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Epson America, Inc. v. USA111, Inc.

United States District Court, D. South Carolina, Rock Hill Division

April 26, 2017

Epson America, Inc., Plaintiff,
v.
USA111, Inc., d/b/a iRULU, Defendant.

          ORDER

          CAMERON MCGOWAN CURRIE, Senior United States District Judge

         Opinion and Order Granting Motion for Preliminary Injunction On January 17, 2017, Plaintiff Epson America, Inc. (“Epson”) filed a Complaint alleging Defendant USA111, Inc., d/b/a iRULU (“iRULU”) made false statements in advertising its consumer projectors, specifically a model called the BL20. Epson seeks, inter alia, injunctive relief restraining iRULU from engaging in false advertising and ordering removal of false advertisements from iRULU's projector product listings. Entry No. 1, Compl. ¶ 44. The central allegation is iRULU's claimed lumen rating is vastly overstated in advertisements and has resulted in injury to Epson. Id. at ¶¶ 27-28, 35.

         On January 19, 2017, Epson filed a motion for preliminary injunction asking the court to enjoin iRULU from engaging in further false advertising regarding its products' lumen rating, order removal of all infringing iRULU products from Amazon.com (“Amazon”) and other websites until iRULU can substantiate any new proposed lumen claims through appropriate testing, and order iRULU to send corrective notices to retailers and customers disclosing the prior false claims regarding the projectors' lumen output. ECF No. 9. For the reasons stated below, the motion for preliminary injunctive relief is granted as to some but not all of the relief requested.

         BACKGROUND

         It is undisputed Epson and iRULU both sell portable consumer projectors online through websites such as Amazon.[1] Quality and price for such projectors are largely determined based on the resolution and brightness of the projector. ECF No. 9-2 ¶ 5. Projector brightness is measured and described in lumens, and lumen ratings are often listed in the projector's description or specifications on sites such as Amazon. Id. at ¶ 6-8. Some product listings include lumen ratings in the product name itself. Id. at ¶ 8. Such ratings are an important piece of information used by consumers when selecting a projector appropriate for their needs. Id. at ¶ 7.

         Many online marketplaces, such as Amazon, identify best-selling products with a “best seller” or similar label. Id. at ¶ 10. These products are often at the top of the results when consumers run searches, which can influence customer selection. Compl. ¶ 36.

         iRULU sells approximately 30 different models of projector with advertised lumen ratings between 800 to 2800 lumens. ECF No. 28-2 ¶ 4; ECF No. 1-3. One such projector is the BL20, advertised on Amazon and other online retailers as having 2600 lumens. Compl. ¶ 21, Answer ¶ 21. The BL20 was designated as an Amazon “Best Seller” in the Fall of 2016, although it currently does not hold that designation. ECF No. 28-2, ¶ 18.

         Epson manufactures and sells many electronic devices, including projectors which fall into the same category as the BL20. ECF No. 9-2 ¶ 3. In July of 2016, Epson commissioned an independent technology consulting company to test the brightness of iRULU's BL20 projector. ECF No. 9-3 ¶ 6. The results showed each projector tested had lumen output of approximately 80 lumens instead of the 2600 advertised. Id. at ¶¶ 7, 10-14.

         Epson filed suit in this court on January 17, 2017, seeking injunctive relief and damages against iRULU. ECF No. 1. Epson requested iRULU be enjoined from falsely advertising its projectors' lumen ratings, and the court order iRULU to remove all false advertisements of the BL20 and all misrepresented iRULU products. Id. at ¶ 44. On January 19, 2017, Epson filed a motion for preliminary injunction pursuant to Federal Rule of Civil Procedure 65.[2] ECF No. 9. iRULU filed a response in opposition on March 1, 2017. ECF No. 28. Epson filed its reply on March 8, 2017. ECF No. 30. The parties declined an evidentiary hearing after agreeing the issues before the court consist of legal claims and inferences to be drawn from the facts submitted in their respective briefs.

         STANDARD

         A preliminary injunction is “an extraordinary remedy . . . which is to be applied only in [the] limited circumstances which clearly demand it.” Direx Israel, Ltd. v. Breakthrough Med. Corp., 952 F.2d 802, 811 (4th Cir. 1991) (internal quotation marks omitted) (citation omitted). The traditional purpose of a preliminary injunction is to “protect the status quo and to prevent irreparable harm during the pendency of a lawsuit ultimately to preserve the court's ability to render a meaningful judgment on the merits.” In re Microsoft Corp. Antitrust Litig., 333 F.3d 517, 525 (4th Cir. 2003). To qualify for injunctive relief, a plaintiff must show (1) likelihood it will succeed on the merits; (2) likelihood it will suffer irreparable harm in the absence of a preliminary injunction; (3) the balance of equities tips in its favor; and (4) the injunction is in the public interest. Winter v. NRDC, Inc., 555 U.S. 7, 20 (2008); Real Truth About Obama v. FEC, 575 F.3d 342, 346 (4th Cir. 2009), vacated on other grounds, 559 U.S. 1089 (2010).

         The Winter-Real Truth standard requires the party seeking the injunction to make a “clear showing” it is likely to succeed on the merits. Real Truth, 575 F.3d at 345; see also Winter, 555 U.S. at 22. This standard compels the moving party to show it is likely to prevail. Regardless of the balance of hardships, it is insufficient for the party to show only “grave or serious questions are presented” in the litigation. Compare Real Truth, 575 F.3d at 346 with Blackwelder Furniture Co. of Statesville v. Seilig Mfg. Co., 550 F.2d 189, 196 (4th Cir. 1977).

         Second, the moving party must make a clear showing it is likely to be irreparably harmed if preliminary relief is denied. To meet this test, the party must show more than a mere possibility of harm. Winter, 555 U.S. at 21. Third, the moving party must show the balance of equities tips in its favor. Id. at 21, 26. Fourth, the court must consider whether grant or denial of the injunction is in the public interest. The court must give “particular regard” to the public consequences of granting a preliminary injunction. Id. at 24; Real Truth, 575 F.3d at 347. The Fourth Circuit no longer recognizes a “flexible interplay” among these criteria. Instead, each requirement must be fulfilled as articulated. Real Truth, 575 F.3d at 347 (quoting Blackwelder, 550 F.2d at 196).

         DISCUSSION

         1. Likelihood of Success on the Merits

         Epson alleges iRULU violated the Lanham Act, 15 U.S.C. § 1051, et seq., by falsely advertising the lumen output of its projectors, specifically the BL20. The Lanham Act creates a private right of action for corporate victims of “false or misleading” descriptions or representations. 15 U.S.C. § 1125(a). Section 1125(a)(1)(B) of the Lanham Act provides:

Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of ...

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