Canadian imported drugs whose origin was disclosed to end consumers couldn’t trigger infringement/false advertising liability

Posted on July 6, 2026 by rtushnet

AbbVie Inc. v. Payer Matrix, LLC, No. 23 CV 2836, 2026 WL
1846752 (N.D. Ill. Jun. 26, 2026)

Another round in AbbVie’s fight
against Canadian imports.

Payer Matrix contracts with employers or an employer’s
pharmacy benefit manager (PBM) or third-party administrator (TPA) to help their
members access high-cost specialty drugs not covered under an insurance plan,
including by assisting them in applying for drug companies’ patient assistance
programs (PAP). PAP eligibility is determined by the drug company; it often requires
applicants to be insured or underinsured. AbbVie specifically requires the
member’s healthcare provider to complete much of the application, “so Payer
Matrix follows up with providers to ensure that the applications submitted are
timely.” “Payer Matrix disclosed its involvement in these applications to
AbbVie and worked with AbbVie representatives as part of its PAP eligibility
investigations.” It also “started a biosimilar program to encourage members and
their health care providers to explore biosimilar alternatives to brand-name
specialty drugs.”

AbbVie didn’t like that PAP lowered its revenue compared to its
co-pay assistance program. It described alternate funding providers (AFPs) like
Payer Matrix as a “malignant tumor” that “needed to be dealt with strategically
and aggressively.” It therefore changed its PAP eligibility requirements to exclude
patients working with Payer Matrix.

AbbVie told representatives to say that AbbVie had “updated
[its] eligibility guidelines to respond to changes with [the patient’s]
insurance provider,” and to say that AFPs “[c]an cause delays to treatment and
be highly disruptive to patients, as well as infringing on benefits intended
for patients who are uninsured or underinsured.” AbbVie sent denial letters
stating that the denial was because AbbVie “believe[d] [the patient’s]
insurance provider is, or is partnering with a third-party company to,
inappropriately utilize our program instead of their insurance coverage.” Sometimes
its representatives speaking to patients went further, telling patients that
Payer Matrix was “committing fraud” or “operating illegally,” and directing
them to contact Payer Matrix for assistance in paying for their medications. “AbbVie
representatives also responded to telephone inquiries from healthcare providers
by telling them that ‘Payer Matrix was causing [ ] problems with coverage,’
that Payer Matrix was acting illegally, and that the providers should not work
with Payer Matrix.”

Meanwhile, the Patient Access Network (“PAN”), a charitable
foundation to which AbbVie donated approximately $100 million in 2023, began
speaking out against AFPs and specifically Payer Matrix. (Um. I’m sure they
have plenty of legal advice, and of course I don’t expect our tax enforcers to
do anything, but how on earth is it legal for AbbVie to give a bunch of money
to a charity that it can write off as a donation and then get the money back
from the charity, as expected? They should be allowed to write off the cost of
the drugs purchased with AbbVie’s money, but that would be a lot less.)

Payer Matrix sued for various product disparagement/advertising
torts as well as antitrust and RICO claims. The RICO claims failed because they
were RICO claims. The antitrust claims failed because they were antitrust
claims (it was antitrust injury that was missing).

Defamation: Illinois recognizes qualified privileges that
protect against liability unless the publication was knowingly false or
published while entertaining serious doubts about its truth, or the publication
was disseminated beyond the proper parties. Some of AbbVie’s communications
were protected by qualified privilege, including statements in the online PAP
application, letters to denied PAP applicants, talking points provided to call
representatives to respond to questions about PAP denials, resulting statements
by call representatives, and some AbbVie statements to healthcare providers. Talking
points to help AbbVie’s call representatives respond to questions about the
instant lawsuit weren’t.

So, for those, knowledge of falsity or reckless disregard
was required, or statements beyond the scope of the privilege—the latter was
only alleged for a few statements by call representatives who said that Payer
Matrix was acting “illegally” or “committing fraud,” and statements to
healthcare providers that they should not work with Payer Matrix and that “all
of the other [drug] manufacturers” would be following AbbVie’s lead. “The
qualified privilege in this case is justified by the need for AbbVie to help
patients and their providers understand their eligibility for the PAP. It is
reasonable to conclude that statements that Payer Matrix was acting illegally
and that healthcare providers should not work with Payer Matrix go beyond the
scope of that need.”

As to plausible knowledge of falsity, the talking points
allegedly directed AbbVie call representatives to state that AFPs “[c]an cause
delays to treatment and be highly disruptive to patients, as well as infringing
on benefits intended for patients who are uninsured or underinsured.” “But,
Payer Matrix alleges, the delays were not Payer Matrix’s fault, and AbbVie,
whose own benefits investigations were the real reason for the delays, knew it.
That is enough to plausibly allege that AbbVie made this statement [and similar
ones to a healthcare provider] while knowing that it was false.”

It was also plausible that AbbVie knew the falsity of the
statement that it “updated [its] eligibility guidelines to respond to changes
with [the applicant’s] insurance provider,” since AbbVie had allegedly worked
with insurance plans affiliated with Payer Matrix and understood Payer Matrix’s
role “since at least 2021,” and thus there were no AFP-related changes to
applicants’ insurance plans in 2023 when the terms changed.

In addition, AbbVie plausibly knew of the falsity of
statements by its representatives instructing denied PAP applicants to ask
Payer Matrix for help with drug coverage, since it knew that wasn’t Payer
Matrix’s role in the system.

But AbbVie’s statements about entities “inappropriately”
using the PAP weren’t statements of verifiable fact, and so there couldn’t be
scienter (or, of course, liability).

Additionally, AbbVie’s talking points explaining its reasons
for bringing this lawsuit were non-actionable opinion: that Payer Matrix “misus[ed]
patient assistance programs” and that “AbbVie aims to protect [its] programs
and patients from [Payer Matrix’s] exploitative tactics.” These weren’t terms
with precise meanings, and the context—explaining the lawsuit—bolstered the “opinion”
characterization.

However, accusations that Payer Matrix’s conduct was
“illegal” or “fraud” were verifiable in context.

Additional barriers defeated some accusations: Alleged
statements by AbbVie that it changed its PAP eligibility requirements due to
“changes with [the patient’s] insurance provider” were not “about” Payer
Matrix. And alleged statements directing members to ask Payer Matrix for
assistance with drug coverage were neither defamatory per se nor defamatory per
quod. On their face, they didn’t impute commission of a crime, suggest an
inability or lack of integrity in performing employment duties, or prejudice
Payer Matrix in its trade (per se). Even if, as argued, they implied that Payer
Matrix was responsible for paying drug costs but failed to do so, Payer Matrix
didn’t plead a connection between its damages and this statement (per quod).

The remaining statements (illegality, fraud, delays) were
defamatory per se, and Payer Matrix also alleged “special damages, including
loss of contracts with health plans, cessation of referrals from brokers and
[healthcare providers], lost profits, and harm to its reputation in the
healthcare and health benefits industries,” including a $26 million drop in
revenue from a single broker in 2024.

Tortious interference: It wasn’t independently wrongful to
refuse to allow PAP participation by members of insurance plans affiliated with
Payer Matrix or publish PAP policies and send denial letters that identified
Payer Matrix by name. As for the stuff that survived the defamation screen
above, AbbVie argued that it didn’t communicate directly with Payer Matrix’s
actual clients. But “AbbVie had reason to believe that its comments would make
their way back to Payer Matrix’s clients; it would be unreasonable to expect
patients to whom AbbVie allegedly accused Payer Matrix of fraud to keep those
accusations from their plan administrators or sponsors.” Payer Matrix also made
specific allegations about losing specific clients due to AbbVie’s accusations.

Illinois Consumer Fraud Act: The Illinois Supreme Court
recently emphasized that in all ICFA claims, the plaintiff must allege that it
was the intended target of the alleged deception. Payer Matrix didn’t allege
that AbbVie intended for it to rely on any alleged deception or unfairness, but
only that it intended to cause reliance by “Members, Plans, PBMs, and TPAs.” So
that claim was dismissed.

Illinois Uniform Deceptive Trade Practices Act Claim: The
alleged false statements underlying the claim were not made “in the context of
false advertising or promotion or a trademark violation.” Payer Matrix was
judicially estopped from arguing that the DTPA covered the statements at issue.
It defeated certain of AbbVie’s Lanham Act claims, and DTPA claims based on the
same conduct, based on the arguments that (1) the Lanham Act is essentially
coextensive with the DTPA, and (2) the accused statements were not made in
commercial advertising or promotion. It could not now argue that the DTPA
covered more than commercial advertising or promotion.

AbbVie also reasserted trademark/false association and false
advertising claims based on allegations that Payer Matrix imported or helped
import medicines from Canada.

In 2024, Payer Matrix began facilitating the importation of
Canadian AbbVie medications in partnership with RxFree4me and RxFree4me’s
affiliated Canadian pharmacies. Its advertising describes RxFree4me as its
“vendor partner” and makes clear that the drugs are sourced internationally. For
plans that participate, each patient gets a form asking them to authorize Payer
Matrix to contact the patient’s prescriber and send the patient’s prescription
to RxFree4me. “The form also states that the drugs will be dispensed by foreign
pharmacies and asks the patient to appoint Payer Matrix as an agent to
facilitate the order, including having the product packaged and delivered.”

If the patient completes the form, Payer Matrix asks the
patient’s doctor to send the patient’s prescription to one of RxFree4me’s
partner U.S. pharmacies, which then works with a Canadian doctor who writes a
new prescription copied from the original. That goes to a Canadian pharmacy for
filling and shipment. “Payer Matrix monitors and facilitates the shipments,
including by contacting patients to confirm that they received the shipments.”

There are alleged differences between the two countries’
drugs, primarily FDA approval versus approval by Health Canada; packaging
instructions with either a US or Canadian number to report side effects; and contact
information for either a US or Canadian patient support program. “Some Canadian
AbbVie labels include temperature ranges in Celsius, and dosage information for
children and adolescents based on their weight in kilograms, whereas the U.S.
AbbVie labels list temperatures in Fahrenheit and give weights in pounds.”

AbbVie also alleged that there were differences in how the
drugs are shipped: Payer Matrix’s method uses third-party carriers that AbbVie
hasn’t approved. “[B]ecause international shipping routes regularly exceed the
storage temperature ranges for AbbVie’s medications, AbbVie ships its medicines
in sealed, temperature-controlled containers and requires its authorized
distributors to follow specific temperature-related guidelines during storage
and transport.” However, it was unable to ensure that the shippers used by
Payer Matrix comply with these requirements. Also, recalls are region-targeted,
so U.S. patients would be alerted to recalls for drugs that they bought in the
U.S., but not for drugs that they bought in Canada.

Even assuming that this was a “gray-market” case, AbbVie’s
claims failed. Such cases find confusion only if there’s a material difference.
Note: They should also fail if the consumer knows what she’s getting, even if
it has a material difference! Maybe there can be unfair competition without
competition, but there shouldn’t be trademark infringement without confusion.

And indeed, the court concluded that AbbVie needed to allege
facts “plausibly showing that consumers would be confused by differences
between the foreign and domestic products.” The court concluded, once again, that
“[i]t is no secret that RxFree4Me sources drugs from Canada,” and “it should be
obvious to Payer Matrix’s members that the imported drugs do not undergo U.S.
regulatory processes because they are sourced from Canadian pharmacies.” Plan members
fill out an authorization form that represents that the medication will be
“dispensed by the foreign Pharmacy.” The form also authorizes Payer Matrix—not AbbVie—to
facilitate the international order, “including by packing the Product and
delivering it to the patient.”

“The differences that AbbVie cites are exactly the
differences that Payer Matrix’s customers would reasonably expect from
medications purchased internationally.” Even the shipping quality controls argument
was “obviated by the fact that Payer Matrix members seeking non-U.S. drugs
authorize Payer Matrix (that is, not AbbVie) to facilitate packing and delivery.”
These differences could therefore not be material. (That’s not how I would have
said it, but it fits with an empirical definition of materiality: We know that the
differences weren’t material to the consumers who ordered the foreign drugs because
they knew they were foreign drugs shipped by Payer Matrix.)

So nice to see: “To be sure, many of the cases suggest that
the types of labeling, compliance, and quality control issues alleged here can
be material in certain circumstances. But none of those cases involve the type
of informed purchase at issue here.” There was no allegation here of
counterfeiting, and the disclosures were made to end users, not intermediaries.

What about confusion by subsequent purchasers?  “That rationale holds up for the types of
extremely expensive durable goods at issue in [cases involving farm equipment],
but it does not make sense here, where Payer Matrix’s members purchase
consumable medications.”

Nor were the differences as significant as those in Novartis
Animal Health US, Inc. v. Abbeyvet Exp. Ltd., 409 F. Supp. 2d 264 (S.D.N.Y.
2005), where, a website sold British-market pet medications to U.S. consumers. “Even
assuming the consumers in that case knew that they were purchasing medications
intended for the British market, the differences were so significant that U.S.
consumers would likely be confused by the British product. For example, the
U.S. versions of the pills were flavored, and the British versions were
unflavored; the British versions were also sold in different dosages.” Those differences
would be material, unlike converting from pounds to kilograms. “And unlike the
differences at issue here that are inherent to the differences between the
Canadian and U.S. pharmaceutical markets—such as regulation by Canadian rather
than U.S. regulatory bodies, and use of the metric system—there is nothing
about the British pet medication market that would make a U.S. consumer expect
to receive an unflavored medication when they were used to buying flavored
medications from the same brand.”

from Blogger https://tushnet.blogspot.com/2026/07/canadian-imported-drugs-whose-origin.html

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advertising injury policy covers Lanham Act/intentional interference claims even though policy uses different words for the torts

Posted on July 3, 2026 by rtushnet

IntermediaryEd v. Cincinnati Ins. Co., 2026 WL 1847615, No.
3:25-cv-00038-SHL-HCA (S.D. Iowa, May 20, 2026)

The court introduces the case:

After filing a lawsuit against a
competitor in Tennessee, Plaintiff IntermediaryEd (formerly known as “ACT”)
sent letters to two of the competitor’s customers making disparaging statements
about the competitor’s products. This was a bad move. The competitor brought
counterclaims under the Lanham Act and for intentional interference with
business relationships, and ACT ended up on the wrong end of a
multimillion-dollar jury verdict.

Its commercial general liability policy covered “personal
and advertising injury” arising out of the “oral or written publication, in any
manner, of material that slanders or libels a person or organization or
disparages a person’s or organization’s goods, products or service.” Thus, ACT was
entitled to defense and indemnity coverage for both the Lanham Act and
intentional interference claims.

But there was an important caveat: The policy contained
exclusions for “knowing violation of rights of another” and/or “material
published with knowledge of falsity,” and the court couldn’t conclude as a
matter of law that ACT lacked such knowledge. Thus, ACT wasn’t entitled to
partial summary judgment on that issue.

The jury in the underlying case was instructed on the elements
of a Lanham Act claim, including commercial advertising and promotion, and on
the elements of intentional interference with business relationships, which
required “improper means,” including “conduct such as violation of statutes,
regulations, or laws. Violence, threats or intimidation, bribery, unfounded
litigation, fraud, misrepresentation, or deceit, defamation, duress, undue
influence, misuse of insider confidential information, or breach of its
fiduciary relationship.” The jury instructions continued that punitive damages
“are reserved for egregious conduct” and should be awarded only if WIN “has
shown by clear and convincing evidence that the defending party has acted
intentionally, recklessly, maliciously, or fraudulently.”

The jury awarded damages ACT in the amount of $218,000 for
false advertising under the Lanham Act and $5,400,000 for intentional
interference with business relationships, additionally finding that punitive
damages should be awarded, though not setting an amount.

The instructions continued (cleaned up):

A person acts intentionally when it
is the person’s purpose or desire to do a wrongful act or to cause the result.
A person acts recklessly when the person is aware of but consciously disregards
a substantial and unjustifiable risk of injury or damage to another. … A person
acts maliciously when the person is motivated by ill will, hatred, or personal
spite. A person acts fraudulently when (1) the person intentionally either
misrepresents an existing material fact or causes a false impression of an
existing material fact to mislead or to obtain an unfair or undue advantage,
and (2) another person suffers injury or loss because of reasonable reliance
upon that representation.

ACT ended up reaching an out-of-court settlement with WIN
(which was redacted), and thus the jury never rendered a verdict on the amount
of punitive damages to award.

CIC argued for a formalistic interpretation: “if WIN did not
recover on theories of slander, defamation or disparagement, then coverage must
be denied, period.” The court disagreed. Coverage can exist when liability is
founded on a different legal theory than the one in the policy but that
involves “identical conduct” by the insured to what would be covered, as long
as the policy does not limit coverage to specific tort names and specify the
formalistic labels that govern. Here, the relevant policy language was “simply
too broad” to be formalistic:

By covering injuries for “personal
and advertising injury” that arise out of the “oral or written publication, in
any manner, of material that slanders or libels a person or organization or
disparages a person’s or organization’s goods, products or services,” the CGL
Policy includes coverage for tort claims that arise out of false and
disparaging statements about a competitor’s goods, products, or services,
regardless of the label attached to those claims. In other words, the policy
covers “causes of action for product disparagement or one that is analogous.”

This conclusion made sense because “courts use a wide range
of terminology to describe commercial tort claims arising out of the ‘oral or
written publication, in any manner, of material that slanders or libels a
person or organization or disparages a person’s or organization’s goods,
products or services.’” Relevant labels include “disparagement,” “product
disparagement,” “trade libel,” “slander of goods,” “injurious falsehood,” “product
defamation,” “commercial disparagement,” or “trade defamation.” “Regardless of
the terminology, the gist of these claims is the same: ‘a party publishes
material derogatory to another’s business, intending to prevent others from
dealing with plaintiff.’” All these torts fell within the scope of the
coverage, “regardless of the exact terminology used in the underlying
litigation.” And sometimes, as here, an intentional interference with business
relationships claim will also fall within the scope of coverage, because of the
“improper means” element of business interference torts: a plaintiff can prove
improper means in the form of trade libel or commercial disparagement. Indeed,
“[t]rade libel and product defamation” are “born of the cause of action for
unlawful interference.”

Likewise, “claims under the Lanham Act sometimes revolve
around trade libel or commercial disparagement in the form of false advertising
regarding a third party’s goods, products, or services. Many courts even
characterize such claims as ‘product disparagement under the Lanham Act’ or
similar verbiage.”

Thus, ACT was entitled to indemnity coverage as a matter of
law, subject to the exclusions. It didn’t matter that the underlying
counterclaimant proved only pecuniary losses in the underlying litigation, not
“reputational harm.” Indeed, in the commercial context, pecuniary losses are a
form of reputational injury: “there is arguably no better way for a business to
show that its products have become ‘lower in esteem or reputation’ or ‘lower in
rank’ than to prove that customers stopped buying them.” Anyway, the policy language
clearly contemplated commercial torts, not just invasion-of-privacy and
defamation-type torts in the personal sense.

It was also clear that the underlying verdict was based on covered
claims; even though both the Lanham Act and intentional interference can
be broader than product defamation (etc.), the underlying litigation’s specific
theories were all based in these business torts.

What about the exclusion for “knowing” falsity? It doesn’t automatically
apply to claims for which something less than “knowledge” is sufficient to
establish liability. “For example, the exclusion does not necessarily apply to
defamation claims because they can be established through evidence that a false
statement was made with reckless disregard for the truth.” Thus, further
development of the record was necessary to determine whether ACT’s conduct was
“knowing” in the way contemplated by those exclusions. “The fact that [the
underlying plaintiff] established the elements for an award of punitive damages
does not change this conclusion, although it undoubtedly strengthens CIC’s
position,” given that the instructions didn’t require intent: “As phrased, the
instruction allows punitive damages based on something less than ‘knowing’
conduct.”

from Blogger https://tushnet.blogspot.com/2026/07/advertising-injury-policy-covers-lanham.html

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“hypoallergenic” plausibly means “free of ingredients likely to sensitize the skin”

Posted on July 3, 2026 by rtushnet

Novick v. Unilever U.S., Inc., 2026 WL 1879145, No. 25cv4804
(EP) (JBC) (D.N.J. Jul. 30, 2026)

The court mostly allows claims that the “hypoallergenic” and
“sensitive skin” representations on Unilever’s Dove Sensitive Skin Body Wash
are false and misleading because the body wash contains ingredients that are
known skin sensitizers that cause allergic reactions under New Jersey, New
York, and California law. According to the complaint, “[t]he scientific and
regulatory definition of a skin sensitizer is a substance that causes
sensitization by skin contact in a substantial number of persons based on human
evidence or appropriate animal testing.”  

A skin sensitizer “may elicit an allergic response at
concentrations smaller than 0.1% in individuals who are already sensitized to
the chemical,” making the “entire product mixture” a skin sensitizer. Allegedly,
a “product that is a skin sensitizer is not hypoallergenic and is not suitable
for sensitive skin,” although there’s no FDA regulation defining the terms.

“Like similarly situated consumers,” plaintiffs allegedly do
“not know the identity of every ingredient” to which their families “are
allergic … [and do] not know [to] which ingredients” they or their families
“may develop an allergy,” but the Dove product allegedly contains at least six
skin sensitizers in amounts “that can be reasonably expected to induce an
allergic response in a significant number of people, and especially so in the
[Product’s] intended customer base.” Consumers allegedly expect a product
labeled as “hypoallergenic” to contain no skin sensitizers that could elicit an
allergic response in sensitized individuals.

Notably, Dove brand Sensitive Skin Body Bar allegedly “contains
neither fragrance chemicals nor a ‘hypoallergenic’ representation on its label
and packaging,” and Kroger’s “copycat” sensitive skin bodywash—marketed as
comparable to Dove’s—declines to claim it is “hypoallergenic” anywhere on its
front label.

On standing, plaintiffs properly pled a price premium theory
of economic injury. Plaintiffs identified two cheaper comparators: Dove’s own
non-hypoallergenic Sensitive Skin Body Bar and the Kroger Copycat explicitly as
a “compare to” alternative.  “A store
brand marketed as the cheaper equivalent is, almost by definition, a
comparable, cheaper product.” Plaintiffs didn’t need to specify the exact value
of their economic injury at the pleading stage.

In addition, “hypoallergenic” etc. was plausibly misleading.
The court found the relevant state consumer protection laws to apply “substantially
the same” standards, though they “diverge in how much a plaintiff must show at
the pleading stage”:

At the pleading stage, the NYGBL
and the CA Consumer Laws both require allegations that “a significant portion
of the general consuming public or of targeted consumers, acting reasonably in
the circumstances, could be misled.” But unlike the NYGBL and the CA Consumer
Laws, the NJCFA treats “capacity to mislead” as the “prime ingredient” of
consumer fraud and does not have the “significant portion” requirement.

Necessarily, a claim that survives under NY/CA misleadingness
would survive under NJ law as well.

Unilever alleged that “hypoallergenic” couldn’t mislead
anyone because the word is inherently relative and “not an objective guidance
about the specific amount of any ingredient in a product.” The prefix “hypo-”
means “less than,” not “zero.” The court disagreed that this prevented
reasonable consumers from being deceived. Plaintiffs plausibly alleged that:

“hypoallergenic” and “sensitive
skin” communicate to reasonable consumers that the Product: (a) is not itself a
skin sensitizer; (b) will not cause irritation, corrosion, or contact
dermatitis when used as directed by intended users; (c) does not contain
significant amounts of ingredients known to cause such reactions in intended
users; and (d) does not contain sensitizers in amounts reasonably expected to
induce allergic responses in significant numbers of intended users or
sensitized individuals.

That the FDA has declined to define “hypoallergenic” and
lets companies decide its meaning was not dispositive. “Unilever’s authorities
do not coalesce around a common definition of ‘hypoallergenic.’ That is the
hallmark of an ambiguous term—not a settled one.” The court declined to decide
on a meaning at this stage.

In addition, “labeling could also be ambiguous if consumers
would not understand the label’s representations at face value.” This is the
newly emerging consumer protection law meaning of ambiguity: “[A product’s]
front label is not ambiguous simply because it is susceptible to two possible
meanings; a front label is ambiguous when reasonable consumers would necessarily
require more information before reasonably concluding that the label is making
a particular representation” (emphasis added). This is the ambiguity “that
governs whether a court may look past the front label to the back. The front
label here makes a definite representation that the Product is suited for
sensitive skin and, as hypoallergenic, will not provoke the reactions that
non-hypoallergenic products may.”

The complaint also sufficiently pled that this was in fact
misleading. It identified a recognized scientific and regulatory
threshold—0.1%—above which a sensitizing ingredient is classified as a skin
sensitizer. Citing Unilever’s own Safety Data Sheet, it alleged that the product
contains cocamidopropyl betaine, the American Contact Dermatitis Society’s
“Allergen of the Year” in 2004, at a concentration of 1 to 10%. Plaintiffs also
alleged the presence of five other skin sensitizers, including fragrance
chemicals, which are allegedly a leading cause of allergic contact dermatitis
according to the American Academy of Dermatology. Other ingredients—citric
acid, glycerin, and sodium benzoate—were allegedly recognized or classified as
skin sensitizers shown to cause allergic reactions on contact, and several were
classified as skin and eye irritants.

Plaintiffs didn’t need to allege laboratory testing under
these circumstances, including that the product was “a mass-produced,
fixed-formula body wash.”

The presence of Amazon consumer reviews reporting reactions
also mattered, though the court considered them not for their truth or as
evidence of how the public understands the term “hypoallergenic.”  Although 87% of reviews submitted by Unilever gave
the product five stars, that proved little. “That most buyers are satisfied
does not establish, as a matter of law, that the label does not mislead people
with sensitive skin—the actual consumers whom the ‘significant portion of …
targeted consumers’ standard exists to protect. Consumer fraud could still be
plausible despite high product satisfaction” (citing Lanham Act cases accepting
15% and lower confusion).

Nor did the back label, even if consulted, cure the front’s
alleged misrepresentation. Here, “reasonable consumers would not require more
information before reasonably concluding that the front label [of the Product]
was making a specific representation.” “And importantly, requiring a consumer
to know the ‘properties, origins, and effects on the skin’ of each listed
ingredient in the Product’s back label is ‘plainly untenable.’” The court believed
that each of the relevant jurisdictions would so hold (as do I).

Nor were plaintiffs required to allege that they suffered
allergic reactions as a result; that wasn’t their theory of deception/harm.

The court then kicked out NJCFA omission claims, but not
NJCFA affirmative misrepresentation claims. “To establish an act of omission
under the NJCFA, ‘plaintiff must show that defendant (1) knowingly concealed
(2) a material fact (3) with the intention that plaintiff rely upon the
concealment.’ ” Intent can be alleged generally but must still be plausible.

Plaintiffs alleged that Unilever had knowledge because of:
(1) Unilever’s website; (2) the Product’s Safety Data Sheet; and (3) negative
reviews posted to the “Dove store” on Amazon. While Unilever’s website acknowledges
that “a selection of ingredients used in fragrances have the potential to cause
skin allergies in some individuals,” it explains that Unilever discloses its
fragrance ingredients “for transparency and to help you make informed choices.”
“That statement is candor, not knowledge of falsity or concealment.”

Likewise, the Safety Data Sheet’s statement about chemical
concentration was not knowledge of its alleged falsity. “A manufacturer that
reasonably reads ‘hypoallergenic’ to mean ‘less’ would not knowingly conceal
the alleged misrepresentation by selling the product. And the negative reviews
didn’t provide knowledge because plaintiffs never alleged that “Unilever
operates the Dove store, monitors Amazon, or receives notice of those reviews.”
More generally, “Internet postings, standing alone, do not impute knowledge to
the manufacturer without facts indicating that the manufacturer ‘viewed or
would have viewed those websites’ or ‘monitored third-party website complaints.’”
Pleading monitoring or reporting lines, cy contrast, can support an inference
of knowledge.

New York statutory claims survived. California
UCL & FAL claims failed, though a CLRA claim survived, because the
remedies for the first two are equitable and plaintiffs didn’t plead that they
lacked an adequate remedy at law.

The implied warranty claim survived in California and New
Jersey; even though it could clean the skin, it was plausibly unfit for ordinary
use because it couldn’t be used for the “purpose of being a body wash suitable
for sensitive skin,” which was the purpose for which it was sold. After all,
just “because a car can be driven does not mean it is merchantable.” Express
warranty claims survived in all jurisdictions.

Unjust enrichment survived, but not common-law fraud and
fraudulent concealment, given the failings on scienter above.

from Blogger https://tushnet.blogspot.com/2026/07/hypoallergenic-plausibly-means-free-of.html

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INTA report on AI and likely confusion analysis

Posted on June 29, 2026 by rtushnet

 INTA’s press release is here. INTA was kind enough to invite me to the launch as press. I’m still digesting overall but the most interesting comment was about consistency: One panelist suggested that AI’s effect on this “hobgoblin of small minds” (my reference, not theirs) could be more about public perception than actual outcomes. Right now lots of people complain about trademark office inconsistency, at least when they get an adverse decision. Because there’s no truly objective metric for what’s right, or even what’s consistent, the well-known biasing effects of having a machine involved could absorb criticism or even refute it. (Accepting blame as a service?) Another possibility the panelist raised was that AI/machine learning in the USPTO could actually ignore nonprecedential opinions, as humans don’t. 

from Blogger https://tushnet.blogspot.com/2026/06/inta-report-on-ai-and-likely-confusion.html

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Reading List: Jessica Litman, Casting Aspersions

Posted on June 26, 2026 by rtushnet

Read it now. Short, readable, and recommended: “If the politics of reforming copyright law to pay more attention to whether and how much … money finds its way into authors’ pockets seems too daunting to try, that says a great deal about the health of the current copyright law, and of the copyright bar.”

from Blogger https://tushnet.blogspot.com/2026/06/reading-list-jessica-litman-casting.html

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Amicus in 5th Circuit age verification/app store case

Posted on June 24, 2026 by rtushnet

 On behalf of the Organization for Transformative Works and the Wikimedia Foundation, Inc. The brief emphasizes the breadth of noncommercial speech affected by Texas’s app store rating, age verification, and parental consent requirements. 

from Blogger https://tushnet.blogspot.com/2026/06/amicus-in-5th-circuit-age.html

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“dishwasher safe” wasn’t too ambiguous to deceive where cutlery was top-rack only

Posted on June 24, 2026 by rtushnet

Simpson v. Walgreen Co., — F.Supp.3d —-, 2026 WL 413565,
No. 23-cv-16465 (N.D. Ill. Feb. 13, 2026)

Simpson bought Walgreens’ Complete Home Heavy Duty (Complete
Home) plastic cutlery. The front and back of the product were labeled
“DISHWASHER SAFE” and “HEAVY DUTY” in all caps. The sides of the product were
also labeled “HEAVY DUTY.” Simpson allegedly bought the product in part because
she believed it was dishwasher safe, which means something different than
“top-rack-only” dishwasher safe. “As it turns out, the bottom of the Complete
Home box cautions: ‘DISHWASHER SAFE IF CLEANED ON THE TOP RACK.’” She didn’t
turn the box over (a move likely to dump all the utensils out if the box has
been opened already) and suffered the consequences. Simpson also alleged that “it
is common practice in the plastic dish industry to clearly indicate when a
product can only be washed safely on the top rack” and that the commonly used
“dishwasher safe” symbols are distinct from the “top rack only” symbols. These
labels are allegedly “particularly important for cutlery, because a
dishwasher’s cutlery basket is ordinarily located on the bottom rack.”

front and bottom of box

She brought the
usual California claims on behalf of a California subclass, as well as state
law claims of common law fraud, unjust enrichment, intentional
misrepresentation, and negligent misrepresentation.

The court refused to dismiss the claims because deception
was plausible.

Walgreens argued that, under McGinity v. Procter &
Gamble Co., 69 F.4th 1093 (9th Cir. 2023), when a label is merely ambiguous, it
is not misleading, and a reasonable consumer would check the bottom of the box
for more details. The packaging for the plastic cutlery, it argued, clarifies
any potential ambiguity with term “dishwasher safe” by adding in all caps the
statement “dishwasher safe if cleaned on the top rack.” Simpson responded that
“disclosures that are not on the consumer-facing front label do not cure
misleading front-label representation because a reasonable consumer is ‘not
expected to look beyond misleading representations on the front of the box to
discover the truth in fine print on the back label.’ ”

I’ve been thinking about the consumer protection concept of
ambiguity that courts seem to be leaning into, and how it differs from Lanham
Act ambiguity, and I think that the consumer protection concept is distinct
(and probably wrongheaded) in folding materiality into the ambiguity inquiry.
Here’s my current thesis, subject to revision:

In consumer protection cases, courts seem to be asking
whether a substantial number of reasonable consumers could think that their
questions were answered by the front matter, and thus not look further. By
contrast, in Lanham Act cases courts find ambiguity when at least one
reasonable interpretation is true, or nonactionable puffery. So, if courts frame
the consumer protection concept as “if one reasonable interpretation of the
front matter is that the consumer’s questions were answered but that answer would
be false, then deception is plausible,” there may not be much, if any, daylight
between the two standards, and I think that’s the right treatment.

The difficulty is that the facts of Trader
Joe’s, which the Ninth Circuit used to announce its consumer protection
ambiguity standard, are so extreme about what “reasonable” consumers are
supposed to know. It seemed that, in Trader Joe’s, the materiality of
manuka honey’s supposed qualities was used to heighten the degree of care
exercised by reasonable consumers. That is, if you care about it, you’re
supposed to read more about it. But that move conflates epistemology (how do
you learn what features a product promises?) with value. Thus, the reason the
consumer protection version of ambiguity seems more stringent than the Lanham
Act version is stealth importation of a heightened consumer care standard. One
way for plaintiffs’ lawyers to proceed, it seems to me, is to specifically
allege that, regardless of what we think a careful consumer should do, consumers
who do care about product features often make judgments about those features
based on the front label, because reasonable consumers don’t think about the details
of everything they care about. That would be an exhausting and impossible way
to move through the world! Alleging facts about standard practices, as the
plaintiff did here, is one way to do make that conclusion more plausible.

The court agreed that McGinty didn’t apply because
there, it was clear that the phrase “Nature Fusion” was ambiguous. But “dishwasher
safe” was not ambiguous in the same way. Since McGinty, other 9th
Circuit cases have come closer to my proposed  “if one reasonable interpretation of the front
matter is that the consumer’s questions were answered but that answer would be
false, then deception is plausible” standard. E.g., Whiteside
v. Kimberly Clark Corp., 108 F.4th 771 (9th Cir. 2024), found that “
‘Plant-based” on the front of a package was plausibly misleading even though
the back of their packaging disclosed the presence of synthetic ingredients.

“Plaintiff plausibly alleges that the front label of the
Complete Home plastic cutlery is unambiguously deceptive to a reasonable
consumer.” I wish the court hadn’t used the word “unambiguously” here, because
that risks conflating “no reasonable consumer would think otherwise” with “a
substantial number of reasonable consumers would receive this message,” and it’s
the latter that sets the standard. Reasonable consumers can vary in the amount
of thought they give to a given purchase, and that’s why we use the “substantial
number” standard: so that we’re not only protecting the most careful subset of consumers.

Anyway, it was plausible that a reasonable consumer “would
look at a box of ‘heavy duty’ plastic cutlery labeled as ‘dishwasher safe’ on
the front and take it at its word.” Whether there was actual ambiguity was for
later (again, worrisome language—the court cites the correct standard, which is
whether there was deceptiveness).

[Other issues omitted, including the dismissal of claims for
injunctive relief on standing grounds.]

from Blogger https://tushnet.blogspot.com/2026/06/dishwasher-safe-wasnt-too-ambiguous-to.html

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We need federal anti-SLAPP law: Scientist wins summary judgment on Splenda’s defamation & related claims

Posted on June 24, 2026 by rtushnet

TC Heartland LLC v. Schiffman, 2026 WL 1785093, No. 1:23-CV-665
(M.D.N.C. Jun. 22, 2026)

In a time of rising authoritarianism, it’s not that
surprising seeing companies following the lead of Trump, Musk, and the like in
suing their critics whose research implicates them in harm. Here, in the
absence of a strong anti-SLAPP regime that could have shifted the costs onto
the plaintiff, the defendant counterclaimed for defamation, but both sides lose
because the proper realm for resolving scientific disputes is the audience of
scientists.

Heartland sells Splenda, an artificial sweetener made with
sucralose. Dr. Susan Schiffman said things about her research about sucralose,
which was published in a peer-reviewed scientific journal, so it sued her for
defamation/trade libel (the differences don’t matter here). Dr. Schiffman challenged Heartland’s online assertions impugning
her scholarship and integrity, so she asserted defamation claims and an abuse
of process claim. Bottom line:

Both Dr. Schiffman and Heartland
have a First Amendment right to express their views on the safety and health
effects of Splenda and sucralose and on the meaning and validity of research
investigating those health and safety issues. Neither party has produced
sufficient evidence to overcome the other’s First Amendment right to talk about
the research and the conclusions to draw from the scientific research, and
neither has shown a disputed question of material fact.

A bit more background: “In 2023, Dr. Schiffman, a professor
at North Carolina State University, and coauthors published an article about
the effects of sucralose and sucralose-6-acetate (“S6A”) in a peer-reviewed
journal.” A hired lab did the experiments, not Dr. Schiffman herself. After the
article was published, Dr. Schiffman worked with N.C. State to issue a press
release about her research, which did mention Splenda; local news stations
interviewed her about the article, and she discussed Splenda in those
interviews, and a few other news sources reported on the article and published
stories with her statements about her research. “In summary, she said that her
research showed that sucralose carries multiple potential health risks, and she
identified sucralose with Splenda.”

In response, “Heartland created a webpage disputing her
article’s findings, her statements about the article, and the article’s
implications. It impugned the quality of her research and essentially accused
her of being a publicity hound.”

To prevail on a defamation claim under North Carolina law,
the plaintiff must establish: (1) the defendant made a false, defamatory
statement; (2) the statement was “of or concerning” the plaintiff; (3) the
statement was published to a third party; and (4) the statement caused injury
to the plaintiff’s reputation. For public figures, actual malice is required.

“Scientific conclusions based on research and speech about
that research do not fit easily into the fact-opinion paradigm.” Scientific
speech “receives First Amendment protection under certain conditions to
encourage legitimate debate about scientific issues and to encourage discussion
and research into matters of public and scientific interest.” [The Supreme
Court has been extremely uninterested in identifying a category of “professional
speech” that can be more heavily regulated. It’s hard to say whether the Court
would be more amenable to “scientific speech” as a category that can be less
regulated.] Although most conclusions in a scientific journal article are, in
principle, “capable of verification or refutation by means of objective proof,”
the court quoted ONY
at length:

it is the essence of the scientific
method that the conclusions of empirical research are tentative and subject to
revision, because they represent inferences about the nature of reality based
on the results of experimentation and observation. Importantly, those
conclusions are presented in publications directed to the relevant scientific
community, ideally in peer-reviewed academic journals that warrant that
research approved for publication demonstrates at least some degree of basic
scientific competence. These conclusions are then available to other scientists
who may respond by attempting to replicate the described experiments,
conducting their own experiments, or analyzing or refuting the soundness of the
experimental design or the validity of the inferences drawn from the
results…. Needless to say, courts are ill-equipped to undertake to referee
such controversies. Instead, the trial of ideas plays out in the pages of
peer-reviewed journals, and the scientific public sits as the jury.

Here, both parties were public figures, at least limited-purpose
ones; indeed, “[t]he argument that Heartland is not a limited-purpose public
figure borders on the ridiculous.”

Heartland purportedly only challenged the post-study
comments, e.g., “A new study finds a chemical formed when we digest a widely
used sweetener is ‘genotoxic,’ meaning it breaks up DNA. The chemical is also
found in trace amounts in the sweetener itself, and the finding raises
questions about how the sweetener may contribute to health problems….”; “Our
work suggests that the trace amounts of sucralose-6-acetate in a single, daily
sucralose-sweetened drink exceed that threshold [of toxicological concern]”; “When
we exposed sucralose and sucralose-6-acetate to gut epithelial tissues – the
tissue that lines your gut wall – we found that both chemicals cause ‘leaky
gut.’ … A leaky gut is problematic, because it means that things that would
normally be flushed out of the body in feces are instead leaking out of the gut
and being absorbed into the bloodstream”; “We found that gut cells exposed to
sucralose-6-acetate had increased activity in genes related to oxidative
stress, inflammation and carcinogenicity”; “[a single packet of Splenda or in
one drink exceeds] the level used in the food industry and in Europe, at the
European food agencies, to say that this is too much genotoxic compound in the
food supply. And so a single packet is too much”; “Risk wise, sucralose is
worse [compared to other artificial sweeteners]”; and “basically, the data
shows it’s not a good idea to consume sucralose.”

It was undisputed “that she made those statements following
the publication of a scientific article she coauthored and that her remarks
were directed to summarizing and explaining her research results to a lay
audience.” Given that courts are “careful when applying defamation and related
causes of action to academic works, because academic freedom is a ‘special
concern of the First Amendment,’ ” “scientific conclusions are protected speech
to the extent they are ‘draw[n] … from non-fraudulent data, based on accurate
descriptions of the data and methodology underlying those conclusions, on
subjects about which there is legitimate ongoing scientific disagreement.’ ” [The
court explicitly noted that its conclusion would not necessarily apply to a
consumer-facing ad.] Accurate “secondary statements,” whether in a
journal article, podcast, or other media, “do not form the basis for a libel
claim.” This could be resolved as a matter of law.

The secondary statements would only be actionable if they
were inaccurate descriptions of the article or the article was based on
fraudulent data. Heartland did not show that either limit applied.

The challenged statements were accurate summaries of the
article, which said things like “Overall, the . . . findings for
sucralose-6-acetate raise significant health concerns regarding the safety and
regulatory status of sucralose itself”; “Data indicate the sucralose-6-acetate
is genotoxic,” and “sucralose-6-acetate significantly increased expression of
genes associated with inflammation, oxidative stress, and cancer.”

Heartland argued that “Dr. Schiffman did not sufficiently
qualify her conclusions as preliminary or note the lack of definitive
assessment as to toxicity in humans.” But Dr. Schiffman used qualifying
language in the N.C. State press release such as “the finding raises questions
about how the sweetener may contribute to health problems,” “our work suggests
that,” and “raises a host of concerns.” The university press release said that
the article relied on “in vitro” experiments and tests. “Even in the
three-minute news interview, Dr. Schiffman was not definitive; she said that
S6A ‘can’ have negative health effects”; the interview specifically referenced
the article.  “Thus, in a shorter fashion
and directed to a lay audience, her secondary statements repeat the conclusions
that she made in the article based on the studies detailed in the article.”

What about nuance? “To the extent Heartland is saying that
the secondary statements are not nuanced enough, that argument if adopted would
essentially prohibit scientists from commenting on sophisticated research to a
lay audience beyond reading their study results in full. And Dr. Schiffman’s
secondary statements were not so over-simplified as to be inaccurate.”

Heartland pointed to Dr. Schiffman’s answer to the question
“How much Splenda or sucralose needs to be consumed in order for this to be
harmful?”: “a single packet … is too much.” In context, this was opinion, and
consistent with statements in the article discussing “significant health
concerns regarding the safety … of sucralose itself,” discussing the
potential genotoxicity of “a single daily sucralose-sweetened drink” and
“single servings of sucralose,” and the like. It was irrelevant that she didn’t
test Splenda; Splenda is made of sucralose.

Nor was there sufficient evidence of fraudulent data or inaccurate
descriptions of data. The purported inaccuracy came from Heartland’s “disagreements
with her results, methodology, and decisions about what to include in and omit
from her published research.” “But omitting data does not necessarily make
research fraudulent.” There was no evidence that the numbers in the studies
were made up or that the tests were not conducted. “Heartland and others can
run their own tests following the same methodology or using methodology they
say is better or more complete, and they are free to use their results to
publicly rebut Dr. Schiffman’s results if that is what such research shows.”

Heartland also pointed to an investigation by N.C. State,
Dr. Schiffman’s employer, into Dr. Schiffman’s research, which seems to have
been prompted by Heartland’s threats. “According to the investigation report, a
vice chancellor convened a panel of professors to investigate whether Dr.
Schiffman committed research misconduct based on Heartland’s allegations in
this case that she (1) omitted contradictory data and (2) did not disclose
conflicting repeat tests.” The committee concluded that Dr. Schiffman did not
follow “best practices” because she “should have reported the negative
Multiflow data from Litron Laboratories in the article” and that a discussion
of the reason behind the differing results “would have been appropriate and …
followed best practices.” The committee stated that the exclusion of some data
“should have been discussed with all coauthors of the article.” But all of that
tended to put the article in the firmly protected category, since these were scientific
differences and not fraud: the report unanimously concluded that Dr. Schiffman
did not commit “research misconduct” because she provided a reason for the
omission. “Failing to use best practices does not equate to fraud, and nothing
in this report supports Heartland’s assertion that Dr. Schiffman used
fraudulent data or did not accurately describe the data and methodology
underlying those conclusions.”

In the alternative, Heartland failed to show actual malice.
Its evidence of malice was: the omissions; a third-party scientist’s opinion that
Dr. Schiffman had bias towards the research outcome because she omitted test
results; funding she received from the Sugar Association over 15 years ago; and
an email about seeking funding broadly from different entities for her
research. None of this evidence was sufficient to convince a finder of fact
that Dr. Schiffman “in fact entertained serious doubts as to the truth of [her]
publication.”  Specifically, the evidence
about funding was “too remote and speculative to permit an inference that she
acted with malice in making the secondary statements.” In this context, “[m]ore
papers, more discussion, better data, and more satisfactory models—not larger
awards of damages—mark the path toward superior understanding of the world
around us.”

The counterclaims failed for similar reasons. Some of
Heartland’s criticisms were protected opinion, including that the article was “not
sound science,” which is vague and encompasses many meanings. Others were scientific
conclusions on a “subject about which there is legitimate ongoing scientific
disagreement.”

The court also rejected an abuse of process counterclaim,
even though “[a]nyone who delves into the record and procedural history of this
case would easily have suspicions about Heartland’s motives.” Which is why we
need a federal anti-SLAPP law.

Indeed, the court says that “[t]he First Amendment does not
require a scientist to defend research studies in court merely because a
company whose sales of a product might be affected by publicity about that
research disagrees with the research or dislikes the publicity.” But … she did
have to defend her research studies in court, in part because Heartland faced
no real threat that it would have to pay for her defense—imposing costs on her
was a rational business decision. An anti-SLAPP law might have given Heartland
pause, and would definitely have made it easier for her to find good counsel.

from Blogger https://tushnet.blogspot.com/2026/06/we-need-federal-anti-slapp-law.html

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PediaSure “growth” claims might communicate height gain, but price premium theory fails

Posted on June 8, 2026 by rtushnet

Noriega v. Abbott Labs., 2026 WL 1601501, No. 23 Civ. 4014
(PAE) (S.D.N.Y. Jun. 4, 2026)

Conventional wisdom is that certification is the ballgame
for consumer class actions, but it might be empirically mistaken. This case is
an example where there’s plenty more litigation ahead. Noriega alleged that the
packaging and marketing of PediaSure Grow & Gain misled consumers when it
claimed to be “Clinically Proven to Help Kids Grow” in violation of New York
General Business Law (“GBL”) §§ 349 and 350.

The court denied summary judgment to Abbott and resolved a
bunch of evidentiary objections.

There’s a disclaimer on the label: an asterisk, dagger, or
other note of the form: “Clinically Proven† to Help Kids Grow.” The disclaimer
has at various times read: “Studied in children at risk for malnutrition”;
“Studied in children at risk for malnutrition, 2 servings per day,” or “Studied
in children with and/or at risk for undernutrition, 2 servings per day.” It appeared
in different colors, sometimes set against a background of the same color, and
other times against a contrasting background.

The label also shows a cartoon giraffe wearing sunglasses,
next to tick marks that resemble a ruler. Under the PediaSure name, the label
states, “Grow & Gain,” and below that, “With Immune Support.” he label
contains circles touting a product attribute, such as “27 Vitamins &
Minerals,” “7g Protein,” and “#1 Pediatrician Recommended Brand.”

Earlier versions displayed an image of a lion. And instead
of the challenged statement, the label read, “Helps Kids Grow.” At least 2 TV
ads also used the challenged statement, including a “worried mom commercial”
depicting a child who is shorter than the children next to him, and who stands
on his tiptoes to appear taller. The voice of a mother states: “Before
PediaSure, I was concerned that he was behind in growth.” She states that her
child’s pediatrician told her to try PediaSure, and that “it’s clinically
proven to help kids grow.” The commercial displays the word, “GROWTH,” above an
image of a child standing next to tick marks. A second ad depicts a child
standing between two taller children, who states that his mother was “concerned
about my growth,” as the commercial depicts a mother measuring the child’s
height against a doorframe. The child states that his mother tried PediaSure
because it is “clinically proven to help kids grow.”

The PediaSure product page of Abbott’s website lists six
published studies, and Abbott completed data collection in another study in
late 2024, after the filing of this lawsuit. Whereas Abbott’s earlier studies
had largely been conducted on children outside of the United States (e.g., the
Philippines, Taiwan, Pakistan and Peru), the new study, AL-48, studied the
effects of PediaSure in children in the United States.

Plaintiff’s experts: First there was marketing expert Dr.
Gita Johar, whose report assessed how consumers would understand the challenged
statement. Her methodology: review academic literature related to consumer
marketing claims, and whether and when consumers can understand disclosures
that purport to modify or limit such claims; review the Complaint and PediaSure
labels and television commercials; then assess, in light of the academic
literature, how target consumers would process the text and imagery on the
PediaSure bottle, whether consumers would notice and understand the footnote
disclaimer, and what reasonable consumers are likely to believe about
PediaSure.

She opined that the PediaSure label would lead consumers to
believe that the product is clinically proven to help kids grow tall and that
the footnote disclaimer is “unlikely to be noticed, read, [or] understood.” She
also opined that this was materially misleading, as clinical proof was a “key
benefit” of the marketing.

This opinion was admissible even though Johar didn’t conduct
empirical research or rely on case-specific data collection. Although a
specific survey would have helped, Dr. Johar’s sources and methodology were
reliable for these “uncomplicated” conclusions. Likewise, considering Abbott’s
internal marketing materials might have helped, but only to fortify “her most
central, and unsurprising, conclusion: that PediaSure’s packaging leads
consumers to believe the product is clinically proven to help kids grow in
height.” With extensive experience in consumer product marketing, a lack of
specific expertise in children’s nutrition drinks didn’t matter.

Her testimony would help the jury because she wasn’t setting
out her personal beliefs, as a consumer, about the meaning of the challenged
statement on the label but rather her opinion, “as a marketing professor, based
on her experience and research, about how a reasonable consumer would view and
process the challenged statement in the context of PediaSure’s packaging.”

The court also denied the motion to preclude Dr. Daniel
Hoffman’s expert report on whether Abbott’s studies supply clinical proof that
PediaSure promotes height growth. He’s a professor in the Department of
Nutritional Sciences at Rutgers University whose expertise includes “[s]tunting
and growth retardation,” and “[e]nergy metabolism and body composition.” Id. He
has published journal articles and presented on topics related to children’s
nutrition and growth. He opined that Abbott ignored its internal claims
substantiation guidance manual that addresses health benefit claims, the
evidence necessary to substantiate such claims, and the claims development
process. He further opined that Abbott improperly applied “inapposite studies
from homogenous populations in developing countries” to children in the United
States, failing to conduct “bridging studies” that enable results from one
population to be translated to another.

He also reviewed FTC communications admonishing Abbott about
its practice of using studies from developing countries to support marketing
claims directed to U.S. consumers and internal Abbott communications that
criticized Abbott’s studies, and depositions in which Abbott employees echoed
those concerns.

The heart of his report analyzed the quality of Abbott’s
studies, concluding that they “do not clinically prove or show that PediaSure
helps children grow.” This heart was admissible, though other aspects of his
testimony were inadmissible, including testimony about Abbott’s internal manual
and whether Abbott complied with its own rules; about Abbott’s compliance with
FTC health claims guidance; and how a reasonable consumer would interpret the
challenged statement.

Finally, Dr. Ingersoll’s expert report claimed that the
challenged statement had a price premium. The court excluded the testimony
because he didn’t specifically test Noriega’s theory of liability: the claim
that PediaSure helps kids grow in height. He also did not test the
disclaimer or imagery on the PediaSure label.

The label’s references to growth “can also—or
alternatively—be read to encompass other forms of growth (e.g., weight, body
composition, and/or muscular development),” and he didn’t test height
specifically. “Nor did it test the features which Noriega claims would make a
consumer more likely to understand the challenged statement as referring to
height growth (the giraffe, tick marks, and ‘Grow & Gain’ label). And it
did not test the disclaimer that Abbott claims contextualized the challenged
statement.”

The court commented that “[i]t would not have been difficult
to design a conjoint survey to test this representation. In cases in which a
label was susceptible of multiple meanings, surveys have tested the premium
traceable to the meaning the plaintiff claimed was false or misleading.”

In addition, the disclaimer should have been included, as
proven by Noriega’s own testimony that she construed the challenged statement
to mean there was “scientific proof that this product can actually make a child
grow in height,” and that such proof entailed examining thousands of children
in the United States who had consumed the supplement for “a year or two” and
“grew more than what they should have.” If she’d read the disclaimer, it might
have changed her assumptions and her willingness to pay. “The challenged
statement unavoidably includes a footnote (indicated by a dagger, asterisk,
paragraph symbol, or section symbol, depending on the packaging) that contains
the disclaimer. To be sure, there is no assurance that any particular purchaser
read the footnote—and conceivably a study could have taken into account the
incidence of purchasers who reviewed the footnote relative to those who
overlooked or disregarded it.” But there was no explanation for its omission
from the survey, suggesting “an impermissibly result-driven methodology.”
Noriega could argue at trial that the disclaimer was too small to read and too
confusingly worded. “But that justification, which is absent from Dr.
Ingersoll’s report, does not support Dr. Ingersoll’s excluding the disclaimer
from the survey and failing to engage with it at all in his report…. By
omitting the disclaimer based on its purported ‘inadequacy,’ Dr. Ingersoll
assumed the conclusion that a conjoint survey is meant to prove.”

Noriega argued that including the disclaimer in a conjoint
survey would have improperly elevated it in importance, causing “focalism
bias.” But conjoint surveys can address that, for example by showing one half
of respondents the disclaimer, and the other half the statement without it. “Beyond
that, there presumably were ways—independent of a conjoint survey—to test Dr.
Ingersoll’s premise that consumers would have overlooked or not understood the
footnote disclaimer. Dr. Ingersoll’s untested assertion to this effect does not
bespeak rigorous methodology.”

Abbott’s materiality witness Dr. Kivetz is a marketing
professor at Columbia Business School. In his survey, the test group was shown
a 360-degree interactive image of PediaSure with the challenged statement and
the cartoon giraffe with tick marks (the product as it appeared in stores). The
control group was also shown an image of PediaSure, but without the challenged
statement and the tick marks on the giraffe. Respondents were then asked how
likely they would be to buy the product; if they didn’t say “don’t know,” they
were asked what made them answer the first question as they did; and asked
about “[a]ny other reason or reasons.” Then all respondents were informed about
the typical price range for a package of six bottles of a pediatric nutrition
drink ($7 to $17), and asked to indicate the highest price they would be
willing to pay for the product that they had been shown.

Kivetz concluded that consumers’ purchase intentions were
similar across the test and control groups, in that 88.7% of test group
participants and 90.4% of control group participants answered that they
definitely or probably would buy the PediaSure product that they were shown. He
also found that “the vast majority” of the reasons respondents in the test
group provided for purchasing PediaSure did not relate to the challenged
statement or height growth. He reported that “only 1.9% of participants” in the
test group gave a purchase explanation that could refer to the challenged
statement, and “[n]ot a single test group participant” mentioned height. In the
control group, no respondents provided, as a reason against purchasing
PediaSure, that the product is not clinically proven or does not help with
height growth. Likewise, the average willingness to pay for test group
respondents was $12.94, compared to $12.49 for control group respondents.

Noriega’s criticisms were not so strong as to render this
testimony inadmissible. This study was a between-group study; in a within-group
study, respondents are shown multiple products and asked which they prefer.
Noriega argued that within-group studies “should almost always” be used to
assess materiality, but between-group studies have been used before in the
false advertising context. And speaking of focalism bias, within-group studies
would have it.  

Although more questions could have been asked, it did more
than ask for a top-of-mind response: it asked consumers why they were
definitely/probably likely or unlikely to buy the product, and instructed
respondents to “be specific and include details.” One part of his opinion,
saying that the survey he conducted is “routinely used in academic, industry,
and litigation settings,” and also citing cases that accepted his consumer
surveys and found that they “conclusively showed that the challenged claims
were not material,” was inadmissible.

Abbott’s “clinically proven” expert Dr. Heyman, a professor
in the Department of Pediatrics at UCSF, also offered admissible testimony that
there was “ample clinical support for a claim that PediaSure helps kids grow,
including in both height and weight” based on an in-depth review of Abbott’s
studies. He also admissibly opined that two studies, which Noriega contended
disproved that PediaSure has height growth benefits, “do not undermine or
contradict” clinical support for the challenged statement. The court excluded
his opinion that Noriega’s grandson grew in height and weight while consuming
PediaSure, and that the grandson was not harmed by his consumption of it. The
court also part of his testimony that depended on a study that was not relevant
because it was completed after the time period on which Noriega’s claims are
based (and after the proposed class period).

Once that was done, Noriega survived Abbott’s motion for
summary judgment. Along with the expert testimony, there was other relevant
evidence that the height message was communicated. A rational juror “could find
that PediaSure’s packaging, viewed as a whole, communicates that the product
helps children grow taller.” Though the wording was unspecific as to the type
of growth,

the imagery alongside it supplies a
strong basis, to say the least, on which a reasonable consumer could read
Abbott to make a representation about height growth. The central image on the
bottle is of a cartoon giraffe—the animal well-known as the tallest of all
mammals. The giraffe appears next to vertical tick marks resembling a ruler
that climb to the level of the giraffe’s head. There is no comparable
horizontal imagery. And the words “Grow & Gain” appear in large font below
the brand name. These features could readily support a consumer’s conclusion
that the word “grow” in the challenged statement refers to height growth, with
the word “gain” referring to weight gain.

The same was true of the commercials, which focused on
children shorter than the children around them. The “worried mom” ad displayed
the word “growth” above an image of a child standing alongside vertical tick
marks; and, in the final scene, shows the child (who has begun drinking
PediaSure) reaching up to erase a classroom white board. The “basketball
commercial” ad showed a child standing between two taller children. The child states
that he has “got a lot to look up to” and the commercial depicts the mother
measuring the child’s height against a doorframe.

A jury could also find that Abbott records and employee
deposition testimony support the conclusion that a reasonable consumer would
take away from PediaSure’s packaging and marketing that it promotes height
growth. A 2015 slide deck, which discusses how the giraffe concept performed in
a packaging study, includes these quotes from respondents: “Measuring tape
image makes it clear this product helps with growth,” and “The giraffe is cool
and he’s an example of what the product does for growing.” Abbott’s brand
director of PediaSure also testified that Abbott’s marketing team sought to
“include height within the definition [of growth] to better define the segments
of growth.”

Likewise, there were genuine issues of fact on the truth of
the height claims. A “rational juror here could find that the deficiencies
identified by Dr. Hoffman are so basic and devastating that Abbott’s studies
cannot credibly be claimed to constitute clinical proof of the challenged
statement.” That juror could agree that establishing that PediaSure promotes
height growth in a malnourished child in a developing country “says absolutely
nothing about whether it does the same for a healthy New York City child with a
sound diet.” “The Court is unpersuaded by Abbott’s suggestion that the nominal
existence of a study, even one that could be found wholly inapposite to the
proposition at hand, inherently defeats a challenge to a claim of clinical
proof.”

A rational jury could also find that the footnote disclaimer
here was ineffective, relying either on Dr. Johar’s testimony or by “examining
the packaging for him or herself,” noting that “the challenged statement and
disclaimer are on opposite sides of the giraffe and that the challenged
statement is larger and more prominent than the disclaimer,” and/or finding
that the disclaimer didn’t address height specifically or explain the
implications of the study feature (“studied in children at risk of malnutrition”)
that it briefly discloses.

Invoking the Lanham Act standard, “Abbott suggests that,
because the challenged statement is impliedly (rather than literally) false,
Noriega is required to come forward with extrinsic evidence that the challenged
statement would mislead consumers.” This isn’t a Lanham Act case, and “GBL §§
349 and 350 do not have an extrinsic evidence requirement.” [Conceptually, this
difference is hard to defend since the core concept, deceptiveness, is the same
for consumers and competitors, both of whom are only harmed when consumers are
deceived, but the real problem is the Lanham Act survey requirement so I’m
certainly not saddened by the court refusing to port it over.] Given the
giraffe and the ruler, this wasn’t a case where a jury would need extrinsic
evidence to determine what message was received.

And there was a material disputed issue on materiality,
including Dr. Johar’s report. Abbott’s internal documents also included an
online survey of more than 500 mothers, which tested the statements that made
respondents most likely to purchase PediaSure; the challenged statement ranked
third out of 13 options. A 2024 marketing presentation stated that, in 2019,
“height households had significant buy rate growth,” and that the fourth most
popular reason consumers purchased PediaSure was that to “help child grow.”  Abbott’s documents also included statements
that 51% of respondents want to buy products that “help my child grow in
height” and that 20% of respondents give children PediaSure to help “grow in
height.” [This may well be why we shouldn’t give much weight to anybody’s
surveys on materiality or what message was communicated—the fact that Abbott
was easily able to figure out a methodology that would give it the opposite
result when it had a very strong interest in so “showing” suggests either that
Abbott’s marketing department is very bad at its one job or that, for business
decision-making purposes, the claim is material.] Abbott weakly argued that its
internal records didn’t “literally” show that height was a reason for purchase,
but they certainly tended to make that conclusion more likely.

Kivetz’s immateriality study, while admissible, was not
dispositive given the other admissible evidence.

What about injury? There was sufficient evidence to survive
summary judgment on one theory of injury: a benefit-of-the-bargain theory.
Noriega testified that $3.25—the cost she claims to have paid per bottle—is “a
lot to pay for something,” and that she understood PediaSure to cost more money
on account of its capacity to improve height. She testified that she believed
that she was “paying more” for the prospect of height benefits and that she
would not have bought PediaSure had the challenged statement not been on the
label. This could show detrimental reliance, but not on a price premium theory.

Good thing statutory damages are available!

from Blogger https://tushnet.blogspot.com/2026/06/pediasure-growth-claims-might.html

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6th Circuit approves of using (at least) same similarity standard for dilution as for confusion

Posted on June 8, 2026 by rtushnet

Scotts Co. v. Procter & Gamble Co., 2026 WL 1601797, No.
25-3555 (6th Cir. Jun. 4, 2026)

Discussion of trade
dress opinion here. False
advertising claim here. The district court didn’t abuse its discretion in
denying a preliminary injunction against P&G on the claims that P&G’s
weed-killer product Spruce infringes on and dilutes Scotts’s Miracle-Gro trade
dress.

Spruce

Scotts defined its claimed common-law trade dress as (1) A
green and yellow color combination; (2) With each color presented as a separate
horizontal band and the top color taking up a smaller ratio than the bottom
color; (3) With the two bands sharing a common border that runs horizontally
along the package; (4) With a straight line dividing the two colored bands; and
(5) A circular horizontally centered graphic element.

Miracle Gro examples

Approximately one-third of Scotts’s Miracle-Gro products, by
revenue, are “specialty products” that come in different packaging. And a
number of third-party products in the lawncare space, some of which are “widely
sold in the lawn-and-garden marketplace,” and at times “shelved right next to”
Miracle-Gro product, have some overlaps.

third parties

On appeal, Scotts objected to three of the district court’s
factor analyses: (1) mark strength, (2) mark similarity, and (3) relatedness of
goods. The big three!

Strength: the district court weighed this “at least somewhat
in Scotts’ favor” because it found that the trade dress had substantial
commercial strength but less conceptual strength. Scotts argued that substantial
commercial strength should be sufficient to make the factor weigh entirely in
Scotts’s favor. No! Strength depends on the interplay of conceptual and
commercial strength. Even though Scotts has invested “substantial effort and
large sums of money over an extended period of time” in promoting the trade
dress, “there’s nothing particularly distinct about using green and yellow for
packaging in the lawn care industry.” Extensive third party use of similar
marks limited the conceptual strength of the mark, reducing its strength for
purposes of this factor. [We can say—but I’m not sure any court has
outright—that a mark can be both very strong and very narrow. American Airlines
is highly recognizable, but it’s pretty easy to use a mark that is both heavily
overlapping (using “American” or “Airlines” or even both plus a geographic
modifier) and not confusing.]

Similarity of marks: Scotts that the district court erred as
a matter of law by “rel[ying] on a legally improper side-by-side comparison of
the packages in the courtroom,” and that it made a “clearly erroneous” factual
finding that the Miracle-Gro trade dress always uses the same ratio of green
and yellow.

While the Sixth Circuit “do[es] not approach trade dress
claims by parsing minute differences between products,” “that does not mean
that actually comparing the packaging is inappropriate.” Indeed, that’s the
best practice. The district court identified the appropriate legal standard:
“[W]hether a given mark would confuse the public when viewed alone, in order to
account for the possibility that sufficiently similar marks may confuse
consumers who do not have both marks before them but who may have a general,
vague, or even hazy impression or recollection of the other party’s mark.” The
district court “appropriately” cited a variety of individual visual differences
to show that the “visual differences add up to a highly dissimilar overall
visual impression between the Miracle-Gro Trade Dress and the Spruce packaging,”
and correctly identified that the products were typically not shown side by
side in retail stores.

The ratio finding was also not clearly erroneous. Scotts’s
registration defines a specific one-third green to two-thirds yellow color
combination. And while Scotts claimed a broader common-law trade dress, its
expert testified that “our Miracle-Gro trade dress says typically one-third
green on top, two-thirds yellow on the bottom,” mentioning  the “one-third/two-third” ratio repeatedly as,
in the court’s words, “a key factor that distinguishes Miracle-Gro from a
multitude of other green and yellow products.”

The court also noted Scotts’ attempt to make its trade dress
a nose of wax.
“[S]ome of the products that Scotts cites as using other ratios also completely
lack other elements that Scotts identified as part of its broader common-law
trade dress …. Scotts can’t have its cake and eat it too; either the
yellow-and-green combination is distinct from the many other green and yellow
products on the market because of its specific ratio, or it isn’t nearly as
distinct as Scotts claims.”

Relatedness of the goods: Because Spruce is a weed killer
and there is no equivalent product in the Miracle-Gro product line, the
district court reasoned that the products are “only somewhat related” because
the products are not “directly competitive.” This too was not an abuse of
discretion. The Sixth Circuit sorts this factor into three categories: “(1)
direct competition of services, in which case confusion is likely if the marks
are sufficiently similar; (2) services are somewhat related but not
competitive, so that likelihood of confusion may or may not result depending on
other factors; and (3) services are totally unrelated, in which case confusion
is unlikely.” This was category (2) because both were lawn and garden products,
but did not directly compete.

Dilution: Scotts argued that the district court erred in
holding that its finding that the Miracle-Gro trade dress and Spruce’s
packaging are “highly dissimilar” also meant that Scotts wasn’t likely to
succeed on its dilution claim. The Sixth Circuit has held that “[t]he degree of
similarity required for a dilution claim must be greater than that which is
required to show likelihood of confusion” because “[t]he purpose of
anti-dilution laws is to provide a narrow remedy when the similarity between
two marks is great enough that even a noncompeting, nonconfusing use is harmful
to the senior user.”

Scotts argued that this precedent had to be rejected after
the TDRA. It noted that both the 9th and 2nd Circuits
have held that there’s no requirement of substantial similarity for dilution
purposes, though I think they’re both wrong. [The underlying logic is that the
TDRA gives a multifactor test for blurring referencing the “degree” of
similarity as well as the “degree” of other factors, so it must be possible to
dilute without a high degree of similarity. I think this is wrong as a matter
of grammar—the statute simply doesn’t say where to draw the line. Moreover, the
other factors are essentially all about fame (with the arguable partial
exceptions of intent/actual association), which by definition will be satisfied
if you get to the multi-factor test because you’ve shown ownership of a famous
mark. So if we want continuity with the other “degree” factors, “very high”
should be required for the factor to favor the plaintiff.]

According to Scotts, the district court should therefore
have done more balancing, which would favor it because of its claimed fame. P&G
pointed out that the definition of dilution is dependent on some amount of
similarity, and that the Ninth Circuit also held that while “a particular
degree of similarity is not a threshold, similarity is the necessary predicate
for dilution analysis.” “The statutory text itself does not seem to mandate
that the district court specifically weigh all six factors; it only states
courts ‘may’ consider ‘all relevant factors’ and offers six examples.”

The court of appeals didn’t resolve the issue; even assuming
that the similarity requirement is no longer heightened relative to a
likelihood-of-confusion analysis, there was no abuse of discretion in finding
that the “high level of dissimilarity” found in the infringement analysis also
ended the dilution inquiry. [This next quote shows why the 2nd and 9th Circuits
are wrong: if it’s not a humorous understatement, it’s a sign that something
has gone very wrong.]  “Since dilution
definitionally requires similarity and some similarity is ‘the necessary
predicate’ for dilution analysis, a finding of a complete lack of similarity
should strongly influence the dilution analysis.”

Even if the dilution similarity standard isn’t more
rigorous than the infringement similarity standard, it was not error to
hold it to the infringement similarity standard—thus, the court of appeals
strongly implies, the dilution similarity standard can’t be less rigorous
than that for confusion.

Some thoughts: If dilution were a less rigorous standard, how
would we calibrate using the other factors of the test (“test”)? Perhaps we
could say that no one can get closer than other slightly-similar marks or
designs on the market. This would be particularly beneficial to makers of
allegedly famous product designs or even packaging, since they’re the ones
particularly likely to want to constrain competitors. This seems to me
to be unrelated to any evidence we could gather about diminished distinctiveness—because
even if we have a theory about preserving conceptual space around a mark, the
fact of the matter is that conceptual space will shift based on other features,
not just similarity. Dida’s Café would probably not make you think about
Adidas, but Dida’s Sneakers could well do so. So identifying the comparators “nearest
to” the famous mark that are perceptually somewhat similar and that therefore define
the scope of its protection against dilution will be conceptually and practically
difficult. Why would we compound our troubles by requiring less than compelling
similarity, which offers us a way to define the scope of protection that is at
least consistent with the idea of drawing firm boundaries around things that
are property?

from Blogger https://tushnet.blogspot.com/2026/06/6th-circuit-approves-of-using-at-least.html

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