Antitrust Law Daily Wrap Up, ADVERTISING—E.D. Mich.: 5-hour ENERGY competitor enjoined from misleading time release advertising, (Aug 27, 2014)

By Linda O’Brien, J.D., LL.M.

In an action by a manufacturer of an energy drink against a competitor for false advertising under the Lanham Act, the manufacturer was entitled to a permanent injunction enjoining the competitor from advertising its products’ time release capabilities, the federal district court in Port Huron, Michigan has ruled. However, issues of material fact precluded the grant of summary judgment on the plaintiff’s durational false advertising claim (Innovation Ventures, LLC v. Bhelliom Enterprises Corp., August 26, 2014, Zatkoff.).

Innovation Ventures is a manufacturer and distributor of an energy drink, using the mark “5-hour ENERGY.” Bhelliom Enterprises markets and sells energy pills and drinks, using the “8-HR” and “ENERGY” marks on its products.

Innovation filed a complaint against Bhelliom under the Lanham Act, alleging trademark infringement and false advertising and requested injunctive relief. Innovative asserted that Bhelliom knowingly misstated its products’ time release capabilities and misrepresented that its products actually provided energy for eight hours. The Sixth Circuit reversed the district court’s dismissal of the claims and denial of Innovative’s request for permanent injunction. The case was remanded to determine whether any of Bhelliom’s advertisements contained literal falsities or misleading representations that tend to deceive a substantial portion of the intended audience. Innovation moved for permanent injunction and summary judgment on its false advertising claims.

Permanent injunction. The Lanham Act provides that a district court may grant injunctive relief to prevent infringement of a party’s registered mark. Bhelliom conceded that its advertisement representing a time released formula were false statements and had been discontinued. The court noted that there was evidence that the defendant continued to use such advertisement, and nothing prevented Bhelliom from continuing to use false advertisements of the same nature in the future. Thus, permanent injunctive relief regarding the defendant’s time release false advertisements was warranted, the court concluded.

False advertising claims. However, the court found that the plaintiff failed to show that the alleged false or misleading statements by the defendant actually or tended to deceive a substantial portion of the audience. To present a viable false advertising claim under the Lanham Act, a plaintiff must demonstrate that (1) the defendant made false or misleading statements concerning its own product or another’s; (2) the statement actually or tended to deceive a substantial portion of the intended audience; and (3) the statement was material in that it would likely influence the deceived customer’s purchasing decisions.

In rejecting the plaintiff’s argument that the defendant’s durational energy claim was literally false and did not require proof that it tended to deceive a substantial portion of the audience, the court noted a key factor was the misrepresentation’s tendency to deceive consumers and found a genuine dispute of material fact as to whether Bhelliom’s eight-hour energy claims were false. Since additional briefing was necessary to resolve the durational false advertising claim, the plaintiff’s motion for summary judgment was denied.

The case is No. 09-13783.

Attorneys: Brian C. Doughty (Brooks Kushman) for Innovation Ventures, LLC. James K. Thome (Vandeveer Garzia) for Bhelliom Enterprises Corp.

Companies: Innovation Ventures, LLC; Bhelliom Enterprises Corp.

Cases: Advertising MichiganNews