Todd Harrison, Shahin Rothermel, and Thomas Smith examine the Tenth Circuit’s recent decision in KetoNatural Pet Foods Inc. v. Hill’s Pet Nutrition Inc. and its implications for false advertising claims in their Law360 article, “10th Circ. Ruling Undermines False Ad ‘Two Clicks’ Rule.” The following is an excerpt:
The July 14 decision in KetoNatural Pet Foods Inc. v. Hill's Pet Nutrition Inc. may ultimately be remembered less for what it says about pet food than for what it says about hyperlinks.
The case involved competing pet food manufacturers, with KetoNatural alleging that Hill's violated the Lanham Act by incorporating misleading third-party content through hyperlinks on its website.
On appeal from a motion to dismiss, the U.S. Court of Appeals for the Tenth Circuit reversed the U.S. District Court for the District of Kansas' decision to dismiss the case, holding that a company's commercial speech can include third-party material it intentionally directs consumers to as part of its promotional message — effectively rejecting the informal "two-click" rule that many businesses had relied on to avoid liability for linked content.
The Tenth Circuit's decision reaches beyond competitor false advertising claims, with potentially significant implications for U.S. Food and Drug Administration, Federal Trade Commission, state consumer protection and other regulatory enforcement.
For years, many companies operated under an informal assumption — sometimes referred to as the two-click rule — that they could avoid liability for third-party claims so long as those claims appeared on another website to which consumers had to navigate independently.
The Tenth Circuit has substantially undermined that assumption. The court held that a company's own commercial speech may include third-party content that it intentionally incorporates through hyperlinks and curated references when those materials function as part of the company's promotional message.
Although the case arises under the Lanham Act, the reasoning has implications well beyond competitor litigation. Companies regulated by the FDA, FTC, state attorneys general and consumer protection statutes should carefully evaluate not only what they say about their products, but also what they direct consumers to read.
For the full article, click here.