January 25, 2012

Expedited Appeal in Lanham Act Cat Litter Case

Seller Beware: Consumer Protection Insights for Industry

On January 17, 2012, the Second Circuit granted Clorox's motion for expedited appeal in the cat litter case (Church & Dwight Co., Inc. v. The Clorox Company), which centers on sensory perception testing and key ingredient testing (along with other issues, including necessary implication and presumption of irreparable harm). Earlier this month, Judge Jed Rakoff of the Southern District of New York preliminarily enjoined Clorox from airing a commercial claiming that carbon used in its Fresh Step cat litter was more effective at absorbing odors than the baking soda (which happens to be the active ingredient in Church & Dwight's cat litter, although C&D products are not mentioned in the ad). The court found that Clorox's sensory perception test that was cited in the ad, using human "sniffers", was not sufficiently reliable to permit (a) the explicit claim that the key ingredient (carbon) is superior to baking soda in controlling odor; and (b) the necessarily-implied claim that the overall cat litter product is superior at odor control based on the test. The decision has some vulnerabilities on important issues.

The Parties & Products. The case concerned Clorox's "Fresh Step" cat litter and Church & Dwight's Arm & Hammer cat litter products, Double Duty and Super Scoop. The Clorox product uses carbon as the odor fighting ingredient whereas Church & Dwight's products use baking soda.

The Commercial. The Clorox commercial features two laboratory beakers (one represented as "Fresh Step" which is filled with a black substance labeled "carbon"; and the other unidentified by brand, but filled with a white substance labeled as "baking soda"). Green gas then fills the beakers, and rapidly evaporates in the carbon beaker but barely changes in the baking soda beaker. Small text appears during this display that says "dramatization" and "based on a sensory lab test."

The Claim. A voiceover in the commercial states: "we make Fresh Step scoopable litter with carbon, which is more effective in absorbing odors than baking soda." The express claim is limited to carbon and baking soda, not the cat litter products.

The Sensory Test. The sensory lab test relied upon by Clorox involved separate sealed jars of cat urine and of cat feces, which were kept: (a) uncovered; (b) covered with carbon; or (c) covered with baking soda. Each jar was permitted to mellow for 24 hours, and was then placed in a "booth" that replicated a small room (where cat boxes are normally kept). The smell of the booth was later evaluated by eleven human panelists trained by Clorox. The panelists would open a portal to the booth, which was approximately 6 feet away from the stimulus. The results reflected that carbon was 32% superior to baking soda in reducing odor.

The Ruling and Potential Issues on Appeal

(1) Sensory Perception Tests. The court appeared most troubled by the uniformity of "zero" ratings for the carbon-treated stimulus. The court made this pivotal comment: "It is highly implausible that 11 panelists would stick their noses in jars of excrement and report forty-four independent times that they smelled nothing unpleasant."

This core holding is troublesome. First, ironically, it was as if the sensory evaluation results were "too good" for Clorox. The fact that none of the 44 carbon cells reported malodor appeared to be a home run for showing that carbon kills odor. But in this case, the Judge used the result to conclude that the test was flawed. This could be an appeal issue: it has long been a golden rule going back to Daubert that one cannot evaluate a scientific test by test results -- even arguably surprising test results. One must base a critique on the method, not the results. Great results could mean that carbon has amazing odor-killing abilities.

Another problem with the court's comment: no one was asked to "stick their noses" in anything -- the panelists in the sensory evaluation opened a portal to a booth the size of a small room where the "jar" was approximately 6 feet away.

The court ultimately seemed skeptical that sensory evaluation (use of trained human panelists to test how products taste, smell, feel and sound) was sufficiently "scientific" to support advertising claims. During the hearing, the Judge made several comments that reflected this bias. The case raises whether and under what circumstances advertisers can use "sensory perception" tests, which are arguably prone to greater subjectivity and error compared to mechanical measurement. Instrumental testing can be used to measure release of odor, as in last year's diaper pail case, but this may not replicate the way in which humans perceive odor. The issue is huge given that sensory evaluation is -- in fact -- a very well-established science and used by every major consumer products company to develop products and substantiate advertising.

(2) Ingredient Tests. The case also involves whether an advertiser can rely on testing of a key ingredient rather than overall product testing. In this case, the court faulted Clorox for using the key ingredient test of carbon versus baking soda to then imply that the cat litter was superior (the court found that this claim was made by necessary implication). Ingredient claims are common and should not automatically lead to an assumption that the advertiser is making a claim about the product itself. An advertiser has the right to tell consumers about its products' key ingredients, including the properties of those key ingredients.

(3) Irreparable Harm Presumption. The court noted the current debate regarding whether the court may presume irreparable harm in Lanham Act false advertising cases, particularly where the claim is comparative. The court essentially presumed irreparable harm, and the issue is sure to be debated on appeal. The Second Circuit should provide guidance on this issue. Is there a presumption of irreparable harm in Lanham Act false advertising cases or is there not? If there is no presumption, what type of showing is required?

(4) Undue Delay in Issuing the Decision. It took the judge 7 months from the evidentiary hearing and 10 months from the initial filing to issue its preliminary injunction, which is not consistent with the statutory requirement of expedition (28 U.S.C. § 1657 states that federal courts "shall expedite the consideration of. any action for temporary or preliminary injunction relief"), and undermines the usefulness of the Lanham Act as a remedy. Judge Rakoff found irreparable harm – that is, harm that cannot be remedied later with money damages. However, allowing the case to simply sit on ice this length of time is not compatible with a finding of irreparable harm.

(5) Plaintiff's Burden. Finally, some of the Judge's comments suggested that he inappropriately shifted the burden from the plaintiff to the defendant. In a "tests prove" / establishment claim case, the plaintiff meets its burden by showing that the test cited in the ad is not sufficiently reliable to support the advertising claim. Naturally, the way this played out at the evidentiary hearing was that Clorox defended its test. But that does not mean that Clorox had the burden -- a defendant in a Lanham Act case doesn't have the burden of showing anything. Thus, when Judge Rakoff makes comments such as "Clorox has not identified any basis for believing" a particular proposition, it suggests strongly that the Judge may have lost track of the legal burden.

© Arnold & Porter Kaye Scholer LLP 2012 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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