Tuesday, February 19, 2019

Competitor can't stop allegedly false promotion of unapproved substances bearing CYA "not for human use" warnings

Nutrition Distribution LLC v. Pep Research, LLC, 2019 WL 652391, No. 16cv2328-WQH-BLM (S.D. Cal. Feb. 15, 2019)

Nutrition Distribution sued Pep for false advertising under the Lanham Act, alleging that its competitor, a supplement company, falsely advertised certain prescription-only drugs and synthetic peptides as “research peptides and chemicals” that are “not for human consumption” and “intended for laboratory research only” while also marketing the products for personal use and consumption by bodybuilders, which is misleading because Pep fails to disclose that the [roducts are banned from sporting events and pose health and safety risks. Pep’s website states, for example, that one product has “undergone several recent studies ... reveal[ing] rises in lean body mass and decreases in body fat,” and “a considerable rise in strength, well being, along with healing possibilities”; another product “enhance[s] bone toughness as well as stop[s] weakening of bones”; and another product “decreases the risk and severity of atherosclerosis.”

A page also states:

All customers represent and warrant that through their own review and study that they are fully aware and knowledgeable about the following:
The[] government regulations regarding the importation, purchase, possession and use of research products and other peptides.
The health and safety hazards associated with the handling of our products in a research setting.
That our products are NOT intended to be used as a food additive, drug, vitamin, supplement, cosmetic or any other inappropriate application. Such a sale would be otherwise denied.

Other allegedly disingenuous pages state: “Safety Information: For Research Use Only. Not Intended for Diagnostic or Human Use. Information is for educational purposes and product is not intended to treat, cure, or diagnose any condition or disease” and “All products are intended for laboratory and research use only, unless otherwise explicitly stated. They are not intended for human ingestion, use, or for use in products that may be ingested.”

Somehow, however, ads for the products turned up on worldclassbodybuilding.com and peakmuscle.com.  Moreover, the products are allegedly intended for human consumption given that they’re “sold in liquid form in dropper vials, for easy oral use, along with the amount of liquid to take for an active oral dose.” Pep allegedly targets “bodybuilders, athletes, and fitness enthusiasts,” using social media and terminology specific to that audience. For example, an affiliate offered a free give away via social media post, and one customer tagged an amateur bodybuilding competitor in the post.

The court granted summary judgment to Pep for failure to show literal falsity.  The problem here seems to be a contradiction: the clear warnings against human consumption are combined with marketing to human consumers, in a wink-wink-nudge-nudge fashion.  Pep argued that failure to disclose safety risks wasn’t false advertising (which is not the case, though it’s often harder to show falsity by omission than to show affirmative falsity) and that use of a particular advertising forum couldn’t constitute falsity (which I think is also wrong as a blanket statement: use of a forum itself can make a representation that the products advertised are appropriate for the target market).

The court seems to have answered a slightly different question, framing the issue as whether the claims “for research purposes only” and “not for human consumption” were literally false, and it then concluded that there was no evidence that these statements were false.  The fact that the products pose health risks to humans wasn’t inconsistent with those statements. “To demonstrate falsity by necessary implication, there must be evidence showing that a particular unambiguous conclusion ‘necessarily flow[s]’ from the Representations in the context of the Product marketing, and that the conclusion is false. There is no evidence in the record demonstrating an unambiguous message necessarily implied by the Representations in the context of the Product marketing.” There was also no evidence submitted of a false implicit message.  [It seems that one possibility here, other than consumer survey evidence, would be expert evidence about how bodybuilders are induced to try unapproved products.  Interesting question about how to frame the survey: in some sense, you’re looking for bodybuilders/other targets to explain how they’d react to seeing an ad for these products in a bodybuilding context.  I am guessing they’d infer that the products could be used by humans to improve performance, given that the only point of advertising them to bodybuilders instead of to research scientists is to suggest that bodybuilders try them.]

Without more, the record (viewed in the light most favorable to plaintiff) showed only that defendants advertised to bodybuilders online, described the products’ putative benefits, sold consumer-usable formulations, and didn’t provide information about health risks or anti-doping bans.  That wasn’t enough to show falsity as a logically necessary conclusion.  [I suspect a government agency could get a different result on whether this combination encourages unlawful use, if the use is in fact unlawful (those do sound like disease/drug claims).]

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