JORDAN, Circuit Judge.
Pernod Ricard USA, LLC ("Pernod") appeals the decision of the United States District Court for the District of Delaware that the label of "Havana Club" brand rum, a rum sold in the United States by Bacardi U.S.A., Inc. ("Bacardi"), is not a false advertisement of the rum's geographic origin under Section 43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B). Because we agree with the District Court that no reasonable interpretation of the label as a whole could lead to the conclusion that it is false or misleading, we will affirm.
This case is the latest battle in a lengthy war between Pernod and Bacardi, two multinational distilleries, over the use of the words "Havana Club" to sell rum in the United States. Though the convoluted history of the conflict has been recounted at length elsewhere, a portion of it requires retelling.
In 1994, Bacardi filed a federal trademark application for use of the "Havana Club" mark on rum in the United States,
In August 2006, just days after Cubaexport's federal trademark registration of "Havana Club" expired, Bacardi began selling rum in Florida using "Havana Club" as the brand name. The rum was distilled in Puerto Rico and was made using the Arechabala family recipe.
On the front of the bottle, the phrase "Havana Club™" appears in large stylized letters, followed by the word "BRAND" in much smaller letters. Below that, in letters of prominent though slightly smaller size than those in the brand name and in a different font, the words "PUERTO RICAN RUM" appear. Beneath that, in smaller letters and different color ink, the label says "HAVANA CLUB™ RUM." The words "Havana Club™" are also repeated several times around the neck of the bottle. The back of the bottle includes a statement in clearly legible type that reads as follows:
In 2006, shortly after Bacardi began its sales of the Havana Club rum made in Puerto Rico, Pernod filed this false advertising suit under Section 43(a)(1)(B) of the Lanham Act, asserting that the labeling of Bacardi's bottle, particularly the use of the words "Havana Club," misleads consumers to believe that the rum is produced in Cuba. At the conclusion of a three-day bench trial, in which Pernod presented unrebutted survey evidence that approximately eighteen percent of consumers who looked at the Havana Club rum bottle were left thinking that the rum was made in Cuba or from Cuban ingredients,
Pernod timely appealed the District Court's decision on the sole ground that the Court erroneously failed to consider the survey evidence presented by Pernod.
It appears that this false advertising dispute is a proxy for the real fight the parties want to have, which is over the right to the exclusive use of "Havana Club" as a trademark. Under the peculiar circumstances of the Cuban trade embargo and the attendant denial of an opportunity to register and protect "Havana Club" as a mark for rum in the United States, Pernod has turned to the false advertising provision of the Lanham Act, § 43(a)(1)(B).
15 U.S.C. § 1125.
To establish a false advertising claim under the Lanham Act, a plaintiff must prove:
Warner-Lambert v. Breathasure, 204 F.3d 87, 91-92 (3d Cir.2000) (citing Johnson & Johnson-Merck Consumer Pharm. Co. v. Rhone-Poulenc Rorer Pharm., Inc., 19 F.3d 125, 129 (3d Cir.1994)). As to the second element, actual deception or a tendency to deceive is presumed if a plaintiff proves that an advertisement is unambiguous and literally false. Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharm. Co., 290 F.3d 578, 586 (3d Cir.2002). If the message conveyed by an advertisement is literally true or ambiguous, however, the plaintiff must prove actual deception or a tendency to deceive, and it may do so with a properly conducted consumer survey. Id. at 586, 588-90; Rhone-Poulenc Rorer, 19 F.3d at 129-31.
Pernod submitted a consumer survey at the trial and asserts that the District Court was required to consider it when determining if Bacardi's "Havana Club" label amounted to a misleading statement of geographic origin. According to Pernod, "[r]esolution of the `pivotal legal question' of whether an advertisement, like Bacardi USA's label, implies an inaccurate message to a sufficient number of consumers `virtually demands survey research because it centers on consumer perception and memory.'" (Appellant's Op'g Br. at 30 (quoting Fed. Judicial Ctr., Reference Manual on Scientific Evidence 235 (2d ed. 2000).) Bacardi responds, in line with the District Court's reasoning, that the initial step in analyzing a statement challenged as false advertising is to "`determine[] what message is conveyed.'" (Appellee's Ans'g Br. at 18 (quoting United States Healthcare, Inc. v. Blue Cross of Greater Phila., 898 F.2d 914, 921 (3d Cir.1990)).) And, Bacardi emphasizes, our precedent provides that "`[s]ometimes this determination may be made from the advertisement on its face.'" Id. (quoting United States Healthcare, 898 F.2d at 922).
To address the competing arguments before us, we must first consider the District Court's reasoning in greater detail. The Court admitted Pernod's survey evidence but decided at step one of the analytical process that no false or misleading statement was made, so no survey evidence was needed. Indeed, the Court questioned whether "Havana Club" is even an actionable statement under § 43(a)(1)(B) because "[i]t is not self-evident
After considering the development of the right of action arising from a "false designation of origin" and exploring the meaning of "origin," the District Court discounted the relevance of the precedents it had just reviewed. It drew a distinction between § 43(a)(1)(A), which is the subsection of § 43(a) that is focused on trademarks and, more generally, unfair competition, and § 43(a)(1)(B), which is the subsection at issue here and addresses false advertising. Section 43(a)(1)(A) forbids, among other things, false or misleading representations that may deceive consumers about the "origin" of goods or services, while § 43(a)(1)(B) forbids false or misleading representations as to the "geographic origin" of goods and services. In light of the addition of the modifier "geographic" to the word "origin" in § 43(a)(1)(B), the District Court considered authority regarding § 43(a)(1)(A) to be "not particularly instructive on the meaning of `geographical origin' as used in § 43(a)(1)(B)." (App. at 21.)
The Court acknowledged that the Supreme Court has held in a § 43(a)(1)(A) case that "origin" refers to "the producer of the tangible goods that are offered for sale, and not the author of any idea, concept, or communication embodied in those goods." Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 37, 123 S.Ct. 2041, 156 L.Ed.2d 18 (2003). "[A]pplying that focus to the interpretation of `geographical origin,'" the District Court said, "would implicate the place of manufacture, rather than the source of that product's recipe or its heritage." (App. at 21.) Nevertheless, relying on a decision of the Trademark Trial and Appeal Board ("TTAB"), an administrative tribunal in the USPTO, the Court considered it "plausible" that the term "geographic origin" in the false advertising context may be broad enough to embody a product's heritage, including its history and recipe. (Id. (citing Corporacion Habanos, S.A. v. Anncas, Inc., 88 U.S.P.Q.2d 1785, 1791 (T.T.A.B.2008) ("a product may be found to originate from a place, even though the product is manufactured elsewhere")).) But, according to the reasoning of the District Court, regardless of whether one considered geographic origin as simply a question of where something is made or, instead, took the broader "heritage" approach to the question of geographic origin, Pernod's claim failed, and it did so for reasons that made survey evidence irrelevant.
As to the place of manufacture, the Court was persuaded that "[t]he Havana Club label clearly and truthfully provides the origin of defendant's rum, and is not deceptive." (App. at 23.) The label proclaims the contents of the bottle to be "Puerto Rican Rum" and specifically says the rum is "distilled and crafted in Puerto Rico[.]" (App. at 12.) The District Court saw no room for deception in that.
Turning to the question of heritage, the Court declared that "Havana Club rum has a Cuban heritage and, therefore, depicting such a heritage is not deceptive." (App. at 24.) Under this broader interpretation of the term "geographic origin," Pernod's survey evidence was necessarily irrelevant, in the Court's view, because Bacardi should have a First Amendment right "to accurately portray where its rum was historically made — as opposed to claiming that the product is still made there." (Id. at 25.) The Court found it particularly important that Bacardi's Havana Club rum is based on the Arechabala family's original Havana Club recipe.
While we may not agree with every aspect of the foregoing analysis,
The central conceptual problem before us is whether language can be clear enough that its meaning is beyond reasonable dispute. Pernod is of course correct that the issue in false advertising cases is "whether an advertisement, like [Bacardi's] label, implies an inaccurate message...." (Appellant's Op'g Br. at 30.) That is somewhat of a tautology, but Pernod's choice of the word "implies" is apt because it rightly indicates that the words themselves have meaning beyond the subjective inferences of any individual reader or listener. Words, malleable though they may be over time, must still, of necessity, be repositories of commonly accepted meaning at any given point in time. Were it otherwise, ordinary discourse would be impossible.
While they lack the precision of numbers, words must, as nearly as possible, be accorded an objectively reasonable meaning if law is to have any fair claim as an instrument of justice. Proof of that is
While most of these examples are from areas of law that do not require, as does the law of false advertising, a studied effort to understand what words mean from the perspective of members of the consuming public, they do show that there is and must be a point at which language is used plainly enough that the question ceases to be "what does this mean" and becomes instead "now that it is clear what this means, what is the legal consequence."
The Mead Johnson decision demonstrates the principle. In that case, the Seventh Circuit considered whether the phrase "1st Choice of Doctors" could be misleading. The court acknowledged that, in the context of a false advertising case, "whether a claim is `false' or `misleading' is an issue of fact rather than law[,]" but it went on to say that "[t]he sort of survey evidence Mead Johnson gathered would not support a conclusion by a reasonable person that Abbott's claim was false or implied a falsehood." Mead Johnson, 209 F.3d at 1034 (reciting language added to 201 F.3d 883, 886-87). Recognizing that there is a baseline meaning to some words that put them beyond any credible claim of misunderstanding, the Seventh Circuit said, "never before has survey research been used to determine the meaning of words, or to set the standard to which objectively verifiable claims must be held." Mead Johnson, 201 F.3d at 886.
Here, there is a factually accurate, unambiguous statement of the geographic origin of Havana Club rum. The label clearly states on the front that the liquor is "Puerto Rican Rum" and, on the back, that it is "distilled and crafted in Puerto Rico." No reasonable consumer could be misled by those statements, and the rest of the label does not put those statements in doubt.
But, as we have already emphasized, we are not dealing with those words in isolation.
Put another way, even if the words "Havana Club," taken in isolation, may be understood as indicating a product's geographic origin in Havana, Cuba, those same words cannot mislead a reasonable consumer who is told in no uncertain terms that "Havana Club" is a brand of rum made in Puerto Rico. Cf. Am. Italian Pasta, 371 F.3d at 392-93 (holding that the phrase "America's Favorite Pasta" in context of the product's whole packaging was not an actionable statement under § 43(a)(1)(B)); Mead Johnson, 209 F.3d at 1034 (adding language to 201 F.3d 883) (holding a reasonable person would not interpret the phrase "1
Under these circumstances, a district court can properly disregard survey evidence as immaterial, because, by definition, § 43(a)(1) does not forbid language that reasonable people would have to acknowledge is not false or misleading.
We hasten to add that cases like the present one should be rare, for one hopes that a case with truly plain language will seldom seem worth the time and expense of contesting in court. That this particular case, and related ones, have been litigated so intensely is due, it seems, to the unusual political baggage and branding potential involved. A word of caution is nevertheless in order, so that our holding today is not taken as license to lightly disregard survey evidence about consumer reactions to challenged advertisements. Before a defendant or a district
Finally, we emphasize once more that our conclusion in this case says nothing of whether the words "Havana Club" are eligible for registration as a trademark. The word "Havana" carries a long legal history in trademark cases. See Corporacion Habanos, 88 U.S.P.Q.2d at 1791 (holding that the trademark "Havana Club" was primarily geographically deceptively misdescriptive when used on cigars not produced in Cuba); In re Bacardi, 48 U.S.P.Q.2d at 1035 (affirming denial of registration to Bacardi for use of the trademarks "Havana Select," "Habana Clasico," "Old Havana," "Havana Primo," and "Havana Clipper," in connection with the sale of rum because the marks were "primarily geographically deceptively misdescriptive... because purchasers' belief that the rum products ... originate in HAVANA, Cuba, is a mistaken belief"). Agency decisions regarding the registration of trademarks look at the words of the mark in isolation and do not consider them in the context of a whole advertisement in which they are used. See In re Budge Mfg. Co., Inc., 857 F.2d 773, 776 (Fed.Cir. 1988) (holding with respect to a clarifying statement made in advertising which the trademark applicant argued negated the misleading nature of the mark, "This argument
Because the phrase "Havana Club" is not a misleading statement of geographic origin under § 43(a)(1)(B) of the Lanham Act when considered in the context of Bacardi's rum label, the District Court was not required to consider Pernod's survey evidence. We will therefore affirm the judgment of the District Court.
McNeilab, Inc. v. Am. Home Prods. Corp., 501 F.Supp. 517, 525 (S.D.N.Y.1980). We would add that, when the meaning of words is beyond all reasonable dispute, there is no issue of fact on the question of meaning.