Monday, July 06, 2015

Exaggerated and outdated photos literally false, court rules

Spruce Environmental Technologies, Inc. v. Festa Radon Technologies, Co., 2015 WL 4038802, No. 15–11521 (D. Mass. July 2, 2015)
Spruce and Festa compete in the radon mitigation industry, selling products for testing and reducing indoor levels of the colorless and odorless radioactive gas radon.  Festa began using a catalog with a section titled “*Dare to Compare* U.S. versus THEM.” It compared a “7 year old AMG Fan v.[a] 5 year old fan from our competitor” and provided a photograph of a gray Festa fan next to a bright yellow Spruce fan. 

Further comparisons, with side by side photos, compared US (referring to Festa) and THEM (referring to Spruce)
1)      “Secure Lock Lever Nuts”
“Inexpensive Wirenuts”
2)      “Solid lid with four screws to ensure a watertight fit. Comes with 2 extra in case you drop one”
“Molded Plastic lid secured with only two screws”
3)      “Factory Sealed Motor Wire”
“Motor wire caulked to seal”
4) “Solid motor lead wires”
“Stranded motor lead wires”
5) “Factory Stamped, Dated, & Serialized”
“Generic–No Manufacture Info”
6) “Terminal Box With (4) Screw Holes With Brass Inserts To Prevent Stripping”
“Terminal Box With (2) Screw Holes. Screw Directly Into Plastic”
7) “Motor Mounted With (4) Mounting Screws. Allows For Better Stability And Quiet, Vibration Free Operation”
“Motor Mounted With only (2) screws”
8) “Capacitor With Factory Installed Lead Wires For Direct Connect”
“Capacitor Requires Wires Installed during assembly”
9) “Watertight Pivoting Grommet”
“Plastic Sleeve Requiring Caulking”
Festa put the same content on its website. Several of the images in Festa’s catalog portray products bearing labels indicating that they are both Home Ventilating Institute (“HVI”) and Energy Star certified.
The court evaluated five falsity claims, but didn’t go into detail on two so I won’t either.  The key claims: 1) depictions of Festa’s products as HVI and Energy Star certified when they are not, 2) claims that the Spruce fan motors are “Generic–No Manufacture Info” even though they do have a manufacturer’s label, and 3) implications that the Spruce fan casing will degrade and change into a yellow color after five years. Even if these weren’t literally false claims, Spruce argued, Festa’s intentional deception justified an inference of actual deception.
Festa responded that it engaged in comparative advertising only after Spruce’s sales representatives told customers that Festa’s radon mitigation fans were “garbage” and “junk.”
As for the yellowing issue, Festa submitted photos of Spruce fans that “have undergone pronounced yellowing after exposure to sunlight.”  However, at the hearing, Festa displayed the Spruce fan shown in Festa’s catalog.  “Although the fan certainly was discolored, it was not the bright shade of yellow portrayed in the photograph.” RT: Note the finding of literal falsity based on visual exaggeration—not unique, but worth highlighting (so to speak). The lack of apples-to-oranges comparison, discussed next, probably plays a role: “Defendant admitted that plaintiff’s fan was photographed with flash while defendant’s fan was not, which may have resulted in the enhanced brightness of the Spruce fan.” The court therefore found likely success on the merits as to this comparison.
As for the certifications, Festa acknowledged that there was a lapse in its Energy Star certification due to missing paperwork and that its fans had not been HVI certified since 2010. Festa submitted the necessary paperwork and expected to be Energy Star certified again shortly, but also removed references to Energy Star from its website and no longer places Energy Star stickers on its fans. The Court found that, even though the fans photographed in the catalog themselves were Energy Star certified, defendant was falsely representing that its fans were currently Energy Star compliant, and likewise with older photos of fans showing an HVI sticker.
How about the description of the Spruce motor as “Generic–No Manufacturer Info”?  Festa argued that the motors appeared generic because the Spruce labels lacked a model number, product name, trademark and manufacturer name, and that one of the motor manufacturer’s own sales representatives did not recognize the motor because the product was not branded.  The court concluded that, though the motor was specifically made for Spruce by another company, the description wasn’t literally false, and that Spruce didn’t prove intentional deception.
Thus, Spruce was likely to succeed on its false advertising claim based only on the comparison of the colors of the fans and the Energy Star and HVI representations. 
The First Circuit measures irreparable harm on a sliding scale, in conjunction with likely success on the merits.  Spruce presented an email from a customer expressing concern over several aspects of its fans, including the discoloration issue because it suggests that “it is a cheap product casing.” The court concluded that money damages would mostly compensate Spruce, but that Spruce showed a “modicum” of irreparable harm to its goodwill and reputation.  Likewise, the balance of equities tipped somewhat in Spruce’s favor because the false representations weren’t egregious.  Festa argued that an injunction would be against the public interest because it would suppress competition, but consideration of Spruce’s potentially anticompetitive motives for suing would have to wait for a later stage; it was in the public interest to remove false advertising from the marketplace.  Thus, the court granted a limited preliminary injunction.

Venable on notable NAD product name ruling

Amy Mudge and Randall Shaheen explain the NAD's take on product names: if you put two terms together, as in "Nourishing Coconut Shampoo," the ingredient has to provide the benefit.  If not, it has to be called "Nourishing Shampoo with Coconut." Also, if you tout your product as X-free, the ingredient you use to replace X can't have the same negative qualities that lead people to avoid X.

Clearblue's pregnancy test gets the blues: recall ordered for false advertising

Church & Dwight Co. v. SPD Swiss Precision Diagnostics, GMBH, 2015 WL 4002468, No. 14–CV–585 (S.D.N.Y. July 1, 2015)
A good old-fashioned false advertising case about pregnancy tests!  Prior opinion, refusing to dismiss the claims as preempted in light of Pom Wonderful.
The parties are the leading makers of home pregnancy tests.  SPD launched the Clearblue Advanced Pregnancy Test with Weeks Estimator, which the FDA cleared for the intended use of telling a woman (1) whether she is pregnant and, if she is pregnant, (2) how many weeks have passed since she ovulated. The Weeks Estimator provides an estimate of “weeks” that is two weeks less than the standard convention: Doctors estimate pregnancy duration (gestational age) based on how many weeks have passed since a woman’s last menstrual period (LMP)—not weeks since ovulation.  (As my kids noticed when we discussed this case, you therefore start out two weeks pregnant—and we agreed that a test that could detect pregnancy at one week would be very, very useful, albeit unlikely in the Muggle world.)
The court didn’t need to decide when pregnancy begins “as a biological matter.” It only needed to determine “whether SPD’s advertising communicates the message that the Weeks Estimator provides an estimate of weeks pregnant that is consistent with a doctor’s estimate of weeks pregnant and, if so, whether this message is false.”  After a two-week bench trial, the court agreed with C&D that SPD’s advertising was false, and found SPD’s deception to be intentional and egregious, although C&D failed to prove a breach of the parties’ prior settlement agreement.
A bit of biology review: a typical menstrual cycle lasts 28 days; the time from LMP to ovulation is generally two weeks, but variance in this phase can be significant. The time from ovulation to the next menstrual period is two weeks, subject to much less variance.  Sperm must fertilize an egg within 24 hours of ovulation, and the resulting blastocyst must travel to the uterus and implant in the lining of the uterus.  Implantation occurs 6-9 days after ovulation. Once implantation occurs, the blastocyst begins secreting human chorionic gonadotropin (hCG), a hormone that signals to a woman’s body that she is pregnant and prevents menses.  Home pregnancy tests detect the presence or absence of hCG in urine.
Tradition dictates the use of the date of LMP as the start of pregnancy, on average 40 weeks before estimated date of delivery at full term (38 weeks after fertilization).  Ultrasounds can now provide a more accurate measure of gestational age, but those are generally done 8-10 weeks after LMP, and the LMP is usually the only piece of data available in early pregnancy, so it’s still the most commonly used method for estimating gestational age and assigning a due date. Regardless of the reasons for adhering to this convention, it remains “universal.”  Indeed, even when professionals use other methods, such as ultrasound, to determine gestational age, they still convert it to LMP-based dating when communicating both to patients and to other medical professionals.  Ultrasound machines are programmed to automatically use LMP to express an estimate of gestational age.  And even when a woman doesn’t remember her LMP or her memory is inconsistent with the ultrasound, doctors will still assign her a LMP two weeks prior to conception as determined by the ultrasound.  The same thing happens with IVF.
This single convention makes sense because it allows everyone involved to communicate easily.  Also, pregnant women traditionally relied on doctors for an estimate of pregnancy duration.  (Interesting definition of tradition, but okay.) “SPD’s suggestion that women could figure this out on their own based on their ‘own awareness of when they ovulated, had intercourse, and other relevant facts; combined with knowledge drawn from ‘myriad sources of information in books and on the internet regarding pregnancy dating,’ is unpersuasive and does not change the fact that historically doctors have been the authoritative source of information for women to find out how many weeks pregnant they are.” The FDA even required SPD to state on all product advertising: “Only your doctor can provide a reliable estimate of gestational age and only your doctor can monitor pregnancy progression.”
The Weeks Estimator, unlike other pregnancy tests, provided an estimate of the number of weeks since fertilization, because hCG levels rise rapidly and predictably during early pregnancy and because fertilization occurs within 24 hours of ovulation, so that the date of fertilization provides a proxy for the date of ovulation. Depending on her hCG level, a pregnant woman who used the Weeks Estimator would see “1–2,” “2–3,” or “3” on the screen—meaning, she was pregnant and it had been 1–2, 2–3, or 3 weeks since ovulation.
Because home pregnancy tests are Class II medical devices, SPD needed 510(k) preclearance for the Weeks Estimator.  Initially, the FDA objected that the “weeks indicator feature may provide misleading information to lay population of users” largely because “the output of this test is not aligned with gestational aging done by healthcare professionals (i.e., it will under-estimate gestational age by an average of 2 weeks).” The FDA required SPD to modify the “Indications for Use” statement on product packaging to include:
This test cannot be used to determine the duration of pregnancy or to monitor the progression of pregnancy. Your doctor determines how many weeks pregnant you are based on the first day of your last menstrual period and ultrasound results. This test provides a different estimate that can not be substituted for a doctor’s determination of gestational age.
SPD wanted to call the product “Conception Indicator,” but the FDA rejected that and accepted “Weeks Estimator.” The FDA also requested that SPD remove the statement “Also Tells You How Far Along You Are” from every area of the box. After some additional back-and-forth, the FDA issued a Clearance Letter for the Weeks Estimator. Among other things, the FDA instructed SPD (1) not to express the product’s results as “weeks pregnant” and (2) to express the results only as “the number of weeks that may have passed since ovulation.”
SPD then launched what was touted as the largest ad campaign in this product category. “Despite FDA’s warnings, internal SPD marketing documents described the ‘communication idea’ for this campaign as: ‘Clearblue Advanced Digital Pregnancy Test with Weeks Estimator gives women the reassurance of knowing much more of their pregnancy because it is the only test that can also tell you how far along you are.’”  The launch advertising consistently communicated the message that the product estimated “weeks pregnant,” “weeks along,” and similar ideas, “while downplaying (or omitting) the message that the product provides an estimate of weeks since ovulation or that the product’s estimate of ‘weeks’ does not align with how a doctor would express an estimate of weeks pregnant.”
The product launched with a box that was on store shelves from August 2013 to February 2014. It showed four images of screens stating, respectively, “Pregnant // 1–2 Weeks”; “Pregnant // 2–3 Weeks”; “Pregnant // 3  Weeks”; “Not Pregnant.” The word “ovulation” didn’t appear anywhere on the front or back of the box.

The side panel contained a small-print, cramped version of the full FDA-required Indications for Use statement, which said in part, “This test cannot be used to determine the duration of pregnancy or to monitor the progression of pregnancy. Your doctor determines how many weeks pregnant you are based on the first day of your last menstrual period and ultrasound results. This test provides a different estimate that cannot be substituted for a doctor’s determination of gestational age.”

From August to December, SPD ran a TV ad that aired thousands of times on at least 65 different networks and was projected to reach millions of women aged 18–49 each month.  It showed two women talking:
1st Woman: I’m pregnant.
2nd Woman: Really?
1st Woman: Two weeks.
2nd Woman: You already went to the doctor?
1st Woman: Not yet, but I took this new Clearblue test. It’s like two tests in one.
2nd Woman: Oh my God, I think I’m going to cry!
As the first woman says “It’s like two tests in one,” an image of the Weeks Estimator appears on screen with the digital screen prominently displaying “Pregnant // 1–2 Weeks.*” After the next line, the commercial cuts to an image for two seconds showing three large digital screens (containing the words “Pregnant // 1–2 weeks,” “Pregnant // 2–3 weeks,” and “Pregnant // 3  weeks”) in an arc over an image of the product with the phrase “ESTIMATED WEEKS SINCE OVULATION (UP TO 3 )” in grayish blue font below the arc and above an image of the product. A voiceover says: “The new Clearblue pregnancy test also estimates how many weeks. Weeks Estimator. Only from Clearblue.” Beginning at 6 seconds into the ad, small white font appears at the bottom of the screen stating:
*Word ‘weeks’ on display is for illustration only. For home use only. Always consult a doctor if you suspect you are pregnant and to confirm, date and monitor pregnancy. Not for multiple pregnancies. Estimates weeks since ovulation up to 3  weeks. Do not use to monitor pregnancy progress or duration.

Other launch advertising was similar, with unqualified use of “weeks” and a prominent uniqueness/value message, such as “Knowing more helps you prepare for the exciting future ahead—78% of women surveyed said they believe it is important to know how far along they are.”  Mentions of ovulation were absent (as in web banners) or buried.  A celebrity spokesperson appeared as a guest on the television show “The Doctors” to promote the Weeks Estimator; she said: “I am the new spokesperson for Clearblue. It’s the pregnancy test. I am. I can’t wait to use it ... because it actually estimates how many weeks of pregnancy you’re in.” SPD argued that she spoke “off script” and was not authorized to make this statement, but internal emails revealed that SPD’s marketing firm was “beyond pleased with how well this pitched placement delivered.”
After C&D complained, the FDA reached out to SPD with concerns, noting it had informed SPD “not [to] talk about weeks pregnant” and “[p]lacing ‘weeks’ in the result window is the same as saying weeks pregnant.”  SPD proposed adding language to the TV ad’s disclaimer and removing dialogue about a doctor’s visit. The FDA found these changes insufficient for failing to “clearly state that the device can only estimate weeks since ovulation (and not weeks of pregnancy),” among other things. The FDA required SPD to take the ad down in 6 days.  SPD revised the product’s package and made a number of other changes to its ads.
The revised package, which hit stores in February 2014, put a gray strip in the top right-hand corner stating: “Only Test That // Estimates Weeks // Since Ovulation*.”  The asterisk apparently referred to the side panel Indications for Use. The digital screens used the words “Pregnant // 1–2”; “Pregnant // 2–3”; “Pregnant // 3 ”; and “Not Pregnant,” but the phrase “Weeks Along” was below them. 

SPD’s TV ad was replaced with an internet-only ad with the dialogue:
1st Woman: I have something to tell you: I’m pregnant!
2nd Woman: Really?
1st Woman: I took this Clearblue test. It’s like two tests in one.
Voice over: Only Clearblue tells you if you are pregnant and estimates how many weeks since ovulation.
2nd Woman: Oh my God, I think I’m going to cry!
Voice over: Weeks estimator, only from Clearblue.
The commercial cut to the image of the digital screens with “Pregnant // 1–2,” “Pregnant // 2–3,” and “Pregnant // 3 ” in an arc over an image of the product with the phrase “ESTIMATED WEEKS SINCE OVULATION (UP TO 3 )” in grayish blue font below the arc and above the product. Then it cut to an image of the Revised Package in the center of the screen with “Weeks Estimator” in large, pink lettering jumping out of the box, distracting the eye from the rest of the packaging. The commercial ended with the full Indications for Use statement on screen for 15 seconds, but that was the only disclaimer.  Other advertising was revised similarly.
The court found intentional deception, which is presumed to be effective.  “Time and again, SPD’s staff recognized and understood that the Weeks Estimator’s result did not align with how doctors express pregnancy duration and that this misalignment could confuse consumers. Rather than clarify its product advertising, SPD’s staff sought to exploit the confusion.”  In what is perhaps a lesson on witness preparation as well as on what judges dislike, the court commented:
SPD’s witnesses acknowledged at trial—often with considerable reluctance—the existence of the LMP convention. After one such longwinded explanation, the Court pointedly asked Dr. Joanna Pike, SPD’s Senior Global Pregnancy Product Manager, “If someone says to you or you read somewhere I am four weeks pregnant without any further explanation, what would you assume that means?” Dr. Pike, withdrawing deeper into her chair, provided a convoluted answer before finally acknowledging that “I think in general you may—you may—this, it is time since LMP because it is widely used,” which she hesitantly admitted was “[t]he truth.” The truth it was.
Given their awareness of the convention, SPD employees recognized the resulting likelihood of confusion.  Dr. Pike wrote to her colleagues:
We should not suggest in U.S. that the product tells you ‘Weeks Pregnant’ when we have been constrained by FDA to say ‘weeks since ovulation’. Indeed, even outside of US, this product doesn’t tell you weeks pregnant—if you are 1–2 weeks by [the Weeks Estimator] then you are 3–4 weeks pregnant because the universal convention for dating pregnancy is from the LMP not from ovulation.... I think FDA would NOT approve if we used ‘Weeks Pregnant’ in any materials and we are very likely to also confuse consumers and might end up with challenge/complaint.
The court didn’t accept Dr. Pike’s explanation that she was conveying the FDA’s views, not her own.
Members of SPD’s U.S. Advisory Board also highlighted the likelihood of confusion. One Board member stated that it was “important not to contradict this clinician-defined measurement,” while another raised concerns about the digital display screens containing “Pregnant 1–2,” etc., noting: “Need to be clearer what this means, i.e. from time of conception NOT LMP, we are Not saying what we are doing.” Another indicated that they might change how pregnancy was counted, but that it would be an uphill battle.
The TV ad was the “most glaring example.”  An internal SPD PowerPoint described the ad as “Best Friends with the insight of knowing it before the doctor visit.”  SPD’s market research revealed that viewers believed the product could tell a woman how far along she was before she went to the doctor.  This necessarily implied that the product would provide the same estimate one would get from a doctor’s visit.
In another lesson about communicating risk, even internally, ClearBlue’s Worldwide Marketing Director, Ryan Daly, told his colleagues: “I know we are being told by some that the FDA will be waiting for this ad, but I really struggle with that given their setup ... they have a pharma ad division but none for [over-the-counter products]. Net, I view the risk as low.” The court interpreted this as a statement that “the likelihood of getting caught airing an ad that contravened FDA requirements was minimal because the FDA did not have resources to police advertising for over-the-counter products.” (Of course, the FDA ultimately did object, despite its lack of resources.)  Daly was, however, concerned that the networks would find the ad unsubstantiated because “some [networks] could get shy should they read the entire intended for use statement. So for this, I think we need to be very careful ... I want us to see everything that we plan to send the TV stations. Only give them what they ask for.”  So rather than give the networks the full Indications for Use statement—less than a page long— SPD gave the networks a substantially truncated version that omitted the warning: “Your doctor determines how many weeks pregnant you are based on the first day of your last menstrual period and ultrasound results. This test provides a different estimate that can not be substituted for a doctor’s determination of gestational age.” Daly could not explain how the ad communicated the message that the product’s estimate is different from a doctor’s estimate.
Again, the court was unconvinced by Daly’s explanation at trial that he was just concerned about overwhelming the networks with too much information. Among other things, SPD also used the truncated version of the Indications for Use as the “super” at the bottom of the screen.  The court also noted “his description of something referred to internally as the ‘Bedford puke,’ an apparent shorthand for the dangers of providing too much information to regulators and broadcasters,” as well as his minimization of the extent of advertising by saying that accused shelf trays were shipped only to a single retailer.  That retailer “just happened to be Target.”  
SPD’s employees also discussed creating a backup ad “that correctly identified a key problem with the ad”: “Back up plan is Best Friends with no mention of ‘knowing before doctor visit.’”  Clearblue’s Brand Manager Kirsten Suarez responded “Can we not wait to receive a letter [from C&D] and then edit? I’m guessing we’d have time between receipt of the letter and actual need to traffic in new copy/pull from the networks.” Again, the court was unpersuaded by her later explanation that she wanted to refer to a doctor to encourage women to get prenatal care.  “[T]hese communications show that SPD staff knew precisely what was false or misleading about the commercial, but they chose to air it anyway.”
Suarez made “other troubling statements about the Weeks Estimator’s advertising that suggest a deliberate attempt both to evade FDA limitations and convey a false message about the product.”  E.g., “One last thing, we can’t actually link together the weeks and pregnant in the way it was on the last couple. What you can say is the only test that estimates weeks, or the only test that also estimates weeks, then the consumer will see Pregnant 1–2 Weeks in the windows and put it together.” The court therefore concluded that SPD “knew that placing the word ‘pregnant’ in proximity to ‘weeks’ would suggest that the product provides an estimate of weeks pregnant,” just as the FDA then told it. 
Suarez recognized that SPD couldn’t say the product estimated “how far along” a woman was, but suggested including survey results indicating that women want to know how far along they are because “[w]e can’t say we’re doing it, just that women want to know.”  She responded to a suggested use of “Find out how far along you are,” with: “This is a tricky one, but the FDA doesn’t actually want us to say that. I think it can be phrased as a question as you had, or we need to use the ‘estimate weeks’ language.”  Further evidence that marketers know and take advantage of what Lanham Act jurisprudence often does not: there is no clear express/implied distinction, and it’s easy to set up a message that works at least as well, if not better, than an express claim.

SPD also understood that consumers didn’t have a good understanding of ovulation.  As Suarez stated, “Trust me, it doesn’t really make sense to [consumers]. … [T]hey don’t have a knowledge of the right days, poor understanding of the details, etc. and it’s not common vernacular of how we would talk anything.”  That’s why SPD didn’t want to use “ovulation” other than as absolutely required.  (I still don’t get why they didn’t just add 2 to their estimate, like everybody else.) A summary of a meeting between SPD employees and its outside marketing firm included the observation that “[o]verall lack of consumers’ understanding of ovulation may cause confusion. Need to address the reason why [healthcare providers] use different method without saying it is wrong or suggesting that Weeks Estimator takes the place of seeing [a healthcare provider].”
SPD “repeatedly suggested that it had tried in vain to include a conversion chart on the outside of the product’s packaging that would mitigate consumers’ confusion regarding how the product’s estimate of weeks differs from a doctor’s estimate of weeks pregnant.” SPD first said that the FDA had forbidden it from doing this, then that it understood the FDA’s instructions as requiring removal “of all performance information concerning the estimation of weeks function, including the Conversion Chart.” Then SPD said that this determination required a “deep” read of the FDA clearance letter. 
“Because SPD often overstated other instances of the FDA and broadcasters ‘requiring’ or ‘mandating’ as opposed to ‘permitting’ or ‘allowing’ certain conduct, the court didn’t credit SPD’s explanation, and the court’s own reading of the clearance and hold letters didn’t indicate that the FDA intended to prohibit SPD from including the conversion chart on the outside of the box.  Plus, SPD often pushed back against the FDA on other changes, but didn’t ask it to clarify about the conversion chart or argue to the FDA that the conversion chart would aid consumer understanding.  In any event, SPD’s own people were concerned about confusion even when the conversion chart was on the outside of the package.
The court also noted that “SPD’s intentional deception extended to other aspects of its advertising not directly relevant here, such as touting the fact to U.S. retailers that 15% of European purchasers of the product had used the product to track their pregnancy despite the FDA’s explicit restrictions on making such statements.”
C&D scored a hat trick: the ads were unambiguous and literally false; even if the ads were ambiguous, SPD’s intentional deception gave rise to a presumption of consumer confusion; and C&D presented evidence of consumer confusion.
The literal falsity here was by necessary implication.  “Considered together, the name of the product (‘Clearblue Advanced Pregnancy Test with Weeks Estimator’) and the digital screens (‘Pregnant // 1–2 Weeks,’ etc.), without any clarification, necessarily imply that the product tells a woman whether she is pregnant and, if she is pregnant, how many weeks pregnant she is.” Further, the product was an OTC test marketed to women for use before they see a doctor.  “[I]n the context of a home pregnancy test that also provides an estimate of ‘weeks,’ the overriding message to consumers is that this is an estimate of weeks pregnant that is consistent with a doctor’s estimate of weeks pregnant.”  This unambiguous message was false.
The presence of the full Indications for Use statement on the side of the package did not change the package’s literal falsity.  “[T]he entire statement is 206 words long, separated into four paragraphs, and printed in minuscule font. Stacey Feldman, C&D’s Vice President of Marketing for Women’s Health and Personal Care, credibly testified that in her experience very few consumers will read the Indications for Use statement on the side panel.” Many courts have disregarded a footnote or disclaimer in fine print, and this one couldn’t fix the literal falsity.  Nor did the package insert fix the problem; along with being in fine print, it was only available after a consumer bought the product, and many consumers wouldn’t review it, especially because of the extensive ad campaign to which they’d already been exposed.
C&D also met the standard for showing implied falsity because of the deliberate deception. The burden shifted to SPD to show that confusion was unlikely, but SPD didn’t.
Indeed, C&D had evidence of both actual confusion and likelihood of confusion. An April 2014 CBS affiliate news report reported that an expectant mother who had purchased the Launch Package believed the product provided an estimate of weeks pregnant that was consistent with how her doctor would estimate weeks pregnant. The woman became concerned, wondering if her “baby was not developing correctly,” when her doctor told her that she was further along in her pregnancy than the estimate provided by the product.  SPD knew about this story, but chose to do nothing to address the confusion.  However, the court disregarded 310 non-US complaints made to SPD’s consumer care line; only 17 of the remaining 30 showed a mistaken belief that the product estimated pregnancy duration the same way a doctor would. This was a small percentage of the nearly 1.9 million Weeks Estimators sold in the US over the relevant period, but that fact didn’t favor SPD either, “because many deceived consumers may not even know about the care line or may not be inclined to call it.”
C&D also presented a consumer survey concluding that roughly 20% of consumers thought that the product’s estimate of weeks was the same as a doctor’s estimate of weeks pregnant.  The export, Hal Poret, conservatively “assumed that a respondent was deceived only if that respondent answered both that the Product estimates the number of weeks a woman is pregnant and that the Product’s estimate of weeks is the same as a doctor’s,” but even so this was a substantial number of consumers.
The revised package and ads didn’t help.  Even disregarding the issue of whether consumers understood the added references to “ovulation,” they were still implicitly false.  SPD’s past intentional deception mattered, even though “an advertiser who has learned the error of its ways and has modified its advertising accordingly should not be forever held to account for prior instances of bad conduct.” Still, “evidence of prior intentional deception may be probative of whether subsequent corrections were sincerely implemented.”  SPD added “since ovulation” to the package, but it wasn’t prominent, consistent with SPD’s dislike of the term.
Regardless, Poret’s surveys also showed that between 16-17.3% of consumers were still confused by the revised package, which was enough for deception.
The court’s analysis of the other ads proceeded similarly. In the TV ad, for example, “[t]he dialogue between the two women only further augments this unambiguous message when the first woman states that she knows she is two weeks pregnant despite not having gone to the doctor yet because she used the Weeks Estimator. This exchange communicates to the viewer that the woman received the same estimate of weeks pregnant from the product that she would have received had she gone to the doctor—which is false.”  The super was of no use, not only because SPD intentionally omitted clarifying language, but also because it was “in small, whitish font that blends in to the white background such that even the Court failed to notice it upon first viewing.”
After falsity, materiality was simple, given SPD’s marketing.
Injury: with literal falsity, no further extrinsic evidence of injury to the plaintiff is required. Moreover, C&D provided evidence showing a logical causal connection between SPD’s false advertising and its own sales position. C&D’s market share in terms of dollar sales for its First Response product had been steadily growing for over a decade. Clearblue’s market share, by contrast, went from approximately 16 dollar share points at the beginning of 2012 to 12.5 dollar share points in August 2013.  After SPD’s extensively advertised launch, Clearblue gained significant market share while First Response lost it.  C&D’s expert credibly testified that this sharp change couldn’t be attributed to any product feature other than the central weeks estimator.  SPD’s internal marketing documents agreed, as did C&D’s market research.
SPD argued that C&D should have conducted “rigorous” regression analysis to control for independent variables.  This argument would be more appropriate in the damages phase; C&D only needed to show a “logical causal connection” and need not “come forward with specific evidence that [defendant’s] ads actually resulted in some definite loss of sales.”
The court noted that, “at $2.6 million in annual sales per dollar share point, even the loss of just one dollar share point is significant in terms of revenue.”  Plus, it was likely that C&D’s countervailing response, such as offering rebates, mitigated the decline in its market share.  SPD’s expert posited that the Weeks Estimator’s exciting new feature grew the market as a whole, meaning that C&D’s dropping market share was less harmful, but “[e]ven if the whole pie grew because of the new product, but C & D’s share of that pie grew at a smaller rate than it would have in the absence of SPD’s false advertising, C & D would still have lost sales on account of the false advertising.”
A finding of false advertising here also furthered the policy of having the Lanham Act and the FDCA complement each other, “allowing the expertise, perspective, and resources of market competitors to augment those of the FDA.”  SPD was willing to take the risk here given its perception of limited FDA resources—a fact that also came up in Pom Wonderful.  The trial confirmed Pom Wonderful’s statement that “competitors who manufacture or distribute products have detailed knowledge regarding how consumers rely upon certain sales and marketing strategies. Their awareness of unfair competition practices may be far more immediate and accurate than that of agency rulemakers and regulators.”  The FDA didn’t have the benefit of C&D’s surveys and additional evidence, revealing additional confusion.
On to permanent injunctive relief.  Irreparable injury/inadequacy of damages: The parties compete directly, and there’s a logical link between SPD’s false advertising and harm to C&D. Moreover, SPD’s disputes about C&D’s need to control for numerous independent variables in establishing its damages “demonstrates the difficulty of fully quantifying the loss of market share that C & D suffered as a result of its direct competitor’s false advertising.” 
Plus, both parties position themselves as “innovators” in the market.  SPD’s internal marketing documents revealed that the TV ad produced a “halo effect” for the Clearblue brand overall.  “[I]t is difficult if not impossible to quantify the harm to C & D caused by SPD’s falsely advertising its product as possessing an innovative feature that it did not in fact possess.”  Further, false advertising in a product category “may cause harm to that category as a whole. Consumers who purchase the Weeks Estimator and then learn that it does not actually estimate weeks pregnant the way a doctor does may lose confidence in home pregnancy tests as a whole and may question innovative features offered by other brands.” Thus, it would be hard to measure C&D’s loss of market share, goodwill, and brand equity.
Balance of hardships: SPD had no protectable interest in its false advertising.  Public interest: greater clarity in advertising certainly wouldn’t harm the public interest.
Thus, SPN was permanently enjoined from “communicating—either literally or impliedly—that the Weeks Estimator provides an estimate of weeks pregnant that is the same as a doctor’s estimate of weeks pregnant.”  The parties were to meet and confer to see if they could agree on specific language for the order.  The appropriate language would extend to messages conveyed, not to specific pieces of advertising.  SPD was required to recall all initial and revised packages currently on store shelves; this was a burdensome requirement, but appropriate in light of the nature of the product and the degree of SPD’s intentional deception.  The court would also consider ordering a corrective advertising campaign “to explain the difference between the product’s estimate of weeks since ovulation and a doctor’s estimate of pregnancy duration based on weeks since LMP.”

Wednesday, July 01, 2015

UK ad regulator disapproves of negative puffery

One big difference between the US and the EU in comparative advertising is that what we would consider negative puffery, like "overpriced," the EU bans as not sufficiently objective.  In this ASA adjudication, the advertiser both ran a review site that looked too much like it was independent, despite a footer at the bottom of every page, and also slagged off the competition in ways the ASA concluded were not allowed:
We considered that, as reviews of competitors' products on a site operated by Pandle, the content of those reviews were part of a marketing communication for Pandle and were therefore subject to the requirements of the CAP Code, which stated that comparisons with identifiable competitors must not be likely to mislead about either the advertised or competing product. The review of Crunch commented on a number of features of the product, including speed, reporting and price. We did not consider that it made clear the basis was for the various claims made for those features such as the speed being "slow", the reporting capabilities as "small" and the price as "high" and the product as "overpriced" and that it was not obvious from the context. We considered that the subjective nature of the terms and language used meant their meaning was ambiguous, and that they were therefore likely to mislead traders about the features and price of the Crunch software. The Code also stated that comparative ads must objectively compare one or more material, relevant, verifiable and representative feature of those products. The review of Crunch included subjective language such as "overpriced", "A bookkeeper or other professional would not use this software for their clients, as they would probably lose money with the time it takes!", "The pricing is high", "we remain sceptical as to whether it's just a novelty or does genuinely save time" and "overpriced compared to other options available" (as well as more positive comments such as "the software looks pleasing to the eye"). We considered that, in the context in which they appeared, those claims were neither objective nor capable of verification ... and therefore concluded that the ad breached the Code.

Tuesday, June 30, 2015

Trademark scholars roundtable: the consumer in different contexts

Session 3:  The Consumer in Different Trade Mark Contexts
Do the questions that we have looked at in the first two sessions vary in different trademark and adjacent contexts? Is assessment of the reaction of the average consumer in trade mark law the same assessment that is performed in examining consumer reactions in the context of passing off or unfair competition law or consumer protection or trade practices law? For example, can we compare the doctrinal apparatus surrounding the “average consumer” now at the heart of EU trade mark law with the means of determining the reaction of a “substantial proportion of the public” test under common law passing off jurisprudence? Is this useful? Does it tell us anything about the (actual or potential) roles for complementary bodies of law in this space? Even within the body of trade mark law proper, is the construct of the consumer different in registration proceedings as opposed to infringement contexts?
Introduction:   Ansgar Ohly: The notion of average consumer in unfair competition and right of publicity/right of personality (German law).  Unfair competition: development of the notion in European law and relation to TM law.
Notion of average consumer has origins in unfair competition law, 1984 Directive against misleading advertising, and also in cases involving free movement of goods. W/o harmonization, standards for advertising were different—protection very strict in Germany, 10-15% misled = sufficient for misleading. Some saw this as undue restriction on free movement. ECJ decided it was disproportionate to ban misleading advertising where an average consumer wouldn’t be misled. Originally created as a harmonization device.
Some complain that average consumers aren’t as sophisticated as ECJ assumes.  Directive on B2C relations: defines average consumer as one who’s reasonably well informed and reasonably attentive/circumspect, taking into account cultural and linguistic factors. There must be consumer relevance: the consumer must be caused to take a transactional decision which he or she otherwise wouldn’t have taken.  ECJ stresses Directive is committed to higher level of consumer protection—much more protective than it used to be.  Purely Creative/Office of Fair Trading about aggressive sales practices. Reminds one of 1970s German case law: consumers ar easily misled.  Also, causing confusion is misleading advertising.
27 of 28 provide civil law remedies, except the UK, to enforce the Directive, so competitors can bring a private action. Evident problem of overlap in most countries. German SCt: Hard Rock CafĂ© in Heidelberg—not licensed by the Hard Rock Group.  How can this be?  He was there before they were, early 1980s when there was only a London Hard Rock and not a protected TM. He has older rights and also there’s an acquiescence issue. But if you ask whether there’s an issue of consumer confusion, then yes: tourists particularly.  (German © law would not cover the Hard Rock logo, which he used.)  Conflict b/t TM logic and unfair competition law: German SCt decided that TM logic prevailed and that TM logic needs to be taken into account in unfair competition analysis, even though Directive does not have exceptions or provisions for balancing competing interests.
TM law: in past, would’ve said TM was less fact specific and more formal, looking at similarity of signs, similarity of goods, and distinctiveness of the mark, and not much at what the consumer does in particular circumstances.  However, TM law might become more unfair competition-like: (1) keyword cases.  Needs to be inquiry into “adverse effect on the origin function,” and such an effect is assumed if ad suggests commercial link or is so unclear that consumer doesn’t know.  Duty of providing information = unfair competition concept. (2) Specsavers: using factors external to the register are taken into account in confusion inquiry. Less certainty.  Risk of overprotection. But also makes clearer what the functions of a TM are and you may avoid overprotection/protect only when there’s a real likelihood of harm.
Personality/merchandising rights: German law is much closer to US law than English law.  German = personality right protecting privacy and publicity at the same time, monistic. UK = no right of publicity, so only way to protect Rihanna against sale of T-shirts w/her image is to use passing off, which requires confusion.  Rihanna: High Court decided this was passing off, on the merit of those particular facts, b/c there had been a previous relationship w/Rihanna and Top Shop. So consumers might think she was behind this particular campaign.  At pains to stress this was very fact specific.  Contrast b/t passing off approach and German law. He thinks: if you want publicity rights you should say so; looking at the consumer clouds the issues of a monopoly right over use of name/image. Doesn’t think consumers care whether T-shirt is official or unofficial.  Either choose IP or nothing.
Rebecca Tushnet

US: average consumer is target consumer; 10-15% can be sufficient.  Accidental convergence or rough justice at least from a Western perspective?  Idea of considering alternatives: what could the advertiser have done instead to communicate its message?  In TM, we say the alternatives are infinite so we don’t need to worry about losing information from suppressing a particular use, but that might not be true. In false advertising we should worry more: if there’s a truthful message received by 50%, we might not want to suppress it if suppression reduces confusion to 5% but also reduces comprehension of the truthful message to 5%. Richard Craswell’s work on this is excellent.
Jennifer Davis persuasively argues that changing economic and social conditions allowed the courts, in trade mark cases, to abandon a view of consumers as heterogeneous and divided by class, education and income and instead to assume the existence of an average consumer whose perceptions were key.  I want to reiterate my call to think of consumers and not the consumer—the plurality/bell curve concept is logically independent of the idea of treating consumers differently in different contexts, but I think that conceiving of consumers in the plural more easily allows us to adjust to different contexts, such as the nuclear reactor not run by Homer Simpson.  Also, though Barton Beebe as usual insightfully criticizes the way that the shift to variations among TMs, not variations among consumers, has become more central to TM tests, I think there’s also a role for seeing the consumer change as she moves through her day.  The marketing and psychological evidence does suggest many contextual determinants of attention and choice, though how that can fruitfully be translated into TM cases remains to be seen. Indeed, I’ll suggest that the marketing evidence might disrupt the project of TM law as distinguished from unfair competition/false advertising law law.
Surveys in false advertising cases: Part of a general pattern of offering a rich account of the reasonable consumer and what s/he cares about and what she doesn’t care about, even when the cases don’t involve surveys.  Individual buyer testimony is relatively more common, and the buyers get to tell their whole stories—why they made the decisions they did, or at least why they think so though they may not have great insight into their own motivations and they too are of course affected by what we’ve been calling the Heisenberg principle that asking the consumer changes how the consumer thinks.  But regardless, we do get a more 3D picture of the consumer in the false advertising cases because of the concept of materiality: TM law structurally isn’t set up to offer this thicker account of consumer decisionmaking.  One reason, I think, is because many times the TM would be part of what doesn’t matter to most consumers, so the account of the consumer compressed only into her response to the TM is inherently contradictory: it is at least not empirical.
US false advertising law has taken a very different approach to surveys from US TM law, dividing cases sharply into those involving literal falsity, where no other evidence of consumer reaction is required, and implicit falsity where only survey evidence—and usually not expert testimony or testimony from individual consumers—is considered sufficient.  Doctrines exist to blunt the force of this division and it doesn’t work that well in my opinion, but it’s notable that this is essentially a cost management doctrine: surveys aren’t worth their costs in many cases where the message is clear.  It’s not a normative decision but an empirical one, in the division we’ve been using.  So the consumer is notionally the same consumer as we confront in TM but we have different ideas about how to figure out what she’s thinking when it comes to false advertising instead of TM.  We could instead try to ramp up the evidentiary requirement in certain troubling infringement cases, as apparently the European courts have done in dilution by requiring proof of an economic effect on the mark—it wouldn’t be that the consumer differs, but that our confidence in whether we can determine the outcome without a greater investigation into the specifics of the plaintiff’s particular consumers differs.
Another specific type of consumer I would like to discuss is the consumer we reject: Found in the context of counterfeiting cases (or even post-sale confusion cases, such as the Atmos clock case in the US).  She’s the bad consumer: the one who is seeking counterfeits. Reaction of this consumer is generally excluded from our averaging process—not a matter of comprehension, but a matter of valuation.  She knows quite well that she is not getting the authentic version and doesn’t care.  She fits on the “nonconfused” end of the spectrum, but it turns out that we don’t just want a 2-dimensional spectrum; we exclude her and shift our inquiry to the more easily confused.  (She is also the only defendant-side consumer whose existence is routinely acknowledged, which makes things even rougher on defendants, pace Mike Grynberg’s work.)
Primary Discussants:    Graeme Austin: Typical C&D in NZ says we’ll get you for passing off, TM infringement, and violation of consumer law. Many cases: courts just work through those causes of action.  (Google keywords was litigated as consumer protection matter, not private cause.)  Array of similar causes of action. 
Coherence: we lack a coherent approach to unfair competition, but Australia wants coherence in all private law.  High Court has said this is an important value.  We should try to achieve coherence between common law and regulatory/statutory law.  In a case expanding TM owners’ rights, Australian court said: policy of TM Act shifted balance of objectives of TM more toward identification and protection of TM owners than the protection of consumers, though that remains an objection. Misleading conduct laws also protect consumers. Reasoning: consumer protection law does the necessary job of protecting consumers, so TM can shift more to producers.  Jigsaw: different statutes doing different things; TM is buffered by modern regulatory laws directed at consumer welfare.
Licensing arrangements/settlements: these can affect consumer welfare, but we don’t police them against misleading/deceptive conduct. Maybe, if those private arrangements result in misleading consumers, we should look to consumer protection and not TM (RT: which would lead to the end of the naked licensing doctrine).  Divergences b/t Aust. and NZ: NZ law says consumer protection shouldn’t override TM law, but Austl. allows consumer protection to pop up in copyright etc.  History of consumer protection law in Aust/NZ: NZ took the Australian Trade Practices Act prohibition against deceptive practices, then added broader consumer protection laws, borrowed by Aust. in recent laws—sense that traders should be subject to one body of law. Interestingly, TM laws of both countries have some significant divergence; parliament is not seeing TM as part of this jigsaw of consumer protection.
Compare statements of statutory purpose: TM statutes are about TMs, not consumer protection. Reflects historical position that consumer confusion isn’t the only game in town. 
What does this say about relationship b/t TM and consumers, and fundamental purpose of TM law?  Dogan described purpose as lowering search costs/enhancing competition.  Wonders if thinking about TM as part of a cluster of laws that go to information in the marketplace would change that.  Consumer information story: can it be downplayed when there are other consumer protection laws surrounding it?
Remedies: seeing in IP flexibility in the remedies, and that’s possibly a good thing for balance.
Finally: other torts, like negligent misstatement—there the liability is conditioned on reasonable reliance by the recipient on the information.  Normative tool for balancing risks of speaking in the market: the speaker is not the insurer of the recipient of the information. Something to borrow for TM law? The consumer needs to do some work.
Stacey Dogan: Search costs v. other goals: struggling w/role of search costs/competition in TM in the US.  Can’t generalize, but thinks there’s a tension between economic model and TM law in practice which reflects normatively impulses that can’t be explained by the economic model—anti exploitation.  (She calls it economic model b/c if you say “search costs” people get hung up on that and miss the ultimate goal.)  “Taking unfair advantage” doesn’t seem explainable on any economic basis: more like natural rights. Parallels in US law. Economic model is very appealing in that it suggests why we protect TMs and also suggests limits on TM, but may be descriptively inaccurate for many doctrines.
Annette Kur: procedures are not harmonized/type of enforcement is diverse and different courts decide, so in practice harmonization becomes very difficult.  Better to have it all in one law.  Coherence in the way Austin described works if the use of the TM owner is regulated by consumer protection acts.  Something that TM law allows the proprietor to do may still be prohibited by consumer protection law.  But what about Hard Rock? Much more difficult. TM law admits there is a conflict, but there are rules, like priority. From a systemic point of view, we accept the conflict w/unfair competition law.  No good & coherent solution to be found if you have two different legal acts regulating the same behavior. Need coordination beyond a general principle of leaving consumer protection to other laws.
Austin: that was part of my point: we need to give more attention to how TM fits into the consumer protection scheme.
Kur: the bad consumer—in European law we “solved” that problem by saying we don’t care about her b/c we don’t need likely confusion by applying special rules for counterfeits/double identity. Does that solve the problem? It at least deals w/it practically.
Sir Robin Jacob: Ohly said TMs were less fact specific than unfair competition; many times that must be so b/c the registered marks aren’t in use, maybe on both sides. But once there is an actual mark in use suing another use, they may look at the facts on the ground: which is what happened in Specsavers.  But so many TM fights are indeed shadowboxing. We should pay less attention to that kind of case. 
When you have TM comparisons, registries start developing formulae for TM comparisons. And they tend to be ridiculous rules.
British perception of Germans: Germans thought any TM was an infringement of another mark.  Terrapin and Terranova: confusing?!  But that has changed.  Introduction of average consumer did send a message.  But we’ve now made a hell of a mess about the average consumer, when really all the court had in mind was to exclude outliers—there’s a range of average consumers.
10-15% is quite serious—6 million people in this country!  Figure should be lower. But we must be sure they are being deceived, b/c mostly consumers aren’t as stupid as courts/TM offices think they are. 
Enforcement: we’ve made a mistake b/c the best person to look after the deceived consumer is the deceived consumer; we need a cause of action beyond malicious falsehood.  Must allow advertisers to be a bit hyperbolic.
Dev Gangjee: Functional definition of consumer—consumer as citizen where information is a tool; rational consumer in contract law; etc.  Less pressure to go for a single idea. But if we see TM as part of broader ecosystem, and it’s ok for other areas to do the heavy lifting, what’s left of the idea of the consumer in TM?  If meaningful engagement w/consumer is happening elsewhere, are we back to consumer as alibi?
Bill McGeveran: Q of who is the victim in various areas of law: in various areas, we’re no longer looking out for the consumer—e.g., right of publicity.  Without consumer in TM, to what extent would similar interventions have occurred to protect producers/people currently deemed TM owners?  Judge Frank in Haelan who splits privacy and publicity rights and says we need to protect them both.  Nothing in that case on the effect on purchasers of baseball cards.  What law would remain w/o consumers? Would it look all that different?  Consumer may be post hoc rationalization/stalking horse for other interests.
Laura Heymann: Hard Rock: was there any discussion of a possible disclaimer?
Ohly: not an issue b/c court said TM law/acquiescence trumped consumer protection. Few other cases mostly involving the internet did use disclaimers.  We could end up in Arsenal-type situation where we put up a sign and the ECJ says a clear disclaimer is immaterial to TM law. But now it has effect in unfair competition.
Heymann: though we know disclaimers are often ineffective.
Ohly: also very hard to do here specifically: the Hard Rock logo is so recognizable that it’s hard to dissuade consumers.  Court distinguished b/t ongoing operation of restaurant and sale of goods: each sale is a new infringement—so they can’t sell merchandise any more b/c it’s a new TM infringement each time.
Kur: it’s true many TM conflicts are not real world conflicts and the rights are broader in the books than in reality.  Brings us back to distinction between registration and infringement.  But should that lead to a situation where the legal principles we apply differ as between the proceedings?  [RT: The way this conversation is going indicates that we have been using the consumer as a concept to pack in other issues; very little in this discussion is about the consumer.]  For systemic reasons, we don’t distinguish in our black letter law.  TM: Like requiring a distance between cars to avoid crashing.   Unfair competition: geared towards a materialized crash, thus geared more towards examining precise circumstances of crash; scope of protection turns out to be smaller.  (RT: This metaphor raises the ‘congestion/we are building too many highways/we are encouraging too many people to buy cars’ issue pretty clearly.)
Graeme Dinwoodie: if you took the consumer out, what would happen?  We could shrink TM so it wasn’t trying to protect the consumer, but maybe that would broaden the scope of TM rights—paradoxical. 
McGeveran: my prediction as well.
Austin: More nuanced—protection of consumers remains an objective, just shifted.  [RT: also wouldn’t you still need the consumer to evaluate scope, if you were at all interested in actual confusion or dilution?]
Dinwoodie: use can expand scope (Specsavers) or to restrict/confine the scope of the mark. Should we have a unidirectional rule?  Sanctity of register v. consumer protection point in different directions.  Without use after 5 years there’s no need to maintain stuff on the register.
Barton Beebe: Does the US even have TM law, as defined by this slightly more formal approach taken by Europe?  We seem to be unfair competition, very fact-specific.  Much less shadowboxing.  More a question than a claim.
Dinwoodie: our casebook completely assimilated §§32 and 43—effectively the same.
Litman: the first and second edition of our book came out before Two Pesos; there were different rules then.
Beebe: now we tell our students there’s no difference in infringement standards between the two.  (And they ask why we made them learn all the registration stuff!)  Jacob’s criticism of niggling rules for TM offices; but wouldn’t it be worse without these rules?
Jacob: they’ve never had clients, they’re isolated—they’re a kind of monastery.  But you have to understand that the rules are artificial; general courts have less excuse [for deferring to them?].
Beebe: we don’t squarely address commercial ethics/morality in the US, possibly set to the side. TM law without God, secular and utilitarian?  Or talking to God directly, without rules.  At the same time, morality sneaks back in through general sense of fairness. 
UK has no misappropriation law as such: you must show misleadingness to win misappropriation; there’s no raw misappropriation.  What about fairness?
Jacob: it’s legitimate appropriation.
Dirk Visser: or you come up with another thing to call it, like the Rihanna case—just deny there’s a misappropriation theory underneath it.
Jacob: old English libel case, Tolley v. Frye, 1935.  Amateur golfer and chocolate co. published an ad implying endorsement, and golfer sued for libel saying people would think he was taking money for that. He won.
Jennifer Davis: TM, unfair competition, and consumer protection law are 3 quite different things in some ways.  UK 1862: first consumer protection law, while unregistered TM law already existed to protect traders’ goodwill.  1875: first registry bill, b/c traders wanted international reciprocity.  UK: w/out registration, test is whether goodwill has been affected, and one way of finding that is confusion, but there are different ways of thinking about consumers reflected.  Though in practice the confusion might be pretty much the same.
Jacob: I used to say that if there was no passing off there was no infringement as a general rule.  An unused registered mark was another matter.

Davis: empirical evidence: we have split cases deciding liability and then damages.  One of the reasons we avoid empirical evidence so much may be because in the first action we don’t have to show any actual damage.
Jacob: have to show it’s likely.
Davis: but never have to quantify. [But this is also true in the US, for injunctive relief.]
Jacob: most countries split liability and financial compensation.  US often puts them together which doubles the size of the case/changes the whole dynamic.
David Llewellyn: too bad for Hard Rock.
Ohly: but what about the consumers?
Llewellyn: consumer protection law, the consumer is a party or there’s a representative body there for her. We shouldn’t forget that the consumer isn’t represented by the TM owner; not a party to the litigation. This is a commercial dispute; consumer protection law is philosophically very different, and we shouldn’t elide the legal differences.
Cases treat passing off as an add-on.  But statute says likelihood of confusion for infringement; passing off is about/should be about deception, not likelihood. There is a conceptual coherence if you look at them as serving their own functions.  But judges here throw them all in and in the US they do too.  Complete mess.  [Though §43(a) says likely confusion too!]
Mid-point summary:   Robert Burrell: TM infringement as precautionary principle: When you’re acting as an attorney you think you’re acting on the precautionary principle, trying to carve out a space for your clients just in case. So when you register for “software” in general, you think you’re protecting your client, not massively inconveniencing other traders who make completely different kinds of software.
TM law and other actions: registration based systems: quite often when we want to expand protection we jettison discussion of consumers and talk about property rights/fairness/dislike of copying.  Confusion is usually the end of discussion when we talk about consumers, but what happens when we want to impose a limiting doctrine?  We use the average consumer to say there’s no liability, but really she might be and we just don’t care. Lack that vocabulary.
Excision of class distinctions in average consumers.  Need to be careful—illiteracy still exists. If we try to unite consumer protection & TM, keep in mind the other functions of consumer protection law, like regulating payday loans. Careful about letting difficult-to-confuse consumer in TM filter back to consumer protection so the consumer is expected to read and understand a bunch of 6-point type.  [Confusion about what? That question can really help, I think—numeracy is generally low, but brand understanding may be high.]
There is a technocratic element to TM law. When judges are setting rules, they have to be applied by lawyers and bureaucrats, and common understandings develop.  Don’t pretend a small/medium enterprise routinely looks through the TM register; it’s lawyers.  So when we think about rules, bear in mind the rules are applied by people who are immersed in the sytem to people who are not.  Having 3 clear factors is better than “just look at it” given 10s of 1000s of marks and the desire for some consistency.  Also remember the speed at which examiners turn over.  Examiners are often there for only a year or two; they need a set of rules to apply.
Double identity: you abstract away from the actual use sign; you abstract away from the goods to the registered goods; then we have double identity; then we have likely confusion—we’ve gone very far in our precautionary principle—too many layers of precaution.  Practice of industry: lawyers register everything possible; then next layers of precaution pile on.
Michael Grynberg: Problem of multifaceted consumer. The empirical consumer might be the metric of liability, or delineation of property boundary; the consumer as end or policy goal. “Public” or “citizens” might be a better term. Intermingling of conceptions of how consumer should be—divorcing policy priors from that construction is difficult. Go to another regime, raise independent question of what we want that law to do and whether that affects the conception of the consumer.
Another issue: transparency. If we have an IP right, we shouldn’t dress it up as unfair competition, as Ohly says, when the confusion narrative doesn’t hold up.
Coherence: do doctrines fit or overlap [or conflict]. Do we need to interpret different regimes in light of each other and do we need different consumer constructs for each?  [The more I hear this the more troubled I get. The consumer is the same person facing the different regimes. If we want any empirical element, we need to deal with that.]  We don’t always need the construct of the consumer even if the consumer’s public/policy face is present—that’s one role of shortcuts in some doctrines.  We don’t necessarily need to evaluate ideal consumer’s likely confusion.  Given the difficulty courts have of isolating what they mean when they say ‘consumer,’ this multifaceted consumer does need to be contained. One way: doctrines that act as constraint—we don’t go to false advertising surveys if we have literal falsity.  ACPA: doesn’t require consumer confusion if there’s cybersquatting.
Even if courts stop playing games w/ consumers, there are plenty of other heuristics to play with. Even if we had a vision of the consumer we all accepted, the uncertainty/fudging could be shifted to another realm, like confusion.
Michael Handler: Feedback effect: TM expands to consider passing off issues in Australia, then passing off expands to catch things like character merchandising.  Complicates a clean delineation of what the statutes are intended to do. 
What it means for registration in Aust.: The standard of confusion for registered marks is if consumers would “wonder” if there was a connection—very low standard.  Often the case that 250-paragraph judgment with 220 paragraphs looking at market and finding no passing off; then a few more para. saying the standard is lower for registration and thus there’s TM infringement.
Jacob: suing for registered TM infringement v. also adding passing off is a huge decision.  Arsenal case: Arsenal should never have sued in passing off, because they didn’t have evidence of deception.  If they’d done it on TM infringement alone, they’d have needed no evidence—same mark, same goods, done.   Favorable facts: then you add passing off and get emotional impact.
Discussion of protection for generic/descriptive terms against confusion: McGeveran: American example of Blinded American Veterans.  If there really is confusion, should the law act?  Then-Judge Ginsburg used unfair competition principles to say it’s generic, but there’s bad will and resulting confusion.  But this isn’t a pop-up enterprise; it has long established goodwill/attempt to divert it.
Heymann: Remedies—you can use the term but you need a disclaimer. Similar with Murphy bed—you can use the name, but can’t call it the “original.”
McGeveran: pointed to as example of why you need some rump non-TM unfair competition law, whereas in most cases there’s complete overlap.
Dirk Visser: is intent more important or likely confusion?
McGeveran: Good question—case talks about both.  (RT: NY Ct App case in famous marks case of Bukhara requires bad faith; confusion alone wouldn’t be enough and that’s an analogous situation.)
Grynberg: more cited by law reviews than cases; extreme situation.
Litman: incoherence: secondary meaning doesn’t count b/c it’s generic, but secondary meaning also produces unfair competition remedy.
Jacobs: Menswear shop called Cording; breakaway director started Gnidroc.  Bad faith?  No one would be confused.  But if D is trying to get trade, court will presume he’s succeeded in his intent—D knows best the mysteries of his business.
Sentfleben: if one field becomes more empirical, does that create pressure on other related fields to become more normative?  Fine tuning w/unfair competition/passing off.  Apply hard rules on genericism to prevent TM rights, but then unfair competition.
Visser: if you prohibit any IP right, it pops up again under unfair competition whether you like it or not.
Dinwoodie: German law—TM law was supposed to be normative and unfair competition empirical—is this switching places?
Kur: German unfair competition law is also normative to an extent, but at the core the risk of misleadingness would lead Germans to look more to empirics/facts of the case, rather than an abstract kind of space around a given TM. The rule that stronger marks get more protection is normative everywhere.
Burrell:  Not everywhere.  Reputation can be a double-edged sword: recognition will be improved so proof of infringement will be harder in Austl.
Visser: in many countries choice between TM or unfair competition can be triggered by other considerations—France has separate courts and separate remedies. Netherlands: cost award requirement only applies to TM, not unfair competition, so everyone goes for TM; same issue w/intermediate remedies. Don’t look for the theoretically best cause of action, but the practically best. That’s a big reason different countries choose different paths.
Jennifer Davis: People may fear losing registration—if the mark is descriptive.  Unfair competition may be more expansive way to go, not less as we [Europeans] often perceive it.
Jacob: the rule of ECJ, fame equals more protection, is obviously factually incorrect. It must be a rule of law.
Grynberg: Going back to Blinded American Veterans, Ginsburg never ordered any of the remedies we’ve discussed; said the district court could work it out.  Look at their webpages today: no disclaimers. The equitable bailout in US TM law is really very narrow.
Llewellyn: the passing off and registered TM infringement causes of action have converged in Singapore.  Some people suggested that there should be no protection for unregistered marks—that’s one way of approaching the issue, though it didn’t get very far.
Kur: our approach to the conflicts may differ by which rules we’re trying to navigate. If we say the consumer is the same, we just transform those issues into the way in which we assess confusion.
McGeveran: There are some of these claims where we disregard the consumer of entirely—right of publicity.
Dinwoodie: Legal transplants: the ECJ taking the advertising notion of the consumer and transplanting it into TM will be harmful unless they reconstruct it w/attention to the different goals.  But we can get comfortable w/messiness if we take that care.