Opinion ID: 6983255
Heading Depth: 3
Heading Rank: 2

Heading: The district court’s rulings on the Lanham Act claims.

Text: Plaintiff appeals the district court’s grant of the ABPS’s renewed motion for judgment as a matter of law on the Lan-ham Act false advertising claim and the denial of its motion for injunctive relief. 1 The Lanham Act provides, in relevant part: (a)(1). Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which— (B). in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act. 15 U.S.C. § 1125(a)(1) & (a)(1)(B) (1994). 15 U.S.C. § 1125(a)(1)(B) thus creates a cause of action for false or misleading advertisement. To state a cause of action for misleading advertisement under the Lanham Act, a plaintiff must establish the following: 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. See U.S. Healthcare, Inc. v. Blue Cross of Greater Philadelphia, 898 F.2d 914, 922-23 (3d Cir.1990); ALPO Petfoods, Inc. v. Ralston Purina Co., 913 F.2d 958, 964 (D.C.Cir.1990). The third and fifth elements-deception and injury — are both components of causation generally. The deception element asks whether the defendant’s misstatements caused the consumer to be deceived. The injury element asks whether the defendant’s deception of the consumer caused harm to the plaintiff. The sort of proof of these elements a plaintiff must show varies depending upon whether damages or injunctive relief is sought. i. The grant of the ABPS’s renewed motion for judgment as a matter of law. When a plaintiff seeks an award of monetary damages for false or misleading advertisement under the Lanham Act, he may show either that the defendant’s advertisement is literally false or that it is true yet misleading or confusing. See, e.g., Castrol, Inc. v. Pennzoil Co., 987 F.2d 939, 943 (3d Cir.1993). Where statements are literally false, a violation may be established without evidence that the statements actually misled consumers. See, e.g., Johnson & Johnson, Inc. v. GAC Int’l, Inc., 862 F.2d 975, 977 (2d Cir.1988); PPX Enters., Inc. v. Audiofidelity Enters., Inc., 818 F.2d 266, 272 (2nd Cir.1987). Actual deception is presumed. See U-Haul Int’l, Inc. v. Jartran, Inc., 793 F.2d 1034, 1040 (9th Cir.1986). Where statements are literally true, yet deceptive, or too ambiguous to support a finding of literal falsity, a violation can only be established by proof of actual deception (i.e., evidence that individual consumers perceived the advertisement in a way that misled them about the plaintiffs product). A plaintiff relying upon statements that are literally true yet misleading “cannot obtain relief by arguing how consumers could react; it must show how consumers actually do react.” Sandoz Pharm. Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 229 (3d Cir.1990). In addition, a Lanham Act claim must be based upon a statement of fact, not of opinion. Groden v. Random House, Inc., 61 F.3d 1045, 1052 (2d Cir.1995); Gillette Co. v. Norelco Consumer Prods. Co., 946 F.Supp. 115, 136 (D.Mass.1996). The district court ruled that all of plaintiffs claims were based upon statements that were either ambiguous or literally true yet misleading and that plaintiff had failed to introduce sufficient evidence of actual deception. Consequently, plaintiff had not introduced sufficient evidence for a reasonable juror to find in favor of plaintiff to justify an award of damages. Judgment as a matter of law is appropriate where “there is no legally sufficient evidentiary basis for a reasonable jury to find on that issue.” Fed.R.Civ.P. 50(a)(1). We review de novo these motions with the identical standard used by the district court, and we must view the evidence in the light most favorable to the nonmoving party. Monday v. Oullette, 118 F.3d 1099, 1101-02 (6th Cir.1997).
Plaintiff bases its Lanham Act claim against the ABPS on seven statements. Two of them are found in mass mailings sent in May, 1988, and October, 1992, where the ABPS wrote: Recently, the American Board of Podia-tric Surgery has received a number of inquiries from hospitals regarding podiatrists presenting credentials from organizations purporting to be certifying boards. The AMERICAN BOARD OF PODIA-TRIC SURGERY ... is the ONLY approved certifying board for podiatric surgery. The American Board of Podia-tric Surgery is approved by the Council on Podiatric Medical Education, which is part of the American Podiatric Medical Association (formerly the American Podiatry Association). First, plaintiff claims the word “purporting” implies that other organizations, such as plaintiff, are not certifying boards, when in fact plaintiff is a certifying board, and thus the statement is literally false. The district court reasoned that because anything “purports” to be what it says it is, the statement was true although misleading, and therefore plaintiff had to prove actual deception. 2 To the contrary, we find that when read in context, the word “purported” means nothing other than “falsely claiming to be.” “Purport” carries this connotation' on its own, and when coupled with the other sentences in the letter, there can be no doubt that anyone reading the message would believe the ABPS to be saying that these other organizations were not certifying boards. While this is true, however, the statement in context is more a statement of opinion than a statement of fact. The ABPS seems to say that only boards approved by the CPME are truly certifying boards, and only the ABPS is approved by the CPME. As noted previously, such a statement is an inactionable statement of opinion. Second, plaintiff claims that the statement that the ABPS is “the ONLY approved certifying board for podiatric surgery” is literally false. This statement is either ambiguous or true but misleading. It is wholly unclear what it means to be an “approved” board, and so plaintiff must demonstrate that the statement actually deceived consumers into believing something untrue. Alternatively, considering the statement in context, it may mean that only the ABPS is approved by the CPME, which is true. Thus, whether ambiguous or true but misleading, plaintiff must introduce evidence of actual deception to recover damages. Third, in a mailing to insurance carriers on October 1, 1992, the ABPS stated that it “is the only professionally recognized certifying board for podiatric surgery, being recognized by the” CPME. Like “approved” in the previously discussed passage, the phrase “professionally recognized” is ambiguous. To be “professionally recognized,” must the ABPS be recognized by most podiatrists? Most people in the medical profession? Some podiatrists? Taken as a whole, the sentence may mean that only boards recognized by the CPME are professionally recognized boards, which is a statement of opinion. Thus, the statement is either opinion or ambiguous, and plaintiff must introduce evidence of actual deception to survive summary judgment. Fourth, in another mailing to hospitals, the ABPS stated that “there has been a proliferation of ‘self-designated’ organizations purporting to have the authority to recognize and certify in podiatric surgery.” Plaintiff complains that the term “self-designated” is disparaging. It may be disparaging, but it is also ambiguous. At trial, evidence suggested that to those in the medical community, “self-designated” could refer to boards not recognized by the CPME, which would be all boards other than the ABPS. In context, the most reasonable interpretation of “self-designated” is “not approved by another body.” Plaintiff may or may not be approved by another body, depending upon how one looks at its relationship with the AAPPS. The AAPPS created and approved plaintiff, and being approved by the very body that created it might be considered self-designation. In any event, “self-designated” is ambiguous, and therefore plaintiff must show actual deception to prevail. Fifth, plaintiff points to the language found in the mass mailings stating that the “CPME is the accrediting agency for po-diatric medicine.... ” Plaintiff claims this is a false statement. However, the statement is too ambiguous to be literally false because it does not say what the CPME accredits. The CPME does, in fact, accredit all of the colleges of podiatric medicine, and it is the only organization that accredits these colleges. Thus, in a sense the statement is true. At worst it is misleading, and plaintiff must present evidence of actual deception. Sixth, plaintiff challenges the ABPS’s statement that “[t]he CPME is the accrediting agency for podiatric medicine, recognized by the U.S. Department of Education and the Council on Postsecondary Accreditation.” Plaintiff interprets this passage to mean that the federal government has approved the CPME for recognizing certification boards, which is false. However, this statement does not necessarily stretch as broadly as the plaintiff would have it. The U.S. Department of Education does, in fact, recognize the CPME for the accreditation of postsecond-ary schools. Thus, the statement is, at worst, true but misleading, and plaintiff must demonstrate actual deception. Finally, plaintiff complains about the ABPS’s statement that the “APMA recognizes only the ABPS for certification in podiatric surgery.” Unfortunately, it points to no place in the record where this statement may be found. We have found instances where the ABPS has claimed that it is the only board approved by the CPME, which is a true statement. While it may be that this statement implies that there is some sort of process whereby other boards can apply for CPME approval and that the ABPS is the only board to gain such approval, the statement itself is literally true. Thus, at worst it is true yet misleading, and plaintiff must demonstrate actual deception. In considering all the above-challenged statements, we have to keep in mind that one of the key elements of a cause of action for misleading advertising under the Lanham Act is “that there is actual deception or at least a tendency to deceive a substantial portion of the intended audience.” See U.S. Healthcare, Inc. v. Blue Cross of Greater Philadelphia, 898 F.2d 914, 922 (3d Cir.1990) (internal citations and quotation marks omitted) (emphasis added). Here, the intended audience is comprised of hospital administrators, insurance companies, and managed care organizations, a sophisticated group of professionals who presumably have familiarity with the issues involved in board certification. Because we conclude that this intended audience would find all of the challenged statements to be, at worst, either ambiguous or true but misleading, the district court correctly reasoned that plaintiff had to present evidence of actual deception in order to survive the ABPS’s renewed motion for judgment as a matter of law and collect damages.
Proof of actual deception requires demonstrating that consumers were actually deceived by the defendant’s ambiguous or true-but-misleading statements. Successful plaintiffs usually present evidence of the public’s reaction through consumer surveys. Johnson & Johnson-Merck Consumer Pharms. Co. v. Rhone-Poulenc Rorer Pharms., Inc., 19 F.3d 125, 129-30 (3d Cir.1994). There must be evidence that a “significant portion” of the consumer population was deceived. See, e.g., William H. Morris Co. v. Group W, Inc., 66 F.3d 255, 258 (9th Cir.1995). 3 Plaintiff presented no consumer survey or other market research demonstrating that consumers were deceived by any ambiguous or true-but-misleading statement made by the ABPS. The most compelling direct evidence of actual deception plaintiff sets forth is found in a letter sent to the ABPS by a Dr. Coles, who was Vice-President of Medical Affairs at a hospital. Coles wrote: “From what you say, we should not give much, if any, credence to the ACCPPS? I will certainly appreciate any further information you can give us.” While this letter may demonstrate some confusion by Coles, it does not show that he was tricked into believing an untruth about plaintiff. And even if Coles were deceived, this one letter is a far cry from demonstrating that a “significant portion” of the consumer population was deceived. Plaintiff argues it presented sufficient evidence of consumer deception in forms other than consumer surveys, market research, or direct evidence that individual consumers were deceived. Plaintiff draws attention to the following evidence: • The CPME sent the ABPS a letter telling it not to tell others that the CPME was recognized by the U.S. Department of Education. • In 1993, the CPME distributed a brochure clarifying its functions and its relation to the federal government. • Evidence was presented suggesting that a member of the California medical licensing board thought that governmental recognition of the CPME extended to regulation of certifying boards. At most, this evidence indicates concern by the CPME and confusion in the California medical licensing board about the ABPS’s representation of the CPME’s relationship with the U.S. Department of Education, and thus it speaks to only one of the challenged statements. Even as it relates to this one statement, however, plaintiff has not presented sufficient evidence of actual deception to support a finding that a significant portion of the consumers were deceived. None of this evidence demonstrates that those parties plaintiff labels as its consumers — hospitals, health care providers, and insurance companies — were deceived. Plaintiff points to cases which indicate that common sense and personal experience can enter into determining whether consumers were deceived. However, none of these cases stand for the proposition that common sense or personal experience alone will suffice for plaintiff to establish actual deception. The court in McNeilab, Inc. v. American Home Prods. Corp., 501 F.Supp. 517, 525 (S.D.N.Y.1980), reasoned that a court as factfinder may use “experience and understanding of human nature” in determining whether market researchers and expert witnesses have established actual deception, but the case cannot be read for the proposition that common sense can substitute for direct evidence. Rather, in McNeilab, common sense acts as a check on evidence tending to establish actual deception, not a substitute for such evidence. Plaintiff relies upon Getty Petroleum Corp. v. Island Transp. Corp., 878 F.2d 650, 656-57 (2d Cir.1989), for the proposition that common sense may guide the jury’s determination without any consumer witnesses or market surveys, but that was a case concerning literal falsity, not ambiguous or true-but-misleading statements. When statements are literally false, the potential for actual deception is naturally greater. Thus, Getty Petroleum merely reaffirms the general rule that in cases of literally false statements, evidence of actual deception is not required. See also Federal Trade Comm’n v. Brown & Williamson Tobacco Corp., 778 F.2d 35, 40-42 (D.C.Cir.1985) (construing the “false advertising” section of the Federal Trade Commission Act and holding that where deception is self-evident, consumer surveys are not required). The district court also ruled that plaintiff had failed to present evidence sufficient for a reasonable jury to find that the alleged deception of consumers had caused it injury. Because we hold that plaintiff failed to present sufficient evidence of actual deception to support an award of damages, we need not consider the second causation issue. ii. The district court’s denial of injunc-tive relief. Plaintiff appeals the district court’s denial of its motion for injunctive relief. As noted above, the evidence of causation a plaintiff must introduce to establish a Lanham Act claim varies depending upon the relief sought. Regarding deception, “injunctive relief may be obtained by showing only that the defendant’s representations about its product have a tendency to deceive consumers while recovery of damages requires proof of actual consumer deception.” Max Daetwyler Corp. v. Input Graphics, Inc., 608 F.Supp. 1549, 1551 (E.D.Penn.1985); see also Black Hills Jewelry Mfg. Co. v. Gold Rush, Inc., 633 F.2d 746, 753-54 (8th Cir.1980). This lower standard has arisen because when an injunction is sought, courts may protect the consumer without fear of bestowing an undeserved windfall on the plaintiff. See Black Hills Jewelry, 633 F.2d at 753 n. 7; J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition 27:31, at 27-50 (1998). Although plaintiff need not present consumer surveys or testimony demonstrating actual deception, it must present evidence of some sort demonstrating that consumers were misled. This court reviews a challenge to the grant or denial of a request for permanent injunction under an abuse of discretion standard. In re Dublin Sec., Inc., 133 F.3d 377, 380 (1997). Applying this deferential standard of review, we are unable to say that the district court abused its discretion in denying plaintiffs motion for injunctive relief. Plaintiffs strongest evidence regarding deception involves the ABPS’s statements regarding the CPME’s relationship with the Department of Education. The CPME directed the ABPS, “In order to avoid the possibility of any confusion in the future ... the Council requests that the Board discontinue referencing in the ABPS correspondence and other public documents the recognition of the Council on Podiatric Medical Education by the ... U.S. Department of Education.” In addition, as noted previously, plaintiff presented evidence suggesting that members of the California medical licensing board were confused concerning the CPME’s relationship with the federal government. Although this is some evidence of deception generally, it does little to prove that hospitals, insurance companies, and health care providers — the entities plaintiff claims are its Lanham Act consumers — were deceived by the ABPS’s statements. The aforementioned letter of Dr. Coles, while perhaps indicating some confusion, is little evidence that consumers were deceived. With such scant evidence of deception, we are unable to say that the district court abused its discretion in denying plaintiffs motion for injunctive relief. Because plaintiff presented insufficient evidence of deception, we do not address the other elements of its Lanham Act claim for injunctive relief.