Eli Lilly & Co. v. Arla Foods, Inc., No. 17-2252, 2018 WL 2998510, -- F.3d – (7th Cir. Jun. 15, 2018)
Arla launched a $30 million advertising campaign aimed at expanding its cheese sales in the US, using the theme “Live Unprocessed.” The ads promise that Arla cheese contains no “weird stuff” or “ingredients that you can’t pronounce”—in particular, no milk from cows treated with recombinant bovine somato-tropin (rbST), an artificial growth hormone. “The flagship ad in the campaign features a vivid rhetorical flourish implying that milk from rbST-treated cows is unwholesome.” The ad opens with a caption: “Arla Cheese Asked Kids: What is r[b]ST?” A cartoon of a six-eyed monster and a fisherman appears and a seven-year-old girl named Leah narrates: “RbST has razor sharp horns. It’s so tall that it could eat clouds. You may want to pet it but the fur is electric.” The commercial then cuts to Leah enjoying a cheese sandwich, and an adult woman narrates: “Actually, rbST is an artificial growth hormone given to some cows, but not the cows that make Arla cheese. No added hormones. No weird stuff. Arla, live unprocessed.” A small written disclaimer appears for a few seconds toward the end of the commercial: “Made with milk from cows not treated with r[b]ST. No significant difference has been shown between milk derived from r[b]ST-treated and non r[b]ST-treated cows.”
|And razor teeth|
Arla defined “weird stuff” on its website:
No artificial additives. No ingredients that you can’t pronounce. No ingredients that sound confusing or in any way like a made-up word. No ingredients with names that sound like they may be aliens with nine arms, beasts with electric fur, gigantic robots[,] or bears in dis-guise. No artificial growth hormones like r[b]ST.* ... Nor anything else artificial[ ] because our cheese has always been made with simple ingredients and never anything weird.
The asterisk directs readers to another part of the website containing the same disclaimer that appears in small print in the television commercial.
Eli Lilly makes the only FDA-approved rbST supplement; it sued for false advertising, and won a preliminary injunction. The court of appeals affirmed, holding that “[c]onsumer surveys or other ‘hard’ evidence of actual consumer confusion are unnecessary at the preliminary-injunction stage.” Its evidence of harm included confidential evidence that a major cheese producer chose to terminate its use of rbST partially in response to Arla’s ads.The trial judge found that milk from rbST-treated cows is equally safe and healthy for human consumption as other milk, something that Arla conceded for purposes of the appeal. In a footnote, the court of appeals said that Arla would have trouble fighting on safety and health for humans anyway, since the FDA twice confirmed the safety of rbST-derived dairy products. A joint panel of the United Nations and World Health Organization also found “no evidence to suggest that the use of rbSTs would result in a higher risk to human health.” [But see International Dairy Foods Assoc. v. Boggs, finding that a ban on no-rbST claims violated the First Amendment and that there was evidence that milk from treated cows was compositionally inferior to milk from untreated cows.]
“A literally false statement will necessarily deceive consumers, so extrinsic evidence of actual consumer confusion is not required.” However, Arla’s ads didn’t make explicitly false claims about the composition or dangers of milk from rbST-treated cows. “Indeed, the explicit statements about rbST are factually accurate: RbST is an artificial growth hormone given to some cows, and Arla does not use milk from those cows.” Nonetheless, proof of actual deception isn’t required at the preliminary injunction stage. “It’s not feasible to require a Lanham Act plaintiff to conduct full-blown consumer surveys in the truncated timeframe between filing suit and seeking a preliminary injunction.” Eli Lilly’s evidence from the ads themselves, evidence about the quality of milk from treated cows, and evidence of decreased demand were enough to show likely success on the merits without a consumer survey.
“[T]he ad campaign centers on disparaging dairy products made from milk supplied by rbST-treated cows.…The use of monster imagery, ‘weird stuff’ language, and child actors combine to colorfully communicate the message that responsible consumers should be concerned about rbST-derived dairy products.” [Put that way, it sounds like another court could have found puffery. I understand the impulse to protect against vague disparagement, but it is worth noting that the court doesn’t ask very much about what factual message exactly consumers will take away.] It was reasonable to find these ads likely to mislead.
The court of appeals also took comfort from FDA guidance warning that ads about rbST-free milk products “may be misleading if not placed ‘in proper context,’” including the disclaimer: “No significant difference has been shown between milk derived from rbST-treated and non-rbST-treated cows.” Arla’s ads put that disclaimer only in tiny print in the tv ad and in an “obscure location” on the webpage. “Neither disclaimer dispels the central message of these advertisements: that cheese made from milk supplied by rbST-treated cows is unwholesome.”
Evidence of decreased demand from a major cheese producer didn’t show actual confusion, but “given the cheese producer’s economic incentive to accurately predict consumer demand, its concern about the ad campaign’s impact on consumers supports the judge’s conclusion.” This also made causation an easy question, since any false or misleading advertising regarding rbST that decreases demand for the supplement would necessarily harm Eli Lilly, the sole US supplier.
The court of appeals also approved of a modified injunction preventing Arla from disseminating any ad substantially similar to the accused ones that “claims, either directly or by implication,” that rbST is anything other than an artificial hormone that prolongs the lactation of dairy cows. That was specific enough, in the context of the rest of the order. The injunction also barred any ad that claims, “either directly or by implication,” that “consumers should not feel ‘good about eating’ or ‘serving to [their] friends and family’ dairy products made from milk of cows supplemented with rbST. That still allowed Arla to make claims about its own products; “[t]he prohibited negative inference can arise only if an Arla advertisement specifically mentions rbST … in a disparaging way.” [Nice to know that the Seventh Circuit is still really, really confident in its consumer-predicting prowess.]
Judge Rovner concurred, agreeing that no proof of confusion was required at this stage but declining to address the other merits of the Lanham Act claim.