Antitrust Law Daily Wrap Up, ADVERTISING—EDWis: Insulation Seller Could Seek Damages in Lanham Act Claim Against Competitor, (Nov 19, 2012)

By Jody Coultas, J.D.

A ceiling and wall insulation systems seller, Thermal Design, Inc., could proceed with Lanham Act false advertising claims against competitor Guardian Building Products, Inc. , according to the federal district court in Milwaukee (Thermal Design, Inc. v. Guardian Building Products, Inc., November 16, 2012, Randa, R.). In a June 2012 decision, the court held that some of Thermal Design’s claims could proceed past summary judgment but the company could not recover monetary damages.

Thermal Design sold an insulation system that could be installed in roofs and walls of large, non-residential buildings that included an added alternative fall protection as a standard feature for worker protection. After Guardian purchased Thermal Design’s biggest competitor and began selling a similar fabric liner system with fall protection, it issued a press release announcing that its Energy Saver insulation system has been enhanced to include OSHA-compliant leading edge fall protection.

In the June decision, Guardian was granted summary judgment of Thermal Design’s claim for damages. According to the court, Thermal Design failed to produce any evidence that it was damaged by actual consumer reliance on the misleading statements and Guardian produced evidence demonstrating that consumers were not confused by Guardian’s ads. Thermal Design moved for reconsideration.

When a statement is literally false, courts do not require a plaintiff to demonstrate actual customer deception in order to obtain relief. In the previous decision, the court noted the presumption of actual consumer confusion, but noted that there must be more than a mere showing of literal falsity and that Thermal Design failed to show other proof of damages.

The court erred in the previous decision by dismissing Thermal Design’s claims for damages. A party seeking damages must show not only the likelihood of confusion, but that it was damaged by actual consumer reliance on the misleading statements. A plaintiff may prove an entitlement to damages besides offering proof of consumer confusion through evidence of diversion of sales, eroding revenues, and other evidence. Because the claims concerned a literally false statement, Thermal Design did not need to demonstrate consumer confusion. Thermal Design presented evidence that it was damaged by the misleading statements in Guardian’s advertisements through an expert opinion.

The case is No. 08-C-828.

John G. Goller (von Briesen & Roper SC) for Thermal Design, Inc. John Aron Carnahan (Husch Blackwell LLP) for Guardian Building Products, Inc.

Cases: Advertising WisconsinNews