$8 Million Damage Award Upheld for Falsely Advertising Product as “Innovative”

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

A jury award of over $8 million against Japanese basketball manufacturer Molten for falsely advertising its product design as “innovative” was upheld by the federal district court in Seattle.

The clear weight of the evidence showed that Molten's advertising of its “dual cushion technology” basketballs as “innovative” deceived customers, influenced consumer purchases, and injured the complaining competitor Baden Sports, the court determined. The jury was properly instructed on the elements of the false advertising claim, and the amount of the award was not grossly excessive or against the clear weight of the evidence, according to the court.

Innovation v. Inventorship

The claim that Molten falsely advertised its product as “innovative” was not barred by Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), in which the U.S. Supreme Court held that a Lanham Act false advertising claim cannot be based on inventorship or ownership of a product.

Although some testimony indicated that witnesses believed that Molten’s advertising was false because the complaining competitor Baden actually created the patented design, other testimony made it clear that the witnesses believed the advertising to be false because Molten’s product was not “new.” The fact that witnesses used Baden’s prior design as evidence to show that Molten’s product was not innovative or new did not mean that Baden was actually basing its false advertising claim on an allegation that “Molten didn’t make it, we did,” the court reasoned.

Puffery

Molten waived the issue of whether its advertising was mere “puffery” in presenting its motion to dismiss Baden’s claims, and the puffery issue could not be presented to the jury, according to the court.

Molten first raised the issue of puffery in a reply brief on its motion to dismiss. Because Baden did not have a chance to respond, the court declined to consider the Molten’s puffery argument on the motion to dismiss.

The only other time Molten raised the issue was in connection with proposed preliminary jury instructions. Whether Molten’s advertising of its “dual cushion technology” basketballs as “innovative” was mere puffery was a question of law—not a fact question to be decided by the jury, the court said.

The January 28, 2008 decision in Baden Sports, Inc. v. Kabushiki Kaisha Molten, will be reported in CCH Trade Regulation Reports and CCH Advertising Law Guide.