Federal Food, Drug, and Cosmetic Act does not Preempt the Lanham Act

On 12 June 2014, the U.S. Supreme Court (USSC) issued an 8-0 opinion (PDF) expounding the intersection of two federal statutes including the Lanham Act in POM Wonderful v. Coca Cola, 571 U. S. ___ (2014). This opinion concerns the alleged preclusion of a cause of action under one federal statute by the provisions of another federal statute. Pre-emption principles are instructive insofar as they are designed to assess the interaction of laws bearing on the same subject.The Lanham Act, which governs trademarks, permits one competitor to sue another for unfair competition arising from false or misleading product descriptions. 15 U. S. C. §1125.The Federal Food, Drug, and Cosmetic Act (FDCA) prohibits the misbranding of food and drink. 21 U. S. C. §§321(f), 331.

The USSC reversed and remanded the Ninth Circuit decision. The result is that POM Wonderful may bring suit against Coca Cola.The USSC held that competitors may bring Lanham Act claims alleging unfair competition based on false or misleading product descriptions on food and beverage labels regulated by the FDCA even though the FDCA exclusively controls what appears on packaging.

The syllabus of the opinion, from which I borrow liberally, presents a succinct summary of the opinion. The Food and Drug Administration (FDA) has promulgated regulations regarding food and beverage labeling including one concerning juice blends. Unlike the Lanham Act, which, relies in large part for its enforcement on private suits brought by allegedly injured competitors, the FDCA and its regulations give the United States nearly exclusive enforcement authority and do not permit private enforcement suits. The FDCA also pre-empts certain state misbranding laws.

Neither the Lanham Act nor the FDCA, in express terms, forbids or limits Lanham Act claims challenging labels that are regulated by the FDCA. The absence of such a textual provision when theLanham Act and the FDCA have coexisted for over 70 years is “powerful evidence that Congress did not intend FDA oversight to be theexclusive means” of ensuring proper food and beverage labeling. See Wyeth v. Levine, 555 U. S. 555, 575 (2009). Both statutes touch on food and beverage labeling, but the LanhamAct protects commercial interests against unfair competition, while the FDCA protects public health and safety.

Petitioner POM Wonderful LLC, which produces, markets, and sells, inter alia, a pomegranate-blueberry juice blend, filed a Lanham Act suit against respondent Coca-Cola Company, alleging that the name, label, marketing, and advertising of one of Coca-Cola’s juice blends mislead consumers into believing the product consists predominantly of pomegranate and blueberry juice when it consists predominantly of less expensive apple and grape juices, and that the ensuing confusion causes POM to lose sales.

The Coca-Cola product only contains 0.3% pomegranate juice and 0.2% blueberry juice. Alleging that the use of that label is deceptive and misleading, POM sued Coca-Cola under §43 of the Lanham Act. 60 Stat. 441, as amended, 15 U. S. C. §1125. That provision allows one competitor to sue another if it alleges unfair competition arising from false or misleading product descriptions. The Court of Appeals for the Ninth Circuit held that, in the realm of labeling for food and beverages, a Lanham Act claim like POM’s is precluded by a second federal statute, the FDCA. The USSC reverses this holding.

The Lanham Act creates a federal remedy “that goes beyond trademark protection.” POM Wonderful at slip op. 10, citing to Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U. S. 23, 29 (2003). The broader remedy is at issue between POM Wonderful and Coca-Cola.

The USSC states that the FDCA and the Lanham Act are complementary and have separate scopes and purposes. The greater specificity in the FDCA would matter only if the Lanham Act and the FDCA cannot be implemented in full at the same time. See RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U. S. ___, ___ (2012) (slip op., at 5–7). But neither the statutory structure nor any empirical evidence indicates to the USSC that there should not be any difficulty in fully enforcing each statute according to its respective terms. In fact, the FDA explicitly encourages manufacturers to include material on their labels that is not required by the regulations. 58 Fed. Reg. 2919.

Coca-Cola and the United States asked the Court to elevate the FDCA and the FDA’s regulations over the private cause of action authorized by the Lanham Act. But USSC states that the FDCA and the Lanham Act complement each other in the federal regulation of misleading labels.

The primary lesson from this opinion is that trademark and unfair competition regulations are separately enforced from other federal and state provisions such as the FDCA. The Lanham Act should be separately considered from other laws such as product labeling. Individuals and businesses should consult with a knowledgeable trademark and trade dress practitioner if they have questions or concerns about trademark and unfair competition regulations in relation to products and services for sale.

U.S. Supreme Court Confirms Patents Cannot Claim Abstract Ideas

On 19 June 2014, the U.S. Supreme Court (USSC) issued a significant decision (PDF) on patent-eligible subject matter in Alice Corp. Pty. Ltd. v. CLS Bank International et al. This case particularly addresses how certain abstract subject matter may be claimed in a patent. Alice Corp. is a unanimous decision relating to the relevant patent statute, 35 U.S.C. 101.

Since reading the opinion, I have been mulling over the impact of this decision and contemplating how to apply it because I often work with computer-centric and abstract subject matter in patent claims. The U.S. Patent and Trademark Office (USPTO) has already given the Examining Corps guidance (PDF) based on this opinion. The guidance is quite specific and provides further insights on how the USPTO and everyone associated with the judiciary should apply this decision.

Alice’s patents included claims directed to a method for exchanging financial obligations, a computer system configured to carry out such method, and computer-readable media containing program code for performing such method. (An exemplary method claim is shown following these remarks.) The USSC found it unnecessary to define the “precise contours of the ‘abstract ideas’ category.”

The Alice Corp. opinion follows Mayo Collaborative Services v. Prometheus Laboratories, Inc, 566 U.S. ___ (2012), an earlier Supreme Court case. In Mayo, the USSC held that the recitation of a computer in the method claims was “‘nothing significantly more’ than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer.” The USSC likewise held those claims not to be drawn to statutory subject matter under 35 U.S.C. § 101.

Section 101 defines the subject matter eligible for patent protection: “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 USSC has historically held that this provision contains an important implicit exception: “Laws of nature, natural phenomena, and abstract ideas are not patentable.” (citations omitted)

The USSC indicated that the “system and [computer-readable] media claims add nothing of substance to the underlying abstract idea” found in the method claims.The USSC cautioned that there is a need to “tread carefully” when addressing the abstract idea doctrine “lest it swallow all of patent law.” I have to agree. After all, human language is imprecise and we have to live with some amount of abstractness in order to provide some justice to those seeking to ride the intellectual coat tails of technical pioneers. This balance of fairness is at the heart of patent law where we want to reward those persons who advance civilization.

In Alice, the USSC observed that “an invention is not rendered ineligible for patent simply because it involves an abstract concept.” Justice Sotomayor and two other Justices issued a concurring opinion to state a belief that any patent claim that merely describes a method of doing business is patent-ineligible.

The USSC applied a two-part test that it introduced in Mayo – the same test that led to the Federal Circuit’s fractured en banc opinion issued earlier in this dispute. Under that two-part test, the USSC found (1) that the claims were drawn to the abstract idea of “intermediated settlement,” which is a “fundamental economic practice long prevalent in our system of commerce,” and (2) that “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.”

The USSC fails to directly address several of the questions surrounding the two-part Mayo test, such as how to determine whether a claim is directed to an abstract idea and how much “more” is required to make such a claim patent-eligible. While I get the concept of “don’t try to patent abstract ideas,” I was left with the feeling of eating a big batch of cotton candy – lots of tasty opinion without a lot of practical substance about how to make the determination in other cases. Nevertheless, the Alice decision provides some guidance on how to view claims in view of section 101.


The parties agree that claim 33 of U.S. Patent No. 5,970,479 is representative of the method claims. Claim 33 recites:

A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

(a) creating a shadow credit record and a shadow debit record foreach stakeholder party to be held independently by a supervisory institution from the exchange institutions;

(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;

(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party’s shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order, and

(d) at the end-of-day, the supervisory institution instructing on[e] of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.


Here are the claims in dispute from the relevant cases:

CLAIM IN ALICE CORP (2014) (not allowed)

A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

(a) creating a shadow credit record and a shadow debit record foreach stakeholder party to be held independently by a supervisory institution from the exchange institutions;

(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;

(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party’s shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order, and

(d) at the end-of-day, the supervisory institution instructing on[e] of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.


CLAIM IN FLOOK (1978) (not allowed)

1. A method for updating the value of at least one alarm limit on at least one process variable involved in a process comprising the catalytic chemical conversion of hydrocarbons wherein said alarm limit has a current value of
Bo + K
wherein Bo is the current alarm base and K is a predetermined alarm offset which comprises:
(1) Determining the present value of said process variable, said present value being defined as PVL:
(2) determining a new alarm base B1, using the following equation:

B1 = Bo (1.0 – F) + PVL (F)

where F is a predetermined number greater than zero and less than 1.0;

(3) determining an updated alarm limit value which is defined as B1 + K; and, thereafter
(4) adjusting said alarm limit to said updated alarm limit value.


CLAIM IN DIEHR (1981) (allowed)

1. A method of operating a rubber-molding press for precision molded compounds with the aid of a digital computer, comprising:

providing said computer with a data base for said press including at least, natural logarithm conversion data (ln), the activation energy constant (C) unique to each batch of said compound being molded, and a constant (x) dependent upon the geometry of the particular mold of the press,
initiating an interval timer in said computer upon the closure of the press for monitoring the elapsed time of said closure,
constantly determining the temperature (Z) of the mold at a location closely adjacent to the mold cavity in the press during molding,
constantly providing the computer with the temperature (Z),
repetitively performing in the computer, at frequent intervals during each cure, integrations to calculate from the series of temperature determinations the Arrhenius equation for reaction time during the cure, which is

ln(v)=CZ+x
where v is the total required cure time,

repetitively comparing in the computer at frequent intervals during the cure each said calculation of the total required cure time calculated with the Arrhenius equation and said elapsed time, and
opening the press automatically when a said comparison indicates completion of curing.

Favorite Patents Series — the Cup Holder

One of my favorite inventions that was created in my lifetime is the coffee cup insulator sleeve. It was officially titled “Cup Holder” and is the subject of US Patent No. 5,425,497. It was filed at the @USPTO on 9 November 1993.

US_5425497

This little item and many variations of it are daily encountered at coffee shops all over America. It is such an apparently ordinary thing that it often escapes attention. It is one of my first recollections of recognizing that something was “patented” or subject to patent protection. Now, patents are part of my daily life as I practice my profession as a patent attorney.

Here is the Abstract of this marvelous invention:

A cup holder is disclosed in the form of a sheet with distal ends. A web is formed in one of the ends, and a corresponding slot is formed in the other end such that the ends interlock. Thus the cup holder is assembled by rolling the sheet and interlocking the ends. The sheet can be an elongate band of pressed material, preferably pressed paper pulp, and is preferably formed with multiple nubbins and depressions. In one embodiment, the sheet has a top and bottom that are arcuate and concentric, and matching webs and cuts are formed in each end of the sheet, with the cuts being perpendicular to the top of the sheet.

U.S. Supreme Court Confirms Contributory Patent Infringement Requires Direct Infringement

Yesterday, 2 June 2014, the Supreme Court of the United States (@SCOTUS) issued a unanimous decision which overturned the en banc decision of the Federal Circuit in Limelight Networks, Inc. v. Akamai Technologies, Inc. Case law is clear that induced liability may arise if, but only if, there is direct infringement. However, the Federal Circuit erroneously went further and reasoned that a defendant can be liable for inducing patent infringement under 35 U.S.C. § 271(b) even if no one has committed direct infringement within the terms of § 271(a) (or other provision of the patent laws).

SCOTUS reiterated that a “patent is not infringed unless all the steps [of the claimed method] are carried out [by a single entity].” 572 U.S. ___, *4 (2014). According to the Warner-Jenkinson case, “[e]ach element contained in a patent claim is deemed material to defining the scope of the patented invention.” A patentee’s rights extend only to the claimed combination of elements.

The Federal Circuit in Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (2008) stated that a method’s steps have not all been performed as claimed by the patent unless they are all attributable to the same defendant – either because the defendant actually performed those steps or because the defendant directed or controlled others who performed them. The Court, in its opinion in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972) rejected the possibility of contributory infringement of the patent in dispute because the machines had not been assembled in the U.S., and direct infringement had consequently never occurred. The Court reasons here that “Limelight cannot be liable for inducing infringement that never came to pass.” Slip Op. at 7.

Accordingly, practitioners and patent owners are on notice that careful claim drafting and claim interpretation are needed. If you have questions about writing or interpreting claims, contact my office to arrange a free initial consultation.