competitor succeeds in enjoining sale of competing but non-FDA-cleared medical devices

Telebrands Corp. v. Vindex Solutions LLC, 2021 WL 534361, No.
21-cv-00898-BLF (N.D. Cal. Feb. 12, 2021)

Telebrands sells stuff, including the Hempvana Rocket, a
handheld transcutaneous electrical nerve stimulation (TENS) unit, “a
pain-relieving pen that uses TENS therapy in the form of direct electrical
stimulation to muscles.” TENS units are classified as Class II medical devices requiring
a 510(k) premarket notification to the FDA and clearance. Telebrands hired a
firm, Exponent, to evaluate competing medical devices, determine whether those
devices were TENS units, and determine whether the device distributors had
sought out and obtained clearance from the FDA after submitting 510(k)
premarket notifications. Exponent identified numerous troublesome devices, including defendants’.

Telebrands alleged that, by unlawfully distributing the
competing TENS units without first obtaining clearance, defendants received an
unfair advantage. Also, their advertising omitted the lack of clearance, which
allegedly meant that consumers “will be confused or misled into purchasing
Defendants’ TENS units believing them to be equivalent to the Hempvana Rocket.”

The court found that Telebrands showed extensive evidence of
unfair business practices, as well as evidence of lost sales, making it likely
to succeed on UCL claims. But the FDCA can only be enforced by the FDA, you
say? There’s a narrow path: “The plaintiff must be suing for conduct that
violates the FDCA [to avoid explicit preemption], but the plaintiff must not be
suing because the conduct violates the FDCA [which would be impliedly preempted].”
Telebrands squeezed through this path because it was suing due to the unfair
competition it faced, not because of the FDCA violation.

Telebrands also showed irreparable harm in lost sales and
“dilution” of the Hempvana brand. Because of the linking practices of
third-party marketplaces such as Amazon, “Telebrands anticipates that the
expenditures made to create a brand for the Hempvana Rocket will inadvertently
inure to the great benefit of Defendants. Defendants will be able to piggyback
off of the money spent on and popularity gained by the advertising for the
Hempvana Rocket.”

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survey evidence disregarded in another vanilla case

Twohig v. Shop-Rite Supermarkets, Inc., 2021 WL 518021, No.
20-CV-763 (CS) (S.D.N.Y. Feb. 11, 2021)

ShopRite sells organic vanilla soymilk. Plaintiffs brought
the now-standard vanilla versus vanillin claims. They argued that the
ingredient list, which includes “Organic Natural Flavors” and “Organic Vanilla
Extract” “fails to clarify any front label ambiguity” because organic vanilla
extract contributes less to the Product’s vanilla taste “than the front label
and the ingredient list would have consumers believe.” Their consumer survey allegedly
found that over forty-three percent of consumers expected the origin of the
Product’s vanilla taste to be “vanilla beans from the vanilla plant” and that
almost fifty-five percent of consumers would be less likely to purchase the
Product if the taste were due to imitation vanilla flavoring.

Even accepting as true that the product wasn’t predominantly
or exclusively flavored by vanilla beans, plaintiffs failed to plausibly allege
that a reasonable consumer would in fact conclude that the word “vanilla” on
the Product’s front label implies that the Product’s flavoring was derived
exclusively or predominantly from vanilla beans. “A reasonable consumer would
understand that ‘vanilla’ is merely a flavor designator, not an ingredient

Why disregard the survey? The survey couldn’t change what
reasonable consumers would understand. [Comment: trademark law bounces rather
casually between normative and empirical understandings of the reasonable
consumer. These cases provide great evidence that false advertising law does so
as well.] Anyway, the survey wasn’t great. Although plaintiffs alleged that
“over 43% (a plurality) believed the origin of the vanilla taste comes from the
vanilla plant,” the survey didn’t show that over 43% of the respondents
believed the flavor in the product came predominantly or exclusively
from vanilla beans, as alleged. The survey offered options about what the label
said about the source of the vanilla taste including “‘That it comes from
vanilla beans from the vanilla plant’ and ‘That it comes from both the vanilla
plant and non-vanilla sources.’” But it could have asked whether the flavor
came 100% from the vanilla plant, so the implicit contrast wasn’t
enough. [Is it likely that the results will be significantly different if you
do rewrite the first option that way? It’d be interesting to find out.]

Also, the survey asked, “What does the label pictured above
convey about the origin of the vanilla taste?” This didn’t give participants
the option of stating that they believed that the label conveyed nothing about
the origin of the vanilla taste, so it was too unreliable to be plausible.
Kicking out a survey on a motion to dismiss is quite a thing, but seems popular in these cases, even as Lanham Act cases say you don’t even have to plead a survey even if you will eventually have to provide one.

And even if federal regulations were being violated, the
complaint didn’t allege that reasonable consumers were aware of these complex
regulations. [Do you have to be aware of them to be guided by them? I have no
idea how octane levels in gas are assessed, but I rely on the existence of a standard

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False endorsement remains broader than many state ROP laws

Walkowicz v. American Girl Brands,
LLC, 2021 WL 510729, No. 20-cv-374-jdp (W.D. Wis. Feb. 11, 2021)

Lucianne Walkowicz “has achieved a
measure of celebrity as an astronomer,” and contended that  defendants misappropriated distinctive aspects
of their personal identity into a space-themed American Girl doll named Luciana
They brought claims under the Lanham Act, Wisconsin’s privacy
statute, and Wisconsin’s common law of negligence.

The court found that it was “plausible that one familiar
with Walkowicz might be confused about whether Walkowicz endorsed or is somehow
affiliated with the Luciana Vega doll, and thus the amended complaint states a
claim for false endorsement under the Lanham Act.” However, there were no
allegations that defendants actually used Walkowicz’s “name,
portrait, or picture”
as required by Wisconsin’s privacy statute, and the
court was unpersuaded that Wisconsin courts would recognize the duty that
Walkowicz alleges was breached by defendants, so the state claims went away.

Walkowicz alleged that they were an astronomer and a TED
Senior Fellow at the Adler Planetarium in Chicago whose TED talk has been viewed
more than a million times. “In a 2011 presentation, Walkowicz discussed their
work on NASA’s Kepler Mission studying the constellation Lyra, including the
constellation’s brightest star, called Vega.” Walkowicz alleges that at least
one American Girl employee or consultant attended multiple events at which they
discussed their work.

American Girl applied for trademarks on a space-themed doll
named Luciana Vega, which it began marketing in 2018 as its “Girl of the Year”
doll. Walkowicz allegedly had a distinctive personal style, often wearing what
they describe as “space themed clothing” and “holographic shoes.” Walkowicz
often wears a purple streak in their brown hair. Luciana also has a purple
streak in her brown hair, and she is sold with a “space themed patterned dress”
and “holographic” shoes. Her accessories include a model telescope, a Mars
habitat playset, and a space suit. American Girl’s book about Luciana describes
her as dreaming of becoming the first astronaut to travel to Mars.

Walkowicz allegedly received multiple emails and
social-media messages commenting on the similarities between Walkowicz and
Luciana and inquiries about whether they had endorsed the doll.

American Girl argued independent creation, which seems both
plausible and not helpful to a trademark claim. It had applied for trademarks
for dolls named “Luciana” and “Princess Luciana” between 2006 and 2010, and its
partner Mattel has long produced and sold space-themed dolls and accessories,
including “Astronaut Barbie” in 1986. That didn’t establish that the
combination into the Luciana Vega doll was done “without any knowledge of
Lucianne Walkowicz”; “Princess Luciana” was an entirely different type of doll.
“And, in any case, independent creation would be only one factor to consider
under the Lanham Act; it would not be a complete legal defense.” [No kidding.]

First, did Walkowicz allege a protectable commercial
interest under Lexmark? Yes: They plausibly pled “a commercial interest
in giving scientific presentations, appearing on scientific television shows,
and participating in science-related events.” And confusion about whether they
endorsed the doll allegedly “led to interference with [their] professional
public persona” and “dilute[d] the value of [their] name.” I will note here, as
I often do, that in a false advertising case these allegations would likely be
treated as conclusory at best. Not to mention that “dilution” is not the same
thing as false endorsement!

Walkowicz wasn’t required to be engaged in doll-adjacent
activity to have a protectable commercial interest. “[A] commercial interest in
public speaking and outreach activities … could plausibly be damaged by the
perception that Walkowicz was associated with defendant’s commercial

Confusion: Also plausibly alleged.

Walkowicz is not toiling away
anonymously in a lab, but is building a reputation as a celebrity scientist
known to the general public. Walkowicz alleges that they are widely recognized
for their scientific accomplishments, with some of their presentations having
been viewed more than one million times. It’s reasonable to infer that this
recognition extends to at least some part of American Girl’s intended market
for the Luciana Vega doll.

They also plausibly alleged that their reputation was
related to key aspects of the doll and that American Girl’s employees and
consultants saw Walkowicz’s presentations. “It’s reasonable to infer from these
allegations that American Girl intended to evoke Walkowicz’s public image to
lend legitimacy and realism to the Luciana Vega doll.” Plus, they alleged
actual confusion, even though it wasn’t clear whether those who were confused were
part of the relevant markets. [Some courts distinguish “queries,” as alleged,
from confusion—someone who asks whether there’s a relationship is aware that
there might not be one. But the cases go back and forth on this.]

Statutory right of privacy: The statute covers uses of a
person’s “portrait” or “picture”; it was based on the NY statute and there was
no Wisconsin precedent about the scope of those terms, so the court looked to Lohan
v. Take-Two Interactive Software, Inc., 97 N.E.3d 389 (N.Y. 2018). Lohan held
that the key question under the statute is whether the challenged image is a
“recognizable likeness” of the plaintiff. “If a jury could not reasonably
conclude that the challenged image is identifiable as the plaintiff solely from
the image itself, the court must dismiss the claim as a matter of law.”
Walkowicz conceded that their “nationality and skin color” differ from that of
Luciana Vega and that the doll’s facial structure was either “entirely
identical” or “nearly identical” to every other American Girl “Girl of the
Year” doll. Other than their purple-streaked brown hair, there were no bodily
similarities, and that wasn’t enough. Similarities in manner of dress and “biographical
characteristics that have nothing to do with visual appearance” did not
constitute using a name, portrait, or picture.

Likewise, “Luciana Vega” was not an unauthorized use of
Walkowicz’s name. Hirsch v. S.C. Johnson & Son, Inc., 90 Wis. 2d 379, 280
N.W.2d 129 (1979), held that retired football player Elroy “Crazylegs” Hirsch
could bring a common-law tort suit against the manufacturer of “Crazylegs”
shaving gel because “[a]ll that is required is that the name clearly identify
the wronged person.” But it wasn’t plausible that “Luciana Vega” would clearly
identify Walkowicz. There was no precedent to hold that “Vega”—a word that was
[allegedly] associated with Walkowicz to some degree but had never been used to
identify them—could be considered their “name.” Inquiries about endorsement
didn’t bridge the gap; if Walkowicz meant to suggest that they could put a claim
together by referring to other aspects of the doll in combination with the
name, that would vitiate the distinction between ROP statutes that list
protected characteristics and ROP rules that protect “identity” generally.

Note: When defendants filed an answer, they did not raise a
First Amendment defense, but rather argued in various ways that Walkowicz
lacked protectable interests in their appearance/variants of their first name.
The case was later dismissed with prejudice because the parties represented
that it was “resolved pursuant to a mutual release in which no monetary payment
has been exchanged.” I’m guessing some sort of donation to a cause supported by
Walkowicz, but I’m just guessing.

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accusing a home inspectors’ group of link with NAMBLA isn’t believable enough for defamation

Examination Board of Professional Home Inspectors v.
International Association of Certified Home Inspectors, 2021 WL 492482, No
18-cv-01559-RBJ (D. Colo. Feb. 10, 2021)

Although an individual’s comments linking his rival to NAMBLA and Jeffrey Dahmer were non-actionable non-facts, statements arguably closer to his expertise were falsifiable despite his over-the-top online persona.

Two entities, EBPHI and ASHI, sued InterNACHI. EBPHI
administers and owns the National Home Inspectors Examination (NHIE), an exam
many states use to license home inspectors. In addition to being a membership association
for home inspectors, InterNACHI also offers a competing licensing exam for the
home inspection industry. Defendant Gromicko made numerous statements about
EBPHI and the NHIE on InterNACHI’s online forum, such as:

The NHIE is a joke of an exam. Meaningless
piece of crap and a scam IMHO….;

The questions about basements are
fine as basements are part of a home inspector’s SOP . ..even in areas that
don’t have basements…the questions about radon and sprinklers are not…I can
go to court for you and get an injunction forcing EBPHI to grade your exam
without those questions. Then through discovery, I’ll find out everyone else
who has ever failed the NHIE, and file a class action suit against the
EBPHI….It’s not even a psychometrically valid exam and I can prove it in
court. They’ll owe millions in lost revenue….Just say go.

EBPHI sued for (1) defamation, (2) trade libel, (3)
commercial disparagement, (4) tortious interference with business expectancy,
and (5) deceptive trade practices under the Colorado Consumer Protection Act.

ASHI and InterNACHI are also competitors in the home
inspection industry as membership organizations. Member home inspectors enjoy
certain benefits, including being advertised to homebuyers on the associations’

ASHI’s website has a “Find a Home Inspector” tool whose
tagline reads, “Educated. Tested. Verified. Certified.” Results list whether
the inspector is an ASHI associate, inspector, or certified inspector, ASHI’s
three membership classes. Certified inspectors must prove they’ve conducted at
least 250 home inspections, pass the NHIE, and meet other standards; inspectors
must pass the NHIE or their state’s exam, conduct at least 75 home inspections,
and meet other standards; associates must complete the ASHI standards of
practice and ethics education modules. Associates are not required to complete
the continuing education requirements until after one year of membership. ASHI
also began using a background verification logo to indicate which home
inspectors had undergone successful background checks; individuals who have
been convicted of felonies aren’t given the logo.

InterNACHI was founded by Gromicko, who is quite active on
its forum. For example, in response to Washington Post article that purportedly
recommended homebuyers use InterNACHI home inspectors rather than ASHI’s, he posted
“[t]he reporter failed to note that ASHI (American Society of Home Inspectors)
was taken over by NAMBLA on Friday.” An InterNACHI member replied that he
searched NAMBLA online and it was not the result he was expecting. Yet another
member replied “[m]e either, creepy and not cool.”  There was, of course, no merger with the North
American Man-Boy Love Association. After this lawsuit started, he posted, “ASHI
is a statistical mass murder [sic] of children on a grand national scale. I’d
sooner work with Jeffrey Dahmer. He only killed and ate 17 people.” “Perhaps it
goes without saying, but ASHI does not engage in the mass murder of children.”
ASHI sued for (1) defamation, (2) trade libel, (3) commercial disparagement,
and (4) deceptive trade practices under the Colorado Consumer Protection Act.
Defendants counterclaimed against ASHI: (1) false advertising under the Lanham
Act, and (2) tortious interference with business expectancy.

Defamation: “[N]o reasonable person, much less a ‘substantial
and respectable minority’ could reasonably believe that the NAMBLA comment is
factual.” Defendants made the statement “alongside other statements incapable
of being factual,” such as that the purported merger was a good thing because
most of ASHI’s members suffered from rigor mortis. No reasonable person “could
believe that a professional home inspectors’ association merged with a fringe,
highly vilified pro-pedophilia group, particularly when such a statement comes
from none other than a loud-mouthed competitor.”

What about the claim that the NHIE wasn’t psychometrically
valid because it tested subjects outside the industry’s standards of practice?
First, was this a matter of public concern? Yes, the exam is offered in 29
states and “has the potential to impact members of the public or the public as
a whole.” The statement was made in online, open forum accessible to virtually
any member of the public with internet access. And it was made in response to
the complaint of a third party—not involved this lawsuit—that she and her
husband were “prepared” and “studied hard” for the NHIE but only recognized a
handful of questions and ultimately failed the test. “Thus, the content, form,
and context of the NHIE comment all support the conclusion that it involved a
matter of public concern.” Although the speaker was self-interested, that
wasn’t dispositive.

This holding meant that actual malice was required, not mere
negligence. “Actual malice may be inferred by the finder of fact if an
investigation is grossly inadequate.” Likewise, “a speaker who willfully
chooses not to learn the truth prior to making an allegedly false statement can
be found to have acted with actual malice.” The record would allow such a
finding. Gromicko knew what “psychometrically valid” required; he admitted that
he read books and articles on psychometrics and exam writing when creating his
own home inspection licensing examination. He wrote the portion of InterNACHI’s
website that, at one point, discussed the psychometric validity of its own test
in some detail. EBPHI also presented evidence that testing outside of the
standards of practice is not a factor that renders a test psychometrically
invalid. Thus, the issue was for the jury.

Nor was this a mere statement of opinion. He implied that psychometric
validity was a verifiable fact by stating that he could prove the NHIE is
invalid in court, which also suggests he had evidence of this “fact.” The
context, offering to “go to federal court for you and get an injunction,” further
implied provability. And the circumstances did too: “Gromicko is the founder of
the largest home inspectors’ membership association in the country. He made
this comment on his company website where he communicates with current and
aspiring home inspectors. … Using his position of a power as an industry
leader, he disseminated this statement to members of the industry and implied
that it was factual and that he had evidence to support it.” Despite his, um,
quirky online persona, he was still in a position of authority such that
“reasonable people would conclude that the assertions [were] ones of fact.”

Was the statement per se defamatory, which is to say did it
carry “its defamatory imputation on its face,” or was it defamatory per quod,
requiring innuendo or extrinsic evidence to establish its defamatory nature? Traditional
categories of defamation per se include “imputation of (1) a criminal offense;
(2) a loathsome disease, (3) a matter incompatible with the individual’s
business, trade, profession or office; or (4) serious sexual misconduct.” Damages
are presumed if the statement is per se defamatory but must otherwise be
proved. The court found that this statement fell into category (3).

There was a dispute about falsity, and also about
damages—EBPHI submitted expert testimony that the number of test takers for
EBPHI’s exam decreased after the comment, and in Florida, the only state to
offer both exams, the number of NHIE test takers dropped following the comment.

interference: Though defamation is a wrongful means of interference, EBPHI
couldn’t prove damages. It identified no individuals with whom they intended to
contract but for InterNACHI’s interference. A drop in the number of test-takers
might be sufficient to establish an inference of injury in other contexts, but
was is insufficient for a tortious interference with business expectancy claim.
“EBPHI’s evidence proves nothing more than that EBPHI had a ‘mere hope’ that
more people would sit for their exam, which is insufficient.”

Counterclaim based on ASHI’s allegedly false tagline “Educated.
Tested. Verified. Certified”: There was no evidence of intentional interference
with InterNACHI’s relationships. After using the tagline, ASHI experienced a
rise in associate members. But that didn’t show intentionality, or that
InterNACHI had anything more than a “mere hope” that the associate members who
joined ASHI would have joined InterNACHI but for the tagline.

Commercial disparagement/trade libel: Same results as

Colorado Consumer Protection Act: Requires a showing that
the challenged practice “significantly impacts the public as actual or potential
consumers.” Courts consider “the number of consumers directly affected by the
challenged practice; the relative sophistication and bargaining power of the
consumers affected by the challenged practice, and evidence that the challenged
practice previously has impacted other consumers or has significant potential
to do so in the future.”

First, even if the NAMBLA comment did support a claim for
defamation, this court has held that “making defamatory statements…is not a
deceptive trade practice….it is purely a private wrong.” And there was no
evidence of public impact; it wasn’t enough to say that the public read or saw
the comments.

Second, the NHIE comment hadn’t been shown to significantly
impact the public. It wasn’t enough that twenty-three fewer people took the
exam in Florida the year after the comment was made, given that the NHIE is a
national exam.

Lanham Act counterclaim against “Educated. Tested. Verified.

First, was this commercial advertising or promotion? While
Angie’s List’s statements about one company on its review statements weren’t
commercial speech as to Angie’s List, this was a very different situation. The
tagline wasn’t speech about one member, but rather “speech that purportedly
applies to every ASHI member, and therefore it is a statement about ASHI as an

Second, did defendants show injury or damages? Defendants
argued that they were entitled to an inference of harm because they’re in a
two-party market (which they would prefer to monopolize, per public comments,
noted by the court, that they might eventually have cause to regret). Despite
this competition, the court held that defendants still “must show some evidence
of causation and injury,” which they have not done.  Although “ASHI experienced a spike in new
associate members” after including the tagline on its website, they didn’t show
any loss suffered by InterNACHI, nor that any of the alleged members who joined
ASHI had any knowledge of InterNACHI’s membership program. Defendants admitted
that the associates who joined ASHI might not have been welcome at InterNACHI
even if they had wanted to join, because InterNACHI “never promotes uncertified
members to the public.”  ASHI was thus “the
only membership service in this two-player market that would allow novice home
inspectors to gain experience and be advertised to homeowners prior to

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no cognizable harm where statutorily required info was provided though not by the required party

Baker v. Yamaha Motor Corp., USA, 2021 WL 388451, E072089
(Cal. Ct. App. Feb. 4, 2021)

Baker sued Yamaha, alleging that its failure to furnish hang
tags to its independent dealer TMI, as required by California’s Vehicle Code,
made it impossible for consumers to determine the true prices of its new,
assembled motorcycles. The trial court granted summary judgment in favor of
Yamaha on the UCL/FAL claims because the undisputed evidence showed that Baker
was not harmed by the absence of the “Yamaha hang tags.” The trial court
concluded that (1) “the only information that Yamaha would have been required
to state on the hang tags was the MSRP,” (2) Baker “read [TMI’s] non-Yamaha
hang tag and knew what the MSRP was,” and (3) Baker would have received
“identical” information “[h]ad Yamaha provided hang tags” to TMI.

Standing under these statutes requires injury in fact
through lost money or property. This Baker could not show, given that when he
decided to buy his Yamaha, he researched and compared prices online, and called
to get information to negotiate a dscounted price. He saw a tag that included
an MSRP and knew that the price didn’t include various taxes/fees. “He
negotiated a deal that was $664.94 less than the MSRP, he was happy with the
price he had negotiated, and he believed it was the best deal he could get from
TMI.” So he suffered no economic injury from Yamaha’s failure. Proof of a
violation of a predicate statute isn’t enough without economic injury.


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false advertising claim fails, in part because of stringent antitrust rules

In re EpiPen (Epinephrine Injection, USP) Marketing, Sales
Practices & Antitrust Litig., MDL No. 2785, No. 17-md-2785-DDC-TJJ (D. Kan.
Dec. 17, 2020)

A lot of stuff here; I will ignore the non-false advertising
related aspects of this mostly antitrust case. The court says the usual
not-good things about false advertising’s relationship to antitrust,
unfortunately: Deceptive speech usually doesn’t violate antitrust laws. In
several circuits, there’s a presumption of a de minimis effect on competition
that can be rebutted by showing six things that aren’t particularly connected
to whether the speech harmed competition: showing that the disparagement was:
(1) clearly false, (2) clearly material, (3) clearly likely to induce
reasonable reliance, (4) made to buyers without knowledge of the subject
matter, (5) continued for prolonged periods, and (6) not readily susceptible to
neutralization or other offset by rivals. As Mike Carrier
and I have explained
, this test was just made up without reference to the
purposes either of false advertising law or the effects of false advertising on
competition, but here we are.

Plaintiff Sanofi failed to show a triable issue of fact on
(1), (5), and (6). As for falsity, Mylan funded and presented a study
purporting to show “Failure to Demonstrate Bioequivalence of Epinephrine
Delivery Based on Partial Area Under the Curve.” While the FDA concluded that
the epinephrine in Sanofi’s Auvi-Q “demonstrated bioequivalence” with the
epinephrine in EpiPen, this study wasn’t false because all it said was this
found failure to show bioequivalent delivery. Likewise, statements
about why payors didn’t include Sanofi’s product in their formularies weren’t
clearly false despite Sanofi’s argument that they misleadingly implied that
there were safety concerns.

There wasn’t enough evidence about duration on (5), and on
(6), Sanofi was a big pharmaceutical company that could have fought back in the
market with its teams of sales reps. Representing the disconnection from
reality in this test, the court noted that the final factor doesn’t require the
plaintiff to have succeeded in neutralizing the falsity—mitigating its damages—it
instead has to show that there was nothing it could have done.

Mylan’s Lanham Act claim against Sanofi: Mylan argued that
Sanofi falsely claimed that its Auvi-Q was the “new EpiPen” or the “talking
EpiPen,” and that Auvi-Q was preferred by physicians and patients over EpiPen. Sanofi
argued that none of its advertisements or promotional materials made any of
these assertions. But Mylan relied on Sanofi’s internal documents reporting
Sanofi market research, which were admissible as business records and party
admissions. Still, the court doubted that they established that Sanofi actually
made the allegedly false/misleading statements. Nothing in the summary judgment
record suggested that Sanofi distributed those materials to consumers, so they
might not be enough to be commercial advertising or promotion. But more
fundamentally, the research materials didn’t seem to reflect “statements that
Sanofi’s sales representatives actually made to physicians.” Instead, they
recorded “what physicians reported they recalled about their interactions with
sales representatives.” [They should therefore show whether doctors took away
misleading implications, but I understand caution about this because consumers
take away all sorts of messages for all sorts of reasons.]

Mylan argued that statements that Auvi-Q was the “new
EpiPen” or a “talking EpiPen” were literally false because they communicated
that Auvi-Q was a new model of the EpiPen. The court found that these
statements were not unambiguous. The evidence was that some people recalled
messaging that Auvi-Q was a “new EpiPen,” or “was going to be like the new
EpiPen,” and two recalled a pharmaceutical sales representative telling them
that “Auvi-Q was the new up-and-coming EpiPen.” But, the summary judgment
record also undisputedly showed that “EpiPen” was used to describe the entire
category of devices, like “ ‘Kleenex’ for tissues or ‘Band-Aid’ for bandages.”
Thus, these were ambiguous statements.

Doctor/patient preference claims: A statement that patients
preferred Auvi-Q was supported by Sanofi’s preference study which found that
patients preferred Auvi-Q’s size, shape, and method of instruction.  Although the FDA told Sanofi that it couldn’t
use this study to make comparison claims that Auvi-Q was easier to use and
easier to carry because patients weren’t actually administrating the EAI
devices in the study, the record didn’t suggest that Sanofi made those claims;
instead the record just showed messaging about a patient “preference” and generalized
messaging about Auvi-Q being easy to carry, easy to use, and easy to follow its
instructions. The latter were also nonactionable opinion.

Last, Mylan argued that Sanofi made false statements by
necessary implication when it advertised Auvi-Q as the “first and only” EAI
device with a “[r]etractable needle mechanism designed to help prevent
accidental needle sticks,” implying falsely that EpiPen doesn’t have
needlestick protection even though EpiPen has a needle cover that extends over
the needle after the EpiPen is administered. But that’s not the necessary
implication of the true claim about Sanofi’s retractable needle. Sanofi also
stated—truthfully—that patients [often] don’t carry their devices, which Mylan
argued falsely implied that patients would be more likely to carry Auvi-Q when
juxtaposed with a claim that Auvi-Q is easy to carry. But Mylan didn’t prove
that Sanofi juxtaposed the statements in this way.

With no extrinsic survey evidence of consumer confusion, the
claims failed. (Two purported instances weren’t enough to show that “a
statistically significant part of the commercial audience” was actually
confused or deceived.) Nor was Mylan entitled to a presumption of consumer
confusion from intentional deception. The record showed that Sanofi did review
advertising and training and warned sales reps about what claims they could and
couldn’t make; it barred them from creating their own promotional materials or
altering Sanofi’s promotional materials in any way. Relatedly, Mylan didn’t
show that the allegedly false statements were made in “commercial advertising
or promotion,” given the lack of evidence of widespread dissemination. Even
Sanofi’s internal documents didn’t “quantify the prevalence of the challenged
statements among the customer base.” And while “28% of 364 physicians surveyed
recalled that Sanofi [sales representatives had] said ‘Auvi-Q preferred over
EpiPen in comparative survey,’ ” many versions of that are true and Mylan
didn’t show how many of them received false or misleading comparative claims.

Plus, Mylan didn’t show that it suffered harm from the
allegedly misleading claims that could be distinguished from the harm caused by
fair competition. Though injury can be presumed from false comparative claims,
the record showed only two instances where a Sanofi rep compared the parties’
products by name. Without explicit comparison, “a presumption of injury is
inappropriate because each competitor’s injury may be only a small fraction of
the defendant’s sales, profits, or advertising expenses.”

This all also got rid of the New Jersey unfair competition

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“advertising injury” insurance exclusion doesn’t exclude false advertising claims

Luxottica, Inc. v. Allianz Global Risks US Ins. Co., 2021 WL
4226197, No. 1:20-cv-698 (S.D. Ohio Jul. 28, 2021)

Mostly this case is about other things, but the court finds
a duty to defend in the underlying false advertising case. Luxottica was sued
in a class action alleging that its AccuFit system for prescription eyeglasses
was falsely advertised as more accurate. Allianz ultimately declined to defend
under its policies, and the court found it had a duty to defend.

In a less insured-favorable move, the court was also
persuaded that the list of what was excluded by the phrase “personal and
advertising injury” in the exclusions (relevantly,
slander/disparagement/privacy violations/© infringement/use of another’s
advertising “idea”) was significant. “This specialized definition does not
include any injuries arising out of false advertising or deceptive business
practices.” Here, that meant that exclusions for “personal and advertising
injury” didn’t apply, but it also suggests that actual “advertising injury”
coverage is narrower than many insureds would like. I would expect insurers to
be more often quoting the statement that insurers “could have included such
claims in this specific and exhaustive list.” Here, “the fact that these claims
are not included in the ‘personal and advertising injury’ exclusions furthers
Luxottica’s arguable claim that Allianz owes it a duty to defend in the
Underlying Lawsuit,” but my guess is that insurers will benefit more from
limitations on advertising injury coverage they do sell.

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No organizational standing from mere conflict with consumer protection mission

In Defense of Animals v. Sanderson Farms, Inc., 2021 WL
4243391, No. 20-cv-05293-RS (N.D. Cal. Sept. 17, 2021)

Let’s play the fun game “which of these statements about
standing should make IP people nervous?”

Previously, Friends of the Earth and the Center for Food
Safety sued Sanderson Farms on the claim its advertisements for chicken were
misleading. Ultimately, the Ninth Circuit agreed that they lacked
organizational standing because they hadn’t diverted resources to combat the
challenged conduct. FoE sued Sanderson again, but the court found that it was
just trying to work around the infirmities of that first case. The plaintiffs
here “followed what [they] understood to be the Ninth Circuit’s implicit
commands to publish action alerts, address Sanderson’s advertising in blog
posts, and petition Sanderson.” But none of that meant they’d diverted resources.

More fundamentally,

organizational standing requires an injury to the
organization itself, not merely its interests. An organization’s entirely
voluntary action cannot confer standing, no matter its quality or quantity. The
organization must be forced to respond to prevent injury …. Even if the
Plaintiffs had transformed themselves entirely into anti-Sanderson advocates,
they would not have standing because it would not have been due to any injury
by Sanderson.

[Now ask: is unfair advantage to the defendant the same
thing as injury to the plaintiff?]

For organizational standing, it is not enough for there to
be “a setback to an organization’s values or interests.” Defendant’s conduct
must result in “an actual impediment to the organization’s real world efforts
on behalf of such principles.” And the organization must divert resources, not
go about business as usual, in repsonse. “Crucially, plaintiffs must show they
would have suffered some other injury if they had not diverted resources to fix
the problem,” such as losing members. “An organization cannot manufacture
standing by choosing to fix problems if they otherwise would not have affected
it. Resources must be spent differently than they would have been otherwise.”

This is merely an application of the same rules that apply
to individual standing. “If the defendant’s conduct did not force the plaintiff
to divert resources, the only injury comes from the plaintiff’s own actions.
This self-inflicted injury would not be fairly traceable to the defendant.”
Neither organizations nor individuals have standing “by virtue of investigating
conduct or starting a new campaign against someone who frustrates its general
mission…. Just as an individual cannot gin up standing by researching and
tweeting about something that indirectly makes his or her life harder, neither
can an organization.” [See also dilution.]

Here, plaintiff IDA didn’t adequately plead any concrete way
in which its mission had been frustrated; it wasn’t enough to plead facts
showing that “the abstract interests it fights for have been set back by
Sanderson’s misleading advertising.” Nor did the complaint plead facts
permitting the conclusion that its diversion of resources was required to
prevent some other injury to its activities. It alleged 200 hours of work
through various activities such as publicity and petitioning the Better
Business Bureau’s National Advertising Division. “Even a large new campaign is
not enough if the organization is not forced to undertake it.” Most of the
activities were voluntary continuations of previous activities, and even
petitioning Sanderson or submitting a complaint to NAD “are at root typical of
IDA’s advocacy”; they were also fairly traceable to IDA, not to Sanderson. IDA
also didn’t explain what it would have done with its time and money otherwise.

Possibly offering some TM hope, the court distinguished
cases in which an organizational plaintiff “was forced to respond to
constituents.” But note that a lot of times TM plaintiffs don’t or can’t plead
more than facts analogous to IDA’s pleading that it “reasonably believed that
[…] IDA members relied on Sanderson’s misrepresentations,” without alleging
that “any members actually sought its guidance, let alone on a scale sufficient
to justify diversion of resources.” Plus, in those cases bad things actually
happened to the constituents, creating “obvious harm” to the organizations
themselves as they struggled to represent their clients.

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consumer’s bid to enjoin Redbubble’s sale of “counterfeits” fails

Vinluan-Jularbal v. Redbubble, Inc., No.
2:21-cv-00573-JAM-JDP, 2021 WL 4286539 (E.D. Cal. Sept. 21, 2021)

Plaintiff thinks Redbubble sells a lot of “counterfeits” and
wants that enjoined under the UCL and CLRA. Despite ruling in her favor on a
lot of predicate issues, the court nonetheless declines.

Vinluan-Jularbal bought two sweatshirts from Redbubble, one
with a UN symbol and the other with “the Dadalorian,” which she alleges are
counterfeit. (There are two pending applications for “Dadalorian,” both filed
by non-Disney entities, and no registrations, if you are wondering.)

Raising larger issues of conflict preemption that will
presumably be mentioned by Redbubble at some point, plaintiff believes that
there are a lot of counterfeits on Redbubble’s site because it doesn’t
proactively police against counterfeit or infringing items.

Plaintiff had Article III standing to seek injunctive relief
despite her statement that she “would never knowingly support a company selling
illegal products in violation of federal law.” “Because Plaintiff states that
she would make further purchases from Redbubble in the future if she could be
assured the products were not counterfeits, Plaintiff suffers a threat of
future harm of being ‘unable to rely on the product’s [authenticity], and so
will not purchase the product although she would like to.’”  (Compare the recent 9th Circuit Coca-Cola
, uncited here: “such an abstract interest in compliance with labeling
requirements is insufficient, standing alone, to establish Article III
standing,” and plaintiffs’ “desire for Coca-Cola to truthfully label its
products, without more, is insufficient to demonstrate that they have suffered
any particularized adverse effects.” The difference, if there is one, is
perhaps that plaintiff here claims she’d patronize Redbubble if she were sure
it didn’t have any counterfeit products, so she’s not asking for truthful
labeling but rather for fundamental changes in its business model.)

What about UCL/CLRA standing? Plaintiff argued that she
showed economic injury because she alleged that she paid more for the
sweatshirts than she would have if she had known they were counterfeit. But
Redbubble was making a different argument: she didn’t prove the items she
bought were counterfeit. “The Court refuses to reach any such conclusion or
finding regarding the items purchased by Plaintiff at this early stage of the
litigation.” Despite that, the court went on to consider other aspects of a
preliminary injunction.

She was asking for a mandatory injunction, not a prohibitory
injunction, because she wasn’t just seeking the removal of the two sweatshirts
but rather seeking to have Redbubble change its business model and sort through
51 million listings. “[B]ecause Plaintiff has not identified all the items that
are allegedly counterfeit, this would require Defendant to take on the affirmative
task of identifying which of its third-party product listings may be
counterfeit and ensure they are removed.” This was a mandatory injunction and
put a greater burden of justification on the plaintiff.

So, was there likely success on the merits (notwithstanding
that we don’t yet know whether the sweatshirts were actually counterfeit
[actually we do know that the Dadalorian wasn’t, but whatever]).

The CLRA prohibits the “[passing] off goods or services as
those of another,” and the UCL’s unlawfulness provision borrows violations of
other laws, including the Lanham Act, even if plaintiff wouldn’t have Lanham
Act standing. California courts have found that “[t]o forestall an action under
the unfair competition law, another provision must actually ‘bar’ the action,”
by providing for exclusive enforcement authority in someone else. [I don’t
think that can substitute for conflict preemption, but that’s not discussed

So was she likely to show a violation of the Lanham Act? “Plaintiff
asks the Court to conclude at this early stage of the litigation that these
items are in fact counterfeit without offering much to support this contention.”
Though she offered evidence that the UN had an active registration, she did not
provide evidence that the mark on the sweatshirt wasn’t genuine, that the mark
was registered for sweatshirts as required for counterfeiting, or that
defendant was not authorized to use the mark.


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Another pharma substitution case fails

Sebela Pharmaceuticals Inc. v. TruPharma, LLC, 2021 WL
4316750, No. 1:20-cv-1677-SB (D. Del. Sept. 8, 2021)

When a false advertising case starts this way, you can guess
how it will end: “Market competition is good. Competitors are free to copy
successful products as long as they do not steal, lie, or mislead.” Here, Sebela
didn’t plausibly allege anything false or deceptive in its rival’s sale of a
medical cream with the same active ingredients in the same strength. A pharma
database links the two as equivalent, which allegedly caused substitution of
TruPharma’s cream for Sebela’s cream. But Sebela didn’t point to any TruPharma
statement as false. TruPharma’s cream is not an FDA-approved generic and has
not been tested for bioequivalence, but Sebela never alleged that it claimed
that its creams “are AB-rated, therapeutically equivalent, bioequivalent,
and/or FDA-approved generics to [Sebela’s cream].”

The closest it came to alleging misleadingness was is a
screen shot of a database that lists Sebela’s cream as an “Equivalent Drug” for
TruPharma’s. “But TruPharma’s cream is indeed ‘pharmaceutically equivalent’: as
Sebela admits, it has the ‘exact same strength and active ingredients’ in the
same form.” Though Sebela argued that “equivalent” implied bioequivalence and
FDA approval, “Sebela gives no reason to think that pharmacists are confused,
let alone misled.” [This might be a survey problem: some plaintiffs have done
better with survey evidence.]

Sebela alleged substitution, but “substitution does not
imply deception. As Sebela’s own complaint shows, pharmacists substitute drugs
based on cost,” and TruPharma’s cream was cheaper. Sebela even pled that insurers
and pharmacy-benefit managers often “decide to only cover a cheaper drug that
is pharmaceutically equivalent, even where there has been no showing of
therapeutic equivalence.” Id. And Sebela admitted that “substitution will also
occur even if a Drug Database states that TruPharma’s [cream] is not an A- or
AB-Rated generic” approved by the FDA.

Confusion was possible, but that wasn’t enough under Twiqbal.
“I find it implausible that trained, licensed pharmacists are fooled. Far more
likely, they are just heeding frugal patients, insurers, and pharmacy-benefits

Moreover, even if Sebela plausibly alleged misleading
statements, it didn’t plausibly allege that TruPharma (rather than the database
operators) made them.

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