District
court opinion blogged here. Suntree
appealed the grant of summary judgment to defendants on Suntree’s false
advertising and trademark claims.
Suntree and Ecosense make stormwater treatment structures called baffle
boxes. The City of West Melbourne sought bids for a stormwater
quality project. The bid documents
required baffle boxes “to be provided by Suntree Technologies, Inc. or approved
equal. Construction details and specs are identified by Suntree Technologies, Inc.
Approved equal shall meet or exceed Suntree Technologies, Inc. specifications.” Under Florida law, the city couldn’t
designate Suntree as the sole approved manufacturer absent a showing of special
circumstances.
The bid solicitation
required bidders to list subcontractors and suppliers, and stated that the list
couldn’t be changed without written consent from the city’s engineer. In addition, the instructions said that the
contract would be awarded on the basis of what was described in the bidding
documents without considering possible substitutes or equals. Such substitutes could only be applied for
after the contract was awarded, through a specified approval process. The documents also said that “[w]henever an
item of material or equipment is specified or described in the Contract
Documents by using the name of a proprietary item or the name of a particular
Supplier, the specification or description is intended to establish the type,
function, appearance and quality required.”
“Rather than incurring the expense of pre-approving an additional, less
expensive supplier, the engineers for the City and County decided to use
Suntree's name in the bidding specifications.
If the contractor who was awarded the project found a less expensive
baffle box that was approved to be of equal quality to Suntree's, the benefit
of the reduction in cost would go to the contractor.”
Derrico submitted the low bid. Derrico’s bid listed Suntree as the supplier
because Derrico didn’t know if a substitute would be accepted. After the bid was accepted, Derrico requested
approval of Ecosense baffle boxes as an “equal” substitute. The city’s representative reviewed the specs
and inspected an installed Ecosense baffle box, then approved it.
After the project was finished, a county engineer requested
that Ecosense prepare a PowerPoint to train city personnel on cleaning and
maintenance. The presentation showed
baffle boxes being cleaned and maintained by City of Rockledge workers. This city was close to Ecosense’s office, the
crew was well-trained, and Ecosense had a good relationship with the city. (Good example of not-formally-relevant facts
inserted to explain the situation.) Both
Ecosense and Suntree baffle boxes had been installed in Rockledge, so the presentation
had photos of both, though Suntree’s name didn’t appear in the
presentation. Ecosense gave the
presentation to West Melbourne and to Titusville, another current
customer. It was on Ecosense’s website
for three months, but Ecosense took it down when Suntree complained.
Suntree sued Ecosense and Derrico; Derrico settled by
agreeing that it wouldn’t attempt to substitue other products for Suntree
products in future bidding. (This seems
a bit … anticompetitive.) As part of the
settlement, in provided evidence that even before it began bidding, it planned
to use Ecosense products and based its cost estimates on Ecosense products, but
listed Suntree because it would have a greater chance of winning the bid. It would have installed Suntree products only
if it had to, if the city had denied its substitution request, but it would
have upheld its commitment to the city in that case.
In discovery, Ecosense produced a brochure that displayed
pictures and descriptions of its products; one photo showed a maintenance
worker looking into the open hatch of a Suntree baffle box. Ecosense destroyed all copies of the
brochure except one exemplar for the litigation.
Suntree argued that listing Suntree as the baffle box
supplier infringed its trademark, and that Ecosense was liable for Derrico’s
conduct. The district court held that
Suntree failed to prove direct infringement, without which there could be no
contributory infringement. The district
court didn’t err by deeming most of the usual confusion factors unhelpful and
irrelevant (strength, similarity of marks, similarity of products, similarity
of marketing channels, similarity of advertising media). Derrico didn’t use Suntree’s mark to identify
Ecosense’s product. The key question was
whether there was a genuine issue of material fact over whether Derrico “used
Suntree’s reputation to win a bid and then used a ‘bait-and-switch’ tactic to
substitute Ecosense's baffle boxes for those of Suntree.”
The court of appeals agreed that Suntree failed to present
any evidence of intent to confuse the city about the source of the baffle
boxes. The undisputed testimony was that
Derrico intended to substitute Ecosense boxes unless “no substitute was
allowed.” Equal substitutions were
specifically allowed in the bidding documents, which was what Derrico was pointed
to when it asked. Undisputedly, listing
Suntree in the bid complied with the instructions to bidders, which told them
that the contract would be awarded without
considering substitutes/equals and that those should be considered after the
contract was awarded. Thus, Suntree
failed to show an intent to deceive the city or an attempt to hide an intent to
seek “equal” approval.
Moreover, Suntree failed to show any evidence that the City
was confused at any time, whether in its “initial interest” or later, about the
quality of baffle boxes required or the fact that contractors could request
approval of substitutes. Again, the
bidding instructions said that naming Suntree (or any specific producer) was “to
establish the type, function, appearance and quality required” for use in the
project. Without evidence of intent to
confuse or actual confusion, the court declined to reach the general question
of whether initial interest confusion was actionable in the Eleventh Circuit. (As with Louboutin,
we have a very thin language of “that’s not what trademark is for,” but that concept is clearly the
driving force here.)
False designation of origin claims based on the brochure and
PowerPoint also failed. Suntree argued
that Ecosense’s use of photos of Suntree boxes constituted attempted reverse passing
off. In such cases, most of the usual
confusion factors are irrelevant.
Suntree failed to show Ecosense intended to tout Suntree’s product as
its own, and Suntree’s immediate response to Ecosense’s complaint supported its
lack of intent to confuse. There was no
evidence of confusion. Ecosense
prevailed (without needing to challenge validity—which should have been the
first step; unless Suntree’s product configuration is nonfunctional and has
secondary meaning, how could there be a reverse passing off claim after Dastar?).
As for the false advertising bit, the first question was
whether Ecosense’s acts occurred in commercial advertising or promotion. Suntree failed to show a genuine issue of
material fact on
whether the brochure and PowerPoint presentation were
created “for the purpose of influencing consumers to buy defendant's goods or
services” and that they were “disseminated sufficiently to the relevant
purchasing public to constitute ‘advertising’ or ‘promotion’ within that industry.” The presentation was created at the request
of an existing product, for customers who’d already purchased it. The engineers who worked on the project testified
“that brochures would not be at all helpful in their determination as to
whether or not they would buy, or allow use of, a product like a baffle box.” Suntree also failed to offer evidence that
the brochure was disseminated to any potential customers. Though in small
markets small distributions may suffice, Suntree failed to put forward any evidence about the number of
potential consumers to whom the statements were disseminated.
Again, I wonder: shouldn’t Ecosense get its fees for this
anticompetitive lawsuit? Certainly the
trademark claim is an unprecedented attempt to create liability from what seem
to be standard bidding practices with very clear contractual provisions about
substitution.
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