Monday, October 14, 2019

Amicus in Dr. Seuss v. ComicMix

Here. With Mark Lemley, Jessica Litman, Lydia Loren, Pam Samuelson, and Erik Stallman. 

incentivized reviews/targeted upvoting can be false advertising, court reiterates


Vitamins Online, Inc. v. HeartWise, Inc., No. 13-CV-982 (D. Utah Sept. 24, 2019)

Supplement industry behavior is wild.  

Vitamins Online sells dietary supplements online, including on Amazon, using the name NutriGold. HeartWise, aka NatureWise, competes with NutriGold, including on Amazon, with products that contain an extract of garcinia cambogia and green coffee. NatureWise had its employees upvote positive reviews on its product pages and downvote negative reviews, increasing the likelihood that potential customers would see positive reviews of its products first and negative reviews last. “NatureWise also encouraged customers to post or repost their positive reviews on Amazon by offering them free products or gifts cards.  NatureWise would review and, in some cases, make minor edits to the reviews before asking the customers to post them on Amazon.” Such reviews could affect NatureWise’s placement in results. Vitamins Online sued NatureWise for false advertising based on: (1) manipulating Amazon’s customer review system and (2) falsely advertising and misrepresenting the content and characteristics of its green coffee and garcinia cambogia products.

NatureWise counterclaimed, alleging among other things that VO’s principal bought over one thousand bottles of one of its garcinia cambogia products and then resold those bottles with an insert that was entitled “AS IS”:

The insert cautioned purchasers to read it before opening the bottle or else the purchaser would unable to return it for a refund. The insert then explained that the product did “not contain inside the bottle what is claimed on the outside label,” that a third-party laboratory had tested and concluded that the label did not entirely match the content of the bottle, and that NatureWise’s online product reviews were not genuine. The insert also claimed that the manufacturer was being sued for its scams and purported fraudulent practices.

Review claims: Rather than taking the relatively more simple path of saying that manipulating reviews can imply false facts and thus constitute a false or misleading representation of fact, the court instead (and ahistorically) seized on the word “device” in §43(a) to say that review manipulation could be a misleading “device.”  (As Graeme Dinwoodie has extensively documented, “device” to the Lanham Act’s drafters meant essentially “badge/logo.” I think the court’s holding is right but its statutory construction is both unnecessary and overelaborate.)

Could review manipulation be falsifiable instead of puffery?  The court pointed to a “well-established exception [to the rule that only factual claims are actionable:] that an opinion by a speaker who lacks a good faith belief in the truth of the statement is actionable.” And an intent to deceive can be presumed to have succeeded even for implied claims.  There was a genuine factual issue about whether NatureWise acted with the intent to deceive consumers. The evidence showed that NatureWise discussed contracting with individuals in the Philippines “to use a rotating IP service and multiple accounts to reduce the effect” of their competitor’s attempts to lower their market share, which could be effective because the conduct was “not connected to NatureWise.” A NatureWise employee expressed that he was “wary of tipping our hand to our customers that we have anything to do with interfering with reviews.” In response, NatureWise’s principal stated that his “only concern” was that Amazon would investigate the positive changes in NatureWise’s product reviews and realize that the accounts voting up NatureWise’s products may not belong to real people. He also expressed the importance of having more third-party sellers so that it would be impossible for Amazon to know which company was behind the up and down voting of reviews.

Second, even without a presumption of deception, Vitamins Online produced a survey that supported its claims. It showed that that a majority of consumers: read reviews when shopping for weight loss products; rely upon those reviews; and believe that product reviews are genuine and done by real customers. A review’s number of stars and its helpfulness rating play influential roles in a consumer’s purchasing decision.

NatureWise argued that these were all just opinions. But there was extrinsic evidence that the reviews mattered, and also some of the reviews might not have been from “real people,” making them literally false.

Injury: this wasn’t a comparative advertising case where injury could be presumed even though there was some evidence of NatureWise targeting VO and even though the parties’ products could appear against each other on Amazon. “[I]t would be unjust and improper for the court to apply a presumption of injury based on a third party’s conduct instead of the defendant’s. The comparison captions found on Vitamins Online’s and NatureWise’s Amazon product pages are a function of Amazon’s website—not a result of NatureWise’s conduct.” VO argued that a presumption of injury was appropriate because the parties dominated the market: one of its witnesses found 17 market participants on Amazon for the products at issue, but approximately 92% of the reviews appear on Vitamins Online’s and NatureWise’s product pages. That wasn’t enough to show market domination.

Although this issue is presently before the Supreme Court, the Tenth Circuit presently holds that either actual damages or willfulness must be shown for disgorgement; VO thus argued that it didn’t need to show actual damages to establish injury. But that conflates injury with entitlement to disgorgement, which only matters once liability has already been established.  That leaves the puzzling question: what is the burden for showing injury when the plaintiff seeks disgorgement? “Bearing in mind that there is a higher burden for seeking money damages and a lower burden for seeking injunctive relief, the court concludes that the standard for disgorgement is somewhere between the two.”

VO introduced evidence that sales plummeted after NatureWise entered the Amazon market, and argued that its survey showed injury.  There were genuine issues of material fact, but VO wasn’t entitled to summary judgment on injury. Outside a two-player market and in the absence of comparative advertising, the parties weren’t necessarily taking each other’s sales; this was better left for the finder of fact (though how the finder of fact is supposed to sort that out is a bit of a mystery).

Inredient claims: VO argued that NatureWise made various false statements about its ingredients/efficacy/etc. Some of the products no longer had existing samples to test; the court concluded that NatureWise had destroyed those products; that VO was prejudiced by that destruction; and that NatureWise acted in bad faith. VO was thus entitled to an adverse inference instruction that this product subset bore all of the allegedly false ingredient claims and that they were false.

NatureWise sought summary judgment on certain challenged statements.

“100% Pure” and “Sourced, Formulated, . . . and Guaranteed to be the Highest Quality Available”: “Particularly in the context of health supplements, a claim that something is ‘100% Pure’ is a measurable statement of fact…. It seems likely that a reasonable consumer viewing such a phrase would expect exactly what the phrase suggests—an unadulterated product consisting purely of the listed ingredients.”  The “sourced etc.” claim was a closer call. In context, however, it immediately followed NatureWise’s label claim that its garcinia cambogia consisted of “Vegetarian Capsules and Absolutely Nothing Else! ZERO Fillers, ZERO Binders, and ZERO Artificial Ingredients.” And there were genuine issues of material fact about whether NatureWise’s products had fillers, binders, and artificial ingredients.

So too with other challenged claims: “For each remaining statement, NatureWise employs an exercise of identifying specific words within each statement that it claims can be interpreted or defined, by dictionary or otherwise, in multiple ways thus rendering the entire statement ambiguous.” The court found that this ignored the requirement of considering the ad context. Combined with the other label statements, “the alleged ambiguities dissipate.”

Moreover, “NatureWise’s exercise of suggesting that several of its own statements are ambiguous seemingly cuts against what a corporation would want when promoting and advertising its health supplement products. That a company deliberately markets its products in an ambiguous and difficult-to-understand manner is anomalous to say the least ….”

The court also found that NatureWise wasn’t entitled to summary judgment on VO’s request for disgorgement.  NatureWise argued that VO didn’t show what sales were attributable to false advertising. But “[t]he language of the Lanham Act is clear: ‘In assessing profits the plaintiff shall be required to prove defendant’s sales only; defendant must prove all elements of cost or deduction claimed.’” “To require Vitamins Online to not only distinguish all sales based on false advertising from all sales based on legitimate conduct, but also require it to apportion its sales among all the various categories and subsets of its claims, would be to violate the plain terms of the statute.”  VO had provided evidence of NatureWise’s sales, as well as some evidence of willfulness, as discussed above, and evidence that NatureWise “discussed stealing the design of Vitamins Online’s labels.”

NatureWise relied on Retractable Techs., Inc. v. Becton Dickinson & Co., 842 F.3d 883, 901 (5th Cir. 2016), but even that case accepted the district court’s finding that some of the defendant’s profits were attributable to its false advertising. The appropriate rule: “a plaintiff need only demonstrate that the defendant has benefitted from the alleged false advertising (which Vitamins Online has done), then the defendant has the burden to reduce its profits by the elements of cost and deduction, which will result in the plaintiff recovering only those profits attributable to the false advertising.”  That’s a pretty generous reading of Becton Dickinson, but ok.  NatureWise argued that disgorgement would result in a penalty instead of compensation, but the defendant “has the power to ensure that the plaintiff does not recover any profits that are not attributable to the false advertising” by meeting its burden; the alternative gives a windfall to the wrongdoer. And the court in its equitable discretion can further protect against bad outcomes.  False advertising cases should be treated no differently than trademark infringement cases for purposes of disgorgement.

By contrast, NatureWise wasn’t entitled to disgorgement on the counterclaims because it neglected to produce evidence of VO’s sales. It also failed to show that it could get injunctive relief. On irreparable injury, although its sales of garcinia cambogia fell after VO sent out the “AS IS” flyer, “NatureWise returned to the top sales ranking on Amazon for garcinia cambogia within only a few months.”  Money damages might well have been sufficient, but for NatureWise’s choice to withdraw its claim for actual damages. Without evidence relating to the only remaining remedies it sought, the counterclaims were dismissed.

The court also struck VO’s jury demand because the only remedies left in the case, disgorgement and injunctive relief, were equitable in nature. VO argued that disgorgement was a surrogate for damages and thereby a legal remedy, but that’s not what the cases say. But even if damages and profits are related, they have distinct purposes and natures; disgorgement focuses on unjust enrichment/deterrence, while damages redress an injury.

Some courts have held that “an accounting of profits can act as a proxy for a legal claim in some circumstances.” The idea is that, “because proving actual damages is difficult, trademark law creates an alternative form of relief—profits as a proxy for damages— which is governed by a less challenging evidentiary regime.”  Under this theory, a plaintiff may be entitled to a jury trial if “1) the case involves similar products, 2) there is no adequate remedy at law and 3) the products compete directly.” The court was unpersuaded.  Anyway, even under this theory, the market would have to be such that a loss for one party was almost automatically a gain for the other, and the market here wasn’t a two-player market.

Thursday, October 10, 2019

ingredient supplier has standing against disparagement of products/false claims about competing product


ThermoLife Int’l LLC v. Vital Pharms. Inc., No. 19-cv-61380-BLOOM/Valle, 2019 WL 4954622 (S.D. Fla. Oct. 8, 2019)

ThermoLife licenses/sells a patented creatine nitrate used in dietary supplements, which is allegedly included in many top-selling dietary supplements. VPX allegedly attacked ThermoLife’s creatine nitrate in its own advertising, including with false and misleading statements about VPX’s own “Super Creatine,” because products including ThermoLife’s creatine nitrate compete directly with VPX’s products.

The court found that Thermolife was within the zone of interests protected by the Lanham Act: it alleged that its business, reputation, goodwill, sales and profits were harmed “when consumers are misled to purchase a falsely advertised product that competes with products containing creatine nitrate sourced from Thermolife. These are the type of commercial interests the Lanham Act seeks to protect.”  And disparagement means that direct competition isn’t required for proximate cause: it was plausible that disparagement of creatine nitrate would affect sales of competing products containing creatine nitrate sourced from Thermolife. (though here the court didn’t distinguish the disparaging parts from the allegedly false self-promotion about VPX’s own product; I support the result but would have appreciated more clarity that it’s not just disparagement that can create proximate cause).

VPX next argued that the complaint didn’t satisfy FRCP 9(b)’s heightened pleading standard. Since there was no controlling precedent, the court declined “to expand Rule 9(b) absent instruction from the Eleventh Circuit or persuasive guidance from its sister districts.”

Nor were the alleged misstatements clearly opinions or nonactionable puffery: VPX allegedly advertised that creatine nitrate was “minimally effective,” “useless,” “can be dangerous,” and “that there is ZERO scientific evidence it can increase performance.” VPX also allegedly falsely and misleadingly compared the solubility of “Super Creatine” to creatine nitrate; blurred the concepts of dissolution rate and solubility; and claimed that “Super Creatine is the world’s only water-stable creatine,” that it is “much more bioavailable than regular creatine,” that it can “beef up your muscles and your brain,” that it can cross the blood brain barrier “twenty times more efficiently than regular creatine,” and that it helps with “all forms of dementia, including Alzheimer’s, Parkinson’s, Huntington’s, and other forms of dementia.” Those were actionable. VPX’s analysis of why its statements were true went to denials of the alleged facts and weren’t a basis for dismissal.

Friday, October 04, 2019

medical influencers show up in false advertising case


Wright Medical Technology, Inc. v. Paragon 28, Inc., 2019 WL 4751807,  No. 18-cv-00691-PAB-STV (D. Colo. Sept. 30, 2019)

Wright is a medical device developer, manufacturer, and distributor; its products include surgical plates and other instruments used to repair bones in the foot and ankle areas. Paragon, founded by three former high-level Wright employees, makes competing orthopedic plate systems and other devices used to repair bones in the foot and ankle. Trade secret claims ensued.

Also, Paragon allegedly promoted a “cadaver course” intended to teach surgeons to perform procedures of the foot and listed Dr. Christopher Hyer, a Wright “Key Opinion Leader” (KOL, a common term for a medical influencer), as “anticipated course faculty” on the course’s promotional material. It also allegedly engaged in unfair competition by submitting a patent application that was nearly identical to a patent application that Wright had filed a month prior and by offering several KOLs equity or ownership interests in Paragon, leading to the KOLs using Paragon products in surgical procedures without disclosing their interests.

As to false advertising, Paragon argued that predictions (here, about who would teach the course) couldn’t be false advertising. But Wright alleged that there was never any consent for the use of the doctor’s name in advertising, and that Paragon was aware of this lack of consent, which was enough.  (But that reasoning has to be incomplete: did Wright allege that Paragon never even asked the doctor to teach the course/that he turned them down before they started promoting it? If he had agreed to teach the course, even without specifically consenting to use of his name in advertising the course, it shouldn’t be false advertising, though the right of publicity result might be different (given the First Amendment-implicating nature of the course, though, it might not).)  Anyway, the rule is that, while “[a]n honest or sincere statement of belief about a future event is not actionable,”...a statement known at that time by the speaker to be false, or a statement by a speaker who lacks a good faith belief in the truth of the statement, may constitute an actionable misrepresentation.”

However, Wright failed to adequately plead that the lack of disclosure from KOLs was deceiving the public, and therefore didn’t adequately plead unfair competition as to that.

Nor did Wright adequately plead passing off (or false advertising) based on the dueling patent applications. A patent application is not a tangible good offered for sale and it didn’t constitute commercial advertising or promotion. 

Lexmark is super-clear: business customers can't sue for Lanham Act false advertising


Jiaherb, Inc. v. MTC Indus., Inc., 2019 WL 4785784, Civil No. 18-15532 (KSH) (CLW) (D.N.J. Sept. 30, 2019)

Brief but very clear statement: after Lexmark, business customers can’t bring Lanham Act claims. Jiaherb makes herbal extracts and other natural products, including saw palmetto oil and powder. MTC is a nutritional ingredient supplier and distributor of saw palmetto extract, from whom Jiaherb purchased all of its saw palmetto extract, totaling thousands of kilograms.  Apparently, saw palmetto has limited availability and to enhance profit, harvesters may dilute their product by adding vegetable oils that contain some of the same components and are thus hard to detect. Jiaherb alleged that this happened, and MTC misrepresented its saw palmetto products as unadulterated, comprehensively tested and certified according to various industry standards. Although Jiaherb did test, one of Jiaherb’s customers performed a more sophisticated Nuclear Magnetic Resonance examination and concluded that the MTC product did in fact contain coconut oil. This customer thus cancelled two purchase orders, representing over $200,000 in lost profits.

Jiaherb’s injury didn’t “stem from MTC’s false advertising or conduct by MTC which unfairly diminished Jiaherb’s competitive position in the marketplace. Rather, Jiaherb is harmed as a consumer of MTC’s product; Jiaherb’s lost profits and goodwill stem from its purchase of a product which it cannot sell. The injury of a consumer-entity that was misled into purchasing a ‘disappointing product’ is precisely the type that the Lexmark Court excluded from Lanham Act relief.”

Claims based under the UCC/state law remained; the court retained subject matter jurisdiction because of the diversity of the parties and the amount in controversy (Jiaherb was seeking a refund of over $400,000 it paid).

Bad definition of suggestiveness in a sad TM case about anti-hate groups


Life After Hate, Inc. v. Free Radicals Project, Inc., 2019 WL 4825072, No. 18 C 6967 (N.D. Ill Sept. 30, 2019)

“At a time when people—particularly young people—are being radicalized online with alarming frequency, nonprofit organizations like Life After Hate and Free Radicals Project provide critical outreach services to help individuals disengage from violence-based extremism. Unfortunately, these two organizations now find themselves in an ugly trademark dispute that can only distract them from the important work they perform.”  LAH sued Christian Picciolini (formerly high ranking at LAH) and his Free Radicals Project for infringement of the mark ExitUSA and a related slogan.  LAH secured a preliminary injunction limiting defendants to fair use of the mark to describe Picciolini’s former work. 

In the process, the court demonstrates that judicial misunderstanding of the standard for descriptiveness versus suggestiveness continues to grow—here it is in the Seventh Circuit.  It probably wouldn’t change the outcome here (though note the description of the parties’ services below), but it’s a bad idea to state the standard as “a suggestive mark requires some imagination to guess the goods/services covered.”  The correct standard, as applied by the PTO, is that a suggestive mark requires imagination to link with the goods/services, knowing the goods/services.  Otherwise QUICK is suggestive for food delivery, printing services, and anything else one might want done quickly.

LAH is an Illinois nonprofit “that follows the model of ‘exit’ programs developed in Europe in the 1990’s to help individuals exit hate groups through education, interventions, academic research, and outreach.” Picciolini helped found LAH in 2009 and left the organization in 2017. In 2018, Picciolini founded Free Radicals Project.

In 2011, LAH’s principals formed a nonprofit.  When one of the founders left LAH, Picciolini informed him that “the assets of LAH and KNW [a LAH program, Kindness not Weakness] belong to the organization,” including “the Youtube and your arno@lifeafterhate.org email address.” Picciolini told him “[w]e’ll need the youtube account back, as well as the KNW twitter credentials.” Picciolini said that LAH needed the YouTube account because “the domain is the organization’s and belongs to us,” and the former founder keeping the account for himself “will be confusing.” He also told the departing founder to turn over access to “all LAH and KNW associated domains” to Picciolini’s GoDaddy account.

In 2014, another principal traveled to Europe and met with a number of “Exit”-branded groups, including Exit Sweden, Exit Germany, Exit Norway, Exit U.K., and Exit Slovakia, that provide similar disengagement and deradicalization services in their respective countries. He decided that LAH should start calling itself “ExitUSA” to more accurately convey the outreach services it was offering and improve its recognition among peer organizations in Europe. LAH began doing business as “ExitUSA,” which became a “program” of LAH. They developed a logo for ExitUSA, a new logo for LAH, and the tagline “No Judgment. Just Help.” The logos were based on Picciolini’s designs. Picciolini said he bought www.ExitUSA.org with his personal funds and was later reimbursed by LAH. The domain was transferred to LAH’s GoDaddy account, which lists Picciolini as the administrator. He also created an “ExitUSA” YouTube channel.

Eventually, conflicts between the principals led to Picciolini’s exit; first he proposed that LAH “spin off” ExitUSA to be run as a separate nonprofit led by Picciolini, but that didn’t happen, though he did resign from LAH’s board and just served as a director of ExitUSA for some time. He was terminated in 2017; again LAH rejected his idea of a “spin off” to avoid “confus[ing] people and rais[ing] questions.” LAH declined in part because ExitUSA was such a “significant part” of LAH and was “associated with [LAH’s] identity.”

Shortly thereafter, LAH’s members learned that they could not control or access the ExitUSA.org domain, which began automatically redirecting users to a different webpage— ChristianPicciolini.com/ExitUSA, which featured ExitUSA logos and slogans, along with Picciolini’s photo and posts about his books. LAH also learned that it could not access the Twitter account @ExitUSATeam, which it had been previously using, or the ExitUSA Youtube channel, which was “attached to [Picciolini’s] email.” Picciolini registered the domain “Exit.us.”  

In 2018, Picciolini started an Illinois nonprofit called Free Radicals Project that used the phrases “No Judgment. Just Help.” and “Free Radicals: There is life after hate.” Four videos created primarily by Picciolini as part of a grant LAH received, which had been posted on the ExitUSA YouTube channel were also posted on the Free Radicals Project site. At some point, ExitUSA.org began automatically redirecting users to a website for Free Radicals Project. The description of the @ExitUSATeam Twitter handle was changed to “ExitUSA (now @FreeRadicalsOrg),” inviting users to visit the @FreeRadicalsOrg Twitter page.

Various people in the industry asked “what was happening with Life After Hate,” “what was happening with...[Exit]USA,” etc. A journalist asked if LAH controlled ExitUSA or if Picciolini did, or if LAH and Picciolini controlled it as partners. [Note that some courts would interpret similar evidence as consumer understanding that there’s uncertainty, rather than consumer confusion.]

LAH retained a lawyer and applied to register “EXITUSA” and “LIFE AFTER HATE,” which were registered in 2018 with a 2017 priority date. It sent a C&D demanding that Picciolini stop using the “ExitUSA” and “Life After Hate” marks; Picciolini then filed a trademark application for “EXITUSA,” which was eventually abandoned. LAH’s officers also tried to reclaim the ExitUSA.org domain through GoDaddy and Google. After the registration, LAH applied to an organization that connects non-profit groups with law firms providing pro bono legal assistance, but after five or six weeks, it learned that it wasn’t selected for services. LAH couldn’t afford the fees of the first lawyer it used. It finally retained counsel in September 2018, and filed suit October 17, 2018.

Around November 2018, the ExitUSA.org domain stopped redirecting to Picciolini’s website; in January 2019, Picciolini stopped using the @ExitUSATeam Twitter account; and in February 2019, the ExitUSA YouTube channel was disabled. Picciolini and Free Radicals Project still allegedly used the “No Judgment. Just Help.” and “Life After Hate” phrases on the Free Radicals Project website and posted links to the four videos LAH produced.

Defendants tried to rebut the presumption of validity for the registered marks, arguing that “Life After Hate” merely describes LAH’s services: namely, helping people with their life after leaving a hate group. The court disagreed, first because of infrequent use of the term by similar organizations in the US. Second, and here’s the wrong part, “[u]nderstanding exactly what services ‘Life After Hate’ provides requires a leap of imagination.” It wasn’t readily apparent that it helped people after they left hate groups, and anyway LAH provided other services (another wrong turn: QWIK PRINT is descriptive for a print store that also sales copy paper and other office supplies, because the term describes one service it provides). Since “a consumer would need to use their imagination to determine the nature of services provided by an organization called Life After Hate,” it was suggestive.  

The same test also deemed ExitUSA suggestive, though a closer call. Defendants noted the existence of other geographic “Exit” groups and argued that “USA” was merely a geographic designation and “exit” merely a type of group. But the record didn’t show that the use of “exit” was so widespread in the US as to make it descriptive or generic.  Likewise, “ExitUSA” didn’t immediately convey “disengagement and deradicalization services.” It “literally sounds like a group that helps people exit the United States—not a group that helps people in the United States exit extremist hate groups. It takes a degree of thought and imagination to make that leap.” 

Finally, “No Judgment. Just Help.” was similarly suggestive because it didn’t immediately convey any ideas, characteristics, or qualities about LAH’s services. (That’s just not true, though—it immediately conveys that the providers won’t judge you—it just doesn’t say what they won’t judge you for, which is the QUICK issue.) And anyway only two parties used it, indicating that the phrase was suggestive.

Sadly, all of this could easily have been done with “descriptive plus secondary meaning,” which the court later says exists.

After that, ownership and likely confusion were mostly not particularly interesting analyses.  One point of note is consumer care:

[I]n this context, the price (or lack thereof) of the services is much less important than the nature of the services. As LAH’s own witness testified, “providing private and confidential services is really the basis of the trust we’re establishing with the people we serve...The people we’re trying to help are already very paranoid and afraid and skittish. They’re trying to hide the idea that they’re trying to change.” … LAH’s services are sensitive, private, and required LAH to establish trust with its clients. This testimony makes clear that consumers of these services are likely to exercise a high degree of care when choosing a service provider. This factor weighs in Defendants’ favor.

The court also deemed three instances of industry people asking what was up to weigh “heavily” against defendants as instances of actual confusion.

In a fairly weird description of the standard for a preliminary injunction, the court found that LAH had a “greater than negligible chance” of showing that it owned valid marks and of showing a likelihood of confusion, resulting in a “good chance” of succeeding on the merits.  Of course, the preliminary injunction standard isn’t math, but “greater than negligible” is really not the standard for likely success on the merits. Clearly that’s just underselling the evidence in this case (the court then says “[i]ndeed, [given the factors,] LAH has a strong likelihood of succeeding”), but it’s still weird.

The court then presumed irreparable injury, despite eBay. Delay can rebut the presumption. Here, LAH learned in August 2017 that ExitUSA.org was automatically redirecting users to ChristianPicciolini.com/ExitUSA, which featured ExitUSA logos and slogans, but it didn’t sue for 14 months. This was again a close call, but here the delay wasn’t too long given LAH’s explanations for the delay. It quickly hired an attorney to help it submit applications to the USPTO, hired another attorney who sent Picciolini a C&D, and attempted to regain control of the ExitUSA.org domain. “More time passed while LAH waited on the results of its USPTO applications and found a third set of attorneys to assist it in bringing its claims, but once it secured new counsel, it promptly brought this suit. Though 14 months is certainly pushing the limit, LAH demonstrated that it was making good faith efforts during that time to investigate and prosecute its trademark rights.” Given the C&D, defendants couldn’t have been lulled into a false sense of security.  (This seems to conflate laches and delay that rebuts a presumption of irreparable harm for purposes of preliminary relief, but it is taken directly from prior cases.)

Defendants argued that an injunction would damage Picciolini’s goodwill and reputation in the anti-extremism community, but that was speculative.

The injunction prohibited use of “LIFE AFTER HATE,” and/or “EXITUSA,” or “No Judgment. Just Help.” (or any variation thereof) “in connection with any goods or services online or offline.” For exitusa.org, defendants could do nothing with it but create a landing page that states: “For those seeking Life After Hate, Inc., please go to www.lifeafterhate.org/exitusa” (though it’s not clear they have to do so); they also couldn’t use the Twitter handle/account or YouTube channels. They couldn’t use LAH videos without a disclaimer conspicuously stating “This video is owned by and is used with the permission of Life After Hate, Inc. Free Radicals Project, Inc. is not in any way affiliated with Life After Hate, Inc.” 

Despite the language of total prohibition that leads off the injunction, they couldn’t use or permit the relevant phrases “on any website or social media account, except for in the limited, fair use manner that sufficiently limits and/or dispels any likelihood of confusion (e.g., Defendants may state in Picciolini’s biography that he co-founded Life After Hate, Inc., but he must also explicitly state that he 'no longer works for and is no longer affiliated with "Life After Hate, Inc." or "ExitUSA."’).” Can he say these things offline under the terms of the injunction? I think he has a First Amendment right to do so. The last part of the injunction suggests that he can by saying that, if defendants mention “Life After Hate” or “ExitUSA,” “they shall explicitly communicate that Defendants are no longer associated with or affiliated with Life After Hate, Inc. or ExitUSA.”

"use in a TM way" just creates another fact issue in the 6th circuit


Ford Motor Co. v. InterMotive, Inc., No. 17-CV-11584-TGB, 2019 WL 4746811 (E.D. Mich. Sept. 30, 2019)

Ford sued InterMotive for trademark infringement, false designation of origin, trademark dilution, cancelation of trademark registration, and declaratory judgment for using Ford’s trademarks in various InterMotive ads; defendants counterclaimed for a bunch of things including misappropriation of trade secrets and trademark infringement based on Ford’s launch of a competing product of the same name:

In 2011 and early 2012, Ford and InterMotive explored a potential business relationship wherein InterMotive would design an “Upfitter Interface Module” (“UIM”) for Ford to use on its vehicles. The UIM, as described in the record, is a product that allows its user to modify a vehicle for special applications such as in the police, fire, and utility truck market. For example, it can program a truck to flash a light if exceeds 65 miles per hour, or program a police vehicle to automatically lock its doors unless certain conditions are met.

Ford alleged that its relationship with InterMotive ended in May 2012; it announced a different design from a different vendor in 2016.  In June 2013, InterMotive and Ford executed a licensing agreement governing the Police Surveillance Mode Module, which Ford argued (and InterMotive disputed) was an express agreement not to use Ford’s marks, regardless of Ford’s alleged acquiescence to InterMotive’s use throughout 2012.

Along with the trade secret claims, InterMotive argued that Ford began using the name “Upfitter Interface Module” with full knowledge of InterMotive’s use of the same name to market its product. After the announcement, InterMotive applied to register UPFITTER INTERFACE MODULE, but it was placed on the Supplemental Register.

The dispute over this triggered Ford’s own trademark claims. First, InterMotive allegedly used the distinctive “Ford Oval” mark on the “splash screen” of InterMotive’s UIM software, in a UIM brochure for Ford, and in a promotional and training video on InterMotive’s website under the heading “The Ford Competitive Advantage.” They also allegedly used the Ford Oval and “Go Further” trademarks in a video on InterMotive’s website describing the “Ford Police Interceptor Surveillance Mode.” InterMotive argued that its uses showed that InterMotive is the source of the UIM product, as evidenced, e.g., by InterMotive’s logo, phone number and web address printed on the bottom of the brochure for prospective buyers, and merely showed that the product operates on Ford vehicles.  (After Ford objected, the oval mark was removed from the splash screen but a Ford mark remained.)

In August 2016, InterMotive’s engineering manager reviewed Ford’s recently-released user manual for the Ford UIM, stating that the user manual “is pretty much a knock off of [InterMotive’s], with different screen layouts”; Ford argued that its UIM was thus not a “blatant copy” of InterMotive’s UIM.

The court found that there was a question of fact whether InterMotive used Ford’s marks “in a trademark way,” which is a predicate question in the Sixth Circuit. 

First, the court noted that on the splash screen, Ford’s mark appeared between the logos of Ram, Chevrolet, GMC and GM below the heading “InterMotive UIM.” InterMotive also argued that the “splash screen” only appears after the customer has downloaded InterMotive’s UIM from the InterMotive website by clicking on an InterMotive software icon—none of which display Ford marks. Ford argued “post-sale” or “marketplace” confusion, but didn’t explain how this would happen.

Second, Ford challenged use of the Ford Oval and “Go Further” trademarks in a video on InterMotive’s website describing the “Ford Police Interceptor Surveillance Mode.” InterMotive responded that it merely posted a link to the video on its website, but Ford hosted (and continued to host) the video on YouTube. Ford just argued that it didn’t authorize InterMotive to use the marks.

Third, Ford argued that InterMotive used the Ford Oval trademark in a UIM brochure for Ford created on July 23, 2013. The heading of the brochure states: “Ford Upfitter Interface Module” followed by the Ford Oval mark below it. InterMotive points to its use of its logo, phone number and web address printed on the bottom of the brochure for prospective buyers. InterMotive argued that “Ford knew about the brochure and actually used it” at trade shows or otherwise and InterMotive used it to demonstrate how InterMotive’s UIM supported Ford vehicles.

Fourth, there was a “Ford Competitive Advantage” video, which InterMotive argued was designed with Ford when they were actively working together; InterMotive’s witness said that Ford provided a high-resolution image of the Ford Oval mark for use in the video and InterMotive argued that the overall video made clear it was from InterMotive.

Ford argued that these uses create a “presumption of confusion” because InterMotive used a “precise replica” of Ford’s marks and because InterMotive’s product competed directly with Ford’s product. But that didn’t matter if there was non-trademark use. Also, the allegedly infringing uses were all from 2012-13—up to four years before Ford had a competing product.

Despite this very favorable description taken straight from the court’s opinion, there’s still a genuine issue of material fact on whether InterMotive only used Ford marks to show that its UIM was compatible with Ford vehicles, which suggests something about the utility of many TM defenses. A jury could accept that “the relationship between Ford and InterMotive ended well before the advertisements were produced and the advertisements give the incorrect impression that Ford, not InterMotive, is either the source of InterMotive’s UIM or otherwise endorses the UIM.” Whether Ford really did provide a high-resolution photo of the Ford Oval mark for InterMotive to use in the “Competitive Advantage” video, whether Ford used and played the video at trade shows, whether Ford welcomed and encouraged the production of the brochure so that InterMotive could inform Ford at trade shows that its UIM was optimized for Ford vehicles, and whether Ford gave InterMotive previous approval to use the Ford Oval mark on InterMotive’s “splash screen” were all issues of fact.  [Query: if all this is true, should InterMotive get its fees?]

Also: why are these facts relevant to whether it was non-trademark use, as opposed to a defense of consent? The court said that “[i]f Ford knew that InterMotive was using its marks to advertise InterMotive’s products’ functionality on Ford vehicles, then Ford—in effect—concedes the … threshold inquiry by saying that InterMotive was not using Ford’s marks to show that Ford was the creator of the UIM.”  But even if Ford contests the threshold inquiry, shouldn’t we ask if there really is a question of fact posed by these uses?  And what Ford “knew” is highly unlikely to have been framed by Ford at the time as an issue of non-TM use, as opposed to “an ok thing a partner is doing”; when they were working together, it wasn’t false to suggest they were working together.  So figuring out what Ford thought isn’t really that helpful in identifying a non-TM use.

Anyway, Ford’s agreements with InterMotive didn’t prohibit InterMotive from using the marks (again, super unclear why that would matter to whether the use was infringing, as opposed to a breach of contract).

There was also, sigh, an issue of fact on trademark dilution, because non-trademark use can’t dilute. There was a genuine issue of material fact on whether InterMotive used Ford marks “only to describe some aspect of the [InterMotive UIM] product.”

As for InterMotive’s claim based on “upfitter interface module,” the PTO characterized the term as “(at best) highly descriptive,” but that examiner statement “does not constitute a finding by the Patent and Trademark Office.” Though Ford argued that the term was generic, a jury could find otherwise. The PTO considered a number of “web page screen captures” showing that the term “upfitter” was being used in a “highly descriptive” way by Dodge, Ram, and Ford. “But a number of those examples are efforts by Ford to market its ‘Ford upfitter interface module,’ which is the subject of InterMotive’s trademark infringement claim.” And, alleged direct, intentional copying of InterMotive’s mark was “strong evidence” of secondary meaning. “InterMotive also presents Ford-affiliated publications where InterMotive advertised its Upfitter Interface Module, demonstrating that it was a brand that Ford associated with InterMotive.”  [Or demonstrating that InterMotive made an upfitter interface module?]

Also, there was an email from a Ford employee who worked on developing Ford’s UIM, which stated that the term “Upfitter Interface Module” was already being used by an existing supplier and recommended changing Ford’s UIM name to one of three suggestions: Programmable Upfitter Interface Module (PUIM),19 Programmable Interface Module (PIM), or Programable Upfitter Module (PUM). The existence of three alternative ways to refer to the product was, InterMotive argued, evidence that “Upfitter Interface Module” wasn’t generic or highly descriptive. This argument has a decidedly mixed record in the courts—there are lots of ways to describe restaurants and hotels, but that doesn’t make “house” or “inn” protectable; there can be multiple generic names for a thing.  But that’s a fact issue here.

InterMotive also provided possible evidence of confusion: “at a 2016 trade show, Ford dealers and trade show personnel were confused over whether Ford’s product came from InterMotive—as prior tradeshows demonstrated that InterMotive was marketing an Upfitter Interface Module that was optimized for Ford vehicles.” [But did that confusion come from the name or the terminated partnership?]

InterMotive also challenged two claims in Ford’s ads as false advertising.  In a promotional video titled “Ford Programmable Upfitter Interface Module ‘Critical’ to Industry,” available on YouTube, a Ford representative states: “Ford is the only product that is actually programmable in these upfitter interface modules.” InterMotive alleged that it did too. Ford argued that this claim was puffery, but it’s a specific claim.  Ford also argued that the statement was immaterial and de minimis, given the video had been viewed less than 300 times at the time Ford’s motion for summary judgment was filed. InterMotive’s witness declared that this wasn’t small “because the work truck market is not very big” and “a single viewer could make the decision to buy thousands of vehicles.” Moreover, the views count didn’t include people at a trade show who viewed the video when it was played; trade shows are an important market for InterMotive. In addition, InterMotive argued that programmability was material because a product that is not programmable “has much less use to the customer.” There were genuine fact issues on materiality.

The second alleged false advertisement came from Ford’s “What You Get” brochure: “[U]nlike aftermarket upfitter modules currently on the market, [Ford’s UIM] is warranted by Ford and will not interrupt the Computer Area Network (CAN).” In a classic caveat emptor argument, Ford contended that its statement was true if taken as conjunctive (it’s the only one that is both warranted by Ford and also won’t interrupt the CAN). Without ruling on this bad argument, the court found that InterMotive hadn’t shown materiality/travel in interstate commerce.