(CN) – The Seventh Circuit ruled that a dairy conglomerate cannot continue its $30 million advertising campaign saying its cheeses are safer than competitors’ products just because its cows do not consume a hormone supplement approved by the Food and Drug Administration.
Eli Lilly and Co. and its subsidiary Elanco US Inc. filed a federal lawsuit last year against Arla Foods Inc. USA and Arla Foods Production LLC.
At the center of the dispute is a hormone supplement called recombinant bovine somatotropin, or rBST, which helps promote milk production in cows.
“Arla’s ‘Live Unprocessed’ advertising campaign brings heightened attention to the rBST-related claims on Arla’s product labels and casts them in a new light,” the complaint states. “When viewed in light of this extensive advertising campaign, Arla’s product labeling perpetuates the false claims that rBST is unsafe, that dairy products made using milk from rBST-treated cows is compositionally different and of inferior quality compared to dairy products made from milk of untreated cows, and that rBST is actually an ingredient in some dairy products.”
Elanco – Eli Lilly’s animal health division – claims Arla ignores the fact that the U.S. Food and Drug Administration has declared “that rBST is safe, and that there is no discernable difference between milk from cows supplemented with rBST and milk from unsupplemented cows.”
Elanco produces and sells the only FDA-approved rBST product under the brand name Posilac, and says the supplement poses no safety risk to humans. It claims “an attack on the safety of ‘rBST’ is thus an attack on Elanco.”
A federal judge issued an injunction against Arla’s advertising campaign and the Seventh Circuit affirmed on Friday.
Writing for a unanimous three-judge panel, U.S. Circuit Judge Diane Sykes said the lower court was right to conclude that Arla’s ads are likely to mislead consumers about the wholesomeness of products made from milk supplied by rbST-treated cows.
“The ad campaign centers on disparaging dairy products made from milk supplied by rbST-treated cows. The ads draw a clear contrast between Arla cheese (high quality, nutritious) and cheese made from rbST-treated cows (impure, unwholesome). The use of monster imagery, ‘weird stuﬀ’ language, and child actors combine to colorfully communicate the message that responsible consumers should be concerned about rbST-derived dairy products,” Sykes wrote in a 16-page ruling. (Parentheses in original.)
The FDA has warned that ads about rbST may be misleading if they’re not placed “in proper context,” according to the ruling.
For example, if an ad says that a product is made “from cows not treated with rbST,” the FDA recommends that there should be a disclaimer saying, “No significant difference has been shown between milk derived from rbST-treated and non-rbST treated cows.”
Judge Sykes noted that Arla did include the FDA’s recommended disclaimer but it appears only in tiny print in the TV commercial and in an obscure location on the company’s website.
Arla argued that a preliminary injunction was not proper because Elanco did not establish a likelihood of success on the basis that the ads actually drove away customers. The cheesemaker specifically claimed that Elanco did not conduct consumer surveys and did not provide evidence showing actual consumer confusion.
It also claimed that the lower court skipped this “causation question” in its preliminary injunction analysis.
However, Sykes refuted Arla’s claim, noting “how easy it is to trace Elanco’s harm.”
“Elanco sells the only FDA-approved rbST supplement in the United States, so any false or misleading advertising regarding rbST that decreases demand for the supplement will necessarily harm Elanco. And Elanco’s evidence of a large cheese producer’s response to Arla’s ad campaign is sufficient factual support for the judge’s decision to issue a preliminary injunction. Nothing more was needed at this stage,” she wrote.
Arla Foods is a global dairy conglomerate headquartered in Denmark that also makes cheese in Wisconsin. According to Elanco’s complaint, Arla is the world’s fourth largest dairy company with $10 billion in annual revenues.
Attorneys for Arla and Elanco did not immediately respond Tuesday to requests for comment on the ruling.