Mexican origin claims revitalized by survey

Govea v. Gruma Corp., 2021 WL 4518457, No. CV 20-8585-MWF (JCx) (C.D. Cal. Aug. 18, 2021)

Previous discussion. The amended complaint fares better: the tortilla packages at issue plausibly misrepresented Mexican origin. Plaintiffs added allegations that “[u]n pedacito de México” translates to “a piece from Mexico,” in addition to “a piece of Mexico.” And they alleged a consumer survey that showed 401 participants the following image: 

It then asked: “Based on the label of the product, where do you believe the product is made?” 70.1% of participants answered Mexico. Gruma argued that the survey was unreliable because it failed to use open-ended questions and controls and failed to consider whether the participants actually zoomed in on the label or read any of its text. “Even if Gruma is correct that the Survey suffers from certain flaws, the Survey at least demonstrates that it would not be ‘impossible for the plaintiff to prove that a reasonable consumer was likely to be deceived.’” Thus, dismissal at this stage was unwarranted. As with another recent case, Rodriguez v. Olé Mexican Foods Inc., 2021 WL 1731604, No. EDCV 20-2324 JGB (SPx) (C.D. Cal. Apr. 22, 2021), the packaging “evokes the spirit of Mexico, which … may also mislead a reasonable consumer about the Tortillas’ geographic origin.”

Plaintiffs had standing to seek injunctive relief because they desired to buy the tortillas in the future, but were currently unable to rely on the packaging.  

Disney's Toy Story 4 daredevil not legally risky

K & K Prods., Inc. v. Walt Disney Studios Motion Pictures, No. 2:20-CV-1753 JCM (NJK) (D. Nev. Sept. 23, 2021)

Evel Knievel was a famous motorcycle daredevil with an “iconic wardrobe: a white jumpsuit embellished only by star-spangled red, white, and blue patriotic insignia with a matching white cape and helmet and a motorcycle adorned by red, white, and blue colors.” “In 1973, Ideal Toys released the Evel Knievel Stunt Cycle, a toy which features a doll of Evel Knievel in his signature…jumpsuit and matching helmet.” The toy came with a red “energizer”, which wound up the toy to be released. K&K claimed rights relating to Evel Knievel, including trademarks, copyrights for audio/visual works, right to publicity, existing licenses, contracts, and common law rights.

image from complaint

EK toy and comparison to EK

EK Daredevil Stunt Set

70s TV ad (I love that the plaintiffs grabbed it off social media)

Toy Story 4 featured a new character, Duke Caboom, who rides a Canadian-flag-colored motorcycle and dresses in a white jumpsuit, helmet, and cape with Canadian insignia. His insecurities are revealed by a flashback to a 70s era scene where a child is playing with his Duke Caboom doll while watching the commercial advertisement for the “Duke Caboom Stunt Cycle.” The toy could not perform as advertised in the commercial. In his final stunt, Duke Caboom tries to jump 40 feet across an amusement park and through lights fabricated to look like a ring of fire. He fails. Disney promoted Toy Story 4 with materials featuring Duke Caboom and also sold Duke Caboom Merchandise, including a Duke Caboom doll in a white jumpsuit with a cape and belt buckle adorned by a red Canadian insignia, a matching helmet and motorcycle, and a red “launcher.” 

traumatic flashback

toy with launcher; other toy images below

“Toy Story 4 actors, directors, and producers referenced the Evel Knievel inspiration for Duke Caboom in six separate interviews.” Consumers and critics likewise noted the similarities.

side by side comparisons

K&K’s false endorsement/false description, trade dress infringement, trademark dilution, and state law claims including right of publicity claims all failed on a motion to dismiss. Rogers applies to the Lanham Act and coordinate state law claims, and this isn’t a difficult Rogers case. K&K simply failed to plead facts indicating that Toy Story 4 wasn’t an expressive work, or that associated merchandise wasn’t sufficiently attached to the “host” expressive work. “It is … well-established that advertising and the sale or licensing of consumer goods related to an expressive work like a film are incorporated into the same Rogers test analysis.”

Obviously, “the alleged allusion to Mr. Knievel bears substantial artistic relevance to the creative work.”  K&K argued that Duke Caboom wasn’t artistically relevant to the film because it does not add “any original material element” to Toy Story 4 and is used “solely to import Evel Knievel…into the film.” That’s not a way around Rogers. “The court is not willing to make the unreasonable inference on the facts that the Duke Caboom’s appearance is simply a gratuitous showing of an Evel Knievel-esque motorcycle stuntman.”

Nor was there any explicit falsity that would confuse consumers into thinking that the “celebrity is somehow behind the [the film] or that [he] sponsors the product.” The “nature of [Disney’s] behavior” and not “the impact of the use” on consumers was the key, even if there had been consumer confusion evidence. The court unnecessarily points out that the toy has “a different name, appearance, and backstory from Evel Knievel.” More to the point, the use of a mark alone is not enough to satisfy this prong of the Rogers test, otherwise “it would render Rogers a nullity.” Even if Disney’s use of Evel Knievel was “blithe,” it was nonactionable without explicit misleadingness.

ROP: The Nevada ROP statute specifically exempts uses that are an “attempt to portray, imitate, simulate, or impersonate a person in a… film” and uses “in connection with an advertisement or commercial announcement for a use permitted by this subsection.” As for the toys, the court predicted that Nevada would imitate California, as it has done in similar situations before, and adopt a transformative use defense. This could be resolved on a motion to dismiss, especially since ROP laws implicate broad free speech interests and “a speedy resolution is desirable because protracted litigation may chill the exercise of First Amendment rights.” Here, Evel Knievel was one of the raw materials for the work, not the “sum and substance” of the work; the work was primarily Disney’s own expression; Disney provided the marketability and economic value of the work because it’s Disney and people already like Disney; and Toy Story 4 wasn’t just a mere exploitation of the fame of through a conventional portrait, superseding the artist’s skill and talent. In California terms, this was more Kirby (video game with a reporter from outer space character who looked like a real singer) than Comedy III (conventional charcoal portrait).

As in Kirby, Duke Caboom was “reminiscent” of Evel Knievel, but not a literal depiction. Unlike the sports videogame cases “where the video game avatars looked the exact same outside of their name and hometown, Duke Caboom is not a carbon copy of Evel Knievel minus a few details.” 

Distortions of a celebrity figure “are not, from the celebrity fan’s viewpoint, good substitutes for conventional depictions of the celebrity and therefore do not generally threaten markets for celebrity memorabilia that the right of publicity is designed to protect.”

non-toxic plausibly means nonharmful, but harmfulness still needs adequate pleading

Rivera v. S.C. Johnson & Son, Inc., 2021 WL 4392300, No. 20-CV-3588 (RA) (S.D.N.Y. Sept. 24, 2021)

Plaintiffs alleged that S.C. Johnson’s labeling of its Windex cleaning products as “Non-Toxic” was misleading in violation of NY’s GBL because those products contain ingredients that may be harmful to humans, pets, or the environment. The court rejected many of S.C. Johnson’s arguments but ultimately found that plaintiffs failed to allege that the products were harmful.

Plaintiffs alleged that the NAD had found that “the term ‘non-toxic’ as used by the Products signifies to reasonable consumers” that those Products will not cause “harm,” meaning “various types of temporary physical illness, such as vomiting, rash, and gastrointestinal upset.” The allegedly harmful ingredients include “acetic acid, alkylbenzene sulfonate, ammonium hydroxide, benzyl benzoate, fragrance components, isopropanolamine, lactic acid, lauramine oxide, propylene glycol, sodium hydroxide, sodium petroleum sulfonate, sodium xylene sulfronate, [and] 2-(hexyloxy)-ethanol.” They alleged that the ingredients were capable of causing certain harmful effects at their “in-use concentrations,” which weren’t disclosed on the products, so the allegations were based on information and belief.

Plaintiffs plausibly alleged that a reasonable consumer might share their understanding of the meaning of “non-toxic.”  S.C. Johnson argued that no reasonable consumer would believe that that “a non-toxic label implies that a product [neither] (1) pose[s] any risk of harm to humans, animals, or the environment, [nor] (2) contain[s] potentially harmful and toxic compounds.” “Although the Court finds that argument appealing from a common-sense perspective, it cannot determine as a matter of law that no reasonable consumer would share Plaintiffs’ understanding of the word toxic.” Plaintiffs’ allegations weren’t implausible or inconsistent with dictionary definitions; even the dictionary preferred by S.C. Johnson offered an alternative definition of “toxic” as “extremely harsh, malicious, or harmful.” “Perhaps that is why, as alleged in the Complaint, the Environmental Protection Agency has cautioned ‘that marketers will rarely, if ever, be able to adequately qualify and substantiate [ ] a claim of “non-toxic” in a manner that will be clearly understood by consumers.’” The NAD’s holding also “undercuts the Company’s characterization of Plaintiffs’ definition as implausible. Indeed, the independent substantiation of a reasonable consumer’s understanding of ‘non-toxic’ helps nudge the claims ‘across the line from conceivable to plausible.’” 

However, plaintiffs failed to allege that the products were toxic by their own definition. “The parties appear to agree that a product could fairly be described as non-toxic as a whole if it ‘contain[s] a toxic substance [but only] at a level that is not harmful to humans or the environment.’” But plaintiffs “essentially acknowledge that they do not know the actual concentrations of the ingredients,” and don’t explain how they came to have their beliefs about the in-use concentrations.  Though S.C. Johnson doesn’t disclose concentrations/percentages, and though Twiqbal doesn’t prevent information/belief pleading when facts are peculiarly within the possession and control of the defendant, plaintiffs had additional options.

First, even if the precise specifications were secret, “information about the effect of those ingredients in their current concentrations is not.” These widely-sold products could have generated publicly available evidence of harm to “people ..., common pets, or the environment,” and plaintiffs didn’t cite their own experiences or even internet reviews. Second, they could have tested the products. Plaintiffs need not always provide an expert to conduct sophisticated chemical analysis before bringing suit. “But the fact that the Products can be purchased at stores as ubiquitous as Target and tested suggests that basic facts about their chemical composition is not something exclusively in the control of Defendant. At the very least, the Complaint could contain allegations as to why such testing would not have been possible here—it does not.” And finally, consultation with experts in the field might have been able to provide “even minimal support” for their bald assertion that “the ingredients’ likely concentrations or percentages by weight” are sufficient to cause harm.

The court did find that plaintiffs’ price premium theory sufficed to allege harm, but that they lacked standing to seek injunctive relief. It was not enough to allege they’d buy in the future only “if assured [they] did not contain components which were toxic and had the harsh physical and environmental effects they did.” However, they did have standing to challenge non-toxic labels on products they didn’t buy because they were sufficiently similar to those products that they did purchase and because the “deceptive non-toxic marketing is identical on each product.” The products need not be nearly identical; rather, the claims about falsity have to raise a “set of concerns [that are] nearly identical.” That was so.

NY can still seek disgorgement even if FTC can't

Federal Trade Comm’n v. Vyera Pharms., LLC, 2021 WL 4392481, No. 20cv00706 (DLC) (S.D.N.Y. Sept. 24, 2021)

Featuring Martin Shkreli as a defendant! The FTC, with NY and a number of other states, sued Vyera for violating the antitrust laws in the market for the pharmaceutical Daraprim, which treats the potentially fatal infection toxoplasmosis. In a reminder that satire is dead and that no cartoon villains can match reality, the day after acquiring the rights to Daraprim, Vyera raised the price from $17.50 per tablet to $750 per tablet; defendants also allegedly schemed to block lower-cost generic drug competition.

The locus of the bad conduct was NY; seven states sued in their parens patriae capacity, that is, they asserted a quasi-sovereign interest “in the health and well-being -- both physical and economic -- of its residents in general.”  They sought injunctive relief and disgorgement of nationwide profits. The FTC can no longer seek disgorgement, but the states sought to do so both under the Sherman Act and under their respective state laws.

Vyera argued that the states lacked parens patriae standing to obtain equitable monetary relief, including disgorgement, on behalf of those who weren’t citizens of their States. Regardless of whether the other states did, NY could do so because the alleged violations stemmed “from decisions made and contracts executed in New York.”  The Attorney General can seek relief on behalf of out-of-state residents injured by the wrongdoing, furthering “New York’s vital interest in securing an honest marketplace,” which is threatened when a defendant uses “a New York business” to engage in its scheme. Thus, disgorgement of net profits attributable to all US sales was potentially available. This was not a penalty, because the states indicated that, should they prevail, they’d undertake to distribute the disgorged profits to all victims wherever they were. And overlapping awards could be avoided by courts sitting in equity (which is how you get disgorgement).

Vyera argued that NY had no parens patriae interest in other states’ citizens. But parens patriae is about standing, not about the scope of a disgorgement remedy.

Bad reviews as evidence of actual knowledge of defects

Partida v. Tristar Prods., Inc., 2021 WL 4352374, No. EDCV 20-436 JGB (KKx) (C.D. Cal. Aug. 5, 2021)

This is a putative consumer class action about pans advertised as non-stick that allegedly weren’t (and also weren’t copper as advertised). It was allegedly false to advertise “Cerami-Tech Non-Stick Technology” so that “[n]othing sticks to the surface and cleanup is a breeze” and that the pans were “Chip-resistant, Heat resistant,” and didn’t require fats or oils to be nonstick. The pans allegedly lost their non-stick performance within days or months of purchase. Tristar argued that its statements that the pans were “durable and last a ‘lifetime’ ” were “nonactionable puffery.” But even statements that “might be innocuous ‘puffery’ or mere statement of opinion standing alone may be actionable as an integral part of a representation of material fact when used to emphasize and induce reliance upon such a representation.” This was a question of fact.

Plaintiffs also sufficiently alleged Tristar’s actual knowledge of the alleged defects at the time of purchase, which the court found required for their specific UCL, CLRA, and FAL claims. Although vague allegations about consumer complaints may not suffice to allege awareness, the complaint here listed “dozens” of complaints, including when and where they were posted, and alleged that that 70% and 86% of consumer [reviews] on third-party websites were negative. “Plaintiffs further allege that experts reported that the Pans were not copper cookware, as advertised.” That was sufficient to allege that Tristar was on notice: “when a significant percentage of product reviews identify a problem, then the company that sells that product can reasonably be deemed on notice of the issue, even if only a subset of consumers chooses to leave a review.”

Ice Cube's case against Robinhood melts again

Jackson v. Robinhood Markets, Inc., No. 21-cv-02304-LB (N.D. Cal. Sept. 20, 2021)

Previously, the court dismissed Ice Cube’s ROP and false endorsement claims for lack of standing because pleading an appearance in a financial newsletter does not suffice to plead endorsement. (Is that lack of Article III standing? Before TransUnion I would probably have said no, but after TransUnion I’m no longer so sure.

Still used in Robinhood's newsletter, captioned Correct yourself before you wreck yourself

Jackson repled Lanham Act claims only, and the court found that he hadn’t fixed the deficiencies in the complaint. Robinhood’s article described a market correction for tech stocks and paraphrased a line from one of his songs, “Check yo self before you wreck yo self,” as “Correct yourself before you wreck yourself,” illustrated with a picture from a movie in which Ice Cube appeared.

The amended complaint cites congressional testimony and SEC filings to illustrate that [the newsletter] Robinhood Snacks is a commercial product that entices new users to sign up for the app and offers digestible educational content that also satisfies certain financial regulatory requirements. It adds allegations about its demographics and the appeal of celebrities like Ice Cube (and its celebrity endorsers Jay-Z, Nas, and Snoop Dog) to support the point that using Ice Cube’s picture and phrase created consumer confusion and suggested Ice Cube’s endorsement of its products.

However, this still failed to plead injury in fact “Robinhood’s use of Ice Cube’s image and phrase does not suggest Ice Cube’s endorsement of Robinhood’s product.” (The court doesn’t say it this way, but: there are many “commercial products” that consist of “noncommercial speech,” such as Naomi Novik’s new novel The Last Graduate which I am very excited to buy! Implicit in the reasoning is that a celebrity appearance in noncommercial speech is not itself enough to suggest endorsement.)

If unauthorized use of Ice Cube’s image suggested endorsement, that would constitute injury in fact. “But the image and phrase are not an endorsement: they illustrate a point in the newsletter about a market correction in tech stocks.” The case law requires more “more than alleged unauthorized use” to

plead implied endorsement. Again, the court doesn’t say as much, but the cited cases involved conventional ads for a separate product (White v. Samsung, the Waits case, etc.), or appearance on product labels (Monk v. N. Coast Brewing Co. Inc., No. 17-cv-05015-HSG, 2018 WL 646679) (N.D. Cal. Jan. 31, 2018).

I still think this is about substantive failure, not Article III standing, but clearly we’re in a period of standing transition.

grudge litigation over warranties with no harm leads to fee award

Grundman v. Tranik Enters., Inc., 2021 WL 565813, 2d Civil No. B297024 (Cal. Ct. App. Feb. 16, 2021)

“This appeal concerns the sale of four luxury watches and a buyer who suffered no cognizable injury. The watches work and there was nothing wrong with the internet sales of these watches.” How’s this going to go?

The watches were sold without the manufacturer’s express warranty but the seller, AuthenticWatches.com, provided its own warranty. Grundman sued under the CLRA, the federal Magnuson-Moss Consumer Warranty Act, California’s Grey Market Goods Act, and its Song-Beverly Consumer Warranty Act. The complaint alleged that Tranik posted watch manufacturer trademarks and logos on AuthenticWatches.com but did not disclose the watches were not eligible for authorized service from the manufacturer. After granting summary judgment (and judgment on the pleadings for the Grey Market Goods claim), the trial court awarded Tranik over $177,000 in attorney’s fees, finding that Grundman brought the action in bad faith on behalf of her husband Fulda, who had a “blood feud” with Tranik.

The feud included Fulda’s purchase of AuthenticWatches.online as an internet domain; filing of a  trademark application for AuthenticWatches.com; and creation of an Amazon.com storefront using the name “AuthenticWatches.com” advertising watches with a link to AuthenticWatches.online. Unsurprisingly, that triggered a federal lawsuit.

Ultimately, Grundman bought four watches, and demanded a refund as soon as they were delivered because they didn’t come with a manufacturer’s warranty even though AuthenticWatches.com provided its own warranty. Fulda was deposed and stated that he spent “close to a million dollars on legal fees” in his vendetta against Tranik, which started when he had to pay a $150 shipping fee as part of their very first watch dispute in 2013.

“The Grey Market Goods Act requires that trademarked goods imported by someone other than the manufacturer’s authorized United States distributor without a warranty valid in the United States be sold with a conspicuous disclosure.” There’s no standalone cause of action; instead, the remedy is to sue under the UCL or CLRA. Judgment on the pleadings was appropriate because this claim duplicated the CLRA claim.

CLRA: Grundman didn’t show reliance—or harm causation. She testified that she didn’t read or recall reading the AuthenticWatches.com disclosures, but bought the watches to help Fulda’s vendetta. The watches were in good working order and she didn’t return them. There was thus no reliance or cognizable injury. The court pointed out that the site’s “Authenticity and Service Guarantee” disclosed that: “ ‘We are not, nor are we affiliated with authorized dealers of any of the timepiece manufacturers advertised.’ ” It further disclosed that “ ‘AuthenticWatches.com does not sell products in accordance to manufacturer suggested retail pricing, therefore, the warranty of merchantability provided is directly through AuthenticWatches.com.’ ” Though she claimed the watches were counterfeit, she testified that she did not know whether they were. “Missing here is the deceptive sales representation, reliance on that representation, and economic damage.” She argued that the watches were worth less without a manufacturer’s warranty, but there was no evidence of that, not even an appraisal.

Appellant did not present the watches for repair or refund, and for good reason. Fulda had the watches tested, found no timekeeping defects, and wore one of the watches to his deposition. Fulda said the watch keeps good time and that he wears it regularly because it is one of his favorite watches.

(He also said: “[m]oney is no object. I want to make as big a mess of this as possible.”) Yeah, I would probably have awarded fees too.

“To sue for a Song Beverly Warranty Act violation, appellant must present the watch for repair.” She didn’t. That also got rid of the MMWA claim.

 

competitor succeeds in enjoining sale of competing but non-FDA-cleared medical devices

Telebrands Corp. v. Vindex Solutions LLC, 2021 WL 534361, No. 21-cv-00898-BLF (N.D. Cal. Feb. 12, 2021)

Telebrands sells stuff, including the Hempvana Rocket, a handheld transcutaneous electrical nerve stimulation (TENS) unit, “a pain-relieving pen that uses TENS therapy in the form of direct electrical stimulation to muscles.” TENS units are classified as Class II medical devices requiring a 510(k) premarket notification to the FDA and clearance. Telebrands hired a firm, Exponent, to evaluate competing medical devices, determine whether those devices were TENS units, and determine whether the device distributors had sought out and obtained clearance from the FDA after submitting 510(k) premarket notifications. Exponent identified numerous troublesome devices, including defendants'.

Telebrands alleged that, by unlawfully distributing the competing TENS units without first obtaining clearance, defendants received an unfair advantage. Also, their advertising omitted the lack of clearance, which allegedly meant that consumers “will be confused or misled into purchasing Defendants’ TENS units believing them to be equivalent to the Hempvana Rocket.”

The court found that Telebrands showed extensive evidence of unfair business practices, as well as evidence of lost sales, making it likely to succeed on UCL claims. But the FDCA can only be enforced by the FDA, you say? There’s a narrow path: “The plaintiff must be suing for conduct that violates the FDCA [to avoid explicit preemption], but the plaintiff must not be suing because the conduct violates the FDCA [which would be impliedly preempted].” Telebrands squeezed through this path because it was suing due to the unfair competition it faced, not because of the FDCA violation.

Telebrands also showed irreparable harm in lost sales and “dilution” of the Hempvana brand. Because of the linking practices of third-party marketplaces such as Amazon, “Telebrands anticipates that the expenditures made to create a brand for the Hempvana Rocket will inadvertently inure to the great benefit of Defendants. Defendants will be able to piggyback off of the money spent on and popularity gained by the advertising for the Hempvana Rocket.”

survey evidence disregarded in another vanilla case

Twohig v. Shop-Rite Supermarkets, Inc., 2021 WL 518021, No. 20-CV-763 (CS) (S.D.N.Y. Feb. 11, 2021)

ShopRite sells organic vanilla soymilk. Plaintiffs brought the now-standard vanilla versus vanillin claims. They argued that the ingredient list, which includes “Organic Natural Flavors” and “Organic Vanilla Extract” “fails to clarify any front label ambiguity” because organic vanilla extract contributes less to the Product’s vanilla taste “than the front label and the ingredient list would have consumers believe.” Their consumer survey allegedly found that over forty-three percent of consumers expected the origin of the Product’s vanilla taste to be “vanilla beans from the vanilla plant” and that almost fifty-five percent of consumers would be less likely to purchase the Product if the taste were due to imitation vanilla flavoring.

Even accepting as true that the product wasn’t predominantly or exclusively flavored by vanilla beans, plaintiffs failed to plausibly allege that a reasonable consumer would in fact conclude that the word “vanilla” on the Product’s front label implies that the Product’s flavoring was derived exclusively or predominantly from vanilla beans. “A reasonable consumer would understand that ‘vanilla’ is merely a flavor designator, not an ingredient claim.”

Why disregard the survey? The survey couldn’t change what reasonable consumers would understand. [Comment: trademark law bounces rather casually between normative and empirical understandings of the reasonable consumer. These cases provide great evidence that false advertising law does so as well.] Anyway, the survey wasn’t great. Although plaintiffs alleged that “over 43% (a plurality) believed the origin of the vanilla taste comes from the vanilla plant,” the survey didn’t show that over 43% of the respondents believed the flavor in the product came predominantly or exclusively from vanilla beans, as alleged. The survey offered options about what the label said about the source of the vanilla taste including “‘That it comes from vanilla beans from the vanilla plant’ and ‘That it comes from both the vanilla plant and non-vanilla sources.’” But it could have asked whether the flavor came 100% from the vanilla plant, so the implicit contrast wasn’t enough. [Is it likely that the results will be significantly different if you do rewrite the first option that way? It’d be interesting to find out.]

Also, the survey asked, “What does the label pictured above convey about the origin of the vanilla taste?” This didn’t give participants the option of stating that they believed that the label conveyed nothing about the origin of the vanilla taste, so it was too unreliable to be plausible. Kicking out a survey on a motion to dismiss is quite a thing, but seems popular in these cases, even as Lanham Act cases say you don't even have to plead a survey even if you will eventually have to provide one.

And even if federal regulations were being violated, the complaint didn’t allege that reasonable consumers were aware of these complex regulations. [Do you have to be aware of them to be guided by them? I have no idea how octane levels in gas are assessed, but I rely on the existence of a standard regardless.]

False endorsement remains broader than many state ROP laws

Walkowicz v. American Girl Brands, LLC, 2021 WL 510729, No. 20-cv-374-jdp (W.D. Wis. Feb. 11, 2021)

Lucianne Walkowicz “has achieved a measure of celebrity as an astronomer,” and contended that  defendants misappropriated distinctive aspects of their personal identity into a space-themed American Girl doll named Luciana Vega. They brought claims under the Lanham Act, Wisconsin’s privacy statute, and Wisconsin’s common law of negligence.

The court found that it was “plausible that one familiar with Walkowicz might be confused about whether Walkowicz endorsed or is somehow affiliated with the Luciana Vega doll, and thus the amended complaint states a claim for false endorsement under the Lanham Act.” However, there were no allegations that defendants actually used Walkowicz’s “name, portrait, or picture” as required by Wisconsin’s privacy statute, and the court was unpersuaded that Wisconsin courts would recognize the duty that Walkowicz alleges was breached by defendants, so the state claims went away.

Walkowicz alleged that they were an astronomer and a TED Senior Fellow at the Adler Planetarium in Chicago whose TED talk has been viewed more than a million times. “In a 2011 presentation, Walkowicz discussed their work on NASA’s Kepler Mission studying the constellation Lyra, including the constellation’s brightest star, called Vega.” Walkowicz alleges that at least one American Girl employee or consultant attended multiple events at which they discussed their work.

American Girl applied for trademarks on a space-themed doll named Luciana Vega, which it began marketing in 2018 as its “Girl of the Year” doll. Walkowicz allegedly had a distinctive personal style, often wearing what they describe as “space themed clothing” and “holographic shoes.” Walkowicz often wears a purple streak in their brown hair. Luciana also has a purple streak in her brown hair, and she is sold with a “space themed patterned dress” and “holographic” shoes. Her accessories include a model telescope, a Mars habitat playset, and a space suit. American Girl’s book about Luciana describes her as dreaming of becoming the first astronaut to travel to Mars.

Walkowicz allegedly received multiple emails and social-media messages commenting on the similarities between Walkowicz and Luciana and inquiries about whether they had endorsed the doll.

American Girl argued independent creation, which seems both plausible and not helpful to a trademark claim. It had applied for trademarks for dolls named “Luciana” and “Princess Luciana” between 2006 and 2010, and its partner Mattel has long produced and sold space-themed dolls and accessories, including “Astronaut Barbie” in 1986. That didn’t establish that the combination into the Luciana Vega doll was done “without any knowledge of Lucianne Walkowicz”; “Princess Luciana” was an entirely different type of doll. “And, in any case, independent creation would be only one factor to consider under the Lanham Act; it would not be a complete legal defense.” [No kidding.]

First, did Walkowicz allege a protectable commercial interest under Lexmark? Yes: They plausibly pled “a commercial interest in giving scientific presentations, appearing on scientific television shows, and participating in science-related events.” And confusion about whether they endorsed the doll allegedly “led to interference with [their] professional public persona” and “dilute[d] the value of [their] name.” I will note here, as I often do, that in a false advertising case these allegations would likely be treated as conclusory at best. Not to mention that “dilution” is not the same thing as false endorsement!

Walkowicz wasn’t required to be engaged in doll-adjacent activity to have a protectable commercial interest. “[A] commercial interest in public speaking and outreach activities … could plausibly be damaged by the perception that Walkowicz was associated with defendant’s commercial activities.”

Confusion: Also plausibly alleged.

Walkowicz is not toiling away anonymously in a lab, but is building a reputation as a celebrity scientist known to the general public. Walkowicz alleges that they are widely recognized for their scientific accomplishments, with some of their presentations having been viewed more than one million times. It’s reasonable to infer that this recognition extends to at least some part of American Girl’s intended market for the Luciana Vega doll.

They also plausibly alleged that their reputation was related to key aspects of the doll and that American Girl’s employees and consultants saw Walkowicz’s presentations. “It’s reasonable to infer from these allegations that American Girl intended to evoke Walkowicz’s public image to lend legitimacy and realism to the Luciana Vega doll.” Plus, they alleged actual confusion, even though it wasn’t clear whether those who were confused were part of the relevant markets. [Some courts distinguish “queries,” as alleged, from confusion—someone who asks whether there’s a relationship is aware that there might not be one. But the cases go back and forth on this.]

Statutory right of privacy: The statute covers uses of a person’s “portrait” or “picture”; it was based on the NY statute and there was no Wisconsin precedent about the scope of those terms, so the court looked to Lohan v. Take-Two Interactive Software, Inc., 97 N.E.3d 389 (N.Y. 2018). Lohan held that the key question under the statute is whether the challenged image is a “recognizable likeness” of the plaintiff. “If a jury could not reasonably conclude that the challenged image is identifiable as the plaintiff solely from the image itself, the court must dismiss the claim as a matter of law.” Walkowicz conceded that their “nationality and skin color” differ from that of Luciana Vega and that the doll’s facial structure was either “entirely identical” or “nearly identical” to every other American Girl “Girl of the Year” doll. Other than their purple-streaked brown hair, there were no bodily similarities, and that wasn’t enough. Similarities in manner of dress and “biographical characteristics that have nothing to do with visual appearance” did not constitute using a name, portrait, or picture.

Likewise, “Luciana Vega” was not an unauthorized use of Walkowicz’s name. Hirsch v. S.C. Johnson & Son, Inc., 90 Wis. 2d 379, 280 N.W.2d 129 (1979), held that retired football player Elroy “Crazylegs” Hirsch could bring a common-law tort suit against the manufacturer of “Crazylegs” shaving gel because “[a]ll that is required is that the name clearly identify the wronged person.” But it wasn’t plausible that “Luciana Vega” would clearly identify Walkowicz. There was no precedent to hold that “Vega”—a word that was [allegedly] associated with Walkowicz to some degree but had never been used to identify them—could be considered their “name.” Inquiries about endorsement didn’t bridge the gap; if Walkowicz meant to suggest that they could put a claim together by referring to other aspects of the doll in combination with the name, that would vitiate the distinction between ROP statutes that list protected characteristics and ROP rules that protect “identity” generally.

Note: When defendants filed an answer, they did not raise a First Amendment defense, but rather argued in various ways that Walkowicz lacked protectable interests in their appearance/variants of their first name. The case was later dismissed with prejudice because the parties represented that it was “resolved pursuant to a mutual release in which no monetary payment has been exchanged.” I’m guessing some sort of donation to a cause supported by Walkowicz, but I’m just guessing.

accusing a home inspectors' group of link with NAMBLA isn't believable enough for defamation

Examination Board of Professional Home Inspectors v. International Association of Certified Home Inspectors, 2021 WL 492482, No 18-cv-01559-RBJ (D. Colo. Feb. 10, 2021)

Although an individual's comments linking his rival to NAMBLA and Jeffrey Dahmer were non-actionable non-facts, statements arguably closer to his expertise were falsifiable despite his over-the-top online persona.

Two entities, EBPHI and ASHI, sued InterNACHI. EBPHI administers and owns the National Home Inspectors Examination (NHIE), an exam many states use to license home inspectors. In addition to being a membership association for home inspectors, InterNACHI also offers a competing licensing exam for the home inspection industry. Defendant Gromicko made numerous statements about EBPHI and the NHIE on InterNACHI’s online forum, such as:

The NHIE is a joke of an exam. Meaningless piece of crap and a scam IMHO....;

The questions about basements are fine as basements are part of a home inspector’s SOP . ..even in areas that don’t have basements...the questions about radon and sprinklers are not...I can go to court for you and get an injunction forcing EBPHI to grade your exam without those questions. Then through discovery, I’ll find out everyone else who has ever failed the NHIE, and file a class action suit against the EBPHI....It’s not even a psychometrically valid exam and I can prove it in court. They’ll owe millions in lost revenue....Just say go.

EBPHI sued for (1) defamation, (2) trade libel, (3) commercial disparagement, (4) tortious interference with business expectancy, and (5) deceptive trade practices under the Colorado Consumer Protection Act.

ASHI and InterNACHI are also competitors in the home inspection industry as membership organizations. Member home inspectors enjoy certain benefits, including being advertised to homebuyers on the associations’ websites.

ASHI’s website has a “Find a Home Inspector” tool whose tagline reads, “Educated. Tested. Verified. Certified.” Results list whether the inspector is an ASHI associate, inspector, or certified inspector, ASHI’s three membership classes. Certified inspectors must prove they’ve conducted at least 250 home inspections, pass the NHIE, and meet other standards; inspectors must pass the NHIE or their state’s exam, conduct at least 75 home inspections, and meet other standards; associates must complete the ASHI standards of practice and ethics education modules. Associates are not required to complete the continuing education requirements until after one year of membership. ASHI also began using a background verification logo to indicate which home inspectors had undergone successful background checks; individuals who have been convicted of felonies aren’t given the logo.

InterNACHI was founded by Gromicko, who is quite active on its forum. For example, in response to Washington Post article that purportedly recommended homebuyers use InterNACHI home inspectors rather than ASHI’s, he posted “[t]he reporter failed to note that ASHI (American Society of Home Inspectors) was taken over by NAMBLA on Friday.” An InterNACHI member replied that he searched NAMBLA online and it was not the result he was expecting. Yet another member replied “[m]e either, creepy and not cool.”  There was, of course, no merger with the North American Man-Boy Love Association. After this lawsuit started, he posted, “ASHI is a statistical mass murder [sic] of children on a grand national scale. I’d sooner work with Jeffrey Dahmer. He only killed and ate 17 people.” “Perhaps it goes without saying, but ASHI does not engage in the mass murder of children.” ASHI sued for (1) defamation, (2) trade libel, (3) commercial disparagement, and (4) deceptive trade practices under the Colorado Consumer Protection Act. Defendants counterclaimed against ASHI: (1) false advertising under the Lanham Act, and (2) tortious interference with business expectancy.

Defamation: “[N]o reasonable person, much less a ‘substantial and respectable minority’ could reasonably believe that the NAMBLA comment is factual.” Defendants made the statement “alongside other statements incapable of being factual,” such as that the purported merger was a good thing because most of ASHI’s members suffered from rigor mortis. No reasonable person “could believe that a professional home inspectors’ association merged with a fringe, highly vilified pro-pedophilia group, particularly when such a statement comes from none other than a loud-mouthed competitor.”

What about the claim that the NHIE wasn’t psychometrically valid because it tested subjects outside the industry’s standards of practice? First, was this a matter of public concern? Yes, the exam is offered in 29 states and “has the potential to impact members of the public or the public as a whole.” The statement was made in online, open forum accessible to virtually any member of the public with internet access. And it was made in response to the complaint of a third party—not involved this lawsuit—that she and her husband were “prepared” and “studied hard” for the NHIE but only recognized a handful of questions and ultimately failed the test. “Thus, the content, form, and context of the NHIE comment all support the conclusion that it involved a matter of public concern.” Although the speaker was self-interested, that wasn’t dispositive.

This holding meant that actual malice was required, not mere negligence. “Actual malice may be inferred by the finder of fact if an investigation is grossly inadequate.” Likewise, “a speaker who willfully chooses not to learn the truth prior to making an allegedly false statement can be found to have acted with actual malice.” The record would allow such a finding. Gromicko knew what “psychometrically valid” required; he admitted that he read books and articles on psychometrics and exam writing when creating his own home inspection licensing examination. He wrote the portion of InterNACHI’s website that, at one point, discussed the psychometric validity of its own test in some detail. EBPHI also presented evidence that testing outside of the standards of practice is not a factor that renders a test psychometrically invalid. Thus, the issue was for the jury.

Nor was this a mere statement of opinion. He implied that psychometric validity was a verifiable fact by stating that he could prove the NHIE is invalid in court, which also suggests he had evidence of this “fact.” The context, offering to “go to federal court for you and get an injunction,” further implied provability. And the circumstances did too: “Gromicko is the founder of the largest home inspectors’ membership association in the country. He made this comment on his company website where he communicates with current and aspiring home inspectors. … Using his position of a power as an industry leader, he disseminated this statement to members of the industry and implied that it was factual and that he had evidence to support it.” Despite his, um, quirky online persona, he was still in a position of authority such that “reasonable people would conclude that the assertions [were] ones of fact.”

Was the statement per se defamatory, which is to say did it carry “its defamatory imputation on its face,” or was it defamatory per quod, requiring innuendo or extrinsic evidence to establish its defamatory nature? Traditional categories of defamation per se include “imputation of (1) a criminal offense; (2) a loathsome disease, (3) a matter incompatible with the individual’s business, trade, profession or office; or (4) serious sexual misconduct.” Damages are presumed if the statement is per se defamatory but must otherwise be proved. The court found that this statement fell into category (3).

There was a dispute about falsity, and also about damages—EBPHI submitted expert testimony that the number of test takers for EBPHI’s exam decreased after the comment, and in Florida, the only state to offer both exams, the number of NHIE test takers dropped following the comment.

 Tortious interference: Though defamation is a wrongful means of interference, EBPHI couldn’t prove damages. It identified no individuals with whom they intended to contract but for InterNACHI’s interference. A drop in the number of test-takers might be sufficient to establish an inference of injury in other contexts, but was is insufficient for a tortious interference with business expectancy claim. “EBPHI’s evidence proves nothing more than that EBPHI had a ‘mere hope’ that more people would sit for their exam, which is insufficient.”

Counterclaim based on ASHI’s allegedly false tagline “Educated. Tested. Verified. Certified”: There was no evidence of intentional interference with InterNACHI’s relationships. After using the tagline, ASHI experienced a rise in associate members. But that didn’t show intentionality, or that InterNACHI had anything more than a “mere hope” that the associate members who joined ASHI would have joined InterNACHI but for the tagline.

Commercial disparagement/trade libel: Same results as defamation.

Colorado Consumer Protection Act: Requires a showing that the challenged practice “significantly impacts the public as actual or potential consumers.” Courts consider “the number of consumers directly affected by the challenged practice; the relative sophistication and bargaining power of the consumers affected by the challenged practice, and evidence that the challenged practice previously has impacted other consumers or has significant potential to do so in the future.”

First, even if the NAMBLA comment did support a claim for defamation, this court has held that “making defamatory statements...is not a deceptive trade practice....it is purely a private wrong.” And there was no evidence of public impact; it wasn’t enough to say that the public read or saw the comments.

Second, the NHIE comment hadn’t been shown to significantly impact the public. It wasn’t enough that twenty-three fewer people took the exam in Florida the year after the comment was made, given that the NHIE is a national exam.

Lanham Act counterclaim against “Educated. Tested. Verified. Certified.”

First, was this commercial advertising or promotion? While Angie’s List’s statements about one company on its review statements weren’t commercial speech as to Angie’s List, this was a very different situation. The tagline wasn’t speech about one member, but rather “speech that purportedly applies to every ASHI member, and therefore it is a statement about ASHI as an association.”

Second, did defendants show injury or damages? Defendants argued that they were entitled to an inference of harm because they’re in a two-party market (which they would prefer to monopolize, per public comments, noted by the court, that they might eventually have cause to regret). Despite this competition, the court held that defendants still “must show some evidence of causation and injury,” which they have not done.  Although “ASHI experienced a spike in new associate members” after including the tagline on its website, they didn’t show any loss suffered by InterNACHI, nor that any of the alleged members who joined ASHI had any knowledge of InterNACHI’s membership program. Defendants admitted that the associates who joined ASHI might not have been welcome at InterNACHI even if they had wanted to join, because InterNACHI “never promotes uncertified members to the public.”  ASHI was thus “the only membership service in this two-player market that would allow novice home inspectors to gain experience and be advertised to homeowners prior to certification.”

no cognizable harm where statutorily required info was provided though not by the required party

Baker v. Yamaha Motor Corp., USA, 2021 WL 388451, E072089 (Cal. Ct. App. Feb. 4, 2021)

Baker sued Yamaha, alleging that its failure to furnish hang tags to its independent dealer TMI, as required by California’s Vehicle Code, made it impossible for consumers to determine the true prices of its new, assembled motorcycles. The trial court granted summary judgment in favor of Yamaha on the UCL/FAL claims because the undisputed evidence showed that Baker was not harmed by the absence of the “Yamaha hang tags.” The trial court concluded that (1) “the only information that Yamaha would have been required to state on the hang tags was the MSRP,” (2) Baker “read [TMI’s] non-Yamaha hang tag and knew what the MSRP was,” and (3) Baker would have received “identical” information “[h]ad Yamaha provided hang tags” to TMI.

Standing under these statutes requires injury in fact through lost money or property. This Baker could not show, given that when he decided to buy his Yamaha, he researched and compared prices online, and called to get information to negotiate a dscounted price. He saw a tag that included an MSRP and knew that the price didn’t include various taxes/fees. “He negotiated a deal that was $664.94 less than the MSRP, he was happy with the price he had negotiated, and he believed it was the best deal he could get from TMI.” So he suffered no economic injury from Yamaha’s failure. Proof of a violation of a predicate statute isn’t enough without economic injury.

 

false advertising claim fails, in part because of stringent antitrust rules

In re EpiPen (Epinephrine Injection, USP) Marketing, Sales Practices & Antitrust Litig., MDL No. 2785, No. 17-md-2785-DDC-TJJ (D. Kan. Dec. 17, 2020)

A lot of stuff here; I will ignore the non-false advertising related aspects of this mostly antitrust case. The court says the usual not-good things about false advertising’s relationship to antitrust, unfortunately: Deceptive speech usually doesn’t violate antitrust laws. In several circuits, there’s a presumption of a de minimis effect on competition that can be rebutted by showing six things that aren’t particularly connected to whether the speech harmed competition: showing that the disparagement was: (1) clearly false, (2) clearly material, (3) clearly likely to induce reasonable reliance, (4) made to buyers without knowledge of the subject matter, (5) continued for prolonged periods, and (6) not readily susceptible to neutralization or other offset by rivals. As Mike Carrier and I have explained, this test was just made up without reference to the purposes either of false advertising law or the effects of false advertising on competition, but here we are.

Plaintiff Sanofi failed to show a triable issue of fact on (1), (5), and (6). As for falsity, Mylan funded and presented a study purporting to show “Failure to Demonstrate Bioequivalence of Epinephrine Delivery Based on Partial Area Under the Curve.” While the FDA concluded that the epinephrine in Sanofi’s Auvi-Q “demonstrated bioequivalence” with the epinephrine in EpiPen, this study wasn’t false because all it said was this study found failure to show bioequivalent delivery. Likewise, statements about why payors didn’t include Sanofi’s product in their formularies weren’t clearly false despite Sanofi’s argument that they misleadingly implied that there were safety concerns.

There wasn’t enough evidence about duration on (5), and on (6), Sanofi was a big pharmaceutical company that could have fought back in the market with its teams of sales reps. Representing the disconnection from reality in this test, the court noted that the final factor doesn’t require the plaintiff to have succeeded in neutralizing the falsity—mitigating its damages—it instead has to show that there was nothing it could have done.

Mylan’s Lanham Act claim against Sanofi: Mylan argued that Sanofi falsely claimed that its Auvi-Q was the “new EpiPen” or the “talking EpiPen,” and that Auvi-Q was preferred by physicians and patients over EpiPen. Sanofi argued that none of its advertisements or promotional materials made any of these assertions. But Mylan relied on Sanofi’s internal documents reporting Sanofi market research, which were admissible as business records and party admissions. Still, the court doubted that they established that Sanofi actually made the allegedly false/misleading statements. Nothing in the summary judgment record suggested that Sanofi distributed those materials to consumers, so they might not be enough to be commercial advertising or promotion. But more fundamentally, the research materials didn’t seem to reflect “statements that Sanofi’s sales representatives actually made to physicians.” Instead, they recorded “what physicians reported they recalled about their interactions with sales representatives.” [They should therefore show whether doctors took away misleading implications, but I understand caution about this because consumers take away all sorts of messages for all sorts of reasons.]

Mylan argued that statements that Auvi-Q was the “new EpiPen” or a “talking EpiPen” were literally false because they communicated that Auvi-Q was a new model of the EpiPen. The court found that these statements were not unambiguous. The evidence was that some people recalled messaging that Auvi-Q was a “new EpiPen,” or “was going to be like the new EpiPen,” and two recalled a pharmaceutical sales representative telling them that “Auvi-Q was the new up-and-coming EpiPen.” But, the summary judgment record also undisputedly showed that “EpiPen” was used to describe the entire category of devices, like “ ‘Kleenex’ for tissues or ‘Band-Aid’ for bandages.” Thus, these were ambiguous statements.

Doctor/patient preference claims: A statement that patients preferred Auvi-Q was supported by Sanofi’s preference study which found that patients preferred Auvi-Q’s size, shape, and method of instruction.  Although the FDA told Sanofi that it couldn’t use this study to make comparison claims that Auvi-Q was easier to use and easier to carry because patients weren’t actually administrating the EAI devices in the study, the record didn’t suggest that Sanofi made those claims; instead the record just showed messaging about a patient “preference” and generalized messaging about Auvi-Q being easy to carry, easy to use, and easy to follow its instructions. The latter were also nonactionable opinion.

Last, Mylan argued that Sanofi made false statements by necessary implication when it advertised Auvi-Q as the “first and only” EAI device with a “[r]etractable needle mechanism designed to help prevent accidental needle sticks,” implying falsely that EpiPen doesn’t have needlestick protection even though EpiPen has a needle cover that extends over the needle after the EpiPen is administered. But that’s not the necessary implication of the true claim about Sanofi’s retractable needle. Sanofi also stated—truthfully—that patients [often] don’t carry their devices, which Mylan argued falsely implied that patients would be more likely to carry Auvi-Q when juxtaposed with a claim that Auvi-Q is easy to carry. But Mylan didn’t prove that Sanofi juxtaposed the statements in this way.

With no extrinsic survey evidence of consumer confusion, the claims failed. (Two purported instances weren’t enough to show that “a statistically significant part of the commercial audience” was actually confused or deceived.) Nor was Mylan entitled to a presumption of consumer confusion from intentional deception. The record showed that Sanofi did review advertising and training and warned sales reps about what claims they could and couldn’t make; it barred them from creating their own promotional materials or altering Sanofi’s promotional materials in any way. Relatedly, Mylan didn’t show that the allegedly false statements were made in “commercial advertising or promotion,” given the lack of evidence of widespread dissemination. Even Sanofi’s internal documents didn’t “quantify the prevalence of the challenged statements among the customer base.” And while “28% of 364 physicians surveyed recalled that Sanofi [sales representatives had] said ‘Auvi-Q preferred over EpiPen in comparative survey,’ ” many versions of that are true and Mylan didn’t show how many of them received false or misleading comparative claims.

Plus, Mylan didn’t show that it suffered harm from the allegedly misleading claims that could be distinguished from the harm caused by fair competition. Though injury can be presumed from false comparative claims, the record showed only two instances where a Sanofi rep compared the parties’ products by name. Without explicit comparison, “a presumption of injury is inappropriate because each competitor’s injury may be only a small fraction of the defendant’s sales, profits, or advertising expenses.”

This all also got rid of the New Jersey unfair competition claim.

"advertising injury" insurance exclusion doesn't exclude false advertising claims

Luxottica, Inc. v. Allianz Global Risks US Ins. Co., 2021 WL 4226197, No. 1:20-cv-698 (S.D. Ohio Jul. 28, 2021)

Mostly this case is about other things, but the court finds a duty to defend in the underlying false advertising case. Luxottica was sued in a class action alleging that its AccuFit system for prescription eyeglasses was falsely advertised as more accurate. Allianz ultimately declined to defend under its policies, and the court found it had a duty to defend.

In a less insured-favorable move, the court was also persuaded that the list of what was excluded by the phrase “personal and advertising injury” in the exclusions (relevantly, slander/disparagement/privacy violations/© infringement/use of another’s advertising “idea”) was significant. “This specialized definition does not include any injuries arising out of false advertising or deceptive business practices.” Here, that meant that exclusions for “personal and advertising injury” didn’t apply, but it also suggests that actual “advertising injury” coverage is narrower than many insureds would like. I would expect insurers to be more often quoting the statement that insurers “could have included such claims in this specific and exhaustive list.” Here, “the fact that these claims are not included in the ‘personal and advertising injury’ exclusions furthers Luxottica’s arguable claim that Allianz owes it a duty to defend in the Underlying Lawsuit,” but my guess is that insurers will benefit more from limitations on advertising injury coverage they do sell.

No organizational standing from mere conflict with consumer protection mission

In Defense of Animals v. Sanderson Farms, Inc., 2021 WL 4243391, No. 20-cv-05293-RS (N.D. Cal. Sept. 17, 2021)

Let’s play the fun game “which of these statements about standing should make IP people nervous?”

Previously, Friends of the Earth and the Center for Food Safety sued Sanderson Farms on the claim its advertisements for chicken were misleading. Ultimately, the Ninth Circuit agreed that they lacked organizational standing because they hadn’t diverted resources to combat the challenged conduct. FoE sued Sanderson again, but the court found that it was just trying to work around the infirmities of that first case. The plaintiffs here “followed what [they] understood to be the Ninth Circuit’s implicit commands to publish action alerts, address Sanderson’s advertising in blog posts, and petition Sanderson.” But none of that meant they’d diverted resources.

More fundamentally,

organizational standing requires an injury to the organization itself, not merely its interests. An organization’s entirely voluntary action cannot confer standing, no matter its quality or quantity. The organization must be forced to respond to prevent injury …. Even if the Plaintiffs had transformed themselves entirely into anti-Sanderson advocates, they would not have standing because it would not have been due to any injury by Sanderson.

[Now ask: is unfair advantage to the defendant the same thing as injury to the plaintiff?]

For organizational standing, it is not enough for there to be “a setback to an organization’s values or interests.” Defendant’s conduct must result in “an actual impediment to the organization’s real world efforts on behalf of such principles.” And the organization must divert resources, not go about business as usual, in repsonse. “Crucially, plaintiffs must show they would have suffered some other injury if they had not diverted resources to fix the problem,” such as losing members. “An organization cannot manufacture standing by choosing to fix problems if they otherwise would not have affected it. Resources must be spent differently than they would have been otherwise.”

This is merely an application of the same rules that apply to individual standing. “If the defendant’s conduct did not force the plaintiff to divert resources, the only injury comes from the plaintiff’s own actions. This self-inflicted injury would not be fairly traceable to the defendant.” Neither organizations nor individuals have standing “by virtue of investigating conduct or starting a new campaign against someone who frustrates its general mission…. Just as an individual cannot gin up standing by researching and tweeting about something that indirectly makes his or her life harder, neither can an organization.” [See also dilution.]

Here, plaintiff IDA didn’t adequately plead any concrete way in which its mission had been frustrated; it wasn’t enough to plead facts showing that “the abstract interests it fights for have been set back by Sanderson’s misleading advertising.” Nor did the complaint plead facts permitting the conclusion that its diversion of resources was required to prevent some other injury to its activities. It alleged 200 hours of work through various activities such as publicity and petitioning the Better Business Bureau’s National Advertising Division. “Even a large new campaign is not enough if the organization is not forced to undertake it.” Most of the activities were voluntary continuations of previous activities, and even petitioning Sanderson or submitting a complaint to NAD “are at root typical of IDA’s advocacy”; they were also fairly traceable to IDA, not to Sanderson. IDA also didn’t explain what it would have done with its time and money otherwise.

Possibly offering some TM hope, the court distinguished cases in which an organizational plaintiff “was forced to respond to constituents.” But note that a lot of times TM plaintiffs don’t or can’t plead more than facts analogous to IDA’s pleading that it “reasonably believed that […] IDA members relied on Sanderson’s misrepresentations,” without alleging that “any members actually sought its guidance, let alone on a scale sufficient to justify diversion of resources.” Plus, in those cases bad things actually happened to the constituents, creating “obvious harm” to the organizations themselves as they struggled to represent their clients.