AMY J. ST. EVE, District Judge:
After an approximately three-week trial, a jury returned a verdict largely in favor of Defendant Whirlpool Corporation ("Whirlpool") and against Plaintiff LG Electronics U.S.A., Inc., ("LG"). Specifically, the jury found in favor of Whirlpool and against LG on LG's claim of false advertising under the Lanham Act. The jury also found in favor of Whirlpool and against LG on LG's claim under the Illinois Consumer Fraud and Deceptive Business Practices Act ("the CFA"). The jury did find in favor of LG and against Whirlpool on LG's claim under the Illinois Uniform Deceptive Trade Practices Act ("the IUDTPA"), which provides only for injunctive relief. 815 ILL. COMP. STAT. 510/3. The jury also specifically found that LG had failed to prove by a preponderance of the evidence that it was entitled to lost profits, price erosion, or to Defendant's profits. LG now seeks a nationwide injunction against Whirlpool based on the jury's verdict. For the reasons discussed below, the Court denies LG any injunctive relief.
LG brought this case against Whirlpool in connection with the latter's advertising of its steam dryers. LG sued Whirlpool for false advertising in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), regarding its steam dryers. LG's Lanham Act claim pursued three separate theories: 1) Whirlpool's advertisements are literally false; 2) Whirlpool's advertisements are literally false by necessary implication; and 3) Whirlpool's advertisements are impliedly false. In addition, LG brought a claim against Whirlpool alleging that it violated the CFA and a claim that it violated the IUDTPA. The gravamen of each of LG's claims was that Whirlpool uses the word "steam" in its advertisements and in the name of its Duet Steam Dryer, and that such use is literally false and misleading because the Duet Steam Dryer does not use steam, but instead uses a mist of cold water sprayed into a warm dryer drum. According to LG's theory at trial, this method is not "true steam" and thus Whirlpool's advertising is false and misleading. As noted above, the jury rejected all of LG's claims except its claim under the IUDTPA. Plaintiff premised its IUDTPA claim on the same evidence that the jury considered and rejected on its Lanham Act and CFA claims.
During trial, LG called 16 witnesses, including one witness via deposition testimony. Whirlpool called seven witnesses, including four witnesses by deposition testimony. LG called three expert witnesses to testify: 1) Anthony Jacobi, a thermodynamics expert; 2) Dr. Mohan Rao, LG's damages expert; and 3) Robert Reitter, LG's survey expert. Whirlpool called Dr. Subbaiah Malladi, a mechanical engineer, who opined that Whirlpool's dryer creates steam.
At the injunction hearing, LG submitted declarations from Dr. Rao; Dr. Jerry Wind, Professor of Marketing at the Wharton School of the University of Pennsylvania; and Mr. John Herring, Vice President of Sales for Home Appliances National Accounts who has responsibility for, among other products, LG's washer
The dispute in this case focused on steam dryers and on the definition of steam. LG and Whirlpool are fierce competitors in the steam-dryer market. In fact, they are the main competitors in that market. LG asserted and argued throughout trial that Whirlpool's "steam" dryers do not actually employ steam, and thus Whirlpool's advertising of its "steam" dryer is false.
During trial, the evidence showed that Whirlpool announced its intention to launch its steam dryer in the fall of 2007. Whirlpool then introduced its steam dryer in the fall of 2007 and was the first company in the industry to market a steam dryer. (Trial Transcript "Tr." at 313; R. 641 at 30; R. 644 at 15.) Whirlpool developed the dryer to serve the needs of its laundry customers who wanted the benefits of wrinkle reduction and odor removal in the clothing placed in the dryer. (Id. at 2459.) Whirlpool also demonstrated that it began researching the use of steam in its laundry products as early as March of 2005. (Id. at 2460-61.) In fact, as of October 2006, Whirlpool had eight engineers committed to the steam project. (Id. at 2465-66.)
LG introduced its steam washer into the marketplace in early 2006. (Injunction Hearing Transcript ("Inj. Hr'g") at 7.) LG did not introduce its steam dryer into the marketplace until December 2007—two months after Whirlpool. (Id. at 14.)
The evidence at trial revealed that LG's and Whirlpool's respective steam dryers use different methods of creating steam. LG's dryer makes steam through an external boiler that boils water and then injects hot vapor into the dryer drum. As Professor Jacobi testified:
(Tr. at 454.) The steam is injected into the dryer drum for a seven-minute cycle. (Id. at 458.)
Whirlpool designed its dryer to create steam through a system that injects a mist of water into a hot dryer drum, where the mist combines with the heated air and tumbling clothes to create steam. (Tr. at 328, 333, 364-65, 390-93, 641-42, 766-67, 2471-73). Ms. Klyn explained:
(Tr. at 2472.) Dr. Malladi testified that the Whirlpool dryer drum attains a temperature far in excess of 212-degrees Fahrenheit, and even reaches close to 300-degrees Fahrenheit at times. (Id. at 1939.) Dr. Malladi opined:
(Tr. at 1940.)
LG's expert, Dr. Jacobi, opined that the Whirlpool dryer does not create or use scientific or thermodynamic steam which he defined as "pure water vapor." (Tr. at 451-52.) He did acknowledge, however, that the Whirlpool dryer contains "water vapor mixed with air." (Id. at 469.)
LG did not introduce any evidence that Whirlpool ever represented that it created steam in its dryers by boiling water. Further, LG did not introduce any evidence that Whirlpool ever advertised that the creation of steam in Whirlpool's steam dryer is similar to the creation of steam in LG's steam dryer.
LG also called Robert Reitter, the Senior Vice President of the consultancy Guideline, as an expert in consumer surveys. Mr. Reitter testified about a consumer survey he conducted using a Whirlpool advertisement referred to as the "Blue World commercial." The commercial advertised the Whirlpool Duet Steam Dryer. Although it informed consumers that the dryer created steam to reduce wrinkles and odors, it did not explain how the dryer created that steam. It is undisputed, however, that Whirlpool has not run that commercial for the past 18 to 24 months. (Inj. Hr'g at 30.)
Mr. Reitter testified that he conducted a survey of consumers in 12 market areas.
Whirlpool's promotional materials and website explain how its dryer creates steam. (R. 644 at 20 (citing the pertinent parts of the record).) Kirk Dunsbergen, who was responsible for the design and development of Whirlpool's dryer, testified that Whirlpool, in its operator's manual and in print advertising, "tells the consumers that [it] spray[s] a fine mist of cold water into the hot air inside of the drum of the Whirlpool steam dryer." (Tr. at 333.) LG did not offer any evidence of actual confusion on the part of any of Whirlpool's customers.
After the Court instructed the jury on the law pertaining to LG's Lanham Act, CFA, and IUDTPA claims, the jury returned general verdicts in favor of Defendant on the first two claims. (R. 631 at 1-2.) Specifically, the jury found for Whirlpool on LG's claim of false advertising under the Lanham Act, and for Whirlpool on LG's claim that Whirlpool violated the CFA. The jury thus rejected LG's three theories that Whirlpool's advertisements
In addition, the jury addressed the monetary damages LG sought in the case. It rendered a verdict that LG had failed to prove by a preponderance of evidence that it is entitled to lost profits, price erosion, or Whirlpool's profits. (R. 631 at 3.)
The jury found for LG on its IUDTPA claim against Whirlpool.
Following the jury verdict, LG filed a motion seeking a permanent injunction against Whirlpool's ongoing advertising of its dryers as using steam. (R. 640.) Plaintiff argues that the jury's finding of a violation of the IUDTPA requires "an injunction to bring Whirlpool's deceptive advertising practices to an end." (R. 641 at 10.)
The Court held an injunction hearing on February 17, 2011. (R. 661.) At the hearing, Plaintiff called John Herring, who joined LG in June 2006 and whom the company made Vice President of National Accounts in August 2009. (Inj. Hr'g at 5-6.) Mr. Herring, who has responsibility for, among other products, LG's washer and dryer sales, testified that LG launched its steam washer in early 2006 which put "LG on the map in terms of a major player in the appliance business." (Id. at 8.) He
Herring testified that Whirlpool launched its steam dryer around October 2007, and that LG followed with its own steam dryer in approximately December 2007. (Id. at 14.) He explained that LG was disappointed with the modest impact of its steam dryer on the company's position and market share, the latter of which grew by slightly over half a point. (Id. at 16.) Herring opined that Whirlpool's launching its steam dryer first explained LG's negligible gain in market share. (Id. at 17.) He then stated that Whirlpool's marketing of steam both reduced LG's price premium, thus impacting its profitability, and harmed Plaintiff's competitive position, brand equity, and goodwill. (Id. at 19-23.) In his opinion, Whirlpool's "deceptive" advertising that its dryers used "steam" caused consumers to purchase Whirlpool's dryers rather than LG's dryers. He explained:
(Inj. Hr'g at 23.) Herring did not do any surveys of customers or interview any customers in preparation for his testimony. (Id. at 25.) Instead, his analysis was based on figures showing that, for "Dryer Market Shares 2006," LG's market share for steam washers was approximately 4.5% for summer 2006. (Id. at 12-13.) This figure doubled to in excess of 9% in summer 2007. (Id. at 13.) At the time Whirlpool launched its stream dryer in October 2007, LG's market share for all dryers was 7.97% and Whirlpool's was 32.04%.
Defendant called Ms. Klyn, who is general manager of the cooking business for North America and was previously product-development director for front-load laundry and, prior to that, category director for Whirlpool brand laundry. (Id. at 28-29, 41-42; Tr. at 836-37.) She testified that Whirlpool no longer runs the "Blue World" and "Geyser" commercials on which Mr. Reitter based this survey and offered opinion, and explained that the company ceased airing them between 18 and 24 months before the February 17, 2011, hearing. (Inj. Hr'g at 29-30.) She also explained that none of Defendant's advertisements purports to convey information as to how LG's steam dryers create or use steam, and none compares the way LG and Whirlpool create steam in their respective dryers. (Id. at 31.) Ms. Klyn
LG asks the Court to enter a nationwide injunction barring Whirlpool from using the word "steam" in describing its dryers. (R. 640.) In the alternative, LG asks the Court to enter an injunction requiring Whirlpool to "make clear each time it uses the term `steam' in connection with its water spray dryers—especially on the panel of the dryer itself—that this `steam' refers to a cold-water spray function which results in an evaporative process no different than the one used in any conventional dryer." (Id.; R. 641 at 12.) Below, the Court discusses the applicable evidence in light of the jury's verdict and reaches factual determinations consistent with that verdict. In making these factual determinations, the Court assessed the credibility of the witnesses, including their respective demeanors while testifying. For the reasons discussed below, the Court denies LG's motion.
Section 3 of the IUDTPA provides that "[a] person likely to be damaged by a deceptive trade practice of another may be granted injunctive relief upon terms that the court considers reasonable." 815 ILL. COMP. STAT. 510/3. The jury found that Defendant had violated the IUDTPA, and LG now seeks injunctive relief. (R. 640.)
Plaintiff presents two broad arguments why the law entitles it to injunctive relief. LG first submits that, because the jury found that Whirlpool's challenged practices violated the IUDTPA, the law presumes irreparable harm, such that an injunction should follow.
Three discrete questions underlie Plaintiff's first argument. Did the jury actually
The Court answers each of these questions in the negative. The jury's general verdict does not amount to a finding that Whirlpool's challenged practice is likely to damage LG. Furthermore, LG has failed independently to prove a likelihood of such harm. Even if this were not the case, the Court has discretion whether to award injunctive relief and would decline to exercise it in this case.
In returning a verdict for LG under the IUDTPA, the jury found that Whirlpool had:
(R. 629 at 36.) Because it was a general verdict, however, the jury did not specify which practice or practices it found to create a likelihood of confusion or misunderstanding.
It is clear, however, that the jury did not have to find that any conduct by Whirlpool damaged LG or was likely to damage LG. The jury instructions did not make harm— be it past, present, or future—a requisite of an IUDTPA violation. (R. 629 at 36-37.) Thus, LG cannot rely on the jury verdict in its favor under the IUDTPA alone to establish a likelihood of harm. Indeed, the Court explicitly instructed the jury that it "should not consider the question of damages." (Id. at 37.) Furthermore, the jury returned specific findings that LG did not prove, by a preponderance of the evidence, that LG is entitled to lost profits, price erosion, or Whirlpool's profits. The jury's general verdict does not reveal that it necessarily, or even probably, made a finding as to a likelihood of harm.
To support this assertion, LG relies on Chicago's Pizza, Inc. v. Chicago's Pizza Franchise Ltd., 384 Ill.App.3d 849, 323 Ill.Dec. 507, 893 N.E.2d 981, 996 (Ill.App. Ct.2008). That case, however, does not support LG's position. In Chicago's Pizza, the trial court had found actual confusion by customers. Chicago's Pizza, 323 Ill.Dec. 507, 893 N.E.2d at 997. The Illinois Court of Appeals did not hold that a likelihood of confusion under the IUDTPA, in itself, necessarily entitles a plaintiff to a presumption of harm or injunctive relief. Id. at passim. Indeed, it noted that the defendant "plans to reopen his business under the name `Chicago's Pizza,' thus perpetuating the potential for confusion. Therefore, we find that plaintiffs are entitled to injunctive relief." Id., 323 Ill.Dec. 507, 893 N.E.2d at 998. In the present case, by contrast, not only is it unclear whether the jury found actual confusion, its general verdict does not reflect a finding that LG is likely to suffer any harm from Whirlpool's objected-to trade practice.
Plaintiff also relies on Multiut Corp. v. Yehuda Draiman, 359 Ill.App.3d 527, 295 Ill.Dec. 818, 834 N.E.2d 43, 51 (Ill.App.Ct. 2005), and Bingham v. Inter-Track Partners, 234 Ill.App.3d 615, 175 Ill.Dec. 447, 600 N.E.2d 70, 74 (Ill.App.Ct.1992). Neither of these decisions holds, however, that a person can satisfy the IUDTPA's requirement that a person be "likely to be damaged" by demonstrating a likelihood of confusion or misunderstanding alone. Multiut, which found that the "trial court's ruling was not contrary to the manifest weight of the evidence," merely upheld the lower court's finding that the defendant had violated the IUDTPA. Multiut, 295 Ill.Dec. 818, 834 N.E.2d at 51. Bingham noted that "injunctive relief is warranted
At the February 17, 2011, hearing, LG also directed the Court's attention to Mead Johnson & Co. v. Abbott Labs., 201 F.3d 883 (7th Cir.2000); Lincoln Diagnostics, Inc. v. Panatrex, Inc., No. 07-CV-2077, 2009 WL 3010840 (C.D.Ill. Sept. 16, 2009), and Bonner v. Westbound Records, Inc., 49 Ill.App.3d 543, 7 Ill.Dec. 409, 364 N.E.2d 570 (Ill.App.Ct.1977). (Inj. Hr'g at 66-68.) Plaintiff proffers the Mead and Lincoln decisions for the principle that a presumption exists that false or misleading advertising gives rise to irreparable harm. (Id. at 67.) Mead involved the distinct setting of a violation of the Lanham Act, however, and so it does not control in this case. Mead, 201 F.3d at 883, passim. The same holds true of Lincoln.
Bonner does not compel a contrary result. There, the Illinois Court of Appeals held that, "[h]aving already found a likelihood of success on the merits in proof of a deceptive trade practice, it necessarily follows that irreparable harm has been demonstrated." Bonner, 7 Ill.Dec. 409, 364 N.E.2d at 576. As an initial matter, that 34-year-old case involved a distinct procedural setting, namely that of a preliminary injunction where the court assessed the likelihood of success on the merits before trial. In contrast, this case proceeded to trial and the Court has the benefit of the jury's verdict, including its finding that LG failed to establish that it was entitled to any monetary damages. See, e.g., Davis v. Pension Ben. Guar. Corp., 571 F.3d 1288, 1291-92 (D.C.Cir.2009) (In assessing a preliminary injunction, "[i]f the movant makes an unusually strong showing on one of the factors, then it does not necessarily have to make as strong a showing on another factor. For example, ... if substantial harm to the nonmovant is very high and the showing of irreparable harm to the movant very low, the movant must demonstrate a much greater likelihood of success."). As explained in greater detail below, LG's showing of future irreparable harm is weak, indeed. This counsels strongly against an award of injunctive relief. See Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 129 S.Ct. 365, 375-76, 172 L.Ed.2d 249 (2008) ("We agree
Further, the Court does not read Bonner or the other cases cited by Plaintiff as depriving it of the discretion that the IUDTPA explicitly bestows upon it in fashioning injunctive relief. See 815 ILL. COMP. STAT. 510/3 ("A person likely to be damaged by a deceptive trade practice of another may be granted injunctive relief upon terms that the court considers reasonable.") (emphasis added). Furthermore, the IUDTPA clearly requires that the relevant plaintiff face a likelihood of harm in order to obtain an injunction. Id. A finding that a practice gave rise to "a likelihood of confusion" does not in itself satisfy this condition. See Kensington's Wine Auctioneers & Brokers, Inc. v. John Hart Fine Wine, Ltd., 392 Ill.App.3d 1, 330 Ill.Dec. 826, 909 N.E.2d 848, 857 (Ill. App.Ct.2009) ("To be eligible for injunctive relief under [the IUDTPA], a plaintiff must show that the defendant's conduct will likely cause it to suffer damages in the future."); see also 3M, 259 F.3d at 608.
Because the jury did not find that Whirlpool's practices are likely to damage LG, Plaintiff's argument that the jury verdict in its favor under the IUDTPA automatically entitles it to injunctive relief fails.
In order to obtain injunctive relief pursuant to the IUDTPA, LG must establish that a "deceptive trade practice" by Whirlpool is likely to harm it. See 815 ILL. COMP. STAT. 510/3 ("A person likely to be damaged by a deceptive trade practice of another may be granted injunctive relief[.]"). The Seventh Circuit has explained that "[t]he standard for a permanent injunction is the same as for a preliminary injunction except that the plaintiff must show actual success on the merits" and "the burden is on the plaintiff to show that damages are inadequate." Chi. Teachers Union, Local No. 1 Am. Fed'n of Teachers v. Bd. of Educ. of the City of Chi., 640 F.3d 221, 232 (7th Cir.2011). Nevertheless, LG faces a higher burden of proof than if it were seeking a preliminary injunction.
The Court finds that Whirlpool has established that its dryers do, in fact, use steam. As a result, Whirlpool's advertising its dryers as using steam neither violates the IUDTPA nor is likely to harm LG in a manner cognizable under that Act. This finding is consistent with the jury's finding for Whirlpool on the CFA claim and against Whirlpool on the broader IUDTPA claim, which required only a finding that Whirlpool engaged in "conduct" that created "a likelihood of confusion or misunderstanding."
LG spends much of its briefing still arguing that Whirlpool's dryer is not a steam dryer and that the jury's verdict supports this argument. (R. 641 at 12-16.) Based on the evidence submitted at trial, which established that the Duet Dryer uses steam, the Court disagrees. The jury's verdict is consistent with this holding.
LG contends that Whirlpool's dryer is merely a cold-water spray dryer, and that its use of such spray precludes one from accurately characterizing it as a steam dryer. (R. 641 at 12-16.) The Court rejects Plaintiff's argument, and finds that Defendant's dryer uses "steam." The evidence clearly established that the drum in Whirlpool's dryer is hot, and in some places hotter than the boiling point of water at the moment the dryer injects mist. (Tr. at 462-64, 2001.) As a result, steam unquestionably results and permeates the drum, thus reaching the tumbling clothes. (Tr. at 641-42, 1950-52, 317-318, 327-328, 421, 1939-40, 1957, 1980, 607-10, 500-01, 2512.)
Strong evidence supports this conclusion. In the first place, Ms. Klyn, an engineer, explained in detail the design and operation of the Duet Steam Dryer, credibly concluding that Whirlpool "absolutely" makes steam in its steam dryer. (Tr. at 2488, 2512.) Furthermore, Dr. Malladi, who has a Ph.D. in mechanical engineering from the California Institute of Technology, echoed this conclusion. Looking to Webster's Third New International Dictionary, Dr. Malladi convincingly testified that multiple definitions of "steam" found in that dictionary encapsulate what occurs in the Whirlpool dryer and drum. (Tr. at 1966-68.) Specifically, he explained that Defendant's dryer uses steam, as defined both by "a vapor arising from some heated substance" and by "water in the state of vapor." (Id.) He testified, however, that one definition—"the invisible vapor into which water is converted when heated to the boiling point"—does not apply to the Whirlpool drum because no boiling occurs. (Id.) He nevertheless concluded—convincingly—that there is steam in the Whirlpool drum under the other definitions. (Id.)
Dr. Malladi further testified that he had reviewed the American Heritage Dictionary of the English Language, which defines steam as "the vapor phase of water."
Ultimately, it would be nonsensical to assert that one does not create, and use, "steam" when one injects cold water or "mist" into a hot drum within which it indisputably evaporates. Because Whirlpool's dryer uses steam when drying clothes, consumers would not be confused or misled by Defendant's accurate representation that its dryer is a steam dryer. As Whirlpool's dryer uses steam, Plaintiff cannot establish a likelihood of future injury. Indeed, LG's explanation why it is likely to suffer future harm from Whirlpool's advertising of steam dryers is based on the value that consumers place on steam. (R. 641 at 26-31.) It follows that, because Defendant's dryers do in fact use steam, Plaintiff's contention as to future harm of a type relevant to the IUDTPA fails.
For reasons explained immediately below, the Court's finding that Whirlpool's Duet Dryer uses steam is consistent with the jury's general verdicts.
The jury returned general findings with respect to the Lanham Act, CFA, and IUDTPA claims, and so it did not explain the basis for its decision.
Although a court may not always be able to determine the basis for a jury's
In the present case, the jury's verdicts imply that it found that the Duet Dryer uses steam. It is important to emphasize that, in making this determination, the Court must not construe the jury's general verdict under the IUDTPA in isolation of the jury's other verdicts, the instructions that the jury considered, and the evidence that the parties presented to the jury at trial. See United States v. Calabrese, No. 02-CR-1050-10, 2007 WL 3037124, at *1 (N.D.Ill. Oct. 17, 2007) ("A jury's verdict should be read in light of the way the case was argued and, although this does not always allow a trial judge to reach a clear conclusion about what the jury did, this reading often allows a reliable judgment about what the verdict meant."); see also El-Hakem v. BJY, Inc., 415 F.3d 1068, 1074 (9th Cir.2005) ("[T]he court `must search for a reasonable way to read the verdicts as expressing a coherent view of the case, and the consistency of the jury verdicts must be considered in light of the judge's instructions to the jury.") (quoting Toner ex rel. Toner v. Lederle Labs., 828 F.2d 510, 512 (9th Cir.1987)); cf. United States v. Etimani, 328 F.3d 493, 504 (9th Cir.2003) ("Read together, the verdict and the instructions might have shown what the jury necessarily found[.]").
Here, had the jury determined that the Duet Dryer does not use steam, the jury would most likely have found for LG under its CFA claim in light of the evidence that the parties introduced at trial. In this respect, the jury's verdict in favor of LG under the IUDTPA, but against LG under the CFA, implies a factual finding that Whirlpool's Duet Dryer uses steam.
There was and is no dispute that Whirlpool advertises its dryers as using steam.
The second element is that "Whirlpool intended for the consuming public to rely on the deception." (Id. at 33.) Substantial evidence introduced at trial reveals that Whirlpool was aware that consumers valued steam and that Whirlpool expected that its advertising of steam would attract consumers. (Tr. at 458-461, 855, 1006, 1287-88, 1434.) Indeed, Whirlpool admitted that it wanted to be the first company to launch a steam dryer, knowing that consumers would value the same. (Id. at 273, 278, 893-94, 1000-01.) Thus, in light of a finding that the Duet Dryer does not use steam, LG would have satisfied the requisite showing that "Whirlpool intended for the consuming public to rely on the deception." (R. 629 at 33.)
The third element is that "the deception occurred in the course of conduct involving trade or commerce." (Id.) There is no dispute that Whirlpool's advertising satisfies this element.
The last elements under the CFA require a showing that LG sustained actual damages and that Whirlpool's deception proximately caused such damages. (R. 629 at 33.) In the present case, the existence of harm to LG caused by Whirlpool's steam-based advertisements is dependent on Whirlpool's Duet Dryer's not using steam. If the jury found that Whirlpool's dryers did not use steam, it would have likely found damage to Plaintiff. Given the abundant evidence in the record that the parties are fierce competitors in the same market (R. 641 at 30; R. 644 at 11), and that consumers place considerable value on steam, the jury would surely have found that any false representation on Whirlpool's part that its dryers used steam harmed LG. Importantly, this element does not require a determination as to a particular magnitude of harm. It merely requires that LG actually sustained damage. (R. 629 at 33.)
It thus follows that the jury's general verdict under the IUDTPA, read in light of the CFA verdict, the evidence introduced at trial, and the instructions, strongly implies that the jury found that Whirlpool's dryers use steam.
Importantly, it would have been consistent for the jury to impliedly find that Whirlpool's Duet Dryer uses steam and to
The jury could have determined that, although the Duet Dryer uses steam, the Blue World commercial, which was the subject of Mr. Reitter's survey, invited the impression that its dryers create steam by boiling. The evidence is such that the jury likely found that this advertisement created a likelihood of confusion or misunderstanding as to how the Duet Dryer operates, but also concluded that this was immaterial in light of the fact that the dryer does use steam. Such a finding would have supported a violation of the broad IUDTPA claim, but would not have supported a violation of either the Lanham Act or CFA. With respect to the latter claim, the likelihood of misunderstanding would not have translated into a more-serious "deceptive act" and, given the misunderstanding's immaterial nature, it would not have caused LG to sustain actual damages. (R. 629 at 33.) As to the Lanham Act claim, the immateriality of the likelihood of misunderstanding means that it would not constitute deception likely to influence the purchasing decisions of consumers.
In this respect, the jury may well have found—indeed, it likely found—that, although Whirlpool's dryers use steam, a particular advertisement that Whirlpool ran created a likelihood of confusion or misunderstanding, but did not violate the Lanham Act or CFA. This is especially probable because the only credible evidence of confusion that LG introduced related to the Blue World commercial.
Mr. Reitter introduced this evidence. He conducted a survey about an advertisement run by Whirlpool for its Duet Steam dryer, seeking to establish "to what extent. . . consumers take away the impression. . . that the dryer uses steam rather than a mist of cold water that is injected onto clothes and then heated by the normal action of the dryer afterwards." (Tr. at 1619, 1622.) Mr. Reitter concluded that "about two-thirds of consumers took away the message that it is a hot vapor in the Whirlpool dryers and not a mist of cold water that is heated up; and, in fact, about two-thirds of consumers emphatically rejected the image of a mist of cold water as describing the operation of the dryer that they saw [the] advertisement for." (Id. at 1622-23.)
Mr. Reitter put two-hundred people in a test group, and created a matched sample of two-hundred similar people whom he put in a control group. (Id. at 1626-27.) He then showed the test group an actual commercial used by Whirlpool for the Duet Steam Dryer. (Id. at 1628.) He played a different commercial issued by Whirlpool around the same time for the Duet Steam Dryer. (Id. at 1629.) The latter commercial mentioned steam less
Mr. Reitter then testified that, "if you compare the two first choices in the test group and the control group, you can see that hot vapor outnumbers cold water mist by more than 5 to 1 among those who saw the test commercial, whereas for the control commercial, the cold water mist slightly outnumbers the hot vapor perception." (Id. at 1651.)
Having viewed the relevant commercial, the jury could have found that it created a likelihood of confusion or misunderstanding, even if it also found that the Duet Dryer uses steam. In this respect, the jury could have found an IUDTPA violation if it perceived the commercial as implicitly suggesting that the particular kind of steam in the Duet Steam dryer was boiled and injected into the chamber.
For the preceding reasons, the jury's implied factual finding that LG's Duet Dryer uses steam is consistent with its general verdict in favor of LG under the IUDTPA.
Because the Court determines, consistent with the jury's implied finding, that Whirlpool's Duet Dryer uses steam, the law does not entitle LG to an injunction under the IUDTPA enjoining Whirlpool from advertising that its dryers use steam. To nevertheless obtain an injunction pursuant to the IUDTPA, LG would have to establish conduct that violates that Act and that is likely to damage LG. It has failed to do so. As explained immediately hereafter, LG limited the evidence of harm that it introduced at trial and at the post-trial hearing to damage that would befall it in the event that Whirlpool's statements that its Duet Dryer uses steam are false or deceptive. As Whirlpool's dryers do use steam, LG's evidence fails to establish a likelihood of damage.
LG relies on the trial testimony and declaration of its expert economist, Dr. Mohan Rao, in support of its motion for an injunction.
Mr. Herring was the sole witness whom LG called at the February 17, 2011, hearing to establish that Whirlpool's marketing of "steam" is likely to harm LG. Mr. Herring testified that Whirlpool launched its steam dryer around October 2007, that LG followed with its own steam dryer in approximately December 2007, and that Plaintiff was surprised by the limited impact its steam dryer had on its position and market share. (Hr'g Tr. at 14-16.) He explained that LG was disappointed with the modest effect of its steam dryer on LG's position and market share, the latter of which grew by slightly over half a point. (Id. at 16.) Mr. Herring further opined that it was the fact that Whirlpool launched its steam dryer first that explained LG's negligible gain in market share. (Id. at 17.) He then stated that Whirlpool's marketing of steam both reduced LG's price premium, thus impacting its profitability, and harmed Plaintiff's competitive position, brand equity, and goodwill. (Id. at 19-23.) Mr. Herring ultimately opined that Whirlpool's use of the term "steam" in its advertising of its dryer "absolutely" harms LG.
Herring's testimony does not satisfy LG's burden, by virtue of this Court's (and the jury's likely implied) finding that
In light of the Court's determination that Whirlpool's dryers use steam, which mirrors the jury's likely implied finding of fact to the same effect, it follows that the jury also made an implied finding that Whirlpool's practices did not harm LG. As explained above, the only evidence of harm that LG introduced at trial concerned the negative effect that Whirlpool's steam-based advertising had on LG's sales. Because the jury likely impliedly found that the Duet Dryer uses steam—a conclusion that the evidence strongly supports—then LG necessarily failed to demonstrate harm.
This conclusion is strengthened by the fact that Plaintiff did not prevail on its Lanham Act and CFA claims, both of which required LG to establish harm, and yet Plaintiff succeeded on its IUDTPA, which did not require a showing of injury. (R. 631 at 1-2.) Further, the jury specifically found that Plaintiff failed to prove that it was entitled to lost profits, price erosion, or Whirlpool's profits.
LG requests "a nationwide injunction. . . prohibiting Whirlpool from using the word `steam' in connection with cold water spray dryers, or, at a minimum, requiring a meaningful qualification to the word `steam' each time it is used[.]" (R. 641 at 46.) Because Defendant's Duet Dryer uses steam, however, the law does not entitle LG to this relief. Whirlpool's advertising of "steam" does not violate the IUDTPA, and so LG is not entitled to enjoin Whirlpool from using the term in connection with the Duet Dryer.
In addition, and as explained in the previous section, LG does not present any evidence of harm independent of injury resulting from Whirlpool's statements regarding steam. Because Whirlpool's dryers do in fact use steam, LG has failed to introduce evidence of harm. This, too, requires the Court to deny injunctive relief to LG. See 815 Ill. COMP. STAT. 510/3 ("A person likely to be damaged by a deceptive trade practice of another may be granted injunctive relief upon terms that the court considers reasonable.").
As explained above, the jury's general verdict does not in itself establish future harm sufficient to entitle LG to injunctive relief. Indeed, the Court explained that the jury likely found an IUDTPA violation based on advertising that it perceived to create a likelihood of misunderstanding with respect to how the Duet Dryer creates steam (as distinct from whether the Duet Dryer uses steam, which it does).
In this respect, the only credible evidence of consumer confusion that LG introduced pertained to a single aired advertisement, which Whirlpool has since discontinued.
LG is not entitled to an injunction. Whirlpool's Duet Dryer uses steam, and so Whirlpool's advertising of that fact is not a practice that this Court could enjoin pursuant to the IUDTPA. LG has pointed to no other ongoing practice of Defendant that creates a likelihood of confusion or misunderstanding. To the extent that the Blue World commercial created such a likelihood by creating the impression that the Duet Dryer creates steam by boiling, such a fact would not give LG a right to injunctive relief because Whirlpool has since discontinued that advertisement. Plaintiff has failed to identify any other business practice of Whirlpool that this Court could enjoin.
Plaintiff's only other argument is that the jury's general verdict in its favor under the IUDTPA in itself entitles it to an injunction. (R. 641 at 23-41.) Above, the Court explained that this verdict did not require the jury to make an express or implied finding of harm to LG, such as would entitle it to injunctive relief under the IUDTPA. See 815 Ill. COMP. STAT. 510/3 (providing that a court may grant injunctive relief to a person "likely to be damaged" by a deceptive trade practice); see also 3M, 259 F.3d at 608 ("[W]hen a plaintiff has demonstrated no actual damages nor [sic] a likelihood of future damages a permanent injunction. . . is inappropriate."). In addition, LG must connect the IUDTPA violation to a particular practice that this Court could enjoin. See Fed.R.Civ.P. 65(d)(1)(C) ("Every order granting an injunction . . . must describe in reasonable detail . . . the act or acts restrained[.]") It has not done so. Therefore, the jury's general verdict for LG under the IUDTPA does not in itself entitle LG to an injunction.
The preceding facts are fatal to LG's motion for a permanent injunction. Even if LG could point to a particular practice of Whirlpool that violates the IUDTPA and that is likely to damage LG, however, the Court, in exercising its discretion, would still decline to award an injunction.
LG contends that the Court need not apply the traditional four-part test under Federal Rule of Civil Procedure 65 for injunctive relief because LG is asking for an injunction under the state-law violation. (Id. at 31.) The Court does not agree. It is black-letter law that, "[i]n ascertaining the meaning of a statute, we begin with the plain language." Barma v. Holder, 640 F.3d 749, 751 (7th Cir.2011). In construing a statute, the Court may look to "the language itself, the specific context in which that language is used, and the broader context of the statute as a whole." United States v. LaFaive, 618 F.3d 613, 616 (7th Cir.2010) (quotations omitted).
The IUDTPA provides that "[a] person likely to be damaged by a deceptive trade practice of another may be granted injunctive relief . . ." 815 Ill. COMP. STAT. 510/3 (emphasis added). By its express terms, this statutory provision imparts discretion on the Court to decide whether to grant
As a result, and contrary to LG's position, a federal court would not grant a person who establishes a violation of the IUDTPA an injunction as a matter of course. Accord eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 392-93, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006) ("As in our decision today, this Court has consistently rejected invitations to replace traditional equitable considerations with a rule that an injunction automatically follows a determination that a copyright has been infringed."). Furthermore, the Court agrees with Whirlpool that the traditional four-factor test in equity applies in deciding whether a federal court should grant permanent injunctive relief for a violation of the IUDTPA. See DeVry, Inc. v. Int'l Univ. of Nursing, 638 F.Supp.2d 902, 910-11 (N.D.Ill.2009); Am. Taxi Dispatch, Inc. v. Am. Metro Taxi & Limo. Co., 582 F.Supp.2d 999, 1005 (N.D.Ill.2008).
The Supreme Court has made clear that, "[a]ccording to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief." eBay, 547 U.S. at 391, 126 S.Ct. 1837. A plaintiff satisfies that test if (1) it has suffered an irreparable injury; (2) remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) the balance of hardships between the plaintiff and defendant warrants a remedy in equity; and (4) a permanent injunction would not disserve the public interest. Id.
Even if LG had demonstrated a likelihood of harm related to a specific business practice that Defendant engages in, the Court would decline to grant an injunction under the four-factor test in equity because Plaintiff cannot satisfy that four-factor test. As noted, LG has not demonstrated past injury or a likelihood of future harm, and so Plaintiff necessarily fails the first factor of the relevant test. Accord 3M, 259 F.3d at 608 ("[W]hen a plaintiff has demonstrated no actual damages nor [sic ] a likelihood of future damages a permanent injunction . . . is inappropriate."). Even if Plaintiff had established such damage from an identifiable deceptive trade practice—and even if LG is correct that irreparable harm would necessarily follow from the same (Inj. Hr'g Tr. at 67)— Plaintiff has failed to demonstrate that the balance of hardships warrants an injunction.
LG implausibly argues that Whirlpool is "indifferent with regard to whether it calls its dryers steam dryers or something else." (R. 641 at 36.) To the contrary, Defendant explains in detail the considerable costs that an injunction would subject it to. (R. 644 at 46-50.) Whirlpool observes that it markets and prominently advertises all thirty-one models of its steam dryers as using steam. (Id. at 46.) Defendant further explains that its advertising of steam dryers appears in a number of different outlets, and asserts that it has invested millions of dollars in effecting the same. (Id. at 46-47.) Defendant estimates that there are approximately 160,000 Whirlpool dryers on trade customers' floors, in inventory, or in various distribution channels. (Id. at 47.) Whirlpool submits that an injunction, in addition to being costly, would adversely impact its credibility and goodwill and would damage
Conversely, and as explained above, Plaintiff has introduced only weak evidence, at best, that Whirlpool's steam-dryer advertising has injured it. Indeed, there is no evidence that Whirlpool is representing that its Duet Dryer uses boiled steam. (Inj. Hr'g at 30.) Nor is there evidence that Whirlpool's advertising purports to explain how LG's steam dryer creates steam. (Id. at 31.) As a result, the Court concludes that the balance of hardships weighs against granting an injunction.
The IUDTPA provides that "[c]osts or attorneys' fees or both may be assessed against a defendant only if the court finds that he has wilfully engaged in a deceptive trade practice." 815 Ill. COMP. STAT. 510/3. See Tarin v. Pellonari, 253 Ill.App.3d 542, 192 Ill.Dec. 584, 625 N.E.2d 739, 747 (Ill. App.Ct.1993) (plaintiff "must demonstrate to the satisfaction of the court that the defendants had wilfully engaged in deceptive trade practices" in order to recover fees and costs). The evidence in this case falls far short of the requisite showing of wilfulness.
LG argues that Whirlpool had actual knowledge that its steam advertising was deceptive, yet it continued to use the word "steam" in its advertising. (R. 641 at 45-46.) In support of its motion for attorneys' fees, LG focuses on the statements of certain members of Whirlpool's legal department that Defendant should say that its dryer creates steam. (Id. at 45.) The Court has already determined, however, consistent with the jury's likely implied finding, that Whirlpool's dryer does indeed produce steam. Therefore, Defendant's marketing of steam does not violate the IUDTPA.
Furthermore, LG premises its IUDTPA claim on the same conduct upon which it based its Lanham Act and CFA claims. The jury rejected both these claims. In addition, the Court found that LG had failed to establish any basis for punitive damages and therefore did not send this issue to the jury. (Tr. at 2380-82 (explaining why there was "not enough evidence to send that to the jury").)
For the foregoing reasons, the Court denies Plaintiff' motion for injunctive relief and attorneys' fees (R. 640). Furthermore, the Court grants Whirlpool's motion to strike testimony and evidence submitted by LG (R. 666).
"LG alleges that Whirlpool violated an Illinois statute called the Illinois Consumer Fraud and Deceptive Business Practices Act ("Consumer Fraud Act"). This Illinois statute prohibits deceptive practices, including but not limited to the use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission. To prove a violation of the Consumer Fraud Act, LG must prove by a preponderance of the evidence that (1) Whirlpool engaged in a deceptive act or unfair practice; (2) Whirlpool intended for the consuming public to rely on the deception; (3) the deception occurred in the course of conduct involving trade or commerce; (4) LG sustained actual damages; and (5) such damages were proximately caused by Whirlpool's deception. The deception must have been material to the consumer. Deception is material where a buyer would have acted differently knowing the information, or if it concerned the type of information upon which a buyer would be expected to rely in making a decision whether to purchase." (R. 629 at 33.)
In determining causation between Defendant's advertising of steam and ensuing harm to Plaintiff, Dr. Rao offered an opinion on (1) whether consumers care about steam, (2) whether consumers can differentiate steam and mist; (3) whether, based on differentiation, consumers end up buying steam dryers; and (4) whether LG lost sales as a result of Whirlpool's making more sales. (Id. at 1286.) On the basis of consumer surveys carried out by Whirlpool, Dr. Rao concluded that purchasers of dryers place significant value on steam. (Id. at 1287-1303.)
Furthermore, Herring's testimony was unconvincing. He testified that Whirlpool's first-mover advantage accounted for LG's disappointing results when Plaintiff subsequently marketed its own steam dryer. He failed to address other factors, however, that could potentially have contributed to the parties' respective market-based performance. Nor did he attempt to measure, or offer an opinion on, the extent of the marginal value that consumers place directly on "steam" in dryers. In addition, Herring testified that Whirlpool's advertising of steam in its dryers negatively affects LG's pricing premium, competitive position, and brand equity, but never purported to offer a view on the magnitude of that effect or to exclude the explanatory relevance of other factors.
Ultimately, Herring contends that Whirlpool's use of the "steam" in its advertising of its dryer "absolutely" harms LG. (Hr'g Tr. at 13). This conclusion, however, instead of being the result of careful research founded on experiential data, amounts to little more than a subjective opinion. On cross-examination, Herring admitted that he had not conducted his own empirical surveys of consumers or interviewed even a single consumer. (Id. at 25-26.) In addition, and as noted, LG failed to establish that he had the requisite foundation to offer many of these opinions. Even if the Duet Steam did not use steam, such evidence would be insufficient to establish that LG is likely to suffer harm from Whirlpool's ongoing advertising of its dryers as using "steam."
