“#1 Brand” Claims Under the Lanham Act: The Second Circuit Clarifies That Literal Falsity Requires an Unambiguous Consumer Meaning When “Brand” May Refer to Parent or Product Lines

“#1 Brand” Claims Under the Lanham Act: The Second Circuit Clarifies That Literal Falsity Requires an Unambiguous Consumer Meaning When “Brand” May Refer to Parent or Product Lines

Introduction

In Zesty Paws LLC v. Nutramax Laboratories, Inc., No. 24-1810 (2d Cir. Oct. 3, 2025), the Second Circuit vacated a preliminary injunction that barred Zesty Paws from advertising itself as the “#1 brand” of pet supplements in the United States. The decision refines how courts must assess “#1 brand” superiority claims under the Lanham Act’s false advertising provision, 15 U.S.C. § 1125(a)(1)(B). Specifically, the court held that a plaintiff seeking to prove literal falsity at the preliminary injunction stage must demonstrate that the challenged claim communicates an unambiguous and necessarily false message to reasonable consumers, and that courts must consider whether the term “brand,” in context, could reasonably refer to either a parent company’s umbrella brand or to individual product-line brands.

The case arises from direct competitors in the pet supplements market. Zesty Paws markets all of its products under a single umbrella brand (“branded house”), while Nutramax uses multiple distinct product-line brands such as Cosequin and Dasuquin (“house of brands”). Nutramax argued Zesty Paws’s “#1 brand” claim was literally false because Nutramax’s total sales (aggregating all Nutramax brands) exceeded Zesty Paws’s. Zesty Paws countered that “brand,” as used in its claims, reasonably referred to a comparison between the Zesty Paws brand and individual competing product brands like Cosequin, not the Nutramax corporate umbrella. The district court enjoined Zesty Paws, finding literal falsity. The Second Circuit vacated, holding the district court applied the wrong legal standard and failed to analyze whether “brand” was susceptible to more than one reasonable interpretation in the context presented.

Summary of the Opinion

The Second Circuit vacated the preliminary injunction and remanded because the district court did not properly apply the literal falsity standard. To establish literal falsity—either expressly or by necessary implication—the message must be unambiguous to reasonable consumers. If the language is susceptible to more than one reasonable interpretation, the claim cannot be literally false. The district court concluded that because Nutramax is a “brand” and outsold Zesty Paws in aggregate, Zesty Paws’s “#1 brand” statements were necessarily false. The Second Circuit held that was error: the court was required to analyze whether reasonable consumers could understand “brand” to refer to Nutramax’s individual product-line brands (e.g., Cosequin, Dasuquin), rather than to the Nutramax umbrella brand. The district court also failed to engage with evidence bearing on consumer understanding, such as packaging emphasizing product-line brands and internal Nutramax documents treating “brand” to mean those lines.

The panel declined to reach implied falsity in the first instance, leaving that issue for the district court on remand. Judge Menashi concurred in the judgment, opining that, on this record, the “#1 brand” claims cannot be literally false as a matter of law because “brand” is plainly susceptible to multiple reasonable interpretations in a marketplace with competing brand architectures.

Factual and Procedural Background

  • Parties and market: Zesty Paws (branded house) vs. Nutramax (house of brands including Cosequin, Dasuquin, Proviable, etc.).
  • Challenged statements: “#1 Brand of Pet Supplements in the USA,” “USA’s #1 Brand of Pet Supplements,” and “#1 Selling Pet Supplements Brand in the USA.”
  • Zesty Paws’s position: Reasonable consumers would understand “brand” to reference product-line brands (Cosequin, Dasuquin, etc.), and Zesty Paws’s aggregate brand sales exceed each of those individual brands.
  • Nutramax’s position: “Brand” means the Nutramax brand; Nutramax’s aggregated sales exceed Zesty Paws’s aggregated sales; thus Zesty Paws’s claim is literally false.
  • District court proceedings: After expedited discovery and an evidentiary hearing, the court granted a preliminary injunction, finding Nutramax likely to succeed on literal falsity and presuming irreparable harm under 15 U.S.C. § 1116(a). It did not reach implied falsity at the preliminary injunction stage.
  • Appeal: Zesty Paws challenged the likelihood-of-success determination on literal falsity.

Issues on Appeal

  • Whether the district court applied the correct legal standard for literal falsity under the Lanham Act to Zesty Paws’s “#1 brand” claims.
  • Whether the court erred by failing to analyze whether reasonable consumers could interpret “brand” to refer to Nutramax’s product-line brands rather than the Nutramax umbrella brand.

Holdings

  • The district court abused its discretion in granting a preliminary injunction because it applied the wrong legal standard for literal falsity—failing to assess whether the challenged “#1 brand” claims unambiguously conveyed a single, necessarily false message to reasonable consumers.
  • Vacatur and remand were required for further proceedings consistent with the correct standard, including the potential consideration of implied falsity (left open for the district court).
  • Concurring opinion: Judge Menashi would hold that, on this record, literal falsity is foreclosed as a matter of law because “brand” is susceptible to more than one reasonable interpretation given the parties’ distinct brand architectures.

Analysis

Precedents Cited and Their Influence

  • Church & Dwight Co. v. SPD Swiss Precision Diagnostics, 843 F.3d 48 (2d Cir. 2016):
    The panel relied on Church & Dwight’s articulation that a statement is literally false only if it is either expressly false or false by necessary implication—i.e., the words or images, in context, necessarily and unambiguously communicate the false message. This case anchors the “unambiguous to reasonable consumers” requirement.
  • Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144 (2d Cir. 2007):
    Time Warner is quoted for the principle that if an advertisement is susceptible to more than one reasonable interpretation, it cannot be literally false. The panel applied this directly to the ambiguity of “brand.”
  • Winter v. NRDC, 555 U.S. 7 (2008):
    Cited for the four-factor preliminary injunction standard. The Second Circuit’s vacatur reflects that misapplication of the likelihood-of-success factor undermines the injunction.
  • Daileader v. Certain Underwriters at Lloyds London Syndicate 1861, 96 F.4th 351 (2d Cir. 2024):
    Reinforces that a preliminary injunction is an “extraordinary remedy.” The court’s readiness to vacate reflects the stringency of this standard.
  • Yang v. Kosinski, 960 F.3d 119 (2d Cir. 2020):
    Provides the standard of review—de novo for legal conclusions, abuse of discretion for the ultimate decision to grant an injunction.
  • State Farm v. Tri-Borough NY Med. Prac. P.C., 120 F.4th 59 (2d Cir. 2024) and City of New York v. Henriquez, 98 F.4th 402 (2d Cir. 2024):
    Explain that an error of law is an abuse of discretion and occurs when the court applies the wrong legal principle or misapplies the right one. The Second Circuit found such an error here.
  • 15 U.S.C. § 1116(a):
    The district court invoked the Lanham Act’s rebuttable presumption of irreparable harm upon a showing of likely success; the Second Circuit’s vacatur necessarily unsettles that presumption because the likelihood-of-success analysis was flawed.

Legal Reasoning

The Second Circuit reaffirmed a core tenet of Lanham Act jurisprudence: literal falsity turns on the message conveyed to reasonable consumers. An advertisement is literally false only when it unambiguously expresses a false message either expressly or by necessary implication. The district court’s analysis short-circuited this inquiry by asking only whether Nutramax is “a brand” and then treating that finding as dispositive. The proper analysis asks whether a reasonable consumer would necessarily understand the “#1 brand” claim to refer to Nutramax’s umbrella brand, rather than to Nutramax’s individual product-line brands.

The panel underscored that “brand strength” and brand architecture evidence are probative of consumer understanding. The court faulted the district court for failing to engage with:

  • Product packaging that prominently uses product-line brand names (e.g., Cosequin, Dasuquin) while relegating “Nutramax” to smaller font or the back panel.
  • Internal Nutramax documents reflecting that the company itself (and its employees) often uses “brand” to refer to the product lines, and even recognized Zesty Paws as holding the top brand position in supplements.

This evidence could lead reasonable consumers to interpret “brand” as referring to those product lines. Because the district court neither acknowledged the requirement that literal falsity must be unambiguous nor explained why Zesty Paws’s interpretation was unreasonable, the court abused its discretion in granting the injunction.

The court declined to address implied falsity because the district court had not made the requisite factual findings at the preliminary injunction stage. However, the court noted that Nutramax may pursue that theory on remand, including arguments that Zesty Paws’s claims compared apples to oranges (e.g., comparing all Zesty Paws products to a single Nutramax product or excluding veterinary-channel sales).

Concurring separately, Judge Menashi would have gone further and held that, given the parties’ “branded house” versus “house of brands” strategies, the term “brand” is necessarily ambiguous in this marketplace. He emphasized that Nutramax’s own packaging and internal materials distinguish the Nutramax “company” from its product-line “brands.” On that record, he concluded, the “#1 brand” claims cannot be literally false as a matter of law and the case should proceed only on implied falsity.

Impact

The decision has immediate and practical implications for litigating and drafting “#1 brand” claims in markets where companies use different brand architectures:

  • Higher bar for literal falsity challenges: Plaintiffs cannot establish literal falsity merely by aggregating a parent company’s sales and labeling the parent a “brand.” They must show that reasonable consumers would unambiguously understand the challenged “#1 brand” claim to refer to the umbrella brand rather than to competing product-line brands.
  • Brand architecture becomes central evidence: Courts must consider how the marketplace presents brands—packaging hierarchy, font size, placement of parent logos, references to “company” vs. “brand,” and internal marketing usage—when assessing consumer understanding of “brand.”
  • Shift toward implied falsity and surveys: Because “brand” often admits multiple reasonable meanings in “house of brands” markets, plaintiffs may increasingly rely on implied falsity theories supported by consumer perception surveys and channel-specific data to show deception or materiality.
  • Preliminary injunction strategy: The ruling cautions district courts to develop a robust record and explicit findings on consumer interpretation at the likelihood-of-success stage. Absent an unambiguous message, literal falsity cannot support early injunctive relief, and the statutory presumption of irreparable harm will not attach.
  • Advertising compliance: Advertisers should tightly define comparators and scope in superiority claims (e.g., “#1 selling joint-health brand among national retail sales, 12 months ending [date]; excludes veterinary-channel sales”), to reduce ambiguity and litigation risk.

Complex Concepts Simplified

  • Literal falsity vs. implied falsity: Literal falsity exists when the advertisement is untrue on its face or unambiguously conveys a false message by necessary implication. Implied falsity exists when the ad, though literally true or ambiguous, nonetheless misleads a substantial portion of consumers. Literal falsity typically does not require survey evidence; implied falsity generally does.
  • False by necessary implication: Even without an express false statement, an ad can be literally false if, in context, it necessarily and unambiguously communicates the false message. Ambiguity defeats “necessary implication.”
  • “Reasonable consumer” standard: The inquiry asks what message a reasonable consumer would take from the ad in context—not how the advertiser intended it or how a hyper-literal reading might parse it.
  • Brand architecture: A “branded house” uses a single umbrella brand across products (e.g., “Zesty Paws [product]”). A “house of brands” employs distinct product-line brands under a parent company (e.g., Nutramax’s Cosequin, Dasuquin). In the latter, consumers may perceive “brand” to mean the product-line brand rather than the parent.
  • Preliminary injunction and irreparable harm: A preliminary injunction requires likelihood of success on the merits, irreparable harm, balance of hardships, and public interest. Under 15 U.S.C. § 1116(a), if a Lanham Act plaintiff shows likely success, a rebuttable presumption of irreparable harm applies—but that presumption falls away if the merits showing is deficient.

Practical Guidance for Litigants and Advertisers

  • For plaintiffs challenging “#1 brand” claims:
    • Assemble evidence of how consumers encounter “brand” in the category: packaging hierarchy, shelf presentation, and marketing usage distinguishing “company” from “brand.”
    • Where ambiguity is likely, focus on implied falsity with consumer surveys testing the ad in context, and document materiality (effect on purchase decisions).
    • Define the relevant market and channels (retail vs. veterinary; online vs. specialty) and demonstrate “apples-to-apples” comparisons.
  • For advertisers making superiority claims:
    • Clarify the comparator in the claim itself (e.g., “#1 selling brand among [defined category/segment]”), and include time period and data source.
    • If you operate a house of brands, ensure parent-brand claims align with how consumers actually perceive your branding, or qualify the claim to the product-line brand where appropriate.
    • Maintain substantiation files showing category definitions, sales data (including or excluding specified channels), and the rationale for the comparator chosen.
  • For courts assessing preliminary injunctions:
    • Explicitly analyze whether the challenged statement is susceptible to multiple reasonable interpretations; if so, literal falsity is unavailable.
    • Engage with marketplace context and evidence—including packaging, internal documents, and the parties’ brand architectures—to assess consumer understanding.
    • If literal falsity is unavailable, consider whether the record supports implied falsity (often requiring survey evidence) and materiality before applying § 1116(a)’s presumption of irreparable harm.

What Remains Open on Remand

  • Implied falsity: The district court may consider whether the “#1 brand” claims, though not literally false, mislead consumers (e.g., by comparing an entire product line to a single competing product or by excluding veterinary sales while implying otherwise).
  • Materiality and injury: Whether any misleading message is material to purchasing decisions and causes actual or likely injury.
  • If the district court again addresses literal falsity: It must make findings explaining why any alternative interpretation of “brand” is unreasonable to the reasonable consumer in this market context.

Conclusion

Zesty Paws LLC v. Nutramax Laboratories, Inc. clarifies a pivotal aspect of Lanham Act false advertising law in the Second Circuit: “#1 brand” claims cannot be enjoined on a literal falsity theory unless the term “brand,” read in context, unambiguously refers to the comparator the challenger prefers (here, the umbrella company brand). Where a competitor operates a “house of brands,” the court must rigorously analyze consumer understanding in light of packaging, marketplace presentation, and internal usage. The decision raises the bar for early injunctive relief premised on literal falsity in superiority claims that use flexible terms like “brand,” and it directs litigants toward implied falsity theories supported by consumer perception evidence when ambiguity is present.

The opinion’s practical message is twofold. For advertisers: define your comparator and scope to avoid ambiguity. For challengers: prove how consumers actually understand the claim, especially in markets with mixed brand architectures. In doing so, this decision advances a consumer-centric approach to false advertising, insisting that courts adjudicate “#1 brand” claims by what consumers reasonably take away—not by corporate identity alone.

Case Snapshot

  • Court: U.S. Court of Appeals for the Second Circuit
  • Panel: Judges Bianco, Menashi (concurring in the judgment), and Lee
  • Decision: Preliminary injunction vacated; case remanded
  • Date: October 3, 2025 (argued June 25, 2025)
  • Key Holding: Literal falsity requires an unambiguous consumer message; where “brand” can reasonably refer to parent or product-line brands, literal falsity is not established without more.

Case Details

Year: 2025
Court: Court of Appeals for the Second Circuit

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