Johnson & Johnson* Merck v. Smithkline Beecham

• Citation: 960 F.2d 294
• Decision Date: 01 April 1992
• Docket Number: No. 918,Docket 91-9048.,918
• Parties: JOHNSON & JOHNSON * MERCK CONSUMER PHARMACEUTICALS COMPANY, Plaintiff-Appellant, v. SMITHKLINE BEECHAM CORPORATION and Jordan, McGrath, Case & Taylor, Inc., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

960 F.2d 294

JOHNSON & JOHNSON * MERCK CONSUMER PHARMACEUTICALS COMPANY, Plaintiff-Appellant, v. SMITHKLINE BEECHAM CORPORATION and Jordan, McGrath, Case & Taylor, Inc., Defendants-Appellees.

No. 918, Docket 91-9048.

United States Court of Appeals, Second Circuit.

Argued January 27, 1992.

Decided April 1, 1992.

Thomas C. Morrison, New York City (Steven A. Zalesin, Patterson, Belknap, Webb & Tyler, Robert J. Trainor, Johnson & Johnson, of counsel), for plaintiff-appellant.

Helene D. Jaffee, New York City (Robin E. Silverman, Daniel Rubin, Weil Gotshal & Manges, Michael C. Lasky, Davis & Gilbert, of counsel), for defendants-appellees.

Before: ALTIMARI, WALKER and McLAUGHLIN, Circuit Judges.

WALKER, Circuit Judge.

Johnson & Johnson * Merck Consumer Pharmaceuticals Company ("J & J * Merck") appeals from the final judgment of the United States District Court for the Southern District of New York, Honorable Miriam Goldman Cedarbaum, Judge, denying J & J * Merck injunctive relief and dismissing its complaint against defendants Smithkline Beecham Corporation ("Smithkline") and Jordan, McGrath, Case & Taylor, Inc. ("Jordan"). J & J * Merck, the manufacturer of MYLANTA, a nonprescription antacid, instituted this action in order to restrain Smithkline and Jordan, the manufacturer and advertiser of TUMS, respectively, a competing brand of antacid, from continuing to air certain television commercials that J & J * Merck claims are false and misleading in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and §§ 349 and 350 of the New York General Business Law.

Because we agree with Judge Cedarbaum's legal analysis, and because we conclude that her factual findings were not clearly erroneous, we affirm the judgment of the district court.

BACKGROUND

J & J * Merck manufactures and markets MYLANTA, a popular nonprescription antacid product that is used to reduce heartburn by dyspepsia sufferers across the nation. MYLANTA contains aluminum hydroxide and magnesium hydroxide as its acid neutralizing agents. Smithkline produces the antacid TUMS. While TUMS is also extremely popular among victims of gastric distress, its formula relies upon calcium carbonate, rather than aluminum or magnesium salts, in treating indigestion and related ailments.

In September of 1990, Smithkline and its advertising agency, Jordan, instituted a television advertising campaign that sought to promote TUMS by comparing the ingredients contained in TUMS to those contained in other leading nonprescription antacids. The first commercial in this media campaign was entitled "Ingredients." Ingredients shows a man and a woman seated at a lunch counter along with other patrons, all of whom are eating such marginally digestible items as grease-laden french fries and chili. A background announcer explains that this couple "ate the same lunch" and "got the same heartburn," but that "his antacid TUMS is very different." A series of competing products then appear on the screen — ROLAIDS, MAALOX, and MYLANTA. At the same time, the ingredients of each of these antacids are visually superimposed on the screen and listed by the announcer: ROLAIDS — "Aluminum Salt"; MAALOX — "Aluminum and Magnesium"; MYLANTA — "Aluminum and Magnesium." Immediately following this remedial menu, the ad continues with a close-up image of a roll of TUMS. The voice-over states that TUMS is "aluminum-free," and that "only TUMS helps wipe out heartburn and gives you calcium you need every day." After the woman is depicted pondering the virtues of a calcium-based antacid, the commercial ends with a visual and verbal statement of the advertisement's slogan: "Calcium rich, aluminum-free TUMS."

The makers of ROLAIDS, MAALOX and MYLANTA found the Ingredients advertisement impossible to swallow. After it was first aired, they immediately complained to Smithkline that Ingredients falsely implied that their antacids were harmful. In early October, 1990, they filed formal protests with each of the three major television networks, objecting to the Ingredients broadcast on the grounds that it was false and misleading. Representatives of Smithkline and Jordan met with network officials to discuss the protests lodged by TUMS' competitors, at which time they advised the networks that they would revise the Ingredients commercial. Thereafter, Smithkline and Jordan voluntarily withdrew Ingredients from the air. Although necessary background, the Ingredients advertisement is not the subject of this action.

In late October, 1990, Smithkline and Jordan released a second version of the TUMS commercial, entitled "Ingredients-Revised." The difference between Ingredients and Ingredients-Revised was that the second advertisement deleted all references to TUMS as an "aluminum-free" product. Rather, Ingredients-Revised emphasized the fact that TUMS contains calcium, ROLAIDS, MAALOX and MYLANTA did not, and that calcium is good for you. In addition to the full version of Ingredients-Revised, Smithkline and Jordan began showing a shortened one. This commercial singled out MYLANTA as the sole target of comparison, while keeping the rest of the commercial substantially the same.

Suffice it to say, Ingredients-Revised did not settle the distress felt by J & J * Merck who continued to perceive appellees' advertising campaign as false and misleading. How did the maker of MYLANTA then seek to spell relief? L-A-N-H-A-M. J & J * Merck sued in the district court to enjoin appellees from continuing to broadcast Ingredients-Revised and its shortened version, on the grounds that the commercials violated § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and §§ 349 and 350 of the New York General Business Law. Specifically, J & J * Merck alleged that both Ingredients-Revised, and the shortened version, falsely represented that: 1) occasional ingestion of TUMS, in the manner directed for antacid relief, results in nutritional benefit to the consumer; and 2) the magnesium and aluminum contained in MYLANTA are unsafe for human consumption.

Initially, J & J * Merck moved for a preliminary injunction. Instead of granting the motion, the district court consolidated the application with an expedited trial on the merits. After a five day bench trial, Judge Cedarbaum concluded that J & J * Merck had "not shown that the message that occasional Tums users will benefit from calcium is false or misleading." Furthermore, she found "that the challenged commercials do not communicate the message that aluminum or magnesium are harmful or unsafe." On the basis of this, Judge Cedarbaum concluded that J & J * Merck failed to demonstrate "that `Ingredients-Revised' is either false or misleading." Accordingly, she dismissed both J & J * Merck's federal and state law claims. This appeal followed.

DISCUSSION

On appeal, J & J * Merck has abandoned its claims relating to calcium and magnesium. Thus, the only issue before us now is whether the challenged commercials communicated a false or misleading message with respect to the safety of aluminum-based antacids. The district court explicitly found that "if the challenged commercials indicated that ... aluminum is dangerous, they would be false and misleading."

J & J * Merck contends that, even though the content of the challenged commercials is literally true, Ingredients-Revised preys upon a publicly held misperception that the ingestion of aluminum causes Alzheimer's disease. According to J & J * Merck, the commercials accomplish this by repeatedly juxtaposing the absence of aluminum in TUMS with its presence in MYLANTA. In turn, this repetition supposedly links MYLANTA with an allegedly popularly held, yet unsubstantiated concern that aluminum is associated with Alzheimer's. Since the aluminum/Alzheimer's connection has not been scientifically established, J & J * Merck argues that Ingredients-Revised purposefully taps into a preexisting body of public misinformation in order to communicate the false and misleading message that aluminum-based antacids are harmful.

The gravamen of J & J * Merck's claim is that advertisers may be held liable for the knowing exploitation of public misperception. While this argument presents a novel theory of Lanham Act liability — one which we neither reject nor embrace — we note that, in any event, it would be unavailing in this case. Because J & J * Merck has failed to show that it has suffered any injury as a result of the challenged TUMS commercials, it cannot obtain relief under any theory of Lanham Act liability that is premised upon an implied falsehood.

I. Liability for Implied Falsehoods

In relevant part, § 43(a) of the Lanham Act as amended provides:

Any person who, on or in connection with any goods or services ... uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any ... false or misleading description of fact, or false or misleading representation of fact, which —

... is likely to cause confusion, or to cause mistake, or ... in commercial advertising or promotion, misrepresents the nature, characteristics, qualities ... 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 likely to be damaged by such act.

15 U.S.C. § 1125(a).

The law governing false advertising claims under the Lanham Act is well settled in this circuit. In order to recover damages or obtain equitable relief, a plaintiff must show that either: 1) the challenged advertisement is literally false, or 2) while the advertisement is literally true it is nevertheless likely to mislead or confuse consumers. See McNeil-P.C.C., Inc. v. Bristol-Myers Squibb Co., 938 F.2d 1544, 1549 (2d Cir.1991); Johnson & Johnson v. GAC Int'l, Inc., 862 F.2d 975, 977 (2d Cir. 1988); Coca-Cola Co. v. Tropicana Products Inc., 690 F.2d 312, 317 (2d Cir.1982); American Home Products Corp. v. Johnson & Johnson, 577 F.2d 160, 165 (2d Cir. 1978).

Where, as...