The US Court of Appeals for the Tenth Circuit has affirmed in part and reversed in part the dismissal of a false advertising complaint involving two rival pet food companies.
The case, KetoNatural Pet Foods, Inc. v. Hill’s Pet Nutrition, Inc., centred on whether statements made by Hill’s Pet Nutrition constituted commercial speech subject to liability under the Lanham Act.
KetoNatural Pet Foods sells grain-free pet food, while Hill’s Pet Nutrition sells more traditional pet food containing grains, placing the two companies in direct market competition.
KetoNatural alleged that Hill’s lost sales and market share after KetoNatural and other nontraditional pet food companies entered the market and gained consumer traction.
According to KetoNatural, Hill’s responded by working with veterinarians and nonprofit organisations to publicise false claims that boutique, exotic, and grain-free diets are associated with an increased risk of dilated cardiomyopathy in dogs.
KetoNatural sued Hill’s for false advertising under the Lanham Act, which requires a plaintiff to allege that a defendant made a false or misleading representation of fact in commercial advertising or promotion.
The district court initially granted Hill’s motion to dismiss, finding that KetoNatural had not adequately alleged that Hill’s engaged in commercial speech or that the challenged statements were false.
On appeal, the Tenth Circuit found that Hill’s website statements linking grain-free diets to canine heart disease plausibly constituted commercial speech, even without referencing a specific Hill’s product directly.
The court relied on the Supreme Court’s 1983 decision in Bolger v. Youngs Drug Products Corporation, which set out three factors for determining commercial speech: whether the content is an advertisement, references a specific product, and is made with economic motivation.
Although the Hill’s website statements did not constitute “a classic advertising campaign” and did not reference a specific product, they functionally served to promote Hill’s products given the company’s dominant position in the traditional dog food market.
The Tenth Circuit also found that KetoNatural had adequately alleged the statements were false, concluding that “the scientific studies” Hill’s relied on did “not establish the assertion for which they are cited” under the establishment claim doctrine.
However, the court ruled that Hill’s was not vicariously liable for statements made by veterinarians and nonprofit organisations, finding those third parties were too attenuated from Hill’s to support a reasonable inference of product promotion.
Critically, KetoNatural failed to allege that the veterinarians and other third parties received a quid pro quo in return for publicising false statements about grain-free diets.
The Tenth Circuit emphasised that a holistic approach is necessary when determining whether a defendant has engaged in commercial speech, going beyond the three Bolger factors alone.
The court noted that even statements not part of a conventional advertisement may constitute commercial speech if they disparage certain product types while the speaker holds a dominant share in the non-disparaged category.
The ruling also clarified that scientific articles generally do not constitute commercial speech, while training and informational materials do not categorically constitute noncommercial speech either.