"#1 Brand" claim was literally false because of apples-to-oranges comparison

Zesty Paws LLC v. Nutramax Labs., Inc., No. 23 Civ. 10849 (LGS), 2024 WL 2853622 (S.D.N.Y. Jun. 4, 2024)

Finding Zesty Paws’ “#1 Brand” claim literally false, the court grants a preliminary injunction despite Zesty Paws’ attempt to create a factual dispute about what a “brand” is.

Nutramax and Zesty Paws are direct competitors in the pet supplement market. Zesty Paws’ products claim to promote joint health (Mobility Bites), behavioral health (Calming Bites), gut health (Probiotic Bites) and skin and coat health (Skin & Coat Bites). Nutramax’s products are intended to support similar pet health needs: joint health (Cosequin and Dasuquin), behavioral health (Solliquin), gut health (Proviable) and skin and coat health (Welactin).

Zesty Paws began an advertising campaign claiming to be (1) the “#1 Brand of Pet Supplements in the USA,” (2) “USA’s #1 Brand of Pet Supplements” and (3) the “#1 selling Pet Supplement Brand in the USA.” Nutramax and Zesty Paws stipulated that, at relevant times, (1) the combined sales of Nutramax pet supplement products exceeded the combined sales of Zesty Paws pet supplement products and (2) the combined sales of Zesty Paws pet supplement products exceeded the combined sales of each individual pet supplement product sold by Nutramax, including Cosequin and Dasuquin. (This seems like a classic apples-to-oranges comparison. Zesty Paws even uses “TM” on some of its advertising for, e.g., the Mobility Bites, suggesting that it’s trying to have sub-brands too, though it may have dialed back on that attempt for purposes of this litigation.)

#1 selling pet supplements brand in the USA ad from website

Mobility Bites image using TM symbol after Mobility Bites

The court found that Nutramax showed that the claims were likely literally false. The dispute turned on what a “brand” is; Zesty Paws argued that Nutramax was not a brand, but Cosequin etc. were. 

Based on the ordinary dictionary meaning of “brand,” Nutramax was a brand. Nutramax also offered two experts from business/management schools who testified that Nutramax satisfied the definition of a “distinctive feature … that identifies goods or services.” It’s used on every package and in advertising. Zesty Paws’ arguments to the contrary critiqued the strength of the brand, not its existence; Zesty Paws argued that it was the #1 “driver brand” in the US, that is, “the brand name that plays the primary driver role in a consumer’s purchase decision.”

But that didn’t create ambiguity. The ordinary meaning of “brand” didn’t include the primary driver concept. (A brand can be a limping mark!)  And there was no evidence that consumers understood the #1 Claims to refer to a “driver brand,” whether from expert opinion, survey, academic literature or even anecdotal evidence.

Zesty Paws’ expert’s survey didn’t address how consumers interpreted the #1 claims. Instead, the survey respondents saw an image of Nutramax’s Cosequin product and asked to specify “the brand name of the product, any other names the product goes by, and the manufacturer of the product.” In response, “86.8 percent of respondents identified Cosequin® as the brand name of the product,” and “10.1 percent of respondents indicated that Nutramax Labs was the brand of the product.” The main survey question asked, “Based on your review, what brand is this product? (Please be as specific as possible.)” That was less about whether respondents generally perceive NUTRAMAX to be a brand in its own right and more about whether respondents identify NUTRAMAX to be the most specific brand name of the particular Cosequin product package. Both ecommerce listings and the tamper-evident seal, not shown to respondents, referenced Nutramax.  “Even without these cues, 10.1 percent of respondents still identified NUTRAMAX as the brand for the Cosequin product. Zesty Paws’ own internal brand awareness studies from about 2020 through 2022 showed that NUTRAMAX frequently scored higher than ZESTY PAWS when respondents were presented with a list of brands that included both names.” Nor did Nutramax’s internal documents concerning a possible move to a COSEQUIN-centered branding strategy matter, because the strategy was never implemented.

Market research data that aggregated sales data under one “brand” per product were also unhelpful, since there can be several brands associated with a product, e.g., Frito Lay® Flamin’ Hot® Cheetos®.” In other words, that COSEQUIN is a brand does not mean that NUTRAMAX is not also a brand. Also, Zesty Paws suggested how one of the market research entities should make the brand comparison, encouraging it to reach out with any questions about “brand delineation” and stating, “As a reminder, please ensure all brands are evaluated at the consumer facing level (i.e. Dasuquin not Nutramax) ....” And an expert testified that “[t]here is nothing [about] Nielsen’s processes or motivations as a data seller that makes them an authority on what is and is not a brand.” They could be inaccurate and inconsistent, and they tracked only a small segment of the pet supplement market.

Thus, Nutramax would likely show literal falsity.

Materiality: Nutramax’s expert testimony satisfied its burden. One marketing expert testified that the effectiveness of various number one claims “has been studied for a long time by academic marketers and there is very consistent evidence that when you make a number one claim, you enhance the perceptions and the purchase of the claimed brand and you depress the perceptions and the purchase of the non-claimed brands.” He also testified that a number one claim in this case is “especially potent because ... we don’t actually get direct experience with these products and so we really have to rely on these claims even more than [we] would with a product like Coke or Pepsi where we get to taste it for ourselves.”

Injury: Likewise, the experts testified that this would likely harm Nutramax, both in the eyes of consumers and retailers: “[t]he belief that Zesty Paws is the market leader will likely lead retailers to give Zesty Paws more shelf space, more prominent shelf positioning and overall increased availability of Zesty Paws products.”

Irreparable harm was presumed and not rebutted by a five-month delay in bringing a preliminary injunction motion because “Nutramax first sent Zesty Paws a notice-of-dispute letter about the #1 Claims on July 17, 2023, shortly after learning of them. The parties then continued to exchange letters until they participated in an unsuccessful mediation on December 7, 2023. Zesty Paws commenced this action on December 13, 2023, and Nutramax filed its preliminary injunction motion on December 22, 2023.” That didn’t show any lack of worry about harm on Nutramax’s part.  

In addition, Nutramax’s experts specifically testified that, in the court’s words, “once a brand’s market leadership is lost, that loss is nearly always permanent along with the benefits brought by the market leadership position.” He stated: “[W]hat we find from the extensive literature is that consumers think more highly of number one brands, they perceive them to be higher quality, they are going to purchase them more frequently, [and] they’re willing to pay more for those products because of that associated higher quality.” Indeed, the court summarized, “the power of signaling market leadership is so strong that even when consumers misperceive a brand as a market leader, the misperceived brand still accrues all of the benefits of market leadership, particularly higher evaluations from consumers.” A second marketing expert testified that lost market share is difficult to regain due to habit, status quo and brand loyalty.

With that out of the way, a preliminary injunction was essentially inevitable.