Perrigo Co. said Thursday that an appeals court has upheld a ruling that Enfamil formula maker Mead Johnson Nutrition Co. made false advertising claims against PBM, Perrigo's store-brand infant formula business.
In December 2009, a jury awarded PBM $13.5 million in damages against the rival baby formula maker over false advertising about over the nutritional value of its product. PBM's formula is sold at Wal-Mart Stores Inc., Sam's Club, Target Corp., Kroger Co. and Walgreen Co., and can cost much less than Enfamil. Perrigo said the money will go to PBM founder Paul B. Manning.
PBM had sued Mead Johnson over ads that claimed "only Enfamil LIPIL is clinically proven to improve brain and eye development." LIPIL is what Mead calls two types of fats that are believed to aid child development. PBM said in its suit that its formula contains the same fats in equal or higher amounts and that it gets the fats from the same supplier as Mead.
Perrigo said Thursday that the U.S. Court of Appeals for the Fourth Circuit upheld the previous lower court's decision to issue an injunction against Glenview, Ill.-based Mead Johnson to bar it from making similar claims, and award damages.
"The Court has made it clear that national brand and store brand suppliers are entitled to fairly compete and advertising abuses will not be tolerated," said Perrigo Chairman and CEO Joseph C. Papa in a statement. "We also appreciate the Court's recognition that PBM could lawfully compare its products to national brand products."
Mead Johnson said it disagrees with the trial court's decision, but is complying with the ruling and has not used the proscribed language in more than a year.
Shares of Allegan, Mich.-based Perrigo rose 91 cents to close at $89.11. Shares of Mead Johnson declined 54 cents to end at $60.82.