FLIR, which makes thermal imaging cameras, sued its
competitor Fluke and Fluke’s media/marketing company Sierra for false
advertising and related claims, while Fluke counterclaimed for false
advertising, trademark infringement, and related claims. The parties consented to having a magistrate
judge deal with the case, and got a slightly quirky but careful opinion on the
summary judgment cross-motions.
Fluke introduced the Ti10 and Ti25 models as its
lowest-price cameras, and FLIR then introduced the ix series at an even lower
price, marketed as “entry level” cameras.
Since at least 2008, FLIR used images captured by higher resolution
thermal imaging cameras superimposed on the display of lower resolution cameras
depicted in its ads. In a deposition,
FLIR’s VP of marketing admitted that, “[i]f a customer purchased an i3 based on
the belief that the images shown in the advertisement for the i3 were in fact
from an i3 thermal imaging camera or another 60 by 60 thermal imaging camera,
that customer would be mistaken[.]”
In late 2009, Fluke and Sierra created a video comparing “drop
test” results for equipment manufactured by Fluke to four competing products,
including the FLIR i7, FLIR i60, and FLIR T400. The video claimed to have tested the cameras
by dropping them two meters onto a concrete floor. The video shows the Fluke Ti32 bouncing and
appearing to remain intact (five times). The video also shows each FLIR camera dropping
multiple times, including at least one drop where no visible damage results,
but also shows drops that cause exterior damage. Text in the video included “2 meter drop”;
“Solid concrete floor”; “All products subjected to identical tests by third
party”; “Fluke Ti32 ... 17 drops and counting”; “The ONLY rugged thermal
imager”; “Why waste money on tools that break?”
After setting out the doctrine, the judge concluded that
“establishment claim” falsity is a subset of falsity by necessary implication,
and set out to determine whether FLIR’s ads were literally false. FLIR was using images from higher resolution,
more expensive cameras on the displays of cheaper, lower resolution
cameras. For example, a 2008 brochure
for the FLIR i5, which has an 80x80 pixel resolution, showed a picture of the
i5 with a thermal image on its screen; this image was undisputedly taken by a
camera with a 320x240 pixel resolution, and thus of a better image quality than
the i5 could ever produce. Thus, Fluke
argued, FLIR misrepresented that the i5 creates an image of 320 x 240 quality.
FLIR disagreed. It
knew that the advertised cameras couldn’t reach the image quality of the displayed
images, but its intention was merely to
show how the images were displayed, not to present precise representations of
the cameras’ capabilities. (Interesting
defense. I wonder why they didn’t tell consumers
that?)
The court declined to grant summary judgment, since a
reasonable jury could conclude that the ads weren’t literally false, even
though Fluke’s arguments were “well-taken.”
The issue was that thermal imaging cameras, even high-resolution ones,
produce “somewhat cloudy” images, and the vast majority of images in FLIR’s ads
were extremely small, “which means it may not always be practical to use images
produced by FLIR's lowest resolution thermal imagers.” The court cited Nikkal Indus.,
Ltd. v. Salton, Inc., 735 F.Supp. 1127 (S.D.N.Y.1990) (mashed potatoes and food
shortening used instead of actual ice cream because the heat generated by the
lights needed to photograph the product made use of actual ice cream
impractical). This is a limitation on
the classic case FTC v. Colgate-Palmolive Co., 380 U.S. 374 (1965), which made
a distinction between visuals used as evidence and visuals not used as
evidence:
In the ice cream case the mashed
potato prop is not being used for additional proof of the product claim, while
the purpose of the Rapid Shave commercial is to give the viewer objective proof
of the claims made. If in the ice cream hypothetical the focus of the
commercial becomes the undisclosed potato prop and the viewer is invited,
explicitly or by implication, to see for himself the truth of the claims about
the ice cream's rich texture and full color, and perhaps compare it to a
"rival product," then the commercial has become similar to the one
now before us. Clearly, however, a commercial which depicts happy actors
delightedly eating ice cream that is in fact mashed potatoes or drinking a
product appearing to be coffee but which is in fact some other substance is not
covered by the present order.
So the question becomes what kind of evidence Fluke would
need to present to the jury to show that consumers are “invited” to see for
themselves the qualities of the camera.
If a survey is required, then it’s not a literal falsity case; if it
could be a literal falsity case, then there’s at least the possibility that
expert testimony about the relevant market could get the job done, on which see
below.
The judge also remarked that “it is not entirely clear how
much of an impact the size, file type, and image editing software utilized had
on an image's quality (i.e., perhaps a dramatic reduction in the size of, say,
a 320 x 240 image renders it the equivalent clarity of an image produced by a
lower resolution camera, depending on the circumstances).” This might be better understood as
materiality rather than falsity, especially since the court noted that all the
ads specified the advertised cameras’ resolution.
In addition, the ads didn’t show the actual size of the
camera’s display; they were shrunk, affecting their resolution. The judge noted that the largest image of the
i5 screen in one brochure was “about the size of the first knuckle of my thumb.” And the resolution of the print ad could also
change the image quality, as could a customer’s graphics display for the
internet ads. Thus, there was a genuine
issue of fact on literal falsity.
(Again, this seems like materiality, but ok.)
FLIR offered expert reports from: (1) Silverman, an
advertising expert whose testimony was proffered to demonstrate “how customers
perceive and respond to images in print and on-line advertising and traditional
catalog environment” and whether “FLIR's use of so-called ‘cut-andpaste images'
in their printed and on-line promotional materials were in any way likely to
deceive or confuse potential customers”; (2) Madding, a technical industry
expert whose testimony was proffered to demonstrate that Fluke did the same
thing in its own ads; and (3) Seffrin, an industry expert whose testimony was
proffered to demonstrate that “[t]he practice of providing high resolution
sample images in descriptive literature is customary within the infrared
industry ... has been around for many years and is well known within the
infrared community.” The judge didn’t
rule on admissibility at this point because summary judgment was denied on
other grounds, but expected argument on the Daubert
motions.
Fluke also moved for summary judgment on FLIR’s claims
against the drop video. Given that this
was comparative advertising, summary judgment largely turned on whether there
was enough evidence to go to a jury on literal falsity. If there was, FLIR would be entitled to
pyramiding presumptions in its favor on deception, reliance/materiality, and harm. FLIR’s evidence centered on its expert
witness, Bisenius, who testified that there were “numerous problems” with the
drop test that rendered the results inconclusive and invalid. Bisenius had extensive experience in
compliance testing of products, and concluded that the drop test wasn’t conducted
by an independent source and was conducted in numerous ways that rendered it
invalid; he also concluded that there’d been deceptive editing of the video
results and that the text in the video wasn’t accurate.
As to whether the source wasn’t independent and whether the
text was accurate, jurors “are just as well equipped to listen to the evidence
and decide if Sierra is an independent source and if the embedded statements in
the video are true. There is nothing about the training and experience of
Bisenius that renders his opinion helpful to the jury on these issues.” Counsel could make the arguments
themselves. But criticism of the testing
method was within his expertise. Fluke’s
objections (such as his lack of expertise in drop testing thermal cameras
specifically) could be raised to the jury.
He could also testify about whether the video had been “edited, enhanced
or touched up,” since that was “something a jury may well be ill-equipped to discern
depending on the facts.”
That out of the way, a reasonable juror could find that the
drop video was literally false because the tests were unreliable. Bisenius criticized Sierra and Fluke for not
using any test standard in developing their methodology, controlling the
testing environment, and testing Fluke’s competitors using more precarious
positions than used for Fluke’s own cameras.
Fluke did better getting rid of FLIR’s trade
libel/commercial disparagement claim. FLIR
couldn’t show malice given Fluke’s legitimate business motives. At most, Fluke “could have been more rigorous
in conducting its drop test depicted in the video. That is not enough under
Oregon law to establish malice.” The
judge concluded that trade libel required a showing that defendant’s false
statement was made with the primary
purpose of maliciously injurying the plaintiff, if not the sole purpose. The record wouldn’t support such a conclusion
here—Fluke wanted to make a more rugged camera that would compete well, and
FLIR recognized that ruggedness was a legitimate competitive issue between the
parties. This also got rid of the civil
conspiracy claim. Fluke instructed
Sierra's president to treat all of the thermal imagers tested “exactly the
same” in an attempt to produce legitimate results.
Sierra sought summary judgment in its favor as well, and won
it on Lanham Act standing grounds. As a
marketing company, it wasn’t in competition with FLIR, and the 9th
Circuit requires “competitive” injury; standing exists “where
misrepresentations about product quality could theoretically draw a consumer
away from [a] competitor's product.” FLIR argued that this caselaw didn’t deal with
joint and several liability; other cases have found that a competitor’s
marketing firm can be liable under the Lanham Act. But those were primarily from the Second
Circuit, which has a different standing test from the 9th Circuit’s
categorical standing test. (I’m not sure
that the Second Circuit’s standing test, which was only articulated in its
current form after the marketing-agency cases were decided and which like all
standing inquiries has mutated in recent years under heavy defendant pressure,
is really driving those decisions. Why
not ask whether there was contributory false advertising?)
FLIR also moved for summary judgment on Fluke's trademark
infringement and unfair competition claims based on Fluke’s purported IR Fusion
trademark. The judge concluded that
there was a genuine issue of fact on whether IR Fusion was generic,
descriptive, or suggestive for the products.
IR Fusion was federally registered (but apparently not incontestable),
but still arguably descriptive “insofar as it describes a feature of Fluke's
thermal imager: its ability to blend thermal and visible light images.” A descriptive mark can still be strengthened
by market success, though, and Fluke submitted evidence of extensive
advertising; this was enough to go to the jury.
A reasonable jury could also reject the genericness claim (FLIR
apparently didn’t seek summary judgment in its favor on that).
FLIR argued that Fluke’s trademark-related claims were
barred by laches, using the 2-year statute of limitations for fraud as an
analogy as other courts in the district had done. The facts were complicated, with a hiatus
between Fluke’s initial C&D and its renewed claims over slightly over two
years; this was the kind of thing that should go to a jury.
FLIR argued that Fluke lacked evidence that its use of “IR
Fusion” and “fusion” was false or misleading, given that the ads plainly
identified FLIR as the source of the advertised products/fusion functionality
of those products. But a reasonable jury
could find literal falsity, at which point no further evidence of consumer
reaction would be required. This doesn’t
square well with the now-standard multifactor confusion test, but might not be
a bad description of the same mark/same goods rule that still applies in
countries other than the US, and Fluke for whatever reason apparently asserted
a “trademark-related false advertising counterclaim” and the court applied
false advertising doctrine. The idea was
that FLIR was falsely representing that its product had fusion functionality
equivalent to that of the Fluke IR Fusion. But the parties have different
patents, making their features not the same.
Even if IR Fusion isn’t a valid mark, it could falsely necessarily imply
that FLIR’s cameras had the same functionality as Fluke’s cameras.
Comment: this argument strikes me as extremely dangerous to
Fluke’s trademark claims. It depends on
the factual proposition that IR Fusion describes something specific in terms of
functionality, which Kellogg would
therefore make freely available for all competitors to use once the patent
expires. And the term would necessarily
be generic now, too, even if others can’t yet use the patented functionality. The false advertising claim, which will
require a showing of materiality and possibly misleadingness—since it might be
hard to prove that IR Fusion definitionally means a specific method of fusing thermal and visible light images to the
relevant consumers—seems riskier than perhaps justified.
The court also refused to grant summary judgment on other
assorted false advertising counterclaims.
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