state consumer protection law gives competitor plaintiff more leeway than Lanham Act, court holds

Posted on September 5, 2023 by rtushnet

SME Steel Contractors, Inc. v. Seismic Bracing Company, LLC,
— F.Supp.3d —-, 2023 WL 4463246, No. 2:17-cv-00702-RJS-DAO (D. Utah Jul.
11, 2023)

The parties compete in the design of buckling-restrained
braces, which are structural devices that help buildings withstand seismic
activity. One of the defendants (Hinchman) used to work for plaintiff SME. Although
BRBs are increasingly being “used in new structural steel construction
projects, the BRB industry is still developing and might be considered a ‘niche
product’ even within the steel construction industry.” I’m going to ignore the
patent claims.

Hinchman asked the University of Utah to evaluate and test
five of [based on later discussion, SBC’s] BRBs. The University issued a report
concluding two of the five BRBs did not satisfy American Institute of Steel
Construction (AISC) 341-10 requirements. The report stated, “Further
development is required for improving these two BRB types.”

Defendant SBC sent a ninety-page document titled “Design
Manual” to at least six prospective clients, including the statement: “These patented
methods have now been tested and qualified for use on projects in accordance
with governing building codes (AISC 341).” It also made lots of claims about
the experience of its “team,” including their participation in specific named
projects. It claimed a “[p]roduce capacity of over 5000 BRBs per year.” The
Design Manual also included several technical drawings of BRBs, which allegedly
infringed plaintiff Core-Brace’s registered drawings.

Plaintiffs also publicized the resulting lawsuit among
customers, which triggered counterclaims.

Core-Brace alleged both false advertising and false
association from the statements in the design manual and related documents. The
court found that Core-Brace lacked standing: “a plaintiff suing under § 1125(a)
ordinarily must show economic or reputational injury flowing directly from the
deception wrought by the defendant’s advertising; and that occurs when
deception of consumers causes them to withhold trade from the plaintiff.”

Even if, as Core-Brace argued, “the recipients of
Defendants’ materials were instrumental in the Defendants being awarded the
projects to the detriment of Core-Brace,” that didn’t constitute evidence that
the recipients considered or relied on the alleged misrepresentations. Core-Brace
didn’t need to definitively exclude other reasons, but it needed to identify
evidence “demonstrating a nexus between the alleged misrepresentations and its
injury.” This was a failure of proximate cause.

The Tenth Circuit has held that courts may presume injury “once
a plaintiff has proven that the defendant has falsely and materially inflated
the value of its product (or deflated the value of the plaintiff’s product),
and that the plaintiff and defendant are the only two significant participants
in a market or submarket.” But Core-Brace failed to show literal falsity or
provide extrinsic evidence of actual confusion.

The statement “[p]roduce capacity of over 5000 BRBs per year”
was not literally false . Acause SBC could use third party manufacturers;
“produce” was ambiguous, unlike “fabricate.” Also, even though SBC had produced
less than 9 BRBs, it wasn’t literally false to say what it could
produce.

What about “patented methods have now been tested and
qualified for use on projects in accordance with governing building codes (AISC
341)”? Two didn’t, but SBC argued that it only offered BRBs that
satisfied the testing requirements. This was ambiguous.

And “greatly overstat[ing]” defendants’ experience and
qualifications wasn’t literally false.

Nor did Core-Brace provide consumer surveys indicating
confusion or any examples of actual confusion, or evidence indicating why SBC
was awarded specific projects over Core-Brace.

Core-Brace argued that deception could be presumed because
of defendants’ bad intent.  But the only
evidence was that Hinchman would have known what potential clients were looking
for and that Core-Brace “was the only other major competitor in the
marketplace.” Summary judgment for defendants.

Plaintiffs did better on aspects of their Utah Truth in
Advertising Act (UTAA) claims that did not require showing likely confusion.
(Is there a harm requirement? If there was no confusion, could there be harm?)
Specifically:

Subsection (e) states that a deceptive trade practice occurs
when a person “represents that goods or services have sponsorship, approval,
characteristics, ingredients, uses, benefits, or qualities that they do not
have or that a person has a sponsorship, approval, status, affiliation, or
connection that the person does not have.”

Subsection (g) states that a deceptive trade practice occurs
when a person “represents that goods or services are of a particular standard,
quality, or grade, or that goods are of a particular style or model, if they
are of another.”

No Utah cases explain the proof requirements, but the words
“likelihood of confusion” aren’t in there. So it could go to trial. I don’t know on what statements, since the court rejected the Lanham Act false advertising claims (and see just next for even more weirdness).

But UTAA claims for deceptive trade practices failed.
Subsection (b) states that a deceptive trade practice occurs when a person
“causes likelihood of confusion or of misunderstanding as to the source,
sponsorship, approval, or certification of goods and services” And subsection
(c) states a deceptive trade practice occurs when a person “causes likelihood
of confusion or of misunderstanding as to affiliation, connection, association
with, or certification by another.”

Using the trademark likely confusion factors, no reasonable
jury could find likely confusion.

Since this wasn’t a trademark case, similarity was
inapplicable/neutral. (Um.) Core-Brace analogized to a celebrity persona case,
but the court didn’t think a corporation was the same, and anyway defendants
weren’t using pictures of the plaintiff corporation. 

Core-Brace asks the court to
compare its persona to the ninety-page Design Manual, with specific attention
to the drawings, project list, logo, and statements regarding testing.220
Although the court can compare the drawings, logo, and project list, it is
unclear how to compare statements about testing, particularly because the
Design Manual includes SBC’s testing report from the University of Utah. It is
also unclear how to weigh those aspects against the remainder of the Design
Manual—including the fact that the Design Manual is repeatedly labeled as
property of SBC and does not mention Core-Brace.

Thus, this factor wasn’t relevant. Still, trademark logic is
so powerful that the court goes on! (Which may say something about the
weaknesses of multifactor balancing tests in general.)

The intent analysis then suggests that a jury could infer
bad intent because … Hinchman was a former employee familiar with Core-Brace
and thus intended to benefit from Core-Brace’s goodwill, despite the lack of
similarity in company names. This is bananapants, and the fact that the court
rejects the claim on other grounds doesn’t make it less so.

There was no evidence of actual confusion; that defendants
won bids that Core-Brace lost and may have intended to “capitalize” on
Core-Brace’s reputation wasn’t a substitute.

Similarity of products/marketing favored Core-Brace, because
the parties compete.

Degree of care: favored defendants. BRBs are expensive and
sold through a bidding process.

Strength of mark: Although the court decided it couldn’t
evaluate similarity and thus dropped it from the analysis, it could evaluate
strength—which basically amounts to a bias against competing against big market
players. A jury could conclude that Core-Brace had a strong reputation among
BRB buyers, so this favored Core-Brace.

Intuitively, the court seems to understand that it’s not
doing the right kind of analysis; although the factors weighed in Core-Brace’s
favor counting-wise, the court still concludes that no reasonable jury could
find confusion likely. The weights of product similarity/mark strength were
outweighed by the expense of the goods/sophistication of the consumers. The
lack of confusion evidence also mattered some. (Note that, in this analysis,
Coke’s lawsuit against Pepsi, or against any new market entrant in the 12-ounce
soda market, should proceed, since Coke wouldn’t be arguing that the name
infringed—it would be arguing that the competition did, and soda is the
opposite of BRBs in sophistication/expense. Coke can likely produce a survey, too.)

Intentional interference with economic relations: no summary
judgment for defendants. Again, the court doesn’t seem to have any interest in
the idea that the background principle is free competition. Interference is
intentional even if a defendant does not act with a purpose of interfering, but
knows “interference is substantially certain to occur as a result.” Defendants
pointed out that plaintiffs were seeking a “de facto noncompete that is
enforceable in perpetuity against any former employee,” whereas Hinchman signed
a non-compete clause that expired six months after his resignation. This was
just a “policy argument.”

What about the improper means element? Because summary
judgment for defendants wasn’t complete, intentional interference with economic
relations could also proceed. (Note that the patent claims and the copyright
claims, which failed on the merits, couldn’t satisfy this element anyway because
of preemption.)

Copyright: even if there was a genuine dispute of material
fact on infringement, summary judgment to defendants because Core-Brace didn’t
show damages. (The alleged infringement took place before the registration.) To
recover indirect profits, a copyright owner must show a “causal link between
the infringement and the indirect profits.” Once again, the fact that companies
that received the design manual later bought BRBs from defendants didn’t show
damage causation.

Plaintiffs’ defamation claims also proceeded, based on
emails defendants sent to third parties discussing the present litigation. Defendants
merely asserting the statements were hyperbole and not defamatory—without even
identifying the statements—wasn’t enough. (I would have thought identifying the
statements was plaintiffs’ burden, but perhaps that has been done elsewhere.)

For roughly similar reasons, the counterclaims for
defamation, deceptive trade practices, and intentional interference with
economic relations based on plaintiffs’ dissemination of lawsuit-related
documents to potential customers also survived. At least sauce for the goose is
sauce for the gander? Interestingly, the court says that one reason a jury
could find the counterclaim statements factual (e.g., that defendants lacked relevant
experience and could “endanger human lives”) was because they were in the
“factual background” section of the documents.

from Blogger http://tushnet.blogspot.com/2023/09/state-consumer-protection-law-gives.html

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AMG Capital didn’t change monetary remedies for civil contempt

Posted on September 5, 2023 by rtushnet

Federal Trade Commission v. National Urological Group, Inc.,
2023 WL 5541756

No. 21-14161, — F.4th —- (11th Cir. Aug. 29, 2023)

Nearly 20 years ago, the FTC sued appellants, alleging they
had misrepresented their weight-loss products to consumers. The district court
granted injunctive relief and ordered them to pay $16 million in equitable
monetary relief, which was then available. “Years later, the district court
found that they had violated the injunction, held them in civil contempt, and
ordered them to pay an additional $40 million in contempt sanctions.” Before that
judgment was collected, AMG Capital limited the FTC’s authority to seek
equitable monetary remedies directly in district court without first going
through an ALJ. The court of appeals affirmed the district court’s holding that
AMG had no bearing on a district
court’s contempt powers.

In the underlying litigation, the district court permanently
enjoined the defendants from making unsubstantiated claims regarding their
weight-loss products. After finding they’d violated the injunction, the court
held them in contempt. The contempt sanctions were to be deposited with the
court and used by the FTC to reimburse consumers. Through garnishment, the FTC
has collected about $2.3 million so far.

Defendants argued that the FTC cannot seek equitable monetary remedies via contempt when it
cannot do so directly under § 13(b). Not so. These sanctions were imposed for
violating the injunction against prospective conduct, and the ability to impose
such injunctions was untouched by AMG.
“When a district court enters an injunction, whether under § 13(b) or any other
authority, it generally retains inherent contempt powers to remedy violations
of its own orders.”

from Blogger http://tushnet.blogspot.com/2023/09/amg-capital-didnt-change-monetary.html

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court certifies “C+Collagen” class even if consumers don’t know that all collagen is from animals

Posted on September 5, 2023 by rtushnet

Gunaratna v. Dennis Gross Cosmetology LLC, No. CV
20-2311-MWF (GJSx), 2023 WL 5505052 (C.D. Cal. Apr. 4, 2023)

Previously, the court
denied a motion to dismiss plaintiffs’ claim that “C + Collagen” was
misleading because defendant’s product had no collagen. Now, a class is
certified.

Defendant argued that individual issues predominated because
the court would have to probe each person’s understanding of the phrase “C +
Collagen.” The Ninth Circuit previously held that it is an error of law and
“per se” abuse of discretion to deny class certification for claims under the
CLRA and UCL (and implicitly the FAL), based on a lack of “evidence that
consumers uniformly interpret the statement in a particular manner.” Instead, “CLRA
and UCL claims are ideal for class certification because they will not require
the court to investigate class members’ individual interaction with the
product.”

Also, plaintiffs did have common proof: a consumer survey.
Defendant argued that the results weren’t uniform, but “the ambiguity (if any)
here can only be about what the ‘+’ in ‘C + Collagen’ conveys, because the
meaning of ‘collagen’ itself is not up for debate. Unlike the word ‘natural,’
collagen does have a single, controlling definition.” There’s just one
dictionary definition!

Plaintiffs’ survey showed that, of those participants that
provided an opinion, 95.2% believed that the products contained collagen after
viewing images of the them. Furthermore, 51.7% of participants indicated they
would be at least somewhat less satisfied if they learned that the products
contained amino acids as opposed to collagen. And 49.2% indicated they would be
at least somewhat less likely to purchase them again after learning the truth.

Defendant noted that only about half the sample indicated
that the presence of collagen was material. That half considered it material “does
not suggest to the Court a lack of materiality”:

Though the case law does not
establish any uniform percentage that allows a court to conclude that the
evidence shows that deception and materiality are susceptible to common proof
(or sufficient to create genuine issues of fact), it would seem to the Court,
that any percentage that a qualified expert determines is statistically
significant should be sufficient for both certification and summary judgment.

Other courts have allowed lower percentages to show common
proof on a motion for class certification, “especially where there is no
question that all potential class members were exposed to the message because
it was on all relevant products sold to the class.” (Citing cases presuming
materiality where 37.1%, 24%, and 25% gave answers indicating materiality.)

Defendant’s own survey also provided some evidence of
materiality. The survey asked participants, previous purchasers of C + Collagen,
to select the most important characteristic that made them buy the product the
first time. Out of the 19 possible “product characteristics,” the
characteristic selected by the largest proportion of respondents (46.7%) was “C
+ Collagen.”

Deception and materiality were thus susceptible to
class-wide proof and plaintiffs didn’t need not show individual reliance
because reliance is presumed upon a showing of class-wide exposure and
materiality.

The class-wide damages model was also tied to their theory
of liability. In calculating restitution damages under the California statutes,
the law “requires only that some reasonable basis of computation of damages be
used, and the damages may be computed even if the result reached is an
approximation.” The proposed conjoint model could do that. The proposed survey
would test the “collagen” claim as compared to the importance attached to
labels describing the desired effects of collagen, such as “anti-wrinkle;”
“Leaves skin plump with moisture;” “anti-aging;” and “You want: Supple skin,
intense hydration.” This would directly test how consumers value the effects of
collagen as compared to the collagen claim itself. And anyway defendant’s
criticisms went to weight, not admissibility. The damages model didn’t need to
isolate and test various possible interpretations of a challenged term; it
could assume that the plaintiff’s theory of liability (falsity/misleadingness)
was true at the class certification stage. Courts might reject a damages model
when plaintiffs haven’t yet shown that the theory of liability was itself
capable of class-wide proof, but that wasn’t the case here.

Defendant also made the argument I’ve seen emerging for a
while: that, under TransUnion, Article III precluded a class
action.  But “TransUnion does not
require that Plaintiffs prove standing as to all members of the class in order
to certify the class. Indeed, the Ninth Circuit recently rejected the argument
that a class may not be certified if it ‘potentially includes more than a de
minimis number of uninjured class members.’” Instead, district courts should
consider if the class is defined in a manner that will lead to the predominance
of individualized issues regarding standing in light of TransUnion.

But a purchaser class was  “defined in a way that ensures that all
members will have suffered a concrete economic injury in the form of a price
premium, if Plaintiffs succeed on the merits.” Defendant argued that the class
would include consumers who didn’t rely on the claim, but they paid a price
premium anyway (if plaintiffs show that), and reliance/causation is presumed
where there’s class-wide exposure to a prominent message. (I think this is the
right result, but it shows the, uh, underdetermined parts of TransUnion,
also on display here:
(when) can legislatures decide to presume reliance?)

It doesn’t matter that people willingly paid the price, even
if they didn’t care about collagen:

If anticompetitive behavior
distorted the market – all consumers overpaid. Defendant does not get to price
discriminate between those who understood the label and those who did not. The
market price is set by supply and demand, and it is always the case that there
are likely consumers who would pay more than the fair market price, but that
does not mean those consumers should have to pay supra-competitive prices. A
price-fixing cartel cannot claim that their inflated prices are not illegal as
to the consumers who are satisfied with the value of the overpriced products.
It is the distortion of the fair market value that results in injury to all
purchasers of the relevant products.

Although it was “possible (if not likely)” that the court
would grant summary judgment to plaintiffs on literal falsity, it wasn’t ready
to do so without further briefing:

Falsity in this action is not about
what consumers believe “collagen” means because the only admissible scientific
evidence establishes that there is only one scientifically-accepted definition
of “collagen.” Where consumers believe “collagen” comes from is simply
irrelevant. Consumers often do not know the sources from which the ingredients
in their products are derived. And the Court is troubled, if not exasperated,
by the fact that a prominent skincare company has repeatedly taken the position
that if reasonable consumers believe, based on the labeling of the Products,
that the Products contain a specific ingredient, the falsity of the labeling
does not turn on whether the Products actually contain that ingredient, but on
whether consumers understand where that ingredient comes from. That position is
untenable.

Instead, falsity turned on how reasonable consumers would
interpret the “+”: containing collagen, or supporting it with vitamin C? And
plaintiffs’ survey “more than suffices” to create a fact issue. Further, there
was currently no admissible evidence showing that a statistically significant
portion of consumers interpret the plus sign to mean “boost,” given that the
court excluded that part of defendant’s survey.

So why not grant summary judgment? Plaintiffs’ survey didn’t
give participants the opportunity, either through a closed- or open-ended
question, to answer that C + Collagen means that vitamin C boosts collagen.
Plus, merits discovery hadn’t closed yet, and defendant could take another bite
at a survey on the “boost” theory. “If, at the close of discovery, no such
evidence is in the record, Plaintiffs are free to move for summary adjudication
on the issue of falsity.”

The court also rejected defendant’s argument that plaintiffs
had to show that consumers wanted “animal” collagen:

Since animals are the only source
of collagen, anyone who desires “collagen” inevitably desires “animal”
collagen. Gunaratna’s testimony that she does not want to place raw animal parts
on her face, does not prove that she did not want collagen in her skin cream,
any more than a deponent’s testimony that they do not want to consume fish
bladder would prove a lack of desire for Guinness beer, as Plaintiffs cleverly
analogize.

Defendant was free to attack the reasonableness of plaintiffs’
reliance on the “C + Collagen” Claim, given their stated goals and desires for
better skin; given that they did not fully understand where collagen comes
from; given the “collagen amino acids” qualifier in other parts of the product
packing; and given the vegan symbol on the back of the outer packaging.

The court also pointed out that, as to materiality, “the
internal emails and documents are replete with communications indicating that
the ‘collagen’ label was highly important to consumers, and in turn to the
retailers and Defendant. For example, when the company used other names,
Sephora thought they weren’t “strong” or “hard-hitting” enough. Plus,
“[r]epresentations about specific ingredients’ presence or absence in a product
are almost self-evidently material in that an advertiser is intending to make a
consequential effect on a consumer.”

Defendant also argued that there could be no proof of
damages because it set the price of the products before choosing a name. But
the majority of sales are through retailers, and it’s those prices that are the
most probative on price. Anyway, were that true, there would have been a lot
fewer sales, making the price premium measure inherently conservative. (Both parties
agreed that the market was competitive.) “[T]he fact that a defendant did not
adjust its price based on the misrepresentation does not disprove the existence
of a price premium.”

from Blogger http://tushnet.blogspot.com/2023/09/court-certifies-ccollagen-class-even-if.html

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are state rules limiting class actions in consumer protection cases procedural or substantive?

Posted on September 5, 2023 by rtushnet

Jones v. Varsity Brands, LLC, 2023 WL 5662590, No.
2:20-cv-02892-SHL-tmp (W.D. Tenn. Aug. 31, 2023)

Varsity is a “prominent host of competitive cheerleading
competitions and camps,” aka a monopolist. I’m just going to focus on the
consumer protection-related claims, because antitrust is a hairball under
current rules. Of interest, plaintiffs sought to pursue violations of the
consumer protection laws of over 30 states as a class action. Several of these
state consumer protection acts—including Tennessee’s, Montana’s, and
Colorado’s—do not permit class actions. But, under Shady Grove Orthopedic
Assocs., P.A. v. Allstate Insurance Co., 559 U.S. 393 (2010), these state
procedural rules could not override FRCP 23, and thus class actions were
permitted in federal court. Although the class action bar in Shady Grove
appeared in NY’s procedural code, and these were embedded in their respective
states’ consumer protection statutes, that didn’t make a substantive
difference. I’m just going to quote:

A divergence from the Federal Rules
of Civil Procedure that makes it so economically onerous for a litigant to
vindicate her rights that she elects to sleep on them does not create a
substantive difference in remedies. To conflate procedural laws that have
practical effects on the ability to seek relief with substantive laws that
alter the remedies themselves is to dissolve the procedural-substantive
distinction altogether. Moreover, Defendants’ argument that the state law class
action bars are substantive runs counter to Rule 23’s central policy
justification of providing for greater justice by establishing the procedures
for a collective action vehicle for small plaintiffs lacking incentives to
litigate on their own because the costs of litigation outweigh the potential
value of their claims.

Moreover, the bars at issue were not “so intertwined with a
state right or remedy that it functions to define the scope of the
state-created right.” “The provisions impose categorical bans on maintaining
class actions brought under certain statutes, but do not work a change to the
substantive law; indeed, one can comprehend the thrust of the statutes here
with or without the class action provisions whereas class action bars in other
states do make substantive changes.” (Comparing a Colorado statute that changes
the remedies available for class actions.)

However, a Tennessee nationwide damages class was kicked
out; individual state damages classes could proceed.

from Blogger http://tushnet.blogspot.com/2023/09/are-state-rules-limiting-class-actions.html

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Free Speech Challenges to the Inflation Reduction Act

Posted on August 29, 2023 by rtushnet

 With Sean Tu, at JAMA. Given how short the piece had to be, we had to cut out some other examples, but the claim is still a good example of the metastasizing First Amendment.

from Blogger http://tushnet.blogspot.com/2023/08/free-speech-challenges-to-inflation.html

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Online contracts, government website edition

Posted on August 25, 2023 by rtushnet

 The terms of service for this state site are interesting. Query what happens when they’re barred by the law of another state (I see no forum selection clause) or by copyright misuse. And given the specific reference to “coffee table books,” what is “any medium” doing and would a non-coffee table nonfiction book using a single photo as an illustration be covered?

Terms:

 You are required to expressly accept the following Terms and Conditions of Use, without any modifications, prior to each use of this website. The State of Hawaii Department of Transportation Airport Division (the “HDOTA”) may revise the Terms and Conditions of Use without any specific notice to you. The Terms and Conditions of Use posted at the time of your use of this website governs that use. If you do not agree with any part of the following Terms and Conditions of Use, you will not be permitted to use this website.

The images and other content, (the “Media”), on this site, https://aviation.hawaii.gov, are protected under applicable intellectual property laws. Unless otherwise stated, intellectual property rights in the website are administered by HDOTA on behalf of itself and the State of Hawaii.

FOR MEDIA USE PLEASE NOTE:

You are prohibited from using the Media for any commercial purpose. Any use, whether or not commercial, that may tend to degrade, tarnish the reputation of, or embarrass the content creator (photographer, videographer etc.), the State of Hawaii, or HDOTA is strictly prohibited.

FOR ALL USE:

The following are general examples of what Media may not be used for or in connection with. The following list is not exhaustive.

  • Taking or attempting to take Media for commercial, marketing, self-promotion, or novelty applications;
  • Taking or attempting to take any action that results in editing or altering images -cropping is acceptable;
  • Taking or attempting to take any action that compromises the website;
  • Taking or attempting to take any action that involves reprinting on coffee table books, garments, posters, mugs, or any medium.

You agree that, upon notice from HDOTA, you will immediately cease all use of the Media and, to the extent possible, remove all Media from any and all materials in which they appear.

Credit is required for each of the Media as specified on this website. Credit must be placed adjacent to any use of the Media.

You, your successors and assigns, agree to release, indemnify and defend HDOTA and the State of Hawaii from and against all costs, liability, loss, damage, and expense, including all attorneys’ fees, and all claims, suits, and demands therefor, arising out of or resulting from your acts or omissions under these Terms & Conditions of Use and your use of the Media.

from Blogger http://tushnet.blogspot.com/2023/08/online-contracts-government-website.html

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Seen at the Capital Jewish Museum

Posted on August 24, 2023 by rtushnet

 Fundraising brochure, Jewish Community Center of Northern Virginia 1989: “You should invest in community property” with Monopoly theme:

from Blogger http://tushnet.blogspot.com/2023/08/seen-at-capital-jewish-museum.html

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“Face” sunscreen 2x as expensive as regular plausibly misleading when formula was the same

Posted on August 8, 2023 by rtushnet

Akes v. Beiersdorf, Inc., 2023 WL 5000434, No. 3:22-cv-869
(JBA) (D. Conn. Aug. 4, 2023)

Akes brought the usual
California claims/unjust enrichment, alleging that she was misled by the
labeling of the 2.5-ounce bottle of Coppertone Sport Mineral sunscreen as “Face
50” to believe that it was “specifically designed” or “specifically formulated”
“for use on the face.”

The label included: “FACE,” “Won’t Run Into Eyes,” and
“Oil Free,” the latter two of which were allegedly “face-specific
representations.” However, the sunscreen is allegedly identical to the sunscreen
in the larger 5-ounce bottle, which costs half as much per ounce. Coppertone
argued that the higher price couldn’t be deceptive and that “[t]here is nothing
deceptive about emphasizing different but equally true aspects of a product to
different market segments, or pricing products differently when sold to
different market segments or in different retail channels.”

The court found it was plausible that the label implied that
it was specifically designed/formulated for the face, not just suitable for the
face—that’s a factual issue. “While labeling products ‘vanilla’ or ‘diet’ was
found insufficiently specific to convey the particular representations that the
plaintiffs in those cases asserted, here the use of the word ‘FACE’ on a lotion
bottle is plausibly understood by consumers to differentiate between the
intended applications of sunscreen—face or body.” Although the mere fact of
different prices doesn’t violate consumer protection laws, it could contribute
to deceptiveness: the price disparity plausibly reinforced the deception that
the “FACE”-labeled product “contained more expensive but specifically
formulated facial sunscreen.”

 

 

from Blogger http://tushnet.blogspot.com/2023/08/face-sunscreen-2x-as-expensive-as.html

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Paul Mitchell plausibly not “cruelty free” because of entry into market requiring animal testing

Posted on August 7, 2023 by rtushnet

Heagney v. John Paul Mitchell Sys., 2023 WL 4947974, No.
23-cv-00687-VC (N.D. Cal. Aug. 2, 2023)

A smoothly written opinion:

As the complaint tells it, Paul
Mitchell has long marketed its business and its products as “cruelty-free.” The
plaintiffs say they took Paul Mitchell at its word and bought some of those
products. But Paul Mitchell, they allege, once imported those products into
China and registered them with the Chinese government—at a time when Chinese
law required that companies test cosmetic imports on animals as a condition of
registration. And, according to the complaint, Paul Mitchell was not exempt
from that requirement.

Read together and taken as true,
these allegations plausibly suggest that Paul Mitchell tested some of its
cosmetic products on animals and that its contrary “cruelty-free” advertising
misled reasonable consumers.

Maybe there’s another explanation, like nonenforcement, but
that didn’t defeat plausibility.  This
also allowed breach of warranty claims to survive. Although not all the
purchased products appeared in the Chinese import registry, “in its marketing,
Paul Mitchell doesn’t just advertise that it sells ‘cruelty-free’ goods. It
also promises that it is a ‘cruelty-free’ company—that it has never done animal
testing, ever.” Because of the plausible allegation that Paul Mitchell broke
its first promise as to some products, it was plausible that it broke its
second promise as to all.

Statute of limitations: Most of the alleged purchases were
made within the three-year or four-year periods that applied, but even as to
the others, the delayed discovery rule was plausibly invoked. “Unlike the kinds
of claims you see in other false-advertising or warranty cases, a promise that
a product is ‘cruelty free’ is not something that a customer can easily test.”
And any reasonable and diligent investigation wouldn’t have disclosed the
alleged truth:

No article that Paul Mitchell cites
suggests that the company imported its products into China when animal-testing
was required. One PETA article calls out three cosmetics companies for
animal-testing in China but does not mention Paul Mitchell at all. The 2012
PETA press release comes closer, but it commends Paul Mitchell for choosing to
“pull out of the Chinese market entirely than hurt even one animal.” If
anything, these sources suggest that Paul Mitchell did live up to its
“cruelty-free” mandate; they could not have formed the basis of the consumers’
complaint.

However, the consumers lacked standing to seek injunctive
relief. Unlike other situations, where consumers might “reasonably, but
incorrectly, assume the product was improved” and buy it again, or avoid an
improved version, even if they would “like to,” because they can’t “rely on the
product’s advertising or labeling,” here consumers couldn’t be misled by the
historical facts, which they now knew. Falsity in the past about whether the
product had ever been tested on animals remains falsity in the future. No
change in ads or in the product could make a difference.

from Blogger http://tushnet.blogspot.com/2023/08/paul-mitchell-plausibly-not-cruelty.html

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What can experts testify to in Lanham Act cases? Not the law or regulations

Posted on August 7, 2023 by rtushnet

GOLO, LLC v. Goli Nutrition Inc., 2023 WL 4952576, No.
20-667-RGA (D. Del. Aug. 3, 2023)

Potentially interesting pretrial rulings in this false
advertising/TM case: Goli’s motion to exclude the testimony of Dr. Jerry Wind
was granted in part to preclude him from opining on the ultimate question of
likely confusion or balancing the trademark infringement factors, which was for
the jury. He could testify about the “consumer journey,” but not about
“convergent validity” to bolster his conclusions about the meaning of the
evidence—the court characterized the use of the phrase here to be “an academic
way of saying the weight of the evidence.” 
Although his opinions on harm were unquantified, they were tied to the
evidence and opined on specific types of harm (loss of control of its brand,
loss of distinctiveness, tarnishment, and loss of sales), which could help the
jury. His opinions on intent and comparisons of infringement to “identity
theft” were excluded.

An expert offered to support GOLO’s request for corrective
damages was excluded. He assumed without further support that GOLO would need
to generate a single impression to repair the harm caused by each allegedly
infringing impression Goli generated; this was unsubstantiated, speculative,
and conclusory. While corrective advertising is an available remedy under the
Lanham Act, it isn’t awarded where the trademark holder has not demonstrated
actual damages and where the alleged infringer has not acted in bad faith. GOLO
couldn’t show any actual damages, and the expert’s opinions about the cost of a
corrective advertising were entirely speculative, without any detail, and
without any basis in studies about what that would require; he could have
relied on someone else’s planned corrective advertising campaign, but none was
submitted. The expert also didn’t “consider the impact of other possible forms
of relief if GOLO is successful on liability, such as cancellation of the Goli
marks, the use of disclaimers, or any other possible components of injunctive
relief.”

Other experts were prohibited from testifying about FDA/FDCA
standards, but could testify about their understanding of the studies they
analyzed independently of FDA standards.

GOLO couldn’t prove any damages for its false advertising
claims and therefore lost summary judgment on that aspect, but, unsurprisingly,
the court found Dr. Wind’s testimony sufficient to show harm for trademark
infringement.

Goli’s counterclaims that GOLO falsely made implied disease
claims survived a preemption argument; they could be presented without
reference to the FDA/FDCA (and had to be). Likewise, the court excluded any
mention of the NAD, the California Task Force, and the California District
Attorney—all of whom have apparently weighed in on some of the claims at issue.

from Blogger http://tushnet.blogspot.com/2023/08/what-can-experts-testify-to-in-lanham.html

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