“To prevail on a Lanham Act false advertising claim [in the Second Circuit], a plaintiff must establish that the challenged message is (1) either literally or impliedly false, (2) material, (3) placed in interstate commerce, and (4) the cause of actual or likely injury to the plaintiff.” Church & Dwight Co. v. SPD Swiss Precision Diagnostics, GmBH, 843 F.3d 48, 65 (2d Cir. 2016).

To establish literal falsity, a plaintiff must show that the advertisement either makes an express statement that is false or a statement that is false by necessary implication, meaning that the advertisement's words or images, considered in context, necessarily and unambiguously imply a false message.” Id. (emphasis added) (internal quotation marks and citation omitted). In other words, “if the language or graphic is susceptible to more than one reasonable interpretation, the advertisement cannot be literally false.” Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 158 (2d Cir. 2007). The inquiry is: “what reasonable consumers would understand [the advertisement] to mean.” Church & Dwight Co., 843 F.3d at 66.

In July 2023, Zesty Paws began advertising itself as the #1 selling pet supplement brand in the United States. Specifically, Zesty Paws touted itself as (1) the “#1 Brand of Pet Supplements in the USA,” (2) the “USA's #1 Brand of Pet Supplements,” and (3) the “#1 Selling Pet Supplements Brand in the USA” (collectively, the “#1 Claims”).

Nutramax sued Zesty Paws for false advertising, asserting that Zesty Paws's “#1 Claims” were false because the combined sales of Nutramax pet supplement products exceeded the combined sales of Zesty Paws pet supplement products.

On June 4, 2024, the district court granted issued a preliminary injunction against Zesty Paws from making its “#1 Claims” because: (1) Nutramax was a brand, Nutramax sold more pet supplements than Zesty Paws, and therefore the #1 Claims were literally false; (2) the #1 Claims were material because they were likely to influence consumer purchasing decisions; and (3) the #1 Claims were a cause of actual or likely injury to Nutramax.

On appeal, the Second Circuit vacated the injunction because the district court did not address whether Zesty Paws's “#1 Claims” could be susceptible to more than one reasonable interpretation such that it would not be unambiguously false.

Here, Zesty Paws had argued that its “#1 Claims” had compared the Zesty Paws brand to only the individual brands of pet supplements that Nutramax sells. Zesty Paws's products include, among others: Mobility Bites (joint health), Probiotic Bites (gut health), Calming Bites (behavioral health), and Aller-Immune Bites (immune health). Nutramax sells a similar range of products: Cosequin (joint health), Dasuquin (joint health), Proviable (gut health), Solliquin (behavioral health), and Imuquin (immune health). For example, Nutramax's product packaging featured the Dasuquin and Cosequin labels in larger font, while simultaneously displaying the Nutramax label in a smaller font, referring to Nutramax as the “Company” or relegating the Nutramax label to the back of the product packaging.

The district court had focused exclusively on whether Nutramax is a brand such that Zesty Paws's #1 Claims must be literally false because it was undisputed that the combined sales of Nutramax pet supplement products exceeded the combined sales of Zesty Paws pet supplement products—but the district court's opinion did not explain why Zesty Paws's alternative interpretation would be unreasonable to a reasonable consumer. “The district court similarly did not address internal Nutramax documents showing that Nutramax employees viewed Nutramax's individual named products, not Nutramax, as its principal brands.”

To ultimately succeed on the literal falsity inquiry, Nutramax had to demonstrate that the #1 Claims are so unambiguous that a reasonable consumer could not share Zesty Paws's interpretation.

The district court, however, failed to acknowledge the legal principle that an advertisement must not be susceptible to more than one reasonable interpretation to be unambiguously false, and did not make that requisite finding in its decision.

The Second Circuit thus vacated the preliminary injunction and remanded the case back to the district court for further proceedings.