Friday, April 29, 2022

truthful statement about role in developing product isn't falsified by later split

Hawrych v. Nutra-Luxe M.D., No. 2:21-cv-830-SPC-MRM, 2022 WL 1187136 (M.D. Fla. Apr. 21, 2022)

“Nearly twenty years ago, Plaintiff Dr. Andrew Hawrych, a plastic surgeon, and Defendant Peter Von Berg, a businessman operating a cosmetics and skin care company, formed an oral agreement to develop new cosmetic products.” Eventually, instead of monthly compensation, Von Berg offered Hawrych a 10% ownership interest in Nutra-Luxe, which worked for 16 years. “Because of Dr. Hawrych’s association, Von Berg incorporated the acronym ‘M.D.’ into the company name, added the phrase ‘physician developed/formulated’ to the product descriptions, and used Dr. Hawrych’s name, likeness, and trademark (‘Hawrych MD’) in various advertisements.”

However, Von Berg allegedly sold Nutra-Luxe to Lash HoldCo, LLC without notice or compensation to Hawrych without paying him, at which point Hawrych revoked permissions and licenses that he had granted Defendants for the use of his name, image, and trademark.

Addressing only the false advertising claim: Given that Hawrych explicitly alleged that he developed the products at issue, Lash-Global’s advertisements stating that Dr. Hawrych developed their products were not plausibly false or misleading. It was not enough to allege that the marketing materials were

“misleading as to his present involvement.” The allegations related to the use of “M.D.” in the company name; the phrase “physician developed/formulated”; the use of his name, likeness, and registered trademark “Hawrych MD”; and, post-license termination, statements that defendant’s “products were developed by Hawrych,” inclusion of Hawrych’s name on their products as listed on their websites; and marketing using terms identical or similar to “Dr. Hawrych” and “Dr. A. Hawrych.” This allegedly misled consumers into thinking he was still associated or connected with the new company, and that it continues to have his sponsorship, endorsement, consent, or approval.

But the alleged statements, e.g, “[t]his revolutionary technology was clinically researched, physician formulated and tested by A. Hawrych MD, A Board Certified Facial Plastic Surgeon” and “Dr. Hawrych’s most advanced skin serum is formulated with two neuro-peptide ingredients,” were admittedly true. “Statements conveying Dr. Hawrych’s role in the research, formulation, and testing of Nutra-Luxe’s products are not rendered misleading because his relationship with the company producing the products has changed.” Thus, the false advertising claim would be dismissed.

False advertising law has a much more structured way of accounting for implications than trademark law does. As a trademark claim, this is harder to kick out just because it’s true, because courts have fewer tools for explaining that the benefit of the true information about product development has to be traded off against the potential misleadingness about continuing involvement, as the current morass of first sale doctrine indicates. But given the benefit of the truth, and the lower-if-present materiality of the allegedly false implication, courts should favor allowing the truth. (Note that Dastar also produces this result!)

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