Abbott Laboratories v. Gerber Products Co., Inc.

• Decision Date: 24 September 1997
• Docket Number: No. 1:97-CV-338.,1:97-CV-338.
• Parties: ABBOT LABORATORIES, Plaintiff, v. GERBER PRODUCTS COMPANY, INC. and Novartis Nutrition Corporation, Defendants.
• Court: U.S. District Court — Western District of Michigan

979 F.Supp. 569

ABBOT LABORATORIES, Plaintiff, v. GERBER PRODUCTS COMPANY, INC. and Novartis Nutrition Corporation, Defendants.

No. 1:97-CV-338.

United States District Court, W.D. Michigan, Southern Division.

September 24, 1997.

Jon G. March, Miller, Johnson, Snell & Cummiskey, Grand Rapids, MI, Thomas C. Morrison, Patterson, Belknap, Webb & Tyler, LLP, New York City, for plaintiff.

Robert D. Vanderlaan, Schenk, Boncher & Prasher, Grand Rapids, MI, for defendants.

OPINION

QUIST, District Judge.

Plaintiff, Abbott Laboratories ("Abbott"), brings this action against Defendants, Gerber Products Company, Inc. ("Gerber") and Novartis Nutrition Corporation ("Novartis"), alleging false advertising under Section 43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B). Now before this Court is Abbott's motion for preliminary injunction.

Facts

Abbott, an Illinois corporation, manufactures health care products including nutritional supplement beverages, pediatric products, prescription pharmaceuticals, and medical devices. Ross, a division of Abbott, makes and sells Ensure, a nutritional supplement beverage on the market.

Novartis, a Minnesota corporation, is a wholly-owned subsidiary of Novartis Corporation. Gerber, a Michigan corporation, is also a wholly-owned subsidiary of Novartis Corporation. Novartis manufactures and distributes various food and over-the-counter health care products, including Resource, a nutritional supplement beverage. Gerber primarily manufactures baby food products but also markets Resource for Novartis.

Nutritional supplement beverages ("NSBs") were developed as meal replacement products for elderly people or people with medical conditions who needed an easily digestible food source to supplement their regular diet. Initially, NSBs were available primarily through hospitals or nursing homes. In recent years, NSBs have been distributed directly to consumers through supermarkets, pharmacies, and other retail outlets.

Ensure has consistently held the greatest market share of all NSBs on the market. Novartis and Gerber (hereinafter collectively referred to as "Gerber") reformulated Resource and, in 1997, launched an advertising campaign and began distributing the newly reformulated Resource in select United States markets. The advertising campaign asserts, among other things, that "America Prefers Resource Over Ensure" and "National Preference Winner Resource Beats Ensure." Abbott subsequently filed suit in this Court alleging that Gerber's advertising claims are false because the studies they are based upon do not support Gerber's claims.

Discussion

1. Preliminary Injunction Standard

Abbott requests preliminary injunctive relief pursuant to Federal Rule of Civil Procedure 65(a). A district court should address the following factors in determining whether to issue a preliminary injunction: 1) the likelihood that the party seeking the preliminary injunction will succeed on the merits of the claim, 2) whether the party seeking the injunction will suffer irreparable harm without the grant of the extraordinary relief, 3) the probability that granting the injunction will cause substantial harm to others, and 4) whether the public interest is advanced by the issuance of the injunction. Dayton Area Visually Impaired Persons, Inc. v. Fisher, 70 F.3d 1474, 1480 (6th Cir. 1995), cert. denied, ___ U.S. ___, 116 S.Ct. 1421, 134 L.Ed.2d 545 (1996) (citing Washington v. Reno, 35 F.3d 1093, 1099 (6th Cir. 1994)). These inquiries are factors "to be balanced, not prerequisites that must be met." Id. (quoting In re DeLorean Motor Co., 755 F.2d 1223, 1229 (6th Cir.1985)). Furthermore, "the degree of likelihood of success required may depend on the strength of the other factors." Id. A district court is given broad discretion in determining whether or not to grant a preliminary injunction. Id.

2. Likelihood of Success on the Merits

Abbott brings this action pursuant to Section 43(a)(1)(B) of the Lanham Act which states in 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 ... 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). In order to establish a prima facie case for false and misleading advertising under the Lanham Act, a plaintiff must show:

(1) a false statement of fact by the defendant in a commercial advertisement about its own or another's product; (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to defendant or by a lessening of the goodwill associated with its products.

Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir.1997) (citations omitted) (footnote omitted). See also ALPO Pet-foods, Inc. v. Ralston Purina Co., 913 F.2d 958, 964 (D.C.Cir.1990) (discussing similar burden of proof on a plaintiff's false and misleading advertising claim); Brown v. Armstrong, 957 F.Supp. 1293, 1301-02 (D.Mass.1997) (applying similar three-part test); Telxon Corp. v. Symbol Techs., Inc., 961 F.Supp. 1113, 1122-23 (N.D.Ohio 1996) (noting same elements that must be established by a plaintiff); Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 27:24 (4th ed.1996) (setting forth and discussing similar criteria).

The pivotal element in the instant case is whether Gerber's advertising campaign contained false statements of fact. In order to prove falsity, a plaintiff must show either that "the advertising is literally false as a factual matter, or ... although the advertisement is literally true, it is likely to deceive or confuse customers." National Basketball Ass'n v. Motorola, Inc., 105 F.3d 841, 855 (2d Cir.1997) (quotations and citation omitted). If a plaintiff can show that a statement is literally false, then a court may grant relief regardless of the reaction of buyers or consumers of the product. Avila v. Rubin, 84 F.3d 222, 227 (7th Cir.1996) (citation omitted). If, however, a statement is not literally false, a court may find the statement to be misleading only if evidence of actual consumer confusion is presented. Id.; L & F Prods. v. Procter & Gamble Co., 45 F.3d 709, 711 (2d Cir.1995) (finding that a plaintiff's theory of implied falsity must be accompanied by extrinsic evidence showing advertisement is likely to mislead or confuse).

In the case at issue, Abbott argues that Gerber's claim that Resource is preferred over Ensure is literally false, and, therefore, Abbott need not show consumer confusion. This Court agrees that if Abbott can establish that Gerber's claim is literally false, that evidence of consumer confusion is not needed.

Abbott asserts that Gerber's claim is false in two ways: 1) the tests Gerber relies upon to support its claim were conducted as taste tests and not as tests indicating overall preference, and 2) these tests do not show that Resource tastes better or is preferred over Ensure.

This Court finds that Gerber's preference claim is, in reality, a taste claim. Abbott's own experts use the term "preference" when describing how consumers feel about the taste of NSBs. For example, Robert Crim, the group marketing manager of Ensure at Ross Laboratories, stated:

It's pretty well documented in the literature that a sweet product in a short-term test might be preferred to a not-sweet product. But if you're drinking one and a half, two, three, four cans a day or servings a day, whatever it might be, the sweeter product would not be preferred because it can be too much of that. So, absolutely, your preferences can change.

(Crim Tr., p. 44.)

Also, the following discourse took place with Joseph Messing, president of Marketing Insights and Technologies, at his deposition:

Mr. Stein: So a paired taste test in a central location on a blind basis is an appropriate fashion of substantiating a preference claim.

Mr. Messing: I believe it is the preferred form.

(Messing Tr., p. 82 (citing Messing Dep., p. 68).) In fact, Messing stated that "[i]n food and beverage products, there is such a high correlation [between asking a consumer which product he preferred overall and which product he preferred for its overall taste] that asking one is tantamount to asking the other." (Messing Tr., p. 89.)

One of Gerber's experts, David Yates, general manager of new business at Gerber, agreed with Messing on this point:

It really is the question that's asked of the consumer — which do you prefer versus which tastes better. From a marketer's standpoint, I think it was Mr. Messing that said yesterday in his mind, for a food product, preference is tantamount to taste. And these are food products. The nutritional profiles are very similar. This gets down to a very specific test that was done for advertising.

(Yates Tr., p. 87.)

Furthermore, Michael Mazis, a professor of marketing at American University, made several similar statements:

It's labeled NBC/Beverage Preference Claims, Research and Documentation Guidelines. So it primarily deals with taste tests. It says here: "In view of the methodology and analytical approaches that can be taken in an attempt to quantify taste equivalence or superiority among products, the following guidelines are suggested,"...