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«Introduction False advertising claims under the Lanham Act may arise from a number of activities other than traditional advertising. Because Congress ...»

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DRAFT 7/24/15

False Advertising Claims against Product Names and Labels

Mary LaFrance

William S. Boyd School of Law, UNLV


False advertising claims under the Lanham Act may arise from a number of activities

other than traditional advertising. Because Congress did not define any of the key terms in the

false advertising provision, key questions have been left to the courts, including (1) whether a

defendant’s assertion of fact about a product is false, and (2) whether that assertion is in the context of “advertising.” In attempting to give meaning to these terms, courts distinguish between claims that are explicitly and implicitly false, impose different requirements of proof for each type of false claim, and allow a certain amount of leeway for “puffery” or patently implausible representations. Yet there are no clear lines distinguishing these categories, and no safe harbors.

The Supreme Court reaffirmed the absence of safe harbors in Pom Wonderful LLC v.

Coca Cola Co., 1 where it held that a product name or label that complies with federal food and drug regulations may still be misleading under the Lanham Act. Even if the Court’s decision is correct as a matter of policy as well as statutory interpretation, it expands the realm of uncertainty for manufacturers and trademark owners.

False advertising claims arising from food and beverage labeling have dramatically increased in recent years, and have gained additional momentum after Pom Wonderful. Because FDA regulations are no longer a safe harbor against federal false advertising claims, Pom Wonderful creates uncertainty with respect to what constitutes false advertising with respect to product names and labels applied to food, beverages, and other products regulated by the FDA.

This may lead to increased false advertising litigation under the Lanham Act. In addition, because the scope of FDCA preemption of state laws is unsettled, Pom Wonderful will encourage more litigation under state false advertising and unfair competition laws; unlike the Lanham Act, these actions can be brought by consumers, and often take the form of a class action.

This article examines the application of false advertising laws to product names and labels, and the conflicts that arise between the FDCA, the Lanham Act, and state consumer protection laws. It concludes that the issues arising from Pom Wonderful can be situated within two broader questions: (1) how we decide whether a product name or label communicates an assertion of fact at all, and (2) how to identify what that assertion is, where different consumers might draw significantly different inferences from the same product name or label. Unless we can reliably determine what meaning consumers ascribe to the language and images on a product label, it will be difficult to assess whether the implicit message is misleading.

134 S.Ct. 2228 (2014).

I. False Advertising Overview The Lanham Act’s false advertising provision is drafted broadly enough to encompass the names of goods or services as well as the information conveyed on labels. A false advertising claim may arise from the use of “any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact” that is used in “commercial advertising or promotion” if it “misrepresents the nature, characteristics, qualities, or geographic origin” of goods or services. 2 The plaintiff must show (1) that the defendant’s statements have actually deceived, or are likely to deceive, a substantial portion of the intended audience, (2) that the deception is material in that it is likely to influence purchasing decisions, and (3) that there is a likelihood of injury to the plaintiff, such as declining sales or loss of good will. 3 Advertising is considered false or misleading under either of two circumstances: The statements may be literally false, in which case the court may grant relief without considering whether the buying public was actually misled. 4 Alternatively, if the statements are literally true or ambiguous, they will be false or misleading if, in light of the merchandising context, they are likely to deceive or confuse consumers. 5 Evidence that consumers were actually misled or confused may include consumer testimony, marketing surveys, proof of lost sales, or other evidence of deception. 6 Mere “puffery,” however, is not actionable. Puffery has been described as “exaggerated advertising, blustering, and boating upon which no reasonable buyer would rely,” 7 and includes vague or highly subjective representations of product superiority. 8 In contrast, actionable false advertising typically requires a false assertion regarding a product’s specific or absolute

The statute reads, in relevant part:

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 fact, or false or misleading representation of fact, which...

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, 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).

See, e.g., Warner-Lambert Co. v. BreathAsure, Inc., 204 F.3d 87, 91-92 (3d Cir. 2000); United Indus. Corp. v.

Clorox Co., 140 F.3d 1175, 1180 (8th Cir. 1998); Johnson & Johnson-Merck Consumer Pharm. Co. v. RhonePoulenc Rorer Pharm., 19 F.3d 125, 129 (3d Cir. 1994); Black & Decker, Inc. v. Pro-Tech Power, Inc., 26 F. Supp.

2d 834, 861-62 (E.D.Va. 1998). As is true of any Lanham Act claim, there must also be a nexus with interstate commerce. Warner-Lambert, 204 F.3d at 92.

Johnson & Johnson-Merck, 19 F.3d at 129; see also Castrol, Inc. v. Pennzoil Co., 987 F.2d 939, 943 (3d Cir.1992).

Lipton v. Nature Co., 71 F.3d 464, 474 (2d Cir. 1995); Castrol, 987 F.2d at 943; Sandoz Pharmaceuticals Corp. v.

Richardson-Vicks, Inc., 902 F.2d 222 (3d Cir. 1990).

See, e.g., Warner-Lambert, 204 F.3d at 96; McNeilab, Inc. v. American Home Prods. Corp., 501 F. Supp. 517, 525 (S.D.N.Y. 1980); Castrol, 987 F.2d at 945. For a critique of the distinction between literally and implicitly false statements, see Rebecca Tushnet, Running the Gamut From A to B: Federal Trademark and False Advertising Law, 159 U. Pa. L. Rev. 1305 (2011).

United Indus. Corp, 140 F.3d at 1180.

Perkis & Liehe, Inc. v. Northern California Collection Serv., Inc., 911 F.2d 242, 246 (9th Cir. 1990).

characteristics, including specific, measurable claims of product superiority based on product testing. 9 A literally false claim need not be explicit; it may be ``conveyed by necessary implication when, considering the advertisement in its entirety, the audience would recognize the claim as readily as if it had been explicitly stated.'' 10 However, the claim must still be unambiguous in order to be literally false: ``The greater the degree to which a message relies upon the viewer or consumer to integrate its components and draw the apparent conclusion,… the less likely it is that a finding of literal falsity will be supported.'' 11 In determining whether a false claim is necessarily implied by a product's name or advertisement, so that the plaintiff will not be required to submit evidence of consumer confusion, courts inquire whether, ``based on a facial analysis of the product name or advertising, the consumer will unavoidably receive a false message from the product's name or advertising.'' 12 Many false advertisement claims involve declarative assertions made in advertising or promoting a product or service. 13 For example, an advertisement may claim that “tests prove” that the advertised product is superior to the competition; such a claim is false if the tests do not in fact prove superiority. 14 In other cases, however, the assertion is less direct, so that the false meaning is merely implied. This is typically the case with false advertising claims arising from product names and labels, where the consumer infers the false assertion from individual words, short phrases, visual images, or a combination thereof.

II. FDCA Preemption and Preclusion The federal Food, Drug, and Cosmetic Act (FDCA) expressly preempts state laws that impose labeling requirements that inconsistent with FDA regulations. 15 However, it does not expressly preclude application of other federal laws, such as the Lanham Act.

Even with respect to state law, the preemptive scope of the FDCA is not entirely clear.

The 1990 NLEA prohibits misbranding of foods, and defines a food as misbranded if the label is “false or misleading in any particular.” 16 The NLEA expressly prohibits states from prescribing United Indus. Corp., 140 F.3d at 1180; Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1145 (9th Cir.

1997); Castrol, 987 F.2d at 945.

Clorox Co. v. Proctor & Gamble Comm. Co., 228 F.3d 24, 35 ((1st Cir. 2000).

Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharms. Co., 290 F.3d 578, 587 (3d Cir.


Id.; see also Warner-Lambert, 204 F.3d at 96-97; Cuisinart, Inc. v. Robot-Coupe Int’l Corp., 1982 U.S. Dist.

LEXIS 13594 (S.D.N.Y. 1982); Vidal Sassoon, Inc. v. Bristol-Myers Co., 661 F.3d 272, 277 (2d Cir. 1981).

See, e.g., Castrol, 987 F.2d at 947; Cuisinarts, Inc. v. Robot-Coupe Int’l Corp., 1982 U.S. Dist. LEXIS 13594 June 9, 1982).

Id. at 947-48.

21 U.S.C. §§ 343(k), 343-1; see, e.g.,Engurasoff v. Coca-Cola Co., 2014 U.S. Dist. LEXIS 116936 (N.D. Cal.

Aug. 21, 2014); Catheter Connections, Inc. v. Ivera Med. Corp., 2014 U.S. LEXIS 98206 (July 17, 2014); Vigiano v. Hansen Natural Corp., 944 F.Supp.2d 877 (C.D. Cal. 2013) (collecting cases).

21 U.S.C. § 343(a).

requirements “not identical to” to federal ones. 17 Specifically, states may not impose any food definitions or food labeling requirements that differ from certain specific requirements of the FDCA. 18 However, this bar on state regulation does not expressly apply to the general prohibition against “false or misleading” labels under § 343(a). Thus, it appears that there is a residual category of food mislabeling which the states are permitted to regulate.

In addition, it is unsettled whether NLEA preemption applies to state laws of general application, like unfair competition or deceptive trade practices laws, because these do not, on their face, impose particular requirements as to food identity or labels. 19 However, adjudicating the application of these laws to any specific consumer complaint will, if the consumer prevails, result in the imposition of such requirements on the losing party. Arguably, then, such laws should be preempted because their application can result in requirements that are not identical to FDA requirements. By analogy, suits for defamation or invasion of privacy are private actions rather than state actions, but because the state will impose a judgment if the plaintiff prevails, defamation and privacy laws are subject to the First Amendment.

As a result of these uncertainties, courts have reached conflicting conclusions on whether consumer complaints arising under state laws prohibiting deceptive labeling or advertising are preempted by the NLEA. 20 Because the NLEA does not recognize a private right of action, 21 and consumers do not have standing to bring false advertising claims under the Lanham Act, consumers and class action attorneys have gravitated to state laws that give consumers a private cause of action for unfair trade practices. In recent years, there has been a dramatic increase in such litigation. 22 Much of this litigation takes place in California, which has created a private 21 U.S.C. §§ 343-1(a)(1). There is an express exemption for maple syrup. Id.

Id. (referencing the requirements of §§ 341 and 343(g)); id. § 343-1(a)(2) (referencing the requirements of §§ 343(c), (e), (i)(2), (w), and (x); id. § 343-1(a)(3) (referencing the requirements of §§ 343(b), (d), (f), (h), (i)(1), and (k)); id. § 343-1(a)(4) (referencing the requirements of § 343(q); id. § 343-1(a)(5) (referencing the requirements of § 343(r)).

In re Simply Orange Orange Juice Marketing & Sales Practices Litigation, 2013 U.S. Dist. LEXIS 28080 (D. Mo.

Mar. 1, 2013) (no evidence of congressional intent to broadly preempt state consumer protection laws); Stewart v.

Smart Balance Inc., 2012 U.S. Dist. LEXIS 138454 (D.N.J. Jun. 26, 2012) (no preemption of claim that product was falsely labeled “fat free” under state law prohibiting “fraudulent” and “deceptive” practices).

Diane P. Flannery & Joan S. Dinsmore, 2013’s Key Rulings in Food Mislabeling Litigation, Law360, available at http://www.law360.com/articles/499170. See, e.g., Guerrero v. Target Corp., 889 F. Supp. 2d 1348, 1361-62 (S.D.

Fla. 2012) (no preemption of Florida honey standards because there is no federal standard of identity for honey);

Perea v. Walgreen Co., 939 F.Supp.2d 1026 (C.D. Cal. Apr. 11, 2013) (NLEA expressly preempts California honey standards even though there is no federal standard of identity for honey); Chacana v. Quaker Oats Co., 752 F. Supp.

2d 1111 (N.D. Cal. 2010) (no preemption of claims addressing the word “wholesome” because they did not involve “nutrient content”); Shepard v. DineEquity Inc., 2009 U.S. Dist. LEXIS 97245 (D. Kan. Sept. 25, 2009) (NLEA preempts claims based on restaurant chain’s statements about fat and calorie content because these were “nutrition content” and not “nutrition information”); Holk v. Snapple Beverage Corp., 574 F. Supp. 2d 447, 454 (D.N.J. 2008) (finding “implied preemption” of complaint against use of “all natural” even though FDA regulations don’t define “all natural”); Evans v. Rich, 2014 U.S. Dist. LEXIS 76721 (E.D.N.C. June 4, 2014) (preemption of complaint about promoting off-label use); Fraker v. KFC Corp., 2007 U.S. Dist. LEXIS 32041(S.D. Cal. Apr. 30, 2007) (preemption); Farm Raised Salmon Cases, 42 Cal. 4th 1077 (2008) (no preemption).

21 U.S.C. § 337.

Diane P. Flannery & Joan S. Dinsmore, 2013’s Key Rulings in Food Mislabeling Litigation, Law360, available at http://www.law360.com/articles/499170.

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