Monday, May 24, 2010

Lanham Act analysis in consumer plaintiff case

Buetow v. A.L.S. Enterprises, Inc., 2010 WL 1957489 (D. Minn.)

Consumer-plaintiffs sued defendants for misrepresenting that their clothing eliminates human odor and is capable of being “reactivated” in a dryer. “Because game animals have an acute sense of smell, there is a demand for odor-controlling clothing in the hunting market.” So ALS patented and sold hunting clothing with embedded activated carbon. ALS licenses its patent and Scent-Lok brand to other retailers, including the other defendants.

Defendants published “countless” ads promoting their clothing, almost all of which used the slogans “odor eliminating technology” or “odor-eliminating clothing.” Many say things like “eliminates all types of odor,” promise elimination of “100% of your scent” or “all human odor,” or use graphics indicating that odor can’t escape the fabric. They also published “numerous” ads saying that consumers can “reactivate” the fabric in a standard clothes dryer. Some ads don’t describe the extent to which odors can be removed, while others say that reactivation makes the clothing “like new” or “pristine.” While there are factual disputes, both parties’ experts agreed that the clothing could not eliminate 100% of a hunter’s odor, and that the clothing, once saturated with odor, couldn’t be reactivated to “like new” or “pristine.”

Plaintiffs sued for violation of various Minnesota state laws. The parties, for some reason, agreed that the appropriate analysis for the claims is the same as that applied under the Lanham Act. (Compare California, which has numerous cases holding that the explicit/implicit distinction does not apply to California consumer protection law, so factfinders can use their own judgment to find a claim misleading even without explicit falsity and even without a consumer survey. When one has actual consumers as plaintiffs, whose reasonability can be assessed—or more broadly, when the direct subjects of the law’s protection are suing rather than competitors whose interests are derivative of those of deceived consumers—this makes sense. Starting from the Lanham Act did substantial harm to plaintiffs here, even though they start out with a very strong position given that even defendants’ experts can’t defend the ad claims.)

Defendants argued that the court could only consider ads that the plaintiffs specifically recalled reviewing and relying on—which meant limiting their claims to the terms “elimination” and “reactivation,” as those were the only statements plaintiffs recalled with specificity. The court disagreed. Because literal falsity would entitle plaintiffs to injunctive relief, the court could consider the other elements of the ads to the extent they were literally false. Defendants argued that plaintiffs lacked constitutional standing to challenge ads they didn’t recall with specificity. After noting that defendants were attempting to prevent the court from reviewing the ads most likely to be found literally false, the court rejected this argument, reasoning that failure to recall specific ads with precision was not fatal, because the record indicated that plaintiffs were exposed to countless ads from the defendants and that they did recall reading and relying on several specific ad claims. The ads upon which they relied were “fairly representative” of defendants’ ad campaign. Since they were undisputably exposed to the ad campaign, they could fairly trace their injuries to the ads sufficient to have standing for injunctive relief.

The court then turned to the odor elimination claim, finding all such ads to be literally false as a matter of law, no matter how expressed. “Eliminate” is subject to only one reasonable interpretation, complete elimination. The court relied on dictionary definitions. Defendants found some dictionary definitions equating “eliminate” with “remove,” and argued that their clothing removes a substantial amount of odor. But the court found that “remove” would also be literally false if used in defendants’ ads. “If an advertisement states that a product will remove roaches from a home, the only reasonable expectation would be that all roaches would be removed, not just some.” Defendants also submitted ads for various other products using “elimination” language, which they argued proved that “eliminate” has several meanings. The court pointed out that (1) those products might actually eliminate what they claimed to eliminate, or (2) those products might be falsely advertised; either way, nothing changed. (I wonder if any of defendants’ lawyers would have been satisfied with an exterminator who claimed to have eliminated roaches in their houses, but later contended that he’d removed a substantial amount of the roaches and thus made good on his claim.)

Some of the ads also made “scent-free,” “odor-free,” and “100%” claims about removing human odor, including graphics showing odor unable to escape the fabric. This too was literally false.

Some ads used “odor-eliminating technology” or “odor-eliminating clothing,” but qualified this (or contradicted it) with further statements—for example, later stating that activated carbon would “virtually eliminat[e]” odor or that the clothing “substantially reduces the chance” that deer will catch the hunter’s scent (I don’t understand why that one is a qualification of the elimination claims—given that humans have been hunting deer successfully for a while, the chance that a hunter not wearing the clothing will be detected is not 100%; a reduction from 30% to 0% is surely substantial). The court found these ads not literally false because the qualifying language might lead reasonable consumers to understand that the clothing can only reduce odor. (If the elimination claim is the slogan, isn’t it a bit bait and switch to sort of qualify the claim later on?)

Plaintiffs’ testimony, along with testimony of several plaintiffs in related cases, was insufficient to create a credible inference of confusion among a significant portion of consumers. (Why is this true? Are these plaintiffs unreasonable consumers? In trademark cases, we routinely presume that consumer confusion is so hard to uncover, because consumers are so unlikely to take the effort to complain, that any evidence of actual confusion is good evidence of likely confusion. Certainly such evidence is more than enough to substitute for a survey; as Barton Beebe has shown, TM surveys are pretty rare and successful TM plaintiffs are not nearly so rare. Moreover, courts tend to poke pretty hard at surveys when they are present, for reasons that are often justified; why idealize the truth-finding power of surveys when they’re not present and actual deceived consumers are?)

The court quoted an earlier case which held that “a small group of [plaintiff’s] friends, allies, and supporters [does not constitute] a valid survey group from which to determine whether actual confusion exists.” How can this be true unless this is also a credibility finding? If the plaintiffs’ testimony is true, they were actually confused—and is it so hard to believe that they would be confused by the supposedly ambiguous ads when the court has already found, easily, that other ads using the same key language were literally false? It may be true that a pocket of confusion doesn’t establish likely confusion among a substantial number of reasonable consumers, but at the very least a factfinder could infer from these consumers’ confusion that other reasonable consumers are likely to react in the same way. However, the court held that the ads with qualifying language were “not misleading as a matter of law.”

Plaintiffs argued that there was evidence of intent to deceive the public, but the court held that “Plaintiffs cite no authority, and the Court finds none, holding that such evidence is an acceptable substitute for evidence of actual consumer confusion.” Somebody was using the wrong search terms. E.g., Porous Media Corp. v. Pall Corp., 110 F.3d 1329, 1333 (8th Cir. 1997) (noting, in a Lanham Act false advertising case, that a presumption of deception upon a finding of intent to deceive has been approved by several courts, and citing same). Here, have another: McNeilab, Inc. v. American Home Prods. Corp., 501 F. Supp. 517, 530 (S.D.N.Y. 1980) (“[P]roof that the advertiser intended to communicate a false or misleading claim is evidence that the claim was communicated, since it must be assumed that more often than not advertisements successfully project the messages they are intended to project, especially when they are professionally designed, as the ones involved here were.”).

On to the reactivation claim. Many of the ads simply stated that the clothing could be “reactivated” for future use; the court was unwilling to find that this communicated a “like new” claim. “Reactivate” has more than one reasonable interpretation—some continued beneficial use might count as reactivation, even if there’s not complete or total restoration. So, for the same reasons noted above, such ads weren’t actionable. However, the “like new” and “pristine” ads were literally false.

Finally, the court dismissed plaintiffs’ claim for injunctive relief under the Minnesota Uniform Deceptive Trade Practices Act, because the plaintiffs were at no risk of future harm, given that they were aware of the false advertising.

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