Milso sued Nazzaro (a former employee), asserting a variety
of claims; I’m only going to discuss the Lanham Act issues. Milso makes and sells caskets, including some
that are made in Mexico and others made in the U.S. Nazzaro also sells caskets, including some
made in China that were allegedly not clearly marked (or marked at all) as
such. His business is called Liberty,
whose logo is the Statue of Liberty wrapped in the American flag; both the logo
and the marketing materials are red, white, and blue.
Milso argued that defendants’ conduct constituted false
designation of origin and false advertising.
Defendants contested standing because of Milso’s Mexican caskets, but
Milso also sold U.S.-made caskets, giving it a reasonable interest to be
protected.
The court rejected the argument that the alleged failure to
label country of origin, a violation of the Tariff Act, was therefore a per se
false designation of origin. Though a
few courts so hold, reasoning that the marking requirement reflects—and helps
create—an environment in which consumers presume unmarked products to be
U.S.-made, other courts have disagreed.
A per se rule that failure to mark is a false designation of origin
would conflict with the rule that the Lanham Act doesn’t impose any affirmative
duty of disclosure; a claim can’t be based on failure to disclose. (I don’t think this follows. That may be the general rule, but the
specific context of country of origin may change background consumer
expectations, and we might not want to put plaintiffs to the expense of proving
this in each individual case any more than we do with literal falsity.) The court agreed that a failure to make a statement
is neither “false” nor a “representation,” especially since a duty to disclose
would be almost limitless. A per se rule
about country of origin “would inappropriately restrict the ability of the
finder of fact to evaluate the particular circumstances of each case.”
Milso argued that the Chinese-made caskets were either never
marked “Made in China” or marked with a sticker so flimsy that it never reached
the consumer, but didn’t produce evidence of this. However, there was a genuine issue as to
whether the stickers were adequate to inform consumers of the country of
origin. Milso also argued that the
extensive use of American iconography constituted false advertising and false
designation of origin. The court found
the company name and iconography, though evoking clear associations with the
U.S., “too general to evoke any specific geographical associations [the U.S.
apparently not counting as a specific geographical place] or to support an
inference that there is an implied claim of domestic manufacture.” Thus, defendants won summary judgment on
literal falsity.
Turning to implicit falsity, Milso submitted a survey
allegedly finding deception above 20%.
But the court found that the study didn’t ask the proper questions. In the study, respondents in the first cell saw
a booklet with three lithographs of Liberty caskets and another with three
lithographs of Matthews caskets; the Liberty lithographs didn’t say “made in
China.” Respondents were then asked to
pick their first, second, and third choices.
Respondents in the second cell saw the same Matthews booklet, but a
Liberty booklet with “made in China” labels.
The expert concluded that “made in China” was material and that its
omission was misleading.
The court found that the survey supported the materiality
claim, but not the misleadingness claim.
The survey didn’t focus on whether the (unaltered) marketing materials
suggested that Liberty’s caskets were manufactured domestically, nor even on
what characteristics of marketing materials in general suggest domestic
manufacture to consumers. Instead, the
expert’s report inferred from the materiality of the information that its
omission was misleading. But that would
apply to any company in the industry, and the claim here was that it was
Liberty’s iconography that required disclosure of the source of the
caskets. So defendants also won summary
judgment on the implicit falsity claim.
No comments:
Post a Comment