Zesty Paws LLC v. Nutramax Laboratories, Inc.

Background

Zesty Paws and Nutramax are direct competitors in the pet-supplement market. Beginning around July 2023, Zesty Paws advertised itself as the “#1 Brand of Pet Supplements in the USA,” “USA’s #1 Brand of Pet Supplements,” and “#1 selling Pet Supplement Brand in the USA.” Zesty Paws used these claims on its website, some social-media pages, a promotional video, and in-store displays. The advertisements included footnotes explaining that the claims relied on Euromonitor research using 2022 online sales estimates and excluding veterinary sales.

The parties stipulated that Nutramax’s combined pet-supplement sales exceeded Zesty Paws’ combined sales, while Zesty Paws’ combined sales exceeded the sales of each individual Nutramax product. Their main dispute was whether Nutramax, as a company name, counted as a “brand” for comparing sales. Zesty Paws argued that only individual product names such as Cosequin and Dasuquin should count.

Nutramax filed counterclaims and moved for a preliminary injunction under the federal Lanham Act and New York law. A preliminary injunction is a temporary court order intended to preserve the parties’ rights while a case proceeds. The court previously entered a temporary restraining order limiting Zesty Paws’ use of the claims in Costco stores.

Legal Standard

The court applied the standard for a prohibitory preliminary injunction, which maintains the last peaceful situation between the parties. Nutramax had to show a likelihood of success on at least one claim, irreparable harm without an injunction, and that the balance of hardships and public interest favored relief. The court determined that the requested injunction would not alter the relevant status quo and therefore did not require the heightened standard applicable to some mandatory injunctions.

Analysis

The court held that Nutramax was likely to succeed on its federal false-advertising claim. Under the Lanham Act, false advertising requires proof that an advertisement is literally or impliedly false, material to purchasing decisions, used in interstate commerce, and causes or is likely to cause injury.

On literal falsity, the court found that Nutramax was likely to prove that “NUTRAMAX” is a brand. The court credited testimony from Nutramax’s experts that the Nutramax name identifies and distinguishes its products. The court also noted that the Nutramax name or logo appears on its products and that Nutramax’s trademark is physically on every product sold in the United States, according to testimony cited in the opinion.

The court rejected Zesty Paws’ argument that a brand must be a “driver brand”—the name that primarily drives a consumer’s purchase. It found no evidence that reasonable consumers understood the challenged claims to use that narrower meaning. The court also found Zesty Paws’ survey unpersuasive because it focused on how respondents identified a particular Cosequin package, rather than whether consumers generally viewed Nutramax as a brand. Because Nutramax’s sales exceeded Zesty Paws’ sales and Nutramax was likely to qualify as a brand, the court concluded that the “#1” claims were likely literally false. The court did not reach Nutramax’s alternative theory that the claims were impliedly false.

The court also found likely materiality because evidence showed that “number one” claims can improve consumers’ views and purchasing of the advertised brand. It found likely injury because the claims could increase Zesty Paws’ sales, reduce Nutramax’s sales, and lead retailers to give Zesty Paws more shelf space and prominence.

For irreparable harm, the court applied a statutory presumption available after a showing of likely success on a qualifying Lanham Act violation. It found that Zesty Paws did not rebut that presumption. The court also credited evidence that lost market leadership, goodwill, consumer perceptions, and market share could be difficult to recover later.

The balance of hardships favored Nutramax because it faced potential lost sales and lasting goodwill damage, while Zesty Paws provided no evidence that the claims appeared on its product packaging. The public interest also favored an injunction because consumers are not well served when false advertising influences their purchasing decisions.

Order

The court GRANTED Nutramax’s preliminary injunction motion. Pending final determination of the action, Zesty Paws may not publish, disseminate, or distribute the challenged “#1” claims, or substantially identical claims, in connection with marketing, promoting, selling, or distributing Zesty Paws pet supplements anywhere in the United States, including Costco stores.

The order binds Zesty Paws, its parents, subsidiaries, officers, agents, employees, and other persons acting with them concerning the claims who receive actual notice. Nutramax must post an additional $50,000 bond, in addition to the $25,000 bond posted for the earlier temporary restraining order. The preliminary injunction takes effect when the additional bond is posted and remains in effect until further court order. The earlier temporary restraining order ends when the preliminary injunction takes effect.