7th Circuit allows nationwide injunction under Illinois consumer protection law

Rebecca Tushnet's 43(B)log 2025-04-28

Republic Technol. (NA), LLC v. BBK Tobacco & Foods, LLP,--- F.4th ----, 2025 WL 1201401, No. 23-2973, No. 23-3096 (7^th Cir.2025)

Republic and BBK (aka HBI) compete in the market for organichemp rolling papers for cigarettes. Republic uses the brand name OCB, while HBIsells, inter alia, a house brand known as “RAW.” Republic sued HBI in 2016seeking a declaration that its OCB trade dress did not infringe HBI’s RAW tradedress for its RAW papers and later added false advertising claims; HBIcounterclaimed, asserting infringement. (Previousdistrict court decisions.)A jury delivered a mixed verdict on the infringement claims, and the districtcourt permanently enjoined some of HBI’s advertising practices. The injunctionrequired HBI’s advertisements to “either clearly constitute permissible opinion... or be factual statements for which HBI maintains tangible, objective,verification.” Both sides appealed, andthe court of appeals affirmed. I’m only going to discuss a couple of theissues.

The jury asked, during deliberations, “Is there a definitionof ‘consumer’? Is that only the End User of the product or including anyone whopurchases the product?” The court told them to review the instructions. Thoseinstructions stated, inter alia, that false advertising requires that astatement “actually deceived or had the tendency to deceive a substantialsegment of HBI’s audience” and “was likely to influence the purchasingdecisions of consumers.” Refusing to clarify that false advertising toretailers was actionable, as Republic asked the court to do, was not an abuseof discretion. The reference to “audience” was “the closest thing to an answerto the jury’s question in the original instructions” and it “resolved the issuein Republic’s favor.” Plus, even if the jury focused on end users, Republicpresented evidence at trial that HBI’s statements misled that group. The courtwasn’t convinced that an extra answer to the jury could reasonably have changedthe result.

On trade dress infringement, the promotional OCB 99-cent24-pack had red lettering, and a full-priced 36-pack with brown lettering; theRAW packaging had bright red lettering. The jury found that Republic’s OCB99-cent red packaging infringed the RAW trade dress but that its full-pricedbrown packaging did not. Although the different name was relevant, a reasonablejury could still have found infringement.

RAW papers

OCB regular

OCB promotional size

The jury heard expert testimony that “some consumers are likely to make quick decisions, without paying much attention when choosing cigarette rolling papers.” “Some evidence tended to show actual customer confusion, including statements from HBI executives that customers and retailers wondered about the relationship between OCB and RAW.” The jury considered competing expert surveys. And there was evidence that a Republic employee conducted market research on the HBI product and proposed that Republic use a similar color scheme in releasing its own product in Europe— “allowing a reasonable jury to infer that Republic intended to ‘palm off’ its product as at least related to HBI’s.” The jury’s confusion finding wasn’t irrational. It “had the opportunity to view side-by-side comparisons of the trade dresses and saw pictures of the products next to each other on store shelves.” Both products “had a brown button on the side, distressed fonts, textured backgrounds, green accents, large red fonts, and three-letter labels.” And the jury’s verdict on the full-price package suggested that it considered likely confusion carefully [or at least unfairness]. Although the distinct product names “make this case a relatively close one, even with our deferential review under Rule 50,” they didn’t justify a finding of noninfringement as a matter of law. “Products may share an affiliation—reflected by similar trade dress—despite different names,” and the court specifically pointed to “testimony from HBI representatives that retailers asked whether OCB was a RAW product.”

side by side view

HBI challenged the injunction as improperly vague and overbroad, and also argued that it should apply only in Illinois rather than having nationwide scope.

Rule 65(d)(1) requires an order granting any injunction to “state its terms specifically” and to “describe in reasonable detail ... the act or acts restrained or required.” District courts may craft injunctions that are “broad enough to be effective, and the appropriate scope of the injunction is left to the district court’s sound discretion.” HBI argued that it was unclear when a statement “clearly constitute[s] permitted opinion,” or when a statement is factual and requires “tangible, objective, verification.” “This argument reflects HBI’s dissatisfaction with the lack of sharp contours in false advertising law.” But a “prohibition on implied falsehoods makes the use of somewhat inexact language unavoidable.”

Courts regularly distinguish between fact and opinion, in false advertising cases and elsewhere.

This injunction was “sufficiently definite” “because it reflects that legal reality. It simply adds some requirements—like maintaining factual verification—to ensure that HBI complies with the law.”

What about the possibility of contempt proceedings on the basis of “harmless and immaterial statements,” such as that rolling paper is brown, or that rolling papers were used in Catalonia in the 1600s? Although “the law does not typically mandate affirmative verification of factual statements, ‘[a] federal court has broad power to restrain acts ... whose commission in the future unless enjoined, may fairly be anticipated from the defendant’s conduct in the past.’” Here, the district court found that HBI had a proven tendency to make unsupported claims in advertising and “a proclivity to attempt to evade court orders.”

As for nationwide scope, HBI’s last argument is that the district court’s injunction should be limited to “conduct occurring primarily and substantially within the State of Illinois.” This was because the jury rejected Lanham Act liability but found a violation of Illinois’s consumer protection law and thus, HBI reasoned, it shouldn’t be held to that standard nationwide. “On the facts of this case, at least, we disagree and affirm the nationwide scope of the permanent injunction, subject of course to the district court’s continuing jurisdiction and power to modify the injunction.”

The limiting principle is generally that “injunctive relief should be no more burdensome to the defendant than necessary to provide complete relief to the plaintiffs.” There were no comity considerations here. Although several states—including Arizona, where HBI is headquartered—have not adopted the Uniform Deceptive Trade Practices Act, HBI didn’t contend that any state permits false or misleading statements of fact in advertising. Thus, there was no showing that other states’ laws differed in ways material to the injunction. “Given the jury’s finding that HBI either misrepresented certain goods or engaged in other conduct that similarly created a likelihood of confusion or misunderstanding, we see no reason to oblige Republic to file separate suits in all 50 states to vindicate its rights to be free from unfair trade practices—rights that come from well-established and relatively uniform principles of state law.”

“However, if HBI engages in advertising activities unrelated to the facts at issue in this case—or that have no connection to Illinois—it may seek ‘clarification or modification’ of the injunction from the district court to ensure that its activities do not run afoul of the injunction.”

Judge Scudder concurred “to underscore my understanding that HBI engages in nationwide advertising, meaning that any application of the district court’s injunction always and necessarily will apply to promotional activities within Illinois. The court’s opinion takes care to recognize that the legal analysis of the injunction’s scope could be different if that fact changes.”

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