Something fishy about this trademark claim?

Posted on June 20, 2014 by rtushnet

GurglePot, Inc. v. New Shreve, Crump & Low LLC, 2014 WL 2744283, No. C13–6029 (W.D. Wash. June 17, 2014)
I’m not really interested in the law in this personal jurisdiction case, finding that there’s no personal jurisdiction in plaintiff’s home state over Massachusetts-based New SCL for this the declaratory judgment of non-infringement. I just really liked the accused trade dress (I think it’s nicer than New SCL’s), and also it reminds me of Justice Scalia’s “cocktail shaker shaped like a penguin.”  Even if there is secondary meaning in the New SCL design, it seems to me that New SCL is asserting rights at the level of idea.

GurglePot

New SCL Gurgling Cod
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Apply fair use to burned area

Posted on June 19, 2014 by rtushnet

Via Five Useful Articles, this deposition excerpt from HathiTrust is nearly priceless–what takes it beyond the usual snark is the very last dig the HT lawyer gets in at the Authors Guild’s theory of the case.

So, HT’s lawyer snarks about multiple litigation copies of HT witness’s book the AG’s lawyer has made in preparation for the deposition; AG lawyer rises to the bait (even though the book is, according to another AG lawyer, CC/noncommercial licensed) and suggests he’ll destroy the extra copies before reading.  HT’s lawyer: “I guess if no one else looks at something, it’s not infringement? That’s an interesting theory.”

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"original" and "first" are mere puffery

Posted on June 18, 2014 by rtushnet


Bern Unlimited, Inc. v. Burton Corp., No. 11-12278, 2014 WL 2649006 (D. Mass. June 12, 2014)
Bern sued six of its competitors in the market for sports helmets, alleging trade dress infringement.  Answering Bern’s third amended complaint, defendants asserted false advertising counterclaims, which the court struck in part.
First, defendants alleged that Bern falsely advertised that its helmets were the “first visor helmet offering a protective visor cover in the front.” The court found this, and claims that the helmets were the “original” and the “first functional visor lid” to be puffery. They were not specific and measurable, and thus not actionable.  (No Dastar analysis required, then.)
Second, defendants alleged that Bern falsely advertised that its helmets were covered by a patent, implying that its competitors’ helmets were imitations.  Bern argued that there could be no falsity because the patent in fact issued and was presumed valid.  But the presumption can be overcome by showing objective and subjective bad faith.  What counts as bad faith is determined on a case by case basis; if the patentee knows of invalidity but represents that a competitor is infringing, that’s clearly bad faith.
The counterclaims alleged that Bern advertised and sold the helmet more than a year before the applicant applied for the patent, triggering the old on sale bar.  If the counterclaims were true, Bern’s statements that the patent covered the helmet were made in bad faith because it couldn’t reasonably have believed that the patent was valid.
Bern argued that statements could only be actionable if they directly referred to a competitor or its products, and that it didn’t explicitly claim that the defendants were infringing its patent.  But the counterclaims alleged that Bern characterized competing helmets as imitations, and did so in the same marketing materials that included references to the patent.  One ad included, on the same page, both a reproduction of the first page of the patent and the statement, “Every single brand in the market now has a brim, but your customer wants the original!”  While the argument that these statements in combination would reasonably cause consumers to believe that competing helmets were infringing was “thin, at best,” the allegations were sufficient to state a claim.
Bern also argued that defendants didn’t allege proximate cause, as required by Lexmark.  But Lexmark’s requirement of injury flowing directly from advertising is satisfied when “deception of consumers causes them to withhold trade from the [claimant].” The counterclaims properly alleged that scenario.
The court also rejected Bern’s argument that the counterclaims were added too late.  Defendants argued that they didn’t know until they received Bern’s document disclosure that Bern knew the patent was invalid from its inception, thus completing their counterclaim with the requisite bad faith.  The court had “doubts” about the timing and purpose of the counterclaims, but still declined to strike them on grounds of undue delay.  There would be some prejudice to Bern, because Bern would be entitled to discovery on deception and materiality (even though literal falsity creates a presumption of deception, that can be rebutted, and materiality has to be shown independently; thus discovery would be appropriate).  But that prejudice was not enough to overcome the interest in adjudicating related claims together; much relevant discovery was already completed, and it would be a waste to separate the claims.
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Washington’s football team registrations cancelled

Posted on June 18, 2014 by rtushnet

If you didn’t get the link from five other places, here it is.  (It turns out that today was a bad day to wear shorts to the office; it’s not the best outfit for being interviewed by a suited TV reporter.)

My contributions: a reminder that Renna v. County of Union has some very important things to say about the lack of protection for marks under sec. 43(a) when those marks are not registrable under sec. 2.

Also, a picture from my collection: I got this from a yard sale; the guy who made them was forced to discontinue them due to threats from the team.  (Object in center of card is an Indian-head nickel.)  You can see Bad Frog Beer hanging out behind the card.

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Grande deception?

Posted on June 18, 2014 by rtushnet
Starbucks and the “free” college education for its workers: The reporting on Starbucks’ offer has gone beyond the headline—and if treated like ordinary advertising, that headline is misleading.  As it turns out, Starbucks will only pay in full for two years, not four; it’s negotiated a discount with ASU online for everyone.  And Starbucks does not pay up front.  Instead, the employee must go out of pocket, and get reimbursed only after sufficient credits have been completed.  I don’t think this meets the standard for “free” offers set forth by the FTC.  Although most of the Guide is directed at other situations, it’s pretty clear that material constraints on the “free” offer have to be disclosed, and the requirement that the employee pay up front is quite significant, financially.  This seems to me similar to the cases involving purported early tax refunds, which were instead tax refund anticipation loans, with very different potential economic consequences.  Calling them “rapid refunds” was false and misleading. 
Consider also that Starbucks is using this announcement to tout its own specialness and corporate social responsibility, as on The Daily Show.  So it’s commercial speech, certainly under Nike v. Kasky.  Just as dolphin-safe tuna is an intangible product attribute that convinces consumers to buy even though saving dolphins does nothing for them directly, so is “free” college tuition for employees, something Jon Stewart highlighted when he stated that because of Starbucks’ announcement he’d be buying from one of their stores.  Given all this, should Starbucks be worried about its PR moment turning into a moment in court?
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Fair use decisionmaking

Posted on June 18, 2014 by rtushnet
Deconstructing arguments that treat fair use as a mysterious and dangerous concept: This detailed analysis of a flowchart is quite useful. And it cites the OTW’s Fair Use Test Suite!
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reading list: marijuana advertising and lessons from tobacco

Posted on June 17, 2014 by rtushnet

Kimber P. Richter, Ph.D., M.P.H. & Sharon Levy, M.D., M.P.H., Big Marijuana — Lessons from Big Tobacco, New England Journal of Medicine:

[T]obacco was not always as lethal or addictive as it is today. In the 1880s, few people used tobacco products, only 1% of tobacco was consumed in the form of manufactured cigarettes, and few deaths were attributed to tobacco use. By the 1950s, nearly half the population used tobacco, and 80% of tobacco use entailed cigarette smoking; several decades later, lung cancer became the top cause of cancer-related deaths. This transformation was achieved through tobacco-industry innovations in product development, marketing, and lobbying….

Marketing strategies go hand in hand with product innovation. The market for marijuana is currently small, amounting to 7% of Americans 12 years of age or older, just as the tobacco market was small in the early 20th century. Once machines began mass-producing cigarettes, marketing campaigns targeted women, children, and vulnerable groups by associating smoking with images of freedom, sex appeal, cartoon characters, and — in the early days — health benefits. There is reasonable evidence that marijuana reduces nausea and vomiting during cancer treatment, reverses AIDS-related wasting, and holds promise as an antispasmodic and analgesic agent. However, marijuana manufacturers and advocates are attributing numerous other health benefits to marijuana use — for example, effectiveness against anxiety — with no supporting evidence. Furthermore, the marijuana industry will have unprecedented opportunities for marketing on the Internet, where regulation is minimal and third-party tracking and direct-to-consumer marketing have become extremely lucrative. When applied to a harmful, addictive commodity, these marketing innovations could be disastrous. This strategy poses a particular threat to young people. Adolescents are more likely than adults to seek novelty and try new products.

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ALI CLE event on Lexmark, Pom, etc.

Posted on June 17, 2014 by rtushnet
First, I apologize for the slew of RSS feed updates you may recently have received if you subscribe via an RSS reader like Feedly—the feed has apparently been broken since early May. I was still here though!  If you’re interested, you can browse the archives at tushnet.blogspot.com, or use any tags of interest to see what you missed.  I have taken measures so I’ll notice earlier next time.
Advertising’s Day in Court: The Supreme Court takes a Stand on False Advertising
Thursday July 10, 2014 1:00 – 2:00 pm Eastern
The law of false advertising has attracted national attention. Two recent Supreme Court decisions interpreting the Lanham Act will provide companies with more flexibility in policing their competitor’s product claims.
The Supreme Court recently issued Lanham Act opinions in Lexmark International v. Static Control Components and POM Wonderful v. Coca Cola, involving standing and preclusion, respectively. The Third Circuit will soon address whether a Lanham Act plaintiff who shows a likelihood of succeeding on its false advertising claim is entitled to a presumption that the defendant’s conduct causes irreparable harm.
What impact will these decisions have on future actions under the Lanham Act? Learn more at this CLE on the latest rulings on the Lanham Act.
What You Will Learn
Discussion will include:
analysis of Court’s decisions in Lexmark and POM Wonderful
standing to bring suit under Lanham Act
FDA preclusion and preemption
remedies: injunctive relief vs. damages
Who Should Attend
This continuing legal education program from American Law Institute CLE will benefit in-house counsel, IP and business attorneys, and other professionals involved in business marketing.
Planning Chair
Christopher M. Kindel, Member, Pirkey Barber PLLC, Austin, Texas
Mr. Kindel focuses his practice on intellectual property trademark and copyright. His experience crosses a wide range of industries including consumer and luxury goods, retail sales, hotel services, music and entertainment, pharmaceuticals, software, financial and consulting services and information technologies industries.
Saul H. Perloff, Member, Norton Rose Fulbright LLP, San Antonio, Texas
Mr. Perloff is a partner in the firm’s Intellectual Property Group and the head of the false advertising group where he represents domestic and international clients in a wide range of complex advertising and unfair competition disputes under the Lanham Act and state law. He also counsels and advises pharmaceutical, consumer product, biotechnology and other clients on advertising and brand protection strategies.
Adam L. Scoville, Vice President & Assistant General Counsel, RE/MAX, LLC, Denver, Colorado
Mr. Scoville leads a team of over a half dozen professionals charged with advertising substantiation, trademarks and brand protection, and other intellectual property issues at RE/MAX, LLC, which franchises real estate brokerage operations with over 90,000 sales associates, in over 6,000 franchised offices, in over 95 countries.
Rebecca L. Tushnet, Professor of Law , Georgetown Law, Washington, D.C.
Professor Tushnet is a professor of law at Georgetown specializing in intellectual property and is a frequent author and speaker on the topic. She also writes the widely-followed 43(B)log False Advertising and More which reports on current IP cases, issues, conferences, and debates.
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Such a lonely word: "honest" isn’t puffery

Posted on June 16, 2014 by rtushnet
Salazar v. Honest Tea, Inc., 2014 WL 2593601, No. 2:13-cv-02318 (E.D. Cal. June 10, 2014)
Salazar alleged that HT’s Honey Green Tea bottles didn’t contain the amount of antioxidants represented on their labels, where independent lab testing determined that the bottles contained an average of 186.7 mg of flavonoids per bottle, or 24 percent below the “247 mg Antioxidants Green Tea Flavonoids Per Bottle” highlighted on the labels.  (Previous versions claimed “250mg EGCG2 Super Antioxidant,” though independent testing showed only 70 mg, and then “Antioxidants 190mg Tea Catechins/Bottle,” though independent testing showed only 119 mg.  Salazar alleged that HT changed its labels but not the formulation.)  Salazar alleged that HT’s “Refreshingly Honest” and “Brutally Honest,” and interactive campaigns centered on the word “honesty,” made this more deceptive.
Salazar brought the usual California claims.  HT argued express preemption, because her tests didn’t employ the FDA-mandated test protocol for nutrient content claims.  Salazar argued that the FDA requirements only apply to disclosures in the “Nutrition Facts,” and that HT’s alleged misrepresentations weren’t “nutrient content claims” subject to the FDA regulations.  The court disagreed.
Under FDA regulations, “compliance with requirements for nutrient content claims” must be determined by analyzing a sample consisting “of a composite of 12 subsamples (consumer units), taken 1 from each of 12 different randomly chosen shipping cases, to be representative of a lot.”  However, Salazar’s claims were based on (1) her own independent testing (finding, for example, an average of 70 mg of EGCG, less than a third of the claimed 250 mg amount, with similar lower-than-claimed results for catechins and bioflavonoids), (2) a report from ConsumerLab.com (finding 57.5 mg of EGCG, with similar lower-than-claimed results for catechins), (3) HT’s own marketing materials referring to supposed independent tests by Men’s Health Magazine(finding 71 mg).
The court found that the label statements were nutrient content claims even if not required to be in Nutrition Facts. Therefore, their accuracy had to be challenged under the 12-sample test method, which allowed for some variation in nutrient content of each individual product.  The complaint didn’t allege such testing. It was therefore dismissed with leave to amend.
However, the court did find that Salazar had standing, making the usual allegations of reliance.  But could she sue for the earlier labels, given that she began buying only in 2012?  At this stage, she’d alleged sufficient similarity between the Honey Green Tea products she bought and those she didn’t. The formulation was identical from 2008-2013, and all the variants related to the advertised antioxidant content.  Material differences, if any, were better addressed at the class certification stage.
HT argued that claims based on  the “Honest Tea” name; its “Refreshingly Honest” and “Brutally Honest” taglines; or its “just a tad sweet” and “a kiss of honey, but not enough to gross you out” statements should be dismissed because they are non-actionable puffery. Salazar argued that she believed them, as a reasonable consumer would.  While nonspecific, nonmeasurable assertions are puffery, some courts have found “honesty” to be actionable.  See, e.g., Richman v. Goldman Sachs Grp., Inc., 868 F.Supp.2d 261, 277 n. 8 (S.D.N.Y.2012) (“If Goldman’s claims of ‘honesty’ and ‘integrity’ are simply puffery, the world of finance may be in more trouble than we recognize.”).  The honey-related statements were more blatant puffery:
It is unclear how one could verify whether the level of honey in defendant’s product qualifies as a “kiss” and is “not enough to gross you out.” A “tad” and a “kiss” are vague and non-specific terms that lack any clear, objective indication of their levels. “Not enough to gross you out” is inherently subjective; two different consumers may have different tolerance levels to the honey.
Thus, the claims were dismissed with prejudice insofar as they relied on honey-related statements.
But “honesty” required more analysis.  The term’s frequent use in trademarks was “suggestive of its hyperbolic, generalized nature.”  HT’s use of “honest” was similar to non-actionable claims for “reliability” and “authentic[ity]” in other commercial product cases. “Adding the terms ‘refreshingly’ and ‘brutally’ to ‘honest’ in the tagline may appeal to consumers but may not substantively contribute to notions of honesty.”  On the other hand, “honest” might imply claims to provide only truthful information, and truthfulness can be measured. 
“Honest Tea” by itself also had a “concrete message.”  HT’s ad campaigns included a website posting, “Honest Tea: If it’s not real, it’s not Honest”; re-styling of the label to accentuate the word “Honest”; a billboard campaign of truths such as “YES, THAT DRESS DOES MAKE YOU LOOK FAT, BE REAL. GET HONEST” and “IT’S NOT ME IT’S YOU, BE REAL. GET HONEST”; and a National Honesty Index social experiment measuring compliance with an honor system across cities. As alleged, “defendant sets out to paint itself as honest and bases virtually its entire product image on that characteristic. These claims are not mere puffery.”
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infringement isn’t disparagement for advertising injury purposes

Posted on June 16, 2014 by rtushnet
Hartford Casualty Ins. Co. v. Swift Distribution, Inc., No. S207172, 2014 WL 2609753 (Cal. June 12, 2014)
The California Supreme Court here provides a relatively rare state court interpretation of the scope of an advertising-related insurance policy.  Hartford insured Swift (here, Ultimate) for claims arising from “[o]ral, written, or electronic publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services.”  A third party, Dahl, sued Ultimate, alleging patent and trademark infringement, false designation of origin, and damage to business, reputation, and goodwill based on Ultimate’s sale of a media cart.  Hartford denied coverage on the ground that the underlying suit didn’t allege disparagement.
The duty to defend is broad.  It can be triggered by the allegations of the complaint, or where extrinsic facts known to the insurer (whether disputed or undisputed) suggest that the claim may be covered. 
The court nonetheless held that a claim of disparagement “requires a plaintiff to show a false or misleading statement that (1) specifically refers to the plaintiff’s product or business and (2) clearly derogates that product or business. Each requirement must be satisfied by express mention or by clear implication.”  These limits derive from the common law tort of disparagement, which has been shaped by First Amendment considerations even as applied to nonmedia defendants. 
These specificity requirements “significantly limit the type of statements that may constitute disparagement, especially since advertisements and promotional materials often avoid express mention of competitors,” though the court noted that other courts “have found certain kinds of statements to specifically refer to and derogate a competitor’s product or business by clear implication.” This can occur when a false or misleading statement necessarilyrefers to and denigrates a competitor’s product.  A total superiority or uniqueness claim may clearly or necessarily disparage another party without expressly mentioning them. 
The underlying complaint here alleged infringement and dilution, and attached Ultimate’s ads, which didn’t name the Multi-Cart or any other competing product.  Ultimate offered two theories of disparagement: the first focused on Dahl’s claim that the products’ similarity in design and product name led to confusion, while the second involved false statements of superiority that allegedly implied the inferiority of Dahl’s product.
Even if the use of Ultimate’s “Ulti-Cart” could reasonably imply reference to Dahl’s “Multi-Cart,” there was no disparagement.  Consumer confusion does not by itself mean disparagement.  Intentional mimicry, without more, doesn’t derogate or malign the subject of copying.  Even assuming it’s true that confusing consumers into thinking that you offer a high-quality product and then offering them a cheap knock-off is derogatory to the trademark owner, because confused consumers will believe that the cheap knock-off represents the legitimate product’s actual quality, no such conduct was alleged here.  Instead, Dahl repeatedly asserted that the two products were “nearly identical, folding transport carts.” “A false or misleading statement that causes consumer confusion, but does not expressly assert or clearly imply the inferiority of the underlying plaintiff’s product, does not constitute disparagement.”
Ultimate argued that its 2010 product catalog disparaged the Multi-Cart by asserting the superiority of the Ulti-Cart: “Ultimate Support designs and builds innovative, superior products,” provides “unique support solutions that are crafted with unparalleled innovation and quality and accompanied by superior customer service,” and the Ulti-Cart has “patent-pending folding handles and levers.” The catalog was referenced in the complaint and should be considered, but were insufficient. Except for the patent-pending statement, the statements were general descriptions of the company.  And “superior” doesn’t necessarily imply a derogatory comparison; according to the dictionary, it may be used to describe something “[o]f great value or excellence; extraordinary” or “notably excellent of its kind: surpassingly good.”  Nor does “patent-pending” guarantee that a patent will be granted or that the product is of higher quality. These statements weren’t specific enough to call into question Dahl’s proprietary rights in his product or to suggest that the Ulti-Cart had any important, unique feature.  Instead, they were mere puffing.  “Were we to adopt Ultimate’s theory of disparagement, almost any advertisement extolling the superior quality of a company or its products would be fodder for litigation.”  That would be a free speech problem.
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