Antitrust Law Daily Wrap Up, ADVERTISING—W.D. Pa.: Steam iron maker enjoined from engaging in literally false advertising, (Jun 4, 2014)

By Greg Hammond, J.D.

Euro-Pro Operating LLC was denied an emergency motion to stay a preliminary injunction order that enjoined the company from engaging in false advertising with regard to a competitor’s steam iron products. The federal district court in Pittsburgh has determined that Euro-Pro failed to meet its burden of demonstrating a likelihood of success on the merits of the appeal, irreparable injury if the stay was denied, and that public interest would support such a stay (Groupe SEB USA, Inc. v Euro-Pro Operating LLC, June 3, 2014, Eddy, C).

Background. Groupe SEB USA, Inc. (SEB) and Euro-Pro offer competing steam iron products to consumers. However, a motion for preliminary injunction was previously granted to SEB, after the district court determined that Euro-Pro made false advertisements about SEB’s products, in violation of the Lanham Act and Pennsylvania’s unfair competition law. Specifically, the court’s order enjoined Euro-Pro from continuing its false advertising and required the company to remove, place stickers on, or otherwise cover up the literally false statements on the packaging of their Shark 405 and Shark 505 products. Euro-Pro filed a notice of appeal and an emergency motion for stay of preliminary injunction order pending appeal.

Likelihood of success. In support of its emergency motion, Euro-Pro set forth a number of arguments that it would be likely to succeed on the merits of the case on appeal. Specifically, Euro-Pro argued: the mandatory relief in the court’s order does not reflect the court’s findings; the evidence does not support a finding of irreparable harm to SEB; the case raises a novel legal issue that weighs in favor of granting a stay pending appellate review; SEB was granted preliminary injunction on a diminished burden of proof; and Euro-Pro is likely to succeed on the merits on appeal because the court failed to credit the scientific test and testimony of their scientific expert.

However, the court disagreed with Euro-Pro’s arguments, noting that: (1) both of Euro-Pro’s Shark 505 and Shark 405 packages contained literally false statements; (2) evidence established a clear showing of a likelihood of irreparable injury to SEB; (3) there was not a novel legal issue regarding consumer survey evidence, as the court discounted the survey by finding the advertisements were literally false; (4) SEB carried its burden in establishing literal falsity; and (5) Euro-Pro’s expert’s testimony was largely irrelevant.

Irreparable injury. Euro-Pro also argued that it would suffer substantial and irreparable injury if the court does not stay its preliminary injunction order, and that the potential harm to SEB would be minimal given the temporary nature of the delay. The court was not swayed by Euro-Pro’s arguments, noting that it attempted to minimize any injury to Euro-Pro by not forcing the company to repackage its products. In addition, the court found that any harm that was likely to be suffered by Euro-Pro was outweighed by the harm that SEB was likely to suffer, including loss of control of operation, goodwill, and trade.

Public interest. In its final argument, Euro-Pro asserted that the public interest supports a stay of the preliminary injunction order because the court’s order was so broadly drawn that it effectively precluded Euro-Pro from using legitimate commercial speech. However, the court disagreed, noting that it precluded Euro-Pro from using literally false commercial speech, which the court determined was not in the public interest. The court therefore denied Euro-Pro’s emergency motion to stay the preliminary injunction.

The case number is 14-137.

Attorneys: Gretchen L. Jankowski (Buchanan Ingersoll & Rooney PC) for Groupe SEB USA, Inc. Mark A. Grace (Cohen & Grace, LLC) and Randall K. Miller (Venable LLP) for Euro-Pro Operating LLC.

Companies: Groupe SEB USA, Inc.; Euro-Pro Operating LLC

Cases: Advertising StateUnfairTradePractices PennsylvaniaNews