false advertising about design in the absence of secondary meaning?

Brian Lichtenberg, LLC v. Alex & Chloe, Inc., No. CV 13–06837, 2014 WL 3698317 (C.D. Cal. July 25, 2014)

Brian Lichtenberg (Brian) designs clothing and accessories, including parodies of designer brands, such as “Homiès” as a play on “Hermès” and “Bucci,” a parody of “Gucci,”  and distributes his products through Brian Lichtenberg, LLC.  Brian alleged that his designs were successful and worn by celebrities.  Brian’s younger brother Chris Lichtenberg (Chris) is the principal of defendant Alex & Chloe.  The complaint alleged that Brian developed “Ballin,” a play on the luxury brand “Balmain,” in January 2012.  Chris allegedly did part-time graphic design and promotional work related to the Ballin project, with access to confidential lists of Brian’s customers and industry contacts.  

Brian alleged that Chris copied and claimed ownership of the “Ballin” design, contacted Brian’s manufacturer and requested that products identical to Brian’s be made under the A & C label, and used Brian’s confidential customer lists to sell the A & C version of the “Ballin” items. He listed Ballin products for sale on the A&C website before Brian’s products came to market.  Chris allegedly repeatedly claimed to own the Ballin design, contacted Brian’s buyers, stated that Brian’s Ballin products were counterfeits, and asked retailers to stop selling them.  He also allegedly claimed that Brian had stolen Ballin and other parody designs from him.  Social media sites allegedly responded to Chris’s request by removing images of Brian’s Ballin apparel posted to Brian’s pages.  A&C then allegedly expanded to include other products similar to Brian’s, and appropriated photographs of celebrities wearing Brian’s products, claiming on the A & C website and elsewhere that those celebrities endorsed A & C.

The court denied a preliminary injunction on Brian’s trade dress claims.  Brian’s alleged trade dress was comprised of:

(1) humorous logos parodying famous designer names; (2) large block lettering mimicking the font used by the designer; (3) gold, gold foil, pink, pink foil, white, and black lettering on a red, hot pink, orange, black, bright blue, neon yellow, or lavender fabric; (4) 40–weight cotton “with a certain ... cut, and dying and (enzyme) washing process;” (5) screen printing (with respect to shirts); (6) a “bulky and shapeless look;” (7) labels of a certain material, construction, and size; (8) woven stitching; (9) hangtags with a Century Gothic font; and (10) embroidery (with respect to hats).

The court found insufficient evidence of secondary meaning.  Declarations by Brian and his head of sales indicated that Brian spent millions of dollars on marketing, but advertising expenses alone can’t establish secondary meaning.  Mere claims by plaintiff and his personal associates that his that advertising has led consumers and celebrities to “instantly recognize the BLTEE Line” by “feel and appearance,” absent further factual support, were insufficient.  Additional declarations from an investor, two boutique owners, a fashion stylist, and a fashion model, all of whom had known Brian for years, were of no help.  They didn’t shed light on the perceptions of the consuming public.  Even if they showed that consumers generally liked the products, that didn’t establish secondary meaning. This also defeated the (in my opinion sanctionable) federal dilution claim.

Mark McKenna, here’s another case about §43(a)(1)(A) versus (a)(1)(B)!  Brian alleged false endorsement based on press and publicity photos of over a dozen celebrities wearing Brian’s products, copied and used on the A&C website.  The court treated this as a §43(a)(1)(B) false advertising claim.  (Which actually makes some sense, because Brian doesn’t have standing to bring a true false endorsement claim; only the celebrities do.) 

The court found that Brian had shown likely success on this claim.  While Chris argued that he’d only made statements about the Ballin design, not the Ballin mark, the court still found falsity.  For example, one A&C website image depicted a celebrity wearing one of Brian’s t-shirts in a music video. The accompanying text identified the celebrity as “wearing an ALEX & CHLOE original Ballin Paris design.”  The court called this “false by implication or, at best, likely to mislead consumers.”  (There’s a Dastar issue here—but I think it may cut against the defendant, since Dastar says that consumers don’t generally care who came up with a work/design, outside the context of more traditionally expressive media.)  Plus, not all of defendants’ statements referred to the “design.”  For example, a fashion model posed for photos in one of Brian’s sweatshirts and gave Brian permission to use the photos. Later, the image appeared on A & C’s product sales page as a “‘Ballin Paris’ Printed Fleece Sweatshirt by Alex & Chloe.”

“Consumers’ confusion and displeasure, and harm to Plaintiffs, is evident from numerous internet posts, as well as from declarations from retailers whose customers demanded refunds.”  This showed likely success on the merits.  Similarly, Brian offered extensive evidence of Chris’s intentional interference with Brian’s contracts with his customers, including urging them to switch to A&C products and sending C&Ds to sellers of Brian’s products.  Even if plaintiffs lacked a protectable trade dress, and even if A&C released its products first, intentional interference was still possible, and here plaintiffs were likely to succeed. So too with their trade secret claim based on Chris’s alleged use of confidential customer lists.  And so too with the defamation claim, given Brian’s evidence that he developed the Ballin design and Chris’s public statements that Brian “stole” the design and was selling counterfeit merchandise. Defendants’ conclusory statements that the allegations were true were insufficient.

Given likely success on the merits on these claims, the remaining factors of the preliminary injunction inquiry were met. “Evidence of loss of control over business reputation and damage to goodwill” was sufficient to establish irreparable harm. “Defendants’ misleading posts about the origins of certain products and suggestions that Brian is a thief, discussed above, certainly have a negative impact on Brian’s reputation and goodwill, and are continuing. Enjoining such acts would serve the public interest, and would not impose any undue hardship upon Defendants.”  (Note that the court doesn’t discuss the traditional reluctance of courts to enjoin defamation.  It seems that defendants may not have contested the defamation claims sufficiently.  However, the injunctive remedy granted also does not actually seem to cover the defamatory but non-intentional interference with contract behavior.)

Defendants were enjoined from using pictures of anyone wearing plaintiffs’ products “in any manner that would lead others to believe that such persons are wearing Defendants’ products”; using plaintiffs’ customer, distributor, or manufacturer lists; and contacting plaintiffs’ customers or prospective customers “for the purpose of encouraging such persons or entities not to do business with Plaintiffs and/or not to purchase or sell Plaintiffs’ products.”