Puffery in the wild

 spotted on the T:

Slow fashion: checkerboard design plausibly infringes another checkerboard design

Hian v. Louis Vuitton USA Inc, 2024 WL 3237591, No. 22-3742 (E.D. Pa. Jun. 28, 2024)

The court tosses out most of an independent fashion designer’s claims against LVMH, while preserving one copyright infringement claim based on a distorted checkerboard pattern. I can’t say I think that one is likely to survive summary judgment, but it still puts LVMH at some risk given the accused items, which include some marketing materials.

 [Hian] sent cold solicitations to a top executive at the fashion conglomerate with hopes of a collaboration. The solicitations included original clothing designs, lookbooks, and other promotional material meant to highlight the designer’s international acclaim in the fashion industry. Ultimately, the fashion conglomerate did not make time to meet with the designer or decide to work with her. But several years later, she saw marketing campaigns and products by the fashion conglomerate that looked like three of her original designs.

Lanham Act claims failed because she didn’t allege secondary meaning, and reverse passing off in these circumstances flunks Dastar. Likewise, state unfair competition/unjust enrichment was preempted by §301, even as related to a design she hadn’t registered.  

There was no claim for copyright infringement of Green Raffia because Hian didn’t plead a registered copyright.

Plaintiff's Green Raffia design and LVMH's accused design

For the two registered designs, Hian successfully pled access: Hian’s representative emailed the Ombre design to a top executive within the LVMH conglomerate who had “access to all divisions, groups, owned companies, brands, and/or teams within LVMH and including ... any and all designers and stylists.” His assistant also physically printed the email and its attachments, including the Ombre design, and placed it on his desk. The second design, Plaque D’egout, wasn’t included in the email, but it was plausibly alleged that someone at LVMH looked up plaintiffs on the internet after plaintiffs’ work was brought to LVMH’s attention, found their Plaque D’egout design, and copied it. “We needn’t check our common sense at the door when evaluating a complaint.” Given what happened to Ombre and other promotional materials, it followed that LMVH designers had a “reasonable opportunity” to investigate plaintiffs and their work further. In addition, Hian pled that she and LMVH use the same textile manufacturers in France, and that it is common for French textile manufacturers to show off designers’ works to other designers.

Substantial similarity: plausible for Plaque D’egout, not for Ombre.

possibly the only accused LVMH clothes above; the rest seems to be marketing

accused design J is bottom right: wavy/distorted LV bag in classic LV colors

accused design M is top right: blue checkerboard top

Plaque D’egout “looks like what one might describe as an irregularly warped black-and-white checkerboard pattern.” A lay observer “might not readily find aesthetic differences between Plaque D’egout and some of the accused LVMH designs,” which shared “a number of aesthetic details in common with Plaque D’egout, including a warped black and white checkerboard pattern with similarly sized boxes.” LVMH argued that the distortions on their checkerboard designs were very different based on the shape and size of the squares in each. “Those may be significant contrasts, but we don’t think that this is necessarily the kind of thing that a lay observer who has not set out to scour the images for differences would notice.” [This is where the “prior art” inquiry/expert testimony would likely focus on summary judgment, if it gets that far.] “And the overall aesthetic feel and total concept of the designs is rather similar.” The fact that the checkerboard design is commonplace might matter, but not at the pleadings stage.

But two accused designs, J and M, weren’t substantially similar as a matter of law because of the “stark differences” between the designs “that would be obvious to even a lay observer who has not set out to look for disparities. Accused design J looks nothing like Plaque D’egout in size, shape, color, or overall aesthetic feel. And accused design M does feature a warped checkerboard design but has an overall aesthetic feel different from Plaque D’egout owing to its different color scheme.”

Note: "Ombre" is apparently a collection of Hian's, so there are two designs shown at the top of this image that she alleged were infringed.

Ombre: “We are sensitive to the factual nature of substantial similarity, but this is not even close. Ombre features horizontal transitions of color broken up by jagged lines with clearly defined edges. In contrast, the accused designs feature softly blended color transitions in various directions. And accused design D has no color transition at all.” Though some designs had similar color schemes, “random similarities are insufficient to establish substantial similarity.”

One thing that the court didn't address is: what exactly does Hian own a copyright to? The design of the original outfit?  The checkerboard fabric? The answer may affect the scope of Hian's rights. If part of the creativity of the design is how the checkerboard is placed on the human body, it seems like the marketing claims are unlikely to be valid, since they aren't replicating anything sculptural in the design. Ah, Star Athletica, screwing things up even when you aren't mentioned.

NetChoice and Calvinball: Initial thoughts

I understand if you don’t think that the First Amendment is an area where SCOTUS is really doing “law” as we were taught it, but as a distraction for myself I have been thinking about (1) the idea that facial challenges are strongly disfavored and (2) the idea that content-based speech restrictions are presumptively unconstitutional. (2) might well be on its way out anyway, and I think (1) will speed its demise, or at least make (2) (hereinafter Reed) something of a dead letter.

Reed is probably still good law as to sign restrictions like those in Reed, which were content-based on their face and applied only to content. But I will note that the rule in Reed prohibited the display of outdoor signs without a permit, but exempted 23 categories of signs from that requirement. It seems like (with severability) the exemptions are content-based, but the permit requirement itself isn’t.

Beyond Reed, what remains? Consider a law that bars speech that creates a public disturbance. Presumably this is not facially content-based, because a public disturbance can come from volume alone, regardless of content. However, if applied to speech that creates a public disturbance because of its content, I would guess that the application has to survive strict scrutiny. And doctrines of vagueness and overbreadth, and their concern with chilling protected speech—if we still care about that and not just about chilling vigorous presidential action—might also bear on the validity of the law, which could therefore still face a facial challenge.

The narrow tailoring inquiry of strict scrutiny (or the reasonable tailoring inquiry of intermediate scrutiny) therefore might come at a different point: when we’re comparing the permissible applications of the law (overly loud noise) to the impermissible ones (speech that creates a public disturbance because of its content). According to NetChoice, we are now supposed to figure out if there are too many impermissible instances compared to permissible ones. How? Tailoring suggests itself as an answer.

But it’s not the only answer. Consider the following hypothetical: Free Speech Junction provides evidence that, under its public disturbance ordinance, it has issued 50 tickets for noise-based violations and 1 ticket for content-based violations. Does that mean that the impermissible applications are substantially outweighed by the permissible applications, such that this is a facially valid ordinance? Its neighboring polity, Nosy Neighborhood, issued 100 tickets for content-based violations and 20 tickets for noise-based violations during the same period. Is its identical ordinance facially invalid? Or should we look at the state-level or national data to figure out how to “count” permissible applications?

Some of the Court’s discussion in NetChoice seems to suggest that we should count services, or even subservices—if the law as applied to Uber or Gmail isn’t content-based, that is a strike against facial invalidity. One of the reasons this suggestion seems strange on its face is that it’s obvious that Texas and Florida didn’t have any interest in covering Uber—such an approach seems to reward overexpansive laws. Maybe here we should give extra weight to what the legislature thought it was doing, since we know that its key aim was impermissible per the Court majority.

Instead of counting services, which seems a lot like counting number of citations, perhaps we could count functions. The Court notes several differences among (probably) covered platforms. But even there we face some problems: do Uber and Etsy perform the same function (selling off-site goods or services) or different functions (selling rides and selling tangible and intangible goods)? Is Discord providing a chat service, a UGC feed, or something else? Do Discord and Reddit do the same things for First Amendment purposes? (Disclosure—I submitted an amicus for Discord—cited by one of the bad concurrences, yay.)

Maybe we could do the same conceptual cut as I did for the public disturbance law: content moderation done for expressive purposes versus content moderation done for nonexpressive purposes. Stated that way—or, even worse, stated the way the legislatures did, “censorship” done for expressive purposes versus “censorship” done for nonexpressive purposes—it’s hard to imagine how the latter might dominate enough to save the law. Perhaps Uber and Etsy do remove a bunch of content for nonexpressive reasons, but even their removals are often going to be because of pure content (Uber drivers or riders who engage in racial slurs, for example, or Etsy merchandise that promotes Holocaust denial).

I’m not optimistic that courts will have a good grasp on this. As I said on Bluesky, people who can imagine that there exist “feeds whose algorithms respond solely to how users act online—giving them the content they appear to want, without any regard to independent content standards” (n. 5) probably shouldn't be making internet policy. Even AO3 and Wikipedia remove stuff! And they do so in the service of ideologies that are far more centrally held than any commercial service’s. They just don’t then apply a weighting algorithm for displaying what they guess will keep the user happier/more engaged.

Anyway, given the conceptual counting difficulties, tailoring might seem like a good source for comparisons: the law is facially invalid if a substantial number of its applications are content-based and don’t survive strict scrutiny, and a more narrowly tailored law would get rid of most of those invalid applications. But the majority doesn’t mention tailoring, only comparison of valid to invalid applications, which gives courts maximum flexibility to do what they will. And that, of course, is the true lesson of this Term.

lawsuit against plaintiffs' expert witness fails on First Amendment grounds

LTL Mgmt. LLC v. Moline, 2024 WL 3219683, No. 23-02990 (GC) (JTQ) (D.N.J. Jun. 28, 2024)

Not currently in bankruptcy, LTL—J&J’s solution to its talc woes—decided to sue a critic for her scientific conclusions about talc risks. The court dismisses J&J’s Lanham Act, trade libel, and common-law fraud claims.

In 2020, Dr. Moline and several co-authors published an article in the widely read Journal of Occupational and Environmental Medicine. It described “33 cases of malignant mesothelioma among individuals with no known asbestos exposure other than cosmetic talcum powder.” It purported to be “the first large case series to identify cosmetic talcum powder contaminated with asbestos as the cause of malignant mesothelioma in cosmetic talc users,” and concluded that “[e]xposure to asbestos-contaminated talcum powders can cause mesothelioma.” (Id. at 2, The article has been described as “groundbreaking,” with “widespread influence” on nationwide litigation in which plaintiffs allege that exposure to cosmetic talcum powder caused their mesothelioma.  

Dr. Moline, the lead author, is an occupational medicine specialist, professor of occupational medicine, and executive for various health departments and programs. She allegedly “made a career” as a paid expert testifying on behalf of plaintiffs in asbestos litigation over the course of twenty years. She appeared in more than 200 cosmetic talc cases against LTL, was deposed in 46 of those cases and testified at trial in 16.

LTL alleged that the central premise of the article was knowingly false for two reasons: (1) The article stated that “[n]o individual identified any asbestos exposure apart from contaminated talcum powder” but Moline allegedly “knew full well that individuals she cited in her Article had admitted to and claimed compensation for exposure to asbestos from other sources” than Johnson & Johnson’s talcum powder. (2) The article stated that that in the six cases where tissue samples were evaluated, “[a]sbestos of the type found in talcum powder was found in all six cases evaluated,” but several samples contained asbestos fibers of the type “encountered in cases of industrial and occupational exposure, not cosmetic talcum powder.”

The article itself cautions that the study “should be understood in the context of its limitations,” including the fact that the data “were obtained from medication records and transcripts of depositions, rather than structured, in-person interviews”; the risk of self-reporting and recall biases in these types of studies; and Dr. Moline’s role as an expert witness in “asbestos litigation, including talc litigation for plaintiffs,” which the article labels as a conflict of interest.

LTL’s allegations relied heavily on Bell v. American International Industries, 627 F. Supp. 3d 520, 526 (M.D.N.C. 2022). Bell, one of the case studies, “sued alleging that her exposure to asbestos through AII’s talcum powder caused her mesothelioma. But Bell had also filed two workers’ compensation claims asserting that she was exposed to asbestos while working for two textile employers.” The district court stated “Bell’s employment history, as well as her belief that she may have been exposed to asbestos during her textile employment, undermine[d] the weight of Dr. Moline’s finding that each of the ‘33 cases ... had no known exposure to asbestos other than prolonged use of talcum powder.’ ” Dr. Moline reviewed Bell’s deposition before drafting the article, leading LTL to allege that she “knew or recklessly ignored available information” that contradicted the Article’s central premise. LTL made similar allegations about alternative sources of exposure for at least four other individuals in the case studies.

In one case, tissue analysis allegedly revealed the presence of asbestos fibers caused only by “industrial and occupational exposure, not cosmetic talcum powder.” In another individual case, Dr. Moline issued an erratum, disclosing that one of the 33 persons should not have been included in the 2020 Article because the individual had been exposed not only to talcum powder, but also to “asbestos contaminated cigarette filters.”

LTL also alleged that Moline republished the allegedly false statements “in myriad settings and with large and varied audiences,” including to several news media organizations, conferences, and oral and written testimony that Dr. Moline delivered before a United States House of Representatives subcommittee on talc litigation, allegedly “for her own professional aggrandizement and financial gain,” and to “add a veneer of credibility” after courts had “repeatedly barred Dr. Moline from offering testimony.”

Were these claims of fact for purposes of the First Amendment constraints on these torts? The court began with the rule that, if a statement can be construed as either fact or opinion, courts “must construe it as an opinion. A contrary presumption would ‘tend to impose a chilling effect on speech.’ ”

As the Second Circuit has recognized, though, statements made in the context of scholarly and academic debate pose “several problems for the fact-opinion paradigm of First Amendment jurisprudence.” ONY, Inc. v. Cornerstone Therapeutics, Inc., 720 F.3d 490, 496 (2d Cir. 2013). The difficulty arises in large part because academic freedom is “a special concern of the First Amendment.” (Query: Are there five votes for this proposition on the current Court?)

ONY says that scientific claims are in principle capable of verification, but at the same time “it is the essence of the scientific method that the conclusions of empirical research are tentative and subject to revision, because they represent inferences about the nature of reality based on the results of experimentation and observation.” Thus, ONY held, although scientific conclusions are “in principle matters of verifiable ‘fact,’ for purposes of the First Amendment and the laws relating to fair competition and defamation, they are more closely akin to matters of opinion, and are so understood by the relevant scientific communities.” ONY distinguished situations in which data were allegedly “fabricated or fraudulently created.”

The Third Circuit has relied heavily on ONY to conclude that a claim for trade libel based on “tentative scientific conclusions” failed as a matter of law. Pacira BioSciences, Inc. v. Am. Soc'y of Anesthesiologists, 63 F.4th 240 (3d Cir. 2023). Pacira alleged that each of the articles in suit “employed flawed methodologies by ... cherry-picking data, relying on studies that ... were deficient, improperly discrediting studies favorable to [Pacira’s drug], and failing to properly limit their conclusions.” The Third Circuit that the statements were not sufficiently “verifiable” because they were “tentative scientific conclusions and were expressly disclosed as such.” “[D]isagreements about the reliability of the methodology and data underlying the statements were insufficient,” because reliability is different from verifiability. But the Third Circuit also endorsed the rule that “a conclusion drawn from falsified or fraudulent data may be actionable.”

In terms of the content, the statements in various places that talcum powder was the only source of exposure for all 33 cases and that other sources of asbestos fibers weren’t found seemed more factual than the comparative claims in ONY and Pacira. Still, in the context of scholarly debate,  “[i]solating challenged speech ... indeed may result in identifying many more implied factual assertions than would a reasonable person encountering that expression in context.” The article was published in a peer-reviewed journal with a self-described purpose of “underlin[ing] the importance of collecting detailed exposure histories ... in patients presenting with mesothelioma.” This supported the conclusion that the statements, including their repetition outside of the journal, were nonactionable “tentative scientific conclusions” protected by the First Amendment.

Verifiability: LTL alleged that at least four additional cases, beyond the erratum, were individuals exposed to “known alternative sources” of asbestos. But cases like Bell instead demonstrate “that Dr. Moline’s statements about asbestos exposure are inferences or conclusions drawn from her review of deposition transcripts and medical records. Such inferences may be subject to critique about their reliability but are not sufficiently verifiable to be actionable as a matter of law.”

What about the Bell district court’s serious concern about the “seeming contradiction” between Bell’s previous workers’ compensation claims and the 2020 Article’s statement that each of the 33 cases “had no known exposure to asbestos other than prolonged use of talcum powder”? The opinion “focused on the weight to be given to Dr. Moline’s findings, thereby demonstrating that they are more akin to opinions as opposed to statements of fact.” Indeed, the Bell court recognized “that the mere existence of the unsuccessful workers’ compensation claims d[id] not definitively establish that Mrs. Bell was in fact exposed to asbestos at the textile workplaces.” The court here found it “telling” that the Bell court didn’t describe Moline’s statements as “false,” or even “incorrect.” Instead, it questioned the validity of the inferences drawn from the results of the underlying data. Imposing liability here would present too great a risk of chilling speech.

The same was true of the other allegedly alternatively exposed individuals. “Put differently, LTL accuses Dr. Moline of failing to include ‘variables that were available to [her]’ — such as the pipes in [one person’s] basement or [another’s] workplace — ‘but that were not taken into account in [her] analysis.’” Such perceived flaws in methodology can’t be cleverly pled as “ ‘false descriptions of data on which the studies rely.’ ” Perhaps other experts would consider these to be “known exposures” to asbestos. “But a scientific conclusion need not account for every piece of data that was not relied on to receive protection.”

Nor did the erratum change the analysis. It didn’t plausibly demonstrate that she fabricated or falsified data. “Rather, it demonstrates exactly why the ‘peer-review process — not a courtroom — ... provides the best mechanism for resolving scientific uncertainties.’”

As for the tissue analysis, the article didn’t purport to consider analyses performed by other experts. A footnote expressly disclosed: “Tissue analysis presented done by author. Tissue analysis might have been done in some cases by other investigator, these results are not presented in this paper.” Even if all of LTL’s allegations are true — that LTL correctly identified one case, and that Dr. Moline was aware of these other tissue analyses — this was a nonactionable scientific conclusion published alongside an “accurate description of the data taken into account.”

Context: Statements published in a peer-reviewed journal were the easiest case. “While statements are not protected solely because they appear in a peer-reviewed journal, such journals are often ‘directed to the relevant scientific community,’ ” who are “best positioned to identify opinions and ‘choose to accept or reject [them].” The various disclosures and stated limits of the article made it clearly scientific opinion for First Amendment purposes.

What about statements in other media? “The relevant case law does not support LTL’s argument that the only way it can combat Dr. Moline’s public statements is by suing her for trade libel, fraud, or false advertising.” Statements in other media that merely summarized the 2020 article’s findings could not give rise to liability. Plus, the actual context weighed in favor of finding nonactionable opinion. E.g., a Time Magazine article described the 2020 article as presenting “case studies of 33 people ... whose only substantial exposure to asbestos was through the use of talcum powder — theoretically ruling out other causes of the disease.” In another mass media publication, Dr. Moline repeated the “overall tenor and tone” of her article, stating that her “main reason” for publishing the article was to “alert clinicians that you need to take a comprehensive exposure history.” And statements in congressional testimony were privileged.

Fraud claims would independently fail because LTL didn’t allege that it reasonably relied on her allegedly false statements. Although LTL alleged that it “made its business decisions and defense of Talc Claims, including but not limited to LTL’s investigation of claims, approaches to settling such claims, retention of experts, and trial strategies — in reasonable and justifiable reliance on her fraudulent” statements, that was inconsistent with other parts of the complaint, where it alleged that, when it decided to discontinue its talc-based products in May 2020, it described questions about the products’ safety — such as the conclusion of the 2020 article — as “misinformation.” In direct response to the Time Magazine article focusing on Dr. Moline’s study, J&J insisted that its talcum powder “is safe, does not contain asbestos nor does it cause cancer, as reflected in more than 40 years of scientific evidence,” and noted that Dr. Moline “has served as a paid witness in asbestos lawsuits and in the study drew on cases referred to her by plaintiffs’ attorneys.” Thus, “the moment the 2020 Article was published, LTL responded as if the Article’s conclusions were false.” Reliance was not plausible.

Lanham Act: The 2020 article was protected noncommercial speech for Lanham Act purposes. “[S]econdary dissemination of a fully protected article can constitute a violation of the Lanham Act” only if the excerpts mislead a reader about the conclusions of the article. That wasn’t alleged here.

 

9th Circuit holds that California's Sherman Act can be enforced by private plaintiffs

Davidson v. Sprout Foods, Inc., --- F.4th ----, 2024 WL 3213277, No. 22-16656 (9^th Cir. Jun. 28, 2024)

In a surprisingly-to-me divided opinion, the majority rejects a theory that private claims under the UCL using California’s Sherman Act as a predicate were impliedly preempted by the FDCA, because the FDCA isn’t supposed to be enforced by private parties. Although the existence of explicit preemption doesn’t always mean that there’s no implied preemption as well, the FDCA’s preemption clause is specific enough to the Sherman Act situation that I would have thought it was obvious that there’s no implied preemption. At least the majority agrees with me!

Anyway, the Sherman Law “incorporates by reference all federal food labeling standards. These include a prohibition against labeling the front of baby food containers with the product’s nutrient content.” That's because babies' nutrient needs aren't the same and the FDA was worried about, e.g., conspicuous low-fat claims. Defendant “nevertheless produced pouches of baby food with labels on the front of the package conspicuously stating the amount of nutrients the pouches contained.”

example pouch making protein, fiber and DHA claims

The district court found preemption; as the majority reasoned, federal law “expressly permits states to enact standards identical to the federal standards and in this case, plaintiffs are attempting to enforce identical standards set forth in a state statute, the Sherman Law. The federal law does not limit the manner in which the state statute is enforced, and private enforcement of that statute does not conflict with federal enforcement of the FDCA.”

Although the Ninth Circuit has found implied preemption where plaintiffs were trying to enforce duties allegedly created by the FDCA, those were drug/device cases, not cases brought under the Sherman Law, a law expressly permitted by the FDCA. “There is no reason we can perceive why Congress would permit states to enact particular legislation and then deny enforcement by their citizens.” Indeed, Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996), interpreted a similar preemption provision and held that “[n]othing ... denied [the state] the right to provide a traditional damages remedy for violations of common-law duties when those duties parallel federal requirements.”

The dissent would have found that the exclusion of private suits from the FDCA meant that, at most, states could only create agencies to enforce laws like the Sherman Law, but the majority correctly found that atextual. One provision of the FDCA, § 310(b), allows states to enforce certain provisions of federal law—but that deals only with enforcement of federal law, not enforcement of state law. The dissent (a Trump appointee) would instead have required the state law being enforced to come “independently” from the common law, not from state adoption of federal standards. Conservatives love the common law when it’s used to disable legal remedies, but the majority noted that this jury-rigged standard didn’t make sense. (The dissent concludes that state enforcement of “identical” rules interferes with the FDCA’s scheme only when the common law isn’t involved—it is anti-legislative and allocates all power to courts.)

The presumption against preemption was unnecessary here, but also favored allowing the claim.

However, fraud-based claims were properly dismissed for failure to plausibly allege misleadingness. (I note that, on remand, there might be causation difficulties with the harm story for the pure Sherman Act violation, but then again the plaintiffs can argue that, in a world complying with the law, the products wouldn’t have been available for sale.)

As for those claims, plaintiffs alleged that Sprout’s labels “misled consumers into believing the products provided health benefits to children under two when the products were in fact nutritionally and developmentally harmful.” But they failed to meet Rule 9(b)’s heightened pleading requirement by failing to sufficiently allege why this implied message was false. Plaintiffs alleged that Sprout’s products contain high amounts of sugar and that sugars in pureed, pouch-based foods can lead to health issues such as tooth decay and cited to several articles and reports suggesting that pouch-based foods may lead to long-term health risks and hinder babies’ development. But these allegations were “largely unspecific to Sprout’s products.” They didn’t explain “at what level sugars become harmful or why the levels of sugar in these products, in particular, could cause harm.” Other harm allegations were “largely speculative”: “consumption of pouches may lead to long term health risks”; that if babies are “overly dependent on pouches,” there are “noted delays in [their] motor development”; and that pouches “can be a gateway to bad long-term snacking habits and routine overeating.” Plaintiffs never actually alleged that Sprout’s products cause any of these harms.

 

bad influence: claims against vodka producer proceed, including failure to disclose endorser payments

Sava v. 21^st Century Spirits, LLC, 2024 WL 3161625, No. 22 C 6083 (N.D. Ill. Jun. 25, 2024)

21^st Century sells Blue Ice Vodka and uses influencers to promote it. Plaintiffs brought claims under the state consumer protection statutes of Florida, Illinois, and California, as well as unjust enrichment, negligent misrepresentation, and breach of express warranty. Some of their claims survive.

Plaintiffs challenged representations that Blue Ice is “handcrafted,” is manufactured in a distillery owned by 21st Century, is filtered four or five times, “tastes better than other vodkas,” has between 52 and 57 calories per ounce, and is “fit-friendly” and has “health benefits,” including that it helps with personal fitness and weight management. In addition, they challenged failure to disclose 21^st Century’s relationships with influencers, one of whom stated that she makes Blue Ice cocktails that have fewer calories than an apple, allegedly implying that Blue Ice “is the healthier alternative.” Plaintiffs alleged that Blue Ice (1) is not “handcrafted” but is, rather, “industrially manufactured” by machines without the “constant supervision of a human,” (2) is not filtered multiple times but is, rather, filtered only once, (3) is not better tasting than other vodkas but is, rather, “inferior,” “generic,” “substandard,” and “low quality,” (4) is not a “healthy product” that helps with personal fitness and weight management but is a product that “poses significant health risks,” and (5) is not manufactured in a distillery owned by 21st Century but is, rather, manufactured as a “private label” for 21st Century at a distillery owned by Distilled Resources Inc. Despite that, to give the impression that Blue Ice is manufactured in a distillery owned by 21st Century and dedicated only to the production of Blue Ice, 21st Century allegedly includes on the Blue Ice website a doctored photograph of the Distilled Resources distillery, digitally placing the Blue Ice logo over the distillery’s actual sign.

allegedly altered sign

actual industrial production facility, as alleged

They further alleged that Blue Ice does not, as alleged, have either 52 or 57 calories per ounce but has, instead, no fewer than 64 calories per ounce. Nor does Blue Ice have only 52 calories per serving; rather, Blue Ice has at least 96 calories per serving.

Skipping a lot of procedural stuff: While plaintiffs’ allegation that one influencer “compares vodka with an apple, suggesting that vodka is the healthier alternative” paraphrased the actual statement (“I make fit-friendly cocktails that have fewer calories than an apple.”), “it is not for the court to decide on a motion to dismiss whether a consumer might or might not reasonably understand the Influencer’s actual representation to suggest.” Also, whether “handcrafted” may be deceptive in a particular case depends, at least in part, on the size of the brand holding its products out as “handcrafted,” and plaintiffs sufficiently alleged that Blue Ice was not a mass seller, so reasonable consumers could believe it “handcrafted” its vodka.

However, “best tasting” was puffery in the context of the statement “We are handcrafted and American made with a singular goal – to create the best tasting vodka. Because taste is everything.”

Disclosure of material connections: The court reasoned that, although the states had adopted FTC rules and guides as their own, the guides remained only guides, not the source of per se violations of statutes like FDUTPA (Florida’s law). Nonetheless, Florida had still instructed that “due consideration and great weight shall be given to the interpretations of the Federal Trade Commission and the federal courts relating to [Section] 5(a)(1) of the Federal Trade Commission Act” when courts are construing “unfair or deceptive acts or practices in the conduct of any trade or commerce.”

Plaintiffs alleged both representations and omissions that could meet the relevant standard. “[T]he court finds it nearly frivolous to argue that a reasonable consumer might not be deceived by defendants’ representations that Blue Ice is filtered multiple times or has as few as 52 calories per serving. These representations are specific and unambiguous and simply cannot be given to ‘fanciful interpretation.’ Put another way, these representations are the antithesis of puffery.” Likewise, “it is difficult to comprehend how a reasonable consumer could not be deceived by 21st Century’s representation on the Blue Ice website, where 21st Century has allegedly doctored a photograph of the distillery by placing its own logo over the logo of the actual distillery.” And, as to claims that the vodka had health benefits that may help with personal fitness and weight management, the Alcohol and Tobacco Tax and Trade Bureau (TTB) views such representations as “mislead[ing] consumers by presenting incomplete information about the health effects and nutritional content of alcohol beverages.” This didn’t control the outcome, but it “strongly suggests that a reasonable consumer might be misled.”

Defendants also argued that “there is no allegation of an endorsement,” and “a photograph [of an Influencer] holding Blue Ice or mentioning [that] a cocktail was made with Blue Ice ... is not an endorsement or advertisement within the meaning of Section 255.5 [of the FTC Endorsement Guides].” The court gave this argument way more weight than it deserved, noting that many of the posts involved far more than holding/mentioning. The court pointed to posts like, “There’s nothing better than relaxing with a smooth @blueicevodkausa cocktail in hand after a long day. With only 52 calories a serving, no sugar added and gluten free, Blue Ice can definitely help you stay fit during quarantine. Have a bottle delivered to your door ... . #fitfriendlyvodka #ketofriendly #potatovodka #vodka.” Anyway, the FTC considers “testimonials” interchangeable with endorsements, meaning “any advertising message ... that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser.” “Drawing all reasonable inferences in plaintiffs’ favor, at least a significant majority of these posts qualify.”

21^st Century argued that reasonable consumers would know that the influencers were paid and thus didn’t need disclosure. Plaintiffs specifically alleged that they took the influencers to be offering “honest advice” about Blue Ice and “would not have purchased [Blue Ice] products if they knew that the Influencers were paid” to promote it. And disclosure “might materially affect the weight or credibility of the [Influencers’] endorsements.”

Florida’s safe harbor didn’t apply because, although the TTB approved the Blue Ice label, the alleged misrepresentations appeared only on the secondary label and bottle collar, as well as the website/social media, none of which were approved by the TTB.

So too with Illinois law, despite defendants’ arguments that their conduct wasn’t in Illinois: “[W]here an Illinois consumer purchases a product in Illinois that a company has marketed to Illinois and distributed for sale in Illinois, the transaction has occurred ‘primarily and substantially’ in Illinois.” Unjust enrichment under Illinois law survived, but not under Florida law because of an unanswered argument that Florida law requires that any benefit must be directly conferred on the defendant by the plaintiff. Express warranty claims failed for want of privity.

 

Initial thoughts on Elster

In part so as not to repudiate big chunks of Tam/Brunetti, the Court instead delivers a major rebuke to Reed v. Town of Gilbert, 576 U.S. 155 (2015) (content-based regulation triggers strict scrutiny), except it doesn’t tell us the scope of the change. The Court seems to rely on the idea that we aren’t really worried that the registration system is government suppression of specific ideas. If so, why did the sign regulations of a city trigger that worry? And, trademark-specific question, does that mean that trademark infringement claims are also not worrisome, or does the difference between denying the benefits of registration and the full suppression/punishment of infringement (and sign ordinances) matter? The swing away from Reed, which less than ten years ago was a major innovation that seemed highly deregulatory, is another example of how the weight of Trump-appointed judges is quickly changing the "conservative" approach to First Amendment free speech doctrine in ways that create divisions among conservatives, as even this relatively unimportant issue demonstrates. (My article with Mark Lemley doesn't cover Elster, but it talks a bit about this dynamic.)

Justice Thomas’s project of dismantling modern defamation law is the undercurrent of his insistence that history and tradition answers the question here. Trademark, conveniently for him, even uses the word “reputation”! Justice Barrett does a good job of showing that history and tradition doesn’t give anything like an answer without also picking a level of generality according to some other principle—since modern registration doesn’t have a history and tradition until the 1940s. This leads her to a surprisingly Breyer-like place of balancing interests.

Under Thomas’s approach, we learn that it just doesn’t matter how tailored the rule is to the underlying interest in protecting against fraud/false connections with people/free riding on their reputations, because 2(c) is enough like previous doctrines reserving rights in names to people who have those names. That reads like a jump away from strict scrutiny right down to rational basis scrutiny, which is concerning, especially since we don’t know what “enough like” means. Next up in registration: flags? Special protections for wines and spirits?

Dilution: tarnishment’s obvious viewpoint-discrimination problem remains untouched by this decision. Some parts of the opinions suggest openness to blurring, whatever the hell blurring is: Defenders of blurring will point to the opinions’ discussions of protecting “reputation” and deterring free riding as legitimate justifications for trademark registration bars, without inquiry into the contours of those concepts or the difference between registration bars and infringement, as well as Thomas’s discussion of the Gay Olympics case, S.F. Arts & Athletics, Inc. v. USOC, 483 U.S. 522 (1987). (Ah yes, the grand history & tradition of making USOC-specific laws.) On the other side, the lack of historical precedent for blurring seems like a problem for some number of Justices (even if a free-riding-based cause of action might be ok). Uncertainties are multiplied by the explicit “good for this day and train only” statements in Thomas’s opinion, as against Barrett’s call for an actual rule of general applicability. For example, I think it would clearly be a mistake to read this opinion as holding that personality interests could justify prohibiting Elster from selling shirts that say TRUMP TOO SMALL, despite the lack of much explicit discussion in the opinions. But that just takes us back to the question of S.F. Arts & Athletics.

Is a free trial version "commercial speech"?

Enigma Software Gp. USA LLC v. Malwarebytes Inc., 2024 WL 2883671, No. 17-cv-02915-EJD (N.D. Cal. Jun. 6, 2024)

This is the latest decision in long-running litigation over Malwarebytes’ characterization of Enigma’s competing cybersecurity and anti-malware software as “malicious,” a “threat,” and as a Potentially Unwanted Program (“PUP”). The court refuses to dismiss Malwarebyte’s claims for violations of the Lanham Act; violations of New York General Business Law § 349; and tortious interference with business (the last on the ground that the 9^th Circuit already said it was sufficiently pled).

Malwarebytes argued that its characterizations of Enigma’s products as “malicious” and a “threat” didn’t occur in commercial advertising or promotion but rather as part of the operation of its products. The court characterized this as a fact-driven question (raising the issue of whether the jury will be asked to decide it).

screenshot of Malwarebytes characterizing Enigma programs as threats; green "upgrade now" button at top of screen

There’s no categorical rule that in-product statements are immune from Lanham Act claims. Here, the allegations sufficiently stated a marketing context. (It’s not clear to me, but it’s possible that the court is holding that this is true only to the extent that they were presented with the free version with an upselling invitation. I think that, as to the free trial version, this is difficult--Eric Goldman doesn't--it seems to me distinguishable from the database ROP cases where people get truthful information about other people during a free trial and also an invitation to access further/more entries in the database, because Malwarebytes is offering a non-informational service--removing programs--in the upsell, not additional noncommercial speech content. But it does seem like an edge case.)

Were the statements in an advertisement? The court reasoned that, although the words at issue—“malicious” and “threat”—were not themselves advertisements, “Enigma has alleged facts permitting an inference in its favor that Malwarebytes makes the speech in an advertising context.” Specifically, it alleged that the words appeared “during a free trial period designed to showcase Malwarebytes’s product capabilities,” so that the users experience “a marketing mechanism for Malwarebytes to entice users to ultimately purchase the Malwarebytes products.” Enigma alleged that Malwarebytes displays the challenged speech directly alongside buttons with phrases such as “Upgrade Now.” See SAC ¶¶ 118–19 (depicting scan results with “threats” near “Upgrade Now” button). This was plausibly an advertisement for purportedly superior products.

Other relevant factors—whether the speech refers to a particular product and whether the speaker has an economic motivation—also weighed in favor of characterizing this as commercial speech. (The court also cited the competition between the parties as relevant to satisfying the Gordon & Breach test for commercial advertising or promotion, even though Lexmark should probably be understood as removing that requirement.)

Enigma also sufficiently alleged that the statements were made to encourage people to buy Malwarebytes’ products and were sufficiently disseminated to the relevant purchasing public, even though only existing Malwarebytes customers saw the designations, because Enigma alleged that the majority of Malwarebytes users are free users and not paying customers, and that Malwarebytes’s sales model relies on its free programs to function as advertisements to induce users to upgrade to paid products. Malwarebytes allegedly displays the challenged designations to all consumers who seek to simultaneously deploy both Malwarebytes and Enigma products.

Material deception: Malwarebytes argued that it sufficiently disclosed to consumers its definitions for “threat” and “malicious,” as well as the specific criteria used to reach those designations, so that a reasonable consumer would understand that the challenged designations did not identify Enigma’s software as malware. In addition, it argued, because the Ninth Circuit held that the “PUP” classification was not an actionable statement of fact under the Lanham Act, the challenged designations were not materially deceptive because they were a disclosed result of the PUP classification and specifically were not statements that Enigma’s products were malware.

The court disagreed. Enigma alleged that it received hundreds of complaints from users of its products who had viewed Malwarebytes’s designations, and that the complaints included statements indicating that the users understood the designations to identify Enigma’s products as malware. Customers allegedly canceled orders for Enigma’s software and requested refunds, which allowed the court to infer that the statements influenced users’ purchasing decisions. The disclosures weren’t dispositive at the motion to dismiss stage.

The NYGBL claim survived for the same reasons.

where ingredients list can't clarify ambiguity, "manage blood sugar" claim is plausibly misleading

Prescott v. Abbott Laboratories, --- F.Supp.3d ----, 2024 WL 2843092, No. 23-cv-04348-PCP (N.D. Cal. Jun. 5, 2024)

Abbott Laboratories’s Glucerna line of powders and shakes are marketed as scientifically designed for people with diabetes to help manage blood sugar. Plaintiffs alleged that because the products contain sucralose and other additives, the products don’t provide the promised health benefits. They brought the usual California statutory claims. The court accepts the allegations as sufficient, except for standing for injunctive relief.

The challenged language includes “to help manage blood sugar,” “#1 doctor recommended brand,” and “scientifically designed for people with diabetes.” The side label states that the beverages are “designed to help minimize blood sugar spikes in people with diabetes compared to high glycemic carbohydrates.”

one of the challenged products with front label claims

“Online and in stores, Glucerna shakes and powders are placed with health and nutritional supplements near diabetes diagnostic equipment and blood glucose tests. One retailer specifically categorizes Glucerna products as ‘Diabetes Management’ on its website.” Plaintiffs alleged that the artificial sweetener used, sucralose, is associated with obesity, type 2 diabetes (as well as its precursor condition, metabolic syndrome), hypertension, and cardiovascular disease; that sucralose can deregulate blood sugar by disrupting the gut microbiome and killing pancreatic cells that release insulin; and that sucralose can cause cells to become resistant to insulin, which can lead to type 2 diabetes or obesity. Several organizations, including the World Health Organization, have advised against consuming sucralose and other artificial sweeteners. Plaintiffs cited similar scientific findings for the additional ingredients maltodextrin and carrageenan.

They alleged that “#1 doctor recommended brand” and “scientifically designed for people with diabetes” conveyed that Glucerna products “aid in managing blood sugar generally” and are “scientifically capable of the treatment of diabetes or other health conditions.”

Abbott argued that the labels didn’t make such broad claims: they didn’t plausibly advertise that the products were “over-the-counter aids to help manage diabetes and blood sugar generally” and “can be used to regulate, achieve, and manage normal and healthy blood sugar levels.” Instead, the drinks were merely intended as a “snack or meal replacement” formulated “to help minimize blood sugar spikes in people with diabetes compared to high glycemic carbohydrates.”

This was a factual question. And unlike in other cases where an ambiguous label could be easily clarified by reading the ingredient list, the side label explanation about minimizing blood sugar spikes didn’t directly contradict the claims that plaintiffs alleged they took away. “This is not the sort of ambiguity that can be definitively resolved by reference to a back label.” Plaintiffs also  plausibly alleged that the other claims on the front label—that Glucerna products are recommended by doctors and scientifically designed for diabetics—make more sweeping representations about how the products work.

As for the alleged harms of the ingredients, Abbott argued that the studies cited didn’t support the claims and that plaintiffs had layered inference on top of inference. This was a factual question that could not be resolved at this stage. “If the allegations directly contradicted the cited studies plaintiffs’ allegations might fairly be deemed implausible, but that is not the case here.” 

However, plaintiffs’ alleged intent to buy Glucerna products again in the future if they can be sure the products will provide the promised benefits was insufficient; because of the nature ofe the alleged deception, they could easily determine based on the ingredients list whether Glucerna had been reformulated without the challenged ingredients.

"#1 Brand" claim was literally false because of apples-to-oranges comparison

Zesty Paws LLC v. Nutramax Labs., Inc., No. 23 Civ. 10849 (LGS), 2024 WL 2853622 (S.D.N.Y. Jun. 4, 2024)

Finding Zesty Paws’ “#1 Brand” claim literally false, the court grants a preliminary injunction despite Zesty Paws’ attempt to create a factual dispute about what a “brand” is.

Nutramax and Zesty Paws are direct competitors in the pet supplement market. Zesty Paws’ products claim to promote joint health (Mobility Bites), behavioral health (Calming Bites), gut health (Probiotic Bites) and skin and coat health (Skin & Coat Bites). Nutramax’s products are intended to support similar pet health needs: joint health (Cosequin and Dasuquin), behavioral health (Solliquin), gut health (Proviable) and skin and coat health (Welactin).

Zesty Paws began an advertising campaign claiming to be (1) the “#1 Brand of Pet Supplements in the USA,” (2) “USA’s #1 Brand of Pet Supplements” and (3) the “#1 selling Pet Supplement Brand in the USA.” Nutramax and Zesty Paws stipulated that, at relevant times, (1) the combined sales of Nutramax pet supplement products exceeded the combined sales of Zesty Paws pet supplement products and (2) the combined sales of Zesty Paws pet supplement products exceeded the combined sales of each individual pet supplement product sold by Nutramax, including Cosequin and Dasuquin. (This seems like a classic apples-to-oranges comparison. Zesty Paws even uses “TM” on some of its advertising for, e.g., the Mobility Bites, suggesting that it’s trying to have sub-brands too, though it may have dialed back on that attempt for purposes of this litigation.)

#1 selling pet supplements brand in the USA ad from website

Mobility Bites image using TM symbol after Mobility Bites

The court found that Nutramax showed that the claims were likely literally false. The dispute turned on what a “brand” is; Zesty Paws argued that Nutramax was not a brand, but Cosequin etc. were. 

Based on the ordinary dictionary meaning of “brand,” Nutramax was a brand. Nutramax also offered two experts from business/management schools who testified that Nutramax satisfied the definition of a “distinctive feature … that identifies goods or services.” It’s used on every package and in advertising. Zesty Paws’ arguments to the contrary critiqued the strength of the brand, not its existence; Zesty Paws argued that it was the #1 “driver brand” in the US, that is, “the brand name that plays the primary driver role in a consumer’s purchase decision.”

But that didn’t create ambiguity. The ordinary meaning of “brand” didn’t include the primary driver concept. (A brand can be a limping mark!)  And there was no evidence that consumers understood the #1 Claims to refer to a “driver brand,” whether from expert opinion, survey, academic literature or even anecdotal evidence.

Zesty Paws’ expert’s survey didn’t address how consumers interpreted the #1 claims. Instead, the survey respondents saw an image of Nutramax’s Cosequin product and asked to specify “the brand name of the product, any other names the product goes by, and the manufacturer of the product.” In response, “86.8 percent of respondents identified Cosequin® as the brand name of the product,” and “10.1 percent of respondents indicated that Nutramax Labs was the brand of the product.” The main survey question asked, “Based on your review, what brand is this product? (Please be as specific as possible.)” That was less about whether respondents generally perceive NUTRAMAX to be a brand in its own right and more about whether respondents identify NUTRAMAX to be the most specific brand name of the particular Cosequin product package. Both ecommerce listings and the tamper-evident seal, not shown to respondents, referenced Nutramax.  “Even without these cues, 10.1 percent of respondents still identified NUTRAMAX as the brand for the Cosequin product. Zesty Paws’ own internal brand awareness studies from about 2020 through 2022 showed that NUTRAMAX frequently scored higher than ZESTY PAWS when respondents were presented with a list of brands that included both names.” Nor did Nutramax’s internal documents concerning a possible move to a COSEQUIN-centered branding strategy matter, because the strategy was never implemented.

Market research data that aggregated sales data under one “brand” per product were also unhelpful, since there can be several brands associated with a product, e.g., Frito Lay® Flamin’ Hot® Cheetos®.” In other words, that COSEQUIN is a brand does not mean that NUTRAMAX is not also a brand. Also, Zesty Paws suggested how one of the market research entities should make the brand comparison, encouraging it to reach out with any questions about “brand delineation” and stating, “As a reminder, please ensure all brands are evaluated at the consumer facing level (i.e. Dasuquin not Nutramax) ....” And an expert testified that “[t]here is nothing [about] Nielsen’s processes or motivations as a data seller that makes them an authority on what is and is not a brand.” They could be inaccurate and inconsistent, and they tracked only a small segment of the pet supplement market.

Thus, Nutramax would likely show literal falsity.

Materiality: Nutramax’s expert testimony satisfied its burden. One marketing expert testified that the effectiveness of various number one claims “has been studied for a long time by academic marketers and there is very consistent evidence that when you make a number one claim, you enhance the perceptions and the purchase of the claimed brand and you depress the perceptions and the purchase of the non-claimed brands.” He also testified that a number one claim in this case is “especially potent because ... we don’t actually get direct experience with these products and so we really have to rely on these claims even more than [we] would with a product like Coke or Pepsi where we get to taste it for ourselves.”

Injury: Likewise, the experts testified that this would likely harm Nutramax, both in the eyes of consumers and retailers: “[t]he belief that Zesty Paws is the market leader will likely lead retailers to give Zesty Paws more shelf space, more prominent shelf positioning and overall increased availability of Zesty Paws products.”

Irreparable harm was presumed and not rebutted by a five-month delay in bringing a preliminary injunction motion because “Nutramax first sent Zesty Paws a notice-of-dispute letter about the #1 Claims on July 17, 2023, shortly after learning of them. The parties then continued to exchange letters until they participated in an unsuccessful mediation on December 7, 2023. Zesty Paws commenced this action on December 13, 2023, and Nutramax filed its preliminary injunction motion on December 22, 2023.” That didn’t show any lack of worry about harm on Nutramax’s part.  

In addition, Nutramax’s experts specifically testified that, in the court’s words, “once a brand’s market leadership is lost, that loss is nearly always permanent along with the benefits brought by the market leadership position.” He stated: “[W]hat we find from the extensive literature is that consumers think more highly of number one brands, they perceive them to be higher quality, they are going to purchase them more frequently, [and] they’re willing to pay more for those products because of that associated higher quality.” Indeed, the court summarized, “the power of signaling market leadership is so strong that even when consumers misperceive a brand as a market leader, the misperceived brand still accrues all of the benefits of market leadership, particularly higher evaluations from consumers.” A second marketing expert testified that lost market share is difficult to regain due to habit, status quo and brand loyalty.

With that out of the way, a preliminary injunction was essentially inevitable.

Another challenge to "up to 8 hours of relief" proceeds

Sheiner v. Supervalu Inc., 2024 WL 2803030, No. 22 Civ. 10262 (NSR) (S.D.N.Y. May 28, 2024)

Supervalu sold a “Maximum Strength Lidocaine Patch” product which contained “topical anesthetic 4% Lidocaine” which “desensitize[s] aggravated nerves” to provide “temporary relief of pain” to the “back, neck, shoulders, knees, elbows” for “up to 8 Hours of relief.” Sheiner’s GBL claims challenged the “up to 8 hours numbing relief” claim, alleging that the patch “is unable to adhere to skin for more than four hours, often peeling off within minutes of light activity” and “did not reliably adhere to Plaintiff’s body for anywhere close to eight hours, which prevented it from providing even temporary pain relief,” also citing a study by the Journal of Pain Research.

Sheiner also challenged “Maximum Strength” because “prescription lidocaine patches exist on the market that deliver greater amounts of lidocaine to the user.” In addition, the package’s “compare to Salonpas® Lidocaine Patch active ingredient” instruction allegedly contributed to confusion because Supervalu’s product “contains roughly forty percent less lidocaine” than found in the Salonpas® OTC Lidocaine Patch product.

In addition, Steiner alleged that the phrase “numbing relief” implies the OTC Product provides relief associated with “medical treatments requiring a prescription and FDA approval,” implying that the product would “completely block and numb nerves and pain receptors, eliminate responses to painful stimuli, and can treat neuropathic and musculoskeletal pain, including back pain.”

Supervalu argued that courts have “recognized that ‘up to’ statements ‘are generally not construed as concrete promises about a product’s maximum yield.’ ” But it was “plausible to contend that the ‘Up to 8 Hours’ language on the label indicates the patch can provide pain relief for as long as eight hours, and the label says nothing about other factors relating to the patch that may result in a much shorter period of pain relief.” Compared to other situations, where self-evident or disclosed contextual factors (like the strength at which coffee is brewed affecting the number of cups that could be brewed from a given amount) informed consumers about whether they could expect to get the “up to” results, “the lidocaine patch labels at issue ‘include no identification of any factors that might limit the amount of time that the patch would remain adhered to the body and deliver relief.’ ”

The other alleged deceptions failed less well: “The argument that a consumer would expect an OTC product to be equivalent to the most powerful prescription medicine is a nonstarter.” A reasonable consumer “would plainly ‘understand that OTC products differ from products that are available with a prescription,’ ” and contain only the “maximum strength” dose available at the drug store. But 4% is the maximum lidocaine concentration allowed by law in OTC products, which this product had, and Steiner failed to identify an OTC lidocaine patch available on the market that is stronger. (The court distinguished cases reaching the opposite conclusion; they only made sense when an OTC drugmaker made a direct comparison to a prescription product.) Also, even if the FDA cautioned manufacturers not to use “Maximum Strength” claims, “the FDA’s regulations or views are irrelevant or at least not dispositive when it comes to determining whether a reasonable consumer would be deceived or misled under GBL §§ 349-50.”

Claims based on “numbing relief” also failed. The interpretation that it would completely block pain was unreasonable. The label explicitly limits its use to “temporary relief of pain,” and Steiner didn’t even allege that he believed that the product would completely block or eliminate pain. Breach of express warranty claims failed for want of timely, prelitigation notice.  

On fraud, the plaintiff failed to allege facts that give rise to a strong inference of fraudulent intent.

Second Circuit affirms rejection of "All Natural" survey as too leading

Bustamante v. KIND, LLC, 100 F.4th 419 (2d Cir. 2024)

The court of appeals affirmed summary judgment in favor of KIND on Bustamante’s false advertising consumer protection class action claims based on KIND’s “All Natural” labeling. The complaint alleged that eleven ingredients contained in some relevant KIND products were “non-natural”: Soy Lecithin; Soy Protein Isolate; Citrus Pectin; Glucose Syrup/“Non GMO” Glucose; Vegetable Glycerine; Palm Kernel Oil; Canola Oil; Ascorbic Acid; Vitamin A Acetate; D-Alpha Tocopheryl Acetate/Vitamin E; and Annatto.

Eventually, the district court excluded plaintiffs’ survey and scientific experts and granted summary judgment.

“To establish deception under the reasonable consumer standard at the summary judgment stage, plaintiffs must present admissible evidence establishing how the challenged statement – ‘All Natural’ – tends to mislead reasonable consumers acting reasonably.”

Although errors in survey methodology generally go only to weight rather than admissibility, it was not an abuse of discretion to exclude the survey expert here. The court found that the survey “does not assist the trier of fact because it is biased, leading, and to the extent it provides any insight, cannot provide the objective standard necessary to answer the key question in this case.”

The survey surveyed California, Florida, and New York consumers who had purchased KIND products, or products from a KIND competitor, in the last twelve months. Respondents saw “a mock-up of the front of a brand-neutral product package and [were instructed] to ‘examine it like you were shopping’ ” and “to assume that the nutrition snack bar is a ‘popular national brand.’ ” The mock-up label displayed the words “All Natural,” and in several respects resembled the packaging of a KIND bar.

The first relevant question asked: “Because of this descriptor [All Natural], what is your expectation for this product?” It offered three possible choices: (a) “Will NOT contain artificial and synthetic ingredients;” (b) “Will contain artificial and synthetic ingredients;” or (c) “Not sure/No expectation.” “86.4% of consumers expected the Product with the ‘All Natural’ claim ‘will NOT contain artificial and synthetic ingredients.’ ” The survey did not define the terms “artificial” or “synthetic.”

The district court found that this question didn’t help determine “in any meaningful sense how reasonable consumers understand the ‘All Natural’ claim, or to test plaintiffs’ theory.” It was “biased” and “lead[ing]” because it “improperly directs survey participants to the ‘correct’ answer” and “is plainly designed to validate plaintiffs’ theory” of liability. This characterization was not manifestly erroneous, especially because the expert conceded that he “worded [his] substantive response options on the basis of [his] understanding of the Plaintiffs’ theory of liability.” The Second Circuit has previously held that a plaintiff could not rely on a survey based on a question that, like this one, “was an obvious leading question in that it suggested its own answer.” (Citing Universal City Studios, Inc. v. Nintendo Co., 746 F.2d 112 (2d Cir. 1984), where the question was “To the best of your knowledge, was the Donkey Kong game made with the approval or under the authority of the people who produce the King Kong movies?” That’s a far more leading question; the sin here seems to have been that the question was closed-ended, even though it had a don’t know/not sure option. Would the Second Circuit be ok with starting with an open-ended question? With asking people whether “All Natural” means “no artificial/synthetic ingredients”? What else could you possibly ask to test plaintiffs’ theory of liability?)

The choice “to display the ‘All Natural’ claim in isolation, rather than as part of the ‘All Natural/Non GMO’ statement, as it always appeared on KIND labels” further undercut the relevance of the results.

The second question asked: “Because of this descriptor [All Natural], what is your expectation for this product?” The options were: (a) “Is NOT made using these chemicals: Phosphoric Acid, Hexane, Potassium Hydroxide, Ascorbic Acid”; (b) “Is made using these chemicals: Phosphoric Acid, Hexane, Potassium Hydroxide, Ascorbic Acid”; or (c) “Not sure/No expectation.” The survey didn’t describe or define these “chemicals” (court’s scare quotes). The results were similar: over 76% of respondents chose (a)

It was also not manifestly erroneous to find this irrelevant. By providing a list, the survey “led survey participants down the path of selecting the answer preferred by plaintiffs.” (Would it have been better to give them an actual ingredient list?) Also, by listing the “chemicals” without defining them, the survey failed to differentiate between “ascorbic acid,” a form of Vitamin C safe for human consumption, and “phosphoric acid,” which is “not safe for ingestion.”

Likewise, it was not an abuse of discretion to exclude the scientific expert because he wouldn’t assist in identifying what reasonable consumers considered artificial or synthetic. He developed a framework that “examined each ingredient’s origin, the extent to which the ingredient had been processed from its natural form, and the final form of the ingredient.” He opined on whether the ingredients could be classified as “natural” under his framework, but didn’t apply a definition used elsewhere, including in the complaint or by the survey. Nor did he specifically analyze KIND ingredients, only how they were “typically” sourced. “But, without some evidence to the contrary, there is no reason to assume that [the expert’s] personal understanding of the term ‘natural’ is relevant to how a reasonable consumer would understand that same term.” Because of that flaw, “the report adds no useful information that would help the trier of fact determine the answer to the relevant legal question: whether consumers were actually deceived.”

Without the expert evidence, summary judgment for KIND was appropriate. Named plaintiffs’ own testimony wasn’t enough because they didn’t provide a cohesive definition of what “All Natural” meant, whether it would mean “containing no artificial or synthetic ingredients, or what it means to be artificial or synthetic. Plaintiffs’ depositions instead showed how variable definitions of “All Natural” can be:

For example, one plaintiff testified that she expected “All Natural” to mean not synthetic. Another plaintiff testified that she expected “All Natural” to mean that the product was made from whole grains, nuts, and fruit. Yet another explained her belief that “All Natural” meant that the ingredients were literally plucked from the ground. Notably, several plaintiffs testified that consumers could have different understandings about the implications of the term “All Natural,” that these understandings could change over time, and that not everyone would agree with their particular understanding of that term. Plaintiffs fail to explain how a trier of fact could apply these shifting definitions to reach a conclusion as to whether the use of the term “All Natural” on KIND product labels was deceptive.

KIND’s own internal documents weren’t helpful because all they showed was that KIND had its own conception of the term, but didn’t show what a reasonable consumer’s understanding was. (Courts used to be more willing to say “the seller’s beliefs about what its audience wants are good circumstantial evidence, given the seller’s incentives,” and they still do in trademark cases.) The FDA’s own request for comments also demonstrated lots of varied understandings.

Nor was it enough for plaintiffs to use the dictionary. (That’s just for courts.) The definition identified, “existing in or caused by nature; not made or caused by humankind,” “is not useful when applied to a mass-produced snack bar wrapped in plastic. Such a bar is clearly made by humans.”

 

"up to" absorbency claims for period underwear were plausibly misleading

Gamino v. Thinx Inc., No. EDCV 23-2067 JGB (SHKx), 2024 WL 2429307 (C.D. Cal. Apr. 18, 2024)

Gamino brought a host of California statutory and common law claims against Thinx, alleging that Thinx’s period underwear didn’t function as advertised; specifically, that it was incapable of holding the amount of liquid advertised. The court declined to dismiss the complaint on a variety of grounds.  

Thinx argued that the absorbency of its products is advertised as performing “up to” a certain threshold, and that reasonable consumers therefore expect that the products’ performance could be less than the maximum. In addition, it argued that no reasonable consumer would read the phrase “prevents leaks” as guaranteeing the products will “absorb whatever amount of fluid is dispensed into them.”

The court disagreed:

The basis of Plaintiff’s claims is not that Defendant’s products occasionally perform below the maximum absorbency advertised, but that the products “do not hold” and “cannot absorb” the “claimed amounts of fluid, and instead leak.” … Plaintiff alleges that Defendant represents its products’ absorbency using specific fluid amounts on its website, product pages, and packaging. … Plaintiff also alleges that testing reveals representative Thinx products cannot absorb the amount advertised on Thinx’s packaging and website, but that each of the products leaks. …  Finally, Plaintiff alleges that other consumers of Thinx products have experienced leakage “with even the smallest amount[t] of blood” or “in less than 15 minutes.” … Based on Plaintiff’s allegations, a reasonable consumer could be misled into believing Defendant’s products can fulfill their advertised, maximum absorbency.

The court quoted prior caselaw: “[M]ultiple courts have found that ‘up to’ representations may materially mislead reasonable consumers.” The allegation that Thinx’s products lacked the capacity to absorb the advertised amounts, plus the lack of allegations that Thinx listed customer-specific factors which could reduce performance (beyond the broad statement that “individual results may vary”), meant that “up to” was no help.

Thinx also argued that Gamino did not suffer an economic injury because she could have received a refund for her purchase. That conflated injury with remedy—despite available refunds, she suffered an economic injury “as soon as she relie[d] on a defendant’s deceptive advertising and part[ed] with more money than she otherwise would have paid.”

Also, Gamino plausibly alleged lack of absorption with allegations of (1) her own experience, (2) the experiences of other consumers, and (3) testing “by using cough syrup to mimic the viscosity of menstrual flow, just as some manufacturers do to test pads and tampons.” At this stage, she didn’t need to allege “which products were tested, who did the testing, whether Thinx uses the same method to test its products,” or “how much the products absorbed when she wore them.”

Gamino also had standing to seek equitable remedies because she plausibly pled that she was still interested in period underwear and wanted to purchase it if she could rely on the advertising. “While the Court likely cannot order Defendant to manufacture a wholly new product ... it surely can issue some form of injunctive relief that would redress Plaintiff’s injury.”

Finally, the court declined to wait for the FDA under the primary jurisdiction doctrine. Among other things, “there is no concrete evidence that the FDA is currently involved in creating a new regulation about how to test the absorbency of period underwear.” Courts “have generally declined to dismiss the complaint on primary jurisdiction absent concrete evidence that the FDA is currently involved in creating a new regulation concerning the subject of the lawsuit.”

BIPLA (Boston Intellectual Property Law Association) Writing Competition call for papers

1st Prize:$1,000 2nd Prize:$500 

BIPLA is once again holding its annual Writing Competition. Law school students are encouraged to submit papers relating to topics involving intellectual property law. Judges will consider the merits of each paper based on: (i) contribution to knowledge respecting intellectual property law; and (ii) the extent to which it displays original and creative thought or information not previously published or available. The requirements for eligibility are outlined below. 

 Content Rules

 1. Articles must be written solely by a student or students either in full-time or part-time attendance at a law school (day or evening) within the jurisdiction of the First Federal Judiciary Circuit or prepared in connection with a course at a law school in the First Circuit. 

 2. Articles must be written or published between September 1, 2023 and August 31, 2024.

 3. Articles must be submitted to the Boston Intellectual Property Law Association on or before September 30, 2024. 

 4. Papers should be no more than the equivalent of ten (10) law review pages including footnotes (30-40 pages typed copy). 

 5. Submission of the paper as a .pdf file is required. Submissions must include the submitter’s name, current address, current telephone number, law school, and employment information (if applicable). Please send all article submissions to: Kevin MacDonald, PhD Shareholder Wolf, Greenfield & Sacks, P.C. Kevin.MacDonald@wolfgreenfield.com Office: 617.646.8497

Reminder on Call for Papers: Trademark and Unfair Competition Scholarship Roundtable 2024

 The Trademark and Unfair Competition Scholarship Roundtable co-hosted by Harvard, NYU, and the University of Pennsylvania will take place this year at Harvard. The Roundtable is designed to be a forum for the discussion of current trademark, false advertising, and right of publicity scholarship, covering a range of methodologies, topics, and perspectives. Five to six papers will be chosen for discussion over the course of the Roundtable, with each paper allocated an entire hour for discussion and assigned a commentator.   

The Roundtable will be held on Friday, October 18, 2024. If there is a critical mass of papers, we may also extend the Roundtable through Saturday morning, October 19. Participation at the Roundtable will be limited and invitation-only and we expect all participants to have read the papers in advance. The Roundtable will cover the travel and lodging expenses for invited authors. 

We invite submissions from academics working on any aspect of trademark, false advertising, marketing, right of publicity, or related areas of the law. Priority will be given to those who can attend the entire event and a dinner the night of Friday, October 18. Submissions must be of full drafts in Microsoft word format. The deadline for submission is May 15, 2024, and decisions on participation will be made shortly thereafter, ideally, by June 1st.   

To submit a draft paper, please fill out the form here (https://forms.gle/QAfdmH18KmgdZAxp7) and upload an anonymized version of your draft.  Please note that the maximum file size that may be uploaded is 10MB. Appendices or other supporting material can be uploaded separately; please do not submit a CV or cover letter. 

For further information about the Roundtable, please email: Barton Beebe (NYU): barton.beebe@nyu.edu; Jennifer Rothman (Penn): rothmj@law.upenn.edu, or Rebecca Tushnet (Harvard): rtushnet@law.harvard.edu.