Antitrust Law Daily Wrap Up, ADVERTISING—NDIll: Address Label Maker Entitled to Final Judgment on Lanham Act False Advertising Claims, (Dec 10, 2012)

By Tobias J. Gillett, J.D., LLM.

The federal district court in Chicago has entered final judgment on false advertising and tortious interference claims brought by address label manufacturer Continental Datalabel, Inc. against its competitor Avery Dennison Corporation. The court found that judicial efficiency and Avery’s need for final resolution of the claims outweighed any concerns about possible overlap between factual issues in those claims and in patent claims stayed pending the results of a United States Patent and Trademark Office reexamination proceeding (Continental Datalabel, Inc. v. Avery Dennison Corporation, December 7, 2012, Feinerman, G.).

The manufacturers produce competing brands of self-adhesive address labels with a feature designed to render them easier to peel from their backing. Avery had advertised its labels with the statements “Only Avery label sheets bend to expose the Pop-up Edge™” and “Only Avery offers the Pop-up Edge™ for fast peeling—just bend the sheet to expose the label edge.”

Continental had filed suit, asserting that Avery’s labels infringed Continental’s patents on the design feature, that Avery’s advertising regarding its labels constituted false advertising in violation of the Lanham Act, and that Avery had tortiously interfered with Continental’s ability to sell its labels to office supply retailers in violation of Illinois law. The court had stayed proceedings on the patent claims, pending a reexamination of Continental’s patents by the PTO, but granted Avery’s motion for summary judgment on the false advertising and tortious interference claims.

The present proceeding concerned the disposition of the false advertising and tortious interference claims, deciding whether the court should enter partial final judgment on the claims it had resolved. Avery urged immediate entry of judgment under Federal Rule of Civil Procedure 54(b), while Continental contended that “immediate entry of a Rule 54(b) judgment would be premature, but should be revisited in three to six months.” Continental argued that, while the legal issues involved in the patent claims did not overlap those involved in the false advertising and tortious interference claims, factual overlap did exist, and raised the possibility that the court of appeals would have to revisit issues addressed in the first appeal in considering the second appeal.

The court determined that it should enter judgment forthwith, concluding that the equities and judicial efficiency favored that result. Although the technical details of Continental’s patents would be relevant to establishing the similarity of Continental’s labels to Avery’s labels in considering both the false advertising claims and the patent claims, the court had assumed for purposes of summary judgment that the labels were similar. The court had ruled against Continental on a separate ground, that Avery’s statements were not false or misleading (2012-2 Trade Cases ¶78,128). The court found “the bare possibility that a court of appeals might have to cover the same factual ground twice on successive appeals” did not make entry of final judgment improper.

The court similarly disposed of Continental’s argument that the damages involved might also overlap, finding that, as the court had not reached the issue of damages in ruling on the false advertising and tortious interference claims, the possibility that the court of appeals would consider damages in resolving the appeal was “remote.”

The possibility that important witnesses could become unavailable by the time the patent claims were decided, and Avery’s desire for final resolution of the claims against it, outweighed the possible factual and damages overlaps, the court concluded. The reexamination proceedings had lasted three years to that point, with “no definite end in sight.” The possibility that important witnesses in the false advertising and tortious interference claims could become unavailable before the claims could be tried “strongly support[ed] entry of a Rule 54(b) judgment,” in the court’s view.

The court also found “inequitable” the prospect that Avery would have to endure the financial uncertainty attending the resolution of the false advertising and tortious interference claims for as long as it took to resolve the patent claims. The court noted that this uncertainty “could detrimentally affect Avery’s planning and business transactions,” while finding no possible harm to Continental from entry of a Rule 54(b) judgment.

The case is No. 09 C 5980.

Maxwell J. Petersen (Pauley Petersen & Erickson) for Continental Datalabel, Inc. Robert W. Unikel (Kaye Scholer LLP) for Avery Dennison Corporation.

Cases: Advertising IllinoisNews