(CN) - The 8th Circuit lifted an injunction banning misleading advertisements for an "odor-eliminating" garment used by hunters, finding that a federal court skipped considering whether the hunters were irreparably harmed by the ads.
In 2007, lead plaintiff Michael Buetow filed a federal class action against clothing manufacturer A.S.L. Enterprises Inc., and its retail subsidiaries, Cabela's Inc., Cabela's Wholesale Inc. and Gander Mountain Co. Inc., alleging that the companies advertised the "odor eliminating material" in its Scent Lok clothing using outright lies.
The district court denied Buetow class certification but granted his request for a permanent injunction to prevent the companies from displaying ads claiming the material is "like new" and "pristine" after the activated carbon it contains is "reactivated" in the dryer.
The clothing companies appealed, and 8th Circuit Judge James Loken, writing for a three-judge panel, lifted the injunction.
Loken found that the hunters "led the district court into error" by arguing that earlier cases had established a precedent that allows courts to dispense with Lanham Act requirements to find that a claimant has been "irreparably harmed" by false advertising, as long as the court finds that the ads in question are "literally false."
"Though the proposition has been repeated in numerous District of Minnesota opinions, it is not correct," Loken wrote. "Rather, it is a careless expansion of a sound principle adopted many years ago by the Second Circuit - when a competitor's advertisement, particularly a comparative ad, is proved to be literally false, the court may presume that consumers were misled and grant an irreparably injured competitor injunctive relief without requiring consumer surveys or other evidence of the ad's impact on the buying public."
The district court also erred by granting the Lanham Act injunction to a group of consumers, rather than to a competitor of the clothing manufacturer, Loken found.
When the 2nd Circuit's principle applies to competitors, the plaintiff must still show that it will be irreparably harmed without the injunction, according to the ruling.
"Plaintiffs and the district court, like prior District of Minnesota opinions, ignored this qualifier, which is an essential and universal predicate to the grant of equitable relief," Loken wrote.
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