SPECIAL FOCUS: Fifth Circuit Clarifies the Law on False Advertising Involving “Scientific Debates”
Author: Thomas C. Morrison
In 2013, the Second Circuit issued an important opinion in Ony, Inc. v. Cornerstone Therapeutics, Inc., a false advertising case. The Second Circuit held that the publication and dissemination of a scientific study that had the effect of touting the comparative benefits of the defendant’s product is noncommercial speech and is thereby immune from the false advertising provisions of the Lanham Act.1 As we noted in an article regarding that opinion, while the court’s central holding was sound, its rather sweeping language created the potential for mischief if extended to facts beyond those at issue in that case. That potential for mischief was squarely presented in the Eastman Chemical case recently decided by the Fifth Circuit.2
The Eastman Case
Eastman, a spinoff from Eastman Kodak, is a leading manufacturer of a copolyster resin designed for use in rigid plastic products. Sold under the trademark Tritan, Eastman’s product is used to make a vast array of household products, such as water bottles, Tupperware, blenders, etc. Defendant PlastiPure is a consulting company that works with plastics manufacturers to help them develop products that are free of chemicals having Estrogenic Activity (“EA”), which is believed to pose health and environmental hazards. Co-defendant CertiChem, Inc. is a sister company that utilizes a patented in vitro test (known as the “MCF-7 assay”) to determine whether manufactured plastic products are EA-free. Both companies are controlled by Dr. George Bittner, a professor at the University of Texas. The two defendants work in tandem: CertiChem tests the clients’ products to determine if they are EA-free, and “certifies” those that are, while PlastiPure works with those same clients to develop products that are EA-free and to develop marketing programs touting that attribute.
Dr. Bittner and a colleague published a peer-reviewed paper on the MCF-7 assay test, which explained the test and the results of its testing on hundreds of plastic products. PlastiPure also disseminated a brochure targeted to manufacturers of plastics products in which it discussed the health hazards of EA-containing plastics, and touted the company’s ability to help them develop EA-free products. This brochure included a bar chart in bold red coloring that identified five products made from Tritan, all of which were shown to have extraordinarily high EA levels. Eastman claimed the defendants’ MCF-7 assay test could not be extrapolated to the real world of plastics products, had no relation to the presence of EA in products made from Tritan, and that its results were contradicted by Eastman’s own testing that showed that Tritan does not have EA. The case was tied to a jury which returned a verdict in favor of Eastman.
In pre- and post-trial motions, defendants argued that whether products made with Tritan exhibit EA, and thus pose a health hazard, is a matter of legitimate “scientific debate” and that, under the Second Circuit’s decision in Ony, statements made in the course of that “debate” are immune from Lanham Act scrutiny. The trial court readily disposed of this argument. As it stated:
“Eastman did not sue Defendants over Dr. Bittner’s scientific paper,
which was also published in a peer-reviewed scientific journal.
Instead, Eastman’s false advertising claims are based on
non-scientific materials, such as an advertising brochure, press
releases, and Defendants’ website, none of which included the full
context of the scientific paper, and some of which pre-dated the
publication of Dr. Bittner’s paper. The ‘scientific debate’ in this case
moved from the pages of academic journals to commercial
advertisements targeted at consumers.”3
Defendants’ Appeal
In their appeal to the Fifth Circuit, defendants’ primary argument was that the presence of EA in commonly-used household goods is a matter of important “scientific debate” and that statements made in the course of that debate are scientific opinions and thus immune from Lanham Act scrutiny. Their argument was extraordinarily sweeping. According to defendants, the mere fact that estrogenic activity in household goods is a matter of “scientific debate” immunizes any and all statements made on that subject – regardless of the context in which they are made:
“Defendants PlastiPure and CertiChem made statements regarding
scientific conclusions they had drawn based both on their own
peer-reviewed and published research and on the peer-reviewed
and published work of others. Each of those statements
constitutes speech relating to academic work and matters of
public interest and is protected by the First Amendment to the
United States Constitution. . . . The public’s right to know both
sides of scientific opinions regarding the safety of products
they use is a value embraced by the First Amendment.”4
Had this argument been made merely in the context of Dr. Bittner’s peer-reviewed paper, it would have been unremarkable. But the argument went far beyond Dr. Bittner’s paper and encompassed any statements that referred to or utilized data from Dr. Bittner’s paper ‒ even statements made in the context of everyday commercial advertising. Here is what defendants told the Fifth Circuit:
“Eastman dedicates substantial effort to demonstrating that
Defendants engaged in commercial speech and then argues the
unremarkable proposition that the First Amendment affords no
protection to false commercial speech. Appellee’s Brief at 32-39.
Amici curiae also employ this tactic. The holding in Ony, however,
goes well beyond that simplistic question. The Question Ony raises
is instead whether a statement relating to one side or the other of a
scientific debate can be false for the purposes of the Lanham Act,
irrespective of whether the statement is made in a
commercial context.” 5
According to defendants, Ony holds that a statement made in everyday commercial advertising cannot be false for purposes of the Lanham Act so long as it relates to an ongoing “scientific debate.”
The Argument of Eastman and the Amicus Parties
Defendants’ First Amendment argument was so sweeping that it caught the attention of the American Chemistry Council (“ACC”) the leading trade group for companies in the chemistry industry, and the Vinyl Institute (“VI”), a trade association representing the leading manufacturers of vinyl-related products.6 While ACC and VI took no position regarding the merits of the underlying dispute, they supported Eastman’s position regarding the First Amendment issue.
The argument advanced by both Eastman and the Amicus parties was simple and straightforward. When scientific debate is carried out via articles in scientific journals and presentations at scientific conferences, it is protected speech. However, when scientific data is used in connection with the dissemination of advertising and promotional materials, the companies responsible for disseminating those materials are subject to the false advertising provisions of the Lanham Act. False advertising cases frequently involve scientific debate about the safety, efficacy or other characteristics of a wide range of products, including drugs, chemicals and medical devices; defendants’ argument would eviscerate the applicability of the Lanham Act to those cases and would open the door to disparagement and scare campaigns about any product or ingredient said (by a competitor) to be unsafe or unhealthy.
The Fifth Circuit Opinion
In a lengthy and well-reasoned opinion, the Fifth Circuit rejected defendants’ argument and affirmed the trial court’s decision and injunction. The court began by acknowledging the crucial Lanham Act distinction between statements of fact, which are actionable, and statements of opinion, which are not.7 The court then discussed the Second Circuit’s opinion in Ony, and acknowledged that court’s holding that statements made in the context of scientific literature or scientific presentations are statements of “opinion” and thus protected speech under the First Amendment.8 But that was as far as the court was willing to go. As the court explained:
“The plaintiff in Ony sought to enjoin statements made within the
academic literature and directed at the scientific community . . . .
Here, in contrast, Eastman did not sue Appellants for publishing an
article in a scientific journal. Rather, Eastman sought to enjoin
statements made in commercial advertisement and directed at
customers.” 9
Moreover, defendants’ commercial speech did not suddenly become immune merely because it related to a matter of “scientific debate”:
“It is of no moment that the commercial speech in this case
concerned a topic of scientific debate. Advertisements do not
become immune from Lanham Act scrutiny simply because their
claims are open to scientific or public debate. Otherwise, the
Lanham Act would hardly ever be enforceable – ‘many, if not most,
products may be tied to public concerns with the environment,
energy, economic policy, or individual health and safety.’ ”10
Finally, the court dealt with a particularly vexing issue that arose in Ony, namely, the Second Circuit’s extension of First Amendment immunity to the “secondary” dissemination of the article in question via a press release. The Fifth Circuit explained that this aspect of the Ony ruling was extremely narrow:
“In Ony, the secondary distribution was limited to the issuance of a
press release summarizing the article’s findings and dissemination
of the article itself. Here, the secondary distribution did not include
any dissemination of the article; in fact, the sales brochure was
distributed prior to the article’s publication. Nor did the sales
brochure simply tout the article’s findings – the sales brochure
specifically highlights the alleged EA content of Tritan, but
the article never even mentions Tritan by name. As the district
court recognized, the different results in Ony and in this case
reflect the difference between presenting an article’s conclusions
and ‘transform[ing] snippets . . . a paper which never
mentions Tritan or Eastman by name . . . into
commercial advertisements claiming Tritan is harmful.’ ”11
As noted in our earlier article about the Ony case, the Second Circuit’s extension of First Amendment protection to Ony’s press release was contrary to prior precedents, which uniformly hold that a press release touting the findings of a scientific study is commercial advertising. The Fifth Circuit wisely limited Ony’s immunity for press releases; the court appears to suggest that any such immunity would only apply where the press release contains a summary of the study results and is accompanied by a copy of the study itself. While the immunization of press releases may continue to govern cases in the Second Circuit, we believe that other courts will either reject this aspect of Ony or severely limit it, as did the Fifth Circuit.
Why it matters: The Fifth Circuit’s decision is a timely addition to false advertising case law. The Second Circuit’s Ony decision, while largely correct, had the potential to unravel decades of false advertising precedent. The Fifth Circuit wisely limited Ony’s scope and reaffirmed the applicability of the Lanham Act to advertising involving scientific claims and issues.
back to top
In Legal Battle, Kale Triumphs Over Chicken
After eight years of battling with fast food chain Chick-fil-A, the maker of “Eat More Kale” products scored a victory when the U.S. Patent and Trademark Office granted him trademark protection.
A fan of the leafy green vegetable, Bo Muller-Moore began making t-shirts and bumper stickers with the slogan “Eat More Kale.” But in 2006, the national fast food chain objected to the phrase. The chicken restaurant has used the slogan “Eat Mor Chikin” since 1995, featured in ads purportedly written by cows seeking to avoid being eaten by encouraging the consumption of chicken in lieu of beef.
The battle continued for years, with Chick-fil-A filing an official letter of protest when Muller-Moore filed for trademark protection in 2011. It told the USPTO that the “Eat More Kale” phrase “is confusingly similar in sight, sound, meaning, and overall commercial impression,” that consumers would mistakenly believe that Chick-fil-A expanded its products and services, and that items with the kale slogan originated from the same source. The letter also cited 31 other “Eat More” companies that agreed to cease and desist their use of such slogan language upon objection from the restaurant chain, ranging from “Eat More Beer” to “Eat More Ice Cream.”
Finding the arguments unavailing, the USPTO granted protection in December to “Eat More Kale” for a host of products, from clothing to grocery bags.
To read the USPTO’s notice of allowance, click here.
Why it matters: To celebrate, Muller-Moore and Vermont Governor Peter Shumlin held a press conference touting the victory as not only a win for mom-and-pop operations against big corporations, but for the local food movement as well. “I am now allowed to protect my simple, original art from copycat artists, and hopefully Chick-fil-A’s trademark bullying spree can come to an end,” he said. “Don’t mess with Vermont,” Shumlin added. “In Vermont, we care about what’s in our food, who grows it, and where it comes from. That’s what Bo and Eat More Kale represent. And that’s something worth fighting for.” A spokesperson for Chick-fil-A responded that “Cows love kale, too!”
back to top
Mobile Cramming Charges Cost T-Mobile $90M
For $90 million, the Federal Trade Commission and T-Mobile reached a deal over the agency’s accusations that the company illegally crammed charges onto consumers’ mobile phone bills.
The agency filed suit in July alleging T-Mobile crammed charges on mobile bills for services like love tips, horoscopes, and celebrity gossip, for which the company received between 35 and 40 percent of the charges, typically $9.99 per month.
According to the Commission, the company not only facilitated the charges, but should have known they were not authorized, in light of the up to 40 percent refund rates in a single month. The agency also said that T-Mobile’s complicated bills often buried the third-party charges in more than 50 pages, and also made it difficult for consumers to discover the cramming.
To settle the suit, T-Mobile promised to provide full refunds to all affected consumers to the tune of $90 million, either in redress or other form of payment. The deal requires that the company contact each of its current and former customers who received cramming charges and explain the refund program and claims process in a clear and concise manner.
In addition, the company agreed to pay $18 million in fines and penalties to the attorneys general of all 50 states and the District of Columbia, as well as $4.5 million to the Federal Communications Commission. If the company’s final payout – including the $22.5 million to the states and FCC – falls short of the $90 million, T-Mobile will pay the balance to the FTC.
Going forward, T-Mobile must obtain express, informed consent from customers prior to placing third-party charges on their bills and provide information to consumers about how to block third-party charges.
“Mobile cramming is an issue that has affected millions of American consumers, and I’m pleased that this settlement will put money back in the hands of affected T-Mobile customers,” FTC Chairwoman Edith Ramirez said in a press release about the case. “Consumers should be able to trust that their mobile phone bills reflect the charges they authorized and nothing more.”
To read the complaint and the proposed consent order in FTC v. T-Mobile, click here.
Why it matters: Mobile cramming was a priority for the FTC in 2014. In addition to the suit against T-Mobile, the agency took several other actions, including filing suit against a group of defendants who allegedly made more than $100 million from mobile cramming. The FTC also issued a staff report and testified before Congress on the issue.
back to top
FTC Sues Data Broker For Selling Information
Continuing its focus on data brokers, the Federal Trade Commission filed a complaint in Arizona federal court against LeapLab for allegedly purchasing payday loan applications and then selling sensitive personal information to third parties it knew did not need such data.
The FTC acknowledged that although LeapLab sold some of its loan applications to actual payday lenders, by charging between $10 and $150 per application, 95 percent of its sales from 2006 to 2013 were for just $0.50 to non-online lenders that had no legitimate reason for buying the names, addresses, phone numbers, bank account numbers, and Social Security numbers.
These purchasers used the information to make unsolicited sales offers (via e-mail, text, or telephone), aggregated the data for resale, or, in the case of Ideal Financial Solutions (named in a separate action filed in 2013), used the information to withdraw money from consumers’ bank accounts without permission, the FTC alleged.
Over a four-year period, Ideal purchased information on at least 2.2 million consumers, the Commission said, and used the data to make unauthorized debits and charges totaling millions of dollars. The company then told consumers that they purchased financial management or counseling products at a payday loan Web site. According to the FTC, LeapLab provided the information for at least 16 percent of Ideal’s victims.
To read the complaint in FTC v. SiteSearch Corp., click here.
Why it matters: “This case shows that the illegitimate use of sensitive financial information causes real harm to consumers,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a statement. “Defendants like those in this case harm consumers twice: first by facilitating the theft of their money and second by undermining consumers’ confidence about providing their personal information to legitimate lenders.” Data brokers have faced close scrutiny from both the Commission – including a staff report issued last June – as well as federal lawmakers.
back to top
False Ad Suit Tossed For Lack of Evidence of Deception
Granting summary judgment in favor of Gerber Products Co., a federal court judge in California held that the putative class action plaintiff failed to present sufficient evidence that consumers were actually deceived by the labels on challenged baby food products.
Natalia Bruton sued “the world’s most trusted name in baby food,” alleging that Gerber deceived consumers with illegal nutrient content claims.
Gerber touted items like Banana Plum Grape and Butternut Squash & Harvest Apple as an “excellent source” and “good source” of various vitamins and minerals, as well as making claims that its products provide “Nutrition for Healthy Growth & Natural Immune Support,” she said.
Seeking class action status, the plaintiff also challenged sugar-related label statements such as “No Added Sugar” and “No Added Refined Sugar,” and argued that federal law requires that such claims be accompanied by a disclosure statement warning of the higher caloric level of the products.
U.S. District Court Judge Lucy H. Koh rejected both claims for a lack of evidence.
California’s unfair competition, false advertising, and consumer protection statutes are governed by a “reasonable consumer standard,” that requires plaintiffs to present evidence that “members of the public are likely to be deceived,” the judge explained. In the court’s view, Bruton failed to show that it was probable that a significant portion of the general consumer public or of targeted consumers, acting reasonably in the circumstances, would be misled.
The plaintiff’s “vague references” to FDA regulations as evidence of how reasonable consumers would view the labels “falls short,” Judge Koh wrote, and nothing in her expert declarations supported a likelihood of deception. Bruton’s own deposition testimony noted that she found the Gerber products “misleading” because they “make you believe that their product, like I said, has something that [a competing brand] doesn’t have.”
“Although couched in language of misrepresentation, this testimony suggests only that Bruton relied on Gerber’s label statements in making her purchasing decision vis-à-vis [the competitor],” the court said.
A few isolated examples of deception are insufficient to withstand a summary judgment, the judge said, granting the motion in favor of Gerber.
To read the order in Bruton v. Gerber Products Co., click here.
Why it matters: The decision emphasized the need for plaintiffs to provide evidence to meet the “reasonable consumer standard,” with more than just “a few isolated examples of actual deception” in order to survive summary judgment. The court also noted that while consumer surveys are not required, the plaintiff’s attempt to rely on her own testimony and expert declarations was insufficient to establish “that a significant portion of the general consumer public or of targeted consumers, acting reasonably in the circumstances, could be misled” by Gerber’s nutrient content and sugar-related claims.
back to top
Noted and Quoted . . . Goldstein Sheds Light on Top Legal Issues Facing Marketers and Advertisers in 2015
Linda Goldstein, Chair of Manatt’s Advertising, Marketing and Media Division, recently penned articles for The Wall Street Journal and Advertising Age that reviewed important legal and regulatory developments for advertisers and marketers in 2014 and highlighted the issues to watch this year.
back to top
1Ony, Inc. v. Cornerstone Therapeutics, Inc., 720 F.3d 490 (2d Cir. 2013).
2Eastman Chemical Co. v. PlastiPure, Inc. et al., 2014 U.S. App. LEXIS 24236 (5th Cir. Dec. 22, 2014).
3Eastman Chemical Co. v. PlastiPure, Inc. et al., 969 F.Supp. 2d 756, 761 (W.D. Texas 2013).
4Brief of Appellants, p. 21.
5Reply Brief of Appellants, p. 12.
6This Firm filed the Amicus brief on behalf of these entities.
7Eastman v. PlastiPure, 2014 U.S. App. LEXIS 24236 at *6-7. This distinction most frequently arises in cases involving “puffing,” which is not actionable. E.g., Pizza Hut, Inc. v. Papa John’s Int’l., Inc., 227 F.2d 489, 495-96 (5th Cir. 2000).
8Id. at p. 8-9.
9Id. at p. 9-10.
10Id. at p. 11-12.
11Id. at p. 13-14, quoting Eastman v. PlastiPure, 969 F.Supp 2d at 764.
12E.g., Gordon & Breach Science Publishers S.A. v. American Institute of Physics, 859 F.Supp 1521 (S.D.N.Y. 1994); Genzyme Corp v. Shire Human Genetic Therapies, Inc., 906 F.Supp 2d 9, 14-15 (D. Mass 2012); Bracco Diagnostics Inc. v Amersham Health, Inc., 627 F.Supp 2d 384, 455-9 (D.N.J. 2009).