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Thursday, December 17, 2009

FALSE ADVERTISING/LANHAM ACT: JURY FINDS NAME-BRAND MANUFACTURER LIABLE TO STORE-BRAND COMPETITOR FOR $13.5 MILLION

          In another example of the value of the Lanham Act to businesses whose competitors make false advertising claims, a Virginia jury has found the manufacturer of the Enfamil baby formula, Mead Johnson & Co., liable under the Act for $13.5 million in damages to a competing manufacturer of a similar, store-brand product for what the latter claimed were false statements disparaging of its own product made in the Enfamil  ad campaign.  PBM Products, LLC v. Mead Johnson Nutrition Co.,E.D.Va., No.3:09–CV–269.  The challenged ads were said to imply that Enfamil had health benefits that the store-brand product lacked, stating,  "It may be tempting to try a less expensive store brand, but only Enfamil LIPIL is clinically proven to improve brain and eye development,” and “There are plenty of other ways to save on baby expenses without cutting back on nutrition.”  The jury determined that these statements were false and misleading including in their disparagement by inference of the competing product.  In addition to jury's monetary award to the competitor, PBM Products, the judge ordered Mead Johnson to refrain from further making such claims, and ordered the company to retrieve from the public domain all advertising material containing the claims.
          The Lanham Act provides very powerful remedies to persons or entities harmed by various types of false and misleading activities pertaining to their products or services.  The most widely known provisions of the Act are those prohibiting trademark infringement; but section 43(a)(1)(B) of the Act also provides for remedies more generally when false or misleading statements are made in advertising or promotions that create a likelihood of harm to the the business of another company or person.  Under the Act such victims may obtain court orders stopping the improper activity, and also may recover very considerable monetary damages from the violator, consisting not only of any monetary harm suffered by the victim but also the profits of the violator, as well as the costs of the lawsuit.

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