-PCP (N.D. Cal. Jun. 5, 2024)

Abbott Laboratories’s Glucerna line of powders and shakes
are marketed as scientifically designed for people with diabetes to help manage
blood sugar. Plaintiffs alleged that because the products contain sucralose and
other additives, the products don’t provide the promised health benefits. They
brought the usual
California statutory claims. The court accepts the allegations as
sufficient, except for standing for injunctive relief.

The challenged language includes “to help manage blood
sugar,” “#1 doctor recommended brand,” and “scientifically designed for people
with diabetes.” The side label states that the beverages are “designed to help
minimize blood sugar spikes in people with diabetes compared to high glycemic
carbohydrates.”

one of the challenged products with front label claims

“Online and in stores, Glucerna shakes and powders are
placed with health and nutritional supplements near diabetes diagnostic
equipment and blood glucose tests. One retailer specifically categorizes
Glucerna products as ‘Diabetes Management’ on its website.” Plaintiffs alleged
that the artificial sweetener used, sucralose, is associated with obesity, type
2 diabetes (as well as its precursor condition, metabolic syndrome),
hypertension, and cardiovascular disease; that sucralose can deregulate blood
sugar by disrupting the gut microbiome and killing pancreatic cells that release
insulin; and that sucralose can cause cells to become resistant to insulin,
which can lead to type 2 diabetes or obesity. Several organizations, including
the World Health Organization, have advised against consuming sucralose and
other artificial sweeteners. Plaintiffs cited similar scientific findings for
the additional ingredients maltodextrin and carrageenan.

They alleged that “#1 doctor recommended brand” and “scientifically
designed for people with diabetes” conveyed that Glucerna products “aid in
managing blood sugar generally” and are “scientifically capable of the
treatment of diabetes or other health conditions.”

Abbott argued that the labels didn’t make such broad claims:
they didn’t plausibly advertise that the products were “over-the-counter aids
to help manage diabetes and blood sugar generally” and “can be used to
regulate, achieve, and manage normal and healthy blood sugar levels.” Instead,
the drinks were merely intended as a “snack or meal replacement” formulated “to
help minimize blood sugar spikes in people with diabetes compared to high
glycemic carbohydrates.”

This was a factual question. And unlike in other cases where
an ambiguous label could be easily clarified by reading the ingredient list, the
side label explanation about minimizing blood sugar spikes didn’t directly contradict
the claims that plaintiffs alleged they took away. “This is not the sort of
ambiguity that can be definitively resolved by reference to a back label.”
Plaintiffs also  plausibly alleged that
the other claims on the front label—that Glucerna products are recommended by
doctors and scientifically designed for diabetics—make more sweeping
representations about how the products work.

As for the alleged harms of the ingredients, Abbott argued
that the studies cited didn’t support the claims and that plaintiffs had
layered inference on top of inference. This was a factual question that could not
be resolved at this stage. “If the allegations directly contradicted the cited
studies plaintiffs’ allegations might fairly be deemed implausible, but that is
not the case here.” 

However, plaintiffs’ alleged intent to buy Glucerna products
again in the future if they can be sure the products will provide the promised
benefits was insufficient; because of the nature ofe the alleged deception,
they could easily determine based on the ingredients list whether Glucerna had
been reformulated without the challenged ingredients.

from Blogger http://tushnet.blogspot.com/2024/06/where-ingredients-list-cant-clarify.html

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“#1 Brand” claim was literally false because of apples-to-oranges comparison

Posted on June 10, 2024 by rtushnet

Zesty Paws LLC v. Nutramax Labs., Inc., No. 23 Civ. 10849
(LGS), 2024 WL 2853622 (S.D.N.Y. Jun. 4, 2024)

Finding Zesty Paws’ “#1 Brand” claim literally false, the
court grants a preliminary injunction despite Zesty Paws’ attempt to create a factual
dispute about what a “brand” is.

Nutramax and Zesty Paws are direct competitors in the pet
supplement market. Zesty Paws’ products claim to promote joint health (Mobility
Bites), behavioral health (Calming Bites), gut health (Probiotic Bites) and
skin and coat health (Skin & Coat Bites). Nutramax’s products are intended
to support similar pet health needs: joint health (Cosequin and Dasuquin),
behavioral health (Solliquin), gut health (Proviable) and skin and coat health
(Welactin).

Zesty Paws began an advertising campaign claiming to be (1)
the “#1 Brand of Pet Supplements in the USA,” (2) “USA’s #1 Brand of Pet
Supplements” and (3) the “#1 selling Pet Supplement Brand in the USA.” Nutramax
and Zesty Paws stipulated that, at relevant times, (1) the combined sales of
Nutramax pet supplement products exceeded the combined sales of Zesty Paws pet
supplement products and (2) the combined sales of Zesty Paws pet supplement
products exceeded the combined sales of each individual pet supplement product
sold by Nutramax, including Cosequin and Dasuquin. (This seems like a classic
apples-to-oranges comparison. Zesty Paws even uses “TM” on some of its
advertising for, e.g., the Mobility Bites, suggesting that it’s trying to have
sub-brands too, though it may have dialed back on that attempt for purposes of
this litigation.)

#1 selling pet supplements brand in the USA ad from website

Mobility Bites image using TM symbol after Mobility Bites

The court found that Nutramax showed that the claims were likely
literally false. The dispute turned on what a “brand” is; Zesty Paws argued
that Nutramax was not a brand, but Cosequin etc. were. 

Based on the ordinary dictionary meaning of “brand,”
Nutramax was a brand. Nutramax also offered two experts from
business/management schools who testified that Nutramax satisfied the
definition of a “distinctive feature … that identifies goods or services.” It’s
used on every package and in advertising. Zesty Paws’ arguments to the contrary
critiqued the strength of the brand, not its existence; Zesty Paws argued that
it was the #1 “driver brand” in the US, that is, “the brand name that plays the
primary driver role in a consumer’s purchase decision.”

But that didn’t create ambiguity. The ordinary meaning of “brand”
didn’t include the primary driver concept. (A brand can be a limping mark!)  And there was no evidence that consumers
understood the #1 Claims to refer to a “driver brand,” whether from expert
opinion, survey, academic literature or even anecdotal evidence.

Zesty Paws’ expert’s survey didn’t address how consumers interpreted
the #1 claims. Instead, the survey respondents saw an image of Nutramax’s
Cosequin product and asked to specify “the brand name of the product, any other
names the product goes by, and the manufacturer of the product.” In response,
“86.8 percent of respondents identified Cosequin® as the brand name of the
product,” and “10.1 percent of respondents indicated that Nutramax Labs was the
brand of the product.” The main survey question asked, “Based on your review,
what brand is this product? (Please be as specific as possible.)” That was less
about whether respondents generally perceive NUTRAMAX to be a brand in its own
right and more about whether respondents identify NUTRAMAX to be the most
specific brand name of the particular Cosequin product package. Both ecommerce
listings and the tamper-evident seal, not shown to respondents, referenced
Nutramax.  “Even without these cues, 10.1
percent of respondents still identified NUTRAMAX as the brand for the Cosequin
product. Zesty Paws’ own internal brand awareness studies from about 2020
through 2022 showed that NUTRAMAX frequently scored higher than ZESTY PAWS when
respondents were presented with a list of brands that included both names.” Nor
did Nutramax’s internal documents concerning a possible move to a
COSEQUIN-centered branding strategy matter, because the strategy was never
implemented.

Market research data that aggregated sales data under one “brand”
per product were also unhelpful, since there can be several brands associated
with a product, e.g., Frito Lay® Flamin’ Hot® Cheetos®.” In other words, that
COSEQUIN is a brand does not mean that NUTRAMAX is not also a brand. Also,
Zesty Paws suggested how one of the market research entities should make the
brand comparison, encouraging it to reach out with any questions about “brand
delineation” and stating, “As a reminder, please ensure all brands are
evaluated at the consumer facing level (i.e. Dasuquin not Nutramax) ….” And
an expert testified that “[t]here is nothing [about] Nielsen’s processes or
motivations as a data seller that makes them an authority on what is and is not
a brand.” They could be inaccurate and inconsistent, and they tracked only a
small segment of the pet supplement market.

Thus, Nutramax would likely show literal falsity.

Materiality: Nutramax’s expert testimony satisfied its
burden. One marketing expert testified that the effectiveness of various number
one claims “has been studied for a long time by academic marketers and there is
very consistent evidence that when you make a number one claim, you enhance the
perceptions and the purchase of the claimed brand and you depress the
perceptions and the purchase of the non-claimed brands.” He also testified that
a number one claim in this case is “especially potent because … we don’t
actually get direct experience with these products and so we really have to
rely on these claims even more than [we] would with a product like Coke or
Pepsi where we get to taste it for ourselves.”

Injury: Likewise, the experts testified that this would
likely harm Nutramax, both in the eyes of consumers and retailers: “[t]he
belief that Zesty Paws is the market leader will likely lead retailers to give
Zesty Paws more shelf space, more prominent shelf positioning and overall
increased availability of Zesty Paws products.”

Irreparable harm was presumed and not rebutted by a five-month
delay in bringing a preliminary injunction motion because “Nutramax first sent
Zesty Paws a notice-of-dispute letter about the #1 Claims on July 17, 2023,
shortly after learning of them. The parties then continued to exchange letters
until they participated in an unsuccessful mediation on December 7, 2023. Zesty
Paws commenced this action on December 13, 2023, and Nutramax filed its
preliminary injunction motion on December 22, 2023.” That didn’t show any lack
of worry about harm on Nutramax’s part.  

In addition, Nutramax’s experts specifically testified that,
in the court’s words, “once a brand’s market leadership is lost, that loss is
nearly always permanent along with the benefits brought by the market
leadership position.” He stated: “[W]hat we find from the extensive literature
is that consumers think more highly of number one brands, they perceive them to
be higher quality, they are going to purchase them more frequently, [and]
they’re willing to pay more for those products because of that associated
higher quality.” Indeed, the court summarized, “the power of signaling market
leadership is so strong that even when consumers misperceive a brand as a
market leader, the misperceived brand still accrues all of the benefits of
market leadership, particularly higher evaluations from consumers.” A second
marketing expert testified that lost market share is difficult to regain due to
habit, status quo and brand loyalty.

With that out of the way, a preliminary injunction was
essentially inevitable.

from Blogger http://tushnet.blogspot.com/2024/06/1-brand-claim-was-literally-false.html

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Another challenge to “up to 8 hours of relief” proceeds

Posted on June 4, 2024 by rtushnet

Sheiner v. Supervalu Inc., 2024 WL 2803030, No. 22 Civ.
10262 (NSR) (S.D.N.Y. May 28, 2024)

Supervalu sold a “Maximum Strength Lidocaine Patch” product
which contained “topical anesthetic 4% Lidocaine” which “desensitize[s]
aggravated nerves” to provide “temporary relief of pain” to the “back, neck,
shoulders, knees, elbows” for “up to 8 Hours of relief.” Sheiner’s GBL claims challenged
the “up to 8 hours numbing relief” claim, alleging that the patch “is unable to
adhere to skin for more than four hours, often peeling off within minutes of
light activity” and “did not reliably adhere to Plaintiff’s body for anywhere
close to eight hours, which prevented it from providing even temporary pain
relief,” also citing a study by the Journal of Pain Research.

Sheiner also challenged “Maximum Strength” because “prescription
lidocaine patches exist on the market that deliver greater amounts of lidocaine
to the user.” In addition, the package’s “compare to Salonpas® Lidocaine Patch
active ingredient” instruction allegedly contributed to confusion because
Supervalu’s product “contains roughly forty percent less lidocaine” than found
in the Salonpas® OTC Lidocaine Patch product.

In addition, Steiner alleged that the phrase “numbing
relief” implies the OTC Product provides relief associated with “medical
treatments requiring a prescription and FDA approval,” implying that the
product would “completely block and numb nerves and pain receptors, eliminate
responses to painful stimuli, and can treat neuropathic and musculoskeletal
pain, including back pain.”

Supervalu argued that courts have “recognized that ‘up to’
statements ‘are generally not construed as concrete promises about a product’s
maximum yield.’ ” But it was “plausible to contend that the ‘Up to 8 Hours’
language on the label indicates the patch can provide pain relief for as long
as eight hours, and the label says nothing about other factors relating to the
patch that may result in a much shorter period of pain relief.” Compared to
other situations, where self-evident or disclosed contextual factors (like the strength
at which coffee is brewed affecting the number of cups that could be brewed
from a given amount) informed consumers about whether they could expect to get
the “up to” results, “the lidocaine patch labels at issue ‘include no
identification of any factors that might limit the amount of time that the
patch would remain adhered to the body and deliver relief.’ ”

The other alleged deceptions failed less well: “The argument
that a consumer would expect an OTC product to be equivalent to the most
powerful prescription medicine is a nonstarter.” A reasonable consumer “would
plainly ‘understand that OTC products differ from products that are available
with a prescription,’ ” and contain only the “maximum strength” dose available
at the drug store. But 4% is the maximum lidocaine concentration allowed by law
in OTC products, which this product had, and Steiner failed to identify an OTC
lidocaine patch available on the market that is stronger. (The court
distinguished cases reaching the opposite conclusion; they only made sense when
an OTC drugmaker made a direct comparison to a prescription product.) Also,
even if the FDA cautioned manufacturers not to use “Maximum Strength” claims, “the
FDA’s regulations or views are irrelevant or at least not dispositive when it
comes to determining whether a reasonable consumer would be deceived or misled
under GBL §§ 349-50.”

Claims based on “numbing relief” also failed. The
interpretation that it would completely block pain was unreasonable. The label
explicitly limits its use to “temporary relief of pain,” and Steiner didn’t
even allege that he believed that the product would completely block or
eliminate pain. Breach of express warranty claims failed for want of timely,
prelitigation notice.  

On fraud, the plaintiff failed to allege facts that give
rise to a strong inference of fraudulent intent.

from Blogger http://tushnet.blogspot.com/2024/06/another-challenge-to-up-to-8-hours-of.html

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Second Circuit affirms rejection of “All Natural” survey as too leading

Posted on June 3, 2024 by rtushnet

Bustamante v. KIND, LLC, 100 F.4th 419 (2d Cir. 2024)

The court of appeals affirmed summary judgment in favor of
KIND on Bustamante’s false advertising consumer protection class action claims
based on KIND’s “All Natural” labeling. The complaint alleged that eleven
ingredients contained in some relevant KIND products were “non-natural”: Soy
Lecithin; Soy Protein Isolate; Citrus Pectin; Glucose Syrup/“Non GMO” Glucose;
Vegetable Glycerine; Palm Kernel Oil; Canola Oil; Ascorbic Acid; Vitamin A
Acetate; D-Alpha Tocopheryl Acetate/Vitamin E; and Annatto.

Eventually, the district court excluded plaintiffs’ survey
and scientific experts and granted summary judgment.

“To establish deception under the reasonable consumer
standard at the summary judgment stage, plaintiffs must present admissible
evidence establishing how the challenged statement – ‘All Natural’ – tends to
mislead reasonable consumers acting reasonably.”

Although errors in survey methodology generally go only to
weight rather than admissibility, it was not an abuse of discretion to exclude
the survey expert here. The court found that the survey “does not assist the
trier of fact because it is biased, leading, and to the extent it provides any
insight, cannot provide the objective standard necessary to answer the key
question in this case.”

The survey surveyed California, Florida, and New York
consumers who had purchased KIND products, or products from a KIND competitor,
in the last twelve months. Respondents saw “a mock-up of the front of a
brand-neutral product package and [were instructed] to ‘examine it like you
were shopping’ ” and “to assume that the nutrition snack bar is a ‘popular
national brand.’ ” The mock-up label displayed the words “All Natural,” and in
several respects resembled the packaging of a KIND bar.

The first relevant question asked: “Because of this
descriptor [All Natural], what is your expectation for this product?” It
offered three possible choices: (a) “Will NOT contain artificial and synthetic
ingredients;” (b) “Will contain artificial and synthetic ingredients;” or (c)
“Not sure/No expectation.” “86.4% of consumers expected the Product with the
‘All Natural’ claim ‘will NOT contain artificial and synthetic ingredients.’ ”
The survey did not define the terms “artificial” or “synthetic.”

The district court found that this question didn’t help
determine “in any meaningful sense how reasonable consumers understand the ‘All
Natural’ claim, or to test plaintiffs’ theory.” It was “biased” and “lead[ing]”
because it “improperly directs survey participants to the ‘correct’ answer” and
“is plainly designed to validate plaintiffs’ theory” of liability. This
characterization was not manifestly erroneous, especially because the expert
conceded that he “worded [his] substantive response options on the basis of
[his] understanding of the Plaintiffs’ theory of liability.” The Second Circuit
has previously held that a plaintiff could not rely on a survey based on a
question that, like this one, “was an obvious leading question in that it
suggested its own answer.” (Citing Universal City Studios, Inc. v. Nintendo
Co., 746 F.2d 112 (2d Cir. 1984), where the question was “To the best of your
knowledge, was the Donkey Kong game made with the approval or under the
authority of the people who produce the King Kong movies?” That’s a far more
leading question; the sin here seems to have been that the question was
closed-ended, even though it had a don’t know/not sure option. Would the Second
Circuit be ok with starting with an open-ended question? With asking people
whether “All Natural” means “no artificial/synthetic ingredients”? What else
could you possibly ask to test plaintiffs’ theory of liability?)

The choice “to display the ‘All Natural’ claim in isolation,
rather than as part of the ‘All Natural/Non GMO’ statement, as it always
appeared on KIND labels” further undercut the relevance of the results.

The second question asked: “Because of this descriptor [All
Natural], what is your expectation for this product?” The options were: (a) “Is
NOT made using these chemicals: Phosphoric Acid, Hexane, Potassium Hydroxide,
Ascorbic Acid”; (b) “Is made using these chemicals: Phosphoric Acid, Hexane,
Potassium Hydroxide, Ascorbic Acid”; or (c) “Not sure/No expectation.” The
survey didn’t describe or define these “chemicals” (court’s scare quotes). The
results were similar: over 76% of respondents chose (a)

It was also not manifestly erroneous to find this
irrelevant. By providing a list, the survey “led survey participants down the
path of selecting the answer preferred by plaintiffs.” (Would it have been
better to give them an actual ingredient list?) Also, by listing the
“chemicals” without defining them, the survey failed to differentiate between
“ascorbic acid,” a form of Vitamin C safe for human consumption, and
“phosphoric acid,” which is “not safe for ingestion.”

Likewise, it was not an abuse of discretion to exclude the
scientific expert because he wouldn’t assist in identifying what reasonable
consumers considered artificial or synthetic. He developed a framework that “examined
each ingredient’s origin, the extent to which the ingredient had been processed
from its natural form, and the final form of the ingredient.” He opined on
whether the ingredients could be classified as “natural” under his framework,
but didn’t apply a definition used elsewhere, including in the complaint or by
the survey. Nor did he specifically analyze KIND ingredients, only how they
were “typically” sourced. “But, without some evidence to the contrary, there is
no reason to assume that [the expert’s] personal understanding of the term ‘natural’
is relevant to how a reasonable consumer would understand that same term.”
Because of that flaw, “the report adds no useful information that would help
the trier of fact determine the answer to the relevant legal question: whether
consumers were actually deceived.”

Without the expert evidence, summary judgment for KIND was
appropriate. Named plaintiffs’ own testimony wasn’t enough because they didn’t
provide a cohesive definition of what “All Natural” meant, whether it would
mean “containing no artificial or synthetic ingredients, or what it means to be
artificial or synthetic. Plaintiffs’ depositions instead showed how variable
definitions of “All Natural” can be:

For example, one plaintiff
testified that she expected “All Natural” to mean not synthetic. Another
plaintiff testified that she expected “All Natural” to mean that the product
was made from whole grains, nuts, and fruit. Yet another explained her belief
that “All Natural” meant that the ingredients were literally plucked from the
ground. Notably, several plaintiffs testified that consumers could have
different understandings about the implications of the term “All Natural,” that
these understandings could change over time, and that not everyone would agree
with their particular understanding of that term. Plaintiffs fail to explain
how a trier of fact could apply these shifting definitions to reach a
conclusion as to whether the use of the term “All Natural” on KIND product
labels was deceptive.

KIND’s own internal documents weren’t helpful because all
they showed was that KIND had its own conception of the term, but didn’t show
what a reasonable consumer’s understanding was. (Courts used to be more willing
to say “the seller’s beliefs about what its audience wants are good
circumstantial evidence, given the seller’s incentives,” and they still do in
trademark cases.) The FDA’s own request for comments also demonstrated lots of
varied understandings.

Nor was it enough for plaintiffs to use the dictionary.
(That’s just for courts.) The definition identified, “existing in or caused by
nature; not made or caused by humankind,” “is not useful when applied to a
mass-produced snack bar wrapped in plastic. Such a bar is clearly made by
humans.”

 

from Blogger http://tushnet.blogspot.com/2024/06/second-circuit-affirms-rejection-of-all.html

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“up to” absorbency claims for period underwear were plausibly misleading

Posted on May 28, 2024 by rtushnet

Gamino v. Thinx Inc.,
No. EDCV 23-2067 JGB (SHKx), 2024 WL 2429307 (C.D. Cal. Apr. 18, 2024)

Gamino brought a
host of California statutory and common law claims against Thinx, alleging that
Thinx’s period underwear didn’t function as advertised; specifically, that it
was incapable of holding the amount of liquid advertised. The court declined to
dismiss the complaint on a variety of grounds.  

Thinx argued that
the absorbency of its products is advertised as performing “up to” a certain
threshold, and that reasonable consumers therefore expect that the products’
performance could be less than the maximum. In addition, it argued that no
reasonable consumer would read the phrase “prevents leaks” as guaranteeing the
products will “absorb whatever amount of fluid is dispensed into them.”

The court disagreed:

The basis of Plaintiff’s claims is not that Defendant’s products
occasionally perform below the maximum absorbency advertised, but that the
products “do not hold” and “cannot absorb” the “claimed amounts of fluid, and
instead leak.” … Plaintiff alleges that Defendant represents its products’
absorbency using specific fluid amounts on its website, product pages, and
packaging. … Plaintiff also alleges that testing reveals representative Thinx
products cannot absorb the amount advertised on Thinx’s packaging and website,
but that each of the products leaks. …  Finally, Plaintiff alleges that other
consumers of Thinx products have experienced leakage “with even the smallest
amount[t] of blood” or “in less than 15 minutes.” … Based on Plaintiff’s
allegations, a reasonable consumer could be misled into believing Defendant’s
products can fulfill their advertised, maximum absorbency.

The court quoted
prior caselaw: “[M]ultiple courts have found that ‘up to’ representations may
materially mislead reasonable consumers.” The allegation that Thinx’s products
lacked the capacity to absorb the advertised amounts, plus the lack of
allegations that Thinx listed customer-specific factors which could reduce performance
(beyond the broad statement that “individual results may vary”), meant that “up
to” was no help.

Thinx also argued
that Gamino did not suffer an economic injury because she could have received a
refund for her purchase. That conflated injury with remedy—despite available
refunds, she suffered an economic injury “as soon as she relie[d] on a
defendant’s deceptive advertising and part[ed] with more money than she
otherwise would have paid.”

Also, Gamino plausibly
alleged lack of absorption with allegations of (1) her own experience, (2) the
experiences of other consumers, and (3) testing “by using cough syrup to mimic
the viscosity of menstrual flow, just as some manufacturers do to test pads and
tampons.” At this stage, she didn’t need to allege “which products were tested,
who did the testing, whether Thinx uses the same method to test its products,”
or “how much the products absorbed when she wore them.”

Gamino also had
standing to seek equitable remedies because she plausibly pled that she was
still interested in period underwear and wanted to purchase it if she could rely
on the advertising. “While the Court likely cannot order Defendant to
manufacture a wholly new product … it surely can issue some form of
injunctive relief that would redress Plaintiff’s injury.”

Finally, the court
declined to wait for the FDA under the primary jurisdiction doctrine. Among other
things, “there is no concrete evidence that the FDA is currently involved in
creating a new regulation about how to test the absorbency of period
underwear.” Courts “have generally declined to dismiss the complaint on primary
jurisdiction absent concrete evidence that the FDA is currently involved in
creating a new regulation concerning the subject of the lawsuit.”

from Blogger http://tushnet.blogspot.com/2024/05/up-to-absorbency-claims-for-period.html

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BIPLA (Boston Intellectual Property Law Association) Writing Competition call for papers

Posted on May 16, 2024 by rtushnet

1st Prize:$1,000

2nd Prize:$500 

BIPLA is once again holding its annual Writing Competition. Law school students are encouraged to submit papers relating to topics involving intellectual property law. Judges will consider the merits of each paper based on: (i) contribution to knowledge respecting intellectual property law; and (ii) the extent to which it displays original and creative thought or information not previously published or available. The requirements for eligibility are outlined below. 
 Content Rules
 1. Articles must be written solely by a student or students either in full-time or part-time attendance at a law school (day or evening) within the jurisdiction of the First Federal Judiciary Circuit or prepared in connection with a course at a law school in the First Circuit. 
 2. Articles must be written or published between September 1, 2024 and August 31, 2024.
 3. Articles must be submitted to the Boston Intellectual Property Law Association on or before September 30, 2024. 
 4. Papers should be no more than the equivalent of ten (10) law review pages including footnotes (30-40 pages typed copy). 
 5. Submission of the paper as a .pdf file is required. Submissions must include the submitter’s name, current address, current telephone number, law school, and employment information (if applicable).

Please send all article submissions to:

Kevin MacDonald, PhD

Shareholder

Wolf, Greenfield & Sacks, P.C.

Kevin.MacDonald@wolfgreenfield.com

Office: 617.646.8497

from Blogger http://tushnet.blogspot.com/2024/05/bipla-boston-intellectual-property-law.html

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Reminder on Call for Papers: Trademark and Unfair Competition Scholarship Roundtable 2024

Posted on May 13, 2024 by rtushnet

 The Trademark and Unfair Competition Scholarship Roundtable co-hosted by Harvard, NYU, and the University of Pennsylvania will take place this year at Harvard. The Roundtable is designed to be a forum for the discussion of current trademark, false advertising, and right of publicity scholarship, covering a range of methodologies, topics, and perspectives. Five to six papers will be chosen for discussion over the course of the Roundtable, with each paper allocated an entire hour for discussion and assigned a commentator.   

The Roundtable will be held on Friday, October 18, 2024. If there is a critical mass of papers, we may also extend the Roundtable through Saturday morning, October 19. Participation at the Roundtable will be limited and invitation-only and we expect all participants to have read the papers in advance. The Roundtable will cover the travel and lodging expenses for invited authors. 

We invite submissions from academics working on any aspect of trademark, false advertising, marketing, right of publicity, or related areas of the law. Priority will be given to those who can attend the entire event and a dinner the night of Friday, October 18. Submissions must be of full drafts in Microsoft word format. The deadline for submission is May 15, 2024, and decisions on participation will be made shortly thereafter, ideally, by June 1st.   

To submit a draft paper, please fill out the form here (https://ift.tt/j1twGQl) and upload an anonymized version of your draft.  Please note that the maximum file size that may be uploaded is 10MB. Appendices or other supporting material can be uploaded separately; please do not submit a CV or cover letter. 

For further information about the Roundtable, please email: Barton Beebe (NYU): barton.beebe@nyu.edu; Jennifer Rothman (Penn): rothmj@law.upenn.edu, or Rebecca Tushnet (Harvard): rtushnet@law.harvard.edu.

from Blogger http://tushnet.blogspot.com/2024/05/reminder-on-call-for-papers-trademark.html

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