Antitrust Law Daily Wrap Up, ADVERTISING—6th Cir.: Energy drink manufacturer may be liable for trademark infringement and false advertising, (Jul 2, 2013)

By Jody Coultas, J.D.

A district court erred in granting an energy shot manufacturer summary judgment on Lanham Act trademark and false advertising claims brought against the manufacturer by a competitor, the U.S. Court of Appeals in Cincinnati has held (Innovation Ventures, LLC v. Bhelliom Enterprises Corp., June 28, 2013, Cook, D.).

“5-hour ENERGY” manufacturer Innovation Ventures, LLC filed separate trademark infringement and false advertising claims against competitors N.V.E., Inc. and Bhelliom Enterprises Corp. A district court ruled in favor of the competitors in both cases. At the appellate level, the N.V.E. decision was reversed on the merits of the trademark claim because the mark was protected (694 F.3d 723, 2012-2 Trade Cases ¶78,053). In its appeal of the Bhelliom case, Innovation argued that the decision concerning N.V.E. required the court to reverse the district court’s grant of summary judgment in favor of Bhelliom. Innovation also requested summary judgment in its favor on the trademark and advertising claims.

The N.V.E. decision required reversal of the grant of summary judgment, according to the court. There was very little that distinguished the case at issue from the N.V.E. case.

Innovation was not, however, entitled to summary judgment on its trademark claims, according to the court. At the outset, the court noted that Innovation forfeited this argument by not moving for summary judgment before the district court. Even if the court could consider the issue, Innovation would be unable to show that it was entitled to summary judgment. There was a question of fact as to whether there was actual customer confusion or intentional copying.

Bhelliom’s alleged willful misrepresentations about its competitors’ products did not warrant a presumption of damages in support of the false advertising claims, according to the court. The district court held that Innovation failed to show actual damages resulting from Bhelliom’s advertising. The district court granted summary judgment to Bhelliom because there was no evidence that the alleged falsities harmed Innovation.

On appeal, Innovation argued that the court could presume damages because Bhelliom’s actions were willful. Courts have presumed damages in cases of comparative advertising where the manufacturer’s product was specifically targeted and the advertiser’s misrepresentations were willful. Although Bhelliom’s advertisements acknowledged the “5-hour ENERGY” products as a competitor, the ads did not target Innovation products.

The district court’s dismissal of Innovation’s false advertising claims for injunctive relief was in error, according to the court. Innovation was unable to show harm. However, distinct evidence of harm was not a prerequisite for injunctive relief. The district court was required to resolve whether any of the advertisements contained literal falsities or misleading representations, and whether they deceived the audience.

The case is No. 11-2090.

Attorneys: Glen David Nager (Jones Day) for Innovation Ventures, LLC. James Kenneth Thome (Vandeveer Garzia) for Bhelliom Enterprises, Corp.

Companies: Innovation Ventures, LLC; Bhelliom Enterprises, Corp.; N.V.E., Inc.

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