United Industries Corp. v. Clorox Co.

• Decision Date: 13 April 1998
• Docket Number: No. 97-3492.,97-3492.
• Citation: 140 F.3d 1175
• Parties: UNITED INDUSTRIES CORPORATION, a corporation, Appellee, v. The CLOROX COMPANY, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

140 F.3d 1175

UNITED INDUSTRIES CORPORATION, a corporation, Appellee, v. The CLOROX COMPANY, Appellant.

No. 97-3492.

United States Court of Appeals, Eighth Circuit.

Submitted January 16, 1998.

Decided April 13, 1998.

Kim J. Landsman, New York City, argued (Erik Haas and Mark G. Arnold, on the brief), for Appellant.

Alan C. Kohn, St. Louis, MO, argued (Robert A. Useted, on the brief), for Appellee.

Before BOWMAN, WOLLMAN, and HANSEN, Circuit Judges.

WOLLMAN, Circuit Judge.

The Clorox Company appeals from the district court's¹ denial of its motion for preliminary injunctive relief brought within the context of its counterclaim against United Industries Corporation for false advertising under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). We affirm.

I.

Clorox and United Industries are competing producers of roach bait insecticide products.² Clorox manufactures and sells Combat, the top-selling brand of roach bait, while United Industries manufactures and sells the Maxattrax brand of roach bait, a small and relatively new participant in this market. United Industries initiated this action against Clorox, seeking a declaratory judgment that the packaging of its Maxattrax product, which predominantly asserts that it "Kills Roaches in 24 Hours," did not constitute false advertising or unfair competition under the Lanham Act. In response, Clorox moved to dismiss the complaint, contending that no actual case or controversy existed between the two parties regarding the packaging claims. Shortly thereafter, however, Clorox withdrew its motion to dismiss and filed an answer and counterclaim, which subsequently was amended. Clorox's amended counterclaim alleged, primarily, that a Maxattrax television commercial that United Industries had recently released for broadcast constituted false, deceptive, and misleading advertising in violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B).³

The commercial at issue, entitled "Side by Side" by the advertising firm that produced it, depicts a split-screen view of two roach bait products on two kitchen countertops. The lighting is dark. On the left, one sees the Maxattrax box; on the right, a generic "Roach Bait" box that is vaguely similar to the packaging of the Combat brand sold by Clorox. An announcer asks the question: "Can you guess which bait kills roaches in 24 hours?" The lights then come up as the camera pans beyond the boxes to reveal a clean, calm, pristine kitchen, uninhabited by roaches, on the Maxattrax side. On the other side, the kitchen is in a chaotic state: cupboards and drawers are opening, items on the counter are turning over, paper towels are spinning off the dispenser, a spice rack is convulsing and losing its spices, all the apparent result of a major roach infestation. At the same time, the message "Based on lab tests" appears in small print at the bottom of the screen. The two roach bait boxes then reappear on the split-screen, and several computer-animated roaches on the "Roach Bait" side appear to kick over the generic box and dance gleefully upon it. The final visual is of the Maxattrax box only, over which the announcer concludes, "To kill roaches in 24 hours, it's hot-shot Maxattrax. Maxattrax, it's the no-wait roach bait." The final phrase is also displayed in print on the screen. The entire commercial runs fifteen seconds.

Clorox filed a motion for a preliminary injunction against this commercial. After expedited discovery and a two-day hearing, the district court denied the motion.

II.

In deciding a motion for a preliminary injunction, district courts are instructed to consider what have come to be known as the Dataphase factors:

(1) The probability of success on the merits;

(2) The threat of irreparable harm to the movant;

(3) The balance between this harm and the injury that granting the injunction will inflict on other interested parties; and

(4) Whether the issuance of an injunction is in the public interest.

Sanborn Mfg. Co., Inc. v. Campbell Hausfeld/Scott Fetzer Co., 997 F.2d 484, 485-86 (8th Cir.1993) (citing Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981) (en banc)); see also Minnesota Mining and Mfg. Co. v. Rauh Rubber, Inc., 130 F.3d 1305, 1307 (8th Cir.1997). No single factor in itself is dispositive; rather, each factor must be considered to determine whether the balance of equities weighs toward granting the injunction. See Sanborn, 997 F.2d at 486; Calvin Klein Cosmetics Corp. v. Lenox Lab., Inc., 815 F.2d 500, 503 (8th Cir.1987).

We have noted that by enacting the Lanham Act, Congress apparently intended to encourage competitors to seek injunctions as a method of combating false advertising, and, in such cases that ultimately prove to have merit, injunctive relief is not to be issued reluctantly. See Black Hills Jewelry Mfg. Co. v. Gold Rush, Inc., 633 F.2d 746, 753 n. 7 (8th Cir.1980). With regard to a preliminary injunction, however, the burden on the movant is heavy, in particular where, as here, "granting the preliminary injunction will give [the movant] substantially the relief it would obtain after a trial on the merits." Sanborn, 997 F.2d at 486 (quoting Dakota Indus., Inc. v. Ever Best Ltd., 944 F.2d 438, 440 (8th Cir.1991)). Caution must therefore be exercised in a court's deliberation, and "the essential inquiry in weighing the propriety of issuing a preliminary injunction is whether the balance of other factors tips decidedly toward the movant and the movant has also raised questions so serious and difficult as to call for more deliberate investigation." General Mills, Inc. v. Kellogg Co., 824 F.2d 622, 624-25 (8th Cir.1987).

A district court has broad discretion when ruling on requests for preliminary injunctions, and we will reverse only for clearly erroneous factual determinations, an error of law, or an abuse of that discretion. See Sanborn, 997 F.2d at 486 (citing Calvin Klein, 815 F.2d at 503). A district court's finding is "clearly erroneous" when, although evidence may exist to support it, upon review of the entire record we are left with the definite and firm conviction that error has occurred. See Prufrock Ltd., Inc. v. Lasater, 781 F.2d 129, 133 (8th Cir.1986); Anderson v. City of Bessemer City, 470 U.S. 564, 573-74, 105 S.Ct. 1504, 1511-12, 84 L.Ed.2d 518 (1985). This deferential standard of review "rests upon the unique opportunity afforded the trial court judge to evaluate the credibility of witnesses and to weigh the evidence." Inwood Lab., Inc. v. Ives Lab., Inc., 456 U.S. 844, 855, 102 S.Ct. 2182, 2189, 72 L.Ed.2d 606 (1982).

A.

In our analysis of the Dataphase factors, we begin by assessing the probability of Clorox's ultimate success on the merits. At the early stage of a preliminary injunction motion, the speculative nature of this particular inquiry militates against any wooden or mathematical application of the test. See Calvin Klein, 815 F.2d at 503. Instead, "a court should flexibly weigh the case's particular circumstances to determine whether the balance of equities so favors the movant that justice requires the court to intervene to preserve the status quo until the merits are determined." Id. (quoting Dataphase, 640 F.2d at 113). Clorox asserts Lanham Act violations and seeks, primarily, permanent injunctive relief against the alleged false claims contained in the Maxattrax "Side by Side" commercial.

Section 43(a) of the Lanham Act

The Lanham Act was intended, in part, to protect persons engaged in commerce against false advertising and unfair competition. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 767-68, 112 S.Ct. 2753, 2756-57, 120 L.Ed.2d 615 (1992) (quoting 15 U.S.C. § 1127); 3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 27:25 at 27-40 (West Group 1997). In particular, the Act prohibits commercial advertising or promotion that misrepresents the nature, characteristics, qualities, or geographic origin of the advertiser's or another person's goods, services, or commercial activities. See Rhone-Poulenc Rorer Pharm., Inc. v. Marion Merrell Dow, Inc., 93 F.3d 511, 514 (8th Cir.1996) (citing 15 U.S.C. § 1125(a)(1)(B)); Sanborn, 997 F.2d at 486.⁴

To establish a claim under the false or deceptive advertising prong of the Lanham Act, a plaintiff must prove: (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 loss of goodwill associated with its products. See Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir.1997); Johnson & Johnson-Merck Consumer Pharm. Co. v. Rhone-Poulenc Rorer Pharm., Inc., 19 F.3d 125, 129 (3d Cir.1994). In addition, to recover money damages under the Act, a "[p]laintiff must prove both actual damages and a causal link between defendant's violation and those damages." Rhone-Poulenc, 93 F.3d at 515.

The false statement necessary to establish a Lanham Act violation generally falls into one of two categories: (1) commercial claims that are literally false as a factual matter; and (2) claims that may be literally true or ambiguous but which implicitly convey a false impression, are misleading in context, or likely to deceive consumers. See Southland, 108 F.3d at 1139; National Basketball Ass'n v. Motorola, Inc., 105 F.3d 841, 855 (2d Cir.1997); Abbott Lab. v. Mead Johnson & Co., 971 F.2d 6, 13 (7th Cir.1992). Many claims will actually fall into a third category, generally known as "puffery" or "puffing." Puffery is "exaggerated advertising, blustering, and...