Rebecca Tushnet's 43(B)log
Time 2021-11-09 12:06:44Web Name: Rebecca Tushnet's 43(B)log
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keywords: description: Rebecca Tushnet's 43(B)logFalse advertising and more
Monday, November 08, 2021 I cant believe its not butterbecause the label said it was all butterBoswell v. Bimbo Bakeries USA, Inc., 2021 WL 5144552, No. 20-CV-8923(JMF) (S.D.N.Y. Nov. 4, 2021)
Boswell sued on the theory that the packaging on EntenmannsAll Butter Loaf Cake was misleading because the cake contains not onlybutter, but also soybean oil and artificial flavors. However, All Butter wasambiguous in contextit was obvious that the product was not a stick of butter,but a cakeand it wasnt enough to allege that reasonable consumers wouldexpect from the label that there wouldnt be non-butter shortening. JudgeFurman relied on In re 100% Grated Parmesan Cheese Mktng. Sales Pracs.Litig., 275 F. Supp. 3d 910 (N.D. Ill. 2017), without noting that it had been rejectedby the Seventh Circuit in Bell v. Publix Super Mkts., 982 F.3d 468 (7thCir. 2020) (albeit with some Seventh Circuit procedural niceties that may bewhy the earlier decision is not red-flagged in Westlaw, which is probablyWestlaws mistake; Bell resolves the same issuewhether 100% GratedParmesan is plausibly misleading if the product contains additional additives;it is an appeal from a subsequent 2019 decision in the same MDL).
Judge Furman used 100% Grated Parmesan to state and illustratethe rule that labels are not misleading if the prominent term is ambiguous andthe ambiguity is resolved by reference to the list of ingredients or aNutrition Facts panel, whereas packaging with a prominent label that isunambiguous and misleading is actionable even if the ingredients listcontradicts the unambiguous label. When youre deciding that a term isambiguous, it might be better to rely on a case where there wasnt judicialdisagreement over that very question.
You might have thought that Mantikas, an actualSecond Circuit case, resolved a label on all fours when it found that thelabeling on whole grain Cheez-It crackers could be false or misleadingbecause, while the boxes contained the words WHOLE GRAIN [or MADE WITHWHOLE GRAIN] in large print in the center of the front panel, the ingredientslist and Nutrition Facts panel revealed that the grain content of thecrackers was not predominantly whole grain, but rather enriched white flour. Thisstated a valid claim under New York law because the statements WHOLE GRAINand MADE WITH WHOLE GRAIN ... falsely imply that the grain content isentirely or at least predominantly whole grain. Those statements wereunambiguous, so the label couldnt correct them. Seems kind of analogous to AllButter/shortening content to me.
But no, this case falls on the 100% Grated Parmesan Cheeseside of the line [again, awkward given the reversal!]. Taken literally, itsuggests that the product is entirely butter, but no one would take itliterally because it modifies Loaf Cake (which by the way means that it doesnot literally suggest that the product is butter, because thats not howmodifiers work). [A]ny reasonable consumer would be aware that the product is,notwithstanding the label All Butter, likely to contain other ingredientscommonly found in cake, such as flour, sugar, milk, and eggs. It was ambiguousbecause Boswell herself provided competing definitionsfirst that consumerswould expect all the shortening would be butter, and then that no butteralternatives or substitutes will be used in the Product where butter is capableof being used. (I need a baker to tell me whether those actually are differentthings.) Anyway, All Butter could merely be description of flavor, denotingthat the product tastes only of butter and does not include a second flavor,such as almond, chocolate, or cinnamon. Because of the ambiguity, reasonableconsumers here would not be lulled into a false sense of security by the boldlettering on the products package
Yodice v. Touro College, 2021 WL 5140058, No. 21cv2026 (DLC)(S.D.N.Y. Nov. 4, 2021)
Its now been long enough that there are a couple of casesfinding potentially valid claims based on Covid closures, but this is not oneof them. Touro allegedly promoted its campus facilities and campus experienceas part of the benefits of its non-online-only degree programs, including NewYork Medical College research facilities, an anatomy lab, a simulation trainingcenter, classrooms and auditoriums, as well many amenities including acafeteria and café, a bookstore, a Health Sciences Library, sports facilities,and many common spaces; it promoted Suburban Living with Easy Access to NewYork City; etc. The mandatory fees that Yodice paid included, among others, aCampus Fee, Tech Fee, and Materials Fee. Touros online program wasallegedly marketed and priced as a separate and distinct product[ ] and boreno fees for in-person services.
Because of the NY governors orders closing schools, Yodicewas forced from campus and did not have access to facilities such aslibraries, laboratories, computer labs, and student rooms, the myriad ofactivities offered by campus life, and networking for future careers.
Breach of contract: The complaint failed to allege specificpromises sufficient to form an implied contract to provide on-campus services.It didnt identify any specific promise to provide live, in-person instruction.Past practice of providing in-personinstruction wasnt a promise to continue to do so, nor was listing classes withmeeting times and locations. Likewise, [t]hat an online program had beenoffered by Touro with its own format and with a lower tuition before thepandemic does not constitute an implicit promise that TCDM would provideexclusively in-person instruction in a separate program it offered prospectivestudents.
So too with claims based on fees; the complaint didntexplain which services were connected to specific fees or whether relatedacademic or extracurricular services were subsequently unavailable to Yodice.
Unjust enrichment: Unlike some treatments of this type ofclaim, the opinion here dismissed unjust enrichment as duplicative of thebreach of contract claim. Yodice cannot fill this gap [in pleading relevantcontractual provisions] through pleading an unjust enrichment claim as analternative route of recovery. With an actual contract to interpret,quasi-contract theories were inappropriate.
N.Y. General Business Law 349, 350: No materiallymisleading act or omission was pled. No reasonable consumer would be misledinto believing that, in the event of a global pandemic and under governmentshutdown orders, TCDM would remain open to deliver in-person instruction to students.
BPI Sports, LLC v. ThermoLife Intl, LLC, 2021 WL 4972975,No. 19-60505-CIV-SMITH (S.D. Fla. Jul. 27, 2021)
BPI sued ThermoLife for violations of the Lanham Act, 15U.S.C. 1125(a), common law unfair competition, and false patent marking.ThermoLifes Muscle Beach Nutrition CRTN-3 says, on the label and on itswebsite, (1) that CRTN-3 is a first-time fusion of Creatine Nitrate, CreatineHCl, and Creatine Monohydrate; (2) that CRTN-3 has a Hyper Infused CreatineMatrix; (3) that CRTN-3 has a Hydro-GO electrolyte matrix; (4) that CRTN-3has THREE OF THE MOST EFFECTIVE FORMS OF CREATINE IN ONE CUTTING-EDGEFORMULA; and (5) that CRTN-3 will INCREASE VASODILATION. ThermoLifes websitealso advertises its Patented Nitrate Technology. (DE 178-3.) ThermoLifeclaims to hold 19 Nitrate Related Patents, More Than 450 Valid Claims, andPatent Coverage in 26 Countries. It states:
If you are interested in making adietary supplement with nitrates in it there is a very good chance yourintended use or composition is covered by one or more of the 450 valid claimsin our patent portfolio, so make sure to speak with us about a license. We arethe only legitimate source for patented and licensed amino acid nitrates.
It requires licensees to use its NO3-T logo on productscontaining ingredients or technology purportedly protected by any one or moreof ThermoLifes patents. Between 2015-2019, its website identified 14 patentsas protect[ed] by the logo, though in 2019 it modified the site to include atable purporting to demonstrate which of ThermoLifes patents were practiced byThermoLifes licensees. One of the patents was reexamined in a way that did notfavor ThermoLife.
ThermoLife argued that BPI didnt show materiality. But afactfinder could conclude that the challenged advertising statements arematerial in that the statements involve inherent qualities or characteristicsof the CRTN-3 product that could influence a consumers decision to purchasethe product. Each of the five targeted statements plainly relate to thequality or describe a characteristic of the CRTN-3 product as a dietarysupplement, whether to ingredient quality/characteristics or to purportedperformance benefits:
The quality of ingredients thatcompose a dietary supplement directly correlates to the nutritional and/orperformance benefits that derive from consuming the product. While mostconsumers could care less about the chemical composition of glue, it ispossible that a consumer who purchases a dietary or nutritional supplement witha desire to push harder, get stronger, recover quicker, and reach [his or hergoals] faster could be so scrupulous as to care about the quality ofingredients contained within and the performance results advertised to derivefrom the product that he or she ingests.
Injury: likewise a factual issue. BPIs CEOs declarationstated that it suffered a decline in sales of its creatine products because ofthe introduction of products containing creatine nitrate, which compromised itsability to fairly compete in the market with its traditional creatine-basedproduct. This evidence of lost market share was sufficient to get to a factfinder.
Falsity: Some (expert or other) evidence of misleadingnesswould be required, but the plaintiff could still argue that the ads weremisleading even though it didnt produce market research or a consumer survey;it did produce declarations stating that the ads created a false impression inthe marketplace that creatine nitrate was a new, superior form of creatine. AndBPIs expert offered opinions that the five challenged statements wereliterally false (and misleading and unsubstantiated).
What about statements about the scope of patents? ThermoLiferelied on Baden Sports, Inc. v. Molten USA, Inc., 556 F.3d 1300 (Fed. Cir.2009) and Robert Bosch LLC v. Pylon Mfg. Corp., 632 F. Supp. 2d 362 (D. Del.2009), to argue that they werent covered by the Lanham Act. Baden reliedon Dastar to hold that authorship, like licensing status, is not anature, characteristic, or quality, as those terms are used in [the LanhamAct]. BPI didnt successfully distinguish the cases, though the statementsabout proprietary rights to and licensing requirements for creatine nitrate couldbe used in support of the remaining claims, where applicable.
False marking: Thecourt previously concluded that ThermoLife didnt have patent rights in thecomposition of matter creatine nitrate under one of the cited patents. As forintent to deceive, it could be inferred from circumstantial evidence: Notwithstandingthe fact that the USPTO rejected ThermoLifes claim for creatine nitrate, adecision that was affirmed by the PTAB and the Federal Circuit Court ofAppeals, it continued to assert propriety rights to creatine nitrate on itswebsites, and issued a press release entitled ThermoLife To Be AnnouncedAdditional Patent Claims on Creatine Nitrate By The USPTO, Effectively MonopolizingThe Use of Creatine Nitrate in Dietary Supplements. For damages, BPI arguedthat the false marking prevented it from entering the creatine nitrate marketitself and caused decreased sales of its own creatine-based products. This wasenough to create a genuine issue of material fact.
Shuman v. SquareTrade Inc., 2021 WL 5113176, No.20-cv-02725-JCS (N.D. Cal. Nov. 3, 2021)
SquareTrade sells service contracts for the protection ofconsumer goods. Shuman alleged that it consistently fails to provide consumerswith the full terms and conditions of the contract at the time of purchase andsystematically pays reimbursement in an amount that is less than the purchaseprice of the covered item when claims are filed. After UCL claims weredismissed, Shuman sought to add new plaintiffs.
Standing to seek injunctive relief: new plaintiff Gonzalesalleged that he felt misled and is not currently inclined to purchaseadditional SquareTrade protection plans, but he continues to purchase consumerproducts that could be covered by a SquareTrade protection plan, and wouldpurchase additional SquareTrade protection plans in the future in the eventthat SquareTrades reimbursement practices were to be reformed to eliminate theunlawful practices discussed in this complaint. This was sufficient toestablish standing to seek injunctive relief.
However, he still didnt allege a violation under either theunfair or the fraudulent prongs of the UCL or that he lacked an adequateremedy at law.
Unfairness is analyzed two different ways: First, thetethering test requires that the public policy which is a predicate to a consumerunfair competition action under the unfair prong of the UCL must be tetheredto specific constitutional, statutory, or regulatory provisions. Second,the balancing test asks whether the alleged business practice is immoral,unethical, oppressive, unscrupulous or substantially injurious to consumers andrequires the court to weigh the utility of the defendants conduct against thegravity of the harm to the alleged victim.
Plaintiffs alleged that the harm arising from SquareTradesconduct is the systematic underpayment of customer claims by 14.2%. That is, SquareTrades2018 Fast Cash program began systematically reimbursing consumers onlyapproximately 85% of the covered products purchase price, regardless of theactual value of the product, when it was purchased, or its cost ofreplacement. Plaintiffs argued that SquareTrades allegedly secret policy ofunderpaying its customers violated the principles undergirding both theConsumers Legal Remedies Act, and the Song-Beverly Consumer Warranty Act.
But those arguments were premised on the assumption thatGonzales was entitled to receive the purchase price of the covered item when hefiled a claim, but they didnt allege any facts showing that this was everpromised to him or that he was entitled to recover the full purchase price onany other ground. Without any such allegations, the harm Plaintiffs cite(underpayment of claims by 14.2%) is not a cognizable harm; nor do any of theconsumer protection laws Plaintiffs cite embody a policy that a productprotection policy must cover the full purchase price of a product. Likewise,the allegations didnt state a claim under the UCLs fraudulent prong.Gonzaless allegations as to what was promised to him with respect toreplacement cost were so minimal that they do not give rise to a plausibleinference that a reasonable consumer would have been misled.
In addition, Gonzales didnt lack an adequate remedy at lawbecause the restitution he sought was the same as the damages he sought on hisbreach of contract claim, namely, reimbursement for the difference between thepurchase price and the amount that was actually paid on the claim. This is notan election of remedies issue. The question is not whether or when Plaintiffsare required to choose between two available inconsistent remedies, it iswhether equitable remedies are available to Plaintiffs at all.
The unjust enrichment claim also failed for similar reasons.NY GBL claims by new plaintiff Abbott also failed. Abbott alleged that she wasmisled because she saw references to protection on a brochure that she didntread and a sales clerk used the word warranty in describing the plan. She wasthen surprised and displeased when SquareTrade paid only 85.8% of thepurchase price of her covered products when she filed claims for coverage. Buta party does not violate General Business Law 349 by simply publishingtruthful information and allowing consumers to make their own assumptions aboutthe nature of the information. However, the original plaintiffs unjustenrichment claim proceeded.
No comments: Labels:consumer protection,false advertising,unfairnessSmall company successfully pleads materiality/damage against Microsoft
TocMail Inc. v. Microsoft Corp., 2021 WL 5084182, No.20-60416-CIV-CANNON/Hunt (S.D. Fla. Jul. 16, 2021)
Previousruling; new judge still finds the false advertising claims sufficientlypled. TocMail sued Microsoft for false advertising of its cloud-based cybersecuritysoftware, Safe Links, which competes with TocMails cloud-based link scanner,as part of a greater Advanced Threat Protection program that accompanies Office365.
Most malicious websites allegedly send users to malicioussites but send security software to benign sites to avoid detection. TocMailalleged that other cloud-based scanners have a key weakness allowing bad guysto discriminate based on the IP address of the user that clicked the link,since cloud-based link scanners (including Safe Links) cannot mimic a users IPaddress. TocMail alleged that only its patented product can successfullyprotect cloud-based servers from IP cloaking attacks by sending users directlyto the benign site to which the link scanner had been redirected. Thus, Microsoftallegedly falsely advertises its scanner as possessing a security capabilitythat it does not actually possess; TocMail identified statements such as ahigher standard of security at lower cost than ... [is available] withon-premises productivity servers [which are not vulnerable to IP cloaking],with Safe Links, we are able to protect users right at the point of click bychecking the link for reputation and triggering detonation if necessary, SafeLinks ensure[s] hyperlinks in documents are harmless, and Office providesthe benefits of cloud computing with ... enterprise-grade security.
A previous version of the complaint alleged falseadvertising and contributory false advertising, and the latter claim wasdismissed; TocMail refiled with a single count of false advertising. Microsoftmoved to dismiss again for want of materiality/injury.
Although the Eleventh Circuit appears not to havecharacterized the materiality standard specifically in Lanham Act cases, it hasnoted in related contexts that materiality is a mixed question of law and factthat requires delicate assessments of the inferences that a reasonable personwould draw from a given set of facts, and therefore, that such assessments arepeculiarly ones for the trier of fact. Microsoft argued that Safe Linksrepresented only one of the many services included in Office 365 and is not, byitself, an inherent quality or characteristic of the product. TocMailrejoined that security is one of Office 365s major selling points, and that ithad alleged an effect on consumer behavior. The court sided with TocMail.Microsoft had allegedly admitted that organizations must consider securitywhen deciding on whether to accept cloud-based services; and that [b]usinessesand users are going to embrace technology only if they can trust it, and its2020 Form 10-K stated that [t]he security of our product and services isimportant in our customers decisions to purchase or use our products orservices. That was sufficient at the pleading stage.
Injury: Microsoft argued that TocMail could not havesuffered injury because TocMail did not have its product readily availableuntil 2019, and because it markets only one service and has little brandrecognition, so it is too small to plausibly allege it has been reputationallyharmed by Microsofts marketing campaign. TocMail responded that it has in factentered the market by actively marketing and selling a competing productthrough their website. TocMail was also seeking disgorgement, so it argued thatit didnt need to show actual harm. At the motion to dismiss stage, the courtwouldnt seek to calculate damages. TocMail sufficiently pled injury byalleging that TocMail and Microsoft currently compete for the same customers, andthat it is hindered from selling its patented solution because Microsoft hasconvinced companies that is has already solved this issue.
No comments: Labels:false advertising Tuesday, November 02, 2021 Classmates.com, the right of publicity, and copyright preemptionCallahan v. PeopleConnect, Inc., 2021 WL 5050079, No.20-cv-09203-EMC (N.D. Cal. Nov. 1, 2021)
Plaintiffs in this putative class action alleged thatPeopleConnect misappropriated their names, photographs, and likenesses and usedthe same in advertising its products and services, including reprintedyearbooks and subscription memberships to the website Classmates.com. Theysued for ROP violations, intrusion on seclusion, and unjust enrichment.
The court rejected the CDA 230 defense because PeopleConnectwould only count as providing information provided by another informationcontent provider if the other info content provider had given it the yearbookscontemplating that they could be published online. And there was at least aquestion of fact whether the yearbook authors/publishers had done so; ratherthe yearbooks seemed to have been provided by users/purchasers. A serviceprovider can be held accountable if, e.g., it is obvious that the person orentity providing information to the service provider is not the creator ordeveloper of the information. [Im guessing the court means to cabin itsholding to situations in which the service actively decides to put specificcontent online instead of just serving as a user conduit for, e.g., revengeporn.] Here, it was obvious that yearbook users/purchasers werentcreators/developers of the yearbooks.
Copyright preemption: PeopleConnect did a little better. Plaintiffsargued that, because PeopleConnect didnt own copyright in the yearbooks, ithad no standing to assert copyright preemption. The court rejects this argument,for good reason. (The court doesnt mention it, but one reason clearly implicatedby this situation is first sale: if someone has a lawfully made copy of ayearbook to sell, their lack of copyright ownership shouldnt affect the factthat ROP claims against the sale are preempted.) The Ninth Circuit has clearlyheld:
Whether a claim is preempted...doesnot turn on what rights the alleged infringer possesses, but on whether therights asserted by the plaintiff are equivalent to any of the exclusive rightswithin the general scope of the copyright. The question is whether the rightsare works of authorship fixed in a tangible medium of expression and comewithin the subject matter of the Copyright Act. If a plaintiff asserts a claimthat is the equivalent of a claim for infringement of a copyrightable work,that claim is preempted, regardless of what legal rights the defendant mighthave acquired.
Jules Jordan Video, Inc. v. 144942 Canada Inc., 617 F.3d1146 (9th Cir. 2010). Allowing such a claim would provide a de facto veto overthe [copyright holders] rights under the Copyright Act, [including its rightsto tolerate use/also would provide a veto over fair uses].
But were the claims preempted? Yes, as applied to ads for copiesof yearbooks, but no, as applied to ads for the subscription service. [U]singa portion of the copyrighted work to promote the copyrighted work does not takea publicity-right claim outside of copyright preemption. This distinctionbetween the reprints and the service doesnt make a ton of sense to me, butperhaps I misunderstand the subscription serviceif it gives you access to thematerials in the yearbooks, then I dont understand why the ruling on theyearbooks doesnt also cover the service. This seems to me like saying that ROPclaims are preempted for advertising a movie, but not for advertising that you cansee that movie on HBO. But the court cited another case with favor that declinedto find copyright preemption because defendant did not simply display[ ] orpublish[ ] photographs depicting Plaintiffs; [w]here, as here, the platformcontaining a plaintiffs photograph sells information about the plaintiff andnot limited rights to his image alone, the Copyright Act will not preempt aclaim concerning the use of the image. So the ROP and unjust enrichment claimswere preempted only to the extent they were based on advertising for reprintedyearbooks.
In addition, the complaint stated a claim for ROPviolations: The statute requires injury, and plaintiffs asserted an economicinjury because [i]f a defendant uses a plaintiffs name and/or likeness toadvertise, then it can reasonably be inferred that the name and/or likeness hassome economic value, even if small. California courts have clearly held thatthe statutory right of publicity exists for celebrity and non-celebrityplaintiffs alike. And statutory damages were also available, even if the only injurywas economic and not mental anguish.
Nor was endorsement required to violate the statutory ROP,only use of name or likeness. And the public affairs exception in the statutedidnt apply. The exception is based on First Amendment concerns but is notcoextensive with [the First Amendment]. It covers something less importantthan news, related to real-life occurrences. But only reprinted yearbooks hada potential connection to public affairs; the subscription membership clearlydoes not.
Plaintiffs also brought a derivative UCL unlawfulness claim,which additionally requires that a plaintiff must have suffered an injury infact and...lost money or property as a result of the unfair competition. Thealleged loss of IP rights qualified as economic injury/lost money or property.
Intrusion upon seclusion: PeopleConnect understandablyargues that Plaintiffs could not have a reasonable expectation of privacybecause their names and likenesses were used in yearbooks which (1) wereclearly intended for public distribution and (2) ultimately had no restrictionson their dissemination. But an expectation of privacy need not be of absoluteor complete privacy. This was a fact question, but fortunately forPeopleConnect, plaintiffs failed to plead that intrusion took place in a mannerhighly offensive to a reasonable person. Plaintiffs alleged that disseminationto millions was offensive and that at least some of the information was highlysensitive, including photographs of Plaintiffs as minors and information aboutwhere they grew up and attended school. But it is entirely speculative thatPlaintiffs information was actually disclosed to millions, and thecharacterization of the information as highly sensitive was hyperbolic. Dismissed with leave to amend.
No comments: Labels:230,copyright,preemption,right of publicity Friday, October 29, 2021 facially plausible false advertising claim can be added to TM complaint
In case you're looking for a roadmap for leave to amend:
Ideavillage Products Corp. v. Copper Compression Brands LLC,2021 WL 5013799, No. 20 Civ. 4604 (KPF) (S.D.N.Y. Oct. 27, 2021)
Ideavillage sued CCB for trademark infringement and falsedesignation of origin related to Ideavillages Copper Fit line ofcopper-infused compression garments. Here, the court granted leave to amend toadd a false advertising claim.
Ideavillage uses the As Seen on TV model to sell itsstuff, as well as its own website/Amazon. One of its most popular products is a line of copper-infusedcompression clothing, marketed under the trademark Copper Fit, allegedlydesigned to alleviate muscle and joint soreness and pain. Defendants alsomarket and sell copper-infused compression products online, including on theirown website/Amazon. They allegedly advertise their products using the termcopper in close proximity to the term fit and have deliberately causedsearches for Copper Fit products to yield results for Defendants products[the horror!].
The deadline for amended pleadings was in January 2021, withfact and expert discovery currently set to close in November 2021, and January 2022,respectively, after several extensions. In May 2021, plaintiffs moved for leaveto file a second amended complaint to add a false advertising claim based on statementson CCBs website. A court should freely give leave when justice so requires, butwhen a scheduling order is in effect, deadlines for amendment of pleadings maybe modified only for good cause and with the judges consent. The primaryconsideration in determining whether good cause exists is whether the movingparty can demonstrate diligence. The standard is typically not met when theproposed amendment rests on information that the party knew, or should haveknown, in advance of the deadline.
Plaintiffs alleged that they only recently discovered thatcertain website statements were (allegedly) false and misleading after they initiateda test buy of certain of defendants products [i]n or about late January2021, and performed tests on samples of these products. This allegedlyrevealed the falsity of representations that Copper Compression products havethe highest copper content, [g]uaranteed and that their products areconstructed with 85% copper-infused nylon[.]
Defendants argued that plaintiffs should have investigatedsooner. While the Court agrees with Defendants that Plaintiffs likely couldhave initiated test buys of and performed tests on Defendants publiclyavailable compression products earlier, Plaintiffs have nevertheless presentedacceptable justification for their delay. Plaintiffs argued that, despitetheir general awareness of the relevant statements, it was only throughdiscovery that they recently [became] aware of the extent to which Defendantsprominently, and repeatedly use these claims in connection with theiradvertising. Materials revealed in discovery can support a finding of goodcause.
Though plaintiffs werent wholly unable to investigatesooner, they werent dilatory once they became aware of the key facts. They initiatedtest buys in or about late January 2021, received the products in or aboutmid-February 2021, and received preliminary testing results in or aboutmid-April 2021. Within a matter of weeks, they informed defendants of theirintent to add a claim and then in mid-May filed notice of the motion to amend. Atthis relatively early stage in the proceedings, with fact discovery still openand prior to any dispositive motion practice, the Court does not find thatPlaintiffs failure to investigate Defendants advertising claims at an earliertime, when it had no basis to suspect their falsity, constitutes a lack ofdiligence that would negate a showing of good cause.
There was no reason to conflate Plaintiffs knowledge ofcertain of Defendants advertising with knowledge of the existence of a viableclaim for false advertising. Using ads that have been on defendants websitesince the inception of this case didnt defeat a finding of good cause, because[a party] need not prove that they uncovered new facts or law in order forthis Court to grant leave to amend.
Moreover, permitting the amended complaint wouldnt beprejudicial in any legally relevant respect. [M]ere allegations that anamendment will require the expenditure of additional time, effort, or money donot constitute undue prejudice. Though it would expand the scope ofdiscovery somewhat, it would not alter the focus of the entire case, or covernew products. In addition, defendants apparently already conducted their owntesting, which they paid for before the formal institution of a falseadvertising claim. Also, as discovery is ongoing and ample time remains beforetrial, allowing the amendment would not significantly delay the resolution ofthe dispute.
Nor would amendment be futile. Plaintiffs specified at least two allegedlydeceptive statements: (i) that defendants products contain the highest amountof copper, and (ii) that all of Defendants Products are made with 85%copper-infused nylon. They alleged materiality and deception as well as injuryto them as direct competitors. It wasnt important that they failed to specifywhich lab they used or to attach the test results to the complaint, or toallege that none of defendants products contained 85% copper.
No comments: Labels:false advertising,trademarkLanham Act willfulness satisfies Bankruptcy Act willful/malicious standardIn re Better Than Logs, Inc., 631 B.R. 670, No. 20-20160-BPH(D. Mont. Jun. 11, 2021)
A rare bankruptcy/false advertising interaction. Creditor Everlogsued BTL for patent infringement and false advertising; BTL ultimatelydefaulted and Everlog was awared nearly $1 million in damages, of which almost$180,000 was allocated as disgorgement for false designation of origin/falseadvertising, on the theory that BTL falsely described its products asmanufactured in Montana when, in fact, the concrete blanks used in BTLsproducts were poured in China.
BTL then entered bankruptcy and listed the Everlog judgmentas disputed. Everlogs proof of claim was for over $1.2 million, including thejudgment, post-judgment interest, and projected damages from BTLs allegedcontinuing infringement of its patent.
Of relevance here, Everlog argued that the false advertisingdamages were nondischargeable in bankruptcy. Everlog relied on the finding ofthe district court that BTL acted willfully in falsely describing itsproducts as manufactured in Montana and awarding Everlog $117,116 in disgorgedprofits accordingly. The creditor has the burden of showing nondischargeabilityby a preponderance of the evidence; the relevant exception is 523(a)(6), whichexcepts from discharge any debt for willful and malicious injury by the debtorto another entity or to the property of another entity. This exception appliesonly where the debtor intends the consequences of their act, not simply the actitself, and both willfulness and maliciousness is required.
BTL argued that summary judgment was inappropriate becausethe district court didnt consider whether the false advertising was malicious.Because this was a default judgment, the court here looked to both the districtcourts order and the material allegations of the complaint.
In the Ninth Circuit, the willful injury requirement issatisfied only if the debtor has a subjective motive to inflict injury or whenthe debtor believes the injury is substantially certain to result from his ownconduct. Lanham Act false advertising requires injury or likely injury. [Doesfalse designation of origin require injury as an element of the cause of action?If its a trademark claim, it does not.]
And [a]n award of disgorged profits based upon false advertisingor false designation of origin is appropriate only upon a showing that thedefendants violation was willful. NB: No longer true under Romag!
Willfulness under the Lanham Act requires a connectionbetween a defendants awareness of its competitors and its actions at thosecompetitors expense. Only deliberate conduct will satisfy this standard;mere negligence will not. The willfulness holding was a finding that BTL acteddeliberately when it falsely advertised its products, and that BTL was aware ofEverlog and acted in a manner that was detrimental to it, causing Everloginjury. At a minimum, BTL was substantially certain its conduct would resultin injury to Everlog. Thus, issue preclusion applied to willfulness.
Naliciousness under 523(a)(6) requires: 1) a wrongfulact; 2) done intentionally; 3) which necessarily causes injury; and 4) is donewithout just cause or excuse. Prior case law establishes that a debtorsdecision to act in violation of a law despite knowing the legal way to conductbusiness satisfied the malice prong. The undisputed facts here led to the sameconclusion. The district court found that BTL looked into the Made in USAstandards and chose to market its products as manufactured in Montana, despitethe fact that they were partially manufactured in China. The willfulnessfinding also satisfied elements (2) and (3). BTL argued that it researched andworked with the State of Montana to verify its products qualified for the Madein Montana designation. But it relied on testimony that the district courtconsidered and rejected. Thus malice was also subject to issue preclusion.
Was this issue actually litigated, though? [A] defaultjudgment is generally not entitled to [issue preclusion] because there is no actuallitigation of the issues. Here, the actual litigation requirement wassatisfied on these facts because BTL initially actively participated in theprior litigation for over a year but eventually abandoned its efforts. [A]llthat remained at the time Everlog moved for entry of BTLs default were twofinal pretrial conferences and the trial itself.
Yum. "A shortbread cookie topped with a layer of caramel, a layer of chocolate ganache, dipped in dark chocolate and drizzled with white chocolate."
Wyndham Vacation Ownership, Inc. v. Sussman, 2021 WL 4948099,No. 6:18-cv-2171-GAP-DCI (M.D. Fla. Sept. 20, 2021)
In this timeshare exit false advertising litigation, thecourt excludes Wyndhams expert. Timeshare exit entities like defendant TETused online advertising and oral sales pitches to timeshare owners to convincethem to sign up for TETs service. TET then contracted with Sussman, anattorney, who would receive a timeshare owners documents, send letters onbehalf of that owner to timeshare businesses, and communicate with thosebusinesses to get the owner out of his or her obligations. Wyndham claims thatTET and Sussman falsely advertised and induced timeshare owners to breach theircontracts with Wyndham by ceasing payments. Wyndhams expert surveyedtimeshare owners who are not related to this case to gauge their responses toTETs advertisements. Scene-setting:
A repeated issue in all these casesis how the timeshare companies can prove that the timeshare exit entitiescaused their damagesi.e., did the entities induce each of the timeshare ownersat issue to stop making their timeshare payments. The most obvious route toproving these cases would be to solicit testimony from the owners as to theirreason for breaching their contracts. However, these lawsuits have involvedhundreds of timeshare owners, and obtaining testimony from every owner would bea labor-intensive effort. Hoping to avoid such a task, the timeshare companieshave attempted, with little success, to find a shortcut.
It's not enough to add up the total of all missed paymentswithout a link between the defendants and the owners actions. In a previoustimeshare case, the court ruled that, absent direct testimony from the ownersregarding their missed payments, [plaintiff] would not be permitted to proceedto trial based on the experts testimony. The court then entertained thepossibility that statistical evidence, rather than direct testimony, mightsupport causation. The plaintiff thus offered a statistical expert who used asubset of influenced accounts and extrapolated those to the remaininghundreds of accounts at issue. Thistestimony was excluded as unreliable due to the +22% margin of error theexperts method produced, and significant issues with the way the expertobtained his data.
This time, Wyndham tried a consumer survey of timeshareowners. Respondents saw a TET webpage, a video performance of TETs salespresentation script, and a welcome email that TET used. Survey questionsincluded whether respondents believed they were being told to stop makingtimeshare payments and whether they would be inclined to stop making timesharepayments. The expert opined that, based on the survey: (1) 32.2% of therespondents believed the statements in the emails told them to stop makingtimeshare payments; (2) 18.5% of those respondents were either very likely orsomewhat likely to act on those instructions and stop making payments; and (3)the survey results demonstrate that [TET] customers were likely misled by[TETs] sales practices and believed that it was appropriate to cease makingpayments to their timeshare company.
However, the expert did not perform any statistical or otheranalysis comparing the sample population to Wyndhams owners. He didnt explainexplain why his methodology reliably enabled the trier of fact to apply hisresults on causation to the owners at issue in this case. [T]hiscase is not about the average consumer. This case is about an identified set oftimeshare owners, every one of whom acted on facts and circumstances specificto him or her. [The expert] may have analyzed timeshare owners in general buthis failure to connect his analysis to the Wyndham owners renders his remainingopinions irrelevant to this case. A jury couldnt extrapolate the results tothe 270 defaulting Wyndham owners at issue, especially since, per the survey, only16 of those 270 would likely stop making payments as a result of TETs ads, andit wasnt clear which 16 to pick for purposes of calculating damages.
[This last bit seems like an error about the nature of the universeof Wyndham owners at issueas I understand it, the 270 did stop, one way oranother, so rather than the probability of whether someone who saw the ads wouldrely on the ads to stop making payments, P[A|B], we really need to know whethersomeone who stopped making payments did so because they saw the ads, P[B|A],something that needs more information to be calculated even if we know P[A|B].The survey is relevant to show P[A|B], which itself is relevant to the overallquestion though insufficient on its own.]
Wyndham Vacation Ownership, Inc. v. Sussman, 2021 WL 4949162,No. 6:18-cv-2171-GAP-DCI (M.D. Fla. Sept. 27, 2021)
With the expert out, Sussman did much better on thesubstantive causes of action. The remaining claims against him were forcontributory false advertising in violation of the Lanham Act; tortiousinterference with existing contracts under Florida law; civil conspiracy tocommit tortious interference; and violations of Floridas Deceptive and UnfairTrade Practices Act.
The Lanham Act false advertising claim was based solely onTETs oral sales presentations (OSPs). Such oral statements, if widely disseminated,can be commercial advertising. But therewasnt sufficient evidence that TET routinely told Wyndhams timeshare ownersto stop making timeshare payments in the OSPs. TETs script for the OSPs didntcontain an instruction to cease making timeshare payments. The owner testimonywasnt consistentonly one said she was told to stop making timeshare paymentsduring a sales presentation. TET officers testimony didnt specify that anyinstructions to stop payments were disseminated during a sales presentation. Thus,Sussman got summary judgment.
Tortious interference: There was no testimony that Sussmanever told a TET-referred client to stop paying. In every owner deposition thatWyndham submitted, the owner states they stopped paying because of TET, notSussman. In fact, when asked about Sussman, the owners stated that they had norecollection of speaking with him or who he even was. No tortiousinterference.
Conspiracy to commit tortious interference: Was there anagreement with TET? Not a written one, but Sussman told TET that he would not accept any owner who hadnot stopped or did not intend to stop making payments to his or her timesharecompany. Sussman explained that this was because he could not successfullynegotiate a release for any owner who continued to make payments on theirtimesharei.e., carry out the service he was being paid to do. Thus, a jurycould reasonably find an agreement that TET would interfere with Wyndhamscontracts.
What about damage causation? Three relevant owners testifiedthat they stopped paying because of TET, so that created an issue of fact onwhether TET caused the breach for those three. But what about the other 247relevant owners? There was only testimony about TETs general practices incommunicating with clients, and the fact that 208 of the 250 relevant ownersstopped making their timeshare payments after hiring TET. Wyndhamscircumstantial evidence may permit a juror to infer that TET interfered withsome contracts, but no juror could reasonably infer from this evidence that TETproximately caused Wyndhams damages. Without some form of direct testimonyfrom these owners or expert testimony to fill in the gaps between TETs generalpractices and the decisions of the individual owners, Wyndham cannot provecausation. TETs CEO stated by affidavit that,while some companyrepresentatives advised clients to stop making payments, TET did not have acompanywide policy of doing so, and that clients had varying reasons for notwanting to pay; some had already planned to stop making payments and otherscould not afford to pay anymore. Without the owners testimony, a factfinder couldntdetermine which owners would have stopped paying regardless of TETsinvolvement.
FDUTPA: Sending letters about the timeshares fell withinFDUTPAs definition of trade or commerce. However, as to loss causation,Sussman was entitled to summary judgment on the damages claim with respect toany owner who didnt testify about causation, though injunctive relief wasstill possible.
No comments: Labels:consumer protection,damages,false advertising,surveys Monday, October 25, 2021 Court rejects "buy button" false advertising claim because consumer hasn't yet lost access to "purchased" contentCaudel v. Amazon.com, 2021 WL 4819602, No.20-cv-00848-KJM-KJN (E.D. Cal. Oct. 15, 2021)
Disagreeing witha case against Apple, the court here concludes that Amazons buy optionthat doesnt give consumers ownership does not harm consumers who havent (yet)lost access to the content, rejecting the price premium theory for reasons thatdont make much sense to me.
The complaint alleges that Amazon charges around $10 lessfor renting electronic video content rather than purchasing it, but that thebuy button doesnt actually give consumers ownership, and that reasonableconsumers would not agree to the higher fee if they understood that purchasedvideo content might disappear from their digital libraries at some point in thefuture.
[T]he majority of courts have consistently found economicinjury when the products contain an actual defect and are allegedly worth lessthan what the consumer paid. But see Andino v. Apple, Inc., No. 20-01628, 2021WL 1549667, at *2 (E.D. Cal. Apr. 20, 2021). [No discussion; just a but seeand a summary of the result.] AlthoughCaudel alleged that she receive[d] a product worth less than [its actual]value, there was just a potential risk of losing video content, which isnot concrete and particularized as to her.
Me: But what about the price premium she alleged shepersonally paid? Why is that not concrete and particularized as to her, not tomention not just imminent but materialized in the money gone from her pocket?The implicit claim is that if there wasnt an actual defect, then there canthave been a price premium, but plenty of things can be worth less than you paidfor them without an actual defect. Thats kind of the point of falseadvertising law generally, and certainly the Made in the USA cases make clearthat deviation from what you were promised as part of the bargain is apotential cause of economic loss.
No comments: Labels:california,consumer protection,false advertisingPuzzlingly calling a venue name a "title," court nonetheless rejects claim against MTV showMGFB Properties, Inc. v. ViacomCBS INC., 2021 WL 4843905, NO.5:19cv257-RH-MJF (N.D. Fla. Sept. 22, 2021)
The Flora-Bama lounge and entertainment complext isregionally famous, and MTV created a national TV series, MTV Floribama Shore.The district court granted summary judgment on the resulting trademark claims,reasoning that plaintiffs likelihood of confusion showing was not strongenough to meet the standard that applies to artistic works. This is so in partbecause the plaintiffs and defendants use the competing marks in substantiallydifferent settings. From the fact section:
The record gives no reason tobelieve that, had there been no Flora-Bama, the defendants would have come upwith the name Floribama Shore on their own.
This does not mean, however, thatthe defendants intended to benefit from the plaintiffs goodwill. Thedefendants believed the name Floribama Shore was superior on its own merit tosuch alternatives as Florida Shore or Gulf Shore. The show, after all, wouldfeature the perceived culture on a Florida panhandle beacha culture that was acloser match to Alabama than to many places on the Florida coast or Gulf ofMexico, including, for example, those in south Florida. Floribama fit.
The plaintiffs evidence of likely confusion, while notstrong, would have withstood summary judgment in a commercial use case. Butthe standard is more exacting when a junior users artistic expression is inthe mix. The court applied Rogers v. Grimaldi with the original title-v-titleexception, not the Ninth Circuit version that first rejected the exception butlater reincorporated title-v-title into the broader Gordon v. Drape Creativeepicycle. The EleventhCircuit adopted Rogers, but did not specify whether it was adopting the Rogerstitle-v-title footnote, so the court here turned to subsequent Second Circuitprecedent, specifically Cliffs Notes, Inc. v. Bantam Doubleday Dell PublishingGroup, Inc., 886 F.2d 490 (2d Cir. 1989). This was a title-v-title case inwhich Rogers did not strictly apply, but the First Amendment concernsfor protecting the defendants noncommercial speech warranted applying thelikely confusion factors with special care. In Twin Peaks Productions, Inc. v.Publications International, Ltd., 996 F.2d 1366 (2d. Cir. 1993), anothertitle-v-title case, the court emphasized: the finding of likelihood ofconfusion must be particularly compelling to outweigh the First Amendmentinterest recognized in Rogers. The Eleventh Circuit subsequently cited CliffsNotes with approval for the propositions that Rogers is generallyapplicable to works of artistic expression and that, when deciding whether anartistically expressive work infringes a trademark, a court must carefullyweigh the public interest in free expression against the public interest inavoiding consumer confusion.
The court rejected defendants argument that, under theNinth Circuit Empire test, an artistically relevant title can violatethe Lanham Act only if it explicitly misleads as to the source or content ofthe work. If that were indeed the law, and if explicitly were construed asstrictly as the defendants say it should be, then the defendants would easilyprevail on the Lanham Act claims in the case at bar. But it isnt clearthats what the Ninth Circuit thinks, after Gordon, and anyway thetitle-v-title exception plus First Amendment-flavored balancing to favorartistic works is superior (apparently because it gives more weight to theinterest in trademark protection, though why that should ever override FirstAmendment rights to engage in noncommercial speech in cases of nonexplicitmisleadingnessthat is, why liability for implied endorsement would satisfystrict scrutinyis left as an exercise for the reader).
[FWIW, in my view Cliffs Notes is better than Gordonbecause Gordon inappropriately generalized the very particularcircumstance of the title of a conventional expressive work to create arule that allows the plaintiff to prevail even when the putative infringementstemmed from use in content, e.g., the punchline of a joke. Stated thatway, it is a much broader exception to Rogers and a much less justifiedone. For one thing, the only reason the Rogers court even contemplatedliability for noncommercial speech was the special marketing role played bytitles in particular. For another, the followup Second Circuit case, CliffsNotesunlike Gordonsays you have to remember the important FirstAmendment interests at stake even when youre back in multifactor test land.]
Why is this even relevant, anyway? As the court notes, [t]heplaintiffs use of its mark Flora-Bama relates primarily to its facility, notto the title of an artistic work. Unconvincingly, the court says,
But the mark has occasionally beenused in the title to artistic works, and in any event, artistic works areperformed at the Flora-Bama. So the exception applies to the plaintiffsclaims, at least to the extent the defendants title MTV Floribama Shore couldbe found misleading and confusingly similar to the plaintiffs titles.
This part is not persuasive. Occasionally been used in thetitle to artistic works is a red herring. It does not appear that any trademarkrights stem from such usesthey seem to have been referentialor thatplaintiffs own any valid trademark rights for artistic works(the ones mentioned in theopinion are CMTs broadcast of a show, Kenny Chesney: Live from the Flora-Bamaand Chesneys song Flora-Bama). [Im sure they have contracts sayingthat they permitted these uses, but so what? That doesnt give them affirmativetrademark rights for songs or TV shows.] Likewise, the idea that because songs areperformed at a venue, then the venue is an artistic work with a titledoesnt make sense. Thats like saying that, because Ford Motor Co. haspublished corporate histories in its name, sponsors Masterpiece Theater, andcreates extensive social media content, Ford Motor Company is now a title forRogers purposes, or that the existence of TheTexas Rangers: The Authorized History or TheCode: An Authorized History of the ASME Boiler and Pressure Vessel Codemakes those entities into titles for Rogers purposes.
Nonetheless, defendants still win.
Strength: Incontestability counts for more in the EleventhCircuit than in most others. But the nature of the mark was more important.It was geographically descriptivea portmanteau of the names of the two stateson whose border the plaintiffs establishment sits, but also commerciallystrong in pointing specifically to plaintiffs, at least before the MTV show.Similarity: Pronunciation was identical, spelling slightly different, MTValways used Shore after Floribama, and they usually insert MTV before Floribama.Also, [t]he graphics are wholly distinct. Overall cuts both ways.
And here is where the weirdness of calling the name of avenue a title kicks in. On the similarity of goods and services, the courtappropriately focused on the things in which plaintiffs had rightsbar/lounge/concertservices. Thus, the parties goods and services were highly dissimilar, as werethe trade channels/customers.
Intent was neutral: Defendants copied the name, but therewas
a convincing explanation forchoosing the name on the merits, unrelated to the plaintiffs goodwill. Whilenot previously used for the purpose, the term Floribama well describes thegeographic area hosting the culture depicted on the defendants show. AndFloribama Shore follows the pattern set by Jersey Shore, the first show in theseries. The defendants target marketa national television audiencefarexceeds the reach of the plaintiffs goodwill. There is no reason to believethe defendants adopted Floribama Shore for their national television seriesbased not on the titles own merit but to trade on the Flora-Bamas regionalpopularity.
Actual confusion: also neutral, despite the plaintiffspoorly constructed surveys and some evidence of confusion, primarily in socialmedia. This evidence was scant and mostly ambiguous, e.g., a social-mediausers misspelling of Floribama in a post about the defendants show hardlyindicates confusion with the Flora-Bama. Social media abound with misspellingsand grammatical errors, and it is unlikely many English majors post commentsabout the defendants show. So too withcasual inquiries by Flora-Bama customerssuch customers may suspect there is aconnection, or may suspect there is none, or may simply be making small talk.There was no evidence of material confusion:
The record includes no evidencethat any individual ever decided to watchor not to watchFloribama Shorebecause the individual believed the show was related to or endorsed by theFlora-Bama. And the record includes no evidence that any individual everdecided to goor not to goto the Flora-Bama because the individual believed itwas related to or endorsed by Floribama Shore. The same is true of the partiescollateral products, including the plaintiffs shows and licensed song.
Given the First Amendment interests at stake, this wasntenough. Here the defendants primary intent was expressionconveying to theaudience the subject of the television seriesnot exploiting the plaintiffsmark, and the court emphasized the substantial disparity in how theplaintiffs and defendants use their marks. This result also protected thesmall amount of consumer products Viacom CBS has sold using the Floribama Shorename, which generated $99 in revenue. [Citing Empire:] When Rogersand its progeny protect use of a mark in the title of an artistic work, thesame ordinarily is true for the sale of consumer products that display thetitle and are otherwise noninfringing.
The court would also construe state law to avoid a conflictwith the First Amendment (and apply the rule that state and federal trademarkprinciples are generally the same), including state dilution law.
Then some more sigh-worthy dicta: Although the Floridadilution statute has an explicit exclusion for [n]oncommercial use of the mark,the court wasnt convinced that use of a mark in an artistic work is alwaysnoncommercial, because previous cases finding that noncommercial speech wasnoncommercial involved lampoons, documentaries, or speech intended primarilyto express a viewpoint, Smith v. Wal-Mart Stores, Inc., 537 F. Supp. 2d 1302(N.D. Ga. 2008), so the court declined to settle the issue. [Mattel, Inc. v.MCA Records, Inc., 296 F.3d 894 (9th Cir. 2002), cited as the lampoon, wassuper super clear that its result did not depend on the nature of thecommentary but on the characterization of the song as noncommercial speech, butI suppose the court here thought the facts overrode the stated reasoning.]
Separately, plaintiffs failed to show the requisite Floridafame, rather than fame in the Flora-Bamas geographic area.
Corbett v. PharmaCare U.S., Inc., 2021 WL 4866124, No.21cv137-GPC(AGS) (S.D. Cal. Oct. 19, 2021)
This is a putative class action for violations of consumerfraud statutes in the sale of Sambucol, a dietary supplement that contains a proprietaryextract of black elderberry. Plaintiffs brought the usual California claims;warranty claims; and Massachusetts and Missouri consumer protection claims.
In March 2020, sales of the elderberry supplementsincreased by 415% over prior years as consumers sought to buy products thatwould offer immune support from the coronavirus. Plaintiffs had twotheories: (1) the products were illegal to sell under the FDCA/DSHEA andCalifornias Sherman Law; and (2) false advertising by affirmative statementsand omissions:
Under the DSHEA, a new dietaryingredient (those not used in the United States before 1994), may be used indietary supplements but must first be submitted to the FDA prior to sale unlessthe ingredient has been present in the food supply as an article used for foodwithout being chemically altered. Dietary supplements that containundisclosed NDIs are adulterated for purposes of the FDCA. Because theelderberry extract was not marketed as a dietary ingredient in the U.S. before1994, and is an NDI, the FAC maintains that Defendant did not notify the FDAwith the required NDI notification for its elderberry extract. As such,Plaintiffs allege that Defendants Products are illegal to sell because theelderberry extract is adulterated and misbranded under the FDCA andCalifornias Sherman.
In addition, defendant allegedly made prohibited implieddisease claims, not merely structure/function claims, by marketing the productsas scientifically tested, virologist developed, developed by a worldrenowned virologist, along with advertising that the products support[ ]immunity or claim immunity support. Scientifically tested was allegedlymisleading because no published studies of the products exist, and the existingstudies test a different elderberry extract, and because it improperlysuggested that the products were effective against disease. And the productswere allegedly misbranded because the labeling fails to include adequatedirections for use and because they claimed high antioxidant levels inviolation of regulations.
The named plaintiffs allegedly saw and relied on themisleading representations, and believed that the products were legally soldsupplements.
PharmaCare argued that plaintiffs lacked Californiastatutory standing because the alleged fact that the products were illegaldidnt establish standing. However, plaintiffs alleged materialmisrepresentations and reliance. The Ninth Circuit has explained that themisrepresentation of prescription pet food as medicine or FDA-controlled canbe a material fact for a reasonable consumerparticularly for a pet owner whois dealing with possibly a sick or unhealthy pet, and so too for humans. Theydo not merely allege a regulatory violation but base their claims onmisrepresentations arising from regulatory violations. The same analysis applied to Missourisconsumer protection law, which requires a causal connection between theascertainable loss and the unfair or deceptive merchandising practice but notreliance. And to Massachusetts law, which does require reliance.
NLEA preemption: TheNLEA expressly preempts any state law that establishes any requirementrespecting any claim of the type described in section 343(r)(1) of this titlemade in the label or labeling of food that is not identical to the requirementof section 343(r) of this title. PharmaCare argued that its use of the phrasesupports the immune system was an acceptable structure/function claim andthus allegations of an implied disease claim were preempted.
As FDA regulationsstate, [i]mplied disease claims do not mention the name of a specific disease,but refer to identifiable characteristics of a disease from which the diseaseitself may be inferred. Courts may consider extra-label materials when determiningwhether certain advertising is an implied disease claim. The FDA warned thatits general rule wasnt intended to establish whether any particularstructure/function claim is appropriate for any specific product, and that anotherwise acceptable structure/function claim might nevertheless be false ormisleading for other reasons. But, as an example, supports the bodysantiviral capabilities or supports the bodys ability to resist infectionwould be a disease claim, in contrast to supports the immune system, [a]more general reference to an effect on a body system that did not implyprevention or treatment of a disease state... Id. The FDA explained that thedistinction is one of specificity.
PharmCare argued that supports the immune system helpsyou...stay healthy and arms you with the best protection nature has to offerwere acceptable structure/function claims. By themselves, that would be true,but plaintiffs also alleged label and extra-label statements and alleged that, viewedin their totality, they are either explicitly or implicitly claiming tomitigate or prevent disease. In particular, scientifically tested,[v]irologist [d]eveloped, contain the most extensively researched extractin the world and [d]eveloped by a world renowned Virologist, allegedlynecessarily implied disease prevention because a virologist is an expert thatdeals with viruses and the disease they cause. So to with other claims like stayhealthy through the toughest season which allegedly implied cold/fluprotection, and a FAQ entry answering What are the traditional uses of blackelderberry? with the statement that it is used in traditional remedies forcolds, coughs, and upper respiratory infections. PharmaCares homepage websitestates, Get that NOT WORRIED ABOUT A 5 HOUR FLIGHT IN THE MIDDLE SEAT kindafeeling: a reasonable consumer could understand this statement as promisingprotection from the COVID virus or other transmissible diseases.
No comments: Labels:consumer protection,false advertising,fda,preemption Tuesday, October 19, 2021 Tiffany bluesToday's swag for use in class, Stuart Semple's Tiff (or is it Tiff---?):
packaging
Grant v. Trump, No. 20-cv-7103 (JGK) (S.D.N.Y. Sept. 28,2021)
Eddy Grant sued Trump and his campaign for retweeting apro-Trump video that used Grants famous Electric Avenue without authorization.Although the motion to dismiss was far better argued than the average Trump filing,it still failedin the process signaling that the effects of Warhol maynot be limited to visual art, as many had hoped.
The animated video was 55 seconds long. It begins with adepiction of a high-speed red train that displays Trump Pence KAG [KeepAmerica Great] 2020.
After the red train passes, thebeginning of Electric Avenue can be heard clearly, along with an excerpt of aspeech by President Biden. Around the same time, a slow-moving handcar,operated by an animated likeness of President Biden, comes into view bearingthe words "Biden President: Your Hair Smells Terrific." The videoinparticular the contrast between the trains and the unflattering nature of theexcerpted language from President Bidenappears intended to criticize PresidentBiden and depict the strength of former President Trump's campaign.
Grants song appears throughout the last 40 seconds of thevideo.
Fair use can rarely be decided on a motion to dismiss, thecourt said, and this wasnt one of those cases.
Transformativeness: Just because the video and song serveddifferent purposes didnt make the video transformative. While it is true thatthe animation is partisan political commentary and the song apparently is not,the inquiry does not focus exclusively on the character of the animation;rather, it focuses on the character of the animation's use of Grant's song.Under Warhol, when there isnt obvious[] comment or relation back, oruse of the original for a purpose other than that for which it was created,then the bare assertion of a higher or different artistic use[] isinsufficient to render a work transformative. Here, the videos overarchingpolitical purpose does not automatically render its use of any non-politicalwork transformative.
The use of the song itself in the video was best describedas a wholesale copying of music to accompany a political campaign ad. Comparedto other political cases like the Don Henley/Running on Empty case, the use heredoes far lessif anythingto modify the song or to comment on the song or itsauthor, whereas in Henley defendants changed lyrics and provided theirown vocals, and supposedly poked fun at Henleys own liberalism, andstill that wasnt transformative because the ad took too much in relation toany legitimate parodic purpose. Here, there was no editing of the lyrics,vocals, or instrumentals at all. Further, the animation does not use ElectricAvenue as a vehicle to deliver its satirical message, and it makes no effort topoke fun at the song or Grant. This was less-favored satire rather thanparody, and defendants have offered no justification for their extensiveborrowing.
Cariou, by contrast, involved fair uses where works wereobscured and altered to the point that [they were] barely recognizable. Thenon-fair-use-as-a-matter-of-law works in Cariou superimposed otherelements that did not obscure the original [work,] and the original [work]remained ... a major if not dominantcomponent of the impression created by the allegedly infringing work. Likewise,in Warhol, there was no fair use because the secondary work retain[ed]the essential elements of the [original work] without significantly adding toor altering those elements.
So too here. Electric Avenue wasnt edited at all and was instantlyrecognizable; the additional audio of President Bidens speech did nothing toobscure the song; and the song, which lasted over 2/3 of the video was, amajor component of the impression created by the animation, even though itappears that the video's creator could have chosen nearly any other music toserve the same entertaining purpose.
Brown v. Netflix, Inc., 462 F. Supp. 3d 453 (S.D.N.Y. 2020),affd, 855 F. App'x 61 (2d Cir. 2021), found a documentarys unauthorized useof a song to be transformative and fair, but that case was readilydistinguishable. That film used 8 seconds of a song as part of the films commentaryon the burlesque art form and its resurgence in Portland, Oregon. The filmcombined the burlesque performances with cultural commentary on topics such asgender, sexuality, and the artistic process, and incidentally captured a dancersuse of the song as background for her performance. The use here is differentin magnitude and kind: the song plays for more than two-thirds of the animationand plays no discernible role in communicating the videos overarchingpolitical commentary. Brown, by contrast, used the brief excerpt aspart of a performance about which the documentary was commenting, and thecontent of the song substantively contributed to the burlesque act.
Also, the use here was commercial because commercial in107 doesnt mean commercial, but whether the user stands to profit fromexploitation of the copyrighted material without paying the customary price.[Really sad that GvO didnt address thisthere seems to me no chancethat the current textualist Court would accept this conflation of a factor one considerationwith factor fours market inquiry.] The use in Henley was commercial becausedefendants stood to gain publicity and campaign donations from their use ofHenleys music. Here, the possibility of commercial advantage cannot beexcluded at this point, especially in light of the instruction from the SecondCircuit Court of Appeals that the profit/non-profit distinction is contextspecific, not dollar dominated.
Another SDNY case, MasterCard Intl Inc. v. Nader 2000 PrimaryComm., Inc., No. 00-cv-6068, 2004 WL 434404 (S.D.N.Y. Mar. 8, 2004), held thata political advertisements parody of a popular MasterCard commercial was anoncommercial use because the candidate used the original work as part of hiscommunicative message, in the context of expressing political speech. But thatwasnt the same as the use here. Nothing about the song was integral to thevideos political message, and in their arguments, the defendants explicitlydisclaim any overlap between the purposes of the song and the video. [Note themove here from whether the defendants overall product was commercial to whetherthe use of the plaintiffs work was commercialI am not sure thats supportedby the statute; I am sure that carving works up this way is going to make fairuse harder to litigate and resolve, and will require inquiry into meaning thatcontrasts sharply with Warhols disavowal of any such inquirya sort ofheads I win, tails you lose effect. FWIW, I think the use here is plausiblynontransformative but noncommercial, and that market effect can makenoncommercial uses unfair.] Confirming that the court is making its commercialityfinding dependent on its transformativeness finding, the court reiterates thatthe video wasnt parodying the song or using it for commentary, unlike the Naderad. Moreover, there is a well-established market for music licensing, but thedefendants sought to gain an advantage by using Grant's popular song withoutpaying Grant the customary licensing fee.
Nature of the work: creative and published, but the factthat a work is published does not mean that the scope of fair use is per sebroader. But factor two has limited weight.
Amount/substantiality: Quantity and quality favoredplaintiffs. The introductory portion of the song that is used in the animationis immediately recognizable. The excerpted portion of the song also includesthe chorus, which is of central importance to the original work. While theexcerpt was only 17.5% of the song's total length, it played for 72.7% of the adsduration. The quantity and value were plainly not reasonable in relation to thepurpose of the copying. "
Market effect: Market analysis embraces both the primarymarket for the work and any derivative markets that exist or that its authormight reasonably license others to develop, regardless of whether theparticular author claiming infringement has elected to develop such markets.And it was plain that widespread, uncompensated use of Grants music inpromotional videospolitical or otherwisewould embolden wouldbe infringersand undermine Grant's ability to obtain compensation in exchange for licensinghis music. Grant didnt need to show that he intended to enter the market forlicensing music to promotional videos, especially on a motion to dismiss, giventhe defendants burden to show lack of market harm.
The fourth factor also, per GvO, take[s] intoaccount the public benefits the copying will likely produce. Though politicalspeech, and in particular [t]he act of ridiculing and lampooning publicfigures[,] is a rich part of our First Amendment tradition, denying fair useespeciallydenying a motion to dismiss on fair usewont chill legitimate politicalsatire. Creators of satirical videos like the one at issue here must simplyconform any use of copyrighted music with copyright law by, for example: payingfor a license; obtaining the copyright owner's permission; or transformingthe chosen song by altering it with new expression, meaning, or message. Defendantscould reassert fair use at the summary judgment stage on a more developedfactual record.
Rebecca TushnetABA Blawg 100
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