Groupe Seb United States, Inc. v. Euro-Pro Operating LLC.

• Citation: 774 F.3d 192
• Decision Date: 17 December 2014
• Docket Number: No. 14–2767.,14–2767.
• Parties: GROUPE SEB USA, INC. v. EURO–PRO OPERATING LLC., Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

774 F.3d 192

GROUPE SEB USA, INC.

v.EURO–PRO OPERATING LLC., Appellant.

No. 14–2767.

United States Court of Appeals,Third Circuit.

Argued Sept. 9, 2014.

Filed: Dec. 17, 2014.

Roger A. Colaizzi, Esq. (argued), Christopher S. Crook, Esq., Venable, Washington, DC, Mark A. Grace, Esq., Cohen & Grace, Pittsburgh, PA, Randall K. Miller, Esq., Venable, Vienna, VA, for Appellant.

Gretchen L. Jankowski, Esq. (argued), Mackenzie A. Baird, Esq., Jordan M. Webster, Esq., Buchanan Ingersoll & Rooney, Pittsburgh, PA, for Appellee.

Before: FISHER, JORDAN and HARDIMAN, Circuit Judges.

OPINION OF THE COURT

FISHER, Circuit Judge.

In this false advertising case, Euro–Pro Operating, LLC (“Euro–Pro”) appeals the District Court's order granting a motion for a preliminary injunction brought by Groupe SEB USA, Inc. (“SEB”). The District Court found that two advertising claims on Euro–Pro's steam irons likely violated section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and enjoined Euro–Pro from using those claims. Euro–Pro raises several issues on appeal, but we principally consider how courts should interpret an advertising claim when the packaging or label unambiguously defines a claim term. The District Court decided that the packaging's definition of a claim term applies to the claim's explicit message. Based on this decision, the District Court disregarded consumer survey evidence offering alternative meanings for the claim term. We agree with the District Court and find its approach firmly based in false advertising law and logic. And because we conclude that the District Court did not otherwise abuse its discretionin granting the preliminary injunction, we will affirm.

I.

A.

SEB distributes and sells various household consumer products under several brand names throughout the country. This case involves SEB's electric steam irons sold under the Rowenta brand name, namely the Rowenta Focus, Model No. DW5080 (“Rowenta DW5080”), and the Rowenta Steamium, Model No. DW9080 (“Rowenta DW9080”). Euro–Pro manufactures, markets, and distributes kitchen and household appliances. It sells these products under the Shark brand name. The dispute here arises from advertising claims on the packaging of two Shark steam irons, the Shark Professional, Model No. GI405–55 (“Shark 405”), and the Shark Ultimate Professional, Model No. GI505–55 (“Shark 505”).

The Shark 405 packaging includes two advertising claims. First, text on the bottom right of the front packaging asserts that the Shark 405 offers “MORE POWERFUL STEAM vs. Rowenta®†† at half the price.” J.A. at A3, A805. The “††” characters refer to a fine-print footnote on the bottom of the packaging, which states that the claim is “††[b]ased on independent comparative steam burst testing to Rowenta DW5080 (grams/shot).” Id. Text on the top right of the front packaging also asserts that the Shark 405 delivers “# 1 MOST POWERFUL STEAM*.” Id. Again, there is a fine-print reference to this claim on the bottom of the packaging that states the Shark 405 “ *[o]ffers more grams per minute (maximum steam setting while bursting before water spots appear) when compared to leading competition in the same price range, at time of printing.” Id. The Shark 505 packaging makes substantially the same claims. ¹

Additionally, both the Shark 405 and the Shark 505 include hang tags on the steam irons for store displays. The hang tags claim that the Shark steam irons deliver “MORE POWERFUL STEAM vs. Rowenta ... at half the price.” J.A. at A4. The hang tags also include a reference stating that the claim is “[b]ased on independent comparative steam burst testing” to the respective Rowenta steam irons in “(grams/shot).” Id.

SEB first learned of the comparative advertising claims on the Shark steam irons in October 2013. Soon thereafter, SEB directed its internal laboratory to conduct testing to determine whether the claims were true. The lab ran tests comparing the Shark 505 and the Rowenta DW9080. The tests measured (1) the variable steam rate in grams per minute according to International Electrical Corporation (“IEC”) 60311 protocol and (2) the mass of a shot of steam in grams per shot according to IEC 60311 protocol.² The test results showed that the Rowenta DW9080 performed the same as the Shark 505 in terms of variable steam rate in grams per minute, with both measuring 37 grams per minute. In the test measuring grams per shot of steam, the Rowenta DW9080 outperformed the Shark 505, with measurements of 1.34 grams per shot and 1.00 grams per shot, respectively.

Because SEB's internal test results were inconsistent with the Shark advertising claims, SEB commissioned SLG Prüfund Zertifizierungs GmbH (“SLG”), an independent laboratory based in Germany, to conduct independent tests based on the Shark claims. SLG tested three steam irons of each model in accordance with IEC 60311 protocol, and it delivered its findings to SEB in a comprehensive thirty-eight page report (“SLG Test Report”). The SLG Test Report showed that the Rowenta DW5080 and the Rowenta DW9080 outperformed the Shark 405 and the Shark 505, respectively, in terms of grams per minute. For the test measuring steam power in grams per shot, the SLG Test Report showed that two of the three Shark 405 steam irons performed worse than all three Rowenta DW5080 steam irons, but one Shark 405 steam iron outperformed all three Rowenta DW5080 steam irons. The Rowenta DW5080's average performance was higher than the Shark 405's average performance.³ The SLG Test Report also showed that two of the three Rowenta DW9080 steam irons performed better in grams per shot than all three Shark 505 steam irons, and one Rowenta DW9080 performed worse than all three Shark 505 steam irons. The Rowenta DW9080's average performance was higher than the Shark 505's average performance.

B.

On January 29, 2014, SEB filed a complaint in the United States District Court for the Western District of Pennsylvania, asserting claims for false advertising under the Lanham Act, 15 U.S.C. § 1125(a), and for unfair competition under Pennsylvania common law. The following day, SEB moved for a preliminary injunction to enjoin Euro–Pro from making the claims on the Shark 405 and the Shark 505.

The District Court held an evidentiary hearing on March 19, 2014, to address SEB's motion for a preliminary injunction.⁴ At the hearing, SEB introduced the aforementioned internal test results and the independent SLG Test Report to show that the claims on the Shark steam irons are false. Euro–Pro introduced testimony and a study from its scientific expert, Dr. Abid Kemal (collectively referred to as the “Kemal Report”). According to the Kemal Report, steam power is the kinetic energy of a steam burst divided by the duration of the burst. Using this measurement for steam power, the Kemal Report showed that the Shark 405 and the Shark 505 deliver more powerful steam than the Rowenta DW5080 and the Rowenta DW9080, respectively. The Kemal Report also showed that “the mass of a shot of steam expelled from [the Shark steam irons] is comparable to the mass of a shot of steam (grams/shot) expelled from [the respective Rowenta steam irons].” J.A. at A909. Additionally, Euro–Pro introduced a consumer survey report prepared by Dr. Gary Ford (“the Ford Survey”) showing that consumers do not have a uniform understanding of the meaning of the phrase “more powerful steam.”

The District Court also heard testimony from SEB's marketing director, Scott Pollard, about the harm to the Rowenta brand caused by the Shark claims. Pollard testified that SEB had invested substantial resources to promote Rowenta as the best brand of steam irons in the eyes of retailers and consumers. According to Pollard, the direct reference to Rowenta on the lower-priced Shark steam irons likely would erode the Rowenta brand's reputation in the eyes of retailers, current consumers, and future consumers.

The District Court granted SEB's preliminary injunction motion. The District Court first concluded that SEB established a likelihood of success on the merits because it demonstrated that the Shark claims are literally false. The District Court next found that SEB had successfully demonstrated a likelihood of irreparable harm in the absence of preliminary relief, relying in large part on Pollard's testimony about the impact on the reputation of the Rowenta brand and on SEB's goodwill. Finally, the District Court concluded that the balance of harms and the public interest favored granting the preliminary injunction. Notably, the preliminary injunction required Euro–Pro to place stickers over the claims on the Shark packaging and remove the hang tags from the steam irons.

Euro–Pro filed this timely appeal on May 15, 2014. Euro–Pro filed motions to stay the preliminary injunction in the District Court and in this Court, but both motions were denied.

II.

The District Court had jurisdiction under 28 U.S.C. §§ 1331 and 1367. We have jurisdiction over the appeal from the order granting the preliminary injunction pursuant to 28 U.S.C. § 1292(a)(1). “We review an order granting a preliminary injunction for abuse of discretion, the factual findings for clear error, and the determinations of questions of law de novo.” Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412, 418 (3d Cir.2010) (internal quotation marks and citation omitted). We review the details of equitable relief for abuse of discretion. Anderson v. Davila, 125 F.3d 148, 159 (3d Cir.1997).

III.

“A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). Awarding preliminary relief, therefore, is only appropriate “upon a clear showing that the plaintiff is entitled to such relief.” Id. at 22, 129 S.Ct. 365. “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence...