False Advertising Injunction Upheld; It’s All Good … And Good for You
In a case involving nutritional claims associated with baby formula, the U.S. Court of Appeals for the Fourth Circuit upheld a $13.5 million jury verdict won by a generic baby formula producer and permanent injunction for false advertising against its longtime legal foe, brand name baby formula producer Mead Johnson. PBM Products v. Mead Johnson & Co., Case No. 10-1421 (4th Cir., April 20, 2004) (Davis, J.).
Plaintiff PBM produces store-brand, “generic” baby formula. Defendant Mead Johnson produces various formulations of baby formula under the brand name “Enfamil.” Both parties’ formulas contain the same level of two key nutrients that are important to an infant’s brain and eye development. The defendant refers to these nutrients by their brand name “LIPIL” and the plaintiff uses the generic descriptor “lipids.”
In 2008, Mead Johnson distributed an advertising mailer to 1.6 million customers comparing its LIPL version of Enfamil-brand baby formula to store brands. The mailer contained a number of statements indicating that, among other things, only Enfamil LIPIL would result in improved brain and eye development. Consequently, PBM sued Mead Johnson for false advertising in violation of the Lanham Act and commercial disparagement. Mead Johnson counterclaimed against PBM for, among other things, false advertising and defamation.
Ultimately, the jury returned a verdict in favor of PBM, finding the defendant had engaged in false advertising in violation of the Lanham Act and awarding PBM $13.5 million in damages. The court also issued a permanent injunction enjoining all four advertising claims at issue. Mead Johnson appealed, arguing that the district court erred by admitting expert consumer surveys and evidence of prior false advertising litigation between the parties. The defendant also contested the issuance and scope of the injunction.
The 4th Circuit affirmed, concluding that the district court did not abuse its discretion by admitting consumer surveys conducted by the plaintiff’s experts that supported claims that the defendant’s advertising attempted to deceive or mislead a substantial portion of its intended audience. Recognizing that plaintiff’s surveys may contain some deficiencies in methodology, the court explained that such flaws generally go to weight rather than admissibility. The 4th Circuit also held that the district court did not err in allowing evidence of prior false advertising litigation between the parties involving other baby formula advertisements. The court explained that such evidence was relevant because it speaks to Mead Johnson’s intent in making its misleading claims. Further, any unfair prejudice was limited by the district court’s exclusion of specific evidence regarding the settlements in the prior litigation.
After determining that the district court did not abuse its discretion in the contested evidentiary rulings, the 4th Circuit considered the propriety and scope of the permanent injunction granted by the district court. The 4th Circuit upheld the injunction, finding that PBM had satisfied the injunction standard announced by the Supreme Court in eBay, Inc. v. MercExchange (2006), (see IP Update, Vol. 9, No. 5). Notably, the court found that the plaintiff had established irreparable harm because the defendant’s advertising had misled consumers. Further, PBM had also established that it had an inadequate remedy at law and that the balance of hardships favored it. Noting the litigation history between the parties, the court concluded that an injunction was warranted to prevent Mead Johnson from making similar claims in the future. Finally, the 4th Circuit held that public interest favors the prevention of false and misleading advertisements and that the scope of the injunction was proper.