Battle Between Beer Giants Goes Back to Seventh Circuit

(AP Photo/Brennan Linsley, File)

CHICAGO (CN) – The Seventh Circuit on Tuesday questioned whether consumers were deceived by Bud Light’s claim about not using corn syrup in its beer, during the latest hearing in an advertising fight between Anheuser-Busch and the maker of two of its competitors.

MillerCoors, which produces Miller Lite and Coors Light, Bud’s main competition, sued Anheuser-Busch in federal court last March over an ad it ran during Super Bowl LIII accusing Miller and Coors of having corn syrup in them.

MillerCoors claims the ad, and the rest of Budweiser’s campaign, confused consumers on purpose. The brewing giant says corn syrup is a common ingredient used during the fermentation process for many beers, including some made by Anheuser-Busch.

However, it is merely a food for the beer yeast to eat, leaving none in the finished beverage, MillerCoors claims.

“AB singled out MillerCoors use of a common brewing fermentation aid, corn syrup, for a deliberate and nefarious purpose,” the complaint states.

The filing continues, “AB purposefully refers to corn syrup as an ingredient in Miller Lite and Coors Light, conveying the clearly misleading message that corn syrup is present in the beers that consumers drink. It does this to degrade the Miller Lite and Coors Light brands. AB’s campaign does not educate consumers; it confuses them.”

Miller-Coors says in its lawsuit that Anheuser-Busch spent over $13 million to run its Super Bowl ad, and even more on the campaign that followed.

“AB plotted an extensive and pervasive advertising scheme designed to frighten consumers into switching away from Miller Lite and Coors Light to Bud Light,” the lawsuit states.

After the corn syrup commercials ran, billboards and packaging followed.

Bud Light’s cases were changed to say “no corn syrup,” “no artificial flavors,” and “no preservatives,” which Miller-Coors says implies that other beers do include those things.

U.S. District Judge William M. Conley, a Barack Obama appointee, granted two preliminary injunctions in the lawsuit, which alleges both false advertising and trademark dilution under the Lanham Act.

The first barred Anheuser-Busch from using specific terms relating to corn syrup and its competitors in its advertisements.

Miller appealed to the Seventh Circuit because the judge did not find that Anheuser-Busch’s ads intended to deceive consumers, and Conley expanded the injunction last September to prevent Anheuser-Busch from making similar claims on its new packaging.

Anheuser-Busch appealed, and those arguments were heard on Tuesday via telephone by a panel consisting of U.S. Circuit Judges Frank Easterbrook, David Hamilton and Amy St. Eve, who were appointed by Ronald Reagan, Barack Obama and Donald Trump, respectively.

“It’s not something you usually advertise for a beer,” Michael Risch, vice dean and law professor at Villanova University’s Charles Widger School of Law, told Courthouse News about Bud Light’s “no corn syrup” claim before Tuesday’s hearing.

He added, “Saying ‘no corn syrup’ is not the same as saying other beers are made with corn syrup.”

But Risch, who specializes in intellectual property law, said that “even if you don’t mention the other beer, if you falsely advertise, if the implication is that other beers are putting corn syrup in…that can still be actionable.”

“The packaging followed the commercial,” the professor said. “To me, that’s where the argument has to be … that the packaging is part of an entire campaign.”

As for Anheuser-Busch, Risch said “the two arguments are that one, they’re more likely to win on the merits, or two, the public interest should bar the injunction in this case.”

Maybe “suddenly people are rising up because they’re worried about corn syrup in beer,” he said, or “they might argue that time has passed” and consumers are no longer connecting the packaging statements to Bud’s competitors.

“The truth is allowed,” Risch added, noting there is no corn syrup used in Bud Light.

Anheuser-Busch could also try to show that the Bud Light brand is being damaged by not being allowed to use the packaging that they want, he said.

During arguments Tuesday, one of Anheuser-Busch’s attorneys, James Bennett of Dowd Bennett, said “the packaging is true and also unambiguous.”

“The district court found that it was literally true, but enjoined it,” Bennett told the panel, adding that he believes it was an error to say the packaging could be misleading.

“Our packaging makes no comparative claim,” the attorney argued, making it different from the other Bud Light advertisements that did mention other beer brands.

Bennett said the court should not just assume that consumers saw the entire campaign and MillerCoors has provided no evidence that consumers have connected Bud Light’s packaging statements to the ads that did mention Miller and Coors beers.

He told the panel that context could make a difference but should not be assumed.

“You cannot extrapolate findings from one advertisement to another,” Bennett said.

But MillerCoors attorney Donald K. Schott of Quarles & Brady emphasized the fierce competition between Bud Light, Miller Lite and Coors Light.

“The market we’re talking about here for premium light beers is essentially a trinary market,” Schott told the judges.

Arguing the court must look at Bud Light’s entire campaign instead of just the packaging, Schott said “this was all staged to run in a process.”

According to the attorney, Bud Light first told consumers they should know what’s in their beer, then it told them corn syrup is in Miller Lite and Coors Light, and finally it said on its packaging that it does not contain corn syrup.

“This was a comparative advertisement,” Schott said.

He noted that Judge Conley in the lower court “looked to the context of the entire campaign to determine the comparative nature of it” and found the statements to be misleading.

Judges Easterbrook and Hamilton questioned whether any of that even matters, since MillerCoors itself admits that it uses corn syrup in the production of its light beers.

Schott replied that the issue is that Bud Light has implied that consumers are ingesting corn syrup in the final product.

He said that over 200 consumer complaints about corn syrup poured into Anheuser-Busch after the Super Bowl ad aired but there were none prior, “evidence that context makes a difference.”

“The funny thing about trademark law is that it goes on the likelihood of confusion,” said Risch, the Villanova professor. “You don’t actually need real evidence.”

If the court thinks consumers are likely to link Bud Light’s packaging to the Super Bowl ad, and that the Super Bowl ad is damaging to the reputation of MillerCoors, the injunction could stand.

“It all depends on how the court perceives the Super Bowl ad,” Risch said, adding that the judges may look at factors like the prominence of the ad, how false it was and what Anheuser-Busch’s intent was in airing it.

Risch said if the injunction is upheld, by the time a trial comes around Bud Light might not want to use those particular ads and packaging anyway.

“I think now they’re really fighting over what they can do in the future,” he said.

The Seventh Circuit panel did not indicate when it would issue its decision on the packaging appeal, or the first appeal on advertising language.

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