In the latest development in the Lanham Act litigation between beer titans MillerCoors and Anheuser-Busch, the district court issued an order enjoining Bud Light from using the “No Corn Syrup” language and icon on product packaging, expanding the existing injunction covering the same claims in print and television advertisements. MillerCoors v. Anheuser-Busch Cos. (MillerCoors II), No. 19-cv-218-wmc, 2019 U.S. Dist. LEXIS 149954 (W.D. Wis. Sept. 4, 2019). However, the court permitted Anheuser-Busch to exhaust its existing supply of packaging with the enjoined image and language (assuming it can be done in 270 days, which Anheuser-Busch has signaled it will). The decision offers an interesting analysis of implied comparative claims and how the defendant’s replacement costs may impact the “irreparable harm” inquiry at the preliminary injunction stage.

In June, we reported on MillerCoors’s partial success in barring Anheuser-Busch’s advertisements that depicted Anheuser-Busch’s Bud Light with the label “NO CORN SYRUP” alongside a Miller Lite bottle with the label “CORN SYRUP.” The court found that MillerCoors had not demonstrated the falsity of ads referencing the mere use of corn syrup, given that MillerCoors in fact uses corn syrup for fermentation when Anheuser-Busch does not. But it enjoined the “CORN SYRUP”/ “NO CORN SYRUP” ads, holding that they communicated the false message that MillerCoors beers actually contain corn syrup.

Although MillerCoors had urged the court at oral argument to extend the injunction to the “No Corn Syrup” language and icon on Anheuser-Busch’s packaging (shown in the images below), the court declined to reach the issue on the record before it, since it had not been addressed in briefing. Instead, the court invited additional submissions from the parties before passing judgment on the packaging claims.

In its most recent decision, upon reviewing the parties’ supplemental submissions, the court handed MillerCoors another partial victory. It prevented Anheuser-Busch from using the “No Corn Syrup” language and icon in new packaging, but it allowed Anheuser-Busch to use up any packaging already printed as of the date the original preliminary injunction became effective (June 6, 2019), up to 270 days after that date, whichever is earlier. That is the exact time frame in which Anheuser-Busch’s quality control policy requires its packaging to be used, so the court’s ruling simply required Anheuser-Busch to run through its normal relabeling cycle for replacing the offending text.

After receiving emergency briefing from Anheuser-Busch, the court further modified its injunction two days later, allowing Anheuser-Busch to use packaging on hand through November 1, 2019 that still contains the “No Corn Syrup” language and icon. MillerCoors v. Anheuser-Busch Cos. (MillerCoors III), No. 19-cv-218-wmc, 2019 U.S. Dist. LEXIS 152559, at *2 (W.D. Wis. Sept. 6, 2019). This was due to Anheuser-Busch’s representations that (1) it had printed additional packaging after June 6, 2019 containing the challenged claims and (2) it “cannot have packaging complying with the court’s injunction until the end of October.” Id. The court was “troubled by [Anheuser-Busch]’s decision to continue to print new packaging containing language that almost certainly violated the spirit of the court’s [June 6, 2019] injunction” but “reserve[d] on whether the defendant’s conduct supports finding an ‘exceptional case,’” such that attorney’s fees may be available to MillerCoors as the prevailing party. Id. at *1-2 (emphasis in original).

When Can Advertising Statements That Do Not Expressly Make Comparative Claims Be Deemed Impliedly Comparative?

The court noted that, unlike the advertising campaign it had previously enjoined, the packaging at issue here is not expressly comparative because it does not mention either Miller Lite or Coors Light. Instead, the packaging claims focus only on the absence of an ingredient (i.e., corn syrup) from Bud Light products. Yet the court held that the “No Corn Syrup” packaging contains the “implicit message” that other beers contain corn syrup, which, as described in the court’s first ruling, is a false message. MillerCoors II, 2019 U.S. Dist. LEXIS 149954, at *9. And because Lanham Act violations are presumed to inflict irreparable harm on the plaintiff, MillerCoors did not need to come forward with evidence of business loss to demonstrate its injury. Id. at *8.

The court’s finding of a likely Lanham Act violation rested on several predicate findings. First, the court observed that the packaging should not be considered in isolation but in light of the full advertising campaign, including the advertisements previously deemed to be false. Second, it recognized that the light beer market consists almost entirely of Bud Light, Miller Lite, and Coors Light—and thus, when Bud Light is touted as not containing corn syrup, consumers could reasonably infer that Bud Light’s principal competitors do contain corn syrup. Finally, the court found that at least some, if not nearly all, Bud Light products are positioned next to Coors Light and Miller Lite at the point of sale, as reflected in the image below. Based on this, the court held that a reasonable jury could “find that a substantial segment of consumers would infer Bud Light’s principal competitors contain corn syrup, especially after a hundred million dollar television and print campaign misleadingly suggested the same thing.” Id.

In explaining how a non-comparative claim could be construed as an implied comparative claim in a limited market, the court analogized to a Second Circuit case in which Time Warner challenged DIRECTV’s “source matters” advertising campaign. That campaign involved a concerted marketing strategy “to educate consumers that to obtain HD-standard picture quality, it is not enough to buy an HD television set”; they must also obtain HD programming. Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 149 (2d Cir. 2007). In its advertisements, DIRECTV had disparaged “cable” but never mentioned Time Warner or any other competitor by name. The court nonetheless found Time Warner had sufficiently shown likelihood of irreparable harm in certain markets, because in those markets Time Warner is the only “cable” option. Thus, consumers in those markets would necessarily understand DIRECTV’s disparagement of “cable” to refer to Time Warner. Id. at 161-63.

The court also distinguished two cases cited by Anheuser-Busch to support its argument that the challenged packaging should not be considered in light of the full advertising campaign. In Ameritox, Ltd. v. Millennium Labs., Inc., the court held that it would consider the ads individually “as opposed to grouping them as an overall advertising campaign” because it could not presume “that consumers received or interpreted every representation in concert.” 889 F. Supp. 2d 1304, 1312 (M.D. Fla. 2012). Here, by contrast, the court found that Anheuser-Busch’s “corn syrup” / “no corn syrup” language “was part of an intentional, coordinated campaign,” and the packaging claims could therefore not be dissociated from the overarching marketing message. MillerCoors II, 2019 U.S. Dist. LEXIS 149954, at *10.

The court also distinguished this case from Pizza Hut, Inc. v. Papa John’s International, Inc., where the Fifth Circuit Court of Appeals had vacated an injunction against Papa John’s use in any context of the slogan “Better Ingredients. Better Pizza.” 227 F.3d 489, 502 n.11 (5th Cir. 2000). The court explained that the injunction against Anheuser-Busch is “substantially more limited” than the one partially vacated in Pizza Hut, given that it does not enjoin Anheuser-Busch from discussing Bud Light’s ingredients or “even prevent it from emphasizing its use of rice over corn syrup.” MillerCoors II, 2019 U.S. Dist. LEXIS 149954, at *10.

In its reply, Anheuser-Busch cited several other cases in support of its argument that ads should be considered individually, but the district court did not address them. Anheuser-Busch will likely characterize this as a material oversight in its pending appeal to the Seventh Circuit.

To What Extent Can the Expense Associated With Replacing Challenged Labeling Inform the Scope of a Preliminary Injunction?

The court found that, given the lack of express comparative statements and Anheuser-Busch’s evidence of the high costs for replacing its packaging material and the likelihood of causing an interruption in its product distribution, it would not enter an injunction barring all use of the packaging. Instead, it essentially allowed Anheuser-Busch sufficient time to use up its existing packaging. MillerCoors II, 2019 U.S. Dist. LEXIS 149954, at *13-14.

This conclusion was driven by the evidence Anheuser-Busch presented of the costs it would swallow if it needed to scrap its existing packaging. As of June 6, 2019, Anheuser-Busch had nearly $28 million worth of “No Corn Syrup” Bud Light packaging on hand, and the beer already packed in those packages was valued at $5 million. Although the court was skeptical of Anheuser-Busch’s estimate of the cost of stickering over its existing packaging—estimated at over $76 million – it nonetheless permitted Anheuser-Busch to run through the ordinary life cycle of its packaging, notwithstanding the impliedly false comparative claims it features.

The court recognized that MillerCoors may perceive the injunction’s scope “as providing very limited relief,” but found that MillerCoors did not present enough evidence that consumers would be harmed if the packaging was not replaced more quickly. Id. at 13 n.5. Although the court left the door open for MillerCoors to demonstrate the feasibility of more aggressive corrective measures, the narrow injunctive relief granted makes it difficult to characterize the outcome as a true win for MillerCoors.

This decision highlights that ads not expressly comparative may still be examined as part of the larger advertising campaign from which they came and thus may be found impliedly comparative, especially in markets with few competitors. The decision is also a reminder that the Lanham Act is concerned with consumer harm, not just competitor harm. Thus, while some jurisdictions presume irreparable injury upon a showing of a likely Lanham Act violation, plaintiffs able to come forward with some proof of consumer harm at the preliminary injunction stage increase their chances of obtaining strong injunctive relief.