508 F.Supp. 1249 (D.Mass. 1981), Civ. A. 71-481, Bose Corp. v. Consumers Union of United States, Inc.

Docket Nº:Civ. A. 71-481
Citation:508 F.Supp. 1249
Party Name:Bose Corp. v. Consumers Union of United States, Inc.
Case Date:January 21, 1981
Court:United States District Courts, 1st Circuit, District of Massachusetts

Page 1249

508 F.Supp. 1249 (D.Mass. 1981)

BOSE CORPORATION, Plaintiff,

v.

CONSUMERS UNION OF U.S., INC., Defendant.

Civ. A. No. 71-481-J.

United States District Court, D. Massachusetts.

Jan. 21, 1981

Page 1250

Blair L. Perry, Joseph E. Riley, Jr., Hale and Dorr, Boston, Mass., Charles Hieken, Waltham, Mass., for plaintiff, Bose Corp.

Marshall Beil, Michael Pollet, Karpatkin, Pollet, Delibert & Beil, New York City, Nancy Gertner, Silverglate, Shapiro & Gertner, Boston, Mass., for defendant, Consumers Union of U.S., Inc.

OPINION

JULIAN, Senior District Judge.

The plaintiff, Bose Corporation (Bose), a manufacturer of loudspeaker systems and other audio equipment, brought this civil action in 1971 against the defendant, Consumers Union of United States, Inc. (CU), a consumer product-testing organization, alleging product disparagement, unfair competition, and violation of Section 43(a) of the Lanham Act, 15 U.S.C. s 1125(a) (1976). Jurisdiction was based on diversity of citizenship, 28 U.S.C. s 1332(a)(1), and on the Lanham Act, 15 U.S.C. s 1121 and 28 U.S.C. s 1338(a) and (b). The lawsuit was

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precipitated by the publication of a review of the plaintiff's product, the Bose 901 Series I loudspeaker system, (the Bose 901), which appeared in the May 1970 issue of the defendant's publication, Consumer Reports.

After an exceedingly protracted period of pretrial discovery 1 the Court severed the issue of damages from the other issues in the case and ordered that a trial be held on the issue of damages only if the plaintiff prevails on the remaining issues. The Court then conducted a non-jury trial which concluded after nineteen days of testimony. 2 This opinion constitutes the Court's findings of fact and conclusions of law as required by Rule 52 of the Federal Rules of Civil Procedure. Further findings of fact and conclusions of law on the issue of damages will be made after the trial on damages is held.

THE PARTIES

Plaintiff

The plaintiff, Bose Corporation (Bose), is a corporation organized under the laws of the State of Delaware and having its principal place of business in Framingham, Massachusetts. It was organized in 1964 under the laws of the Commonwealth of Massachusetts and became a Delaware corporation by merger in December, 1978. When this action was commenced on February 23, 1971, the plaintiff was a Massachusetts corporation and had its principal place of business in Natick, Massachusetts.

Dr. Amar G. Bose (Dr. Bose) is the founder, principal owner, and chief executive officer of the plaintiff corporation. The name of the plaintiff corporation is derived from the surname of Dr. Bose. Dr. Bose is also the inventor of the Bose 901, the product involved in this action.

Dr. Bose received his Bachelor of Science degree and his Master of Science degree from Massachusetts Institute of Technology (M.I.T.) in 1952 and his Doctor of Science degree from the same institution in 1956. He has been a member of the faculty of M.I.T. in the Department of Electrical Engineering since 1956. He is the co-author of a textbook entitled Introductory Network Theory. For the purposes of this action the defendant concedes that he is an expert in the field of loudspeaker design.

The Bose 901 system was designed by Dr. Bose in 1967. The system consists of two loudspeaker cabinets, an electronic device called an "active equalizer," and necessary wiring and connections. Each of the cabinets is of pentagonal shape when viewed from above, being designed to have one side (the front face) facing toward the listener and two other sides (the rear faces) facing away from the listener. The two rear faces join at an angle in the rear of the cabinet to form a "V". The front face contains a

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single driver. 3 Each of the two rear faces contains four drivers. The nine drivers are of equal size. Because of this configuration of drivers within the Bose 901 cabinets, each Bose 901 loudspeaker radiates one-ninth of the sound directly into the listening area, and eight-ninths of the sound into the listening area after reflection off one or more walls. The shape of the Bose 901 cabinets and the design of the Bose 901 system as a whole are unique and unconventional.

The Bose 901 was first marketed in late 1967 or early 1968. In 1968 Bose began to advertise and extensively promote the Bose 901. Bose published advertisements promoting the Bose 901 in the national consumer high fidelity magazines 4, in national general publications 5, and in other publications.

A significant portion of the Bose marketing efforts was directed toward soliciting reviews of the Bose 901 by professional reviewers. Bose obtained the right to reprint such reviews and distributed reprints of the reviews as part of its promotional campaign. 6

Defendant

The defendant, Consumers Union of United States, Inc. (CU), is a not-for-profit corporation organized and existing under the laws of the State of New York and having its principal place of business in Mount Vernon, New York. CU was organized in 1935. When this action was commenced, CU had its principal place of business in Mount Vernon, New York.

From May 1936, to date, CU has published a magazine called Consumer Reports, in which information about the quality, characteristics, and prices of various consumer products is set forth. At all times relevant to this action, Consumer Reports has been published on a monthly basis. Consumer Reports is distributed by mail to subscribers and is sold on newsstands.

The influence of Consumer Reports on consumers' buying decisions is substantial. During 1970 and 1971 Consumer Reports and CU had a very favorable reputation for independence, integrity, accuracy, and freedom from bias. Subscribers to Consumer Reports tend to make buying decisions relative to consumer products after consulting reports published in Consumer Reports, among other sources, and in 1970 millions of readers relied upon the product information published in the magazine. Many consumers would not think of making a substantial purchase without consulting Consumer Reports.

The Consumer Reports Article

On pages 272 through 279 of the May 1970 issue of Consumer Reports CU published an article entitled "Loudspeakers" (the Article). The Article contained CU's evaluation of the quality and performance of twenty-four different loudspeakers based on CU's tests of the loudspeakers. In a section (the Bose 901 Portion) boxed off from the main body of the Article, under the heading "Some loudspeakers of special interest," appeared the following comments about the Bose 901:

Some loudspeakers of special interest

BOSE 901. No loudspeaker design has ever really captured the realism of live concert hall sound, although many designers have tried. The Bose 901 system (The Bose Corp., Natick, Mass.) takes an interesting shot at realism. The concept behind the Bose system is based on the contention that in an actual concert hall most of the sound you hear has been bounced from the walls;

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it does not come directly from the orchestra. Therefore, the Bose 901 speaker system directs only about 10 per cent of its output toward the listener and bounces the other 90 per cent from the wall. The Bose 901 system comes as a package with two speaker systems and an electronic equalizer that can be easily connected to your amplifier. The package is priced at $476 ($496 on the West Coast).

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Each speaker cabinet contains nine small (five-inch) speakers. Small speakers tend to reproduce high frequencies more efficiently than low frequencies. But so many speakers together in each cabinet help to reinforce bass tones, and help to disperse the sound more evenly. The electronic equalizer is intended to further compensate for the relatively low bass efficiency of small speakers, to compensate for the loss of treble when sound is reflected from the walls, and thus to help provide a uniform overall response. The active equalizer can be adjusted, within limits, to vary the sound to individual taste.

To determine what effect the system has on stereo reproduction, CU's engineers made a special tape, in the anechoic chamber, of a cricket-like noise-maker moving from extreme left to extreme right. We played the tape through the Bose system in our listening room and asked a panel to judge the direction from which the sound appeared to come. For comparison, the panel also listened to the same tape through a pair of ADC 303AX speakers, check-rated in the accompanying report. The panelists were able to locate the sound accurately from both the ADC and Bose systems when they sat directly between the speakers, but not when they sat at either the extreme left or extreme right. So, at least for pinpointing sharp noises, there appeared to be no difference between the speaker systems.

We repeated the experiment using a variety of stereo records. When it came to music, the panelists immediately noted a remarkable difference between the systems. The Bose 901 seemed considerably more spacious and reverberant, actually to the point of giving the impression that the wall of the listening room had dropped away. The effect was rather dramatic and was felt from any listening position.

But after listening to a number of recordings, it became apparent that the panelists could pinpoint the location of various instruments much more easily with a standard speaker system than with the Bose system. Worse, individual instruments heard through the Bose system seemed to grow to gigantic proportions and tended to wander about the room. For instance, a violin appeared to be 10 feet wide and a piano stretched from wall to wall. With orchestral music, such effects seemed inconsequential. But we think they might become annoying when listening to soloists. On an impulse, we also played some monophonic records through the Bose. To our surprise, they too acquired the same spacial openness and...

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