TM may look like a certification mark, but that doesn't harm a competing trade organization

North American Olive Oil Ass’n v. D’avolio Inc., 16-CV-6986 (SJF) (ARL), 2020 WL 2079421 (E.D.N.Y. Apr. 30, 2020)

NAOOA, a trade association for olive oil marketers/sellers/etc., sued a number of defendants for false advertising about olive oil sold by others. The court dismisses the complaint without leave to amend.

NAOOA members pledge to abide by olive oil quality and purity standards established by the International Olive Council, and NAOOA “offers a Certified Quality Seal Program to indicate compliance with global trade standards.” Its members account for approximately 55-60% of total olive oil sales in the United States.

Defendant VFC produces olive oil and uses the “Ultra Premium” designation, a category created by VFC which purportedly represents the highest quality olive oil in the world. VFC’s website claims that the UP standard “is reserved for the finest extra virgin olive oils in the world, and as such, the UP grade exceeds all existing [standards] for the grade known as extra virgin olive oil.” VFC registered the UP mark and the word mark “UP ULTRA PREMIUM EXTRA VIRGIN OLIVE OIL CERTIFIED LAB TESTED SENSORY EVALUATED HIGHEST STANDARD” (not as certification marks). NAOOA alleged that defendants disparaged its members’ olive oil and NAOOA’s own reputation, and that its UP grade was deceptive.

VFC’s website states that “[o]ver 50% of the oil produced in the Mediterranean area is of such poor quality that it must be refined to produce an edible product.” D’Avolio allegedly “distorts findings of an alleged industry report to represent to consumers that various brands sold in supermarkets hold no health benefits,” referencing a study undertaken by the University of California at Davis in 2010 and stating that the study examined “numerous supermarket brands” and found that 70% “failed to qualify chemically as Extra Virgin Olive Oil and was so old ... to hold no health benefit. This study not only demonstrated that extra virgin olive oil is a term that is often misused, but also that the organic certification process does not take in to account quality, authenticity, or health benefits.” Defendant O Live Brooklyn’s owner gave an interview in which he stated that “if you’re buying olive oil from a supermarket, it might not be real olive oil, or it might be old,” in which case it has “lost all of the goodness and freshness in it.” He also advised readers to “avoid major brands. Those bottles have been sitting around on shelves for God knows how long.” Defendant The Crushed Olive’s website states that “[t]he market has become flooded with these oils that are regulated by absurdly low standards and fostered by numerous trade associations that sacrifice quality for price.” NAOOA is allegedly widely recognized as the leading olive oil trade association in North America.”

As for the UP designation, NAOOA alleged that defendants market their olive oils to mislead consumers “into falsely believing that the recognized benefits of olive oil can only be achieved by consuming olive oil” meeting the UP standard and certification, but consumers are unaware that the UP mark cannot be displayed on the product of other olive oil producers even if they meet or exceed UP standards because it’s a trademark.  This allegedly falsely leads consumers to believe that the olive oil was certified, sponsored, or approved by a third party.

NAOOA had standing to sue on its own behalf, but not on behalf of its members. Thus, the court focused on harms to NAOOA itself.

First, the complaint didn’t sufficiently allege joint liability in an organized campaign to penetrate the olive oil market.  Merely selling VFC-produced olive oils bearing the UP mark wasn’t sufficient to tie the retailer defendants together; the complaint didn’t allege they sold only VFC-produced olive oil, and it alleged “only minimal, stray conduct by the Defendants individually.”

Considering the different statements on their own, there was no plausible theory that a statement about the nature, quality, and characteristics of supermarket olive oils had “any bearing on NAOOA itself.” Anyway, statements like “[o]ver 50% of the oil produced in the Mediterranean area is of such poor quality that it must be refined to produce an edible product” and “...if you’re buying olive oil from a supermarket, it might not be real olive oil, or it might be old. In this case, it’s lost all of the goodness and freshness in it” had not been alleged to be false with non-conclusory facts. “NAOOA does not suggest that olive oil is immune from diminution of quality over time,” so it was illogical to think that the statement about old olive oil was literally false. Nor did defendants’ use of the UC Davis report qualify as successfully pled falsity.  NAOOA contended that the report was “widely discredited,” but cases discussing the report merely pointed out the limitations imposed on a consumer relying on it as the basis for a suit related to the purchase of items produced by one of the brands discussed in the study, given its small sample size, ties to one geographic region, and time elapsed since the study.  Regardless, the complaint didn’t explain how any of the statements related to any goods or services of NAOOA’s.

Also, most of the statements were puffery: “vague and lacking in precise meaning.” “[A]bsurdly low standards,” “might not be real olive oil, or it might be old,” and over 50% of olive oil from the Mediterranean is of “such poor quality” and requires refining to “produce an edible product” were all puffery: “generalized or exaggerated statements which a reasonable consumer would not interpret as a factual claim upon which he could rely.” The court doesn’t explain why “real” and “over 50%” don’t indicate the existence of standards by which the claims could be evaluated (even if ordinary consumers don’t have the ability to do so).

There were no allegations that the retail defendants used the UP mark or helped create it. Selling products with the UP mark wasn’t enough. And the complaint failed to plausibly allege that VFC’s use of the UP mark affected NAOOA by causing consumers to believe that NAOOA wasn’t reputable or reliable.

The UP mark includes the language “Highest Standard” and “Certified*Lab Tested*Sensory Evaluated.” NAOOA argued that “certification” was misleading because “there is no third party that certifies the quality of the olive oils that bear the UP designation.” But there was no caselaw indicating that the mere use of “certified” was misleading, and NAOOA didn’t allege that VFC’s products didn’t meet its own standards or that the standards were themselves fraudulent. “In the absence of allegations regarding the certification process itself as applied to VFC’s products, the actual identity of the tester is not material to the quality and characteristics of the product. In other words, NAOOA has not plausibly alleged that the mere omission of the identity of the tester alone is likely to influence the purchasing decision of a consumer.”  [I suspect many consumers would find independent certification far more valuable than self-certification; there is some litigation over things like the “Green Check” mark for household cleaning products in this vein, and the FTC might also not be super happy with this practice.]

As a separate theory, NAOOA alleged that VFC marketed olive oil with the UP mark to “mislead consumers into falsely believing that the recognized health benefits of olive oil can only be achieved by consuming olive oil bearing” the UP mark, but there were no specific factual allegations supporting this theory. VFC’s website said that “[t]he UP standards is reserved for the finest extra virgin olive oils in the world, as such, the UP grade exceeds all existing [standards] for the grade known as extra virgin olive oil. In order to qualify for the UP grade, the extra virgin olive oil must meet or exceed a comprehensive set of Production, Storage, transportation, Testing, Chemistry, and Organoleptic requirements [created by VFC].” But that wasn’t enough for NAOOA’s theory of falsity.

The court also dismissed NAOOA’s claim for cancellation of the registration.  Rejecting its argument that it falsely presented itself as a certification mark, the court ruled that the UP mark didn’t misrepresent the source of the goods. I wonder if this theory would have gone better at the TTAB in a cancellation petition; the court doesn’t seem particularly attentive to what the differences are supposed to be/why certification marks are not supposed to discriminate in terms of who can use them as long as their standards are met.

Coordinate state law claims also failed.