07-0468-cv

Time W arner Cable , Inc. v. DIRECTV , Inc. UNIT ED S TAT ES COU RT OF A PP EALS 1 F OR THE S ECOND C IRCU IT 2

_______________ 3 4 August Term, 2006 5 6 (Argued: May

29, 2007 Decided: August 9, 2007) 7 8 Docket No. 07-0468-cv 9

_______________ 10 11 12 T IME W ARNER C ABLE , I NC ., 13 Plaintiff-Appellee , 14 15 —v.— 16 17 DIRECTV, I NC ., 18 19 Defendant-Appellant

. 20

_______________ 21 22 B e f o r e : 23 KEARSE , S TRAUB , and P OOLER , 24 Circuit Judges

. 25

_______________ 26 Interlocutory appeal from an opinion and order of the United States District Court for the 27 Southern District of New York (La ura Tay lor Swain, Judge ) issued February 5, 2007, 28 prelimina

rily enjoining

DIRE CTV, I

nc. from dissemina

ting, in a ny market in

which Time 29 Warner Cable, Inc. provide s cable service, certain television commerc ials and Internet 30 adverti sements f

ound to like ly violate the

Lanham Act on l iteral f

alsity ground s. 31 A FFI RMED IN P ART , V ACATED I N P ART , AND R EMANDED . 32

_________________________________ 33 Saul B. Shapiro, Patterson Belknap Webb & Ty ler LL P (Sarah E. Zgliniec, Catherine 342

A. Williams, on the brief ), New York, NY, for Plaintiff-Appellee. 1 2 Daniel H. Bromberg, Quinn Emanuel Ur quhart Oliver & Hedges, L LP, Redwood 3 Shores, CA (Marc L. Gre enwald, Sanford I. Weisburst, Quinn Emanuel Ur quhart 4 Oliver

& He dge s, L

LP , Ne w Yo rk, NY; Mic hae l E. Will iam s, Ju stin C. G rif fin , A. J. 5 Bedel, Quinn Emanuel Urquhart Oliver & H edges, LL P, Los Angeles, CA; and 6 Margr

et Caruso , Quinn Ema

nuel Urq uhart Oli ver & H edges , LL

P, Redwood

Shores, 7 CA, on the brief ), for Defen dant-App ellant. 8

_________________________________ 9 STRAUB, Circuit Judge : 10 Defendant-Appellant DI RECTV, Inc. (“DI

RECTV”) appeals from the February 5, 2007 11 opinion and order of the United States District Court for the Southern District of New York 12 (Laura Tay

lor Swain, Judge ) prelimi narily enjoining

it from dis seminatin

g, in an y ma rket in 13 which Pla

intiff-A ppellee Time Warner Cable , Inc . (“TWC”) provides cable se rvice, c ertain 14 television commercials and Interne t advertisements found likely to violate the L anham Act on 15 literal falsity g

rounds. Time Warner Cable, Inc. v. DIRECTV, Inc ., 475 F. Supp. 2d 299 16 (S.D.N.Y. 2007). 17 This a

ppea l req uire s us to

clar ify cert ain a spects of o

ur fa lse adver tising doc trine . We 18 make thr

ee clar ifications in part

icular. First, we

hold that a

n advert isement c an be lite

rally false 19 even thou

gh it doe s not explici

tly make a fa

lse asse rtion, if t he words or imag es, consi dered in 20 context, necessarily and una mbiguously imply

a false message. Second, we de cide that the 21 categ ory

of non-a ctionabl e “puff

ery ” encomp asses vis

ual depictions that, while fa ctually 22 inaccur

ate, ar e so gro ssly

exagg erated

that no re asonable

consumer

would re ly on them in 23 navigating the marketplace. T hird, we conclude that the likelihood of irreparable ha rm may be 24 presumed where the plaintiff demonstrates a likelihood of succ ess in showing that the 25 defenda

nt’s comp arative

adverti sement is l iterally false a nd that g iven the nature of the mark et, it 261 This factual background is derived fr om the District Court’s findings of fact, which are not in dispute. See Time Warner Cable, Inc. , 475 F. Supp. 2d at 302-04. 3 would be obvious to the viewing audience that the advertisement is targeted at the plaintiff, even 1 though the plaintiff is not identified by na me. Reviewing the District Court’s decision under 2 these principles, we affirm in part, vacate in pa rt, and remand for further proce edings consistent 3 with this opinion. 4 5 FACTUAL BACKGROUND 1 6 A. The Parties 7 TWC and DI RECTV are major

play ers i n the multi chan

nel videoservice i

ndust ry . TWC 8 is the second-largest cable company in the United States, serving more than 13.4 million 9 subscribers. Like all cable providers, TWC must operate through franchises let by local 10 government entities; it is currently the franchisee in the grea ter part of New York City

. 11 DIRECTV is one of the country ’s largest satellite service providers, with more tha n 15.6 million 12 customers nationwi de. Bec ause DI RECTV broa

dcasts di rectly via sate llite, it is n

ot subject to 13 the same franchise limitations as cable companies. As a re sult, in the markets where TWC is the 14 franchisee, DI

RECTV and other satellite providers pose the greate st threat to its market share. 15 The competition in these markets for new customers is extremely fierce, a fact to which the 16 adverti sements c

halleng ed in this c ase atte st. 17 TWC offers both analog and digital television services to its customers. DIRECTV, on 18 the other hand, delivers 100% of its programming digitally. Both c ompanies, however, offer 19 high-definition (“HD”) service on a limited number of their respective channels. Transmitted at 202 The “p” and “i” designations stand for “ progressive” and “interlace d.” In the prog ressive format, the full picture updates every sixtieth of a second, while in the interlaced format, half of the picture updates every

sixtieth of a second. The higher the “p” or “i” number, the greater the resolution and the better the picture will appear to the viewer

. 4 a higher resolution than analog or tra ditional digital programming, HD provides the home viewer 1 with theater-like picture quality on a wider screen. The picture quality of HD is governed by 2 standards recommended by the Advanced Television Sy stems Committee (“ATSC”), an 3 international non-profit organization that develops voluntary standards for digital television. To 4 qualify as HD unde r ATSC standards, the screen resolution of a television picture must be at 5 least 720

p or 1080i. 2 TWC and DIRECTV do not set or alter the scree n resolution for HD 6 progra

mming pr ovided by the networks; inste ad, they make ava

ilable suf ficient b andwidth

to 7 permit the HD level of resolution to pass on to their customers. To view progra mming in HD 8 format, customers of either provider must have an HD te levision set. 9 There is no dispute, at least on the present record, that the HD programming provided by 10 TWC and DIRECTV is equivalent in picture quality . In terms of non-HD prog ramming, digital 11 service generally yields better picture

quality than analog

service, because a digital sig nal is more 12 resistant to interference. See Consumer Elecs. Ass’n v. F.C.C., 347 F.3d 291, 293-94 (D.C. Cir. 13 2003). That said, TWC’s analog cable service sa tisfies the technical specifications, e.g. signal 14 level requirements and signal leakag e limits, set by the Feder al Communications Commission 15 (“FCC”). See 47 C.F.R. § 76.1, et seq . Accor ding to a FCC fact sheet, a nalog se rvice that meets 16 these spe cificat

ions produ

ces a picture tha

t is “hig h enoug h in quality

to provide

enjoy able 17 viewing with barely perceptible impairments.” 18 B. DIRECTV’s “SOURCE MATTERS” Campaign 195

In the fall of 2006, DI

RECTV launched a multimedia advertising campaign ba sed on the 1 theme of “SOURCE MATTERS.” The concept of the campaig n was to educate consumers that 2 to obtain HD-standard picture quality , it is not enough to buy an HD te levision set; consumers 3 must also receive HD programming f rom the “source,” i.e. , the television service provider. 4 1. Jessica Simpson Commercial 5 As part of

its new ca

mpaign, DIRE CTV beg an runnin g a tele vision com

mercial in 6 October 2006 featuring celebr ity Jessica Simpson. In the c ommercial, Simpson, portraying her 7 character of Daisy Duke from the movie The Duke s of Hazzard

, tells some of her customers at 8 the local diner: 9 Simpson: Y’all ready to order? 10 11 Hey , 253 stra ight day s at the g ym to get this body and y ou’re not 12 gonna watch me on DI RECTV HD? 13 14 You’r e just not go nna get the be st pi cture o ut of s ome fan cy big 15 screen TV without DIRECTV. 16 17 It’s bro adc ast in 108 0i . I to tal ly do n’t kno w wh at t hat mea ns, but I 18 want it. 19 The original version of the commercial conc luded with a narrator say ing, “For picture quality

that 20 beats cable, y

ou’ve got to get DI

RECTV.” 21 In re sponse to o bjection s by

TWC, and pur

suant to a greements ente

red into by the partie s, 22 DIRECTV pulled the original version of the commercial and replaced it with a revised one 23 (“Revised Simpson Commercial”), which began airing in early De cember 2006. The Revised 24 Simpson Commercial is identical to the original, except that it ends with a different tag line: “For 25 an HD picture that can’t be beat, g et DIRECTV.” 266 2. William Shatner Commercial 1 DIRECTV debuted another c ommercial in October 2006, featuring ac tor William Shatner 2 as Captain James T. Kirk, his character from the popular Star Trek television show and film 3 series. The following conversation takes plac e on the Starship Enterprise: 4 Mr. Chekov: Should we raise our shields, Captain? 5 6 Captain Kirk: At ease, Mr. Chekov. 7 8 Again with the shields. I wish he’d just re lax and enjoy the 9 amazing picture clarity of the DIRECTV HD we just hooked 10 up. 11 12 With what Starfleet just ponied up for this big screen TV, 13 settling for cable would be illogical. 14 15 Mr. Spock: [Clearing throat.] 16 17 Captain Kirk: What, I can’t use that line? 18 19 The original version ended with the announcer saying, “ For picture quality

that beats cable, 20 you’ve got to get DIRECTV.” 21 DIRECTV agre ed to stop running the Shatner commercial in November 2006. I n January 22 2007, DIRECTV released a revised version of the commercial (“Revised Shatner Commercial”) 23 with the revamped tag line, “For a n HD picture that can’t be beat, ge t DIRECTV.” 24 3. Internet Advertisements 25 DIRECTV also wage d its campaign in cy berspace, placing banner

advertisements on 26 various websites to promote the message that when it comes to picture qua lity, “source matters.” 27 The banner ads ha ve the sa me basic structur e. They open by showing an imag e that is so

highly 28 pixelated t

hat it is impo ssible to di scern w hat is bein

g depicted. On to

p of this ind

istinct ima

ge is 297

superimposed the slogan, “SOURCE MATTERS.” After about a second, a vertical line splits the 1 screen into two parts, one labeled “OTHER TV” a nd the other “DIRECTV.” On the OTHER TV 2 side of the l ine, the pi cture is ex tremely pixelat ed and dist orted, lik e the openin g image. By 3 contrast, the picture on the DI RECTV side is exceptionally sharp and clea r. The DIRECTV 4

screen

reveal s that wha

t we have been look

ing at a ll along is an imag e of New

York Gia nts 5 quarterback Eli Manning; in another ad, it is a picture of two women snorkeling in tropical 6 waters. The advertisements then invite browsers to “F IND OUT WHY DI RECTV’S picture 7 beats cable” and to “L EARN MORE” about a special offer. I n the original design, users who 8 clicked on the “LEARN MORE” ic on were automatically directed to the HDTV section of 9 DIRECTV’s website. 10 In addition to the banner adver tisements, DIRECTV created a demonstrative 11 advertisement that it featured on its own website. Like the banner ads, the website demonstrative 12 uses the split-screen technique to compare the picture quality of “DI

RECTV” to that of “OTHER 13 TV,” which the ad later identifies as repre senting “basic cable,” i.e. , analog cable. The 14 DIRECTV side of the scree n depicts, in high resolution, an image of football play er Kevin Dy son 15 making a

touchdow

n at the Sup er Bowl . The por tion of the

image on the OTHER TV side is 16 not ice abl y pix ela ted and bl urr y. Th is vi sua l d is pl ay is acc om pan ied by th e fo ll owi ng t ex t: “If 17 you’re hooking

up your high- definition TV to basic cable, y ou’re not getting the best picture on 18 every c

hannel. For unparalleled clarity , you need DI

RECTV HD. You’ll enjoy 100% digital 19 picture and sound on every channel and also get the most sports in HD – including all y our 20 favorite football games in high definition with NFL SUNDAY TICKET.” 21 228 PROCEDURAL HISTORY 1 A. Filing of Action and Stipulation 2 On December 7, 2006, TWC filed this action charging DIRECTV with, inter alia , false 3 advertising in violation of § 43(a) of the L anham Act. 15 U.S.C. § 1114, et seq . Initial 4 negotiations led to the execution of a stipulation, in which DIRECTV ag reed that pending final 5 resolution of the action, it would stop running the original versions of the Simpson and Shatner 6 commercials and also disable the link on the banner advertisements that route d customers to the 7 HDTV page of its website. DI RECTV further stipulated that it would not claim in any 8 advertisement, either directly or by implication, that “the picture quality presently

offered by 9 DIRECTV’s HDTV service is superior to the picture offered presently by Time Warner Cable ’s 10 HD TV se rv ic e, or th e p re se nt HD TV se rv ic es of ca bl e t el ev is io n p ro vi de rs in ge ne ra l. ” F in al ly, 11 DIRECTV agre ed that any bre ach of the stipulation would result in irreparable harm to TWC. 12 The stipulation contained the caveat, however, that nothing in it “sha ll be construed to be a 13 finding on the merits of this action.” The District Court entered an orde r on the stipulation on 14 December 12, 2006. 15 B. Preliminary Injunction Motion 16 The following week, on December 18, TWC filed a motion for a preliminary injunction 17 against the Revis ed Simpson C ommercia l, as well as the ba nner advertiseme

nts and we

bsite 18 demonstrative (collectively , “Internet Adver tisements”), none of which were specifica lly covered 19 by the stipulation. TWC claimed that each of these advertisements was literally false, obviating 20 the need for extrinsic evidence of consumer conf usion. TWC further argued that as DI RECTV’s 21 direct competitor, it was entitled to a presumption of irreparable injury . On January 4, 2007, 229

afte r disc over ing t hat D IRE CTV ha

d star ted r unnin g the Revis ed Sha

tner Comme rcia l, TWC 1 filed supplemental papers requesting that this commercial a lso be preliminarily enjoined on 2 literal f

alsity ground s. 3 DIRECTV vigorously opposed the motion. It asserted that the Revised Simpson and 4 Shatner C ommercia ls were n ot litera lly f alse bec ause no si

ngle sta tement in t

he comme

rcials 5 explicitly claimed that DI RECTV HD is superior to cable HD in terms of picture quality

. 6 DIRECTV did not deny that the Internet Advertiseme nts’ depictions of cable were facially false. 7 Rather, it argued that the I nternet Advertisements did not violate the Lanha m Act because the 8 images constituted non-actionable puffery . Finally, DI RECTV argued that irreparable ha rm 9 could not be presumed because none of the conte sted advertisements identified TWC by name. 10 C. The District Court’s February 5, 2007 Opinion and Order 11 On February 5, 2007, the District Court issued a decision granting TWC’s motion. The 12 District Court determined that TWC had met its burden of showing that each of the cha llenged 13 advertisements was likely to be proven literally f

alse. Addressing the television commercials, the 14 District Court held that the meaning of particular statements had to be de termined in light of the 15 overall context, and not in a vacuum as urged by DIRECTV. Given the commercia ls’ obvious 16 focus on HD picture quality , the District Court found that the Simpson’s assertion that a viewer 17 cannot “get the best picture out of some big fancy big screen TV without DIRECTV” a nd 18 Shatner’s quip that “settling for cable would be illogica l” could only be understood as making the 19 literally false c laim that DIRECTV HD is superior to cable HD in pictur e quality. See Time 20 Warner Cable, Inc. , 475 F. Supp. 2d at 305-06. As for the Inter net Advertisements, the District 21 Court found that the facially false depictions of cable’s picture quality could not be discounted as 2210

mere puf fery because it was poss ible that c onsumers unfamilia

r with HD t

echnolog y would 1 actually re ly on the image s in deciding whether to hook up their HD television sets to DI RECTV 2 or analog cable. See id. at 306-08. 3 In a ssessing irrepa rable ha rm vel non , the District Court observed that under Second 4 Circuit c ase law, irrepa rable ha rm could b e presumed wher e the mova

nt “demon strates a 5 likelihood of success in showing literally false defendant’s comparative adve rtisement which 6 mentions plaintiff’s product by name .” Id. at 308 (quot ing Castrol, Inc. v. Quaker State Corp. , 7 977 F.2d 57, 62 (2d Cir. 1992) (internal quotation marks omitted)). The District Court 8 acknowledged that the Revised Shatner Commercial a nd the Internet Advertiseme nts did not 9 specific ally

name TWC, b

ut conclu ded that a presumpt ion of irr eparab le harm was never

theless 10 appropr

iate bec ause the

adverti sements ma

de explicit

refer ences to “cable ,” and in t

he marke ts 11 where TWC is the franchisee, “cable” is func tionally sy

nonymous with “Time Warner Cable.” 12 See id. As for the Revised Simpson Commercial, the District Court reasoned that although the 13 adverti sement did not explicit

ly r efere nce “ca ble,” ir repara ble harm should be p

resumed because 14 “TWC is DIRECTV’s main competitor in markets served by TWC.” Id. The District Court 15 further noted that DIRECTV had br eached the stipulation by c ontinuing to run the contested 16 commercials and that this breach also supported a finding of irreparable harm. See id. at n.5. 17 In accorda nce with its opinion, the District Court entered a preliminary injunction barring 18 DIRECTV from disseminating, “in any market in which [TWC] provides cable service,” 19 (1) the Revised Simpson Commercial and Revised Shatner Commercial, “and 20 any other a dvertisement disparaging the visual or audio qua lity of TWC or 21 cable high-definition (“HDTV”) pr ogramming as compared to that of 22 DIRECTV or satellite HDTV prog ramming”; and 23 2411

(2) the I

nternet Advertis ements “and any other advertisement making 1 repres entation s that the s ervice provided by T ime Warne

r Cable, or cable 2 service in general, is unwatcha ble due to blurriness, distortion, pixellation 3 or the like, or inaudible due to static or other interferenc e.” 4 5 DISCUSSION 6 A party see king preliminary

injunctive relief must establish: (1) either (a) a likelihood of 7 success on the merits of its case or (b) sufficiently serious questions going to the merits to make 8 them a fair ground for litigation and a ba lance of hardships tipping decidedly in its favor, and (2) 9 a likelihood of irreparable harm if the reque sted relief is denied. See Coca-Cola Co. v. 10 Tropicana Prods., Inc. , 690 F.2d 312, 314-15 (2d Cir. 1982), abrogated on other grounds by 11 Fed. R. Civ. P. 52(a). We review the entry of a preliminary

injunction for excess of discretion, 12 which may

be found where the District Court, in i ssuing the injunct ion, relie d upon cle arly 13 erroneous findings of fact or er rors of law. S.C. Johnson & Son, Inc . v. Clorox Co. , 241 F.3d 14 232, 237 (2d Cir. 2001). “[T]he district judge’s determination of the meaning of the 15 advertisement [is] a finding of fact that shall not be set aside unless clearly erroneous.” Id. 16 (altera

tions in ori ginal; in

ternal q uotation ma

rks omitte d); see also Johnson &Johnson v. GAC 17 Int’l, Inc ., 862 F.2d 975, 979 (2d Cir. 1988) (“ GAC Int’l, Inc. ”). 18 A. Likelihood of Success on the Merits 19 1. Televisio n Comm ercials 20 Section 43 (a) of the La nham Act p

rovides, in pertine

nt part tha

t: 21 Any

person w ho, on or in

connection with a

ny goods or se

rvices . . . uses in 22 commerce . . . any . . . false or misleading description of fact, or f alse or 23 misleading representation of fact, which – 24

. . . . 2512

(B) in commercial advertising or promotion, misrepresents the nature , 1 characteristics, qualities, or geog raphic origin of his or her or another 2 person’s goods, services, or commerc ial activities, 3 shall be li able in a civil act ion by any person w ho believ es that he

or she is or is 4 likely

to be dama

ged by such act

. 5 6 15 U.S.C. § 1125(a)(1). 7 Two diff

erent theories o f recov ery are ava ilable to a plaintiff who bring s a false 8 advertising action under § 43(a) of the L anham Act. First, the plaintiff can demonstrate that the 9 challenged advertisement is literally false, i.e. , false on its face. See GAC Int’l, Inc. , 862 F.2d at 10 977. When a

n advert isement is

shown to be

literally or faci ally

false, c onsumer d

eception is 11 presumed and “the court may grant relief without refere nce to the advertisement’s [actual] impact 12 on the buying public.” Coca-Cola Co. , 690 F.2d at 317

. “This is bec ause p laint iffs a llegi ng a 13 literal f

alsehood are cla iming tha t a statement, on its

face, c onflicts w

ith reali ty, a claim that is 14 best supported by compar ing the statement itself with the reality it purports to describe.” 15 Schering Corp. v. Pfizer Inc ., 189 F.3d 218, 229 (2d Cir. 1999). 16 Alterna

tively , a plaint

iff can show that t

he adve rtisemen t, while not literall

y f alse, is 17 nevertheless likely to mislead or confuse consumers. See Coca-Cola Co. , 690 F.2d at 317. 18 “[P]laintiffs alleging an implied falsehood are claiming that a statement, whatever its literal truth, 19 has left an impression on the listener [or viewer] that conflicts with reality ” – a claim that 20 “invites a comparison of the impression, rather than the statement, with the truth.” Schering 21 Corp. , 189 F.3d at 229. Therefore, where as “plaintiffs seeking to establish a literal falsehood 22 must generally

show the s

ubstance of what is

convey ed, . . . a district c ourt must rely

on extrinsic 23 evidenc e [of cons umer dec eption or

confusion] to suppor

t a finding

of an impli citly

false 243 Under either theory , the plaintiff must also demonstrate that the false or misleading

representation involved an inherent or material quality of the product. See S.C. Johnson & Son, Inc. , 241 F.3d

at 238; Nat’l Basketball Ass’n v. Motorola, Inc. , 105 F.3d 841, 855 (2d Cir. 1997). TWC has met this requirement, as it is undisputed that picture quality is an inhere nt and material characteristic of multichannel video service. 13 message.” Id. (internal quotation marks omitted). 3 1 Here, TWC chose to pursue only the first path of literal falsity, a nd the District Court 2 grante d the pre liminary injunction

against the tele

vision com

mercial s on that ba sis. I

n this 3 appeal, DIRECTV does not dispute that it would be a misrepr esentation to claim that the picture 4 quality of DI

RECTV HD is superior to that of cable HD. Rather, it argue s that neither 5 commercial explicitly makes such a c laim and therefore cannot be literally false. 6

a. Revised Simpson Commercial 7 DIRECTV’s arg ument is easily dismissed with respect to the Revised Simpson 8 Commerci al. I

n the cri tical line s, Simpson te lls audien ces, “Y ou’re ju st not gon

na get t he best 9 picture

out of some

fancy big scr een TV without DI

RECTV. I

t’s broa dcast in 1 080i.” These 10 statements make the explicit assertion that it is impossible to obtain “the best picture” – i.e. , a 11 “1080i”-resolution picture – from any source other than DI

RECTV. This claim is flatly untrue; 12 the uncon

troverte d factua

l recor d establishes that viewers c an, in fa ct, get the same “best picture” 13 by ordering

HD programming from their ca ble service provider. We therefore a ffirm the District 14 Court’s determination that the Revised Simpson Commercial’s contention “that a viewer cannot 15 ‘get the best picture’ without DI RECTV is . . . likely to be proven literally false.” Time Warner 16 Cable, Inc. , 475 F. Supp. 2d at 306. 17 b. Revised Shatner Commercial 18 The issue of whether the Re

vised Shat

ner Comme

rcial is l ikely

to be proven litera

lly f alse 1914

require s more analy sis. When in terpreting the

controve rsial sta tement, “With what Sta

rfleet j ust 1 ponied up for this big screen TV, settling for c able would be illogical,” the District Court looked 2 not only at that particular te xt, but also at the surrounding context. In light of Shatner’s opening 3 comment extolling the “amazing picture quality of [] DIRECTV HD” and the announcer’ s 4 closing remark highlighting the unbeatable “HD picture” provided by DIRECTV, the District 5 Court found that the line in the middle – “settling for cable would be illogical” – clearly r

eferred 6 to cable’s HD picture quality . Since it would only be “illogica l” to “settle” for cable’s HD 7 picture if it was materially inferior to DIRECTV’s HD picture , the District Court concluded that 8 TWC was likely to establish that the statement was literally false. 9 DIRECTV argue s that the District Court’s ruling was clearly erroneous because the actual 10 statement at issue, “settling for cable would be illogica l,” does not explicitly compare the picture 11 quality of DI

RECTV HD with that of cable HD , and indeed, does not mention HD at a ll . In 12 DIRECTV’s view, the District Court based its determination of litera l falsity not on the words 13 actually used, but on wha t it subjectively perce ived to be the general messag e conveyed by the 14 commercial as a whole. DI RECTV contends that this was plainly improper under this Court’s 15 decision in American Home Products Corp. v. Johnson & Johnson , 577 F.2d 160 (2d Cir. 1978). 16 TWC, on the other han d, mainta ins that the

District C ourt prop erly

took conte

xt into 17 account in interpreting the commercial, as dire cted by this Court in Avis Rent A Car System, Inc. 18 v. Hertz Corp. , 782 F.2d 381 (2d Cir. 1986). TWC argues that under Avis Rent A Car , an 19 advertisement can be literally false even though no “combination of words betwe en two 20 punctuat

ion signa ls” is untr ue, if the clear me aning o f the stat ement, c onsidere d in context, is 21 false. Given the commercial’s repea ted references to “HD picture ,” TWC contends that the 2215

District C ourt cor

rectly found tha

t “settlin g for c able wou

ld be illogical” lit

erally made the false 1 claim that cable’s HD picture quality is inferior to DIRECTV’s. 2 To appre ciate the parties’ dispute, i

t is nece ssary

to understand the t

wo key cases, 3 America n Home Pr oducts and Avis Rent A Car. The America n Home Pr oductscase involved a 4 false a

dvertisin g claim asserte d by

McNeil Laboratories, I

nc., the manufacturer of

Tyl enol, 5 against American Home Products Corporation, the manufa cturer of the competing drug Anacin. 6 One of the challe

nged a dvertise ments was

a televis ion comme

rcial, in which a s

pokesman

told 7

consumer

s: 8 Your body knows the diff erence between these pain re lievers [showing other 9 products ] and Adult St rength Anacin. For pain

other tha n heada che Ana cin 10 re du ce s t he in fl am ma ti on th at of te n c om es wi th pa in . T he se do no t. Sp ec if ic al ly, 11 inflammation of tooth extraction[,] muscle strain[,] backache[,] or if your doctor 12 diagno ses tendonitis [,] neur itis. Anac in reduc es that inf lammation

as Anac in 13 relieves pain fast. These do not. Take Adult Strength Ana cin. 14 Am. Home

Prods. , 577 F.2d at 163 n.3 (notations of special effects omitted). Another 15 adverti sement, w hich appe ared in national ma gazines , advised

readers: 16 Anacin c an reduc e inflammation tha t comes wi

th most pain . Ty

lenol ca nnot. 17 18 With any of these pains, y our body knows the diffe

rence between the pain relieve r 19 in Adult-Strength Anacin and other pain relievers like Ty lenol. Anacin can 20 reduce the inflammation that often comes with these pains. 21 22 Tyl enol can not. Even

Extra-Stre

ngth Ty lenol ca nnot. And A

nacin re lieves pa

in 23 fast as it reduces inflammation. 24 Id. at 163 n.4 . The prin t advert isement vi sually

depicte d the aforementioned “pa ins” as sp ots 25 located on a human body , correlating to tooth extraction, muscle strain, muscular backac he, 26 tendonitis, neuritis, sinusitis, and sprains. Id. 27 To ascertain the meaning of these a dvertisements, the district court turned to consumer 2816

reaction survey s. See id. at 163. Based on these survey s, it found that: (1) the television 1

commerc ial repr

esented that Anac in is a supe

rior pain relieve r gene rally , and not only

with 2 refer

ence to t he parti cular c onditions e numerat ed in the c ommercia

l or to Ana

cin’s all eged a

bility 3 to reduc e inflammation; (2) the print a

dvertise ment clai med that A

nacin is a superior analge sic 4 for cer

tain kinds of pain be cause A

nacin ca n reduce inflamma

tion; and ( 3) both ad

vertisements 5 represented that Anacin reduce s inflammation associated with the conditions specified in the ads. 6 Id. at 163-64. The district court determined that the first two claims were f actually fa

lse. Id. at 7 164. Altho

ugh the district c ourt did not definiti vely decide t he vera city of the thir

d claim, it 8

reasone d that “be cause the three claims [we

re] ‘inte gral a

nd insepa rable,’ the adve

rtisemen ts as a 9 whole” violated the Lanham Ac t. Id. (internal quotations and citation omitted). 10 America

n Home Pro ducts app ealed, a rguing that since

the adve rtisemen ts did not c ontain 11

an express claim for greater ana lgesia, they

could not violate § 43(a), even if consumers 12 mistakenly perce ived a different and incorrect mea ning. See id. This Court d isagre ed. I

t first 13 observed that “[§] 43(a) of the Lanha m Act encompasses more than literal falsehoods”; implied 14 falsehoods are also prohibited. Id. at 165. The Court emphasized, however, that when an 15 advertisement relies on “clever use of innuendo, indire ct intimations, and ambiguous 16 suggestions,” instead of literally false statements, the truth or falsity of the ad “usually

should be 17 tested by the re actions of the public.” Id. It provided district courts with the following g uidance 18 fo r a na lyz in g a cl ai m o f i mp li ed fa ls it y: 19 A co urt may, of c our se, con st rue and par se t he l ang uag e of th e ad ver ti sem ent . It 20 may have pe rsonal reactions as to the defensibility or indefensibility of the 21 deliberately ma nipulated words. It may

conclude that the language is far from 22 candid and would never pass muster under tests otherwise a pplied – for example, 23 the Securities Acts’ injunction that “thou shalt disclose”; but the court’s reaction 2417

is at best not determinative and at worst irrelevant. The questi on in such c

ases is 1 – what does the person to whom the advertisement is addressed find to be the 2 message ? 3 4 Id. at 165 -66 (q uoti ng Am. Brands, Inc. v. R. J. Reynolds Tobacco Co. , 413 F. Supp. 1352, 1357 5 (S.D.N.Y. 1976)). 6 Applying these principles to the facts of the case, the America n Home Pr oducts Court 7 determined that “the district court’s use of consumer response data was proper” because “ the 8 claims of both the television commercial and the print advertisement [were] ambiguous.” Id. at 9 166. “This obscurity,” the Court e xplained, “[wa]s produced by severa l references to ‘pain’ and 10 body sensation acc ompanying the assertions that Anacin reduces inflammation.” Id. Therefore, 11 “[a] read

er of or listener to these a

dvertise ments cou

ld reasonably

infer tha t Anacin i s superior to 12 Tyl enol in re ducing pain ge nerally (Claim One ) and in r

educing certain kinds of pa

in (Claim 13 Two).” Id. “Give n thi s rath er obv ious ambigu ity,” th e Cour t conc luded that t he dis trict judge 14 “was wa

rrante d in examinin

g, and may

have be en compe lled to exam ine, cons umer dat a to 15 determine first the messages convey ed in order to determine ultimately the truth or falsity of the 16 messages.” Id. (footnote omitted). 17 America n Home Pr oducts dealt with a claim of implied falsity. See id. at 165 (“We are 18 dealing not with statements which are literally or grammatically

untrue . . . . Rather, we are 19 asked to determine whether a statement acknow ledged to be literally

true and gr

ammatica lly 20 correct nevertheless has a tendency to mislead, confuse or deceive .” (qu otin g Am. Brands, Inc. , 21 413 F. Supp. at 1357)). In Avis Rent A Car , the false advertising action was premised on a theory 22 of literal, not implied, falsity. I n the facts of that case, Avis Rent A Car System, Inc., the self23 proclaimed “Number 2” in the car re ntal business, sued “Number 1” Hertz Corporation over an 2418

adverti sement tha

t procla imed, in la

rge bo ld print, that “ Hertz ha s more new cars t han Avis 1 has cars. ” Avis Rent A Car , 782 F.2d at 381-82. Below a picture of mec hanics unloading new 2 cars into

an airport parkin

g lot, the adverti sement we

nt on to expla

in: “I f you’d like

to drive s ome 3 of the ne

west car s on the ro ad, rent

from Her tz. Beca use we ha ve more new 1984 c ars than Avis 4 or anyone e lse has cars – new or old. . . . Whether y ou’re renting for business or pleasure , 5 chances are y

ou’ll find a domestic or imported car y ou’ll want to drive.” Id. at 382. At the 6 bottom of the ad was Hertz’s slogan, “ The #1 way to rent a car.” Id. 7 At the time the advertisement was published, Hertz only had about 97,000 1984 model 8 cars, whereas Avis had a total of approximately 102,000 cars. See id. at 383. However, 6776 9 cars in Avis’s fleet were in the process of be ing sold and were no longer ava ilable for rental. Id. 10 at 384. Thus, the literal truth or falsity of the claim that “Hertz has more new cars than Avis has 11 cars” turned on whether the statement “r eferred to the rental fleets or the total fle ets of the two 12 companies.” Id. at 383. The district court found that because the advertiseme nt said “cars,” and 13 not “cars for rent,” it had to be read a s referring to the companies’ total flee ts and, as such, was 14 literally false. See id. at 384. 15 This Court held that the district court’s finding was clearly erroneous. It pointed out that 16 the part

ies had “ made the ir reputa

tions as c ompanies

that rent cars, not companies that sell or 17 merely

own cars,” and that the ad vertisement had a

ppeare d “in publi cations that would c ome to 18 the attention of prospective renters, not car buy ers or financial analysts.” Id. at 385. Moreover, 19 the adve

rtisemen t featur ed a lar ge pict ure of a n airpor t rental l ot and mad

e three specific 20 references to rentals. See id. Taking this context into consideration, the Court concluded that the 21 claim that “Hertz has more new cars than Avis has new c ars” could only be understood as 2219

referring to the companies’ re ntal fleets. The Court elaborated: 1 Fundame ntal to an y ta sk of inte

rpreta tion is the p

rinciple that text mus t 2 yie ld to conte xt. Recog

nizing this , the Supre

me Court long ag o inveig hed ag ainst 3 “the tyranny of literalness.” In his determination to “g o by the written word”

and 4 to ignore the context in which the words were used, the district judge in the 5 present case failed to heed the familiar warning of Judge L earned Hand that 6 “[t]here i s no surer way to misrea d any document

than to re ad it liter

ally ,” as we ll 7 as his oft-cited admonition that “it is one of the surest indexes of a mature and 8 developed jurisprudence not to make a fortress out of the dictionary.” 9 These a nd similar

invocati ons aga

inst litera lness, tho ugh del ivered most 10 often in connection with statutory a nd contract interpretation, are releva nt to the 11 interpretation of any writing, including advertisements. Thus, we have 12 emphasized that in reviewing FTC actions prohibiting unfair a dvertising practices 13 under the Federal Trade Commission Act a cour t must “consider the 14 advertisement in its entirety a nd not . . . engage in disputatious dissection. The 15 entire mosaic should be viewed rather than eac h tile separately .” . . . Similar 16 approaches have been taken in L anham Act cases involving the claim that an 17 advertisement was false on its face. 18 19 Id. at 385 (citations omitted). 20 At first glance, America n Home Pr oducts and Avis Ren t A Car may appea r to conflict. 21 America n Home Pr oducts counsels that when an advertisement is not false on its face, but 22 instead r

elies on in

direct in timations, district c ourts shou ld look to c onsumer r

eaction to 23 determine meaning, and not rest on their subjective impressions of the a dvertisement as a whole. 24 Avis Rent A Car , on the other hand, instructs district courts to consider the overall context of an 25 advertisement to discern its true meaning, and holds that the messag e conveyed by an 26 advertisement may be viewed as not false in the context of the business at issue, even the written 27 words are not literally accurate. 28 On closer reading, however, the two cases can be reconciled. I n American Home 29 Products , we did not say that context is irrelevant or tha t courts are myopic ally bound to the 30 expl icit words of an ad verti semen t. Rat her, we held t hat wh ere it is “cl ear tha t . . . the la nguage 314 Several district courts in this Circuit have already embraced the doctrine. See, e.g. , Johnson & J

ohnson-Merck Consumer Pharm. Co. v. Procter & Gamble Co. , 285 F. Supp. 2d 389, 391 (S.D.N.Y. 2003), aff’d , 90 Fed. Appx. 8 (2d C ir. 2003) ; Tambrands, Inc. v. Warner-Lambert Co. , 673 F. Supp. 1190, 1193-94 (S.D.N.Y. 1987). 20 of the ad vertisement[] is not unambiguo us,” the d istrict c ourt shoul d look to consumer r esponse 1 data to resolve the ambiguity

. Am. Home Prods. , 577 F.2d at 164

. In Avis Rent A Car , we 2 concluded that there was no ambiguity to resolve because even though the state ment, “Hertz has 3 more new cars than Avis has cars,” did not expressly qualify the compar

ison, given the 4 surrounding context, it “unmistakably” r eferred to the companies’ rental fle ets. Avis Rent A Car , 5 782 F.2d at 384. 6 These two cases, read togethe r, compel us to now formally a dopt what is known in other 7 circuits as the “false by necessary

implication” doctrine. See, e.g. , Scotts Co. v . United I ndus. 8 Corp ., 315 F.3 d 264, 274 ( 4th Cir. 200 2); Clorox Co. P uerto Ric o v. Proc tor &

Gamble 9 Commercial Co. , 228 F.3d 24, 34-35 (1st Cir. 2 000); Southland S od Farms v

. Stover S eed Co ., 10 108 F.3d 1 134, 1139 ( 9th Cir. 199 7); Castrol Inc. v. Pennzoil Co. , 987 F.2d 939, 946-47 (3d Cir. 11 1993) (“

Pennzoil Co. ”). 4 Under this doctrine, a district court evaluating whethe r an 12 advertisement is literally fa lse “must analyze the message conveyed in full context,” Pennzoil 13 Co. , 987 F.2d at 946, i.e. , it “must c onsider t he adve rtisemen t in its entir

ety and not . . . enga

ge in 14 disputatious dissection,” Avis Rent A Car , 782 F.2 d at 385 (in ter nal quo tat io n m ark s om it ted ). If 15 the words or images, considered in context, necessar ily imply a false message, the adver tisement 16 is literally false and no e xtrinsic evidence of consumer confusion is required. See Novartis 17 Consumer Health, Inc. v. Johnson & Johnson-Merck Pharm. Co. , 290 F.3d 578, 586-87 (3d Cir. 18 2002) (“A ‘literally false’ message may

be either explicit or ‘convey ed by nec essary implication 1921

when, considering the advertisement in its entirety , the audience would recognize the claim as 1 readil y as if it h ad been expl icit ly stated .’” (qu otin g Clorox Co. Puerto Rico , 228 F.3d at 35)). 2 However, “only

an unambiguous message can be literally false.” Id. at 587. Therefore, if the 3 language or g

raphic is susceptible to more than one reasonable interpre tation, the advertisement 4 cannot be literally f alse. See Scotts Co. , 315 F.3d at 275 (stating that a literal falsity argument 5 fails if the statement or image “can re asonably be unde rstood as conveying

different messages”); 6 Clorox Co. Puerto Rico , 228 F.3d at 35 (“[A] factfi nder m ight co nclud e that the me ssage 7

conve yed by a partic ular ad verti semen t rema ins s o bala nced b etween severa l plau sibl e meani ngs 8 that the c laim made by t he adve rtisemen t is too unc ertain to

serve a s the basi s of a lite ral fals ity 9 claim . . . .”). There may still be a “basis for a claim that the advertisement is misleading,” 10 Clorox Co. Puerto Rico , 228 F.3d at 35, but to resolve such a claim, the district court must look 11 to consume

r data to determine what “

the pers on to whom the adver tisement i s addres sed find[s] 12 to be the message,” Am. Home Prods. , 577 F.2d at 166 (citation omitted). In short, wher e the 13 advertisement does not unambiguously make a claim, “the court’s reaction is at best not 14 determinative and at worst irrelevant.” Id. 15 Here, the District Court found that Shatner’s assertion that “settling for cable would be 16 illogica

l,” consi dered in

light of the adve rtisemen t as a who le, unamb iguously made the false 17 claim tha

t cable’ s HD pictu

re quali ty is inferior to that of D IRECT

V’s. We ca

nnot say that this 18 finding was clearly erroneous, especially

given that in the immediately preceding line, Shatner 19 praises the “amazing picture clarity of DIRECTV HD.” We acc ordingly a ffirm the District 20 Court’s conclusion that TWC established a likelihood of success on its claim that the Revised 21 Shatner Commercial is literally fa lse. 2222 2. Internet Advertisements 1 We have made clear that a district court must examine not only the words, but also the 2 “visual images . . . to assess whether [the advertisement] is literally false.” S.C. Johnson & Son, 3 Inc. , 241 F.3d

at 238. I t is uncont

roverte d that the

images used in the

Inte rnet Adv ertiseme

nts to 4 represent cable are inac curate depictions of the picture quality provided by ca

ble’s digital or 5 analog service. The I nternet Advertisements are therefore explicitly and literally

false. See 6 Coca-Cola Co. , 690 F.2d at 318 (reversing the district court’s f inding of no literal falsity in an 7 orang e juice c ommercia l where “ [t]he visual

componen

t of the a d makes a n explicit 8

re pr es en ta ti on th at Pr em iu m P ac k i s p ro du ce d b y sq ue ez in g o ra ng es an d p ou ri ng th e f re sh ly9 squeezed

juice dir ectly into the c arton. Th

is is not a tr

ue repr esentat ion of how

the produ

ct is 10 prepared. Premium Pack juice is heated and sometimes frozen prior to pa ckaging.”). 11 DIRE CTV does not contes t this point. Rather, i t asserts that the images a

re so gr ossly 12 distorted and exaggerated that no re asonable buye r would take them to be accurate depictions “of 13 how a consumer’s television picture would look when connected to c able.” Co ns eq ue nt ly, 14 DIRECTV argue s, the images are obviously just puffery, whic

h cannot form the basis of a 15 Lanham Act violation. Notably, TWC agrees that no Lanha m Act action would lie against an 16 advertisement that was so exaggera ted that no reasonable consumer would rely on it in making 17 his or her purchasing decisions. TWC contends, however, that DI RECTV’s own evidence – 18 which indicates that consumers are highly confused about HD technology – shows that the 19 Internet Advertisements pose a real danger of consumer r eliance. 20 This Court has had litt le occa sion to explore the c oncept of puffer y in the false 21 advertising context. In Lipton v. Na ture Co ., 71 F.3d 464 (2d Cir. 1995), the one case where we 2223

discussed the subject in some depth, we characterized puffe ry as “[s]ubjective claims about 1 products, which cannot be proven either true or f alse.” Id. at 474 (internal quotation marks 2 omitted). We also cited to the Third Circuit’s description of puffery in Pennzoil Co. : “Puffe

ry is 3 an exaggeration or overstate ment expressed in broad, vague, and commendatory language. ‘Such 4 sales talk, or puffing, as it is commonly called, is considered to be offered and unde rstood as an 5 expression of the seller’s opinion only, which is to be discounted a s such by the buy er. . . . The 6 ‘puffing’ rule amounts to a seller’s privileg e to lie his head off, so long as he say s nothing 7 specific.’” Penzoil Co. , 987 F.2d at 945 (quoting W. Page Keeton et al., Prosser and Keeton on 8 the Law of Tor

ts § 109, at 756-57 (5th ed. 1984)). Apply ing this definition, we concluded that 9 the defendant’s contention that he had conducted “thor ough” research was just puffe ry, which 10 was not actionable under the L anham Act. See Lipton , 71 F.3d at 474. 11 Lipton ’s and Pennzoil Co. ’s definition of puffery does not translate well into the world of 12 images. Unlike words, images cannot be vague or broad. Cf. Pennzoil Co. , 987 F.2d at 945. To 13 the contrary , visual depictions of a product are gener ally “specif

ic and measurable,” id. at 946, 14 and can therefore “be pr oven either true or false,” Lipton , 71 F.3d at 474 (internal quotation 15 marks omit

ted), as this case demonstr

ates. Ye t, if a visu

al repr esentat ion is so g

rossly 16 exaggerated that no rea sonable buyer would take it at face value, there is no dang er of consumer 17 deception and hence, no basis for a false advertising claim. Cf. Johnson & J ohnson * Merck 18 Consumer Pharm. Co. v. Smithkline Beecham Corp. , 960 F.2d 294, 298 (2d Cir. 1992) (“[T]he 19 injuries redressed in false advertising ca ses are the result of public deception. Thus, where the 20 plaintiff cannot demonstrate that a statistically significant part of the commercial audienc e holds 21 the false belief allegedly communicated by the c

hallenged advertisement, the plaintiff cannot 2224

establish that it suffered any injury as a re sult of the advertisement’s message. Without injury 1 there can be no claim, rega rdless of commercial context, prior advertising history, or audience 2 sophistica

tion.”); see also U

.S. Healt hcare, I nc. v. Bl ue Cross of G

reater Ph iladelphia , 898 F.2d 3 914, 922 ( 3d Cir. 199 0) (“Me re puff ery , advert

ising tha t is not dec eptive f

or no one would re ly 4 on its exaggerated claims, is not actionable under § 43( a).” (internal quotation marks omitted)). 5 Other circuits have recognized that puff ery ca n come in at least two different forms. See, 6 e.g. , Pizza Hut, Inc. v. Papa John’s Int’l, Inc. , 227 F.3d 489, 497 (5th Cir. 2000). The first form 7 we identified in Lipton – “a ge neral c laim of sup eriority over com parable products that is so 8 vague that it can be understood as nothing more than a mere expression of opinion.” Id. ; see 9 Lipton , 71 F.3d at 474. The second form of puffery , which we did not address in Lipton , is “an 10 exaggerated, blustering, a nd boasting statement upon which no reasonable buy er would be 11 justified in relying.” Pizza Hut, Inc. , 227 F.3d at 497; accord United Indus. Corp. v. Clorox Co. , 12 140 F.3d 1175, 1180 (8th Cir. 1998) (“Puffery is exaggerated advertising , blustering, and 13 boasting upon which no reasonable buy er would rely

and is not actionable under § 43(a).” 14 (internal quotation marks omitted)). We believe that this second conception of puffer y is a better 15 fit wher

e, as her e, the “statement

” at issue is expresse d not in wor

ds, but thr

ough ima ges. 16 The Distr ict Court d

etermine d that the

Inte rnet Adv ertiseme

nts did not s atisfy

this 17 alternative definition of puffery because DIRECTV’s ow n evidence showed that “many HDTV 18 equipment purchasers are confused a s to what image quality to expect when viewing non-HD 19 broadcasts, as their prior experience with the equipment is often limited to viewing H D 20 broadcasts or other digital images on floor model televisions at large retail chains.” Time Warner 21 Cable, Inc. , 475 F. Supp. 2d at 307. Given this confusion, the District Court reasoned that 2225

“consumers unfamiliar with HD equipment could be led to believe that using an HD television 1 set with a

n analog cable f eed mig ht result i n the sort of distort ed imag es showc ased in 2 DIRE CTV’s I

nternet Advertis ements, e special ly s ince thos e adver tisements make re ferenc e to 3 ‘basic cable.’” Id. 4 Our review of the record persuades us that the District Court clearly erred in rejecting 5 DIRE CTV’s puf

fery defense . The “OTHER TV” images in the I nternet Advertis ements a

re – to 6 bo rr ow th e w or ds of Ro na ld Bo yer , T WC ’s Se ni or Ne tw or k E ng in ee r – “u nw at ch ab ly b lu rr y, 7 distorted, and pixelated, and . . . nothing like the images a customer would ordinar ily see using 8 Time Warner Cable’s cable service.” B oyer fur ther explained that 9 the types of g ross distortions shown in DIRECTV’s Website Demonstrative and 10 Banner Ads are not the ty pe of disruptions that could naturally ha ppen to an 11 analog or non-HD digital cable picture. These advertisements depict the picture 12 quality of cable te levision as a series of large colore d square blocks, laid out in a 13 grid like graph paper, whic h nearly e ntirely obscure the

image. This is not the 14 type of wavy or “snowy”

picture that might occur from degr adation of an 15 unconverted analog cable pictur e, or the type of

macro-blocking or “pixelization” 16 that might occur from degrada tion of a digital cable picture. Rather, the 17 patchwork of colored blocks that DI RECTV depicts in its advertisement appears 18 to be the type of distortion that would result if someone took a low-resolution 19 photograph and enlarge d it too much or zoomed in too close. If DI RECTV 20 intended

the adve rtisemen t to depict a pixelizati on proble m, this is a g

ross 21 exaggeration of one. 22 As Boye

r’s declaration establishes, the I nternet Advertisements’ depictions of cable are 23 not just inaccurate; they are not even remotely

realistic. It is difficult to imagine that any 24 consumer, whatever the level of sophistication, would actually be fooled by the I

nternet 25 Advertis ements int o thinking

that cab le’s pict

ure qual ity i s so poor that the ima ge is “nearly 26 entirely

obscure [d].” As DI

RECTV stat

es in its br

ief, “e ven a pe rson not a cquainte d with cab le 27 would realize TWC could not realistically supply an unwatchably

blurry imag e and survive in the 2826

marketplace.” 1 In reaching the contrary

conclusion, the District Court relied heavily on the declaration of 2 Jon Gieselman, DIRECTV’s Senior Vice-President of Adve rtising and Public Relations. 3 Howeve

r, Giese lman mere ly s tated tha t the common misconc eption amongst fi rst-time 4 purchasers of HD televisions is that “they will automatically ge

t exceptional clarity on ever y 5 channel” just by plugging their new television sets into the wall. Nothing in Gieselman’s 6 declar

ation indic ates tha

t consume

rs mistake

nly believe that hooki

ng up the ir HD tele

visions to 7 an analog cable feed w ill produce an unwatchably distorted picture. More importantly, the 8 Internet Advertisements do not claim that the “ OTHER TV” is an HD television set, or that the 9 corresponding images repr esent what happens when an HD television is connected to ba sic cable. 10 The Internet Adver tisements simply purport to compare the picture quality of DI

RECTV’s 11 progra

mming to that of bas ic cable progra mming, a nd as disc ussed above, the c omparison is so 12 obviously hy

perbolic that “no reasonable buy er would be justified in rely ing” on it in navigating 13 the marketplace. Pizza Hut, Inc. , 227 F.3d at 497. 14 For these reasons, we conclude that the D istrict Court exceeded its permissible discretion 15 in prelimi

narily enjoining

DIRE CTV from d

isseminat ing the I nternet Advertis ements. 16 B. Irreparable Harm 17 A plaintiff seeking a preliminary injunction under the Lanham Act must persuade a court 18 not only

that it is lik

ely to succe ed on the merits, bu t also that it is likely

to suffe r irrepa rable 19 harm in the absence of immediate relief. See Coca -Cola Co. , 690 F.2d at 316. B ecause

“[i]t is 20 virtually

impossible

to prove t

hat so much of one’ s sales wi ll be lost or that one’ s goodwi ll will 21 be damaged as a direct re sult of a competitor’s advertisement,” we have re solved that a plaintiff 2227

“need not . . . point

to an act ual loss or

diversion of sale s” to satis fy this requ irement. Id. At the 1 same time , “someth ing more than a pla

intiff’s mere sub jective b elief tha

t [it] is injure d or likely 2 to be damaged is required before [it] will be entitled even to injunctive relief.” Johnson & 3 Johnson v. Carter-Wallace, Inc ., 631 F.2 d 186, 189 (2d Cir. 198 0). The r ule in this C ircuit, 4 therefore, is that a plaintiff “must submit proof which provides a rea sonable basis” for believing 5 that the false advertising will likely cause it injury. Coca-Cola Co. , 690 F.2d at 316. 6 In gener

al, “[t]he likelihood of injury and causation will not be presumed, but must be 7 demonstrated in some manner.” Id . We have held, however, that these elements may be 8 presume d “wher

e [the] plai

ntiff dem onstrate s a likelihood of suc cess in showing lit erally false 9 [the] defendant’s comparative advertisement which mentions [the] plaintiff’s product by name.” 10 Castrol, Inc. , 977 F.2d at 62. We explained the reason for the presumption in McNeilab, Inc. v. 11 American Home Products Corp. , 848 F.2d 34 (2d Cir. 1988). There, we observe d that in the

case 12 of a “misleading, non-comparative commer cial[] which tout[s] the benefits of the product 13 advertised but ma[kes] no direct reference to any competitor’s product,” the injury “accrues 14 equally to all competitors; none is more likely to suffer from the offending broadc asts than any 15 other.” Id. at 38. Thus, “some indication of actual injury and causation” is necessary “to satisfy 16 Lanham Act standing r equirements and to ensure [the] plaintiff’s injury [is] not speculative.” Id. 17 By contr

ast, where the case presents a fa lse comparative advertising claim, “the conc erns . . . 18 regarding speculative injury do not arise.” Id. This is bec ause a f alse “c omparison to a spec ific 19 competing product necessarily diminishes that product’s value in the minds of the consumer.” 20 Id. Ac co rd in gl y, n o p ro of of li ke ly i nj ur y is ne ce ss ar y. 21 Although neither of the television commercials identifies TWC by name, the rationale for 2228

a presumption of irreparable harm applies with equa l force to this case. The Revised Shatner 1 Commercial explicitly disparage s the picture quality of “ cable.” As the District Court found, 2 TWC is “cable” in the areas where it is the franchisee. Time Warner Cable, Inc. , 475 F. Supp. 2d 3 at 308. Th

us, even though Shatner do es not ide ntify TWC by name, consumers in

the mark ets 4

covere d by

the prel iminary

injunction

would undo

ubtedly understa nd his der ogator y st atement, 5 “settling for cable would be illogical,” as referring to TWC. Because the Re vised Shatner 6 Commercial “necessarily diminishes” TWC’s value “in the minds of the consumer,” the District 7 Court properly ac corded TWC a presumption of irreparable harm. McNeilab, Inc. , 848 F.2d at 8 38. 9 The Revised Simpson Commercial, unlike the original version pulled in December 2006, 10 does not explicitly refer to “cabl e.” How ever, the fact that the commercia l does not name 11 plaintiff’s product is not necessarily dispositive. As we said in Ortho Pharmaceutical Corp. v. 12 Cosprophar, Inc. , 32 F.3d 690 (2d Cir. 1994), the application of the presumption is disfavored 13 “where the products are not obviously in competition or where the defen dant’s a dvertise ments 14 make no direct reference to any competitor’s produc ts.” Id. at 696 (e

mphasis a dded); see also 15 Hutchinso n v. Pfeil , 211 F.3d 515, 522 ( 10th Cir. 20 00) (“[T]he presum ption [of ir

repara ble 16 injury] is properly limited to circumstances in which injury would indee d likely flow from the 17 defenda

nt’s obje ctionabl e stateme nts, i.e., when the

defenda nt has explic itly

compare d its 18 product to the plaintiff’s or the plaintiff is an obvious competitor with respect to the 19 misr eprese nted p roduc t.” (ci ting Ortho Pharm. Corp. , 32 F.3d a t 694)). Accordin

g to a sur vey in 20 the record, approximately 90% of households have either cable or satellite servic e. Given the 21 nearly binar

y structure of

the television services market, it would be obvious to consumers that 225 Becau se we conclude that irrep arable injury was prop erly

presume d, we nee d not addr ess the Distr ict Court’ s alterna

tive rati onale tha

t DIRE CTV’s bre ach of the stipulat ion suppor

ts a fi nd in g o f i rr ep ar ab le in

ju ry. 29 DIRECTV’s claims of superiority are aimed at diminishing the value of cable – which, as 1 discussed above, is synony mous with TWC in the areas covered by the preliminary injunction. 2 Therefore, although the Revised Simpson Commercial does not explicitly mention TWC or 3 cable, it “necessarily diminishes” the value of TWC’s product. McNeilab, Inc. , 848 F.2d at 38. 4 The District Court thus did not err in presuming that TWC has “a reasonable basis” f or believing 5 that the advertisement will likely ca use it injury. Coca-Cola Co. , 690 F.2d at 316. 5 6 In su

m, we conclude tha

t the Distr

ict Court d

id not exce ed its allowable dis cretion in 7 preliminarily enjoining the further dissemination of the Revised Simpson and Revised Shatner 8 Commerci als in any market w here TWC is

the fra nchisee . The Dist

rict Cour t’s orde r also 9 forbids the dissemination of “any other advertisement disparaging the video or audio quality of 10 TWC or cable high-definition (‘HDTV’) prog ramming as compared to that of DI RECTV or 11 satellite HDTV programming.” As wor ded, this statement could be construed to prohibit the 12 unfavorable comparison of even TWC’s analog programming. To eliminate any ambiguity, we 13 instruct the District Court to change the phrase “TWC or cable” to “TWC’s or cable’s,” and the 14 phrase “DIRECTV or sa tellite” to “DIRECTV’s or satellite’s.” 15 16 CONCLUSION 17 For the f

orego ing rea sons, we AFF IRM the preliminary injunction in part, VACATE it in 18 part, and REMAND for further proceedings c onsistent with this opinion. 19