1. GREENBERG TRAURIG, LLP ATTORNEYS AT LAW WWW.GTLAW.COM ©2009. All rights reserved. Beverage School: Beverages 101 Legal and Regulatory Issues December 2, 2012 Speaker: Justin J. Prochnow  prochnowjj@gtlaw.com  (303) 572-6562

2. - 2 - 2 MAKING A LIST  Beverages vs. Supplements  Contracts  Labels and Claims  Endorsements and Testimonials  Intellectual Property  FDA Enforcement  Civil Litigation  Final Thoughts

3. - 3 - 3 WHAT DO YOU WANT TO BE WHEN YOU GROW UP?

4. - 4 - 4 BEVERAGES vs. SUPPLEMENTS  Beverages □ Regulated as conventional foods □ Nutrition Facts – 21 CFR 101.9 □ 8 oz serving size or single-serving containers □ Ingredients must be approved food additives or GRAS  Liquid Supplements □ Regulated as dietary supplements □ No set serving size □ Supplement Facts – 21 CFR 101.36 □ Ingredients must be dietary ingredients  2009 FDA Guidance on Supplements/Beverages

5. - 5 - 5 HEY BUDDY, YOU WANNA BUY A WATCH?

6. - 6 - 6 CONTRACTS AND AGREEMENTS  Contracts with manufacturers, suppliers, distributors, affiliates marketers, consultants, etc. □ The time to address issues is at the outset when everyone is still talking to each other □ Contract considerations:  Obligations and responsibilities  Indemnifications / Insurance  Non-compete / Non-disclosure  Breaches / Cures  Termination  Dispute Resolution

7. - 7 - 7 IS THERE GOLD IN DEM DER HILLS? (STAKING YOUR CLAIMS)

8. - 8 - 8 LABELING  FDA regulates labeling, FTC regulates ads  21 USC § 321(m) □ The term “labeling” means all labels and other written, printed or graphic matter  (1) upon any article or any of its containers or wrappers, or  (2) accompanying such article  FDA and the courts have identified brochures, booklets, films, sound recordings, and other pieces of printed, audio or visual matter to be labeling, including websites and other Internet materials

9. - 9 - 9 LABELING  Labeling regulations - 21 CFR Part 101 □ Examples of primary labeling regulations  Statement of Identity (21 CFR 101.3)  Net Quantity of Contents (21 CFR 101.105)  Nutritional Information (21 CFR 101.9 and 101.36)  List of Ingredients (21 CFR 101.4)  Name and Address of Business (21 CFR 101.5)  Food Allergen Labeling Act of 2004  Adverse Event Reporting  Can you copy someone else’s label? □ Only if you know you are copying the A+ student!

10. - 10 - 10 CLAIMS  THREE TYPES OF CLAIMS PERMITTED FOR FOODS, BEVERAGES AND SUPPLEMENTS □ STRUCTURE-FUNCTION CLAIMS □ NUTRIENT CONTENT CLAIMS □ HEALTH CLAIMS

11. - 11 - 11 CLAIMS  A FOOD, BEVERAGE OR SUPPLEMENT PRODUCT MAY NOT BE INTENDED TO DIAGNOSE, TREAT, CURE, OR PREVENT A DISEASE  If it does, it will be considered a drug by FDA □ It doesn’t matter if a company can provide substantiation that a supplement or food product does treat or prevent disease; except for limited exceptions, (specified health claims), cannot make disease claims □ Mention of specific diseases, such as diabetes, HIV, cancer, Alzheimer’s are red flags to the FDA of likely disease claims

12. - 12 - 12 IS IT FACT OR OPINION?

13. - 13 - 13 ADVERTISING  All advertising is regulated by the FTC and is subject to the Truth-in-Advertising Laws which require that advertising be: □ Truthful and not misleading □ Not unfair □ Adequately substantiated

14. - 14 - 14 ADVERTISING  Consumer Testimonials □ Adopted statements of company □ Must be substantiated □ Presumed representative, disclose typical results if not  Material Connections □ Endorsers □ Social Media □ Bloggers □ Affiliates  Affiliate Monitoring

15. - 15 - 15 IT’S ALL IN THE NAME

16. - 16 - 16 INTELLECTUAL PROPERTY  TRADEMARKS □ TM v. Circle R □ Common-law trademarks  PATENTS □ What is protectable?  TRADE SECRETS  COPYRIGHTS

17. - 17 - 17 WHO’S YOUR DADDY?

18. - 18 - 18 FDA REGULATION  Food Facility Registration  Food Safety □ Recalls  Inspections □ Food Safety Modernization Act □ Current Good Manufacturing Practices  Responses to FDA Actions □ Form 483s and Warning Letters  Seizures and Injunctions  Imports and Exports / Customs

19. - 19 - 19 HOW MANY LAWYERS DOES IT TAKE…?

20. - 20 - 20 CIVIL LITIGATION  Huge increase over last year or two on number of cases filed against food, beverage, and supplement companies for claims  Broad statutes in California and other states have provided plaintiff lawyers enticing avenues to bring class actions for alleged misleading or improper claims  Recent potential class actions cases filed have run the gamut, including “all natural” claims, nutrient content claims, alleged false and misleading claims, implied healthy claims, and other claims that allegedly are unsubstantiated

21. - 21 - 21 CIVIL LITIGATION  Top 10 List of Class Action Litigation Claims □ “All Natural” Claims □ False and Misleading / Unsubstantiated Claims □ Dangerous / Failure to Warn □ Weight Loss Claims □ Healthy and Nutritious □ Nutrient Content Claims □ Standard of Identity □ Geographic Origin □ Products Liability □ Prop 65

22. - 22 - 22 BUT… DON’T BE SCARED AWAY!

23. - 23 - 23 THERE IS HOPE… IT IS NOT ALL DARK CLOUDS THERE IS SUCCESS TO BE FOUND FOR THOSE THAT PROPERLY PREPARE!

24. - 24 - 24 FINAL THOUGHTS  DON’T JUMP IN WITHOUT DEVISING A GOOD GAME PLAN  THE CHOICE OF BEVERAGE OR SUPPLEMENT IS AN IMPORTANT ONE – IT WILL LIKELY SHAPE MANY DECISIONS DOWN THE ROAD  YOU MUST ENSURE YOUR LABELING AND ADVERTISING IS COMPLIANT – THE SMALL COST NOW WILL BE MAGNIFIED LATER  TAKE CARE OF ISSUES EARLY ON – SMALL ISSUES BECOME BIG PROBLEMS!

25. - 25 - 25 LEGAL DISCLAIMER  This presentation consists of general legal information. It is not intended to give legal advice about a specific legal problem, nor does it create an attorney-client relationship.  Due to the importance of individual facts of every situation, the generalization in this presentation may not necessarily be applicable to all situations. Changes in the law could make parts of this presentation obsolete in the future.  This information is provided with the understanding that if specific legal advice is required, the services of the presenter or another competent attorney should be sought.

26. - 26 - 26 Questions? Justin J. Prochnow Greenberg Traurig LLP 1200 17th Street, Suite 2400 Denver, Colorado 80202 (303) 572-6562 prochnowjj@gtlaw.com September 2012