An EGG-cellent Example of How a Law Suit Can Backfire: Unilever v. Hampton Creek
Hampton Creek, according to its website, is “a company dedicated to [helping everyone] eat delicious food that’s healthier, sustainable, and affordable.” Earlier this year, Hampton Creek was featured on This Week in Startups where it demonstrated its “Just Mayo” product.
Just Mayo is an egg-free dressing designed to replace traditional egg-based mayonnaise. Indeed, one of the main points of Just Mayo, appears to be to avoid the use of eggs. According to Hampton Creek CEO Joshua Tetrick, eggs are some of the most inefficient food products, requiring an energy to food ratio of 39:1. Hampton Creek on the other hand achieves an energy to food ratio of 2:1. According to Tetrick, Just Mayo resulted from two years of research and development by Hampton Creek.
On October 31, 2014, Conopco (a company that does business as Unilever), the maker of Hellman’s mayonnaise, sued Hampton Creek for false advertising and unfair competition under the Lanham Act (federal law) and various state laws. According to Unilever, the Food and Drug Administration regulations define “mayonnaise” as “the emulsified semi-solid food prepared from vegetable oil” and containing an “acidifying” ingredient of either (1) vinegar or (2) lemon or lime juice, and an “egg yolk-containing” ingredient. Unilever also alleges that “mayo” is a commonly understood synonym for “mayonnaise.” Therefore, according to Unilever, Hampton Creek is falsely advertising its product by calling it “mayo” when it does not include any “egg yolk-containing ingredient.” See the Complaint here.
False Advertising Under the Lanham Act
False advertising plaintiff’s typically have to prove:
(1) the defendant made a false or misleading statement of fact in a commercial advertisement about a product;
(2) the statement either deceived or had the capacity to deceive a substantial segment of potential consumers;
(3) the deception is material, in that it is likely to influence the consumer’s purchasing decision;
(4) the product is in interstate commerce, and the plaintiff has been or is likely to be harmed by the statement.
Should the case progress, it will be interesting to see how a court addresses the second element above. Just Mayo is specifically and clearly marketed as being egg free. Therefore, regardless of the FDA’s definition of “mayonnaise” it would seem hard to suggest that Hampton Creek’s “Just Mayo” brand could deceive or have the capacity to deceive a substantial segment of potential consumers looking for traditional egg-based mayonnaise.
Shortly after Unilever initiated its suit, it received significant public backlash. Well known chef Andrew Zimmerman initiated a petition on Change.org asking Unilever to stop bullying Hampton Creek. In the word of Zimmerman:
Unilever, a UK-based 60 billion dollar multinational corporation, filed a lawsuit confessing that Hampton Creek is taking away market share from a couple of its products: Hellmann’s and Best Foods. Thus, as Unilever admits, it’s attempting to rely on an archaic standard of identity regulation that was created before World War II to mandate that Hampton Creek removes its products from store shelves.
As of November 20, the petition had over 70,000 online signatures.
Additionally, as reported by One Green Planet, marketing experts have stated that Hampton Creek received over $3M of free product placement based advertising per day in the week following the lawsuit. Accordingly Hampton Creek received over $21M of marketing benefits in just the first week following the lawsuit.
It will be interesting to see how far Unilever presses the lawsuit. It is unlikely that they expected this degree of backlash and this outpouring of support for Hampton Creek. Indeed, given the increasing awareness of the need for sustainable food sources, and allergy-friendly foods, the public opinion appears to be that Hampton Creek is on the right side of history. Accordingly, filing a lawsuit against a competitor requires much deeper analysis than whether one is likely to prevail on its legal claim. Here, even if Unilever ultimately prevails on its claims (which is not a certainty, as discussed above), it’s quite possible that Hampton Creek might end up the winner.