Antitrust Law Daily Wrap Up, ADVERTISING—W.D. Tex.: Commercial advertisements about product’s safety were false and misleading, (Sep 4, 2013)

By Jody Coultas, J.D.

PlastiPure, Inc.’s commercial advertisements and promotions violated the Lanham Act false advertising provision by making false and misleading statements about Eastman Chemical Company’s plastic resin product, the federal district court in Austin, Texas has held (Eastman Chemical Company v. PlastiPure, Inc., August 30, 2013, Sparks, S.). The court also granted Eastman an injunction against PlastiPure.

Eastman alleged that PlastiPure incorrectly stated that Eastman’s plastic resin product Tritan, or products made from Tritan, leached chemicals capable of causing estrogenic activity when subjected to various stressors, and those estrogenic chemicals could cause harm to humans.

A jury found in favor of Eastman on the Lanham Act claim. PlastiPure filed its motion for judgment as a matter of law, and the court instructed the parties to file proposed final judgments.

Section 43(a) of the Lanham Act required Eastman to establish: (1) A false or misleading statement of fact about a product; (2) that either deceived, or had the capacity to deceive a substantial segment of potential consumers; (3) the deception was material; (4) the product was in interstate commerce; and (5) an injury resulted from the statement. In order to submit an issue to the jury, the evidence must be sufficient so that a jury will not ultimately rest its verdict on mere speculation and conjecture.

Judgment as a matter of law was not appropriate and the claims were properly submitted to the jury, according to the court. PlastiPure argued that the statements at issue were matters of scientific debate protected by the First Amendment and not actionable as the statements were based on peer reviewed scientific journal article. However, the false advertising claims were based on nonscientific materials—such as an advertising brochure, press releases, and PlastiPure’s website—rather than on a scientific journal article. Some of the statements even predated the journal article. The jury was also presented with sufficient evidence to determine whether the companies were competitors, whether the statements were false, whether Eastman’s customers were actually deceived by the statements, and whether Eastman was injured.

PlastiPure could not show that the jury’s finding was unreasonable, according to the court. Although the scientific journal article was protected, the commercial advertisements that used snippets of that article were not. The fact that scientists disagreed as to whether Tristan was dangerous also did not immunize PlastiPure from making the statements. The jury made numerous credibility determinations in evaluating the scientific testimony and concluded that PlastiPure falsely claimed Tritan was harmful. The jury’s conclusion was not invalid simply because the issues were difficult or technically complex.

The court granted Eastman an injunction prohibiting PlastiPure from making a number of statements in commercial advertisements or promotions about Tristan. A permanent injunction may be issued if a plaintiff demonstrated: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

Although PlastiPure removed the press release and brochure from its website and did not plan to redistribute them, there was a possibility PlastiPure could make similar statements in the future. Some of Eastman’s injuries would be compensable, but others were not easily reduced to a damages figure. An injunction would only prevent PlastiPure from repeating false statements in commercial advertisements or promotions. Finally, the public had a strong interest in the enforcement of the Lanham Act’s prohibition on false advertisements, and would suffer no harm because PlastiPure’s scientific pursuits were unaffected by the terms of the injunction.

PlastiPure was enjoined from advertising that (1) Tritan resins and products leach chemicals having significant estrogenic activity; (2) Tritan, or products made with Tritan, are dangerous to human health because they exhibit estrogenic activity; (3) Tritan resins and products leach chemicals having significant estrogenic activity after common-use stresses; or (4) PlastiPure’s use of the MCF-7 in vitro assay is a definitive final test for estrogenic activity in chemicals or substances, including Tritan.

The case is No. A-12-CA-057-SS.

Attorneys: Eleanor Ruffner (Fritz Byrne Head and Harrison, PLLC) for Eastman Chemical Company. Robert G. Hargrove (Hays & Owens) for PlastiPure, Inc.

Companies: Eastman Chemical Company; PlastiPure, Inc.

Cases: Advertising TexasNews