Monthly Archives: September 2014

Trademarks, the Lanham Act, and Your Business

The Lanham Act Reexamined

In recent months, the U.S. Supreme Court has issued two opinions that clarify the scope of the Lanham Act.  In March, the court ruled on Lexmark International v. Static Control Components, which addressed the issue of standing, including the issue of who could bring a claim, thereby clarifying the Lanham Act’s broad language which states that “any person who believes that he or she is or is likely to be damaged” by another person’s false advertising could bring a civil action.  The high Court’s Lexmark ruling confirmed the right of one competitor to sue another competitor for “false or misleading” statements in advertising and labeling, and dismissed prior complex tests for proving standing to bring Lanham Act claims.In June, following Lexmark, the court ruled in Pom Wonderful v. Coca-Cola, that Lanham Act claims were not pre-empted by Food and Drug Administration (FDA) labeling regulations.  In both of these cases, the court outlined the importance of the Lanham Act and the rights of competitors to use the Lanham Act to address false and misleading statements in both advertising and labeling on products, for the benefit of the consumer.

The Pom case is illustrative, in that it is a very simple example of a Lanham Act claim by a competitor.  Pom sells pure pomegranate juice, which it claims has health benefits.  Pom sued competitor Coca-Cola under the Lanham Act alleging that the label on one of its juice products misleads consumers into believing the product consists predominantly of pomegranate and blueberry juice as it prominently displays the wording “pomegranate blueberry”, when it in fact, the product contains only 0.3% pomegranate juice and 0.2% blueberry juice.  In its opinion, the Supreme Court reviewed the intersection between two bodies of federal law-the Lanham Act, and the FDA’s labeling requirements.  Coca-Cola claimed that Pom’s Lanham Act claims were barred because Congress intended the FDA labeling rules to govern product labeling issues.  The high Court disagreed with Coca-Cola, ruling that Pom Wonderful may pursue claims under the Lanham Act against competitor Coca-Cola for alleged false claims on its product labels. (Ironically, Pom Wonderful is appealing a decision of the Federal Trade Commission that concluded Pom’s health claims on its products were deceptive.)

According to a Bloomberg article, “the ruling means that food labels will come under increasing scrutiny, and it’s possible many won’t fare well.”

While this is an important ruling for food manufacturers, the decision extends to all types of businesses.  Indeed, the general issues of unfair competition, and false advertising create a potential Lanham Act claim for any operating business.

Your Business and the Lanham Act

Any business, regardless of whether it sells labeled products, should be aware that it, in addition to other regulations, may be subject to claims of unfair competition and/or false and deceptive advertising under the Lanham Act.  Here are a few tips for consideration to help avoid such claims:

1.  Review your product labels, website, advertising and other written materials.  Ask whether your company’s product labels and advertising is accurate and truthful.  Do they claim that your product or service does more than it really does?  Could your claims be considered misleading to consumers?  Could your product or service claims be confusing to the average customer or client?  If so, maybe it is time for a re-write before you find yourself fending off claims by competitors.

 

2.  Consider your competitors’ claims.  Are your competitors claiming that their products can do more than they really do, in a way that is harming your business?  Could competitor statements be misleading or confusing to consumers?  If your competitors are making fraudulent or misleading claims, and those claims are harming your company’s bottom line, bringing a Lanham Act claim might be one way to fight back.

 

If you have questions about trademarks, or the Lanham Act, and the intersection between the Lanham Act and your intellectual property, you need an experienced trademark attorney.  Anna Vradenburgh is a well-respected, business-mind expert in trademark issues with extensive experience prosecuting domestic and foreign trademarks.  In addition to her prosecution practice, Anna also assists clients in the selection and use of trademarks and represents clients in trademark opposition matters, domain name dispute matters, and before the federal Trademark Trial and Appeals Board.  Anna can also assist your company in licensing maters, including drafting and negotiation of trademark licensing agreements.  For more information visit the Eclipse Law Group website, or contact Anna at (818) 488-8146.

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Water Bottler Thirsty for Justice in Trademark Dispute

Maine Springs LLC v. Nestlé Waters, U.S. District Court for District of Maine, 2:14-cv-00321 (2014), Filed August 11, 2014

One Maine water bottler is thirsty for justice in a federal unfair competition dispute.  Maine Springs LLC, a local water company in Maine, has filed a suit against Nestlé Waters NA in U.S. District Court for the District of Maine alleging false and misleading advertising, and tortious interference with business.  More specifically, Maine Springs alleges that labels on Nestlé’s bottled water products bearing the Poland Spring® mark contain false and/or misleading statements as to the sources of the water in violation of the federal Lanham Act, and that because of its assertion of its trademark rights in the Poland Spring® mark against Maine Springs, Nestlé has effectively interfered with Maine Springs’s attempts to sell its bulk water to other third party bottling companies.

This suit is one of the first to follow a recent ruling from the U.S. Supreme Court in a similar labeling dispute between Coca-Cola and Pom Wonderful, LLC (discussed in more detail below).  In that case, the Supreme Court ruled that a Lanham Act claim could be brought against a competitor challenging the competitor’s food and beverage label, even though the food and beverage label was subject to Food and Drug Administration labeling regulations.

The dispute between Maine Springs and Nestlé arises from Maine Springs allegations that the Poland Spring, a natural water source in Maine, has not been in use for more than 30 years, and thus, accordingly the complaint, was not in use in 1994, when Nestlé began bottling and selling water under the Poland Spring® brand.  Thus, any statements made by Nestlé that the water is sourced from the Poland Spring are false and misleading.  Further, according to the complaint, Nestlé’s label indicates that the water is 100% spring water.  Maine Springs contends that this too is false, and states that Nestlé utilizes water from other springs and non-spring water sources, from other places in the region.

According to Nestlé, the Poland Spring® brand is famous and has been marketed for decades.  Indeed, Nestlé owns numerous U.S. federal trademark registrations that include the words POLAND SPRING for spring water.  Based on its rights in these registrations, Nestlé sent Maine Springs a cease and desist letter threatening litigation in response to Maine Springs’ attempt to bottle and market a bottled water product after securing permits to extract water from underground spring water sources in Maine, wherein the label on the bottled water product identified the source of the water as Poland Spring, Maine.  Nestlé contended that this would create confusion with Nestlé’s Poland Spring® bottled water product.

Further, Maine Springs was in the process of securing contracts to sell bulk water to other small and mid-sized bottlers, including Niagara Bottling Company, and Crystal Rock.  Maine Springs alleges that because of a cease and desist letter from Nestlé threatening trademark infringement against Maine Springs for labeling that indicated that the water source was Poland Spring, its potential business partners rejected Maine Springs’ proposals for fear of threatened litigation by Nestlé.  Although there are no allegations that Nestlé ever directly contacted any of the bottlers, Maine Springs alleges that Nestlé’s actions constituted tortious interference with prospective business advantage.

This is the third lawsuit that Nestlé has defended regarding the label on its bottled water.  The company settled two prior consumer class action suits for fraud in Illinois and Connecticut, by parties who claimed that Nestlé used municipal water to fill its bottles, despite product labels that represented the product was 100% natural spring water.

Whether Nestlé’s statements on the labels are false and misleading remains to be seen, as does whether threatening litigation against Maine Springs constitutes tortious interference of business with parties in negotiation with Maine Springs.  However, based on its registrations, Nestlé has the right to object to product labels that attempt to utilize its brand Poland Spring® as a source identifier of the product.  Competitors, however, are entitled to identify the geographic location Poland Spring.  Thus, the resolution of this issue will likely depend upon the manner in which the identification of the geographic location, Poland Spring, is presented on the label, as it is not likely that Nestlé’s registration rights will allow them the ability to prevent truthful statements regarding the geographic location of the water being sold to be included on the product.

If you have questions about trademarks, or have received a cease and desist letter from a competitor, you need an experienced trademark attorney.  Anna Vradenburgh is a well-respected, business-mind expert in trademark issues with extensive experience prosecuting domestic and foreign trademarks.  In addition to her prosecution practice, Anna also assists clients in the selection and use of trademarks and represents clients in trademark opposition matters, domain name dispute matters, and before the federal Trademark Trial and Appeals Board.  Anna can also assist your company in licensing maters, including drafting and negotiation of trademark licensing agreements.  For more information visit the Eclipse Law Group website, or contact Anna at (818) 488-8146.