Congress Passes GMO Labeling Bill, President Obama To Sign into Law

On July 14th, Congress passed a GMO labeling bill by a vote of 306-117 that would preempt Vermont’s mandatory labeling act that went into effect on July 1st.  The White House said President Obama will sign the bill into law.

Under the legislation, explicit labeling of GMO ingredients is voluntary and companies are allowed to instead use a computer-generated QR (quick response) code to identify GMO ingredients.  Consumers can scan the QR code with a smartphone which takes them to a website to find out if a product includes GMOs ingredients.  The Organic Trade Association, which has supported mandatory labeling, supported the bill because, among other things, it includes a provision allowing organic food companies to label their products as non-GMO.

Notably, the FDA has stated that if modified genes are removed in the manufacturing process ― which can happen with ingredients such as corn syrup and canola oil ― there is no requirement for notification under the law.  But the Agriculture Department, which would oversee GMO labeling under the law, apparently disagrees with that interpretation.  Accordingly, many believe the scope of ingredients requiring notification under the new law might ultimately be decided by courts.

Republicans and Congresspersons from rural states strongly supported the legislation. “The clock has run out, my producers need certainty and an interstate commerce nightmare will shortly ensure if we don’t pass this bill,” said Rep. Rodney Davis, R-Ill.

Federal Circuit Rules that MAYA Trademark for Wine is “Sufficiently Dissimilar” from MAYARI Wine

On appeal from the U.S Trademark Trial and Appeal Board (the “Board”), the Federal Circuit ruled on June 24th that consumers are not likely to confuse the trademarks MAYA and MAYARI with respect to wine.  Georgallis Holdings, LLC (“Georgallis”) filed an application with the U.S. Patent and Trademark Office to register the trademark MAYARI for use on wine.  Oakville Hills Cellar, Inc. (“Oakville”), d/b/a Dalla Valle Vineyards, opposed the registration alleging that the mark would likely cause confusion with Oakville’s previously registered mark MAYA for wine.

 

Accordingly, the appeal focused on DuPont factors for assessing likelihood of confusion:
(1) the similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation, and commercial impression; (2) the similarity or dissimilarity of the goods as described in an application or registration or in connection with which a prior mark is in use; (3) the similarity or dissimilarity of trade channels; (4) the conditions under which and buyers to whom sales are made; (5) the fame of the prior mark; (6) similar marks in use on similar goods; (7) the absence of actual confusion; (8) the right to exclude others from use; (9) the extent of potential confusion; and (10) other probative facts, here, federal labelling requirements applicable to wine.

The Board found that (i) the second, third, and fourth DuPont factors favored a finding of likelihood of confusion, (ii) the first DuPont factor favored a finding of no likelihood of confusion, and (iii) the remaining DuPont factors were neutral.

Specifically, for the second DuPont factor, the Board found the goods at issue to be “identical,” despite “a substantial difference in price” and other “differences in the specific nature of the wines” sold by Oakville and Georgallis.  The Board reasoned that “[i]n the context of an opposition proceeding, the question of registrability of an applicant’s marks must be decided on the basis of the identifications of goods set forth in the application and registration at issue.”  Because Georgallis “has requested a registration applicable to all kinds of wine in all price ranges,” and because Oakville’s registration “covers use of its mark on all kinds of wine,” the Board found the second DuPont factor to weigh in favor of a finding of likelihood of confusion. Likewise, the Board found the third and fourth DuPont factors, namely, the similarity of trade channels and the sophistication of buyers, to weigh in favor of a finding of likelihood of confusion.

The foregoing is is a key distinction between evaluating likelihood of confusion for purposes of trademark registration, as opposed to an actual claim of trademark infringement, which allows robust discovery into, and an analysis of, all factual issues.

But with regard to the first DuPont factor, the similarity or dissimilarity of the marks in appearance, sound, connotation, and commercial impression, the Board found that MAYA and MAYARI “are visually similar only in part” because they share the same initial four letters.  Significantly, however, the Board found “no reason to perceive any separation, visual or otherwise, between the MAYA- and -RI portions” of MAYARI because “[t]he letters RI, alone, have no relevant meaning, providing no reason for a customer to view the mark logically as MAYA plus RI, rather than as a single unitary expression.”  The Board also rejected Oakville’s argument that “the bottle label [bearing the mark MAYARI] will inevitably appear to read ‘MAYA’ at certain orientation relative to an observer,” reasoning that “the likelihood of such a mistake remains a matter of speculation, absent evidence regarding the occurrence or regularity of mistakes of this sort.”

Regarding meaning,  the Board agreed with Georgallis and found that “most customers would likely perceive MAYA as a female personal name or the name of the pre-Columbian civilization” and “perceive MAYARI as a coinage without meaning.”  The Board reasoned that “customers would likely find the term MAYA to be somewhat familiar, while finding MAYARI unfamiliar.”  Overall, the Board found that “the marks create significantly different commercial impressions.”  The Board therefore found the first DuPont factor to weigh against a finding of likelihood of confusion.

In balancing the relevant DuPont factors, the Board noted that the parties’ goods are identical and would travel through the same trade channels to the same classes of customers, some of whom would exercise no more than an ordinary degree of care in selecting the goods; but that the marks are visually similar only in part, are only possibly similar in their pronunciation, and would likely be perceived to have different meanings and overall commercial impressions. The Board therefore gave dispositive weight to the first factor and concluded that “the marks are sufficiently different that . . . confusion is not likely.”  Accordingly, the Board dismissed Oakville’s opposition.

On appeal, the Federal Circuit held that (a) “substantial evidence supports the Board’s finding that the marks at issue are sufficiently dissimilar as to appearance, sound, meaning, and commercial impression,” (b) “the Board did not err in finding that ‘no evidence show[ed] that [the marks] would be pronounced alike, and they may well be pronounced quite differently,'” and (c) “substantial evidence supports the Board’s
finding that MAYA is a familiar word, whereas MAYARI has no recognized meaning to U.S. consumers.”

The foregoing can be boiled down to the point that consumers were unlikely to be confused because the MAYA marks communicates specific meanings while the MAYARI mark has no meaning in the U.S.

FDA Allows KIND to Use “Healthy” Claim on its Labels and Will Reevaluate “Healthy” Claims

On May 10, 2016, the FDA announced that Kind LLC may label its snack bars “healthy” so long as it’s clearly part of its “corporate philosophy” and not a nutritional statement.  In conjunction with this statement, the FDA stated that it will be reevaluating the standard for “healthy” claims and, more broadly, all nutrient content claims.

The announcement relates back to a warning letter issued by the FDA to KIND in March 2015 asserting that the labeling of numerous KIND products bore a variety of nutrient content claims, including “healthy” claims, but the products did not meet the requirements to make such claims.  In its recent announcement, the FDA stated that KIND had taken steps to revise its the labels to address these issues.  The FDA then noted that, after resolution of that issue:

KIND requested confirmation that it could use the phrase “healthy and tasty” only in text clearly presented as its corporate philosophy, where it isn’t represented as a nutrient content claim, and does not appear on the same display panel as nutrient content claims or nutrition information. In our discussions with KIND, we understood the company’s position as wanting to use “healthy and tasty” as part of its corporate philosophy, as opposed to using “healthy” in the context of a nutrient content claim. The FDA evaluates the label as a whole and has indicated that in this instance it does not object.

KIND described this permission as a reversal of its 2015 FDA warning letter.  The FDA classified it as a reevaluation after KIND removed or amended nutritional claims on its product labels to meet regulatory standards.

Both positions are valid.  The FDA’s announcement concluded by stating:

In light of evolving nutrition research, forthcoming Nutrition Facts Labeling final rules, and a citizen petition, we believe now is an opportune time to reevaluate regulations concerning nutrient content claims, generally, including the term “healthy.” We plan to solicit public comment on these issues in the near future.

The evaluation of “evolving nutrition research” will no doubt extend to saturated fats in nuts and other foods.  The 2015 FDA Warning Letter to KIND said the term “healthy” was improper because the products did not qualify as “low in saturated fat” as required under FDA regulations.  Most of that saturated fat content came from almonds, cashews or other nuts.  But the FDA’s regulations for what qualifies as “healthy” are 20 years old and conceived when healthy eating was viewed as a low-fat diet.   Much has changed since then including the understanding that some fats are healthy.  Under the outdated, current standards, almonds, avocados, and salmon are generally deemed unhealthy while many  fortified sugary cereals are “healthy.”  Creating new standards for “healthy” claims will take significant time so do not expect any changes until late 2017 at the earliest.

FDA Issues Final Menu Labeling Guidance

The U.S. Food and Drug Administration (FDA) announced on 29th April the publication of its final guidance for industry, “A Labeling Guide for Restaurants and Retail Establishments Selling Away-From-Home Foods – Part II (Menu Labeling Requirements in Accordance with 21 CFR 101.11).”

The FDA intends to begin enforcing the menu labeling final rule one year from the date that the Notice of Availability (NOA) is published in the Federal Register.  The NOA for the guidance is expected to be published in early May 2016.  This guidance is intended to help restaurants and similar retail food establishments understand nutrition labeling requirements under the Federal Food, Drug, and Cosmetic Act (FD&C Act) and implementing regulations that may apply to them.

The complete guidance is available in PDF

Jury Finds in Favor of Coca-Cola in POM False Advertising Suit

UPDATE:  The jury found in favor of Coca-Cola and against POM Wonderful in the trial over whether Coca-Cola misled consumers into believing that Coke’s “Minute Maid Enhanced Pomegranate Blueberry Flavored 100% Blend” contained more than a very small amount of pomegranate juice.  The jury deliberated for less than one day following a six-day trial.

Coke’s position was primarily that (1) pomegranate juice has a strong taste and a small amount imparts flavor and (2) consumers understand the difference between a juice’s featured flavor and its ingredient statement.  POM, in contrast, argued that Coca-Cola’s labeling gave it an unfair competitive advantage because pomegranates have unique health benefits sought by consumers who were misled into believing they could obtain those benefits in Coca-Cola’s “100%” juice-blend product.  Although this case puts a damper on POM’s avowed intent to “clean up the industry,” POM’s success at the Supreme Court and shifting public opinion on labeling are likely to curtail the labeling practices of similar products in the foreseeable future.

GMO Labeling Bill Stalls in U.S. Senate

Yesterday, the U.S. Senate failed to pass a bill sponsored by the chairman of the Senate Agriculture Committee, Pat Roberts (Rep. Kansas), that would prohibit state labeling laws and create federal standard for voluntary labeling of GMO for genetically modified products.  The bill would have blocked Vermont from implementing its first-in-the-nation mandatory GMO labeling law that is set to take effect on July 1st.   In reference to Vermont’s law, Senator Roberts has said, “The time to act is now.”  The Roberts bill failed to get the 60 votes needed to move forward. The measure failed to pass a procedural vote by a tally of 48-49.

The Senate bill is similar to the Safe and Accurate Food Labeling Act that passed the U.S. House on July 23, 2015, by a vote of 275-150, including support from 45 Democrats.  Among other things, the House bill would amend the Federal Food, Drug, and Cosmetic Act to (1) set forth standards for any food label that contains claims that bioengineering was or was not used in the production of the food, (2) preempt any state and local labeling requirements with respect to bioengineered food, (3) require the FDA to issue regulations setting standards for natural claims on food labels, and (4) preempt any state or local regulations that are not identical to the requirements of the Act. Certification would be voluntary and would allow companies to advertise their foods as GMO-free. The bill’s proponents contend that the bill protects against a patchwork of state GMO labeling laws while ensuring that all Americans’ desire to know what’s in their food is respected.  Critics have labeled the bill “the Dark Act” because they contend it would keep Americans in the dark as to the ingredients in their food.

With regard to the stalled Senate bill, many commentators believe that a compromise could still be reached between Senator Roberts and “industry friendly” Democrats.

Compromise would be difficult, however, between the Roberts’ bill and a separate labeling bill introduced by Senate Democrats on March 2, 2016 — the Biotechnology Food Labeling and Uniformity Act.  That bill requires manufacturers to disclose the presence of GMO’s on a product’s Nutrition Fact Panel and provides several choices to Manufacturers for how to comply.   Senators Jeff Merkley (D. Ore.), Patrick Leahy (D. Vt.), Jon Tester (D. Mont.) and Dianne Feinstein (D. Calif.), who introduced the bill, call it a common-sense compromise that would likewise not burden manufacturers with a patchwork of state regulations while also providing important information to consumers.  Of course, mandatory labeling of GMO ingredients is at the heart of this debate and this is a likely sticking point for both sides.

Accordingly, expect continued Congressional activity and debate on this issue over the next few months in light of the Vermont law scheduled to go into effect on July 1st.

 

Jury Trial Starts Today in POM v. Coca-Cola

POM Wonderful’s battle with Coca-Cola is nearing an end as a federal jury trial starts today in the long-running dispute.  The case involves a now discontinued Coca-Cola product called “Minute Maid Enhanced Pomegranate Blueberry Flavored 100% Blend,” which both parties agree contained 99.4% apple and grape juices, with very little  pomegranate or blueberry juice.  In June 2014, the Supreme Court rejected Coca-Cola’s argument that labels specifically authorized and deemed “not misleading” by regulations issued by the FDA pursuant to the Federal Food Drug and Cosmetic Act precludes any claim brought under the Lanham Act’s general prohibition against “misleading” statements.

Notably, Coca-Cola is seeking to argue that POM’s “unclean hands” precludes any award of damages.  This affirmative defense relates to POM’s allegedly deceptive advertising practices that were the subject of an FTC Commission opinion. The trial judge has ruled, however, that the FTC ruling cannot be considered as evidence in this regard.

In 2010, another federal jury found that Welch Foods, Inc. deceptively marketed a “100% Juice White-Grape and Pomegranate” product that contained little pomegranate juice, but also found that POM did not prove that it had suffered any damages as a result.  If POM again fails to show that it suffered damages then it might undermine future efforts by companies to file suit over questionable marketing practices by competitors.  Generally, obtaining an order requiring a competitor to stop such marketing practices is sufficient motivation but here, of course, the product at issue has already been discontinued.