Sunday, August 22, 2010

Blog comments as consumer confusion evidence

QVC, Inc. v. Your Vitamins, Inc., --- F.Supp.2d ---, 2010 WL 2985801 (D. Del.)

Defendant Andrew Lessman made a series of blog posts (which the court called “blogs”) about his and QVC’s respective dietary supplements. QVC moved for a TRO and preliminary injunction, which were denied.

QVC makes Nature’s Code supplements, including Resveratrex and Hair, Skin & Nails supplements (Nature’s Code Hair). In 1992, Lessman started marketing dietary supplements on QVC, but left QVC in 1997 and began marketing with QVC’s primary competitor, the Home Shopping Network. Lessman began marketing Healthy Hair Skin & Nails (Healthy Hair), which has generated more than $70 million in revenue. Defendants also make Resveratrol-100, which competes with Resveratrex. Lessman alleged that, in the course of negotiating over a return to QVC, he disclosed the success of Healthy Hair, and that QVC started marketing Nature’s Code Hair shortly after the negotiations stalled.

Lessman then blogged that “QVC's Hair Skin and Nails isn't Healthy ... it is just sleazy and deceptive.” He stated that QVC took his “most successful product's name and use[d] it to try and deceive customers,” “create[d] a low quality product,” and that QVC's “lack of integrity is totally in keeping with the lack of quality of their vitamins.” In a followup post, he repeated the allegations. The next day, he posted “QVC's Hair, Skin and Nails ... Over 99% Additives!”:

[A] quick look at the label reveals numerous additives, including two Artificial Colors/Dyes .... the four active ingredients are Biotin 3 mgs (3,000 mcg); Hyaluronic Acid 1 mg; Silica 10 mg (actually 4.7 mg Silicon); Lutein 0.6 mg (600 mcg). Adding up their weights ... the four active ingredients (14.6 mg) comprise about 1% of the tablet making it 99% additives! That's right ... 99%! But why would QVC do this?! Perhaps a bigger tablet fools you into thinking you're getting more, but who knows? Anyhow, this large tablet is just as deceptive and confusing as their use of my product's name to sell it.

The post continued by praising Biotin. Then it criticized Hyaluronic Acid because

I have followed the research on HA for over 30 years, but I have never used it, because there is no science that shows it offers any benefit when taken orally and there is a significant body of troubling research that connects it to cancer. Back in 1979 I first considered using HA, but chose not to, because in my humble opinion, it is totally useless and potentially unsafe. HA is not well absorbed from the Gl tract and as a result, can offer no benefits. HA does not necessarily "cause" cancer, since it occurs naturally in the body, but credible research points to a relationship and mechanism between HA and cancer, which should preclude its use in vitamins. Personally, I would never take HA, so of course, I would never put it in my products. … In closing, oral HA offers no benefits to the hair, skin or nails and at 1 mg, it is all but meaningless. The only benefit to this ultra-low level is that it likely poses no risk.

He further criticized Silica for “solubility limitations” and said that Lutien “will NOT improve the growth of your hair, skin and nails.” He concluded that QVC’s copying was “downright disparaging to my product.”

He then weighed in with “A Few Words on Resveratrol and QVC's Colorful and Sweet Versions,” praising his own Resveratrol-100 as delivering an “ultra-concentrated” dose of the supplement because of its source, Japanese knotweed, which was better than grape/wine extracts, and contending that Resveratrex (1) includes three artificial colors; (2) is "almost two-thirds additives;" (3) has an active ingredient comes from polygonum cuspidatum (not Japanese knotweed); and (4) contained active ingredients that were “an all but meaningless list of seven different botanicals--NONE of which states a standardization of any kind. You have NO idea how much you get of each." As to the Resveratrex drink, he wrote that: (1) despite the wine-shaped bottle and "Fruits from the Vine" type, the supplement does not come from wine; (2) there are 4 grams of sugar per serving from "a mystery source;" (3) sugar-rich grape concentrate is included; (4) sugar is the "dominant ingredient;" and (5) there is no standardization of any of the ingredients.

Lessman also produced three videos that essentially restated the claims from his articles.

The Delaware Deceptive Trade Practices Act bars conduct that "[d]isparages the goods, services, or business of another by false or misleading representation of fact" or that generally "creates a likelihood of confusion or of misunderstanding." Neither competition nor actual confusion is required to prevail, creating a difference with the Lanham Act with respect to implicitly false statements. QVC also argued that responses to Lessman’s blog posts showed actual confusion.

QVC contended that the 99% additives statement was false by necessary implication because the context implied that additives are harmful when, in fact, they’re innocuous. Though QVC calculated the percentage at 97.76%, the court considered 99% largely correct, and Lessman didn’t specifically state that the additives were harmful or rendered Nature’s Code hair inferior. However, interwoven with statements about QVC’s products “lacking quality” and the like “renders customer confusion plausible.” QVC was required to provide expert testimony or other evidence to support a finding that these statements were true but misleading, and blog comments don’t count. (I’m missing a few things. What happened to the DTPA claim? Also, isn’t QVC required to prove that its additives don’t render the product inferior, or did defendants concede that for purposes of this motion?)

As for the silicon dioxide/silica claim, plaintiffs argued that scientific studies don’t support the claim that silica is unabsorbable. Defendants provided a declaration from a professor at U Mass-Lowell stating that pharmaceutical-grade silicon dioxide (or silica) is “hardly soluble,” citing manufacturer specifications. On this record, the statements were not completely unsubstantiated sufficiently to make them per se false under Third Circuit law. Since Lessman didn’t specifically say that the silica in Nature’s Code Hair is nonabsorbable or nonorganic, consumer reaction evidence would be required to succeed on those theories.

Similar problems existed with plaintiff’s attack, on the present record, on Lessman’s Resveratrex claims. Many of the allegedly false claims were only implied, requiring consumer reaction evidence.

The HA/cancer claims were the most serious. Lessman stated that he was “very familiar” with the research because he’d “followed” it for over 30 years, which was an imprecise term and not explicitly false even though he had others check the research over the last decade or so. Defendants submitted literature which documents a correlation between cancer and high HA levels in the body, with no theory of causation. This was consistent enough with Lessman’s statements to avoid explicit falsity or falsity by necessary implication.

However, given the context, the statements “may likely mislead and confuse consumers into believing that the HA in Nature's Code Hair causes cancer.” But the degree of confusion wasn’t something the court could determine on its own.

Turning then to the evidence of confusion in the record, the court rejected blog posts (or comments; the court’s terminology is off) as evidence of likely confusion. There were 67 comments to the 99% additives post and 50 to the Reseveratrex post. Only a few indicated a relationship between Lessman’s statements and a decision not to buy Nature’s Code Hair. This was not sufficient to show likely success on implied falsity. In a footnote, the court noted that it was not determining whether blog posts (comments) should be deemed relevant and credible evidence generally, but commented that blog posts may be more reliable than broad-based surveys because they “represent direct feedback from consumers specifically interested in the product(s) at issue,” despite authenticity concerns.

I still don't know what happened to the DTPA claim, except that the court seems implicitly to be holding that, absent consumer evidence, this particular set of claims doesn't seem confusing to the court in its independent judgment, though it would be nice to have a clearer articulation of why.

No comments: