Incontestable Trademark Newsletter - March 2010

Profession:Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
 
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Civil Cases

Doctor's Assocs., Inc. v. QIP Holders LLC, 2010 WL 669870 (D. Conn. Feb. 19, 2010) by Danny Awdeh

ABSTRACT

Subway brought false-advertising claims based on a series of commercials run by Quiznos, which claimed that Quiznos sandwiches had double the amount of meat of Subway sandwiches. Quiznos moved for summary judgment, arguing that the evidence showed that the claims in its advertisements were not false or misleading. After an intensive inquiry into the factual bases for Quiznos' double-meat claims, including analyses of studies commissioned by Quiznos to back up its claims, the court declined to grant summary judgment, citing numerous disputes of material fact as to the truth or falsity of Quiznos' claims. Among other things, the court noted an audit showing that some Quiznos sandwiches contained less meat than its internal guidelines dictated, and noted that Quiznos' commercials and market study omitted the fact that the comparison Subway sandwiches are available with a double portion of meat.

CASE SUMMARY

FACTS

In 2006, Defendants QIP Holders LLC and iFilm Corp. (collectively "Quiznos") launched an advertising campaign promoting its new line of "double meat" sandwiches. As part of that campaign, Quiznos aired television commercials claiming that its "Prime Rib Cheesesteak" and "Ultimate Italian" sandwiches have twice the meat of comparable sandwiches offered by plaintiff Doctor's Associates, Inc. ("Subway"), its competitor.

The Prime Rib Commercials

Quiznos' commercials for its "Prime Rib Cheesesteak" (the "Prime Rib Commercials") depicted its Prime Rib and Subway's "Cheesesteak" sandwiches side-by-side with consumers commenting on the quantity of meat in each. The commercials displayed the text: "Quiznos New Prime Rib Cheesesteak v. Subway Cheesesteak . . . Only Quiznos has real Prime Rib. And more than 2x the meat."

Quiznos based its "2x the meat" claim in the Prime Rib Commercials on, among other things, the parties' sandwich "specifications." According to Quiznos, the specifications for its sandwich call for 5.0 oz. of meat, while Subway's specifications call for less than 2.5 oz. Before airing the commercials, Quiznos conducted an audit of its stores, which revealed that 94% of its franchisees were making sandwiches containing at least 4.0 oz. of meat—twice the amount in Subway's sandwiches according to Quiznos.

The Ultimate Italian Commercials

In 2007, Quiznos aired television commercials comparing Quiznos' "Ultimate Italian" and Subway's "Italian BMT" sandwiches (the "Ultimate Italian Commercials"). Similar to the Prime Rib Commercials, the Ultimate Italian Commercials displayed the text: "Quiznos New Ultimate Italian v. Subway's Italian BMT. The Quiznos has 2x the meat . . . Based upon average precooked weight, in an independent national sampling of Quiznos small Ultimate Italian v. Subway regular 6-inch Italian BMT. Sandwich prices differ." (emphasis added.) The specifications for Quiznos' Ultimate Italian call for 5.0 oz. of meat, while Subway's specifications call for 2.25 oz.

Before airing its commercials, Quiznos retained Guideline, Inc., a survey firm, to measure the meat in Quiznos' Ultimate Italian and Subway's Italian BMT sandwiches at various stores (the "Guideline Study"). The Guideline Study found that on average, the meat in Quiznos' small Ultimate Italian weighed 4.82 oz., while the meat in Subway's 6-inch Italian BMT weighed only 2.35 oz.

ANALYSIS

This decision addressed Quiznos' motion for summary judgment on Subway's false-advertising claims. To prevail on its false-advertising claims, Subway had to prove that Quiznos' Prime Rib and Ultimate Italian Commercials were either (1) literally false, or (2) likely to mislead and confuse consumers. For ads based on test results, literal falsity may be established by proving that those results are not sufficiently reliable.

Quiznos moved for summary judgment as to the Prime Rib Commercials by arguing that those ads were true because the Quiznos Prime Rib sandwich actually contained two times as much meat as the Subway Cheesesteak sandwich. Because the Prime Rib Commercials did not rely on test results, the court required Subway to prove that Quiznos' claims are literally false. Recognizing at least the following disputed issues of material fact, however, the court declined to rule on Quiznos' summary judgment motion. First, the court noted that "field checks" of the Prime Rib meat portions at 651 Quiznos stores revealed that 27.65% of those stores failed to meet Quiznos' 5 oz. standard, and 10.29% made sandwiches with less than 4 oz. of meat. Second, Subway's sandwiches are available with a double portion of meat, but Quiznos' commercials addressed only the single-portion serving. Third, Subway's Cheesesteak sandwich was no longer offered during the time the Prime Rib Commercials were aired. Instead, Subway was offering a 6-inch "Steak and Cheese" sandwich with 2.5 oz. of meat, which could be doubled to 5 oz.

Unlike the Prime Rib Commercials, the Ultimate Italian Commercials made claims based on test results, namely, the Guideline Study. Subway argued that there were disputes of material fact because the claim in the Ultimate Italian Commercial that the Quiznos Ultimate Italian sandwich contains two times the meat of Subway's Italian BMT was literally false because Subway always offered a double portion of meat on its Italian BMT, and because Quiznos offered a Classic Italian sandwich with a single portion of meat to which Quiznos could have compared Subway's Italian BMT. The court decided that the issue was not ripe for summary judgment. Specifically, the court noted that even though the Guideline Study supported Quiznos' "2x the meat" claim with respect to Subway's single-meat serving, it did not address whether the claim was true for Subway's double-meat portion.

CONCLUSION

This decision serves as a good example of the fact-intensive inquiry that a court may undertake in false-advertising cases, and suggests that some claims may not be decided short of a jury trial. The case is also important because it offers further insight into how tests and surveys may be scrutinized by the court in assessing the alleged truth of advertised claims.

Gallup, Inc. v. Bus. Research Bureau (Pvt.) Ltd., 2010 WL 545857 (N.D. Cal. Feb. 11, 2010) by Naresh Kilaru

ABSTRACT

Following the republication of public opinion polls of the Pakistani national election by independent U.S. news organizations, which had been published by Pakistani polling company Gallup Pakistan on its website at www.gallup.com.pk, U.S.-based Gallup filed a trademark-infringement action against Gallup Pakistan. Finding that the Pakistani defendant had no business presence in the United States, did not sell or advertise any services in the United States, and that its activities were wholly extraterritorial, the district court denied plaintiff's summary judgment motion for lack of subject matter jurisdiction. The district court also emphasized that granting the relief requested by the plaintiff raised issues of comity as the parties were involved in a contemporaneous trademark dispute in Pakistan over the same mark.

CASE SUMMARY

FACTS

Plaintiff Gallup, Inc. ("Gallup"), the well-known U.S.-based market research and public opinion polling company, has used the GALLUP mark for its public opinion polling services for more than 70 years and owns numerous U.S. registrations therefor. The defendants ("Gallup Pakistan") run a public opinion polling service that has operated in Pakistan under the trade name GALLUP PAKISTAN for more than 30 years. Gallup Pakistan operates an English-language website at the URL www.gallup.com.pk, which is accessible in the United States and prominently displays the GALLUP PAKISTAN mark.

Gallup Pakistan is a member of the Zurich-based Gallup International Association ("GIA"), an international polling organization with more than 60 member agencies around the world. While GIA and the plaintiff were both founded by the same individual (Dr. George Gallup), the two organizations are otherwise unrelated and are involved in ongoing trademark disputes around the world.

In early 2008, following Gallup Pakistan's publication on its website of the results of six Pakistani public opinions polls regarding the Pakistan national election, thirteen major news organizations, including the New York Times, Reuters, and Time, republished the Pakistani polling results in the United States. Two of the articles inaccurately attributed the poll results to "Gallup."

Gallup filed suit in the United States for trademark infringement alleging a violation of its trademark rights based upon: (1) Gallup Pakistan's use of the GALLUP mark on its English-language website; and (2) Gallup Pakistan's use of the GALLUP mark in connection with its polling and survey results as published in the United States. Gallup sought to enjoin Gallup Pakistan's use of the GALLUP mark in the United States and its operation of an English-language website at www.gallup.com.pk .

Gallup Pakistan filed an answer and a motion to dismiss for lack of subject matter jurisdiction. The court initially denied the motion to dismiss, finding that the complaint alleged sufficient acts within the United States to warrant the exercise of subject matter jurisdiction. However, after Gallup filed a motion for summary judgment on its trademark-infringement claims, the court revisited the issue of subject matter jurisdiction in light of the factual evidence presented by both parties.

ANALYSIS

Courts in the Ninth Circuit must consider three factors in determining whether to extend the Lanham Act's jurisdictional reach over extraterritorial activities: (1) whether the extraterritorial...

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