By Thomas K. Lauletta, J.D.
Disgorgement of profits and corrective advertising awards against Rust-Oleum were also vacated, but injunctive relief as to two other claims were unchallenged.
Illinois Tool Works (ITW) failed to support its claims for disgorgement-of-profits or corrective-advertising awards with sufficient evidence in its false advertising suit against rival car windshield water repellant maker Rust-Oleum. The U.S. Court of Appeals in New Orleans held that a federal district court erred in denying Rust-Oleum’s renewed motion for judgment as a matter of law as to those issues, and damage awards to ITW were vacated. ITW also failed to present evidence that Rust-Oleum’s claim that its RainBrella product lasted over 100 car washes was material and the district court’s injunction enjoining Rust-Oleum from continuing to make that claim was therefore reversed. However, the district court’s injunction against the making of two other claims by Rust-Oleum was affirmed because ITW forfeited its challenge to those claims on appeal by presenting inadequate briefing (Illinois Tool Works Inc. v. Rust-Oleum Corp., April 9, 2020, Clement, E.).
ITW and Rust-Oleum Corporation sell competing water repellant products for use on vehicle windshields. ITW’s product is Rain-X and Rust-Oleum’s product is RainBrella. Illinois Tool Works complained that a Rust-Oleum commercial made three false claims: (1) that RainBrella lasts over 100 car washes, (2) that RainBrella lasts twice as long as the leading competitor (who everyone admits is Rain-X), and (3) the so-called "And Remember" claim: "And remember, RainBrella lasts twice as long as Rain-X. We ran it through 100 car washes to prove it." A jury agreed that these claims amounted to false advertising and awarded the plaintiff $392,406 for disgorgement of Rust-Oleum’s profits and $925,617 for corrective advertising, which the district court reduced to $329,506. The district court also granted a permanent injunction against the three advertising claims.
ITW appealed the reduction in the jury’s damage awards; Rust-Oleum moved for a judgment in its favor as a matter of law. In analyzing these appeals, the appellate court noted that the district court judgments would be overturned only if the evidence to support them was legally insufficient.
Damages award. The appellate court noted that false advertising damages under the Lanham Act, 15 U.S.C. § 1125(a), were available for disgorgement of profits only if: the damage award is equitable, and the defendant’s profits are attributable to the Lanham Act violation. Here, although the district court held that such a disgorgement was equitable, neither the district court, nor ITW, provided evidence linking the false advertising to the amount of Rust-Oleum’s profits. Further, ITW failed to demonstrate a reasonable inference that the false advertising generated profits or show that even a single customer purchased Rust-Oleum’s product because of the false advertising. Accordingly, the district court award of damages for disgorgement of profits was reversed.
The appellate court also reversed the award for corrective advertising, noting that ITW never asserted that it planned to run corrective advertising, that such advertising was necessary to correct Rain-W’s injured reputation, or what would have been the cost of such advertising, if it proved necessary. In this light, the appellate court concluded that the jury award for corrective advertising—even though reduced by the district court—was based on pure speculation. Accordingly, the jury could not have reasonably awarded any amount to ITW for corrective advertising.
Injunctive relief. ITW argued the injunction against Rust-Oleum’s "100-car-washes" claim was proper because the claim was: (1) was a false or misleading statement of fact about its product that (2) tended to deceive a substantial portion of consumers, (3) likely influenced these consumers’ purchasing decisions, and (4) injured or likely injured Illinois Tool Works as a result (Pizza Hut, Inc. v. Papa John’s Int’l, Inc.). The appellate court concluded that ITW had failed to meet these requirements because it presented no evidence that the deceptive advertising was material—that it was likely to influence consumers’ purchasing decisions. The appellate court rejected ITW’s arguments that a claim about an inherent quality or characteristic of a product is necessarily material, or that the importance and prominence of that advertisement in Rust-Oleum’s marketing was evidence that the advertisement was material to consumers. Although decisions by the third and eleventh circuits supported both of these views, the appellate court noted that the fifth circuit has not adopted either of these positions. According, ITW presented insufficient evidence that the "100-car-washes" claim was material, which meant that the jury’s verdict on this claim was legally unsupportable.
Based on a procedural failing, Rust-Oleum was deemed not to have appealed the district court’s enjoining of its claims that: (1) its RainBrella product lasts twice as long as Rain-X; and (2) the so-called "And remember" claim.
Court decision. Based on the district court’s error in denying Rust-Oleum’s motion for judgment as a matter of law, the Court of Appeals vacated the damages awarded to ITW. The appellate court reversed the district court’s enjoining Rust-Oleum from making its "100-car-washes" claim, but affirmed the district court’s enjoining of the other two false advertising claims.
This case is No. 19-20210.
Attorneys: Bradley Louis Cohn (Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP) for Illinois Tool Works Inc. Philip A. Jones (Barnes & Thornburg LLP) for Rust-Oleum Corp.
Companies: Illinois Tool Works Inc.; Rust-Oleum Corp.
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