That is the issue raised by a fight between two laboratories that perform sophisticated analyses of urine for the presence of drugs in order that physiacists (pain doctors) might manage patient compliance with opioid dosing.

Millennium Laboratories Inc. sued Ameritox, Ltd. alleging false advertising under the Lanham Act and advancing a number of theories. See Millennium Complaint.

Ameritox counter-claimed that Millennium falsely represents their services as having the fastest turnaround time and as being the only company to use a certain technology. See Ameritox Counterclaim.

The Pre-Trial Motions Practice

After many pre-trial motions, the court dismissed each of Ameritox’s counterclaims because there was no factual evidence presented that Millennium’s advertising was false. Further, Millennium produced evidence showing their ads were literally true. The court also dismissed several of Millennium’s false advertising claims. Under the Lanham Act, a representation is either false on its face, in which case deception is presumed, or it is literally true or ambiguous but likely to mislead or confuse consumers. In the latter situation, absent “stark evidence” that the deception was willful, there must be extrinsic evidence that consumers were or would likely be deceived. In this case, the Court concluded Millennium’s consumer survey evidence purporting to demonstrate deception was flawed because it did not contain “any meaningful form of control.” As a result, the Court dismissed Millennium’s allegations that Ameritox’s ads were misleading. The only surviving claims were Millennium’s allegation that four Ameritox advertisements were literally false when they asserted that Ameritox’s tests could “tell a doctor whether the patient was compliant.” Millennium claimed that the nature of these tests can determine the presence or absence of a drug and in what quantity at a given moment. What it cannot do is determine what dosage was originally consumed and at what rate it was metabolized. Ameritox countered that, when read fairly, the ad meant that the test, with its sophisticated algorithm based upon a parametric treatment of metabolism, “afforded doctors another tool to ‘help’ or ‘assist’ them in monitoring their pain patients.” See Court Memorandum.

The Case Goes To Trial

The judge ordered a bifurcated trial. The first phase called for the jury to issue an advisory verdict as to the literal falsity of the Ameritox advertisements. If the jury made such a finding, the judge would independently decide “whether each of the four ads conveyed a message that was literally false.” At the end of this phase, both jury and judge found the Ameritox ads literally and unambiguously false. The trial then moved onto the second phase which evaluated whether the ads caused Millennium injury and if so, what remedies would follow. Here, the court determined that Millennium could only speculate, but not show, what damages it had suffered. The judge then ordered the parties to mediate the remaining issues surrounding equitable relief. The parties agreed to a Consent Order in which Ameritox would cease using the offending language and the CEO would communicate with customers disclosing the jury’s advisory verdict that its four ads were literally false.

The New Lanham Act Claims

Within hours after the judge entered the Consent Order, both sides issued press releases and public statements concerning the litigation. Each side then filed a Lanham Act claim against the other based upon alleged falsities in the public pronouncements. In this instance, the judge noted that there was a significant legal hurdle for each side insofar as he doubted that press releases constituted “commercial advertising or promotion” under the Lanham Act. In addition, the judge found that both sides would be unable to show monetary damages or loss of goodwill arising from the releases. Thus, according the Court, “the characteristic relief” would be equitable and to convene a jury to examine the issues, facts and actions from the first trial in order to reach a proper result in the second, would be wasteful and unproductive. Therefore, the judge decided that under his inherent authority to enforce the Consent Order, the Court would moot each side’s claims by issuing a Memorandum “that neutrally and objectively recounted the earlier litigation.” Find Court Memorandum here. Sources: Millennium Laboratories, Inc. v. Ameritox, LTD., Civil Case L-10-03327 (D. Md.)

This article was prepared by Bob Rouder ( / 512 536 2491) and Saul Perloff ( / 210 270 7166) of Fulbright’s Practice.