Conte, pro se, sued Newsday and a bunch of others for
violating the Lanham Act and other laws (most claims were dismissed). The false advertising claim was based on
Newsday’s use of inflated circulation figures, which allegedly attracted more
advertising dollars than the truth would have, and there was also a trade dress
claim based on alleged imitation of Conte’s TV publication. In this opinion,
the court granted summary judgment on the remaining federal claims to Newsday
and related defendants and declined to exercise supplemental jurisdiction over
the remaining claims.
Conte’s I Media was founded in December 2003; it published
and distributed TV Time magazine, a
“free, weekly, full color, gloss-coated, easy to read TV-listings publication
containing articles and features related to television as well as crossword
puzzles, cartoons and word games.” It was financed by selling delivery routes
to independent distributors, who were supposed to recoup their investments
through payments for each delivery of TV
Time. It was first published in late
November 2004, and last published on May 1, 2005; only sixteen issues were
published (there were some missed weeks).
Conte didn’t maintain corporate books or hire an accountant. Newsday argued that no one paid to advertise
in TV Time and Conte didn’t seriously
attempt to sell ads in it. In spring
2005, some of Conte’s distributors were contacted by investigators from the
Nassau County DA’s office who were investigating him for fraud. He testified that I Media failed for lack of
cash flow, among other reasons.
Although Conte spoke with potential clients about paying to
advertise in TV Time only after he
learned about Newsday’s circulation fraud, he claimed to have spoken to a long
list of potential clients about advertising in TV Week Magazine, a different I Media publication, before then.
Indeed, he testified that he tried to capitalize on Newsday’s misrepresentation
once he learned of it (e.g., emailing one prospect, “The reality is that
Newsday is charging you a fortune for the sloppy product and phantom circulation
that they give you”).
Newsday had its own TV-related publication, TV Picks, which was redesigned in
various ways in 2004 and 2005; as part of the redesign, Newsday decided to use
glossy paper stock for the cover, as it had done before 2004 under the name TV Plus; other companies such as the NYT
and the NY Daily News also published TV guides on Long Island in that timeframe
with glossy covers.
Consumers Warehouse, a Long Island company, had been
advertising in Newsday for over 25 years and was contractually bound to
advertise in Newsday’s TV publication through the end of 2005. The Consumers
defendants learned of the new format in December 2004, including the fact that
the footer at the bottom of the cover page would become ad space; the February
2005 edition of TV Picks featured a
banner there for Consumers Warehouse.
One of Consumers’ principals found a copy of TV Time in his driveway and contacted Conte for a rate card; he
viewed it as a potential way to reach non-Newsday
subscribers since it was being distributed for free. Conte never responded with a rate card but
offered to place a full page ad as a courtesy in the next edition, an offer renewed
twice. Ads for Consumers Warehouse appeared at least four times in TV Time, though Conte never sent an
invoice and never received any written commitment to advertise therein. Conte rejected Consumers’ offer to advertise
in TV Time for 26 weeks for $50,000,
though a woman who worked for Conte at the time testified that it was the only
company willing to pay Conte for advertising at the time and that she tried
unsuccessfully to convince him to agree.
Conte counteroffered for a larger amount, claiming to have other
interested advertisers, and Consumers wished him luck.
Separately, a Newsday
reporter, Harrington, claimed that he was approached by some of Conte’s
distributors in May/June 2005, and he began researching a story. Higher-ups testified that they weren’t
involved in this investigation.
Harrington called Ram Marketing, one of Conte’s vendors, allegedly to
verify its relationship with Conte. The
president stated that he didn’t remember the conversation and that it wouldn’t
have affected his business relationship with Conte. In July, Harrington attended a meeting of
Conte’s route distributors and their attorney; the defendants contended that
his sole purpose was to gather information. He also called Conte—in defendants’
version, to give him an opportunity to give his side of the story; in Conte’s
version, as part of an extortion scheme.
Thirty-three of Conte’s distributors then filed a class action alleging
that I Media was a fraudulent scheme.
Their attorney drafted the complaint without any assistance from
Newsday. In September, Newsday ran
Harrington’s articles “Distributors sue over TV Time” and “DA opens criminal
probe into iMedia,” both quoting the complaint.
(Among other things, Conte subsequently filed an $8.3 billion lawsuit
against Nassau County, the Nassau District Attorney, and various Assistant
District Attorneys and investigators with the present court.)
Conte first contended that Newsday’s inflated circulation
figures violated §43(a), causing advertisers to buy from Newsday instead of
from Conte.
The Second Circuit has a pragmatic, case by case approach to
standing—a plaintiff must show that it has a reasonable interest to be
protected, even a future interest. A more substantial showing is required where
there isn’t direct competition. Here the
evidence showed that Conte didn’t have standing:
It is undisputed that, for a period
of time, Newsday inflated its circulation figures in the marketplace. However,
it is also uncontroverted that plaintiff did not begin to solicit advertisers
for his TV Time publication (the product that was allegedly in competition with
Newsday's products) until after Newsday publicly acknowledged its misstatements
and revised its circulation numbers. Accordingly, plaintiff cannot demonstrate
a reasonable basis for believing that his potential to attract advertisers to
TV Time was damaged by Newsday's false advertising.
Even extending his claim to an alleged diversion from
Conte’s TV Week publication, another
product for which he allegedly solicited advertisers during the period when
Newsday was misstating its circulation, he failed to show likely injury or
causation: he had no evidence that he would have sold more ads if Newsday
hadn’t misstated its circulation. His theory
depended on multiple unevidenced speculations: that the inflated numbers
allowed Newsday to set higher rates, then allowing it to offer discounts for
long term exclusive agreements that prevented advertisers from advertising with
I Media. This was too attenuated a
theory.
Separately, the court granted summary judgment on Conte’s
false advertising claim for allegedly disparaging statements about him because
the only evidence of potentially deceptive statements came from two Newsday articles, which aren’t
commercial advertising or promotion.
Even if there were other deceptive statements about Conte
outside those articles, they wouldn’t have been part of an organized campaign
to penetrate the relevant market and wouldn’t be actionable. Conte argued that some of his route
distributors were Newsday employee/agents, that those people made false
criminal accusations about him, and that Newsday was liable for those
statements. Setting aside Conte’s agency
liability argument, the allegation that they disseminated falsities was “simply
conclusory and unsupported by any evidence in the record.” His argument was based on an email from
Harrington to an editor stating, “Got a call from a Newsday agent. He and
around 25 other agents are in contact with the Nassau DA's office after the
owner of a TV guide-type magazine they began distributing (not Newsday), from a
Mellville company called Imedia, has stopped providing them with paper and the
owner apparently has fled ... They believe the operation is a Ponzi
scheme....” This didn’t show that false
accusations had been made, and even if the distributors conveyed their beliefs
that Conte’s business was a Ponzi scheme, subjective opinions aren’t
actionable. Separately, even assuming
that there were evidence that Newsday employee/agents made deceptive statements
about Conte, no “rational” juror could conclude that they were made as part of
an organized campaign to penetrate the relevant market, which was not I Media
distributors but rather all potential route distributors.
Finally, the court rejected the trade dress claim. The claimed TV Time trade dress was comprised
of commonly used, nonunique and functional elements: a glossy cover, off-the-shelf
fonts/large font sizes in the title, and the design and layout of the
advertising footer. Though combinations
can be protectible, the fact that a claimed trade dress is composed exclusively
of common or functional elements invites careful scrutiny to prevent a single
competitor from tying up a product or marketing idea. Here, there was no
evidence that the combination of these functional and generic elements was
anything but functional and generic.
Conte sought protection for the idea or concept of a glossy cover of an
ad-supported magazine, and the Lanham Act doesn’t protect ideas or concepts.
Even assuming that his trade dress was descriptive and not generic, there was
no evidence of secondary meaning: no evidence of ad expenditures, consumer
studies, unsolicited media coverage, sales success, or longterm use. Speculative
assertions of copying don’t create secondary meaning, and even intentional
copying doesn’t trigger any presumption of secondary meaning. And even assuming that he had protectable
trade dress, no “rational” juror could find likely confusion. Similarity was dispositive: the titles TV Time and TV Picks were at best marginally similar from the common use of
(generic) “TV”; Newsday added its house mark; the size of the periodicals
differed; so did the date range format; so did the way the title was positioned
with respect to the cover photo; so did how they were distributed (as a
standalone and with Newsday,
respectively). The cumulative effect
eliminated any likelihood of confusion.
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