Friday, April 10, 2009

5 Hour Power struck unfair blow against alleged infringer 6 Hour Power

Innovation Ventures, LLC v. Body Dynamics, Inc., 2009 WL 877640 (E.D. Mich.)

The court adopted the magistrate’s report and recommendation, which was as follows: Plaintiff does business as Living Essentials; the parties sell dietary supplements formulated as energy shots. Living Essentials, which sells 5 HOUR ENERGY® shots, sued Body Dynamics (BDI), alleging that BDI’s use of 6 HOUR ENERGY infrined its trademarks by using a substantially similar phrase and package illustrations. BDI counterclaimed for false advertising, tortious interference, and related business torts. BDI also sought a declaratory judgment of the registration’s invalidity—that ® comes from the Supplemental Register (which makes invalidation unlikely, but also points to the highly descriptive nature of the mark).

The key: Living Essentials obtained a preliminary injunction in a separate case, then created the impression that BDI’s product was the subject of a court ordered recall.

In September 2007, BDI began selling MINI THIN RUSH® dietary supplements in liquid, capsule, and chewing gum form. The liquid energy shot has “6 Hour Energy!” at the top of the label. Living Essentials has been using 5-HOUR ENERGY since September 2004, and it registered a trademark a year later.

In April 2008, the court granted Living Essentials a preliminary injunction against N2G Distributing, not BDI, for trade dress infringement, finding that N2G’s bottle label for INSTANT ENERGY was “remarkably” similar, with the same color scheme, font, and depiction of a silhouetted figure ascending a mountain. But it didn’t enjoin use of the descriptive phrase “6 Hour Energy Shot.” Living Essentials hadn’t carried its heavy burden of showing that the primary sigificance of 5 HOUR ENERGY was to identify the source of the product rather than the product itself, and plenty of competitors used highly similar phrases such as “7 Hour Energy Boost,” “6 Hour Energy!,” “Extreme Energy Six Hour Shot,” and “6 Hour Power,” making Living Essentials’ secondary meaning claim less persuasive.

After the injunction issued, Living Essentials issued a press release and notice to customers, “RECALL OF ‘6 HOUR’ SHOT ORDERED.” It said:

Court orders immediate stop to manufacturing, distributing and sale of 6 Hour Energy shot.

Dear Customer,

We are pleased to announce that we won a decision against a “6 Hour” energy shot that closely mimicked 5-Hour Energy®. The United States District Court, in Case No. 08-CV-10983, issued a preliminary injunction ordering the immediate recall of all the “6 Hour” product, and told its manufacturer to stop making, distributing and selling it.

If you have any of the “6 Hour” energy shots in your store(s) or warehouse(s) contact the product’s manufacturer or your distributor to return the product immediately.

DO NOT RETURN ANY 5-HOUR ENERGY®. It can be difficult to tell 5-Hour Energy® apart from the "6 Hour" knockoff product. …

The press release didn’t identify the manufacturer, didn’t identify the product, and didn’t include an illustration of the trade dress. It was published as a “legal notice” in the Convenience Store News, the primary industry publication. (Query: did counsel approve this? What should counsel have told the client who wanted to run this notice?) As a result, numerous brokers and distributors of MINI THIN RUSH contacted BDI about returning its products, and BDI lost a bunch of sales. BDI had to hire a PR firm to respond.

The press release was misleading in saying that Living Essentials won a decision “against a ‘6 Hour’ energy shot,” when it really won a trade dress injunction against N2G. The use of the case number doesn’t communicate what product or party was enjoined (and indeed, why use the case number and not the name?). Moreover, the judge specifically denied an injunction against the only feature Living Essentials did identify, “6 Hour.”

Living Essentials rejoined that any confusion was BDI’s fault, for using the confusingly similar 6 HOUR ENERGY slogan, which constitutes trademark infringement. This conflated two separate issues, the alleged infringement and the press release, which falsely communicated that Living Essentials had achieved a court-ordered recall of all drinks using “6 HOUR ENERGY” on the label. Even if Living Essentials has a meritorious trademark infringement claim, the press release is misleading. Living Essentials could easily have avoided confusion by identifying the manufacturer and the trade dress—it included a picture in the complaint and the motion papers—but chose not to do so. Unless and until Living Essentials establishes trademark infringement, it’s misleading to represent that all energy drinks using “6 HOUR ENERGY” on the label are subject to a federal court’s recall order.

The district court adopted the magistrate judge’s reasoning on this point over Living Essentials’ strong objections. It argued that the court shouldn’t look at likelihood of success in isolation from its trademark infringement claim, because if it wins on trademark infringement, then BDI would have no legitimate interest in “6 HOUR ENERGY” and therefore no ground to claim harm. But the present procedural posture of the case involves nothing more than allegations of infringement; Living Essentials hadn’t moved for a preliminary injunction or offered evidence to support its claim. Right now, BDI is entitled to use the phrase on its products. If Living Essentials ultimately wins its infringement claim, BDI may not be able to claim any further false advertising injuries, but that’s for later.

Living Essentials then argued that the press release didn’t misstate any facts. It took steps to avoid misleading the audience by providing contact information for any questions and concerns, and by using “singular” words such as “the,” “its,” and “a” to indicate that it had won a victory against a single product and manufacturer. (Note: this is why we pay lawyers—to get them to make such claims with a straight face.) The court thought the magistrate got it right, considering Living Essentials’ anti-confusion measures “modest at best.”

Living Essentials also contended that the issue was moot because it didn’t intend to publish the press releases again. Voluntary cessation doesn’t render a claim for injunctive relief moot.

BDI showed actual deception among brokers, distributors, and customers. Among other things, at a trade show, one convenience store manager refused to take a free sample, believing it to have been recalled because something was wrong with the product.

The falsehood was material: a consumer is less likely to purchase a product she believes is subject to a court-ordered recall, as the trade show incident demonstrated.

There was a presumption of irreparable injury from a Lanham Act violation. (eBay hasn’t yet been held to change this in the Sixth Circuit.) BDI’s goodwill was being tarnished in the industry. The public interest also supported an injunction, since the public has an interest in avoiding deception.

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