Antitrust Law Daily Wrap Up, ADVERTISING—N.D.N.Y.: False ad claims brought by “the original” rocket ice pop lift off, (May 18, 2015)

By Greg Hammond, J.D.

Wells Enterprises, Inc., the maker of the “first red-white-and-blue rocket shaped frozen ice pop sold in the United States,” has stated sufficient false advertising claims against competitor Conopco Inc., doing business as Unilever, over the use of the phrase “the original” on its packaging for its red-white-and-blue “Firecracker” rocket ice pop. The federal district court in New York City partially denied Unilever’s motion to dismiss Wells’ false advertising counterclaims, finding that Unilever’s use of the phrase “the original” could leave consumers with the impression that the Firecracker was the first red-white-and blue rocket shaped frozen ice pop (Conopco Inc. v. Wells Enterprises, Inc., May 14, 2015, Buchwald, N.).

Background. Unilever filed suit against Wells in March 2014, alleging federal trademark infringement; false designation of origin and unfair competition in violation of the Lanham Act; and unfair competition, deceptive trade practices, and injury to business reputation under New York state law. The suit claimed that the packaging of Wells’ “Bomb Pop” is confusingly similar to the trade dress for Unilever’s “Firecracker” products. Wells counterclaimed for false advertising, trademark infringement, and related state law claims, alleging that Unilever altered its Firecracker product packaging to prominently feature the phrase “The Original,” knowing that the Bomb Pop was the first red-white-and-blue rocket shaped frozen treat. Unilever moved to dismiss the false advertising and trademark infringement counterclaims.

False advertising. Wells claimed that the words and picture featured on the Firecracker’s packaging necessarily and falsely imply that the Firecracker was the first rocket ice pop, rather than the Bomb Pop. The court found that the brand-specific use of “original” typically serves to distinguish between different versions of a manufacturer’s product, but that only the “original Firecracker” exists, rendering the brand-specific interpretation redundant for Unilever. Furthermore, the court concluded that the branding of the Firecracker as “the original Firecracker” on its packaging could imply that the Firecracker is the first rocket ice pop, supporting a claim for false advertising.

Second, the court found that the use of the term “original” could serve to differentiate otherwise similar rocket ice pops, demonstrating that it is plausibly material to consumer purchasing decisions. Unilever’s decision to highlight the word on its packaging suggested the relative importance and materiality of the claim to originality in its marketing of rocket ice pops. Moreover, given the similarity between the ice pops, the court found it plausible that an originality claim could sway a consumer.

In its third argument, Unilever challenged Wells’ false advertising counterclaim on the ground that Wells failed to demonstrate injury to a commercial interest. However, Wells alleged that “nineteen years of BOMB POP packaging touting the BOMB POP as the original red-white-and-blue rocket-shaped frozen ice pop”—and the goodwill Wells amassed over the two decades—were sufficient to plead damages at the current state of litigation. The motion to dismiss was therefore denied with regard to the Lanham Act false advertising claims.

Deceptive practices. Unilever also challenged Wells’ deceptive acts or practices claims under New York General Business Law Sections 349 and 350, arguing that the claims were insufficiently consumer-oriented. Although Wells was correct that its General Business Law claims concerned false advertising rather than merely trademark infringement, implicating more than non-actionable “confusion over the ownership of intellectual property,” the harm arising from Unilever’s allegedly false advertising was not sufficiently directed at or borne by consumers to constitute the “gravamen” of Wells’ complaint. Rather, the primary injury sought to be redressed was the harm to Wells’ business, which does not present “significant ramifications for the public at large,” above and beyond Wells’ private injury, the court concluded. The motion to dismiss the New York deceptive acts or practices claims was consequently granted.

Trademark infringement. The court also dismissed the federal trademark infringement and New York common law unfair competition claims, finding that Wells failed to make an affirmative allegation of consumer confusion as required by the two statutes. Unilever argued that Wells failed to sufficiently plead likelihood of confusion because it asserted only a conditional claim arising “if there is a likelihood of confusion” as to the source of the Bomb Pop. Nevertheless, the court concluded that Wells could allege consumer confusion that is conditional or contingent upon the outcome of the plaintiff’s infringement claim. The court consequently granted Wells leave to amend these two counterclaims.

The case number is 14 Civ. 2223 (NRB).

Attorneys: Gregory Paul Gulia (Duane Morris, LLP) for Conopco Inc. Beth Ilana Goldman (Frankfurt Kurnit Klein & Selz PC) and Natalie Hanlon-Leh (Wilmer Cutler Pickering Hale and Dorr LLP) for Wells Enterprises Inc.

Companies: Conopco Inc.; Wells Enterprises, Inc.

Cases: Advertising StateUnfairTradePractices NewYorkNews