Lg Electronics U.S.. Inc. v. Whirlpool Corp..

• Decision Date: 09 May 2011
• Docket Number: No. 08 C 242.,08 C 242.
• Citation: 790 F.Supp.2d 708
• Parties: LG ELECTRONICS U.S.A., INC., a subsidiary of LG Electronics, Inc., a Korean company, Plaintiff,v.WHIRLPOOL CORPORATION, Defendant.
• Court: U.S. District Court — Northern District of Illinois

790 F.Supp.2d 708

LG ELECTRONICS U.S.A., INC., a subsidiary of LG Electronics, Inc., a Korean company, Plaintiff,

v.WHIRLPOOL CORPORATION, Defendant.

No. 08 C 242.

United States District Court,N.D. Illinois,Eastern Division.

May 9, 2011.

Ronald Y. Rothstein, Bryna Joyce Roth Dahlin, Eric L. Broxterman, John George Marfoe, Lawrence R. Desideri, Marlen Cortez Morris, Mary M. Hutchings, Winston & Strawn LLP, Chicago, IL, for Plaintiff.Brian D. Roche, Carey L. Bartell, Jennifer Yule Depriest, Vanessa Marti Heftman, Reed Smith LLP, Chicago, IL, Charles Ash, Jr., J.A. Cragwall, Jr., Jacob J. Sadler, Janet L. Ramsey, John J. Bursch, Warner, Norcross & Judd LLP, Grand Rapids, MI, James J. McGovern, Stephen George Morrison, Nelson Mullins Riley & Scarborough LLP, Columbia, SC, Patrick Coleman Wooten, Nelson Mullins Riley & Scarborough, Charleston, SC, for Defendant.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Judge:

After an approximately three-week trial, a jury returned a verdict largely in favor of Defendant Whirlpool Corporation (“Whirlpool”) and against Plaintiff LG Electronics U.S.A., Inc., (“LG”). Specifically, the jury found in favor of Whirlpool and against LG on LG's claim of false advertising under the Lanham Act. The jury also found in favor of Whirlpool and against LG on LG's claim under the Illinois Consumer Fraud and Deceptive Business Practices Act (“the CFA”). The jury did find in favor of LG and against Whirlpool on LG's claim under the Illinois Uniform Deceptive Trade Practices Act (“the IUDTPA”), which provides only for injunctive relief. 815 Ill. Comp. Stat.. 510/3. The jury also specifically found that LG had failed to prove by a preponderance of the evidence that it was entitled to lost profits, price erosion, or to Defendant's profits. LG now seeks a nationwide injunction against Whirlpool based on the jury's verdict. For the reasons discussed below, the Court denies LG any injunctive relief.¹

BACKGROUND

LG brought this case against Whirlpool in connection with the latter's advertising of its steam dryers. LG sued Whirlpool for false advertising in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), regarding its steam dryers. LG's Lanham Act claim pursued three separate theories: 1) Whirlpool's advertisements are literally false; 2) Whirlpool's advertisements are literally false by necessary implication; and 3) Whirlpool's advertisements are impliedly false. In addition, LG brought a claim against Whirlpool alleging that it violated the CFA and a claim that it violated the IUDTPA. The gravamen of each of LG's claims was that Whirlpool uses the word “steam” in its advertisements and in the name of its Duet Steam Dryer, and that such use is literally false and misleading because the Duet Steam Dryer does not use steam, but instead uses a mist of cold water sprayed into a warm dryer drum. According to LG's theory at trial, this method is not “true steam” and thus Whirlpool's advertising is false and misleading. As noted above, the jury rejected all of LG's claims except its claim under the IUDTPA. Plaintiff premised its IUDTPA claim on the same evidence that the jury considered and rejected on its Lanham Act and CFA claims.

During trial, LG called 16 witnesses, including one witness via deposition testimony. Whirlpool called seven witnesses, including four witnesses by deposition testimony. LG called three expert witnesses to testify: 1) Anthony Jacobi, a thermodynamics expert; 2) Dr. Mohan Rao, LG's damages expert; and 3) Robert Reitter, LG's survey expert. Whirlpool called Dr. Subbaiah Malladi, a mechanical engineer, who opined that Whirlpool's dryer creates steam.

At the injunction hearing, LG submitted declarations from Dr. Rao; Dr. Jerry Wind, Professor of Marketing at the Wharton School of the University of Pennsylvania; and Mr. John Herring, Vice President of Sales for Home Appliances National Accounts who has responsibility for, among other products, LG's washer and dryer sales. (R. 641–1 at 1.) Whirlpool submitted a declaration from Pamela Klyn, who is the General Manager for Whirlpool Cooking for the North America region, but was the Product Development Director for Defendant's front-load washer and dryer platforms during the development of the Whirlpool steam dryer. (R. 644–19 at 2.) At the hearing, Mr. Herring testified for LG and Ms. Klyn testified for Whirlpool.

I. Steam Dryers

The dispute in this case focused on steam dryers and on the definition of steam. LG and Whirlpool are fierce competitors in the steam-dryer market. In fact, they are the main competitors in that market. LG asserted and argued throughout trial that Whirlpool's “steam” dryers do not actually employ steam, and thus Whirlpool's advertising of its “steam” dryer is false.

During trial, the evidence showed that Whirlpool announced its intention to launch its steam dryer in the fall of 2007. Whirlpool then introduced its steam dryer in the fall of 2007 and was the first company in the industry to market a steam dryer. (Trial Transcript “Tr.” at 313; R. 641 at 30; R. 644 at 15.) Whirlpool developed the dryer to serve the needs of its laundry customers who wanted the benefits of wrinkle reduction and odor removal in the clothing placed in the dryer. ( Id. at 2459.) Whirlpool also demonstrated that it began researching the use of steam in its laundry products as early as March of 2005. ( Id. at 2460–61.) In fact, as of October 2006, Whirlpool had eight engineers committed to the steam project. ( Id. at 2465–66.)

LG introduced its steam washer into the marketplace in early 2006. (Injunction Hearing Transcript (“Inj. Hr'g”) at 7.) LG did not introduce its steam dryer into the marketplace until December 2007—two months after Whirlpool. ( Id. at 14.)

II. The Dryers

The evidence at trial revealed that LG's and Whirlpool's respective steam dryers use different methods of creating steam. LG's dryer makes steam through an external boiler that boils water and then injects hot vapor into the dryer drum. As Professor Jacobi testified:

That steam goes through a tube and it's injected into the dryer drum. It enters the dryer drum, which is a cooler environment full of air, and it forms that kind of billowy white cloud that's something like what the teapot makes.

(Tr. at 454.) The steam is injected into the dryer drum for a seven-minute cycle. ( Id. at 458.)

Whirlpool designed its dryer to create steam through a system that injects a mist of water into a hot dryer drum, where the mist combines with the heated air and tumbling clothes to create steam. (Tr. at 328, 333, 364–65, 390–93, 641–42, 766–67, 2471–73). Ms. Klyn explained:

Water was automatically delivered to the dryer through the nozzle in the back, and the mist was combined with the heat from the dryer and created steam.

(Tr. at 2472.) Dr. Malladi testified that the Whirlpool dryer drum attains a temperature far in excess of 212–degrees Fahrenheit, and even reaches close to 300–degrees Fahrenheit at times. ( Id. at 1939.) Dr. Malladi opined:

Steam is created when the spray enters in the hot region—some of it is entering a region where it's substantially higher than 212 degrees Fahrenheit and there is an evaporation and the resulting vapor is this elevated temperature.

And steam is also created by evaporation from heated substance; that is, the drum and, then, the clothing and also by the hot air in the dryer.

(Tr. at 1940.)

LG's expert, Dr. Jacobi, opined that the Whirlpool dryer does not create or use scientific or thermodynamic steam which he defined as “pure water vapor.” (Tr. at 451–52.) He did acknowledge, however, that the Whirlpool dryer contains “water vapor mixed with air.” ( Id. at 469.)

LG did not introduce any evidence that Whirlpool ever represented that it created steam in its dryers by boiling water. Further, LG did not introduce any evidence that Whirlpool ever advertised that the creation of steam in Whirlpool's steam dryer is similar to the creation of steam in LG's steam dryer.

III. Testimony Regarding Confusion in the Marketplace

LG also called Robert Reitter, the Senior Vice President of the consultancy Guideline, as an expert in consumer surveys. Mr. Reitter testified about a consumer survey he conducted using a Whirlpool advertisement referred to as the “Blue World commercial.” The commercial advertised the Whirlpool Duet Steam Dryer. Although it informed consumers that the dryer created steam to reduce wrinkles and odors, it did not explain how the dryer created that steam. It is undisputed, however, that Whirlpool has not run that commercial for the past 18 to 24 months. (Inj. Hr'g at 30.)

Mr. Reitter testified that he conducted a survey of consumers in 12 market areas.² Reitter opined at trial that he found a “very distinct deception” in the Blue World commercial “in that it conveyed to people the idea that it is a hot steam that—that takes place in the dryer and that does its work, rather than a mist of cold water that is heated by the regular action of the dryer.” (Tr. at 1622.) Reitter did not conduct any surveys regarding whether consumers associate steam inside the dryer with boiled steam. Nor did he conduct any consumer surveys with respect to Whirlpool's other advertising, its promotional materials that consumers review on Whirlpool's website, its point of purchase materials in the showrooms where the dryers are sold, or its printed advertising. He also did not conduct any surveys of Whirlpool's advertising that describes how the Whirlpool dryer creates steam. (Tr. at 1659–60.)

Whirlpool's promotional materials and website explain how its dryer creates steam. (R. 644 at 20 (citing the pertinent parts of the record).) Kirk Dunsbergen, who was responsible for the design and development of Whirlpool's dryer, testified that Whirlpool, in its operator's manual and in print advertising, “tells the consumers that [it] spray[s] a fine mist of cold water into the hot air inside of the drum of the Whirlpool...