Grant Airmass Corp. v. Gaymar Industries, Inc.

• Decision Date: 20 October 1986
• Docket Number: No. 85 Civ. 2712-CLB.,85 Civ. 2712-CLB.
• Citation: 645 F. Supp. 1507
• Parties: GRANT AIRMASS CORPORATION, Plaintiff, v. GAYMAR INDUSTRIES, INC. and Calspan Corporation, Defendants.
• Court: U.S. District Court — Southern District of New York

645 F. Supp. 1507

GRANT AIRMASS CORPORATION, Plaintiff, v. GAYMAR INDUSTRIES, INC. and Calspan Corporation, Defendants.

No. 85 Civ. 2712-CLB.

United States District Court, S.D. New York.

October 20, 1986.

COPYRIGHT MATERIAL OMITTED

Ronald St. Onge, St. Onge Steward Johnston & Reens, Stamford, Conn., for plaintiff.

David Steckler, Rivkin, Radler, Dunne & Bayh, Uniondale, N.Y., for Gaymar.

Howard W. Segal, Segal & Meltzer, New York City, for Calspan.

MEMORANDUM AND ORDER

BRIEANT, Chief Judge.

INTRODUCTION

Plaintiff Grant filed the original complaint in this action in April 1985 alleging product disparagement, defamation of a corporation, libel, slander of goods, negligence, injury to business reputation, unjust enrichment, and unfair competition under federal and state law. This Court has dismissed for failure to state a claim all but Grant's claims under the Lanham Act § 43(a) and the New York General Business Law § 350. See Memorandum and Order, June 25, 1985. After extensive pretrial discovery, defendants have served three separate motions for summary judgment pursuant to Rule 56, F.R.Civ.P.: (1) Calspan's motion for summary judgment against Grant, (2) Gaymar's motion for summary judgment against Grant, and (3) Gaymar's motion for partial summary judgment dismissing Calspan's cross-claim for attorneys' fees.

Plaintiff Grant and defendant Gaymar are competitors in the field of pressure sore prevention products, that is, air mattresses and mattress pads to prevent bedsores. Grant claims that Gaymar engaged in a scheme to disparage the products of Grant. Grant further claims that, as part of Gaymar's scheme, it commissioned defendant Calspan, a research firm, to undertake a false and misleading comparative study of pressure sore prevention products, such study to be used in Gaymar's advertising literature. It is Grant's contention, that the publication of four pieces of product literature pursuant to this scheme violates prohibitions in the Lanham Act and the New York General Business Law against unfair competition by means of false advertising. As the same operative facts establish a violation of both the Lanham Act § 43(a) and the General Business Law § 350, the following discussion applies equally to both claims put forth by Grant.

Defendants deny liability claiming that the comparative study and the advertising brochures were not deceptive and that, in any case, Grant has not demonstrated injury to its business as a result of such literature. In addition, Calspan has cross-claimed against Gaymar for indemnity and attorneys' fees.

BACKGROUND

The record in this case shows that it is widely believed that bedsores or decubitus ulcers, which can be fatal, are caused by the unrelieved pressure on body tissues that accompanies the prolonged immobility of persons receiving bedcare in hospital, nursing home and other health care environments. The goal of pressure sore prevention products such as those sold by Grant and Gaymar is to relieve pressure on body tissues at contact points with the mattress to below the critical level of 32 mm. Hg. There are two main types of pressure sore prevention products: (1) dynamic, such as alternating pressure pad systems that use air pressure pumps to inflate and deflate the mattress in cycles; and (2) static, such as air or foam mattresses and bed cushions. Consumers of these products believe that unless a product can reduce tissue pressure to below critical levels, it is of nominal value in fighting bedsores.

The number of firms that develop and market pressure sore prevention products, although small, is highly competitive. In the early 1980's, plaintiff Grant's method of gaining market share involved for the most part offering its products at a better price. In response, defendant Gaymar determined to promote its products' alleged superiority and set out to develop comparative literature.

From 1981 to 1984, Gaymar published and disseminated four pieces of product literature that contain comparisons of Gaymar's and Grant's pressure sore prevention products. In August 1981, Gaymar independently created and issued the first disputed piece of literature, a brochure entitled "Protection From Pressure Sores—Alternating Pressure Systems by Gaymar and Grant—A Comparison." The brochure stated that Grant's alternating pressure pad system could not reduce tissue pressure below critical levels. Later in 1981, Gaymar hired Calspan to conduct tests comparing Gaymar products against a number of competing products including Grant's alternating pressure pad system, for use in Gaymar advertising. The result of the Calspan tests are contained in the second publication, a report dated May 14, 1982. The Calspan name and logo appear prominently on the front page of the report and the report describes Calspan as "an independent not-for-profit research/development center." In August 1982, Gaymar issued the third publication, a brochure based upon data contained in the Calspan report. In 1984, this brochure was revised nonsubstantively and was reissued constituting the fourth disputed publication.

The central issue in this lawsuit is the veracity, accuracy, purpose, and effect of the allegedly independent, scientific study by defendant Calspan on which three publications issued by Gaymar were based. This study tested the pressure relief characteristics of twelve dynamic and static pressure sore prevention products in a procedure involving two human subjects. Among the circumstances of the Calspan testing procedures significant to this litigation are the use of a Gaymar employee as a testing subject, the use of testing equipment and competing products supplied by Gaymar, the reliance on Gaymar instructions regarding operation and evaluation of the competing products tested, Gaymar's provision of a seven-year-old, substantially altered and malfunctioning Grant air pressure pump to inflate and deflate the Grant pressure pad system, and the replacement of the malfunctioning Grant pump with a nonconforming Gaymar pump in order to complete the tests.

The Calspan report ranked the twelve pressure sore prevention products, listing the four Gaymar products tested as best in reducing tissue pressure to below critical levels. The report ranked the Grant product in the middle of the list and indicated that the Grant product could not provide the tissue pressure relief required to prevent or alleviate bedsores. The report also contained ambiguous language regarding the causes of the malfunctioning of the Grant air pressure pump and did not explain fully the hybrid nature of the pressure pad system that produced the test results attributed to a Grant product. Gaymar additionally altered some of the findings in the report before reprinting and disseminating it. Together, Gaymar and Calspan printed and distributed over 9,000 copies of the report holding it out as an independent, scientific study.

Grant has alleged that these four pieces of literature disparaging Grant's products were part of a malicious campaign by Gaymar to regain business lost to Grant. Grant claims that Gaymar and Calspan as joint tortfeasors intentionally made materially fraudulent and misleading representations about Grant's and Gaymar's products in violation of federal and state prohibitions against unfair competition by means of false advertising.

CALSPAN'S MOTION FOR SUMMARY JUDGMENT AGAINST GRANT

In support of its Motion for Summary Judgment Against Grant, Calspan argues that it is not an entity which, within the facts of this case, may be held liable under the Lanham Act § 43(a). Alternatively, Calspan claims that its report did not contain any false statements and that, in any case, the allegedly false report did not cause damages to Grant. The Lanham Act § 43(a) reads in pertinent part:

(a) Any person who shall affix, apply, or annex, or use in connection with any goods or services, ... any false description or representation, including words or other symbols tending falsely to describe or represent the same, and shall cause such goods or services to enter into commerce, and any person who shall with knowledge of the falsity of such ... description or representation cause or procure the same to be transported or used in commerce ..., shall be liable to a civil action ... by any person who believes that he is or is likely to be damaged by the use of any such false description or representation. 15 U.S.C. § 1125(a).

Calspan argues that its conduct in this matter does not come within the purview of the Lanham Act prohibition against falsely describing or misrepresenting goods and, with knowledge of the falsity, causing such goods to enter commerce. First, Calspan claims that, as the Lanham Act is intended to protect against unfair competition, it may be used only as against competitors. According to Calspan, since it is a research firm and does not compete with either Grant or Gaymar in the sale of pressure sore prevention products, the claim against it must be dismissed. Second, Calspan contends that it cannot be held liable for contributory infringement because such liability may attach only to participants in the chain of distribution of the advertised goods who caused them to enter commerce. Calspan claims that testing facilities, such as itself, that do not deal in the goods, cannot be said to have caused them to be used in commerce.

While Calspan is correct in noting that competition between the litigants is a factor in evaluating Lanham Act claims, Vidal Sassoon, Inc. v. Bristol-Meyers Company, 661 F.2d 272, 274 (2d Cir.1981); Johnson & Johnson v. Carter-Wallace, Inc., 631 F.2d 186, 190 (2d Cir.1980), such claims are not restricted to those against competitors of the plaintiff. Our Court of Appeals has held that "competitive injury is not required for recovery under section 1125(a)." Spring Mills, Inc. v. Ultracashmere House, Ltd., 724 F.2d 352, 357 (2d Cir.1983), reaffirming 689 F.2d 1127, 1136 n. 13 (1982)....