SCOTUS: FDA Regulations No Bar to Lanham Act Claims

Justice Kennedy

Earlier today the United States Supreme Court issued another of the many intellectual property related decisions the Court took during the October 2013 term. In this case, POM Wonderful LLC v. The Coca-Cola Company, the Supreme Court reversed a decision from the Ninth Circuit that held that within the realm of labeling for food and beverages, a Lanham Act claim asserting that the label is deceptive and misleading is precluded by the Federal Food, Drug, and Cosmetic Act (FDCA). The Supreme Court ruled that a claim brought pursuant to the Lanham Act, which makes deceptive and misleading advertising actionable under 15 U.S.C. § 1125(a), is not precluded by the FDCA, which forbids the misbranding of food, including by means of false or misleading labeling.

This case arose relating to the belief of POM that claims made by the Coca-Cola Company were misleading with respect to a juice blend sold by Coca-Cola’s Minute Maid division. The juice sold by Coca-Cola prominently displays the words “pomegranate blueberry,” but in truth the product contains only .3% pomegranate juice and only .2% blueberry juice.

In a unanimous ruling delivered by Justice Kennedy (minus Justice Breyer who took no part in the decision) explained that there is no text within the statutes that would support the contention that the FDCA precludes Lanham Act claims. Indeed, the Supreme Court specifically found the FDCA and the Lanham Act to complement each other.

Justice Kennedy wrote:

Beginning with the text of the two statutes, it must be observed that neither the Lanham Act nor the FDCA, in express terms, forbids or limits Lanham Act claims challenging labels that are regulated by the FDCA. By its terms, the Lanham Act subjects to suit any person who “misrepresents the nature, characteristics, qualities, or geographic origin” of goods or services. 15 U. S. C. §1125(a). This comprehensive imposition of liability extends, by its own terms, to misrepresentations on labels, including food and beverage labels. No other provision in the Lanham Act limits that understanding or purports to govern the relevant interaction between the Lanham Act and the FDCA. And the FDCA, by its terms, does not preclude Lanham Act suits. In consequence, food and beverage labels regulated by the FDCA are not, under the terms of either statute, off limits to Lanham Act claims. No textual provision in either statute discloses a purpose to bar unfair competition claims like POM’s.

One of the important facts relied upon by the Supreme Court in this decision seems to be the fact that the FDA does not pre-approve food and beverage labels as it does with certain other labels, such as drug labels. Thus, the Lanham Act is not making actionable that which has been expressly reviewed and permitted by a federal agency.

Nevertheless, the government did raise a somewhat similar argument in favor of Coca-Cola, which was also rejected by the Supreme Court. The government argued that Lanham Act claims should be precluded to the extent the FDCA or other FDA regulations require or authorize the aspects of the challenged label. The Supreme Court observed that the government mistake is to assume that the FDCA sets a ceiling on regulation relative to food and beverage labels. The Supreme Court rebuffed the government argument by showing the absurdity of the position, explaining:

The Government asks the Court to preclude private parties from availing themselves of a well-established federal remedy because an agency enacted regulations that touch on similar subject matter but do not purport to displace that remedy or even implement the statute that is its source. Even if agency regulations with the force of law that purport to bar other legal remedies may do so, it is a bridge too far to accept an agency’s after-the-fact statement to justify that result here. An agency may not reorder federal statutory rights without congressional authorization.

(internal citations omitted). While not an earth shattering statement, and rather unnecessary for the ultimate conclusion, one cannot help but notice the final sentence in the above quote, which could signal what the Supreme Court is thinking, or may think and ultimately hold, relative to other important questions of the day relating to executive power in general.

At the end of the day, the 17 page decision could well have been much shorter. The statutes provide no support for Lanham Act claims being precluded, which makes perfect sense when you understand that the FDA does not pursue enforcement measures with respect to objectionable food and beverage labels. Ultimately, a Lanham Act claim is a necessary and important mechanism for individuals and companies to privately police and enforce federal statutes that prohibit misleading labeling.



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