Antitrust Law Daily Wrap Up, ADVERTISING—NDIll: Turbo Blower Manufacturer Enjoined From Continuing to Make Literally False Statements About Competitor , (Apr 23, 2013)

By Jody Coultas, J.D.

KTurbo, Inc. violated the Lanham Act and Illinois Deceptive Trade Practices Act (DTPA) by providing customers and prospective customers with advertising asserting that competitor Neuros Co., Ltd. exaggerated its claims about its products, according to the federal district court in Chicago (Neuros Co., Ltd. v. KTurbo, Inc., April 17, 2013, Darrah, J.). The court granted Neuros attorney’s fees and an injunction against KTurbo.

Both companies manufacture high-speed turbo blowers used in the treatment of water at waste water treatment plants. Neuros filed the Lanham Act and DTPA claim against KTurbo for making false statements about Neuros.

A district court dismissed the claim and denied Neuros an award of attorney’s fees. The Seventh Circuit reversed the dismissal, finding that KTurbo disseminated false advertising to potential customers. On remand, the district court was required to rule on the Lanham Act and DTPA claim and determine whether to award attorney’s fees and injunctive relief.

Attorney fees. The court held that KTurbo violated the Lanham Act false advertising section and the DTPA. Attorney’s fees may be awarded under the Lanham Act and DTPA in exceptional cases or where the party’s violation was especially egregious. In this case, KTurbo continued to make false statements about Neuros’ blowers even after it was evident that its statements were literally false. KTurbo sought to drive Neuros out of the market with its claims, and continued to violate the false advertising statutes despite knowing that its claims regarding Neuros were false. Such actions were objectively unreasonable and egregious, the court held. Therefore, Neuros was entitled to attorneys’ fees under the Lanham Act. Neuros was also entitled to attorneys’ fees under the DTPA because KTurbo willfully engaged in a deceptive practice.

Injunctive relief. Neuros was also entitled to an injunction prohibiting KTurbo from continuing to spread false information and requiring it to provide corrective advertising. Injunctions may be granted if the party seeking the injunction can demonstrate that it will suffer irreparable harm absent the injunction, there is no adequate legal remedy, the balance of hardships weighs in favor of an injunction, and the injunction will not harm the public. KTurbo’s Lanham Act and DTPA violations could not be remedies at law as the false statements could have lingering effects on business. Neuros was unable to quantify the damages sustained and was irreparably harmed by the false statements. The other factors also weighed in favor of injunctive relief.

The case is No. 08-cv-5939.

Attorneys: Joshua D. Yount (Mayer Brown LLP) for Neuros Co., Ltd. Constance Susan Martin (Schwabe, Williamson & Wyatt) for KTurbo, Inc.

Companies: Neuros Co., Ltd.; KTurbo, Inc.

Cases: Advertising StateUnfairTradePractices IllinoisNews