Antitrust Law Daily Wrap Up, ADVERTISING—S.D.N.Y.: Clearblue pregnancy test maker falsely advertises “weeks pregnant”, (Jul 6, 2015)

By Greg Hammond, J.D.

A leading manufacturer of home pregnancy tests falsely and intentionally conveyed that its “Clearblue Advanced Pregnancy Test with Weeks Estimator” estimates the number of weeks a woman is pregnant consistent with how a doctor would make such an estimate. The federal district court in New York City granted the plaintiff manufacturer’s request for permanent injunctive relief, based on findings that the false representations were made intentionally and with an egregious nature, the manufacturer would suffer irreparable injury absent a permanent injunction, a damage award would be inadequate, and the balance of hardships and the public interest weighed in favor of the award of permanent injunctive relief (Church & Dwight Co., Inc. v. SPD Swiss Precision Diagnostics, GmbH, July 1, 2015, Nathan, A.).

SPD Swiss Precision Diagnostics, GmbH is the manufacturer of the Weeks Estimator, which was cleared by the FDA for the intended use of telling a woman: (1) whether she is pregnant and, if she is pregnant, (2) how many weeks have passed since she ovulated.

Competing pregnancy test manufacturer Church & Dwight Co., Inc. filed suit against SPD, claiming that SPD engaged in false advertising by conveying the false message that the Weeks Estimator tells a woman how many weeks pregnant she is consistent with how a doctor would estimate weeks pregnant. However, Church argues that doctors estimate pregnancy duration based on how many weeks have passed since a woman’s last menstrual period, whereas the Weeks Estimator approximates weeks since ovulation. On average, ovulation occurs two weeks after a woman’s last menstrual period.

The court concluded that: (1) SPD engaged in false advertising in violation of the Lanham Act and New York state law; (2) SPD engaged in intentional deception of an egregious nature; (3) Church is entitled to a permanent injunction; and (4) Church failed to prove that SPD breached the parties’ prior settlement agreement.

With regard to the false advertising claim, the court determined that, despite an FDA warning, internal SPD marketing documents described the “communication idea” for the Weeks Estimator marketing campaign as giving women the reassurance of knowing more about their pregnancies because the Weeks Estimator is the only test that can also tell you “how far along you are.” Further, the court found that the advertising consistently communicated the message that the product estimates “weeks pregnant,” while downplaying the message that the product provides an estimate of weeks since ovulation or that the product’s estimate of “weeks” does not align with how a doctor would express an estimate of weeks pregnant.

The court therefore concluded that the packaging, television commercial, webpage, and other advertising materials were intentionally deceptive, noting that SPD was aware the Weeks Estimator’s result did not align with the standard convention for dating pregnancy; SPD was warned by the FDA, its U.S. Advisory Board, and in-house scientific staff concerning the possibility of consumer confusion; but SPD nevertheless intentionally designed its advertising to mislead consumers about the difference between the product’s estimate of weeks since ovulation and a doctor’s estimate of weeks pregnant.

Because the “weeks estimating” function is an inherent quality or characteristic of the product, demonstrating materiality, and because the advertising is false by necessary implication, demonstrating the advertising is likely to cause injury to Church, Church established SPD’s liability for false advertising under the Lanham Act and New York state law.

Injunctive relief also was granted because: (1) it will be difficult to replace or measure the harm to Church’s loss of market share, goodwill, and brand equity caused by SPD’s false advertising; (2) Church has been and likely continues to be injured by SPD’s false advertising, while SPD cannot claim any protected interest in its false advertising because it cannot assert an equitable interest in the perpetuation of an advertising campaign that is literally false; and (3) providing greater clarity in advertising an over-the-counter medical device would not disserve the public interest. The parties were therefore ordered to confer to see if they can reach an agreement on the specific language of a permanent injunction order.

The breach of contract claim failed, however, because there was no evidence from which the Court could conclude that SPD breached the parties’ earlier settlement agreement.

The case number is 14-CV-585 (AJN).

Attorneys: Jeffrey H. Warshafsky (Proskauer Rose LLP) for Church & Dwight Co., Inc. Jeffrey G. Knowles (Coblentz, Patch, Duffy & Bass, LLP) for SPD Swiss Precision Diagnostics, GmbH.

Companies: Church & Dwight Co., Inc.; SPD Swiss Precision Diagnostics, GmbH

Cases: Advertising NewYorkNews