June 2014
Practice Groups:
IP Litigation
Marketing &
Advertising
FDA
Recent Supreme Court Decision on “Truth-inLabeling” Has Far-Reaching Implications
By David J. Byer, Jason L. Drori and Whitney J. Baran
On April 28, 2014, we reported on the United States Supreme Court’s involvement in the
juice-labeling lawsuit between POM Wonderful LLC (“POM”) and Coca-Cola (“Coke”). In
POM Wonderful LLC v. Coca-Cola Co. (“POM”), POM sued over the labeling and advertising
of Coke’s Minute Maid Blueberry Pomegranate juice product, which POM alleged misled
consumers in violation of the federal Lanham Act because the product, in fact, contained little
pomegranate or blueberry juice (<0.5%). Coke had successfully argued to the United States
District Court for the Central District of California and the United States Court of Appeals for
the Ninth Circuit that regulations promulgated by the U.S. Food and Drug Administration
(“FDA”) under the Federal Food, Drug, and Cosmetic Act (“FDCA”) expressly authorized the
name and label of the product, precluding any Lanham Act challenge. The Supreme Court,
thus, was called upon to address whether a private party may bring a Lanham Act claim with
respect to a product label regulated by—and conforming to—the FDA’s requirements.
A. The Supreme Court Finds for POM and against Preclusion
On June 12, 2014, the Court unanimously ruled in POM’s favor, holding that federal labeling
requirements do not preclude private enforcement of the Lanham Act against a competitor
alleged to have violated the statute. The Court primarily relied on the text of the Lanham Act
and FDCA, ruling “neither … in express terms, forbids or limits Lanham Act claims
challenging labels that are regulated by the FDCA.” The reach of the Lanham Act extends to
misrepresentations on labels, including food and beverage labels, and “[n]o … provision in
the Lanham Act … purports to govern the relevant interaction between the Lanham Act and
the FDCA.” Accordingly, “food and beverage labels regulated by the FDCA are not, under
the terms of either statute, off limits to Lanham Act claims.”
In examining the statutory text, the Court acknowledged the limited preemption provision
added to the FDCA when Congress amended it in 1990 as part of the Nutrition Labeling and
Education Act. The provision bars any state-law labeling rules “of the type” but “not identical
to” federal food and beverage labeling requirements. It makes no mention of requirements
imposed by other sources of law, including federal law, however, which the Court interpreted
to mean that “Congress … did not intend the FDCA to preclude requirements arising from
other sources” or, more specifically, “to preclude federal claims.”
The Court concluded that the FDCA and Lanham Act complement each other, not only in
their text and structure, but “in a more fundamental respect” designed to “take[] advantage of
synergies among multiple methods of regulation.” While the FDA is charged with enforcing
the FDCA’s labeling and packaging provisions, the Court distinguished between the agency’s
ability and that of market participants to timely identify and root out unfair competition
practices:
The FDA … does not have the same perspective or
expertise in assessing market dynamics that day-to-
Recent Supreme Court Decision on “Truth-in-Labeling”
Has Far-Reaching Implications
day competitors possess. Competitors who
manufacture or distribute products have detailed
knowledge regarding how consumers rely upon
certain sales and marketing strategies. Their
awareness of unfair competition practices may be far
more immediate and accurate than that of agency
rulemakers and regulators. Lanham Act suits draw
upon this market expertise by empowering private
parties to sue competitors to protect their interests on
a case-by-case basis.
The Court reasoned that precluding Lanham Act claims could leave competitors and
consumers with “less effective protection in the food and beverage labeling realm than in
many other, less regulated industries,” something Congress likely did not intend.
The Court rejected Coke’s arguments that Congress sought to bar private Lanham Act suits
like POM’s to ensure national uniformity in food and beverage labeling and to spare
manufacturers the burden of complying with a constellation of labeling requirements. The
Court pointed out that “Congress not infrequently permits a certain amount of variability by
authorizing a federal cause of action even in areas of law where national uniformity is
important,” and, in any event, that “Lanham Act actions are a means to implement a uniform
policy to prohibit unfair competition in all covered markets.”
The Justices also rejected the United States’ argument against permitting false advertising
claims where the FDA has authorized a challenged aspect of the product’s label. While the
federal juice-naming regulation reflects the FDA’s judgment in weighing competing interests
during the rulemaking process, the Court held, “[t]he Government assumes that the FDCA
and its regulations are at least in some circumstances a ceiling on the regulation of food and
beverage labeling. But … Congress intended the Lanham Act and the FDCA to complement
each other with respect to food and beverage labeling.” In its decision, the Court
acknowledged the distinct functional aspects of the FDCA and the Lanham Act and the
reality that, unlike drug labels, “FDA does not preapprove food and beverage labels under its
regulations… (and) does not necessarily pursue enforcement measures regarding all
objectionable labels.” Thus, precluding Lanham Act claims could leave industry and
consumers “with less effective protection in the food and beverage labeling realm than in
many other, less regulated industries.”
B. Takeaways from POM
To trademark and regulatory lawyers and industry stakeholders, POM likely will be received
as a mixed bag. On the one hand, the decision recognizes that federal food labeling and
false advertising laws are complementary and can both be fully enforced according to their
terms. The Supreme Court, thus, put regulated industries on notice that compliance with
FDA regulations will not, as a matter of law, preclude future liability under the Lanham Act—
or perhaps other federal laws providing a private cause of action.
On the other hand, for companies like POM locked in “truth-in-labeling” disputes, the case is
a sword for combating unfair competition in the marketplace. Following POM, Lanham Act
defendants may not argue—at least not easily—adherence or deference to FDA regulations
to escape liability for mislabeling or false or misleading advertising.
2
Recent Supreme Court Decision on “Truth-in-Labeling”
Has Far-Reaching Implications
Either way, POM will certainly have a substantial and wide-ranging impact across FDAregulated industries. Companies would be well-served to review their labels and labeling
claims for compliance with both the FDCA and the Lanham Act. K&L Gates LLP will monitor
and report on significant post-POM rulings as they arise.
Authors:
David J. Byer
Jason L. Drori
Whitney J. Baran
david.byer@klgates.com
+1.617.261.3115
jason.drori@klgates.com
+1.617.951.9143
whitney.baran@klgates.com
+1.509.241.1597
Anchorage Austin Beijing Berlin Boston Brisbane Brussels Charleston Charlotte Chicago Dallas Doha Dubai Fort Worth Frankfurt
Harrisburg Hong Kong Houston London Los Angeles Melbourne Miami Milan Moscow Newark New York Orange County Palo Alto Paris
Perth Pittsburgh Portland Raleigh Research Triangle Park San Diego San Francisco São Paulo Seattle Seoul Shanghai Singapore Spokane
Sydney Taipei Tokyo Warsaw Washington, D.C. Wilmington
K&L Gates comprises more than 2,000 lawyers globally who practice in fully integrated offices located on five
continents. The firm represents leading multinational corporations, growth and middle-market companies, capital
markets participants and entrepreneurs in every major industry group as well as public sector entities, educational
institutions, philanthropic organizations and individuals. For more information about K&L Gates or its locations,
practices and registrations, visit www.klgates.com.
This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in
regard to any particular facts or circumstances without first consulting a lawyer.
© 2014 K&L Gates LLP. All Rights Reserved.
3