FLIR Systems, Inc. v. Sierra Media, Inc. et al, No. 3:2010cv00971 - Document 257 (D. Or. 2012)

Court Description: OPINION AND ORDER: 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 and DENIED in part; Sierra's motion (Docket No. 175) for summary judgment is GRANTED in its entirety; and FLIR's motion (Docket No. 176) for summary judgment is DENIED in its entirety. Signed on 10/9/12 by Magistrate Judge Dennis J. Hubel. (kb)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 DISTRICT OF OREGON 9 PORTLAND DIVISION 10 11 12 FLIR SYSTEMS, INC., an Oregon corporation, No. 3:10-cv-00971-HU OPINION AND ORDER Plaintiff, 13 14 v. 15 SIERRA MEDIA, INC., a Washington corporation, and FLUKE CORPORATION, a Washington corporation, 16 17 Defendants. 18 19 Devon Zastrow Newman, Schwabe, Williamson & Wyatt, P.C., Portland, Oregon, for plaintiff FLIR Systems, Inc. 20 21 William A. Brewer III, Michael J. Collins, C. Dunham Biles, and Robert M. Millimet, Bickel & Brewer, Dallas, Texas, for plaintiff FLIR Systems, Inc. 22 23 24 25 26 Kenneth R. Davis II and Parna A. Mehrbani, Lane Powell P.C., Portland, Oregon, for defendant Fluke Corporation. Caroline M. McKay, Dane H. Butswinkas, and Matthew V. Johnson, Williams & Connolly LLP, Washington, District of Columbia, for defendant Fluke Corporation. Benjamin N. Souede, Angeli Law Group LLC, Portland, Oregon, for defendant Sierra Media, Inc. 27 28 Page 1 - OPINION AND ORDER 1 2 HUBEL, J., Before the Court are four motions for summary judgment 3 pursuant to Federal Rule of Civil Procedure ( Rule ) 56(c): (1) 4 defendant Fluke Corporation s ( Fluke ) motion for summary judgment 5 on its counterclaim for injunctive relief and damages for false 6 advertising under Section 43(a) of the Trademark Act of 1946 7 ( Lanham Act ), 60 Stat. 441, as amended, 15 U.S.C. § 1125(a); (2) 8 Fluke s motion for summary judgment on plaintiff FLIR Systems, 9 Inc. s ( FLIR ) claims for false advertising, trade libel/ 10 commercial disparagement, and civil conspiracy; (3) defendant 11 Sierra Media s ( Sierra ) motion for summary judgment on FLIR s 12 claims for trade libel/ commercial disparagement, civil conspiracy, 13 and aiding and assisting; and (4) FLIR s motion for summary 14 judgment on Fluke s counterclaims for trademark infringement, 15 unfair competition, and false advertising under the Lanham Act, and 16 trademark infringement under Oregon common law. 17 There is full consent by all parties to adjudication of the 18 case by a magistrate judge pursuant to 28 U.S.C. § 636(c). 19 reviewed the papers and pleadings submitted by the parties and 20 having heard oral argument on the pending motions, the Court hereby 21 ORDERS as follows: (1) Fluke s motion (Docket No. 177) for summary 22 judgment on its counterclaim for injunctive relief and damages for 23 false advertising is DENIED; (2) Fluke s motion (Docket No. 178) 24 for summary judgment on FLIR s claims for false advertising, trade 25 libel/ commercial disparagement and civil conspiracy is GRANTED in 26 part and DENIED in part; (3) Sierra s motion (Docket No. 175) for 27 summary judgment is GRANTED in its entirety; and (4) FLIR s motion 28 (Docket No. 176) for summary judgment is DENIED in its entirety. Page 2 - OPINION AND ORDER Having 1 2 I. The facts FACTUAL AND PROCEDURAL BACKGROUND essential to this case are relatively 3 straightforward. FLIR deals in infrared cameras, thermography, and 4 thermal imaging equipment. 5 range of industrial, commercial, and government markets around the 6 world. 7 a publicly traded company, and is in the business of manufacturing, 8 distributing, and servicing electronic test tools and software. 9 Fluke also manufactures and distributes thermal imaging cameras FLIR s products are sold in a wide Fluke is a wholly-owned subsidiary of Danaher Corporation, 10 that compete with FLIR s products in interstate commerce. Sierra, 11 on the other hand, is Fluke s long-time media and marketing 12 company. Sierra and Fluke s relationship spans over fifteen years, 13 and Fluke has become one of Sierra s largest customers. 14 neither manufactures, nor distributes thermal imaging cameras. Sierra 15 In late-2007/ early-2008, after Fluke introduced the Fluke 16 Ti10 and Fluke Ti25 model cameras as its lowest price offerings, 17 FLIR introduced its ix series at an even lower price. 18 series, which includes the FLIR i3, FLIR i5 and FLIR i7 camera 19 models, are marketed as entry level cameras. 20 2008, FLIR has used images captured by higher resolution thermal 21 imaging cameras superimposed on the display of lower resolution 22 cameras depicted in its online and print advertising, including 23 advertisements for the ix series. 24 marketing, Allen Frechette ( Frechette ), has admitted that, [i]f 25 a customer purchased an i3 based on the belief that the images 26 shown in the advertisement for the i3 were in fact from an i3 27 thermal imaging camera or another 60 by 60 thermal imaging camera, 28 Page 3 - OPINION AND ORDER FLIR s ix Since at least FLIR s vice president of 1 that customer would be mistaken[.] (Frechette Dep. 234:24-235:4-7, 2 Jan. 30, 2012.) 3 In September of 2009, Fluke and Sierra (collectively, 4 Defendants ) worked together to create a video that compared drop 5 test results of thermal imaging equipment manufactured by Fluke to 6 four competing products, including the FLIR i7, FLIR i60, and FLIR 7 T400. 8 and reliability of the thermal imaging cameras by dropping them 9 from a height of two meters onto a concrete floor. Defendants claimed to have tested the durability, quality The video 10 depicts the Fluke Ti32 bouncing and appearing to remain intact. 11 With respect to FLIR s cameras, although the video shows each of 12 FLIR s imagers dropping multiple times, including for each imager 13 at least one drop where no visible damage results, it also shows 14 drops that caused exterior damage to FLIR s cameras. 15 video shows nineteen camera drops: five for the Fluke Ti32 and 16 fourteen for the four competing products. 17 spoken in the video, but the following text appears embedded in the 18 video: Fluke thermal imagers ; Rugged ; 5 thermal imagers ; 2 19 meter drop ; Solid concrete floor ; All products subjected to 20 identical tests by third party ; Fluke Ti32 . . . 17 drops and 21 counting ; The ONLY rugged thermal imager ; Why waste money on 22 tools that break? ; Get a demo today . . . 1-800-760-4523 . . . 23 www.fluke.com/demo. Overall, the There are no words were 24 FLIR filed this suit in August of 2010. On December 30, 2010, 25 FLIR filed a six-count first amended complaint against Defendants 26 for: (1) false advertising in violation of the Lanham Act (Count 27 One); (2) trade libel/ commercial disparagement (Count Two); (3) 28 intentional interference with prospective economic relations (Count Page 4 - OPINION AND ORDER 1 Three); (4) civil conspiracy (Count Four); (5) aiding and assisting 2 (Count Five); and (6) declaratory relief regarding Fluke s alleged 3 IR Fusion trademark (Count Six).1 4 counterclaims on May 27, 2011, asserting, inter alia, causes of 5 action for trademark infringement, unfair competition and false 6 advertising under the Lanham Act, as well as a common law claim for 7 trademark infringement.2 II. 8 Fluke filed an answer and LEGAL STANDARD 9 Summary judgment is appropriate if pleadings, the discovery 10 and disclosure materials on file, and any affidavits show that 11 there is no genuine issue as to any material fact and that the 12 movant is entitled to judgment as a matter of law. 13 P. 56(c). Summary judgment is not proper if factual issues exist 14 for trial. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 15 1995). 16 FED. R. CIV. The moving party has the burden of establishing the absence of 17 a genuine issue of material fact. 18 U.S. 317, 323 (1986). 19 genuine issue of material fact, the nonmoving party must go beyond 20 the pleadings and identify facts which show a genuine issue for 21 trial. Id. at 324. Celotex Corp. v. Catrett, 477 If the moving party shows the absence of a A nonmoving party cannot defeat summary 22 23 24 25 26 27 28 1 FLIR s claim for intentional interference with prospective economic relations (Count Three) was dismissed by this Court s Opinion and Order entered on May 10, 2011. 2 For clarity, background information relevant to Fluke s trademark infringement counterclaim, unfair competition counterclaim, and false advertising counterclaims that do not concern FLIR superimposing higher resolution images on the LCD screen of its lower resolution cameras will be discussed in conjunction with the analysis of FLIR s motion for summary judgment. Page 5 - OPINION AND ORDER 1 judgment by relying on the allegations in the complaint, or with 2 unsupported conjecture or conclusory statements. 3 Spacelabs Medical, Inc., 343 F.3d 1107, 1112 (9th Cir. 2003). Thus, 4 summary judgment should be entered against a party who fails to 5 make a showing sufficient to establish the existence of an element 6 essential to that party s case, and on which that party will bear 7 the burden of proof at trial. 8 9 Hernandez v. Celotex, 477 U.S. at 322. The court must view the evidence in the light most favorable to the nonmoving party. Bell v. Cameron Meadows Land Co., 669 F.2d 10 1278, 1284 (9th Cir. 1982). All reasonable doubt as to the 11 existence of a genuine issue of fact should be resolved against the 12 moving party. 13 Where different ultimate inferences may be drawn, summary judgment 14 is inappropriate. 15 136, 140 (9th Cir. 1981). Hector v. Wiens, 533 F.2d 429, 432 (9th Cir. 1976). Sankovick v. Life Ins. Co. of N. Am., 638 F.2d 16 However, deference to the nonmoving party has limits. 17 nonmoving party must set forth specific facts showing a genuine 18 issue for trial. 19 a scintilla of evidence in support of plaintiff s positions [is] 20 insufficient. 21 (1986). 22 lead a rational trier of fact to find for the nonmoving party, 23 there is no genuine issue for trial. Matsushita Elec. Indus. Co., 24 Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal 25 quotation marks omitted). 26 /// 27 /// 28 /// FED. R. CIV. P. 56(e). The The mere existence of Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 Therefore, where the record taken as a whole could not Page 6 - OPINION AND ORDER 1 2 III. A. DISCUSSION Fluke s Motion for Summary Judgment on its Lanham Act False Advertising Counterclaim [#177] 3 There are five elements to a false advertising claim under the 4 Lanham Act: 5 6 (1) a false statement of fact by the defendant in a commercial advertisement about its own or another s product; 7 8 (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; 9 (3) the deception is material, in that it is likely to influence the purchasing decision; 10 11 12 13 (4) the defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to defendant or by a lessening of the goodwill associated with its products. 14 Skydive Ariz., Inc. v. Quattrochi, 673 F.3d 1105, 1110 (9th Cir. 15 2012). Falsity may be established by showing that a statement of 16 fact was literally false, either on its face or by necessary 17 implication, or that the statement was literally true but likely to 18 mislead or confuse consumers. Southland Sod Farms v. Stover Seed 19 Co., 108 F.3d 1134, 1139 (9th Cir. 1997) (citation omitted). When 20 an advertisement is shown to be literally or facially false, 21 consumer deception is presumed, and the court may grant relief 22 without reference to the advertisement s actual impact on the 23 buying public. Time Warner Cable, Inc. v. DirecTV, Inc., 497 F.3d 24 144, 157 (2d Cir. 2007) (citation and internal quotation marks 25 omitted; alterations deleted).3 26 27 3 28 The Lanham Act false advertising claims that are the subject (continued...) Page 7 - OPINION AND ORDER 1 Under the false by necessary implication doctrine, [a] 2 plaintiff may show that an advertisement is literally false . . . 3 when, considering the advertisement in its full context, the 4 relevant audience would recognize the false implied claim as easily 5 as if it had been stated explicitly. 6 Pharms., LLC, -- F. Supp. 2d -- , 2012 WL 2540234, at *4 (S.D.N.Y. 7 June 29, 2012). 8 the court must view the face of the statement in its entirety, 9 rather than examining the eyes, nose, and mouth separately and in Pamlab, LLC v. Macoven As the Ninth Circuit explained in Southland Sod, 10 isolation from each other. Southland Sod, 108 F.3d at 1139 11 (quoting Cuisinarts, Inc. v. Robot Coupe Int'l Corp., No. 81 Civ 12 731-CSH, 1982 WL 121559, *2 (S.D.N.Y. June 9, 1982))); Time Warner 13 Cable, 497 F.3d at 157 ( The entire mosaic should be viewed rather 14 than each tile separately. ) 15 A subspecies of the false by necessary implication doctrine is 16 a challenge to an advertisment claim based on product testing, 17 Pamlab, 2012 WL 2540234, at *5, which courts in other circuits 18 often times refer to as an establishment claim. 4 19 Co. v. Vital Pharm., Inc., No. 08-cv-1545, 2010 WL 1734960, at *4 20 (S.D. Cal. Apr. 27, 2010). 21 based on product testing is literally false, the plaintiff must 22 demonstrate such tests are not sufficiently reliable to permit one 23 to conclude with reasonable certainty that they established the Hansen Beverage To prove that an advertisment claim 24 25 26 27 28 3 (...continued) of Fluke s motions for summary judgement concern advertisements that are allegedly literally false. 4 FLIR s Lanham Act false advertising claim based on the production of the drop video is properly characterized as a product testing claim. Page 8 - OPINION AND ORDER 1 claim made. Southland Sod, 108 F.3d at 1139 (internal quotation 2 marks and citation omitted). 3 attacking the validity of the defendant s test directly; (2) 4 showing the defendant s tests are contradicted or unsupported by 5 other scientific evidence; or (3) showing that the tests, even if 6 reliable, do not 7 defendant[.] Id. 8 1. establish This burden may be met by: (1) the proposition asserted by the Are FLIR s Advertisements Literally False? 9 Fluke contends that the undisputed material facts establish 10 that FLIR s advertising practice -- using images from higher 11 resolution (and more expensive) thermal imaging cameras on the 12 displays of lower resolution (and less expensive) cameras pictured 13 in its advertising - is literally false. 14 falsity, according to Fluke, is FLIR s 2008 brochure for the 15 Extech/Flir i5, which has a detector resolution of 80 x 80 pixels. 16 On the front page of the 2008 brochure is a picture of the i5 with 17 a thermal image of three fuses on its screen. 18 that the image of the three fuses was taken by a camera with a 19 resolution of 320 x 240 pixels. 20 resolution camera, it is of a better image quality than the i5 21 model could produce (320 x 240 = 76,800 pixels versus 80 x 80 = 22 6,400 pixels). 23 i5 s LCD screen, it is Fluke s position that FLIR is representing 24 to consumers that the i5 creates an image of 320 x 240 quality. 25 An example of literal It is undisputed Because that image is from a high- By cutting and pasting the 320 x 240 image onto the FLIR contends its advertisements are not literally false. In 26 fact, FLIR knows that its advertised cameras cannot attain the 27 image quality of the displayed thermal images; however, FLIR claims 28 the intention of the Advertisements is merely to show how the Page 9 - OPINION AND ORDER 1 images are displayed on the thermal imaging camera, not to 2 present precise representations of the quality capabilities of the 3 advertised cameras. (Pl. s Am. Resp. at 1.) 4 A District Court in this circuit has stated in dicta that an 5 advertisment can be literally false even though it does not 6 explicitly make a false assertion, if the words and images, 7 considered in context, necessarily and unambiguously imply a false 8 message. 9 563RAJ, 10 CertainTeed Corp. v. Seattle Roof Brokers, No. C09- 2010 WL 2640083, at *10 (W.D. Wash. June 28, 2010) (citation omitted). 11 An instructive example of such as case is provided by the 12 Eight Circuit s decision in Rhone-Poulenc Rorer Pharm., Inc. v. 13 Marion Merrell Dow, 93 F.3d 511 (8th Cir. 1996). 14 advertisment at issue featured images such as two similar gasoline 15 pumps 16 accompanied by the slogan, Which one would you choose. 17 516. 18 false because it falsely represented that the [drug manufacturer s 19 product] may be indiscriminately substituted for a competitor s 20 product, id., even though it was not FDA-approved to treat all of 21 the same disorders, physicians needed to monitor patients who 22 switched to the product, and the drug was absorbed differently when 23 taken 24 manufacturer represented that its product ha[d] certain qualities 25 that it in fact d[id] not actually have. 26 Abbott Laboratories v. Mead Johnson & Co., 971 F.2d 6, 14 (7th Cir. 27 1992)). or airline tickets with dramatically There, the different prices, Id. at The Eight Circuit determined the advertisment was literally with a meal. Id. at 28 Page 10 - OPINION AND ORDER 514. In other words, the drug Id. at 516 (citing 1 In this case, it is important to note, at the outset, that 2 [l]iteral falsity is a question of fact, and summary judgment 3 should not be granted where a reasonable jury could conclude that 4 a statement is not false. K&N Eng g, Inc. v. Spectre Performance, 5 2011 WL 4387094, at *9 (C.D. Cal. Sept. 20, 2011); Time Warner 6 Cable, 497 F.3d at 158 ( [O]nly an unambiguous message can be 7 literally false. . . . Therefore, if the language or graphic is 8 susceptible 9 advertisement to more cannot than be one reasonable literally interpretation, false ); Buetow v. the A.L.S. 10 Enters., Inc., 650 F.3d 1178, 1185 (8th Cir. 2011) ( The standard 11 for proving literal falsity is rigorous. ) 12 That said, although Fluke s arguments are well-taken, 13 questions of fact remain as to whether FLIR s advertisements are 14 literally 15 primarily by the following considerations. 16 cameras (even higher resolution infrared cameras) produce somewhat 17 cloudy images, (see, e.g., Davis Decl. Ex. 24 at 4), and a vast 18 majority of the images in FLIR s advertisements are extremely 19 small, which means it may not always be practical to use images 20 produced by FLIR s lowest resolution thermal imagers. 21 Indus., Ltd. v. Salton, Inc., 735 F. Supp. 1127, 1230 (S.D.N.Y. 22 1990) (mashed potatoes and food shortening used instead of actual 23 ice cream because the heat generated by the lights needed to 24 photograph the product made use of actual ice cream impractical). 25 Second, it is not entirely clear how much of an impact the 26 size, file type, and image editing software utilized had on an 27 image s quality (i.e., perhaps a dramatic reduction in the size of, 28 say, a 320 x 240 image renders it the equivalent clarity of an false. In reaching Page 11 - OPINION AND ORDER this conclusion, I am guided First, thermal imaging See Nikkal 1 image produced by a lower resolution camera, depending on the 2 circumstances). 3 Third, all of FLIR s advertisements referenced in Fluke s 4 amended memorandum include a specification as to each advertised 5 camera s detector resolution (e.g., the number of pixels that the 6 camera is capable of displaying). 7 Fourth, and finally, based on the visual images and 8 accompanying text in FLIR s advertisements, I cannot say that all 9 reasonable jurors would conclude that the messages conveyed are 10 necessarily and unambiguously false. 11 play 12 resolution image on the view finder of a lower resolution camera in 13 its print advertising. The clear suggestion being that the cheaper 14 camera produced the higher resolution image. 15 two other significant factors in determining whether the . . . 16 images, considered in context, necessarily and unambiguously imply 17 a false message. 18 here. First, we have FLIR There are a few concepts at admitting it put a higher However, there are CertainTeed, 2010 WL 2640083, at *10. The first issue is the size of the camera s display depicted 19 in FLIR s advertisement. If the size of the display on which the 20 higher resolution image was superimposed was the actual size of the 21 camera s display, then perhaps only the pixels of resolution would 22 be involved in the necessary and unambiguous message conveyed. 23 When the printed ad s picture of the camera gets reduced or 24 enlarged from the actual display size of the camera, however, the 25 resolution of the printed image can change dramatically.5 26 27 28 5 The largest image of the three fuses depicted on the FLIR i5's LCD screen in the 2008 brochure is about the size of the first (continued...) Page 12 - OPINION AND ORDER 1 The second issue revolves around the resolution of the print 2 ad itself. What is the resolution or print density of the print ad 3 and the images in the advertisement? 4 quality of the image superimposed on the view finder of the lower 5 resolution camera. 6 Internet, the graphics display of the customer s computer becomes 7 an issue, as does their printer if they print the ad. 8 does not eliminate these issues of fact on the FLIR ads, thus 9 precluding summary judgment for Fluke on this claim. This too can change the Since many of the ads are accessed on the The record Accordingly, 10 I deny Fluke s motion for summary judgment on its counterclaim 11 because there is a genuine issue of material fact as to whether 12 FLIR s advertisements are literally false under the applicable law. 13 2. 14 Evidentiary Objections In its response to Fluke s motion for summary judgment on its 15 counterclaim, 16 witnesses: 17 testimony was proffered to demonstrate how customers perceive and 18 respond to images in print and on-line advertising and traditional 19 catalog environment and whether FLIR s use of so-called cut-and- 20 paste images in their printed and on-line promotional materials 21 were in any way likely to deceive or confuse potential customers 22 (Silverman Report ¶ 9); (2) Dr. Robert Madding, a technical 23 industry expert whose testimony was proffered to demonstrate that 24 Fluke has engaged in the same advertising practice that is the 25 subject of its counterclaim against FLIR; and (3) Robert James (1) FLIR cited Bruce Silverman, 26 27 5 28 reports (...continued) knuckle of my thumb. Page 13 - OPINION AND ORDER an provided by advertising three expert expert whose 1 Seffrin, an industry expert whose testimony was proffered to 2 demonstrate that [t]he practice of providing high resolution 3 sample images in descriptive literature is customary within the 4 infrared industry . . . has been around for many years and is well 5 known within the infrared community. (Pl. s Am. Resp. at 12.) 6 Fluke challenges the admissibility of these experts testimony 7 on relevancy grounds and the reliability requirements enunciated in 8 Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 591 99 (1993) 9 (indicating district courts analyzing the admissibility of 10 scientific opinion testimony under Federal Rule of Evidence 702 11 must ensure that the testimony is based on scientifically valid 12 principles and is relevant to the facts in issue). 13 judgment I need not rule on these objections as I deny the motion 14 without considering any of these three opinions. 15 fact I found exists without considering this testimony. See Harlan 16 v. Roadtrek Motorhomes, Inc., No. 07-cv-0686, 2009 WL 928309, at *6 17 n.5 (S.D. Cal. Apr. 2, 2009) (same). 18 be raised in the parties Daubert motions set for oral argument 19 October 30, 2012, concerning the admissibility of a variety of 20 expert testimony at trial. 21 indication of the ruling to expect following the October 30 22 hearing. 23 24 25 B. 1. On summary The question of I expect the same issues will The lack of a ruling now is no Fluke s Motion for Summary Judgment on FLIR s Claims [#178] Count One (FLIR s False Advertising Claim) FLIR s Lanham Act false advertising claim concerns Fluke s 26 dissemination of the drop video. Fluke argues it is entitled to 27 summary judgment on FLIR s Lanham Act false advertising claim for 28 four independent reasons. First, as a matter of law, Fluke argues Page 14 - OPINION AND ORDER 1 that the statements complained of are not literally false, nor are 2 they misleading in context. 3 evidence that a substantial portion of the viewing audience was 4 misled. 5 that the challenged statements, even if false or misleading, are 6 material, 7 decisions. 8 shown that is has been or is likely to be injured as a result of 9 the challenged conduct. Second, Fluke argues there is no Third, Fluke claims that no reasonable juror could find as they did not influence consumers purchasing Fourth, and finally, Fluke argues that FLIR has not 10 With respect to false comparative advertising, a court s 11 summary judgment analysis largely turns on element one and whether 12 sufficient evidence exists to permit a juror to conclude that an 13 advertisement is literally false. 14 1146 (reversing summary judgment where a reasonable juror could 15 conclude advertisements were literally false). 16 occurs when there is a genuine issue of fact as to whether the 17 advertisement is literally false. 18 plaintiff s favor with respect the remaining elements that are 19 typically contested in Lanham Act false advertising cases, thereby 20 precluding 21 defendant.6 22 Supp. 2d 1232, 1241 (W.D. Wash. Mar. 16, 2010) (recognizing that a 23 plaintiff is entitled to a presumption of deception, reliance and 24 damage when there are issues of fact as to whether a comparative the grant of See Southland Sod, 108 F.3d at A domino effect A presumption is created in the summary judgment in favor of the See Nat l Prods., Inc. v. Gamber-Johnson LLC, 699 F. 25 26 6 27 28 Often times, the parties in Lanham Act false advertising cases do not dispute element four: whether the defendant caused the false statement to enter interstate commerce. The same can be said here as well. Page 15 - OPINION AND ORDER 1 advertisment is literally false), aff d, 449 F. App x 638 (9th Cir. 2 Sept. 7, 2011). 3 a. The Admissibility of FLIR s Expert Testimony 4 FLIR argues that a reasonable juror could conclude that the 5 video is literally false. In support of its position, FLIR relies 6 heavily on the opinion of its drop test expert witness, William 7 Bisenius ( Bisenius ), whose testimony was proffered to demonstrate 8 that there were numerous problems with the drop test that 9 rendered the results inconclusive and invalid. Fluke challenges 10 the admissibility of Bisenius testimony on relevancy grounds and 11 the reliability requirements set forth in Daubert. 12 Bisenius is the president of CertifiGroup Inc. and, according 13 to his Compliance 14 International 15 Measurement Equipment. 16 holds 17 (Certified Engineer and Technician). 18 1.) 19 bachelor of science in electrical engineering and has over twenty- 20 seven years of experience in compliance testing of products, 21 including over eight years as a senior engineer and engineering 22 manager 23 organization, Underwriters Laboratories ( UL ). Based on Bisenius 24 analysis, research, and experience, he concluded: (1) the drop test 25 was 26 problems with the testing, including concerns with the test method, 27 test location, test equipment, management of test samples, as well 28 as test interference from parties involved, renders the [drop] test the Expert rare Research in Report, Product Safety, is considered including Test (Millimet Decl. Ex. 59 at 1.) double NARTE certification of NCE an and Bisenius and NCT (Millimet Decl. Ex. 59 at Bisenius graduated from San Jose State University with a not for the conducted product by an Page 16 - OPINION AND ORDER safety testing independent and source; certification (2) [n]umerous 1 results inconclusive and invalid ; (3) [e]diting of the video 2 results in a misperception that all imagers other than Fluke s fail 3 with a single drop impact from 2 meters ; and (4) [m]ultiple 4 statements made by Fluke in text in the video do not appear 5 accurate. (Millimet Decl. Ex. 59 at 1.) 6 Pursuant to Federal Rule of Evidence 702, a witness who is 7 qualified as an expert by knowledge, skill, experience, training, 8 or education may testify in the form of an opinion or otherwise, 9 if: (1) the expert s scientific, technical, or other specialized 10 knowledge will help the trier of fact to understand the evidence or 11 to determine a fact in issue; (2) the testimony is based on 12 sufficient facts or data; (3) the testimony is the product of 13 reliable principles and methods; and (4) the expert has reliably 14 applied the principles and methods to the facts of the case. 15 R. EVID. 702. FED. 16 The Ninth Circuit discussed the requirements for admissibility 17 of an expert s opinion in Primiano v. Cook, 598 F.3d 558 (9th Cir. 18 2010). 19 20 21 22 23 24 25 26 As the Ninth Circuit explained, Daubert held that Federal Rule of Evidence 702 replaces the old . . . gatekeeping test, [e.g.,] general acceptance in the particular field, with a different test which is, in some respects, more open to opinion evidence. The requirement that the opinion testimony assist the trier of fact goes primarily to relevance. For scientific opinion, the court must assess the reasoning or methodology, using as appropriate such criteria as testability, publication in peer reviewed literature, and general acceptance, but the inquiry is a flexible one. Shaky but admissible evidence is to be attacked by cross examination, contrary evidence, and attention to the burden of proof, not exclusion. In sum, the trial court must assure that the expert testimony both rests on a reliable foundation and is relevant to the task at hand. 27 28 Page 17 - OPINION AND ORDER 1 Primiano, 598 F.3d at 564 (internal quotation marks and citation 2 omitted). 3 Bisenius first and fourth opinions are not subjects on which 4 the jury needs help determining the issue. 5 sorts of issues juries decide. 6 listen to the evidence and decide if Sierra is an independent 7 source and if the embedded statements in the video are true. There 8 is nothing about the training and experience of Bisenius that 9 renders his opinion helpful to the jury on these issues. The Court 10 is confident counsel will make the arguments which this proffered 11 testimony constitutes without the witness arguing for them. 12 sustain the objection to this proffered testimony. 13 Whether the testing They are the typical They are just as well equipped to method rendered the test I results 14 inconclusive or invalid is a proper subject for expert testimony 15 and that field is within the expertise of Bisenius. 16 Bisenius second conclusion, Fluke claims it should be excluded on 17 the 18 understanding -- either through personal experience or acquired 19 knowledge -- about how the thermal imaging camera industry drop 20 tests cameras; (2) Bisenius opinion fails to tie his opinion to 21 any objective standard; and (3) Bisenius failed to articulate what 22 difference any of the alleged deficencies made to the drop video. 23 The criticisms Fluke has for his testimony are fertile grounds for 24 cross examination, not exclusion. 25 is overruled. grounds that (1) Bisenius does not purport to As to have any The objection to that testimony 26 Lastly, whether a video or photo has been edited, enhanced or 27 touched up is something a jury may well be ill-equipped to discern 28 Page 18 - OPINION AND ORDER 1 depending on the facts. 2 overruled. 3 b. The objection to this testimony is Could a Reasonable Juror Conclude that the Drop Video is Literally False? 4 FLIR argues that a reasonable juror could conclude that the 5 video is literally false because the drop test was flawed, and 6 accordingly produced invalid results. I agree. 7 Where, as here, the defendant s ad explicitly or implicitly 8 represents that tests or studies prove its product superior, [the] 9 plaintiff satisfies its burden by showing that the tests did not 10 establish the proposition for which they were cited. Castrol, Inc. 11 v. Quaker State Corp., 977 F.2d 57, 63 (2d Cir. 1992). Keeping in 12 mind that a product testing claim can be literally false even if 13 the cited test or study does prove the proposition, if the test was 14 not sufficiently reliable to permit one to conclude with reasonably 15 certainty that the test established the proposition for which it was 16 cited. Riddell, Inc. v. Schutt Sports, Inc., 724 F. Supp. 2d 963 17 (W.D. Wisc. July 14, 2010) (emphasis in the original) (citation and 18 internal quotation marks omitted).7 19 In Bisenius opinion, there were numerous problems with the 20 drop test that rendered the test results inconclusive and invalid. 21 For example, Bisenius criticized Defendants for not using or 22 23 24 25 26 27 28 7 This Court s reading of Castrol, which was relied upon by the Ninth Circuit in Southland Sod, is in accordance with the district court s interpretation in Riddell. See Castrol, 977 F.2d at 63 ( [P]laintiff satisfies its burden by showing that the tests did not establish the proposition for which they were cited. . . . [P]laintiff can meet this burden by demonstrating that the tests were not sufficiently reliable to permit a conclusion that the product is superior. . . . [This] standard of course assumes that the tests in question, if reliable, would prove the proposition for which they are cited. ) Page 19 - OPINION AND ORDER 1 consulting any test standard in developing the test methodology. He 2 also opined that the test results could have been impacted by 3 irregularities with the drop test stand, such as its quality, 4 inability to be calibrated, and string jerk release. With respect 5 to the testing environment, Bisenius criticized Defendants drop 6 test because the floor was not level and had numerous imperfections; 7 the drop stand was too close to the wall; and the test was performed 8 outdoors with uncontrolled and changing weather conditions. 9 Furthermore, Bisenius observed that the test stand could be seen 10 rocking during the test as a result of poor construction and the 11 Fluke Ti32 was not tested in other sitting positions on the drop 12 platform, despite Fluke s competitor s thermal imagers being put 13 into various and increasingly more precarious positions on the 14 platform. 15 (Millimet Decl. Ex. 59 at 5.) In short, it is for the jury to decide whether the drop test 16 did, or did not, establish the proposition for which it was cited 17 in light of the criticisms leveled at the test. Having raised a 18 question of fact on the first element, FLIR is entitled to a 19 presumption that there are questions of fact on deception (element 20 two), materiality (element three), and damage (element five). 21 fourth element is not challenged by Fluke. The Therefore, Fluke s 22 motion for summary judgment is denied on this claim. 23 2. Count Two (Trade Libel/ Commercial Disparagement) 24 To prevail on a state law trade libel claim, it must be 25 established that the defendant published false allegations about the 26 plaintiff with malice, and that the plaintiff suffered special 27 damages or pecuniary harm as a result of the publication. 28 Page 20 - OPINION AND ORDER See 1 Soloflex, Inc. v. NordicTrack, Inc., Civ. No. 93-545-JE, 1994 WL 2 568401, at *13 (D. Or. Feb. 11, 1994). 3 Fluke s argument regarding FLIR s trade libel/ commercial 4 disparagement claim is fourfold. First, Fluke argues that the drop 5 video does not contain any false statements. Second, Fluke argues 6 that, even if FLIR could show the drop video contains a false 7 statement, not one of the allegedly false statements is regarding 8 FLIR s products (e.g., that [a]n independent 3rd party performed 9 and filmed this drop test video ; Fluke Ti32 17 Drops and 10 counting . . . The ONLY rugged thermal imager . . . Why waste money 11 on tools that break? ) Third, Fluke claims that there simply is no 12 evidence that it acted with malice by publishing the drop video. 13 Finally, Fluke claims that FLIR cannot show it incurred any special 14 damages as a result of the publication of the drop video. 15 FLIR counters by arguing that summary judgment is inappropriate 16 because a reasonable juror could conclude that the video, in its 17 full context, falsely represents the actual results of the drop 18 test; Fluke acted with malice in publishing the video; and FLIR 19 suffered special damages or pecuniary harm as a result of the video. 20 Fluke submits evidence it contends supports that it acted with 21 a legitimate business motive, not purely out of malice. Fluke 22 argues a series of emails exchanged in March 2010 by several high23 ranking employees of FLIR suggests FLIR perceived a competitive 24 motivation for Fluke. For example, on March 18, 2010, FLIR s vice 25 president of thermography sales, Thomas Scanlon ( Scanlon ), emailed 26 his co-workers, in essence acknowledging the legitimacy of Fluke s 27 marketing strategy: 28 Page 21 - OPINION AND ORDER 1 2 3 4 I ve always felt the drop test exposes a vulnerability in our camera design and I have been surprised it has taken Fluke this long to try to expose this weakness [in our cameras]. I would love to do a drop test from 2.5 meters and follow that up with a drop from a diving platform into a swimming pool. . . . Fluke is trying to play hardball and I would love to make them regret they ever made this video. 5 (Mehrbani Decl. Ex. 9 at 1.) Scanlon went on to state: 6 7 8 9 10 I think we would have a hard time proving the video was deceptive. Our cameras are not designed to drop from 2 meters and the result portrayed in the video is not completely unpredictable. . . . We will soon be in a position to introduce cameras to the market that are more rugged than the Fluke cameras portrayed in the video. They may be actually setting themselves up for a very dangerous exposure on the rugged cameras decision. 11 (Mehrbani Decl Ex. 8 at 1.) 12 That same day, FLIR s general manager, Rickard Lindvall 13 ( Lindvall ), responded to Scanlon s emails, stating: As you know 14 we have focus[ed] on this [vulnerability in our camera design] for 15 our [up]coming volume cameras. . . . [I]t s just about deciding that 16 this is important. As we have. It will take some time before our 17 complete volume line can do [a] 2m drop[.] . . . [But] we have 18 closed the gap[.] (Mehrbani Decl. Ex. 9 at 1.) FLIR s director 19 of sales in the United States, Brent Lammert ( Lammert ), suggested 20 that a 2+ meter drop need[ed] to be in [FLIR s] next product 21 launch. (Mehrbani Ex. 8 at 4.) However, Frechette felt it was more 22 important to preserve the aesthetics of FLIR s cameras: Not sure 23 I agree on a 2m drop . . . [our camera would] have to be wrapped in 24 plastic like the [F]luke [camera]. . . looks like crap. (Mehrbani 25 Ex. 8 at 3.) 26 The problem with this evidence is its origin in FLIR employee 27 statements and its focus on FLIR s thoughts and perceptions. It 28 says nothing directly about Fluke s motivation for the drop test or Page 22 - OPINION AND ORDER 1 the ad. Evidence pertaining to Fluke s employee s statements 2 regarding the drop video are revealing in this regard. For example, 3 in August 2009, an email with the subject line Beat FLIR input 4 needed began 5 employees. to circulate among several high-ranking Fluke In that chain of emails, Fluke employee Kirsten Paust 6 stated: 7 Guys we have to get a document together ASAP that shows the [Fluke] Ti32 and where we win against FLIR straight up. This has to be a priority. . . We are missing a real opportunity here to communicate our differentiation to the marketplace. We [only rely on the fact that] we have interchangeable lenses we have so much more than that 8 9 10 11 (Millimet Decl. Ex. 18 at 1.) Fluke employee Jay Choi offered one 12 of those advantages: An imager built for the industrial environment 13 only imager with 2m drop test and best in class 2 year warranty. 14 Fewer moving parts (no weak articulating lens joint and motorized 15 focus) that will break down. (Millimet Decl. Ex. 18 at 4.) 16 Similarly, Fluke employee Michael Stuart suggested emphasizing the 17 ruggedness of Fluke Ti32 compared to FLIR s cameras. 18 Decl. Ex. 18 at 6.) (Millimet This evidence reveals a legitimate competitive 19 motivation. The parties discuss how to define malicious for purposes of the 20 21 tort of trade libel under Oregon law. They suggest the court should 22 look to the law of defamation. In a defamation action under Oregon 23 law, malice may be established by evidence that a statement was 24 published: (1) with knowledge that it was false or with reckless 25 disregard of whether it was false or not, (2) with [a] high degree 26 of awareness of [its] probable falsity; or (3) when "defendant in 27 fact entertained 28 publication. serious doubts as to the truth of [its] McNabb v. Oregonian Pub. Co., 69 Or. App. 136, 140 Page 23 - OPINION AND ORDER 1 (1984); Fodor v. Leeman, 41 P.3d 446, 448-49 (2002). Fodor 2 presented a question of the sufficiency of the evidence that 3 demonstrated the defendant s malice. The evidence suggested the 4 defendant could have conducted a more thorough investigation to 5 determine whether the statements that he made about plaintiff and 6 his article were true. Id. at 449. The Oregon Court of Appeals 7 held such evidence is insufficient to establish actual malice, 8 id., and affirmed the trial court s summary judgment dismissing the 9 defamation claim based on this evidence. Id. FLIR s record at its 10 best suggests no more than that Fluke could have been more rigorous 11 in conducting its drop test depicted in the video. That is not 12 enough under Oregon law to establish malice. 13 Further, to the extent FLIR seeks to establish that Fluke s 14 motivation for production of the drop test video was the malicious 15 injury of FLIR, how dominant, if at all, must Fluke s purpose be for 16 FLIR to avoid summary judgment? The tort of trade disparagement has 17 as an element that the false statement be made with malice. Must 18 malice be the only reason for the statement s publication, the 19 primary reason, or any part of the reason the statement was made? 20 The Oregon case law is sparse on trade libel. 21 address this issue. It does not directly I note that malice has been described by the 22 Oregon Supreme court in a case not involving trade libel as the 23 intention to injure another without just cause or excuse. 24 Heitkemper v. Cent. Labor Council, 192 P. 765, 772 (1920) (citation 25 omitted). This will usually depend on the relationship between the 26 parties and the factual background. As one court observed, the 27 intent to injure in a situation involving competitors can be negated 28 by a showing that the acts were done for professional or competitive Page 24 - OPINION AND ORDER 1 advantage. Bro-Tech Corp. V. Thermax, Inc., 651 F. Supp. 2d 378, 2 419 (E.D. Pa. 2009). 3 I conclude that the law in Oregon on this issue is that to 4 recover for trade libel a plaintiff must establish that the 5 defendant s publication of the false statement was done with a 6 primary purpose of maliciously injuring the plaintiff. To require 7 it to be the sole purpose is too stringent a standard as it enables 8 the defendant to escape responsibility for any trumped up secondary 9 purpose for the statement s publication. Likewise, to allow the 10 recovery for trade libel upon the showing of any desire to reduce 11 the business of the plaintiff, is too liberal a standard. It 12 ignores the fact the cases recognize that any time a person promotes 13 his own product in competition, if the promotion is successful, it 14 necessarily is to the detriment of the defendant s competitors. I 15 conclude that the Oregon court s inclusion of maliciousness in the 16 elements of the tort for purposes of establishing any liability at 17 all suggests a desire for more culpability than this low threshold 18 to support the tort. Therefore, I conclude that FLIR must raise a 19 material issue of fact that would allow a reasonable juror to 20 conclude that the primary purpose of the drop test video was to 21 maliciously injure FLIR. 22 I do not believe this record supports such a finding. The 23 evidence that Fluke developed a line of cameras that was rugged 24 enough to better survive a drop from two meters, and saw that as a 25 marketing advantage of its products that was worthy of promotion, 26 suggests it had legitimate reasons to produce the drop test video. 27 Whatever adverse effects the video might have on Fluke s competitors 28 were sufficiently secondary to this legitimate purpose on this Page 25 - OPINION AND ORDER 1 record that Fluke is entitled to summary judgment on this claim. The 2 incidental harm to a competitor that is always involved in 3 legitimate business competition is not compensable as trade libel 4 upon a showing of a false statement being involved under Oregon law, 5 unless the plaintiff can show that the primary motivation of the 6 false statement was the injury of the plaintiff. 7 3. Count Four (Civil Conspiracy) 8 In Count Four, FLIR alleges that Fluke and Sierra conspired to 9 disparage FLIR and its products. Under Oregon law, [a] civil 10 conspiracy consists of (1) two or more persons; (2) an object to be 11 accomplished; (3) a meeting of the minds on the object or course of 12 action; (4) one or more unlawful overt acts; and (5) damages as a 13 result of the overt act or acts. 14 392, 402 (2009). Morasch v. Hood, 232 Or. App. But civil conspiracy is not a separate tort for 15 which damages may be recovered; rather it is a way in which a person 16 may become jointly liable for another s tortious conduct. Id. 17 Based on this understanding of civil conspiracy, Count Four is 18 dependent upon a valid underlying predicate tort (FLIR s state law 19 trade libel claim) and satisfaction of the aforementioned elements. 20 As no predicate tort remains to support FLIR s civil conspiracy 21 claim, Fluke is entitled to summary judgment on Count Four. Cf. 22 Pardue v. Gray, 136 F. App x 529, 533 (3d Cir. June 27, 2005) ( A 23 cause of action for civil conspiracy requires a separate underlying 24 tort as a predicate for liability. )8 25 26 27 28 8 The Lanham Act false advertising claim will not support the civil conspiracy claim either. See Opinion and Order, infra, at 32-37. Page 26 - OPINION AND ORDER 1 Even assuming, arguendo, that FLIR s trade libel/ commercial 2 disparagement claim survived summary judgment, I would still 3 conclude that Defendants are entitled to summary judgment as to 4 Count Four. As with trade libel, to be actionable, the primary 5 purpose of a civil conspiracy must be to cause injury to another. 6 Yanney v. Koehler, 147 Or. App. 269, 275 (1997) (emphasis added). 7 In this case, there is no genuine issue of material fact because the 8 record is devoid of any evidence suggesting a conspiracy with the 9 primary purpose of causing harm to FLIR. Instead, in hiring Sierra 10 to create and disseminate a promotional video, the only harm Fluke 11 may have intended to cause FLIR was the incidental harm to a 12 competitor that is necessarily part of all legitimate business 13 competition. BCD LLC v. BMW Mfg. Co., LLC, 360 F. App x 428, 437 14 (4th Cir. 2010); Bliss v. S. Pac. Co., 212 Or. 634, 641 (1958) ( So 15 long as the object of the combination is [t]o further its own fair 16 interest or advantage, and not the injury of another, its members 17 are not liable for any injury which is merely incidental. ) 18 To that end, the Fourth Circuit s decisions in BCD LLC and 19 Waldrep Bros. Beauty Supply Inc. v. Wynn Beauty Supply, 992 F.2d 59 20 (4th Cir. 1993), are instructive.9 21 and BMW Manufacturing Co., LLC In BCD LLC, Clemson University ( BMW ) had explored possible 22 educational initiatives on which they could collaborate, including 23 a wind tunnel that would cater to the racing industry. BCD LLC, 360 24 25 9 26 27 28 South Carolina law regarding civil conspiracy is quite similar to that of Oregon. See Lee v. Chesterfield Gen. Hosp., Inc., 289 S.C. 6, 344 S.E.2d 379, 382 (1986) (Under South Carolina law, [a] civil conspiracy . . . consists of three elements: (1) a combination of two or more persons, (2) for the purpose of injuring the plaintiff, (3) which causes him special damage. ) Page 27 - OPINION AND ORDER 1 F. App x at 431. BMW was not interested in funding a wind tunnel, 2 but proposed an alternative plan of partnering with Clemson to 3 establish a graduate engineering center ( GEC ) as part of Clemson s 4 International Center for Automotive Research. Id. at 431-32. One 5 year later, in April 2002, a developer, Clifford Rosen, and Clemson 6 entered into a terminable-at-will agreement in order to lay the 7 foundation for the development of a motorsports facility with a wind 8 tunnel. 9 Id. After BMW and Clemson drafted a Memorandum of Expectations 10 with respect to the GEC in July 2002, Rosen began to urge Clemson 11 and BMW to consider using property he owned as the potential site. 12 Id. at 432. However, BMW emphasized the need to distinguish the 13 state-funded GEC from the privately-funded facility Rosen was 14 developing, and Clemson declined to commit itself to using Rosen s 15 property. Id. 16 his project. 17 Rosen interpreted this as BMW attempting to kill Id. at 432-33. In January 2003, Rosen sent a letter to Clemson expressing 18 concerns about the wind tunnel project. Id. at 433. Despite Rosen 19 following up with a letter reiterating his commitment to the 20 project, Clemson s President responded on March 12, 2003, informing 21 Rosen that his 2002 agreement constituted a mere letter of intent 22 that was terminable at will. Id. In October 2003, Rosen and 23 Clemson agreed to an entirely different agreement, which Rosen 24 characterized as an attempt to mitigate the damage caused BMW s 25 actions. Id. Rosen then brought a civil conspiracy action against 26 BMW in the United States District Court for the District of South 27 Carolina. Id. The district court granted BMW s motion for summary 28 judgment and Rosen filed a timely appeal. Page 28 - OPINION AND ORDER Id. 1 The Fourth Circuit affirmed the district court s holding, 2 stating: 3 4 5 6 7 8 9 10 11 12 13 In this case, there is no genuine issue of material fact because the record is devoid of any evidence suggesting a conspiracy. Indeed, no facts have been presented that could lead a court to conclude that BMW's objective was to injure Rosen s business. Although Rosen claims that there were meetings, telephone calls, and emails exchanged between BMW, [Clemson s subsidiary], and [Clemson s subsidiary]'s attorneys plotting ways to leverage him to give up his property and contract rights, such claims are insufficient. Rosen has not provided a scintilla of evidence that would suggest that BMW possessed the requisite motive to injure. Rather, the record indicates that BMW was motivated by its desire to establish the GEC, which in and of itself does not imply an explicit desire to damage Rosen s business. The only harm that BMW may have intended to cause Rosen was the incidental harm to a competitor that is necessarily part of all legitimate business competition. That increased benefits for one entity may come at the expense of a competing entity is merely a fact of life in a market economy. 14 Id. at 437. 15 In Waldrep, a beauty salon products distributor (Waldrep) 16 brought suit against a competitor (Wynn) after manufacturers (Redken 17 and Sebastian) terminated Waldrep s at-will distributorship contract 18 in favor of Wynn. 19 intended to Waldrep, 992 F.2d at 60-61. purchase Waldrep and had Originally, Wynn discussed the possible 20 acquisition and assignment of Waldrep s distribution agreements with 21 Redken and Sebastian. Id. at 61. Not long after the negotiations 22 reached an impasse, Redken and Sebastian notified Waldrep of the 23 termination of its distribution agreements. Id. A lawsuit 24 followed, with Waldrep alleging that Wynn engaged in a civil 25 conspiracy to destroy Waldrep s business. Id. at 60. The jury 26 found for Waldrep, and the district court denied Wynn s motion for 27 judgment as a matter of law. Id. Finding no evidence that Wynn 28 did anything other than compete on the merits with Waldrep, the Page 29 - OPINION AND ORDER 1 Fourth Circuit reversed the judgment of the district court. Id. In 2 so holding, the Fourth Circuit stated: 3 4 5 6 7 8 9 10 11 Business competition produces success and failure; over time, only firms that satisfy their customers will survive. In this diversity case, plaintiff seeks to erect the tort law of South Carolina as a barrier to the forces of market competition. . . . The evidence in this case . . . demonstrated that Wynn s object was simply to make money[.] . . . The only harm that Wynn intended to cause Waldrep was the incidental harm to competitors that is necessarily part of all legitimate business competition. To be sure, Waldrep was harmed by the loss of business, but those losses must be considered against the gain to Redken and Sebastian from having a more energetic and efficient distributor. That increased profits for one enterprise may come at the expense of a competitor is a fact of life in a market economy. We cannot, however, simultaneously encourage competitors to compete and hold them liable in tort whenever they do so successfully. 12 Id. at 61, 63. 13 Much the same can be said here. The evidence in this case 14 demonstrates that Fluke s primary objective was simply to make money 15 through legitimate competition. The evidence of this includes(1) 16 the attempts to conceal FLIR s logo in the video; (2) the inclusion 17 of another competitor s camera and drops where no visible damage 18 results to FLIR s cameras; and (3) the emphasis being placed 19 primarily on the structural integrity of the Fluke Ti32. The 20 purpose of the video was to demonstrate Fluke s unique ruggedness 21 compared to competitive cameras in the market at the time, (Stuart 22 Dep. 23:14-16, Dec. 6, 2011), but Fluke nevertheless instructed 23 Sierra s president, Dan Cardenas ( Cardenas ), to treat all of the 24 thermal imagers tested exactly the same in an attempt to produce 25 legitimate results. (Cardenas Dep. 13:16-16:18, Jan. 20, 2012.) 26 Perhaps most tellingly, Scanlon predicted that Fluke would 27 attempt to exploit, or make 28 Page 30 - OPINION AND ORDER money off of, this competitive 1 advantage before the drop video was ever created. Specifically, 2 on December 1, 2008, Scanlon was informed that FLIR lost a sale (15 3 units at $3,700 each) because the customer preferred the Fluke 4 camera s perceived ruggedness and ability to withstand a drop 5 test. (Mehrbani Decl. Ex. 9 at 3.) The very next day, Scanlon 6 emailed FLIR s vice president of product management, Torbjorn 7 Hamrelius, stating: 8 I am surprised Fluke has not made a bigger deal out of the drop test, but our free pass on this competitive advantage may be coming to an end. . . . I would not be surprised to see them run hard with this design advantage. We should carefully consider a drop test promise on our next camera design and explore a way to make our current I-series products more rugged. 9 10 11 12 (Mehrbani Decl. Ex. 9 at 3.) In August 2009, Scanlon s prediction 13 came to fruition as ideas began to circulate among employees of 14 Fluke as to how it could improve 15 effectively compete with FLIR. its marketing in order to Chief among them being to emphasize 16 the Fluke Ti32 s ruggedness and ability to withstand a two meter 17 drop. (Millimet Decl. Ex. 18 at 2-6.) The following month, Fluke 18 hired Sierra to produce the drop video. 19 In summary, there is no genuine issue of material fact as to 20 whether Fluke engaged in a civil conspiracy with the primary purpose 21 of causing injury to FLIR. Fluke would therefore be entitled to 22 summary judgment on Count Four on this ground as well. 23 C. 24 Sierra s Motion for Summary Judgment [#175] Sierra moves the Court for an order granting summary judgment 25 on the only remaining claims against it: Counts One (false 26 advertising under the Lanham Act), Two (trade libel/ commercial 27 disparagement), Four (civil conspiracy) and 28 assisting) of FLIR s first amended complaint. Page 31 - OPINION AND ORDER Five (aiding and 1 1. Count One (False Advertising) 2 With respect to Count One, Sierra s argument is twofold. First, 3 Sierra argues that FLIR does not have standing to prosecute its 4 Lanham Act false advertising claim against Sierra in this action 5 because there is no dispute as to the material fact that Sierra does 6 not compete against FLIR in the market for thermal imaging cameras. 7 Second, even assuming FLIR had standing to pursue its false 8 advertising claim, Sierra claims it would still be entitled to 9 summary judgment because there is no genuine issue of fact as to 10 whether the Lanham Act was violated. 11 The Ninth Circuit set out the test for Lanham Act standing in 12 Jack Russell Terrier Network of N. Cal. v. Am. Kennel Club, Inc., 13 407 F.3d 1027 (9th Cir. 2005), where the court held that a 14 plaintiff must show: (1) a commercial injury based upon a 15 misrepresentation about a product; and (2) that the injury is 16 competitive, or harmful to the plaintiff s ability to compete with 17 the defendant. Id. at 1037. In the context of a Lanham Act false 18 advertising claim, standing exists where misrepresentations about 19 product quality could theoretically draw a consumer away from [a] 20 competitor s product. Healthport Corp. v. Tanita Corp. of Am., 563 21 F. Supp. 2d 1169, 1177 (D. Or. 2008) (citing Waits v. Frito-Lay, 22 Inc., 173 F.3d 725, 734 (9th Cir. 1992)). 23 Sierra asserts that FLIR fails the competitive prong of Jack 24 Russell because 25 manufactures and FLIR sells and Sierra infrared are not cameras competitors: and thermal FLIR imaging 26 equipment, while Sierra is a media marketing company that does not 27 manufacture, produce, sell, or distribute thermal imagers, or any 28 other product. (Sierra s Mem. Supp. at 6.) Page 32 - OPINION AND ORDER In support of its 1 position, Sierra relies primarily on Halicki v. United Artists 2 Commc ns, 812 F.2d 1213 (9th Cir. 1995) and Fuller Bros., Inc. v. 3 Int l Mktg., Inc., 870 F. Supp. 299 (D. Or. 1994). 4 In Halicki, the plaintiff produced The Junkman, a film 5 designed to appeal to teenagers and young adults. Halicki, 812 F.2d 6 at 1213. Despite the film s commercial success being closely 7 connected with a PG rating, the distributors advertised the movie 8 as rated R, indicating that the film was unsuitable for children and 9 young adults. Id. In rejecting the movie producer s contention 10 that to state a Lanham Act claim, all he need do was show that the 11 distributors made a false representation about his film and that 12 he was injured by the representation, the Ninth Circuit emphasized 13 that the injury sustained must be one the Lanham Act is intended to 14 prevent. Id. at 1214. Thus, the misrepresentation as to The 15 Junkman s rating was not actionable under the Lanham inasmuch as the 16 movie producer had not been injured by a competitor. Id. at 1214- 17 15. 18 Similarly, in Fuller, the manufacturer of Tire Life, a liquid 19 formula that extends the life of truck tires, brought a Lanham Act 20 action against the manufacturer of Equal, a formula that reduces 21 vibration and eliminates radial and lateral force variation when 22 placed inside the tires. Fuller, 870 F. Supp. at 301. In 23 evaluating whether Tire Life s manufacturer had standing to bring 24 a claim for false advertising, this court noted that competitors are 25 [p]ersons endeavoring to do the same thing and each offering to 26 perform the act, furnish the merchandise, or render the service 27 better or cheaper than his rival. 28 Dictionary 257 (5th ed. 1979)). Page 33 - OPINION AND ORDER Id. at 303 (quoting Black s Law Although the two formulas were 1 marketed to many of the same customers, Fuller determined that Tire 2 Life s manufacturer lacked Lanham Act standing because the two 3 manufacturers were not competitors: 4 5 6 7 E[qual] is a tire balancing product. T[ire] L[ife] is not a tire balancing product. If this court holds that [Tire Life s manufacturer] has sta[nding] . . . under the Lanham Act, the Lanham Act becomes a federal statute creating the tort of misrepresentation, actionable as to any goods or services in commerce affected by the misrepresentation. 8 Fuller, 870 F. Supp. at 303 (quoting Halicki, 812 F.2d at 1214). 9 In response, FLIR argues that the case law on which Sierra 10 relies does not concern a co-defendant that is jointly and severally 11 liable with the plaintiff s competitor for false advertising, and 12 therefore is inapposite. According to FLIR, courts that have 13 considered analogous situations -- where the plaintiff sues its 14 competitor and a marketing firm that helped create and disseminate 15 false advertisements -- have found that a competitor s marketing 16 firm can be held liable under the Lanham Act. In support of this 17 proposition, FLIR relies primarily on Second Circuit case law, such 18 as Grant Airmass Corp. v. Gaymar Indus., Inc., 645 F. Supp. 1507 19 (S.D.N.Y. 1986). 20 In Grant, the plaintiff and defendant were competitors in the 21 field of pressure sore prevention products (e.g., mattresses and 22 pads that prevent bedsores). Grant, 645 F. Supp. at 1509. It was 23 alleged that Gaymar commissioned its co-defendant in the case, a 24 research firm, to undertake a false and misleading comparative study 25 of pressure sore prevention products. Id. The research firm moved 26 for summary judgment, arguing that, as a non-competitor in the sale 27 of pressure sore prevention products, it could not be held liable 28 under the Lanham Act. Id. at 1511. Page 34 - OPINION AND ORDER Grant rejected this argument 1 and held that the plaintiff was entitled to frame a Lanham Act 2 claim against all those allegedly responsible for falsely describing 3 and placing in commerce the advertised goods. Id. The research 4 firm s not status as a non-competitor therefore did require 5 dismissal of the false advertising claim against it. Id. 6 Sierra contends that FLIR s reliance on Grant is misplaced and 7 tantamount to ignoring Ninth Circuit precedent in favor of the 8 Second Circuit s directly conflicting standard. I agree. 9 Seventh, the Ninth, and Tenth Circuit have adopted The so-called 10 categorical approach, wherein the plaintiff must be in actual or 11 direct competition with the defendant and assert a competitive 12 injury to establish prudential standing. Phoenix of Broward, Inc. 13 v. McDonald s Corp., 489 F.3d 1156, 1164-65 (11th Cir. 2007). By 14 contrast, in the First and Second Circuits, the dispositive issue 15 is not the degree of competition, but whether the plaintiff has 16 a reasonable interest to be protected against the type of harm 17 that the Lanham Act is intended to prevent. 18 Id. at 1165. Indeed, it is beyond question that the Second and Ninth 19 Circuits analyze the standing of commercial plaintiffs by applying 20 differing standards: 21 22 23 24 25 The strongest application is the categorical approach utilized by the Seventh, Ninth, and Tenth Circuits. . . . Our test for standing has been called the reasonable interest approach. Under this rubric, in order to establish standing under the Lanham Act, a plaintiff must demonstrate (1) a reasonable interest to be protected against the alleged false advertising and (2) a reasonable basis for believing that the interest is likely to be damaged by the alleged false advertising. 26 Famous Horse Inc. v. 5th Ave. Photo Inc., 624 F.3d 106, 111-13 (2d 27 Cir. 2010). As opposed to the categorical approach, the sine qua 28 Page 35 - OPINION AND ORDER 1 non of standing under the reasonable interest approach is not 2 whether the plaintiff and defendant are in competition. Id. at 113. 3 It is too well settled to require citation of authority that 4 this court is bound by circuit precedent. The dispositive issue 5 here, then, is the degree of competition because the Ninth Circuit 6 utilizes the so-called categorical approach to determine standing. 7 Because Sierra and FLIR are not competitors, FLIR lacks standing to 8 sue Sierra for false advertising under the Lanham Act. Sierra is 9 therefore entitled to summary judgment on Count One. 10 2. Counts Two 11 Sierra is entitled to summary judgment for all the reasons 12 discussed above with respect to Fluke, Opinion and Order, supra, at 13 20-26. 14 3. Count Four 15 With respect to Count Four, as discussed above, there is no 16 genuine issue of material fact as to whether Fluke published false 17 allegations about FLIR with malice, nor is there a genuine issue of 18 fact as to whether Fluke engaged in a civil conspiracy with the 19 primary purpose of causing injury to FLIR. This eliminates trade 20 libel as the tort to support a civil conspiracy. 21 FLIR lacks standing to sue Sierra for false advertising under 22 the Lanham Act, as discussed above. This leaves no underlying claim 23 for Sierra and Fluke to have conspired to commit. Thus, I grant 24 Sierra s motion for summary judgment on Count Four. See Bliss, 212 25 Or. at 642 (explaining that it takes two to conspire, and if one 26 defendant is not liable for conspiracy, the other defendant is 27 likewise exonerated as a conspirator[.] ); US West, Inc. v. Business 28 Discount Plan, Inc., 196 F.R.D. 576, 590-91 (D. Colo. 2000) (finding Page 36 - OPINION AND ORDER 1 that a telephone company lacked standing to a bring false 2 advertising claim under the Lanham Act against a telemarketer and 3 a verification services company as they were not competitors of the 4 telephone company, and accordingly granting summary judgment in 5 their favor despite allegations that they conspired with a 6 competitor of the telephone company); see also Pardue, 136 F. App x 7 at 533 ( A cause of action for civil conspiracy requires a separate 8 underlying tort as a predicate for liability. ) 9 4. 10 Count Five Turning to the merits of Count Five, it is FLIR s contention 11 that Sierra aided and assisted Fluke in the commission of the tort 12 of trade libel. Under Oregon law, aiding and assisting, like civil 13 conspiracy, is not a separate tort for which damages may be 14 recovered: [N]either conspiracy nor aid and assist is a 15 separate theory of recovery. Rather, conspiracy to commit or aiding 16 and assisting in the commission of a tort are two of several ways 17 in which a person may become jointly liable for another s tortious 18 conduct. Granewich v. Harding, 329 Or. 47, 53 (1999) (internal 19 citations omitted). Because I have determined that Fluke and Sierra 20 are entitled to summary judgment on FLIR s state law trade libel 21 claim (the predicate underlying tort), I grant Sierra s motion for 22 summary judgment on Count Five. Cf. Yadanpanah v. Sacramento Valley 23 Mortg. Group, 2009 WL 4573381, at *5 (N.D. Cal. Dec. 1, 2009) 24 (explaining that a defendant s liability under an aiding and 25 abetting theory is dependent upon the commission of an underlying 26 tort. ) 27 /// 28 /// Page 37 - OPINION AND ORDER 1 5. Evidentiary Objections 2 In its reply memorandum, Sierra argued that FLIR s newly 3 produced evidence of injury on FLIR s Count One (e.g., declarations 4 from two FLIR employees) and its expert William Bisenius opinions 5 are inadmissible. (Sierra s Reply at 22.) Upon review, I overrule 6 Sierra s objections as moot because the evidence moved against did 7 not impact my determination of the merits of Sierra s motion for 8 summary judgment. The injury element is not the basis of my 9 decision. 10 See Harlan, 2009 WL 928309, at *6 n.5 (same). D. 11 FLIR s Motion for Summary Judgment [#176] FLIR claims it is entitled to summary judgment on Fluke s 12 trademark infringement and unfair competition claims based on its 13 purported IR Fusion trademark because Fluke s trademark is invalid 14 and such claims are barred by the doctrine of laches. For those and 15 other reasons, FLIR also claims it entitled to summary judgment on 16 Fluke s other false advertising counterclaims based on (1) FLIR s 17 use of the terms IR Fusion and fusion in its advertisements; and (2) 18 two FLIR PowerPoint presentations and two similar advertisement, the 19 banana advertisment and the 12 Things promotional literature. 20 1. The Validity of Fluke s IR Fusion Trademark 21 Generally, [t]he more likely a mark is to be remembered and 22 associated in the public mind with the mark s owner, the greater 23 protection the mark is accorded by trademark laws. GoTo.com, Inc. 24 v. Walt Disney Co., 202 F.3d 1199, 1207 (9th Cir. 2000). The 25 strength of a mark is evaluated conceptually and commercially. Id. 26 A its mark s conceptual strength depends, in large part, 27 connection to the good or service to which it refers. on Fortune 28 Dynamic, Inc. v. Victoria s Secret Stores Brand Mgmt., Inc., 618 Page 38 - OPINION AND ORDER 1 F.3d 1025, 1032-33 (9th Cir. 2010). The less 2 connection, the stronger the mark, and vice versa. 3 obvious the Id. at 1033. From weakest to strongest, marks are categorized as: (1) 4 generic; (2) descriptive; (3) suggestive; (4) arbitrary; and (5) 5 fanciful. Yellow Cab Co. of Sacramento v. Yellow Cab of Elk Grove, 6 Inc., 419 F.3d 925, 927 (9th Cir. 2005). Mindful of the wisdom 7 embodied in the well-established principle that [due to] the 8 intensely factual nature of trademark disputes, summary judgment is 9 generally disfavored in the trademark arena, Fortune Dynamic, 618 10 F.3d at 1031 (citation and quotation marks omitted; alteration 11 deleted), I conclude there is a genuine issue of fact as to which 12 category Fluke s IR Fusion mark fits within. See id. at 1034 13 (stating that which category a mark belongs in is a question of 14 fact, and accordingly leaving it to the jury to decide whether a 15 mark was descriptive or suggestive due to the intuitive nature of 16 such an inquiry); Stuhlbarg Int l Sales Co., Inc. v. John D. Brush 17 & Co., Inc., 240 F.3d 832, 840 (9th Cir. 2001) ( Whether a mark is 18 generic is a question of fact ); Levi Strauss & Co. v. Blue Bell, 19 Inc., 778 F.2d 1352, 1355 (9th Cir. 1985) (en banc) ( [T]he question 20 of secondary meaning is one of fact. ) 21 Suggestive arbitrary, and fanciful marks are considered 22 inherently distinctive and are automatically entitled to protection 23 because they naturally serve to identify a particular source of a 24 product. Yellow Cab, 419 F.3d at 927. Descriptive marks define 25 a particular characteristic of the product in a way that does not 26 require any exercise of the imagination. Id. Such a mark can 27 receive trademark protection if it has acquired distinctiveness by 28 establishing secondary meaning in the marketplace. Page 39 - OPINION AND ORDER Id. Generic 1 marks, on the other hand, give the general name of the product; 2 they embrace an entire class of products. Id. (quoting 3 Kendall Jackson Winery, Ltd. v. E. & J. Gallo Winery, 150 F.3d 1042, 4 1047 n.8 (9th Cir.1998)). Generic marks are not capable of 5 receiving protection because they identify the product, rather than 6 the product s source. Yellow Cab, 419 F.3d at 927 (quoting KP 7 Permanent Make Up, Inc. v. Lasting Impression I, Inc., 408 F.3d 596, 8 602 (9th Cir. 2005)). 9 In the present case, although Fluke s IR Fusion trademark has 10 been federally registered, FLIR asserts that the terms IR Fusion 11 and fusion are either generic or descriptive without acquired 12 secondary meaning, 13 protection. and therefore not entitled to trademark According to Fluke, however, its IR Fusion mark is 14 suggestive, and therefore afforded protection without proof of 15 secondary meaning. 16 I conclude there is a genuine issue of material fact as to 17 whether Fluke s IR Fusion mark is suggestive or descriptive. Setting 18 aside the fact [t]he line between descriptive and suggestive marks 19 in nearly incapable of precise description, Fortune Dynamic, 618 20 F.3d at 1033, suggestive marks typically do not describe the 21 product s 22 Survivor feature Prods., but suggest 406 F.3d them, 625, 632 Surfvivor (9th Media, Cir. Inc. 2005), v. while 23 [d]escriptive terms directly describe the quality or features of 24 the product. Brookfield Commc'ns, Inc. v. W. Coast Entm't Corp., 25 174 F.3d 1036, 1058 n.19 (9th Cir. 1999). Arguably, the IR Fusion 26 mark does the latter insofar as it describes a feature of Fluke s 27 thermal imager: its ability to blend thermal and visible light 28 images. Page 40 - OPINION AND ORDER 1 Nevertheless, a suggestive or descriptive mark, which is 2 conceptually weak, can have its overall strength as a mark bolstered 3 by its commercial success. M2 Software, Inc. v. Madacy Entm t, 421 4 F.3d 1073, 1081 (9th Cir. 2005). An otherwise inherently weak mark 5 can be strengthened by, among other things, extensive advertising, 6 length of exclusive use, public recognition, and the success of the 7 mark s holder. See id. (collecting cases). Here, Fluke has put 8 forth evidence indicating its IR Fusion mark has been extensively 9 advertised ($25.2 million since 2005) in its print media (brochures, 10 technical data sheets, catalogues, direct mail), Internet media 11 (website pages and videos, paid search), and at live events 12 (seminars, technology forums, trade shows).10 Whatever its ultimate 13 force, this evidence is sufficient to make the categorization and 14 strength of the IR Fusion mark a question for the jury. See Fortune 15 Dynamic, 618 F.3d at 1034-35 (reaching a similar conclusion); see 16 also E. & J. Gallo, 967 F.2d at 1291 (explaining that the strength 17 of a mark is determined by its placement on the continuum of marks: 18 generic, descriptive, suggestive, arbitrary, or fanciful). 19 A genuine issue of material fact also exists with respect to 20 whether Fluke s IR Fusion mark is generic. [A] generic term is the 21 name of the product or service itself -- what the product is, and 22 as such . . . the very antithesis of a mark. Filipino Yellow 23 Pages, Inc. v. Asian Journal Publ ns Inc., 198 F.3d 1143, 1147 (9th 24 Cir. 1999) 25 deleted). (citation and quotation marks omitted; alteration Generic terms describe the product in its entirety. 26 Surfvivor, 406 F.3d at 632. Examples include Liquid controls for 27 10 28 Paid search refers to the marketing practice of gaining traffic by buying ads on search engines. Page 41 - OPINION AND ORDER 1 equipment that dispenses liquid, or Multistate Bar Examination for 2 a bar examination that may be taken across multiple states. Id. 3 Viewing the evidence in the light most favorable to Fluke, a 4 reasonable jury could conclude that IR Fusion does not state the 5 general name of Fluke s product -- a thermal imaging camera -- and 6 therefore does not fit within the generic category. See 7 Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1141 n.2 (9th Cir. 8 2002) ( At the other end of the spectrum, ENTREPRENEUR does not 9 state the general name of EMI s product -- a magazine -- and 10 therefore does not fit within the generic category. ) 11 In sum, whether Fluke s IR Fusion mark is generic, descriptive 12 or suggestive is a determination for the jury. FLIR s motion for 13 summary judgment is therefore denied on this ground. 14 2. The Doctrine of Laches 15 FLIR argues that Fluke s trademark and unfair competition 16 claims are barred by laches. Laches is an equitable defense to 17 Lanham Act claims that embodies the principle that a plaintiff 18 cannot sit on the knowledge that another company is using its 19 trademark, and then later come forward and seek to enforce its 20 rights. Internet Specialties W., Inc. v. Milon DiGiorgio Enters., 21 Inc., 559 F.3d 985, 989-90 (9th Cir. 2009). It is well settled that 22 laches is a valid defense to Lanham act claims. Jarrow Formulas, 23 Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835 (9th Cir. 2002). For 24 guidance, the Court looks to the 2-year statute of limitations for 25 fraud claims by analogy. adidas America, Inc. v. Payless 26 Shoesource, Inc., 540 F. Supp. 2d 1176, 1180 n.1 (D. Or. 2008); 27 Johannsen v. Brown, 797 F. Supp. 835, 839-40 (D. Or. 1992) ( This 28 court agrees with those decisions which have found that claims Page 42 - OPINION AND ORDER 1 brought under . . . the Lanham Act are most comparable to claims 2 brought for fraud. ) If the plaintiff filed suit within the 3 analogous limitations period, the strong presumption is that laches 4 is inapplicable. Jarrow, 304 F.3d 829 at 835. However, if suit 5 is filed outside of the analogous limitations period, courts often 6 have presumed that laches is applicable. Id. at 836. The test for 7 laches is a two-part inquiry: first, did the plaintiff unreasonably 8 delay in filing suit; and second, was the defendant prejudiced by 9 the delay. 10 Internet Specialties, 559 F.3d at 990. The laches period starts when the party knew or should have 11 known about its potential cause of action. Internet Specialties, 12 559 F.3d at 990. The following timeline of events related to FLIR s 13 laches defense is undisputed. On April 15, 2008, Fluke s counsel, 14 Heidi Sachs ( Sachs ), sent a cease-and-desist letter to FLIR s 15 general counsel, William Davis ( Davis ), stating: 16 17 18 19 20 21 22 23 24 It has come to our attention that F[LIR] recently commenced using IR FUSION for a camera that directly competes with Fluke s thermal imagers containing IR Fusion technology. . . . Such use constitutes an infringement of Fluke s state and federal trademark rights and a violation of unfair competition laws. Use of the identical mark on a directly competing product makes it difficult to imagine that this trademark infringement was unintentional. Nevertheless, in an the interest of an amicable resolution of this matter, please confirm that F[LIR] will . . . [i]mmediately cease use of IR FUSION, or an confusingly similar mark[,] . . . [p]rovide an accounting of the materials distributed . . . [so] Fluke [can] determine whether corrective advertising is necessary to rectify this situation[,] . . . [and] [c]onfirm that F[LIR] will not use, register or seek to register IR Fusion or any confusingly similar mark[.] 25 (Sachs Decl. at 5-6.) On April 22, 2008, Richard O Brien 26 ( O Brien ) of Sidley Austin LLP in Chicago, Illinois, responded to 27 Sachs cease-and-desist letter, stating: 28 Page 43 - OPINION AND ORDER 1 We represent FLIR . . . with respect to the matters addressed in your letter of April 15, 2008. FLIR disputes that IR-FUSION is a valid trademark and disputes that it had made any use of that term in a trademark sense, versus a descriptive, generic, or other sense. Nonetheless, in order to avoid devoting further attention to incurring any expense with respect to this issue, FLIR has taken reasonable steps to avoid any use of the term IR-FUSION in any way that could even be argued to be a trademark use. Specifically, FLIR has taken steps to remove all of the uses on its website of the term IR-FUSION that existed at the time you sent your letter and has taken reasonable steps to recall and avoid further dissemination of any marketing materials that so use the term. We also assure you that although FLIR plans to aggressively promote its own fusion functionality, FLIR has no intention of registering IRFUSION as a trademark or domain name. 2 3 4 5 6 7 8 9 10 (Sachs Decl. at 7.) 11 On August 5, 2010, Sachs sent a second cease-and-desist letter, 12 this time directly to O Brien, indicating Fluke was surprised and 13 disappointed to learn that FLIR [wa]s still using IR Fusion on its 14 website, despite FLIR s prior representations that it would not do 15 so. (Sachs Decl. at 8.) In support of her position, Sachs cited, 16 among other things, a September 1, 2008 press release that appeared 17 to have been posted after O Brien responded to the original cease18 and-desist letter.11 That letter also stated that unless FLIR 19 immediately stopped its infringing use of Fluke s mark, Fluke would 20 consider all legal options. 21 After receiving Sachs August 5, 2010 letter, Davis proposed 22 a 30-day standstill period to Jonathan Graham ( Graham ), who is 23 general counsel to Fluke s parent company, Danaher Corporation.12 At 24 25 26 11 It is not entirely clear when Sachs became aware of the September 1, 2008 press release or any other representative example. 27 12 Danaher Corporation s 28 Page 44 - OPINION AND ORDER general counsel is located in (continued...) 1 that time, however, Graham was not prepared to agree to such a 2 proposal. Most likely, this was due to the fact that Graham was not 3 the one who sent the cease-and-desist letters, nor had he been 4 informed about FLIR s alleged infringement of the IR Fusion mark. 5 Rather, the cease-and-desist letters were sent by Sachs, a partner 6 at Perkins Coie LLP in Seattle, Washington, who, on December 12, 7 2006, was appointed the attorney of record on filed with the United 8 States Patent and Trademark Office ( USPTO ) with respect to Fluke s 9 IR Fusion trademark application. 10 On August 17, 2010, at 11:18 a.m., Davis emailed Graham 11 indicating he needed to speak with him at his earliest convenience. 12 At 1:13 p.m., Graham responded to the email and accompanying voice 13 mail, stating: 14 15 16 17 18 I got ahold of someone who could tell me they are quite confident Fluke is not about to sue F[LIR] imminently, but all learned that [the] people that have details [I] need to respond more thoroughly to the points you made are not available today[.] . . . So I think we can assure you that we are not going to get any perceived first mover advantage and we ll keep i[t] that way until you and I have a conversation in which I am informed by the facts from Fluke s perspective. 19 (Johnson Decl. Ex. 27 at 1.) That same day, Davis sent a letter to 20 Graham, stating: 21 22 23 24 25 While you agreed to attempt to stop the filing of any lawsuit, given the fact that you are out of the country, you could offer no assurance that you would be able to do so. Following our conversation, I discussed the situation with our management and counsel. The fact that you were unaware of Fluke s recent letter and that you could not be certain that you could avoid an impending lawsuit, combined with the rejection of my . . . proposal, do not afford FLIR the comfort we were seeking. According we filed the suit we prepared, naming Fluke and 26 27 12 28 (...continued) Washington, District of Columbia. Page 45 - OPINION AND ORDER 1 2 Sierra as defendants. However, we remain willing to engage with you to resolve this matter through discussions after you have had a chance to investigate the claims between the parties. 3 (Johnson Decl. Ex. 28 at 2.) 4 On November 30, 2010, during a Rule 16 conference, Fluke s 5 counsel informed the Court that (1) it intended to move to dismiss 6 seven of the eight claims asserted by FLIR; and (2) with respect to 7 FLIR s remaining claim (i.e., the declaratory judgment claim 8 regarding the IR Fusion mark), Fluke would file an answer and 9 infringement counterclaim . . . once the motion to dismiss on the 10 other seven claims is . . . decided. (Johnson Decl. Ex. 29 at 3.) 11 That same day, Fluke and Sierra each filed a motion to dismiss. 12 Resolution of Defendants motions to dismiss was delayed, however, 13 after FLIR filed a first amended complaint as a matter of course in 14 December 2010. Once again, Defendants moved to dismiss FLIR s 15 claims on January 27, 2011. Oral argument was held on April 25, 16 2011, and the Court issued its Opinion and Order on May 10, 2011. 17 On May 27, 2011, Fluke filed its answer and counterclaims in 18 accordance with Fluke s counsel s representations during the 19 November 30, 2010 Rule 16 conference. 20 The Ninth Circuit has previously observed that [b]ecause a 21 claim of laches depends on a close evaluation of all the particular 22 facts in a case, it is seldom susceptible of resolution by summary 23 judgment. Couveau v. Am. Airlines, Inc., 218 F.3d 1078, 1083 (9th 24 Cir. 2000). This observation holds true in the present case. FLIR 25 asserts that Fluke knowingly failed to pursue its trademark and 26 unfair competitions claims until May 27, 2011, even though the 27 applicable 2-year laches period had expired on April 15, 2010 (two 28 Page 46 - OPINION AND ORDER 1 years after Fluke mailed the original cease-and-desist letter). 2 FLIR s argument flips the summary judgment standard on its head by 3 taking the evidence in the light most favorable to itself. First, 4 and perhaps most importantly, FLIR s argument fails to take into 5 account the fact that its April 22, 2008 response to Fluke s 6 original cease-and-desist letter could reasonably be interpreted as 7 an agreement to stop all allegedly infringing use. See Bad Boy, 8 Inc. v. Bad Boy Enters., Inc., 1:08-cv-00050 JHL, 2009 WL 4251022, 9 at *5 (E.D. Ark. Nov. 24, 2009) (denying summary judgment on laches 10 defense where parties disputed the message conveyed by their letters 11 regarding a trademark, stating: The fact finder must determine what 12 message was conveyed by the letters between [Defendant] and 13 [Plaintiff] ); see also Liquid Glass Enters., Inc. v. Dr. Ing. 14 h.c.f. Porsche AG, 8 F. Supp. 2d 398, 405-06 (D. N.J. 1998) 15 (concluding that seven year delay was completely excusable where 16 cease-and-desist letters were sent by a party when it became aware 17 of improper advertisements, and the opposing party s response 18 represented that the matter could be solved amicably) (citing E19 Systems, Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir. 1983))). 20 According to Sachs, she accepted and relied on FLIR s 21 representations that it would stop its infringing use in good faith, 22 and with expectation that FLIR would respect Fluke s intellectual 23 property rights in the IR Fusion Mark. 24 (Sachs Decl. ¶ 10.) Second, FLIR s claim that Fluke did not file its counterclaims 25 until nine months after the laches period allegedly ended (i.e., on 26 May 27, 2011, nine months after the 2-year anniversary of the 27 original cease-and-desist letter), is particularly self-serving in 28 light of Fluke s counsel s representations during the November 30, Page 47 - OPINION AND ORDER 1 2010 Rule 16 conference and FLIR s subsequent filing of an amended 2 complaint in December 2010, which necessitated another round of 3 dispositive motions and delayed Fluke s filing of its counterclaims 4 by several months. See generally Becker v. Fitzgerald, No. 94 C 5 7646, 1995 WL 215143, at *2 (N.D. Ill. Apr. 10, 1995) (recognizing 6 that if a motion under Rule 12 has been served, the defendant s 7 single answer is to be made after the ruling on the motion within 8 the limits set by Rule 12(a)(4)(A)). 9 Third, and finally, it is of particular importance that, as of 10 August 2010, FLIR and Fluke were attempting to resolve this matter 11 out of court.13 Cf. Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610 12 F.3d 1171, 1183 (9th Cir. 2010) ( An additional delay of two years 13 ensued before Toyota brought this suit, but during that period the 14 parties were actively seeking to resolve this matter out of court. 15 It was not unreasonable for Toyota to attempt to avoid the expense 16 and inconvenience of a lawsuit. ) 17 In short, viewing the evidence in the light most favorable to 18 Fluke, there is a genuine issue of fact as to whether Fluke filed 19 its trademark and unfair competition claims within the 2-year 20 limitations period. As a result, I cannot conclude that Fluke s 21 delay in bringing its counterclaims was either reasonable, or 22 unreasonable, as a matter of law. FLIR s motion for summary 23 judgment is therefore denied on this ground. See adidas America, 24 Inc. v. Payless Shoesource, Inc., 529 F. Supp. 2d 1215, 1253-54 (D. 25 Or. 2007) (making similar observations). 26 /// 27 28 13 (Pl. s Reply Br. at 8 n.15.) Page 48 - OPINION AND ORDER 1 3. Fluke s Other False Advertising Counterclaims 2 FLIR moves the Court for an ordering granting it summary 3 judgment on Fluke s false advertising counterclaims based on (1) 4 FLIR s use of the terms IR Fusion and fusion in its advertisements; 5 and (2) two FLIR power point presentations and two similar 6 advertisements, the banana advertisment and the 12 Things 7 promotional literature. As a preliminary matter, I have already 8 concluded that there are issues of fact regarding the validity of 9 Fluke s mark and the applicability of laches. Thus, FLIR is not 10 entitled to summary judgment on the basis of either the validity of 11 the Fluke s mark, nor laches. 12 a. FLIR s Use of the Terms IR Fusion and Fusion in its Advertisements 13 FLIR claims that Fluke has no evidence that its use of terms 14 IR Fusion and fusion in advertisements that plainly identify FLIR 15 as the source of the advertised products, and do not mention Fluke, 16 are false and misleading. FLIR also argues that Fluke has no expert 17 testimony, including no consumer surveys or other extrinsic 18 evidence, to support its contention that FLIR s advertisements are 19 false and misleading with respect to whether FLIR or Fluke is the 20 source of the fusion functionality available on FLIR thermal imaging 21 cameras. 22 These arguments miss the mark. As discussed above, literal 23 falsity is a question of fact, and summary judgment is inappropriate 24 where sufficient evidence exists to permit a juror to conclude that 25 an advertisment is literally false. See Southland Sod, 108 F.3d at 26 1146 (reversing summary judgment where a reasonable juror could 27 conclude advertisements were literally false); see also Time Warner, 28 Page 49 - OPINION AND ORDER 1 497 F.3d at 157 ( When an advertisement is shown to be literally or 2 facially false, consumer deception is presumed, and the court may 3 grant relief without reference to the advertisement s actual impact 4 on the buying public. ) 5 With this in mind, Fluke s trademark-related false advertising 6 counterclaim is predicated upon its contention that FLIR is falsely 7 representing that its product has certain qualities that it in fact 8 does not actually have (i.e., fusion functionality equivalent to 9 that of IR Fusion). See generally Rhone-Poulenc, 93 F.3d at 516 10 (recognizing that an advertisement can be literally false if it 11 falsely represents that the product has certain qualities that it 12 does not actually have). According to Fluke s counsel, as Fluke 13 and FLIR s separate patents indicate, each company s respective 14 feature is not the same. (Fluke s Resp. Opp n at 30.) FLIR 15 counters by arguing that Fluke has made no showing that any FLIR 16 advertisement falsely states that they include Fluke s, rather than 17 FLIR s, fusion functionality. However, this does not alleviate my 18 concern that FLIR s use of the term IR Fusion, which may or may not 19 be a valid mark, could necessarily falsely imply that FLIR s cameras 20 possess the same fusion functionality as Fluke s cameras. 21 therefore deny FLIR s motion for summary judgment on I Fluke s 22 trademark-related false advertising counterclaim on this ground as 23 well. 24 In a footnote in its reply brief, FLIR argued that expert 25 reports on which Fluke relies, including the report of Fluke s 26 damages expert, Serena Morones, were not signed under oath, and thus 27 are inadmissible. I overrule FLIR s objections as moot because the 28 evidence objected to was not considered and Fluke avoids this motion Page 50 - OPINION AND ORDER 1 for summary judgment without consideration of this evidence. No 2 implications may be drawn regarding the use of the evidence at 3 trial. 4 b. FLIR s Two PowerPoint Presentations, the Banana Advertisement and the 12 Things Promotional Literature 5 FLIR argues it is entitled to summary judgment on Fluke s 6 false advertising claims regarding two FLIR PowerPoint presentations 7 and two similar advertisements, the banana advertisment and the 8 12 Things promotional literature, because Fluke cannot show any 9 compensable injury resulting from such advertisements. Paragraphs 10 38 and 39 of Fluke s counterclaims against FLIR concern the two 11 PowerPoint presentations that are allegedly false. Those paragraphs 12 provide: 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 38. F[LIR] s misrepresentations are not limited to its own thermal imaging cameras. In a customer-directed presentation entitled Why Flir for Architectural Testing, F[LIR] states that the file format for images captured with the Fluke Ti32 camera is proprietary and that the Fluke Ti32 camera does not have an insulations alarm. Both statements are false. Fluke s thermal imaging cameras also capture images in a non-proprietary bitmap format and have an insulations alarm. Furthermore, in a series of images taken in a dimly-lit room, F[LIR] asserts that a dark thermal image (contrasted with a bright thermal image captured with the Flir b60 camera) was captured by a Fluke thermal imaging camera when it was not. 39. In another consumer-directed presentation entitled T-Series Line Up, Comparison to the Fluke Ti32, Flir states that the Ti32 camera s manual focus will result in blurry images. This statement is false and misleading, since clear images are routinely captured with Fluke s manual focus. Furthermore, on a slide entitled F[LIR] Has a Lamp, Fluke Does Not!, F[LIR] states that without a lamp the Fusion feature is rendered useless in poorly lit areas! F[LIR] then asserts through the use of side-by-side images that a F[LIR] camera captured bright thermal images while a Fluke camera captured dark images. But the assertion is false the dark images portrayed in the presentation are in a square format that could not have been taken by a Fluke thermal imaging camera, which captures images in a Page 51 - OPINION AND ORDER 1 2 3 4 5 landscape format. Finally, F[LIR] states in a slide entitled F[LIR] Has Radiometric JPEG, Fluke Does Not!, that Fluke s software has to be installed on each computer to view the images. F[LIR] also makes the same statement in an advertisement for its i-series thermal imaging cameras. These statements are false and misleading because images are captured on Fluke s thermal imaging cameras in a bitmap standard format that does not require the installation of Fluke s software on each computer in order to view the images. 6 (Fluke s Answer and Countercls. at 24-25.) 7 Paragraphs 40 and 41 of Fluke s counterclaims against FLIR 8 concern the so-called banana advertisement and 12 Things 9 promotional literature. Those paragraphs provide: 10 11 12 13 14 15 40. F[LIR] has also used false and misleading marketing materials at trade shows. In one such instance, F[LIR] sales representatives affixed yellow banana cartoons on actual yellow bananas (clearly referring to Fluke s distinctive yellow trade dress) that include a badge across the body of the cartoon stating Drop Proof and a dialogue bubble stating I cannot measure, but you can drop me. This tasteless marketing piece s assertion that Fluke thermal imaging cameras cannot measure is false and misleading, since Fluke s thermal imaging cameras can indeed measure. 16 17 18 19 20 41. Finally, although all thermal imaging cameras have temperature accuracy variations, F[LIR] s advertisement entitled 12 Things to Know Before Buying an Infrared Camera falsely claims that unless a thermal imaging camera offers a temperature accuracy specification that is consistent with those of F[LIR] s cameras, [y]our images and temperature measurements will be wrong. 21 (Fluke s Answer and Countercls at 25.) 22 FLIR s only argument with respect to the two PowerPoint 23 presentations, the banana advertisement and the 12 Things 24 promotional literature is that Fluke has no evidence that it has 25 suffered any injury from those allegedly false advertisements, which 26 in turn entitles FLIR to summary judgment. Upon review, I conclude 27 that FLIR has not met its burden of establishing the absence of a 28 genuine issue of material fact. Page 52 - OPINION AND ORDER Cf. Southland Sod, 108 F.3d at 1 1145-46 (recognizing that an inability to show actual damages does 2 not alone preclude recovery, nor does it warrant the grant of 3 summary judgment, because the preferred approach allows the 4 district court in its discretion to fashion relief, including 5 monetary relief, based on the totality of the circumstances. ) 6 Accordingly, I deny FLIR s motion for summary judgment on Fluke s 7 counterclaims based on the FLIR s two PowerPoint presentations, the 8 banana advertisement and the 12 Things promotional literature. 9 IV. CONCLUSION 10 Consistent with the discussion above, Fluke s motion (Docket 11 No. 177) for summary judgment on its counterclaim for false 12 advertising is DENIED; Fluke s motion (Docket No. 178) for summary 13 judgment on FLIR s claims for false advertising, trade libel/ 14 commercial disparagement and civil conspiracy is GRANTED in part and 15 DENIED in part; Sierra s motion (Docket No. 175) for summary 16 judgment is GRANTED in its entirety; and FLIR s motion (Docket No. 17 176) for summary judgment is DENIED in its entirety. 18 IT IS SO ORDERED. 19 Dated this 9 day of October, 2012. 20 /s/ Dennis J. Hubel _________________________________ DENNIS J. HUBEL United States Magistrate Judge 21 22 23 24 25 26 27 28 Page 53 - OPINION AND ORDER

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