Coors Brewing Co. v. Anheuser-Busch Companies, Inc.

• Decision Date: 19 August 1992
• Docket Number: No. 92 Civ. 5959 (MBM).,92 Civ. 5959 (MBM).
• Citation: 802 F. Supp. 965
• Parties: COORS BREWING COMPANY, Plaintiff, v. ANHEUSER-BUSCH COMPANIES, INC. and D'Arcy Masius Benton & Bowles, Defendants.
• Court: U.S. District Court — Southern District of New York

802 F. Supp. 965

COORS BREWING COMPANY, Plaintiff, v. ANHEUSER-BUSCH COMPANIES, INC. and D'Arcy Masius Benton & Bowles, Defendants.

No. 92 Civ. 5959 (MBM).

United States District Court, S.D. New York.

August 19, 1992.

Daniel J. Kornstein, Robert D. Helfand, Kornstein Veisz & Wexler, New York City, Bradley, Campbell, Carney & Madsen, Golden, Colo., for plaintiff.

Richard Lehv, Laurence S. Rickles, Weiss Dawid Fross Zelnick & Lehrman, P.C., New York City, Kenneth A. Plevan, Miriam L. Siroky, Constance S. Huttner, Skadden, Arps, Slate, Meagher & Flom, New York City, for defendants.

OPINION AND ORDER

MUKASEY, District Judge.

Plaintiff, Coors Brewing Company, sues Anheuser-Busch Companies, Inc. and D'Arcy Masius Benton & Bowles, Anheuser-Busch's advertising agency, claiming that Anheuser-Busch's recent promotional campaign violates § 43(a) of the Lanham Act, New York unfair competition law, and §§ 349 and 350 of New York General Business Law. Plaintiff has sought a preliminary injunction prohibiting defendants' continued use of the advertisements at issue. For the reasons set forth below, plaintiff's application for a preliminary injunction is denied.

I.

Since 1978, Coors has been expanding from the western United States into a nationwide market. Also since 1978, Coors has marketed a reduced-calorie beer called Coors Light. Coors manufactures its line of beers, including Coors Light, using a process that the beer industry calls "high gravity brewing." During the 30 to 60 days it takes to produce the "high gravity" brew, it is cooled to about 4 to 5 degrees centigrade. When the aging process is completed, the brew is filtered to remove yeast and other microbes. The temperature of the brew then is reduced further, to approximately minus 1 degree centigrade. Finally, the high gravity brew, whose alcohol content exceeds the statutory maximum for beer, is "blended" with water.

Most Coors Light is processed fully, i.e., brewed, blended, and bottled, in Golden, Colorado. However, somewhere between 65% (plaintiff's figure) and 85% (defendants' figure) of the Coors Light supplied to the Northeast is "blended" and bottled in Virginia. Using "special insulated railcars" (Pl.Mem. at 9), plaintiff transports the high gravity brew from Colorado to Virginia, where plaintiff adds Virginia water to the brew, further filters the mixture, and then bottles it.

Defendant Anheuser-Busch produces a reduced-calorie beer called Natural Light. Like Coors Light, Natural Light is produced by a process of "high gravity" brewing. Apparently, the only material difference between the processes used to produce Coors Light and Natural Light is that Natural Light is pasteurized, a process that involves heating, whereas Coors Light is brewed at low temperatures.¹ In addition, Natural Light apparently is processed entirely— i.e., brewed, blended, and bottled — in regional Anheuser-Busch breweries.

Defendants recently began an advertising campaign comparing Natural Light with Coors Light. That campaign includes radio, television, and point-of-sale advertisements, which, not surprisingly, promote Natural Light at the expense of Coors Light.

Defendants' 30-second television commercial consists of a series of images accompanied by the following narrative:

This is a railroad tanker. flash the image of a railway tanker This is the taste of the Rockies. flash the image of a can of Coors Light Tanker. image of a railway tanker Rockies. image of a can of Coors Light

Actually, a concentrated form of Coors Light leaves Colorado in a tanker and travels to Virginia, where local water dilutes the Rockies concentrate before it's sent to you.

So what's it gonna be, the Rockies concentrate or an ice cold Natural Light that leaves our local breweries fresh and ready to drink? Like this picture of a Natural Light delivery truck, not like this picture of railway tanker.

So drink fresh, cold Natural Light and don't be railroaded.

The phrase "don't be railroaded" is accompanied by the image of a can of Coors Light atop a railroad car, over which is superimposed a circle with a diagonal line through its center — the international safety warning symbol.

Similarly, defendants' radio advertisements portray a dialogue between two (male) beer-drinkers. One beer-drinker asks the other, "Did you know that Coors Light ships beer concentrate in railroad tanker cars?" The first beer-drinker then continues: "Yeah, all the way from Colorado— 1,500 miles to Virginia. That's where they add local water."

In addition, defendants have been distributing printed materials to be displayed by retailers. These point-of-sale materials assert that Coors Light is made from concentrate while Natural Light is fresh. These materials also contain the logo "Don't be railroaded" above the image a Coors Light inside the international safety warning symbol.

Plaintiff argues that the Natural Light advertisements imply that "differences in production make Natural Light `fresh' in a way in which Coors Light is not." (Compl. ¶ 3) In other words, those advertisements imply that Natural Light is "fresher" than Coors Light because Natural Light leaves the factory ready to drink while Coors Light leaves Colorado in a "concentrate" form, which is diluted when it reaches Coors' plant in Virginia.

Plaintiff also contends that by broadcasting nationally the Natural Light advertisements, defendants lead consumers outside the Northeast to believe erroneously that their Coors Light is shipped to Virginia to be diluted before being shipped to their regional retailers.

II. Lanham Act Claims

A party seeking a preliminary injunction must prove (1) the threat of irreparable harm, and (2) either (a) likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the movant's favor. Covino v. Patrissi, 967 F.2d 73, 76 (2d Cir.1992); Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979).

A. Irreparable Injury

Where a comparative advertisement is found to be false or misleading, irreparable harm will be presumed. McNeilab, Inc. v. American Home Products Corp., 848 F.2d 34, 38 (2d Cir.1988). The Second Circuit has explained that, "A misleading comparison to a specific competing product necessarily diminishes that product's value in the minds of the consumer." Id.; see also Coca-Cola Company v. Tropicana Products, Inc., 690 F.2d 312, 317 (2d Cir.1982) ("Sales of the plaintiffs' products would probably be harmed if the competing products' advertising tended to mislead consumers in the manner alleged.").

In the case at hand, Coors and Anheuser-Busch are direct competitors in the reduced-calorie beer market. Therefore, if plaintiff can establish that the challenged advertisements either are literally false or are misleading — that is, if plaintiff can establish a likelihood of success on the merits, then irreparable injury will be presumed.

B. Likelihood of Success

Section 43(a) of the Lanham Act provides in relevant part:

Any person who, on or in connection with any goods or services, ... uses in commerce ... any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which —

* * * * * *

(2) 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).

The Second Circuit has held that in order to obtain injunctive relief against a false or misleading advertising claim² pursuant to section 43(a) of the Lanham Act, a plaintiff must demonstrate either: (1) that an advertisement is literally false; or (2) that the advertisement, though literally true, is likely to mislead and confuse customers. See Johnson & Johnson * Merck Consumer Pharmaceuticals Co. v. Smithkline Beecham Corp., 960 F.2d 294, 297 (2d Cir.1992); McNeil-P.C.C., Inc. v. Bristol-Myers Squibb Co., 938 F.2d 1544, 1548-49 (2d Cir.1991); Johnson & Johnson v. GAC International, Inc., 862 F.2d 975, 978-79 (2d Cir.1988); Coca-Cola Co., 690 F.2d at 317.

If a plaintiff can prove that an advertising claim is literally false, "the court may enjoin the use of the claim `without reference to the advertisement's impact on the buying public.'" McNeil-P.C.C., 938 F.2d at 1549 (quoting Coca-Cola Co., 690 F.2d at 317).

However, if the plaintiff alleges that the advertising claim, despite being literally true, is likely to mislead or confuse customers, "It is not for the judge to determine, based solely upon his or her own intuitive reaction, whether the advertisement is deceptive." Johnson & Johnson * Merck, 960 F.2d at 297. Therefore, in order to maintain a claim of implied falsehood under § 43(a), the plaintiff must prove, "by extrinsic evidence, that the challenged commercials tend to mislead or confuse consumers." Id. at 297.

In other words, the plaintiff must submit consumer surveys showing that the challenged advertising claim tends to mislead or deceive consumers. Where the plaintiff fails to "demonstrate that a statistically significant part of the commercial audience holds the false belief allegedly communicated by the challenged advertisement, the plaintiff cannot establish that it suffered any injury as a result of the advertisement's message." Id. at 298. However, "The extent to which consumers are deceived need not be established to support the finding that an advertisement tends to mislead, all that is required is a `qualitative showing to establish that a not insubstantial number of consumers received a false or misleading impression from it.'" McNeil-P.P.C., Inc. v. Bristol-Myers Squibb Co., 755 F.Supp. 1206, 1211 (S.D.N.Y.1990) (bracket in original) (quoting McNeilab, Inc....