Antitrust Law Daily Wrap Up, FALSE ADVERTISING—EDLa: False Advertising Claims Based on Iced Confection Manufacturer’s Assertion of Trademark Rights Fail, (Feb 1, 2013)

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

Manufacturers, distributors, and retailers of iced confections, flavor concentrates, and ice shaving machines failed to state unfair competition claims based on a machine and concentrate manufacturer’s alleged false advertising committed through fraudulent assertions of trademark rights and false representations concerning certain trademarks, the federal district court in New Orleans has ruled (Southern Snow Manufacturing Co., Inc. v. SnoWizard Holdings, Inc., January 30, 2013, Brown, N.). Pursuant to an earlier ruling in the case, they could not prove literal falsity and did not provide evidence to support the elements of materiality and deception, in the court’s view.

SnoWizard, Inc. manufactures and distributes flavor concentrates and ice-shaving machines for making ice confections. In the mid-2000s, SnoWizard began asserting federal and state trademark rights in the names of the flavor concentrates it manufactured.

Various competing manufacturers of ice-shaving machines and flavor concentrates, distributors of those products, and iced confection retailers responded by filing suit against SnoWizard, asserting a variety of claims relating to fraudulent procurement of federal trademark registration, false trademark infringement assertion, trademark infringement, and violations of the Louisiana Unfair Trade Practices Act (LUTPA).

These claims included unfair competition based on false advertising under the Lanham Act, the LUTPA, and Texas law. The claims asserted that SnoWizard engaged in false advertising through “false designation of origin and false and misleading descriptions of fact” with respect to certain trademarks, and “fraudulent assertions of…trademark right…to existing and potential customers, distributors, and competitors” with respect to all trademarks at issue. SnoWizard filed counterclaims and motions to dismiss.

The present action addressed claims appearing in a civil action that was consolidated with three other civil actions before the court. A previous ruling addressing very similar claims had determined that the plaintiffs had “no claim for unfair competition under the Lanham Act or LUTPA insofar as they rely on the legal assertion that use of trademarking symbols with a generic term constitutes a literally false statement.” Moreover, the previous ruling concluded that the plaintiffs had “no evidence of materiality, i.e., how the presence of those trademarks are likely to influence the customers’ purchasing decision, or of actual deception, which is necessary for monetary relief, or of the tendency to deceive, which is necessary for injunctive relief.”

Since the plaintiffs could not rely on literal falsity, SnoWizard argued, they had to prove all of the elements of a claim “for false advertising under the Lanham Act, including materiality and the tendency to deceive.” As the plaintiffs had not provided any evidence to support the elements of materiality and deception, SnoWizard contended, their claim should be dismissed.

The court agreed, concluding that the previous ruling was “equally applicable” to the present claims. As the plaintiffs had not “provided any arguments or produced any evidence to establish a genuine issue of material fact for trial on essential elements,” the court dismissed their claims for unfair competition under the Lanham Act, the LUTPA, and Texas law.

The court also dismissed claims for declaratory judgment of invalidity and unenforceability of two of SnoWizard’s trademarks and for damages for fraudulent procurement of trademark registrations. In addition, the court dismissed other claims as to certain plaintiffs as duplicative of parties and claims in the other consolidated cases.

The case is Nos. 06-9170, 09-3394, 10-0791, and 11-1499.

Attorneys: Mark Edward Andrews (Andrews Arts & Sciences Law, LLC) for Southern Snow Manufacturing Co., Inc. Jack Edward Morris for SnoWizard Holdings, Inc.

Companies: Southern Snow Manufacturing Co., Inc.; SnoWizard Holdings, Inc.

Cases: Advertising LouisianaNews