Thursday, April 07, 2016

"Excessive use of professional reviewers" might be false advertising

Interlink Products Int’l, Inc. v. F & W Trading LLC, No. 15-1340, 2016 WL 1260713 (D.N.J. Mar. 31, 2016)
The parties compete to sell showerheads; Interlink claims rights in the marks AQUASPA, AQUASTORM, AQUADANCE, and SPIRALFLO for showerheads.  It sued F&W for false advertising, trademark infringement, and related claims, and F&W counterclaimed for false advertising etc. based on Interlink’s allegedly false representations of compliance with the Energy Policy Act, which sets flow rate requirements for showerheads. 
On the counterclaims, F&W argued that the product instructions constituted actionable “advertising or promotion” because they “serve the purpose of influencing the customer who purchased the item to continue purchasing Interlink showerhead products and to also influence other potential customers who become aware of them through contact with the initial purchaser.” The court disagreed, finding that product inserts were post-sale and didn’t influence consumers in their purchasing choices.
Interlink argued that F&W shouldn’t be allowed to proceed on claims based on Interlink’s alleged violation of the Energy Policy Act, because F&W didn’t plead that it itself complied with the standards and couldn’t plausibly allege damages.  The court disagreed.  If consumers chose Interlink over F&W based on the allegedly false claims, F&W may have suffered damages.
Tortious interference: F&W argued that Interlink purposely used black image backgrounds instead of white ones in its Amazon sales, against Amazon policy.  But “F&W provides no support for its argument that the violation of a website’s image requirements gives a third-party user of the website a cause of action for unlawful competition. Interlink’s compliance with Amazon’s image requirements is a matter and Interlink.”
The court did decline to dismiss claims based on Interlink’s alleged failure to mark showerheads with their country of origin, given F&W’s admission that at least some of its showerheads were also not marked; F&W argued that it was now in full compliance with the law, which was enough to avoid dismissal.
Turning to Interlink’s claims, Interlink alleged that F&W used Interlink’s pictures and product descriptions, thus falsely advertising their own products.  F&W argued that the pictures used showed the different functions of the showerhead and that Interlink didn’t allege that the functions were unavailable in F&W’s products or that the F&W products were inferior.  But Interlink’s argument was that F&W was misrepresenting that their product was in fact Interlink’s product (or that they were of the same nature and quality), and that’s a violation of §43(a).  (Ah, but (1)(a) or (1)(b)?)
Defendants also allegedly misrepresented that AQUAFLOW was a registered trademark; defendants rejoined that the ® symbol was used by mistake and that they’d ceased using the trademark symbol. Citing McCarthy’s statement that the “use of ... the ® adjacent a mark not federally registered is ... a form of false advertising which may result in serious repercussions,” the court found that Interlink had pled a plausible claim for false advertising.  (Why is this plausibly material?)
Interlink also alleged that defendants manipulated product reviews, and thus numerical product ratings, “through the excessive use of professional reviewers” who were flooded with free samples, leading to reviews that “are inherently biased and tend to favor the seller.” That was enough to state a claim for implied falsity.  (What exactly is the falsity?  Assuming that the free sample was disclosed, is “bias” something more than puffery?)
Interlink also sufficiently alleged false advertising by pleading that: (1) defendants advertise that the installation of their dual showerhead requires “absolutely no tools”; (2) this statement is “literally false”; and (3) the product instructions “clearly instruct the purchasers to use” tools.
However, as a non-consumer (purchases made for purposes of this litigation didn’t count), Interlink lacked standing under New Jersey consumer protection law.
The court also found Interlink’s trademark confusion claims based on defendants’ AQUAFLOW compared to its marks AquaSpa and SpiralFlo plausible.  Given how descriptive those terms are, that seems like a troubling result, but the court here doesn’t seem inclined to ask for much from either side here.  Interlink also alleged trade dress infringement of a trade dress comprising:
(1) The use of circular pictures arranged in a vertical column showing the various function modes of the showerheads, together with the terminology used to describe the functions and the font and positioning of the function descriptions beneath the pictures;
(2) photographs of Interlink’s products;
(3) the look, feel and style of the presentation of product images;
(4) the non-functional aspects of the design of the products, specifically the shape of the shower handle, head and shower jet design ...; and
(5) the trademarks used in connection with the products.
Interlink adequately alleged non-functional elements—the package design’s use of circular pictures in a vertical column with certain fonts, words, and pictures, along with Interlink’s trademarks. 

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