GREENBERG TRAURIG, LLP ATTORNEYS AT LAW WWW.GTLAW.COM ©2009. All rights reserved.

Beverage School: Beverages 101Legal and Regulatory Issues

December 2, 2012

Speaker:

Justin J. Prochnow prochnowjj@gtlaw.com (303) 572-6562

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MAKING A LIST

Beverages vs. Supplements

Contracts

Labels and Claims

Endorsements and Testimonials

Intellectual Property

FDA Enforcement

Civil Litigation

Final Thoughts

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WHAT DO YOU WANT TO BE WHEN YOU GROW UP?

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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

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HEY BUDDY, YOU WANNA BUY A WATCH?

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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

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

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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

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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!

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CLAIMS

THREE TYPES OF CLAIMS PERMITTED FOR FOODS, BEVERAGES AND SUPPLEMENTS□ STRUCTURE-FUNCTION CLAIMS

□ NUTRIENT CONTENT CLAIMS

□ HEALTH CLAIMS

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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

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IS IT FACT OR OPINION?

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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

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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

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IT’S ALL IN THE NAME

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INTELLECTUAL PROPERTY

TRADEMARKS□ TM v. Circle R

□ Common-law trademarks

PATENTS□ What is protectable?

TRADE SECRETS

COPYRIGHTS

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WHO’S YOUR DADDY?

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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

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HOW MANY LAWYERS DOES IT TAKE…?

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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

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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

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BUT…

DON’T BE SCARED AWAY!

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THERE IS HOPE…

IT IS NOT ALL DARK CLOUDS

THERE IS SUCCESS TO BE FOUND FOR THOSE THAT PROPERLY PREPARE!

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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!

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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.

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Questions?

Justin J. ProchnowGreenberg Traurig LLP1200 17th Street, Suite 2400Denver, Colorado 80202(303) 572-6562prochnowjj@gtlaw.com

September 2012