are certificates of analysis and other technical specs commercial speech?

Sweegen, Inc. v. Manus Bio Inc., No. 8:24-cv-01757-JVS-DFM, 2024 WL 5317280 (C.D. Cal. Dec. 19, 2024)

Sweegen is one of the largest suppliers of non-GMO Rebaudioside M or “Reb M” sweetener, manufactured through bioconversion from stevia leaves. Its competitor makes NutraSweetM Reb M. Sweegen alleged that Manus falsely told its customers, mostly consumer packaged goods (CPG) companies, that its NutraSweet M was made through extraction or bioconversion from stevia, but Sweegen allegedly commissioned independent tests that show that Manus’s sweetener is not produced by bioconversion. Although Manus argued this was a typographical error, Manus allegedly continued to mislabel its product as stevia leaf extract on its promotional materials and product description statements.

Sweegen sued for violations of the Lanham Act and coordinate state law. Reasoning, dubiously to me, that Manus wasn’t engaged in commercial speech, the court grants the motion to dismiss.

Sweegen identified five types of documents: the Certificate of Analysis supplied to customers; an order confirmation describing NutraSweetM as stevia extract; Manus’s “Technical Specification”; the GRAS (Generally Recognized as Safe) Notification submitted to the FDA; and the Confirmation of non-GMO Ingredient Certificate; all of which stated that Manus’s NutraSweetM is “stevia extract” or made through bioconversion.

Under Ariix, LLC v. NutriSearch Corp., 985 F.3d 1107 (9th Cir. 2021), “commercial speech analysis is fact-driven,” and courts must “try to give effect to a common-sense distinction between commercial speech and other varieties of speech.”

Manus argued that these documents weren’t commercial speech because there was no economic motivation to induce purchases through them; they were “solely technical and procedural”—things like “a Certificate of Analysis or order confirmations are routine documents used in the ordinary course of business, provided after the purchase.”

Sweegen responded that these were still promotional in that they were used to convince CPG companies to purchase Reb M, “who in turn make the same misrepresentations to end-user consumers. The written materials are directly used by CPG manufacturers to claim that their product is non-GMO or made from stevia extract.” Although that would persuade me (except as to materials submitted to the FDA), Manus persuaded the court. [Note that even after Lexmark, Sweegen might have difficulty showing standing to sue the CPG manufacturers who are repeating the false claims on their own ingredient lists, even though that’s definitely advertising, given its reasoning on causation below—so the court’s reasoning may allow false advertising arbitrage.]

Ignoring that purchasers wouldn’t buy things that didn’t meet their standards, the court reasoned:

Common sense suggests that technical specifications, confirmation orders, and certificates are routine and informational. The “primary purpose” of a Certificate of Analysis is to confirm the contents of an order. Manus provides Technical Specifications primarily to inform buyers of acceptable labels for NutraSweetM. ... The argument that Manus’s CPG customers use the information from Manus’s materials to promote its Reb M as stevia extra is one step removed from finding that Manus provided the documents with the primary purpose of reaping economic benefit.

Anyway, even if these materials were commercial speech, the court wasn’t convinced that the purpose of the speech was to influence consumers to buy Manus’s Reb M or that it was sufficiently disseminated to the relevant purchasing public. Although the documents were integral to the sales, the court reasoned that Manus’s documents were not created to influence consumers to buy the product. And, though the facts seem to suggest a coordinated campaign, the court didn’t think they were sufficiently disseminated if they were only sent after purchase. (Although apparently the non-GMO certificate was a “one-off”, as was the GRAS notification to the FDA, which I agree deserves different treatment.) Perhaps this could be corrected by amendment: “The required level of circulation to meet this element may vary by industry but no additional facts are alleged to support that Manus’s materials were sufficiently disseminated. Furthermore, the Complaint does not mention who the ‘relevant purchasing public’ is and whether it includes the end-product users or just the CPG companies.” Plus, I would think that the certificates etc. would be important to potential repeat customers.

Sweegen did plead proximate causation since they compete for the same CPG clients.