Ferring Pharmaceuticals Inc. v. Braintree Laboratories,
Inc., 2014 WL 3850072, No. 13–12553 (D. Mass. Aug. 4, 2014)
This is mostly a false advertising case, but stick around
for the weird dilution ruling. The
parties compete in the market for bowel preparation drugs that are administered
prior to colonoscopies. Ferring sells
Prepopik, and Braintree sells Suprep.
They sued/countersued each other for false advertising under the Lanham
Act and unfair business practices under MGL ch. 93A. Ferring also alleged that Braintree diluted
the Prepopik mark by suggesting that Prepopik (the product) poses the same
risks as a chemically identical product sold in Canada, Pico-Salax. Braintree also sued for trade secret
misappropriation.
The court here resolved Ferring’s motion to dismiss
Braintree’s counterclaims and Ferring’s motion for summary judgment.
Ferring’s motion, trade secrets: Ferring’s VP and GC
contacted Braintree to express concerns about certain Braintree training
materials that he’d come to possess, supposedly “sent in from the field” by an
unknown source. Ferring returned six
pages, but Braintree believed Ferring had the whole set of materials because it
didn’t disseminated only those six pages.
The court found that Braintree failed to state a claim; it
didn’t adequately specify any trade secrets, and the six pages Ferring admitted
possessing didn’t contain any protectable trade secrets. They included publicly available information
about Prepopik and information about Ferring’s marketing strategy. “Braintree cannot plausibly claim that
information it has obtained about the marketing strategy of a competitor is a
protectable trade secret.”
The materials did recommend strategies for Suprep in light
of Prepopik’s marketing strategy: claims that Suprep was more effective, less
expensive, and safer for patients with low renal function; encouragement to sales
representatives to emphasize the link between Prepopik and Pico-Salax (“Don’t
hide from the fact that Pico is out there and discuss this with accounts”); and
suggestions to leverage existing relationships (“BLI has been servicing these
accounts for over 3 decades, don’t be fooled by a foreigner!”). Though one court suggested that marketing
strategies could be protectable trade secrets under Massachusetts law, there
was no evidence that the information about price, efficacy and safety differences
was proprietary to Braintree. “Furthermore, it is implausible that platitudes
such as ‘Cash in on relationships!’ are the product of significant effort or
investment or are valuable to Braintree’s competitors.”
Lanham Act false advertising: Braintree alleges that Ferring
made four false or misleading claims about Prepopik: “superior cleansing
efficacy”, “lowest volume”, “flexible dosing” and “helps achieve success.” Because literal falsity is a question of
fact, it’s rarely susceptible to a motion to dismiss. The court also declined to apply Rule 9(b)
heightened pleading to false advertising claims.
The “superior cleansing efficacy” claim was, according to
the relevant ad, backed up by study results; it was a statement of fact, not
puffery. In fine print, the relevant ad
explained that the claim was based on “demonstrated non-inferiority” during
randomized trials. The claim was allegedly falsified by evidence from a
head-to-head study, and allegedly overstated Prepopik’s efficacy. That was
enough to plead literal falsity.
Ferring repeatedly advertised Prepopik as the “lowest volume of active prep solution/ingredient,”
but Braintree alleged that this was false and misleading because there are
tablet-only prep products requiring no solution. Ferring argued that a reasonable doctor would
be aware of the different kinds of prep regimens and would understand that the
ads only compared Prepopik to other products that required some amount of
liquid. The court doubted that any
reasonable doctor would find the claim misleading, but evaluating audience
reaction wasn’t its job at the motion to dismiss stage.
Braintree alleged that Ferring’s “flexible dosing” claim was
false and misleading as patients must take certain identified doses, must drink
certain requisite quantities of other liquids, and must finish drinking all
requisite liquids at least two hours before their colonoscopy. The relevant ad
claimed “FLEXIBLE DOSING using either a split dose or day-before regimen.” Ferring
argued that the ad didn’t claim that there were no restrictions on use. Unlike the two previous comparative claims,
this one didn’t draw any implicit comparisons or assert a specific and
measureable benefit that could be proven true or false. At most, “flexible” was ambiguous, and no
reasonable person reading the advertisement as a whole would fail to understand
that, as used in context, “flexible dosing” refers to “either a split dose or
day-before regimen.”
As for “helps achieve success ... with the lowest volume of
active prep solution,” Braintree didn’t identify a specific ad that made the
“helps achieve success” claim, so it was gone and would’ve been puffery anyway.
The court did apply a heightened pleading standard to
related New Jersey Consumer Fraud Act claims, and found that Braintree hadn’t
pled enough facts to establish that Ferring actually distributed a different
set of claims—information and belief was enough. Also, the court held that unfair competition
under New Jersey common law doesn’t cover false advertising, only palming off.
As to Braintree’s motion for summary judgment, Ferring
alleged that Braintree engaged in a nationwide campaign to disparage Prepopik,
and that Braintree’s false and misleading statements about Prepopik’s risks “diluted
Ferring’s trademark in Prepopik.”
Allegedly false claims that Prepopik was “dangerous” or
“deadly”: Ferring’s press release announcing Preopik’s FDA approval stated that
“Ferring has a long history in the international gastroenterology market, where
PREPOPIK is available in Canada (marketed under the name PICO–SALAX), U.K., and
other countries ....” Pico-Salax and
Prepopik are chemically identical, but Prepopik is approved in the US for only
one indication, while Pico-Salax is approved in Canada for the additional uses
of preparing for x-ray examinations and surgeries and is also approved for
pediatric use. The dosing instructions
also differ; the Prepopik dose is smaller, which can change risks associated
with fluid and electrolyte imbalances. Pico-Salax is available over the counter
while Prepopik is prescription only.
A Canadian agency published information about Pico-Salax in
Canadian Adverse Reaction Newsletter, stating that “[t]he diarrhea produced by
[Pico–Salax] can lead to dehydration and loss of electrolytes, particularly
sodium which may result in hyponatremia and convulsions.... As of June 30,
2012, Health Canada received 11 reports of convulsions suspected of being
associated with Pico–Salax.” Ferring
alleged that Braintree was using the newsletter and related statements to claim
that Prepopik was unsafe. One rep
allegedly wrote “Pico-Salax = Prepopik” on a copy of the newsletter given to a
doctor.
Braintree argued that it was true that Pico-Salax was
dangerous and that Pico-Salax was Prepopik give their chemical equivalency. The
court found genuine issues of material fact, including what conclusions should
be drawn from the newsletter and whether the different dosages eliminated the
risk of convulsion.
Allegedly false or misleading claims about Suprep’s efficacy
and superiority: Braintree’s marketing
materials say Suprep is 98% effective whereas Prepopik is only 74% effective,
but Ferring alleged that there were no head-to-head studies and its own
clinical trials showed greater effectiveness. A Braintree ad claimed superiority in bowel
cleansing based on investigator grading compared to a control group treated
with polyethelene glycol, but Ferring argued that the prescribing information
and FDA approval documents for Suprep indicated that no statistically or
clinically significant differences between groups treated with the two
preparations.
Ferring argued that the ad made an establishment claim, and
Braintree disagreed, but it was wrong. “While the claims do not expressly
reference a study or test, claims of 98% effectiveness and superior results ‘based
on investigator grading’ are not ‘general claims of superiority.’” Thus
Ferring’s burden would be to show that the tests weren’t sufficiently reliable
to permit a conclusion that Suprep was superior. There were genuine factual disputes about
this; a study abstract alone couldn’t establish reliability, and Ferring hadn’t
been provided the full results.
As a result, the ch. 93A claim, which in a competitor action
requires “rascality,” also survived past summary judgment.
State trademark dilution: here we take a turn into the
completely wrong. Ferring alleged that
Braintree’s negative comparisons were likely to dilute Prepopik’s distinctive
quality as a mark—and the court bought it,
at least for summary judgment purposes.
Ok, deep breaths. Of course, even
dilution proponents should immediately see the fatal problems. (1) The mark is not the product. Dilution protects marks, not products. Braintree disparaged (truthfully or not) the
product. False advertising can be a
legitimate cause of action in such cases, along with commercial
disparagement/trade libel. (Which, not
at all incidentally, are subject to important First Amendment limitations, like
“falsity.”) Dilution
cannot be implicated here. Braintree
didn’t suggest that the product had a stupid name. (2) Relatedly, comparative advertising does not
have any effect on the “distinctive” quality of the mark, other than to reinforce it as being connected to its
producer and distinguish it from the
advertiser’s own product. Using a mark
to describe the mark owner’s product can’t be dilutive. Not even Deere
v. MTD would go that far.
What went wrong? Braintree may have put too much emphasis
on another logical, but much less powerful, argument, which was that it’s
impossible to dilute a mark by comparing it to another mark owned by the same
entity, Ferring. But “[w]hile Braintree
is correct that no Massachusetts case has expressly held that Ferring may
assert a trademark dilution claim based upon confusion between two of its own
marks, it is also the case that no court applying Massachusetts law has
foreclosed that theory.” (And note the
incidental slippage between confusion and dilution. But I’m not even mad about that.) The court found that a federal court’s
previous statement that dilution arises from an association with “products or
services marketed by others” was “clearly dicta,” which again, argh—that is the
classic definition of dilution used even by its profoundest believers. Kodak pianos, anyone?
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