"#1 Brand" claim was literally false because of apples-to-oranges comparison

Zesty Paws LLC v. Nutramax Labs., Inc., No. 23 Civ. 10849(LGS), 2024 WL 2853622 (S.D.N.Y. Jun. 4, 2024)

Finding Zesty Paws’ “#1 Brand” claim literally false, thecourt grants a preliminary injunction despite Zesty Paws’ attempt to create a factualdispute about what a “brand” is.

Nutramax and Zesty Paws are direct competitors in the petsupplement market. Zesty Paws’ products claim to promote joint health (MobilityBites), behavioral health (Calming Bites), gut health (Probiotic Bites) andskin and coat health (Skin & Coat Bites). Nutramax’s products are intendedto support similar pet health needs: joint health (Cosequin and Dasuquin),behavioral health (Solliquin), gut health (Proviable) and skin and coat health(Welactin).

Zesty Paws began an advertising campaign claiming to be (1)the “#1 Brand of Pet Supplements in the USA,” (2) “USA’s #1 Brand of PetSupplements” and (3) the “#1 selling Pet Supplement Brand in the USA.” Nutramaxand Zesty Paws stipulated that, at relevant times, (1) the combined sales ofNutramax pet supplement products exceeded the combined sales of Zesty Paws petsupplement products and (2) the combined sales of Zesty Paws pet supplementproducts exceeded the combined sales of each individual pet supplement productsold by Nutramax, including Cosequin and Dasuquin. (This seems like a classicapples-to-oranges comparison. Zesty Paws even uses “TM” on some of itsadvertising for, e.g., the Mobility Bites, suggesting that it’s trying to havesub-brands too, though it may have dialed back on that attempt for purposes ofthis litigation.)

#1 selling pet supplements brand in the USA ad from website Mobility Bites image using TM symbol after Mobility Bites

The court found that Nutramax showed that the claims were likelyliterally false. The dispute turned on what a “brand” is; Zesty Paws arguedthat Nutramax was not a brand, but Cosequin etc. were. 

Based on the ordinary dictionary meaning of “brand,”Nutramax was a brand. Nutramax also offered two experts frombusiness/management schools who testified that Nutramax satisfied thedefinition of a “distinctive feature … that identifies goods or services.” It’sused on every package and in advertising. Zesty Paws’ arguments to the contrarycritiqued the strength of the brand, not its existence; Zesty Paws argued thatit was the #1 “driver brand” in the US, that is, “the brand name that plays theprimary driver role in a consumer’s purchase decision.”

But that didn’t create ambiguity. The ordinary meaning of “brand”didn’t include the primary driver concept. (A brand can be a limping mark!)  And there was no evidence that consumersunderstood the #1 Claims to refer to a “driver brand,” whether from expertopinion, survey, academic literature or even anecdotal evidence.

Zesty Paws’ expert’s survey didn’t address how consumers interpretedthe #1 claims. Instead, the survey respondents saw an image of Nutramax’sCosequin product and asked to specify “the brand name of the product, any othernames the product goes by, and the manufacturer of the product.” In response,“86.8 percent of respondents identified Cosequin® as the brand name of theproduct,” and “10.1 percent of respondents indicated that Nutramax Labs was thebrand of the product.” The main survey question asked, “Based on your review,what brand is this product? (Please be as specific as possible.)” That was lessabout whether respondents generally perceive NUTRAMAX to be a brand in its ownright and more about whether respondents identify NUTRAMAX to be the mostspecific brand name of the particular Cosequin product package. Both ecommercelistings and the tamper-evident seal, not shown to respondents, referencedNutramax.  “Even without these cues, 10.1percent of respondents still identified NUTRAMAX as the brand for the Cosequinproduct. Zesty Paws’ own internal brand awareness studies from about 2020through 2022 showed that NUTRAMAX frequently scored higher than ZESTY PAWS whenrespondents were presented with a list of brands that included both names.” Nordid Nutramax’s internal documents concerning a possible move to aCOSEQUIN-centered branding strategy matter, because the strategy was neverimplemented.

Market research data that aggregated sales data under one “brand”per product were also unhelpful, since there can be several brands associatedwith a product, e.g., Frito Lay® Flamin’ Hot® Cheetos®.” In other words, thatCOSEQUIN is a brand does not mean that NUTRAMAX is not also a brand. Also,Zesty Paws suggested how one of the market research entities should make thebrand comparison, encouraging it to reach out with any questions about “branddelineation” and stating, “As a reminder, please ensure all brands areevaluated at the consumer facing level (i.e. Dasuquin not Nutramax) ....” Andan expert testified that “[t]here is nothing [about] Nielsen’s processes ormotivations as a data seller that makes them an authority on what is and is nota brand.” They could be inaccurate and inconsistent, and they tracked only asmall segment of the pet supplement market.

Thus, Nutramax would likely show literal falsity.

Materiality: Nutramax’s expert testimony satisfied itsburden. One marketing expert testified that the effectiveness of various numberone claims “has been studied for a long time by academic marketers and there isvery consistent evidence that when you make a number one claim, you enhance theperceptions and the purchase of the claimed brand and you depress theperceptions and the purchase of the non-claimed brands.” He also testified thata number one claim in this case is “especially potent because ... we don’tactually get direct experience with these products and so we really have torely on these claims even more than [we] would with a product like Coke orPepsi where we get to taste it for ourselves.”

Injury: Likewise, the experts testified that this wouldlikely harm Nutramax, both in the eyes of consumers and retailers: “[t]hebelief that Zesty Paws is the market leader will likely lead retailers to giveZesty Paws more shelf space, more prominent shelf positioning and overallincreased availability of Zesty Paws products.”

Irreparable harm was presumed and not rebutted by a five-monthdelay in bringing a preliminary injunction motion because “Nutramax first sentZesty Paws a notice-of-dispute letter about the #1 Claims on July 17, 2023,shortly after learning of them. The parties then continued to exchange lettersuntil they participated in an unsuccessful mediation on December 7, 2023. ZestyPaws commenced this action on December 13, 2023, and Nutramax filed itspreliminary injunction motion on December 22, 2023.” That didn’t show any lackof worry about harm on Nutramax’s part.  

In addition, Nutramax’s experts specifically testified that,in the court’s words, “once a brand’s market leadership is lost, that loss isnearly always permanent along with the benefits brought by the marketleadership position.” He stated: “[W]hat we find from the extensive literatureis that consumers think more highly of number one brands, they perceive them tobe higher quality, they are going to purchase them more frequently, [and]they’re willing to pay more for those products because of that associatedhigher quality.” Indeed, the court summarized, “the power of signaling marketleadership is so strong that even when consumers misperceive a brand as amarket leader, the misperceived brand still accrues all of the benefits ofmarket leadership, particularly higher evaluations from consumers.” A secondmarketing expert testified that lost market share is difficult to regain due tohabit, status quo and brand loyalty.

With that out of the way, a preliminary injunction wasessentially inevitable.