692 F.2d 189 (1st Cir. 1982), 82-1230, Bose Corp. v. Consumers Union of United States, Inc.

Docket Nº:82-1230.
Citation:692 F.2d 189
Party Name:BOSE CORPORATION, Plaintiff, Appellee, v. CONSUMERS UNION OF UNITED STATES, INC., Defendant, Appellant.
Case Date:November 02, 1982
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

Page 189

692 F.2d 189 (1st Cir. 1982)

BOSE CORPORATION, Plaintiff, Appellee,



No. 82-1230.

United States Court of Appeals, First Circuit

November 2, 1982

Argued Sept. 14, 1982.

Rehearing Denied Nov. 23, 1982.

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Michael N. Pollet, New York City, with whom Marshall Beil, Carol A. Schrager, Karpatkin, Pollet, Perlmutter & Beil, New York City, Nancy Gertner, and Silverglate & Gertner, Boston, Mass., were on brief, for defendant, appellant.

Blair L. Perry, Boston, Mass., with whom Hale & Dorr, and Charles Hieken, Boston, Mass., were on brief, for plaintiff, appellee.

James F. McHugh, Jane E. Serene, Bingham, Dana & Gould, and John Reinstein, Boston, Mass., on brief for Civil Liberties Union of Massachusetts, amicus curiae.

Henry R. Kaufman, New York City, on brief for Dow Jones & Co., Inc., et al., amici curiae.

Before DAVIS [*], CAMPBELL and BOWNES, Circuit Judges.

BOWNES, Circuit Judge.

This product disparagement case arises from an article evaluating the Bose 901 Series I stereo loudspeaker system by Consumer Reports, the monthly magazine of defendant-appellant, Consumers Union (CU). The district court found, in a bench trial limited to liability, that one statement in the article was false and was published with knowledge that it was false or with reckless disregard of its falsity. Bose Corp. v. Consumers Union of the United States, Inc., 508 F.Supp. 1249 (D.Mass.1981) (Julian, J.). In a subsequent trial, damages were

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assessed in the amount of $115,296.00 plus interest and costs of $95,609.64. Bose Corp. v. Consumers Union of the United States, Inc., 529 F.Supp. 359 (D.Mass.1981) (Caffrey, J.). CU appeals both the finding of liability and the assessment of damages. We reverse on the issue of liability.

The Facts

Dr. Amar Bose founded the Bose Corporation in 1964 and is the corporation's principal owner and chief executive officer. CU conceded that he is an expert in the field of loudspeaker design. 1 Dr. Bose designed the Bose 901 in 1967, and it was first marketed late in that year or early in 1968. The shape and design of these loudspeakers were "unique and unconventional." Bose, 508 F.Supp. at 1252. Each of the two loudspeaker cabinets in the system had the five-sided shape of a baseball home plate when viewed from above; one side in the front faced the listener and two sides in the rear faced away from the listener. The front face of each cabinet contained one driver 2 and each of the two rear faces had four drivers. As a result, the listener received one-ninth of the sound directly from the loudspeakers and eight-ninths of the sound by reflection off the wall behind the speakers.

Consumer Reports provides information about consumer products to mail subscribers and newsstand customers. At the time the article in question was published the magazine enjoyed "a very favorable reputation for independence, integrity, accuracy, and freedom from bias." Id. at 1252. 3 In the article, entitled "Loudspeakers," CU evaluated the quality and performance of twenty-four loudspeakers based on tests it had conducted. In a section boxed off from the main portion of the article and entitled "Some speakers of special interest," seven paragraphs of the eight-page article discussed the Bose 901. One other speaker, the Harmon-Kardon HK50, was also evaluated in this section.

The article explained the novel design of the Bose 901 as an attempt to simulate the sound patterns in a live concert hall, where listeners hear most of the sound after reflection off the walls and not directly from the orchestra. After describing the various components of the Bose system, the article next explained a test in which CU engineers compared the Bose 901 to another speaker 4 by using a special recording "of a cricket-like noisemaker moving from extreme left to extreme right." CU played the recording through the speakers in a listening room and "asked a panel to judge the direction from which the sound appeared to come." CU concluded from this test that, "at least for pinpointing sharp noises, there appeared to be no difference between the speaker systems."

The next two paragraphs of the article described the results of a second test that CU performed on the Bose 901:

We repeated the experiment using a variety of stereo sounds. 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.

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But after listening to a number of recordings, it became clear that the panelists could pinpoint the location of various instruments much more easily with a standard speaker 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 size distortions as the stereo records.

The article then discussed the sound quality of the Bose 901 and stated that if the speaker had been tested with the main group of speakers "it would have fallen between the high- and medium-accuracy groups. The overall sound was of good quality ... [but] the speakers tended to overemphasize the middle bass, giving it a somewhat overly full, heavy sound." The article concluded that because the Bose 901 "is so unusual ... a prospective buyer must listen to it and judge it for himself." It noted that the Bose 901 "requires a gigantic amount of power" and recommended "an amplifier of 50 watts per channel for the deepest base response." 5

The Findings of the District Court

The court determined that under the applicable law of product disparagement, 6 it was the plaintiff's burden to prove that the statements made by CU were of a disparaging or defamatory nature and that the statements were false. After concluding that "the Article, when read as a whole is disparaging," the court proceeded to analyze in detail each alleged factual error in the article to determine if it was false and if it was disparaging. It found that although the use of the words "panel and panelists" was misleading because there were only two persons doing the testing, it was not disparaging. Bose's attack on the "sound quality" critique was rejected on the grounds that "it is nothing more than an opinion and, as such, it cannot be proved to be true or false," citing to Gertz v. Robert Welch, Inc., 418 U.S. 323, 339, 94 S.Ct. 2997, 3006, 41 L.Ed.2d 789 (1974). The court found that Bose had not sustained its burden of proof that the statement as to the power requirements of the system was false.

The district court's finding of liability was based on part of one sentence in the article which reads: "Worse, individual instruments heard through the Bose system seemed to grow to gigantic proportions and tended to wander about the room." The court, in its analysis, divided the sentence into two parts. It found that the description "seemed to grow to gigantic proportions" had not been proven false but found the statement that the instruments "tended to wander about the room" was both false and disparaging. The evidence on which this finding was based is summarized as follows. CU's two employees who conducted the listening test "testified that the wandering sounds they heard were confined to an area within a few feet of the wall near which the Bose 901 loudspeakers were placed." CU conceded that the words "about the room" might not have described the wandering with precise accuracy, but argued that the wandering of sound was important to consumers, not where it wandered. CU maintained that the statement was substantially true because it accurately described the important observation. The district court referred to testimony that an amount of movement is expected with all stereo speakers and concluded that the location of the sounds' movement was as important to a consumer as the fact of movement.

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Thus, the court found the statement not to be substantially true. After rejecting CU's argument that the statements in the article about "a violin appear[ing] to be 10 feet wide and a piano stretch[ing] from wall to wall" modified the statements about wandering sounds to imply that the wandering occurred along the wall between the speakers, the court stated that the ordinary meaning of "about" the room was "around" the room. The court found the statement to be disparaging: "A statement that attributes such grotesque qualities as instruments wandering about the room to the plaintiff's product could have no effect other than to harm the reputation of the product." The use of the word "worse" to introduce the statement in the article showed that CU intended it to have a harmful effect.

Having determined that Bose had proved by a preponderance of the evidence that the statement about individual instruments tending to wander about the room was false and disparaging, the district court proceeded to analyze the impact of the first amendment on the standard of care required of CU. It cited several lower court decisions and discussed the first amendment balance between the need for an uninhibited press and the legitimate state interest in compensating victims of defamation in concluding that the actual malice standard of New York Times v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), applies to product disparagement cases. It then applied the...

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