Avoiding “False Advertising” and “Genuineness of Product” Class Action Litigation

What makes champagne “champagne”?  According to the Comité Interprofessionnel du Vin de Champagne (CIVC), only bubbly wine made through traditional methods and grapes from the Champagne region of France.  The United States agreed to this definition in a 2006 trade agreement.  Not just wine makers must think twice before affixing the word “champagne” to their product.  The CIVC even threatened litigation against Apple for using “champagne” as a color name for the iPhone.

Businesses in the United States increasingly face copy-cat litigation emulating the arguments employed by the CIVC.  For example, coffee growers in the Hawaii Kona region filed a class action against businesses marketing and selling “Kona” coffee but contained little or no coffee produced in the Kona region.  The Complaint originally named large retailers such as Costco, Walmart, Safeway, and Amazon, among others.

Not all of these “false advertisement” claims have merit.  Dairy milk producers have complained that use of the term “milk” by producers of plant-based alternatives (e.g., soy milk, almond milk, oat milk, etc.) misled and confused consumers.  The Food and Drug Administration (FDA) prevented the dispute from escalating by issuing guidance that plant-based milk can be labeled “milk” without misleading consumers.  The FDA rejected milk producers’ argument that plant-based milk would obscure the real meaning of “milk” as a dairy-based animal product because “milk” constitutes a common and usual name.

These cases highlight three ways to either avoid or defend against similar false advertising claims.  First, a product is unlikely to mislead consumers if it uses a common and usual name.  This argument will be particularly effective against plaintiffs seeking to claim a commonly used term as their own.  Second, whether consumers are confused or misled about a product name presents a question of fact usually addressed by expert testimony.  The FDA was persuaded by studies that showed consumers were able to distinguish between the term “milk” on various products.  Finally, a particular label may convey other important information to consumers besides a product description.  Consumers found the term “milk” indicated a particular quality and consistency of the product.  Whereas alternative labels, such as plant-based “drink” suggested a lower quality product.  Remembering these considerations may help businesses avoid or defend against similar “false advertising” class action claims in the future.