Wednesday, May 10, 2017

allegedly false claims of official endorsement by Trump can be false advertising, LLC v. Wright Brothers, Inc., 2017 WL 1838932,  No. 16-CV-2790 (S.D. Cal. May 8, 2017) makes bobbleheads, including the Hillary Clinton Striped Prison Pantsuit Bobblehead, an application for copyright registration for which was filed Sept. 2, 2016 (and an application covering just the head was filed in May 2016).

Bobbleheads argued that defendants made unauthorized copies in two of their bobbleheads:

(I see the claim for the first, but the second?  How is that anything more than the same idea?)

Several days after filing for the copyright registration, Bobbleheads sent a C&D to defendants, and defendants allegedly took steps to make it appear that they had temporarily discontinued the sale of the first version.  Bobbleheads also sent numerous DMCA takedown notices to ISPs, allegedly causing defendants to shift their advertising and sales to other platforms and outlets.

Bobbleheads also alleged that defendants falsely advertised that their products were sponsored or otherwise affiliated with the Trump/Pence Presidential campaign (using the Trump/Pence campaign logo on websites and other advertisements; indicating that a copyright for their website was owned by or affiliated with Trump; and stating in their advertisements that Defendants’ bobbleheads were “The official bobble head doll of the 2016 Donald Trump Presidential campaign”). Plus, defendants allegedly falsely advertised that they were selling the second version, but actually shipped the first version.

The court first considered whether Rule 9(b) applied to the Lanham Act claim, and held that it did where the claim is grounded in fraud, as here. Under that standard, the claims survived in part, with the exception of conclusory allegations that defendants used Bobblehead’s pictures of its own bobblehead to sell their competing bobbleheads.

Defendants also successfully argued that Bobbleheads lacked standing under Lexmark because it failed to allege any kind of reputational or economic injury as a result of the conduct charged.  Merely stating that defendants’ false advertising “somehow caused Plaintiff to suffer damages” was not specific enough—there were no more specific allegations of, “at the very least, lost sales or damage to its reputation.” This wasn’t enough to plead proximate causation.  Bobbleheads argued that “if one product is the ‘official’ product, every other product is unofficial and therefore inferior. Consumers in the market are likely to choose the official product over the unofficial one and thus Defendants, through their false advertising campaign have diverted sales from the Plaintiff....” Such allegations might be sufficient, but they weren’t in the complaint; Bobbleheads could replead.

Defendants argued that Dastar barred any relief.  But Dastar is about false authorship claims, not false endorsement.  Bobbleheads didn’t allege reverse passing off, or anything about the manufacturer of the goods.  Instead, Bobbleheads’ false advertising claim was based on misrepresentations about “official” Trump endorsement. This claim was “unrelated to the authorship or origin of Defendants’ bobbleheads,” and thus not covered by Dastar.

Defendants also argued that, “to the extent Plaintiff complains of Defendants using an alleged false copyright notice, such a claim must fail because the Copyright Act covers that kind of activity, but does not allow for a private right of action.” But Bobbleheads wasn’t asserting a claim for misuse of a copyright notice; instead the allegedly false copyright notice was part of the overall false advertising claim based on misrepresentation of “official” Trump campaign status.

Defendants further challenged the plausibility of materiality here: It doesn’t matter if some customers who thought they were ordering the second version received the first version because “the joke of the bobblehead is the same regardless of the subtle variation in her hand position.”  But literally false statements and images were allegedly used to market the bobbleheads, and literal falsity is presumed to have deceived consumers.  Defendants could attack materiality later.

Finally, defendants argued that associations with the Trump organization were opinions/puffery, not actionable facts.  The court disagreed. “Whether or not the Trump organization did, in fact, sponsor Defendants’ bobbleheads or claim copyright in the website are ‘knowable’ facts, not opinions.”  There was a conceptual difference between use of a symbol (TM or ©) indicating one’s belief in one’s own alleged rights, versus use of a symbol indicating that someone else, e.g. the Trump organization, claims rights in defendants’ website—the latter is an ascertainable fact.

The court also deferred ruling on defendants’ argument that Bobbleheads couldn’t get statutory damages and attorney’s fees because Bobbleheads learned of the alleged infringement before it applied for the registration.  (Only the full doll registration was relevant because the allegations of copying focused on everything but the head.)  On the allegations of the complaint, the date on which defendants began their infringement was unknown.

Plan P2 Promotions, LLC v. Wright Brothers, Inc., 2017 WL 1838943, No. 16-CV-2795  (S.D. Cal. May 8, 2017)

Same story, different bobblehead, here the Donald Trump Red Hat Bobblehead, published in 2015, application for registration filed October 19, 2016.

Here, based on the dates, PPP agreed that it wasn’t entitled to statutory damages/attorney’s fees under the Copyright Act, but the court refused to dismiss its request for attorney’s fees under the Lanham Act.  PPP adequately pled that this case was exceptional in that defendants “were willfully blind and acted in reckless disregard” of plaintiff’s rights, defendants falsely claimed an association with the Trump organization; and that defendants engaged in a bait-and-switch advertising campaign in order to hide their infringement of PPP’s bobblehead and deceive consumers into purchasing a product they did not order.

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