Johnson & Johnson Vision Care v. 1-800 Contacts

Decision Date29 July 2002
Docket NumberNo. 02-10322.,02-10322.
PartiesJOHNSON & JOHNSON VISION CARE, INC., Plaintiff-Appellee, v. 1-800 CONTACTS, INC., Defendant-Appellant.
CourtU.S. Court of Appeals — Eleventh Circuit

Michael J. Korn, Korn & Zehmer, P.A., Jacksonville, FL, Garth T. Vincent, Munger, Tolles & Olson, LLP, Los Angeles, CA, for Defendant-Appellant.

Harold P. Weinberger, New York City, James W. Middleton, Rogers, Towers, Bailey, Jones & Gay, P.A., Jacksonville, FL, for Plaintiff-Appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before BIRCH, MARCUS and CUDAHY*, Circuit Judges.

BIRCH, Circuit Judge:

In this interlocutory appeal, 1-800 CONTACTS, Inc. ("1-800") argues that the district court erred when it issued a preliminary injunction forbidding 1-800 from making certain statements about the products and services of Johnson & Johnson Vision Care, Inc. ("J&J"). The district court based its injunction on the conclusion that three of the advertisements used by 1-800 included false statements about J&J, and as such violated § 43(a) of the Lanham Act, codified at 15 U.S.C. 1125(a).1 Because we conclude that the district court erred in applying the law, we VACATE the preliminary injunction, and REMAND.

I. BACKGROUND

Both J&J and 1-800 are in the contact lens business. J&J manufactures lenses, including those under the well-known ACUVUE ® brand; 1-800 sells lenses, including ACUVUE, over the phone and the internet. J&J argues that three of 1-800's advertisements make statements about J&J or about ACUVUE that are literally false. The first advertisement at issue is a letter sent by 1-800 to its customers recommending CIBA Vision's Focus Dailies, a 1-day lens, over J&J's ACUVUE, a 2-week lens. In this letter (the "Focus Dailies letter"), 1-800 cites a study published by a trade journal named Contact Lens Spectrum ("CLS study") which identified a five to one consumer preference for Focus Dailies over ACUVUE. The second advertisement, also a letter, was sent by 1-800 to customers who requested J&J lenses that were not in stock at the time of the customer's order. This letter (the "Exclusive Deal letter") explains that 1-800's inability to process the customer's order was due to J&J's policy of distributing contacts exclusively to eye doctors, rather than to retailers like 1-800. The third advertisement is a four-page pamphlet about Focus Dailies (the "Focus Dailies pamphlet") that was sent out with the Exclusive Deal letter. The pamphlet cites the five to one preference for Focus Dailies and compares the qualities of the lens against those of "competing lenses." R1-33, Ex. G at 3.

J&J brought suit against 1-800, alleging false advertising under § 43(a) of Lanham Act and under multiple state law provisions across the country. J&J moved for a preliminary injunction, which the district court granted. 1-800 now appeals the injunction.

II. DISCUSSION

Only if the district court abused its discretion will we reverse the grant of a preliminary injunction. Am. Bd. of Psychiatry & Neurology, Inc. v. Johnson-Powell, 129 F.3d 1, 2-3 (1st Cir.1997). We review the district court's findings of fact under the clearly erroneous standard. Id. at 3. The facts found by a district court are "clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Univ. of Georgia Athletic Ass'n v. Laite, 756 F.2d 1535 (11th Cir.1985) (internal quotations omitted). The clearly erroneous standard is appropriate in cases, such as this one, in which the evidence is primarily documentary; the fact that the district court's decision was not a function of credibility determinations does not affect the standard of review. Anderson v. City of Bessemer City, 470 U.S. 564, 574, 105 S.Ct. 1504, 1511-12, 84 L.Ed.2d 518 (1985). Lastly, our review of the district court's application of law is de novo, premised on the understanding that "[a]pplication of an improper legal standard ... is never within a district court's discretion." Johnson-Powell, 129 F.3d at 3.

For a district court to grant a preliminary injunction, the movant must establish: (1) a substantial likelihood of success on the merits of the underlying case, (2) the movant will suffer irreparable harm in the absence of an injunction, (3) the harm suffered by the movant in the absence of an injunction would exceed the harm suffered by the opposing party if the injunction issued, and (4) an injunction would not disserve the public interest. Carillon Imp., Ltd. v. Frank Pesce Int'l Group Ltd., 112 F.3d 1125, 1126 (11th Cir. 1997) (per curiam). To establish the likelihood of success on the merits of a false advertising claim under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), the movant must establish: (1) the ads of the opposing party were false or misleading, (2) the ads deceived, or had the capacity to deceive, consumers, (3) the deception had a material effect on purchasing decisions, (4) the misrepresented product or service affects interstate commerce, and (5) the movant has been — or is likely to be — injured as a result of the false advertising. ALPO Petfoods, Inc. v. Ralston Purina Co., 913 F.2d 958, 964 (D.C.Cir.1990). If the movant is unable to establish a likelihood of success on the merits, a court need not consider the remaining conditions prerequisite to injunctive relief. Pittman v. Cole, 267 F.3d 1269, 1292 (11th Cir.2001).

Our analysis begins and ends with the five elements J&J needed to establish the likelihood of success. First, J&J needed to prove that 1-800's ads were false or misleading. This element is satisfied if the challenged advertisement is literally false, or if the challenged advertisement is literally true, but misleading. Johnson & Johnson * Merck Consumer Pharms. Co. v. Smithkline Beecham Corp., 960 F.2d 294, 297 (2d Cir.1992). It is clear that the district court found each of the three advertisements to be either false or misleading, but it is unclear into which category the court placed the ads.2

The category is relevant; once a court deems an advertisement to be literally false, the movant need not present evidence of consumer deception. Am. Council of Certified Podiatric Physicians and Surgeons v. Am. Bd. of Podiatric Surgery, Inc., 185 F.3d 606, 614 (6th Cir. 1999). If the court deems an ad to be true but misleading, the movant — even at the preliminary injunction stage — must present evidence of deception.3 While "full-blown consumer surveys or market research are not an absolute prerequisite," the moving party must provide "expert testimony or other evidence." United Indus. Corp., 140 F.3d at 1183. The district court did not require J&J to provide evidence that 1-800's advertisements deceived or tended to deceive consumers. R1-38-6. As such, we conclude that the district court found the advertisements to be literally false.

There is one additional point to consider before we begin our analysis: the district court did not assess each advertisement independently, but instead evaluated the three in concert. R1-38-4. The court reasoned that "[i]f the ad campaign as a whole would be misleading to the reasonable consumer, then the defendant should be enjoined from using that ad campaign." Id. It is true that "a court must analyze the message conveyed in full context," Castrol Inc. v. Pennzoil Co., 987 F.2d 939, 946 (3rd Cir.1993), and that "the court must view the face of the statement in its entirety, rather than examining the eyes, nose, and mouth separately and in isolation from each other." Id. (citation omitted). While the court should consider context, it may not assume context. The problem with the district court's approach is the assumption that consumers will be exposed to every advertisement in a campaign.4 Accordingly, we have organized our opinion to reflect the fact that 1-800 sent the Exclusive Deal letter and the Focus Dailies pamphlet together, and sent the Focus Dailies letter without any accompanying advertisement.

A. The Focus Dailies Letter

The Focus Dailies letter states that "Focus Dailies are preferred 5 to 1 over Acuvues." R1-33, Ex. A (emphasis omitted). The letter elaborates that 84% of participants in a recent study preferred Focus Dailies, finding them to be more comfortable, more convenient, and easier to handle than ACUVUE lenses. Id. The district court found that the Focus Dailies Letter "misrepresented to consumers the superiority of Focus Dailies" by failing to "make it clear to the consumer that the study was comparing modalities (i.e. length of time wearing the lens, one day wear versus two week wear) and not the quality of lenses with the same modality." R1-38-4.

As the common law of false advertising has developed, several circuits have determined that the nature of a plaintiff's burden in proving an advertisement to be literally false should depend on whether the defendant's advertisement cites consumer testing. See, e.g., C.B. Fleet Co. v. SmithKline Beecham Consumer Healthcare L.P., 131 F.3d 430, 435 (4th Cir.1997); Rhone-Poulenc Rorer Pharms. Inc. v. Marion Merrell Dow, Inc., 93 F.3d 511, 514-15 (8th Cir.1996); Castrol, Inc. v. Quaker State Corp., 977 F.2d 57, 62 (2d Cir.1992). If an advertisement cites such testing, the advertisement is labeled as an "establishment" claim. BASF Corp., v. Old World Trading Co., 41 F.3d 1081, 1090 (7th Cir.1994). To prove an establishment claim literally false, the movant must "prove that these tests did not establish the proposition for which they were cited." Quaker State Corp., 977 F.2d at 63. We find this method of evaluating such advertisements to be analytically sound, and adopt the reasoning for use in the Eleventh Circuit.

In this case, the goal of the CLS study "was to evaluate the overall patient preference of Focus Dailies one day contact lenses as...

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