Ambiguity in consumer protection cases means something different than ambiguity in Lanham Act cases

Posted on June 27, 2023 by rtushnet

Would you believe I substantially shortened the analysis?

La Barbera v. Olé Mexican Foods Inc., 2023 WL 4162348, No.
EDCV 20-2324 JGB (SPx) (C.D. Cal. May 18, 2023)

Granting reconsideration, the court reverses its
previous ruling and dismisses the claims with prejudice. Notable for an
extensive discussion of why it would be unreasonable for a consumer of
defendant’s products to think they originated in Mexico, dooming the usual
California claims, and for surfacing a key problem with the idea of an “ambiguous” claim.

All the accused products allegedly use: (a) the phrase “El
Sabor de Mexico!” or “A Taste of Mexico!”; (b) a Mexican flag on the front and
center of the packaging; and (c) the brand name “La Banderita” (or “the flag”),
a reference to the Mexican flag displayed prominently on the Products. Some also
contain a circular logo with the Mexican flag and the word “Authentic.” Sone
also contain Spanish words or phrases, such as “Sabrosísimas” or “Tortillas de
Maiz.” However, all the accused products “clearly and prominently” say “MADE IN
U.S.A.” on the back and state they were “Manufactured by: Olé Mexican Foods,
Inc., Norcross, GA 30071.”

The court agreed with defendant that recent Ninth Circuit
precedents required more of reasonable consumers than earlier cases. When the front
of the package is not misleading but ambiguous (whatever that means), consumers
can be required to look at the back of the package for clarification.

Note: What ambiguity versus misleadingness usually means in
practice, as far as I can tell, is whether the court thinks the front is misleading.
The court here tries to create a distinction that could work, but—as it notes—the
standard of care it imposes is pretty high, requiring more lawyerly precision
than most consumers (even lawyers) engage in for most purchases. The court
thinks this result is dictated by a single panel of the Ninth Circuit; I’m not
so sure.

Anyway, plaintiffs must plausibly allege “a probability that
a significant portion of the general consuming public or of targeted consumers,
acting reasonably in the circumstances, could be misled.” Applying the Manuka
honey precedent, the court found that standard not satisfied. The court
gave a detailed exegesis of that case, Moore v. Trader Joe’s Co., 4 F.4th 874
(9th Cir. 2021), noting that the panel reasoned that reasonable consumers would
use contextual information to conclude that “100% New Zealand Manuka Honey” did
not have to be made with honey solely sourced from manuka flowers. “Perhaps the
panel’s most surprising holding was the following: ‘given the foraging nature
of bees, a reasonable honey consumer would know that it is impossible to
produce honey that is derived exclusively from a single floral source.’” In addition,
“the products’ inexpensive price would put a reasonable consumer on notice that
the concentration of Manuka flower nectar was relatively low,” as would a “10+”
rating on the label.

So, “if the Ninth Circuit thought the plaintiffs’ reading of
the Trader Joe’s product so implausible that it could be dismissed as a matter
of law, it would surely hold the same here.” Moore

imagines a “reasonable consumer”
who is intelligent, someone capable of analyzing different pieces of
information, engaging in logical reasoning, and drawing “contextual inferences”
from a product and its packaging. She is diligent, for she does not just view
one phrase or image in isolation, but looks at the entirety of the packaging
together—she “take[s] into account all the information available” to her and
the “context in which that information is provided and used.” And she appears
to exhibit some skepticism about the representations made to her by a product’s
advertising, aware that corporations attempting to sell items are conveying
information to a given end and in a certain light. She does not expect
advertisers to lie to her, nor should any consumer be expected to endure
affirmative misrepresentations or strongly misleading claims. But she
understands nuance and context, and that when making her purchasing decisions,
all representations made by a seller are designed to sell.

Being a reasonable consumer of all the low-cost products we
buy sounds exhausting! But, the court reasoned, Moore also has additional
premises:

(1) that reasonable consumers in the
market for a given product generally know a little bit about that product, at
least more than a random person on the street, who may have no interest in that
product or given it any thought; and (2) if a consumer cares about any
particular quality in a product, she is willing to spend at least a few seconds
reading a product’s packaging to see if it answers her question.

It follows that the “reasonable tortilla consumer” “knows a
thing or two about tortillas, including a cursory understanding of their
history and cross-border appeal, and has a basic grasp of broader social
phenomena, such as the significant presence of Mexican American or Latino
immigrants in the United States and the foods they have introduced into the
mainstream American market.”

Moreover, if something is material to consumers, Moore
indicates that they will be more careful and “invest at least a few seconds
into reading the front and back labels of a product to see if it answers their
question.” Although a reasonable consumer starts with the front of a package, “unless
the front label is unmistakably clear about the issue for which she seeks an
answer, she knows that she would ‘necessarily require more information before
[she] could reasonably conclude’ what the answer is.” Then she would look at
the product itself, including its context, for answers. This distinction
between misleadingness and ambiguity is workable, but courts will have to keep
in mind that, when a substantial number of reasonable consumers would
think they could answer the question (and would be wrong about a reasonable
answer) from the package front, misleadingness is possible.

As a matter of judicial
experience and common sense, “any reasonable tortilla consumer who cares even a
little bit about whether the tortillas she is buying in a grocery store are
made in a Mexican factory rather than an American one, is willing to spend five
seconds reading a product’s packaging to find out.” The court took pains to
distinguish this from requiring the consumer to use the company’s website or
compare reviews online. It was not suggesting that consumers must do anything
more than “spend five seconds looking at the front and back labels.”

While I think Moore was wrong—it made up a class of
sophisticated Manuka honey purchasers and the back labels did nothing to clarify—the analysis here is much more solid
given the specific context of geographic origin information. A reasonable
consumer “does not approach purchasing decisions with a professorial genius or
inclination toward exhaustive research,” but if she cared about Mexican origin,
she’d notice that the front package doesn’t say “one way or the other” and
check the back, because “geographic origin information is often on the back of
packaging.”

Another way to see it is that consumer protection claims arise
along a spectrum:

On one end, plainly fanciful or
unreasonable interpretations of a product’s labeling are subject to dismissal. On
the other end, false or ambiguous front-label claims cannot be cured by
contradicting back-label statements as a matter of law. Between these poles,
ambiguous front-label claims that are consistent with back-label claims permit
courts greater latitude to consider the surrounding context of the product and
packaging to determine if the claims are misleading.

I don’t like this framing as much because it double-counts
ambiguity while conflating two different meanings. Some ambiguity is what
Lanham Act cases mean when they say a claim is ambiguous: “some consumers may
receive a true message, while others may receive a false one,” and that should
be included in the class of potentially misleading claims. But the ambiguity
the court here seems focused on, which seems right, is whether a reasonable
consumer could even answer the relevant question from the front of package
information.

Her, “there are certainly no falsehoods on the front of the
labels, while the back labels have nothing to contradict or correct.”

So let’s look at the packages:

La Banderita Sabrosísimas Corn

Other than “La Banderita” and “Sabrosísimas,” every single
other word (apart from “tortillas” itself) on the front and the back of the
packaging was in English, not Spanish. It wasn’t true that there was a “Mexican
flag on the front and center of the packaging”: the tricolor was there, but “Defendant
has erased the national coat of arms (an eagle perched on a cactus with a
rattlesnake in its mouth) from the center white stripe and replaced it with an
image of corn.”

La Banderita Sabrosísimas Flour

Though there was more Spanish, e.g., Sabrosísimas Tortillas
Caseras and El Sabor de Mexico, English words and phrases still predominated,
and the back was even clearer than the other packages that it was made in the
US.

La Banderita Burrito Grande

Hardly any Spanish-language representations on the front
label, apart from the brand name and “Burrito Grande,” “the latter of which
hardly counts as Spanish because it would be recognizable to even monolingual
English-speaking Americans.”

La Banderita Whole Wheat Fajita

Similar.

A reasonable consumer  

would know that the United States
of America is a nation of immigrants. She has a basic understanding that there
is such a thing as global capitalism, in which markets for goods and services
operate across borders. She would know that foods associated with other
cultures, from Chinese to Italian to Mexican, have become enormously popular in
the United States, with Americans of all kinds enjoying these cuisines, or
Americanized versions of them, at restaurants and at home. Because these foods
are commonplace in the United States, not just in their countries of origin,
she understands that there are American businesses, or multinational
businesses, that sell these kinds of foods—i.e., it is an inherently unreasonable
assumption that just because a food clearly originates from a foreign country,
whether it is pasta or tortillas, that ipso facto it must be made in that
country. This is obviously true of ethnic restaurants, which by definition
serve food originating from foreign nations but made in the United States. But
it is also true of manufactured products, including the kind of products
produced by the kinds of businesses like Defendant’s: an American company
manufacturing and selling goods in the United States, founded and led by a
family with an immigrant background who make foods originating from their
family’s nation of origin.

Some Spanish on the package wouldn’t be misleading. “Virtually
all of the words on the Products’ labels are in English, not Spanish, and even
most of the Spanish words or phrases are translated into English.” Even
assuming that a package entirely written in Spanish might convey to a consumer
that its primary market is Spanish speaking, and that a reasonable consumer
could infer that products targeting the Mexican market are more likely to be
made in Mexico, no reasonable consumer would think these products targeted a
monolingual Spanish-speaking market.

Further, nothing in statements like “The Taste of Mexico!”
were inherently false or misleading; rather, they were meaningless/trivially
true in that tortillas are Mexican; “one could eat a hamburger or any
quintessentially ‘American’ food outside the United States and say that it ‘tastes
of America.’”

The court was also careful to note that images, logos and graphics
“can convey a strong message to consumers, and often they can be more powerful
than words alone.” But not all flag-like uses are the same.

If the Products contained an actual
Mexican flag, especially one paired with any kind of statement of a seemingly “official”
nature, perhaps a consumer could think the Products display some kind of
governmental imprimatur of Mexican origin. A product that bears the Mexican
flag and says “Made in Mexico” or “Hecho en Mexico” beneath it is obviously
misleading if, in fact, the product is made in the United States. So, too, may
be a product bearing a Mexican flag with the words “Official Product” or “100%
Mexican” or another phrase that suggests a representation regarding the
product’s supply chain, rather than just a cultural affiliation. But no
reasonable consumer would think the Mexican flag imagery on the Products
suggests that they must be made in Mexico, for these are highly stylized
“flags,” decidedly unofficial in nature: they adopt the Mexican tricolor, with
images of wheat or corn in lieu of the national coat of arms. Such imagery
evokes Mexican heritage, which is truthful, rather than misleading: tortillas
originate from Mexico.

Then there was some more speculative stuff, like that
reasonable consumers will know that fajitas are Tex-Mex, not Mexican (really?),
that whole wheat is an American thing, and that burritos have only limited
popularity in northern Mexico but they’re central to Mexican-American cuisine.

The court was also not persuaded by the complaint’s allegations
that a substantial number of reasonable consumers would pay more for tortillas
of Mexican origin. Although a price premium for authenticity could be
plausible, “it is not reasonable to assume that potential consumers for
Defendant’s products are seeking out the most traditional of tortillas, for
they are buying them at ‘grocery retailers in California.’” The plaintiff
alleged that Olé targeted Hispanic consumers, “[b]ut anyone with a basic
familiarity with Mexican culture, including many or most Mexican Americans
living in the United States, knows that the vast majority of Mexicans acquire
their tortillas at tortillerias, and no tortilleria would package their
products in a manner remotely similar to the Products. The Products also do not
look like mass-produced tortillas sold in Mexican grocery or convenience
stores, not least because they are mostly written in English, not Spanish.”

Anyway, authenticity was nothing more than subjective; it was
a social construct. “Reasonable tortilla consumers care about whether their
tortillas are good—and that is not the same thing as caring solely about
whether their tortillas are made in Mexico.” [I was pretty sympathetic up to
this point, but consumers are generally entitled to want what they want for
whatever reasons they want, even if the reasons are dumb ones. And while “authentic”
is probably puffery in this context, that’s not the challenged representation—it’s
Mexican origin, which people can plausibly value because of their varied
conceptions of authenticity.]

But the court used this point to challenge the idea that
defendant was acting in bad faith: It was ok to offer “Mexicanness” with
made-in-the-US food. Have some culture war:

An individual can be proud to be an
American while simultaneously acknowledging, and celebrating, her Mexican
heritage; a company can be based in the United States with a corporate culture
that acknowledges, and celebrates, Mexican culture and cuisine. By implicitly
rejecting these ideas, lawsuits like this one perpetuate an unfortunate, and
unreasonable, undercurrent of essentialism: that foreign-sounding people, words
and foods are less American than the people, language and cuisine associated
with the “real” America. If a consumer begins with the presumption (seemingly
an unrebuttable one if she is also unwilling to look at the back of a package
to see if it is made in the United States) that all ethnic food products she
finds in an American grocery store are manufactured in a foreign country
because they are inherently “foreign,” she fundamentally misunderstands the
American experience. For purposes of a FAL, CLRA or UCL claim, she is also not
a reasonable consumer ….

The dismissal (which is now on appeal) was without leave to
amend, despite the existence of a survey. The survey couldn’t change the
results. Among other things, the survey deliberately showed only portions of the
packaging to participants and to exclude the parts where they say they are made
in the United States. “A participant would have to click on a tiny and
difficult-to-find link to view any additional images, and nowhere do the survey
results show whether or how many participants did so.”

Comment: Here’s where an understanding of the dual meanings
of “ambiguous” would be helpful. If there is a good enough “I don’t
know/not enough information to answer” option, even a survey showing only the
front can provide relevant evidence about whether the front of the package is
ambiguous in the way that means “a reasonable consumer would understand that
she can’t answer X question with this information” or ambiguous in the way that
means “30% are fooled and 70% aren’t.”

The survey also fatally failed “to provide adequate factual
detail as to why a consumer might believe the Products were made in Mexico.” They
needed to be asked why they believed that.

from Blogger http://tushnet.blogspot.com/2023/06/ambiguity-in-consumer-protection-cases.html

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A&E’s (c) and TM claims survive against former producer’s new version of cop show

Posted on June 26, 2023 by rtushnet

A&E Television Networks, LLC v. Big Fish Entertainment,
LLC, 2023 WL 4053871, No. 22 Civ. 7411 (KPF) (S.D.N.Y. Jun. 16, 2023)

The court refused to dismiss copyright and trademark claims
based on copying of a TV show format, including the hosts.

A&E owns a trademark (for entertainment services) and
registered copyrights for Live PD, “which for four years featured live feeds of
law enforcement activity across America, along with live narration and
commentary from host Dan Abrams and others.” It developed the show with Big
Fish, but the parties agreed that A&E would have exclusive ownership of the
rights in Live PD. “In 2020, as America reckoned with police brutality after
the death of George Floyd, the show was taken off the air.”

Two years later, defendants launched “On Patrol: Live,”
which was allegedly virtually identical to Live PD.

The complaint alleged that Live PD

followed several police departments
from across the country in real time as they patrolled their communities, while
hosts Dan Abrams, Sergeant Sean “Sticks” Larkin, and a third host, discussed
the footage from a studio. This type of documentary-style series — combining
carefully selected live footage from cameras mounted on police dashboards with
in-studio commentary — was the first and only series to feature the work of law
enforcement in real time over a sustained period.

Slicing the numbers: Live PD was the number one program
(excluding sports programs) in the key demographic of adults aged 25-54
twenty-eight times in 2018; was the most watched program on ad-supported cable
television during prime time on Friday and Saturday nights in 2019; and rose to
among the top spots in all of cable, drawing approximately three million
viewers per weekend in 2020. A&E also greenlit spinoffs: Live PD: Rewind,
Live PD: Police Patrol, Live PD: Roll Call, Live PD Presents: Women on Patrol,
Live PD Presents: PD Cam, Live Rescue, Live PD Presents: Top Ten Police
Vehicles, and Live PD: Wanted.

Defendants allegedly launched an ad blitz proclaiming “the
return,” “relaunch,” and “revival” of Live PD on REELZ, a competitor network to
A&E. On Patrol: Live used the same two hosts and also features Curtis
Wilson, who previously featured as a contributor on Live PD. REELZ allegedly told
advertisers that the “working title” of the show was “PD Live,” and went so far
as to announce that “REELZ ADDS #1 TV SHOW TO OUR PROGRAMS LINEUP” with “ALL
NEW LIVE EPISODES.” A&E alleged that the new title “On Patrol: Live” was
already associated with the Live PD spinoff Live PD: Police Patrol.

On June 8, 2022, multiple articles were allegedly released
announcing — erroneously — that Live PD was making its return on REELZ,
including a Wall Street Journal article declaring “Live PD is coming back this
summer as ‘On Patrol: Live’ ” and an Atlanta Journal-Constitution article
proclaiming that Live PD would “soon be live once again” as On Patrol: Live on
the REELZ network. Former Live PD host and current On Patrol: Live host and
executive producer Dan Abrams tweeted “somewhat misleadingly” on that day that
“Live PD is coming back” while thanking “the #livepdnation” for its “patience.”
One month later, he announced a promotional tour for On Patrol: Live in a
manner that allegedly suggested a continuation of the Live PD series, noting
that it was “hard to believe we are almost back!!” and linked a New York Post
article stating that “Live PD [was] back as On Patrol: Live two years after
being canceled”

An executive producer of both shows allegedly perpetuated
the continuation theory by telling Entertainment Weekly that REELZ believed in
the Live PD show in its original format and did not seek to bring it back in a
completely different manner. REELZ’s official Twitter account retweeted the
various articles discussed above and issued a press release announcing the
purportedly “new” series “from the producers of Live PD,” and quoting Abrams as
being “thrilled” that the “team is finally back together.” A Facebook fan page
with nearly 137,000 members changed its name from “A&E LIVE PD” to “Reelz —
On Patrol Live.”

The new show was allegedly “virtually indistinguishable from
Live PD,” following police and sheriff’s departments in real time across the
country (including some of the same departments previously featured on Live PD),
while the hosts (described above) comment on the action from a studio. 

Media critics allegedly readily observed that the new show
was “a clone of A&E’s Live PD,” and that “On Patrol: Live is Live PD.” Fan
reactions on social media included “Ok. I’m confused. Is Live PD back on the
air? If so, how do I watch?”; “Dan Abrams really got Live PD back on the air
disguised under a new name and on a new channel.”; “Watching Live PD. Yeah,
yeah ok. On Patrol whatever! @danabrams, this is the best Friday night in
years! Glad to have you back!”; “So awesome to be spending Friday &
Saturday nights watching Live PD again. I missed it!” (Query: what percentage
of social media comments about On Patrol: Live does this represent? Is that a
good measure of confusion? Confusion about what, exactly?)

The new show was a hit for REELZ.

Copyright: infringement can occur when someone else  copies “the author’s original contributions”
to the subject work — that is, “the original way in which the author has
‘selected, coordinated, and arranged’ the elements of his or her work,” even if
those elements, standing on their own, are not protectable. (So, one thing that
distinguishes this case from several other plaintiff-sues-original-author cases
like Fogerty v. Fantasy is that the creators are part of a corporation
and so the work began life as work for hire. Nonetheless, it doesn’t seem that
shocking that people who made a work before will do something similar when
hired to make another. The key question is, of course, how far copyright will
go to interfere with that artistic continuity.)

At this stage, the court held that Live PD was comprised of
original expressions of non-protectable elements, and applied the more
discerning ordinary observer test. Unprotectable elements/scènes à faire: the
idea of an unscripted police show is not itself copyrightable, police
department footage, disclaimer banners, segments about missing children or
wanted lists, a three-host format, a view toggling between live footage and
in-studio hosts, and red and blue lights.

Of note, the court declined to find that the show’s “Missing”
segment, “Wanted” segment, and “Crime of the Week” segment, along with the
show’s segments before and after commercial breaks, were copyrightable in
themselves. “In light of the thin degree of originality that inheres in Live PD
as a whole, the Court will not find that each segment, on its own, is entitled
to similar protection.”

Nonetheless, A&E successfully alleged infringement of
its thin copyright: “Plaintiff and Defendants are uniquely situated in that the
two shows are nearly identical and use the same creative arrangement of the
same hosts, lighting, guests, camera angles, screen toggling, and other stock
elements, and it is that combination of identical elements that creates two
works that are virtually indistinguishable.”

The following similarities, taken together, plausibly
alleged infringement:

• Both shows begin with nearly-identical percussive,
fast-paced music playing while a black screen displays an introductory
disclaimer in white letters with nearly identical language, and such music and
display appears each time the show returns from commercial;

• Both shows toggle between footage of live or pre-packaged
police patrol action and studio commentary by the show’s hosts discussing the
unfolding action;

• Dan Abrams is the primary host, and Sgt. Larkin the
co-host, of both shows;

• Each show features a third host, which, for On Patrol:
Live is Deputy Sheriff Curtis Wilson of the Richland County Police Department,
a former recurring participant on multiple episodes of Live PD;

• In both shows, the three hosts are dressed similarly and
situated around a table with Abrams on the left, Larkin in the middle, and the
third host on the right;

 

• The studio in which the hosts sit features large TV
screens on the walls and blue and red lights behind the screens;

• Abrams narrates the action on screen in both shows and
uses the exact same catchphrases such as “What’s the theory here?” and “Let’s
take a good look at [the missing person]”;

• Both shows feature several of the same law enforcement
departments and On Patrol: Live even brings back some of the same individual
officers from those counties;

• Both shows include “Crime of the Week” and “Missing”
segments, with the latter segments for both shows cutting to Angeline Hartmann
of the National Center for Missing and Exploited Children for a description of
the circumstances behind the missing person;

 

• Both shows include a segment featuring footage of a
previously committed crime while one of the hosts explains the crime and
describes the suspect for whom police officers are looking;

• Both shows display the location of the law enforcement
action in a rectangular box at the lower left-hand corner of the screen and,
when officers speak to the camera, the shows both flash the officer’s name and
department;

• Both shows feature descriptions of the events in the lower
left-hand corner (e.g., “traffic stop”) with the location of the event beneath
the description;

 

• Both shows display the exact same “earlier in” tagline on
the top corner of the screen when airing pre-recorded footage;

• Both shows at times utilize dual screens, particularly
during car chases, with footage of the road displayed in a larger screen in the
upper-right-hand corner and middle of the TV screen and a smaller, overlapping
screen in the lower-left-hand corner displaying the officer in the car;

• When introducing footage for the first time from a
specific location, both shows display a similar U.S. map on the screen that
shows the viewer where the event is taking place;

• Both shows also use the same or nearly identical camera
angles, motion theory (i.e., how the graphics are zoomed in and out), process
to settle on and highlight a location, and palette when featuring the U.S. map
(including color choices, how the colors are used, and the relationship between
the chosen colors);

• Both shows use strikingly similar logos that draw on the
same marks and iconographies;

• When transitioning from one location to another, both
shows first flash a screen with the city or county and state of the second
location before cutting to law enforcement footage;

• Both shows end virtually identically, with footage of law
enforcement action playing in a rectangular box in the middle of the screen
while the credits flash beneath the footage in white letters and police lights
flash on dark pavement in the background; and

• The time slots (and thus the time period covered by the
live action) of both shows are the same — 9:00 p.m. to 12:00 a.m. on Friday and
Saturday nights. [Um, is that even something you can count in copyright? I’m
dubious about whether airtime is an element of the work. Although the court is
quite careful, this does seem to be TM/market analysis creeping into
copyright.]

The court found that this situation “presents the rare
instance of ‘very close copying’ of Plaintiff’s original expression of elements
that is nearly indistinguishable from the infringing work.” None of the
elements alone would suffice, but the total look & feel was the same.
Although “one cannot own a copyright in an individual, like host Dan Abrams …
the Court may consider a host’s identity as part of the substantial similarity
analysis. Thus the relevant inquiry is not the fact that Dan Abrams and Sgt.
Larkin appear in both shows, but rather that they are used in the same fashion,
around virtually identical desks with virtually identical mugs, and surrounded
by nearly all of the same elements across both works.”

Big Fish didn’t identify sufficient differences to avoid
infringement—the hosts wore suits on Live PD while they wore polo shirts on On
Patrol: Live; they didn’t always sit in the same positions; and the textual
iconographies of “Crime of the Week” differed. “A slight change of clothes,
fonts, or seat positions does not engender substantial enough differences to
stop an average lay observer from recognizing that the work, assessed as a
whole, was copied from Plaintiff’s work, even if the individual segments on
their own are not substantially similar.”

Other cases rejecting infringement claims involved
“substantial differences” in “concept, feel, and theme.” E.g., American Runway
was distinguishable from Project Runway because, inter alia, American Runway
“is much more populist and inclusive; the viewer has a powerful voice in the
outcome of the show, and the program caters to engaging the fashion
sensibilities of its ‘real American’ audience.”

Trademark/unfair competition: A&E smartly relied on its
LIVE PD registered trademark, rather than any elements of the show, which would
create serious Dastar/functionality problems. It successfully pled
confusion based on the facts about the pre-launch and post-launch
advertising/social media reactions alleged above. A&E plausibly pled that
its mark was strong. On similarity, the court declined to consider the working
title PD Live; there was no authority that advertisers should be treated as
consumers for purposes of likely confusion, and there was no evidence that they
were confused or confusable consumers.

“LIVE PD and On Patrol: Live are plainly dissimilar,” and “that
the two share the word ‘Live’ is insufficient, on the facts alleged in the
Complaint, to suggest that a consumer would plausibly confuse the two.” Indeed,
A&E itself argued that defendants “deliberately fostered the misperception
that On Patrol: Live was a continuation of Live PD by repeatedly using the LIVE
PD mark to promote their new show,” suggesting that it didn’t think that
consumers would confuse the two standing on their own. So too with “patrol.” “Both
On Patrol: Live and Live PD: Police Patrol feature the words ‘live’ and ‘patrol,’
but these words are commonplace in describing the activity of police
departments and a show with live action. On this record, the Court does not
find that such marks, without any indication as to the two marks’ shared
appearance or other contextual factors, would be likely to confuse customers as
to the nature of the mark.”

Competitive proximity: Though the two shows never aired on
cable simultaneously, both parties’ YouTube channels feature clips related to
their respective shows. So they’re in the same online video market.

Anecdotal evidence of actual confusion on social media was
also alleged. (Was the source of the confusion the use of the name, or the use
of elements for which A&E lacks trademark protection? The court notes that
the tweets were not dispositive, but still found that they weighed in A&E’s
favor at this stage.)

Bad faith was plausibly alleged. Defendants plausibly used the
LIVE PD mark to exploit the show’s good will and reputation, including by
REELZ’s retweeting of various articles and headlines informing the public that
Live PD would be “returning” on REELZ and issuing a press release touting the
series as the “de facto” successor to Live PD. The quotes from Dan Abrams in
its press release that he was “thrilled” that the “team is finally back
together,” when viewed in conjunction with Abrams’s repeated tweets about Live
PD’s supposed return, suggested that defendants were “capitalizing on Live PD’s
reputation and recognition (and that of its host) for their own gain.” (But
does “that of its host” have a separate TM existence, and what should
future employers be able to say about the host? I think the court expects
nominative fair use to take care of this, and that’s plenty defensible.) It was
exploiting the goodwill and reputation of Live PD to tell advertisers that
“REELZ ADDS #1 TV SHOW TO OUR PROGRAMS LINEUP” with “ALL NEW LIVE EPISODES”
(id. ¶¶ 48, 131), and making no effort to distinguish the two shows. (Suppose all the REELZ promotions said “a new show from the producers and stars of Live PD.” Sufficient to avoid a problem? Does REELZ have to avoid retweeting anyone who doesn’t include that detail? Are the retweets a plausible source of causation of confusion?)

What about nominative fair use? In the Second Circuit, you
add the factors to the Polaroid factors and weigh them somehow. It’s
true that you can’t reasonably talk about the new work from the producers of
Live PD without saying that, so this factor weighed in favor of nominative fair
use. But A&E plausibly alleged that defendants used too much, making the
LIVE PD mark the “centerpiece of their deceptive marketing campaign.” Defendants
responded that A&E’s claims centered around third-party articles and
retweets that they promoted, rather than their own words. Defendants’ only
alleged statements regarding Live PD were in a press release, wherein REELZ
announced the “new” series as “from the producers of Live PD.” The court noted
defendants’ point, but, “at least at the motion to dismiss stage, Defendants’
retweets — i.e., their public endorsements — of news articles claiming that
Live PD was making its return, and REELZ’s press release quoting Dan Abrams’s
statement that he was ‘thrilled’ the ‘team is finally back together’
(especially in light of Abrams’s continued tweets indicating that the Live PD
show was back), were unnecessary to identify the new show, and therefore
excessive for purposes of this factor.”

So too with the third NFU factor. It was plausible that
defendants acted “willfully and intentionally to confuse the public as to the
affiliation and sponsorship of the work.”           

from Blogger http://tushnet.blogspot.com/2023/06/a-c-and-tm-claims-survive-against.html

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materiality dispute avoids sj in literal falsity case (also no seller standing against ingredient supplier)

Posted on June 26, 2023 by rtushnet

World Nutrition Inc. v. Advanced Enzymes USA, 2023 WL
4105345, No. CV-19-00265-PHX-GMS (D. Ariz. Jun. 21, 2023)

WNI and defendants AST/Specialty sell enzyme supplement
products. WNI and AST sell directly to consumers, while Specialty is a wholesaler
that sells to other businesses, including AST. Each side alleged false
advertising by the other, primarily that each falsely advertised their products
as containing enteric coating, which protects an enzyme from the stomach’s
acidic environment and preserves its activity until it reaches the small
intestine. WNI had some additional claims of false advertising by AST (that AST
is a manufacturer, that it uses a Bioactive Protein Peptide System, that it
employs a formulator and master enzymologist, and that it conducts in-house
laboratory testing). AST also contended that WNI falsely advertised its
products as containing buffer enteric coated serrapeptase, and falsely
advertised the efficacy of its two liquid products as well as its compliance
with “Good Manufacturing Practices” (GMP), as established by federal law.

Relevant background: more than 20 years ago, WNI purchased
an enzyme blend in bulk from Specialty; it got sued for falsely advertising a
product sourced from as containing enteric coated serrapeptase. “WNI lost at
trial and ceased purchasing products from Specialty.”

Previously, the court dismissed Specialty’s Lanham Act claim
against WNI on standing grounds. Specialty then moved for summary judgment on
WNI’s claims on the grounds that WNI didn’t have Lanham Act standing, since it
was a wholesaler and WNI sells directly to consumers. The court agreed that
Specialty fell outside the relevant zone of interests.

Although vicarious liability may be possible, there was no
evidence that Specialty exercised control over AST or its advertiser. Nor was
there evidence that Specialty induced AST to falsely advertise or knew that AST
was engaging in false advertising of its products. “The mere existence of a
supplier relationship does not give rise to vicarious liability.” Likewise, Arizona’s
unfair competition law requires a plaintiff to “either show that it was engaged
in competitive business with [defendant] or that [defendant’s] actions were
likely to produce public confusion,” so the state law claims also failed.

Unclean hands couldn’t be resolved on summary judgment
because of “genuine disputes of material fact underpinning most aspects of both
party’s claims.” The only undisputedly false statement was WNI’s statement that
its products contained buffer enteric coated serrapeptase. But “even if these
statements constitute inequitable conduct that relates to the subject matter of
the claims” the court couldn’t balance the parties’ wrongdoing while many
disputes remained for trial.

In addition, as to that undisputedly false statement, there
was a genuine dispute over materiality. Although the court gave AST a
presumption of materiality, WNI sufficiently rebutted it for purposes of
avoiding summary judgment: (1) Because the products are digestive enzymes,
which do not require enteric coating at all, the statement was meaningless; (2)
the products at issue were WNI’s digestive products, which didn’t compete with
AST’s products, which are systemic products, which would rebut likely harm.
Sort of weirdly, the court concludes that these put other elements into
dispute, rebutting the presumption of materiality—but it seems like (2) at
least would merely make the presumption of materiality insufficient for
liability.

Whether advertising GMP compliance, including adjacent to
statements about quality control, falsely advertised that the products
themselves are high quality and safe or merely indicated that the products are
manufactured in GMP compliant facilities was for the jury, as was
materiality/harm.

Declining to use ordinary conversational principles, the
court also found that a jury would have to resolve whether AST’s advertising of
a product as containing “enteric coated serrapeptase and nattokinase” when only
the former was enteric-coated. (After it allegedly resumed the enteric coating,
AST changed the advertising to say “enteric-coated serrapeptase and
enteric-coated nattokinase.”) Whether “enteric coated” modified both terms was
a jury issue. AST also did say, during the relevant period, “the serrapeptase
and nattokinase in Serracor NK are enterically coated,” but AST urged that
these statements were “buried in [two] additional informational tabs and a blog
post” which sufficiently challenged deception and materiality. (I’d have gone
for falsity by necessary implication, myself.)

from Blogger http://tushnet.blogspot.com/2023/06/materiality-dispute-avoids-sj-in.html

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Advertising injury policy’s IP exclusion means ROP claims aren’t covered

Posted on June 26, 2023 by rtushnet

Covington Specialty Insurance Company v. Omega Restaurant
& Bar, LLC, — F.Supp.3d —-, 2023 WL 2720805, No. 2:21-cv-247 (E.D. Va.
Mar. 30, 2023)

This is fallout from one of the many right of publicity etc.
lawsuits against clubs for advertising them with images of models without those
models’ consent. Omega was sued in state court by a group of such models;
Covington sought a declaration that it had no duty to defend, which it secured
on summary judgment.

The relevant policy provides coverage for bodily injury,
property injury, and advertising injury, subject to certain conditions and
exclusions. The underlying lawsuit asserted misappropriation of images and
likenesses for advertising purposes under state law; violation of the Virginia
business conspiracy statute; and violations of the Lanham Act for false
advertising and false association.

In Virginia, insurance contracts are interpreted according to
general principles of contract law; any ambiguity is construed against the
insurer. “In deciding whether coverage applies, a court may consider only the
underlying complaint and the relevant policy.” A duty to defend is triggered if
there’s any possibility that a judgment against the insured will be covered.

Additionally, “[l]anguage in a policy purporting to exclude
certain events from coverage will be construed most strongly against the
insurer.”

Covered personal/advertising injury included

d. Oral or written publication, in
any manner, of material that slanders or libels a person or organization or
disparages a person’s or organization’s goods, products or services;

e. Oral or written publication, in
any manner, of material that violates a person’s right of privacy;

f. The use of another’s advertising
idea in your “advertisement”; or

g. Infringing upon another’s
copyright, trade dress or slogan in your “advertisement”.

It excluded knowing violation of the rights of another, and
injury “arising out of the infringement of copyright, patent, trademark, trade
secret or other intellectual property rights. … However, this exclusion does
not apply to infringement, in your ‘advertisement,’ of copyright, trade dress
or slogan.”

Covington argued that the ROP claim was an intellectual
property right; although Omega didn’t contest this, it’s not obviously true
(see what’s going on in courts’ characterizations of the ROP for §230 purposes)
and it’s probably past time to add ROP (or name, image and likeness if you prefer)
to that list if insurers really want it excluded. However, given how ROP claims
work, they really should be treated like copyright, trade dress, and
slogan—they’re routinely connected to advertising and the advertising can
regularly be distinguished from the underlying goods/services. Certainly
insureds have at least as much reason to want such insurance, and given the
extension of the right of publicity there is a set of claims that don’t involve
knowing violations of rights.

Anyway, Omega also didn’t contest that the conspiracy
allegation was an excluded “criminal act” and knowing violation of rights of
another, or that the Lanham Act claims aren’t one of the enumerated offenses in
the definition of personal/advertising injury. Instead, it argued that the
underlying lawsuit alleged misappropriation of advertising ideas and
slander/libel/disparagement.

The Virginia ROP “protects both a property interest and a
right to privacy.” But it is generally known as the “right of publicity” as
evolved from the right of privacy. The court concluded that the ROP is an
intellectual property right. Black’s Law Dictionary defines “intellectual
property” as “[a] category of intangible rights” including “trade-secret
rights, publicity rights, moral rights, and rights against unfair competition.”
 

“The distinction between the right of privacy and the right
of publicity is critical to the coverage determination here because the Policy
provides coverage for violation of one (the right of privacy) but excludes coverage
for infringement of the other (as an intellectual property right).” But the
exclusion didn’t swallow the coverage rendering the coverage meaningless,
because other personal/advertising injury offenses were covered.

There was thus no duty to defend as to the ROP, and the
court also found that the policy excluded the conspiracy claim and didn’t cover
Lanham Act claims based on confusion about underlying plaintiffs’ employment at
and/or endorsement of Omega. This was important because false endorsement/false
advertising claims could succeed without the existence of intellectual property
rights.

Omega’s arguments favoring coverage failed because the
underlying complaint didn’t even implicitly allege misappropriation of
advertising ideas, given that there’s no general common law right against
misappropriation in Virginia. Nor did the underlying complaint state a
potential claim for defamation by implication despite the fact that the
underlying plaintiffs alleged that the false suggestion of association with
Omega “would be highly offensive to a reasonable person.”

Courts have divided on whether similar allegations can
actually found a defamation claim. Here, the underlying complaint didn’t
“elaborate” on how such an association or affiliation would subject the underlying
to “scorn, ridicule, or contempt” or render them “infamous, odious, or
ridiculous.” Plus, the underlying complaint alleged that Omega used the images
to promote and draw customers to their business—not to shame or disgrace the
underlying plaintiffs.

from Blogger http://tushnet.blogspot.com/2023/06/advertising-injury-policys-ip-exclusion.html

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ESG statements are commercial speech excluded from California’s anti-SLAPP law

Posted on June 21, 2023 by rtushnet

Hicks v. Grimmway Enters., Inc., 2023 WL 3829689, No. 22-CV-2038
JLS (DDL) (S.D. Cal. Jun. 5, 2023)

Hicks alleged that defendant, a California agricultural
corporation, misrepresented the environmental impact of its farming practices
through its advertising and “Inaugural Report on Environmental, Social and Governance
Actions.” She alleged that its statements about “regenerative farming”; its ESG
commitments; and “preserving natural resources” were “false, deceptive, and
misleading.” She brought the usual
California statutory claims.

Defendant brought a motion to strike under the anti-SLAPP
law. The anti-SLAPP law does not apply to commercial speech when:

(1) the cause of action is against
a person primarily engaged in the business of selling or leasing goods or
services;

(2) the cause of action arises from
a statement or conduct by that person consisting of representations of fact
about that person’s or a business competitor’s business operations, goods, or
services;

(3) the statement or conduct was
made either for the purpose of obtaining approval for, promoting, or securing
sales or leases of, or commercial transactions in, the person’s goods or
services or in the course of delivering the person’s goods or services; and

(4) the intended audience is an
actual or potential buyer or customer, or a person likely to repeat the
statement to, or otherwise influence, an actual or potential buyer or customer.

The court found that the commercial speech exception applied
to the ESG report. It was undisputed that (1) was satisfied; the ESG report
also contains several representations of fact about the defendant’s business
operations and goods, boasting of “Environmental Stewardship,” “Leadership in
Organics,” low-emission farm equipment, “Responsible Farming Practices,” and
“Quality Assurance and Food Safety,” among other aspects of its business
operations and goods. One section of the ESG Report is “pointedly” titled
“Operations” and describes efforts to “increase productivity, food safety and
quality, and accountability.”

Moreover, the ESG report was created, at least in part, to
promote the defendant’s goods or services. It “repeatedly spotlights the safety
and quality of Defendant’s goods. ‘Consumers can buy our products with
confidence that they meet the industry’s most rigorous safety standards,’ reads
the ESG Report.” Although “significant sections of the ESG Report discuss
topics not strictly tied to Defendant’s goods and services,” such as “Employee Health
and Wellness,” “Diversity, Equity, and Inclusion,” and various philanthropic
initiatives, the “overall message” was that the defendant was an ethically
responsible grower and seller of high-quality food products. “As such, the ESG
Report promotes Defendant’s products and its brand more generally.”

“Finally, the ESG Report’s audience consists of actual and
potential customers, as well as organizations likely to influence potential
customers.” Although the defendant argued that the report was directed to “internal
and external stakeholders like employees, policymakers, and advocacy groups,”  the report itself defined the term
“stakeholders” as including those groups and also “Consumers” and “Customers.” The
ESG Report was distributed to “Chambers of Commerce,” “various trade
associations,” and “the media,” “all of which are likely to influence potential
customers.” It was also published on the defendant’s website, where direct
customers and end-consumers could access it. Although defendant’s VP for External
Affairs & Corporate Responsibility stated that the report was only
published online so that the defendant could be eligible for a global corporate
governance award and “was not put online for any sales-related purpose and was
not directed to end-consumers,” the plaintiff submitted evidence that links to
the ESG Report were widely circulated on the defendant’s social media accounts.
Whatever the initial motivation, “the subsequent promotion of the ESG Report to
Defendant’s social media followers supports the conclusion that the ESG Report
was used to target Defendant’s actual and potential customers.”

It did not matter whether the challenged statements
were made specifically for the purpose of promoting defendant’s sales. The
communication as a whole was the key.

from Blogger http://tushnet.blogspot.com/2023/06/esg-statements-are-commercial-speech.html

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“sweetened with monk fruit” and “sugar free” plausibly suggest food is entirely/predominantly sweetened with monk fruit

Posted on June 20, 2023 by rtushnet

Scott v. Saraya USA, Inc., No. 22-cv-05232-WHO, 2023 WL
3819366 (N.D. Cal. Jun. 5, 2023)

Scott alleged that Saraya’s representations that its granola
and other products are “sweetened with monk fruit” or “monk fruit sweetened” were
false and deceptive because they are not entirely or predominantly sweetened
with monk fruit, bringing the usual
California statutory and common-law claims. The court found that Scott
plausibly alleged that these statements, read alongside the statements “sugar
free,” “no sugar added,” or “zero sugar” also appearing on the products’ front
labels, would mislead a reasonable consumer to believe that they were solely or
predominantly sweetened with monk fruit.

The complaint alleged that monk fruit was “a premium fruit
which consumers value given its nutritional values, lack of impact on blood
sugar, antioxidant levels, and more” and that “[c]onsumers seeking monk fruit
products do so for a specific reason—they want solely, if not predominantly,
monk fruit given its premium nature and understood benefits.” Further, the
complaint alleged that Saraya’s competitors “offer products that are advertised
similarly and are actually solely sweetened with monk fruit” and Saraya itself
sells “Lakanto Monkfruit Extract Drops,” which are also advertised as having
“zero sugar” and contain only monk fruit. Thus, consumers could reasonably
believe that products can actually be sweetened solely with monk fruit.
However, the challenged products are  allegedly“predominantly sweetened with erythritol,”
a sugar alcohol that “can lead to multiple side effects, including digestive
problems, diarrhea, bloating, cramps, gas, nausea, and headaches,” and that has
been linked to an increased risk of heart attack and stroke. Monk fruit is allegedly
less processed and “considered to be a more premium sweetener than erythritol,”
and is “much more expensive.”

An earlier version of the complaint didn’t sufficiently
allege why consumers would believe that

“sweetened with monk fruit” or “monk fruit sweetened,” “on
their own,” meant “entirely, or at the very least predominantly, sweetened with
monk fruit.” The amended complaint fixed this problem by alleging both that “sugar
free,” “no sugar added,” or “zero sugar” on the front, coupled with mention of
only one sweetener, misled consumers, along with the existence of monk
fruit-only sweetened competitors.

Saraya argued that the product nowhere said “only monk
fruit.” Although the back of the label “contains a short passage on the
discovery of monk fruit, its perceived benefits, and where Lakanto harvests its
monk fruit,” it also contains an ingredient list that “expressly states that
the product contains ‘Non GMO Lakanto Monkfruit Sweetener (Erythritol and Monk
Fruit Extract).” That wasn’t enough, given the plausible allegations of the
complaint.

With no other sweetener mentioned
on the front label, it is plausible that a reasonable consumer would believe
that monk fruit was the products’ sole or predominant sweetener. That the sugar
and monk fruit representations both appear in large font on the representative
labels, with the sugar statements made above the monk fruit statements, further
support this.

The existence of competitors with all monk fruit sweetening
carried less weight but still helped.

 

from Blogger http://tushnet.blogspot.com/2023/06/sweetened-with-monk-fruit-and-sugar.html

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literally false material comparative ad avoids sj because of dispute about injury

Posted on June 20, 2023 by rtushnet

MacuHealth, LP v. Vision Elements, Inc., 2023 WL 3863341, No.
8:22-cv-199-VMC-JSS (M.D. Fla. Jun. 7, 2023)

MacuHealth sells a nutritional supplement of the same name
that is intended to maintain or improve eye health; Vision Elements is a
competitor that sells Early Defense. Each capsule of MacuHealth’s product
contains three active ingredients, LMZ carotenoids, and Vision Health states
that Early Defense has the same active ingredients in the same amounts. Approximately
1 percent of Early Defense product sales are direct to consumers and 99 percent
are to eyecare physicians.

MacuHealth bottle: note colors

“The LMZ carotenoids used in MacuHealth and Early Defense
are extracted and derived from marigold flower petals using solvents. It is
industry standard to use as solvents hexane or methanol to extract and derive
the LMZ carotenoids. The solvents are largely removed from the LMZ carotenoids
during the production process, but residual amounts remain in the final
product.”

Vision Elements’ challenged ads stated that Early Defense
had “Clean label ingredients: Solvent-free carotenoids derived from non-GMO
marigold flowers through an eco-friendly super critical CO2 extraction process
– No hexane, methanol, or acetone” and the bottle states that Early Defense
“contains none of the following:…Class 2 solvents – hexane, methanol,
acetone[.]” The FDA states that Class 2 solvents “should be limited in pharmaceutical
products because of their inherent toxicity.” These claims were repeated at
trade shows, in personal product pitches, and in emails to potential customers.

Vision Elements’ ads used comparisons based on the
MacuHealth bottle, labeled “Competitor A.”

Vision Elements also used “Competitor Solvent Extraction
Method” at trade shows, a document that includes a cover page of a patent
assigned to MacuHealth’s LMZ carotenoid supplier, and compares that patent’s
use of hexane as an extraction solvent to the use of supercritical CO2
extraction techniques. MacuHealth is the only competitor of Vision Elements
that used that supplier.

Vision Elements comparative ads

Unfortunately for Vision Elements, it turned out that its
own source also used hexane extraction. It didn’t inquire into the ultimate
source or methods of production until the litigation began. Vision Elements initially relied on the
certificates of analysis it received from its supplier to demonstrate that the
supercritical CO2 extraction method was used on the batches it purchased, but
ultimately admitted that the certificates did not provide a basis for
determining whether Class 2 solvents were used. MacuHealth presented evidence of residual solvents in Early Defense capsules.Vision Elements chose not to test for the presence of solvents in Early
Defense.

Vision Elements’ principal testified that the solvent claims
were “highly important” to customers and that it distinguished Early Defense
from competitors like MacuHealth.

An attendee at an industry conference asked, “How is it that
[MacuHealth] doesn’t have a way to do things without solvents?” One substantial
customer and reseller of MacuHealth for many years switched and promoted Early
Defense based in part on Vision Elements’ “clean formulation,” but, along with
another doctor who switched, stated in an affidavit that Vision Elements’
advertisements promoting Early Defense as free from Class 2 solvents did not
affect her decision to purchase Early Defense or recommend it to patients.

Unsurprisingly, there were no genuine disputes on literal
falsity; thus no additional evidence of consumer deception was required. There
were no genuine disputes on materiality either—the court pointed to Vision
Element’s own admission; potential consumers’ questions to MacuHealth; and the
“prevalence” of the solvent claims across Vision Elements’ website, its bottle,
and its oral and email pitches to potential consumers. “Through its own
actions, Vision Elements has demonstrated that its solvent claims are material.”

However, there was a genuine dispute of material fact on
injury. There was evidence that customers switched due to “clean” claims, but
their affidavits indicated that it wasn’t because of the solvents. (Yeah, I
have to wonder if they’re worried about their own liability too.) The court
declined to apply a lesser standard for injunctive relief—demonstrating again
that the TMA’s presumption of irreparable harm only works for trademark claims,
for which harm is not a recognized element of the cause of action; where harm
has to be shown as part of the claim, the presumption doesn’t do any work. FWIW, I would have presumed harm from the evident materiality of the claim
and the direct comparative advertisement, at least for injunctive relief. 

This
also controlled the results for FDUTPA and common law unfair competition.

Negligent misrepresentation: “To state a cause of action for
negligent misrepresentation in Florida, a plaintiff must allege: ‘(1) the
defendant made a misrepresentation of material fact that [it] believed to be
true but which was in fact false; (2) the defendant was negligent in making the
statement because [it] should have known the representation was false; (3) the
defendant intended to induce the plaintiff to rely…on the misrepresentation;
and (4) injury resulted to the plaintiff acting in justifiable reliance upon
the misrepresentation.’ ” Here too, there was no genuine dispute on the first
three elements.

from Blogger http://tushnet.blogspot.com/2023/06/literally-false-material-comparative-ad.html

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To every cow her calf: claim against Organic Valley partially survives based on maternal separation

Posted on June 20, 2023 by rtushnet

Takahashi-Mendoza v. Cooperative Regions of Organic Producer
Pools, 2023 WL 3856722, No. 22-cv-05086-JST (N.D. Cal. May 19, 2023)

Plaintiff sued defendant, which does business as Organic Valley,
under the CLRA and UCL, challenging labels on milk that say:

1. “Organic Valley’s commitment to
the highest organic standards and animal care practices helps make all our food
delicious and nutritious”;

2. “Humane Animal Practices[:] Our
organic animal care focuses on holistic health practices, including daily doses
of sunshine, fresh air, and pasture”;

3. “Pasture-Raised Goodness[:]
Organic Valley’s commitment to high standards of animal care go above and
beyond organic standards because we know the best milk comes from happy cows”;

4. “We Hold Ourselves to the
Highest Standards”;

5. “Our cows are social and so are
we!”

6. “We are your neighbors, a
national cooperative of real farmers growing real food the right way”; and

7. “Pasture-Raised with Love.”

Along with the “idyllic imagery” of the labels – some of
which feature images of human mothers and children and at least one of which
includes “an image of what any reasonable consumer would infer to be a mother
and her calf” – these statements allegedly lead a reasonable consumer to infer that
Organic Valley’s milk products meet the highest standards for humane treatment
of dairy cows, which is allegedly false.

 

Instead, Organic Valley’s member farms allegedly separate
cows and calves “shortly after birth,” a practice which may inflict stress upon
the cows and impair their immune responses. Some farms house calves
individually, a practice associated with “poor growth and chronic hunger.” And male
calves are sold to commercial farms to be raised and slaughtered for meat, and,
once their milk production levels drop, female cows are also slaughtered. 

Surveys allegedly show the majority of consumers agree that
cows should not be separated from their calves early after birth or within a
few hours of birth and that participants would pay the same or more for milk
from cows not separated from their calves shortly after birth. Consumers allegedly
pay a premium for Organic Valley products in order to support humane farming
practices, which they believe do not involve separating cows and calves shortly
after birth.

Although plaintiff had standing to seek injunctive relief,
she didn’t sufficiently allege that her claim for money damages under the CLRA
was inadequate, so equitable relief claims were dismissed.

The court rejected reliance on several statements as “unmeasurable,
subjective claims about Defendant’s products on which no reasonable buyer would
rely.” Considered in context, “growing real food the right way,”
“Pasture-Raised with Love,” “the best milk comes from happy cows,” and “[o]ur
cows are social and so are we” were unmeasurable opinions. Dictionary
definitions of “social” didn’t “provide a usable standard for defining a social
cow. Further, no reasonable consumer would interpret the phrase, ‘Our cows are
social and so are we,’ when followed immediately by several logos for social
media networks, to mean that the cows are never alone.”

But the remaining statements, in context, were actionable
statements of fact. “Whether Defendant observes ‘Humane Animal Practices’ in
its milk production does not amount to puffery.” Other statements were also
definite enough in context. By claiming that “Organic Valley’s commitment to
high standards of animal care go above and beyond organic standards,” Organic
Valley was itself claiming to meet or exceed measurable, objective standards. “We
Hold Ourselves to the Highest Standards” was similarly definite, as it was
immediately followed by a list of five standards, including “Humane Animal
Practices[:] Our organic animal care focuses on holistic health practices,
including daily doses of sunshine, fresh air[,] and pasture”; and “The
Pasture-Raised Difference[:] More time on pasture means our cows’ milk
naturally delivers omega-3 and CLA.” However, the court then found that the “We
Hold Ourselves to the Highest Standards” and “Humane Animal Practices” claims
were not plausibly deceptive, because in context they didn’t suggest that
calves would be kept with their mothers but rather focused on other specific
practices.]

Deceptiveness was supported by survey data showing that “76
percent of consumers shopping at conventional grocery stores, and 87 percent of
consumers at premium/natural grocery stores, including consumers of dairy
products, say they are concerned about the welfare of animals raised for food.”
Further survey data suggests “low acceptance of any cow-calf management system
involving early separation” and that consumers consider “that early separation
was a breach of [the] standard of care owed to both cows and calves.” And
survey data allegedly showed that consumers are willing “to pay the same or
more for milk from cows who were not separated from their calves prematurely,”
and that survey participants characterized “premature maternal separation as
‘unnatural,’ ‘unacceptable,’ ‘inhumane,’ and ‘cruel.’ ” This made deception
plausible, not because consumers would be aware of specific third-party
certification standards, but because the statement about “high standards of
animal care” “potentially runs afoul of consumer expectations regarding the
early separation of calves from their mothers.”

from Blogger http://tushnet.blogspot.com/2023/06/to-every-cow-her-calf-claim-against.html

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Once again surveys fail to aid consumer-plaintiffs in greenwashing case

Posted on June 20, 2023 by rtushnet

McGinity v. Procter & Gamble
Company, — F.4th —-, 2023 WL 3911531, No. 22-15080 (9th Cir. Jun. 9, 2023)

The court affirmed
the dismissal of consumer protection claims against P&G products that used “Nature
Fusion” in bold, capitalized text, with an image of an avocado on a green leaf.
A concurrence expressed some discomfort, given the prevalence of
“greenwashing.”

McGinity alleged
that P&G’s packaging “represents that the Products are natural, when, in
fact, they contain non-natural and synthetic ingredients, harsh and potentially
harmful ingredients, and are substantially unnatural.” A survey of more than
400 consumers who saw only the front label indicated that 74.9% of consumers
thought the label conveyed that the shampoo contained more natural than
synthetic/artificial ingredients, and 77.4% of consumers thought the same about
the conditioner. When asked about the phrase “Nature Fusion,” 52.6% of
consumers thought that the phrase “Nature Fusion” meant that the product did
not contain synthetic ingredients; 49.1% of consumers thought that the phrase
“Nature Fusion” meant that the product contained only natural ingredients; and
69.2% of consumers thought that the phrase “Nature Fusion” meant that the
product contained both natural and synthetic ingredients.

The court found
that the front label was ambiguous, but not misleading, as shown by “the nearly
50/50 split in survey responses interpreting whether the phrase means that the
products are all-natural and lack synthetic ingredients.” (I teach that false
advertising is probabilistic: if a representation is likely to deceive a
substantial number of reasonable consumers, it is deceptive, even if not
everyone is misled—but that conclusion is most reliable for
competitor-plaintiffs, as this case shows. The court doesn’t discuss “don’t
know/not sure” answers, but those answers are arguably the only ones perceiving
ambiguity, a concept that is maybe not super helpful as applied to a
population.)

The
court also used the survey’s nearly 70% “both natural and synthetic
ingredients” results to reason that the back label was relevant to what
consumers would reasonably take away. Whether a back label ingredients list
“can ameliorate any tendency of [a] label to mislead” depends on whether the
“back label ingredients list … conflict[s] with” or “confirm[s]” a front
label claim. … However, the front label must be unambiguously deceptive for a
defendant to be precluded from insisting that the back label be considered
together with the front label.

“Unambiguously
deceptive,” based on my reading of the cases, seems to mean that the court
agrees that it would be reasonable for a consumer to conclude that she need
seek no further information based on the front label. But that suggests that
the court is holding that nearly half of consumers who thought that the product
contained only natural ingredients were unreasonable. Why? It is perfectly
workable to have a normative definition of reasonability, but it’s a bit odd to
have it only in consumer protection cases and use an empirical definition in
Lanham Act cases.

Anyway, the front
label here was ambiguous, not misleading. [This distinction also seems a bit
lawyerly to me.]

“Unlike
a label declaring that a product is “100% natural” or “all natural,” the front
“Nature Fusion” label does not promise that the product is wholly natural.
Although the front label represents that something about the product bears a
relationship to nature, the front label does not make any affirmative promise
about what proportion of the ingredients are natural. Instead, as the parties
point out, “Nature Fusion” could mean any of a number of things: that the
products are made with a mixture of natural and synthetic ingredients, that the
products are made with a mixture of different natural ingredients, or something
else entirely….

We
hold that when, as here, a front label is ambiguous, the ambiguity can be
resolved by reference to the back label. In addition to the ingredient lists,
the back labels of the Nature Fusion shampoo and conditioner contain the
phrases “Smoothness Inspired by Nature” and “NatureFusion® Smoothing System
With Avocado Oil.” Upon seeing the back labels, it would be clear to a
reasonable consumer that the avocado oil is the natural ingredient emphasized
in P&G’s labeling and marketing. The ingredients list, which McGinity
alleges includes many ingredients that are synthetic and that a reasonable
consumer would not think are natural, clarifies that the rest of the
ingredients are artificial and that the products thus contain both natural and
synthetic ingredients.

The survey didn’t
help because it didn’t provide access to the back label. The court says that
the results confirmed the ambiguity of the term, because, “[h]ad the survey
participants had access to the products’ back labels, they would have had an
immediate answer to this question—they could see that the products contain
avocado oil, a natural ingredient, as well as many synthetic ingredients.” But
that’s not a satisfactory rebuttal to the survey because the survey suggests
that nearly half the respondents didn’t think there was a question to be
answered, and thus would have had no particular reason to consult the back.
Now, it’s quite possible that the survey was bad—that a “don’t know/not
sure/need more information” option would have received substantial
endorsement—but that’s a different objection. According to the survey, most
consumers didn’t find the label ambiguous, they just didn’t agree on what
message was delivered, which is not the same thing as having questions about
it.

Basically, courts
want the flexibility to find deceptiveness when the back and the front are, in
the court’s view, too distinct:

Although
a back label cannot contradict deceptive statements made on the front label,
the back label can be used to interpret what is conveyed by the labeling when
the front label is ambiguous, as here. With the entire product in hand, we
conclude, no reasonable consumer would think that the products are either
completely or substantially natural. The survey results do not make plausible
the allegation that the phrase “Nature Fusion” is misleading.

The court also
cautioned: “it is important that potential or current litigants draft questions
for consumer surveys with utmost care. Although the particular survey proved
noninformative in the context of this case and the results of the survey,
consumer surveys may well be relevant and helpful in other cases.” That is, as
McCarthy says in the Lanham Act context, the survey will help when it
reinforces the conclusion the judge has already drawn, and not otherwise.

Judge Gould, joined
by Judge Berzon (odd, but ok): Concurred to express concern that P&G was
treading close to “greenwashing,” “a set of deceptive marketing practices in
which an entity publicly misrepresents or exaggerates the positive
environmental impact or attributes of a product[.]”  The concurrence pointed to the FTC’s Green
Guides, which “give general principles that all marketers can use to avoid
deceiving consumers unintentionally or from mere negligence.”

Here,
although there is only one natural ingredient in the products, the word
“Nature” is in bold, capitalized text on the front labels and is one of the
largest words on the bottles, second only to the brand name, “Pantene.” As a
consumer hoping to purchase natural personal care products, McGinity was drawn
to the emphasis on “Nature” and thought that the labeling meant that the
products were “of, by, and from ‘Nature.’ ” … The phrase “Nature Fusion” may be
more ambiguous and less deceptive than “green” or “eco-friendly,” but I still
note how the use of such a phrase sounds alarm bells similar to those sounded
in the Green Guides.

from Blogger http://tushnet.blogspot.com/2023/06/once-again-surveys-fail-to-aid-consumer.html

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Even counterfeiters can make nonconfusing uses where use clearly indicates compatibility rather than source

Posted on June 19, 2023 by rtushnet

JUUL Labs, Inc. v. Chou, — F.Supp.3d —-, No. CV 21-3056
DSF (PDx), 2023 WL 3886046 (C.D. Cal. Jun. 8, 2023)

Juul, which makes vaping products including charging
docks/cases and cables for the main devices, sued defendants for trademark
infringement and counterfeiting. After a bench trial, the court found
defendants liable for some counterfeiting/infringement, but also rejected claims to the
extent that they were based on product listings that merely suggested compatibility
with Juul products—a careful result. I’ll skip most of this to focus on the
interesting bit.

At one point, the relevant website listed a “JUUL Portable
Charger,” showing a picture of an OVNS-branded charger. 

OVNS branded charger

It also listed a “Universal Magnetic JUUL Charging Cable” with
no trademark visible on the product in the available picture.

charging cable

The court found likely confusion with regard to a “JUUL
Mobile Phone Case,” but not as to the magnetic charging cables or portable
chargers. As to the charging cables, “[t]he use of the word universal implies
compatibility with JUUL and not that it is a JUUL product. There is nothing
else in the product description or on the picture of it that indicates it is a
JUUL product.” Similarly, the OVNS branding and the supplementary nature of the
charger meant that the use indicated compatibility, not source. “Here the label
and branding of another logo eliminates any likelihood of confusion.”

However, where there was infringement, it was willful, so
this wasn’t a case of a court bending over backwards to avoid liability, but
rather avoiding precedent that would sweep in legitimate sellers of compatible
goods. The court awarded $2 million in statutory damages.

from Blogger http://tushnet.blogspot.com/2023/06/even-counterfeiters-can-make.html

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