The Third Circuit has rendered a notable decision with important implications for the use of fine print in advertising. The Court held that small print statements that explicitly define the terms of a more prominent superior performance claim can render that performance claim unambiguous – and thus subject to a literal falsity claim – even if consumers are unlikely to read the small print and even if there is survey evidence indicating that consumers consider the overall performance claim ambiguous.
This decision is also noteworthy for its discussion of the evidence required to prove “irreparable harm” in the wake of Ferring – another Third Circuit opinion covered on this blog – which rejected the presumption of irreparable harm for injunctive relief under the Lanham Act.
The case involved two steam iron manufacturers. Groupe SEB USA (the maker of Rowenta electric steam irons) sued Euro-Pro Operating LLC (the maker of Shark steam irons) for false advertising over packaging that touted: Shark irons have the “#1 most powerful steam” and “more powerful steam vs. Rowenta at half the price.”
Fine print footnotes on the advertising explained that the basis for the comparative power claims was “independent comparative steam burst testing,” which measured power in grams per minute and/or in grams per shot. The Court determined that this empirical footnote explicitly defined “powerful” as measured by steam burst testing so that it became a “clearly defined term,” possessing an unambiguous meaning that could be proven false by contrary testing. The Court further determined that the claims were unambiguous regardless of whether or not consumers were likely to read these explanatory footnotes. Moreover, the Court concluded that consumer surveys indicating consumers interpreted the term “powerful” differently also did not render the claim ambiguous.
Plaintiff SEB was able to provide evidence – through testing – that its irons were more powerful than Euro-Pro irons in terms of grams per minute and grams per shot. This rendered the more “powerful” claims false. Accordingly, the Court affirmed the District Court’s decision to grant SEB a preliminary injunction.
Finally, in granting injunctive relief, the Court found that SEB established a likelihood of irreparable harm based on “fair inferences” of harm to reputation and goodwill drawn from facts on the record. The decision offers some guidance as to what evidence can fulfil the irreparable harm element in the wake of the Third Circuit’s decision in Ferring. In this case, the Third Circuit determined that “the literally false comparative advertising claims at issue, the competitive relationship between the parties and products, and the judgment of [SEB’s marketing director] that the harm to SEB’s brand reputation and goodwill is impossible to quantify” constituted a sufficient showing of irreparable harm to justify an injunction.
Ultimately, this decision offers clear guidance to advertisers and their lawyers: language clarifying the meaning of an otherwise ambiguous term must be carefully considered and treated as if it were part of the overall claim, no matter how tiny the footnote’s font.
It is also worth bearing in mind that a footnote does not work in the opposite direction: a corrective statement in a footnote separated from the claim it is purporting to qualify almost never is sufficient to rescue that claim if, without the footnote, the claim is false or misleading.” The Third Circuit recognized this rule in other circuits, but refused to address the issue in this case – above the line, or below.