Can calling your product “local” on advertising or packaging give your competitors a claim against you for false advertising and unfair competition if you don’t meet their definition of “local”?
What’s in a geographic descriptor? Would advertising implying a connection to Hawaii, say, be actionable if a craft beer, craft spirits, or wine isn’t made in Hawaii? What about Japan? You’ll have to ask Kona and Asahi about those issues, but what about saying something like “local” to describe your product when you’re not made in the state where you’re using that language? Turns out that can cost you.
Bimbo Bakeries recently took U.S. Bakery to task for false advertising and trade secret claims. The primary issue we’re concerned with here is that Bimbo accused US of falsely advertising that some of its bread products as “local” in a company tagline when the products were not made in the state where they were advertised as “local.”. The court let the case go to a jury and the jury found in Bimbo’s favor and awarded $8 Million to Bimbo for the false advertising claims.
US challenged the “local” claims as they did not believe that the question of whether using “local” on a product is false advertising should have been a decision of the jury. The court disagreed and found that the issue was factual and therefore properly for the jury to decide. US also challenged that while Bimbo claimed national consumer confusion and national damages for improper use of the term “local” on US’s products, Bimbo had only presented evidence of consumer confusion in Utah. The court upheld the jury’s determination that US had falsely advertised its products as local when they were shipped in from out of state and refused to overturn the jury verdict. It did however agree that the damages should only have been calculated based on Utah related figures and issues and reduced the verdict accordingly to roughly $80k.
In deciding that the jury had a right to assess what’s “local” the court held that while the term had no set definition, it was a “statement of fact” and not one of “general opinion.” Bimbo was allowed to prove that use of local tended to mislead or confuse consumers as to where the product is made. “Under the false advertising provisions of the Lanham Act, a phrase is eligible for protections as a representation of geographic origin only if the phrase is geographically descriptive an used in a deceptive manner so as to create a likelihood of confusion concerning the geographic origin of a product.”
The court applied this standard and held that Bimbo had presented evidence that US used the term in a deceptive manner to suggest that “its bread products were particularly fresh and of high quality because they were baked in the geographic vicinity of where they were sold.” So he jury’s verdict was not in error.
You can read the full opinion here.
Both parties have filed notices of appeal to the 10th Circuit.
The Takeaway: Vetting your advertising and packaging for geographically descriptive claims has a nuance that you might not have considered before. The term “local” is not puffery and to the extent a competitor or consumer could show that its a misrepresentation – it will be actionable.
This may be problematic in metro areas close to a state line. Kansas City, Missouri, Washington DC etc. As I understand it Google applies a 25 – 40 mile standard for what it considers local advertising.