Friday, May 01, 2020

Seventh Circuit mostly ends corn syrup war: Coors can't bar AB from touting "ingredients"

Molson Coors Beverage Co. USA v. Anheuser-Busch Cos., Nos. 19-2200, 19-2713, 19-2782, 19-3097 & 19-3116 (7th Cir. May 1, 2020)

I think of the Second Circuit as usually the most formalist Lanham Act court (you have to say the magic words when it comes to the likelihood of confusion test, for example), while the Seventh Circuit is the most formless: it reaches the result it thinks correct as a matter of common sense in any given case, while giving the absolute minimum in the way of principles or rules. Honestly, this case may do better than average in rule-giving, at least because of the way the court characterized the facts (noticeably, without describing any of the relevant ads or the way that AB framed corn syrup as similar to high-fructose corn syrup): Because both parties agree that AB’s beer is made using corn syrup, even if no corn syrup is in the final beverage, Coors is allowed to advertise that fact.  This is a version of reading misleadingness out of the test for false advertising, which the Seventh Circuit often (but not always!) does.

The district court split the baby, allowing AB to advertise that Bud Light is made using rice while Coors’s products are made using corn syrup, but not to use ads that cause consumers to think that Coors contains corn syrup. The court of appeals simply rejected the idea that the true statement “their beer is made using corn syrup and ours isn’t” could falsly imply that “their beer contains corn syrup.”  Coors identifies corn syrup as an “ingredient” in its beer. Coors pointed out that “ingredients” isn’t the same thing as “contains”: there’s no alcohol on that ingredient list. “Yet common usage equates a product’s ingredients with its constituents—indeed, some of Molson Coors’s own managers testiļ¬ed that a beer ‘contains’ what’s on the ingredients list.” Anyway, AB didn’t use the word “contain,” even if some consumers “doubtless” inferred that corn syrup was in the beer. Coors’s own statements would yield the same inference. [The Seventh Circuit is, as always, very confident about what consumers would think, no matter what evidence of consumer reaction is present or absent.  Given error costs in litigation, this approach is not without its merits, but in cases like this it lacks the epistemological humility that might better protect the consumers we have.]

“By choosing a word such as ‘ingredients’ with multiple potential meanings, Molson Coors brought this problem on itself. It is enough for us to hold that it is not ‘false or misleading’ (§1125(a)(1)) for a seller to say or imply, of a business rival, something that the rival says about itself.”

Judgment affirmed to the extent that an injunction was denied, reversed to the extent that it was granted. Remanded (perhaps to see whether the terrible dilution claim, now the only issue in the case, can proceed).

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