HUBEL, United States Magistrate Judge.
Before the Court are four motions for summary judgment pursuant to Federal Rule of Civil Procedure ("Rule") 56(c): (1) defendant Fluke Corporation's ("Fluke") motion for summary judgment on its counterclaim for injunctive relief and damages for false advertising under Section 43(a) of the Trademark Act of 1946 ("Lanham Act"), 60 Stat. 441, as amended, 15 U.S.C. § 1125(a); (2) Fluke's motion for summary judgment on plaintiff FLIR Systems, Inc.'s ("FLIR") claims for false advertising, trade libel/commercial disparagement, and civil conspiracy; (3) defendant Sierra Media's ("Sierra") motion for summary judgment on FLIR's claims for trade libel/commercial disparagement, civil conspiracy, and aiding and assisting; and (4) FLIR's motion for summary judgment on Fluke's counterclaims for trademark infringement, unfair competition, and false advertising under the Lanham Act, and trademark infringement under Oregon common law.
There is full consent by all parties to adjudication of the case by a magistrate judge pursuant to 28 U.S.C. § 636(c). Having reviewed the papers and pleadings submitted by the parties and having heard oral argument on the pending motions, the Court hereby ORDERS as follows: (1) Fluke's motion (Docket No. 177) for summary judgment on its counterclaim for injunctive relief and damages for false advertising is DENIED; (2) Fluke's motion (Docket No. 178) for summary judgment on FLIR's claims for false advertising, trade libel/ commercial disparagement and civil conspiracy is GRANTED in part and DENIED in part; (3) Sierra's motion (Docket No. 175) for summary judgment is GRANTED in its entirety; and (4) FLIR's
The facts essential to this case are relatively straightforward. FLIR deals in infrared cameras, thermography, and thermal imaging equipment. FLIR's products are sold in a wide range of industrial, commercial, and government markets around the world. Fluke is a wholly-owned subsidiary of Danaher Corporation, a publicly traded company, and is in the business of manufacturing, distributing, and servicing electronic test tools and software. Fluke also manufactures and distributes thermal imaging cameras that compete with FLIR's products in interstate commerce. Sierra, on the other hand, is Fluke's long-time media and marketing company. Sierra and Fluke's relationship spans over fifteen years, and Fluke has become one of Sierra's largest customers. Sierra neither manufactures, nor distributes thermal imaging cameras.
In late-2007/early-2008, after Fluke introduced the Fluke Ti10 and Fluke Ti25 model cameras as its lowest price offerings, FLIR introduced its ix series at an even lower price. FLIR's ix series, which includes the FLIR i3, FLIR i5 and FLIR i7 camera models, are marketed as "entry level" cameras. Since at least 2008, FLIR has used images captured by higher resolution thermal imaging cameras superimposed on the display of lower resolution cameras depicted in its online and print advertising, including advertisements for the ix series. FLIR's vice president of marketing, Allen Frechette ("Frechette"), has admitted that, "[i]f a customer purchased an i3 based on the belief that the images shown in the advertisement for the i3 were in fact from an i3 thermal imaging camera or another 60 by 60 thermal imaging camera, that customer would be mistaken[.]" (Frechette Dep. 234:24-235:4-7, Jan. 30, 2012.)
In September of 2009, Fluke and Sierra (collectively, "Defendants") worked together to create a video that compared "drop test" results of thermal imaging equipment manufactured by Fluke to four competing products, including the FLIR i7, FLIR i60, and FLIR T400. Defendants claimed to have tested the durability, quality and reliability of the thermal imaging cameras by dropping them from a height of two meters onto a concrete floor. The video depicts the Fluke Ti32 bouncing and appearing to remain intact. With respect to FLIR's cameras, although the video shows each of FLIR's imagers dropping multiple times, including for each imager at least one drop where no visible damage results, it also shows drops that caused exterior damage to FLIR's cameras. Overall, the video shows nineteen camera drops: five for the Fluke Ti32 and fourteen for the four competing products. There are no words were spoken in the video, but the following text appears embedded in the video: "Fluke thermal imagers"; "Rugged"; "5 thermal imagers"; "2 meter drop"; "Solid concrete floor"; "All products subjected to identical tests by third party"; "Fluke Ti32 ... 17 drops and counting"; "The ONLY rugged thermal imager"; "Why waste money on tools that break?"; "Get a demo today ... 1-800-760-4523... www.fluke.com/demo."
FLIR filed this suit in August of 2010. On December 30, 2010, FLIR filed a six-count first amended complaint against Defendants for: (1) false advertising in violation of the Lanham Act (Count One); (2) trade libel/commercial disparagement (Count Two); (3) intentional interference with prospective economic relations (Count Three); (4) civil conspiracy (Count Four); (5) aiding and assisting (Count Five); and (6) declaratory relief regarding Fluke's alleged
Summary judgment is appropriate "if pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). Summary judgment is not proper if factual issues exist for trial. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995).
The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324, 106 S.Ct. 2548. A nonmoving party cannot defeat summary judgment by relying on the allegations in the complaint, or with unsupported conjecture or conclusory statements. Hernandez v. Spacelabs Medical, Inc., 343 F.3d 1107, 1112 (9th Cir.2003). Thus, summary judgment should be entered against "a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322, 106 S.Ct. 2548.
The court must view the evidence in the light most favorable to the nonmoving party. Bell v. Cameron Meadows Land Co., 669 F.2d 1278, 1284 (9th Cir.1982). All reasonable doubt as to the existence of a genuine issue of fact should be resolved against the moving party. Hector v. Wiens, 533 F.2d 429, 432 (9th Cir.1976). Where different ultimate inferences may be drawn, summary judgment is inappropriate. Sankovich v. Life Ins. Co. of N. Am., 638 F.2d 136, 140 (9th Cir.1981).
However, deference to the nonmoving party has limits. The nonmoving party must set forth "specific facts showing a genuine issue for trial." FED.R.CIV.P. 56(e). The "mere existence of a scintilla of evidence in support of plaintiff's positions [is] insufficient." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Therefore, where "the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (internal quotation marks omitted).
There are five elements to a false advertising claim under the Lanham Act:
Skydive Ariz., Inc. v. Quattrocchi, 673 F.3d 1105, 1110 (9th Cir.2012). Falsity may be established by showing that a statement of fact "was literally false, either on its face or by necessary implication, or that the statement was literally true but likely to mislead or confuse consumers." Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir.1997) (citation omitted). "When an advertisement is shown to be literally or facially false, consumer deception is presumed, and the court may grant relief without reference to the advertisement's actual impact on the buying public." Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 157 (2d Cir.2007) (citation and internal quotation marks omitted; alterations deleted).
Under the false by necessary implication doctrine, "[a] plaintiff may show that an advertisement is literally false ... when, considering the advertisement in its full context, the relevant audience would recognize the false implied claim as easily as if it had been stated explicitly." Pamlab, LLC v. Macoven Pharms., LLC, 881 F.Supp.2d 470, 476 (S.D.N.Y.2012). As the Ninth Circuit explained in Southland Sod, "the court must view the face of the statement in its entirety, rather than examining the eyes, nose, and mouth separately and in isolation from each other." Southland Sod, 108 F.3d at 1139 (quoting Cuisinarts, Inc. v. Robot-Coupe Int'l Corp., No. 81 Civ 731-CSH, 1982 WL 121559, *2 (S.D.N.Y. June 9, 1982)); Time Warner Cable, 497 F.3d at 157 ("The entire mosaic should be viewed rather than each tile separately.")
A subspecies of the false by necessary implication doctrine is a challenge to an advertisement claim based on product testing, Pamlab, 881 F.Supp.2d at 476-77, which courts in other circuits often times refer to as an "establishment claim."
Fluke contends that the undisputed material facts establish that FLIR's advertising
FLIR contends its advertisements are not literally false. In fact, FLIR knows that its advertised cameras cannot attain the image quality of the displayed thermal images; however, FLIR claims "the intention of the Advertisements is merely to show how the images are displayed on the thermal imaging camera," not "to present precise representations of the quality capabilities of the advertised cameras." (Pl.'s Am. Resp. at 1.)
A District Court in this circuit has stated in dicta that "an advertisement can be literally false even though it does not explicitly make a false assertion, if the words and images, considered in context, necessarily and unambiguously imply a false message." CertainTeed Corp. v. Seattle Roof Brokers, No. C09-563RAJ, 2010 WL 2640083, at *10 (W.D.Wash. June 28, 2010) (citation omitted).
An instructive example of such as case is provided by the Eight Circuit's decision in Rhone-Poulenc Rorer Pharm., Inc. v. Marion Merrell Dow, 93 F.3d 511 (8th Cir.1996). There, the advertisement at issue featured "images such as two similar gasoline pumps or airline tickets with dramatically different prices, accompanied by the slogan, `Which one would you choose.'" Id. at 516. The Eight Circuit determined the advertisement was literally false because it "falsely represented that the [drug manufacturer's product] may be indiscriminately substituted" for a competitor's product, id., even though it was not FDA-approved to treat all of the same disorders, physicians needed to monitor patients who switched to the product, and the drug was absorbed differently when taken with a meal. Id. at 514. In other words, the drug manufacturer represented that its product "ha[d] certain qualities that it in fact d[id] not actually have." Id. at 516 (citing Abbott Laboratories v. Mead Johnson & Co., 971 F.2d 6, 14 (7th Cir.1992)).
In this case, it is important to note, at the outset, that "[l]iteral falsity is a question of fact, and summary judgment should not be granted where a reasonable jury could conclude that a statement is not false." K & N Eng'g, Inc. v. Spectre Performance, 2011 WL 4387094, at *9 (C.D.Cal. Sept. 20, 2011); Time Warner Cable, 497 F.3d at 158 ("[O]nly an unambiguous message can be literally false.... Therefore, if the language or graphic is susceptible to more than one reasonable interpretation, the advertisement cannot be literally false"); Buetow v. A.L.S. Enters., Inc., 650 F.3d 1178, 1185 (8th Cir. 2011) ("The standard for proving literal falsity is rigorous.")
That said, although Fluke's arguments are well-taken, questions of fact remain as to whether FLIR's advertisements are literally false. In reaching this conclusion, I am guided primarily by the following considerations. First, thermal imaging cameras (even higher resolution infrared
Second, it is not entirely clear how much of an impact the size, file type, and image editing software utilized had on an image's quality (i.e., perhaps a dramatic reduction in the size of, say, a 320 × 240 image renders it the equivalent clarity of an image produced by a lower resolution camera, depending on the circumstances).
Third, all of FLIR's advertisements referenced in Fluke's amended memorandum include a specification as to each advertised camera's detector resolution (e.g., the number of pixels that the camera is capable of displaying).
Fourth, and finally, based on the visual images and accompanying text in FLIR's advertisements, I cannot say that all reasonable jurors would conclude that the messages conveyed are necessarily and unambiguously false. There are a few concepts at play here. First, we have FLIR admitting it put a higher resolution image on the view finder of a lower resolution camera in its print advertising. The clear suggestion being that the cheaper camera produced the higher resolution image. However, there are two other significant factors in determining whether the "... images, considered in context, necessarily and unambiguously imply a false message." CertainTeed, 2010 WL 2640083, at *10.
The first issue is the size of the camera's display depicted in FLIR's advertisement. If the size of the display on which the higher resolution image was superimposed was the actual size of the camera's display, then perhaps only the pixels of resolution would be involved in the "necessary and unambiguous" message conveyed. When the printed ad's picture of the camera gets reduced or enlarged from the actual display size of the camera, however, the resolution of the printed image can change dramatically.
The second issue revolves around the resolution of the print ad itself. What is the resolution or print density of the print ad and the images in the advertisement? This too can change the quality of the image superimposed on the view finder of the lower resolution camera. Since many of the ads are accessed on the Internet, the graphics display of the customer's computer becomes an issue, as does their printer if they print the ad. The record does not eliminate these issues of fact on the FLIR ads, thus precluding summary judgment for Fluke on this claim. Accordingly, I deny Fluke's motion for summary judgment on its counterclaim because there is a genuine issue of material fact as to whether FLIR's advertisements are literally false under the applicable law.
In its response to Fluke's motion for summary judgment on its counterclaim, FLIR cited reports provided by three expert witnesses: (1) Bruce Silverman, an advertising expert whose testimony was proffered to demonstrate "how customers perceive and respond to images in print and on-line advertising and traditional catalog environment" and whether "FLIR's
Fluke challenges the admissibility of these experts' testimony on relevancy grounds and the reliability requirements enunciated in Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 591-99, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) (indicating district courts analyzing the admissibility of scientific opinion testimony under Federal Rule of Evidence 702 must ensure that the testimony is based on scientifically valid principles and is relevant to the facts in issue). On summary judgment I need not rule on these objections as I deny the motion without considering any of these three opinions. The question of fact I found exists without considering this testimony. See Harlan v. Roadtrek Motorhomes, Inc., No. 07-cv-0686, 2009 WL 928309, at *6 n. 5 (S.D.Cal. Apr. 2, 2009) (same). I expect the same issues will be raised in the parties' Daubert motions set for oral argument October 30, 2012, concerning the admissibility of a variety of expert testimony at trial. The lack of a ruling now is no indication of the ruling to expect following the October 30 hearing.
FLIR's Lanham Act false advertising claim concerns Fluke's dissemination of the drop video. Fluke argues it is entitled to summary judgment on FLIR's Lanham Act false advertising claim for four independent reasons. First, as a matter of law, Fluke argues that the statements complained of are not literally false, nor are they misleading in context. Second, Fluke argues there is no evidence that a substantial portion of the viewing audience was misled. Third, Fluke claims that no reasonable juror could find that the challenged statements, even if false or misleading, are material, as they did not influence consumers' purchasing decisions. Fourth, and finally, Fluke argues that FLIR has not shown that is has been or is likely to be injured as a result of the challenged conduct.
With respect to false comparative advertising, a court's summary judgment analysis largely turns on element one and whether sufficient evidence exists to permit a juror to conclude that an advertisement is literally false. See Southland Sod, 108 F.3d at 1146 (reversing summary judgment where a reasonable juror could conclude advertisements were literally false). A domino effect occurs when there is a genuine issue of fact as to whether the advertisement is literally false. A presumption is created in the plaintiff's favor with respect the remaining elements that are typically contested in Lanham Act false advertising cases, thereby precluding the grant of summary judgment in favor of the defendant.
FLIR argues that a reasonable juror could conclude that the video is literally false. In support of its position, FLIR relies heavily on the opinion of its "drop test expert witness," William Bisenius ("Bisenius"), whose testimony was proffered to demonstrate that there were "numerous problems" with the drop test that rendered the results inconclusive and invalid. Fluke challenges the admissibility of Bisenius' testimony on relevancy grounds and the reliability requirements set forth in Daubert.
Bisenius is the president of CertifiGroup Inc. and, according to his "Compliance Research Report," is "considered an International Expert in Product Safety, including Test and Measurement Equipment." (Millimet Decl. Ex. 59 at 1.) Bisenius holds "the rare double NARTE certification of NCE and NCT (Certified Engineer and Technician)." (Millimet Decl. Ex. 59 at 1.) Bisenius graduated from San Jose State University with a bachelor of science in electrical engineering and has over twenty-seven years of experience in compliance testing of products, including over eight years as a senior engineer and engineering manager for the product safety testing and certification organization, Underwriters Laboratories ("UL"). Based on Bisenius' analysis, research, and experience, he concluded: (1) the drop test was not conducted by an independent source; (2) "[n]umerous problems with the testing, including concerns with the test method, test location, test equipment, management of test samples, as well as test interference from parties involved, renders the [drop] test results inconclusive and invalid"; (3) "[e]diting of the video results in a misperception that all imagers other than Fluke's fail with a single drop impact from 2 meters"; and (4) "[m]ultiple statements made by Fluke in text in the video do not appear accurate." (Millimet Decl. Ex. 59 at 1.)
Pursuant to Federal Rule of Evidence 702, a witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise, if: (1) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (2) the testimony is based on sufficient facts or data; (3) the testimony is the product of reliable principles and methods; and (4) the expert has reliably applied the principles and methods to the facts of the case. FED.R.EVID. 702.
The Ninth Circuit discussed the requirements for admissibility of an expert's opinion in Primiano v. Cook, 598 F.3d 558 (9th Cir.2010). As the Ninth Circuit explained,
Primiano, 598 F.3d at 564 (internal quotation marks and citation omitted).
Bisenius' first and fourth opinions are not subjects on which the jury needs help determining the issue. They are the typical sorts of issues juries decide. They are just as well equipped to listen to the evidence and decide if Sierra is an independent source and if the embedded statements in the video are true. There is nothing about the training and experience of Bisenius that renders his opinion helpful to the jury on these issues. The Court is confident counsel will make the arguments which this proffered testimony constitutes without the witness arguing for them. I sustain the objection to this proffered testimony.
Whether the testing method rendered the test results inconclusive or invalid is a proper subject for expert testimony and that field is within the expertise of Bisenius. As to Bisenius' second conclusion, Fluke claims it should be excluded on the grounds that (1) Bisenius does not purport to have any understanding — either through personal experience or acquired knowledge — about how the thermal imaging camera industry drop tests cameras; (2) Bisenius' opinion fails to tie his opinion to any objective standard; and (3) Bisenius failed to articulate what difference any of the alleged deficiencies made to the drop video. The criticisms Fluke has for his testimony are fertile grounds for cross examination, not exclusion. The objection to that testimony is overruled.
Lastly, whether a video or photo has been edited, enhanced or touched up is something a jury may well be ill-equipped to discern depending on the facts. The objection to this testimony is overruled.
FLIR argues that a reasonable juror could conclude that the video is literally false because the drop test was flawed, and accordingly produced invalid results. I agree.
Where, as here, the "defendant's ad explicitly or implicitly represents that tests or studies prove its product superior, [the] plaintiff satisfies its burden by showing that the tests did not establish the proposition for which they were cited." Castrol, Inc. v. Quaker State Corp., 977 F.2d 57, 63 (2d Cir.1992). Keeping in mind that a product testing "claim can be literally false even if the cited test or study does prove the proposition, if the test was not sufficiently reliable to permit one to conclude with reasonably certainty that the test established the proposition for which it was cited." Riddell, Inc. v. Schutt Sports, Inc., 724 F.Supp.2d 963 (W.D.Wisc.2010) (emphasis in the original) (citation and internal quotation marks omitted).
In Bisenius' opinion, there were numerous problems with the drop test that rendered the test results inconclusive and invalid. For example, Bisenius criticized Defendants for not using or consulting any test standard in developing the test methodology.
In short, it is for the jury to decide whether the drop test did, or did not, establish the proposition for which it was cited in light of the criticisms leveled at the test. Having raised a question of fact on the first element, FLIR is entitled to a presumption that there are questions of fact on deception (element two), materiality (element three), and damage (element five). The fourth element is not challenged by Fluke. Therefore, Fluke's motion for summary judgment is denied on this claim.
To prevail on a state law trade libel claim, it must be established that the defendant published false allegations about the plaintiff with malice, and that the plaintiff suffered special damages or pecuniary harm as a result of the publication. See Soloflex, Inc. v. NordicTrack, Inc., Civ. No. 93-545-JE, 1994 WL 568401, at *13 (D.Or. Feb. 11, 1994).
Fluke's argument regarding FLIR's trade libel/commercial disparagement claim is fourfold. First, Fluke argues that the drop video does not contain any false statements. Second, Fluke argues that, even if FLIR could show the drop video contains a false statement, not one of the allegedly false statements is regarding FLIR's products (e.g., that "[a]n independent 3rd party performed and filmed this drop test video"; "Fluke Ti32 — 17 Drops and counting ... The ONLY rugged thermal imager ... Why waste money on tools that break?") Third, Fluke claims that there simply is no evidence that it acted with malice by publishing the drop video. Finally, Fluke claims that FLIR cannot show it incurred any special damages as a result of the publication of the drop video.
FLIR counters by arguing that summary judgment is inappropriate because a reasonable juror could conclude that the video, in its full context, falsely represents the actual results of the drop test; Fluke acted with malice in publishing the video; and FLIR suffered special damages or pecuniary harm as a result of the video.
Fluke submits evidence it contends supports that it acted with a legitimate business motive, not purely out of malice. Fluke argues a series of emails exchanged in March 2010 by several high-ranking employees of FLIR suggests FLIR perceived a competitive motivation for Fluke. For example, on March 18, 2010, FLIR's vice president of thermography sales, Thomas Scanlon ("Scanlon"), emailed his co-workers, in essence acknowledging the legitimacy of Fluke's marketing strategy:
(Mehrbani Decl. Ex. 9 at 1.) Scanlon went on to state:
(Mehrbani Decl Ex. 8 at 1.)
That same day, FLIR's general manager, Rickard Lindvall ("Lindvall"), responded to Scanlon's emails, stating: "As you know we have focus[ed] on this [vulnerability in our camera design] for our [up]coming volume cameras.... [I]t's just about deciding that this is important. As we have. It will take some time before our complete volume line can do [a] 2m drop[.]... [But] we have closed the gap[.]" (Mehrbani Decl. Ex. 9 at 1.) FLIR's director of sales in the United States, Brent Lammert ("Lammert"), suggested that a "2+ meter drop need[ed] to be in [FLIR's] next product launch." (Mehrbani Ex. 8 at 4.) However, Frechette felt it was more important to preserve the aesthetics of FLIR's cameras: "Not sure I agree on a 2m drop ... [our camera would] have to be wrapped in plastic like the [F]luke [camera] ... looks like crap." (Mehrbani Ex. 8 at 3.)
The problem with this evidence is its origin in FLIR employee statements and its focus on FLIR's thoughts and perceptions. It says nothing directly about Fluke's motivation for the drop test or the ad. Evidence pertaining to Fluke's employee's statements regarding the drop video are revealing in this regard. For example, in August 2009, an email with the subject line "Beat FLIR — input needed" began to circulate among several high-ranking Fluke employees. In that chain of emails, Fluke employee Kirsten Paust stated:
(Millimet Decl. Ex. 18 at 1.) Fluke employee Jay Choi offered one of those advantages: "An imager built for the industrial environment — only imager with 2m drop test and best in class 2 year warranty. Fewer moving parts (no weak articulating lens joint and motorized focus) that will break down." (Millimet Decl. Ex. 18 at 4.) Similarly, Fluke employee Michael Stuart suggested emphasizing the "ruggedness" of Fluke Ti32 compared to FLIR's cameras. (Millimet Decl. Ex. 18 at 6.) This evidence reveals a legitimate competitive motivation.
The parties discuss how to define malicious for purposes of the tort of trade libel under Oregon law. They suggest the court should look to the law of defamation. In a defamation action under Oregon law, malice may be established by evidence that a statement was published: (1) "with knowledge that it was false or with reckless disregard of whether it was false or not," (2) "with [a] high degree of awareness of [its] probable falsity;" or (3) when "defendant in fact entertained serious doubts as to the truth of [its] publication." McNabb v. Oregonian Pub. Co., 69 Or.App. 136, 140, 685 P.2d 458 (1984); Fodor
Further, to the extent FLIR seeks to establish that Fluke's motivation for production of the drop test video was the malicious injury of FLIR, how dominant, if at all, must Fluke's purpose be for FLIR to avoid summary judgment? The tort of trade disparagement has as an element that the false statement be made with malice. Must malice be the only reason for the statement's publication, the primary reason, or any part of the reason the statement was made? The Oregon case law is sparse on trade libel. It does not directly address this issue. I note that malice has been described by the Oregon Supreme court in a case not involving trade libel as "the intention to injure another without just cause or excuse." Heitkemper v. Cent. Labor Council, 99 Or. 1, 192 P. 765, 772 (1920) (citation omitted). This will usually depend on the relationship between the parties and the factual background. As one court observed, the intent to injure in a situation involving competitors can be negated by a showing that the acts were done for professional or competitive advantage. Bro-Tech Corp. v. Thermax, Inc., 651 F.Supp.2d 378, 419 (E.D.Pa.2009).
I conclude that the law in Oregon on this issue is that to recover for trade libel a plaintiff must establish that the defendant's publication of the false statement was done with a primary purpose of maliciously injuring the plaintiff. To require it to be the sole purpose is too stringent a standard as it enables the defendant to escape responsibility for any trumped up secondary purpose for the statement's publication. Likewise, to allow the recovery for trade libel upon the showing of any desire to reduce the business of the plaintiff, is too liberal a standard. It ignores the fact the cases recognize that any time a person promotes his own product in competition, if the promotion is successful, it necessarily is to the detriment of the defendant's competitors. I conclude that the Oregon court's inclusion of maliciousness in the elements of the tort for purposes of establishing any liability at all suggests a desire for more culpability than this low threshold to support the tort. Therefore, I conclude that FLIR must raise a material issue of fact that would allow a reasonable juror to conclude that the primary purpose of the drop test video was to maliciously injure FLIR.
I do not believe this record supports such a finding. The evidence that Fluke developed a line of cameras that was rugged enough to better survive a drop from two meters, and saw that as a marketing advantage of its products that was worthy of promotion, suggests it had legitimate reasons to produce the drop test video. Whatever adverse effects the video might have on Fluke's competitors were sufficiently secondary to this legitimate purpose on this record that Fluke is entitled to summary judgment on this claim. The incidental harm to a competitor that is always involved in legitimate business competition is not compensable as trade libel upon a showing of a false statement being involved under Oregon law, unless
In Count Four, FLIR alleges that Fluke and Sierra conspired to disparage FLIR and its products. Under Oregon law, "[a] civil conspiracy consists of (1) two or more persons; (2) an object to be accomplished; (3) a meeting of the minds on the object or course of action; (4) one or more unlawful overt acts; and (5) damages as a result of the overt act or acts." Morasch v. Hood, 232 Or.App. 392, 402, 222 P.3d 1125 (2009). But civil conspiracy is not "a separate tort for which damages may be recovered; rather it is a way in which a person may become jointly liable for another's tortious conduct." Id. Based on this understanding of civil conspiracy, Count Four is dependent upon a valid underlying predicate tort (FLIR's state law trade libel claim) and satisfaction of the aforementioned elements. As no predicate tort remains to support FLIR's civil conspiracy claim, Fluke is entitled to summary judgment on Count Four. Cf. Pardue v. Gray, 136 Fed.Appx. 529, 533 (3d Cir. 2005) ("A cause of action for civil conspiracy requires a separate underlying tort as a predicate for liability.")
Even assuming, arguendo, that FLIR's trade libel/commercial disparagement claim survived summary judgment, I would still conclude that Defendants are entitled to summary judgment as to Count Four. As with trade libel, to be actionable, "the primary purpose of a civil conspiracy must be to cause injury to another." Yanney v. Koehler, 147 Or.App. 269, 275, 935 P.2d 1235 (1997) (emphasis added). In this case, there is no genuine issue of material fact because the record is devoid of any evidence suggesting a conspiracy with the primary purpose of causing harm to FLIR. Instead, in hiring Sierra to create and disseminate a promotional video, the only harm Fluke may have intended to cause FLIR "was the incidental harm to a competitor that is necessarily part of all legitimate business competition." BCD LLC v. BMW Mfg. Co., LLC, 360 Fed. Appx. 428, 437 (4th Cir.2010); Bliss v. S. Pac. Co., 212 Or. 634, 641, 321 P.2d 324 (1958) ("So long as the object of the combination is [t]o further its own fair interest or advantage, and not the injury of another, its members are not liable for any injury which is merely incidental.")
To that end, the Fourth Circuit's decisions in BCD LLC and Waldrep Bros. Beauty Supply Inc. v. Wynn Beauty Supply, 992 F.2d 59 (4th Cir.1993), are instructive.
After BMW and Clemson drafted a "Memorandum of Expectations" with respect to the GEC in July 2002, Rosen began to urge Clemson and BMW to consider using property he owned as the potential site. Id. at 432. However, BMW emphasized the need to distinguish the state-funded GEC from the privately-funded facility Rosen was developing, and Clemson declined to commit itself to using Rosen's property. Id. Rosen interpreted this as BMW attempting "to kill his project." Id. at 432-33.
In January 2003, Rosen sent a letter to Clemson expressing concerns about the wind tunnel project. Id. at 433. Despite Rosen following up with a letter reiterating his commitment to the project, Clemson's President responded on March 12, 2003, informing Rosen that his 2002 agreement constituted a mere letter of intent that was terminable at will. Id. In October 2003, Rosen and Clemson agreed to an entirely different agreement, which Rosen characterized as an attempt to mitigate the damage caused BMW's actions. Id. Rosen then brought a civil conspiracy action against BMW in the United States District Court for the District of South Carolina. Id. The district court granted BMW's motion for summary judgment and Rosen filed a timely appeal. Id.
The Fourth Circuit affirmed the district court's holding, stating:
Id. at 437.
In Waldrep, a beauty salon products distributor (Waldrep) brought suit against a competitor (Wynn) after manufacturers (Redken and Sebastian) terminated Waldrep's at-will distributorship contract in favor of Wynn. Waldrep, 992 F.2d at 60-61. Originally, Wynn intended to purchase Waldrep and had discussed the possible acquisition and assignment of Waldrep's distribution agreements with Redken and Sebastian. Id. at 61. Not long after the negotiations reached an impasse, Redken and Sebastian notified Waldrep of the termination of its distribution agreements. Id. A lawsuit followed, with Waldrep alleging that Wynn engaged in a civil conspiracy to destroy Waldrep's business. Id. at 60. The jury found for Waldrep, and the district court denied Wynn's motion for judgment as a matter of law. Id. "Finding no evidence that Wynn did anything other than compete on the merits with Waldrep," the Fourth Circuit reversed the judgment of the district court. Id. In so holding, the Fourth Circuit stated:
Id. at 61, 63.
Much the same can be said here. The evidence in this case demonstrates that Fluke's primary objective was simply to make money through legitimate competition. The evidence of this includes (1) the attempts to conceal FLIR's logo in the video; (2) the inclusion of another competitor's camera and drops where no visible damage results to FLIR's cameras; and (3) the emphasis being placed primarily on the structural integrity of the Fluke Ti32. "The purpose of the video was to demonstrate Fluke's unique ruggedness compared to competitive cameras in the market at the time," (Stuart Dep. 23:14-16, Dec. 6, 2011), but Fluke nevertheless instructed Sierra's president, Dan Cardenas ("Cardenas"), to treat all of the thermal imagers tested "exactly the same" in an attempt to produce legitimate results. (Cardenas Dep. 13:16-16:18, Jan. 20, 2012.)
Perhaps most tellingly, Scanlon predicted that Fluke would attempt to exploit, or make money off of, "this competitive advantage" before the drop video was ever created. Specifically, on December 1, 2008, Scanlon was informed that FLIR lost a sale (15 units at $3,700 each) because the customer preferred the Fluke camera's "perceived ruggedness" and ability to withstand a drop test. (Mehrbani Decl. Ex. 9 at 3.) The very next day, Scanlon emailed FLIR's vice president of product management, Torbjorn Hamrelius, stating:
(Mehrbani Decl. Ex. 9 at 3.) In August 2009, Scanlon's prediction came to fruition as ideas began to circulate among employees of Fluke as to how it could improve its marketing in order to effectively compete with FLIR. Chief among them being to emphasize the Fluke Ti32's ruggedness and ability to withstand a two meter drop. (Millimet Decl. Ex. 18 at 2-6.) The following month, Fluke hired Sierra to produce the drop video.
In summary, there is no genuine issue of material fact as to whether Fluke engaged in a civil conspiracy with the primary purpose of causing injury to FLIR. Fluke would therefore be entitled to summary judgment on Count Four on this ground as well.
Sierra moves the Court for an order granting summary judgment on the only remaining claims against it: Counts One
With respect to Count One, Sierra's argument is twofold. First, Sierra argues that FLIR does not have standing to prosecute its Lanham Act false advertising claim against Sierra in this action because there is no dispute as to the material fact that Sierra does not compete against FLIR in the market for thermal imaging cameras. Second, even assuming FLIR had standing to pursue its false advertising claim, Sierra claims it would still be entitled to summary judgment because there is no genuine issue of fact as to whether the Lanham Act was violated.
The Ninth Circuit set out the test for Lanham Act standing in Jack Russell Terrier Network of N. Cal. v. Am. Kennel Club, Inc., 407 F.3d 1027 (9th Cir. 2005), where the court held that "a plaintiff must show: (1) a commercial injury based upon a misrepresentation about a product; and (2) that the injury is `competitive,' or harmful to the plaintiff's ability to compete with the defendant." Id. at 1037. In the context of a Lanham Act false advertising claim, standing exists "where misrepresentations about product quality could theoretically draw a consumer away from [a] competitor's product." Healthport Corp. v. Tanita Corp. of Am., 563 F.Supp.2d 1169, 1177 (D.Or.2008) (citing Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1109 (9th Cir. 1992)).
Sierra asserts that FLIR fails the competitive prong of Jack Russell because FLIR and Sierra are not competitors: FLIR manufactures and sells infrared cameras and thermal imaging equipment, while Sierra is a media marketing company that "does not manufacture, produce, sell, or distribute thermal imagers, or any other product." (Sierra's Mem. Supp. at 6.) In support of its position, Sierra relies primarily on Halicki v. United Artists Commc'ns, 812 F.2d 1213 (9th Cir.1987) and Fuller Bros., Inc. v. Int'l Mktg., Inc., 870 F.Supp. 299 (D.Or.1994).
In Halicki, the plaintiff produced "The Junkman," a film designed to appeal to teenagers and young adults. Halicki, 812 F.2d at 1213. Despite the film's commercial success being closely connected with a PG rating, the distributors advertised the movie as rated R, indicating that the film was unsuitable for children and young adults. Id. In rejecting the movie producer's contention that to state a Lanham Act claim, all he need do was show that the distributors "made a false representation about his film and that he was injured by the representation," the Ninth Circuit emphasized that the injury sustained must be one the Lanham Act is intended to prevent. Id. at 1214. Thus, the misrepresentation as to The Junkman's rating was not actionable under the Lanham inasmuch as the movie producer had not been injured by a competitor. Id. at 1214-15.
Similarly, in Fuller, the manufacturer of "Tire Life," a liquid formula that extends the life of truck tires, brought a Lanham Act action against the manufacturer of "Equal," a formula that reduces vibration and eliminates radial and lateral force variation when placed inside the tires. Fuller, 870 F.Supp. at 301. In evaluating whether Tire Life's manufacturer had standing to bring a claim for false advertising, this court noted that competitors are "[p]ersons endeavoring to do the same thing and each offering to perform the act, furnish the merchandise, or render the service better or cheaper than his rival." Id. at 303 (quoting Black's Law Dictionary 257 (5th ed. 1979)). Although the two formulas were marketed to many of the same
Fuller, 870 F.Supp. at 303 (quoting Halicki, 812 F.2d at 1214).
In response, FLIR argues that the case law on which Sierra relies does not concern a co-defendant that is jointly and severally liable with the plaintiff's competitor for false advertising, and therefore is inapposite. According to FLIR, courts that have considered analogous situations — where the plaintiff sues its competitor and a marketing firm that helped create and disseminate false advertisements — have found that a competitor's marketing firm can be held liable under the Lanham Act. In support of this proposition, FLIR relies primarily on Second Circuit case law, such as Grant Airmass Corp. v. Gaymar Indus., Inc., 645 F.Supp. 1507 (S.D.N.Y.1986).
In Grant, the plaintiff and defendant were competitors in the field of pressure sore prevention products (e.g., mattresses and pads that prevent bedsores). Grant, 645 F.Supp. at 1509. It was alleged that Gaymar commissioned its co-defendant in the case, a research firm, to undertake a false and misleading comparative study of pressure sore prevention products. Id. The research firm moved for summary judgment, arguing that, as a non-competitor in the sale of pressure sore prevention products, it could not be held liable under the Lanham Act. Id. at 1511. Grant rejected this argument and held that the plaintiff was "entitled to frame a Lanham Act claim against all those allegedly responsible for falsely describing and placing in commerce the advertised goods." Id. The research firm's status as a non-competitor therefore did not require dismissal of the false advertising claim against it. Id.
Sierra contends that FLIR's reliance on Grant is misplaced and tantamount to ignoring Ninth Circuit precedent in favor of the Second Circuit's directly conflicting standard. I agree. The Seventh, Ninth, and Tenth Circuit have adopted the so-called categorical approach, wherein the plaintiff must be in "actual" or "direct" competition with the defendant and assert a competitive injury to establish prudential standing. Phoenix of Broward, Inc. v. McDonald's Corp., 489 F.3d 1156, 1164-65 (11th Cir.2007). By contrast, in the First and Second Circuits, the dispositive issue is not the degree of "competition," but whether the plaintiff has a "reasonable interest" to be protected against the type of harm that the Lanham Act is intended to prevent. Id. at 1165.
Indeed, it is beyond question that the Second and Ninth Circuits analyze the standing of commercial plaintiffs by applying differing standards:
Famous Horse Inc. v. 5th Ave. Photo Inc., 624 F.3d 106, 111-13 (2d Cir.2010). As
It is too well settled to require citation of authority that this court is bound by circuit precedent. The dispositive issue here, then, is the degree of competition because the Ninth Circuit utilizes the so-called categorical approach to determine standing. Because Sierra and FLIR are not competitors, FLIR lacks standing to sue Sierra for false advertising under the Lanham Act. Sierra is therefore entitled to summary judgment on Count One.
Sierra is entitled to summary judgment for all the reasons discussed above with respect to Fluke, Opinion and Order, supra, at 1134-38.
With respect to Count Four, as discussed above, there is no genuine issue of material fact as to whether Fluke published false allegations about FLIR with malice, nor is there a genuine issue of fact as to whether Fluke engaged in a civil conspiracy with the primary purpose of causing injury to FLIR. This eliminates trade libel as the tort to support a civil conspiracy.
FLIR lacks standing to sue Sierra for false advertising under the Lanham Act, as discussed above. This leaves no underlying claim for Sierra and Fluke to have conspired to commit. Thus, I grant Sierra's motion for summary judgment on Count Four. See Bliss, 212 Or. at 642, 321 P.2d 324 (explaining that it takes two to conspire, and if one defendant is not liable for conspiracy, the other defendant "is likewise exonerated as a conspirator[.]"); US West, Inc. v. Business Discount Plan, Inc., 196 F.R.D. 576, 590-91 (D.Colo.2000) (finding that a telephone company lacked standing to a bring false advertising claim under the Lanham Act against a telemarketer and a verification services company as they were not competitors of the telephone company, and accordingly granting summary judgment in their favor despite allegations that they conspired with a competitor of the telephone company); see also Pardue, 136 Fed.Appx. at 533 ("A cause of action for civil conspiracy requires a separate underlying tort as a predicate for liability.")
Turning to the merits of Count Five, it is FLIR's contention that Sierra aided and assisted Fluke in the commission of the tort of trade libel. Under Oregon law, aiding and assisting, like civil conspiracy, is not a separate tort for which damages may be recovered: "[N]either `conspiracy' nor `aid and assist' is a separate theory of recovery. Rather, conspiracy to commit or aiding and assisting in the commission of a tort are two of several ways in which a person may become jointly liable for another's tortious conduct." Granewich v. Harding, 329 Or. 47, 53, 985 P.2d 788 (1999) (internal citations omitted). Because I have determined that Fluke and Sierra are entitled to summary judgment on FLIR's state law trade libel claim (the predicate underlying tort), I grant Sierra's motion for summary judgment on Count Five. Cf. Yzadanpanah v. Sacramento Valley Mortg. Group, 2009 WL 4573381, at *5 (N.D.Cal. Dec. 1, 2009) (explaining that "a defendant's liability under an aiding and abetting theory is dependent upon the commission of an underlying tort.")
In its reply memorandum, Sierra argued that "FLIR's newly produced evidence of injury" on FLIR's Count One (e.g., declarations
FLIR claims it is entitled to summary judgment on Fluke's trademark infringement and unfair competition claims based on its purported IR Fusion trademark because Fluke's trademark is invalid and such claims are barred by the doctrine of laches. For those and other reasons, FLIR also claims it entitled to summary judgment on Fluke's "other" false advertising counterclaims based on (1) FLIR's use of the terms IR Fusion and fusion in its advertisements; and (2) two FLIR PowerPoint presentations and two similar advertisement, the "banana advertisement" and the "12 Things" promotional literature.
Generally, "[t]he more likely a mark is to be remembered and associated in the public mind with the mark's owner, the greater protection the mark is accorded by trademark laws." GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1207 (9th Cir.2000). The strength of a mark is evaluated conceptually and commercially. Id. A mark's conceptual strength depends, in large part, on its connection to the good or service to which it refers. Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Mgmt., Inc., 618 F.3d 1025, 1032-33 (9th Cir.2010). "The less obvious the connection, the stronger the mark, and vice versa." Id. at 1033.
From weakest to strongest, marks are categorized as: "(1) generic; (2) descriptive; (3) suggestive; (4) arbitrary; and (5) fanciful." Yellow Cab Co. of Sacramento v. Yellow Cab of Elk Grove, Inc., 419 F.3d 925, 927 (9th Cir.2005). Mindful of the wisdom embodied in "the well-established principle that [due to] the intensely factual nature of trademark disputes, summary judgment is generally disfavored in the trademark arena," Fortune Dynamic, 618 F.3d at 1031 (citation and quotation marks omitted; alteration deleted), I conclude there is a genuine issue of fact as to which category Fluke's IR Fusion mark fits within. See id. at 1034 (stating that which category a mark belongs in is a question of fact, and accordingly leaving it to the jury to decide whether a mark was descriptive or suggestive due to the intuitive nature of such an inquiry); Stuhlbarg Int'l Sales Co., Inc. v. John D. Brush & Co., Inc., 240 F.3d 832, 840 (9th Cir.2001) ("Whether a mark is generic is a question of fact"); Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1355 (9th Cir.1985) (en banc) ("[T]he question of secondary meaning is one of fact.")
Suggestive arbitrary, and fanciful marks are considered inherently distinctive and are automatically entitled to protection because they naturally serve to identify a particular source of a product. Yellow Cab, 419 F.3d at 927. Descriptive marks "define a particular characteristic of the product in a way that does not require any exercise of the imagination." Id. Such a mark can receive trademark protection if it has acquired distinctiveness by establishing "secondary meaning" in the marketplace. Id. Generic marks, on the other hand, "give the general name of the product; they embrace an entire class of products." Id. (quoting Kendall-Jackson Winery, Ltd. v. E. & J. Gallo Winery, 150 F.3d 1042, 1047 n. 8 (9th Cir.1998)). "Generic
In the present case, although Fluke's IR Fusion trademark has been federally registered, FLIR asserts that the terms "IR Fusion" and "fusion" are either generic or descriptive without acquired secondary meaning, and therefore not entitled to trademark protection. According to Fluke, however, its IR Fusion mark is suggestive, and therefore afforded protection without proof of secondary meaning.
I conclude there is a genuine issue of material fact as to whether Fluke's IR Fusion mark is suggestive or descriptive. Setting aside the fact "[t]he line between descriptive and suggestive marks in nearly incapable of precise description," Fortune Dynamic, 618 F.3d at 1033, suggestive marks typically do not describe the product's feature but suggest them, Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 632 (9th Cir.2005), while "[d]escriptive terms directly describe the quality or features of the product." Brookfield Commc'ns, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1058 n. 19 (9th Cir.1999). Arguably, the IR Fusion mark does the latter insofar as it describes a feature of Fluke's thermal imager: its ability to blend thermal and visible light images.
Nevertheless, "a suggestive or descriptive mark, which is conceptually weak, can have its overall strength as a mark bolstered by its commercial success." M2 Software, Inc. v. Madacy Entm't, 421 F.3d 1073, 1081 (9th Cir.2005). An otherwise inherently weak mark can be strengthened by, among other things, extensive advertising, length of exclusive use, public recognition, and the success of the mark's holder. See id. (collecting cases). Here, Fluke has put forth evidence indicating its IR Fusion mark has been extensively advertised ($25.2 million since 2005) in its print media (brochures, technical data sheets, catalogues, direct mail), Internet media (website pages and videos, paid search), and at live events (seminars, technology forums, trade shows).
A genuine issue of material fact also exists with respect to whether Fluke's IR Fusion mark is generic. "[A] generic term is the name of the product or service itself — what the product is, and as such ... the very antithesis of a mark." Filipino Yellow Pages, Inc. v. Asian Journal Publ'ns Inc., 198 F.3d 1143, 1147 (9th Cir. 1999) (citation and quotation marks omitted; alteration deleted). Generic terms describe the "product in its entirety." Surfvivor, 406 F.3d at 632. "Examples include `Liquid controls' for equipment that dispenses liquid, or `Multistate Bar Examination' for a bar examination that may be taken across multiple states." Id. Viewing the evidence in the light most favorable to Fluke, a reasonable jury could conclude that IR Fusion does not state the general name of Fluke's product — a thermal imaging camera — and therefore does
In sum, whether Fluke's IR Fusion mark is generic, descriptive or suggestive is a determination for the jury. FLIR's motion for summary judgment is therefore denied on this ground.
FLIR argues that Fluke's trademark and unfair competition claims are barred by laches. Laches is an equitable defense to Lanham Act claims that "embodies the principle that a plaintiff cannot sit on the knowledge that another company is using its trademark, and then later come forward and seek to enforce its rights." Internet Specialties W., Inc. v. Milon-Di Giorgio Enters., Inc., 559 F.3d 985, 989-90 (9th Cir.2009). It is well settled that laches is a valid defense to Lanham act claims. Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835 (9th Cir.2002). For guidance, the Court looks to the 2-year statute of limitations for fraud claims by analogy. Adidas America, Inc. v. Payless Shoesource, Inc., 540 F.Supp.2d 1176, 1180 n. 1 (D.Or.2008); Johannsen v. Brown, 797 F.Supp. 835, 839-40 (D.Or.1992) ("This court agrees with those decisions which have found that claims brought under ... the Lanham Act are most comparable to claims brought for fraud.") "If the plaintiff filed suit within the analogous limitations period, the strong presumption is that laches is inapplicable." Jarrow, 304 F.3d 829 at 835. "However, if suit is filed outside of the analogous limitations period, courts often have presumed that laches is applicable." Id. at 836. The test for laches is a two-part inquiry: first, did the plaintiff unreasonably delay in filing suit; and second, was the defendant prejudiced by the delay. Internet Specialties, 559 F.3d at 990.
The laches period starts when the party "knew or should have known about its potential cause of action." Internet Specialties, 559 F.3d at 990. The following timeline of events related to FLIR's laches defense is undisputed. On April 15, 2008, Fluke's counsel, Heidi Sachs ("Sachs"), sent a cease-and-desist letter to FLIR's general counsel, William Davis ("Davis"), stating:
(Sachs Decl. at 5-6.) On April 22, 2008, Richard O'Brien ("O'Brien") of Sidley Austin LLP in Chicago, Illinois, responded to Sachs' cease-and-desist letter, stating:
(Sachs Decl. at 7.)
On August 5, 2010, Sachs sent a second cease-and-desist letter, this time directly to O'Brien, indicating Fluke was "surprised and disappointed to learn that FLIR [wa]s still using IR Fusion on its website," despite FLIR's prior representations that it would not do so. (Sachs Decl. at 8.) In support of her position, Sachs cited, among other things, a September 1, 2008 press release that appeared to have been posted after O'Brien responded to the original cease-and-desist letter.
After receiving Sachs' August 5, 2010 letter, Davis proposed a 30-day standstill period to Jonathan Graham ("Graham"), who is general counsel to Fluke's parent company, Danaher Corporation.
On August 17, 2010, at 11:18 a.m., Davis emailed Graham indicating he needed to speak with him at his earliest convenience. At 1:13 p.m., Graham responded to the email and accompanying voice mail, stating:
(Johnson Decl. Ex. 27 at 1.) That same day, Davis sent a letter to Graham, stating:
(Johnson Decl. Ex. 28 at 2.)
On November 30, 2010, during a Rule 16 conference, Fluke's counsel informed the Court that (1) it intended to move to dismiss seven of the eight claims asserted by FLIR; and (2) with respect to FLIR's remaining claim (i.e., the declaratory judgment claim regarding the IR Fusion mark), Fluke would file "an answer and infringement counterclaim ... once the motion to dismiss on the other seven claims is ... decided." (Johnson Decl. Ex. 29 at 3.) That same day, Fluke and Sierra each filed a motion to dismiss. Resolution of Defendants' motions to dismiss was delayed, however, after FLIR filed a first amended complaint as a matter of course in December 2010. Once again, Defendants moved to dismiss FLIR's claims on January 27, 2011. Oral argument was held on April 25, 2011, and the Court issued its Opinion and Order on May 10, 2011. On May 27, 2011, Fluke filed its answer and counterclaims in accordance with Fluke's counsel's representations during the November 30, 2010 Rule 16 conference.
The Ninth Circuit has previously observed that "[b]ecause a claim of laches depends on a close evaluation of all the particular facts in a case, it is seldom susceptible of resolution by summary judgment." Couveau v. Am. Airlines, Inc., 218 F.3d 1078, 1083 (9th Cir.2000). This observation holds true in the present case. FLIR asserts that Fluke knowingly failed to pursue its trademark and unfair competitions claims until May 27, 2011, even though the applicable 2-year laches period had expired on April 15, 2010 (two years after Fluke mailed the original cease-and-desist letter). FLIR's argument flips the summary judgment standard on its head by taking the evidence in the light most favorable to itself. First, and perhaps most importantly, FLIR's argument fails to take into account the fact that its April 22, 2008 response to Fluke's original cease-and-desist letter could reasonably be interpreted as an agreement to stop all allegedly infringing use. See Bad Boy, Inc. v. Bad Boy Enters., Inc., 1:08-cv-00050 JHL, 2009 WL 4251022, at *5 (E.D.Ark. Nov. 24, 2009) (denying summary judgment on laches defense where parties disputed the message conveyed by their letters regarding a trademark, stating: "The fact finder must determine what message was conveyed by the letters between [Defendant] and [Plaintiff]"); see also Liquid Glass Enters., Inc. v. Dr. Ing. h.c.F. Porsche AG, 8 F.Supp.2d 398, 405-06 (D.N.J.1998) (concluding that seven year delay was "completely excusable" where cease-and-desist letters were sent by a party when it became aware of improper advertisements, and the opposing party's response represented that the matter could be solved amicably) (citing E-Systems, Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir.1983)). According to Sachs, she "accepted and relied on FLIR's representations that it would stop its infringing use in good faith, and with expectation that FLIR would respect Fluke's intellectual property rights in the IR Fusion Mark." (Sachs Decl. ¶ 10.)
Second, FLIR's claim that Fluke did not file its counterclaims until nine months after the laches period allegedly ended (i.e., on May 27, 2011, nine months after the 2-year anniversary of the original cease-and-desist letter), is particularly self-serving in light of Fluke's counsel's representations during the November 30, 2010
Third, and finally, it is of particular importance that, as of August 2010, FLIR and Fluke were attempting to resolve this matter out of court.
In short, viewing the evidence in the light most favorable to Fluke, there is a genuine issue of fact as to whether Fluke filed its trademark and unfair competition claims within the 2-year limitations period. As a result, I cannot conclude that Fluke's delay in bringing its counterclaims was either reasonable, or unreasonable, as a matter of law. FLIR's motion for summary judgment is therefore denied on this ground. See adidas America, Inc. v. Payless Shoesource, Inc., 529 F.Supp.2d 1215, 1253-54 (D.Or.2007) (making similar observations).
FLIR moves the Court for an ordering granting it summary judgment on Fluke's false advertising counterclaims based on (1) FLIR's use of the terms IR Fusion and fusion in its advertisements; and (2) two FLIR power point presentations and two similar advertisements, the "banana advertisement" and the "12 Things" promotional literature. As a preliminary matter, I have already concluded that there are issues of fact regarding the validity of Fluke's mark and the applicability of laches. Thus, FLIR is not entitled to summary judgment on the basis of either the validity of the Fluke's mark, nor laches.
FLIR claims that Fluke has no evidence that its use of terms IR Fusion and fusion in advertisements that plainly identify FLIR as the source of the advertised products, and do not mention Fluke, are false and misleading. FLIR also argues that Fluke has no expert testimony, including no consumer surveys or other extrinsic evidence, to support its contention that FLIR's advertisements are false and misleading with respect to whether FLIR or Fluke is the source of the fusion functionality available on FLIR thermal imaging cameras.
These arguments miss the mark. As discussed above, literal falsity is a question of fact, and summary judgment is inappropriate where sufficient evidence exists to permit a juror to conclude that an advertisement is literally false. See Southland Sod, 108 F.3d at 1146 (reversing summary judgment where a reasonable juror could conclude advertisements were literally false); see also Time Warner, 497 F.3d at 157 ("When an advertisement is shown to be literally or facially false, consumer deception is presumed, and the court may grant relief without reference to the advertisement's
With this in mind, Fluke's trademark-related false advertising counterclaim is predicated upon its contention that FLIR is falsely representing that its product has certain qualities that it in fact does not actually have (i.e., fusion functionality equivalent to that of IR Fusion). See generally Rhone-Poulenc, 93 F.3d at 516 (recognizing that an advertisement can be literally false if it falsely represents that the product has certain qualities that it does not actually have). According to Fluke's counsel, "as Fluke and FLIR's separate patents indicate, each company's respective feature is not the same." (Fluke's Resp. Opp'n at 30.) FLIR counters by arguing that Fluke has made no showing that any FLIR advertisement falsely states that they include Fluke's, rather than FLIR's, fusion functionality. However, this does not alleviate my concern that FLIR's use of the term IR Fusion, which may or may not be a valid mark, could necessarily falsely imply that FLIR's cameras possess the same fusion functionality as Fluke's cameras. I therefore deny FLIR's motion for summary judgment on Fluke's trademark-related false advertising counterclaim on this ground as well.
In a footnote in its reply brief, FLIR argued that expert reports on which Fluke relies, including the report of Fluke's damages expert, Serena Morones, were not signed under oath, and thus are inadmissible. I overrule FLIR's objections as moot because the evidence objected to was not considered and Fluke avoids this motion for summary judgment without consideration of this evidence. No implications may be drawn regarding the use of the evidence at trial.
FLIR argues it is entitled to summary judgment on Fluke's false advertising claims regarding two FLIR PowerPoint presentations and two similar advertisements, the "banana advertisement" and the "12 Things" promotional literature, because Fluke cannot show any compensable injury resulting from such advertisements. Paragraphs 38 and 39 of Fluke's counterclaims against FLIR concern the two PowerPoint presentations that are allegedly false. Those paragraphs provide:
(Fluke's Answer and Countercls. at 24-25.)
Paragraphs 40 and 41 of Fluke's counterclaims against FLIR concern the so-called "banana advertisement" and "12 Things" promotional literature. Those paragraphs provide:
(Fluke's Answer and Countercls at 25.)
FLIR's only argument with respect to the two PowerPoint presentations, the "banana advertisement" and the "12 Things" promotional literature is that Fluke has no evidence that it has suffered any injury from those allegedly false advertisements, which in turn entitles FLIR to summary judgment. Upon review, I conclude that FLIR has not met its burden of establishing the absence of a genuine issue of material fact. Cf. Southland Sod, 108 F.3d at 1145-46 (recognizing that an inability to show actual damages does not alone preclude recovery, nor does it warrant the grant of summary judgment, because "the preferred approach allows the district court in its discretion to fashion relief, including monetary relief, based on the totality of the circumstances.") Accordingly, I deny FLIR's motion for summary judgment on Fluke's counterclaims based on the FLIR's two PowerPoint presentations, the "banana advertisement" and the "12 Things" promotional literature.
Consistent with the discussion above, Fluke's motion (Docket No. 177) for summary judgment on its counterclaim for false advertising is DENIED; Fluke's motion (Docket No. 178) for summary judgment on FLIR's claims for false advertising, trade libel/ commercial disparagement and civil conspiracy is GRANTED in part
IT IS SO ORDERED.
