When should a misleadingness claim be dismissed on the pleadings?

Everett Laboratories, Inc. v. River’s Edge Pharmaceuticals, LLC, 2010 WL 1424017 (D.N.J.)

The parties compete in the market for prenatal vitamins. Everett asserted patent and trademark claims. River’s Edge counterclaimed for, among other things, false advertising, arguing that Everett falsely advertised its VITAFOL as FDA “approved” and falsely claimed that VITAFOL was a registered trademark. Everett argued that it only advertised VITAFOL as “FDA-regulated” and that VITAFOL is a registered mark.

The question was whether Everett’s ad describing VITAFOL as an “FDA regulated, prescription nutritional product[ ]” would lead consumers to believe that it was FDA-approved. The court didn’t address Everett’s FDA preclusion argument because it found the counterclaim insufficiently well-pled under Rule 8(a). Because the claim was misleadingness and not falsity (thus requiring evidence of consumer perception), and because River’s Edge only baldly asserted that the ad was “likely to cause confusion, or to cause mistake, or to deceive as to the approval” of VITAFOL, there was no basis for the court fo find that consumers would be misled. This was mere conjecture as to the effect of Everett’s language and thus failed to state a claim.

Comment: This approach, if it catches on and if it means more than that the plaintiff must explain its theory of how consumers are misled in more detail, might be a big deal, especially if courts apply it to cases in which falsity and misleadingness are pled in the alternative. Kicking out a misleadingness claim at the pleading stage would change many cases substantially.

River’s Edge also argued that the actual registered mark is VITAFÔL, with a diacritical mark over the O. Everett argued tacking: if an alteration is not material and creates the same commercial impression, it’s not abandoned. The court found that the difference between the two forms was too small to render VITAFOL unprotected by actual registration of VITAFÔL. The overall commercial impression was the same and the key element was preserved. Thus, the counterclaim was dismissed. (Materiality would have seemed to be an obvious barrier, too, but that might not work on a motion to dismiss, though I can easily see an aggressive application of Iqbal/Twombly, not dissimilar to what the court did with the misleadingness claim, that would have done so.)