A recent decision involving both antitrust and Lanham Act claims sheds light on the risks of false advertising. On March 23, 2020, the District Court of Colorado granted and denied in part Johns Manville’s (“JM”) motion to dismiss Chase Manufacturing’s (“Chase”) complaint alleging that JM violated the Sherman Act by engaging in tying and monopolization and the Lanham Act for false advertising. Both JM and Chase sell calcium silicate, known as calsil, which insulates pipes, tanks, and other equipment in industrial facilities. JM accounts for the majority of the domestic calsil market.
According to Chase’s complaint, JM’s sales managers allegedly told customers that Chase’s calsil “may have asbestos and may put…customers and employees at risk,” was poor quality and could not be “trusted to meet specifications,” and was “Chinese” (meaning it was produced in China). A JM sales representative asked a purchaser why it would “risk buying an unproven product that may not meet specifications.” Chase alleged that that two of the five largest distributors heard these comments. JM’s sales managers also allegedly told a smaller distributor that JM never sold calsil that was made in China. Finally, JM’s website FAQ page stated “[w]hile we are aware of one other manufacturer in Asia that produces water resistant calcium silicate, it is an expensive, custom-order product that is not readily available.”