Monday, October 09, 2006

Why we buy -- or don't

MapInfo Corp. v. Spatial Re-Engineering Consultants, 2006 WL 2811816 (N.D.N.Y.)

The parties, who make computer software, are former partners whose relationship deteriorated into a six-count complaint and fourteen counterclaims. They initially agreed to develop a version of SRC’s proprietary software integrated with MapInfo’s proprietary data, creating a joint product marketed under MapInfo’s trademark. Eventually they agreed to terminate the partnership, and then MapInfo sued.

This opinion caught my eye because of a dispute about expert witness testimony on disparagement claims. The court precluded expert witness testimony on damages stemming from defendant’s false advertising/disparagement counterclaim, because plaintiff produced affidavits from many of the relevant customers that plaintiff’s negative statements didn’t affect their purchasing decisions. The court found that (apparently brief) expert testimony about the subconscious way that negative advertising and disparagement work was insufficient to create a material issue in the face of these affidavits. Because defendant couldn’t show any harm, therefore, its damages claims – Lanham Act as well as state law-based – were dismissed.

This turns out to be yet another subtle way in which the Lanham Act relaxes the standards of liability from the common law. In a Lanham Act case seeking injunctive relief, even when the plaintiff is required to show that consumers perceived a false message (implicit falsity), the plaintiff is not required to show that consumers believed the message. If it’s a material claim, consumers are presumed to have been deceived. This is consistent with a lot of consumer research that shows that people are terrible at giving the actual reasons for their decisions. Sure, they give reasons, and the reasons sound plausible, but they’re often quite wrong, as researchers have shown experimentally by manipulating the very factors consumers say are decisive and finding no differences in consumer choices. That said, it’s entirely understandable that courts would credit specific purchasers’ testimony about why they chose a particular competitor. If they didn’t, the entire truth-finding enterprise could be at risk. More generally, false advertising and trademark cases are at heart probabalistic – likely confusion, likely deception – and evidence of actual confusion/deception is not only hard to come by, but potentially irrelevant.

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