Tuesday, March 29, 2016

Smokeless, no fire: tobacco advertising & TM claims dismissed

VMR Products, LLC v. V2H ApS, 2016 WL 1177834, No. 2:13–cv–7719 (C.D. Cal. Mar. 18, 2016)
VMR makes electronic cigarettes under the federally registered trademarks V2CIGS and V2. V2H ApS is a Danish tobacco company that makes a smokeless tobacco product called “snus” under the name V2TOBACCO, and V2 Tobacco A/S is its wholly owned distributor subsidiary. The parties have litigated cases in Denmark, Sweden, and the Southern District of Florida, and have opposed each other’s applications to register their trademarks in both the United States and Europe.
VMR alleged that defendants infringed its marks with their V2TOBACCO product through advertising on www.v2tobacco.com; there was no evidence that defendants’ snus purchased from US stores bore the mark V2TOBACCO, but US consumers could buy the snus through third-party online stores, which were accessible by clicking on links available on the website, and this snus bore the mark V2TOBACCO “[a]t the bottom of [the] tin.”  This sufficed as use in commerce.
The court dismissed likely confusion claims based on VMR’s V2CIGS mark.  VMR previously sought a declaratory judgment that its V2CIGS didn’t infringe V2 TOBACCO, alleging in its complaint that there was no likelihood of confusion; that the marks were different; and that the products were different.  VMR was therefore estopped from arguing to the contrary; the court also applied the Sleekcraft factors.
Strength: There was no evidence that V2CIGS had been registered without a showing of secondary meaning, so there was no presumption of inherent distinctiveness; there was also no evidence about inherent distinctiveness or descriptiveness either way, so strength was neutral; likewise there was no evidence about defendants’ intent.  VMR was estopped from arguing that the goods and the marks were similar; it submitted no admissible evidence of actual confusion; the parties both advertise on websites, but Network Automation says that’s not important; there was no evidence that any of the parties’ products are sold in the same or even similar stores; there was no evidence that either party had plans to expand into the other’s market; and defendants offered evidence that tobacco products are legally required to be maintained by retailers under lock and key, and argued that therefore consumers exercise a degree of care in purchasing tobacco products.  Confusion was not likely with respect to the V2CIGS mark.
VMR also argued that defendants made “illegal, literally false and/or misleading” statements that the raw material in their snus product is selected on the basis of a “low level of Nitrosamines” on their website and in their product catalog. The Tobacco Control Act precludes the introduction into interstate commerce of any modified risk tobacco product unless the FDA has issued an order that the product may be commercially marketed.  VMR contended that the “low” levels of nitrosamines claim advertised snus as a modified risk tobacco product without FDA approval.
First, the court found that V2H could be held liable for the website statements: it was the registrant and owner of www.v2tobacco.com; had previously removed content from the website; and was the “parent company” of V2 Tobacco.
Second, the court addressed standing: Under Lexmark, a plaintiff’s claim must fall within the “zone of interest” of the statute, and the plaintiff must have experienced “economic or reputational injury” that is proximately caused by the defendant’s deceptive advertising.  VMR showed that the parties were competitors in the tobacco market, but offered no evidence of injury proximately caused by the allegedly false statements. VMR argued that it would be harmed if an adult smoker, who wanted to purchase a smokeless nicotine product, relied on defendants’ alleged false advertising to buy snus instead of VMR’s electronic cigarettes.  However, there was no requirement that a plaintiff prove injury if it sought only injunctive relief.  (Something feels weird about this, but ok.)  Thus, VMR had standing to pursue its claims, but not standing to seek “additional ancillary relief that would require proof of injury” such as damages for lost sales.
VMR argued that defendants’ statements that their snus contains low levels of nitrosamines were “literally false” because (1) the statements  equated to advertising the snus as a “modified risk tobacco product” under the Act; (2) the Tobacco Control Act defines “modified risk tobacco products” as those tobacco products that are used to reduce the harm or risk of tobacco-related diseases associated with commercially marketed tobacco products; (3) the FDA has not approved the snus as a “modified risk tobacco product”; and therefore, (4) defendants’ advertisements violate the Tobacco Control Act.  (This doesn’t seem very “literal” to me, given the chain of inferences required.  It also seems like a preclusion problem, given the interpretation necessary to make this into an issue of falsity instead of a violation of the Tobacco Control Act itself.)  The court found that this was not a literally false claim given that the FDA hadn’t yet approved [hunh?] the use of “low” to describe the level of nitrosamines in the product.
Defendants offered evidence that their snus did, in fact, have low levels of nitrosamines.  VMR offered no evidence of misleadingness, or of materiality.  Nor would the court presume injury given the absence of comparative advertising here: “the alleged injury accrues equally to all competitors.”  Summary judgment for defendants.

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