Antitrust Law Daily Wrap Up, ADVERTISING—D. Mass.: False advertising counterclaims against helmet manufacturer proceed, (Jun 13, 2014)

By Greg Hammond, J.D.

Counterclaims that a sport helmet manufacturer violated the Lanham Act by making multiple false representations in advertising were allowed to proceed. The federal district court in Boston determined that the manufacturer’s competitors adequately alleged false advertising claims, arising from the manufacturer’s representation that its helmet was covered by a patent (Bern Unlimited, Inc. v The Burton Corporation, June 12, 2014, Saylor, F).

Background. Bern Unlimited, Inc. manufactures biking, skating, snow, and water sport helmets. In 2006, Bern released the “Baker” line of snow helmets, which was a commercial success. According to Bern, the helmets have two distinct design elements: (1) the “rounded profile of the helmet, which is designed to follow the shape of the wearer’s head,” and (2) a distinctive visor. However, Bern filed suit against seven other corporations that also design and sell sports helmets, accusing those companies of selling helmets with confusingly similar designs to Bern’s.

After Bern filed its third amended complaint, the six remaining defendant companies filed counterclaims, alleging that Bern falsely advertised that its helmets were covered by U.S. Design Patent No. D572,865 S (the ‘865 patent) and that Bern was the first to invent a helmet with a visor. Specifically, the companies brought counterclaims for: (1) a declaratory judgment that the ‘865 patent is invalid and that Bern cannot enforce it; (2) false advertising in violation of the Lanham Act; and (3) unfair and deceptive trade practices in violation of Massachusetts law. Bern filed a motion to strike the companies’ counterclaims.

Declaratory judgment counterclaims. In support of its motion to strike, Bern argued that there was no “actual controversy” with regard to the defendant companies’ declaratory judgment claims, as it disclaimed the ‘865 patent. Because the companies conceded that the validity and enforceability of the ‘865 patent was moot, the court granted Bern’s motion to strike the declaratory judgment claims.

False advertising counterclaims. Bern also argued that the defendant companies’ false advertising counterclaims should be dismissed on the ground of futility. According to the court, the two elements of a Lanham Act false advertising claim that are in question in this case are: (1) whether the companies alleged a false description of fact and (2) whether the companies have been or are likely to be injured as a result of the misrepresentation.

The first allegedly false representation involved Bern’s claim that the helmets were “the first visor helmet offering a protective visor in the front.” In support of its motion to strike, Bern argued that its “first visor helmet” statements were non-actionable puffery. The court agreed, reasoning that the claims were not specific and measurable, but were rather exaggerated advertising. Consequently, the motion to strike was granted with regard to the Lanham Act claims based on puffery.

However, the court denied Bern’s motion to strike the companies’ counterclaims that Bern falsely advertised its helmets were covered by the ’865 patent. Because Bern advertised and sold its Baker helmet for more than a year prior to filing an application for patent, and because it was alleged that Bern knew the ’865 patent was invalid when the company made its false advertisements, the court concluded that the defendant companies stated sufficient allegations for a claim under the Lanham Act. In addition, the court found that the defendant companies alleged sufficient injury, by stating that the false advertising resulted in increased sales for Bern and decreased sales for them. Consequently, the motion to strike the remaining Lanham Act counterclaims was denied.

The case number is 11-12278-FDS.

Attorneys: Andrew A. Caffrey, III (Birnbaum & Godkin, LLP) for Bern Unlimited, Inc. Hunter D. Keeton (Wolf, Greenfield & Sacks, PC) for The Burton Corp. Anne M. Readel (Perkins Coie LLP), and James M. Campbell (Campbell, Campbell, Edwards & Conroy, PC) for Easton-Bell Sports, Inc. Marc J. Goldstein (Beveridge & Diamond, PC), and Peter S. Ehrlichman (Dorsey & Whitney, LLP) for Smith Sport Optics, Inc. Robert H. Stier, Jr. (Pierce Atwood LLP) for Vans, Inc. Christopher P. Flanagan (Wilson Elser), and Jeffery A. Key (Key & Associates) for Amer Sports Winter & Outdoor Co. Lawrence D. Graham (Lowe Graham Jones PLLC) for K-2 Corp.

Companies: Bern Unlimited, Inc.; The Burton Corp.; Easton-Bell Sports, Inc.; Smith Sport Optics, Inc.; Vans, Inc.; Amer Sports Winter & Outdoor Co.; K-2 Corp.

Cases: Advertising StateUnfairTradePractices MassachusettsNews