Friday, March 06, 2015

Focus, Grasshopper: infringement isn't false advertising

Grasshopper Motorcycles, Ltd. v. Rivera, No. 14–cv–320, 2015 WL 853564 (W.D. Wis. Feb. 26, 2015) (magistrate judge)
Grasshopper sells a moon-shaped backrest designed to be attached behind the driver’s seat of a motorcycle. “Its 2013 sales were approximately $333,000, with the majority of these sales occurring on eBay.” It claimed trademark rights in the design of its motorcycle backrest and the goodwill associated with the Grasshopper name and products.  Grasshopper leased part of its commercial space to Rivera for unrelated business, but then learned that Rivera, doing business as Better Built Backrests, was making a motorcycle seat backrest that looked a lot like Grasshopper’s backrest, using online marketing that looked similar to Grasshopper’s. Some customers allegedly mistakenly purchased a backrest from Rivera, thinking it was a Grasshopper backrest. Grasshopper sued and moved for summary judgment.
Rivera built his first backrest around January 2014, and had never before constructed motorcycle backrests and had not been trained in sewing or upholstery. For the purposes of the motion, the court accepted that the photos, layout and wording that Rivera used in his on-line advertising were very similar to Grasshopper’s. Rivera described his seats as “professionally sewn.” “In April 2014, he included a photo on his eBay advertisement that showed a black vinyl backrest that was labeled ‘My competitors Finished product,’ and which had large staples closing off the upholstery work. Next to this photo was a second photo of a nearly-identical backrest labeled ‘Better Built Finished Product,’ which was a more finished looking product without visible staples.” At his deposition, Rivera admitted that the former photo was actually a backrest he built himself, allegedly to resemble the look of backrests made by his competitors, including Grasshopper, which in his view are inferior to his own because of the visible stapling. Around July 2014, eBay removed his advertisement from his eBay webpage because it violated eBay’s policy against including “gratuitous information that doesn’t describe the item being sold,” which Rivera understood to mean the photo and language stating that his “product is much less expensive than the high-dollar OEM1 products.” Rivera removed the “competitor’s product” photo and the OEM language and re-listed his backrests on eBay.
Grasshopper argued that undisputed evidence showed false advertising under state and federal law with the photo of the stapled backrest and the “professionally sewn” claim.  But its complaint didn’t allege false advertising, only copying and misappropriation of Grasshopper’s backrest design.  Rivera, representing himself, had not waived his right to object to this broadening of the complaint. At this point, the court would deny leave to amend on timeliness grounds, regardless of the merits, but the court addressed the claims on the merits for the sake of completeness.
Even assuming literal falsity [RT: which does actually seem to be the case], Grasshopper was seeking damages, and it therefore needed to show actual harm. It failed to do so. There was some evidence of customer confusion: “affidavits from customers and employees who report that it is difficult on eBay to distinguish Rivera’s backrest from Grasshopper’s because of the similarity of the written advertisements and photos and because both backrests are listed for approximately the same price.” There was also anecdotal evidence of customers who purchased a Better Built backrest by mistake, intending to purchase a Grasshopper backrest. But that’s confusion about the wrong thing.  Grasshopper needed to show that it lost sales because of Rivera’s false statements, not by the appearance of Rivera’s product or his marketing:
Indeed, if what Grasshopper is claiming is true—that Rivera’s online advertising looked so much like Grasshopper’s that customers were misled into thinking it was Grasshopper’s—then how could Rivera’s false statements have hurt Grasshopper? Obviously, a customer believing he was viewing Grasshopper’s posting for its backrests would not think the shoddy backrest shown on the “competitors Finished product” photo was Grasshopper’s, and would be happy to know that Grasshopper’s backrests were “professionally sewn.”
This also doomed summary judgment on the state deceptive practices law claim, which requires pecuniary harm, and anyway doesn’t offer a cause of action to competitors for representations made to third parties. Nor did Grasshopper show that Wisconsin state common law unfair competition covered false advertising.  “Rivera’s alleged copying of Grasshopper’s marketing style could, in theory, amount to misappropriation of a property right. However, Grasshopper has not adduced evidence sufficient to establish that its marketing materials have value independent from the backrests themselves, which are not the subject of the summary judgment motion.” None of the summary judgment evidence showed that Grasshopper had a “distinct” marketing style that customers associated with Grasshopper. And whether Rivera copied the language of Grasshopper’s ads was a question of fact for a jury.

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