Wednesday, February 11, 2015

fake reviews actionable; unflattering comparison not

Homeland Housewares, LLC v. Euro-Pro Operating LLC, 2015 WL 476287, No. CV 14–03954 (C.D. Cal. Feb. 5, 2015)
The parties compete in the market for home blenders.  Homeland makes the Bullet line, and Euro-Pro makes the Nutri Ninja Pro.  Previous proceedings discussed here.  Homeland sued for false advertising and also claimed the Nutri Ninja’s packaging infringed Homeland’s trade dress by copying the “color scheme, fonts, phraseology, and overall look and feel” of the Nutribullet packaging. As for the falsehoods, Homeland alleged false comparisons on the packaging, “a campaign to plant false reviews on the Internet making false claims of defects in NUTRIBULLET blenders and touting the NUTRI NINJA as a superior alternative,” and false claims in Nutri Ninja infomercials.
Homeland alleged that certain negative consumer reviews online were actually planted by Euro-Pro.  It identified a specific review and a comment on that review, allegedly making particular false statements about the Nutribullet’s performance.  “Assuming, as seems reasonable, that placing a review on a widely-available website is placing a statement into interstate commerce, these allegations suffice to state a claim for false advertising.”
As to the infomercial, it included a head-to-head comparison of the two blenders attempting to blend the same “ice, frozen fruits, and ... fibrous, difficult to extract vegetables, nuts, and seeds.”  One host declared that the Nutribullet had “trouble” blending those ingredients, and that the Nutri Ninja didn’t, but Homeland alleged that the comparison test failed to use the Nutribullet properly and didn’t fill it with enough liquid. So the comparison test allegedly didn’t show “trouble” blending when the Nutribullet was operated according to its instructions. However, Homeland didn’t allege differences in the power provided to the products, or that some component of the Nutribullet had been removed, or that the Nutribullet was actually effective in blending that particular combination of ingredients.  “[N]ot adding liquid does not result in a literally false impression on the part of the viewer. Rather, it creates the literally true impression that the NUTRI NINJA can blend this particular set of ingredients without adding any liquid, while the NUTRIBULLET cannot.”  This could still be misleading, but the court didn’t find that plausible here.  The demonstration “merely demonstrates that the products perform differently.”
Turning to the trade dress claim, Homeland tried to fix the defects in its earlier pleading by specifying more carefully the trade dress claimed: “predominantly” green packaging; block-font, all-capital lettering in white or green; the product’s “trademark logo” in the top left hand corner; photo of the product against “a cornucopia of fruits and vegetables”; pictures of blender container filled with blended contents; wattage of the blender on the right side; a “band of text” on the bottom of the package; and distinctive “phraseology,” including “Nutri,” “Pro,” “Extractor,” “Watt,” “Power” and “Extractor Blade.”  Homeland also pled that the overall look and feel was the same.
Euro-Pro argued that Homeland failed to plead secondary meaning.  Homeland alleged that it had spent several hundred million dollars on promoting the Bullet line and its associated trade dress.  By alleging specific promotional channels, including infomercials, it probably pled distinctiveness for purposes of a motion to dismiss. 
Euro-Pro also argued functionality, in that most of the details described features and functionality of the Nutribullet. The court determined that “at least some of the elements of the trade dress are commonly used by others in the industry, and Plaintiffs could not be given exclusive use of them: e.g., photographs of fruits and vegetables; photos of blended juice; and references to the wattage of the blender’s motor.” But multiple functional features can be combined into a nonfunctional whole. “[I]t is possible to arrange photographs of fruits and vegetables, photos of blended juice, and claims about wattage, along with other purely arbitrary elements like color, typeface, and layout, into a non-functional trade dress.”
It was at the confusion stage that the allegations failed.  (Very interesting to see a dismissal on likely confusion grounds in a non-expressive use case.)  Homeland alleged high similarity, identical goods, and identical marketing channels.  Euro-Pro argued that Homeland’s allegations were conclusory and implausible given the obvious differences in packaging, especially Euro-Pro’s use of the Nutri Ninja mark.
Not all of the factors in the multifactor test have equal weight; strength and uniqueness of the trade dress and actual similarity are paramount.  Here, the claimed elements of the trade dress were largely functional—photos of fruit, product photos, product descriptions—arranged in a unique way. This was protectable but not strong; the predominant nonfunctional element was color, which wasn’t enough by itself to justify strong protection. Thus, the court required substantial similarity to find likely confusion plausible.
The two packages were “plainly” not substantially similar. Though the packages used a quite similar green background color, the Nutribullet package offset the green with black bands at the top and bottom. Both trademark logos were in the upper left corner of the front of the box, but the marks themselves had different fonts/design elements.  Features were mentioned in different places, and the Nutri Ninja showed a cyclone of fruits and ice being drawn down into a cup, with three other cups in the background, while the Nutribullet box showed two cups, much larger and closer in scale, and their lids. Examining the two packages as a whole, “the Court finds that there is no plausible claim that the two are substantially similar, and this is determinative of the question of likelihood of consumer confusion.”  Plus, one whole side of the Nutri Ninja is devoted to a comparison with the Nutribullet, “which would also tend to alleviate consumer confusion.”
Homeland argued trade libel based on its claims above; Euro-Pro argued it hadn’t sufficiently pled special damages.  Homeland needed to allege facts “showing an established business, the amount of sales for a substantial period preceding the publication, the amount of sales subsequent to the publication, and facts showing that such loss in sales were the natural and probable result of such publication.” This time around Homeland alleged somewhat more specific facts about its established business and the dropoff in sales: in stores where the Nutri Ninja Pro appeared, sales declined about 31%, but increased 14.5% where it wasn’t sold. Homeland also alleged a dollar amount of loss.  Though these numbers weren’t “well-tethered to specifics,” that was enough at the pleading stage to allege special damages.

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