Zesty Paws v. Nutramax was an appeal in the Second Circuit from the Southern District of New York that dealt with false advertising claims under the Lanham Act.
Zesty Paws and Nutramax sell competing products in the veterinary supplement industry. After Zesty Paws advertised itself as the number one pet supplement brand in the United States, it received a letter from Nutramax telling it to cease and desist. Zesty Paws then sued for declaratory judgment and Nutramax counterclaimed, saying that Zesty Paws’ assertion was literally false and misleading. Additionally, Nutramax asked the court to enjoin Zesty Paws from repeating the claim.
The district court sided with Nutramax, saying that Zesty Paws’ claim was literally false because Nutramax had much larger sales and distribution. The district court agreed that Nutramax was a brand that included all of its sub-brands, and was therefore the larger of the two supplement companies. So, the district court found a likelihood of success, denied Zesty Paws’ request for declaratory judgment, and issued the injunction in favor of Nutramax.
In the Second Circuit, Zesty Paws claimed the district court erred in its factual analysis. It argued that each of the sub-brands of Nutramax was perceived by consumers as an individual brand, while all of Zesty Paws’ products were marketed under one brand. Furthermore, Zesty Paws pointed to the packaging of Nutramax products that said each sub-brand was a Nutramax company. Through that lens, Zesty Paws claimed, it was in fact the number one, best-selling brand. The Second Circuit agreed that the Zesty Paws’ advertisement could be understood to be factually accurate.
In reviewing the district court’s determination of fact, the appeals court cited precedent stating that if a claim could be interpreted in more than one way, it could not be literally false. It concluded that the district court had abused its discretion because it did not properly apply the legal standard to determine the literal fact claim. A reasonable consumer, it said, might distinguish the parent company from the brand. So, the case was remanded to the Southern District of New York for reconsideration.
The Second Circuit noted that the district court could (maybe, should) have been swayed by the existence of internal emails among Nutramax employees, which confirmed that they considered each of the sub-brands to be a different public face of the products.
I’m not sure what Nutramax could have done to prevent this reversal of fortune, other than wishing for better facts by mandating that employees use the full corporate names for all their products in internal emails. In any event, at the risk of stifling basic communications, employees need to recognize that one never knows how emails might matter in a trademark or other dispute.
