Thursday, December 03, 2009

Enfamil Ad Claims Enjoined; Store Brand Awarded $13.5 Million

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

A jury awarded $13.5 million to store brand infant formula producer PBM Products on a finding that Mead Johnson & Co. falsely advertised its Enfamil® LIPIL® formula in violation of the Lanham Act.

After the jury returned its verdict on November 10, the federal district court in Richmond, Virginia enjoined Mead Johnson from publishing any advertisement containing a false representation about PBM’s infant formula. PBM supplies store-brand infant formulas to Walmart, Sam's Club, Target, Kroger, Walgreens, and other retailers.

The December 1 injunction order expressly bars Mead Johnson from making the following claims: “It may be tempting to try a less expensive store brand, but only Enfamil LIPIL is clinically proven to improve brain and eye development,” and “There are plenty of other ways to save on baby expenses without cutting back on nutrition.”

The court directed Mead Johnson to retrieve any and all advertisements, promotional materials, or other literature containing the above claims.

The December 1 order does not articulate the basis for entering the injunction. In an earlier ruling (see Trade Regulation Talk, May 28, 2009), the court had denied PBM’s motion for a preliminary injunction (CCH Advertising Law Guide ¶63,417; 2009-1 CCH Trade Cases ¶76,619).

Laches Defense

Mead Johnson unsuccessfully contended that PBM’s suit was barred by the defense of laches on the theory that PBM had not diligently pursued its Lanham Act claim.

Mead Johnson argued that its challenged ad claims in a 2008 mailer had been made for more than two years. The court viewed the two-year Virginia statute of limitation period for fraud as analogous to false advertising under the Lanham Act, which lacks a statute of limitations.

Contrary to Mead Johnson’s contention, the 2008 Mailer took a new approach in tone and message towards store brand infant formula, according to the court. Mead Johnson consciously decided that its marketing should be more aggressive and risky, as it had witnessed a decrease in its sales and an increase in store brand sales, the court said.

The 2008 Mailer and its attack on store brands was the result of that marketing decision. On these facts, the court determined that Mead Johnson had not shown that PBM lacked diligence in pursuing its Lanham Act claim.

The December 1 order in PBM Products, LLC v. Mead Johnson Nutrition Co. will be reported in CCH Trade Regulation Reports and CCH Advertising Law Guide.

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