Innovation/LE claimed that Bhelliom infringed LE’s 5-hour
ENERGY mark by selling 8-HR ENERGY products and falsely advertised their
capabilities. The court of appeals reversed a grant of summary judgment in Bhelliom’s
favor on the trademark claims based on the similar result in Innovation
Ventures, LLC v. N.V.E., Inc., 694 F.3d
723 (6th Cir. 2012), and also partially reversed on the false advertising
aspect.
LE sued NVE for selling 6 Hour POWER:
Bhelliom also entered the market with an energy pill, Mr.
Energy® 8–HR Maximum Strength ENERGY, and later expanded the 8–HR ENERGY product
line to include energy shots:
The same judge presided over LE’s suits against NVE and
Bhelliom, granting summary judgment to both.
Finding that LE’s mark was suggestive and that several infringement
factors favored each side, the court of appeals determined that summary
judgment was inappropriate because the products and sales channels were the
same (though the analysis would differ for the energy pills) and consumers
wouldn’t be making sophisticated decisions.
With “evenly balanced factors”—the strength of LE’s mark, the similarity
of the marks, the lack of evidence of actual confusion, and the defendant’s
intent didn’t favor a finding of confusion—summary judgment should’ve been
denied; the court said that the absence of actual confusion and bad intent generally
neither favors nor weighs against a confusion finding. (In other words, on those factors: Heads I
win, tails you lose.)
Comment: So, each piece of this is certainly prefigured in
existing case law. But to me it suggests
the deep rot that has taken hold of the multifactor confusion test. Read literally, the court is saying that,
even with a weak mark and dissimilarity of marks, a competitor in a mass market
should get to go to a jury because, after all, competition means that the similarity
of goods and marketing channels favor a finding of infringement, and those two factors
have to be balanced against the mark strength and similarity of marks
factors. This is the worst kind of mindless
counting, and worsened here because the court finds that, because trial was
required against a different competitor
making a different product, it follows that summary judgment was also
inappropriate against Bhelliom. It is
worth nothing that, except for putting a picture of the defendant’s product in the
opinion (which is definitely a good thing!), the court of appeals offered no
analysis at all of the similarity of these
marks: “Considering the similarity of the products, the record evidence, and
the district court's rationale, one would expect that our judgment in NVE should control here.”
LE overreached in seeking a grant of summary judgment on
appeal, though. It failed to distinguish
the energy shots from the pills, and its arguments on mark strength and
similarity of marks didn’t take the case out of the realm of close calls that
could go either way. “Though we
typically resolve trademark claims as a matter of law, we recognize that
certain cases present factual disputes or such evenly balanced factors that the
matter is properly resolved by the finder of fact.”
LE’s false advertising claim was based on Bhelliom’s claims (1)
that the products use a time-released formula, consistent with a Harvard
University study that revealed higher sustained energy levels from the
consumption of low doses of energy-boosting substances throughout the day; and
(2) that the products provide eight hours of energy.
The district court granted summary judgment to Bhelliom
because LE failed to show harm. LE
argued that willful misrepresentations warranted a presumption of damages, and
that injunctive relief doesn’t require damages.
The court agreed with the second point and remanded.
It’s true that Lanham Act damages are presumed in cases of
willfully deceptive comparative advertising where the plaintiff’s product is
specifically targeted. On willfulness,
LE offered the testimony of an employee at the company that manufactured
Bhelliom’s products that Bhelliom knew that the products lacked a time-released
formula, which was “colorable evidence” of knowing misstatements. It didn’t offer evidence of willfulness on
another ad depicting the comparative effectiveness of Bhelliom's products
vis-à-vis other energy shots, so the court only analyzed the time-release ads.
Willfulness alone doesn’t warrant a presumption of damages,
absent targeting of the plaintiff. The Lanham Act requires damages as
compensation and not as a penalty. As
McCarthy writes, it may be appropriate to grant an injunction “even where the
likelihood of provable impact on the plaintiff may be subtle and slight,” because
that protects both competitors and the public, but not to grant damages that
would be a windfall to the plaintiff.
Here, there wasn’t targeting: at best, one of the
time-released formula statements acknowledged LE’s 5-hour ENERGY as a
competitor, but it didn’t misrepresent their
formulas or effectiveness. “Rather, the
press-release states that the competitors proclaim energy boosts that match
their products' respective five- and six-hour names and calls the competitors ‘successful.’
Indeed, the press release offers only one direct point of comparison between ‘8–HR
ENERGY’ and the competition: whereas ‘the taste of the drink and the
inconvenience of the packaging make [energy shots] a less than ideal choice for
many individuals,’ Bhelliom's ‘easy-to-swallow capsule avoids the harsh taste
of energy drinks.’” Those generic
statements were mere puffery. “Thus, at
bottom, LE objects to the fact that Bhelliom oversold its own product, not that
Bhelliom misrepresented or caused confusion regarding LE's product.” Presumed
damages were therefore inappropriate.
Claims for injunctive relief, however, need not meet such a
high standard. “[D]istinct evidence of
harm” isn’t a prerequisite. If
statements have a tendency to deceive consumers, injunctive relief is
appropriate. LE argued that the time-release
claims were literally false, creating a tendency to deceive as a matter of law;
Bhelliom conceded the falsity of the claims, but they only concerned the
pills. Though Bhelliom argued that the
ads had been discontinued, the court of appeals remanded for appropriate
injunctive relief. However, the court
couldn’t presume deception with regard to the 8-hour-energy claims, whose
falsity was in genuine dispute and for which LE didn’t present evidence of
actual consumer deception. This was also
remanded.
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