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E-Image Data Corp. v. Digital Check Corp.

United States District Court, E.D. Wisconsin

March 20, 2018

E-IMAGEDATA CORP., Plaintiff,
v.
DIGITAL CHECK CORP., Defendant.

          DECISION AND ORDER

          LYNN ADELMAN DISTRICT JUDGE

         e-ImageData Corp. brings this action against Digital Check Corp. d/b/a ST Imaging and proceeds on claims of false or deceptive advertising in violation of § 43(a) of the Lanham Act, which provides in relevant part as follows:

Any person who, on or in connection with any goods . . ., uses in commerce any . . . false or misleading description . . . or . . . representation of fact, which . . . in commercial advertising or promotion, misrepresents the nature, characteristics, [or] qualities . . . of his or her or another person's goods . . . or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a)(1)(B). ST Imaging moves for summary judgment, and e-Image moves for partial summary judgment on liability as to certain of its claims under § 43(a).

         On a party's motion, I must “grant summary judgment” on “each claim” or “part of each claim . . . on which summary judgment is sought. . . . if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is “material” if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A “dispute about a material fact is ‘genuine, ' . . . if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         In addressing a motion for summary judgment, “[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in [its] favor.” Id. at 255. Where, as here, both parties move for summary judgment, each is entitled to “that sympathetic reading of the record” with respect to the other's motion. Hotel 71 Mezz Lender LLC v. Nat'l Ret. Fund, 778 F.3d 593, 603 (7th Cir. 2015). With these principles in mind, I next present the underlying facts and then describe e-Image's claims.

         I. BACKGROUND

         e-Image and ST Imaging are commercial competitors that make, promote, and sell systems used to view and interact with materials stored in microform. “Microform” refers to various means of “reproducing printed matter or other graphic material in a much-reduced size, ” which allows for the storage of documents, books, periodicals, and images, among other things, in “durable, extremely compact, and easily accessible file records.” Microform, Encyclopaedia Britannica, https://www.britannica.com/technology/ microform (last visited March 19, 2018). Reproducing materials in microform usually renders them unreadable to the naked eye. The parties' systems use hardware and software to allow users to view materials in microform on a screen and convert those materials into digital files that can then be saved, edited, printed, and shared.

         e-Image and ST Imaging typically sell their systems, which cost thousands of dollars, to institutions like libraries, universities, and businesses. Each party sells through a national network of resellers, which respond to direct inquiries and requests for proposals from potential customers in their assigned territories. These resellers compete directly for many sales through a process that often includes bidding, in-person product demonstrations, and hands-on customer testing. The parties and their resellers have found that customers base their purchasing decisions on a wide variety of factors, including but not limited to price, ease of use, and functionality.

         Since 2006, e-Image has sold microform viewer and imaging systems under the brand name “ScanPro, ” including the ScanPro 1000, the ScanPro 2000, the ScanPro 3000, and the ScanPro i9300. Since 2010, ST Imaging has sold competing systems under the brand name “ViewScan, ” including the ViewScan I, which ST Imaging introduced in April of that year; the ViewScan II, which it introduced in June 2013; and the ViewScan III, which it introduced a year later, in June 2014.

         For the most part, e-Image's claims arise from ST Imaging's statements about the characteristics of its ViewScan devices to potential customers during the sales process. For instance, an ST Imaging brochure for the ViewScan I provides that it has a “zoom range” of “7X to 54X Optical Zoom” and “7X to 96X Digital Auto Zoom, ” see Piery Decl. Ex. 5, ECF No. 84-8, at 5, and brochures for the ViewScan II and the ViewScan III provide that they have an “[o]ptical zoom lens 7X to 105X, ” see Piery Decl. Ex. 69, ECF No. 88-24, at 7; Piery Decl. Ex. 46, ECF No. 87-28, at 7. Though, a later brochure for the ViewScan II instead provides that it is capable of “[o]ptical” magnification “with digital zoom 7x to 105x.” See Piery Decl. Ex. 70, ECF No. 88-25, at 7. The parties dispute the meaning and accuracy of these and other representations by ST Imaging about the “optical zoom capabilities of its ViewScan devices.” See Pl.'s Mot., ECF No. 78.

         Similarly, the parties dispute the meaning and accuracy of ST Imaging's statements about the “camera megapixel capabilities” of the ViewScan II and the ViewScan III. See Id. For example, brochures for the ViewScan II provide, under the heading “Camera, ” for a “[m]aximum image size” of “80 megapixels, ” see Piery Decl. Ex. 69, supra, at 7; Piery Decl. Ex. 70, supra, at 7, while a brochure for the ViewScan III advertises a “14 Megapixel Image Sensor - Capable of capturing more than 56 megapixels of data, ” see Wilbert Decl. Ex. 21, ECF No. 33, at 3.

         e-Image also asserts false or deceptive advertising claims based on ST Imaging's representations that its ViewScan products are “UL Certified.” UL, or Underwriters Laboratories, develops product safety standards, tests products for compliance with those standards, and certifies products that pass its tests. UL did not certify any of the ViewScan devices until December 2015-when it certified the ViewScan III-but brochures for all 3 devices, published months and years earlier, indicate UL certification. See Piery Decl. Ex. 5, supra, at 5; Piery Decl. Ex. 46, supra, at 7; Piery Decl. Ex. 69, supra, at 7; Piery Decl. Ex. 70, supra, at 7; see also Rennecker Dep., Piery Decl. Ex. 8, ECF No. 84-11, at 63:19-64:11 (explaining use of a number on each brochure indicating when it was published on ST Imaging's website).

         Lastly, with respect to product claims, e-Image asserts that ST Imaging has falsely or deceptively equated its ViewScan devices with e-Image's competing ScanPro devices in direct communications to potential customers and to its resellers, encouraging them to equate the products when responding to requests for proposals and bids from potential customers. The parties dispute whether and to what extent these statements were ...


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