Pizza Hut, Inc. v. Papa John's International, Inc.

Facts

P is the largest pizza chain in the United States. D is the third largest. D adopted a slogan: 'Better Ingredients. Better Pizza.' In 1996, D filed for federal trademark registration and its application was ultimately granted. D has invested over $300 million building customer goodwill in this trademark. P launched its 'Totally New Pizza' campaign. P declared 'war' on poor quality pizza. National ads aired during this campaign touted the 'better taste' of Pizza Hut's pizza, and 'dared' anyone to find a 'better pizza.' D countered with ads featuring P's co-founder Frank Carney touting the superiority of D's pizza over P's. Carney had left the pizza business in the 1980s but returned as a franchisee of Papa John's because he liked the taste of Papa John's pizza better than any other pizza on the market. The ad campaign was remarkably successful. D's sales increased 11.7 percent over May 1996 sales, while Pt's sales were down 8 percent. D launched a second series of ads touting the results of a taste test in which consumers were asked to compare the two pizzas. In the ads, D boasted that it 'won big time' in taste tests. The taste test showed that consumers preferred D's traditional crust pizzas over P's comparable pizzas by a 16-point margin (58% to 42%). Consumers preferred D's thin-crust pizzas by a fourteen-point margin (57% to 43%). D also ran a series of ads comparing specific ingredients used in its pizzas with those used by its 'competitors.' D touted the superiority of its sauce and its dough. D asserted that its sauce was made from 'fresh, vine-ripened tomatoes,' which were canned through a process called 'fresh pack,' while its competitors make their sauce from remanufactured tomato paste. D stated that it used 'clear filtered water' to make its pizza dough, while the 'biggest chain' uses 'whatever comes out of the tap.' D's asserted that it gives its yeast 'several days to work its magic,' while 'some folks' use 'frozen dough or dough made the same day.' D punctuated its ingredient comparisons with the slogan 'Better Ingredients. Better Pizza.' P has not contested the truthfulness of the underlying factual assertions made by D in the course of these ads. P claims that 'scientific evidence' establishes that filtered water makes no difference in pizza dough, that there is no 'taste' difference between 'fresh-pack' sauce and 'remanufactured' sauce, and that fresh dough is not superior to frozen dough. D asserts that 'each of these 'claims' involves a matter of common sense choice of fresh versus frozen, canned vegetables and fruit versus remanufactured paste, and filtered versus unfiltered water. D claims that consumers can and do form preferences every day without 'scientific' or 'expert' assistance. P charged D with false advertising in violation of Section 43(a)(1)(B) of the Lanham Act. After a three-week trial, the district court, without objection, submitted the liability issue to the jury through special interrogatories. The jury found that P's slogan, and its 'sauce claims' and 'dough claims' were false or misleading and deceptive or likely to deceive consumers. The jury determined that D's 'taste test' ads were not deceptive or likely to deceive consumers and that D's 'ingredients claims' were not false or misleading. The jury found that two of the three D television ads at issue were false or misleading and deceptive or likely to deceive consumers. The court concluded that the 'Better Ingredients. Better Pizza.' slogan was 'consistent with the legal definition of non-actionable puffery' from its introduction in 1995 until May 1997. However, the slogan 'became tainted in light of the entirety of D's post-May 1997 advertising.' The magistrate judge permanently enjoined D from 'using any slogan in the future that constitutes a recognizable variation of the phrase 'Better Ingredients. Better Pizza.' or which uses the adjective 'Better' to modify the terms 'ingredients' and/or 'pizza.' It also enjoined PD from identifying Frank Carney as a co-founder of Pizza Hut, 'unless such advertising includes a voice-over, printed statement or a superimposed message which states that Frank Carney has not been affiliated with Pizza Hut since 1980,' and enjoined the dissemination of any advertising that was produced or disseminated prior to the date of this judgment and that explicitly or implicitly states or suggested that 'D's component is superior to the same component of P's pizzas.' D was enjoined from 'explicitly or implicitly claiming that a component of D's pizza is superior to the same component of P's unless the superiority claim is supported by either (1) scientifically demonstrated attributes of superiority or (2) taste test surveys.' D appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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