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April 8, 2019

LANHAM ACT
Are retailers potentially liable under the Lanham Act for displaying and selling products whose labeling contains false claims?
In an ongoing battle between manufacturers of “male dietary products,” Outlaw Laboratory, LP, which makes the “Tristeel” product line, filed suit in Texas federal court against the manufacturer and 14 convenience stores/gas stations that sold “Rhino” products made by Shenoor Enterprise, Inc. The case was grounded in the Lanham Act and alleges that the label statements on the Rhino product line claimed that the products are “all natural” and contain “no harmful synthetic chemicals.” These statements are allegedly false because Rhino products have been shown to contain “dangerous undisclosed ingredients” typically found only in prescription drugs, not OTC products. The claim is based on FDA announcements that Rhino products were tested and found to contain sildenafil and other chemicals.

The Court dismissed the suit on motions by some of the retailer defendants for failure to state a claim. In reaching this conclusion, the Court found that the defendant retailers had not on their own made a false statement in the context of commercial advertising or promotion – they merely displayed and sold the products as labeled by Shenoor. However, the Court held open the possibility that under a different set of facts, the retailers could be found liable for violations of the Lanham Act, provided that the retailers could be shown to have taken an active role in creation and/or dissemination of the false claims. [Outlaw Laboratory, LP v. Shenoor Enterprise, Inc., et al., No. 3-18-CV-2299-B, N.D. Tex., March 4, 2019]