Monday, March 11, 2013

Are Mobileye and iOnRoad confusingly similar?

Mobileye, Inc. v. Picitup Corp., 2013 WL 830837 (S.D.N.Y.)

Mobileye sued defendants (iOnRoad) for various claims.  Mobileye makes single-camera-based Advanced Driver Assistance Systems (“ADAS”), which warn drivers when they are drifting out of their lane or are about to collide with an object in front of them. iOnRoad makes an Android app that purports to perform similar functions.  In this opinion, the court granted summary judgment to iOnRoad for some claims, including all Mobileye’s patent infringement claims, and denied it on trademark infringement and some false advertising claims (also preserving related state law claims).

The alleged false advertising fell into two categories: first, statements that allegedly claim that the iOnRoad app complies with government and automotive industry safety standards “by describing the app as a car safety app and by employing automotive industry terminology to describe the app's functions.”  For example, Google Play’s description said that the app provided “Forward Collision Warning” and “Lane Departure Warning,” which Mobileye contended were ADAS terms of art connoting a minimum level of performance/safety in compliance with statndards set by private industry and by the National Highway Transportation Safety Administration.  Independent tests, Mobileye contended, showed that the iOnRoad app didn’t meet NHTSA or the stricter private industry specifications.  However, iOnRoad didn’t expressly claim government approval.

Second, iOnRoad allegedly made false comparisons with Mobileye and similar ADAS systems, such as, “iOnRoad is the affordable alternative to expensive collisions avoidance systems such as Mobileye,” omitting differences in performance. 

Mobileye commissioned surveys to determine the extent to which consumers perceived iOnRoad to be an app to increase driving safety by preventing collisions etc., the extent to which iOnRoad ads created an impression that the app met auto industry standards, and the extent to which the ads created an impression that the app was the same or similar to $1000 systems used in luxury cars.  The first survey showed respondents—drivers who were smartphone owners—about the main message of an iOnRoad ad, offering them a “temperature detection” option to control for yea-saying.  After netting out yea-sayers, the surveyor found that 71.3% noticed the Forward Collision Warning (FCW) feature and 43.7% noticed the Lane Departure Warning (LDW) feature, and that 25.6% believed that the FCW feature complied with industry standards, while 15.6% believed the LDW figure did so (if you only took the percentage of those who noticed the claims who believed that they reflected industry standards, the percentages increased to 35% and 34.3% respectively).  For government safety standards, 24.1% and 14.1% believed the features complied with NHTSA (33.8% and 32.4% using the alternate method).

iOnRoad argued that these conclusions were unreliable because there was no evidence that respondents knew anything about the relevant government or industry standards.  The court held that this “misses the point”—it was undisputed that iOnRoad didn’t meet the NHTSA and industry standards, and whatever their requirements, the survey measured the percentage of respondents who believed that it did (whatever those standards happen to be).

The second survey involved a test group shown a Google Play description of iOnRoad’s app stating, “Similar systems in luxury cars cost more than $1,000 while iOnRoad is FREE,” while the control group was shown the same ad with that statement omitted.  Net of the control, 38.1% of respondents noticed the statement, and 17.7% indicated that they thought it meant that iOnRoad and similar systems in luxury cars “either had the same features, employed similar technologies, or were substitutes for one another.” Adding in those who thought that the statement meant the app was a good deal raised this to 23.0% (and again, if you only look at those who noticed the statement, the percentages were 45.6% and 56.7% respectively).  These respondents were also asked how well they believed the performance of the app compared to that of similar systems in luxury cars.  Fifteen percent of the test group and 4% of the control had no opinion, but 9.2% of the test respondents indicated that the app would perform the same or better than luxury car systems.  Again, the court rejected iOnRoad’s argument that there was no evidence that respondents knew how luxury car systems would perform: that missed the point, which was not to evaluate actual differences but rather consumer perceptions.

Mobileye’s damages expert opined that if the ads lead consumers to believe that the iOnRoad app is comparable to Mobileye and other ADAS systems, Mobileye would be harmed (1) by consumers who used the iOnRoad app, were disappointed, and lost faith in ADAS systems generally, believing iOnRoad’s performance to be representative; since Mobileye has 60-80% of the US ADAS market, this decreased demand for ADAS systems would harm it; (2) by consumers substituting iOnRoad for Mobileye.  The court found the first harm to be impermissible unsupported conjecture, but on the present state of the record allowed the second.  However, the expert “declined” to quantify the damages, opining that the bulk of the damage would come from harm to Mobileye’s reputation, ultimately leading to lost sales.

The court found that claims based on the idea that the ads implicitly claimed NHTSA approval were not allowed; under the relevant cases, only literally false claims of government approval are actionable, rejecting Mobileye’s argument that evidence of consumer confusion on the matter was sufficient.  A court will not impute a representation of governmental approval in the absence of explicit claims, in order to preserve the Lanham Act as “a focused consumer protection statute” instead of “a wide-ranging vehicle for private enforcement of federal regulations.”  However, the logic of this line of cases extended only to government standards, not to implicit misrepresentations of compliance with private industry standards.  The problem of allowing implicitly false misrepresentations of compliance with law is that it would “permit private enforcement of government standards when Congress has not provided a private cause of action and has instead entrusted enforcement to the relevant public agency,” but that problem doesn’t exist when the standards aren’t set or enforced by the government.  Thus, the claims about implicit misrepresentation of compliance with industry standards survived summary judgment.

The second category of allegedly false ads were statements comparing iOnRoad to Mobileye and similar ADAS systems while omitting differences relating to safety and performance.  iOnRoad argued that none of the statements purported to provide an exhaustive list of differences and that they weren’t shown to be misleading, given the low level of survey respondents who answered that the systems were the same, similar, or substitutes or that the app has the same or better performance than ADAS systems; it argued that 20% should be the threshold for finding a substantial percentage of consumers are deceived.

Mobileye argued that one statement was literally false—a claim on iOnRoad’s website that one difference between the app and “similar systems in luxury vehicles” was that iOnRoad “offer[s] much more information besides beeps,” because Mobileye’s systems also offer information “besides beeps,” and iOnRoad offered no features that weren’t also available in ADAS systems such as Mobileye’s.  Mobileye also argued that the relevant figure from the comparative ads survey was 23%, and that there was no 20% threshold.  (Further, Mobileye contended that the fact that iOnRoad removed many of the challenged statements from its website tacitly admitted their falsity, but FRE 407 clearly prohibited the introduction of subsequent remedial measures as proof of culpability.)

The court initially found iOnRoad’s arguments persuasive, since the statements didn’t purport to exhaust all differences between the two products, and given Mobileye’s own argument in the trademark portion of the case that the products were substitutes the idea that the products were “similar” didn’t seem misleading.  But on closer review of the survey, viewed in the light most favorable to Mobileye, the court looked at the 9.2% of consumers who believed that “Similar systems in luxury cars cost more than $1,000 while iOnRoad is FREE” meant that the overall performance of the iOnRoad app is equal to or better than that of similar systems in luxury cars. There’s no hard threshold for misleadingness, and while 9.2% isn’t overwhelming, the court couldn’t conclude it was insubstantial as a matter of law.  Thus, a reasonable jury could find that the comparisons between iOnRoad's app and similar systems in luxury vehicles were implicitly false.  (For all these claims, the court also noted that the survey covered only one ad, but held that the other ads identified by Mobileye were similar enough in content that a reasonable jury could also find them false based on the survey evidence.)

iOnRoad further challenged Mobileye’s evidence of harm.  Its damages expert didn’t calculate any lost sales, revenues, or profits; and iOnRoad argued that Mobiley had no reputation among consumers to be harmed.  Mobileye argued that diminishing demand for a category of products in which Mobileye held between 60-80% of the market was sufficient, and the lack of quantifiability simply made the harm irreparable. The court agreed that Mobileye had shown likely future injury sufficient to justify injunctive relief if Mobileye prevailed on the other elements, but granted iOnRoad’s motion for summary judgment on damages.

The trademark infringement claim also survived, though I don’t get why.  Mobileye began using its mark in 2001 and registered it in 2006.  It also used the slogan “acts like a third eye on the road” in its promotional materials for several years, though without a registration. “Viewing the facts in Mobileye's favor, it appears that iOnRoad analyzed, monitored, and imitated Mobileye's slogan, product terminology, performance, visual appearance, sound effects, and overall trade image. The Court notes, however, that Mobileye has not asserted a trade dress claim in this action.”

iOnRoad argued that MOBILEYE was suggestive: evoking motion/transportation plus vision.  Plus, Mobileye had no direct evidence of consumer recognition, and its own survey expert opined that it wasn’t well-known to the general consuming public. Mobileye, Inc.’s yearly gross profits have never exceeded $1 million, and net profits have never exceeded $62,000, while Mobileye Technologies, Inc. showed annual net losses of more than $10 million.

The court rejected Mobileye’s response that MOBILEYE was a fanciful neologism.  However, Mobileye argued that it had received a large amount of publicity and unsolicited press coverage, had won numerous awards, and was frequently featured in industry conferences.  The court concluded that there was sufficient evidence for purposes of summary judgment that MOBILEYE was “moderately strong,” even though it was clearly suggestive and “plainly evokes the essential characteristics of a vision-based automotive product.”  “[W]hile the Court cannot conclude that a reasonable jury would find the mark as strong as if it were fanciful or arbitrary, the record also would not compel a reasonable jury to find the mark weak either.”

As for similarity, there was very little.  Mobileye argued that both marks evoked an automotive eye, and that iOnRoad was similar to Mobileye’s (descriptive!) slogan “a third eye on the road,” and that iOnRoad's app imitated many aspects of Mobileye's features and marketing language.  But Mobileye didn’t have a trademark in its slogan and didn’t bring a trade dress claim.  And the marks shared nothing beyond a single syllable and “an evocation of a vision-based automotive product. This might lead consumers to believe that the goods sold under these two marks belong to the same market, but is unlikely to confuse consumers as to the source or sponsorship of the goods. The Court thus concludes that the two marks are at best very weakly similar.”  (How can this not end the inquiry?  While the other factors may bear on confusion, something more than weak similarity—especially similarity based on core descriptive elements—has to be present for the other factors to matter, if we care about competition at all.)

iOnRoad unpersuasively argued that the products didn’t compete, but of course they do, as its own comparative ads indicated.  There was no evidence of actual confusion. 

As for intent, iOnRoad contended there was no record evidence about why it adopted the mark.  Mobileye argued that iOnRoad’s deliberate copying of Mobileye’s trade image was so egregious that it should shift the burden to iOnRoad to show lack of confusion.  Again, Mobileye’s claim was for infringement of the work mark, not slogan or trade dress, and the court already concluded that the two marks were at best weakly similar, “negating any finding of deliberate copying.”  However, a reasonable jury “could find based on iOnRoad's surrounding conduct regarding Mobileye's overall trade image that it adopted the ‘iOnRoad’ name with the intent to capitalize on Mobileye's goodwill.”  (So, as I understand it: because iOnRoad copied elements that, as far as we know on this record, are entirely in the public domain—Mobileye doesn’t seem to have offered any evidence that its trade dress was nonfunctional or, even if nonfunctional, distinctive—a jury could infer something about the not-very-similar trademark?  That doesn’t make any sense to me.)

iOnRoad’s product was of lower quality than Mobileye’s system.

As for sophistication, iOnRoad argued that the car manufacturers, fleet managers, and rental car companies who were Mobileye's primary customers were sophisticated. Mobileye, defying precedent, argued that this would actually make them more likely to make a mental association between the two marks.  “[W]ithout knowing much more about the particulars of the market, this factor does not strongly favor either side.”  (This highlights another lacuna in the case, which is that iOnRoad is competing directly for end consumers of cars, while Mobileye is selling to sellers/renters of cars—there are some courts that would (wrongly) find that Mobileye lacked standing to bring a false advertising claim under these circumstances.)

The court found that, overall, mark similarity and lack of actual confusion favored granting iOnRoad’s motion for summary judgment. Consumer sophistication was neutral, and the remainign five factors—strength of the mark, proximity of the products, “bridging the gap,” bad faith, and quality of the products—weighed towards denying the motion. “Thus, although Polaroid analysis is not generally reducible to a mechanical counting exercise, a clear majority of factors here weigh in Mobileye's favor.” Also, strength, similarity, and proximity are generally the three most important factors, and two of those three critical factors favored Mobileye here. Motion denied.  (I … do not get this in the slightest.  If the marks are dissimilar, why doesn’t that overwhelm strength and proximity?  By this logic, Coca-Cola should be able to sue any market entrant into the cola sector—after all, it has strong marks and the products would compete!)

The trademark dilution claims failed.  There wasn’t sufficient evidence that Mobileye was famous or even widely known to the general consuming public, as Mobileye’s own expert opined.  “And if that were not enough, the Court has already noted that the evidence is rather weak that Mobileye's mark has even acquired secondary meaning.”  (This would be a good case for fees, if not some mention of Rule 11.)  New York dilution doesn’t require fame, but it does require an “extremely strong” mark, along with “substantial” similarity greater than that required for infringement: a substantial segment of the target group of customers must see the two marks as essentially the same.  Mobileye couldn’t come close to satisfying this requirement.

Mobileye’s GBL § 349 claim for deceptive acts or practices failed because the gravamen of such a claim must be consumer injury/harm to the public interest such as danger to public health or safety, not mere competitive disadvantage.  Mobileye argued that misleading the public about whether the app complied with government and industry safety standards raised safety concerns.  The court disagreed: even if consumers were confused about compliance with relevant safety standards, Mobileye pointed to no evidence that the app was actually dangerous or unsafe.

However, the other state law claims survived.  The amorphous misappropriation cause of action covers reaping where one hasn’t sown; it requires bad faith, and there was enough evidence of bad faith (as recited above) for the claim to avoid summary judgment. Likewise for unjust enrichment: it was enough for Mobileye to claim that all iOnRoad’s revenue from downloads represented unjust enrichment. 

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