Wednesday, April 13, 2011

Unsubstantiated safety claim can be literally false

Guidance Endodontics, LLC v. Dentsply International, Inc., 2011 WL 1336473 (D.N.M.)

Earlier discussion here. Guidance sued Dentsply, a much larger company that both competes with and supplies Guidance. Dentsply counterclaimed; it went badly for Guidance.

One counterclaim involved false advertising under the Lanham Act. Though the court held that some of the allegedly false claims were mere puffery, it allowed others to proceed. The claims that survived related to the following statements: "[n]ow you can treat every case better, quicker and safer with EndoTaper"; and EndoTaper "files can be used like ProTaper F1 to F5 or used in a Crown-Down like ProFile, GT, Endo Sequence, or K3 to create the perfect canal shape more efficiently and easier than any other file system." At a jury trial, the jury evaluated these statements as well as the more general claim that Guidance falsely advertised that the EndoTaper is efficient, safe and flexible. The jury found that Guidance had willfully falsely advertised, awarding $93,000 to Dentsply. (There was also a much larger punitive damages award not at issue in this ruling.)

Guidance moved for judgment as a matter of law, holding that there was insufficient evidence for a reasonable jury to arrive at this verdict. On such a motion, the judge must draw all reasonable inferences in favor of the nonmoving party.

Puffery is a claim that consumers would not take seriously because of its vagueness. Context matters, so the relative expertise of the speaker and the listener matter. Moreover, “the larger the audience the more likely it is that the statement is puffery.” As I said before, this is often untrue—think of DTC drug ads—and of course is often at least counterbalanced with the relative expertise consideration given the information mismatch between mass advertisers and their audiences. The only situation in which this principle really makes sense involves comparing the statement “this investment is a good one for you” when made by an individual with knowledge of the plaintiffs’ particular circumstances—less likely to be puffing—with the same statement made in a TV ad. The cited case, Alpine Bank v. Hubbell, 555 F.3d at 1106-07, is not to the contrary, since it says that "mass advertising expressed in vague terms (as in political campaigns) is not relied on by rational adults.").

Anyway, Guidance argued that the three statements at issue were puffery and hadn’t been shown to be false. The court disagreed. Using superlatives alone didn’t make the statements puffery. Whether one product is “quicker” or “safer” than another is testable, and a reasonable consumer might believe testing had occurred. Likewise, characterizing EndoTaper as "efficient, safe and flexible” involved statements of fact, not vague generalities. (I can see a court coming out the other way on this. The vagueness question is: how efficient does something have to be before it is “efficient”? How do we measure that—cost, dentist-hours, something else? How safe does it have to be in order to be “safe”? If, however, there are general standards in the industry for efficiency, safety, and flexibility, then the puffery argument gets more difficult.)

After that, the court found that there was sufficient evidence to support the jury’s finding of falsity as to safety. There were a couple of instances of apparent malfunction in the record, plus testimony that “the sharper the file, the less safe it is.” EndoTaper was apparently sharper than other designs. While there was testimony that some doctors would prefer sharper to safer files, this testimony did not help make the “safer” or “safe” claims true.

In addition, the court held that “a reasonable consumer might believe that Guidance Endodontics had engaged in some sort of testing before making statements that the EndoTaper was ‘safe’ and ‘safer.’” Guidance didn’t do any testing, therefore this (implicit) claim was false because it was utterly unsubstantiated (citing Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharm. Co., 290 F.3d 578 (3rd Cir. 2002)). Though the court says this isn’t a necessary implication case, this part of it is—given the nature of the claim and the nature of the product, consumers would expect substantiation, which wasn’t present.

For the same reason—absence of substantiation through testing—there was sufficient evidence to support the jury’s verdict of falsity on the claim that the EndoTaper could create “the perfect canal shape more efficiently and easier than any other file system.” In addition, Guidance’s ads also claimed that a different product was “easier” than any other file system, creating a contradiction.

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