Thursday, September 29, 2016

when are state law unfair competition claims preempted?

Duer v. Bensussen Deutsch & Associates, Inc., 2015 WL 11256568, No. 14-CV-01589 (N.D. Ga. Jul. 8, 2015)

Very broad preemption finding makes me blog this older case that popped out of Westlaw.  Duer makes medicine dosage adherence tools suitable for affixing to pill bottles. The product has seven slides, each representing a day of the week, and a user moves a slide each day she takes a pill.  Duer claimed rights in the trademark “Take-n-Slide”; a utility patent; and copyright in the insert sheet packaged with her product.  Defendants allegedly copied Duer’s product and package insert sheet, which she discovered when one of their customers contacted her, believing that they’d received her product.

Duer properly alleged non-functionality by identifying  several non-functional elements, including the particular shape of the product, the vertical arrangement of the days of the week, and the chosen color scheme. “The existence of a utility patent which contains claims that may include the above elements does not change the analysis.” The utility patent was strong but not conclusive evidence of functionality; she was entitled to try to meet her “heavy” burden of showing nonfunctionality. Duer also properly pled secondary meaning, with details about her ad expenditures, how long she’d advertised, and at least one instance of actual confusion as well as intentional copying.

However, the court dismissed Duer’s claims for false advertising and unfair competition.  False advertising: the product insert allegedly actually displayed Duer’s product.  However, this wasn’t “commercial advertising or promotion,” because it wasn’t disseminated to influence consumers to buy defendants’ goods.  “A product insert cannot influence a consumer’s purchasing decision because the public would only see a product insert after purchasing the product.”

Duer’s unfair competition/passing off claim failed because she failed to allege that defendants weren’t the actual, physical origin of the products it sold.  This seems quite wrong: her argument was that defendants sold products that were falsely attributed to her; the fact that they are the origin is kind of the point.

More plausibly, but still interestingly, the court held that Duer’s Georgia Uniform Deceptive Trade Practice Act and her tortious interference with contract claim were preempted by the patent/copyright laws because they relied on the same conduct alleged in her patent, copyright, and trade dress infringement claims.  [Sloppiness here: there’s no preemption based on the trade dress-related claims, on these facts.]  Duer was essentially arguing reverse passing off—that defendants were claiming her design as their own—which courts routinely find to be preempted.

Duer argued that her GUDTPA claim had an “extra element” of a deceptive act, but reverse passing off implicitly contains a deceitful act or misrepresentation.  “The fact that the defendants were selling the allegedly infringing works under their own names—and, hence, implicitly misrepresenting the origin of the works or causing confusion in the consuming public cannot alter the finding of preemption.” 

1 comment:

Unknown said...

There is much for discussion here, but I am particularly troubled by “A product insert cannot influence a consumer’s purchasing decision because the public would only see a product insert after purchasing the product.” What if a friend bought it and I see the product and insert after my friend's purchase, and I decide that it appears to be a good product based in part on the insert, so I then buy one? What if I buy it once just to see, and the insert is part of what influences me to buy another?