United States District Court, N.D. Illinois
January 7, 2004.
SIRIUS LABORATORIES, INC., Plaintiff,
RISING PHARMACEUTICALS, INC., Defendant
The opinion of the court was delivered by: JAMES ZAGEL, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Sirius Laboratories, Inc. filed suit against Defendant Rising
Pharmaceuticals, Inc. alleging violations of the Lanham Act,
15 U.S.C. § 1125(a), the Illinois Consumer Fraud Act, 815 ILCS 505/1
et seq., and the Illinois Deceptive Trade Practices Act, 815 ILCS 510/1
et seq. The statements alleged to be false are the product name
"Anthralin Cream 1% USP" and its placement on the product's box, tubing,
packaging inserts, price list and submission of data to First Data Bank, a
trade organization. Rising moves to dismiss all claims pursuant to
Federal Rule of Civil Procedure 12(b)(6). A claim may be dismissed either
because it asserts a legal theory that is not cognizable as a matter of
law or because it fails to allege sufficient facts to support a
cognizable legal claim. In ruling on a motion to dismiss, I must presume
that all allegations contained in the Complaint are true, and resolve all
doubt and inferences in favor of Sirius. See Albright v. Oliver,
510 U.S. 266, 267 (1994).
From February 2001 until late 2002, Sirius was the sole distributor of
an anthralin cream 1% United States Pharmacopia (USP) prescription
medicine for the treatment of psoriasis. At
some point, Rising began offering a lower-cost substitute anthralin cream
product which it named and labeled "Anthralin Cream 1% USP." Sirius
alleges that this product actually contains less than 1%, as defined
under the governing USP standard which requires a product to contain
90.50-115.00% of the labeled strength. The USP a not-for-profit
organization funded through the contributions of pharmacy, medicine and
other health care professionals, as well as academia, the federal
government and consumer organizations is entrusted by the Food
and Drug Administration (FDA) with establishing standards that ensure the
quality of medicines and other health care technologies. FDA regulations
not only recognize and incorporate the USP standards,
21 U.S.C. § 321(j), but also look to it to define what constitutes a
drug, 21 U.S.C. § 321(g)(1).
Preclusion of Lanham Act Claim by Food, Drug And Cosmetic Act
In its Lanham Act claim, Sirius alleges that Rising's product is
misbranded and falsely labeled because it contains less than anthralin
cream 1% USP as defined under the USP specification. Under § 43(a) of
the Lanham Act, a party has a private cause of action for
misrepresentation and false description of any goods, including
pharmaceuticals. 15 U.S.C. § 1125(a); Genderm Corp. v. Biozone Labs.,
No. 92 C 2533, 1992 WL 220638, at *12 (N.D. Ill. Sept. 3, 1992). One
limitation exists for claims brought under the Lanham Act. "[C]ourts have
held not only that a plaintiff may not seek to enforce directly the
[Food, Drug and Cosmetic Act, 21 C.F.R. § 146.135 et seq. (FDCA)]
through the Lanham Act but also that a plaintiff may not maintain a
Lanham Act claim if the claim requires direct application or
interpretation of the FDCA or FDA regulations." Healthpoint, Ltd. v.
Ethex Corp., 273 F. Supp.2d 817, 837 (W.D.
Tex. 2001) (collecting cases). "[S]uch a claim would allow a private
litigant to interfere with the PDA's own investigatory time-table and
prosecutorial decision-making [and] would force the Court to rule directly
`on the legality of . . . conduct before the FDA has had a chance to do
so.'" Summit Tech., Inc. v. High-Line Med. Instruments, Co.,
933 F. Supp. 918, 932 (C.D. Cal. 1996) ("Summit II") (quoting Summit
Tech., Inc. v. High-Line Med. Instruments Company, Inc., 922 F. Supp. 299,
306 (C.D. Cal. 1996) ("Summit I"). The District Court should not
"determine presumptively how a federal agency will interpret and enforce
its own regulations." Summit II, 933 F. Supp. at 932 (quoting Sandoz
Pharm. Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 223 (3rd Cir. 1990)
(citations omitted); see Dial A Car, Inc. v. Transp., Inc., 82 F.3d 484,
490 (D.C. Cir. 1996) (Lanham Act cannot be used as a "back-door method"
of interpreting and enforcing administrative regulations). "To do so
would violate Congressional intent that the FDA have discretion to
enforce the FDCA and implementing regulations." Healthpoint, 273 F.
Supp.2d at 837 (citing United States v. Goodman, 486 F.2d 847, 855 (7th
In this case, Rising argues that Sirius' Lanham Act claim should be
dismissed because the issue of whether a product is adulterated or
misbranded under FDA standards is an issue within the exclusive purview
of the FDCA and thus not properly decided in a Lanham Act case. According
to the FDCA, a drug or device is misbranded "if its labeling is false or
misleading in any particular." 21 U.S.C. § 351(a). A drug is
adulterated if it is represented as a drug of the name of which is
recognized in an official compendium (such as the USP), and its strength
differs from, or its quality or purity falls below, the standard set
forth in such compendium. Such determination as to strength, quality, or
purity shall be made in accordance with the tests or
methods of assay set forth in such compendium. 21 U.S.C. § 351(b).
Congress has formally recognized the USP as an official compendium.
21 U.S.C. § 321(j).
Unfortunately, "[t]here is no single, bright-line test to distinguish
sustainable from non-sustainable claims." Healthpoint, 273 F. Supp.2d at
837. Perhaps as a result, therefore, some courts have held that certain
false statements are actionable under the Lanham Act "even if their truth
may be generally within the purview of the FDA." Summit II, 933 F. Supp.
at 933; see Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1138 (4th Cir.
1993); Summit II, 933 F. Supp. at 933; Grove Fresh Distribs., Inc. v.
Flavor Fresh Foods, Inc., 720 F. Supp. 714, 716 (N.D. Ill. 1989) ("Grove
Fresh I"); Grove Fresh Distribs., Inc. v. Everfresh Juice Co., No. 89 C
1113, 89 C 1117, 89 C 1118, 1989 WL 152670 (N.D. Ill. Nov. 29, 1989)
("Grove Fresh II"). Of course, the two most relevant cases for purposes
of a case in the Northern District of Illinois such as the present one
are Grove Fresh I and II.
In Grove Fresh I, a plaintiff alleged that because defendant's orange
juice contained additives and adulterants, the representation that the
product was "100% orange juice from concentrate" was false. 720 F. Supp.
at 716. The district court denied the defendant's motion to dismiss the
Lanham Act claim, holding that it was not an impermissible attempt to
recover damages for the misbranding of food in violation of the FDCA:
Grove Fresh relies on the FDA regulation [that defines
"orange juice from concentrate"] merely to establish
the standard or duty which defendants allegedly failed
to meet. Nothing prohibits Grove Fresh from using the
FDCA or its accompanying regulations in that fashion.
. . . Grove Fresh does not base its claim solely on
the FDCA or FDA regulations. Grove Fresh alleges that
defendants have violated section 43(a) of the Lanham
Act. Even without the FDA regulation defining "orange
juice from concentrate," Grove Fresh could attempt to
establish a violation of section 43(a). Grove Fresh
would simply need to provide other evidence
establishing the proper market definition of "orange
juice from concentrate."
Id. at 716. The Court allowed plaintiff to bring a Lanham Act cause of
action for affirmatively misrepresenting facts whether the orange
juice was "pure" under a commercial definition without
interpreting any FDA regulation.
Two months later, I reached roughly the same conclusion in Grove
Fresh II. In that case, I held that "[w]here Congress has precluded
private causes of action under the FDCA, [I] find it difficult to justify
the use of the FDCA to establish a crucial element of a private cause of
action under the Lanham Act." Grove Fresh II, 1989 WL 152670, at
*3. Therefore, I prohibited plaintiff from arguing that defendants'
products did not meet FDCA standards to establish a crucial element of
its Lanham Act claim because this would have been "very substantial use
of the FDCA." Id. To sustain its claim, the plaintiff would have
to "provide other evidence establishing the proper market definition of
`orange juice from concentrate.'" Id.
In contrast to the Grove Fresh cases, consideration of Sirius'
Lanham Act claim would not require me to interpret the FDCA or any of its
accompanying regulations. First, Sirius is simply relying on the USP
definition of 1% anthralin cream to establish the standard which Rising
failed to meet. This standard is not ambiguous, nor is it subject to
interpretation or the exercise of some discretion. Rising's product
either meets the USP standard because it contains between 90.50% and
115.00% of the labeled strength of anthralin cream or it does not, and
therefore my decision on this issue would not usurp any function
otherwise delegated to the FDA. Second, the USP is a not-for-profit
organization entrusted by the FDA with establishing standards that ensure
the quality of medicines and other health care technologies. Although it
arguably performs government functions, the USP is neither part of the
government nor of the FDA specifically. And in contrast to rules and
regulations promulgated directly by the FDA, the
standards established by the USP are incorporated by the FDA into
its rules and regulations. In other words, the USP and its established
pharmaceutical standards exist independently of both the FDA and the
FDCA, and I find this to be determinative in finding that use of a USP
standard is not a "direct application or interpretation of the FDCA or
FDA regulations." Healthpoint, 273 F. Supp.2d at 837.
False Statements in "Commercial Advertising or Promotion"
"There are two bases of liability under the Lanham Act: (1) false
representations concerning the origin, association or endorsement of
goods or services through the wrongful use of another's distinctive
mark, name, trade dress or other device (otherwise known as `false
association' or `false endorsement') and (2) false representations in
advertising concerning the qualities of goods or services (`false
advertising')." L.S. Heath & Sons, Inc. v. AT&T Info. Sys.,
Inc., 9 F.3d 561, 575 (7th Cir. 1993). In a false advertising case such
as this, § 43(a)(1)(B) of the Lanham Act expressly requires a
plaintiff to prove that the allegedly felse claims have arisen in
"commercial advertising or promotion." 15 U.S.C. § 1125(a)(1)(B); see
First Health Group Corp. v. BCE Emergis Corp., 269 F.3d 800, 802-03 (7th
Cir. 2001); Gordon and Breach Science Publishers S.A. v. American Inst.
of Physics, 859 F. Supp. 1521, 1532-33 (S.D.N.Y. 1994) (published surveys
and press release did not constitute "commercial advertising or
promotion"). "Advertising" is "the action of calling something to the
attention of the public [especially] by paid announcements," and
"promotion" is the "furtherance of the acceptance and sale of merchandise
through advertising, publicity, or discounting." American Needle &
Novelty, Inc. v.
Drew Pearson Mktg., Inc., 820 F. Supp. 1072, 1077 (N.D. Ill. 1993)
(quoting Webster's Ninth New Collegiate Dictionary 59, 942 (1986)).
In this case, Rising argues that Sirius' allegations that it engaged in
false advertising because its labeling is incorrect is insufficient to
trigger liability under subpart (1)(B) because the conduct does not
constitute "commercial advertising or promotion." Rising cites to
Gillette Co. v. Norelco Consumer Prods. Co., 946 F. Supp. 115 (D. Mass.
1996), and Marcyan v. Nissen Corp., 578 F. Supp. 485, 506-07 (N.D. Ind.
1982), in support of this proposition. However, both cases can be
distinguished from the present case. In Gillette, the district court
ruled that package inserts were not "advertising or promotion" under the
Lanham Act because statements made inside the product's packaging,
available to consumers only after the purchase has been made, "did not
affect the choice to purchase, that choice having been made at an earlier
point." 946 F. Supp. at 134. Similarly, in Marcyan, the allegedly false
misrepresentations were contained in a user's manual provided to the
purchaser of the defendant's exercise equipment together with the
product. 578 F. Supp. at 507. Even though the manuals were available
separately at trade shows, the court found in favor of the defendants
because the purportedly false representation was never made available to
the general purchasing public or in sufficient quantities to constitute
an advertisement. Id. (manual is not advertising material). In contrast,
however, Sirius alleges that according to the box, tube, package insert,
and the name of the product itself, Rising has falsely represented to the
consuming public that its product contains the active ingredient
"Anthralin Cream 1% USP." Even if the tube and package insert do not
affect the choice to purchase, the same cannot be said about the box and
the product name itself. Both the name of the product and representations
made on the product box may "influence a consumer in his or her choice
purchase a product." Gillette, 946 F. Supp. at 135. Accordingly, I find
that Sirius has alleged false statements made in "commercial advertising
or promotion." Therefore, I will not dismiss the Lanham Act claim.
State Law Claims
The only argument that Rising advances for the dismissal of Sirius'
state law claims is the argument that its Lanham Act claim must fail. The
corollary to Rising's argument, of course, applies here. Because the
Lanham Act claim is sustainable, Sirius' claims under the Illinois
Deceptive Trade Practices Act and Consumer Fraud Act must also survive.
For the reasons above, Rising's Motion to Dismiss is DENIED.
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