Tuesday, October 11, 2016

court says product reformulation might be deceptive if survey supports claim

Nutrition Distribution LLC v. Driven Sports, 2015 WL 12645002, No. LA CV13-06195  (C.D. Cal. Jan. 15, 2015)

Nutrition sued defendants over their sales of a nutrition supplement product called “Craze.” In July 2013, defendants discontinued the sale of the initial version of Craze after it was reported that the ingredients included amphetamine, amphetamine analogues and/or methamphetamine analogues, none of which was identified on the product label. The FDA sent a warning letter and defendants discontinued sales.  Defendant DS intends to sell Craze again with about 75% similarity to the prior formula.

Although the prior label was materially false, plaintiff couldn’t show irreparable injury with respect to that version, since there was no evidence the prior formula would be used again. Injunctive relief wasn’t justified; it would serve only a hypothetical public interest.

Plaintiff also sought to prevent defendants from using the Craze trademark in any new product.  Again, plaintiff couldn’t show irreparable harm; among other things, it couldn’t show that money damages would be inadequate if the revised Craze improperly diverted sales from plaintiff’s products.

The court also didn’t accept theory of misleadingness, which was that: (1) some members of the public are aware that the old version of Craze contained the prohibited substances, and will assume that the new version will as well, and for that reason will purchase it; or (2) some members of the public were unaware that the old version contained the prohibited substances, liked its effect and will, therefore, assume that the new version will be the same, and for that reason will purchase it. “Although these theories may have some equitable appeal, neither is supported by any evidence.” One could also hypothezie that “another group of those who used the earlier version of Craze learned that it was taken off the market because it contained the Substances, as a result, does not trust DS products, and will not purchase the new version of Craze even if DS represents that it does not contain any improper component.” A consumer survey could help validate plaintiff’s theories, but plaintiff offered none at this point in the case.

In a footnote, the court analogized to a cancellation request, which requires a plaintiff to “show a real and rational basis for his belief that he would be damaged by the registration sought to be cancelled, stemming from an actual commercial or pecuniary interest in his own [trade]mark.” As noted above, that evidence was missing.  Also, plaintiff didn’t show that such a request would be deemed timely under § 1064(1), which requires that a cancellation request be made within five years of a registration.  [NB: Cancellation on the basis of deceptiveness is not subject to the five-year limitation.]

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