Wednesday, March 30, 2011

"False advertising" claim fails in Seat Sack v. Childcraft

This was an internet-era case: Appellant provided evidence that Childcraft’s
website was programmed so that, at least during some
period of time, a visitor entering the term “Seat Sack” into
the website’s search engine was directed to a webpage
showing only the Seat Pocket.

The CAFC said of the false advertising matter in "Seat Sack":

No requirement of a trademark to pursue "false advertising":

Unlike a
claim for unregistered trademark infringement, a plaintiff
claiming false advertising under the Lanham Act need not
demonstrate that it has protectable trademark rights.
See Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 112–113
(2d Cir. 2010) (setting out elements for Lanham Act false
advertising claim, which do not include a requirement
that a party possess trademark rights); see also J. Thomas
McCarthy, 5 McCarthy on Trademarks and Unfair Com-
petition § 27:9 (4th ed. 2010) (discussing the separate “two
prongs” of § 1125(a) for trademark infringement and false
advertising and their separate substantive rules and
elements). The district court’s conclusion that the Seat
Sack mark was not inherently distinctive and had not
acquired secondary meaning is not dispositive of this
Lanham Act claim.

As to "false advertising" in the Second Circuit:

Nevertheless, the district court properly granted
summary judgment on appellant’s false advertising claim.
To succeed on a false advertising claim for damages, a
plaintiff must “introduce evidence of actual consumer
confusion” unless it can prove intentional deception. See
Res. Developers, Inc. v. Statue of Liberty-Ellis Island
Found., Inc., 926 F.2d 134, 139 (2d Cir. 1991). Appellant
did not prove intentional deception, as it provided no
evidence to contradict two declarations by Childcraft
employees which stated that Childcraft did not purpose-
fully change the automated search protocols to yield
results for Seat Pockets in a search for Seat Sacks.
Therefore, appellant has to prove actual consumer confu-
sion to receive damages. Where, as here, the statement is
not literally false or false by necessary implication, to
obtain an injunction on a false advertising claim, a plain-
tiff must also prove “by extrinsic evidence, that the chal-
lenged [advertisements] tend to mislead or confuse con-
sumers” and must “demonstrate that a statistically sig-
nificant part of the commercial audience holds the false
belief allegedly communicated by the challenged adver-
tisement.” Merck Consumer Pharm. Co. v. Smithkline
Beecham Corp., 960 F.2d 294, 297–98 (2d Cir. 1992).

The party asserting "false advertising" lost on summary

In opposing summary judgment, appellant did not
point to any specific evidence of customer confusion. It
merely stated that “[p]ublic confusion is clearly set forth
in the facts of this case.” Appellant’s Memorandum of
Law in Opposition to Defendants’ Motion to Dismiss and
in Support of Plaintiff’s Cross Motion for a Preliminary
Injunction at 9, Seat Sack, Inc. v. Childcraft Educ. Corp.,
No. 07-CV-3344 (July 24, 2007), ECF No. 26. Appellant
failed to raise a genuine issue of material fact on the
Lanham Act false advertising claim concerning the exis-
tence of customer confusion. The district court did not err
in granting Childcraft’s motion for summary judgment.

As to "how" the CAFC got this case:

Appellant timely appealed the
district court’s decision to the United States Court of
Appeals for the Second Circuit, which transferred the case
to this court because of our exclusive jurisdiction under 28
U.S.C. § 1295(a)(1) flowing from the design patent in-
fringement claim.


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