[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
JULY 29, 2002
No. 02-10322 THOMAS K. KAHN
________________________ CLERK
D.C. Docket No. 01-01198 CV-J-20
JOHNSON & JOHNSON VISION CARE, INC.,
Plaintiff-Appellee,
versus
1-800 CONTACTS, INC.,
Defendant-Appellant.
__________________________
Appeal from the United States District Court for the
Middle District of Florida
_________________________
(July 29, 2002)
Before BIRCH, MARCUS and CUDAHY*, Circuit Judges.
BIRCH, Circuit Judge:
*
Honorable Richard D. Cudahy, U.S. Circuit Judge for the Seventh Circuit, sitting by
designation.
In this interlocutory appeal, 1-800 CONTACTS, Inc. (“1-800") argues that
the district court erred when it issued a preliminary injunction forbidding 1-800
from making certain statements about the products and services of Johnson &
Johnson Vision Care, Inc. (“J&J”). The district court based its injunction on the
conclusion that three of the advertisements used by 1-800 included false statements
about J&J, and as such violated § 43(a) of the Lanham Act, codified at 15 U.S.C.
1125(a).1 Because we conclude that the district court erred in applying the law, we
VACATE the preliminary injunction, and REMAND.
I. BACKGROUND
Both J&J and 1-800 are in the contact lens business. J&J manufactures
lenses, including those under the well-known ACUVUE ® brand; 1-800 sells
lenses, including ACUVUE, over the phone and the internet. J&J argues that three
1
As codified, § 43(a) provides:
(1) 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 misleadng representation of fact, which . . .
(B) 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.
15 U.S.C. § 1125(a)(1)(B).
2
of 1-800's advertisements make statements about J&J or about ACUVUE that are
literally false. The first advertisement at issue is a letter sent by 1-800 to its
customers recommending CIBA Vision’s Focus Dailies, a 1-day lens, over J&J’s
ACUVUE, a 2-week lens. In this letter (the “Focus Dailies letter”), 1-800 cites a
study published by a trade journal named Contact Lens Spectrum (“CLS study”)
which identified a five to one consumer preference for Focus Dailies over
ACUVUE. The second advertisement, also a letter, was sent by 1-800 to
customers who requested J&J lenses that were not in stock at the time of the
customer’s order. This letter (the “Exclusive Deal letter”) explains that 1-800's
inability to process the customer’s order was due to J&J’s policy of distributing
contacts exclusively to eye doctors, rather than to retailers like 1-800. The third
advertisement is a four-page pamphlet about Focus Dailies (the “Focus Dailies
pamphlet”) that was sent out with the Exclusive Deal letter. The pamphlet cites the
five to one preference for Focus Dailies and compares the qualities of the lens
against those of “competing lenses.” R1-33, Ex. G at 3.
J&J brought suit against 1-800, alleging false advertising under § 43(a) of
Lanham Act and under multiple state law provisions across the country. J&J
moved for a preliminary injunction, which the district court granted. 1-800 now
appeals the injunction.
3
II. DISCUSSION
Only if the district court abused its discretion will we reverse the grant of a
preliminary injunction. Am. Bd. of Psychiatry & Neurology, Inc. v. Johnson-
Powell, 129 F.3d 1, 2-3 (1st Cir. 1997). We review the district court’s findings of
fact under the clearly erroneous standard. Id. at 3. The facts found by a district
court are “clearly erroneous when, although there is evidence to support it, the
reviewing court on the entire evidence is left with the definite and firm conviction
that a mistake has been committed.” Univ. of Georgia Athletic Ass’n v. Laite, 756
F.2d 1535 (11th Cir. 1985) (internal quotations omitted). The clearly erroneous
standard is appropriate in cases, such as this one, in which the evidence is primarily
documentary; the fact that the district court’s decision was not a function of
credibility determinations does not affect the standard of review. Anderson v. City
of Bessemer City, 470 U.S. 564, 574, 105 S. Ct. 1504, 1511-12 (1985). Lastly,
our review of the district court’s application of law is de novo, premised on the
understanding that “[a]pplication of an improper legal standard . . . is never within
a district court’s discretion.” Johnson-Powell, 129 F.3d at 3.
For a district court to grant a preliminary injunction, the movant must
establish: (1) a substantial likelihood of success on the merits of the underlying
case, (2) the movant will suffer irreparable harm in the absence of an injunction,
4
(3) the harm suffered by the movant in the absence of an injunction would exceed
the harm suffered by the opposing party if the injunction issued, and (4) an
injunction would not disserve the public interest. Carrillon Imp., Ltd. v. Frank
Pesce Int’l Group Ltd., 112 F.3d 1125, 1126 (11th Cir. 1997) (per curiam). To
establish the likelihood of success on the merits of a false advertising claim under §
43(a) of the Lanham Act, 15 U.S.C. § 1125(a), the movant must establish: (1) the
ads of the opposing party were false or misleading, (2) the ads deceived, or had the
capacity to deceive, consumers, (3) the deception had a material effect on
purchasing decisions, (4) the misrepresented product or service affects interstate
commerce, and (5) the movant has been — or is likely to be — injured as a result
of the false advertising. ALPO Petfoods, Inc. v. Ralston Purina Co., 913 F.2d 958,
964 (D.C. Cir. 1990). If the movant is unable to establish a likelihood of success
on the merits, a court need not consider the remaining conditions prerequisite to
injunctive relief. Pittman v. Cole, 267 F.3d 1269, 1292 (11th Cir. 2001).
Our analysis begins and ends with the five elements J&J needed to establish
the likelihood of success. First, J&J needed to prove that 1-800's ads were false or
misleading. This element is satisfied if the challenged advertisement is literally
false, or if the challenged advertisement is literally true, but misleading. Johnson
& Johnson * Merck Consumer Pharms. Co. v. Smithkline Beecham Corp., 960
5
F.2d 294, 297 (2d Cir. 1992). It is clear that the district court found each of the
three advertisements to be either false or misleading, but it is unclear into which
category the court placed the ads.2
The category is relevant; once a court deems an advertisement to be literally
false, the movant need not present evidence of consumer deception. Am. Council
of Certified Podiatric Physicians and Surgeons v. Am. Bd. of Podiatric Surgery,
Inc., 185 F.3d 606, 614 (6th Cir. 1999). If the court deems an ad to be true but
misleading, the movant — even at the preliminary injunction stage — must present
evidence of deception.3 While “full-blown consumer surveys or market research
are not an absolute prerequisite,” the moving party must provide “expert testimony
or other evidence.” United Indus. Corp., 140 F. 3d at 1183. The district court did
not require J&J to provide evidence that 1-800's advertisements deceived or tended
2
The district court found that the Focus Dailies letter and the Focus Dailies pamphlet
“misrepresented” the results of the contact lens study, and that the ads were likely to “mislead[]” a
consumer. R1-38-4. While such characterizations support the reading that the district court
considered the ads to be misleading, not literally false, the district court also referred to the “false
comparative claims” included in the two ads. Id. at 7. As for the Exclusive Deal letter, the district
court found that 1-800 included “misleading statements” regarding J&J’s distribution policy. Id.
at 4. Later in the opinion, however, the district court referred to the “false statements” in the
Exclusive Deal letter. Id. at 6.
3
There is debate among the circuits regarding the extent of the movant’s burden. Some
circuits require that the movant prove that the ads actually deceive consumers, see, e.g., United
Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1183 (8th Cir. 1998), while others are satisfied with
proof that the ads have a tendency to deceive consumers, see, e.g., Pizza Hut, Inc. v. Papa John’s
Int’l, Inc., 227 F.3d 489, 497 (5th Cir. 2000). The distinction does not affect the outcome of this
case. Even in circuits with the lower standard, the movant must produce some evidence of consumer
reaction, and J&J presented none.
6
to deceive consumers. R1-38-6. As such, we conclude that the district court found
the advertisements to be literally false.
There is one additional point to consider before we begin our analysis: the
district court did not assess each advertisement independently, but instead
evaluated the three in concert. R1-38-4. The court reasoned that “[i]f the ad
campaign as a whole would be misleading to the reasonable consumer, then the
defendant should be enjoined from using that ad campaign.” Id. It is true that “a
court must analyze the message conveyed in full context,” Castrol, Inc. v. Penzoil
Co., 987 F.2d 939, 946 (3rd Cir. 1993), and that “the court must view the face of
the statement in its entirety, rather than examining the eyes, nose, and mouth
separately and in isolation from each other.” Id. (citation omitted). While the
court should consider context, it may not assume context. The problem with the
district court’s approach is the assumption that consumers will be exposed to every
advertisement in a campaign.4 Accordingly, we have organized our opinion to
reflect the fact that 1-800 sent the Exclusive Deal letter and the Focus Dailies
4
Time lapse is a related issue. Even if a consumer saw each advertisement in a campaign,
it is unlikely that the consumer would use the elements of Advertisement A seen on a Monday to
interpret Advertisement B seen on a Thursday. If there is no time lapse, then consumers may well
use Advertisement A to interpret Advertisement B. For example, 1-800 sent its Focus Dailies
pamphlet along with its Exclusive Deal letter. Because a consumer was likely to view those
advertisements at the same time, it is appropriate to analyze them together. The Focus Dailies letter,
however, was sent alone. As such, we will not assume the context of the Exclusive Deal letter or
the Focus Dailies pamphlet when analyzing the Focus Dailies letter.
7
pamphlet together, and sent the Focus Dailies letter without any accompanying
advertisement.
A. The Focus Dailies Letter
The Focus Dailies letter states that “Focus Dailies are preferred 5 to 1 over
Acuvues.” R1-33, Ex. A (emphasis omitted). The letter elaborates that 84% of
participants in a recent study preferred Focus Dailies, finding them to be more
comfortable, more convenient, and easier to handle than ACUVUE lenses. Id. The
district court found that the Focus Dailies Letter “misrepresented to consumers the
superiority of Focus Dailies” by failing to “make it clear to the consumer that the
study was comparing modalities (i.e. length of time wearing the lens, one day wear
versus two week wear) and not the quality of lenses with the same modality.” R1-
38-4.
As the common law of false advertising has developed, several circuits have
determined that the nature of a plaintiff’s burden in proving an advertisement to be
literally false should depend on whether the defendant’s advertisement cites
consumer testing. See, e.g., C.B. Fleet Co. v. SmithKline Beecham Consumer
Healthcare L.P., 131 F.3d 430, 435 (4th Cir. 1997); Rhone-Poulenc Rorer Pharms.
Inc. v. Marion Merrell Dow, Inc., 93 F.3d 511, 514-15 (8th Cir. 1996); Castrol,
8
Inc. v. Quaker State Corp., 977 F.2d 57, 62 (2d Cir. 1992). If an advertisement
cites such testing, the advertisement is labeled as an “establishment” claim. BASF
Corp., v. Old World Trading Co., 41 F.3d 1081, 1090 (7th Cir. 1994). To prove an
establishment claim literally false, the movant must “prove that these tests did not
establish the proposition for which they were cited.” Quaker State Corp., 977 F.2d
at 63. We find this method of evaluating such advertisements to be analytically
sound, and adopt the reasoning for use in the Eleventh Circuit.
In this case, the goal of the CLS study “was to evaluate the overall patient
preference of Focus Dailies one day contact lenses as compared to two-week
replacement Acuvue lenses.” R1-33, Ex. B at 1. The CLS study concluded that a
significant majority of the test participants preferred Focus Dailies. Id. at 3. In its
Focus Dailies letter, 1-800 leads with a quotation from the CLS study: “patients
concluded that the Focus Dailies lens was more comfortable overall, more
convenient and easier to handle than the two-week Acuvue lens.” R1-33, Ex. A
(quoting R1-33, Ex. B at 3). The Focus Dailies letter explicitly states that the CLS
study compared a one-day lens to a two-week lens. Using the establishment claim
method of evaluating the contested advertisement, the district court’s finding of
literal falsity cannot be upheld.
9
It is true that the CLS study includes two variables: brand and modality.
Modality is not a constant, and to that extent the design of study was imperfect.5
The fact that a study’s design is imperfect, however, does not render 1-800's
advertisements false.6 J&J cannot prove that the CLS survey reached a conclusion
different from the proposition cited in the Focus Dailies letter. Because the district
court did not properly evaluate the advertised proposition, and because J&J cannot
satisfy the burden of proof once the proposition is appropriately analyzed as an
establishment claim, we conclude that the district court’s decision with respect to
the Focus Dailies letter was error.
B. The Exclusive Deal Letter
1-800 sent the Exclusive Deal letter to 1-800 customers who requested J&J
contacts that were out of stock at the time of the customer’s order. The letter
5
The district court determined that the Focus Dailies letter would mislead consumers to
believe that CLS tested Focus Dailies against ACUVUE’s one-day disposable lens. 1-800's
advertisement, however, explicitly states that CLS compared a one-day lens to a two-week lens.
Although the five to one preference is stated in places without clarifying the modalities tested, the
Focus Dailies letter cannot be interpreted as literally false. The best case that a plaintiff could make
is that the letter is misleading — an argument which J&J has not raised and which we do not
address.
6
A movant may undermine the validity of the test results cited by the defendant “by
demonstrating that the tests were not sufficiently reliable to permit a conclusion that the product is
superior.” Quaker State, 977 F.2d at 63. J&J, however, did not contest the reliability of the CLS
survey.
10
explains 1-800's inability to fill the order, stating that J&J “has cut off our supply
of some of their products, including yours, in order to force you to buy them from
an eye doctor instead of from us.” R1-33, Ex. F.7 During the preliminary
injunction hearing, 1-800 stated that despite the fact that J&J had cut off its supply,
1-800 is still able to fill over 99% of customer orders for J&J products. R2-71.
The district court found that 1-800's fill rate contradicted 1-800's statement about
J&J’s distribution policy, and declared false advertising: “1-800 has made false
statements in its advertising by simultaneously stating that it cannot supply J&J
lenses to its customers and also stating that it fills nearly all its orders for J&J
lenses.” R1-38-6.
As mentioned previously, the fact that the district court did not require
evidence of consumer confusion leads us to the conclusion that the district court
found 1-800's statements to be literally false. See Am. Council, 185 F.3d at 614.
Review of the facts, however, reveals that both of 1-800's statements are true: (1)
J&J had cut off 1-800's supply, and (2) 1-800 was able to fill over 99% of customer
7
The Exclusive Deal letter also included a policy statement from the code of ethics
promulgated by the American Medical Association. The policy statement called into doubt the
ethics of J&J’s distribution policy. R1-33, Ex. F. Before the preliminary injunction hearing at the
district court, 1-800 acknowledged that the quotation was not applicable to the circumstances, R1-
33-5, and omitted the quotation from the letter. See id. at Ex. K.
11
orders for J&J.8 1-800 was able to maintain a stock of J&J products by purchasing
the lenses through alternative channels. After 1-800 revealed the presence of a
gray market, the gap between two superficially contradictory statements is bridged.
Thus, 1-800's statement that J&J cut off its supply of lenses is not false due to a
contradiction.
In addition, the district court found that the Exclusive Deal letter was
literally false because J&J contracted with “eye care practitioners” rather than with
“eye doctors” as stated in 1-800's advertising material. R1-58-1-2. According to
the district court, the category of “eye care practitioner” is broader than the
category “eye doctor.” Id. at 2. Although there is a strong argument that 1-800's
advertisement is better construed as underinclusive, rather than as literally false,
we need not reach that conclusion. Instead, we reverse based on the district court’s
application of the law.
To succeed on a claim of false advertising, the plaintiff must establish that
“the defendant’s deception is likely to influence the purchasing decision.”
Cashmere & Camel Hair Mfrs. Inst. v. Saks Fifth Ave., 284 F.3d 302, 311 (1st Cir.
2002) (internal quotations omitted). A plaintiff may establish this materiality
8
Pursuant to a court-approved settlement agreement, J&J is now distributing lenses to direct
retailers, provided certain conditions are met. See In re Disposable Contact Lens Antitrust
Litigation, No. MDL1030 (M.D. Fla., Feb. 8, 2001 ). The fact that J&J now distributes to direct
retailers does not affect the outcome of this case.
12
requirement by proving that “the defendants misrepresented an inherent quality or
characteristic of the product.” Nat’l Basketball Ass’n v. Motorola, Inc., 105 F.3d
841, 855 (2d Cir. 1997) (internal quotations omitted). The materiality requirement
is based on the premise that not all deceptions affect consumer decisions. In
Motorola, for example, the Second Circuit concluded that Motorola’s
advertisement that its SportsTrax device provided sports information “direct from
each arena” was literally false, but irrelevant to consumer decisions. Id.
Consumers were interested in the fact that statistics were updated quickly, and did
not make purchasing decisions based on whether data was collected firsthand or
though broadcasts. Id. J&J’s argument fails because J&J did not prove that 1-
800's use of the term “eye doctor” was material to consumer decisions.
The plaintiff must establish materiality even when a the court finds that the
defendant’s advertisement is literally false. Cashmere & Camel Hair, 284 F.3d at
312 n.10; S.C. Johnson & Son, Inc. v. Clorox Co., 241 F.3d 232, 238 (2d Cir.
2001). The district court appears to have conflated the element of consumer
deception with the element of materiality. R1-38-6 (“[T]he Court now turns to
whether or not the deception was material. While J&J has the ultimate
responsibility for proving that the deception did in fact affect consumers’
purchasing decisions . . . J&J . . . only need show that the statements had the
13
tendency to deceive consumers.”). Such conflation is not without precedent; it
appears that the Fifth Circuit blurred the boundary between the two elements in its
recent Pizza Hut decision. See Pizza Hut, 227 F.3d at 497.9 To the extent that the
Fifth Circuit decision marks a circuit split, we stand with the First and Second
Circuits, concluding that the plaintiff must establish materiality even when a
defendant’s advertisement has been found literally false.
We note that 1-800 sent the Exclusive Deal letter along with the Focus
Dailies pamphlet. The letter was sent to explain 1-800's inability to fill a
customer’s order, and the pamphlet was sent to provide the customer with an
alternative. Beyond this link, our analysis of the Exclusive Deal letter is not
informed by the Focus Dailies pamphlet.
C. The Focus Dailies Pamphlet
The Focus Dailies pamphlet is an advertisement, highlighting the advantages
of the lens: comfort, convenience, and cost. The district court found that the
pamphlet, considered along with the Focus Dailies letter, made “false comparative
claims.” R1-38-7. This language, coupled with the fact that the district court did
9
In Pizza Hut, the Fifth Circuit reasoned that “[w]ith respect to materiality, when the
statements of fact at issue are shown to be literally false, the plaintiff need not introduce evidence
on the issue of the impact the statements had on consumers. In such a circumstance, the court will
assume that the statements actually misled consumers.” 227 F.3d at 497 (internal citation omitted).
14
not require proof of consumer confusion, see Am. Council, 185 F.3d at 614, leads
us to understand that the district court found the advertisement to be literally false.
We begin with the language of the pamphlet. The cover cites a five to one
consumer preference for Focus Dailies, but does not name a competing product.
R1-33, Ex. G at 1. In fact, neither “Johnson & Johnson” nor “Acuvue” appear
anywhere in the pamphlet. The other three pamphlet pages explain that the lens is
comfortable due to thin edges and high water content, and reasonably priced due to
cost-efficient production.
J&J’s false advertising claim is based on 1-800's comparison of Focus
Dailies to ACUVUE. Because the Focus Dailies pamphlet does not cite “Acuvue”
or “J&J,” we turn to context to determine whether a consumer might imply a
comparison of the two products. The district court analyzed the Focus Dailies
pamphlet within the context of the Focus Dailies letter. These two advertisements
were not paired by 1-800; there would be no reason for consumers to see them
together.10 The pamphlet was actually coupled with the Exclusive Deal letter,
10
The district court reasoned that a consumer whose interpretation of the Focus Dailies
pamphlet was informed by the Focus Dailies letter might reason that the CLS study compared Focus
Dailies to the one-day disposable lens under the ACUVUE brand. As previously mentioned,
however, there is no reason for consumers to see these advertisements together. Moreover, “[t]he
greater the degree to which a message relies upon the . . . consumer to integrate its components and
draw the apparent conclusion . . . the less likely it is that a finding of literal falsity will be
supported.” United Indus. Corp., 140 F.3d at 1181.
15
which focused on J&J and its trade practices. Within the Exclusive Deal letter is a
reference to ACUVUE: “We have enclosed more information about a lens
preferred 5 to 1 to Acuvue.” R1-33, Ex. F. Because the context of the Focus
Dailies pamphlet includes a reference to ACUVUE, the nature of our analysis
shifts. We analyze the advertisement as an establishment claim: J&J must establish
that the quoted proposition is not supported by the CLS study. See Quaker State
Corp, 977 F.2d at 63. As explained earlier in this opinion, J&J did not and cannot
meet this burden of proof, so the pamphlet — even read within an expansively
defined context— cannot be construed as literally false.
III. CONCLUSION
The district court erred in its application of the law. The Focus Dailies letter
cannot be considered literally false because J&J did not disprove 1-800's
establishment claim. To make its case, J&J needed to prove that the cited study did
not establish the advertised proposition. Quaker State Corp., 977 F.2d at 63. The
CLS study did in fact establish that consumers prefer Focus Dailies, which is a
one-day lens, to ACUVUE, which is a two-week lens, so J&J’s argument fails. As
for the Exclusive Deal letter, 1-800's statement that J&J has cut off its supply of
lenses is not literally false because the statement appears to contradict the fact that
16
1-800 is able to fill over 99% of customer orders for J&J lenses. Both statements
are true. Nor is 1-800's reference to “eye doctor” rather than “eye care
practitioner” reason for an injunction: J&J failed to prove that 1-800's use of the
phrase “eye doctor” had any effect on consumer behavior. With respect to the
Focus Dailies pamphlet, J&J again faces an establishment claim by 1-800 which
J&J did not and cannot disprove. Accordingly, we conclude that the district court
granted the preliminary injunction in error.
VACATED AND REMANDED.
17