COLA’s – The calendar and the courtroom

Blog 34

One of the issues we’re seeing more people have frustrations with is the time and detail involved with Certificates of Label Approval (COLAs).  With these COLA’s the Alcohol and Tobacco Tax and Trade Bureau (TTB) is finding itself caught in a very sticky situation. On one hand their funding is shrinking, due to decreasing budgets each year, government shutdowns, issues regarding extended leave of absences, and the effects of ever changing rules and policies from a very sporadic Congress.

On the other hand TTB is dealing with an industry that is growing exponentially and thus introducing a tremendous amount of new products into the marketplace.  Due to the speed of the growth, the produces are eager to get their products into the market quickly as well.  This results in a bottleneck for everyone and generates longer approval times for new COLA applications. This bottleneck remains even with the steps to expedite and a substantial number of changes to streamline the COLA filing process that the TTB has implemented. The current COLA processing times (as of March 25, 2014) are 40 days for distilled spirits labels, 17 days for malt beverage labels, and 25 days for wine labels.

TTB has also discussed that they would like to make even more changes to the COLA process, in hopes of further speeding it up for the industry and reducing the strain on their staff at the same time.  TTB also has many other matters to attend to in regards to COLA’s, one such legal issue that may affect the entire process is happening this spring.

On January 10, 2014, the U.S. Supreme Court agreed to hear an appeal by Pom Wonderful LLC against The Coca-Cola Company.  The Court will examine whether Pom can bring a federal Lanham Act false advertising claim against a Minute Maid juice product label that had been approved by the U.S. Food and Drug Administration (FDA).  (Pom Wonderful LLC v. The Coca-Cola Co., U.S. Supreme Court case no. 12-761).

The Lanham Act, (Section 43(a) (Section 1125 (a)), was enacted by Congress in 1946 based on the power granted to it by the commerce clause, in order to prevent “False designations of origin, false descriptions…”.  It provides for a national system of trademark registration and protects the owner of a federally registered mark against the use of similar marks if such use is likely to result in consumer confusion, or if the dilution of a registered mark is likely to occur.  The scope of the Lanham Act is independent of and concurrent with common law.

The issue in the lawsuit is a label for “Pomegranate Blueberry Flavored Blend of 5 Juices.”  The label presents the words “Pomegranate Blueberry” in larger type than the remainder of the phrase, on the label created by Minute Maid, a subsidiary company of The Coca-Cola Company.  Pom has claimed that the label was misleading because the product contains 0.3 percent pomegranate juice and 0.2 percent blueberry juice, totaling 0.5% of the product and it directly competes with their brand of Pomegranate juice based products.

Prior to the U.S. Supreme court agreeing to hear the appeal by Pom, a California federal trial court and the 9th Circuit federal appeals court in California both ruled that Pom could not bring a Lanham Act false advertising claim against the label, since it had been examined and approved by the FDA.  Pom has argued that the decisions were inconsistent with established laws in other U.S. courts, and that federal regulations establish a baseline for what an advertiser is required to do to avoid a claim that the advertising is false and misleading. Pom also argued that federal law does not establish a limit on how far a company can go in its labeling.  Coca-Cola has argued that product labeling that is specifically authorized by the Food, Drug and Cosmetic Act (FDCA) and approved by the FDA cannot be charged as false or misleading under another federal statute such as the Lanham Act.

The primary question presented to the Supreme Court is whether or not a private party can bring a Lanham Act claim challenging a product label regulated under the FDCA. The Supreme Court’s decision could have a tremendous impact on the alcohol beverage industry, TTB and COLA’s.

The Supreme Court is expected to hear argument this spring (2014) and decide the case by June 2014.  Depending on the decision, alcohol beverage industry members could find they have additional insulation against a federal false advertising claim, but they may likewise be limited in bringing a federal false advertising lawsuit against a competitor’s label that has been approved by TTB.

 

 

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