Yesterday, the Supreme Court decided a case that dealt with the intersection of the Food, Drug and Cosmetic Act ("FDCA") and the Lanham Act. At issue was whether a company can sue a competitor for violating the Lanham Act for unfair competition arising from false and misleading labels, where the labels are found to comply with the FDCA.
The Court's unanimous decision may have wide reaching effects -- read on to see if your company will be affected.
POM Wonderful, LLC v. The Coca-Cola Co. -- Background
POM Wonderful ("POM") manufactures and sells pomegranate juice, one of its flavors being a blend of pomegranate and blueberry. Coca-Cola's Minute Maid Division makes a 5-juice blend, with the most predominant words on the label being "pomegranate blueberry," yet the juice actually only consists of 0.2% blueberry juice and 0.3% pomegranate juice. The "blend" is actually 95% apple and grape juice, and Coca-Cola's product is "almost five times cheaper" according to NPR's Nina Totenberg.
POM Wonderful, LLC v. The Coca-Cola Co. -- Lower Courts
POM sued Coca-Cola for violating the Lanham Act for unfair competition arising from false and misleading labels. The district court granted Coca-Cola's motion for summary judgment in part, holding the FDCA precluded Lanham Act challenges related to the "name and label of Coca-Cola's juice blend." The Ninth Circuit affirmed in relevant part.
POM Wonderful, LLC v. The Coca-Cola Co. -- Supreme Court Analysis
The Supreme Court began its analysis noting that this was not a preemption case because there was no state law at issue. Instead, the issue is correctly regarded as a "preclusion" case and the Court had to examine how the two statues intersected.
Writing for the Court, with the exception of Justice Breyer who did not take part, Justice Kennedy found the FDCA and the Lanham Act complementary. That is, the FDCA was enacted to protect the public, and the Lanham Act was created to protect "commercial interests against unfair competition." The Court found no statutory intent or Congressional action to the contrary.
The Ninth Circuit's decision was reversed, and the case remanded.
Since the Court has breathed new life into this case, we're guessing that this case will settle, though Coca-Cola may surprise us and take a gamble. Regardless, this case may instigate a host of litigation with competitors suing each other over their product labels -- legal departments would be wise to review their company's product labels, and maybe even the labels of their competitor's products.
- Supreme Court Clarifies Pleading Requirements for Lanham Act Claim (FindLaw's In House Blog)
- Alito Unrecuses From Aereo and Pom Wonderful; Unrecusal Tax Break (FindLaw's Supreme Court of the United States Blog)
- 2 Burning Questions Answered Re: Inherited IRAs and Lanham Claims (FindLaw's Supreme Court of the United States Blog)