Update: Supreme Court Appears Skeptical of Coca-Cola’s Arguments

Minute-Maid

From Reuters:

In arguments this morning before the Supreme Court, Coca-Cola said that the label for its Minute Maid “Pomegranate Blueberry” juice (with “flavored blend of 5 juices” in smaller type below) complied with rules laid down by the FDA.  Thus, Coca-Cola argued, the company could not be sued by POM for being “misleading” under the Lanham Act, which is designed to protect trademarks.

Chief Justice John Roberts appeared to disagree: “I don’t know why it’s impossible to have a label that fully complies with the FDA regulations and also happens to be misleading on the entirely different question of commercial competition, consumer confusion that has nothing to do with health.”

Justice Anthony Kennedy also disagreed with Coca-Cola’s assertion that consumers were sophisticated enough to know that other juices would be in the bottle because the food label contained the word “flavored” (a term of significance under FDA regulations): “Don’t make me feel bad because I thought that was pomegranate juice.”

Kennedy said pointedly at another instance: “I think it’s relevant for us to ask whether people are cheated in buying this product.”

And when Coca-Cola’s attorney disputed that the label was misleading, Justice Ruth Bader Ginsburg asserted, “Suppose that the reality is that consumers are misled.”

Please also see the Washington Post’s excellent article on the oral argument.

Supreme Court to Hear Arguments Monday in POM Wonderful v. Coca-Cola

On Monday, April 21st, the Supreme Court will hear argument in POM Wonderful v. Coca-Cola, which I recently wrote about here.  The question before the high court is whether a company may bring deceptive advertising claims under Federal Law with respect to a statement specifically allowed under FDA regulations.  In this case, POM alleged that Coke’s marketing of its Minute Maid “Pomegranate Blueberry” juice violated the Lanham Act because consumers are misled to believe that the drink consists primarily of pomegranate and blueberry juices.  The lower courts resolved case in Coke’s favor on preemption grounds because the product’s label was in full compliance with FDA guidelines.

If the Supreme Court sides with POM, it will significantly alter the existing legal landscape.  Presently, the Lanham Act yields to FDA regulations on preemption grounds when the two are in conflict.  In other words, potentially deceptive labels are allowed if the relevant statements have been specifically approved by the FDA.  A ruling in POM’s favor would effectively nullify this safe harbor with the result that anything on a label could be a potential target in litigation.

 

Buffalo Trace Targets Bison Ridge in Trademark / Trade Dress Dispute

Bison-Buffalo

Sazerac Co., the owner of the Buffalo Trace Distillery and its flagship BUFFALO TRACE bourbon, has filed suit against Crosby Lakes Spirits, Co. in the Western District of Kentucky for federal trademark and trade dress infringement and unfair competition.  Sazerac complains that Crosby Lakes Spirits’ BISON RIDGE Canadian Whiskey is a competing product with a confusingly similar trademark and product packaging.

Each of the BISON RIDGE bottles prominently feature a sketched rendering of a standing, forward-facing buffalo, similar to the Buffalo Logo displayed on Sazerac’s BUFFALO TRACE product packaging. As with Sazerac’s BUFFALO TRACE whiskey, BISON RIDGE whisky is golden brown in color and both of its products (BISON RIDGE BLENDED CANADIAN WHISKY and BISON RIDGE SPECIAL RESERVE CANADIAN WHISKY) are marketed in clear bottles featuring the same color combination of brown, white, and gold.  In addition, as with Sazerac’s BUFFALO TRACE product packaging, the neck label on the 1.0 Liter and 1.5 Liter BISON RIDGE BLENDED CANADIAN WHISKY products incorporate an image of a forward-facing buffalo in gold situated in between and immediately above the words “BISON” and “RIDGE,” which are displayed in white font.

The defendant has responded to the Complaint with a motion to dismiss for improper venue, arguing that the case should have been brought in Minnesota.

This case highlights that owners of well-known brands (and if you know bourbon then you know Buffalo Trace) must vigilantly police their trademark and trade dress rights.  Here, even if  a reasonable consumer might not mistakenly purchase the BISON RIDGE product believing it was BUFFALO TRACE bourbon, there is a solid argument that a reasonable consumer would believe the BISON RIDGE product is sponsored by, approved by, or otherwise associated with Sazerac and its Buffalo Trace product.  And if Sazerac did not take action, then its trade mark and trade dress would be somewhat weakened since there would multiple buffalo / bison marks in the same product category, i.e., whiskey.

March 27 Webinar: Legal Pitfalls in Marketing and Labeling of Food and Beverage Clients

I am presenting a webinar next Thursday, March 27, 2014 from 1:00 to 2:00 pm EST titled Legal Pitfalls in Marketing and Labeling of Food and Beverage Products.  The webinar is free and CLE credit is available.

The program provides a framework for understanding the key players and issues that shape the conduct of food companies in marketing and labeling their products.  This will include a brief summary of relevant regulations and government agencies, as well as activists and consumer movements, that are influencing how food is marketed in the United States.  The program will then examine numerous class-action lawsuits as case studies to highlight the risks faced by food companies and the various forces that influence, or seek to influence, their behavior.  The webinar is presented by Momentum events.

All are welcome and you may sign up for this event here.

FDA Proposes Updates to Nutrition Facts Label

As anticipated, the FDA has announced its proposed updates to the Nutrition Facts label for food packages.

Proposed                             Current

Proposed-NF

Current-NF

Proposed changes include:

  • Including “added sugars” on the label to help consumers know how much sugar has been added to the product.
  • Updating serving size requirements to reflect the amounts people currently eat.
  • Adding “dual column” labels to indicate both “per serving” and “per package” calorie and nutrition information for larger packages that could be consumed in one sitting or multiple sittings.
  • Requiring the declaration of potassium and vitamin D.
  • Revising the Daily Values for a variety of nutrients such as sodium, dietary fiber and Vitamin D.
  • Removing total “Calories from Fat” but continue to require information on “Total Fat,” “Saturated Fat,” and “TransFat.”
  • Refreshing format to emphasize certain elements, such as calories, serving sizes and Percent Daily Value.

None of these proposals were unexpected.  The FDA will accept public comment on the proposal for 90 days.

Trader Joe’s Settles “All Natural” Lawsuit for $3.4 Million

A federal judge has preliminarily approved a settlement in a class-action lawsuit in which Trader Joe’s was accused of falsely advertising certain cookies, cinnamon roles, “fresh pressed” apple juice and other products as “all-natural” when they contained ascorbic acid, potassium carbonate in the form of cocoa processed with alkali, vegetable mono and diglycerides, xanthan gum, and/or sodium acid pyrophosphate, all of which plaintiffs alleged are synthetic.

Notably, plaintiffs cited the following statement in their Complaint that had been on the FAQ section of the Trader Joe’s website.

If you see Trader Joe’s on a label, then you can know that the product contains NO artificial flavors, colors or preservatives; NO genetically modified ingredients; NO MSG; and NO added Trans Fats. What does it contain?  Quality

Under the proposed settlement, Trader Joe’s will establish a settlement fund of $3.375 million from which class member may receive payment for the average price of the purchased goods.  Trade Joe’s has also agreed to stop advertising the products as “all-natural.”

Supreme Court to Decide Whether POM Can Sue Coke Over Labels That Satisfy FDCA

Minute-MaidThe Supreme Court has agreed to hear an appeal by POM Wonderful LLC in its  suit against Coca-Cola regarding allegedly misleading labels.  The case was originally filed by POM in 2008 when it alleged that Coca-Cola misled consumers about the contents of its Minute Maid “Pomegranate Blueberry” juice (with “flavored blend of 5 juices” in smaller type below).  The claims were brought under the false advertising provision of Lanham Act as well as under California’s Unfair Competition Law and False Advertising Law.  POM claimed the label is misleading to consumers because, despite the name, the product  contains very little pomegranate or blueberry juice and consists of, instead, approximately 99% apple and grape juice, which is less-expensive (specifically, 99.4% apple and grape juices, 0.3% pomegranate juice, 0.2% blueberry juice, and 0.1% raspberry juice).

But Coca-Cola said the images on the product correctly identify the five fruits in the juice blend and that the name – “Pomegranate Blueberry – flavored blend of 5 juices” – informed consumers as much while describing that the blend tastes like pomegranate and blueberry.

The 9th Circuit affirmed the district court’s grant of summary judgment to Coca-Cola because POM was impermissibly challenging FDA regulations permitting the name and labeling that Coca-Cola used.  It reasoned that the Food, Drug and Cosmetic Act (“FDCA”) comprehensively regulates food and beverage labeling which, in turn, means that a plaintiff cannot sue under the Lanham Act (1) to enforce the FDCA or its regulations; (2) to interpret ambiguous FDA regulations; or (3) even to decide whether conduct violates the FDCA.  Accordingly, express preemption existed.

As best we can tell, Coca–Cola’s label abides by the requirements the FDA has established.  We therefore accept that Coca–Cola’s label presumptively complies with the relevant FDA regulations and thus accords with the judgments the FDA has so far made. Out of respect for the statutory and regulatory scheme before us, we decline to allow the FDA’s judgments to be disturbed.

The 9th Circuit thus did not reach the question of whether the label was, in the context of a Lanham Act claim, deceptive and/or misleading.

On appeal to the Supreme Court, the question presented as stated by POM is:

Whether the court of appeals erred in holding that a private party cannot bring a Lanham Act claim challenging a product label regulated under the Food, Drug, and Cosmetic Act.

Coke frames the question differently:

Whether the Ninth Circuit correctly held that a private litigant cannot use the Lanham Act’s general prohibition against “misleading” statements to challenge a product name and label specifically authorized, and deemed “not misleading,” by regulations duly issued by the [FDA] pursuant to the [FDCA].

The subtext of the case is that POM was losing sales to Minute Made in the face of POM’s extensive advertising and promotion of its  pomegranate juice products as having particular health benefits (for which it has received attention from FTC as noted in my prior posts here).  The case will likely be argued before the Supreme Court in April with a ruling expected by June.