Serving the Legal Needs of Dietary Supplement Companies
Contents Dietary Supplement Legal Update (June 2019) FDA ISSUES VINPOCETINE WARNING
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AMARIN APPEALS DECISION OF INTERNATIONAL TRADE COMMISSION
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HI-TECH SUES FDA ON DMHA
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BIPARTISAN DRAFT BILL TO REFORM PATENT ELIGIBILITY
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FDA ASKED TO TAKE ACTION AGAINST NICOTINE ADDICTION SUPPLEMENTS
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COURT ENFORCES FDA'S USE OF INSPECTION WARRANT
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CBD LIQUID FORMULATIONS ARE FOUND TO BE PATENT ELIGIBLE
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USPTO ISSUES GUIDE ON HEMP-DERIVED CBD TRADEMARKS
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CALIFORNIA ASSEMBLY PASSES CBD BILL
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FTC AMENDS COMPLAINT IN ALLEGED FREE TRIAL AND CONTINUITY SCHEME
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Authors: Kevin M. Bell, Principal KMBell@pbnlaw.com 202.517.6325
Kevin Bell is an IP attorney who focuses practice focuses primarily on litigating complex disputes involving patents, trademarks, trade secrets, trade dress and unfair competition before federal courts and agencies, the International Trade Commission and various alternative dispute resolution forums. Kevin has extensive experience in licensing intellectual property and regularly provides strategic counseling to clients regarding development and enforcement of intellectual property portfolios. Richard J. Oparil, Principal RJOparil@pbnlaw.com 202.517.6323 Richard represents companies in patent, trademark, unfair competition, trade secrets, trade regulation and other complex litigation at the trial and appellate levels and before the International Trade Commission. He has litigated patent, trademark, unfair competition, trade secrets and copyright cases in District Courts and the Court of Appeals for the Federal Circuit. Richard is actively engaged in investigations and regulatory issues at the Federal Trade Commission and Food and Drug Administration.
FDA ISSUES VINPOCETINE WARNING The FDA issued a safety warning for the dietary supplement ingredient vinpocetine. The June 3, 2019 warning is specifically addressed to women of childbearing age. The warning appears to be primarily based on a report by NIH's National Toxicology Program (NTP), which found that consuming vinpocetine is associated with adverse reproductive effects (miscarriage or decreased fetal weight) in animals1. The agency is also advising companies to evaluate their product labeling to ensure that it provides safety warnings against use by pregnant women and women who could become pregnant. The FDA received five new dietary ingredient notifications for vinpocetine as an ingredient in dietary supplements from 1997-99. In September 2016, the FDA requested comments on whether vinpocetine is legal for sale as a dietary supplement. The comment period is closed. As part of its June 3 warning announcement, the FDA said it will "expedite completion" of that administrative review. Vinpocetine may appear on product labels as Vinca minor extract, lesser periwinkle extract, or common periwinkle extract. Supplements containing the ingredient are often marketed for uses that include enhanced memory, focus, or mental acuity; increased energy; and weight loss.
AMARIN APPEALS DECISION OF INTERNATIONAL TRADE COMMISSION The U.S. Court of Appeals for the Federal Circuit recently affirmed a decision that a private party may not take action to enforce the Food, Drug and Cosmetics Act (FDCA) where the FDA has not taken a position on the issue. The appeal arose from a complaint Amarin filed with the International Trade Commission (ITC) under § 337 of the trade statute, which authorizes the ITC to bar imports of products based on such things as infringement of intellectual property rights or unfair competition. Amarin's complaint alleged that its competitors' synthetically produced omega-3 products (synthetically produced eicosapentaenoic acid (EPA) omega-3 products in ethyl ester or reesterified triglyceride form) were unlawfully labeled and marketed as “dietary supplements” in violation of § 337, the Lanham Act relating to unfair competition, and the FDCA. Amarin argued that the products are unapproved “new drugs” that require FDA approval and cannot be sold as dietary supplements. Amarin asked ITC to bar the importation of the products. Some of the respondents in Amarin's complaint argued that the ITC did not have the authority to initiate the requested investigation. They claimed that FDA is the exclusive agency to determine whether the products at issue could be legitimately sold as dietary supplements. FDA weighed in and asked the ITC not to institute the investigation on the ground that Amarin was attempting to use the ITC to enforce food and drug statutes. FDA noted that it has not yet decided whether synthetically produced omega-3 products were dietary supplements or new drugs. 1 The warning is available at https://www.fda.gov/news-events/press-announcements/statement-warning-women-childbearing-age-about-possible-safety-risks-dietary-supplements-containing?utm_ca mpaign=060319_Statement_FDA%20warns%20women%20about%20dietary%20supplements%20containing%20vinpocetine&utm_medium=email&utm_source=Eloqua. The NIH report is available at https://ntp.niehs.nih.gov/ntp/about_ntp/trpanel/2019/july/dart03_508.pdf.
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The ITC agreed with the respondents and FDA, finding that Amarin’s complaint did not allege an unfair method of competition or an unfair act and FDA is the entity exclusively charged with enforcing the FDCA. As such, the ITC declined to institute an investigation and dismissed the complaint. The Federal Circuit affirmed the ITC's dismissal2. The Court ruled that Amarin's claims were based entirely on and would not exist without the FDCA. It ruled that affirmative FDA approval is not required in the dietary supplement context. Instead, "manufacturers self-police." The FDA has not provided guidance as to whether the products at issue in this case should be considered “new drugs” that require approval. Given this lack of guidance, the Court held "that a complainant fails to state a cognizable claim under § 337 where that claim is based on proving violations of the FDCA and where the FDA has not taken the position that the articles at issue do, indeed, violate the FDCA. Such claims are precluded by the FDCA. The appellate court, however, made clear that a Lanham Act § 43(a), for false advertising or unfair competition, would not be precluded if the FDA has considered and decided an issue. This is consistent with a decision by the Ninth Circuit (and discussed by the Federal Circuit), which found that the FDA had never taken the position that the [medical device] products had not been properly cleared under 510(k). “Because the FDCA forbids private rights of action under that statute, a private action brought under the Lanham Act may not be pursued when, as here, the claim would require litigation of the alleged underlying FDCA violation in a circumstance where the FDA has not itself concluded that there was such a violation.” A private party may bring a Lanham Act claim where the FDA has taken a position on a regulatory issue and the defendant is engaged in unlawful false advertising or unfair competition.
HI-TECH SUES FDA ON DMHA Hi-Tech Pharmaceuticals sued the FDA on May 1, 2019 in the District of Columbia, claiming the agency bypassed rule-making procedures in favor of a "campaign of intimidation" to try to force companies to destroy their products containing 2-Aminoisopheptane, or DMHA. Hi-Tech alleged that: "DMHA has existed in the food supply for many years" and "Hi-Tech and the industry have sold millions of bottles of dietary supplement products containing this ingredient without any serious adverse event reports." Hi-Tech alleged that DMHA is a natural constituent of the Walnut tree and Kigelia Africana fruit. The FDA placed DMHA on its FDA Dietary Supplement Ingredient Advisory List. And on April 10, 2019, the FDA issued a warning letter to Hi-Tech on DMHA. The warning letter stated that there is no information demonstrating that DMHA was lawfully marketed as a dietary ingredient in the United States before October 15, 1994, nor is there information demonstrating that this ingredient has been present in the food supply as an article used for human food in a form in which the food has not been chemically altered. As such, Hi-Tech should have submitted a new dietary ingredient notification (NDIN) to FDA. It further wrote that there is no history of use or other evidence of safety establishing that DMHA will reasonably be expected to be safe when used as a dietary ingredient. The warning letter also noted that "we have questions about whether DMHA is, in fact, a dietary ingredient. If DMHA were not a dietary ingredient under section 201(ff)(1) of the Act, it would be an unsafe food additive. If a substance is not generally recognized as safe http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/18-1247.Opinion.5-1-2019.pdf.
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(GRAS) by qualified experts for its intended use in food and does not qualify for any of the other exemptions from the food additive definition, it is a food additive. Food additives require premarket approval based on data demonstrating safety. Any food additive that has not been approved for its intended use in food is deemed to be unsafe and causes the food to be adulterated" under FDCA § 402(a)(2)(C)(i). H-Tech's complaint seeks declaratory and injunctive relief against the FDA. The company alleges that: "Under the guise of 'modernizing' this regulatory structure [for supplements], the FDA has embarked on a campaign to drive certain dietary ingredients/supplements from the marketplace by simply declaring, without evidence or rule making, that certain dietary ingredients/supplements are not in fact dietary ingredients but rather unapproved food additives, deemed adulterated by statute. In the case of DMHA containing products, which pose no danger to consumers, the FDA has simply declared them, via a posting to its website, to be 'adulterated' because DMHA is allegedly not a dietary ingredient marketed before October 15, 1994…. This has been accompanied by a campaign of intimidation against dietary supplement companies like Hi-Tech who include this ingredient in their products. For Hi-Tech and several of its competitors, this has taken the form of warning letters and pressure by the FDA to remove and destroy DMHA containing products." Hi-Tech and its CEO, Jared Wheat, are defendants in a pending criminal case in the Northern District of Georgia on several charges, including mail and wire fraud and money laundering. Hi-Tech and Wheat are currently appealing a $40 million civil contempt sanction for violating an injunction. They are also appealing a District Court ruling which found that the FDA lawfully seized $2.2 million worth of DMAA products.
BIPARTISAN DRAFT BILL TO REFORM PATENT ELIGIBILITY Five members of Congress have released the draft text of legislation to amend federal law relating to when inventions are eligible to patented under 35 U.S.C. § 101. The draft was released by Sens. Tillis and Coons (the Chair and Ranking Member of the Senate Judiciary Subcommittee on Intellectual Property), Reps. Collins (the Ranking Member of the House Judiciary Committee), Johnson (Chair of the House Judiciary Subcommittee on Intellectual Property and the Courts), and Stivers. The draft bill text is intended to counter a series of Supreme Court decisions – Alice, Mayo and Myriad – that created judicial exceptions to patent eligibility. Section 101 currently provides: "Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title." The Court's decisions have limited patent eligibility for natural phenomena, laws of nature, and abstract ideas. The draft legislation, if adopted, would provide greater certainty for inventors that new dietary supplement products or methods of use could be patentable and that their research and development costs could be recovered.
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FDA ASKED TO TAKE ACTION AGAINST NICOTINE ADDICTION SUPPLEMENTS The Center for Science in the Public Interest (CSPI) has asked FDA to take enforcement action against sellers of 15 dietary supplements that claim to treat nicotine addiction. In an April 24, 2019 letter, CSPI is asking the FDA to take enforcement action against 15 manufacturers of dietary supplements that claim the products will ease nicotine withdrawal or help smokers quit tobacco mean that the FDA should classify the products as unapproved new drugs. CSPI urged FDA to ask the companies to withdraw the claims and products and authorize its inspectors to seize the products. CSPI argues that because nicotine dependence is a disease, products that claim to help people quit smoking are drugs under the FDCA. These products are unapproved OTC drugs. It also argued that the products are misleadingly labeled because they use exaggerated and unsubstantiated claims about effectiveness to divert consumers from FDA-approved products and treatment.
COURT ENFORCES FDA'S USE OF INSPECTION WARRANT A Pennsylvania District Court recently approved the FDA's use of an "inspection warrant" to inspect an uncooperative manufacturer. Inspection warrants are authorized by 21 U.S.C. § 374(a). FDA’s Regulatory Procedures Manual requires the following criteria to seek an inspection warrant: (a) FDA is entitled by statute or regulation to inspect the facility and to have access to the information which has been refused; (b) there is a compelling FDA need for that information; and (c) the company had refused to allow inspection or access to information in spite of a clear demonstration or explanation of statutory authority. In In the Matter of Administrative Establishment Inspection, FDA tried five times to inspect Spa and Organic Essentials after an outbreak of salmonella was linked to the company's kratom product. Kratom is a food and Spa and Organic is subject to regulation by FDA as a food manufacturer and distributor. The company refused to cooperate with FDA inspectors. At FDA's request, the Court issued an inspection warrant. Spa and Organic Essentials sought to quash the warrant. It found that probable cause for an administrative warrant may be based on either: (a) a particularized showing that the manufacturing plant targeted for the search is the location of suspected violations; or (b) a showing that the industry in general poses certain hazards to workers coupled with a showing that the targeted facility was selected at random as part of a general plan to pursue and eliminate suspected industry-wide violations. The Court concluded there was ample probable cause for the FDA to conduct this search. There was evidence that Spa and Organic was the potential source for the tainted kratom and the company refused to cooperate with other investigative measures. The FDA also sought to require Spa and Organic to make statements and provide passwords for computers seized by FDA. But the Court denied that request. The inspection warrant did not affirmatively require the company to provide testimony as well as an inspection. While the Court left open the possibility the FDA could take other steps to compel production of testimonial information, the legal authority to do so is questionable.
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CBD LIQUID FORMULATIONS ARE FOUND TO BE PATENT ELIGIBLE A Colorado federal judge ruled on April 17, 2019, that a cannabis patent is not directed to a naturally occurring phenomenon and is thus eligible to be patented. The case appears to be the first to allege infringement of a cannabis-related patent. U.S. Patent No. 9,730,911 claims various liquid cannabinoid formulations. This includes formulations that require at least 95% of the total cannabinoids be CBD, that are purported to help treat chronic pain and other ailments. United Cannabis, the patent owner, sued its competitor, Pure Hemp, in July 2018 for selling products that allegedly have the same liquid formulations covered by its patent. Pure Hemp moved for summary judgment. It argued that that United Cannabis’ liquid cannabinoid formulations are not eligible for a patent under 35 U.S.C. § 101 because they are natural phenomena that are not patent eligible. The Court denied the motion on the ground that the formulations were United Cannabis’ own “handiwork” and that the liquefied version of cannabinoids at the concentrations specified in the patent do not occur in nature. Thus, the patent is not “directed to” an unpatentable law of nature, a natural phenomenon, or an abstract idea. The Court's decision referenced, but did not rely upon, the recent Federal Circuit decision in Natural Alternatives International.
USPTO ISSUES GUIDE ON HEMP-DERIVED CBD TRADEMARKS The U.S. Patent and Trademark Office (USPTO) announced on May 2, 2019, that it allow trademark registration for marks used on some hemp-based products, including those containing hemp-derived CBD, except for foods, beverages, dietary supplements, or pet treats. Examination Guide 1-19 comes in the wake of the 2018 Farm Bill, which removed hemp and its byproducts from the Controlled Substances Act and allowed more non-academic cultivation of hemp.3 The USPTO has previously denied or delayed cannabis-related trademark applications on the ground the goods or services cannot be used lawfully in commerce (which is required for registration). The new Examination Guide acknowledges that marks used on hemp products (including CBD) produced lawfully under a state pilot program, which controls the means by which hemp may be grown and processed within a given state, are not illegal under the Controlled Substances Act and so should be registrable. However, there is an important caveat to any applicant seeking a quick registration. Based on the FDA’s position that the sale of foods, beverages, dietary supplements, or pet treats containing CBD (regardless of how derived) is illegal under the FDCA, the USPTO said it will not allow registration of marks for those products unless or until the changes its position. That may take some time. The FDA held a public hearing on May 31 for stakeholders in the cannabis industry and is forming a high-level working group to explore pathways for legally selling and marketing CBD supplements. At the hearing, the acting FDA Commission raised a number of questions regarding CBD, including: (1) how much of the 3
The Guide is available at https://www.uspto.gov/sites/default/files/documents/Exam%20Guide%201-19.pdf.
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cannabis extract is safe to consume daily; How will it interact with other drugs? What if a consumer is pregnant? What is CBD’s effect on children? What happens if someone takes it over the course of years? Commissioner Sharpless, said answers are still unknown. He went on to say that "[t]here are important reasons to generally prohibit putting drugs in the food supply” and CBD is no exception. Companies selling smokable hemp-derived CBD products, which are not subject to FDA’s policy, may have a case for federal trademark registration now.
CALIFORNIA ASSEMBLY PASSES CBD BILL The California State Assembly has unanimously passed a bill to permit the retail sale of hemp-derived CBD. AB228 provides food, drinks and cosmetics that contain hemp-derived CBD are legal for sale in California.4 The bill would negate a 2018 statement by the Department of Public Health that CBD could not be used in any animal or human food, including dietary supplements. The bill goes to the California Senate. Gov. Gavin Newsom has not taken a position on the legislation.
FTC AMENDS COMPLAINT IN ALLEGED FREE TRIAL AND CONTINUITY SCHEME The FTC filed an amended complaint in a Central District of California case alleging a multi-national scheme to defraud consumers through deceptive “free trial” offers and negative-option continuity plans. The amended complaint names a Latvian financial institution and its CEO as additional defendants, alleging they participated in the scheme by processing $40 million in consumer payments. They allegedly engaged in "credit card laundering" by approving and maintaining merchant accounts in the name of shell companies with straw owners, and that they manipulated chargeback levels in those merchant accounts to evade credit card chargeback monitoring programs. In its original complaint, the FTC alleged that Apex Capital Group, LLC, two individual defendants, and related entities marketed “free trial” offers for personal care products and dietary supplements online, but then billed consumers the full price and enrolled them in negative-option continuity plans without their consent. The defendants used dozens of shell companies and straw men in the United States and the United Kingdom to obtain the merchant accounts needed to accept consumers’ credit and debit card payments. The amended complaint adds two defendants to the case –a Latvian financial institution and payment processor, and its CEO. The FTC alleges that the new defendants opened at least 50 merchant accounts in the names of U.K.-registered shell companies for the benefit of the Apex defendants who ran the scheme. The FTC also alleges they manipulated credit card chargeback levels to avoid card network rules and transaction monitoring programs intended to prevent fraud. Both practices are alleged to unfairly injure consumers in violation of the FTC Act.
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The Guide is available at https://www.uspto.gov/sites/default/files/documents/Exam%20Guide%201-19.pdf.
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Since passage of the Dietary Supplement Health and Education Act of 1994 (DSHEA), the dietary supplement industry has grown to more than $35 billion in annual sales. This robust growth of the industry reflects not only increased interest among consumers in these products, but also means new legal and regulatory challenges to overcome. Our Dietary Supplement practice includes the following:
Porzio’s Attorneys have been serving the needs of the Dietary Supplement industry for over 20 years. Based in Washington DC, they have a deep understanding of the marketplace and myriad of legal, regulatory, and public policy issues that must be navigated by established as well as start-up companies.
Intellectual Property
Porzio’s attorneys, including those with advanced science degrees registered to practice before the U.S. Patent and Trademark Office (PTO), offer full-service representation in patent, trademark, copyright, trade secret and unfair competition law to dietary supplement companies. We provide fundamental services including U.S. and foreign patent preparation, patent and trademark prosecution, litigation, opinions, licensing, transactions, due diligence, and portfolio management. We have particular expertise in handling more specialized matters including complex administrative proceedings such as inter partes reviews (IPRs) reexaminations, reissues, interferences and appeals to the Board of Patent Appeals, as well as appeals to the Federal Circuit and proceedings before the International Trade Commission. When a patent dispute arises, either before the PTO or in federal District Court, Porzio’s experienced litigators work closely and collaboratively with the scientists to bring about a successful resolution as quickly and efficiently as possible. Porzio has advised and represented clients in patent, trademark, trade secret, unfair competition and copyright cases in several courts around the country, including federal and state courts in Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, Nevada, New York, North Carolina, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin.
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Public Policy and Adocacy REGULATORY AFFAIRS Porzio’s attorneys regularly represent dietary supplement companies that have issues before federal and state government agencies, including the Food and Drug Administration (FDA). Federal Trade Commission (FTC), Department of Justice (DOJ), Department of Agriculture (USDA), Department of Commerce (DOC), Department of Defense (DOD), Department of Interior (DOI), Drug Enforcement Agency (DEA), Customs and Border Protection (CBP) and State Attorneys’ General. We advise and counsel dietary supplement clients on complying with FDA and FTC regulations and guidance documents. Porzio’s attorneys are experienced in advertising and promotion, claim substantiation, health claims, current good manufacturing practice (cGMP), warning letters and other matters before the FDA and FTC. Oftentimes, FTC and FDA investigations are run in parallel with investigations by the DOJ, United States Attorneys’ Offices and State AGs. Porzio attorneys have particular experience in these matters.
Porzio’s Washington, DC office is comprised of attorneys that were previously with the law firm of Patton Boggs LLP. On legislative matters before the U.S. Congress, they are in regular contact with Senate and House of Representatives Leaders, Committees, Members and senior staff. We represent clients in rulemaking proceedings before federal and state agencies. Our policy practice also involves working with clients on stratagies and advocacy training on how best to engage in grassroots lobbying efforts to better communicate their needs to their elected representatives.
Porzio attorneys routinely monitor and are in contact with regulators on new rules, guidance and policies. For example, Porzio participated with Natural Products Association on the FDA’s revised New Dietary Ingredient Guidance shortly after it was issued and continues to update and advise clients on matters of importance regarding actions being taken in Washington, D.C. LITIGATION Porzio has a deep bench of attorneys in litigating intellectual property, deceptive trade practices (Lanham Act § 43(a)), breach of contract and product liability cases. Our knowledge of supplements and the science behind them provide clients with an added value that other firms do not have. PROPOSITION 65 Porzio not only advises clients on complying with Proposition 65, it has also litigated warning letter cases in California courts. With the regulators issuing new rules, clients can expect to have new challenges in this area in the coming years.
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Kevin M. Bell kmbell@pbnlaw.com 202.517.6325
Richard J. Oparil rjoparil@pbnlaw.com 202.517.6323
Porzio, Bromberg & Newman, P.C. 1200 New Hampshire Avenue NW Suite 710 Washington, DC 20036-6802 Tel 202.517.1888 Fax 202.517.6322 www.pbnlaw.com
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