The Lanham Act is most frequently invoked for its trademark provisions, but it also includes more general provisions against unfair competition. One aspect of the prohibitions on unfair competition is that the Lanham Act allows a private party to sue another (i.e., a competitor) for unfair competition arising from false or misleading product descriptions.
The Supreme Court recently decided such a case between POM Wonderful, LLC (“POM”) and Coca-Cola. POM sued Coca-Cola over Coca-Cola’s Minute Maid brand of juice products. POM and Coca-Cola are competitors in the beverage industry. POM is known for pomegranate juice products, including a pomegranate juice blend. Coca-Cola, via Minute Maid, also sells juice blends, and this controversy arose over just how much pomegranate juice is in the Minute Maid product.
POM claimed that Coca-Cola mislead consumers. Specifically, POM claimed that consumers, instilled with a false belief that Coca-Cola’s product contained mostly pomegranate juice, purchased Coca-Cola’s product instead of POM’s pomegranate juice product. Coca-Cola labels its juice product with the prominent words ‘pomegranate blueberry’ even though the juice consists of five juices. In fact, the juice is a blend of 99.4% apple and grape juices, 0.3% pomegranate juice, 0.2% blueberry juice, and 0.1% raspberry juice. As a result, POM sued Coca-Cola under the Lanham Act for Coca-Cola’s misleading label on its product. Coca-Cola took the position that it could not be sued under the Lanham Act based on its label because its label was already regulated by the FDA.
The District Court agreed with Coca-Cola. The court pointed to the fact that the FDA had not prevented Coca-Cola from labeling its products in such a manner. In fact, the court noted that the FDA had allowed Coca-Cola to market its product in this manner. The Court of Appeals agreed with the District Court’s decision. The Court of Appeals noted that Congress intended the FDA to manage the labeling of products and the FDA had not asked Coca-Cola to label its product in a non-deceptive manner. POM appealed the Court of Appeals ruling. The Supreme Court of the United States agreed to review the case and decide whether POM could bring a Lanham Act claim even though Coca-Cola’s product is regulated by FDA.
The Court found that POM could bring a Lanham Act claim against Coca-Cola despite the fact that Coca-Cola’s product was regulated by the FDA. The Court noted that unlike the FDA, competitors, such as POM and Coca-Cola, are in a much better position to spot a Lanham Act violation in consumer products. Specifically, the Court stated that competitors who market and sell products are more in tune with how and why consumers buy certain products. Therefore, competitors can spot an unfair label with more accuracy and speed.
In addition, the Court pointed to the fact that the FDA does not preapprove food and beverage labels under FDA regulations. Instead, the FDA relies on enforcement actions and other preventative ‘after the fact’ measures in order to remove unfair labels from the market. The Court highlighted that the FDA even admitted that it does not pursue actions against all labels that could possibly be deceptive and unfair. Without Lanham Act protections for private parties, the Court felt that the FDA’s goal of protecting the health and safety of the public would be hindered. Furthermore, the Court ruled that the Lanham Act and the Federal Food, Drug, and Cosmetic Act (the FDCA, under which the FDA operates) work together. In other words, Congress intended that neither act prevent the other from being enforced. In addition, the court noted that neither the FDCA nor the Lanham Act contain any provisions or sections that limit Lanham Act claims brought by those who challenge labels regulated by the FDA.
Based on the reasons set forth above, the Court found that POM could bring a Lanham Act claim against Coca-Cola. The Court sent POM’s case back down to the lower court for further proceedings. A court will now determine whether Coca-Cola’s label is in fact unfair and a violation of the Lanham Act.
Thanks to Chris Beddow, USC Law class of 2015 for assistance in research and drafting this post.