survey isn't evidence of actual deception, court says in First Amendment case w/TM relevance

Express Oil Change, L.L.C v. Mississippi Board of Licensure for Professional Engineers & Surveyors, No. 18-60144 (5th Cir. Feb. 19, 2019)

Just as a matter of client advocacy, it is time for these First Amendment cases about the government’s near-inability to regulate based on the meaning of words to start being cited in run-of-the-mill trademark and false advertising cases.  I don’t think the results will be good policy, but at the very least we will see whether courts mean what they say, or instead mean “legislative and administrative entities shouldn’t get to regulate but it’s ok when private parties sue under the same theories.”  In particular, where trademark and false advertising treat “false and misleading” as the regulable category (albeit with different standards of proof for “misleadingness” in §43(a)(1)(B) cases than for falsity), First Amendment commercial speech law has for decades made a distinction between actually/inherently misleading speech and potentially misleading speech.  Here the Fifth Circuit applies that distinction to disregard a survey showing 55% deception—that’s just “potential”—and hold that, without actual consumer deception, only a disclaimer remedy is allowable.  (Among other things, the First Amendment doctrine has yet to engage with what we know in TM/advertising law about the ineffectiveness of disclosures and the range of responses among consumers—a few actually confused consumers out of millions don’t necessarily justify liability, especially where the challenged use provides useful information to other consumers.  The libertarian anti-statistical bent of this crop of judges may have additional implications for their reactions to those arguments in trademark and other First Amendment cases.)

Mississippi legally restricts the use of the term “engineer.” Express Oil Change operates several automotive service centers in Mississippi under the name “Tire Engineers.” In 2015, the Mississippi Board of Licensure for Professional Engineers & Surveyors determined that the name “Tire Engineers” violated the pertinent statutes and requested that Express cease using it.  Express sued for a declaratory judgment that its use was ok; the trial court ruled against it.

The district court found that “Tire Engineers” was inherently likely to deceive consumers that the services performed at Tire Engineers are performed by tire engineers or under the supervision of tire engineers.” The court accepted “substantial evidence” that “the term ‘tire engineers’ is used by courts, universities, tire manufacturers, tire manufacturers, general periodicals, specialized periodicals, and the general public to refer to actual engineers who have expertise in the manufacture, selection, and repair of tires.” A survey conducted by the Center for Research and Public Policy found that “[s]ixty-six percent of the respondents expected that Tire Engineers ‘has professional engineers on staff,’” and “[f]ifty-eight percent [of respondents] expected Tire Engineers to use engineers to service tires.” Additionally, the Board highlighted an Express advertisement claiming that “[a]ll of our Express Oil Change & Tire Engineers have tire engineers who are qualified to [service] . . . tires . . . .”  (Express discontinued use of “Tire Engineers have tire engineers” in 2017, but the court didn’t indicate that Express couldn’t bring the phrase back.)

“The party seeking to uphold a restriction on commercial speech carries the burden of justifying it.” This “burden is a ‘heavy’ one,” and may not be “satisfied ‘by mere speculation or conjecture.’” Commercial statements that are actually or inherently misleading aren’t protected by the First Amendment. “[A] statement is actually or inherently misleading when it deceives or is inherently likely to deceive.” Joe Conte Toyota, Inc. v. La. Motor Vehicle Comm’n, 24 F.3d 754, 756 (5th Cir. 1994). Statements that are only potentially misleading, however, are within the scope of the First Amendment, and their regulation is judged by Central Hudson (or, though the court doesn’t say so here, by Zauderer when the state’s remedy is requiring an additional disclosure).

Express argued that “[t]he term ‘engineer’ is commonly used to describe jobs and trades other than professional engineering” and pointed out that the Fifth Circuit had already rejected the “circular” reasoning that a term “is inherently misleading because it does not conform to [a state actor’s] definition . . . of the term.”  The court of appeals agreed with Express: “Because its essential character is not deceptive, Tire Engineers is not inherently misleading. The name, first trademarked in 1948, apparently refers to the work of mechanics using their skills ‘not usu[ally] considered to fall within the scope of engineering’ to solve ‘technical problems’ related to selecting, rotating, balancing, and aligning tires.”  “Engineer” “can mean many things in different contexts, and it is certainly not limited to those professionals licensed by Mississippi to practice engineering.”  Since it was not “devoid of intrinsic meaning,” it wasn’t inherently misleading.  [That formulation, though derived from earlier cases, seems particularly unhelpful here. Even if we think that non-onomotopoeiac words had “intrinsic” meaning, that meaning would seem determine whether a use was inherently misleading—is the use consistent with its meaning, or contradictory?  Words without intrinsic meaning, by contrast, would seem more readily non-false/non-misleading, as we hold in puffery cases.]

Lanham Act lawyers, pay attention: The court thought that the survey cut both ways, given that it asked: “The company ‘Tire Engineers’ advertises that it has ‘qualified personnel’ to repair tires. As a result of this advertising how strongly do you expect the following[:] . . . That the company, Tire Engineers, is performing engineering services.” “Just over one-half of all respondents with an opinion, [fifty-five percent], suggested they believed a company that uses the name ‘Tire Engineers’ performs engineering services for tires,” but nearly 45% percent of respondents stated that they did not share this belief or were unsure. “While this suggests that the name is potentially misleading, it also suggests that the name is not inherently—that is, its essential character is not—misleading.”  If 55% deception isn’t enough for actual/inherent deceptiveness, then no survey will be. 

In addition, the district court failed to account for the way the Tire Engineers mark is used: “on the company’s website, which describes its automotive services (not any professional engineering services), and at its retail stores, which appear like any other store that performs automotive services . . . .”

The district court separately determined that “Tire Engineers” was actually misleading, based on a phone poll commissioned by the Board, which found that “[a]lmost half of the respondents (47.8%) believed that a company [using] the name ‘Tire Engineers’ performs engineering services for tires.” This wasn’t evidence that any actual consumer had been misled, which is required for “actual” misleadingness.  But the court of appeals decided that Supreme Court and circuit precedent required “evidence of deception” to find actual misleadingness, even though none of those cases actually addressed whether survey evidence could be “evidence of [actual] deception.”  [I am even more convinced after this case that the rejection of probabalistic evidence is a core aspect of today’s conservative jurisprudence, which conveniently allows the rejection of all kinds of regulation/legislation that is based on probabalistic calculations.]

The district court wasn’t wrong that the name was potentially misleading, but its remedy—the ban on the use of “engineers”—flunked Central Hudson because it was more extensive than necessary.  Express wanted at most “a simple point-of-sale disclaimer that ‘Tire Engineers does not employ professionally-licensed engineers or provide engineering services.’” [Express has no worries about initial interest confusion/bait and switch, apparently.]  The court of appeals didn’t rule on what kind of disclaimer would be sufficiently tailored, but the Board needed to consider less restrictive means such as a disclaimer.

Because of all this, the court of appeals didn’t reach whether INS v. Sorrell trumped Central Hudson.