Beer Company Files False Advertising Lawsuit Under Lanham Act
July 17, 2019
Battle of the Beers – Competitors Facing Off in False Advertising Suit Under the Lanham Act
Although the Lanham Act is more commonly known as a trademark statute, businesses can also rely on it pursue claims against competitors for misleading advertising or labeling. MillerCoors, LLC (MillerCoors) recently made headlines when it filed a lawsuit against Bud Light maker Anhauser-Busch Companies, LLC (Anheuser-Busch). The suit alleges that the competitor’s Super Bowl ads “deceive beer consumers into believing that there is corn syrup and high-fructose corn syrup in Miller Lite and Coors Light.”
In case you missed the ad campaign, the Bud Light “king” travels around the medieval countryside seeking to return a barrel of corn syrup that was misdelivered to his kingdom. The ad suggests that Miller Lite and Coors Light beer contains corn syrup, while Bud Light does not. You can watch it here.
According to MillerCoors, the company does use corn syrup — but not high-fructose corn syrup — in the brewing process. However, Miller Coors alleges that there is no corn syrup left in the final product. As argued in its complaint:
Under the guise of “transparency,” AB singled out MillerCoors use of a common brewing fermentation aid, corn syrup, for a deliberate and nefarious purpose: it was aware that many consumers prefer not to ingest “high-fructose corn syrup” or “HFCS,” and had reportedly conducted extensive focus group testing in which it found that consumers do not understand the difference between ordinary corn syrup (used by numerous brewers, including AB itself) and HFCS, the controversial sweetener commonly used in soft drinks. Thus, AB plotted an extensive and pervasive advertising scheme designed to frighten consumers into switching away from Miller Lite and Coors Light to Bud Light.
MillerCoors’ suit includes claims for false advertising and trademark dilution under the Lanham Act. MillerCoors is also seeking a preliminary and permanent injunction to stop the allegedly deceptive ads from airing.
False Advertising Under the Lanham Act
Under the Lanham Act, a plaintiff can pursue claims for false or misleading advertising. Specifically, 41 U.S.C. § 1125(a)(1) provides:
Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which—…in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
In its suit, MillerCoors alleges that Anheuser-Busch’s ad campaign misleads consumers because it fails to disclose: (1) there is no corn syrup in Miller Lite or Coors Light once the beer is ready for consumption; (2) corn syrup and high-fructose corn syrup are not the same thing; and (3) Anheuser-Busch uses corn syrup and high-fructose corn syrup in many of its other products.
The Lanham Act also prohibits trademark dilution and authorizes trademark owners to seek injunctive relief to prevent it. Pursuant to 15 U.S.C. § 1125(c):
The owner of a famous mark that is distinctive, inherently or through acquired distinctiveness, shall be entitled to an injunction against another person who, at any time after the owner’s mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury.
In its complaint, MillerCoors alleges: “The Campaign’s willfully negative statements regarding Coors Light and Miller Lite beers are likely to dilute the tremendous goodwill and iconic standing of the famous COORS LIGHT and MILLER LITE marks, and the Miller and Coors brands generally.”
Remedies Under the Lanham Act
As the U.S. Supreme Court noted in POM Wonderful LLC v. Coca Cola, the Lanham Act provides a powerful tool for businesses who believe that their competitors aren’t playing by the rules. It also allows them to pursue violations that regulators may not.
“Competitors who manufacturer or distribute products have detailed knowledge regarding how consumers rely upon certain sales and marketing strategies. Their awareness of unfair competition practices may be far more immediate and accurate than that of agency rulemakers and regulators,” the Court explained. Accordingly, the “Lanham Act draws upon this market expertise by empowering private parties to sue competitors to protect their interests on a case-by-case basis.”
Plaintiffs who successfully bring a Lanham Act claim can obtain an injunction against the false or misleading advertising, as well as monetary damages. In some cases, plaintiffs can also recover their attorneys’ fees.
Key Takeaways for Businesses
The so-called “Corngate” dispute between the country’s top brewers offers valuable lessons. First, businesses should work closely with their legal counsel and review marketing materials for any potential false advertising liability prior to launching a new advertising campaign. This is particularly important for ads which specifically reference a competitor and/or a competing product or service.
For businesses that find themselves on the receiving ad of misleading ads by their competitors, the Lanham Act can be an effective legal remedy. It is advisable to work with an attorney experienced in unfair competition who can determine the best strategy.
If you have any questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, David Einhorn, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.