Mead Johnson v. Abbott Laboratories ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-2215
Mead Johnson & Co.,
Plaintiff-Appellee,
v.
Abbott Laboratories,
Defendant-Appellant.
On Petition for Rehearing
Decided April 12, 2000
Before Bauer, Easterbrook, and Kanne, Circuit Judges.
Per Curiam. Mead Johnson has filed a petition for
rehearing asking us to remand so that the
district court may increase the amount of the
injunction bond. A higher bond would produce a
higher potential award of damages for wrongful
injunction, because we have already held that the
district court should not have awarded
preliminary injunctive relief. According to Mead
Johnson, Coyne-Delany Co. v. Capital Development
Board, 717 F.2d 385, 394 (7th Cir. 1983), holds
that it is possible to increase the injunction
bond even after the injunction has been reversed.
Coyne-Delany does not hold any such thing. None
of the parties to the case requested such a step.
What the panel in Coyne-Delany remarked is that
a litigant aggrieved by an insufficient
injunction bond may ask the court of appeals to
increase it. An increase could be beneficial to
the enjoined party if (a) the court of appeals
affirms the preliminary injunction, but a
possibility remains that permanent relief will be
denied; or (b) the preliminary injunction is
vacated for legal error, but the district court
remains free to afford new injunctive relief, the
situation in International Game Technology v. WMS
Gaming Inc., 1999 U.S. App. Lexis 22971 (Fed. Cir.
Sept. 3, 1999); or (c) the increase precedes
reversal of the preliminary injunction, and thus
affords the enjoined party additional damages for
harm suffered during the period between the
increase of the bond and the end of injunctive
relief. Nothing in Coyne-Delany suggests that an
injunction bond may be increased after the
preliminary injunction has already been reversed
and will not be replaced by another.
A bond is a condition to preliminary injunctive
relief. Coyne-Delany holds, among other things,
that, if the injunction is reversed, compensation
for harm caused by the injunction cannot exceed
the amount of the bond. 717 F.2d at 393-94. That
conclusion would be vitiated if the district
judge could increase the bond after the
injunction had been set aside, for then the bond
would not cabin the damages. We explained in
Coyne-Delany that the bond requirement is an
exception to the norm in American litigation that
the parties bear their own costs and expenses. A
prevailing party may recover up to the amount of
the bond; beyond that, there is no basis for
cost-shifting. To permit changes in the bond
after an injunction’s reversal would be to
overturn the rule in fact, if not in name.
What is more, posting a bond is voluntary.
"[I]f the plaintiff’s damages [for persuading the
court to issue a wrongful injunction] are limited
to the amount of the bond, at least he knows just
what his exposure is when the bond is set by the
district court. It is not unlimited. If the bond
is too high he can drop the suit." 717 F.2d at
394. If the bond can be increased after reversal,
the plaintiff lacks the option to drop the suit
in order to limit its exposure. Anyway, what
would a post-reversal bond secure? If the
plaintiff is entitled to balk and walk away, as
Coyne-Delany says (and Fed. R. Civ. P. 65(c)
contemplates), then an order to increase the bond
would be ineffectual. An injunction bond is a
condition of a preliminary injunction. Once the
injunction has been reversed, the bond no longer
serves a function other than securing payment of
the prevailing party’s damages. As we held in
Coyne-Delany, these damages cannot exceed the
amount of the bond that was in effect while the
injunction lasted. Thus there is neither logical
nor legal room for a post-reversal increase in an
injunction bond. See Thomas & Betts Corp. v.
Panduit Corp., 65 F.3d 654, 664 n.13 (7th Cir.
1995).
Abbott Laboratories also has filed a petition
for rehearing. In response to that petition, the
panel amends its opinion by replacing the
paragraph at slip op. 7-8 (201 F.3d 883, 886-87)
with this language:
Section 43(a)(1) forbids misleading as well as
false claims, but interpreting "misleading" to
include factual propositions that are
susceptible to misunderstanding would make
consumers as a whole worse off by suppressing
truthful statements that will help many of them
find superior products. A statement is
misleading when, although literally true, it
implies something that is false. Abbott
Laboratories v. Mead Johnson & Co., 971 F.2d 6,
13 (7th Cir. 1992). "Misleading" is not a
synonym for "misunderstood," and this record
does not support a conclusion that Abbott’s
statements implied falsehoods about Similac.
Reducing ads and packaging to meaningless
puffery can’t be the objective of the Lanham
Act--though it is a logical (and likely)
outcome of Mead Johnson’s approach, given the
normal level of confusion and misunderstanding
reflected in consumer surveys. Asked at oral
argument whether a seller of aspirin could
label that drug as an anti-inflammatory useful
for arthritis (a medically established property
of aspirin) if a survey showed that consumers
confused palliation of symptoms with a cure for
the disease, counsel for Mead Johnson replied
that the claim of anti-inflammatory properties
would be misleading for the same reason "1st
Choice of Doctors" is misleading. This
consequence of Mead Johnson’s view is so
counterproductive that the basic position
cannot be accepted. We are not comforted by
Mead Johnson’s assurance that a seller could
overcome consumer misunderstanding and make the
claim about anti-inflammatory (or anticavity)
benefits if it delivered additional details
about the nature and extent of these effects.
Requirements along the lines of a package
insert with medical details are the province of
regulations issued by the Food and Drug
Administration, not of litigation under the
Lanham Act. What is more, adding details could
be so costly and burdensome that sellers might
choose to omit all of the information. See
Morales v. Trans World Airlines, Inc., 504 U.S.
374, 389-90 (1992); cf. Todd v. Societe BIC,
S.A., 9 F.3d 1216, 1218-19 (7th Cir. 1993) (en
banc) (observing that compendious advice is not
always more useful to consumers). Anyway, if
consumers did not read (or understand) the
medical details they would be none the wiser,
and on Mead Johnson’s view the claim should be
enjoined anyway.
None of this calls into question the
understanding, expressed by many decisions,
that whether a claim is either "false" or
"misleading" is an issue of fact rather than
law. See Abbott Laboratories v. Mead Johnson &
Co., 971 F.2d at 13-15; Castrol, Inc. v.
Pennzoil Co., 987 F.2d 939, 943-45 (3d Cir.
1993); Johnson & Johnson * Merck Consumer
Pharmaceuticals Co. v. Smithkline Beecham
Corp., 960 F.2d 294, 298 (2d Cir. 1992). Our
fundamental conclusion is that a producer
cannot make a factual issue just by conducting
surveys about how science is done (or, worse,
about how surveys should be conducted). The
sort of survey evidence Mead Johnson gathered
would not support a conclusion by a reasonable
person that Abbott’s claim either was false or
implied a falsehood.
All members of the panel have voted to deny
Mead Johnson’s petition for rehearing. No judge
has called for a vote on Abbott Laboratories’
petition for rehearing en banc, which is denied,
as is Abbott’s petition for rehearing.