RICHMOND, Va. (CN) - A brand-name baby-formula maker that spread lies about its generic competitor cannot overturn a $13.5 million jury verdict for false advertising, the 4th Circuit affirmed.
PBM Products filed suit in 2009 after its store-brand infant formula, which is sold in Wal-Mart, Sam's Club, Target, Kroger supermarkets and Walgreens, was trashed as inferior in a mailer that Mead Johnson Nutrition sent to 1.5 million people. Mead Johnson, which manufactures Enfamil formula, had claimed that "only Enfamil LIPIL is clinically proven to improve brain and eye development."
LIPIL is what Mead calls two types of fats - docosahexaenoic acid and arachidonic acid - that are believed to aid child development. PBM said in its suit that its formula contains the same fats in equal or higher amounts, and that it gets the fats from the same supplier as Mead.
The Gordonsville, Va.-based PBM has sued Mead Johnson twice before over advertising campaigns.
"As the litigation history of the parties demonstrates, despite having twice been restrained from disseminating misleading advertising, Mead Johnson continued to do so," Judge Andre Davis wrote for a three-judge panel. "PBM cannot fairly compete with Mead Johnson unless and until Mead Johnson stops infecting the marketplace with misleading advertising."
Mead Johnson had appealed after a jury awarded PBM $13.5 million in damages and Chief U.S. District Judge James Spencer issued an injunction.
"PBM demonstrated that remedies at law are inadequate," Davis wrote. "While the jury awarded PBM substantial damages, the damages judgment compensates PBM for harm that flowed directly from the mailer.
"As the district court aptly noted, the injunction prevents Mead Johnson from 'infecting the marketplace with the same or similar claims in different advertisements in the future.'"
PBM's parent company, Perrigo, applauded the 4th Circuit's decision in a statement. "The court has made it clear that national brand and store-brand suppliers are entitled to fairly compete and advertising abuses will not be tolerated," CEO and chairman Joseph Papa said in the statement. "We also appreciate the court's recognition that PBM could lawfully compare its products to national brand product."
In a statement of its own, Mead Johnson said it disagreed with the trial court's decision, but that it would comply with the 4th Circuit ruling. It also noted that it had not used the proscribed language in any of its advertising in more than a year.
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