Continental and Avery compete in the market for
self-adhesive address labels. Continental
sued for patent infringement, unfair competition/false advertising, and
tortious interference with its dealings with Staples and Office Depot. The patent claims were stayed pending
reexamination. The court here granted summary
judgment to Avery on the Lanham Act and tortious interference claims.
In 2006, the parties began to market easier-to-peel labels:
Avery’s Easy Peel and Continental’s FastPly.
Each product’s backing sheet was perforated, allowing them to be torn
into columns that exposed the edges of the labels. This enabled easier peeling than traditional
backing sheets did. In 2008, Avery
introduced its next generation of Easy Peel labels, which could be folded
rather than torn and thus a partially used sheet could be flattened and even
re-run through a printer. Avery’s
instructions advised users not to put a sheet through a printer more than once,
but many consumers did so, and Staples saw this capability as an advantage. Rather than revamping the FastPly labels,
Continental tested them and concluded that they could also be folded to make
the labels “pop up” without needing to be torn.
Avery’s 2008 advertising materials claimed “Only Avery label
sheets bend to expose the Pop-up Edge™” and “Only Avery offers the Pop-up Edge™
for fast peeling—just bend the sheet to expose the label edge.” Avery also applied to register Pop-up Edge
with the PTO; its application was granted in 2010, and Continental didn’t
challenge its validity.
Continental unsuccessfully sought to place its products in
Staples and Office Depot, allegedly because of Avery’s threats to sue for
patent infringement, despite not having relevant patents at the time (a patent
was later granted). Two Continental officers
were told by Staples and Office Depot representatives that those retailers feared
a patent suit from Avery, as did others.
In 2009, an Avery rep sent an email to Staples stating, “Once the patents
are granted Avery will aggressively defend its IP [intellectual property],” and
an internal Avery document from mid–2008 referred to the Easy Peel labels as a
“Patented Avery Exclusive” well before Avery had actually been granted a patent.
The Lanham Act claim was that the “Only Avery” statements
were false because FastPly labels could also be folded to expose their edges
without being torn. The court began by
quoting the unfortunate, intent-heavy language from Schering-Plough: “‘literal’ falsehood is bald-faced, egregious,
undeniable, over the top.... The proper domain of ‘literal falsity’ as a
doctrine that dispenses with proof that anyone was misled or likely to be
misled is the patently false statement that means what it says to any
linguistically competent person.”
Plainly, the “Only Avery” claims were that only Avery had
something called “the Pop-up Edge™.” But
what was that—the generic feature of bendability so that edges pop up, which
for purposes of this motion the court assumed that FastPly also possessed, thus
making the claim false? Or instead a
trademarked feature—the particular version of that function carrying the “Pop-up
Edge” name—which would be true?
This is where falsity by necessary implication would be very
useful. The “only Avery” claim doesn’t
make sense as a reason to buy unless the claim is about functionality—why would
a consumer care that the name of Avery’s implementation of the functional
feature is trademarked? But the court
didn’t agree, and instead held that no reasonable jury could find that Avery
was referring to the function instead of the mark. LensCrafters, Inc. v. Vision World, Inc., 943
F.Supp. 1481 (D. Minn.1996), supported this—the court there held that claims to
be the exclusive supplier of “Featherwate” lenses wasn’t false even though identically
composed unbranded lenses were widely available, and Featherwate was just as
descriptive as Pop-up Edge was.
Analogizing to a far more famous mark, Avery argued that
while a McDonald’s ad claiming “only McDonald's serves hamburgers with
quarter-pound patties” would be literally false, an ad that “the Quarter
Pounder® hamburger is available only at McDonald's” would not be false. I think this analogy proves the exact
opposite: the non-TM-claimed parts of the statements “Only Avery label sheets
bend to expose the Pop-up Edge™” and “Only Avery offers the Pop-up Edge™ for
fast peeling—just bend the sheet to expose the label edge” explicitly refer to
the functionality of the pop-up edge, thus directing consumers to think about
the descriptive aspects of the phrase even if it also has trademark
significance, similar to the false “quarter-pound patties.” Likewise, note that Quarter Pounder, not
Quarter Pounder hamburger, is the mark for McDonald’s, while for Avery the claimed
mark states the whole product feature, again making it more likely that
consumers would understand the claim to encompass the feature and not just its
source. (In other words, the fact that
Avery’s mark is for a feature, not for a product or service as a whole, the way
a traditional trademark is, may well affect consumer understanding.)
Since no reasonable jury could find literal falsity, the
court turned to misleadingness.
Continental offered an expert survey of likely users of self-adhesive
labels. The test cell used the “Only
Avery” statements and the control cell used the same statements without “only”
and “unique.” The questions:
What does this sentence communicate
or say regarding how many label companies offer this feature? (Read each
possible answer and then choose one)
______ No label company offers this
feature
______ Just one label company
offers this feature
______ Two label companies offer
this feature
______ Three or more label
companies offer this feature
______ This sentence does not say
how many label companies offer this feature
In the test cell, 82.1% or 82.5% selected “just one label
company offers this feature,” while 34.4% and 36.7% of the control group did
so. But the court found that this survey just proved the unremarkable
proposition that “only” and “unique” convey exclusivity to many consumers. But the pertinent question was not
exclusivity, but exclusivity as to what,
and the survey didn’t answer that question.
Thus, there was no evidence of misleadingness, and summary judgment was
granted to Avery.
Continental also lost its tortious interference claim
because it couldn’t show an intentional and unjustified interference that
induced or caused the loss of a business expectancy. Had Avery claimed to hold a patent, not just
a pending patent application, or had it claimed that it was going to sue for
infringement of its patent application, those statements would have been false
and unjustified, but Continental didn’t provide enough admissible evidence from
which a reasonable jury could find that Avery actually made either of those
statements. Continental’s witnesses
testified that Staples and Office Depot believed that Avery, rather than
Continental, had a patent on the product, but their testimony was hearsay. Avery’s direct statement, which was in
essence that it would sue anyone it saw as an infringer once its patent was
granted, wasn’t false, and in fact federal patent law would preempt any state
law imposing liability for warning of potential patent litigation, without bad
faith, and there was no evidence of bad faith.
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