Thursday, July 21, 2016

court grants motion to dismiss on nominative fair use grounds

Beachbody, LLC v. Universal Nutrients, No. 16-02015, 2016 WL 3912014 (C.D. Cal. July 18, 2016)

Beachbody sued Universal and Wal-Mart for using its “shakeology” mark on product packaging and purchase receipts. The court granted defendants’ motion to dismiss—apparently the standard is higher when you sue Wal-Mart.

Trademark infringement: the court found nominative fair use on the allegations of the complaint.  First, Beachbody alleged that its “shakeology” meal replacement shakes had a unique blend of ingredients that weren’t comparable to the ingredients in defendants’ OmniHealth shakes, and that its shakes were widely recognizable. However, the court found that Beachbody didn’t plead facts showing that consumers would readily identify Beachbody’s shakes without the use of “shakeology,” making the use necessary to identify Beachbody. 

Second, Beachbody alleged that defendants’ use of the term was almost identical to Beachbody’s.  But defendants said they didn’t use the same logo, font, or coloring scheme, and the court found that Beachbody didn’t plead facts showing that defendants used more of the mark than reasonably necessary to identify Beachbody.

Third, Beachbody alleged that the phrase “compare to the ingredients in shakeology” on the OmniHealth packaging would confuse consumers about Beachbody’s endorsement of the OmniHealth meal replacement shakes.  I would have called this “implausible,” but the court said that Beachbody didn’t provide evidence of actual association, and noted that the back of the OmniHealth boxes “clearly stated” the lack of association.  Moreover, Beachbody’s shakes are only sold on its own website, and they are sold for much more than defendants’ product.  Therefore, Beachbody didn’t sufficiently allege likely confusion about affiliation.

The use on the receipts was different (and I would have advised against this)—allegedly, receipts for purchases of the OmniHealth shakes say only “shakeology” as the product description.  But the court found that Beachbody didn’t allege any facts to show that consumers would likely associate the products based on the receipts.  Absent sufficient allegations to defeat the nominative fair use defense, the trademark infringement claim had to be dismissed.

Related claims such as contributory infringement and state-law unfair competition also failed, for the same reasons.

False advertising: “compare to the ingredients of shakeology” allegedly falsely suggested to consumers that the ingredients in OmniHealth shakes were comparable or similar to those in Plaintiff’s shakes. “Compare to ...” statements can convey a specific message and thus can be falsifiable.  However, such a claim of implicit falsity requires extrinsic evidence of consumer deception, and Beachbody didn’t plead any.  “Simply making the conclusory statement that Defendants’ ingredients are incomparable to Plaintiff’s proprietary blend of ingredients does not establish a plausible claim for false advertising.”  (So it has to have a survey in hand to sue?) 

Nor did the use of “shakeology” on Wal-Mart receipts constitute false advertising, because the use of the name on the receipt “would not be a significant factor in a consumer’s purchasing decision,” and therefore wouldn’t be an advertisement.  [Hunh?  This is under-reasoned; it first sounds like materiality (which is bold on a motion to dismiss).  The argument that a receipt isn’t “commercial advertising or promotion” is reasonable, but given that meal-replacement shakes are probably supposed to be purchased multiple times, a receipt might serve as a kind of ad for the next purchase.  The real problem is that this is really a trademark claim; the alleged falsity is about the source of what the consumer bought, and if anything a receipt that said “shakeology” would probably make it harder for the consumer to figure out that she can only get OmniHealth shakes at Wal-Mart.]

Commercial disparagement/trade libel failed too: Beachbody didn’t plead facts that if believed, could prove any special pecuniary damages from the Wal-Mart receipts. 

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