Opinion ID: 704085
Heading Depth: 3
Heading Rank: 2

Heading: Implicit Reference to Food Plus

Text: 8 Although Omicron's letter contains no literally false statement about Food Plus, the Lanham Act encompasses more than blatant falsehoods. It embraces innuendo, indirect intimations, and ambiguous suggestions evidenced by the consuming public's misapprehension of the hard facts underlying an advertisement. Vidal Sassoon, Inc. v. Bristol-Myers Co., 661 F.2d 272, 277 (2d Cir.1981) (internal quotation omitted); see Better Business Bureau of Metropolitan Houston, Inc. v. Medical Directors, Inc., 681 F.2d 397, 400 (5th Cir.1982). Omicron's letter warned pharmacists to beware of anyone attempting to sell a product just like Food Source One or one that replaces Food Source one. In light of Group W's impending promotion of Food Plus as a substitute product, this language at least implied that Food Plus infringed on rights associated with Food Source One. 9 Where a statement is not literally false and is only misleading in context, however, proof that the advertising actually conveyed the implied message and thereby deceived a significant portion of the recipients becomes critical. See Johnson & Johnson-Merck Consumer Pharmaceuticals Co. v. Rhone-Poulenc Rorer Pharmaceuticals, Inc., 19 F.3d 125, 129-30 (3d Cir.1994); Johnson & Johnson  Merck Consumer Pharmaceuticals Co. v. Smithkline Beecham Corp., 960 F.2d 294, 297-98 (2d Cir.1992) (requiring plaintiff to demonstrate that a statistically significant part of the commercial audience holds the false belief allegedly communicated by the challenged advertisement); 3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, Sec. 27.07[d] (3d ed. 1992) [hereinafter McCarthy]. Omicron clearly had the right to advise pharmacists that it would defend its intellectual property rights vigorously and to ask that they assist in this effort by informing Omicron of any potentially infringing products. Although the context of the letter and some of its language may have intimated that Food Plus was an infringing product, Group W should not be permitted to receive damages from Omicron in the absence of evidence that this was the message Omicron's letter actually conveyed to recipients and that the recipients were therefore deceived. 10 Group W failed to meet its burden of demonstrating that a significant portion of the pharmacists who received Omicron's letter interpreted it as implying that Food Plus was an infringing product. Of the three hundred pharmacies who received the letter, Group W presented testimony of two pharmacists who thought the letter referred to Food Plus, as well as similar testimony from an employee of one of these pharmacists. The only other supporting evidence consisted of statements from the president and an employee of Group W, who recounted telephone calls from pharmacists expressing concern that buying Food Plus might create legal difficulties. Group W's president identified six pharmacists other than the two who testified, while the employee was only able to say that she received several such calls. 11 Crediting the hearsay testimony of Group W's president, Group W thus produced evidence that eight of the three hundred pharmacists--less than 3%--interpreted Omicron's letter as referring to Food Plus. Such a small percentage does not constitute proof that a significant portion of recipients were deceived. See Johnson & Johnson-Merck, 19 F.3d at 133-34 (finding a showing that 7.5% of advertising recipients were deceived insufficient under Lanham Act); 4 McCarthy Sec. 32.54 (noting that courts have found evidence sufficient where 21 to 34 percent of the recipients were deceived); cf. id. Sec. 32.54[c] (stating that in the related context of trademarks, a showing that less than 10% of consumers were confused is evidence that confusion is not likely). 12 Group W's failure to establish that a significant number of consumers were actually deceived is not necessarily fatal to its case. If Omicron intentionally misled consumers, we would presume consumers were in fact deceived and Omicron would have the burden of demonstrating otherwise. 2 See Harper House, 889 F.2d at 209; U-Haul Int'l, Inc. v. Jartran, Inc., 793 F.2d 1034, 1040-41 (9th Cir.1986). The district court made no explicit finding that Omicron acted with the intent to deceive the recipients of the letter. 3 13 However, some of the district court's findings suggest the court may have implicitly found that Omicron intentionally attempted to deceive. In particular, the court found that Omicron knew of Group W's impending product launch before sending the letter and that Omicron's false representations were knowingly made. Given the inconclusive state of the record, we remand to allow the district court to make an explicit finding as to whether Omicron acted with the intent to deceive. 14 REVERSED AND REMANDED.