The McCarthy Series: U.S.P.T.O. v. Booking.com: What the Recent SCOTUS Ruling Means for Trademark Law

Posted on July 29, 2020 by rtushnet

My notes are messed up because I had technical difficulties! But the McCarthy Institute will apparently publish video on its YouTube channel.

David Bernstein,
Debevoise & Plimpton: intro to case/overview. 

Hal Poret: Used a Teflon
survey to educate consumers about difference between brand & common name,
including .com terms to show they could be either (staples.com = brand name;
officesupplies.com = generic term). Also used washingmachine.com to account for
bias towards considering .coms to be brand names.  Pattern of responses for booking.com and
wm.com: clear that booking.com & wm.com produced essentially opposite
results—heavily in favor of brand, and heavily in favor of common name
respectively. Booking.com’s results not just from bias in favor of considering
a .com to be a brand. Dissent/PTO misunderstands significance of control:
substantial noise doesn’t reflect a problem w/a survey but w/a real world bias
that the survey needed to grapple with.  Even if you remove the people who misclassified
wm.com, those who didn’t thought booking.com classified it as a brand by a 2:1
margin. 

So this is perhaps
reflecting [de facto] secondary meaning and not lack of genericness. What are
possibilities for accounting for this? Could do additional education in the
survey training. Could include a .com in the mini-test respondents must pass. Could
make the entire survey about .com terms, so all the educational section and
examples would be about .com. Another possibility: change answer choices to
instead of asking about brand/common, could focus on distinguishing b/t
descriptiveness and genericness, which can be done. Could also look for
secondary meaning to look for respondents who are responding to previous
knowledge of the website versus those who weren’t previously familiar of the
term—to weed out influence of actual secondary meaning. Could also ask those
who were aware of the site questions to distinguish between whether they
thought it was descriptive or generic: is the primary meaning a description of
the products/services or is the primary meaning a type of product/service. 

RT: Brief note: the
Poret report relied on the 74.8% total “brand name” response for booking.com as
the relevant number rather than treating the net 44.8% as the key when the 30%
who responded “brand name” for wm.com are taken into account as a control. This
matters if (but only if) one holds the opinion that a threshold over 50% in the
relevant consumer group is the correct threshold for showing that the primary
meaning of a term is as a trademark. But realistically, measuring brand
awareness is going to be hard in a Teflon survey, which is primarily directed
at a different question. 

Given that the
majority explicitly says that it’s not reaching the survey criticisms because
of the PTO’s concessions, I think Mr. Poret’s suggestions for future surveys
are useful. A few specific comments: asking if people have heard of generic.com
suggests looking for secondary meaning; the interpretive question will be what
to make of people who say, as 1/3 seem to have done with wm.com, “I’ve never
heard of this particular generic.com but forced to choose between
generic/brand/not sure, I’ll go with brand.” If domain names are not
inherently distinctive by virtue of being domain names, it may be necessary to
offer a fourth option to make a Teflon survey work, something like “neither a
brand name nor a generic word.” Really interesting to see if people could be
trained on the Abercrombie spectrum!

Caveat: classifications
are legal matters and surveying on them may be a bad idea. Very few trademark
lawyers can predict the suggestive/distinctive line in a given dispute by
looking at prior cases. If we can’t get useful answers from five minutes of
training an ordinary consumer, we will have to look elsewhere. 

Another possibility:
use Likert scales where people give answers and then rate their degree of
certainty—using Likert scales can reveal a lot about where respondents are
basically guessing. Some empirical work by Sprigman et al on this forthcoming.

The larger problem
is the still uncertain issue of de facto secondary meaning: if the SCt opinion
means that there is no remaining doctrine of de facto secondary meaning, then
the survey as conducted in Booking is fine. If there is still such a doctrine,
then the survey shows that it may not be possible to ask consumers questions
they can reasonably be expected to answer. Respondents were (a) trained on the
brand/generic distinction, (b) classified screening examples correctly in order
to have their responses counted, and (c) uniformly got “supermarket” correct
and 398 out of 400 got “sporting goods” correct—if 30% of those people,
who clearly understood the task, still considered wm.com to be a brand name, when
everyone agrees that it lacks trademark function, then this type of survey may
simply not work for the relevant question. 

To put it another
way, post-decision, a Teflon survey will likely always produce the result “not
generic” for a generic.com. But “not generic” is not necessarily the same thing
as “a trademark,” and especially given the PTO’s increased and welcome
attention to trademark function, we may see much more attention to whether that
has been shown. Bold applicants may even argue that the Court majority at least
implicitly endorsed the district court’s reasoning that domain names are
usually inherently distinctive b/c everyone understands that they are exclusive—but
trademark function is a requirement even for matter that could in theory be
inherently distinctive, so we might see more attention to that point.  

Bernstein: footnote
6 says other evidence might be better than surveys. Voice of the consumer
evidence.

Peter Golder, Prof. Marketing,
Dartmouth: Hearing the Voice of Consumer through Archival Evidence. Archival
evidence can avoid certain biases. Consumer perceptions can change over time:
Howard Johnson’s was once the most well known fast food chain, and quotes you
think are about McDonald’s were about it. Here: look at consumer perceptions
from tweets, referring to booking.com as one among several members of a class
like Travelocity.  Can also look at
prevalence of consumer serach. Can look at historical “name of class”—what did
competitor call itself? Example: Portable electronic camera was one early name;
took a while to converge on “digital camera.” Carefully designed studies can be
scientifically valid and persuasive in litigation. 

RT: Relevant, but
normative issues remain about interpreting things like usage versus
comprehension and whether de facto secondary meaning is a thing. Test suite: determine
what would this methodology have done for some of the key cases already
decided, “hog” for motorcycles, shredded wheat, etc. I don’t think that if
there’s a divergence b/t the results and the case law it’s fatal, because it
might be that the courts were wrong, but I do think it’s important to see what
kind of results you’d have gotten in such cases to see what the match is. More
overarchingly: still have the normative issue: is there such a thing as de
facto secondary meaning? If not—if de facto secondary meaning is de jure
secondary meaning—then this methodology is perfectly good in itself to answer
the relevant questions. 

Q: competition issues?

Issues still to
come: if wm.com might be inherently distinctive, what about
washingmachines.com? Is that confusingly similar and how will we know? Consistent
with past Supreme Court decisions, questions about the scope of the mark have
all been deferred to the infringement inquiry: Freecycle example of how this
can allow overclaiming against people who are using only the generic portion. The
majority says that this risk attends any descriptive mark, but not all
descriptive terms are comprised of generic components: while one need not use “soft”
to sell one’s mattresses, one generally must use mattress to do so. Open
question: will courts use plausibility to put an early end to such cases? 

Related issue:
prosecution history estoppel, well known in patent but unknown in TM until
recently: Booking will likely increase both the PTO and the courts’ interest in
the concept. Two important examples pre-Booking: First, Bottega Veneta’s application
to register a specific width and angle of basket weave for shoes and bags,
which the PTO granted but with an explicit statement that the registered rights
did not extend past the width and angle of straps specifieds in the
registration; second, the Lettuce Turnip the Beet case in which a court said
that where the PTO found that a phrase failed to function as a mark when used
to decorate a T shirt but did function as a mark on a tag, the court would not
find liability for the defendant’s decorative use. 

If other registrants
say something like what booking did—that it wasn’t going to assert its rights
against variations—courts and the PTO may see a competitive need to enforce
those concessions. 

Golder: use of
generic.com hasn’t been key component of competitive advantage—market leaders don’t
have the generic term in their names in key industries. [As Christine Farley pointed out in comments, that was against a different background legal regime. Given the installed base, the real question is what happens in new industries or new forms of advertising. It’s not surprising that freecycle, a newly invented generic, is one place that problems have developed.]

Bernstein:
booking.com is looking to prevent confusing uses. Cars.com: a brick &
mortar dealer used a sign cars.com and was unaffiliated. Similarly w/UDRP
rights. But there will be recognized limits on the breadth b/c the TM is still
composed of highly descriptive if not generic components. Booking is a generic
term for booking things and .com is a generic tld. So the ability to prevent other
uses will depend on the totality of the facts: there’s a lot of mechanisms to
prevent against overenforcement: likely confusion; descriptive fair use. 

Q: can this opinion
can be cabined as holding only that a generic.com domain name isn’t necessarily
generic? 

RT: yes; the opinion
doesn’t preclude the idea that .coms are inherently distinctive because unique,
but nor does it embrace it. Depends on the cases that people bring whether the
doctrine develops in a way that protects users of generic terms from having to go through full
trials/at least develop a full summary judgment record for. Descriptive fair
use won’t be any help b/c using a term in the domain name will at least create
a fact issue on “use as a mark.” 

Bernstein: if you
have a registration, UDRP panelists will usually defer to it and find confusing
similarity. If you don’t have a registration, you really need to show acquired
distinctiveness. UDRP doesn’t have access to discovery tools—would probably
have to be pretty overwhelming to persuade a panelist that the domain name is serving
as a mark. Booking.com was already registered in many countries around the
world; brings US into conformity; key takeaway goes beyond domain names, to
hashtags, addresses, combinations of marks, etc. Issue is not whether the term
is composed of terms that are generic but what is the perception of the term as
a whole.


Q: booking.com had so much secondary meaning—isn’t it difficult for a survey to
separate out that from what people think of the term in the abstract? Wouldn’t
the survey have had to be done years before to separate that out? 

Poret: it’s a
recurring problem that often shows up. You can’t go back in time and measure it
back then. May be able to help people to distinguish between describing
characteristics and identifying a class. 

Golder: archival
analysis can be a complement to these methods. Can estimate the life of a brand
even before it dies. Can find how terms were being used in archived materials.
Federal Circuit in Converse case raised issue of historical secondary meaning
being a challenge, but archive can serve as a time machine.

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“graham cracker” is dead metaphor, implying nothing about graham flour content

Posted on July 22, 2020 by rtushnet

Kennedy v. Mondelēz Global LLC, 2020 WL 4006197, No. 19-CV-302-ENV-SJB
(E.D.N.Y. Jul. 10, 2020) 

(R&R by someone I remember from my debate days, Sanket
Bulsara) 

Plaintiffs alleged that the terms “grahams” and “graham
crackers,” along with other statements and images, in Nabisco and Honey Maid’s
graham cracker products, violated NY consumer protection law by falsely implying
that the products contained predominantly graham flour—as opposed to white
flour—and more honey than sugar. The magistrate recommends dismissal. 

The Nabisco Grahams box contains the words “Nabisco
Grahams,” “Original,” and “made with 8g of whole grain per 31g serving,” and
pictures of a tan, khaki-colored, darkened-color, or “noticeably dark-tan hue”
cracker and a swaying, unrefined stalk of wheat. On the side: “No High Fructose
Corn Syrup,” “More than a century of great graham know-how,” “A sensible snack
with a satisfying hint of sweetness,” and “NABISCO Grahams – a tradition of
wholesome nutrition.” 

The Honey Maid label includes a similar picture of a tan,
khaki-colored cracker, as well as pictures of a bee and a honey dipper, with
the words “Honey Maid,” “Made with Real Honey, “No High Fructose Corn Syrup,”
and “8g of Whole Grain per 31g serving.” 

The dictionary definition of “graham crackers” is “a
slightly sweet cracker made of whole wheat flour” or “a semisweet cracker,
usually rectangular in shape, made chiefly of whole-wheat flour.” Graham flour
is a whole grain wheat flour (and calling the product “grahams” allegedly
represents that it’s all graham flour, since grahams is allegedly the common or
usual name for the flour). Plaintiffs alleged that reasonable consumers would
expect graham flour to predominate, but it doesn’t. Truthful suggested names:
“crackers made with graham flour,” “graham-flavored crackers,” or “crackers
with X% graham flour.” Plaintiffs also alleged that predominately graham flour
crackers are available, including as institutional versions of these very
products made for schools (since the ones sold in stores don’t meet nutritional
standards/the USDA’s grain crediting standards). 

Similarly, consumers allegedly expect that honey and
molasses are to be the predominant, but not necessarily the exclusive,
sweeteners for graham crackers as opposed to refined, white sugar. 

The recommendation: No. First, the word “graham” in
“grahams” or “graham crackers” “does not connote graham flour.” The predominant
meaning is “a slightly sweet, darker-colored, rectangular, and perforated
cracker … a type of cracker that is used in desserts like s’mores.” Reasonable
consumers wouldn’t think that graham means “graham flour,” and as a result
assume that graham flour is either the predominant ingredient in the product or
that graham flour predominates over other types of flour. As with the name Coca-Cola,
the descriptiveness has been lost. 

Plaintiffs pointed to dictionary definitions that said that
a graham cracker was “a slightly sweet cracker made of whole wheat flour,” or
“a semisweet cracker, usually rectangular in shape, made chiefly of whole-wheat
flour,” but the products indisputably contain graham flour. And the definitions
didn’t agree that graham flour had to predominate. [That strikes me as overreading.
“Made of” at least implies something like predominance, especially compared to “made
with,” and “chiefly” is pretty clearly about predominance.] “Such a variation
between ostensibly reasonable definitions suggests that Mondelez’s use is necessarily
not misleading or deceptive.” [No, it suggests that it’s not literally false,
which is not the same thing.] 

The fact that other graham crackers, including other
products with the same name sold to institutions, have more graham flour didn’t
matter. Putting the word “graham” before “cracker” still wouldn’t lead a
reasonable consumer to assume predominance. 

The result would be different if the label said “Crackers
Made with Graham Flour.” [Compare treatment of the dictionary definitions above
….] In Mantikas v. Kellogg Co., 910 F.3d 633 (2d Cir. 2018), the court found
that it was plausible that labelling of Cheez-It crackers as “whole grain” and
“made with whole grain” caused reasonable consumers to believe the grain in the
product was predominantly whole grain. [This distinction only makes sense if
you really believe—and I see why you might—that “graham cracker” has just become
detached from any relationship to graham flour in the same way that Coca-Cola
has become detached from a relationship to kola nuts.] Calling something a “graham
cracker” doesn’t say anything about the quantum of graham flour in the product.
[Presumably it could therefore have zero graham flour and still be a “graham cracker”—otherwise
the distinction from Mantikas really breaks down.] 

Anyway, the statement that there are “8g of whole grain per
31g serving” “remedies any ambiguity about how much whole grain is in the
product per serving.” 

Distinguishing the honey-related claims from Mantikas
was a heavier lift, but here we go: The crackers are in fact “made with real
honey.” And the products don’t state anywhere that honey is the only sweetener.
“Sweetening grahams with honey does not foreclose the use of other sweeteners
or make the representation deceptive.” Mantikas was no help because that
case distinguished claims to be misled “about the quantity of an ingredient
that obviously was not the products’ primary ingredient.” So while “reasonable
consumers are likely to understand that crackers are typically made
predominantly of grain, … [t]hat same consumer, confronted with the claim
that a cracker is ‘made with real vegetables,’ ” for example, “likely would not
likely conclude that the cracker was made predominantly of vegetables.” Here, reasonable
consumers wouldn’t think that “made with honey” means the grahams contain more
honey than sugar. Thus, “similar representations about non-dominant ingredients
are non-deceiving.” [Doesn’t exactly get at the precise question, where an
ingredient plays a particular function but isn’t actually the predominant
ingredient playing that function. The closest analogy is probably the juice
cases: if you say “made with real pomegranates” and show only a pomegranate on
the label, and in fact the juice is 95% grape and 5% pomegranate, is that deceptive?]

 

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confusion over confusion: court holds that disparagement can be infringing

Posted on July 22, 2020 by rtushnet

Nutreance LLC v. Primark, LLC, 2020 WL 3892995, No.
4:18-cv-00098-SRC (E.D. Mo. Jul. 10, 2020)

“This is a trademark infringement/false advertising case involving
competitors in the nutritional-supplements market.” The court holds that
the alleged bad conduct is actionable, but unfortunately considers some of it
(disparaging the plaintiffs at a webpage reached using keywords) as possibly
trademark-infringing without actually setting out how consumers could be confused
about the link between the plaintiffs and the criticism or about the relationship of the two explicit
competitors. 

Plaintiffs alleged that defendants “orchestrate a scheme to
publish sham reviews of Plaintiffs’ products online, on websites purporting to
be independent and unbiased, but actually controlled by Defendants.” The sites
rank products, invariably ranking plaintiffs’ products as superior and
defendants’ competing products as the top choice. They allegedly buy keyword
ads using plaintiffs’ trademarks to steer potential customers to the fake
review sites. 

Some of the defendants (Admark) contracted with non-party
review site hosts to conduct “affiliate marketing.” Admark agreed to pay the hosts
a 20% commission on all sales of Admark products referred by the review websites,
which agreed to place banner ads for Admark products on their sites. The review
hosts disclose that they may receive a commission for product sales, but an
“Advertising Disclosure” states: “We are independently owned and the opinions
expressed herein are our own. All editorial content is written without
prejudice or bias, regardless of sponsor or affiliate associations.” This was
allegedly untrue: the review sites were actually controlled by various
defendants. The hosts allegedly 

paid third-party copywriters to
prepare the reviews with an appearance of objectivity, but always concluding
that the competitors’ products were inferior. Potential customers who entered
the name of competitors’ products into search engines would see results near
the top of the list using phrases like “shocking facts,” “exposed,” “scam,” or
“warning,” and urging customers to first review the Review Hosts’
purportedly-unbiased reviews before purchasing the competitor’s product.
Prospective customers who clicked on these links would see the Review Hosts’
sham review, including false and disparaging information about the competitor’s
product. 

Trademark infringement under §32: because plaintiffs conceded
they hadn’t shown source confusion, they were only claiming “affiliation,
connection, or association” confusion under §43(a), so the §32 claim was
dismissed. [Intriguing, given current doctrine that assimilates all confusion to 32, but wait for it.] 

False advertising: survived defendants’ motion for summary
judgment (except as to some specific defendants whose involvement wasn’t
supported by evidence). Plaintiffs offered evidence that certain defendants “exercised
considerable or complete control over the content” on the review sites, and
that those sites published false representations of independence and lack of
bias. There was also evidence that the reviews of plaintiffs’ products included
literally false statements, “including the false representation that no
clinical studies were done on any of Plaintiffs’ products.” Even without
evidence of consumer reaction, literal falsity allows a court to grant relief.  [Are all the alleged falsities literally
false?] 

A jury could also reasonably conclude that “sham reviews,
purporting to be unbiased, that consistently ranked Plaintiffs’ products as
inferior to Defendants’ competing products” were material. There were affidavits
from plaintiffs’ principals about quantifiable losses and expert testimony to
quantify those losses. 

§43(a) unfair competition: A jury could reasonably find
likelihood of confusion regarding, at least, “the affiliation, connection, or
association” of defendants with the Review Hosts [clearly yes] and Plaintiffs’
trademarks. [Clearly no. If the reviews are disparaging and suggest defendants’
products instead, it is hard to see how there could be confusion over either
the review sites’ affiliation with plaintiffs or plaintiffs’ affiliation with
defendants.] In so holding, the court gave “significant weight” to the evidence
that relevant defendants “deliberately concealed—and in fact materially
misrepresented—their affiliation” with the review hosts and websites. [That
suggests false advertising, not a false suggestion of affiliation with
plaintiffs.] Also, defendants used plaintiffs’ marks marks as paid search
terms on search engines “to steer customers to the sham review pages hosted by
the Review Hosts and, in turn, to Defendants’ competing products.” The parties’
products directly competed, which favored plaintiffs in the multifactor
confusion test. A jury could reasonably find likelihood of confusion. [Yes, but
about what?] 

Commercial disparagement: “One who publishes a false statement
harmful to the interests of another is subject to liability for pecuniary loss
resulting to the other if (a) he intends for publication of the statement to
result in harm to interest of the other having a pecuniary value, or either
recognizes or should recognize that it is likely to do so, and (b) he knows
that the statement is false or acts in reckless disregard of its truth or
falsity.” A jury could find in plaintiffs’ favor based on the evidence above—even
without apparent evidence of specific people from whom sales were lost. So too
with defamation claims. [As with the Lanham Act claims, the court is not being
super careful about the distinction between defamation and product
disparagement; it doesn’t explain why “not clinically tested” would harm the
reputation of the seller, as opposed to the seller’s product.] 

On tortious interference, by contrast, there was no evidence
that defendants knew that the plaintiffs had an existing relationship with
customers that was disrupted. “[A] mere assertion of interference with
prospective customers fails to raise a right to relief above the speculative
level.”

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July 29 Webinar – The McCarthy Series: What the BOOKING.COM Ruling Means for Trademark Law

Posted on July 22, 2020 by rtushnet

I’ll be part of the panel: 

On Wednesday, July 29th, at 12 noon Eastern Standard Time (9
AM PST), the McCarthy Institute will host a webinar to discuss the
ramifications of the Supreme Court’s decision in USPTO. v. Booking.com B.V.
Entitled “The McCarthy Series: U.S.P.T.O. v. Booking.com: What the Recent
SCOTUS Ruling Means for Trademark Law,” the webinar will present “the
survey expert whose survey played a prominent role in the briefing, the oral
argument, the Court’s decision, and Justice Breyer’s dissent, amici who
submitted briefs on both sides of the case, and co-counsel for
Booking.com.” Registration (here) is free. 

The panelists will explore what the BOOKING.COM ruling means
“for survey and other consumer perception evidence in the future, what is
the applicability of the case beyond domain names (and is there anything left
to the Supreme Court’s 1888 case finding that a generic term combined with the
generic corporate descriptor Company cannot serve as a trademark), and how can
brand owners, competitors and consumers navigate the anti-competitive concerns
raised by the USPTO and Justice Breyer in the post-Booking.com world.” 

Prof. David Franklyn, Director of the McCarthy Institute,
will serve as moderator. The four panelists are:

David Bernstein, Partner, Debevoise & Plimpton, LLP.

Prof. Rebecca Tushnet, Professor of First Amendment Law,
Harvard Law School

Peter Golder, Marketing Professor, Tuck Dartmouth.

Hal Poret, Hal Poret LLC, survey expert.

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Sue Bee beats suit: “pure” survey not good enough to show deception over trace pesticide amounts

Posted on July 21, 2020 by rtushnet

Tran v. Sioux Honey Assoc., 2020 WL 3989444, No. 17-cv-00110-JLS-SS
(C.D. Cal. Jul. 13, 2020) 

Tran brought the usual California claims based on Sioux
Honey products labeled as “Pure” and “100% Pure,” arguing that the products
were mislabeled because they contain glyphosate, a synthetic chemical and
herbicide. Tran relied in part on testing carried out by the FDA in 2016 on a
Sioux Honey sample which identified the presence of Glyphosate in a concentration
of 41 parts per billion. A subsequent 2018 analysis commissioned by Tran’s
counsel, on three samples “returned varied results — there was no detectable
level of glyphosate in one sample; 30 parts per billion in a second sample, and
40 parts per billion in a third sample.” The parties agreed that glyphosate was
not an additive incorporated during the manufacturing process, but rather was a
byproduct of the honey’s natural production, when bees encounter the glyphosate
herbicide in nature. 

First, Tran could represent class members with claims
arising from the purchase of products labeled “100% Pure” even though she only
bought “Pure” labelled honey, as those claims were “reasonably co-extensive
with those arising” from the purchase of products labeled “Pure.” 

Second, Tran failed to produce evidence that would allow a
reasonable factfinder to find that the labels were deceptive to reasonable
consumers. Though the court had been unwilling to dismiss the claims at the
pleading stage, at this point Tran needed evidence that reasonable consumers
believed the word “Pure” on the label means that there will be no trace amounts
of pesticide in their honey. 

Tran relied on a survey. The expert (Thomas J. Maronick) surveyed
251 individuals over 18 who (1) lived in California, (2) were their household’s
primary food shopper or shared responsibilities for food shopping, and (3)
purchased or considered purchasing processed honey in the two months preceding
the Survey. After they saw a photo of a representative product, the 159
participants who responded that they saw the phrase “Pure Premium Honey” on the
label were asked two follow-up questions about the meaning of that term. 

First, they were asked the open-ended question, “[w]hat does
the word ‘Pure’ mean to you when you see it on a label for honey?” Second, they
were asked “[b]ased on what you saw on the label, which of the following, if
any, reflect your understanding of what ‘Pure’ means when you see it on a label
for honey?”: 

□ No additives □ Nothing artificial □ Made from pure bees □ Made with no chemicals □ Nothing but honey □ No chemical residues □ Other (specify) □ Don’t know/not sure 

In responding to the open-ended question, five participants
stated something to the effect that the term indicated the product contained no
chemicals, 19 stated that it meant the product contained nothing artificial, 52
stated that it meant that the product was “natural” or “just honey,” and 54 stated
that it meant that the honey contained no additives or substances added to it. In
response to the “closed-end” question as to what “pure” meant, 115 selected “no
additives,” 123 selected “nothing artificial,” 108 selected “no chemicals,” 114
selected “nothing but honey,” 100 selected “no chemical residues,” and 77
selected “made from pure bees.” [Are they made from real Girl
Scouts?] 

But the theory of the case has always been about trace
amounts of glyphosate, and the survey “avoided the relevant question.” At his
deposition, Maronick acknowledged that he “wasn’t asked to focus on trace
amount[s].”

Tran argued that “a jury can determine whether advertising
is likely to mislead simply by comparing the challenged advertising to what was
actually delivered.” But in cases like this one, where “the allegedly false
word has no fixed meaning,” “even though not required, survey evidence can be
particularly helpful in determining whether a reasonable consumer would be
misled by accused labeling.” And even if a survey is not required, there must
be some evidence to satisfy the reasonable consumer test. [Could the named plaintiff’s
own testimony ever do this? If surveys aren’t required, something like that
must be allowed instead, I’d think.] Tran’s own personal view was only that pure
means “without added ingredients or chemicals,” and she offered “nothing to
show that her view of the labels equates to that of the reasonable consumer.” 

“Chemical residues” in the survey wasn’t enough to do the
trick. Nothing in the expert report suggested that “chemical residue” satisfies
as a stand-in for “trace” amounts, and “residue” and “trace” have different
dictionary definitions, with the latter indicating “a minute and often barely
detectable amount.” The court thought “[i]t would have been simple to present
the Survey participants with a question going to whether the participant viewed
a honey product containing trace amounts, or 41 parts per billion, of
glyphosate, as less than ‘Pure’ or ‘100% Pure.’”

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expert can’t substitute for survey evidence (at least w/o experience w/consumer reactions)

Posted on July 21, 2020 by rtushnet

Kurin, Inc. v. Magnolia Medical Technol., Inc., 2020 WL
4049977, No. 18-cv-1060-L-LL (S.D. Cal. Jul. 20, 2020) 

A lot going on here in this false advertising case about
blood collection devices (one called Steripath); I will omit a lot of the contested
claims at issue. The most broadly interesting thing: the court rejects an
attempt to use a subject matter expert’s testimony to replace consumer survey
evidence of deception, even though the product is specialized/bought by
sophisticated entities (a situation where this technique has occasionally
worked). 

The proposed expert opinion was about whether the relevant consumers,
though generally familiar with FDA regulations, would have understood that “FDA
registered and listed” does not mean the same thing as “FDA approved” given the
regime applied to medical devices.  The opinion
was based on the  proposed expert’s
experience as an attorney representing medical device manufacturers before the
FDA.

Kurin argued that his opinion was admissible because he “has
25 years of experience regarding FDA compliance.” But the proposed expert had no
experience or expertise in market research or marketing and did not review any
market surveys to form his opinion; he only infrequently interacted with
purchasers of medical devices, and thus his opinion could not reliably be based
on his experience. Nor did he review any literature on the topic of “medical
device purchasers’ perception of statements about FDA regulatory status.”
Instead, he relied on two references to Steripath’s regulatory status in an
article and a presentation, although he didn’t know whether their authors would
be involved in purchasing such a device. 
His opinion was not admissible. 

Other notes: While health-related claims are often held to a
high standard, the court here found that certain statements were puffery. In
particular, Magnolia advertised that Steripath eliminates or “virtually
eliminates” false positive results. The evidence indicated that Magnolia could
substantiate a false positive rate below 1%. Under the circumstances, “virtually
eliminates” was puffery, as was the claim that “Steripath will
‘…significantly improve specimen integrity and the accuracy, consistency, and
predictability of critical laboratory tests.’ ” 

By contrast, the statement that “Steripath is the ‘only
vein-to-bottle closed blood culture collection system that is proven to
virtually eliminate preventable error of blood culture contamination and
false-positive results for sepsis’ ” was not puffery to the extent that
Magnolia contested whether Steripath was a “closed system.” (The claim still
failed based on proximate cause/harm issues.)

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court rejects survey indicating consumers think “white chips” have white chocolate

Posted on July 21, 2020 by rtushnet

Cheslow v. Ghirardelli Chocolate Co., No. 19-cv-07467-PJH,
— F.Supp.3d —-, 2020 WL 4039365 (N.D. Cal. Jul. 17, 2020) 

Plaintiffs brought the usual California claims against Ghirardelli’s
“Premium Baking Chips Classic White Chips.” They sought to bolster the
plausibility of the complaint by including a consumer survey about whether the labeling
misleads consumers into believing that the product contains white chocolate. 1,278
respondents were asked about one of four products: Ghirardelli’s Classic White
Chips, Nestle Toll House’s Premier White Morsels, Target’s Market Pantry White
Baking Morsels, and Walmart’s White Baking Chips, e.g., “Based on your review
of this package, do you think that this product contains white chocolate?” 

According to the results, 91.88% of respondents indicated
that they believed the product contained white chocolate. In response to “If,
after purchasing this Product, you learned that the Product contained no white
chocolate or chocolate of any kind, would you be less or more satisfied with
you purchase?” 64.69% of respondents answered that they would either be “much
less satisfied” or “somewhat less satisfied.” Similar percentages responded
that they would be much or somewhat less likely to purchase the product again. 

Each named plaintiff also alleged with greater specificity
than in the first complaint the reasons why they were deceived by the packaging
and why they relied on the product’s package. “For example, Cheslow desired
white chocolate chips to bake holiday cookies, bars, and brownies and found the
product in a section of a Target store labeled ‘chocolate chips.’” Plaintiffs
also alleged facts about the history of chocolate and the attributes of white
chocolate to support the allegation that chocolate is perceived to be a unique,
irreplaceable product and that reasonable consumers do not think they are
purchasing a “cheap knock-off pretending to be chocolate.” 

None of this worked.

In dismissing the previous version of the complaint, the
court held that “white” in “white chips” was a color reference, so “it would
not be appropriate to base liability off of a misunderstanding of that word.”
[Ah, those silly consumers—not misled, but just misunderstanding.] Likewise,
for the images of baking chips and cookies with chips, “it would be
unreasonable to draw a specific qualitative message about a product from an
image on that product.” Since there was nothing deceptive on the front of the
package, plaintiffs couldn’t reasonably ignore the ingredients label, which didn’t
include the words chocolate or cocoa. The placement of the product in the
grocery aisle wasn’t alleged to be under defendant’s control, and anyway it wasn’t
reasonable to draw any conclusion from its placement. 

The court declined to revisit its holding that “white”
definitely means a color, no matter what the context (I assume it would be
happy to get a “flat white” that was a smooth cup of milk), and so considered
the new allegations in isolation. 

Citing Becerra v. Dr. Pepper/Seven Up, Inc., 945 F.3d 1225
(9th Cir. 2019), which dealt with the meaning of “diet,” Ghirardelli argued
that the court should reject the survey. The court agreed. Just as, survey
notwithstanding, “a reasonable consumer would still understand ‘diet’ in this
context to be a relative claim about the calorie or sugar content of the
product,” it was still the case that understanding “white” in “white chips” to
mean “white chocolate” was unreasonable. So Becerra posed a legally
identical question: “whether a consumer survey can shift the prevailing
reasonable understanding that white chips does not include chocolate.” [Where
does the “prevailing” understanding come from? Prevailing here means winning,
not widespread—reasonableness as courts implement it is a normative concept.
But being explicit about that is a bit embarrassing for a system that is supposedly
dedicated to consumer protection. My own view about the reasonable consumer
construct is that it should be more empirical in cases like this one, as “[a]
drunken man is as much entitled to a safe street as a sober one, and much more
in need of it,” Robinson v. Pioche, Bayerque & Co., 5 Cal. 460 (1855).]  

The court noted that a survey can bolster a plausible claim but
can’t make an implausible claim plausible. [No epistemological modesty here,
even on a motion to dismiss! I should be clear: this is a readily available
reading of Becerra; the court here isn’t going off on a frolic of its
own. That’s just a problem with a standard that says that likely deception has
to be alleged but then rejects evidence of actual consumer reaction—the magic
happens where the court posits, without saying outright, that a substantial–here, nearly unanimous–majority of consumers are unreasonable in what they think words mean, and
therefore marketer exploitation of their “misunderstanding” is acceptable.] 

Anyway, the survey was bad because it only showed respondents
the front panel of the packages; consumers aren’t entitled to disregard the
ingredient list in the absence of a deceptive front panel.

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does unclean hands require actual deception? answers may differ for TM/false advertising

Posted on July 21, 2020 by rtushnet

Certified Nutraceuticals, Inc. v. Avicenna Nutraceutical,
LLC, No. 18-56631, — Fed.Appx. —-, 2020 WL 4037411 (9th Cir. Jul. 17, 2020) 

This memorandum opinion comes with a partial dissent calling
out the majority’s differential treatment of §43(a)(1)(A) and (B) claims for
unclean hands purposes. The district court rejected Certified’s false
advertising claim based on misstatements about the patented nature of
Avicenna’s products because Certified had made similar false claims about its
products. The court of appeals affirmed. Unclean hands “requires balancing the
alleged wrongdoing of the plaintiff against that of the defendant,” and the
district court did that. Unclean hands also “requires a finding of
inequitableness or bad faith,” including “any willful act concerning the cause
of action or bad faith relative to the matter.” Although evidence of actual consumer
deception is relevant, and although in trademark cases the Ninth Circuit requires
a showing that the “plaintiff used the trademark to deceive consumers,” it was
enough here to determine that Certified knowingly made false statements about the
patented nature of its directly competing product. 

Judge Paez would have reversed on unclean hands. Sufficient
inequitable conduct in trademark cases requires proof of actual deception. [Side
note: I’m not sure this was a correct description—cases often say things like “show
that plaintiff used the trademark to deceive consumers,” but “used to deceive”
and “actually deceived” could differ a lot depending on how much one values
intent versus effect, and the prior cases don’t seem to have turned on the
distinction. However, this case plus the dissent makes it more likely that, going
forward, evidence of actual deception will be required in trademark cases instead
of just highly probative. Cf. Republic Molding Corp. v. B.W. Photo Utils., 319
F.2d 347 (9th Cir. 1963) (stating that the “extent of actual harm caused by the
conduct in question” is “highly relevant” to whether the plaintiff’s conduct
was inequitable).] 

Here, the district court made no finding about actual
deception. Affirming therefore drew a distinction between trademark and false
advertising claims that didn’t exist. Prior false advertising claims rejected unclean
hands where “[o]ur review of the record reveal[ed] no evidence of actual deception
caused by plaintiffs’ advertising,” TrafficSchool.com, Inc. v. Edriver Inc.,
653 F.3d 820 (9th Cir. 2011), or where the plaintiff showed only the knowing
falsity of a claim, Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829
(9th Cir. 2002). Thus, Judge Paez dissented in part.

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calling pork “prime” doesn’t misleadingly imply USDA grading

Posted on July 6, 2020 by rtushnet

Davis v. Fresh
Market, Inc., 2020 WL 3489369, No. 19-CV-24245-PCH (S.D. Fla. Jun. 26, 2020) 

Plaintiffs alleged
that defendants violated Florida consumer protection law by misrepresenting,
via the name, that their Chairman’s Reserve Prime Pork product had been graded
prime by the USDA, even though the USDA does not grade pork (and approved the
product name). Plaintiffs alleged additional statements, such as a newsletter
stating, “Just like prime beef, the new Chairman’s Reserve Prime Pork is the
upper-echelon of quality in terms of having superior marbling …. ‘We’re excited
to provide our guests with fresh pork that’s the same caliber as our prime beef
offerings….”; a quote from Tyson’s President of marketing and premium
products reading, “People know of ‘prime.’ They get it right away”; a website
displaying images of prime pork next to prime beef; and the like. But
defendants never used the term “USDA.” The court found the theory implausible. 

First, USDA approval
of the name/labeling wasn’t preemptive. While FDUTPA doesn’t apply to an “act
or practice required or specifically permitted by federal or state law,” there
was no approval of the promotional materials; the USDA has no authority to
regulate ads in conjunction with labels. 

However, plaintiffs’
theory was still unpersuasive because there were no allegations that the
defendants did anything to communicate that the USDA even grades pork; they
didn’t claim that the product is graded. According to defendants, plaintiffs’
theory assumed that a reasonable consumer would be aware of USDA’s grading
scheme for beef but not aware that there was no such scheme for pork. This was
implausible: “A reasonable consumer sufficiently familiar with USDA grading
would note the absence of the term ‘USDA.’”

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flushable wipes injunctive relief class must go, damages class can stay

Posted on July 6, 2020 by rtushnet

Kurtz v. Costco
Wholesale Corp., — Fed.Appx. —-, 2020 WL 3480830, Nos. 17-1856-cv,
17-1858-cv (2d Cir. Jun. 26, 2020) 

This is a flushable
wipes case. The court of appeals decertifies an injunctive relief class under
NY law, but allows a damages class to proceed on a price premium theory.
There’s no likelihood of future injury here because the named plaintiff didn’t
claim that he intended to purchase additional flushable wipes. [Side note: the
doctrine that individual class representatives have to have separate Article
III standing for each type of relief sought, even if they plainly have Article
III standing to seek some other kind of relief, is a consequence of precedent protecting the police against
private litigation seeking to make them stop killing people! Like qualified immunity, it doesn’t strike
me as a very good rule.] 

Although defendants
offered objections to plaintiffs’ expert’s regression model, that went to
probative value and not admissibility; the district court didn’t abuse its
discretion in allowing the case to proceed. (Here, the expert arguably failed
to consider some significant variables, and the regression allegedly didn’t
produce a price premium if the time frame is shifted or if additional products were
included in the underlying dataset, but the expert testified that changing the
timeframe of his model while making appropriate adjustments to other variables
still yielded a price premium, and the district court found that Weir used a
sufficiently wide range of sources to render the end-result “statistically
reliable.”) 

Comcast Corp. v.
Behrend, 569 U.S. 27 (2014), held that “a model purporting to serve as evidence
of damages in [a] class action must measure only those damages attributable to
that theory.” But plaintiff’s model did that: it purported to measure the price
premium attributable to the allegedly false “flushable” label. The class action
was a perfectly good way to resolve the common question of whether the model
was any good.

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