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Money4Nothing, falsity for free

By Rebecca Tushnet

Green Bullion Financial Services, LLC v. Money4Gold Holdings, Inc., 2009 WL 1758728 (S.D. Fla.)

Plaintiff does a good business as Cash4Gold. It spent a bunch of money building a brand, but a descriptive name and a difficulty showing secondary meaning at the time of defendants? actions prevented it from succeeding on its trademark claims, as detailed here. (Its copyright claims also failed). Many of defendants? internet ad banners and logos ?took Plaintiff?s advertising efforts and brand and attributed them to Defendant. For example, one advertisement on Google placed on behalf of Defendant asked whether consumers had seen Defendant's Super Bowl commercial. Defendant, however, did not run an ad during the Super Bowl, but Plaintiff did. Other websites placed by Defendant?s sub-affiliates directly stole Plaintiff?s operating name and logo. Clicking on these sites would direct consumers to Defendant?s website.?

I find it interesting that this intentional copying didn?t support at least a finding of secondary meaning in the logo at the time of the copying.

Anyway, plaintiff tried to get around the trademark problem by pleading false advertising. The ?See our Super Bowl Ad?? ads were literally false, as were the ads containing plaintiff?s name, Cash4Gold, because they ?impl[ied]? (necessarily) that plaintiff was the operator of the advertised sites. And because of the literal falsity, consumer deception could be presumed.

The hangup was one of the substantial differences between modern trademark law and false advertising law: materiality. A trademark plaintiff doesn?t have to show that confusion was material; a false advertising plaintiff does. And because materiality would have come from secondary meaning?a consumer?s expectation of doing business with the entity known as Cash4Gold?failure to show secondary meaning left plaintiff with no evidence of materiality.

I note that ?As Seen on TV? has been found to be material in other cases, though secondary meaning was not separately litigated. Telebrands Corp. v. Wilton Indus., Inc., 983 F. Supp. 471, 475 (S.D.N.Y. 1997); Project Strategies Corp. v. National Comms. Corp., 1995-2 Trade Cas. (CCH) P 71,181 (E.D.N.Y. Oct. 27, 1995) (finding statement material because it was likely to cause consumers to identify defendant?s product with plaintiff?s, which actually had been advertised on television).

Separate from the trademark issue, one could argue, using fairly standard economic theories of advertising, that ?as seen on TV? is material in itself because it indicates a sort of reproductive fitness: this company is successful enough to advertise on TV, and thus is not a fly-by-night operation. (Indeed, the court notes in its recitation of the facts how unusual it is for a new company to be able to afford a Superbowl ad.) Consumers may be reassured by national TV advertising and use it as a factor in determining whether to do business with the company. See, e.g., Lillian R. BeVier, Competitor Suits for False Advertising Under Section 43(a) of the Lanham Act: A Puzzle in the Law of Deception, 78 VA. L. REV. 1, 10 (1992) (explaining the economic theory according to which advertisers use the high costs of advertising to signal consumers that their products are good and successful); Jean Wegman Burns, Confused Jurisprudence: False Advertising Under the Lanham Act, 79 B.U. L. REV. 807, 827 & n.88 (1999) (same).

The court evidenced some displeasure with the defendants? conduct and with the parties? presentation of the case, signalling that it might be favorable to a return by the plaintiff, with better evidence.

Full post as published by 43(B)log on June 26, 2009 (boomark / email).