Design Resources, Incorporated v. Leather Industries of America
2015 U.S. App. LEXIS 10258
| 4th Cir. | 2015Background
- DRI developed "NextLeather®," a synthetic upholstery covering with a polyurethane face and a backing containing leather fibers; DRI labeled it "bonded leather" in compliance with FTC Guides.
- Ashley ran full-page ads in Furniture Today in March–April 2007 stating some suppliers "are using leather scraps that are mis-represented as leather."
- LIA’s lab director, Dr. Nicholas Cory, gave advisory testing to DRI and later was quoted in two Furniture Today articles criticizing use of "leather" or "bonded leather" for such composite products.
- DRI sued Ashley and LIA under the Lanham Act and state law, alleging the ad and Dr. Cory’s statements falsely accused DRI of marketing NextLeather® as leather and caused lost sales and reputational harm.
- The district court granted summary judgment for Ashley and LIA, holding DRI failed to show the statements were false or misleading under the Lanham Act; DRI appealed.
- The Fourth Circuit affirmed, finding (1) the Ashley ad was not literally or impliedly false as to NextLeather®, (2) Dr. Cory’s Gunin quote was true as to calling non-hide products "leather," and (3) the Andrews quote was non-actionable opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ashley ad was false or misleading under the Lanham Act | The ad necessarily implied it referred to bonded leather/NextLeather® and falsely accused DRI of marketing it as "leather" | The ad did not mention bonded leather or DRI; any inference to NextLeather® is attenuated and not a necessary implication; no evidence a consumer was misled about DRI | Court: Affirmed summary judgment for defendants — ad not literally false by necessary implication and plaintiff produced no evidence of consumer confusion about NextLeather® |
| Whether Dr. Cory’s Gunin Article statement (calling use of "leather" for alternatives "outright deception, outright fraud") was false | The statement implicitly accused DRI of fraud by describing characteristics that match NextLeather® | Statement correctly asserts that using the unqualified term "leather" for products consisting of scraps/shavings is deceptive; truthful statement of fact | Court: Affirmed — statement is true and not false or misleading |
| Whether Dr. Cory’s Andrews Article statement ("bonded leather" is "deceptive") was actionable fact or protected opinion | Statement implies factual assertion that use of "bonded leather" is deceptive despite FTC guidance and Dr. Cory’s earlier advice to DRI | Statement is an opinion/prediction about how consumers will perceive the term and does not assert verifiable fact | Court: Affirmed — statement is non-actionable opinion under Lanham Act (not empirically verifiable) |
| Whether plaintiff presented legally sufficient evidence of injury (consumer confusion or lost sales) | DRI pointed to post-publication decline in sales and remediation expenses as injury | Defendants noted lack of evidence tying specific consumer confusion to the contested statements; surveys did not show respondents identifying DRI/NextLeather® | Court: Affirmed — plaintiff failed to show evidence linking statements to consumer confusion or specific loss attributable to defendants |
Key Cases Cited
- PBM Products, LLC v. Mead Johnson & Co., 639 F.3d 111 (4th Cir. 2011) (Lanham Act five‑element framework for false advertising)
- Scotts Co. v. United Indus. Corp., 315 F.3d 264 (4th Cir. 2002) (literal falsity and necessary implication analysis)
- C.B. Fleet Co. v. SmithKline Beecham Consumer Healthcare, L.P., 131 F.3d 430 (4th Cir. 1997) (implied falsity standard)
- Castrol Inc. v. Pennzoil Co., 987 F.2d 939 (3rd Cir. 1993) (necessary implication where ad logically compels comparison to competitors)
- Clorox Co. P.R. v. Proctor & Gamble Comm. Co., 228 F.3d 24 (1st Cir. 2000) (limits on literal falsity from attenuated or suggestive implications)
- United Indus. Corp. v. Clorox Co., 140 F.3d 1175 (8th Cir. 1998) (consumer inference limits for literal falsity)
- Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489 (5th Cir. 2000) (statements of general opinion not actionable under § 1125)
- Presidio Enters. v. Warner Bros. Distrib. Corp., 784 F.2d 674 (5th Cir. 1986) (predictions and opinions not empirically verifiable and nonactionable)
- Milkovich v. Lorain Journal Co., 497 U.S. 1 (U.S. 1990) (opinion/defamation boundary referenced but distinguished for Lanham Act context)