Previously, the
court denied Generac’s motion for a Lanham Act preliminary injunction on the
ground that materials sent to over 1200 dealers weren’t commercial advertising
or promotion. After the Seventh
Circuit’s decision in Neuros
Co., Ltd. v. KTurbo, Inc., 698 F.3d 514 (7th Cir. 2012), the court granted
Generac’s motion for reconsideration on that point.
Generac had already established that Kohler's statement that
the Generac Generator lacks a “Low–Speed Diagnostic Exercise” was literally
false. Falsity was enough to lead to a finding of irreparable injury in the
context of comparative advertising (citing McCarthy and Axiom).
Kohler argued that injunctive relief was moot because the
offending handbook was no longer in circulation. Still, Generac argued that, to avoid the
lingering impact of the false advertising, Kohler should be required to inform
dealers and distributors of the falsity of its statements and to instruct them
to destroy the old handbook. The question was whether the harm Generac would
suffer in the absence of an injunction was greater than the harm that Kohler
would suffer if it were granted. The
more likely a plaintiff is to prevail, the less heavily need the balance of
harms favor it. Kohler argued that,
given the narrow audience of dealers and the lack of evidence about how they
used the handbook, the remote possibility of lost goodwill was less weighty
than the harm to Kohler of having to take unnecessary corrective action and
harming its own reputation.
The court disagreed, given Generac’s strong probability of
prevailing on the merits. The harm to
Generac was the risk of continued dissemination of the falsity in existing
copies of the handbook. Since Kohler
didn’t tell its dealers why it provided a replacement handbook or direct them
to destroy the prior version, the remaining steps were necessary to eradicate
any residual effects of the false advertising.
Kohler also argued that the public interest was minimal
because the parties provided consumers with lots of advertising related to
their respective generators. But it’s
always in the public’s interest to have truth replace falsity. Thus, Kohler would be required to inform its
dealers and distributors of the falsity of its statement and instruct them to
destroy any remaining copies or CDs of the Handbook.
Generac asked for attorneys’ fees because Kohler dragged the
case out for eleven months after ceasing distribution of its false statements,
but the court didn’t find that the case was exceptional.
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