Two right of publicity possibilities in the news

Corvette: Baby, that was much too fast. 1958-2016

How well would this ad fare if challenged under Jordan v. Jewel? It does inherently promote the Corvette brand, it seems to me.

Mexican food so authentic Donald Trump would build a wall around it

What principle would a court have to create to exempt this ad from Trump's right of publicity?

Cal. court sensibly rejects Fourth Circuit's GNC rule on consumer protection claims

Mullins v. Premier Nutrition Corp., 2016 WL 1534784, No. 13-cv-01271 (N.D. Cal. Apr. 15, 2016)

This case revisits an issue with which courts have struggled: when consumer plaintiffs plead that a product advertised as clinically proven isn’t, is that a mere “lack of substantiation” claim unavailable to private parties?  I think the answer is no—plaintiffs are pleading that they can show that a specific claim made by the defendant is false—and so does the court here.  Along the way, the court also deals with the hot mess that is the Fourth Circuit’s In re GNC holding, drawing its teeth in a way that should benefit future California plaintiffs, at least.

 

Plaintiff Kathie Sonner (a replacement plaintiff) argued that Premier sold “what amounts to worthless snake oil”: Joint Juice, a liquid dietary supplement containing glucosamine and chondroitin.  The ads claim that the product will “help keep joints flexible and lubricated.” The bottles used the slogan, “A bottle a day keeps your joints in play,” and also used the logo and contact information of the Arthritis Foundation.

 

Example of happy joints ad

Joe Montana endorsement

Premier chose to target consumers who suffered from joint pain and arthritis.  Its ads suggested pain relief by showing exclamations of joy by people performing ordinary activities that can be painful for people with joint pain.  Premier bid on AdWords for, among others, “arthritis treatments,” “how to stop arthritis,” “supplement for arthritis,” and “arthritis cures,” and bought ad space in Arthritis Today, the Arthritis Foundation’s magazine. Premier research and internal customer data generally shows that more than 90% of Joint Juice users suffer joint pain and are interested in pain relief.

 

By contrast, Premier had Hal Poret conduct a survey for this litigation, demonstrating why litigation surveys are not particularly reliable.  200 respondents had bought Joint Juice before, and 200 had purchased a product containing glucosamine, but not Joint Juice. The survey began with an open-ended question: “[T]ell us why you decided to purchase Joint Juice,” with spaces for up to twenty possible responses and an “I don’t know” option.

 

Then Poret asked respondents to select from a list of choices the “reasons or factors that influenced your decision to purchase Joint Juice” (or the other product).  Choices included: “I had generally heard about or read about the benefits of glucosamine”; “Statements or information I read on the Joint Juice bottle or packaging”; “The product is vegetarian” ‘ “Price/less expensive”; “Liked the taste”; “Endorsed by Joe Montana”; “Orange packaging[.]”  There were two false “control choices” (1) “Statements or information I read/heard in promotions on a home shopping channel or website, such as HSN or QVC”; and (2) “Endorsed on the Dr. Oz show or website.”  (Note that “source” statements like this are incredibly unreliable, because people’s memory for source is much weaker than their memory for content.  Getting these “wrong” wouldn’t serve as a good control for beliefs about product characteristics.)

 

You may notice that Poret didn’t ask whether consumers believed that Joint Juice would relieve pain or other arthritis symptoms.  Instead, he asked respondents who referred to the packaging to identify the specific statements that made an impression.  He concluded that consumers purchase Joint Juice for myriad reasons, and only 5.5% chose to buy the product because of the statements on the label. Poret concluded that “roughly 75% of respondents answered that they were not influenced by statements on the package and roughly 75% answered that they were not influenced by statements in advertising.” Instead, recommendations from friends and family members had primary weight.  Which of course explains the detailed marketing studies Premier commissioned about how to target its marketing.

 

Sonner’s expert disagreed, concluding that, despite serious design flaws and coding errors, the survey confirmed that most Joint Juice users bought with the hope that it will provide joint health benefits or relieve joint pain. As an example of a coding problem, Poret did not treat as motivated by joint health concerns those who tried the product to see if “it would work.” Sonner’s expert’s coding indicated that 91% of those surveyed identified joint health and pain concerns influenced the decision to buy Joint Juice.  The expert also noted that many of the offered reasons didn’t mention joint pain or health, but instead were reasons why the consumer might choose one glucosamine product over another, and thus were poor options.

 

Sonner alleged that, in fact, glucosamine and chondroitin do not and cannot palliate arthritic joints or improve the function of healthy joints, and brought the usual California claims.  An invalid substantiation-based claim demands that a defendant either “put up or shut up.”  By contrast, Sonner submitted evidence directly supporting her claims of falsity and misleadingness, including a lot of double-blinded studies, clinical protocols, and meta-analyses, as well as three experts, including one who testified about a medical consensus against the joint claims. This evidence raised triable issues of fact. Premier had evidence suggesting that the research was equivocal, but Sonner offered “principled” critiques of each submitted study favoring Premier.  “If a jury agrees with those criticisms, then it may also logically decide that it is misleading to claim Joint Juice can provide benefit in the face of substantial evidence to the contrary.”

 

Sonner alleged both falsity and misleadingness.  As to falsity, she argued that the glucosamine and chondroitin in Joint Juice were not bioavailable in sufficiently high quantities to produce any positive effect, meaning the express messages—that Joint Juice would help keep joints flexible and lubricated—were false or misleading. In addition, she argued that the packaging and ads falsely implied that Joint Juice could relieve joint pain and stiffness in arthritic joints.  Premier argued that its ads made only general health benefits and that the disclaimer on the back of the package would disabuse users of any notion that Joint Juice treats or provides relief for arthritis. Premier further challenged Sonner’s ability to prove the existence of any implied message in the absence of a consumer survey.

 

To prevail, Sonner needed to show that “a significant portion of the consuming public or of targeted consumers acting reasonably under the circumstances, could be misled” by the statements on Joint Juice packages.  While Lanham Act cases require survey evidence for implied falsity claims, California courts have expressly rejected the “view that a plaintiff must produce a consumer survey or similar extrinsic evidence to prevail on a claim that the public is likely to be misled by a representation.”  Sonner offered three types of evidence: the ads themselves, her experiences, and Premier’s marketing research surveys.

 

The court thought that this was sufficient to create a factual issue:

 

The name alone implies that the whole point to drinking the product is to receive joint health benefits. Sonner testified that she believed Joint Juice, like ibuprofen, would provide pain relief. While an isolated anecdotal incident is likely insufficient to show that the reasonable consumer understands this implied pain message, Sonner’s account is some evidence of Premier’s unspoken message.

 

Further, Premier’s own research showed that its customers “cited joint pain as the principal reason they tried and continued to use Joint Juice,” which could persuade a reasonable jury that Premier’s ads “subliminally encouraged people to buy the product to relieve joint pain.”  Sonner didn’t need her own survey when sufficient evidence could be found in Premier’s own files.

 

The disclaimer on the back wasn’t sufficient to prevent misleadingness.  The Gerber case rejected the assertion that “reasonable consumers should be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box.”  In the 9^th Circuit, “courts cannot hold as a matter of law that disclaimers vitiate claims for misleading representations.”  The jury should review the package as a whole, especially given the evidence in the record that the disclaimer didn’t change consumers’ views about the use of Joint Juice for treating joint pain and stiffness.

 

Premier argued that all Sonner had was a battle of the experts, and therefore she had to lose because UCL and CLRA claims fail if the plaintiffs do not aver “that all scientists agree that glucosamine and chondroitin are ineffective at providing the promised joint health benefits.” In re GNC Corp., 789 F.3d 505, 515 (4th Cir. 2015) (emphasis in original).  In re GNC reasoned that, even if “the vast weight of competent clinical evidence” cuts against a purported health claim, the UCL claim for literal falsity failed as long as “a reasonable difference of scientific opinion exists.”

 

The court had noted above that California doesn’t use the explicit/implicit divide when it discussed surveys; starting with the GNC court’s error in understanding the Lanham Act standard (explicit means stated outright; it’s not a standard looking to the quantum of evidence proving the falsity), that decision is rotten all the way down.  Speaking with great restraint, the court here commented that “[t]here is cause to believe the Fourth Circuit’s characterization of California law is flawed.”  In re GNC didn’t analyze California law to predict what the California Supreme Court would do, “as district courts in this circuit must.”  Instead, it used Lanham Act precedent, which doesn’t apply. 

 

Moreover, the court continued, In re GNC only addressed whether a plaintiff could allege literal falsity, not whether it could use evidence of a solid scientific consensus to prove that a claim was misleading.  Given the intentional breadth of California consumer protection law, and its recognition that even technically accurate claims may mislead or deceive, “a manufacturer may not hold out the opinion of a minority of scientists as if it reflected broad scientific consensus.” Thus, “even if a reasonable expert testifies that the scientific literature is equivocal, a plaintiff may prevail under the UCL and CLRA if she proves that the expert is nevertheless incorrect.”

 

Sonner could therefore win in two ways.  She could prove literal falsity “if a reasonable jury concludes all reasonable scientists agree that drinking glucosamine and chondroitin do not relieve joint pain or stiffness associated with [arthritis] and that Joint Juice does not provide any general joint health benefits.”  She could do this by showing that Premier’s expert’s opinions were unreasonable.  (It is silly to call this literal falsity and not the next path also literal falsity, but at least the court gets everything else right.)  Or, she could show that “the vast weight of the competent evidence establishes that those health claims are false.” This second theory would allow her to “concede the existence of scientific studies substantiating a representation, but argue that those studies are poorly designed, incredible, or represent the view of a minority of scientists.”

 

There was a genuine dispute both about whether Premier’s expert’s opinions were reasonable in light of the scientific evidence and whether “the totality of the evidence” supports the conclusion that Joint Juice does not relieve joint pain or stiffness in arthritic joints or improve joint health, in general.  (Note the move, correct in my opinion, from “vast weight” to “totality of the evidence”—the standard is usually proof by a preponderance of the evidence, and there is no reason to depart from that here.)

 

Furthermore, even if a jury found that Premier didn’t make any implied claims directed at arthritis sufferers, there was sufficient evidence that the amount of glucosamine and chondroitin in Joint Juice could have no positive impact on general joint health.

 

Premier argued that, because Joint Juice is a supplement, not a drug, studies proving that it didn’t work were irrelevant, because the FDCA allows supplements to be sold even without randomized, placebo-controlled, double-blind clinical trials supporting their efficacy.  Um, no.  “That the FTC permits supplement manufacturers to make claims unsupported by randomized clinical trials is not a reason to reject the use of such studies to prove supplement claims are false or misleading.”

 

Remedy: The UCL allows restitution, while the CLRA allows restitution, actual damages, punitive damages, and “[a]ny other relief that the court deems proper.”  Sonner sought a full refund, and the court agreed that this could be appropriate if the product was shown to have no value.  In other cases rejecting the full refund model, consumers received a product with other benefits aside from the allegedly false claim.  But Sonner claimed that she and other Joint Juice consumers wouldn’t have bought it absent its joint-related claims—that it was nothing more than a liquid pill.  “Unlike juice, which consumers purchase for hydration, or cigarettes, which smokers purchase for flavor and to assuage nicotine cravings, Joint Juice is for all intents and purposes a liquid pill.”  Premier even stated that the only reason to buy Joint Joice was “the medicinal value of the glucosamine and chondroitin it contains.”  Given the evidence of why consumers bought Joint Juice, there was at least enough evidence to survive summary judgment as to full-value restitution.

 

The court did refuse to exclude Hal Poret’s testimony and survey. Poret never asked consumers whether they purchased Joint Juice because of its purported joint health benefits or how they understood the messages on Joint Juice labels and ads.  “[A]s long as [the survey] is conducted according to accepted principles and is relevant,” the “technical inadequacies in a survey, including the format of the questions or the manner in which it was taken, bear on the weight of the evidence, not its admissibility.”  The court found that the survey questions “cre[pt]  close to the general rule’s outer boundaries,” but didn’t cross them.  Sonner could address the coding and the questions on cross-examination. Indeed, her expert’s recoding offered opinions favorable to Sonner’s claims based on these data—“a fact that undermines her contention that the survey is unreliable, irrelevant, or unduly prejudicial.”

 

Flagging supplement case revived

ThermoLife Intern., LLC v. Gaspari Nutrition Inc., --- Fed.Appx. ----, 2016 WL 1460171, No. 14–15180 (9th Cir.  Apr. 14, 2016)

 

ThermoLife sued Gaspari (GNI) false advertising under the Lanham Act and unfair competition under Arizona common law, based on GNI’s allegedly false advertising of its testosterone boosters as “safe,” “natural,” “legal” and compliant with the FDCA.  The court of appeals vacated the long-suffering district court’s grant of summary judgment and remanded, given that its preemption analysis was based on now-overturned 9^th Circuit precedent. 

 

The court of appeals first reversed the exclusion of two experts’ opinions, and upheld the exclusion of two others.  The first wrongly excluded expert opined that the dietary supplement industry would not have deemed GNI’s products “safe,” which was relevant even if it didn’t offer a definitive opinion on safety, and also provided a usable standard for determining “safety”—the industry standard.  The expert’s “presumption that GNI’s ingredients were not safe was sufficiently valid in light of the industry’s strict reliance on establishing safety through certain procedures GNI had not used.” 

 

Another expert’s survey, which asked consumers of testosterone boosters whether they would have continued using GNI’s products (or switched to another testosterone booster) after learning GNI’s advertisements were false, was relevant to materiality.  “Although the district court faulted the survey’s biased questions and unrepresentative sample, neither defect was so serious as to preclude the survey’s admissibility.”  The sample at least included consumers both of GNI’s products and of other testosterone boosters. “Nor was the survey unreliable simply because it was not validated. Berger reasonably explained why the survey could not be validated and concluded it was nevertheless a ‘good survey’ based on respondents’ ‘consistent, across-the-board answers.’”

 

With that out of the way: “Pom Wonderful established that the FDCA generally does not preclude Lanham Act claims for false labeling of food.”  And its rationale applied to ThermoLife’s claim as well: neither the FDCA nor the Lanham Act expressly barred ThermoLife’s claims, and the FDCA’s public health-protective aim was not inconsistent with the Lanham Act’s protection of commercial interests “by relying on the market expertise of competitors.”

 

GNI argued that Pom Wonderful could be distinguished because ThermoLife’s claims “require litigation of the alleged underlying FDCA violation ... where the FDA has not itself concluded that there was such a violation.” But ThermoLife’s claims that GNI falsely advertised its products as “safe” and “natural” required no interpretation of the FDCA, nor did ThermoLife need to demonstrate a FDCA violation to prevail on its claims that GNI falsely advertised its products as “legal” or “DSHEA-compliant.”  

 

Usually, claims about legality are generally inactionable opinion because they “purport to interpret the meaning of a statute or regulation.” But there is a “well-established exception” that an opinion “by a speaker who lacks a good faith belief in the truth of the statement” is actionable. Because every opinion “explicitly affirms ... that the speaker actually holds the stated belief,” a CEO’s statement about legal compliance “would falsely describe her own state of mind if she thought her company was breaking the law.” ThermoLife pointed to numerous emails indicating GNI was aware its products were not DSHEA-compliant, creating a triable issue of falsity about legality.

 

Safety statements were also factual claims.  GNI argued that its products were presumed safe until the FDA proved otherwise. But the statutory provision on which GNI relied didn’t mention a presumption of safety.  It defined when a supplement is safe enough that it wouldn’t be an “adulterated food.” A reasonable jury could find GNI’s products were not safe, based on the evidence about recalls and the expert’s report. There was also a triable issue of falsity on GNI’s claim that a product was “natural” and that its ingredients were “naturally occurring and are found in natural foodstuffs,” which were factual claims.

 

The district court also erred in its analysis of materiality.  Survey results and internet message board posts “indicated that the safety, legality and natural ingredients of GNI’s products were—to varying degrees—important factors in consumer purchasing decisions.”  

 

And there was also a triable issue on injury.  There is a presumption of commercial injury when the parties directly compete and the defendant’s ad tends to mislead: when competitors vie for the same customers, “a misleading ad can upset their relative competitive positions” and thereby cause injury. There needs to be evidence of causality, but evidence of direct competition provides a causal link between likely deception and injury.   

 

There was also no preemption of the state unfair competition law claim.  Although the FDCA expressly preempts state-law requirements that conflict with certain FDCA provisions, that didn’t include § 343(a), which governs the misbranding of food through false or misleading labeling. Moreover, there was a general “presumption against pre-emption,” and there was no preemption given that “the state-law duty ‘parallels’ the federal-law duty.”

 

 

When is confusion unlikely for purposes of a motion to dismiss?

Nutter's IP Law Bulletin covers Southgate v. Soundspark, Inc., No. 14-CV-13861-ADB, 2016 WL 1268253 (D. Mass. Mar. 31, 2016), in which the court found confusion implausible on the pleadings based on a description of the parties' businesses.  Although Southgate had a valid registration for a design mark for "Sound Spark Studios,"

Southgate did not sufficiently plead how his company was similar to and competed with defendants’; the court said that the complaint offered little evidence of similarity aside from the fact that “both companies are involved in the music industry.” The court also explained that the complaint said nothing of the companies’ respective “channels of trade, advertising, or consumer base.” And the defendants’ apparent good faith in rebranding to “TapTape” mattered, too.

District court still rejects contribution/contributory false advertising for supplier

Nestlé Purina Petcare Co. v. Blue Buffalo Co., No. 4:14 CV 859, 2016 WL 1579195 (E.D. Mo. Apr. 19, 2016)

 

Previous ruling on ad agency’s potential liability for helping create allegedly false ads.  Blue Buffalo also sought contribution from Wilbur-Ellis, one of its suppliers (since the ads involved claims about the contents of Blue Buffalo’s pet food).  “For a right to contribution to exist under Missouri law, defendants must be jointly and severally liable to the plaintiff for the same indivisible harm.”  However, Blue Buffalo didn’t sufficiently allege that Wilbur-Ellis was potentially liable to Purina for the same, indivisible injury it is alleged to have caused. Rather, Blue Buffalo alleged that it lost customer goodwill and paid above market-price for the by-product meal it bought from Wilbur-Ellis, and that it was exposed by Wilbur-Ellis’s conduct to liability in this case and others.

 

Purina alleged that Blue Buffalo harmed Purina by disparaging its pet food and making false claims about Blue Buffalo’s own pet food. Although Duty Free Americas, Inc. v. Estee Lauder Cos., 797 F.3d 1248 (11th Cir. 2015), held that a claim of contributory false advertising could be maintained under the Lanham Act, the plaintiff has to show that the relevant defendant “contributed to that conduct either by knowingly inducing or causing the conduct, or by materially participating in it.”   The court had previously concluded that there was no federal common law right to contribution under the Lanham Act, nor is there an express right of contribution under the Lanham Act.  “While the Eleventh Circuit’s reasoning in support of recognizing a right to contributory false advertising is sound, it is not persuasive enough to compel me to reconsider my previous ruling or to reject the line of cases holding that no such right exists.”

 

Thus, Blue Buffalo’s only hope was to seek contribution from Wilbur-Ellis based on Purina’s unjust enrichment claim. But there was no allegation that Purina conferred a benefit on Wilbur-Ellis. Purina’s claim for unjust enrichment alleged that it conferred a benefit on Blue Buffalo: Blue Buffalo’s profits from sales to consumers who chose it because of the false advertising.  (Still don’t see how that’s Purina conferring a benefit on Blue Buffalo.)  Purina’s injuries from this unjust enrichment aren’t the same as the injuries Wilbur-Ellis allegedly caused, and Purina couldn’t have sued Wilbur-Ellis.  “As a supplier, Wilbur-Ellis could not be found liable for Purina’s claims that Blue Buffalo knowingly and in bad faith engaged in false advertising or that it made false comparative statements.”

 

All transformative from here: 2013 case about music in reality film

Threshold Media Corp. v. Relativity Media, LLC, No. CV 10-09318, 2013 WL 11287701 (C.D. Cal. Mar. 15, 2013)

 

Older case that just popped up in my Westclip search; blogging because it’s still interesting after three years.  Threshold sued Relativity for infringing its copyright in two sound recordings by using portions in Relativity’s film Catfish.  The recordings were of the same song, “All Downhill from Here,” as a duet by Amy Kuney and Tim Myers.  The studio version is 3:29 in length, and the acoustic version is 3:09.  Catfish was a “reality thriller” filmed in documentary style.  It followed Yaniv Schulman, a 24–year–old photographer who lives in New York City, as he developed an online friendship with Abby, an eight-year-old girl in Ishpeming, Michigan, her mother Angela, and several of their family and friends, especially Abby’s 19–year–old half-sister, Megan. Yaniv’s brother, Ariel, and their friend Henry Joost filmed Catfish.

 

The film begins as Abby and Yaniv have been corresponding because of paintings Abby created based on Yaniv’s photos, which she saw in a newspaper article.  Yaniv thinks that Megan “has a big crush” on him; she writes and records a song for Yaniv, which is played while Yaniv discusses it.  They flirt online. 

In the first use, Megan (using IM) says she’ll take requests and record a song.  Yaniv asks for “Tennessee Stud.” She emails Yaniv an acoustic recording, which Yaniv plays while he, Ariel, and Henry discuss how impressed they are with her talent.  Angela also posted copies of songs purportedly recorded by her and Megan. “Yaniv clicks on a song entitled ‘Downhill,’ and the Acoustic Recording is heard playing from his computer for approximately 19 seconds–from the beginning of the song until partway through the third line of the introductory verse.”  With the music in the background, “Ariel and Henry tell Yaniv to let Megan know how much they love her songs, and Yaniv is shown typing this into an instant message.”

 

In the second use, “Ariel begins singing along with the music before it cuts out, continuing for a few seconds afterward, for a total of approximately 16 seconds.”  The third use is ominous: Ariel googles “ ‘its [sic] all downhill from here’ song” and the film cuts to a shot of an audio player playing “All Downhill From Here / BY Amy Kuney [featuring] Tim Myers / ON One Tree Hill.”  The studio recording plays for 28 seconds total; after 8 seconds, Yaniv and Ariel discuss the similarities, but Ariel says that Angela’s is better. Yaniv and Ariel discuss Megan’s failure to attribute the source:

 

Ariel: All right. Listen, you can’t hold it against her. She didn’t say, “Hey, I wrote this song.”

Yaniv: It doesn’t matter, it’s just still–yeah.

Ariel: Yeah. And still, her voice is ten times better than this girl. And she’s clearly an artist because that came from a deep– from deep expression and feeling.

Yaniv: And she found a song, kind of obscure.

Ariel: She covered a song, yeah. People make careers out of that.

Yaniv: Yeah.

 

The fourth use is the full reveal: we hear a track entitled “Amy Kuney ‘All Downhill From Here’ (Original) from One Tree Hill,” the acoustic recording.  The friends discuss whether this is the same recording; Yaniv realizes that he’s been deceived and becomes agitated, condemning Megan for accepting his compliments on her singing.  They discover that she also copied “Tennessee Stud,” which was actually performed by Suzanna Choffel.  The rest of the film chronicles their journey to confront Megan and Angela, which leads to the discovery that Megan—and most of the rest of Abby’s friends and family—were merely Angela’s creations.

 

The court found that the uses of the recordings were highly transformative, adding new expressive content and using the original expression for an entirely different purpose.  The music comprised only part of the scenes, which had video footage, original dialogue, and other sounds.  The men comment on the quality of the music, albeit not in “erudite” terms (“[t]his one’s sick”; the acoustic recording is “better” than the studio recording), and discuss whether the recording attributed to Amy Kuney is the same recording Angela posted on her Facebook page.  “This critical commentary and analysis falls squarely within the category of new expressive content that transforms the copyrighted expression into something different.”  Criticism and review are broad concepts, applicable here.  “Nor is it relevant that their commentary was presented as part of a work of entertainment”; entertainment can include critical commentary.

 

The use also served a completely different purpose than the original, a consideration that can allow “wholesale copying of an entire work.” The original’s purpose was to entertain listeners. “The purpose of including Kuney’s song in Catfish was not to entertain using Kuney’s music and lyrics or even to evoke a similar story line” of a person who withdrew from the world after a failed relationship. Instead, it was to show Angela’s deception and to document the pivotal moment in which the deception was discovered.  Only comparison allowed Yaniv to determine that Megan had falsely claimed the song as her own; by playing the song, the filmmakers invited the audience to make the same comparison to reach its own conclusion.  “This critical analysis is entirely different than the song’s original entertainment purpose.”  SOFA Entm’t v. Dodger Prods., 709 F.3d 1273 (9th Cir. 2013), accepted a similar use of a music clim in a play for historical purposes, and Lennon v. Premise Media Corp., 556 F. Supp. 2d 310 (S.D.N.Y.2008), found fair use the movie Expelled’s use of a clip of Lennon’s “Imagine” to critique the scientific theory of evolution and, by implication, Lennon’s naiveté.  “Catfish is even more transformative than Expelled, which used the copyrighted song and its lyrics to convey the song’s original message–albeit in a critical manner. In contrast, Catfish uses Kuney’s song as a plot device–in an entirely different story–to identify (or, more accurately, misidentify and then clarify) the song’s author.”  The explicit attribution to Kuney as the real author also weighed in favor of fair use.  (Note that the court didn’t find that lack of attribution to the copyright owner was relevant.)

 

“Defendants recorded and published clips of Kuney’s song not to retransmit its message in a different medium, but because the song played an integral role in the plot of an unfolding story about the reality and unreality of online relationships.”  Catfish was, in some sense, designed to entertain, but it didn’t entertain in the same way as “All Downhill from Here,” and was therefore transformative. 

 

Threshold argued that Relativity could have used an alternative storytelling device to reveal Angela’s lies without “gratuitously” playing the song again and again.  Nope: first, the song wasn’t repeated gratuitously.  Second, the filmmakers didn’t choose the song.  The uncontroverted evidence was that the film documented “the real-life relationship between Yaniv and Angela,” although it may have distorted reality in other respects; thus, a reviewer’s conclusion that the film was “slipshod in its adherence to basic ethical norms” was irrelevant. There was just no evidence that the filmmakers had any control over the songs Angela chose.  “Whether certain members of the general public doubt that the events depicted in the film are real is irrelevant.”  The only critical fact, confirmed by Threshold’s citation of off-camera evidence, was that “Yaniv did not realize before the scene at issue that Angela had copied the songs from somewhere else and was genuinely surprised to find out the truth.” 

 

Thus, the fact that Catfish was commercial had minimal relevance, as did the expressive nature of Kuney’s original work (factor two).  The amount of the work used—about 22% of the acoustic recording and 12% of the studio recording—was also okay in light of the purpose.  Catfish used no more than necessary to document the critical events. The first use was “enough to give the audience a sense of the song but no more”; similarly, the second use was no longer than necessary “to give the audience a sense of what he is doing.”  The third use basically repeated the first use, now attributed correctly, and used “long enough for Yaniv and the filmmakers to comment on and for the audience to grasp the two versions’ similarity. The fourth use … is somewhat longer because Yaniv, Ariel, and Henry are commenting on the track more actively as it continues to play in the background.”  By the time the chorus comes on, “the scene’s focus is on the realization that Angela has lied rather than on presenting the music for its own inherent entertainment value.

Threshold argued that Relativity could have used an alternative plot device to reveal the deception, though it didn’t explain how.  Though the filmmakers could have reenacted the scene with different music or replaced the scene with an interview of Yaniv narrating the key events. “But such alternatives artificially impinge upon the creative process. They would force the filmmakers to sacrifice the film’s verisimilitude, its drama, or both. The descriptive term ‘reality thriller’ would no longer apply.”  Though “one might quibble whether the filmmakers could have cut a second or two from their uses,” the overall amount used was reasonable in light of the purpose, and thus factor three favored Relativity.

 

Finally, market effect: Catfish wouldn’t substitute for a purchase of the song.  Digital music stores typically allow prospective purchasers to hear at least 30-second samples; [i]t is inconceivable that hearing a similarly timed clip of Kuney’s song in Catfish would dissuade a listener from purchasing it if the listener were otherwise predisposed to do so,” especially since the audio quality of the song in the film is low because it’s played through laptop speakers and captured as ambient sound instead of being recorded directly into the audio track—“or at least the film is engineered to sound that way.”

 

Nor was there any harm to potential synch licenses.  Even if the onetime use of the song on a TV show in the past showed a market demand for future synch licenses, which was doubtful, Catfish wouldn’t affect that demand.  Market demand for synch licenses for TV and movies “inevitably tapers off over time as the song falls out of people’s favor or memories,” and creators of audiovisual works may prefer recently released songs.  Some songs are more enduring than others, but this song was published on May 18, 2008, and licensed the next day for use in a One Tree Hill episode. More than two years passed before Catfish came out, with no further licensing of the studio recording, and the acoustic recording had never been licensed.  “These facts are inconsistent with Plaintiff’s assertion that a synchronization market exists.”  If anything suppressed demand for synch licenses, it was far more likely that it was the use in One Tree Hill.  “The creators of other television shows and movies, wanting their works to appear fresh, may not want to synchronize a song that has already been heard on television.”  There was no evidence that any of Kuney’s other songs had been licensed more than once.

 

Balancing the factors, the court noted that the filmmakers didn’t have a choice about which song to use in the story to document the critical moment that Yaniv first realized that Megan and Angela were lying to him.  This was not an ordinary synchronization context, “where the filmmakers or studio can bargain with various artists for the use of their songs in a film, television show, or commercial. If one artist presents a holdout problem, … there is a sufficiently large market that the filmmaker or studio can decide how to balance the economic and artistic tradeoffs.”  Catfish couldn’t turn to that market. “To hold that their use of Amy Kuney’s music was not fair would be to grant Plaintiff not just a copyright but–in effect–a veto over a new, transformative work.”  So, fair use.

Minimal pleading of responsibility suffices to evade 230 dismissal

Congoo, LLC v. Revcontent LLC, 2016 WL 1547171, No. 16-401 (D.N.J. Apr. 15, 2016)

 

The parties compete in the market for native advertising.  Congoo alleged that Revcontent caused false/misleading native advertising to be published.  Revcontent asserted §230 immunity.  The court found the following allegations sufficient to avoid dismissal based on the idea that Revcontent is an “information content provider” for purposes of the false advertising claims:

• Defendants have published or caused to be published many impressions of native advertising unit ads (“Defendants Ads”) with various Published Websites, including Publisher Websites that were previous clients of Plaintiff.

• Many, if not most of Defendants’ Ads and the Advertisement Websites to which the Ads redirect unsuspecting consumers, employ false and misleading advertising intended to deceive innocent consumers out of the significant monies by charging their debit cards or credit cards.

• Defendants have employed the above stated false and misleading representative in advertising to generate greater income from their Ads and those of Defendants’ Advertisers, (emphasis added).)

This sufficiently pled that Revcontent was responsible in part for the development of the subject advertisements.   Eric Goldman will not be pleased.  Nothing about contribution to the content in any way?

 

Revcontent also challenged whether Congoo adequately pled falsity or standing under §43(a)(1)(B).  However, the complaint alleged “false and misleading representations in advertising” in which Revcontent participated, which was enough for falsity.  As for standing, Congoo alleged that Revcontent’s false and misleading statements in advertising allowed it to generate greater income from ads and therefore to offer more attractive rates to publishers than Congoo could. This was “an injury to a commercial interest in sales or business reputation proximately caused by [Revcontent’s] misrepresentations.”

Student IP writing competition from the Virginia Bar

Intellectual Property Section Intellectual Property Law Student Writing Competition

For more than 40 years, the Intellectual Property Section of the Virginia State Bar has striven to advance the quality of intellectual law practice in the Commonwealth of Virginia. The Intellectual Property Law Student Writing Competition (the “Competition”) seeks to promote academic debate and the dissemination of ideas and scholarly writing in the field of intellectual property. The Competition is sponsored by the Intellectual Property Section of the Virginia State Bar. All articles submitted will receive consideration for publication by the Section to its membership. Student authors entering the competition thereby authorize such publication. The Section publication’s editors reserve the right to make editorial revisions to the author’s article prior to publication on the Section’s website. Prize $5,000 and publication on the Section’s website.

If the Section determines that a second article is of sufficient quality, it may award a second prize of $2,500 for that article, as well. Eligibility The Competition is open to all students enrolled and in good standing during the 2015-16 academic year (including December 2015 graduates) at (i) any Virginia law school, or (ii) a law school outside Virginia as a resident of Virginia (with proof of residency). Articles must have been written solely by the entrant while enrolled in law school. Topic & Format Articles must relate to an intellectual property law issue or the practice of intellectual property law. Preference may be given to topics demonstrating particular relevance to contemporary events, addressing unsettled issues of law, or presenting novel and unique perspectives. Articles should be approximately 25 to 40 typed pages (including footnotes) in length. Entries must be double-spaced, in at least 12-point font, with one-inch margins and numbered pages. Citations should conform to the Bluebook. Entries must be submitted electronically in WordPerfect or Microsoft Word format.

Entries should also include the student’s name, address, telephone number, law school, expected graduation date, and the following signed statement: “I declare that during the 2015-16 academic year, I was enrolled and in good standing (i) at a Virginia law school, or (ii) at a law school outside Virginia as a Virginia resident. I further declare that this entry was written solely by me while enrolled and in good standing in law school.” The student author’s inclusion of this statement in the transmittal email, together with his or her typed name between two forward slashes (i.e. /Jane M. Doe/) shall constitute a signature for the purpose of the signed statement requirement. Deadline All entries must be sent by email to tbranscom@cowanperry.com and must be received no later than 4:00 P.M. Eastern Daylight Time on Friday, May 20, 2016. For problems with transmission, please contact Tara A. Branscom at 540-777-3459. Judging Entries will initially be judged by members of the Section, in their sole discretion, who will select no more than five finalists.

The final judge will be the Honorable Richard Linn of the U.S. Court of Appeals for the Federal Circuit. Judge Linn will select the winner, in his sole discretion, from among the finalists. Criteria for judging include: • Subject matter originality • Relevance to intellectual property practice • Quality of topic development • Analysis of the subject matter • Quality of writing • Proper reliance on cited authorities • Clarity of expression • Grammar, spelling and vocabulary

The winner will be announced no earlier than August 12, 2016 and no later than September 16, 2016. Presentation of Award The winner will be notified by telephone and electronic mail and will be invited to the Section’s 28th Annual Fall Weekend Seminar, for an award presentation ceremony. Hotel accommodations for that evening will be provided to the winner by the Section.

Other Terms & Conditions No article submitted as an entry in this competition may be published in any other forum until the competition has ended and the winner has been announced. After that time, articles submitted but not selected as the winning article may be published without limitation. The author of the winning article grants the Section a non-exclusive license to publish the article at the Section’s discretion. Other publications of the article by the author must include a footnote acknowledging the award from the Section. By submitting an article in this competition, the student author agrees to be bound by the rules, terms and conditions governing the competition and the award of any prizes therein. The Section reserves the right not to make an award in this competition if no entries of acceptable quality are received.

Expert testimony in false advertising cases can rely on studies of other events

Concordia Pharmaceuticals, Inc. v. Method Pharmaceuticals, LLC, 2016 WL 1464639, No. 3:14CV00016 (W.D. Va. Apr. 13, 2016)

 

Previous opinion on how announcing a product launch and not following up might be false advertising discussed here.  Here, the court resolves some challenges to the parties’ expert witnesses.  Daubert requires that expert testimony must be “the product of reliable principles and methods that are reliably applied to the facts of the case.”  Courts aren’t required to admit opinion evidence “connected to existing data only by the ipse dixit of the expert,” but neither must they determine that the testimony is irrefutable.

 

Concordia’s expert Dr. Reisetter, a licensed pharmacist with a doctorate in pharmacy administration, who also works as a consultant for the pharmaceutical and medical industries, offered opinions on the market impact and industry consequences of Method’s submissions to drug databases. Reisetter had performed extensive research on the effects of database listings on the perceptions and behavior of pharmacists and doctors. Here, he offered the opinion that Method’s efforts to list its Me-PB-Hyos products with the databases “caused the marketplace to believe that there was an actual ‘generic’ or pharmaceutical equivalent for Donnatal appropriate for substitution,” and that this “set off a series of inevitable downstream events in the marketplace that adversely affected the number of prescriptions for Donnatal filled and units sold, despite no such product being available.”

 

Method argued, among other things, that Reisetter improperly relied upon surveys conducted in other cases (or, apparently, other “research projects”) in forming his opinions.  While there are valid concerns here—especially for surveys conducted for other litigation, as opposed to for other research objectives—I think it’s often a mistake to assume that surveys conducted for a specific litigation are more reliable than surveys conducted without the specific case in mind.  Even the techniques we have for detecting bias are not necessarily very reliable, and if anything, generalized knowledge about a field might be more useful and predictive. 

 

The court found that exclusion was unwarranted; the issues could be adequately addressed on cross-examination.  In particular, “[w]hile the court may ultimately limit the extent to which Dr. Reisetter is permitted to reference specific responses to survey questions, the court will permit him to offer opinion testimony based on the results of the prior surveys,” as long as experts in the field would reasonably rely on these kinds of prior surveys. “The defendants are also free to point out that Dr. Reisetter ‘s opinions are not based on quantitative or qualitative research employed to determine actual market behavior in response to the particular database listings at issue in this case.” In a footnote, the court said that, because these prior surveys didn’t “account for the actual allegations in this case,” they wouldn’t support an implied falsity theory.  It’s this kind of reasoning that makes me sad—I think appropriately conducted surveys can tell you how consumers will react to a claim, or a type of claim, even without expensively testing the exact ad claim at issue in a particular defendant’s advertising. For example, “Made in USA” is the kind of claim that is likely to work the same way across products and contexts.  More generally, elevating surveys over marketing experts creates a false sense of precision, while raising litigation costs and ignoring on the front end (the survey requirement for implicit falsity claims) all the weaknesses of surveys that courts—expensively—deal with on the back end (the particular survey once conducted, which might well end up being discounted).

 

Method also offered the opinions of Dr. William Fassett, a licensed pharmacist and a professor emeritus of pharmacotheraphy at Washington State University with an extensive background.  In his report, he opined that price increases such as those Concordia implemented for Donnatal would explain the harm Concordia attributed to Method’s actions: that the reactions of pharmacists and prescribers to price increases are generally consistent and that he would expect formularies to eventually exclude Donnatal, and prescriptions for Donnatal to ultimately decrease, in response to increased prices.  As an example, he cited a prescription pain reliever that, like Donnatal, had no generic equivalent. When the manufacturer increased the price by over 600%, the results were increased sales dollars, fewer prescriptions and unit sales, exclusion from formularies, and substitution, “all of which would be expected with Donnatal.”

 

His opinions were “derived from his decades of experience as a pharmacist, during which he dispensed Donnatal and its generic competitors; his extensive experience working with formulary committees; and his specialized knowledge of how formulary committees make coverage determinations.”  Personal experience is a possible qualification for an expert as long as he can “explain how [his] experience leads to the conclusion reached, why [his] experience is a sufficient basis for the opinion, and how [his] experience is reliably applied to the facts.”

 

The court did exclude a portion of Concordia’s damages expert’s report dealing with lost profits. Concordia failed to establish that his lost profit calculations were “the product of reliable principles and methods” that were “reliably applied” to the particular facts of this case. He failed to take into account numerous market factors that could have affected Donnatal sales and prescriptions.  For example, while he determined that Donnatal prescription volume was “generally unaffected by price increases,” he limited his analysis to two price increases in 2012, a time when existing inventories of competing generic products were being eliminated from the market, and he disregarded another price increase in 2013 that was followed by a reduction in Donnatal prescription volume and unit sales. This price increase occurred after generics had been removed from the market, but before Method’s products were listed with the pharmaceutical databases.  Nor did he consider the impact of newer drugs available for treating IBS, “which, unlike Donnatal, have been approved for effectiveness by the FDA.” The expert’s failure to consider them, or to offer an explanation for his failure, creates “enough of a doubt as to the overall reliability of [his] opinions as to render them inadmissible.”

Further results from my FOIA case against ICE

With the assistance of Georgetown's Institute for Public Representation, I sued ICE to get it to answer some questions about why its representative claimed that "X sucks" merchandise would infringe X's trademark rights, at least where X is a sports team.  ICE has made three productions so far, and it's basically a lot of blurry pictures and heavily redacted guides produced by sports teams/apparel companies.  Assuming that the sample I have is at all representative, it seems to me that ICE does seize a lot of plain counterfeits, but it can also seize more questionably.  Is this design on a shirt likely to cause confusion about source?


Blunt Blowin' Bull with bloodshot eyes and marijuana

Certainly, many of the photos showed counterfeits, including counterfeit tags claiming to be genuine NFL etc. merchandise.  With the caveat that the organization of the production makes start/endpoints for different seizures difficult to determine, there was one seizure centering on Seattle Seahawks merchandise that didn't follow this pattern.  There didn't seem to be counterfeit tags--ICE didn't produce photos of tags for this seizure, and their practice is apparently to photograph tags when they might be counterfeits.  Some of this merchandise bore Seahawks logos alone; others involved Seahawks-related images, or a logo plus other positive/fannish commentary.  Many of those shirt didn't look particularly official to me; they might make good examples for discussion of trademark as a pure merchandising right, which ICE is helping to protect.

Superman/Seahawks

Seahawks with list

Match-up with both teams' logos

Go Hawks Re-Pete

I have no idea what's going on here; suggestions very welcome

Why not us?

Comments on section 512 from the OTW and a few others

The Copyright Office has posted the responses to its notice of inquiry on 512.  Here's the Organization for Transformative Works comment on 512.  Also, among the 90,000+ responses, there are comments from Eric Goldman, and a comment based on the empirical work of the Takedown Project.  If anyone wants my collection of downloaded long-form comments, let me know and I'll send you the Dropbox link.  I'm sure there will be many interesting submissions in there. And a lot of grandstanding from practically everybody.

announcing product launch and pricing can be false advertising if no launch occurs

Concordia Pharmaceuticals, Inc. v. Method Pharmaceuticals, LLC, 2016 WL 1271082, No. 3:14CV00016 (W.D. Va. Mar. 29, 2016)

 

Concordia bought the Donnatal line of pharmaceutical products from former plaintiff PBM. Donnatal is a prescription line of combination phenobarbital and belladonna alkaloid (PBA) products that is used in the treatment of irritable bowel syndrome and acute enterocolitis. They’re grandfathered drugs; the FDA was required to conduct a retrospective evaluation of such drugs in 1962.  Concordia benefits from conditional approval ANDAs that allow Donnatal to be legally marketed until the FDA resolves questions regarding the drugs’ effectiveness under the FDCA; the FDA has concluded that Donnatal is safe.

 

Donnatal faced competition from generic PBA products that were pharmaceutically equivalent to Donnatal for many years, but then manufacturers of the generic versions began to take their products off the market, making Donnatal the only PBA product available for prescription.

 

Method, a wholesale drug distribution company, tried to enter the market with a PBA product it planned to call Me-PB-Hyos, and sought a manufacturer for a product that would be pharmaceutically equivalent to Donnatal. Method issued four purchase orders to another company, Winder, for the development of Me-PB-Hyos, including a purchase order for stability tests. Winder and Method agreed on the price that Winder would charge and discussed commercial production.

 

Method listed the Me-PB-Hyos products with two pharmaceutical industry databases, used nationwide by wholesalers, third-party payors, pharmacies, and pharmacists.  Based on the information provided by Method, the Me-PB-Hyos products were assigned the same Generic Product Identifier as Donnatal by one database, with a marketing start date of June 1, 2014, and the marketing category was listed as “unapproved drug other.”  The other database listed the Me-PB-Hyos products in early June 2014.  In both databases, the price information provided by Method indicated a lower price than that for Donnatal.

 

This lawsuit began, and Method contacted Winder, stating “We think it might be best to bail on this project at Winder and not bring Winder into the litigation.”  On the same day, Method advised one of the databases that “Me-PB-Hyos is an active product and will be available to ship by 11/15/14.” Following up, Method explained that “The products were never launched. Within days of our listing with Medi-Span back in April, Method was sued by a competitor… Based on the status of the case, Method intends to launch in mid-November.”  But it never did, and about a month later, the databases removed their active listings for the Me-PB-Hyos products.

 

After the Me-PB-Hyos products were listed on the databases, pharmacists began to submit claims for the product.  There were instances in which insurance coverage for Donnatal was refused; at least once, a claim for Donnatal was refused while a subsequent claim for Me-PB-Hyos was approved. But because Me-PB-Hyos was unavailable, the patient was switched to different medications and didn’t receive a prescription for Donnatal.  Third-party payors began placing Me-PB-Hyos on their formularies as a generic alternative to Donnatal, and at least once Donnatal was actually removed from a formulary with Me-PB-Hyos listed as the preferred generic alternative.  Some doctors stopped prescribing Donnatal altogether based on the mistaken belief that it was no longer available. One doctor testified that “12 or 14 prescriptions ... were turned down” in June of 2014, and that she “slowly stopped writing [prescriptions] because [she] didn’t want to get the phone calls back” from pharmacies indicating that Donnatal wasn’t available.  The total number of Donnatal prescribers decreased by nearly eighteen percent in the twelve-month period following Method’s claimed launch date, and weekly prescription counts for Donnatal also decreased, though the causation was disputed.

 

From January 2012 to June 2014, the prices of Donnatal products increased by 1,480%, and then in June Concordia doubled the price again.  Its profits and profit margin increased after Method’s Me-PB-Hyos products were listed with the databases, though Concordia argued that it would have made even more had Method not listed its products.

 

Concordia argued that the listings were literally false, since no Me-PB-Hyos products were ever manufactured.  Method responded that the mere existence of a listing for a product in a pharmaceutical drug database is not a representation of current commercial availability, and that at least one pharmaceutical industry representative deposed by Concordia testified that it was common to find a database listing for a product that was not yet commercially available. Concordia’s own pleadings stated that databases are “used ... to evaluate medications that are currently or will soon be on the market.”  There was a genuine issue of material fact about literal falsity as to availability; a reasonable jury could conclude that there was literal falsity by necessary implication.

 

Concordia also argued that  Method made literally false statements indicating that the Me-PB-Hyos products had been approved by the FDA, because the package inserts included the following: “FDA has classified the following indications as “possibly” effective: For use as adjunctive therapy in the treatment of irritable bowel syndrome (irritable colon, spastic colon, mucous colitis) and acute enterocolotis ....”  Method responded that it never claimed that its own product had been approved, and specifically advised the listing services of the absence of FDA approval (thus the category “unapproved drug other”).   Its reference, Method argued, was to PBA drug products, and it noted that product labels and package inserts for other generic PBA drug products previously on the market contained similar language.  The court still found a factual issue as to literal falsity: “reasonable minds could differ as to whether FDA approval was conveyed by necessary implication as a result of the indications and usage section of the package inserts.”

 

Concordia also argued that Method made false claims of pharmaceutical equivalence, because it had no products with the same active ingredients in the same amounts—it hadn’t produced anything.  (Isn’t this really an unusual lack of substantiation claim?  Before there is a product, it seems that it’s neither true nor false that the product is pharmaceutically equivalent.  The product isn’t.  That doesn’t mean it’s not pharmaceutically equivalent, because the failure to be comes before it could be evaluated as equivalent or not.)  Indeed, the court’s phrasing makes clear that this is a lack of substantiation claim: “Concordia argues that Method had no basis for the information contained in the labels and inserts” (emphasis added).  Method argued that it intended to distribute a pharmaceutically equivalent product, and was only halted by this lawsuit. 

 

The court again found a material issue of fact, hinging in part on whether Method falsely represented that the products were commercially available.  If a jury so found, it could also find the descriptions of ingredients to be literally false.  But if the listing merely indicated an intent to market, a jury could find that there was no literal falsity. 

 

The court went through the same reasoning with respect to Method’s price claims.

 

Materiality: assuming that the Fourth Circuit would require a showing of materiality even in cases of literal falsity, there was a genuine issue of material fact on materiality. A jury could find that claims of pharmaceutical equivalence, price, FDA approval, and availability were likely to influence purchasing decisions.  So too with harm, even without Fourth Circuit guidance on when a presumption of harm might be allowed, given the (contested) evidence of harm recited above.  (There was other evidence of alternative causes—for example, “Donnatal was pulled up with no generic product showing” at three major pharmacy chains, and the doctor who testified might have been told that Donnatal was no longer being made because one version had in fact been discontinued.)

 

State-law unfair competition claims survived for the same reason, but not Virginia Consumer Protection Act claims, because that law doesn’t provide competitors with standing. Likewise, unjust enrichment failed because there was no evidence that Method received any value from using Donnatal product labels to create its own labels.  (Anyway, that theory sounds like a FDCA preemption claim waiting to happen.) Nor could conspiracy claims survive; employees of a corporation can’t conspire with the corporation, and there was no evidence that Winder was part of any conspiracy; even though it knew that Method wanted to make a competing product, there was no evidence that it knew about the database listings, the only source of harm here.  Tortious interference also failed for want of evidence of any specific, existing contractual relationship or business expectancy that was destroyed.

 

"Excessive use of professional reviewers" might be false advertising

Interlink Products Int’l, Inc. v. F & W Trading LLC, No. 15-1340, 2016 WL 1260713 (D.N.J. Mar. 31, 2016)

 

The parties compete to sell showerheads; Interlink claims rights in the marks AQUASPA, AQUASTORM, AQUADANCE, and SPIRALFLO for showerheads.  It sued F&W for false advertising, trademark infringement, and related claims, and F&W counterclaimed for false advertising etc. based on Interlink’s allegedly false representations of compliance with the Energy Policy Act, which sets flow rate requirements for showerheads. 

 

On the counterclaims, F&W argued that the product instructions constituted actionable “advertising or promotion” because they “serve the purpose of influencing the customer who purchased the item to continue purchasing Interlink showerhead products and to also influence other potential customers who become aware of them through contact with the initial purchaser.” The court disagreed, finding that product inserts were post-sale and didn’t influence consumers in their purchasing choices.

 

Interlink argued that F&W shouldn’t be allowed to proceed on claims based on Interlink’s alleged violation of the Energy Policy Act, because F&W didn’t plead that it itself complied with the standards and couldn’t plausibly allege damages.  The court disagreed.  If consumers chose Interlink over F&W based on the allegedly false claims, F&W may have suffered damages.

 

Tortious interference: F&W argued that Interlink purposely used black image backgrounds instead of white ones in its Amazon sales, against Amazon policy.  But “F&W provides no support for its argument that the violation of a website’s image requirements gives a third-party user of the website a cause of action for unlawful competition. Interlink’s compliance with Amazon’s image requirements is a matter Amazon.com and Interlink.”

 

The court did decline to dismiss claims based on Interlink’s alleged failure to mark showerheads with their country of origin, given F&W’s admission that at least some of its showerheads were also not marked; F&W argued that it was now in full compliance with the law, which was enough to avoid dismissal.

 

Turning to Interlink’s claims, Interlink alleged that F&W used Interlink’s pictures and product descriptions, thus falsely advertising their own products.  F&W argued that the pictures used showed the different functions of the showerhead and that Interlink didn’t allege that the functions were unavailable in F&W’s products or that the F&W products were inferior.  But Interlink’s argument was that F&W was misrepresenting that their product was in fact Interlink’s product (or that they were of the same nature and quality), and that’s a violation of §43(a).  (Ah, but (1)(a) or (1)(b)?)

 

Defendants also allegedly misrepresented that AQUAFLOW was a registered trademark; defendants rejoined that the ® symbol was used by mistake and that they’d ceased using the trademark symbol. Citing McCarthy’s statement that the “use of ... the ® adjacent a mark not federally registered is ... a form of false advertising which may result in serious repercussions,” the court found that Interlink had pled a plausible claim for false advertising.  (Why is this plausibly material?)

 

Interlink also alleged that defendants manipulated product reviews, and thus numerical product ratings, “through the excessive use of professional reviewers” who were flooded with free samples, leading to reviews that “are inherently biased and tend to favor the seller.” That was enough to state a claim for implied falsity.  (What exactly is the falsity?  Assuming that the free sample was disclosed, is “bias” something more than puffery?)

 

Interlink also sufficiently alleged false advertising by pleading that: (1) defendants advertise that the installation of their dual showerhead requires “absolutely no tools”; (2) this statement is “literally false”; and (3) the product instructions “clearly instruct the purchasers to use” tools.

 

However, as a non-consumer (purchases made for purposes of this litigation didn’t count), Interlink lacked standing under New Jersey consumer protection law.

 

The court also found Interlink’s trademark confusion claims based on defendants’ AQUAFLOW compared to its marks AquaSpa and SpiralFlo plausible.  Given how descriptive those terms are, that seems like a troubling result, but the court here doesn’t seem inclined to ask for much from either side here.  Interlink also alleged trade dress infringement of a trade dress comprising:

 

(1) The use of circular pictures arranged in a vertical column showing the various function modes of the showerheads, together with the terminology used to describe the functions and the font and positioning of the function descriptions beneath the pictures;

(2) photographs of Interlink’s products;

(3) the look, feel and style of the presentation of product images;

(4) the non-functional aspects of the design of the products, specifically the shape of the shower handle, head and shower jet design ...; and

(5) the trademarks used in connection with the products.

 

Interlink adequately alleged non-functional elements—the package design’s use of circular pictures in a vertical column with certain fonts, words, and pictures, along with Interlink’s trademarks.