Companies spend an immense amount of time on advertising and sending out messages to consumers. Competitors often do not like or agree with those messages. But can competitors turn that dislike into a claim for false advertising under the Lanham Act? Not always, as the United States District Court for the Eastern District of Michigan recently dismissed false advertising claims brought by energy drink maker Vitamin Energy, Inc. against International IP Holdings, LLC and Innovation Ventures, LLC (“Innovation Ventures”), the makers of 5-HOUR ENERGY energy shots.
The parties' conflict began as a trademark infringement dispute, when Innovation Ventures sued Vitamin Energy over the use of phrases such as 7 HOURS of ENERGY, which Innovation Ventures asserted was similar to its own 5-HOUR ENERGY trademarks. Vitamin Energy—which began selling VITAMIN ENERGY energy shots in 2017—responded with a claim for false advertising against Innovation Ventures. Vitamin Energy challenged several of Innovation Ventures' advertisements, including use of the 5-HOUR ENERGY trademark itself and statements that consuming 5-HOUR ENERGY shots would “recharge your batteries all the way back to 100%, fast.”
Innovation Ventures moved to dismiss Vitamin Energy's false advertising claim for lack of subject matter jurisdiction and failure to state a claim. To establish subject matter jurisdiction, Vitamin Energy needed to show (1) that it was within the “zone of interests” protected by the Lanham Act and (2) that its injury was proximately caused by Innovation Ventures' violation of the Act. The court found that Vitamin Energy was within the “zone of interests” because it asserted that Innovations Ventures' false and/or misleading advertisements influenced consumers' purchasing decisions, resulting in both economic and reputational injury to Vitamin Energy. As for proximate cause, Vitamin Energy could not establish that it had been injured by ads that Innovation Ventures discontinued before Vitamin Energy was founded. However, because one of the challenged campaigns was still running on 5-HOUR ENERGY's YouTube channel and Innovation Ventures was still using the phrase “5-HOUR ENERGY” in its ads, the court found that Vitamin Energy could establish subject matter jurisdiction with respect to those statements.
Moving to the motion to dismiss for failure to state a claim, the court noted that a false advertising claim under the Lanham Act requires the plaintiff to allege that: (1) the defendant made false or misleading statements concerning his own product or another's; (2) the statement actually deceives or tends to deceive a substantial portion of the intended audience; (3) the statement was material in that it would likely influence the deceived consumer's purchasing decisions; (4) the advertisements were introduced into interstate commerce; and (5) there was some causal link between the challenged statements and harm to the plaintiff.
The court found that the “back to 100% energy” statements were unsupported claims about the 5-HOUR ENERGY product, were literally false, and could be used to establish a Lanham Act violation without evidence that the statements actually misled consumers. The court also found that, even if the statements were not literally false, they could be misleading, as “a reasonable consumer could be deceived by the context of the statements and images in the[] advertisements.”
The court then moved to the fifth element, which required Vitamin Energy to plead a causal link between the challenged advertisements and harm to Vitamin Energy. In its claim, Vitamin Energy described a “hypothetical scenario where an exhausted truck driver, in reliance on Innovation Ventures' deceptive advertising, consumes a 5-HOUR ENERGY shot under the impression that his/her energy will be immediately restored to 100% for the long drive ahead.” Vitamin Energy also alleged that Innovation Ventures' false advertising influenced consumer purchasing decisions, resulting in economic and reputational injury to Vitamin Energy. The court ultimately found that Vitamin Energy's allegations were conclusory and did not include the factual allegations needed to establish a causal link. As a result, it granted Innovation Ventures' motion to dismiss.
Vitamin Energy attempted to fix its deficient claim by asking the court for permission to amend it, but the court denied the motion as futile. The court observed that “none of [Vitamin Energy's] arguments allege new facts that establish that [Innovation Ventures'] actions caused [Vitamin Energy's] alleged injuries. All of [Vitamin Energy's] arguments are conclusory and speculative.” Because Vitamin Energy's proposed amended claim still did not make out a proper cause of action for false advertising, the court denied Vitamin Energy leave to amend.
The case is Int'l IP Holdings, LCC v. Vitamin Energy, Inc., Case No. 19-11716 (E.D. Mich., Oct. 4, 2023).
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