Wednesday, August 12, 2015

Pure mourning: Pom fails to get preliminary injunction again

Pom Wonderful LLC v.  Pur Beverages LLC, No. 13-cv-06917 (C.D. Cal. Aug. 6, 2015) 
Pom fares no better its second time around. Although the court of appeals previously found likely confusion between its marks and defendant’s “pūr pŏm” energy drink (which allegedly contains no pomegranate juice at all) and remanded for a re-analysis of the remaining preliminary injunction factors, Pom was unable to show irreparable harm distinct from its showing on likely confusion. 
The harm at issue must not merely be irreparable; it must also be imminent. “Speculative injury does not constitute irreparable injury sufficient to warrant granting a preliminary injunction.” Thus, unsupported and conclusory statements about harm are insufficient. Herb Reed.  A finding of reputational harm “may not be based on ‘pronouncements [that] are grounded in platitudes rather than evidence.’”
Pom argued three varieties of irreparable harm: (1) the POM mark would lose distinctiveness and potentially become generic; (2) it would lose its return on its investment in its mark; and (3) its reputation and goodwill would be harmed.
As for loss of distinctiveness, Pom offered the declaration of Fernando Torres, the Chief Economist at IPmetrics LLC, an intellectual property consulting firm.  Torres stated that the problem with free riders like Pur is that infringement “will eventually destroy the value of the reputational investment embodied in the trademark.” He opined that, because Pom Wonderful has cultivated a distinctive brand using the POM mark, “allowing a third party to make a confusing use of ‘pom’ under the guise of a generic abbreviation for the ingredient pomegranate would help push the valuable POM trademarks toward generic use.” Such a “loss of distinctiveness” couldn’t be quantified in terms of lost sales or lost profits.  The court was unimpressed.  “Although Torres cites economic theory to supports his opinions, the opinions are not tied to actual evidence, and constitute little more than assertions grounded in ‘platitudes rather than evidence’” (quoting Herb Reed).  His conclusions “would apply in any trademark infringement case where the plaintiff owns a distinctive trademark.” A risk isn’t a likelihood of irreparable harm.
There was no evidence that the “distinctiveness” or perceived value of Pom’s mark would likely be affected negatively by Hubbard’s use of “pūr pŏm,” including no evidence that consumers’ association of the POM mark with Pom Wonderful had weakened since pūr pŏm entered the market or that other companies had attempted to market pomegranate beverages under “pom” in the more than two years since Pur began doing done so. “Such evidence might make irreparable harm likely, as opposed to just merely possible.” But Torres merely assumed that others would, in the future, begin using the POM mark on their products after observing Hubbard do so. That was mere speculation on this record.  Plus, Torres said it takes time for genericide to occur, and didn’t opine that this period could run during the pendency of the trial.  Ultimately, the court found, his opinions were “little more than speculative statements regarding the type of harm that can arise in any trademark infringement case.”  His evidence was non-specific to Pom Wonderful “and equally applicable to any trademark infringement case. Consequently, it is not sufficient to show a likelihood of irreparable harm.”
Pom quoted defendant Hubbard’s statement to the press in response to the question, “Would you consider changing your drink’s name, and why or why not?”
I will prove that pom means pomegranate.  When I do, it will make their standard word trademark of ‘POM,’ that is currently incontestable, invalid. They will lose their registration of the mark under the theory of genericness. Although it may be true that when they initially got the standard word mark of ‘POM’ it had no meaning at the time. They, and numerous other makers of pomegranate flavored products, have widely used the term pom to describe pomegranate flavoring. Just like I do with my product.  The term has now become generic, and thus, not deserving of Federal Trademark Registration. . . . Mark my words: I will be the company that makes Pom Wonderful lose their trademark ‘POM.’ I will then allow the consumer packaged goods industry to use the properly used, and widely known term ‘pom’ to describe its pomegranate flavored products, without the threat of a bully company suing every person or company that utters those three letters in sequence.
Pom argued that this was an admission that “part of his reason for using ‘pŏm,’ as part of his energy drink’s name, is to pave the way for others to use POM as a flavor descriptor, turning this incontestable mark into a non-protectable generic word.”  But the court found that these statements weren’t about this case, but rather about ongoing cancellation proceedings before the TTAB, wherein Pur argued that Pom abandoned its word mark by using “P♥M” rather than “POM.” Risks connected to the cancellation petition weren’t connected to the purported infringement, and didn’t adequately demonstrate likely irreparable harm from that infringement.
Plus, even attributing this statement to the current infringement, that didn’t show irreparable harm, just because it might become generic “over time” if third parties begin to use it in a descriptive and/or generic sense.  Pom actively polices its trademark and this hypothesized use has yet to begin.  Again, this was merely speculative.
Loss of return on investment by preventing Pom from fully exploiting its reputation: Pom argued that Pur’s use “limit[s] Pom’s ability to control the reputation of its recognized brand and the perception of Pom’s premium quality products.” This was again speculative and not supported by evidence. Torres claimed that post-infringement, the value the trademark lost due to the infringing activity is never recouped, but the testimony offered wasn’t specific to Pom.  Since it would be true in every infringement case, this claim couldn’t be “squared with the rule that a plaintiff must adduce evidence of likely irreparable harm to obtain an injunction.”
Harm to reputation and goodwill: Pom argued that (1) the infringement damaged its ability to communicate a consistent brand message; (2) Pom’s reputation as a seller of healthy beverages conflicted directly with consumers’ perception of energy drinks; and (3) Pom lacked control over the quality of Pur’s products.
As for the brand message claim, Pom argued that it focused on communicating that it uses only 100% pure pomegranate juice in its products. Pom has expended substantial resources marketing products that contain only 100% pomegranate juice and litigating against companies that market their products as “pomegranate juice” when the products are predominantly cheaper “filler juices.” Because Pur’s product contained no pomegranate juice, any association between Pom and Pur would harm Pom’s brand. Likewise, while Pom “prides itself [on] advertising that is sophisticated, smart and witty,” Pur’s ads are often “low-brow and tasteless.”  But there was no evidence of harm to Pom’s goodwill.  Though Pur had been selling its products for more than two years, there was no evidence Pom’s customers were aware of Pur’s product or that they had a negative reaction to it or to Pur’s advertising.  It was certainly “possible” that Pom’s reputation and/or goodwill could be damaged by having less control over its brand messaging, but it didn’t show that such harm was likely.
There is a distinction between a likelihood of irreparable harm and a showing of actual harm.  But one way to show likely irreparable harm is to show actual confusion or harm right now.  Post-Herb Reed cases have therefore, when granting injunctive relief, often relied on “some evidence of actual confusion or actual harm,” including confusion surveys.  (NB: Confusion is not harm; harm is harm.  Also, a survey doesn’t necessarily show actual confusion of plaintiff’s customers, unless the parties compete directly, so it doesn’t inherently show the damage that the court said it was looking for.)  Among other cases, the court cited OTR Wheel Engineering, Inc. v. West Worldwide Services, Inc., 602 Fed. Appx. 669 (9th Cir. Mar. 18, 2015), which affirmed a preliminary injunction and found that there was some evidence of irreparable harm where the infringing product was sold to the plaintiff’s major customer, which led to a dispute between the plaintiff and its customer—“a nonquantifiable injury to the goodwill it had created with its customer.”  In Life Alert Emergency Response, Inc. v. LifeWatch, Inc., 601 Fed. Appx. 469 (9th Cir. Feb. 4, 2015), there was a declaration “reporting numerous and persistent complaints from would-be customers who received robo-calls for what they believed were Life Alert products,” as well as emails and social media posts substantiating the threat to Life Alert’s reputation and goodwill.
Negative association with energy drinks: Pom noted that energy drinks have been associated with 224 adverse event reports to the FDA between Jan. 2012-Nov. 2014.  But that didn’t go far enough to show that Pur was a disreputable product, or that Pom’s customers associated Pur’s product with Pom or saw energy drinks as disreputable. Again, absent evidence about Pom’s consumers, this was merely conclusory and speculative.
The court distinguished and disagreed with E&J Gallo Winery v. Grenade Beverage, LLC, No. 1:13-cv-00770- AWI-SAB, 2014 WL 4073241, *1 (E.D. Cal. Aug. 15, 2014), report and recommendation adopted, 2014 WL 5489076, *1 (E.D. Cal. Sept. 8, 2014), which had accepted a similar theory of harm involving Gallo wine v. EL GALLO for energy drinks.  Gallo said it didn’t want to be associated with energy drinks because it believed that mixing alcohol and energy drinks promoted irresponsible behavior.  The court reasoned: “While Plaintiff may not have introduced admissible evidence to support the proposition that energy drinks are associated with irresponsible drinking or that an association with energy drinks would be harmful to Plaintiff’s reputation, it is enough that Plaintiff has introduced evidence of loss of control over their own business reputation.”
Not only is this case on appeal, it’s directly at odds with Titaness Light Shop, in which the 9th Circuit rejected a plaintiff’s speculative theory that its customers wouldn’t want to be associated with defendant’s product, which was sold on “a website that supposedly catered to marijuana growers.” “[A]ssertions by a representative of the plaintiff that its goodwill and reputation would be harmed if consumers associated its product with an item that did not fit the plaintiff’s brand image” were not sufficient. The Ninth Circuit in Titaness observed that the plaintiff did not show that its “customers [were] aware of the website, [that they] would associate the products on the site with    marijuana, or [that they] would stop purchasing Sunlight products if they mistakenly believed that Sunlight was marketing to marijuana growers.”  
Basically, the Ninth Circuit ruled that “it was not sufficient for a movant to assert that it had developed a particular brand image and that any association with a product inconsistent with that image would harm its reputation.”  But that’s what Gallo accepted and what Pom asked the court to accept here.  More fundamentally, Gallo essentially presumed irreparable harm without evidence other than its likely success on the merits.  “If a conclusory assertion that a third party has used the plaintiff’s mark in a way that is ‘directly contrary to [plaintiff’s] philosophy,’ or that plaintiff does ‘not want to associate itself or its [ ] trademark’ with the third party or its business were sufficient to satisfy a plaintiff’s burden, it is likely that irreparable harm would be found in any case where plaintiff was able to demonstrate a likelihood of success on the merits.”
Evidence that customers have a negative perception of energy drinks in general or of pūr pŏm in particular would probably have sufficed to show irreparable harm, but that wasn’t present.  “It would be reasonable to infer likely harm to a plaintiff’s reputation or goodwill if it could demonstrate that the consuming public has a negative perception of defendant’s product, a product that is sold under a confusingly similar mark.”  (Note the structural similarity here with showing materiality in false advertising—courts generally don’t require successful plaintiffs to show that the false claim is material to the exact same people who receive the false message, according to the plaintiff’s survey; showing that it is the kind of claim that is material in the relevant context suffices.  At long last, and at the remedy stage, irreparable harm is being used to reintroduce a materiality standard to trademark.)
Lack of control over the quality of Pur’s products: Pom argued that it was at risk if even “a single incident of poor quality control or a single consumer getting ill from drinking pūr pŏm” was reported. Again, this would be true in every trademark infringement case. There was no evidence that pūr pŏm had caused illness, or facts allowing a reasonable inference that this would occur in the future.
Pom argued that the danger to it was great because Pur’s principal was Hubbard, “a litigious and shifty business owner with a checkered past.” Pom proffered evidence that Hubbard has been charged with theft, criminal trespass, assault, and attempting to elude the police, and that he had routinely been “vengeful” in previous litigation to which he has been a party.  As Pom noted, Hubbard had filed a cancellation petition.  But Hubbard explained that he did so based on research indicating that Pom Wonderful has never used POM as a trademark without the “o” in the shape of a heart. Thus, he asserts, Pom was improperly granted a trademark and/or that it abandoned the word mark by not using “POM” in commerce. The court would not impute bad faith to Hubbard based on the fact that he exercised his legal right to file such a petition; plus, that’s unrelated to irreparable harm from continued infringement.
Pur said that all its remaining inventory was pūr pŏm as opposed to other products; Pom argued that this made clear that Pur was relying on confusion to stay in business.  That might be true, or maybe he hadn’t been successful in selling pūr pŏm, which would cut against finding irreparable harm.

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