Atari v. 3DO advertisement
Dag Johansen Esq.
Subject: Atari v. 3DO advertisement
Newsgroups: rec.games.video.atari,rec.games.video.3do,rec.games.video.advocacy
Organization: NETCOM On-line Communication Services (408 261-4700 guest)
Summary:
Keywords:
I figure some of you might find this interesting:
ATARI CORPORATION, Plaintiff, v. THE 3DO COMPANY, Defendant.
ATARI CORP. v. 3DO CO.
NO. C 94-20298 RMW (EAI)
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA
May 16, 1994, Decided
May 16, 1994, Filed; May 25, 1994, Entered
JUDGE RONALD M. WHYTE
Defendant The 3DO Company's ("3DO") motion to dismiss and plaintiff Atari's
motion for a preliminary injunction were heard on May 13, 1994. The court has
read the moving and responding papers. For the reasons set forth below, the
court grants defendant's motion to dismiss.
I. BACKGROUND
3DO produces and markets (through licensees) a multimedia home game system.
Atari Corporation ("Atari" produces and markets a competing multimedia home game
system called Jaguar. On May 3, 1993 Atari filed an ex parte application for a
Temporary Restraining Order ("TRO") and an Order to Show Cause ("OSC") regarding
issuance of a preliminary injunction pursuant to Fed.R.Civ.Pro. Rule 65. Atari
alleges that 3DO's slogan, "3DO, The Most Advanced Home Gaming System in the
Universe" is false and misleading in violation of Section 43(a) of the Lanham
Act, 15 U.S.C. Section 1125(a), and the California Unfair Business Practices Act
and False Advertising Law, California Business and Professions Code Section
17200 and 17500 et seq. and 17508. [*2] After a hearing on May 6, 1994, the
court denied Atari's application for a TRO and issued an Order to Show Cause
regarding a preliminary injunction. In addition, the parties agreed by
stipulation that defendant could file a motion to dismiss on the grounds that
3DO's slogan is not an actionable statement as a matter of law.
II. LEGAL STANDARDS
A. Motion to Dismiss
In ruling on a motion to dismiss, district courts must accept all material
allegations of fact alleged in the complaint as true, and resolve all doubts in
favor of the plaintiff. Blake v. Dierdorff, 856 F.2d 1365, 1368 (9th Cir. 1988).
The court may dismiss a complaint as a matter of law for either of two reasons:
(1) lack of a cognizable legal theory, or (2) the pleading of insufficient facts
under a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749
F.2d 530, 533 (9th Cir. 1984).
B. Preliminary Injunction
The Ninth Circuit holds that, in order to obtain a preliminary injunction, a
movant must show: 1) a strong likelihood of success on the merits, 2) the
possibility of irreparable injury to the plaintiff if the preliminary relief
[*3] is not granted, 3) the balance of hardships favoring the plaintiff, and
4) advancement of the public interest. Los Angeles Memorial Coliseum Comm. v.
National Football League, 634 F.2d 1197, 1200 (9th Cir. 1980). A party may meet
the burden under these four factors by demonstrating either: 1) a combination of
probable success on the merits and the possibility of irreparable injury, or 2)
that serious questions of law are raised and the balance of hardships tips
sharply in its favor. Fong v. Lawn, 851 F.2d 1559, 1561 (1988).
III. ANALYSIS
A. Motion to Dismiss
Atari argues that 3DO's slogan, "the most advanced home gaming system in the
universe" is false and misleading because the Jaguar system's greater bus
bandwidth makes it "more advanced" than the 3DO system. In opposition, 3DO
argues that its slogan is too vague and general to constitute an actionable
statement of fact.
The dispositive issue is whether the alleged misrepresentation is merely
"puffery" and thus not actionable under the Lanham Act and California unfair
competition and false advertising statutes, or whether it is a statement of fact
which has the [*4] tendency to deceive the reader. In Sterling Drug, Inc. v.
Federal Trade Commission, 741 F.2d 1146, 1150 (9th Cir. 1984), cert. denied, 470
U.S. 1084, 85 L. Ed. 2d 143, 105 S. Ct. 1843 (1985), the court described puffery
in advertising to be "claims [which] are either vague or highly subjective."
Puffing involves "outrageous generalized statements, not making specific claims,
that are so exaggerated to preclude reliance by consumers." Cook, Perkiss &
Liehe, Inc. v. Northern California Collection Serv., 911 F.2d 242, 246 (9th Cir.
1990) (citation omitted.) "The common theme that seems to run through cases
considering puffery in a variety of contexts is that consumer reliance will be
induced by specific rather than general assumptions." Cook, Perkiss & Liehe,
Inc. v. Northern California Collection Serv., 911 F.2d 242, 246 (9th Cir. 1990).
The Cook court illustrates this distinction with an example from Smith-Victor
Corp. v. Sylvania Electric products, Inc., 242 F. Supp. 302, 308-09 (N.D. Ill.
1965). [*5] In Smith-Victor, an advertiser's statement that its lamps were
"far brighter than any lamp ever before offered for home movies" was ruled
puffery. However, when the advertiser quantified numerically the alleged
superior brightness with statements such as "35,000 candle power and 10-hour
life," the court found a potential Lanham Act claim. Cook, supra, 911 F.2d at
246 citing Smith-Victor, 242 F. Supp. at 308-09. In Cook, the court found that
the statement "we're the low cost commercial collection experts" was a general
assertion of superiority and "not the kind of detailed or specific factual
assertions that are necessary to state a false advertising cause of action under
the Act." Cook, 911 F.2d at 246. The court agreed with the Magistrate Judge that
"it is beyond the realm of reason to assert . . . that a reasonable consumer
would interpret this as a factual claim upon which he or she could rely."
In the case at bar, the slogan "the most advanced home gaming system in the
universe" is a general assertion of superiority and "not the kind of detailed or
specific factual assertion" that [*6] is required to state a false
advertising cause of action under the Lanham Act. Plaintiff argues that the
slogan attributes objective, quantifiable attributes to the 3DO system which are
simply untrue. Plaintiff contends that the statement that the 3DO system "is the
most advanced system" would tend to give a reasonable consumer a view that the
statement was based on a test of some sort because the statement concerns an
attribute which is measurable, the bus bandwidth. The court disagrees. The
slogan is clearly distinguishable from the actionable statement in Smith-Victor
that involved numerical quantification. The 3DO slogan makes no specific,
quantifiable claims. The claim that the system is the "most advanced" is general
and contains no reference, express or implied, to "bus bandwidth" or any other
specific attribute. Moreover, the claim that the 3DO system is the most advanced
in the universe is the kind of "outrageous generalized statement" that is so
"exaggerated as to preclude reliance by consumers."
Plaintiff also argues that since it also states a claim under the unfair
trade practices act and false advertising law of the California Business and
Professions Code Sections [*7] 17200, 17500 and 17508 and since the rules on
puffery are derived from state law fraud concepts, California law is instructive
on the Lanham issues and the state law claims. Relying on Keith v. Buchanan, 173
Cal.App.3d 13, 21, 220 Cal. Rptr. 392 (1985), plaintiff contends that California
law creates a presumption in Atari's favor and applies a liberal test. However,
even under the test propounded in Keith, plaintiff's argument fails. In Keith,
the court stated that "commentators have noted several factors which tend to
indicate an opinion statement [rather than an affirmation of fact]. These are
(1) a lack of specificity in the statement made. . . ." Keith v. Buchanan,
supra, 173 Cal.App. 3d at 21. As stated above, 3DO's slogan is not a detailed or
specific factual assertion but a general statement. Therefore, the court finds
that the alleged misrepresentation is inactionable.
B. Preliminary Injunction
As discussed above, the court has found that 3DO's slogan is inactionable.
Therefore, plaintiff has failed to show the probability of success on the merits
or even that serious questions [*8] of law are raised. As a result, plaintiff
has not met its burden of showing a combination of probable success on the
merits and the possibility of irreparable injury or that serious questions of
law are raised and the balance of hardships tip sharply in its favor.
IV. ORDER
The court hereby denies plaintiff's motion for a preliminary injunction and
grants defendant's motion to dismiss.
DATED: May 16, 1994
RONALD M. WHYTE
United States District Judge
JUDGMENT
Pursuant to the court's order dated May 16, 1994 which denied plaintiff's
motion for a preliminary injunction and granted defendant's motion to dismiss,
judgment is hereby entered against plaintiff and in favor of defendant.
It is ordered that the plaintiff take nothing, that the action be dismissed
on the merits , and that the defendant The 3DO Company recover of the plaintiff
Atari Corporation its costs of action.
DATED: May 16, 1994
Dag Johansen Esq.
: In opposition, 3DO
: argues that its slogan is too vague and general to constitute an actionable
: statement of fact.
I know it is poor netiquette to follow your own post . . . but
I love that line. 3DO's basic defense is that the statement is
meaningless hyperbole. It is a good defense, but sort of an embarassing
thing to admit.
David Watters
What's embarassing is Atari's cry baby litigation which got laughed out
of court. "Mommy, there saying there unit is the best in the universe,
waa waa waa."
As if Atari knows nothing about marketting and hype.
Well, at leaset Atari now owes 3DO money for all legal costs. <snicker>
--
It's what's above this line that counts, get it?
David Watters
wat...@infinet.com [My other .signature is a Porsche]
Scott A. Krotz
>I figure some of you might find this interesting:
>
>
> ATARI CORPORATION, Plaintiff, v. THE 3DO COMPANY, Defendant.
>
> ATARI CORP. v. 3DO CO.
>
> NO. C 94-20298 RMW (EAI)
[silly lawsuit deleted]
Hey thats pretty funny! Its amazing we didnt hear about this before.
Even Atari lawyers think bus bandwidth is all that matters! :)
I wonder what all those folks who went ballistic at the rumor that 3DO was
going to sue the WSJ think of this..
Scott
Jason Tyler Davidson
: Subject: Atari v. 3DO advertisement
: Newsgroups: rec.games.video.atari,rec.games.video.3do,rec.games.video.advocacy
: Organization: NETCOM On-line Communication Services (408 261-4700 guest)
: Summary:
: Keywords:
Well the point of this legal act is moot because up to this point, there
really is nothing on the Jaguar platform to show a game that 3do cannot
do, so therfore it is correct and no I am not a 3d0er, I just think its
not right, because at this point Atari has no games that really show off
the Jaguar as 64 bits, any PC or 3do can do the same thing and there is
software that just does not show off the Jaguar as a 64 bit machine.
Atari has to back up their claim with proof and there is no proof, so what
that it has a bus bandwidth of 64-bits, so does the Pentium and I dont
see any performance increase of the bandwidth.