Antitrust Law Daily Wrap Up, ADVERTISING—5th Cir.: Commercial statements on scientific evidence not immune from Lanham Act scrutiny, (Dec 23, 2014)

By Jody Coultas, J.D.

The U.S. Court of Appeals in New Orleans refused to reverse a jury verdict finding PlastiPure, Inc. liable for Lanham Act false advertising based on commercial statements made about a competitor’s products. The appeals court agreed with the district court that the commercial speech forming the basis for the false advertising claim was not scientific speech exempt from Lanham Act liability (Eastman Chemical Company v. PlastiPure, Inc., December 22, 2014, Elrod, J.).

Eastman Chemical Company manufactures a plastic resin called Tritan and sells it to manufacturers of water bottles, baby bottles, food containers, and other consumer products. Shortly after Tritan’s launch, consumers became concerned that bisphenol A (BPA) could be harmful to humans. Chemicals that mimic estrogen are said to possess estrogenic activity (EA), and can trigger hormone-dependent cancers, reproductive abnormalities, and other negative health conditions.

PlastiPure, a competitor of Eastman, distributed a brochure at trade shows and directly to potential customers that contained a chart depicting products containing “Eastman’s Tritan” as having significant levels of EA. Eastman filed Lanham Act claims based on the sales brochure and other marketing materials.

A jury found that PlastiPure violated the Lanham Act by making false and misleading statements about Eastman’s plastic resin product. A Texas district court upheld the verdict and issued a permanent injunction against PlastiPure, but denied Eastman’s request for attorney fees and costs. The court also denied PlastiPure’s motion for judgment as a matter of law and rejected PlastiPure’s argument for a new trial.

The scientific speech at issue was not outside the scope of the Lanham Act, according to the court. On appeal, PlastiPure argued that commercial statements relating to live scientific controversies should be treated as opinions for Lanham Act purposes, and enjoining statements that embrace one side of an open scientific debate would stifle academic freedom and inhibit the free flow of scientific ideas. However, Eastman’s claims were not based on an article published in a scientific journal, but on statements made in commercial advertisements directed at customers. The fact that the commercial speech related to a scientific matter did not render the speech outside the purview of the Lanham Act. The injunction only barred statements made “in connection with any advertising, promotion, offering for sale, or sale of goods or services.” PlastiPure could continue to pursue their research and publish their results.

There was sufficient evidence to support the jury’s determination that PlastiPure violated the Lanham Act, according to the court. PlastiPure urged the court to reverse the jury’s verdict because there was no evidence to support the conclusion that PlastiPure’s statements regarding Tritan’s EA were false. Eastman presented evidence that there was no evidence of estrogenic activity in Tritan, and the jury was free to credit’s Eastman’s evidence over the evidence presented by PlastiPure. The jury also found that PlastiPure’s statements were misleading, which served as an independent basis for the district court’s injunction. PlasiPure did not challenge the sufficiency of this finding.

Any errors in the jury instructions were harmless and not a proper basis for overturning the verdict, according to the court. In order to demonstrate reversible error, PlastiPure needed to show substantial and ineradicable doubt that the jury had been properly guided in its deliberations. PlasiPure failed to show how the instruction affected the outcome of the case. PlastiPure argued that the statements were not literally false, but conceded the statement could be misleading. Because the jury found the statement both false and misleading, any error in the jury instructions was not harmful.

The case is No. 13-51087.

Attorneys: Richard Wayne Harrison (Fritz, Byrne, Head & Harrison, PLLC) for Eastman Chemical Co. Bryan David Lauer (Scott, Douglass & McConnico, LLP) for PlastiPure, Inc., and CertiChem, Inc.

Companies: Eastman Chemical Company; PlastiPure, Inc.

Cases: Advertising LouisianaNews MississippiNews TexasNews