Lanham Act False Advertising Cases, Vol. 1, No. 3

Second Circuit Adopts False Advertising Safe Harbor for Statements Made on FDA-approved Labeling 

Apotex Inc. v. Acorda Therapeutics, Inc., 823 F.3d 51 (2d Cir. 2016)        

In a dispute between rival pharmaceutical manufacturers, the Second Circuit affirmed summary judgment for defendant Acorda Therapeutics, adopting the rule that “representations commensurate with information in an FDA label generally cannot form the basis for Lanham Act liability.” The court noted that the rule reflects proper deference to FDA expertise and insulates companies from liability when they engage in commercial speech consistent with labeling requirements. It rejected plaintiffs’ challenges to defendant’s advertising statements that did not appear on the FDA-approved label, as the statements were consistent with the information on the label. After agreeing with the district court that a reasonable juror could understand one of Acorda’s marketing brochures to communicate a literally false message, the appellate court nevertheless affirmed summary judgment, holding that plaintiff Apotex had failed to demonstrate materiality by adducing “evidence that this inaccuracy would dissuade consumers from purchasing” its product. “Falsity alone does not make a false advertising claim,” the court observed. View the decision. 

Court Dismisses Lanham Act Suit Targeting Better Business Bureau’s Statements About Own Rating System 

Wall & Assocs., Inc. v. Better Bus. Bureau of Central Virginia, No. 16-cv-119, 2016 WL 3087055 (E.D. Va. May 31, 2016)      

The Council of Better Business Bureaus Inc. (CBBB) is a not-for-profit organization that licenses the Better Business Bureau (BBB) name and model to a network of not‑for‑profit regional bureaus. Under the model, the regional BBBs provide ratings of and accreditation to local businesses. After Wall & Associates’ tax-settlement business received low ratings from several regional BBBs, Wall sued regional BBBs and the CBBB for false advertising under the Lanham Act, alleging they “falsely advertise and promote the rating system as a national, uniform, and unbiased standard when in reality it is implemented by regional, independent licensees applying their own ‘subjective, biased, and personal criteria.’” The court granted defendants’ motion to dismiss for lack of “statutory standing,” holding that “[w]hile the asserted injury” — Wall’s lost business — “may have been proximately caused by the unfavorable ratings, Wall had not adequately alleged a direct injury caused by Defendants’ characterizations of their rating system as uniform, objective and unbiased.” View the decision. 

Court Enjoins Likely False Exclusive-Formulation Statement  

Simone v. VSL Pharm., Inc., No. TDC-15-1356, 2016 WL 3466033 (D. Md. June 20, 2016) 

Plaintiff invented a probiotic formulation that was first manufactured by Danisco USA Inc. and sold by VSL Pharmaceuticals Inc. under the name “VSL#3” and, after he “parted ways” with VSL, began a new partnership with ExeGi Pharma LLC to market the same Danisco-manufactured formulation as “Visbiome.” Protracted litigation ensued. VSL sought an injunction to end advertising statements that VSL#3 was no longer on the market and that Visbiome was the rebranded version of that product. The court issued the injunction, noting that VSL had “stockpile[d]” the formulation and could continue to sell it; statements that the formulation was “exclusively available” were likely to be literally false, and VSL would be irreparably injured by the misrepresentations. View the decision. 

Food Certification Organization’s Email to Grocery Stores Enjoined as Commercial Speech 

Handsome Brook Farm, LLC v. Humane Farm Animal Care, Inc., --- F. Supp. 3d ---, No.16-cv-592, 2016 WL 3348431 (E.D. Va. June 15, 2016) 

Plaintiff is a farm selling eggs produced by it and others, some of which are packed in Illinois at a facility called Phil’s Fresh Eggs. Defendant, HFAC, is a food certification organization. During an annual inspection of Phil’s, an HFAC inspector reported that she was unable to find certain ethical certifications on file. On the basis of this report, HFAC’s executive director drafted an email stating that plaintiff’s certification was “not current” and that there was “no validation” for its “Pasture Raised” certification. She sent the email to individuals employed at 39 companies, including the top 10 conventional grocery chains in the United States, urging these grocery store representatives to consider changing suppliers. In fact, plaintiff’s USDA certifications were up to date. Plaintiff sought a temporary restraining order and, later, a preliminary injunction. The court granted the injunction, finding that the email was commercial speech given the sender’s organizational goal of directing consumer demand toward certain consumer goods. The court also affirmed plaintiff’s Lanham Act standing even though the parties were not direct competitors, and concluded that the email served a promotional purpose and was distributed sufficiently to constitute advertising. View the decision.