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A.L.S. Enterprises, Inc. v. Robinson Outdoor Products, LLC

United States District Court, W.D. Michigan, Southern Division

January 30, 2017

A.L.S. ENTERPRISES, INC., Plaintiff,
v.
ROBINSON OUTDOOR PRODUCTS, LLC, Defendant.

          OPINION REGARDING PLAINTIFF'S AND DEFENDANT'S POST-TRIAL MOTIONS

          GORDON J. QUIST UNITED STATES DISTRICT JUDGE

         Plaintiff, A.L.S. Enterprises, Inc. (ALS), sued Defendant, Robinson Outdoor Products, LLC (Robinson), for false advertising in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), alleging that Robinson made false or misleading statements of fact regarding Robinson's Trinity scent-control hunting clothing. The parties tried the case to a jury from May 10, 2016, through May 19, 2016. At the conclusion, the jury returned a verdict for ALS, finding that ALS had proved its false advertising claims as to the three advertising statements at issue. The jury awarded ALS $1.3 million in lost profits plus $2 million in damage control costs, and found that ALS is entitled to disgorgement of Robinson's profits in the amount of $500, 000. Finally, the jury said that Robinson acted willfully. (ECF No. 209.)

         Robinson has filed a combined motion for: (1) judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50; (2) an equitable adjustment of the jury award pursuant to 15 U.S.C. § 1117(a); and/or (3) a new trial pursuant to Federal Rule of Civil Procedure 59. ALS has filed the following motions: (1) motion for preliminary injunction; (2) motion for enhanced damages; and (3) motion for attorney's fees and prejudgment interest. The motions are fully briefed and ready for decision.

         For the reasons set forth below, the Court will grant Robinson's motion for judgment as a matter of law and, alternatively, grant Robinson's motion for a new trial. In addition, the Court will grant ALS's motion for a permanent injunction but will deny ALS's motions for enhanced damages and attorney's fees and prejudgment interest.

         I. Background

         ALS and Robinson are competitors in the scent-control hunting products market. Both companies sell scent-control clothing designed to mask human scent or odor from animals, and market their products primarily to bow hunters. ALS markets its products under the Scent-Lok brand name, and Robinson markets its products under the ScentBlocker brand name. ALS and Robinson share many of the same retail customers, including so-called big-box retailers Cabela's, Gander Mountain, and Dick's Sporting Goods.

         ALS owns a patent that relates to carbon-based scent-control hunting clothing, pursuant to which ALS makes and sells carbon hunting clothing. ALS licensed its carbon technology to Robinson from 1997 until late 2012, during which time both parties sold carbon scent-control clothing.

         In 2011 or 2012, Robinson began to investigate using synthetic polymers as an alternative to carbon for an adsorbent. Robinson eventually settled on a product called Macronet and terminated its license with ALS, electing to focus solely on clothing containing its Macronet technology, which Robinson named “Trinity.” In August 2012, Robinson retained Dr. Roger Pearson of Aspen Research Corporation to perform a static adsorption test using the same size pieces of fabric containing four different adsorptive technologies: Macronet (Trinity); Robinson's Cold Fusion carbon product; ALS's carbon product; and Zeolite-a material used in Under Armour scent-control clothing. Using butyric acid to mimic human scent, Dr. Pearson designed the test to measure the uptake of butyric acid in each fabric sample over various time intervals that concluded at 144 hours. Dr. Pearson reported the raw data from his test in report A47053. (PX 142B.)[1] Based on the data from A47053, Robinson performed an additional calculation designed to further compare the technologies and isolate for the adsorbent by dividing the amount of butyric acid adsorbed by the weight of each different fabric sample. (DX 50.)

         The Trinity product that Robinson ultimately commercialized contained significantly less Macronet than the Trinity fabric sample Aspen tested in A47053. Whereas the Trinity fabric tested in A47053 had a Macronet loading of 40 grams per square meter, the Macronet loading on the commercialized Trinity fabric was 6.25 grams-one-sixth of the loading used in A47053. (ECF No. 233 at PageID.2055-56.)

         In the fall of 2012 and continuing through 2014, Robinson pitched its Trinity products to Cabela's, Gander Mountain, and Dick's in various presentations. The materials that Robinson presented to these retailers included the following statements or claims: (1) 1 ScentBlocker Jacket with Trinity has the scent adsorbing capacity of 3 Scent-Lok jackets with carbon alloy and 8 Under Armour jackets with Zeolite (the 8-3-1 claim); (2) activated carbon technology has 44% of the odor adsorption capacity of the Trinity technology (the 100-44 claim); and (3) Trinity technology adsorbs up to 40% more odor than carbon and up to 200% more than Zeolite (the 40/200 claim). (See, e.g., PX 150, 159B, 165B.) The same materials also said that Trinity technology allowed for lighter loading of the adsorbent, making possible lighter fabrics and designs with adequate adsorption. (See, e.g., PX 150, 159B.) The 8-3-1 and 100-44 claims were made only to Cabela's, Gander Mountain, and Dick's, while the 40/200 claim was made to all of Robinson's retail customers and to consumers.

         In March 2014, Robinson engaged Aspen to perform another test using the same methodology employed in test A47053, but this time using commercialized Robinson Trinity and ALS carbon products. (ECF No. 240 at PageID.2424-25, 2620.) Robinson ordered the test to determine the validity of ALS's national ad campaign stating that Scent-Lok products were 16 times more effective than ScentBlocker products. (Id. at PageID.2495.) The results of the test, identified as A48444, showed that ALS's and Robinson's products performed at about the same level. (Id. at PageID.2629.)

         II. Discussion

         A. Robinson's Motion

         1. Motion for Judgment as a Matter of Law

         Robinson argues that it is entitled to judgment as a matter of law because ALS failed to present sufficient evidence to establish the requisite elements of its false advertising claim as to each of the asserted advertising claims.

         A court confronted with a motion for judgment as a matter of law must decide “whether there is sufficient evidence to raise a question of fact for the jury.” Warkentien v. Vondracek, 633 F.2d 1, 6 (6th Cir. 1980). The inquiry for resolving a Rule 50 motion is essentially the same as that for resolving a Rule 56 motion for summary judgment. White v. Burlington N. & Santa Fe Ry Co., 364 F.3d 789, 794 (6th Cir. 2004) (citing Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 2110 (2000)). The Sixth Circuit describes the district court's analysis as follows:

In determining whether the evidence is sufficient, the trial court may neither weigh the evidence, pass on the credibility of witnesses, nor substitute its judgment for that of the jury. Rather the evidence must be viewed in the light most favorable to the party against whom the motion is made, drawing from that evidence all reasonable inferences in his favor. If, after thus viewing the evidence, the trial court is of the opinion that it points so strongly in favor of the movant that reasonable minds could not come to a different conclusion, then the motion should be granted.

Ratliff v. Wellington Exempted Vill. Schs. Bd. of Educ., 820 F.2d 792, 795 (6th Cir. 1987) (citations omitted).

         To prove a claim of false advertising under the Lanham Act, a plaintiff must establish that

1) the defendant has made false or misleading statements of fact concerning his own product or another's; 2) the statement actually or tends to deceive a substantial portion of the intended audience; 3) the statement is material in that it will likely influence the deceived consumer's purchasing decisions; 4) the advertisements were introduced into interstate commerce; and 5) there is some causal link between the challenged statements and harm to the plaintiff.

Am. Council of Certified Podiatric Physicians & Surgeons v. Am Bd. of Podiatric Surgery, Inc., 185 F.3d 606, 613 (6th Cir. 1999). Where, as here, several statements are at issue, a court must assess each statement independently. Johnson & Johnson Vision Care, Inc. v. 1-800 Contacts, Inc., 299 F.3d 1242, 1247-48 (11th Cir. 2002). As for the first element, a plaintiff who seeks an award of damages may prove either that the statement “is literally false or that it is true yet misleading or confusing.”[2] American Council, 185 F.3d at 614. If a statement is literally false, deception is presumed, i.e., the plaintiff need not introduce evidence that consumers perceived the statement in a misleading manner. Id.; see also Innovation Ventures, LLC v. N.V.E., Inc., 694 F.3d 723, 735 (6th Cir. 2012) (noting that “where statements are literally false, a violation may be established without evidence that the statements actually misled consumers”). If a statement is ambiguous or true but misleading, the plaintiff must present proof of actual deception. American Council, 614 F.3d at 614.

         A statement can be literally false either explicitly or by “necessary implication.” Innovation Ventures, 694 F.3d at 735-36 (quoting Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharm. Co., 290 F.3d 578, 586-87 (3d Cir. 2002)). The “necessary implication” doctrine encompasses the so-called “establishment claim, ” which permits a plaintiff to prove literal falsity based on product testing. See FLIR Sys., Inc. v. Sierra Media, Inc., 903 F.Supp.2d 1120, 1129 (D. Or. 2012) (describing establishment claims as a “subspecies of the false by necessary implication doctrine”). When an establishment claim is at issue, a plaintiff may prove literal falsity “by demonstrating that the tests were not sufficiently reliable to permit a conclusion that the product is superior, ” or by showing that “the tests, even if reliable, do not establish the proposition asserted by the defendant.” Castrol, Inc. v. Quaker State Corp., 977 F.2d 57, 63 (2d Cir. 1992). When a plaintiff seeks to prove literal falsity through an establishment claim, the defendant must identify the tests that support its advertising statement. Id.

         a. 8-3-1 and 100-44 Claims

         Robinson admits that the 8-3-1 and 44-100 claims were literally false. (ECF No. 225 at PageID.1761-63.) Therefore, while ALS was thus not required to present evidence that these statements actually deceived the retailers, it was still required to show both that these statements were material to the retailers' purchasing decisions and that there was a causal link between these statements and some harm. ALS failed to do so for both elements. First, as to materiality, while both statements could influence a purchasing decision because they suggest that Trinity adsorbed more odor than activated carbon technology, both statements were always presented together to the retailers, who were sophisticated buyers, and oftentimes appeared in materials near the 40/200 claim. Given that these statements were mathematically at odds with one another, it is implausible (without testimony from the retailers) that sophisticated and knowledge retail buyers would have relied on either statement.[3] As for harm, ALS failed to offer any evidence sufficiently linking these statements to any retailer's purchasing decision.[4]

         b. The 40/200 Claim

         In contrast to the 8-3-1 and 100-44 claims, the 40/200 advertising claim was made to both retailers and consumers. Because ALS proceeded on the theory that the 40/200 claim was an establishment claim, a substantial portion of the evidence at trial focused on whether the tests supporting this claim were reliable and, in fact, supported the claim.

         i. The Evidence Established That the Claim ...


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