GARY R. BROWN, United States Magistrate Judge:
Cablevision Systems Corp. and Verizon New York, Inc., along with related entities (each group collectively referred to as "Cablevision" and "Verizon," respectively) represent two industry leaders in the provision of data services to consumers, including, as principally relevant herein, wireless access to the Internet, commonly referred to as "WiFi."
In this action, Cablevision and Verizon each seek to enjoin certain advertisements produced by the other, claiming that those advertisements mislead the public or otherwise seek unfair advantage. Currently pending before the Court are cross-motions for preliminary injunctions. Cablevision's application largely focuses on Verizon's claims to offering the "Fastest WiFi Available from any provider," primarily based on the assertion that the WiFi routers offered by Verizon are not demonstrably faster than those offered by Cablevision. Verizon, for its part, chiefly challenges Cablevision's representations that it offers its customers 1.1 million WiFi hotspots, principally arguing that these ads are misleading because the overwhelming majority of those hotspots are located within customers' homes. Other challenges raised by Verizon include: (1) claims that Optimum WiFi offers a "better data network"; (2) a claim that Verizon "two-times" its customers by charging separately for home Internet and cellular data service; and (3) statements relating to Cablevision's "Freewheel", a WiFi only device providing certain functions similar to those offered by cell-tower based "smartphone."
Because, as detailed herein, neither organization has met the demanding standards for the issuance of a preliminary injunction, both motions are denied.
Plaintiffs Cablevision Systems Corp. and CSC Holdings, LLC commenced this action by filing a complaint against defendants Verizon Communications Inc., Verizon New York, Inc., and GTE Wireless Incorporated on January 29, 2015. Docket Entry ("DE") 1. On February 2, 2015, plaintiffs filed a motion for preliminary injunction. DE 11. At a conference before the Honorable Leonard D. Wexler, plaintiffs withdrew their motion for preliminary injunction, and the parties set forth a briefing/discovery schedule as to anticipated cross-motions for preliminary injunction, and a hearing date of May 28, 2015 for those motions. DE 20.
Plaintiffs filed an amended complaint against defendants on February 11, 2015.
On May 26, 2015, Judge Wexler referred the preliminary injunction hearing to the undersigned for a report and recommendation. DE 78. Each party then filed their respective motions for preliminary injunction on May 27, 2015. DE 84-88. On May 28, 2015, upon the parties' consent, Judge Wexler ordered that the case be reassigned to the undersigned to conduct all proceedings. DE 89.
The undersigned held a preliminary injunction hearing on May 28, 2015, June 4, 2015, and June 5, 2015. DE 90, 92, 94. On June 3, 2015, defendants filed an amended counterclaim and answer to the plaintiffs' First Amended Complaint. DE 92. On June 26, 2015, the Court "so ordered" a stipulation of dismissal against Verizon Communications Inc. Stipulation and Order dated June 26, 2015. On June 26, 2015, plaintiffs filed an answer to defendants' counterclaim to the First Amended Complaint, DE 105, and a Second Amended Complaint against defendants on the same date. DE 107. Defendants filed an answer and amended counterclaim to plaintiff's Second Amended Complaint on July 10, 2015. DE 114.
The primary product offering by Verizon at issue in the instant matter is Verizon FiOS ("FiOS"), tr. 27:20-24; 170:14-15, which describes Verizon's fiber optic network
In a now-discontinued version of that advertising campaign, Verizon expressly predicated its "fastest WiFi" claim "on baseline maximum throughput speed results of 2014 Intertek router study." See, e.g., CSC Ex. 9, 11; Tr. 186:8-13; 186:20-187:2; 453:8-9. That router study tested the speed of FiOS's router against a number of other competitive devices offered by other Internet Service Providers and hardware manufacturers, but notably not including Cablevision's router. See CSC Ex. 1, at 7, Tr. 67:6-9. That test, though, focused solely on the speed of the routers transmitting WiFi data, but did not test the speed of the routers when connected to the Internet. See, e.g., CSC Ex. 1, Tr. 67:2-5; 71:4-9. Generally speaking, in that test, FiOS's router bested the other devices tested under most conditions, excluding, of course, Cablevision's router, which was not tested. CSC Ex. 1; Tr. 452:4-10. On its website, FiOS advertised the "fastest WiFi
After receipt of the second Intertek study, Verizon continued to advertise its "Fastest WiFi" claim, with a change to the attribution. DX. AAA; Tr. 187:11-17; 188:5-10. Now, instead of basing the claim upon the Intertek study, Verizon premised its claim upon "Verizon's combination
There is no dispute that, once its router is connected to its WiFi network, FiOS does offer a faster connection to the Internet than Cablevision, particularly when considering its more expensive speed plans. Tr. 120:6-8; 529:2-4; see also id. at 170:22-171:10, 171:19-22, 174:2-12, 184:11-185:1. At the same time, Cablevision offered expert opinion that WiFi speed, technically speaking "is the speed of that communication from a router to a device such as a laptop or tablet." CSC Proposed Findings ¶ 42, DE 103 (citing Tr. 60:20-61:3, 71:4-9); see also 60:12-15. To support this assertion, Cablevision points to non-Internet uses of WiFi, such as wireless printing or streaming video between two devices within a home. CSC Proposed Findings ¶ 44 (citing Tr. 72:4-14, 470:4-471:7, 283:8-24). Cablevision admits, as it must, that Internet connection is a common, if not preeminent, WiFi application. Id. at ¶ 43 (DX DD at 1). Cablevision concedes that "some consumers may at times use the term `WiFi' as a `shortcut' to refer not only to the WiFi connection itself, but also to a (wired) connection to the internet when accessed via WiFi." Id. at ¶ 45 (citing Tr. 71:18-25, 105:9-15, 109:2-3); see also Tr. 126:5-126:8.
Verizon, for its part, highlights numerous examples that suggest that consumers understand the term "WiFi," and by extension, the concept of WiFi speed, primarily, if not exclusively, in the context of a wireless connection to the Internet. See, e.g., Tr. 182:7-17, 183:17-21, 358:24-359:5, 377:10-23. The evidence introduced includes Cablevision's own Frequently Asked Questions webpage,
Cablevision maintains and touts a network of "WiFi hotspots" which allow its
Verizon challenges several claims that Cablevision makes with respect to its wireless network. See, e.g., Tr. 28:15-16, 298:2-6; see also id. at 22:18-20, 210:4-12. Principally, Verizon contends that Cablevision's advertising touting its 1.1 million hotspots misleads consumers because approximately 1 million of those hotspots emanate from routers in the private homes of its subscribers. Tr. 341:11-16; 342:13-16; see also Tr. 44:13-21; 557:1-10. Hence, Verizon argues, these hotspots are not truly "public." Tr. 192:20-24; 193:6-12; 194:6-10. Additionally, Verizon points to numerous Cablevision ads that could be construed to suggest through omission, that these hotspots are located exclusively in public places. DX F, G, H, OO (television commercial discussing hotspots in public locations).
Closely related to the WiFi network issue are advertisements by Cablevision touting that it offers a "better data network" than Verizon, see DX E, DX M, DX N; tr. 198:18-199:8, 397:21-24, and suggestions that Verizon "two-times" it customers by charging for cellular data usage from customers that have already paid for WiFi access at home. See DX L; Tr. 308:12309:10. As to the former, it is undisputed that when connected to WiFi, mobile computer devices can access greater quanta of data far faster than when connected via cellular towers. Tr. 256:8-10. At the same time, it is also well beyond dispute that Verizon's cellular towers provide
In recent months, Cablevision launched a new product known as Freewheel, an all-WiFi communication device. CSC Ex. 43; Tr. 307:7-9. Freewheel consists of a Motorola Moto-G model smartphone configured to function only using WiFi connections rather than traditional cellular telephone towers. CSC Ex. 43; Tr. 316:18-317:9. Using this configuration enables Cablevision to offer consumers a relatively low-cost mobile device that can be used, where WiFi is available, to make and receive phone calls, text and surf the Internet. Id.; Tr. 317:1-4. Verizon objects to many aspects of the Freewheel advertising, including references to the device as a "phone," and comparisons drawn to cell phones and smartphones. See, e.g., Verizon Findings ¶ 22, DE 102 (citing Tr. 397:1-3); Tr. 403:17-19. Verizon does not offer any survey evidence on the issue of consumer confusion, but points to internal Cablevision marketing research — focus group studies of preliminary Freewheel advertisements — suggesting that certain viewers could be confused about the nature of the Freewheel device and the extent of the "coverage" of the WiFi network which allows the device to be online. DX B; Tr. 395:13-16.
For its part, Cablevision defends the marketing campaign, suggesting that Freewheel does, in fact, function as a smartphone when connected to WiFi, and identifies limiting language in the ads designed to inform consumers about the device. See Tr. 323:4-9, 323:15-19, 324:2-8, 530:9-18. While each side tries to focus the dispute on discrete wording in the campaign, the gestalt is best gathered from viewing excerpts from the web site advertisement, which are reproduced below:
DX N. Using this "picture is worth a thousand words" approach, it seems clear that Cablevision has positioned its Freewheel product as something new and different from a cellular phone.
A party seeking preliminary injunctive relief must demonstrate
Red Earth LLC v. United States, 657 F.3d 138, 143 (2d Cir.2011) (internal quotation marks omitted). The Court has "wide discretion in determining whether to grant a preliminary injunction," as it is "one of the most drastic tools in the arsenal of judicial remedies." Grand River Enter. Six Nations, Ltd. v. Pryor, 481 F.3d 60, 66 (2d Cir.2007) (citations omitted). In Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 153 (2d Cir.2007) ("DIRECTV"), a case which bears great factual similarity to the instant dispute, the Second Circuit noted: "the district judge's determination of the meaning of the advertisement [is] a finding of fact that shall not be set aside unless clearly erroneous." Id. (quoting S.C. Johnson & Son, Inc. v. Clorox Co., 241 F.3d 232, 237 (2d Cir.2001), and citing Johnson & Johnson v. GAC Int'l, Inc., 862 F.2d 975, 979 (2d Cir.1988)).
DIRECTV involved false advertising claims by Time Warner Cable against DIRECTV relating to the television picture quality provided by the two entities, in particular, the quality improvement purportedly offered by DIRECTV's digital HDTV broadcasts. The Second Circuit set forth the theories available to a plaintiff in a false advertising action under § 43(a) of the Lanham Act:
DIRECTV, 497 F.3d at 153.
Importantly, "[a] showing of irreparable harm is the single most important prerequisite for the issuance of a preliminary injunction." Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 118 (2d Cir.2009) (citation omitted). "Irreparable harm `exists in a trademark case when the party seeking the injunction shows that it will lose control over the reputation of its trademark pending trial,' because loss of control over one's reputation is neither `calculable nor precisely compensable.'" New York City Triathlon, LLC v. NYC Triathlon Club, Inc., 704 F.Supp.2d 305, 343 (S.D.N.Y.2010) (quoting Power Test Petroleum Distribs., Inc. v. Calcu Gas, Inc., 754 F.2d 91, 95 (2d Cir.1985)).
Cablevision's challenge to the Verizon FiOS "Fastest WiFi" ads proves unpersuasive. As a factual matter, Cablevision does not dispute, and the evidence clearly establishes, that Verizon FiOS's speed plans allow customers to wirelessly connect to the Internet at speeds far in excess of those offered by Cablevision. Tr. 120:6-8, 529:2-4, 170:22-171:10, 171:19-22, 174:2-12, 184:11-185:1; CSC Ex. 2 at 47; Tr. 70:12-16, 88:22-89:4.
Rather than challenge the claim directly, Cablevision premises its contention on credible evidence suggesting that, as a technical matter, WiFi speed relates to the performance speed of a router rather than the actual speed at which consumers can connect to the Internet. However, persuasive evidence of record — including Cablevision's own documents — clearly demonstrates that in common parlance, consumers understand WiFi to refer to a wireless connection to the Internet. Tr. 73:8-13; 127:7-10; DX DD; DX JJ; DX NN; DX PP; see also Internet Access in NYC, NYCGO.COM, http://www.nycgo. com/articles/internet-access-in-nyc (last visited Aug. 4, 2015). Thus, having the "fastest WiFi" would commonly be interpreted
Therefore, based on the evidence offered at the hearing, this Court cannot conclude that Cablevision will likely succeed or offer a serious question going to the merits of whether Verizon's ad represents a literal falsehood. On the question of implied falsity, the Verizon ads do not, in any manner, rely upon "use of innuendo, indirect intimations, and ambiguous suggestions," and the doctrine seems inopposite. DIRECTV, 497 F.3d at 156. Moreover, Cablevision does not offer any evidence of consumer reaction to the Verizon ads that might support this theory, which is generally required to support such a claim. Id.
Relying on the Third Circuit's decision in Groupe SEB USA, Inc. v. Euro-Pro Operating LLC, Cablevision argues that Verizon's earlier predication of the "Fastest WiFi" claim solely upon the Intertek study of router speed prevents the company from changing its subsequent advertisement. 774 F.3d 192 (3d Cir.2014). In Groupe SEB, the defendant advertised its steam iron in packaging hawking the fact that the product offered "More Powerful Steam ... at half the price," explicitly defining the phrase to refer to "grams per minute" produced by the device. In the course of litigation — having never changed its packaging — defendant urged the Court to deem the term ambiguous based upon consumer surveys. The Third Circuit rejected this efforts, noting "Euro — Pro chose a definition for steam power and now must live with it." Id. at 202. Cablevision attempts to shoehorn this determination into a doctrine that suggests that Verizon, having first advertised an erroneous measure of WiFi speed is forever forbidden from altering it. Tr. 16:1-9.
This would appear to be an overly broad reading of the case, and makes no sense here. Rather, Verizon's commitment to discontinue the erroneous statement that it has the fastest WiFi based solely upon the router speed study renders the question of preliminary relief as to those ads moot. Stokely-Van Camp, Inc. v. Coca-Cola Co., 646 F.Supp.2d 510, 524-25 (S.D.N.Y.2009) ("Coca — Cola's cessation of the ads and its commitment not to run such ads during the pendency of this lawsuit obviates the need for a preliminary injunction on these issues because SVC cannot show any likelihood of irreparable injury without the preliminary injunction"). And given that the Court finds that Cablevision cannot demonstrate a likelihood of success on the question of whether the "Fastest WiFi" claim is literally or implicitly false, preliminary relief is unwarranted.
Based on these findings, Cablevision's application for a preliminary injunction is denied.
As a threshold matter, Cablevision argues that Verizon's motion should be denied because of unreasonable delay in seeking preliminary injunctive relief as to most of its promotions. The Second Circuit has held that "[a] district court should generally consider delay in assessing irreparable harm." Tom Doherty Associates, Inc. v. Saban Entm't, Inc., 60 F.3d 27, 39 (2d Cir.1995); Kuklachev v. Gelfman, 629 F.Supp.2d 236, 250 (E.D.N.Y. 2008), aff'd, 361 Fed.Appx. 161 (2d Cir.
As an initial matter, I find that Verizon's inordinate delay in seeking relief in connection with all but the Freewheel ads weighs heavily against a finding of irreparable harm as to those ads. Although Verizon's counsel points to the lack of a bright-line rule in assessing delay, tr. 556:1-25, he failed to articulate any reason why Verizon waited more than six months before bringing claims against the "1.1 million hot spots" ads.
Verizon challenges the veracity of Cablevision's claims of offering subscribers access to a network of 1.1 million WiFi hotspots. Tr. 28:15-16; 298:2-6. Even assuming that the challenge is not time-barred, it still fails. It is true, as Verizon suggests, that review of Cablevision's advertisements reveal that it studiously avoids any mention of the fact that most of these hotspots consist of routers located in the homes of residential customers, while, at the same time, emphasizing those hotspots located in public facilities.
During the hearing, Cablevision provided credible expert evidence demonstrating that Cablevision's dual-SSID routers provide WiFi connection at distances of 135' or more, DX QQ; CSC Ex. 38 at Ex. 3, Tables 1.0, 1.1, 2.0; Tr. 83:5-84:6, and Verizon's expert testified that consumers could use the devices at such distances. Tr. 464:8. The Intertek router studies commissioned by Verizon tested routers at distances of 101' and 135', noting that these locations "were outside the home." CSC Ex. 1 & 2 at 15. As many single-family homes in this district are located on plots of one-quarter acre (measuring approximately 100 feet square), or sometimes less, signals from residential routers can be accessed from the street or sidewalk. Tr. 83. Courts have construed streets and sidewalks as "public facilities" in any number of contexts. See, e.g., Hill v. Colorado, 530 U.S. 703, 715, 120 S.Ct. 2480, 147 L.Ed.2d 597 (2000) (describing "public sidewalks, streets, and ways" as "`quintessential'
As to the "better data network" ads, Verizon contends that "Cablevision's claim that the Optimum WiFi Network is a `better data network' is literally false as Verizon has better, more expansive geographic data coverage." Verizon Proposed Findings ¶ 51. However, I cannot conclude that, in this context, "better" necessarily relates to geographic coverage. It is beyond dispute, for example, that a consumer connected to WiFi will experience faster downloads than when connected through cellular towers, such that some users could consider Cablevision's WiFi offering "better" than Verizon's more available cellular network which features narrower bandwidth. Tr. 256:8-10.
That the meaning of "better" can be questioned not only undermines any claim of falsity, but renders this language inactionable puffery. In DIRECTV, the Second Circuit quoted the Third Circuit in defining puffery:
DIRECTV, 497 F.3d at 159. In Lipton v. Nature Co., the Court of Appeals determined that the "general assertion that the research ... conducted was `thorough' is mere `puffing' and therefore, not actionable." 71 F.3d 464, 474 (2d Cir.1995). Given these authorities, to say that one's product is "better" than a competitive product, without more specificity, could well define the concept of puffery.
Verizon contends that, to the extent that Cablevision refers to its Freewheel device as a "phone" or "smartphone," rather than as a "device," such references represent a literal falsehood. This argument is misplaced. As the evidence clearly demonstrates, the Freewheel actually is a "Motorola Moto-G model smartphone."
Verizon's principal contention, though, emanates from the concern that consumers will confuse the service offered with the Freewheel with cellular telephone service,
The only consumer perception evidence offered at this juncture involves Cablevision's own focus group studies of preliminary versions of Freewheel advertisements. To be clear, that focus group evidence did suggest the possibility of consumer confusion: the company conducting the work for Cablevision warned that "[c]omparisons to cellular in messaging exposed during the groups helped create the perception that Freewheel service (including talk/text) will be ubiquitous given respondents' near universal coverage experience with cell service for talk/text/data[.]" DX A at 6; see also DX B at 3.
Cablevision argues that the Court cannot rely on focus group research as such information is "inherently unreliable for determining the message communicated by advertising, because they are qualitative rather than quantitative," CSC Proposed Findings ¶ 227 (citing Scotts Co. v. United Indus. Corp., 315 F.3d 264, 277 (4th Cir. 2002)). Though Scotts held focus groups insufficient under Daubert to support a claim in that case, the matter is readily distinguishable. The Fourth Circuit found that "the moderators of the groups channeled the discussions and led the participants into giving responses favorable to Scotts," and such procedures "destroyed the objectivity of the discussions, rendering
In this matter, the evidence clearly shows that the focus groups were shown preliminary drafts of Freewheel advertisements, and that substantial changes were made to the promotions before release. See Tr. 323:4-19. The changes include specific qualifications of the text to make clear that "it's a WiFi phone" rather than a "cell phone," as demonstrated by Exhibit 44:
CSC Ex. 44 (emphasis added). Another post-focus group change made to the promotional material included this page of the website (and significantly, Freewheel could, at that time only be purchased from the website), which further clarifies the nature of the device:
Id. Thus, because of these substantial changes to the promotion made after the focus group review, I find that that focus
Based on these findings, Verizon's motion for a preliminary injunction based on the Freewheel promotion must be denied.
For the reasons set forth herein, plaintiffs' and defendants' cross-motions for preliminary injunction are DENIED.
