Can a claim using the word “local” constitute false advertising?
That question was recently asked in Utah federal court as part of a recent lawsuit involving bread products. Leland Sycamore invented the formula for “Grandma Sycamore’s Home-Maid Bread” in 1979 and obtained federal trademark protection for part of the packaging’s design.
In 1998, Sycamore sold the rights to Grandma Sycamore’s bread to a predecessor-in-interest of Bimbo Bakeries. The purchase included a complete transfer of all business assets, including intellectual property, trade secrets and machinery. Sycamore also executed a nondisclosure agreement, promising to keep confidential the production formulations, trade secrets and manufacturing processes involved in Grandma Sycamore’s bread.
When competitor U.S. Bakery reintroduced its Grandma Emilie’s bread product in 2013, it contracted with a bakery operated by Sycamore’s son, Tyler. Bimbo claimed that U.S. Bakery misappropriated its trade secrets by hiring Tyler, who disclosed the confidential methods of making Grandma Sycamore’s bread. As part of the dispute, Bimbo also challenged the defendant’s advertising tagline of “Fresh. Local. Quality.” Because the products were produced in Idaho and sold in Utah, Bimbo argued it was deceptive to advertise them as “local.”
U.S. Bakery moved for summary judgment, arguing that the term “local” cannot constitute false advertising because it is indefinite and not measurable. But U.S. District Judge David Nuffer disagreed.
A claim for false designation of origin is typically clear, the court acknowledged, as in the case of an advertisement for “Idaho potatoes.” If those potatoes were grown in Utah, then the claim could easily be proven false. He also noted that a claim of “local” is not nearly as straightforward.
“The United States Department of Agriculture has concluded ‘[t]hough “local” has a geographic connotation, there is no consensus on a definition in terms of the distance between production and consumption,’” the court wrote. “Bimbo has provided surveys showing that the tagline ‘local’ was misleading and material to potential purchasers. Because the term local does not carry a set definition, whether the term is false or misleading is a question appropriate for the fact finder. Summary judgment is denied because whether ‘local’ is misleading is a factual question.”
The case proceeded to trial. In early October, a federal jury found in favor of Bimbo Bakeries on all counts, including the false advertising claim. Finding the deception willful, jurors said the defendants raked in more than $8 million as a result of the false advertising and awarded just over $2 million in total damages.
To read the order in Bimbo Bakeries USA, Inc. v. Sycamore, click here.
To read the verdict form, click here.
Why it matters: The verdict serves as a cautionary tale for advertisers about the use of a “local” claim. While the court found the term does not carry a set definition, the jury was convinced that out-of-state products could not be described as local. It found that the defendant engaged in false advertising and awarded more than $2 million in total damages.