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Will the Supreme Court Revisit the Interplay of Unfair Competition Law and the Federal Food, Drug, and Cosmetic Act?

Last term, the Supreme Court decided POM Wonderful LLC v. Coca-Cola Corp., 134 S. Ct. 2228 (2014).  POM makes a pomegranate-blueberry juice blend that contains only pomegranate and blueberry juice.  Coca-Cola makes and sells a pomegranate-blueberry beverage under its Minute Maid brand that contains only “0.3% pomegranate juice and 0.2% blueberry juice.”  Id. at 2233.  POM sued Coca-Cola for false advertising under section 43(a) of the Lanham Act.  Both the district court and the Ninth Circuit Court of Appeals held that POM’s claim was precluded because Coca-Cola’s beverage label complied with the Federal Food, Drug, and Cosmetic Act (“FDCA”).  A unanimous Court reversed, holding a competitor in POM’s position “may bring Lanham Act claims like POM’s that challenge food and drug labels that are regulated by the FDCA.”  Id.

On Monday, the Court indicated it may revisit the intersection of unfair competition law and the FDCA.  The Court asked the Solicitor General for his views on a petition for discretionary review from the Federal Circuit’s decision in Allergan, Inc. v. Athena Cosmetics, Inc., 738 F.3d 1350 (2013).  In that case, Allergan sued Athena under California’s unfair competition law (“UCL”).  Allergan claimed Athena violated the UCL by marketing a product called RevitaLash without approval from the Food and Drug Administration (“FDA”) or the California Department of Health Services.  Id. at 1353.

Allergan’s theory of recovery stems from how drugs and cosmetics are regulated under the FDCA.  Allergan's theory is also reminiscent of POM Wonderful.  Allergan makes a prescription eyelash enhancer called LatisseId.  In late 2008, FDA approved Latisse “to treat hypotrichosis of the eyelashes by increasing their growth including length, thickness and darkness.”  To obtain FDA approval, Allergan conducted clinical trials in order to establish that Latisse was safe and effective as an eyelash treatment.

Athena makes and markets RevitaLash as a cosmetic.  A cosmetic product is not subject to pre-market approval by the FDA.  This means a cosmetic manufacturer is not required to conduct clinical trials prior to putting its product on the market.  Allergan brought suit under the UCL on the grounds that Athena that RevitaLash is a “drug” under the FDCA and California law and Athena is marketing RevitaLash without the required regulatory approvals.  In essence, Allergan claims that by avoiding the drug approval process and post-approval regulation, RevitaLash unfairly competes against Allergan’s FDA-approved Latisse drug franchise.

The district court granted Allergan summary judgment on its UCL claim.  The Federal Circuit affirmed the district court’s grant of summary judgment.  It rejected two of Athena’s arguments in the process.

Athena first argued that Allergan’s UCL claim was pre-empted.  In rejecting Allergan’s argument, the court found “no clear purpose by Congress to preempt the state law claim at issue.”  Id. at 1355.  That Allergan’s UCL claim was premised on Athena violating California food and drug law that paralleled the FDCA was of no consequence to the Federal Circuit because “the California Health Code is not an obstacle to realizing federal objections.”  Id. at 1356.

Athena also argued that the district court erred in granting summary judgment that RevitaLash was a “drug” under the FDCA and the California Health Code.  Classification of RevitaLash as a “drug” triggers the need for regulatory approval giving rise to Allergan’s UCL claim.  Looking at the record, the court held that “there is no genuine dispute that Athena objectively intends the products at issue to be used to affect the structure of eyelashes.”  Id. at 1357.  As a result, “Athena objectively intends the products at issue to be used as drugs” without the necessary regulatory approvals.  Id.  The court then affirmed the district court.  Id. at 1357–58.

Athena petitioned the Supreme Court for discretionary review.  Athena’s petition asks the Supreme Court to reverse the Federal Circuit on preemption grounds.  Athena notes that FDA has not taken regulatory action against RevitaLash as an unapproved drug.  According to Athena, Allergan cannot avoid the FDCA’s bar on private enforcement actions, 21 U.S.C. § 337(a), by bringing a state unfair competition claim premised on violation of state food and drug law that incorporates the FDCA.

Athena had to be encouraged by the Supreme Court’s invitation to the Solicitor General.  As one review of the Court’s cert-granting practices recently found, “the Court granted briefing on the merits in 34% of cases in which it called for the views of the [Solicitor General], a 36-time increase above the overall grant rate.”  David C. Thompson & Melanie F. Watchell, “An Empirical Analysis of Supreme Court Certiorari Petition Procedures: The Call for Response and the Call for the Views of the Solicitor General,” 16 Geo. Mason L. Rev. 237, 295 (2009).  If history is any indicator, the Solicitor General will likely offer his views on the case in early 2015.  See id. at 296 (finding the Solicitor General “takes an average of 4.6 months to respond to invitations”).

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