Thursday, August 28, 2014

#1 with a bullet: Nutribullet wins false advertising claim, but its green isn't inherently distinctive

Homeland Housewares, LLC v. Euro-Pro Operating LLC, 2014 WL 4187982, No. CV 14–03954 (C.D. Cal. Aug. 22, 2014)

Homeland and Euro-Pro compete in the home blender market. Homeland sells three Nutribullet products: Classic, Sport, and Pro.  Euro-Pro sells Ninja blenders, including the Nutri Ninja Pro, which is sold near Nutribullet blenders on retailers’ shelves.  Homeland challenged a comparison chart, “Nutri Ninja v. Nutribullet,” with lists of various features: “Nutrient & Vitamin Extraction,” “900 Watts,” “21,000 RPMs,” “Finer Consistency,” “Ice Crushing,” “Pulse Technology,” “Sip & Seal Lids,” and “Fits in Cupholders.”  The chart indicates that the Nutri Ninja Pro operates at 900 Watts, produces 21,000 RPMs, has ice crushing capability, has pulse technology, has sip & seal lids, and fits in cupholders, but that the Nutribullet does not.  Homeland alleged that each of these factual assertions was false as to each product in its line.

In addition, the Nutri Ninja Pro package says “# 1 MOST POWERFUL*,” which Homeland likewise contended was false. The asterisk corresponded to a small-print disclaimer on the bottom of the box, which states: “ *Based on wattage of single serve blenders and nutrition extractors MSRP under $100.”  (Here’s a related case against Euro-Pro for making a “More Powerful” claim with a similarly hidden small print limitation.)  Homeland also argued trade dress infringement.

Homeland sought a preliminary injunction.  On false advertising, Euro-Pro argued that the comparison chart covered only the Nutribullet Classic, since it was undisputed that three statements (900 watt motor, 21,000 RPMs, and “sip and seal”) were false if applied to the Sport and Pro.  The court agreed with Homeland that the comparison chart covered each Nutribullet model.  Nutribullet is prominently displayed on the packaging of all three, and is the dominant feature.  A consumer viewing the products would “naturally consider each to be a ‘NUTRIBULLET.’”  But the chart didn’t differentiate, with the effect of lumping them all together.

Euro-Pro argued that the products were displayed near each other, and that consumers would resolve the contradiction between Euro-Pro’s chart and the statements on a Nutribullet Pro box by concluding that the statement must refer to a different model.  Shifting the burden to the consumer to investigate was inconsistent with the Lanham Act’s consumer protection function, and was also unrealistic.  The parties agreed that the products were often sold alongside many other competing brands.  “[T]here is strong reason to doubt that a typical consumer would make a one-to-one comparison between the features of the parties’ products and then have the realization Euro–Pro envisions.” Having trusted the Nutri Ninja Pro statements and concluded that it was superior, they might not bother to seek out the Nutribullet models.

Euro-Pro argued that the chart only referred to the lower-end Nutribullet because Homeland’s trade dress claim only alleged infringement of the Classic trade dress, which uses a green background, unlike the Sport and Pro.  The court disagreed—the shared background color didn’t establish that the reference to Nutribullet in the chart would cause a consumer to understand that the comparison was limited to only one model.  Nor did the price differences between the under-$100 Nutri Ninja and Classic versus the over-$100 Sport and Pro clarify matters.  The price range, from about $90 to $130, wasn’t so great that the reference could only be to the Classic.

Because the chart claimed to cover each Nutribullet model, it was literally false. The statements were plainly material.  “Indeed, that the statements relate to key factors informing consumer decisions is evidenced by the fact that Euro-Pro itself felt the features were significant enough to consumers to highlight prominently in comparing its goods to those of its competitor.” And given the direct competition, “there is little basis for doubt that Homeland is likely to be injured as a result of the false statements in the form of diverted sales or diminished goodwill.”

Thus, Homeland was likely to succeed on the merits on the wattage, RPMs, and “sip & seal” functionality claims, though the record was presently insufficient on the other allegedly false statements on the packaging.

The court then found that Homeland showed likely irreparable harm.  Damage to goodwill qualifies as irreparable harm.  (No Herb Reed citation?)  Euro-Pro effectively accused Homeland of making inferior products, which self-evidently would tend to diminish consumer goodwill.  Plus, Euro-Pro’s claim that the Pro and Sport lacked features that Homeland’s packaging specifically claims to have “carries the implication that Homeland is lying about its product’s features, an assertion with obvious reputational consequences.”

The balance of equities and the public interest also favored an injunction.  The injunction didn’t require immediate recall and would allow Euro-Pro four months to liquidate its inventory and phase in new packaging.

No relief was warranted on Homeland’s trade dress claim, however. Homeland failed to show inherent distinctiveness or secondary meaning.  The packaging wasn’t inherently distinctive, which required a “design, shape or combination of elements [ ] so unique, unusual or unexpected in this market that one can assume without proof that it will automatically be perceived by customers as an indicator of origin” (quoting McCarthy).

Nutri Ninja

Nutribullet Classic
Homeland alleged that Euro-Pro infringed by copying “(a) phraseology (“Nutri,” “Pro,” “Extractor,” “Watts”), (b) layout of texts and pictorial elements, (c) selected orange lettering, and (d) most conspicuously, its depiction of a blender with an inverse container against a predominantly green background, showing a cornucopia of fruits and vegetables in similar position[s].”  Setting aside the vagueness of some of this description, “Homeland’s trade dress claim fails because most of the elements it contends comprise its trade dress are not, in fact, arbitrary or unexpected given the nature of the product.”  “Nutri,” “watts,” “extractor,” and “pro” all described or implied aspects of the product.  “Nor is the presentation of an arrangement of fruits and vegetables behind the blender arbitrary given that the product’s primary function is to create drinks by blending fruits and vegetables.”  The “inverse container” was just an image of the product itself, which, like other similar products, operates with the container upside down.  The green background wasn’t arbitrary given Homeland’s emphasis in its marketing on the nutritional benefits of the product.

Nor was there convincing evidence of secondary meaning.  Homeland’s only evidence was its claim to have spent “several hundred million dollars on advertising and promoting the NUTRIBULLET line of kitchen appliances and associated trade dress to single itself [out] as the producer of the NUTRIBULLET line.” But the effectiveness of the advertising is the key, and Homeland offered no evidence that its ads effectively created a secondary meaning for its trade dress, or even that its ads were focused on the packaging trade dress instead of promoting the Nutribullet products themselves.

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