Court Opinion

ID: 4285137
Source: CourtListenerOpinion
Date Created: 2018-06-18 07:00:31.842674+00
Date Added: 2024-06-11T14:35:43.673562
License: Public Domain

In the

    United States Court of Appeals
               For the Seventh Circuit
                   ____________________
No. 17-2252
ELI LILLY AND COMPANY and
ELANCO US, INC.,
                                              Plaintiffs-Appellees,

                               v.

ARLA FOODS, INC., and
ARLA FOODS PRODUCTION LLC,
                                          Defendants-Appellants.
                   ____________________

          Appeal from the United States District Court
               for the Eastern District of Wisconsin.
        No. 17-C-703 — William C. Griesbach, Chief Judge.
                   ____________________

    ARGUED SEPTEMBER 13, 2017 — DECIDED JUNE 15, 2018
                 ____________________

   Before BAUER, ROVNER, and SYKES, Circuit Judges.
   SYKES, Circuit Judge. In 2017 Arla Foods, a global dairy
conglomerate based in Denmark, launched a $30 million
advertising campaign aimed at expanding its cheese sales in
the United States. Branded “Live UnprocessedTM,” the
campaign covers all major media platforms and targets the
growing market for all-natural foods. To that end, the ads
2                                               No. 17-2252

assure consumers that Arla cheese contains no “weird stuﬀ”
or “ingredients that you can’t pronounce”—in particular, no
milk from cows treated with recombinant bovine somato-
tropin (“rbST”), an artiﬁcial growth hormone. The ﬂagship
ad in the campaign features a vivid rhetorical ﬂourish
implying that milk from rbST-treated cows is unwholesome.
Narrated by a seven-year-old girl, the ad depicts rbST as
(among other things) a cartoon monster with razor sharp
horns and electric fur.
    Enter Eli Lilly & Company and its subsidiary, Elanco US,
Inc. (collectively, “Elanco”). Elanco makes the only FDA-
approved rbST supplement and markets it under the brand
name Posilac®. Soon after the Arla ad campaign debuted,
Elanco ﬁled suit alleging that the ads contain false and
misleading statements in violation of the Lanham Act.
Elanco simultaneously moved for a preliminary injunction
and supported the motion with copies of the ads, scientiﬁc
literature documenting rbST’s safety, and evidence that a
major cheese producer had decreased its demand for rbST in
response to the ad campaign. The district judge concluded
that Elanco has a reasonable likelihood of success on the
merits and issued the requested injunction. The judge later
modiﬁed his order to cure technical deﬁciencies.
    Arla appeals, arguing that Elanco (1) failed to produce
consumer surveys or other reliable evidence of actual con-
sumer confusion; and (2) did not submit adequate evidence
linking the ad campaign to decreased demand for its rbST.
Arla also challenges the modiﬁed injunction as vague and
overbroad and lacking adequate factual ﬁndings.
   We aﬃrm. Consumer surveys or other “hard” evidence
of actual consumer confusion are unnecessary at the
No. 17-2252                                                    3

preliminary-injunction stage. And the evidence of causation
is suﬃcient at this stage of the proceedings: the harm is
easily traced because Elanco manufactures the only FDA-
approved rbST supplement on the market. Finally, the
modiﬁed injunction is suﬃciently deﬁnite and adequately
supported by the record and the judge’s ﬁndings.
                        I. Background
    On April 25, 2017, Arla rolled out a $30 million advertis-
ing campaign designed to expand its presence in the United
States. Dubbed “Live UnprocessedTM,” the campaign centers
on “Americans’ increasingly voracious desire to know more
about the products they’re eating and feeding their fami-
lies.” The campaign spans all platforms: television commer-
cials, YouTube advertisements, social-media outreach, in-
store advertising, and a website.
     Two 30-second television commercials form the center-
piece of Arla’s campaign. One is specifically at issue here.
The commercial opens with this caption: “Arla Cheese
Asked Kids: What is r[b]ST?” As the audience watches a
cartoon of a six-eyed monster and a fisherman, a seven-year-
old girl named Leah narrates: “RbST has razor sharp horns.
It’s so tall that it could eat clouds. You may want to pet it but
the fur is electric.” The commercial then cuts to a scene of
Leah enjoying a cheese sandwich, and the narrator’s voice
switches to that of an adult woman: “Actually, rbST is an
artificial growth hormone given to some cows, but not the
cows that make Arla cheese. No added hormones. No weird
stuff. Arla, live unprocessed.” A small written disclaimer
appears for a few seconds toward the end of the commercial:
“Made with milk from cows not treated with r[b]ST. No
4                                                No. 17-2252

significant difference has been shown between milk derived
from r[b]ST-treated and non r[b]ST-treated cows.”
   Other parts of the ad campaign reiterate the claim that
Arla cheese contains “no weird stuff.” Arla defines “weird
stuff” on its website:
      No artificial additives. No ingredients that you
      can’t pronounce. No ingredients that sound
      confusing or in any way like a made-up word.
      No ingredients with names that sound like
      they may be aliens with nine arms, beasts with
      electric fur, gigantic robots[,] or bears in dis-
      guise. No artificial growth hormones like
      r[b]ST.* … Nor anything else artificial[] be-
      cause our cheese has always been made with
      simple ingredients and never anything weird.
The asterisk directs readers to another part of the website
containing the same disclaimer that appears in small print in
the television commercial.
   Elanco produces and sells the only FDA-approved rbST
supplement under the brand name Posilac®. On May 19,
2017, Elanco filed suit against Arla and simultaneously
moved for a preliminary injunction. The suit alleges that
Arla’s ad campaign makes false and misleading statements
concerning the composition, health, and safety of dairy
products made from milk from rbST-treated cows. The
complaint asserts claims for violation of the Lanham Act,
15 U.S.C. § 1125(a), and the Wisconsin Deceptive Trade
Practices Act, WIS. STAT. § 100.20(1).
   As factual support for a preliminary injunction, Elanco
submitted copies of the advertisements themselves, scientific
No. 17-2252                                                 5

studies and expert testimony about the safety of rbST, the
FDA’s regulatory guidance regarding rbST-related adver-
tisements, and confidential information that a major cheese
producer chose to terminate its use of rbST partially in
response to Arla’s advertisements.
    The judge held an evidentiary hearing and thereafter
granted Elanco’s motion for preliminary injunctive relief.
After reviewing the scientific evidence submitted by the
parties, the judge found that milk from rbST-treated cows is
equally safe and healthy for human consumption as other
milk. He then concluded that Arla’s ads contain a “mislead-
ing message that cheese from cows treated with rbST is
dangerous, unhealthy, and something that you should not
feel good about feeding to your family.” The judge prelimi-
narily enjoined Arla from disseminating the ads and any
others “substantially similar thereto.” The order also prohib-
ited Arla from making claims disparaging rbST or Posilac®.
    Arla sought interlocutory review as permitted under
28 U.S.C. § 1292(a)(1). In its opening brief, Arla identified
two technical defects in the judge’s order: it impermissibly
incorporated documents by reference, and it failed to specify
which advertisements or specific promotional claims were
enjoined. In response Elanco returned to the district court
and asked the judge to cure the technical problems in a
modified order. The judge did so, issuing a modified injunc-
tion pursuant to Rule 62(c) of the Federal Rules of Civil
Procedure.
                       II. Discussion
    To win a preliminary injunction, the moving party must
establish that (1) without preliminary relief, it will suﬀer
6                                                         No. 17-2252

irreparable harm before ﬁnal resolution of its claims;
(2) legal remedies are inadequate; and (3) its claim has some
likelihood of success on the merits. BBL, Inc. v. City of Angola,
809 F.3d 317, 323–24 (7th Cir. 2015). If the moving party
makes this showing, the court balances the harms to the
moving party, other parties, and the public. Id.
   For purposes of this appeal, Arla concedes that rbST-
derived dairy products are of the same quality, nutrition,
and safety as other dairy products. 1 Arla instead focuses on
whether Elanco produced suﬃcient evidence to establish a

1 Arla would have trouble contesting the point anyway. The FDA has
twice conﬁrmed the safety of rbST-derived dairy products. It initially
approved Posilac® in 1993 after determining that rbST “is safe and
eﬀective for dairy cows, that milk from rbST-treated cows is safe for
human consumption, and that production and use of the product do not
have a signiﬁcant impact on the environment.” Interim Guidance on the
Voluntary Labeling of Milk and Milk Products from Cows that Have Not
Been Treated with Recombinant Bovine Somatotropin, 59 Fed. Reg. 6279,
6279–80 (Feb. 17, 1994). The FDA reexamined the possible health risks of
rbST in 2016, conﬁrming that rbST is “safe and eﬀective for its intended
uses and that there is no signiﬁcant diﬀerence between milk from cows
treated with [rbST] and untreated cows.” U.S. FOOD & DRUG ADMIN.,
U.S. DEP’T OF HEALTH & HUMAN SERVS., CITIZEN PETITION DENIAL
RESPONSE FROM FDA CDER TO THE CANCER PREVENTION COALITION, ET
AL., 16 (Mar. 21, 2016), https://www.regulations.gov/document?D=FDA-
2007-P-0119-0007.
     In 2014 a joint panel of the United Nations and World Health Organ-
ization also found “no evidence to suggest that the use of rbSTs would
result in a higher risk to human health.” World Health Organization,
Food and Agriculture Organization of the United Nations, Joint
FAO/WHO Expert Committee on Food Additives, Evaluation of Certain
Veterinary Drug Residues in Food, WHO TECHNICAL REPORT SERIES 988, 78
(2014), http://apps.who.int/iris/bitstream/10665/127845/1/9789241209885_
eng.pdf?ua=1.
No. 17-2252                                                        7

likelihood of success on the merits of its Lanham Act claim.
We review an order granting a preliminary injunction for
abuse of discretion. Id. at 324. Arla also challenges the scope
of the injunction, arguing that it is vague and overbroad and
does not meet various formal requirements of Rule 65(d) of
the Federal Rules of Civil Procedure. We review these ques-
tions of law de novo. Lineback v. Spurlino Materials, LLC,
546 F.3d 491, 504 (7th Cir. 2008).
A. Likelihood of Success on the Merits
    To prevail on a deceptive-advertising claim under the
Lanham Act, a plaintiﬀ must establish that (1) the defendant
made a material false statement of fact in a commercial
advertisement; (2) the false statement actually deceived or
had the tendency to deceive a substantial segment of its
audience; and (3) the plaintiﬀ has been or is likely to be
injured as a result of the false statement. 2 Hot Wax, Inc. v.
Turtle Wax, Inc., 191 F.3d 813, 819 (7th Cir. 1999). We have
recognized two types of actionable statements under the
Lanham Act: those that are literally false and those that are
literally true but misleading. Id. at 820. The evidence re-
quired to satisfy the ﬁrst two elements of the claim varies
according to the type of statement at issue.
    A literally false statement will necessarily deceive con-
sumers, so extrinsic evidence of actual consumer confusion
is not required. Id. We have characterized statements in this
category as “bald-faced, egregious, undeniable, [and] over
the top.” Schering-Plough Healthcare Prods., Inc. v. Schwarz

2 Elanco’s Lanham Act claim is the main event at this stage of the
proceedings. The state-law claim is largely duplicative, so the judge
didn’t need to say much about it and neither do we.
8                                                   No. 17-2252

Pharma, Inc., 586 F.3d 500, 513 (7th Cir. 2009). The inquiry
asks whether the defendant made an explicit representation
of fact that on its face conﬂicts with reality. See BASF Corp. v.
Old World Trading Co., 41 F.3d 1081, 1091 (7th Cir. 1994). For
example, if Arla’s television commercial had said, “drinking
milk from cows treated with rbST gravely endangers your
health,” Elanco would need no additional evidence of
consumer confusion to prevail on its claim.
    Arla’s ads make no explicit false claims about the compo-
sition of or dangers posed by milk from rbST-treated cows.
Indeed, the explicit statements about rbST are factually
accurate: RbST is an artiﬁcial growth hormone given to some
cows, and Arla does not use milk from those cows. We
therefore leave to one side Elanco’s contention that Arla’s ad
campaign contains literally false statements.
    For the other category of actionable statements—those
that are literally true but misleading—the plaintiﬀ ordinarily
must produce evidence of actual consumer confusion in
order to carry its burden to show that the challenged state-
ment has “the tendency to deceive a substantial segment of
its audience.” Hot Wax, 191 F.3d at 819–20. The parties agree
that at trial this evidence typically comes in the form of
consumer surveys. They dispute, however, whether Elanco
was required to conduct consumer surveys or produce other
hard evidence of actual consumer confusion in order to win
a preliminary injunction.
   We’ve held that “such proofs are not required at the pre-
liminary injunction stage.” Abbott Labs. v. Mead Johnson & Co.,
971 F.2d 6, 15 (7th Cir. 1992). It’s not feasible to require a
Lanham Act plaintiﬀ to conduct full-blown consumer sur-
veys in the truncated timeframe between ﬁling suit and
No. 17-2252                                                9

seeking a preliminary injunction. Here the judge properly
analyzed whether the evidence Elanco submitted at this
stage—the ads themselves, the regulatory guidance, and the
evidence of decreased demand—established a likelihood of
success on the merits. Consumer surveys were unnecessary.
    The judge permissibly scrutinized the content of Arla’s
ads to determine whether they convey a misleading mes-
sage. Some of that content is mundane and noncontrover-
sial—for example, the characterization of Arla cheese as a
food “[y]ou can feel good serving … to the whole family.”
But the ad campaign centers on disparaging dairy products
made from milk supplied by rbST-treated cows. The ads
draw a clear contrast between Arla cheese (high quality,
nutritious) and cheese made from rbST-treated cows (im-
pure, unwholesome). The use of monster imagery, “weird
stuﬀ” language, and child actors combine to colorfully
communicate the message that responsible consumers
should be concerned about rbST-derived dairy products. The
judge reasonably concluded that these ads are likely to
mislead consumers about the wholesomeness of products
made from milk supplied by rbST-treated cows.
   Regulatory guidance supports the judge’s conclusion.
The FDA has warned that ads concerning rbST may be
misleading if not placed “in proper context.” Interim Guid-
ance on the Voluntary Labeling of Milk and Milk Products
from Cows that Have Not Been Treated with Recombinant
Bovine Somatotropin, 59 Fed. Reg. 6279, 6280 (Feb. 17, 1994).
Specifically, when a food advertisement states that the
product is made “from cows not treated with rbST,” the
FDA recommends that the ad also include the following
disclaimer: “No significant difference has been shown
10                                                            No. 17-2252

between milk derived from rbST-treated and non-rbST-
treated cows.” Id.
   Arla’s ads do not provide this needed context. True, the
FDA’s recommended disclaimer appears in the ad cam-
paign, but only in tiny print in the television commercial and
in an obscure location on the webpage. Neither disclaimer
dispels the central message of these advertisements: that
cheese made from milk supplied by rbST-treated cows is
unwholesome.
    Elanco also introduced conﬁdential evidence that a major
cheese producer decided to cease using milk from rbST-
treated cows based in part on Arla’s ads. To be sure, this
evidence of decreased demand does not reﬂect actual con-
sumer confusion. But given the cheese producer’s economic
incentive to accurately predict consumer demand, its con-
cern about the ad campaign’s impact on consumers supports
the judge’s conclusion that the ads convey a misleading
message about rbST. Given Arla’s concession that rbST-
derived dairy products are no diﬀerent than other dairy
products, all the available evidence at this stage—the ads
themselves, the FDA’s regulatory guidance, and the evi-
dence of decreased demand—points in the same direction:
Elanco has a reasonable likelihood of success on the merits
of its Lanham Act claim. 3

3 Elanco argues in the alternative that Arla’s ads are false by necessary
implication. This Lanham Act doctrine allows a plaintiﬀ to bypass
presenting evidence of consumer confusion altogether “[i]f the words or
images, considered in context, necessarily imply a false message.” Time
Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 158 (2d Cir. 2007). At
least ﬁve other circuits use this “misleading per se” doctrine for Lanham
Act claims. See id.; Scotts Co. v. United Indus. Corp., 315 F.3d 264, 274 (4th
No. 17-2252                                                               11

    Arla next attacks the suﬃciency of the evidence on the
element of causation—that is, whether Elanco established a
likelihood of success that the ads actually drove away cus-
tomers. Causation requires proof of an injury to a commer-
cial interest in sales or business reputation proximately
caused by the defendant’s misrepresentations. Lexmark Int’l,
Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1395
(2014).
    As an initial matter, Arla contends that the judge im-
properly skipped the causation question in his preliminary-
injunction analysis. Not so. After concluding that Arla’s ads
are misleading, the judge speciﬁcally addressed Elanco’s
evidence that a major cheese producer stopped using milk
from rbST-treated cows based in part on the ad campaign.
    A more extended treatment of the causation question was
largely unnecessary given how easy it is to trace Elanco’s
harm. Elanco sells the only FDA-approved rbST supplement
in the United States, so any false or misleading advertising
regarding rbST that decreases demand for the supplement
will necessarily harm Elanco. And Elanco’s evidence of a
large cheese producer’s response to Arla’s ad campaign is
suﬃcient factual support for the judge’s decision to issue a
preliminary injunction. Nothing more was needed at this
stage.

Cir. 2002); Clorox Co. P.R. v. Proctor & Gamble Commercial Co., 228 F.3d 24,
34–35 (1st Cir. 2000); Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134,
1139 (9th Cir. 1997); Castrol Inc. v. Pennzoil Co., 987 F.2d 939, 946–47 (3d
Cir. 1993). Because we agree with the judge that Elanco presented
suﬃcient evidence of consumer confusion at this stage of the proceed-
ings, we do not need to consider the alternative theory that the ads are
false by necessary implication.
12                                                  No. 17-2252

B. Challenges to the Form of the Injunction
    As we’ve noted, in its opening brief, Arla raised several
objections to the form of the original injunction. At Elanco’s
request, the judge issued a modiﬁed injunction responding
to these objections. That’s a permissible procedure. The civil
rules allow the district court to modify an injunction to
maintain the status quo pending appeal. FED. R. CIV. P. 62(c).
More to the point, the court is authorized to “aid[] in the
appeal” by resolving technical objections or clarifying
imprecise wording. See Dixon v. Edwards, 290 F.3d 699, 709
n.14 (4th Cir. 2002). The judge did just that when he issued
the modiﬁed injunction.
    Arla continues to press some of its objections to the form
of the injunction. Most prominently, it contends that the
injunction is vague and overbroad, so we’ll start there.
Rule 65 requires that every injunction “(A) state the reasons
why it issued; (B) state its terms speciﬁcally; and (C) describe
in reasonable detail—and not by referring to the complaint
or other document—the act or acts restrained or required.”
FED. R. CIV. P. 65(d).
   The speciﬁcity requirements in the rule “spare[] courts
and litigants from struggling over an injunction’s scope and
meaning by informing those who are enjoined of the speciﬁc
conduct regulated by the injunction and subject to con-
tempt.” Patriot Homes, Inc. v. Forest River Hous., Inc., 512 F.3d
412, 415 (7th Cir. 2008) (internal quotation marks omitted).
Whether a particular injunction is overbroad or vague is
necessarily a highly fact-bound inquiry. “[An] injunction
must … be broad enough to be eﬀective, and the appropriate
scope of the injunction is left to the district court’s sound
No. 17-2252                                                13

discretion.” Russian Media Grp., LLC v. Cable Am., Inc.,
598 F.3d 302, 307 (7th Cir. 2010).
    Section 1 of the modiﬁed injunction prohibits Arla from
disseminating the advertisement attached as Exhibit 1 to the
order (we’ve described it above) and “any other advertise-
ment substantially similar thereto” that “claims, either
directly or by implication,” that rbST or Posilac® is “a
massive beast, animal, or monster” with “razor sharp
horns,” or “is so tall it could eat clouds,” or has “electric
fur,” or “electrocutes or harms people.” This section of the
injunction also prohibits Arla from disseminating any adver-
tisement that claims or implies that rbST or Posilac® is
anything other than an artiﬁcial hormone that prolongs the
lactation of dairy cows.
    Arla insists that the “substantially similar” language is
vague and overbroad. We disagree. The Lanham Act’s
prohibition on implied falsehoods makes the use of some-
what inexact language unavoidable. See Scandia Down Corp.
v. Euroquilt, Inc., 772 F.2d 1423, 1432 (7th Cir. 1985) (“When
the diﬃculty stems from the inability of words to describe
the variousness of experience, the court may prefer brief
imprecise standards to prolix imprecise standards.”). Read
as a whole, the modiﬁed injunction essentially prohibits Arla
from portraying rbST as something it’s not. That’s suﬃcient-
ly deﬁnite, especially when considered in the context of the
rest of the order. See S.C. Johnson & Son, Inc. v. Clorox Co.,
241 F.3d 232, 238 (2d Cir. 2001) (ﬁnding a bar on “false or
misleading descriptions” suﬃciently speciﬁc when read in
the context of the district court’s orders).
    Arla also objects to section 2(e) of the modiﬁed injunc-
tion, which prohibits any advertisement that claims, “either
14                                                 No. 17-2252

directly or by implication,” that “consumers should not feel
‘good about eating’ or ‘serving to [their] friends and family’
dairy products made from milk of cows supplemented with
rbST or Posilac®.” Arla objects that this part of the injunction
forecloses any positive statement that its own products are
“something you should feel good about eating.” That fear is
unfounded. The prohibited negative inference can arise only
if an Arla advertisement speciﬁcally mentions rbST or
Posilac® in a disparaging way. Nothing in the injunction
prohibits Arla from claiming that consumers can feel good
about eating its own products.
    Finally, Arla argues that the modified injunction lacks
adequate factual findings. Two rules govern here.
Rule 52(a)(2) of the Federal Rules of Civil Procedure requires
that the court “state the findings and conclusions that sup-
port its action.” Rule 65(d)(1) requires that every injunction
“state the reasons why it was issued.” A court “need only
make brief, definite, [and] pertinent findings” to support its
order. FED. R. CIV. P. 52 advisory committee’s note to 1946
amendment.
    Arla first complains that section 2(a) of the injunction
broadly prohibits any statements claiming that rbST is
“dangerous or unsafe,” but the judge’s factual finding in
support of this prohibition says only that rbST-derived dairy
products are not dangerous or unsafe for human consumption.
This is hair-splitting. Rule 52(a)(2) does not require “over-
elaboration of detail” or “particularization of facts.” Id. This
case concerns Arla’s misleading advertising claims about the
safety of rbST-derived dairy products for human consump-
tion; it has nothing to do with other uses of rbST-derived
dairy products. There is no ambiguity here.
No. 17-2252                                                15

   Second, Arla contends that the judge’s factual findings
do not adequately support Section 2(e) of the injunction,
which again prohibits any direct or implied claim that
consumers should not feel “good about eating” cheese made
from milk supplied by rbST-treated cows. To the contrary,
the order traces the scientific evidence regarding rbST before
concluding that milk from rbST-treated cows is just as safe
and healthy as other milk.
   In sum, we find no abuse of discretion, no substantive
legal error, and no defect in the form or content of the in-
junction. The judge’s order therefore is
                                                   AFFIRMED.
16                                                No. 17-2252

    ROVNER, Circuit Judge, concurring in part and concurring
in the judgment. I join all but one discrete portion of Judge
Sykes’ well-reasoned opinion. For purposes of this interlocu-
tory appeal, Arla has not challenged the district court’s find-
ing that its advertisements are likely to mislead consumers.
Apart from arguing (erroneously, I agree) that Elanco was
required to submit proof of actual consumer confusion at
this stage of the proceedings, Arla has not quarreled with the
district court’s preliminary analysis of the content of the ads
and the message they convey to consumers. See Arla Reply
Br. 10. Consequently, there is no need for us to address that
aspect of Elanco’s Lanham Act claim at this time.