Wednesday, April 23, 2008

False Ad Suit Against Poultry Producer Not Barred by USDA Label Approval

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

Advertising by Tyson Foods that its chicken was “Raised Without Antibiotics that impact antibiotic resistance in humans” could violate the Lanham Act’s false advertising prohibition, even though the U.S. Department of Agriculture approved Tyson’s use of the phrase on labels, the federal district court in Baltimore has ruled.

Competitors Sanderson Farms and Perdue Farms sued Tyson for nationally advertising its chicken as “Raised Without Antibiotics” by means of television commercials, radio spots, print ads, billboards, posters and other media. In addition, Tyson advertised several forms of the qualified claim that its chicken was “Raised Without Antibiotics that impact antibiotic resistance in humans.”

The competitors alleged that Tyson’s chicken feed contained “ionophores”—molecules that kill microorganisms—and that ionophores are antibiotics.

“Raised Without Antibiotics”

The Food Safety and Inspection Service of the USDA originally approved Tyson’s use of a “Raised Without Antibiotics” label. FSIS subsequently revoked that approval and specifically stated that ionophores are antibiotics. FSIS informed Tyson that it could no longer use a product label claiming that its chicken was “Raised Without Antibiotics.” Subsequently, the label was qualified to read “Raised Without Antibiotics that impact antibiotic resistance in humans.”

The competitors clearly stated a claim upon which relief could be granted by asserting that the unqualified advertising claim “Raised Without Antibiotics” was literally false, the court held. Without current USDA approval for its label, Tyson could not rely on the USDA’s former, briefly held position as a defense.

Qualified Ad Claim

The competitors also could pursue their suit on the ground that Tyson’s use of the qualifying phrase—“that impact antibiotic resistance in humans”—was ineffective at curing the literal falsity of the root claim—“Raised Without Antibiotics,” the court determined.

The competitors asserted that Tyson’s non-label advertisements containing the qualified claim were false or misleading to the consumer public despite the fact that the USDA had determined that the qualified claim was not “false or misleading” under the Poultry Products Inspection Act. While FSIS’s determination involved a highly technical and scientific review of the proposed label language, it did not involve a review of whether the language was misleading to the consumer when combined with images and promotional slogans, the court observed.

Consumer Survey

The competitors submitted a 600-participant survey to show that Tyson’s qualifying language had no demonstrable consumer impact. The survey buttressed the allegation that Tyson’s qualified claim meant something different to the consumer public, when viewed as part Tyson’s advertisements, than it meant to the experts and scientists at the USDA during the label approval process.

A non-label false advertising claim brought under the Lanham Act was not precluded even though the advertising phrase at issue was approved for use on labels by the USDA, the court concluded. The opposite conclusion would extend USDA expertise into an area—advertising—that the agency had no congressional authority to enter, while at the same time significantly curtailing the congressional protections explicitly accorded to “persons engaged in . . . commerce” under the Lanham Act, the court said.

The April 15, 2008 decision in Sanderson Farms, Inc. v. Tyson Foods, Inc. will be reported in CCH Trade Regulation Reports and CCH Advertising Law Guide.

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