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Eli Lilly and Co. v. Arla Foods, Inc

United States Court of Appeals, Seventh Circuit

June 15, 2018

Eli Lilly and Company and Elanco US, Inc., Plaintiffs-Appellees,
v.
Arla Foods, Inc., and Arla Foods Production LLC, Defendants-Appellants.

          Argued September 13, 2017

          Appeal from the United States District Court for the Eastern District of Wisconsin. No. 17-C-703 - William C. Griesbach, Chief Judge.

          Before Bauer, Rovner, and Sykes, Circuit Judges.

          SYKES, CIRCUIT JUDGE.

         In 2017 Arla Foods, a global dairy conglomerate based in Denmark, launched a $30 million advertising campaign aimed at expanding its cheese sales in the United States. Branded "Live UnprocessedTM, " the campaign covers all major media platforms and targets the growing market for all-natural foods. To that end, the ads assure consumers that Arla cheese contains no "weird stuff" or "ingredients that you can't pronounce"-in particular, no milk from cows treated with recombinant bovine somato-tropin ("rbST"), an artificial growth hormone. The flagship ad in the campaign features a vivid rhetorical flourish implying that milk from rbST-treated cows is unwholesome. Narrated by a seven-year-old girl, the ad depicts rbST as (among other things) a cartoon monster with razor sharp horns and electric fur.

         Enter Eli Lilly & Company and its subsidiary, Elanco US, Inc. (collectively, "Elanco"). Elanco makes the only FDA-approved rbST supplement and markets it under the brand name Posilac®. Soon after the Arla ad campaign debuted, Elanco filed suit alleging that the ads contain false and misleading statements in violation of the Lanham Act. Elanco simultaneously moved for a preliminary injunction and supported the motion with copies of the ads, scientific literature documenting rbST's safety, and evidence that a major cheese producer had decreased its demand for rbST in response to the ad campaign. The district judge concluded that Elanco has a reasonable likelihood of success on the merits and issued the requested injunction. The judge later modified his order to cure technical deficiencies.

         Arla appeals, arguing that Elanco (1) failed to produce consumer surveys or other reliable evidence of actual consumer confusion; and (2) did not submit adequate evidence linking the ad campaign to decreased demand for its rbST. Arla also challenges the modified injunction as vague and overbroad and lacking adequate factual findings.

         We affirm. Consumer surveys or other "hard" evidence of actual consumer confusion are unnecessary at the preliminary-injunction stage. And the evidence of causation is sufficient at this stage of the proceedings: the harm is easily traced because Elanco manufactures the only FDA-approved rbST supplement on the market. Finally, the modified injunction is sufficiently definite and adequately supported by the record and the judge's findings.

         I. Background

         On April 25, 2017, Arla rolled out a $30 million advertising campaign designed to expand its presence in the United States. Dubbed "Live UnprocessedTM, " the campaign centers on "Americans' increasingly voracious desire to know more about the products they're eating and feeding their families." The campaign spans all platforms: television commercials, YouTube advertisements, social-media outreach, in-store advertising, and a website.

         Two 30-second television commercials form the centerpiece of Arla's campaign. One is specifically at issue here. The commercial opens with this caption: "Arla Cheese Asked Kids: What is r[b]ST?" As the audience watches a cartoon of a six-eyed monster and a fisherman, a seven-year-old girl named Leah narrates: "RbST has razor sharp horns. It's so tall that it could eat clouds. You may want to pet it but the fur is electric." The commercial then cuts to a scene of Leah enjoying a cheese sandwich, and the narrator's voice switches to that of an adult woman: "Actually, rbST is an artificial growth hormone given to some cows, but not the cows that make Arla cheese. No added hormones. No weird stuff. Arla, live unprocessed." A small written disclaimer appears for a few seconds toward the end of the commercial: "Made with milk from cows not treated with r[b]ST. No significant difference has been shown between milk derived from r[b]ST-treated and non r[b]ST-treated cows."

         Other parts of the ad campaign reiterate the claim that Arla cheese contains "no weird stuff." Arla defines "weird stuff" on its website:

No artificial additives. No ingredients that you can't pronounce. No ingredients that sound confusing or in any way like a made-up word. No ingredients with names that sound like they may be aliens with nine arms, beasts with electric fur, gigantic robots[, ] or bears in disguise. No artificial growth hormones like r[b]ST.* … Nor anything else artificial[] because our cheese has always been made with simple ingredients and never anything weird.

The asterisk directs readers to another part of the website containing the same disclaimer that appears in small print in the television commercial.

         Elanco produces and sells the only FDA-approved rbST supplement under the brand name Posilac®. On May 19, 2017, Elanco filed suit against Arla and simultaneously moved for a preliminary injunction. The suit alleges that Arla's ad campaign makes false and misleading statements concerning the composition, health, and safety of dairy products made from milk from rbST-treated cows. The complaint asserts claims for violation of the Lanham Act, 15 U.S.C. § 1125(a), and the Wisconsin Deceptive Trade Practices Act, Wis.Stat. § 100.20(1).

         As factual support for a preliminary injunction, Elanco submitted copies of the advertisements themselves, scientific studies and expert testimony about the safety of rbST, the FDA's regulatory guidance regarding rbST-related advertisements, and confidential information that a major cheese ...


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