The opinion of the court was delivered by: ALFRED M. WOLIN
In this action, Castrol Inc. ("Castrol") has sued Pennzoil Company and Pennzoil Products Company ("Pennzoil") for false and misleading representations of fact disseminated in commercial advertising in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Castrol further asserts that Pennzoil's media campaign violates the Consumer Fraud Act of the State of New Jersey, N.J.S.A. 56:8-2 and Common Law Unfair Competition. Castrol seeks a permanent injunction to enjoin Pennzoil from broadcasting, publishing or disseminating, in any form, or in any medium, the commercials or claims Castrol contends falsely describe or represent Pennzoil's motor oil products. Additionally, Castrol seeks compensatory and punitive damages, and reasonable attorneys fees.
The Court has jurisdiction under 28 U.S.C. §§ 1332 and 1338 as to the claims brought pursuant to the Lanham Act, and has supplemental jurisdiction over the claims arising under the New Jersey Consumer Fraud Act and under common law unfair competition. Venue is proper in this district pursuant to 28 U.S.C. § 1391.
Suit was instituted on March 31, 1992 by Verified Complaint, and Castrol's application for a temporary restraining order was denied on April 8, 1992. Castrol's motion for a preliminary injunction was consolidated with a trial on the merits. See Fed. R. Civ. P. 65(a)(2). The merits trial began on April 27, 1992, and concluded on May 4, 1992. The Court heard testimony from ten witnesses. Castrol presented no testimony on monetary damages. Therefore, no monetary relief was considered and is deemed waived by Castrol.
Castrol and Pennzoil are two of the major motor oil companies who manufacture and distribute their products in the United States. Competition for market share is keen, especially among the do-it-yourself segment of the public. Each of these motor oil companies engages in extensive advertising campaigns and closely monitors the other's media output. At the core of this dispute, is Pennzoil's television and print advertising campaign that states Pennzoil "outperforms any leading motor oil against viscosity breakdown." Closely coupled with Pennzoil's viscosity breakdown claim are related claims that pertain to "engine failure and premature engine wear, longer engine life and better engine protection." The television media campaign which began on or about February 15, 1992, features C.G. "Chuck" Rider, Bill Ingle and Michael Waltrip, all associated with a Nascar race team, John Andretti, Indy Car Race Team driver, and Arnold Palmer, a luminary of professional golf. Similar claims of superiority are disseminated through Pennzoil's print campaign.
I. THE TELEVISION COMMERCIALS
Each of the television commercials features an individual associated with professional sports. Four of them feature individuals well known to professional race car competition. In the fifth, Arnold Palmer a professional golfer who has a long association with Pennzoil and currently competes on the professional golf tour, is a spokesman for Pennzoil. In each of these celebrity commercials, the phrase "outperforms any leading motor oil against viscosity breakdown" is flashed across the television screen after the celebrity has introduced the product and proclaimed its superiority. Accompanying the alleged offending claim is a Pennzoil trademark in the lower righthand corner of the screen.
In this commercial, Rider conveys to the viewer that viscosity breakdown would mean to him "engine failure . . . and with Pennzoil he does not have that problem."
B. Bill Ingle - Crew Chief
Ingle contends that viscosity breakdown can cause "engine failure and premature engine wear . . . and with Pennzoil that is a problem that you don't have to worry about."
C. John Andretti - Driver
Andretti asserts that "longer engine life and better engine protection are definitely two things you can expect out of Pennzoil."
D. Michael Waltrip - Driver
Because Waltrip drives a race car for a living, he "depends on the parts and pieces in his car . . . and [he feels] confident knowing that Pennzoil is protecting the moving parts inside of his engine."
Palmer confides that in his youth his family, "not being [from] a very wealthy family, [his family] had to take very good care of its equipment . . . so that it lasted a long time and that's why they used Pennzoil."
II. CASTROL'S CONTENTIONS
The following paragraphs taken from Castrol's Verified Complaint succinctly summarize Castrol's contentions: S
8. In a series of five television commercials, and in other media, Pennzoil makes the following representation about its products: 'Pennzoil outperforms any leading motor oil against viscosity breakdown.' This claim of product superiority is false on its face. When compared to Castrol motor oils, Pennzoil's motor oils do not provide superior protection against viscosity breakdown. Castrol motor oils equal or exceed Pennzoil's products according to every industry standard of viscosity breakdown. In fact, in industry approved laboratory tests, two of Pennzoil's three leading brands of motor oil failed even to pass the most demanding test of viscosity breakdown protection.
9. In addition, Pennzoil's television commercials convey the false and misleading message that, because of Pennzoil's purported viscosity breakdown advantage, Pennzoil motor oils prevent 'engine failure' better than other motor oils and afford customers 'longer engine life' and 'better engine protection' than other motor oils. These claims are baseless. There is no proof that consumers run any risk of suffering engine failure or shorter engine life if they use a motor oil other than Pennzoil.
10. Pennzoil's television commercials are false, misleading and deceptive, in violation of federal and New Jersey law. Castrol seeks an injunction prohibiting defendants from broadcasting the Pennzoil television commercials at issue or from making similar claims in any medium.I
III. PENNZOIL'S CONTENTIONS
Pennzoil denies that its primary message "outperforms any leading motor oil against viscosity breakdown" is literally false. Likewise, it asserts that the secondary message associated with engine failure, premature engine wear, longer engine life and better engine protection is true.
In support of its contentions, Pennzoil relies on an industry recognized test referred to as ASTM D-3945.
This test measures viscosity breakdown and its results are reported in terms of percent viscosity loss. Because Pennzoil motor oils report a lesser percent of viscosity loss than other major motor oils, it reasons that its media statements are true and do not violate the Lanham Act.
By way of background, the Court accepts as true designated paragraphs of the Verified Complaint, trial stipulations and trial testimony, which the Court deems undisputed between the parties.
A. The Function of a Motor Oil in a Passenger Car
Motor oil in a passenger car primarily functions to lubricate the moving metal parts inside the car's engine in order to limit metal-to-metal contact. An oil performs this function by providing a protective film between metal parts. Modern multi-grade motor oils are designed to have adequate resistance to flow to maintain the oil's thickness and protective film across the wide range of temperatures and stress experienced in an engine. The measure of a motor oil's resistance to flow is known as "viscosity." (Verified Complaint P11).
Multi-grade motor oils are chemically formulated to provide sufficient viscosity at high temperatures so that the oil's protective film does not become too thin. The viscosity of motor oils is enhanced by chemical additives, often referred to as Viscosity Index Improvers. (Verified Complaint P12).
To ensure that a motor oil maintains its protective film thickness in use, its viscosity must remain at an adequate level under the extreme stress exerted on the oil when it passes between metal engine parts during operation. This stress creates a "shearing" effect which can break down the level of an oil's viscosity during actual engine use. (Verified Complaint P13).
The viscosity of motor oils is measured and analyzed according to several well-established tests and specifications in the motor oil and automobile industries. Tests exist for measuring the viscosity of fresh, unused oil and for measuring the viscosity of oils that have been exposed to shearing and high temperature. (Verified Complaint P14).
B. The SAE Grading System
The Society of Automotive Engineers (the "SAE") classifies all passenger car motor oils according to a viscosity grading system known as SAE J300. Pursuant to SAE J300, the viscosities of unused, and thus unsheared, motor oils are measured using a test procedure developed by the American Society for Testing and Materials known as ASTM D-445. The ASTM D-445 test is an industry-recognized laboratory test that measures the "kinematic viscosity" of motor oils in units called "centistokes" (cSt) according to the rate at which a given motor oil flows through a thin glass tube, or capillary, at 100 degrees C. (Verified Complaint P15).
With respect to high temperature performance, SAE J300 classifies motor oils into several grades according to the following viscosity ranges:
SAE Grade Viscosity (cSt)
20 5.6 9.3
30 9.3 12.5
40 12.5 16.3
50 16.3 21.9
The grade designations found on multi-grade motor oils -- such as 5W-30, 10W-30 and 10W-40 -- are derived from the J300 standard, and refer to the oil's measured viscosity at specified low and high temperatures. (Verified Complaint P16).
SAE J300 is a "pass/fail" standard. An oil is not rated any higher because its viscosity measures higher within the grade ranges. Therefore, a new 5W-30 or 10W-30 motor oil must have a viscosity of at least 9.3 cSt and a new 10W-40 motor oil must have a viscosity of at least 12.5 cSt. (Verified Complaint P17).
All Castrol and Pennzoil passenger car motor oils pass the SAE J300 standards for their specified grades, as do Quaker State, Valvoline and Texaco motor oils. In no respect are Pennzoil motor oils superior to Castrol motor oils according to SAE J300. (Verified Complaint P18).
D. Viscosity Breakdown Tests and Standards
Tests and specifications have been developed to measure the breakdown in a motor oil's viscosity caused by the stress of shearing and high temperatures experienced during engine use. (Verified Complaint P19).
Viscosity breakdown tests and specifications have been promulgated by both automobile and motor oil industry organizations, as well as by individual auto makers. The most demanding viscosity breakdown standards have been established by the Committee of Common Market Automobile Constructors, or "CCMC." The CCMC is an association of the major European automobile manufacturers, including Mercedes-Benz, BMW and Jaguar. (The CCMC recently reorganized itself into the Association of European Automobile Constructors, or "ACEA"). (Verified Complaint P20).
The CCMC motor oil specifications contain two viscosity breakdown requirements. A motor oil must satisfy both of these viscosity breakdown requirements in order to meet CCMC specifications. They are the "Shear Stability" or "Stay-in-Grade" requirement and the "High Temperature/High Shear Viscosity" or "HTHS" requirement. (Verified Complaint P21). Other organizations have developed similar standards.
1. The Stay-in-Grade Requirement
The CCMC "Shear Stability" or "Stay-in-Grade" test measures an oil's viscosity before and after it has been subjected to shearing in the same manner as prescribed by SAE J300. The Stay-in-Grade specification requires that motor oils, after being sheared, must still maintain the minimum kinematic viscosity level required to stay within the SAE J300 grade classification established for new oil. The industry-recognized laboratory test prescribed by the CCMC for shearing the oil to determine whether it stays in grade is known as CEC L-14-A-78. To meet this Stay-in-Grade standard, for example, 5W-30 and 10W-30 oils must still measure at least 9.3 cSt, and 10W-40 oils must still measure at least 12.5 cSt after being sheared. Like SAE J300, the Stay-in-Grade standard is a "pass/fail" standard.
There is no industry standard or specification that ranks motor oils higher than others on the basis of a higher after shear kinematic viscosity within the SAE J300 grade.
(b) The International Lubricant Standardization and Approval Committee ("ILSAC") Standard
Through ILSAC, the Motor Vehicle Manufacturers Association of the United States, Inc. and the Japan Automobile Manufacturers Association, Inc. have jointly developed and approved performance standards for gasoline-fueled passenger car engine oils. The test procedure prescribed by ILSAC for determining whether a motor oil stays in grade after shearing is known as the "L-38" test. The L-38 test is an industry-recognized fired-engine laboratory test method for measuring changes in kinematic viscosity, among other things.
(c) The United States Department of Defense ("DOD") Standard
The DOD established motor oil specifications for internal combustion engines used in the United States military (the "Military Specification"). The Military Specification was in effect until October 1991, and required that motor oils meet the Stay-in-Grade standard after shearing in the L-38 test.
(d) The Chrysler Motors Corporation ("Chrysler") Standard
The "High Temperature/High Shear Viscosity" or "HTHS" test measures an oil's viscosity during exposure to high temperature and shear conditions, like the environment in an operating engine where viscosity is important. The HTHS specification requires that motor oils retain a certain level of viscosity, measured in units called "centipoise" ("cP"), using a widely recognized laboratory test procedure. In order to meet ...