It’s Like Comparing Apples and Pomegranates; Jury Doesn’t Buy Pom Wonderful’s False Advertising Claims

In January 2009 Plaintiff Pom Wonderful LLC (“Pom”) filed a complaint against Ocean Spray Cranberries, Inc. (“Ocean Spray”), alleging false advertising and unfair competition in respect to the marketing of its “100% Cranberry and Pomegranate” juice (pictured). Apparently, the labeling prominently featured pomegranates when in fact the juice contained only 2% pomegranate juice with the main ingredients being grape and apple juice. According to Pom, this deceived consumers and thus diverted sales from its own pomegranate juice product.

Ocean Spray countered with an “unclean hands” affirmative defense by alleging that Pom misled consumers by (1) failing to disclose that water is a primary ingredient of “POM Wonderful brand beverage products,” (2) failing to disclose that Pom's product is made from concentrate, and (3) misrepresenting that Pom products are fresh squeezed into bottles, when in fact Pom makes its juice from concentrate. Pom Wonderful LLC v. Ocean Spray Cranberries, Inc., 2011 WL 4852481 (C.D. Cal. Oct. 12, 2011). Based on these allegations, Ocean Spray lodged its own false advertising counterclaim against Pom. Pom Wonderful LLC v. Ocean Spray Cranberries, Inc., 2011 WL 4852472 (C.D. Cal. Oct. 12, 2011). Admitting that it has no evidence supporting the impact of Pom’s advertising on its own sales, and that if such impact did exist, it would be negligible and unquantifiable, Ocean Spray urged the court to use its discretion in permitting monetary relief based on the totality of the circumstances.

While the court refused to strike Ocean Spray’s defense, it granted summary judgment for Pom on Ocean Spray’s counterclaim. Not only did Ocean Spray fail to provide why the totality of the circumstances warrants relief, it appears that Ocean Spray has benefited from Pom’s deceptive trade practices. “Ocean Spray's Chief Operating Officer testified that strong sales of Ocean Spray's pomegranate-flavored product were attributable, at least in part, to the popularity of pomegranate juice resulting from Pom's advertising efforts.” Pom Wonderful, 2011 WL 4852472.

Aware of this, Ocean Spray persisted that this was a comparative advertising case, where a direct reference to a competitor’s product presumes injury because it diminishes the brand’s value in the mind of the consumers. As evidence, it offered Pom’s reference to “cranberry juice cocktails” in Pom’s advertising. Ocean Spray claimed that its brand is exclusively associated with cranberry juice cocktails since that is its “primary product.” However, the court was not persuaded. “Pom's reference to a generic product or class of products does not exhibit the specificity required of a comparative advertisement.” Pom Wonderful, 2011 WL 4852472.

Ocean Spray had a better chance with its evidence of Pom’s “Pomegranate Truth” website, which features images of three competing juices, including Ocean Spray’s Cranberry & Pomegranate Juice. However, the website merely lists the ingredients of the juice, the veracity of which Ocean Spray does not dispute. “Had Pom made some false comparative statement regarding Ocean Spray's Juice, the use of an image of the Juice's bottle would likely be sufficiently specific to constitute a comparative advertisement. The website, however, makes no misleading statement of the type described in Ocean Spray's counterclaim.” Id. The referenced page can be found here: http://www.pomwonderful.com/about/pom-truth/read-the-label/

However, even though Pom managed to get to trial, it didn’t fare so well with its own claims among the jury. JurisNotes reports that after a two-week trial, the jury only deliberated for two hours before issuing their verdict. The jury curtailed the question of Pom’s damages by agreeing that it was unable to prove that Ocean Spray’s label or advertising was misleading. http://www.jurisnote.com/News/pomw565.pdf.

Pom has also been unsuccessful with similar cases against other competitors such as Tropicana and Welch. Nevertheless, for some reason I feel that a class action may be brewing against all of these companies.

Copyright Legislation Prospects

Both the House and the Senate have presented bills in the past year that, if passed, would introduce increased liability to copyright infringers on the internet. The bills have had deeply different receptions amongst industries affected by copyright law. The entertainment industry steadfastly supports increased attempts to control copyright infringement while many in technology and computer industries believe the bills overstep necessary enforcement strategies and will negatively affect their ability to carry on their business as usual.

The Senate bill was introduced in May and is called the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011 (PROTECT IP Act). The entire text of the bill can be found here. The act creates a right of action for infringement against domain name owners of websites that are found to be "dedicated to infringing activities." S. 986, 112th Cong. § 3. The act goes on to note that Internet Advertising Services and Information Location Tools have a responsibility not to facilitate access to infringing websites. This could mean that Google and other search engines would be held liable when their search engines provide users with links to websites that contain infringing material. Not surprisingly, this portion of the act is particularly controversial because of the huge costs it would impose on search engines. Additionally, the act repeatedly notes that it is applicable to direct, various, and contributory copyright infringement; hinting at the idea that websites that may only tangentially have an effect on copyright infringement might now be subject to lawsuits.

The PROTECT IP act would also implement important measures to more effectively crack down on websites with infringing material that threaten the public health. These type of websites are generally fraudulent pharmaceutical websites that infringe on company copyrights and trademarks to illegally sell prescription drugs. S. 986, 112 Cong. § 5. Despite the Act controversy, The Senate Judiciary Committee approved the PROTECT IP act but it has yet to make it to the floor of the Senate as it was blocked by Senator Ron Wyden.

In coordination with the Senate's act, the House introduced the Stop Online Piracy Act (SOPA) at the end of October. The text for that bill can be found here. The provisions in this Act overlap with PROTECT IP and are opposed or supported by the same industries. Website and domain name owners are additionally worried about SOPA because of its broad language that would not give possible contributory infringers reasonable time to clean up their website before either being sued or having their site attacked.The House of Representatives Judiciary Committee will hold a hearing on the Act this Wednesday, at which time the proponents and opponents of the bill will have a chance to try to integrate their opposing views into the bill.

For more information on the passage of these bills, see The Stop Online Piracy Act: Big Content’s full-on assault against the Safe Harbor, House Hearing on Stop Online Piracy Scheduled.

“Richard Cheese” Sheds Insight on the Right to Publicity / Right to Privacy Distinction

While the unique “right of publicity” is often, yet understandably, overlooked as being a subset of intellectual property, this classification proved crucial in a fresh Second Circuit decision. On November 1^st, the court upheld Hartford Casualty Insurance Company’s refusal to defend independent music label Oglio in a separate suit involving right of publicity allegations.

The other suit was instigated in 2006 by Mark Jonathan Davis, known to his fans as “Richard Cheese,” a comedian/lounge singer whose character performs lounge versions of famous pop and rock songs. He entered into a contract with Oglio from 2000-2003 in which he was to record an album entitled Lounge Against the Machine (LATM) as Richard Cheese, which Oglio would then distribute. In addition to owning the copyrights to the recordings, Oglio also had the right to use the name “Richard Cheese” and his likeness in promoting and advertising the album. In addition, Oglio retained the option. exercisable for two years after execution of the agreement, to require Davis to record a second album with similar terms upon a minimum advance payment of $15,000.

Following the financial success of LATM in 2001, Oglio attempted to exercise its option, but sought to reduce the minimum advance from $15,000 to $7,000. After Davis refused, Oglio threatened to replace him with other singers. Oglio followed through and in 2002 released two lounge-style albums: Diary of a Loungeman by “Bud. E. Love” and Sub-Urban by “Jaymz Bee & Deep Lounge Coalition." According to Davis’ complaint, “the Competing Albums [were] a way to piggyback on [LATM] and to trade on the goodwill and public recognition earned by Davis. […] Both the names of the competing artists and the titles of the Competing Albums were obviously intended by Oglio to attract fans of Richard Cheese's lounge-style versions of songs and to capitalize on Davis's celebrity […] and reduce the value and unique goodwill of Davis's Professional Name throughout the entertainment industry.” Oglio Entertainment Group, Inc. v. Hartford Casualty Ins. Co., 2011 Cal. App. LEXIS 1361, 4-5 (Cal. App. 2d Dist. Nov. 1, 2011). Upon expiration of their three year agreement, Oglio continued to sell and promote Davis’s albums along with the competing albums on its website, www.richardcheese.com.

Oglio and Davis eventually settled for $80,000 in September 2006 after Hartford disclaimed coverage in May 2006. Oglio then filed the present suit against Hartford for breach of contract. Oglio claimed that Davis’ alleged injury for appropriation of his name and likeness was included in the policy’s coverage for privacy violations. However, Hartford answered that the right of publicity is not only separate from privacy rights, but falls under intellectual property rights, which were specifically excluded from coverage. The exclusion provision pertained to any advertising injury “[a]rising out of any violation of any intellectual property rights, such as patent, trademark, trade name, trade secret, service mark or other designation of origin or authenticity.” Oglio Entertainment Group. LEXIS 1361 at 17.

As a final chance, Oglio attempted to demonstrate that their advertising injury was one, covered by the policy, arising out of “[c]opying, in your ‘advertisement,’ a person's or organization's ‘advertising idea’ or style of ‘advertisement.’” Id. at 20. However, Hartford’s counter that this policy extended only to the style of advertisement, as distinguished from the product being advertised, was sufficient to sustain their demurrer. The court held that, “this does not allege that Oglio copied, in an advertisement, Davis's advertising idea or style of advertisement, but that Oglio sought out artists to copy Davis's product and later sold a competing product, injuring Davis's sales and the value of his professional name.” Id. at 21.

Indeed California’s infamous right of publicity law, codified in Cal. Civ. Code §3344, defines a right of publicity violation as consisting in, “any person who knowingly uses another's name, voice, signature, photograph, or likeness, in any manner, on or in products, merchandise, or goods [emphasis added], or for purposes of advertising or selling, or soliciting purchases of, products, merchandise, goods or services, without such person's prior consent.

Twitter and Twittad Settle Trademark Infringement Suit; Twitter agrees to restore Twittad’s account

Due to the popular social networking site Twitter, the noun/verb “tweet” is now a familiar and exhausted term in everyday discourse. However, it is also a registered trademark, and Twitter expressed its protectiveness over the mark in a recent complaint against advertising company Twittad’s registration of “Let Your Ad Meet Tweets.”

Twittad, a limited liability company with its principal place of business in Iowa, maintains the website twittad.com, which offers advertising services contingent on Twitter’s services. Twittad currently pays a network of over 27,000 private users for tweeting commercial ads. In its federal trademark application for “Let Your Ad Meet Tweets,” Twittad specified that the registration was namely for providing advertisement space on the internet for others.

In its complaint, Twitter points out that Twittad failed to mention that its advertising services were meant to be used solely in connection with Twitter’s services. According to Twitter, “Tweet” is the only distinctive portion of this mark, which was registered in order to exploit the “popularity and fame of Twitter’s ‘Tweet' brand." (2011 WL 3983379 (N.D.Cal.)). As Twitter also owns a host of “tweet” marks including “Cotweet,” “Tweetdeck,” and of course “Retweet,” Twittad’s mark could appear to be in this family of marks and confuse consumers.

Twitter is specifically claiming that “Let Your Ad Meet Tweets” should be cancelled pursuant to 15 U.S.C. §1502(d), §1064, and §1119. Also known as the Lanham act, the federal statute provides that a trademark registration should be refused if it “comprises a mark which so resembles a mark registered in the Patent and Trademark Office,” 15 U.S.C.A. § 1502(d) (West)). A petition to cancel registration may be filed by “any person who believes that he is or will be damaged, including as a result of a likelihood of dilution by blurring or dilution by tarnishment.” Id. § 1064 (West). Courts have the power to cancel such registrations under §1119.

However, according to JurisNotes, as of 10/19/2011, Twitter has agreed to drop its suit against Twittad in exchange for being assigned the entire interest in the mark. While other terms of the settlement are confidential, it seems that Twittad’s Twitter account will be restored and it can continue its advertising services while still using the tagline “Let Your Ad Meet Tweets.”

For more information, see the original complaint for declaratory judgment filed in the Northern District Court of California. (2011 WL 3983379 (N.D.Cal.). The trademark registration for “Let Your Ad Meet Tweets” can be found here: http://tess2.uspto.gov/bin/showfield?f=doc&state=4010:bpjbqg.2.1The assignment of title history for the mark clearly indicates that Twitter was assigned the entire interest on 10/11/2011.

Reddit's Right in a Movie Script?

An unknown author writes a script that gets purchased by a major production company. It sounds like a fairly straightforward story and licensing deal, right? Not for James Erwin who wrote "Rome, Sweet Rome" a story about a modern day U.S. Marine who goes back in time to fight in Ancient Rome. Erwin then sold the exclusive movie rights to Warner Brothers. However, this deal presents some interesting copyright issues because Erwin originally shared his ideas for "Rome, Sweet Rome" on Reddit, a social news website whose content is entirely user created. In addition to publishing his story here, user content was contributed by the community and arguably used by Erwin to finalize his story.

Reddit has a stake in Erwin's deal because of the User Agreement that all Reddit users agree to when they join the website community. The agreement specifies that users "agree that by posting messages, ... or engaging in any other form of communication with or through the Website, you [the user] grant us [Reddit] a royalty-free, perpetual, non-exclusive, unrestricted, worldwide license to use, reproduce, ... distribute, ... or sublicense any such communication in any medium ... and for any purpose, including commercial purposes, and to authorize others to do so." This presents the possibility that Reddit could now turn around and sell the portions of "Rome, Sweet Rome" divulged on the website. Section 205(e) of the Copyright Act states that a "nonexclusive license ... prevails over a conflicting transfer of copyright ownership" which seems to indicate that Reddit could legally license away the movie rights to "Rome, Sweet Rome," specifically the portions of the story and feedback trading on Reddit.

James Erwin, per Warner Bros. advice, has since removed "Rome, Sweet Rome" from Reddit and Reddit has not made any public efforts to sell its rights in the script. However, Reddit is operated by Advance Publications, a subsidiary of Conde Nast Publications. This means that they might be more likely than a small, independent website to license rights out to test the legal waters on the issue.

Regardless of whether Reddit acts on "Rome, Sweet Rome," it brings about an interesting issue of the rights of nonexclusive rights of licensees and licensors. For more on this story, see Does Warner Bros. Really Have Exclusive Movie Rights to a Story Posted on Reddit?

PIPG Wine & Cheese Salon

Please join the Penn IP Group for a Wine & Cheese Salon to discuss some relevant and interesting IP issues. The event will be held tomorrow, October 20 at 4:30 in Gittis 213. PIPG members and interested students are encouraged to come out, discuss IP topics, and enjoy some cheese, wine, and non-alcoholic beverages. Prompts for tomorrow include the new Smith-Leahy America Invents Patent Act and IP issues related to Fashion Law (to get excited for the Spring Symposium). We hope to see you there!

Leahy-Smith America Invents Act Goes Into Action

On September 16, President Obama signed the Leahy-Smith America Invents Act. This Act is Congress' attempt to revamp the patent system in the U.S. which has been criticized over the years for being costly, inefficient, and difficult to maneuver. The new Act is also aimed at reducing needless litigation over patent rights. This is being implemented with a switch from a first-to-invent system to a first-to-file system. This means that from now on the first person to file their patent with the USPTO will gain the patent rights. This encourages inventors to file for a patent as soon as they conceive of an invention, rather than sitting on the idea. This has the potential to reduce litigation which can often arise when parties both maintain they were the first-to-invent. The potential drawback is that it favors inventors who are familiar with the patenting process while leaving out smaller inventors who do not realize the urgent need to file. However, it greatly simplifies the overall process and streamlines the U.S. version with the patent systems of Europe and Japan.

Another important aim of the Act is to encourage innovation by small inventors who historically have been shut out of the patenting process because of its costliness. It can cost thousands of dollars and several years of paperwork to get a patent through the USPTO. Many small inventors simply do not have the time, resources, or patience for this process. In order to reduce the barriers to patenting for small inventors, the Act creates the category of "Micro-Entities." This refers to inventors with 4 or less filed patents who do not have a median household income of 3 times the median according to the IRS for the previous year. These micro-entity inventors receive as much as 75% off of the usual fees associated with patent filing. The idea behind this is that new and small inventors are reluctant to file their patents and thus, either the invention goes unpatented and potentially unmarketed, or bigger inventors and companies are able to infiltrate the market for the new idea even though the small inventor may have thought of the product first. The drawback of this provision is that it might not be very far reaching since micro-entities have a fairly specific definition in the Act which may even leave out many small inventors. Additionally, many of the industries that rely heavily on patents, like pharmaceuticals and medical devices, really only have inventions coming out of years of R&D funding from major corporations or in connection with universities. These groups would presumably all be left unaffected by the micro-entity provision.

To read the entire act or to learn more about the implementation of Leahy-Smith America Invents go to uspto.gov or click on this link: Leahy-Smith America Invents Act.