1. Marketing Products in the Current Regulatory and Litigation Environment
Michigan State University College of Law
Food Law Current Issues Seminar – July 14, 2016
Steven B. Steinborn
Note – 3D supergraphic ‘mask’ is now a selectable object in foreground of slide.

2. Overview Litigation and Regulatory Risk Tolerance
Identifying Risk Areas
Managing Risk

3. Litigation And Regulatory Risk Tolerance
Starting point – understanding risk continuum; critical threshold legal assessment
Where does a given claim or planned marketing plan fall on continuum?
Threshold issue in constructing claims: risk tolerance
Litigation “costs” - negative publicity/impact on brand equity, cost of potential settlement or a negative outcome on the merits, drain on resources, legal fees
Court decisions all-over-the-map. Numerous potential defenses and possible judicial outcomes

4. Litigation Risk Tolerance
Risk adverse –avoid claims that are or could be subject to litigation or regulatory sanction
Moderate risk-taking – limited to well-substantiated claims; recognition you may be sued but less likely to lose on the merits.
Aggressive risk taker - roll the dice!
Remember: Cannot evaluate risk unless you have accurate understanding of legal landscape

5. Whose Looking Over Your Shoulder?
Food and Drug Administration
Federal Trade Commission
State mini-FDA’s
State Attorneys General
Private Plaintiff/Consumer Advocacy Groups
Competitors

6. Identifying Risk Areas: Misbranding Cases
Nutrient Content Claims
Ingredient Claims/Product Naming
Health Claims

7. Risk areas: Nutrient Content Claims
FDA Warning Letter to KIND, objecting to “healthy” claims
“+” Claims
Antioxidant claims
Failure to disclose level of total fat where good source of fiber claim is made and product is not low in fat
Failure to include % Daily Value for protein
Failure to declare poly and mono unsaturated fats
Class action plaintiffs filed lawsuit days after letter was posted by FDA

8. “made with ___” No bright line rule
Need a material amount, consistent with consumer expectations
Lawsuits over “made with real fruit” claims
In assessing claim, consider:
Graphics – do they imply how much or what type of the ingredient?
Whether any nutrients are associated with the highlighted ingredient – are those nutrients present at sufficient levels?
Consult FDA flavor labeling rule
Hogan Lovells

9. “No artificial _____” “No artificial ingredients”
has been challenged as an implied “all natural” claim
“No artificial flavors”
FDA has defined artificial flavor (21 CFR (a)(1))
“No preservatives”
FDA has defined chemical preservative (21 CFR (a)(5))
Lawsuits filed challenging this claim where a product contains citric acid as an ingredient
Hogan Lovells

10. “No artificial ____” “No artificial colors”
FDA takes the view that all colors, regardless of source, are not natural
FDA regulations define artificial color as any color additive (21 CFR (a)(4))
Many companies make a qualified claim: “No artificial colors – added colors from natural sources”
Hogan Lovells

11. Health-Related or Nutrition Cases
Immune system claims
Claims that juice provides the brain support benefits
Claims that infant formula prevents or reduces the risk of developing allergies
Heart symbols
Weight loss claims
Nutritional “Halo”/Value Claims
“Real” claims
Wholesome breakfast
Depictions of fruits or vegetables not present in product or at low levels

12. Lessons and Recommendations
Use of “natural” in any context should be carefully evaluated; many companies opt to switch than fight
FDA “natural” notice for public comment promising but unlikely to yield definitive rule
“Natural” as illustration of risk assessment
Remove claims
Reformulate product to avoid use of targeted ingredients
Tailor claims to specific ingredients (rather than the entire product)
Continue to make claims consistent with FDA’s existing policy

13. Lessons and Recommendations
FDA policies and regulations remain relevant and important – basis for preemption and to avoid lawsuits premised on technical violations
Heed FDA Warning Letters and guidance to diminish risk
Conduct internal audit of labels; identify issues and select appropriate timeframe for revisions where needed

14. Lessons and Recommendations
Nutrition and health claims – premium on substantiation
Often a high level of proof is required – consider the Federal Trade Commission’s “competent and reliable scientific evidence” standard
Competitive advantage to companies with sound science
Tailor claims to level of science
Leverage new Dietary Guidelines and Committee Report for consensus views on nutrition science

15. Other Proactive Strategies
Leverage third-party certification bodies
Involve academic or other credible “external” experts
Clarity in constructing claims; avoid unintended implied claims