The Board had found the involved marks to be similar in appearance, sound, meaning and commercial impression. Applicant argued that in its mark TAKETEN refers, as shown in its specimen of use, to ten days, whereas in the cited mark TAKE 10! refers to ten minutes. The CAFC observed, however, that neither mark suggests any specific meaning of "TEN" or "10." The registrability of a mark must be determined "based on the identification of goods set forth in the application regardless of what the record may reveal as to the particular nature of an applicant’s goods," and so the court agreed with the Board’s finding that the marks engender similar connotations. See Octocom Sys., Inc. v. Houston Computer Servs., Inc., 918 F.2d 937, 942 (Fed. Cir. 1990). The court also agreed with the Board that registrant's addition of an exclamation point to "take ten" did not distinguish the marks in overall commercial impression.
At bottom, substantial evidence supports the Board’s conclusion that the first DuPont factor points towards a likelihood of confusion. However, “we note that similarity is not a binary factor but is a matter of degree." In re Coors Brewing Co., 343 F.3d 1340, 1344 (Fed. Cir. 2003). Here, there are some, albeit modest, differences between the two marks.
With regard to the issue of the relatedness of the goods and services, the CAFC concluded that substantial evidence did not support the Board's finding. The evidence relied upon by the examining attorney showed that printed materials are used in connection with various health services programs. However, the fact that goods are and services are "used together" does not show relatedness. When the types of goods and services at issue are "well-known or otherwise generally recognized as having a common source of origin, the PTO’s burden to establish relatedness will be easier to satisfy." However, when the relatedness of the goods and services is "obscure or less evident," the PTO must show "something more" than the mere fact that the goods and services are "used together."
While we have applied the “something more” standard in the past in the context of restaurant services, the rule is not so limited and has application whenever the relatedness of the goods and services is not evident, well-known or generally recognized.
Here, the USPTO did not show that applicant's services and the printed materials of the cited registration are generally recognized as being related, nor did it show the "something more" needed to prove relatedness in this case. The CAFC therefore concluded that the Board’s finding of relatedness between the involved services and goods was not supported by substantial evidence.
As to channels of trade, the evidence on both sides was lacking. The court agreed with the TTAB that registrant's goods were not limited to use by educators, but the court disagreed with the Board that the channels of trade overlap because both applicant and registrant advertise on the Internet.
Advertising on the Internet is ubiquitous and “proves little, if anything, about the likelihood that consumers will confuse similar marks used on such goods or services.” Kinbook, LLC v. Microsoft Corp., 866 F. Supp. 2d 453, 470–71 n.14 (E.D. Pa. 2012) (quoting J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 24:53.50 (4th ed. Supp. 2011)).
The Board had conceded that consumers of applicant's services would exercise a high degree of care, but it had found no evidence that consumers would exercise that same care when analyzing printed materials received while participating in the services. The court ruled that the Board's conclusion was in error because the record contained "no evidence to support a conclusion that the level of care exercised by consumers before entering a health-care program is any different from the level of care exercised once in the program." Consequently, the Board's determination that this factor was neutral lacked substantial supporting evidence.
The CAFC concluded that the refusal to register was not supported by substantial evidence in light of the dissimilarities between the involved services and goods and the high degree of consumer care. The court therefore reversed the Board’s decision and remanded the case for further proceedings.
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TTABlog note: What further proceedings might there be?
Text Copyright John L. Welch 2014.
Since registrant's fertilizers encompass applicant's "fertilizers for agricultural use," the Board found the goods to be legally identical. The Board therefore presumed that the involved goods travel through the same channels of trade to the same classes of consumers. Moreover, when the goods are legally identical, a lesser degree of similarity between the marks is needed to support a likelihood of confusion.
Applicant and Examining Attorney Brian P. Callaghan argued at length over which portions of the marks should be considered dominant. The Examining Attorney submitted various third-party registrations for marks for fertilizer, with the word GROW disclaimed. Applicant pointed to its disclaimer of the word PHOTO in arguing that GRO is the dominant part of its mark, but the Board observed that the voluntary disclaimer of PHOTO does not mean that PHOTO cannot be dominant, since consumers are unaware of any disclaimer that might have been entered in the USPTO record.
Applicant also asked the Board to consider the dictionary definition of the word "photosynthesis," arguing that PHOTO is suggestive of a product for plants. It pointed to its ownership of several registration for other marks containing the word GRO, while registrant owns three other registration for marks containing the term MAX, showing that applicant emphasizes the GRO part of its mark, while registrant emphasizes MAX.
The Board saw no reason to give substantially more weight to any component of either mark, concluding that PHOTO, GRO, and MAX are of "relatively equal distinctiveness." The other third-party marks owned by applicant and registration were of little relevance. But the Board did acknowledge that PHOTO, as the first term in each of the involved marks, may have slightly more prominence than the remainder of the marks.
The Board found that the marks "resemble each" other visually and phonetically, and also in meaning, to the extent that both begin with the word PHOTO. They are also "structurally similar." Considering the overall commercial impressions of the two marks, the Board concluded that consumers would likely perceive the marks as "related to each other."
Applicant claimed that it used its mark first, but that is, of course, irrelevant in an ex parte proceeding. Section 2(d) requires refusal based on a mark's resemblance to a mark "registered" in the USPTO, regardless of the alleged priority of the applicant.
Finally, applicant contended (but without proof) that is mark has co-existed with the registered mark for at least 15 years. Of course, such uncorroborated statements are of little evidentiary value [I would have said no evidentiary value - ed.], particularly in an ex parte context where the registrant has no opportunity to be heard on the issue.
And so the Board affirmed the refusal.
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TTABlog note: Looking at the packaging/labels of the two products, do you think a court would find infringement?
Text Copyright John L. Welch 2014.
Following a series of unsuccessful lawsuits with Paul Davis Restoration, Inc., Matthew Everett, a former franchisee, began running a radio ad:This is a business advisory. Paul Davis Restoration, Inc., a national operator of fire and water restoration franchises, is seeking a judgment of 25 percent commission on certain prior sales, which constitutes an unenforceable penalty in violation of Wisconsin state statutes and case law governing such restrictions and practices. In addition, they are seeking to impose several other terminations and conditions that are in direct violation of Wisconsin’s Fair Dealership laws, those Wisconsin laws which are designed to protect all Wisconsinites. To learn more, please visit pdr-wi.com. This ad paid for by Paul Davis Restoration of NOWI.The court enjoined Everett from using “Paul Davis Restoration” as a trade name; he was no longer a franchisee. Although he agreed to remove that reference from the ad, given the litigation history between the parties, the court found that he hadn’t mooted the claim.
Paul Davis also argued that the rest of the ad was false and misleading; Everett argued that suppressing it would violate the First Amendment. Jordan v. Jewel Food Stores, Inc., 743 F.3d 509 (7th Cir. 2014), used a test for identifying commercial speech assessing whether (1) the speech is an advertisement; (2) the speech refers to a specific product; and (3) the speaker has an economic motivation for the speech.
The speech was undoubtedly in the form of an ad, and presumptively had an economic purpose: “advertising costs money, and most private citizens do not buy ad time merely to express their personal or political views.” Also, Everett was a competitor of Paul Davis, and the content addressed topics of economic import. And Everett’s own emails showed a purpose to divert business from Paul Davis to Everett: “This began running today in the markets we serve. It will begin running Statewide next week. …” Running the ad in “the markets we serve” limited the ad to areas where Everett had an economic interest in driving business away from Paul Davis. “The threat implied by the ad is that Paul Davis’ business from the state and insurance carriers will dry up (and migrate to Everett’s business).” Also, the ad labeled itself a “business advisory,” which the court found to be “an effort to make the communication sound official, rather than something based on a citizen’s private views.”
The ad didn’t refer to a specific product, but it did refer to a specific company and that company’s services. In context, it was clearly commercial speech.
In addition, the court found that the ad was false. The ad claimed that Paul Davis was seeking “an unenforceable penalty in violation of Wisconsin state statutes and case law governing such restrictions and practices.” That is, the ad said that Paul Davis was breaking the law. But it was merely seeking to enforce an arbitration award against Everett. Even if the arbitrator got it wrong, “the fact that questions of law may be arguable does not mean a competitor can accuse a company of illegal conduct merely for seeking to enforce a lawfully obtained arbitration award. If Paul Davis’ CEO were tried and exonerated for a crime, a competitor would not be able to claim that the CEO committed criminal acts merely on the basis that it was the competitor’s opinion that the jury erred.” (I should note that this rule must be limited to commercial speech. If I, acting as a private citizen, opine that OJ Simpson is a murderer, the jury’s verdict of acquittal can’t be dispositive, and couldn’t be even before the civil verdict agreeing with me.) There was no reasonable argument that Paul Davis was breaking any law by seeking to enforce an arbitration award, making the claim misleading and false.
The next statement, accusing Paul Davis of “direct violation of Wisconsin’s Fair Dealership laws,” also simply took issue with the rulings of the arbitration panel and the courts. The claim of “direct violation” was not just an opinion but implied that the Paul Davis’s liability was clear, “when just the opposite is true.” Accepting that many legal questions are arguable, and thus unfalsifiable, “would allow anyone’s subjective legal views to insulate them from liability simply on the basis that they disagreed (for whatever reason) with the rulings of a court.” Everett was free to run an ad expressing disagreement with the arbitration or the courts and arguing why he believed they erred. “But here, the ad makes the preposterous claim that there is something illegal about attempting to enforce an arbitration award. The only conceivable purpose of such an assertion is to mislead consumers and others into thinking that the Plaintiff has engaged in illegal activity.”
Thus there was a strong likelihood of success on the merits. The parties didn’t much discuss the other factors, but “[g]iven the difficulty of calculating damages due to false accusations of illegal activity, the Plaintiff would suffer irreparable harm and would have no adequate remedy at law.” So an injunction against the ad issued.
District court opinion discussed here. Euro-Pro appealed the preliminary injunction against it based on Lanham Act false advertising claims against its advertising for its steam irons. The court of appeals treated this as primarily a case about “how courts should interpret an advertising claim when the packaging or label unambiguously defines a claim term.” The court agreed with the district court that if a claim is false by the advertiser’s own definition, then consumer survey evidence can be disregarded and literal falsity is established. In addition, while bound by the circuit’s earlier rejection of a presumption of irreparable harm, the court of appeals found that the evidence before the district court justified an inference of irreparable harm.
SEB’s Rowenta models 5080 and 9080 compete with Euro-Pro’s Shark 405 and 505. The Shark 405 packaging claims that the Shark 405 offers “MORE POWERFUL STEAM vs. Rowenta®†† at half the price.” The “††” characters refer to a fine-print footnote on the bottom of the packaging, which states that the claim is “††[b]ased on independent comparative steam burst testing to Rowenta DW5080 (grams/shot).” The front of the packaging also says that the Shark 405 delivers “#1 MOST POWERFUL STEAM*.” The asterisk refers to another footnote on the bottom saying the Shark 405 “*[o]ffers more grams per minute (maximum steam setting while bursting before water spots appear) when compared to leading competition in the same price range, at time of printing.” The Shark 505 packaging makes substantially the same claims, except with a comparison to the Rowenta 9080. Packaging hang tags claimed “MORE POWERFUL STEAM vs. Rowenta . . . at half the price,” with a reference claiming “[b]ased on independent comparative steam burst testing” to the respective Rowenta steam irons in “(grams/shot).”
SEB ran tests to check these claims, and found that the Rowenta 9080 performed the same as the Shark 505 in grams per minute. In grams per shot of steam, the Rowenta 9080 was superior. SEB then commissioned an independent lab to do more tests, which found that the 5080 and 9080 outperformed the Shark 405 and 505, respectively, in grams per minute and grams per shot, on average. (The district court made a calculation error that led it to conclude that the Shark 405’s average performance was slightly higher than the Rowenta DW5080’s average performance.)
Euro-Pro introduced testimony and a study from its scientific expert, Dr. Abid Kemal, who calculated steam power based on the kinetic energy of a steam burst divided by the duration of the burst. Using this measurement, Kemal concluded that the Sharks outperformed the Rowentas on steam power, and that the grams per shot results were comparable between the products. Euro-Pro also submitted a consumer survey from Dr. Gary Ford showing that consumers do not have a uniform understanding of the meaning of the phrase “more powerful steam.”
SEB’s marketing director, Scott Pollard, testified that “SEB had invested substantial resources to promote Rowenta as the best brand of steam irons in the eyes of retailers and consumers. According to Pollard, the direct reference to Rowenta on the lower-priced Shark steam irons likely would erode the Rowenta brand’s reputation in the eyes of retailers, current consumers, and future consumers.”
The key dispute on appeal was whether the Shark claims were literally false. Literal falsity analysis must consider the message in context. The first interpretive step is figuring out whether the challenged claim conveys an unambiguous message, which is then evaluated for falsity. Only unambiguous claims can be literally false. The standard of review for a determination of ambiguity/unambiguity is clear error.
The district court found that the “more powerful than Rowenta” was unambiguous, given the footnote reference to grams per shot. The “#1 most powerful” claim was also unambiguous by necessary implication because of the proximity to the other claim’s comparison to Rowenta. This was false, given SEB’s evidence and the fact that the Kemal report didn’t measure steam power in grams/shot or grams/minute.
The court of appeals agreed that the “more powerful vs. Rowenta” claim was unambiguous. “When a product’s packaging includes an advertising claim and unambiguously defines a claim term, the packaging’s definition of the claim term applies to the claim’s explicit message.” (As we’ll see, there are some qualifications to come. I don’t think this is license to advertise “$40/day every day*” and define “day” in a footnote as Monday-Friday.)
The court of appeals reasoned that “[t]o make something explicit is to state it clearly and precisely.” So, when Euro-Pro “took the affirmative step to include a reference on the Shark packaging that clearly defined the key term in its claim—that steam power is measured in grams per shot—it made an explicit claim.” This was also unambiguous because grams/shot was a unit of measurement used by the leading independent standard-setter for relevant technologies. There was only one plausible meaning: “the claim means exactly what the reference on the packaging says it does.”
This conclusion was supported by the rule that courts must view claims in the context of the entire ad. “[I]gnoring the reference in our analysis would be not only to read the claim out of context, but also to ignore part of the claim itself denoted by the symbol.”
This conclusion was also consistent with other areas of the law where courts engaging in interpretation must apply an author-provided definition, as in statutory interpretation, patent claim construction, insurance contracts, and other contracts.
What about the fact that the symbol referred to fine-print footnotes that consumers are “presumably” less likely to read? “We understand that other courts have held that footnote disclaimers purporting to make a false or misleading claim literally true cannot cure the claim’s false or misleading message. We have not addressed this issue, and we do not decide it today.” (Really? I hope not, but I don’t see why the logic wouldn’t cross over to make a footnoted claim at least ambiguous, except for the fact that such a conclusion would be a terrible idea, which is why the court of appeals tries to dodge it.) Instead, the court of appeals said, its holding was “analytically distinct” from such no-takebacks cases. Its holding was that “what a product’s packaging says a claim term means is in fact part of the claim’s explicit message. If that explicit message is both unambiguous and false, the claim is literally false.” (But what about my “day” example above? Wouldn’t the footnote alone require a plaintiff to provide a consumer survey to show misleadingness by making the definition of “day” “ambiguous”?)
Furthermore, Euro-Pro’s consumer survey purporting to show alternative meanings for “steam power” wasn’t relevant. Euro-Pro invoked Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., 653 F.3d 241 (3d Cir. 2011), for the proposition that courts had to consider consumer surveys in determining whether a message was unambiguous. That case actually approved the use of the name “Havana Club” for rum despite consumer survey evidence indicating that many consumers thought the rum came from Cuba, even though the label stated “Puerto Rican Rum.” There’s got to be a point at which we stop arguing over what a claim means and turn to the legal consequence of that meaning, and that point was reached with the label at issue. But the Pernod Ricard court cautioned that judges should not “lightly disregard” consumer surveys because they may reveal “potential ambiguities in an advertisement” that show reasonable consumers may in fact be misled by the advertisement. Plus, “a district court’s decision to disregard survey evidence is reviewable de novo, since it is founded on a legal conclusion based on underlying facts, that is that no reasonable consumer would be misled by an advertisement.”
However, this case, unlike Pernod, involved literal falsity, so evidence of actual consumer deception wasn’t required. Consumer surveys don’t need to be used to define the meaning of words that are plain enough and have “baseline meanings such that consumer survey evidence is irrelevant.” Here, Euro-Pro explained what it meant on the packaging; the court wasn’t substituting its own perception for consumer perceptions, but rather using the definition Euro-Pro provided.
Likewise, the court of appeals agreed that the “most powerful steam” claim was unambigously comparative to Rowenta. True, the relevant message wasn’t “explicit,” because the corresponding footnote referred to “leading competition in the same price range,” and the parties agreed that Rowenta steam irons are in a different price range. But this was still false by necessary implication, because consumers would unavoidably receive a false message given that the “most powerful steam” claim appeared directly above the “more powerful vs. Rowenta” claim. (Note that here we may have an answer to the question whether a footnote definition can convert a claim to ambiguous: at the very least, not in this instance, which means not all the time. If the main holding is just a version of estoppel, it’s not that significant.)
Since there was no clear error in finding the messages unambiguous, the next question was falsity, and there was also no clear error in that determination. The district court reasonably relied on SEB’s tests, which used the relevant measurements, and even the Kemal report didn’t find a grams/shot difference. Euro-Pro argued that the district court improperly shifted the burden of proof to Euro-Pro.
But the Third Circuit held in Novartis that “a court may find that a completely unsubstantiated advertising claim by the defendant is per se false without additional evidence from the plaintiff to that effect.” Euro-Pro argued that this exception only applied when a defendant refused to present anyevidence, whereas it provided the Kemal report. Novartis was not so narrow. (This is probably the much bigger holding.) The Kemal report was “mostly irrelevant” to the messages actually conveyed by the ads. Thus, Euro-Pro’s claims were entirely unsubstantiated. Anyway, the district court also had affirmative evidence of falsity; it didn’t shift the burden of proof at all.
Now, irreparable harm: the district court didn’t have the benefit of Ferring Pharmaceuticals, Inc. v. Watson Pharmaceuticals, Inc., 765 F.3d 205 (3d Cir. 2014), which applied eBay to Lanham Act cases and barred presumptions of irreparable harm in place of a “clear showing” thereof. But it said it wasn’t applying a presumption, regardless. Portions of the district court opinion do read that way, and the district court cited repeatedly to a case relying on the now-disallowed presumption. Other parts are consistent with Ferring, so it was unclear whether the wrong standard affected its analysis. But anyway, the district court could be affirmed if there was sufficient record evidence of irreparable harm.
The record here did contain such evidence of “likely harm to the Rowenta brand’s reputation and SEB’s goodwill. See S & R Corp. v. Jiffy Lube Int’l, Inc., 968 F.2d 371, 378 (3d Cir. 1992) (‘Grounds for irreparable injury include loss of control of reputation, loss of trade, and loss of goodwill.’).” [Note that this too is pre-eBay.] SEB’s marketing director testified to Rowenta’s strong reputation; the products compete side by side; and the marketing director testified that false comparative claims would likely harm Rowenta’s reputation, especially since the Sharks were lower-priced.
This was not a “veiled” presumption of irreparable harm. “Ferringdoes not bar drawing fair inferences from facts in the record. Indeed, a key lesson from Ferring is that courts considering whether to grant injunctive relief must exercise their equitable discretion in a case-by-case, fact-specific manner.” The inference of likely irreparable harm to brand reputation and goodwill was supported “not by a general rule or presumption but by the literally false comparative advertising claims at issue, the competitive relationship between the parties and products, and the judgment of Pollard that the harm to SEB’s brand reputation and goodwill is impossible to quantify.”
Chief Justice Roberts’ eBayconcurrence noted that the trend to grant injunctions in patent suits shouldn’t be forgotten entirely when applying the four-factor test—a page of history is worth a volume of logic; Justice Kennedy agreed. (Compare actual results post-eBay in patent cases—a lot of injunctions, but a lot of denials too.) The same was true here, for reasons particular to false advertising. Ferring distilled two justifications for the traditional presumption: (1) a misleading or false comparison to a specific competing product necessarily causes that product harm by diminishing its value in the mind of the consumer, similar to trademark infringement cases; and (2) the harm necessarily caused to reputation and goodwill is irreparable because it is virtually impossible to quantify in terms of monetary damages.“Although we no longer apply a presumption, the logic underlying the presumption can, and does, inform how we exercise our equitable discretion in this particular case.” So basically, it’s up to the district court: a permissible inference rather than a presumption. “Logic” seems to be another word for “no individualized evidence of harm required.” Thus, any error by the district court was harmless.
Finally, Euro-Pro challenged the scope of the injunction on First Amendment grounds. Injunctions against false or misleading commercial speech must be narrowly tailored to cover only the speech most likely to deceive consumers and harm the plaintiff. The injunction here required Euro-Pro to put stickers over the two claims at issue and remove the hang tags. Given that false commercial speech is unprotected, and that SEB showed likely success on the merits, the court of appeals saw no First Amendment problems.
Euro-Pro argued that the injunction was overbroad because it required Euro-Pro to cover the ad claims rather than only the references, which were critical to the literal falsity analysis—without the references, the claims might be ambiguous. No such luck. The references plus the claims together comprised the literally false message; the injunction was properly limited to literally false claims. And Euro-Pro’s reasoning would be unworkable: district courts can’t be expected to parse each part of a literally false claim “to see if the removal of a word or a portion here and there would render the remainder true.” (Not to mention that the plaintiff would then have to be prepared to show falsity and deceptiveness for every imaginable redaction of the claim.)http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Motion to Dismiss: Petitioner's claims centered on Microsoft's user manual for a game called "Stoked," which manual displayed the term "Huck" in its pages. Apparently, the game "Stoked" runs on the XBOX 360. Petitioners claimed ownership of twelve applications for marks comprising or containing the word "Huck." However, the Board observed, the HUCK marks bear no resemblance to the mark XBOX 360.
Petitioners claimed that use of the term "Huck" in the "Stoked" user manual infringed the HUCK marks. But this claim of damage was not based on the continued existence of the XBOX 360 registration.
The fact that the word "Huck" may be used in respondent's written materials that happen also to bear respondent's registered mark, a mark not remotely similar to "Huck," does not establish a basis upon which to allege standing to cancel the registration of the subject mark.
Even if petitioners had suffered damage by distribution of the Microsoft user manuals, that damage was unrelated to the XBOX 360 mark. Consequently, petitioners do not have a personal stake in this proceeding and have no reasonable belief of damage caused by continuation of the registration. Because standing is a necessary element of a petition for cancellation, the petition must be dismissed.
Nonetheless, the Board went on to consider the two claims asserted by petitioners. As to their fraud claim, one part concerned use of the R-in-a-circle symbol with the mark STOKED, but the petition did not seek cancellation of a registration for STOKED. The other part concerned allegedly false statements made in Microsoft's Section 8 & 15 declaration for the XBOX 360 registration, but this claim was based merely on "information and belief" and failed to include a recitation of specific facts constituting the alleged fraud, as required by Rule 9(b), Fed. R. Civ. P.
Turning to the Section 14(3) misrepresentation of source claim, petitioners did not allege that Microsoft's use of the XBOX 360 mark was calculated to trade on petitioners' goodwill and reputation, but instead focused on use of the term "Huck." The facts alleged did not constituted a viable claim under Section 14(3) since there was no allegation that the XBOX 360 mark was in any way associated with petitioners.
Thus petitioners failed to state a claim upon which relief can be granted, and the Board dismissal of the petition was again warranted. [In a footnote, the Board pointed out that it is empowered to determine only the right to register, and has no authority to determine the right to use, nor to award the $1 billion dollars in damages sought by petitioners.]
Motion for Sanctions: Petitioner NSM filed twenty-nine oppositions, cancellations, and requests for extension of time to oppose since 2008. [Who do they think they are? Leo Stoller? - ed.]. It instituted nine cancellations or oppositions against marks that bear "absolutely no resemblance to its asserted marks," and six extensions of time to oppose marks that "do not appear to resemble petitioners' HUCK marks." Petitioners' repeated and inadequate assertions of fraud, claims of false connection under Section 2(a), deceptiveness and immoral or scandalous matter, likelihood of confusion, and dilution evidence the abuse of the Board's procedures. Petitioners have alleged ownership of marks that are, with few exceptions, entirely dissimilar from the marks they challenged.
Petitioners’ pattern of behavior leaves no doubt that the noted proceedings were initiated in bad faith, and at least with the intent to harass third parties who have lawfully registered their marks, or to unnecessarily delay those seeking to register their marks.
On five prior occasions the Board granted motions dismissing Petitioner NSM's pleadings based either on lack of standing or failure to state a claim. The Board concluded that in this case petitioners could not have had a good faith belief that the assertion of the same claims was warranted.
Indeed, petitioners’ vexatious conduct unnecessarily disrupts the fair allocation of Board resources. The filing of such frivolous cases requires that the Board sift through each case filed by petitioners, including pages upon pages of unsupported claims that in turn trigger further motion practice to prevent unnecessary litigation from going forward. These are resources and time better devoted to more meritorious matters. The Board has an interest in seeing that its processes are not abused for purposes of harassment and delay.
The Board concluded that, under Rule 11 and its inherent authority to sanction, "any sanction short of judgment would be futile and unfair to respondent and any other party targeted by petitioners." Therefore, it dismissed this case with prejudice as a sanction for petitioners' conduct in this case.
Furthermore, the Board ordered the petitioners to show cause why they, their shared principal, Zane Murdock, and any entity owned or controlled by Murdock, should not face additional sanctions to deter this pattern of filing frivolous petitions. Included in the proposed additional sanctions were requirements that these persons must retain outside counsel for any future filings, that they not file any request for extension of time for one year, and that they never file a notice of opposition or petition for cancellation where the challenged mark bears no resemblance to the HUCK marks and where the legal basis for the claim is fraud.
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TTABlog note: Well, at least Leo Stoller isn't forgotten, since one of his sanction decisions was cited.
Text Copyright John L. Welch 2014.
This right of publicity/trademark case based on use of recorded performances to which the plaintiff didn’t own the copyright could’ve gone a lot of ways—statutory exclusion, First Amendment/Rogers, copyright preemption, Dastar—the important thing is that it goes nowhere.
Jeremiah Cummings was a member of the rhythm and blues music group, Harold Melvin and the Blue Notes from 1973 to 1980. On several occasions, the Blue Notes appeared on Soul Train, including an interview where group members were asked to introduce themselves by name. Cummings alleged that he didn’t sign any release or grant of rights for future use of his performance. (In the Ninth Circuit, he should’ve brought copyright claims!) Footage from the Blue Notes’ performances has been used in (1) DVD compilations called “Best of Soul Train” and (2) TV ads and Internet videos marketing these DVDs. The trademarks Soul Train and Time Life (used under license) were prominently displayed on the DVD packaging and contents. The complaint also alleged that certain defendants licensed stock footage of the Soul Train shows. Cumming alleged that this violated Cummings’ rights of publicity and privacy, as well created a false assocation.
The NY right of publicity claim failed on choice of law grounds, since NY applies the law of the plaintiff’s domicile to such claims—here, that’s Illinois. The materials in question were clearly exempt from Illinois law, given its explicit provision that the statutory right of publicity didn’t apply to “use of an individual’s identity in an attempt to portray ... [an individual] in a live performance, ... musical work, film, radio, television, or other audio, visual, or audio-visual work,” as long as the performance “does not constitute in and of itself a commercial advertisement for a product, merchandise, goods, or services.” Naturally, “promotional materials, advertisements, or commercial announcements” for such use are also exempt. (And the statute supplanted any common law right, also explicitly.) That’s that.
The claim was also independently preempted by copyright law:[O]nce a performance is reduced to tangible form, there is no distinction between the performance and the recording of the performance for the purposes of preemption under § 301(a). Thus, if a baseball game were not broadcast or were telecast without being recorded, the Players’ performances similarly would not be fixed in tangible form and their rights of publicity would not be subject to preemption. By virtue of being videotaped, however, the Players’ performances are fixed in tangible form, and any rights of publicity in their performances that are equivalent to the rights contained in the copyright of the telecast are preempted.Nat’l Basketball Ass’n v. Motorola, Inc., 105 F.3d 841, 849 (2d Cir. 1997).
Nor could Cummings bring a successful NY right of privacy claim, since his likeness wasn’t used for advertising or for purposes of trade, as required by N.Y. Civ. Rights Law § 50. (The court doesn’t make very clear what separate NY “right of publicity” claim it was dealing with above, since NY has no common law right of publicity.) The New York Court of Appeals has “underscored that the statute is to be narrowly construed,” and excludes publications on newsworthy events or matters of public interest, which go well beyond “hard news.” Gautier v. Pro–Football, Inc., 304 N.Y. 354 (1952), involved an animal trainer who consented to perform during the halftime show of a pro football game. Because he consented to perform in front of 35,000 spectators in a game attracting wide and legitimate public interest, he had no claim against having his performance televised. Even without a release, he consented to perform live on national television; using the recordings of those performances doesn’t invade his right of privacy, even if he wasn’t paid. And the promotional materials advertising the DVDs were protected by the doctrine of incidental use, allowing advertising of otherwise protected materials.
The Lanham Act claim was dismissed for failure to plead anything explicitly misleading, per Rogers v. Grimaldi. The DVD sets were artistic works, “and the Complaint does not allege facts that could possibly show that consumers are likely to be confused about the source or ownership of those works because of the depiction of Plaintiff, among many other artists, in and on the DVD sets.” The risk of confusion was outweighed by the First Amendment interests at stake, particularly given that Cummings was depicted along with many other artists and that the Soul Train and Time Life trademarks were prominently displayed.
Cummings’ state law deceptive business practices and common law trademark infringement claims suffered the same fate because Illinois courts apply the same analysis to Lanham Act claims as to coordinate state law claims. (Interesting choice of law question: do they apply Rogers, after all a Second Circuit case? The Fortres Grand district court used Rogers without discussion, and the Seventh Circuit has cited its First Amendment prioritization favorably; smart money says yes to Rogers, but it’s always possible that the iconoclasts on that court would make up their own test, which Illinois would then presumably follow.) In addition, these claims were also preempted by §301 as not qualitatively different from copyright claims.http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Deauville sued Arion for false advertising and unfair competition, and Arion counterclaimed. This opinion granted in part Deauville’s motion to dismiss.
Deauville makes Power Stick deodorant, antiperspirant, body spray, and body wash through “value-priced retailers.” Arion sells European American Design products that compete with Power Stick products. Deauville alleged that EAD product labels “contain false and misleading statements or otherwise fail to meet the requirements for product labeling in the United States.”
Arion counterclaimed with similar allegations, arguing that the Power Stick product labels were misleading because the statement “Made in the U.S.A. of U.S. and/or imported ingredients” was ambiguous—because of the and/or, there was no guarantee that any ingredients would be domestic. Deauville also advertises online with languages such as “Why we are made in America?” without clarifying whether the product ingredients are domestic or foreign.
Deauville argued that its products contained no more than a de minimis amount of foreign content (something Arion contested) and that its unqualified and qualified statements weren’t misleading. Moreover, Deauville argued, whether it complied with the FTC’s guidelines wasn’t provably false and there was no private right of action under the FTCA. Arion relied on the FTC’s analysis of US origin claims to show the element of deceptiveness, arguing that the FTC had conducted significant research on consumer understanding of such claims; Deauville didn’t disagree with that part of the argument, but did contend that only the FTC could evaluate compliance with its guidelines and resulting deception.
The FTC permits unqualified statements of U.S. origin only when “all or virtually all” of the ingredients are domestic. The final assembly must take place in the US, but other factors also matter, including “the portion of the product’s total manufacturing costs that are attributable to U.S. parts and processing” and “how far removed from the finished product the foreign content is.” To the FTC, “there is no single ‘bright line’ to establish when a product is or is not ‘all or virtually all’ made in the United States.”
Power Stick products used a qualified U.S. origin statement (“of U.S. and/or imported ingredients”) and its ads used unqualified statements (“manufactured in the USA”). Arion didn’t contest that the products were manufactured domestically, but argued that the use of a qualified statement justified an inference that the products contained more than a de minimis amount of foreign content, requiring a better qualification to avoid confusion.
The court disagreed: the FTC says there’s no bright line, and so even if Deauville was forced to provide all available information about Power Stick ingredients, “neither the parties nor the Court would be in a position to determine whether there was sufficient foreign content to satisfy the FTC’s standard.” Thus, whether Deauville was in compliance with FTC policy was not provably false. Query: Would it be provably false if the FTC relied on it in FTC-initiated proceedings? That is, is this really a falsity holding, or a delegation of this particular question to the FTC even if private false advertising claims can proceed on other theories? Perhaps this sentence suggests an answer: “The Court does not wish to become the handmaiden of the FTC, nor does it imagine that the FTC would welcome the help.”
The court further clarified that, although the use of both statement types and “and/or” language could be confusing, Arion made those arguments only in the context of FTC policy. The US origin statements could be misleading if the products indeed contained more than a de minimis amount of foreign content, but Arion need to allege some evidence suggesting that confusion could be proven. It didn’t, other than by arguing about what the label implied about the ingredients, and therefore it failed to state a claim. (Thus, presumably, if there were sufficient facts alleged, a jury could use the FTC findings as evidence that false statements about US origin were deceptive and material to consumers. This is not a preclusion case but a pleading case.)
However, some counterclaims under California statutory law survived. Deauville argued that Arion lacked standing to claim that Deauville’s products violated FDA labeling requirements, because their products also violated those requirements. At the pleading stage, general allegations of injury were sufficient. Arion alleged that Power Stick Cool Blast violated numerous FDA requirements for over-the-counter drugs, in violation of California’s UCL. Deauville was allegedly able to charge less than Arion for similar products by “skirting labeling requirements[,]” thus diverting consumers and retaining greater profit. This was a plausible chain of injury, given Arion’s allegation of direct competition.
Deauville’s argument that Arion too violated FDA rules was essentially an unclean hands argument that the court couldn’t assume to be true for purposes of a motion to dismiss, as was its claim that the products didn’t really compete.http://tushnet.blogspot.com/feeds/posts/default?alt=rss
According to music icon Don Henley, intellectual property rights are not a joking matter.
Duluth Trading Company found this out when it adopted the advertising slogan: “Don a henley, take it easy” to promote and sell Henley shirts (examples pictured below).
Despite my purported (at least in my mind) fashion expertise, I first learned what a Henley was by reading the complaint filed by Don Henley against the Duluth Trading Company.
Henleys (the shirts) are named after rowers that donned (no pun intended) them while rowing in royal regattas called Henley-On-Thames.
Don Henley sued Duluth Trading Company based on the ad campaign, alleging violation of his common law and statutory rights of publicity; trademark infringement and false endorsement in violation of federal law; and violations of the California Business & Professions Code.
In response, Duluth Trading Co. basically asked Henley “Can’t you take a joke?” The company’s lawyers brought a motion to dismiss the right of publicity claims based on the First Amendment, which allows using a celebrity’s name in a transformative nature to cheekily point out the coincidence that the iconic Mr. Henley’s first name also means “to wear” and his last name explains what you should be wearing.
You may recall that I posted about the right of publicity before here. Regardless of the merits as an Eagles (and especially Don Henley) fan, I am pulling for Mr. Henley to win this dispute.
- Debbie Laskey, MBA
There is an often-overlooked aspect of marketing that can be considered a distant relative. Public relations, also referred to as PR, is this sometimes forgotten but very important component of marketing promotions. At its core, PR can be defined as managing a brand’s image and reputation, but it touches all aspects of a business including employees, shareholders, customers, investors, financial markets, politics, media, and business partners.
When executed well, PR can garner free publicity in The New York Times, The Wall Street Journal, and on CNN. When executed poorly or a crisis happens, publicity or saying the wrong thing may cause an employee to be terminated – or even worse, a company can go out of business.
Talented PR professionals develop long-term relationships with reporters, and over time, reporters depend on marketing and PR pros to provide them with the information they need to write their articles.
Here are my Top 10 Branding Tips Using PR:
 Develop a competitive positioning statement and include with all printed collateral and online web pages, for example, fact sheets, brochures, annual reports, etc.
 Write articles about your company and how your product or service has solved problems for your customers – and submit to local, regional, and national publications and websites.
 Videotape experts from your company as they answer questions about your product or service and submit to TV and radio stations.
 Develop traditional press kits and online versions and include fact sheets, press releases, media alerts, printed or PDF versions of media coverage, etc.
 Develop a media list of appropriate reporters who cover your industry and reach out to share updates on a regular basis – don’t forget to update on a regular basis too.
 Create a schedule for regular press releases and distribute to your media list – and post on your online press room.
 Develop testimonials and case studies by interviewing satisfied customers and use these people as brand advocates/ambassadors – include these items in your press kits.
 Showcase your brand at industry trade shows and obtain keynote speaking engagements for your company experts – events are also great places to announce new products or services.
 Blogs have become an easy way for companies to share news and control how the information is presented, therefore, create a blog or several blogs – invite comments and monitor them quickly to further evolve compelling conversations.
 Since social media has changed the landscape for the dissemination of news, develop a social media marketing plan and integrate it with your overall marketing and PR outreach initiatives (e.g., Facebook, Twitter, LinkedIn, YouTube, Google+, and Pinterest).
What would you add to this list?
In re Petroleum Service Company, Serial No. 85904470 (December 12, 2014) [not precedential]. [Refusal to register BLUESKY LUBRICANTS for oils and lubricants, including lubricants for industrial machinery [LUBRICANTS disclaimed], in view of the registered mark BLUE SKY for "chemical additives for the after-treatment of exhaust gas, in particular chemical additives for reducing nitrogen oxides in exhaust gas from diesel engines; chemicals used in industry, in particular oil binders, anti-freezing agent, road salt"].
In re Kenneth T. Riddleberger, Serial Nos. 85632364 and 85637348 (December 12, 2014) [not precedential]. [Refusals to register 8UP and 8UPSPORTS for various clothing items, including t-shirts and sweatshirts, in view of the registered marks shown below, for various clothing items, including t-shirts and sweatshirts [APPAREL and CLOTHING disclaimed].
In re Thomas Barton, Serial No. 85826787 (December 11, 2014) [not precedential].[Refusal to register BARTON FAMILY for "wine; wines" in view of the registered mark THOMAS BARTON for "alcoholic beverages, namely, wines"]. [Note: see the case TTABlogged here].
In re Moll Anderson Productions, LLC, Serial No. 85777948 (December 10, 2014) [not precedential]. [Refusal to register ANDERSON WORLD MEDIA for music sound recordings and television and movie production [WORLD MEDIA disclaimed], in view of the registered mark MIKE ANDERSON MEDIA for audio and video recording services and film production [MEDIA disclaimed].
Read comments and post your comment here
TTABlog Big Hint: Any predictions? See any WYHA's here?
Text Copyright John L. Welch 2014.
The patent, copyright and trademark statutes are not paragons of clarity when it comes to assignment. They all require that assignments be in writing, which is fine as far as it goes. What seems to befuddle lawyers is what to do when the transfer is by operation of law. The Copyright Act acknowledges implicitly that there is such a thing as a transfer by operation of law (“A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing …”). A decision by the Court of Appeals for the Federal Circuit has construed the statutory section regarding assignment as simply silent on a transfer by operation of law, blessing a sale as the result of a security interest. But in United Tactical Systems, LLC v. Real Action Paintball, Inc. the Northern District of California was just stumped by the registered trademark PEPPERBALL for irritant projectiles used by military and law enforcement.
PepperBall Technologies, Inc. was the owner of the mark but had money trouble and defaulted on loans. A new company, Advanced Tactical Ordnance Systems, LLC (“ATO”) also doing business as Phoenix International, Inc., was formed. ATO transitioned PepperBall Technologies by retaining most of the employees, trainers and suppliers of PepperBall Technologies as well as the telephone numbers, email and website. On January 9, 2012 Phoenix International purchased all of PepperBall Technologies’ tangible and intangible property at a UCC foreclosure sale, as memorialized in a transcript.
ATO sued defendant Real Action Paintball, Inc. in Indiana and obtained a preliminary injunction for trademark infringement and false advertising, but the case was then dismissed for lack of personal jurisdiction. ATO, now known as United Tactical Systems, Inc. (“UTS”), sued Real Action Paintball again in the Northern District of California and asked for a new preliminary injunction. Shortly after the action was filed in Indiana, ATO filed this curious assignment with the PTO:
If you can’t read it, it is an assignment from Advanced Tactical Ordnance Systems, LLC to Advanced Tactical Ordnance Systems, LLC—yeah, from itself to itself.
Real Action Paintball claimed, successfully at least for purposes of a preliminary injunction, that UTS had not proved that it was the owner of the registered trademark. Only a “registrant,” which includes its successors and assigns, may sued for infringement under § 32 of the Lanham Act. The court held that UTS had not proven all the links in its chain of title, namely the one from PepperBall Technologies to ATO:
Some courts have held that a business trade name and its marks are presumed to pass to its buyer, absent contrary evidence. However, other courts have stressed the importance of the “writing requirement” in determining the validity of trademark assignments. UTS provided no case law supporting the validity of transfer of the PepperBall mark. … [A]t this point there are too many unresolved issues and factual disputes for the Court to find that UTS has demonstrated a likelihood of success that it is the “registrant” within the meaning Lanham Act.
But what about “by operation of law”? The trademark statute says this: “Assignments shall be by instruments in writing duly executed.” Like the Patent Act it makes no reference to “by operation of law.” Indeed, if there is an assignment of the mark, it has to be in writing. But there is the concept of transfer “by operation of law” separate and apart from an assignment: “It is doubtless the law, as in that case it is held, that ‘the property in a trade-mark will pass by assignment, or by operation of law, to any one who takes at the same time the right to manufacture or sell the particular merchandise to which the trade-mark has been attached….” Horton Mfg. Co. v. Horton Mfg. Co., 18 F. 816, 819 (C.C.D. Ind. 1883). And “Where the trademark involved is not a personal one and the transfer is made by operation of law through bankruptcy or a general assignment for the benefit of creditors, most courts have held that a trustee in bankruptcy has the power to sell the goodwill of a company and its symbolic trademarks with other assets of the bankrupt.” EH Yacht, LLC v. Egg Harbor, LLC, 84 F. Supp. 2d 556, 567 (D.N.J. 2000).
I have no idea whether the way the foreclosure sale was done was lawful, but no one suggested it wasn’t. This trademark was transferred, the only problem was the plaintiff didn’t know how to document it.
United Tactical Systems, LLC v. Real Action Paintball, Inc., No. 14-cv-04050-MEJ (N.D. Cal. Dec. 2, 2014).
How sophisticated can you be and still be a consumer for the purpose of consumer protection law? Pretty sophisticated, in some cases.
The plaintiffs: Minnesota Life is an insurance, pension, and investment products firm that provides its services to individuals and families. Securian Financial, its parent, is an insurance and financial services firm with over 13 million clients, and Securian Holding is its parent. Advantus Capital Management is a registered investment adviser wholly owned by Securian Financial. Advantus provided asset management services to Minnesota Life and Securian Holding. Advantus has billions of dollars in assets under its management and its professionals have significant experience in the investment industry. Advantus advised and managed the Advantus Series Fund, whose investments backed some Minnesota Life products.
Wells Fargo is a bank offering a Securities Lending Program. The SLP allows Wells Fargo to act as an agent lending its clients’ securities to brokers in return for collateral, usually cash. Wells Fargo then invests the collateral on behalf of its clients.
Plaintiffs were institutional investor clients of Wells Fargo’s SLP. They were experienced in a number of types of asset management, including “traditional asset management,” but they didn’t administer any SLPs. Wells Fargo marketed the SLP as involving investments in “short term money market instruments” that “maximize[d] earnings, while taking minimal risk.” Plaintiffs alleged that the securities lending business was very complex and requires specialized knowledge and processes. Plaintiffs and Wells Fargo entered into a number of securities lending agreements, and they paid Wells Fargo approximately $5 million for its services. Further complexities ensued, involving structured investment vehicles and hedging activities; they went bad. Plaintiffs sued for breach of contract (and ERISA violations), which I won’t discuss, and violation of Minnesota consumer protection statutes.
Wells Fargo sought summary judgment on the grounds that plaintiffs, as sophisticated merchants, were barred from bringing consumer protection claims. Minnesota’s consumer protection/unfair trade practices laws are “generally very broadly construed to enhance consumer protection.” The controlling state precedent didn’t bar “merchants” from bringing consumer fraud claims across the board. “Instead, courts focus their analysis on whether a party can be considered a sophisticated merchant in the specific skills or goods at issue, and only those parties that are in fact deemed to be sophisticated merchants in the specific skills or goods at issue have been precluded from asserting Minnesota consumer claims.” The court found that a jury could reasonably concluded that plaintiffs weren’t “merchants” for purposes of these transactions, based on disputed facts about their sophistication.
Though it would be an uphill battle, there was enough evidence to go to a jury about whether they were sophisticated in matters of securities lending. Plaintiffs offered evidence that they never held themselves out as having special skills or knowledge with respect to the securities lending business. To this they added an expert opinion that securities lending is a highly complex business that involves complex services, processes, and monitoring, and evidence that, “due to this complexity, they did not have the mechanisms for managing securities lending and also gave management discretion entirely to Wells Fargo for their investments.” In addition, a jury could accept that Wells Fargo agreed that plaintiffs weren’t sophisticated in this area given the marketing materials Wells Fargo provided to them, which detailed the program and Wells Fargo’s risk safeguards.
The court also denied plaintiffs’ motion for summary judgment on their breach of contract claims.http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Florida bars attorney advertising from referring to past results, which a Bar task force held in 1997 were inherently misleading to laypeople, because cases that appear similar to laypeople offer differ substantially to the law; past results don’t show competence or fitness on any particular matter; laypeople can’t judge well what counts as a good result versus a bad one—an apparent success might be a failure and vice versa; and success or failure don’t necessarily reflect on an attorney’s ability or performance. Conclusion: “Only a person with legal training and experience in the particular field and a knowledge of all the facts would be in a position to accurately judge how a particular result reflects upon the lawyer.” The rules applied to radio, billboards, and TV; most websites and email were separately regulated and didn’t have a blanket ban on using past results. The Bar didn’t link its recommendations to any specific data or findings from surveys, focus groups or data analysis.
In 2007, the Bar was directed to study the issue again, and in 2013, the Supreme Court of Florida adopted a completely revised set of attorney advertising rules. Now, advertising could refer to past results that were “objectively verifiable,” and the restrictions weren’t based on the advertising medium.
The Bar reasoned that “[t]he U.S. Supreme Court has generally struck down regulations restricting advertising truthful information;” that “[o]f those responding to the survey on public perception of lawyer advertising, 74% indicate that past results are an important attribute in choosing a lawyer[; i]t is clear that the public wants this information available to them;” and that “[m]ost of those Florida Bar members who provided written and oral comments also noted that the lawyer advertising rules should not prohibit truthful statements regarding past results.”
Rubenstein developed an ad campaign about past recoveries for clients. The Bar issued opinion letters approving some and rejecting some, including some that could comply with appropriate disclaimers. For example, Rubeinstein submitted a TV ad animated with a cartoon car accident, a courthouse and dollar signs drawn on a dry-erase board; using an attorney voice over; and depicting the words “COLLECTED OVER $50 MILLION FOR THEIR CLIENTS IN JUST THE LAST YEAR! Gross proceeds. Results in individual cases are based on the unique facts of each case.”
In 2014, the Bar issued new “Guidelines for Advertising Past Results.” The Guidelines advised that inclusion of past results “carries a particularly high risk of being misleading,” requiring more information than usual ads. Display, radio, and TV ads couldn’t effectively communicate the necessary information and couldn’t comply with the rules.
The ABA’s Model Rules of Professional Conduct don’t have blanket bans on references of past results. Most states follow the ABA approach, but 6 require references to past results to be accompanied by a disclaimer. No other state barred past results entirely in any media form.
As a result of the Guidelines, the Bar withdrew some of its prior approvals of Rubenstein’s ads. The Bar also told Rubenstein that certain ads also violated the rules by stating that the firm obtained a specific recovery and omitting facts necessary to avoid misleading consumers—in this case, they advertised gross recoveries, rather than the amount actually received by the client. Rubenstein didn’t challenge the application of that rule.
The Bar also commissioned a survey, currently in progress, to determine whether ads containing references to large-dollar recoveries were misleading, and how well disclaimers worked. This research was in progress when the opinion issued.
Attorney advertising is commercial speech protected by the First Amendment. The court found that the challenge was quasi-facial, not just as-applied: plaintiffs were challenging the ban on TV and radio advertising of past results. Attorney ads with past results statements were at most potentially misleading, not necessarily misleading. Intermediate scrutiny applies to bans on commercial speech that isn’t false or inherently deceptive: Central Hudson asks whether the ban (1) promotes a substantial governmental interest; (2) directly advances the interest asserted; and (3) is not more extensive than necessary to serve that interest.
Discussion: And here we get to the immense swamp of “inherent” misleadingness, a concept the Supreme Court has invoked but never defined, and certainly not with reference to ordinary legal concepts of misleadingness. The Bar regulated this speech because it deemed past results claims to carry a high risk of misleading consumers. The court in this case understood that claim to be a concession that such ads are only likely or potentially misleading. But “actually” misleading ads never have to mislead everyone; usually likelihood of misleadingness establishes misleadingness for, just by way of example, the Lanham Act. That is, a high risk of misleading reasonable consumers is misleadingness. What else could “inherently” misleading be? Even false ads won’t fool everyone. Also, of course, this analysis has huge implications for the constitutionality of practically everything the FTC does, not just the endorsement and substantiation guidelines.
Anyhow, the Bar conceded that Central Hudson applied, and the court also noted that no other state had found this blanket media ban necessary. Public Citizen, Inc. v. La. Attorney Disciplinary Bd., 632 F.3d at 219, like this case, struck down a rule barring attorney communications containing references to past successes or results except by client request. It’s possible to present past results in a non-misleading way, as opposed to promising results.
The court found that the rule supported three substantial governmental interests. The record reflected that the rule was part of a scheme for protecting the public from false or misleading lawyer claims; promoting the provision of useful information; and preventing “advertising that contributes to disrespect for the judicial system” or that “causes the public to have an inaccurate view of the legal system,” all of which were substantial.
However, the Bar failed to show that the restrictions advanced the government’s interests in a direct and material way. Mere speculation or conjecture is insufficient; the government needed to show that the harms at issue were real and that the restriction would in fact alleviate them materially. The Bar failed to meet its burden of showing that restrictions on use of past results in attorney advertising supported its interests.
Instead, the record evidence showed that consumers wanted more “useful” and “factual” information to help them chose an attorney. Many consumers were interested in attorney “qualifications,” “experience,” “competence” and “professional record (i.e., wins/losses).” In addition, the Bar’s surveys showed that negative attitudes about legal system and lawyers consistently declined over the relevant survey period, despite the increase in quantity and breadth of attorney advertising. The Bar’s blanket assertions that the use of past results was misleading to the untrained public and that past results are not informative about competence or fitness were not backed by evidence. The Bar’s survey showed that 74% of consumers believed that past results were an important attribute in choosing a lawyer. Also, the Bar’s prior report explained that there was no reason to distinguish among media.
But the Bar didn’t provide any factual support when it reversed course in 2014. “In the absence of evidence—especially in light of the fact that the Bar continues to permit the widespread use of past results in other advertising media—[the Bar’s rationale] amounts to mere conjecture and speculation.” The pending survey wasn’t before the court, and the Bar didn’t ask the court to wait for the outcome. It wasn’t enough to fear that people would get unrealistic expectations and make bad decisions with truthful information. However, if the Bar developed sufficient evidence, the restriction wouldn’t necessarily be unconstitutional for all time.
The court continued that the rule wasn’t properly tailored to the asserted interests. Central Hudson’s fit requirement doesn’t require perfection, but it does require reasonability—a restriction can’t be broader than reasonably necessary to prevent deception. The Bar didn’t show that blanket bans on display ads, TV, and radio were necessary, or that lesser restrictions such as a disclaimer or required language wouldn’t suffice.
Thus, Rubenstein was entitled to injunctive relief; on this record, “there is no attorney subject to the Rules as to whom the Guidelines’ blanket prohibition on advertising using of past results in indoor and outdoor display, television and radio media could survive scrutiny under the Central Hudson standard.”http://tushnet.blogspot.com/feeds/posts/default?alt=rss