Friday, September 13, 2024

"Made in the USA" materiality showing requires evidence, not just interested witness testimony

Illinois Tool Works Inc. v. J-B Weld Co., No. 3:19-cv-1434 (JAM), 2024 WL 4117244 (D. Conn. Sept. 9, 2024)

The parties compete in the sale of “chemical bonding products marketed for home and automotive use.” Here, the court kicks out Lanham Act claims/counterclaims on summary judgment for want of materiality—for “Made in USA” and the term “epoxy”—as well as another claim on laches grounds. The first one’s the potential surprise, and raises evidentiary questions about hearsay that a court in a trademark case might have seen differently.

J-B has used unqualified “Made in USA” claims in its advertising. The parties disputed whether J-B’s silicone sealants, manufactured by its suppliers, contain ingredients sourced from abroad and the significance of those ingredients.

ITW advertises “the interchange between its products and the matching OEM manufacturer products” in its materials, sometimes including OEM interchanges for specific automotive brands in its package advertising. It also marketed certain products as epoxies despite their not fitting the chemical definition of an epoxy. The parties agreed that “an epoxy is a polymer containing one or more epoxy or epoxide groups,” and that adhesives containing epoxides are distinct from adhesives containing methyl methacrylate (“MMAs”), and they have distinct health and safety concerns. ITW’s accused products didn’t contain chemical epoxide groups, but it categorized them as epoxies on its website. It took the position that, “from a marketing perspective, the definition of an epoxy is any two-part adhesive,” regardless of its specific chemical composition. J-B Weld disagreed and cited a few Amazon reviews in which customers say things like “Is this epoxy or just adhesive?”; “Can anyone tell me if this has methyl methacrylate (mma)? that’s what i want but i can’t tell for sure”; “What is the base chemical of this glue—epoxy, methacrylate, or polyurethane?” Some of ITW’s technical product data sheets did differentiate between “the ‘chemical type’ of an epoxy and a non-epoxy,” identifying differences in odor and flashpoint, among other product characteristics.

ITW didn’t submit sufficient evidence of the materiality of “Made in USA,” offering only “two deposition excerpts in which ITW employees offer their opinions and vague impressions on the issue.” The former director of marketing testified that consumers “definitely” purchase products “based on Made in the USA advertising.” He elaborated: “Because of the type of consumer that shops for our products in general, the profile are people that highly value Made in the USA.” He said that Walmart told his team that “made in the USA is a priority for them.” The court deemed this hearsay and thus irrelevant for summary judgment—but I wonder whether it could also be characterized as evidence of the speaker’s mental state. Regardless, “[c]ourts that have deemed ‘Made in USA’ claims material have been offered much richer evidentiary records,” including actual retailer testimony.

In addition, ITW didn’t show actual injury; in the Second Circuit, literal falsity alone isn’t enough to presume injury in the absence of comparative advertising as well as direct competition. This wasn’t comparative advertising (or a two-player market).

OEM: The court found laches; ITW had used OEM advertising since 2001 and J-B didn’t sue until 2020. J-B argued that the relevant period should begin in 2014, when J-B entered the market, and that it wasn’t unreasonable for a new market entrant to wait to sue the most significant competitor. But that still didn’t excuse six years of delay (where the relevant state period was three years). And ITW was likely to be prejudiced “by being forced to discontinue a marketing strategy it has relied on for so many years and with the risk that customers will assume—in the absence of OEM labeling claims—that the formulation of its products have changed.”

Epoxy: In J-B Weld Co., LLC v. Gorilla Glue Co., 978 F.3d 778 (11th Cir. 2020), J-B lost a false advertising claim against a different competitor based on the competitor’s use of the term “epoxy” in advertising its non-epoxy MMA-based product. The court of appeals reasoned that “consumers likely categorize ‘epoxies’ as all two-part resin-and-hardener adhesives, regardless of the chemical constitution of the resin.” It cited the testimony of J-B’s own expert “that consumers likely only care about whether the product sticks two surfaces together effectively.” Even if there were “safety and odor” differences, there wasn’t a showing of materiality.

The record here wasn’t sufficiently different from that in Gorilla Glue. A “smattering” of Amazon reviews was insufficient to change anything. J-B’s own CEO’s opinion about whether ITW’s epoxy claim would affect consumer purchasing decisions didn’t help because he wasn’t qualified expert on consumer purchasing decisions, and “his self-interested opinion about consumer purchasing decisions exceeds the limits of permissible lay opinion testimony that must be based on a witness’s own sensory perception.”

In the alternative, J-B also failed to show injury from either the OEM or epoxy advertising. Its 30(b)(6) witness testified that various retailer customers told them that J-B was losing business because ITW used “OEM” labels and J-B didn’t, but that was hearsay. Even nominal damages required evidence of injury.

 

No comments: