Hill's Pet Nutrition, Inc. v. Nutro Products, Inc.
| Decision Date | 25 March 2003 |
| Docket Number | No. 03-001-SAC.,03-001-SAC. |
| Parties | HILL'S PET NUTRITION, INC., Plaintiff, v. NUTRO PRODUCTS, INC., Defendant. |
| Court | U.S. District Court — District of Kansas |
Bernard J. Rhodes, Lathrop & Gage L.C, Kansas City, MO, for Plaintiff.
Michael B. Hurd and Richard R. Johnson, Shook, Hardy & Bacon L.L.P., Kansas City, MO, for Defendant.
This case comes before the court on plaintiffs motion for a preliminary injunction. An evidentiary hearing was held on March 11, 2003, at which both parties presented evidence, including expert witnesses.
In summary, plaintiff alleges that defendant has falsely advertised that its "Natural Choice" brand of dog food is the top selling brand of dog food in the United States, and seeks an order requiring defendant to immediately cease its false advertising, recall its advertisements, promotional materials, and packages which contain the alleged false advertising.1 Specifically, plaintiff alleges that defendant's advertisements, promotional materials, and packages of products which bear a gold medallion "burst" stating "Natural Choice-# 1 In America's Pet Stores," but do not expressly refer only to defendant's Natural Choice Lamb Meal & Rice Formula, are false and misleading, in violation of the Lanham Act and Kansas common law. Defendant denies that the alleged advertisement and representations are false or misleading.
Having reviewed the parties' pleadings and exhibits, and having heard the testimony, the court issues the following findings of fact and conclusions of law.
The parties are competitors in the specialty or premium dog food market. Both manufacture premium dog food and distribute their products to specialty stores which sell primarily, if not exclusively, pet supplies and accessories for household pets, rather than mass marketing these products to grocery, department, or other non-specialty stores.
Plaintiff is based in Topeka, Kansas, and produces the number one selling brand of premium dog food in the United States. That brand is Science Diet.
Defendant is a foreign corporation, and produces the number one selling Lamb Meal and Rice Formula premium dog food in the United States. That product is sold under Nutro's "Natural Choice" brand.
Defendant first became aware near the end of 2001 that its Lamb Meal and Rice Formula was the number one selling product among specialty stores' dog food products from a Roper Audits and Survey Worldwide (ASW) report. The parties agree that this survey is generally accepted as reliable in their industry.
The Roper ASW survey showed that defendant's Lamb Meal and Rice Formula product was the number one seller among lamb and rice products and the number one product sold in any category description for the second quarter of 2002, whether measured by pounds sold, or by monetary sales volume.
Based upon the information in the Roper ASW survey, defendant began an advertising campaign capitalizing upon its status as number one.
In January of 2002, defendant added to its Lamb Meal and Rice formula packages the statement, "America's # 1 selling Lamb Meal & Rice Formula dog food." This verbiage is in comparatively small font and appears directly underneath the brand logo, which states in much larger letters, "Nutro Natural Choice." See
Plaintiffs Exh. 5, 8, 11. Plaintiff does not allege that this statement is false or misleading, or that this form of advertising is otherwise illegal. Plaintiff admits this statement is true.
In September of 2002, defendant began applying a sticker to its 44 pound bags of Lamb Meal and Rice Formula dog food, which was gold or yellow in color, in the shape of a sunburst, which contained a large #1. See plaintiffs Exh. 14. The words within the burst, when read in conjunction with the # 1 symbol, read, "NAURAL CHOICE, #1 IN AMERICA'S PET STORES."2 Plaintiff alleges that this statement is false or misleading.
Soon thereafter, defendant began producing Lamb Meal and Rice Formula dog food in packages which had the # 1 burst printed on them. See plaintiffs Exh. 6, 9, 12. Defendant never used the # 1 burst on packages other than its Lamb Meal and Rice Formula dog food packages.
Also in September of 2002, defendant began using the # 1 burst in its "point of purchase" materials. Point of purchase or point of sale materials are advertising materials sent by a manufacturer to stores which sell its products, with instructions that the materials be placed on or near certain products in a store, for the purpose of influencing consumer's decisions at the time of purchase. Although store employees could place point of purchase materials somewhere other than on or near the product advertised by those materials, this would defeat the purpose of the materials and would, in many cases make no sense, as the materials offer sales, bonuses, or other promotional offers relating solely to the specific product mentioned therein. See e.g., plaintiffs exhs. 1B, 1C, 1D, 1F. On September 5, 2002, defendant did a bulk mailing which contained the # 1 burst. See plaintiffs exh. IN.
On some undisclosed date thereafter, plaintiff learned of defendant's use of the verbiage, "# 1 Selling Dog Food in America's Pet Stores," and by letter dated November 11, 2002, first complained to defendant about it. See plaintiffs exh. II, and attachments. Plaintiff thereafter learned of defendant's use of the # 1 burst, and, after receipt of defendant's response to their initial letter, complained to defendant about that as well. See plaintiffs exhs. 1J, 1L.
After receiving plaintiffs first letter, defendant decided to change its point of purchase material. Accordingly, defendant reprinted approximately 10,000 tee-shirts which it awards as prizes to persons who demonstrate its products in the stores, to cover the # 1 burst with a new burst. It also recalled final art which was already at the printers, redesigning the advertising materials before they were printed and released, to cover or omit the # 1 burst. It distributed no point of purchase materials after November of 2002 which contained the # 1 burst.
After November of 2002, defendant has used a new burst in lieu of the # 1 burst on all its point of sale materials. The new burst states within the burst itself, "NATURAL CHOICE LAMB & RICE # 1 IN AMERICA'S PET STORES."3 See plaintiffs exhs. 10, 13.
Defendant continued to use the # 1 burst on its packaging for a short time after it received plaintiffs first letter in November of 2002, as it believed that consumers would not reasonably be confused by statements made on the very product about which the statements were made, i.e., Lamb Meal and Rice Formula dog food. After receiving plaintiffs second letter, defendant changed its statements on its dog food packages as well, not because it believed its # 1 burst was false or misleading, but because it wished to avoid litigation. Thus beginning in December of 2002, defendant began using the new burst on its packaging, in lieu of the # 1 burst.
Defendant has agreed to use the new burst on its future packaging and point of purchase materials. Although the design thereof may change, defendant will use the same words or their equivalent in its advertising. Plaintiff admits that the language in the new burst is true.
Defendant has an existing inventory of packages with the # 1 burst printed on them. Approximately 2,500 20-pound bags already manufactured are filled, palletized, and shrink-wrapped in inventory in Tennessee, still awaiting shipment. Another unknown quantity of smaller, 2pound trial-size bags not manufactured by defendant are also palletized and paperbaled in inventory in California and Tennessee. These products all have a shipment date of March 27, 2003.
An unknown quantity of defendant's packages of dog food shipped before November of 2002, which bears the # 1 burst, remains unsold in stores. Defendant's products have a `sell by date' or shelf life of 14 months after the date of manufacture. No Natural Choice products age to their expiration date, and its 40 pound bags are routinely sold within 120 days. The trial-size bags, which are recommended to consumers by groomers, take longer to sell than the larger bags.
It is possible for defendant to create a sticker, at an approximate cost of % cent each, and place it over the # 1 burst on bags in stores and in inventory. To do so would require defendant to use its store demonstrators for that purpose instead of for the purpose for which they were hired, and to pay for the labor involved in unpacking and repacking those packages in inventory which await shipment. Applying the stickers would take a period of time to accomplish, as defendant's demonstrators visit only approximately 2,000 out of 10,700 stores each week, and thus are not in every store every month.
The price paid per bag of premium dog food is nearly double that of dog food which is mass marketed. Consumers who purchase premium dog food are believed to be more affluent, better read, and more willing to spend money caring for their pets, than their mass market counterparts. Because the premium product is expensive, consumers seek confidence in their purchasing decisions, so rely upon advice from friends, veterinarians, breeders, or other pet professionals, and what they read.
Plaintiffs primary focus in marketing for the specialty market, rather than for the mass market, is upon a `switcher,' i.e., a person who is not 80% to 100% brand loyal. Although some consumers switch from one brand to another within the specialty dog food market, plaintiffs advertising efforts are intended to influence consumers to switch from mass market products to the specialty dog food market.
A brand is a trusted symbol upon which consumers rely to guide their purchasing decisions. Brand equity is the value of the brand, trust, and consumer confidence— the premium price a manufacturer can...
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