Groupe SEB USA, Inc. v. Euro-Pro Operating LLC , 774 F.3d 192 ( 2014 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______
No. 14-2767
______
GROUPE SEB USA, INC.
v.
EURO-PRO OPERATING LLC.,
Appellant
______
On Appeal from United States District Court
for the Western District of Pennsylvania
(W.D. Pa. No. 2-14-cv-00137)
Magistrate Judge: Honorable Cynthia R. Eddy
______
Argued September 9, 2014
Before: FISHER, JORDAN and HARDIMAN, Circuit
Judges
(Filed: December 17, 2014)
Roger A. Colaizzi, Esq. (ARGUED)
Christopher S. Crook, Esq.
Venable
575 7th Street, N.W.
Washington, DC 20004
Mark A. Grace, Esq.
Cohen & Grace
105 Braunlich Drive
Suite 300
Pittsburgh, PA 15237
Randall K. Miller, Esq.
Venable
8010 Towers Crescent Drive
Suite 300
Vienna, VA 22182
Counsel for Appellant
Gretchen L. Jankowski, Esq. (ARGUED)
Mackenzie A. Baird, Esq.
Jordan M. Webster, Esq.
Buchanan Ingersoll & Rooney
301 Grant Street
One Oxford Centre, 20th Floor
Pittsburgh, PA 15219
Counsel for Appellee
2
______
OPINION OF THE COURT
______
FISHER, Circuit Judge
In this false advertising case, Euro-Pro Operating, LLC
(“Euro-Pro”) appeals the District Court’s order granting a
motion for a preliminary injunction brought by Groupe SEB
USA, Inc. (“SEB”). The District Court found that two
advertising claims on Euro-Pro’s steam irons likely violated
section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and
enjoined Euro-Pro from using those claims. Euro-Pro raises
several issues on appeal, but we principally consider how
courts should interpret an advertising claim when the
packaging or label unambiguously defines a claim term. The
District Court decided that the packaging’s definition of a
claim term applies to the claim’s explicit message. Based on
this decision, the District Court disregarded consumer survey
evidence offering alternative meanings for the claim term.
We agree with the District Court and find its approach firmly
based in false advertising law and logic. And because we
conclude that the District Court did not otherwise abuse its
discretion in granting the preliminary injunction, we will
affirm.
3
I.
A.
SEB distributes and sells various household consumer
products under several brand names throughout the country.
This case involves SEB’s electric steam irons sold under the
Rowenta brand name, namely the Rowenta Focus, Model No.
DW5080 (“Rowenta DW5080”), and the Rowenta Steamium,
Model No. DW9080 (“Rowenta DW9080”). Euro-Pro
manufactures, markets, and distributes kitchen and household
appliances. It sells these products under the Shark brand
name. The dispute here arises from advertising claims on the
packaging of two Shark steam irons, the Shark Professional,
Model No. GI405-55 (“Shark 405”), and the Shark Ultimate
Professional, Model No. GI505-55 (“Shark 505”).
The Shark 405 packaging includes two advertising
claims. First, text on the bottom right of the front packaging
asserts that the Shark 405 offers “MORE POWERFUL
STEAM vs. Rowenta®†† at half the price.” J.A. at A3, A805.
The “††” characters refer to a fine-print footnote on the
bottom of the packaging, which states that the claim is
“††[b]ased on independent comparative steam burst testing to
Rowenta DW5080 (grams/shot).” Id. Text on the top right of
the front packaging also asserts that the Shark 405 delivers
“#1 MOST POWERFUL STEAM*.” Id. Again, there is a
fine-print reference to this claim on the bottom of the
packaging that states the Shark 405 “*[o]ffers more grams per
minute (maximum steam setting while bursting before water
4
spots appear) when compared to leading competition in the
same price range, at time of printing.” Id. The Shark 505
packaging makes substantially the same claims.1
Additionally, both the Shark 405 and the Shark 505
include hang tags on the steam irons for store displays. The
hang tags claim that the Shark steam irons deliver “MORE
POWERFUL STEAM vs. Rowenta . . . at half the price.”
J.A. at A4. The hang tags also include a reference stating that
the claim is “[b]ased on independent comparative steam burst
testing” to the respective Rowenta steam irons in
“(grams/shot).” Id.SEB first learned of the comparative advertising
claims on the Shark steam irons in October 2013. Soon
thereafter, SEB directed its internal laboratory to conduct
testing to determine whether the claims were true. The lab
ran tests comparing the Shark 505 and the Rowenta DW9080.
The tests measured (1) the variable steam rate in grams per
minute according to International Electrical Corporation
(“IEC”) 60311 protocol and (2) the mass of a shot of steam in
1
The Shark 505 packaging makes the same claims as
the Shark 405 packaging, but the corresponding references
are slightly different. With respect to the first claim, the
Shark 505 packaging states in fine print that it is Ҡ[b]ased on
independent comparative steam burst testing to Rowenta
DW9080 (grams/shot).” J.A. at A4, A806. The second
reference, which relates to the “#1 MOST POWERFUL
STEAM” claim, states that it “*[o]ffers more grams per
minute (extended steam burst mode before water spots
appear) when compared to leading competition in the same
price range, at time of printing.” Id.5
grams per shot according to IEC 60311 protocol.2 The test
results showed that the Rowenta DW9080 performed the
same as the Shark 505 in terms of variable steam rate in
grams per minute, with both measuring 37 grams per minute.
In the test measuring grams per shot of steam, the Rowenta
DW9080 outperformed the Shark 505, with measurements of
1.34 grams per shot and 1.00 grams per shot, respectively.
Because SEB’s internal test results were inconsistent
with the Shark advertising claims, SEB commissioned SLG
Prüf- und Zertifizierungs GmbH (“SLG”), an independent
laboratory based in Germany, to conduct independent tests
based on the Shark claims. SLG tested three steam irons of
each model in accordance with IEC 60311 protocol, and it
delivered its findings to SEB in a comprehensive thirty-eight
page report (“SLG Test Report”). The SLG Test Report
showed that the Rowenta DW5080 and the Rowenta DW9080
outperformed the Shark 405 and the Shark 505, respectively,
in terms of grams per minute. For the test measuring steam
power in grams per shot, the SLG Test Report showed that
two of the three Shark 405 steam irons performed worse than
all three Rowenta DW5080 steam irons, but one Shark 405
steam iron outperformed all three Rowenta DW5080 steam
irons. The Rowenta DW5080’s average performance was
2
As the District Court found, the IEC is the leading
“international standards organization that prepares and
publishes international standards for all electrical,
electronic[,] and related technologies, collectively known as
‘electrotechnology.’” J.A. at A5. The IEC standards for
steam irons are laid out in IEC 60311.
6
higher than the Shark 405’s average performance.3 The SLG
Test Report also showed that two of the three Rowenta
DW9080 steam irons performed better in grams per shot than
all three Shark 505 steam irons, and one Rowenta DW9080
performed worse than all three Shark 505 steam irons. The
Rowenta DW9080’s average performance was higher than the
Shark 505’s average performance.
B.
On January 29, 2014, SEB filed a complaint in the
United States District Court for the Western District of
Pennsylvania, asserting claims for false advertising under the
Lanham Act, 15 U.S.C. § 1125(a), and for unfair competition
under Pennsylvania common law. The following day, SEB
moved for a preliminary injunction to enjoin Euro-Pro from
making the claims on the Shark 405 and the Shark 505.
The District Court held an evidentiary hearing on
March 19, 2014, to address SEB’s motion for a preliminary
3
The District Court’s factual finding to the contrary
was clearly erroneous. The District Court miscalculated the
average performance of the Shark 405 in terms of grams per
shot and incorrectly stated that the Shark 405’s average
performance was slightly higher than the Rowenta DW5080’s
average performance. The three Rowenta DW5080 steam
irons that were tested produced averages of 1.30, 1.25, and
1.07 grams per shot, yielding a combined average of 1.207.
J.A. at A7, A617. The three Shark 405 steam irons that were
tested produced averages of 1.49, 0.96, and 1.02 grams per
shot, yielding a combined average of 1.157, not 1.217 as the
District Court found. J.A. at A7, A619.
7
injunction.4 At the hearing, SEB introduced the
aforementioned internal test results and the independent SLG
Test Report to show that the claims on the Shark steam irons
are false. Euro-Pro introduced testimony and a study from its
scientific expert, Dr. Abid Kemal (collectively referred to as
the “Kemal Report”). According to the Kemal Report, steam
power is the kinetic energy of a steam burst divided by the
duration of the burst. Using this measurement for steam
power, the Kemal Report showed that the Shark 405 and the
Shark 505 deliver more powerful steam than the Rowenta
DW5080 and the Rowenta DW9080, respectively. The
Kemal Report also showed that “the mass of a shot of steam
expelled from [the Shark steam irons] is comparable to the
mass of a shot of steam (grams/shot) expelled from [the
respective Rowenta steam irons].” J.A. at A909.
Additionally, Euro-Pro introduced a consumer survey report
prepared by Dr. Gary Ford (“the Ford Survey”) showing that
consumers do not have a uniform understanding of the
meaning of the phrase “more powerful steam.”
The District Court also heard testimony from SEB’s
marketing director, Scott Pollard, about the harm to the
Rowenta brand caused by the Shark claims. Pollard testified
that SEB had invested substantial resources to promote
Rowenta as the best brand of steam irons in the eyes of
retailers and consumers. According to Pollard, the direct
reference to Rowenta on the lower-priced Shark steam irons
likely would erode the Rowenta brand’s reputation in the eyes
of retailers, current consumers, and future consumers.
4
The matter was resolved by a United States
magistrate judge by consent of the parties, pursuant to 28
U.S.C. § 636(c)(1).
8
The District Court granted SEB’s preliminary
injunction motion. The District Court first concluded that
SEB established a likelihood of success on the merits because
it demonstrated that the Shark claims are literally false. The
District Court next found that SEB had successfully
demonstrated a likelihood of irreparable harm in the absence
of preliminary relief, relying in large part on Pollard’s
testimony about the impact on the reputation of the Rowenta
brand and on SEB’s goodwill. Finally, the District Court
concluded that the balance of harms and the public interest
favored granting the preliminary injunction. Notably, the
preliminary injunction required Euro-Pro to place stickers
over the claims on the Shark packaging and remove the hang
tags from the steam irons.
Euro-Pro filed this timely appeal on May 15, 2014.
Euro-Pro filed motions to stay the preliminary injunction in
the District Court and in this Court, but both motions were
denied.
9
II.
The District Court had jurisdiction under 28 U.S.C.
§§ 1331 and 1367. We have jurisdiction over the appeal from
the order granting the preliminary injunction pursuant to 28
U.S.C. § 1292(a)(1). “We review an order granting a
preliminary injunction for abuse of discretion, the factual
findings for clear error, and the determinations of questions of
law de novo.” Zambelli Fireworks Mfg. Co. v. Wood, 592
F.3d 412, 418 (3d Cir. 2010) (internal quotation marks and
citation omitted). We review the details of equitable relief for
abuse of discretion. Anderson v. Davila, 125 F.3d 148, 159
(3d Cir. 1997).
III.
“A preliminary injunction is an extraordinary remedy
never awarded as of right.” Winter v. Natural Res. Def.
Council, Inc., 555 U.S. 7, 24 (2008). Awarding preliminary
relief, therefore, is only appropriate “upon a clear showing
that the plaintiff is entitled to such relief.” Id. at 22. “A
plaintiff seeking a preliminary injunction must establish that
he is likely to succeed on the merits, that he is likely to suffer
irreparable harm in the absence of preliminary relief, that the
balance of equities tips in his favor, and that an injunction is
in the public interest.” Id. at 20.
On appeal, Euro-Pro challenges the District Court’s
conclusions on the first and second factors in the preliminary
injunction test: first, that SEB established a likelihood of
success on the merits; and second, that SEB showed a
likelihood of irreparable harm without preliminary relief.
Euro-Pro also contends that the District Court’s injunction
violates the First Amendment and is overbroad.
10
A.
SEB brought its false advertising claims pursuant to
the Lanham Act and Pennsylvania common law. Section
43(a) of the Lanham Act provides in pertinent part:
(1) Any person who, on or in connection with any
goods or services, or any container for goods, uses in
commerce any word, term, name, symbol, or device, or
any combination thereof, or any false designation of
origin, false or misleading description of fact, or false
or misleading representation of fact, which—
...
(B) in commercial advertising or promotion,
misrepresents the nature, characteristics,
qualities, or geographic origin of his or her or
another person’s goods, services, or commercial
activities,
shall be liable in a civil action by any person who
believes that he or she is or is likely to be damaged by
such act.
15 U.S.C. § 1125(a)(1)(B).
To establish a claim for false advertising, a Lanham
Act plaintiff must prove five elements:
1) that the defendant has made false or misleading
statements as to his own product [or another’s]; 2) that
there is actual deception or at least a tendency to
11
deceive a substantial portion of the intended audience;
3) that the deception is material in that it is likely to
influence purchasing decisions; 4) that the advertised
goods traveled in interstate commerce; and 5) that
there is a likelihood of injury to the plaintiff in terms
of declining sales, loss of good will, etc.
Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., 653 F.3d
241, 248 (3d Cir. 2011) (alteration in original) (quoting
Warner-Lambert Co. v. Breathasure, Inc., 204 F.3d 87, 91–92
(3d Cir. 2000)).5
A plaintiff can prevail in a false advertising action if it
proves that the advertisement “is either (1) literally false or
(2) literally true or ambiguous, but has the tendency to
deceive consumers.” Novartis Consumer Health, Inc. v.
Johnson & Johnson-Merck Consumer Pharm. Co., 290 F.3d
578, 586 (3d Cir. 2002). Proof of literal falsity relieves the
plaintiff of its burden to prove actual consumer deception. Id.Here, the only dispute is whether the Shark claims are
literally false.
“A determination of literal falsity rests on an analysis
of the message in context.” Johnson & Johnson-Merck
Consumer Pharm. Co. v. Rhone-Poulenc Rorer Pharm., Inc.,
19 F.3d 125, 129 (3d Cir. 1994). In deciding whether an
advertising claim is literally false, a court must decide first
whether the claim conveys an unambiguous message and
5
On appeal, the parties do not dispute the District
Court’s determination that a false advertising action under
Pennsylvania common law is identical to claims under the
Lanham Act, except there is no interstate commerce element
under Pennsylvania law.
12
second whether that unambiguous message is false. Novartis,
290 F.3d at 586. “A ‘literally false’ message may be either
explicit or ‘conveyed by necessary implication when,
considering the advertisement in its entirety, the audience
would recognize the claim as readily as if it had been
explicitly stated.’” Id. at 586–87 (quoting Clorox Co. P.R. v.
Proctor & Gamble Commercial Co., 228 F.3d 24, 35 (1st Cir.
2000)). Unless the claim is unambiguous, however, it cannot
be literally false. Id. at 587. “‘The greater the degree to
which a message relies upon the viewer or consumer to
integrate its components and draw the apparent conclusion . .
. the less likely it is that a finding of literal falsity will be
supported.’” Id. (quoting United Indus. Corp. v. Clorox Co.,
140 F.3d 1175, 1181 (8th Cir. 1998)). We review a district
court’s findings that an advertising claim is unambiguous and
literally false for clear error. See id. at 589.
The District Court analyzed the two advertising claims
at issue separately. It first determined that Euro-Pro’s claim
that the Shark steam irons offer “MORE POWERFUL
STEAM vs. Rowenta” is unambiguous. The District Court
found that the footnote reference to this claim governs the
claim’s meaning, as the packaging explicitly claims that the
Shark steam irons offer more powerful steam measured in
grams per shot than the respective Rowenta steam irons. The
District Court also determined that the “#1 MOST
POWERFUL STEAM” claim is unambiguous but for
different reasons. Recognizing that the reference to this claim
explicitly restricts the claim to comparisons to steam irons in
the same price range and that Rowenta steam irons are in a
higher price range, the District Court still found an
unambiguous message of superiority over Rowenta steam
irons conveyed by necessary implication due to the claim’s
13
close proximity to the “MORE POWERFUL STEAM vs.
Rowenta” claim.
With respect to the question of falsity, the District
Court found that both claims are false because all the
scientific evidence that measured steam power in grams per
shot and grams per minute—the measurements for steam
power provided on the Shark packaging—disproved Euro-
Pro’s claims of superiority over Rowenta.6 The District Court
rejected Euro-Pro’s scientific evidence, the Kemal Report, as
irrelevant because it did not measure steam power in grams
per shot or grams per minute. The District Court also
observed that Euro-Pro failed to come forward with any other
evidence that actually supported its claims.
1.
We agree with the District Court that the “MORE
POWERFUL STEAM vs. Rowenta” claim is unambiguous.
When a product’s packaging includes an advertising claim
and unambiguously defines a claim term, the packaging’s
definition of the claim term applies to the claim’s explicit
message. As explained below, we think this rule is consistent
with false advertising law and common sense.
In certain cases, determining the message conveyed by
a claim is a simple exercise because the claim is explicit and
unambiguous. See Novartis, 290 F.3d at 586. And so it is
here. To make something explicit is to state it clearly and
precisely. Therefore, when Euro-Pro took the affirmative
6
As previously mentioned, the District Court
incorrectly stated that the SLG Test Report showed that the
Shark 405’s average performance in grams per shot was
higher than the Rowenta DW5080’s average performance in
grams per shot. The record shows that the opposite was true.
14
step to include a reference on the Shark packaging that clearly
defined the key term in its claim—that steam power is
measured in grams per shot—it made an explicit claim. The
claim is also unambiguous because grams per shot is a unit of
measurement provided by the IEC, the leading independent
publisher of standards for electrotechnology, including steam
irons. Thus, there is no “‘apparent conclusion’” to be drawn
about this claim’s meaning, id. at 587 (quoting United Indus.,
140 F.3d at 1181), nor is its meaning “balanced between
several plausible meanings,” Clorox Co. P.R., 228 F.3d at 35.
There is only one available conclusion and only one plausible
meaning—the claim means exactly what the reference on the
packaging says it does.
Moreover, as we previously discussed, courts deciding
whether a claim is literally false must view the claim in the
context of the entire advertisement. See Rhone-Poulenc, 19
F.3d at 129. Here, the reference that defines the meaning of
steam power is on the Shark packaging, and the claim
expressly links to the reference using a symbol—“††” on the
Shark 405 and “†” on the Shark 505. Thus, ignoring the
reference in our analysis would be not only to read the claim
out of context, but also to ignore part of the claim itself
denoted by the symbol.
Our holding is also consistent with other areas of the
law where courts interpreting a term’s meaning apply a
specific definition if one is provided by the author. See, e.g.,
Meese v. Keene, 481 U.S. 465, 484 (1987) (“It is axiomatic
that the statutory definition of the term excludes unstated
meanings of that term.”); Phillips v. AWH Corp., 415 F.3d
1303, 1316 (Fed. Cir. 2005) (en banc) (“[O]ur cases
recognize that the specification may reveal a special
definition given to a claim term by the patentee that differs
from the meaning it would otherwise possess. In such cases,
15
the inventor’s lexicography governs.”); J.C. Penney Life Ins.
Co. v. Pilosi, 393 F.3d 356, 363 (3d Cir. 2004) (applying
Pennsylvania law to interpret an insurance contract, and
explaining that words expressly defined in a policy will be
given that definition by courts interpreting the policy); 12
Richard A. Lord, Williston on Contracts, § 34:11, at 123 (4th
ed. 2012) (“Another method for excluding usage is to have
the contract define terms in a manner that is different from the
industry or trade definitions for those terms. Then the
contract definitions govern and usage is inapplicable . . . .”).
We see no reason to depart from this principle here.
We therefore agree entirely with the District Court that
the reference’s definition of steam power governs the term’s
meaning in the “MORE POWERFUL STEAM vs. Rowenta”
claim. Accordingly, the claim’s explicit and unambiguous
message is that the Shark steam irons offer more powerful
steam measured in grams per shot than the respective
Rowenta steam irons.
The fact that the references are in fine-print footnotes
and presumably less likely to be read by consumers does not
alter our analysis, as Euro-Pro urges it should. We
understand that other courts have held that footnote
disclaimers purporting to make a false or misleading claim
literally true cannot cure the claim’s false or misleading
message. See, e.g., Am. Home Prods. Corp. v. Johnson &
Johnson, 654 F. Supp. 568, 590 (S.D.N.Y. 1987). We have
not addressed this issue, see Pernod, 653 F.3d at 252 n.13
(declining to address the situation when an allegedly
misleading claim is corrected by a true statement contained in
fine print), and we do not decide it today. Our rather
unremarkable holding here is analytically distinct. It is that
what a product’s packaging says a claim term means is in fact
16
part of the claim’s explicit message. If that explicit message
is both unambiguous and false, the claim is literally false.
Nor does the presence of consumer survey evidence
showing alternative meanings for a defined term affect our
holding. Euro-Pro would have us ignore the packaging’s
definition of steam power and instead credit consumer survey
evidence demonstrating that the meaning of steam power is
ambiguous. According to Euro-Pro, the District Court’s
decision to ignore the Ford Survey is inconsistent with our
decision in Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc.,
653 F.3d 241 (3d Cir. 2011). The crux of Euro-Pro’s
argument is that consumer surveys must be considered by
courts in determining whether a claim’s message is
ambiguous. As explained below, Euro-Pro’s argument does
not hold up.
In Pernod, we addressed whether courts must always
consider survey evidence showing that consumers are misled
by an advertising claim. There, the appellant asserted that the
name of a brand of rum, “Havana Club,” misled consumers
about the brand’s geographic origin. Id. at 247. Beneath the
“Havana Club” name, the label prominently stated that it was
“Puerto Rican Rum,” an accurate statement of where the rum
was distilled. Id. at 245–46. The District Court found that
the label made no false or misleading statement, so it
disregarded consumer survey evidence showing that eighteen
percent of consumers were confused about the brand’s
geographic origin. See id. at 247–48.
We held that the district court properly disregarded the
consumer survey evidence. Our conclusion rested on the
principle “that there is and must be a point at which language
is used plainly enough that the question ceases to be ‘what
does this mean’ and becomes instead ‘now that it is clear
17
what this means, what is the legal consequence.’” Id. at 251.
Applying this principle, we observed that the label contained
a “factually accurate, unambiguous statement of geographic
origin,” prominently stating that it was “Puerto Rican Rum.”
Id. at 252. As a consequence, we concluded that no
reasonable consumer could be misled by the “Havana Club”
name when it was considered in the context of this prominent
truthful statement on the label. Id. at 252–53. Consumer
survey evidence was therefore immaterial because the
Lanham Act does not prohibit a claim that “reasonable people
would have to acknowledge is not false or misleading.” Id. at
253. But we cautioned that judges should not “lightly
disregard” consumer surveys because they may reveal
“potential ambiguities in an advertisement” that show
reasonable consumers may in fact be misled by the
advertisement. Id. at 254–55. Finally, we noted that “a
district court’s decision to disregard survey evidence is
reviewable de novo, since it is founded on a legal conclusion
based on underlying facts, that is that no reasonable consumer
would be misled by an advertisement.” Id. at 255 n.18.
As our discussion of Pernod demonstrates, it is readily
distinguishable from the issue before us here. Unlike Pernod,
the case before us involves claims of literal falsity, so
evidence of actual consumer deception is not required. See
Novartis, 290 F.3d at 586. By disregarding the consumer
survey evidence in this case, the District Court did not make
the same legal conclusion we recognized in Pernod: that no
consumers could be misled by the advertisement. The
District Court instead made a factual finding about what the
claim means and that its message is clear and unambiguous.
Pernod does not license courts to use consumer survey
evidence to define the meaning of words in an advertising
claim. In fact, our analysis in Pernod recognized that words
18
may be used plainly enough and carry baseline meanings such
that consumer survey evidence is irrelevant. See 653 F.3d at
251 (discussing Mead Johnson & Co. v. Abbott Labs., 201
F.3d 883, 886 (7th Cir. 2000), opinion amended on denial of
reh’g, 209 F.3d 1032 (7th Cir. 2000) (explaining that “never
before has survey research been used to determine the
meaning of words, or to set the standard to which objectively
verifiable claims must be held”)). In this case, Euro-Pro
plainly explained on the packaging what it meant by its claim,
so we are puzzled by Euro-Pro’s characterization of the
District Court’s approach as a court inserting its “own
perception” ahead of consumer perception. Appellant’s
Opening Br. at 33. Far from using its own perception of the
claim’s meaning, the District Court used the definition
provided by Euro-Pro in the reference, and, concluding that
Euro-Pro’s message was explicit and unambiguous, it
reasonably declined to substitute the uninformed first
impressions of consumers about the claim’s meaning. See
Mead Johnson, 201 F.3d at 886. Euro-Pro chose a definition
for steam power and now must live with it. It cannot use a
consumer survey to create an ambiguity out of whole cloth.
Accordingly, we conclude that the District Court did not err
in failing to consider the Ford Survey in its analysis.7
7
Citing language from the District Court’s
memorandum opinion denying a stay of the preliminary
injunction, Euro-Pro also argues that the District Court
improperly based its finding that the message is unambiguous
on its finding that the message is literally false. Appellant’s
Opening Br. at 33. A summary reading of the District Court’s
opinion granting the preliminary injunction belies this
argument. The District Court first concluded that the
message is unambiguous and then found the message is
19
Turning to the “#1 MOST POWERFUL STEAM”
claim, we again agree with the District Court that this claim
unambiguously conveys that Shark steam irons deliver more
powerful steam than Rowenta steam irons. Unlike the
“MORE POWERFUL STEAM vs. Rowenta” claim, however,
the relevant message here is not explicit. The corresponding
reference to the “#1 MOST POWERFUL STEAM” claim
states that the Shark steam irons “[o]ffer[] more grams per
minute . . . when compared to leading competition in the
same price range,” and the parties agree that Rowenta steam
irons are in a different price range. But, as we discussed
earlier, a literally false claim may also be conveyed by
necessary implication when considering the advertisement in
its entirety. See Novartis, 290 F.3d at 586–87. The question
here is whether, “based on a facial analysis of the product
name or advertising, . . . the consumer will unavoidably
receive a false message.” Id. at 587. Here, the answer is yes.
The “#1 MOST POWERFUL STEAM” claim appears
directly above the “MORE POWERFUL STEAM vs.
Rowenta” claim, and the proximity of the two claims
necessarily and unavoidably conveys a message that Shark
steam irons offer the most powerful steam, even when
compared to Rowenta steam irons. We therefore cannot say
the District Court’s finding is clearly erroneous.
2.
Having decided that the claims convey unambiguous
messages, the next question is whether those messages are
false. We find no clear error in the District Court’s
determination that the messages are false. The District Court
reasonably relied on SEB’s internal test results and the SLG
Test Report. Both tests measured steam power in grams per
literally false. J.A. at A12–14.
20
shot and grams per minute—the measurements for steam
power provided on the Shark packaging—in accordance with
independent, objective standards promulgated by the IEC.
Both tests also showed that the Rowenta steam irons either
outperformed or performed as well as the Shark steam irons.
Moreover, the Kemal Report acknowledged that there is no
difference in grams per shot of steam between the Shark
steam irons and the respective Rowenta steam irons. Put
simply, all the relevant evidence before the District Court
refuted Euro-Pro’s claims of superiority.
Euro-Pro makes one final argument in an effort to
overcome the District Court’s finding of literal falsity.
According to Euro-Pro, the District Court improperly shifted
the burden of proof away from SEB to Euro-Pro. In addition
to the rule that the party seeking preliminary relief bears the
burden of satisfying the four-factor test, ECRI v. McGraw-
Hill, Inc., 809 F.2d 223, 226 (3d Cir. 1987), the general rule
in false advertising cases is that a plaintiff bears the burden of
proving falsity, Novartis, 290 F.3d at 589. But in Novartis,
we recognized an exception to the general rule and held that
“a court may find that a completely unsubstantiated
advertising claim by the defendant is per se false without
additional evidence from the plaintiff to that effect.” Id. at
590. Euro-Pro argues that the Novartis exception only
applies when a defendant refuses to present any evidence to
support the truth of its claim. According to Euro-Pro, unlike
the defendant in Novartis, Euro-Pro provided “robust” and
uncontroverted evidence—the Kemal Report. Appellant’s
Opening Br. at 24.
We do not read Novartis so narrowly. Euro-Pro fails
to appreciate that the Kemal Report is mostly irrelevant to the
messages actually conveyed by the Shark claims. The Kemal
Report’s primary conclusion is that the Shark steam irons
21
have more powerful steam than the respective Rowenta steam
irons when steam power is measured by calculating the
kinetic energy of a steam burst over the burst’s duration. But
Euro-Pro does not, and cannot, argue that the Kemal Report
supports the claims that the Shark steam irons offer more
powerful steam measured in grams per shot or grams per
minute than the respective Rowenta steam irons. In fact, as
we previously mentioned, the Kemal Report concedes that the
Shark steam irons deliver the same grams per shot of steam as
the respective Rowenta steam irons. Therefore, Euro-Pro’s
claims are entirely unsubstantiated and exactly like the claims
in Novartis.
But even though Novartis permits a finding of falsity
based on Euro-Pro’s failure to come forward with any
evidence to support its claims, we note that the District Court
relied on SEB’s affirmative showing of falsity at least as
much as it relied on Euro-Pro’s failure to substantiate its
claims. We therefore cannot say that the District Court
shifted the burden of proof at all. Thus, the District Court’s
finding that the claims are false is not clearly erroneous.
Accordingly, the District Court correctly decided that
SEB established a likelihood of success on the merits.
B.
Euro-Pro next argues that the District Court erred by
finding that SEB established a likelihood of irreparable harm
in the absence of preliminary relief.
We recently clarified the standard for irreparable harm
in Lanham Act cases in Ferring Pharmaceuticals, Inc. v.
Watson Pharmaceuticals, Inc., 765 F.3d 205 (3d Cir. 2014).
There, we held that “a party seeking a preliminary injunction
in a Lanham Act case is not entitled to a presumption of
irreparable harm but rather is required to demonstrate that she
22
is likely to suffer irreparable harm if an injunction is not
granted.” Id. at 217. Of particular relevance to this case, our
analysis in Ferring relied in large part on the Supreme
Court’s decision in eBay Inc. v. MercExchange, L.L.C., 547
U.S. 388 (2006). In eBay, the Supreme Court held that
“broad classifications” and “categorical rule[s]” about when
injunctions should issue are inconsistent with exercising
“equitable discretion” pursuant to traditional equitable
principles. 547 U.S. at 393–94. Like the Patent Act at issue
in eBay, “[t]he Lanham Act’s injunctive relief provision is
premised upon traditional principles of equity.” Ferring, 765
F.3d at 214 (citing 15 U.S.C. § 1116(a)). It follows that a
presumption, or categorical rule, of irreparable harm in
Lanham Act cases is inconsistent with exercising discretion
according to traditional equitable principles. Id. at 215–16.
Our decision in Ferring also emphasized that courts may
award preliminary injunctive relief only upon a “‘clear
showing’” of a likelihood of irreparable harm. Id. at 217(quoting Winter, 555 U.S. at 22).
Although the District Court below did not have the
benefit of our holding in Ferring, it presciently declined to
apply a presumption of irreparable harm, at least overtly. The
District Court decided that:
[A]lthough the Third Circuit held in [Kos
Pharmaceuticals, Inc. v. Andrx Corp., 369 F.3d 700,
726 (3d Cir. 2004)] that a court may find a
presumption of irreparable injury if a likelihood of
success on the merits is proved, the Supreme Court’s
later decisions in eBay and Winter . . . indicate that
such a presumption no longer exists in the Lanham Act
context. Consequently, [SEB] bears the burden of
showing that it is likely to suffer irreparable harm in
the absence of preliminary injunctive relief.
23
J.A. at A17.
In spite of the District Court’s express disavowal of a
presumption, Euro-Pro contends that the District Court erred
by applying a relaxed standard and a de facto presumption in
determining that SEB demonstrated a likelihood of
irreparable harm. On the one hand, we agree with Euro-Pro
that portions of the District Court’s opinion may be construed
as applying a relaxed standard. For example, the District
Court stated that a likelihood of irreparable harm is proven if
a plaintiff establishes “a reasonable basis for the belief that it
is likely to be damaged as a result of the false advertising.”
J.A. at A18 (internal alterations and quotation marks omitted).
In Novartis, we rejected this very standard. 290 F.3d at 595.
The District Court also cited repeatedly to a case that relied,
at least in part, on a presumption of irreparable harm. J.A. at
A18–20 (citing W.L. Gore & Assocs., Inc. v. Totes Inc., 788
F. Supp. 800, 811 (D. Del. 1992)). But other parts of the
District Court’s opinion, including its detailed discussion of
the specific claims, the relationship between the competing
products, and SEB’s explanation of the likely injury to the
Rowenta brand’s reputation, as well as its conclusion that
SEB “convincingly demonstrated” a likelihood of irreparable
harm, are consistent with Ferring. J.A. at A18–20. It is
therefore unclear whether the District Court’s reference to the
wrong standard actually affected the substance of its analysis.
We need not dwell on the question, however, because
even if the District Court erred by reciting and applying the
wrong standard, we may uphold the District Court’s finding
of a likelihood of irreparable harm if it is supported by
sufficient evidence in the record. See Novartis, 290 F.3d at595–96. Here, the record contains sufficient evidence of
24
likely harm to the Rowenta brand’s reputation and SEB’s
goodwill. See S & R Corp. v. Jiffy Lube Int’l, Inc., 968 F.2d
371, 378 (3d Cir. 1992) (“Grounds for irreparable injury
include loss of control of reputation, loss of trade, and loss of
goodwill.”). The District Court credited the testimony of
Pollard, SEB’s marketing director, that Rowenta steam irons
enjoy strong reputations among retailers and consumers as the
premier steam-iron brand on the market, and that this first-
rate reputation is the result of substantial SEB investments in
advertising, promotion, and product development. In
addition, the District Court found that Rowenta and Shark
steam irons compete against each other, that they are often
sold side-by-side on retail shelves, and that relative steam
power is an important factor for consumers. And most
importantly, the District Court credited Pollard’s testimony
that the claims on the Shark steam irons, which, to be clear,
are “literally false, unsubstantiated comparative claims that
identify its competitor by name,” would likely harm the
Rowenta brand’s reputation among retailers and consumers,
especially because Shark steam irons are lower-priced. J.A.
at A19–20. Finally, the District Court found that the harm to
SEB would be impossible to calculate monetarily.
By finding that SEB established a likelihood of
irreparable harm, we are not connecting these facts using a
veiled presumption of irreparable harm. Ferring bars such a
presumption; we emphasize, however, that Ferring does not
bar drawing fair inferences from facts in the record. Indeed, a
key lesson from Ferring is that courts considering whether to
grant injunctive relief must exercise their equitable discretion
in a case-by-case, fact-specific manner. A critical aspect of
fact-finding in this and other contexts is drawing reasonable
inferences from facts in the record. See generally Anderson
v. City of Bessemer City, 470 U.S. 564, 574 (1985)
25
(explaining that the clearly erroneous standard of review
applies to findings that rest on “inferences from other facts”).
The inference drawn by Pollard, the District Court, and now
this Court—that SEB is likely to suffer irreparable harm to its
brand reputation and goodwill—is supported not by a general
rule or presumption but by the literally false comparative
advertising claims at issue, the competitive relationship
between the parties and products, and the judgment of Pollard
that the harm to SEB’s brand reputation and goodwill is
impossible to quantify. Nor does Ferring change the rule that
harm to reputation and goodwill constitutes irreparable harm,
so long as the plaintiff makes a clear showing. Based on the
facts of this case, we conclude that SEB clearly showed a
likelihood of irreparable harm to its brand reputation and
goodwill.8
8
In a concurring opinion in eBay, Chief Justice
Roberts noted that it “is not surprising” that injunctions are
granted in a vast majority of patent infringement suits because
it is difficult to protect a patentee’s right to exclude through
monetary damages. See eBay, 547 U.S. at 395 (Roberts, C.J.,
concurring). Although this trend does not “justify a general
rule” that injunctive relief should be granted whenever there
is patent infringement, the Chief Justice cautioned that neither
should it be forgotten entirely when courts apply the
traditional four-factor test. Id. “When it comes to discerning
and applying [legal] standards, in this area as others, a page of
history is worth a volume of logic.” Id. (internal quotation
marks omitted); see also id. at 395–97 (Kennedy, J.,
concurring) (agreeing that “history may be instructive in
applying [the four-factor] test” but primarily “when the
circumstances of a case bear substantial parallels to litigation
the courts have confronted before”).
26
Accordingly, any error committed by the District
Court was harmless because there is sufficient evidence in the
record to support a finding that SEB is likely to suffer
irreparable harm without preliminary relief.
C.
Euro-Pro’s final challenge is to the constitutionality
and scope of the District Court’s injunction. “District Courts
are afforded considerable discretion in framing injunctions.”
Meyer v. CUNA Mut. Ins. Soc., 648 F.3d 154, 169 (3d Cir.
2011). At the same time, an injunction “should be ‘no more
burdensome to the defendant than necessary to provide
complete relief to plaintiffs.’” Novartis, 290 F.3d at 598(quoting Califano v. Yamasaki, 442 U.S. 682, 702 (1979)).
The same point applies here, though for reasons
particular to false advertising. In Ferring, we observed that
other Courts of Appeals applied a presumption of irreparable
harm in false comparative advertising cases like this one. See
765 F.3d at 210–11. We distilled a twofold justification for
the presumption: “(1) a misleading or false comparison to a
specific competing product necessarily causes that product
harm by diminishing its value in the mind of the consumer,
similar to trademark infringement cases; and (2) the harm
necessarily caused to reputation and goodwill is irreparable
because it is virtually impossible to quantify in terms of
monetary damages.” Id. at 211. We also noted that we
applied a presumption of irreparable harm for substantially
the same reasons in trademark infringement cases. Id. at
211–12. Although we no longer apply a presumption, the
logic underlying the presumption can, and does, inform how
we exercise our equitable discretion in this particular case.
27
“Moreover, because commercial speech is entitled to
appropriate protection under the First Amendment, an
injunction restraining allegedly false or misleading speech
must be narrowly tailored to cover only the speech most
likely to deceive consumers and harm [the plaintiff].” Id.
(alteration in original) (internal quotation marks omitted).
Here, the District Court’s order granting the
preliminary injunction requires Euro-Pro to place stickers
over the “MORE POWERFUL STEAM vs. Rowenta” and the
“#1 MOST POWERFUL STEAM” claims on both the Shark
405 and the Shark 505. Also, the order directs Euro-Pro to
remove the hang tags from the steam irons.
Commercial speech conveying a literally false
message is not protected by the First Amendment. See id.
(“We conclude that the injunction does not violate the First
Amendment . . . because each of these messages is false.”).
As we have explained, we agree with the District Court’s
conclusion that SEB will likely prevail on its false advertising
claims. Therefore, we see no First Amendment violation.
Euro-Pro contends that the District Court’s injunction
is overbroad because it requires Euro-Pro to cover the
advertising claims themselves rather than only the references
to the claims. Euro-Pro correctly points out that the
references are critical to the literal falsity analysis. Without
the definitions from the references, the claims about relative
steam power may be considered ambiguous, and as such,
could not be literally false. See id. at 587. Thus, Euro-Pro
argues that the injunction should have targeted only the
references.
We disagree with Euro-Pro’s narrow characterization
of its advertising claims. Although the references provide the
definition for steam power that the District Court
28
appropriately adopted in this case, the references and the
advertising claims together compose the literally false
messages. Therefore, the injunction is not overbroad because
it is limited to reaching claims that are literally false. See
Castrol Inc. v. Pennzoil Co., 987 F.2d 939, 949 (3d Cir.
1993). Moreover, the logic underlying Euro-Pro’s argument
would create an unworkable framework. Under Euro-Pro’s
suggested approach, district courts could not just enjoin the
dissemination of literally false advertising claims, but they
also would need to parse each part of those literally false
claims to see if the removal of a word or a portion here and
there would render the remainder true. We cannot say that
the District Court abused its discretion when it required Euro-
Pro to place stickers over the entirety of the false advertising
claims rather than only part of them.
IV. CONCLUSION
For the foregoing reasons, we find no abuse of
discretion by the District Court granting SEB’s motion for a
preliminary injunction. Accordingly, we will affirm.
29