Castrol Inc. v. Pennzoil Company and Pennzoil Products Company

987 F.2d 939, 25 U.S.P.Q. 2d (BNA) 1666, 1993 U.S. App. LEXIS 4205, 1993 WL 22242
CourtCourt of Appeals for the Third Circuit
DecidedMarch 3, 1993
Docket92-5353
StatusPublished
Cited by246 cases

This text of 987 F.2d 939 (Castrol Inc. v. Pennzoil Company and Pennzoil Products Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Castrol Inc. v. Pennzoil Company and Pennzoil Products Company, 987 F.2d 939, 25 U.S.P.Q. 2d (BNA) 1666, 1993 U.S. App. LEXIS 4205, 1993 WL 22242 (3d Cir. 1993).

Opinions

OPINION OF THE COURT

ROSENN, Circuit Judge.

The primary issue raised by this appeal is whether one of this nation’s major oil companies engaged in deceptive advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a) (1988). The parties to this appeal further call upon this court to interpret the degree to which commercial speech is protected by the First Amendment to the United States Constitution.

Commercial advertising plays a dynamic role in the complex financial and industrial activities of our society, leading author Norman Douglas to go so far as to observe that “[y]ou can tell the ideals of a nation by [941]*941its advertisements.”1 Because honesty and fair play are prominent arrows in America’s quiver of commercial and personal ideals, Congress enacted section 43(a) of the Lanham Act “to stop the kind of unfair competition that consists of lying about goods or services.” U-Haul Int’l, Inc. v. Jartran, Inc., 681 F.2d 1159, 1162 (9th Cir.1982). Although “[cjomparative advertising, when truthful and nondecep-tive, is a source of important information to consumers and assists them in making rational purchase decision,” Triangle Publications v. Knight-Ridder Newspapers, 626 F.2d 1171, 1176 (5th Cir.1980), the consumer called upon to discern the true from the false requires a fair statement of what is true and false.

The plaintiff-appellee in this case, Castrol Inc. (Castrol), a major motor oil manufacturer and distributor of its products, sued in the United States District Court for the District of New Jersey, alleging that Pennzoil Company and Pennzoil Products Company (Pennzoil) advertised its motor oil in violation of section 43(a) of the Lanham Act2 when it claimed that its product “outperforms any leading motor oil against viscosity breakdown.” Additionally, Castrol challenged Pennzoil’s related secondary claim that Pennzoil’s motor oil provides “longer engine life and better engine protection.” After a bench trial on the merits, the district court held that Pennzoil’s advertisements contained claims of superiority which were “literally false.”

Consequently, the court permanently enjoined Pennzoil from “broadcasting, publishing, or disseminating, in any form or in any medium,” the challenged advertisements or any “revised or reformulated versions” thereof. This injunction was superseded by a more narrowly tailored Amended Order and Final Judgment, prohibiting only “revised or reformulated false or deceptive versions of the commercials.” The district court denied Castrol’s request for money damages and attorney’s fees and retained jurisdiction for the purpose of enforcing or modifying its judgment. Pennzoil immediately appealed on the grounds that its advertisements did not contain false claims and that the permanent injunction issued by the district court infringed on its right to free speech as protected by the First Amendment.3 We affirm.

I. FACTS

The district court opinion thoroughly recites the material facts of this case, which are not in dispute. Castrol Inc. v. Pennzoil Co. & Pennzoil Prods. Co., 799 F.Supp. 424 (D.N.J.1992). We set forth only a distillation thereof essential to an understanding of our disposition of this appeal. Castrol’s suit stems from a Pennzoil advertising campaign of its motor oil consisting of print and television commercials. These commercials feature either various members of national race car glitterati, or Arnold Palmer, a professional golf luminary of national repute, asserting that Pennzoil motor oil outperforms any leading motor oil against viscosity breakdown. The court found that the advertisements also implied that Pennzoil’s products offered better protection against engine failure than any other leading motor oil.

Motor oils minimize metal-to-metal contact in an engine by providing an optimum protective film between moving parts. The oils are designed to provide sufficient resistance to flow to maintain the oil’s thickness [942]*942and protective film across the wide range of temperatures and stress generated by high speed motor engines. The measure of a motor oil’s resistance to flow is called “viscosity.” Ideally, viscosity should remain at an adequate level under all types of stress when the oil flows between engine parts in operation, but stress may cause a “shearing” effect which breaks down the viscosity of the oil during engine use. Viscosity breakdown has both a mechanical and chemical effect, the first causing a physical thinning of the lubricant and the latter the formation of sludge, varnish, and deposits on the engine. Because it is critical to motor oil performance, viscosity is the basis on which motor oils are classified and marketed by a grading system known as “SAE J300.”

According to SAE J300, the viscosity of unused motor oils is measured by an industry-recognized laboratory test developed by the American Society for Testing and Materials (ASTM). The tests and specifications measure the breakdown in motor oil viscosity caused by the stress of shearing and high temperatures during engine use. The court found that the Committee of Common Market Automobile Constructors (CCMC) has established “the most demanding viscosity breakdown standards.” Cas-trol, 799 F.Supp. at 430. CCMC is an association of major European automobile manufacturers, including Mercedes-Benz, BMW, and Jaguar. CCMC motor oil specifications contain two viscosity breakdown requirements: (1) the Shear Stability or Stay-in-Grade test, and (2) the High Temperature/High Shear (HTHS) test.

The Stay-in-Grade Test requires that the subject motor oil, after being sheared, maintain a minimum kinematic viscosity level in order to remain within its SAE J300 grade. The Stay-in-Grade standard is a “pass/fail” standard, and it does not rank motor oils within each grade. The district court found that all Castrol and Pennzoil passenger car motor oils pass the SAE J300 standards for their specified grades. Castrol, 799 F.Supp. at 429. Both parties to the litigation have stipulated that Pennzoil does not outperform Castrol against the Stay-in-Grade viscosity breakdown standard.

The HTHS test is a more rigorous test, which measures an oil’s reduced viscosity during exposure to high temperatures and large shear forces generated by rapidly moving parts similar to the conditions in an operating engine. HTHS standards have been adopted by the Society of Automotive Engineers (SAE), the CCMC, General Motors, Chrysler, and Ford. By this standard’s measure, Pennzoil did not outperform Castrol in any way; rather, it was Castrol motor oils which proved superior.4

Pennzoil, however, does not rely on the aforementioned tests to lend credence to its claims of superiority with respect to viscosity breakdown and protection from engine wear. Rather, Pennzoil claimed superiority on the basis of research it conducted utilizing the ASTM D-3945 Test, promulgated by the American Society of Testing and Materials.

Pursuant to this test, motor oil is passed through a diesel injector nozzle at a shear rate that causes a reduction in the kinematic viscosity of the fluid under test. The reduction in kinematic viscosity is reported as a percent loss of the initial kinematic viscosity.

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987 F.2d 939, 25 U.S.P.Q. 2d (BNA) 1666, 1993 U.S. App. LEXIS 4205, 1993 WL 22242, Counsel Stack Legal Research, https://law.counselstack.com/opinion/castrol-inc-v-pennzoil-company-and-pennzoil-products-company-ca3-1993.