Challenges of a Lanham Act Injunction in Food Cases: Lessons from an Advertising Battle Between Two Major Consumer Products Companies
The recent decision in Stokely-Van Camp, Inc. v. Coca-Cola Co. (i.e., Gatorade vs. Powerade) illustrates the hurdles a company has to overcome to convince a court to stop a competitor from using arguably false advertising. Stokely-Van Camp, Inc. (“SVM”) was challenging advertising that compared Powerade ION4 to Gatorade Thirst Quencher.
Judge John G. Koeltl of the Southern District of New York characterized the case as “an advertising battle between two major consumer products companies over one company’s comparison of its beverage to human sweat.”
Following a two-day preliminary injunction hearing, the court denied a request to enjoin various advertising claims about Powerade ION4. Ultimately, to succeed, SVM, makers of Gatorade, had to show (1) likelihood of irreparable harm and (2) either a likelihood of success on the merits or serious questions going to the merits that were sufficient to make them fair grounds for litigation, with a balance of hardships tipping decidedly in its favor.
As with any request for a preliminary injunction, this is a difficult standard to meet. Personal experience is that no matter the legal standards, judges often revert to the “is a building going to collapse?” gut-check approach.
“Unclean hands” are also a big deal when it comes to injunctions. Courts are very reluctant to grant injunctive relief if they get a sense that the moving party is itself guilty of the acts it complains of.
In the SVM case, the court came down against SVM on the second prong concerning the merits of its Lanham Act false advertising and trademark dilution claims. The court ruled that the claims were moot (because Coca-Cola already dropped the aggrieved advertising campaign), nonactionable puffery or, for the implied falsity claims, not supported by extrinsic evidence.
The court went further in addressing irreparable harm. Even if SVM’s claims were merited, the court did not believe SVM was entitled to a presumption of irreparable harm, because Coca-Cola discontinued the comparison ads. The court also found SVM’s arguments of a public health risk unconvincing.
Perhaps the most interesting lesson is the court’s final conclusion of law that SVM had “unclean hands.” Even if SVM’s injunction motion had met the legal standard, fatal to its motion would have been that “SVC complains about Coca-Cola’s claims regarding the presence of calcium and magnesium in Powerade ION4, but it has made virtually identical claims about calcium and magnesium in its own Gatorade Endurance Formula.”
The court concluded by saying, “SVC cannot, having jumped on the bandwagon of calcium and magnesium first, now jump off and claim that Coca-Cola must get off too.”
Bottled Water Association Sues Over Water Bottle Ads
The International Bottled Water Association (IBWA) is taking aim at an advertising campaign for Eco Canteen stainless steel water bottles, claiming the ads wrongly suggest that plastic water bottles are unhealthy and unsafe.
In a lawsuit filed in the U.S. District Court for the Western District of North Carolina, IBWA claims that Eco Canteen’s television ads and content on various Eco Canteen websites deceive the public into believing that single-serve and reusable plastic water bottles constitute a safety and health risk to consumers. Among other things, IBWA’s lawsuit alleges that some of Eco Canteen’s ads have:
- Improperly linked plastic water bottles to breast and prostate cancer and stated that plastic water bottles “could be poisoning you and your family”;
- Matched images of single-serve plastic water bottles with Eco Canteen’s claims “relating to an organic compound called Bisphenol A (BPA) with the intent to confuse consumers into believing that single-serve bottles also contain BPA even though they do not”;
- Conveyed false and misleading information regarding the alleged health risks of BPA; and
- Suggested that exposing certain water bottles to warm temperatures can lead to leaching of chemicals.
IBWA brings two claims against Eco Canteen: (i) a false advertising claim under the Lanham Act, 15 U.S.C. § 1125; and (ii) an unfair competition claim under North Carolina law. A copy of the complaint (including exhibits showing some of the Eco Canteen ads about which IBWA complains) is available here.
Kellogg Co. Agrees to Settle False Advertising Claims
Cereal maker Kellogg Company has entered into a consent agreement with the U.S. Federal Trade Commission to settle charges that certain Kellogg advertisements contain false or misleading statements.
At issue in the FTC’s complaint are statements from Kellogg’s advertising that eating a bowl of Kellogg’s Frosted Mini-Wheats cereal for breakfast is clinically shown to improve kids’ attentiveness by nearly 20 percent. The complaint also challenges a separate advertising claim that eating Frosted Mini-Wheats for breakfast was clinically shown to improve children’s attentiveness by nearly 20 percent when compared to children who ate no breakfast. The complaint alleges that both of the challenged claims are false and violate the Federal Trade Commission Act.
The proposed settlement would, among other things, bar Kellogg from making comparable claims about Frosted Mini-Wheats unless the claims are true and not misleading. The consent agreement will be subject to public comment through May 19, 2009. The FTC will then decide whether to make the agreement final.
