Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_04-cv-00836/USCOURTS-almd-2_04-cv-00836-1/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1125 Trademark Infringement (Lanham Act)

---

1. Exhibit 11 to Midlothian’s motion for summary

judgment on defendants’ counterclaim (Doc. No. 61),

Declaration of Bryce M. Harvey, p. 1.

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE

MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

MIDLOTHIAN LABORATORIES, )

L.L.C., )

)

Plaintiff, )

)

v. ) CIVIL ACTION NO.

) 2:04cv836-MHT

PAMLAB, L.L.C., and PAN ) (WO)

AMERICAN LABORATORIES, )

L.L.C., )

)

Defendants. )

OPINION

This lawsuit involves a dispute over a ‘medical food’

and the trademark for it.

The plaintiff is Midlothian Laboratories, L.L.C., an

Alabama company that markets and distributes ‘generic’

versions of prescription drugs and vitamin products.1

 The

defendants are Pamlab, L.L.C. and Pan American

Laboratories, L.L.C., Louisiana companies that market and

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 1 of 87
2. Exhibit 13 to Midlothian’s motion for summary

judgment on defendants’ counterclaim (Doc. No. 61),

deposition of Barry D. LeBlanc, p. 11.

3. Exhibit 2 to Pamlab’s motion for summary judgment

(Doc. No. 56), Declaration of Barry D. LeBlanc, p. 2.

2

distribute prescription drugs and vitamin products. Pan

American Laboratories, L.L.C. is a wholly-owned

subsidiary of Pamlab, L.L.C., and both defendants will be

referred to as “Pamlab.”2

 Pamlab is the owner of a

federal trademark registration (Reg. No. 2,547,853) for

the mark FOLTX for “Folic acid / B-complex medical food

supplement” in International Class 5.3

 The court will

differentiate between the mark and the product for which

it stands by indicating the mark as “FOLTX” and the

product as “Foltx,” except where the court quotes from

documents using a different orthography.

Midlothian charges Pamlab with false advertising and

trademark cancellation under the U.S. Trademark Act of

1946 (the Lanham Act) and unfair competition under

Alabama state law. Count I of Midlothian’s complaint

alleges “improper use” and false advertising in violation

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 2 of 87
4. Count V in Midlothian’s complaint alleges

violation and inducement to violate the Florida Deceptive

and Unfair Trade Practices Act. This court will address

this count in a separate order.

3

of § 43(a)(1) of the Lanham Act, 15 U.S.C. § 1125(a)(1);

count II alleges false advertising in violation of

§ 43(a)(1) of the Lanham Act, 15 U.S.C. § 1125(a)(1);

count III alleges inducement to violate § 43(a) of the

Lanham Act, 15 U.S.C. § 1125(a); count IV alleges

violation and inducement to violate the common law of

Alabama (tort of interference); and count VI alleges that

the FOLTX mark has been abandoned, such that its

registration should be cancelled pursuant to 15 U.S.C.

§ 1119.4

 In response, Pamlab has filed a counterclaim

alleging false advertising in violation of § 43(a)(1) of

the Lanham Act, 15 U.S.C. § 1125(a)(1). 

Jurisdiction over Midlothian’s federal claims is

proper under 15 U.S.C. § 1121 (trademark), 28 U.S.C.

§ 1331 (federal question), and 28 U.S.C. § 1338 (unfair

competition in trademark). Supplemental jurisdiction

over Midlothian’s Alabama state-law claim is proper under

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 3 of 87
4

28 U.S.C. § 1367. Jurisdiction over Pamlab’s

counterclaim is proper under 15 U.S.C. § 1121 (trademark)

and 28 U.S.C. § 1331 (federal question).

This case is before the court on Pamlab’s motion for

summary judgment on all of Midlothian’s claims,

Midlothian’s motion for summary judgment on count I of

its complaint, and Midlothian’s motion for summary

judgment on Pamlab’s counterclaim. Having reviewed the

extensive factual record in detail, the court concludes,

for reasons given below, that summary judgment should be

granted in favor of Pamlab on Midlothian’s federal and

Alabama state-law claims, and summary judgment should be

denied on Pamlab’s counterclaim.

I. SUMMARY-JUDGMENT STANDARD 

Summary judgment is appropriate “if the pleadings,

depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 4 of 87
5

matter of law.” Fed. R. Civ. P. 56(c). Under Rule 56,

the party seeking summary judgment must first inform the

court of the basis for the motion, and the burden then

shifts to the non-moving party to demonstrate why summary

judgment would not be proper. Celotex Corp. v. Catrett,

477 U.S. 317, 323 (1986); see also Fitzpatrick v. City of

Atlanta, 2 F.3d 1112, 1115-17 (11th Cir. 1993)

(discussing burden-shifting under Rule 56). The court’s

role at the summary-judgment stage is not to weigh the

evidence or to determine the truth of the matter, but

rather to determine only whether a genuine issue exists

for trial. Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 249 (1986). In doing so, the court must view the

evidence in the light most favorable to the non-moving

party and draw all reasonable inferences in favor of that

party. Matsushita Elec. Indus. Co. v. Zenith Radio

Corp., 475 U.S. 574, 587 (1986).

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 5 of 87
5. Harvey declaration, p. 2.

6. LeBlanc declaration, p. 2.

7. Id.

6

II. BACKGROUND

When Pamlab first began marketing Foltx in October

1999, the product consisted of 1.0 mg. of vitamin B12, 25

mg. of vitamin B6, and 2.5 mg. of folic acid.5

 Pamlab

markets Foltx directly to physicians as a prescription

treatment for vitamin B12 deficiency.6

 Its marketing

techniques include employing a sales team to visit

physicians directly, providing product samples,

publishing articles and advertisements in medical

journals, and funding clinical studies.7

Although Foltx is marketed as a prescription product,

it is not a drug. Rather, it is classified as a ‘medical

food’: a product prescribed by physicians to patients who

have special nutrient needs in order to manage a disease

or health condition. The U.S. Food and Drug

Administration (FDA) has formulated no specific

requirements for the safety or appropriate use of medical

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 6 of 87
7

foods. “Medical foods do not have to include nutrition

information on their labels, and their claims do not need

to meet specific standards.” U.S. Food & Drug Admin.,

Medical Foods, http://www.cfsan.fda.gov/~dms/ds-medfd.

html. 

The Orphan Drug Amendments of 1988 enacted, for the

first time, a statutory definition of “medical food”:

 “The term ‘medical food’ means a food

which is formulated to be consumed or

administered enterally under the

supervision of a physician and which is

intended for the specific dietary

management of a disease or condition for

which distinctive nutritional

requirements, based on recognized

scientific principles, are established

by medical evaluation.”

Orphan Drug Amendments of 1988 § 5(b)(3), 21 U.S.C.

§ 360ee(3). However, the legislative history of the

amendments is silent as to the types of products meant to

be covered. The statutory definition was incorporated

into the Federal Food, Drug and Cosmetic Act (FDCA),

which exempts medical foods from the nutrition labeling,

health claim, and nutrient-content-claim requirements

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 7 of 87
8

applicable to most other foods. 21 U.S.C.

§ 343(q)(5)(A)(iv). The paradoxical result of this

exemption is that “medical foods intended for use by sick

people are subject to much less scrutiny than virtually

all other foods, which are intended for the healthy

general population.” Regulation of Medical Foods, 61

Fed. Reg. 60,661 (proposed Nov. 29, 1996) (to be codified

at 21 C.F.R. ch. I).

The FDA published an advanced notice of proposed

rulemaking regarding medical foods in November 1996,

citing the rapid increase in the number of products

marketed as medical foods and the “potential for injury

to consumers and fraud as claims that are not supported

by sound science proliferate for these products.” Id. at

60,663. After a careful analysis of the definition of

medical foods and the statutory scheme in which it was

promulgated, the FDA stated that “some level of

substantiation for a medical food’s claimed usefulness in

the dietary management of disease” is required: “The

agency’s preliminary view is that the scientific standard

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8. In withdrawing the proposed rule, the FDA advises

that it “will continue to refer to the basic principles

described in the [proposed rule] and in FDA’s Medical

(continued...)

9

contained in the statutory medical food definition may

require some of the same type of data for medical foods

as are needed to support drug claims (e.g., data from

clinical investigations).” Id. at 60,670.

However, in regulations published November 26, 2004,

the FDA withdrew the proposed rule, stating: “Because of

competing priorities that have tied up FDA’s limited

resources, the agency has been unable to consider, in a

timely manner, the issues raised by comments on the

[proposed rule], and does not foresee having sufficient

resources in the near term to do so.” Withdrawal of

Certain Proposed Rules and Other Proposed Actions, 69

Fed. Reg. 68,831, 68,834 (Nov. 26, 2004). Therefore,

medical foods continue to occupy a regulatory loophole

exempt from both the nutrition-nutrient labeling

requirements applicable to most foods, as well as the

labeling and testing requirements applicable to drugs.8

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 9 of 87
8. (...continued)

Foods Compliance Program (CP 7321.002) when evaluating

medical foods.” Id. It also advises that it retains

enforcement jurisdiction under 21 U.S.C. § 343 over all

foods (including medical foods) with false or misleading

labeling, as well as over medical foods with unapproved

ingredients.

9. Harvey declaration, p. 2.

10. Exhibit 5 to Pamlab’s motion for summary judgment

(Doc. No. 56), Deposition of Bryce Harvey, pp. 74-77. 

10

It is in this context that Pamlab produced and marketed

Foltx.

 In December 2003, Midlothian brought to market its

first product: a medical food consisting of the same

amounts of folic acid, vitamin B12 and vitamin B6 as

Foltx, and marketed as a ‘generic equivalent’ to Foltx.9

In contrast to Pamlab, Midlothian does not market its

product to physicians; rather, it markets to drug

wholesalers and retailers such as pharmacy chains, who,

according to state laws, may (and in some cases are

required to) substitute a generic product when presented

with prescriptions for Foltx.10

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 10 of 87
11. Exhibit 10 to Pamlab’s response in opposition to

Midlothian’s motion for summary judgment on defendants’

counterclaim (Doc. No. 76), Midlothian advertisement.

12. Exhibit C to Pamlab’s unified supplemental

response to Midlothian’s motion for summary judgment on

counterclaim and reply in support of defendants’ motion

for summary judgment (Doc. No. 82), deposition of Rhonda

Yeater, p. 98.

13. Id., pp. 91-94.

14. Exhibit 10 to Exhibit D to Pamlab’s unified

supplemental response to Midlothian’s motion for summary

(continued...)

11

Midlothian’s advertisements claim that its product is

a “generic equivalent” and is “bioequivalent” to Foltx.11

The manufacturer of Midlothian’s product, Chemins

Company, Inc., performed chemical analyses on each batch

of Midlothian product and produced a certificate of

analysis indicating the amounts of active ingredients

present in each batch.12 Midlothian never asked for or

received the certificate of analysis for any batch of its

product until sometime after March 2005, over 14 months

after the product appeared on the market.13 At least one

test of Midlothian’s product revealed the presence of

only two of the active ingredients found in Foltx.14

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 11 of 87
14. (...continued)

judgment on counterclaim and reply in support of

defendants’ motion for summary judgment (Doc. No. 82),

product analysis report appended to the deposition of

Roger Graben.

15. Exhibit 4 to Midlothian’s motion for summary

judgment on defendants’ counterclaim (Doc. No. 61),

declaration of Barry D. Leblanc in Metabolite

Laboratories, Inc. v. Midlothian Laboratories, LLC, civil

action no. 1:03cv2570-WYD (D. Colo.), p. 3.

16. Exhibit 6 to Midlothian’s motion for summary

judgment on defendants’ counterclaim (Doc. No. 61),

docket sheet for Metabolite Laboratories, Inc. v.

Midlothian Laboratories, LLC, civil action no.

1:03cv2570-WYD (D. Colo.).

17. Id.

12

One week after learning that Midlothian had

introduced its product (by listing it on a pharmaceutical

database) and that a second company, Breckenridge

Pharmaceuticals, Inc., planned to list its own ‘generic’

version of Foltx,15 Pamlab filed a federal patentinfringement suit against Midlothian and Breckenridge in

federal court.16 That case was dismissed after Pamlab

failed to obtain a temporary-restraining order.17 Both

‘generic’ products remain on the market. 

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 12 of 87
18. LeBlanc Declaration, pp. 3-4.

19. Id., p. 3.

20. Exhibit 12 to Midlothian’s motion for summary

judgment on defendants’ counterclaim (Doc. No. 61),

Folbalin advertisement. The record does not establish

when these products were first marketed. 

21. Exhibit 13 to Midlothian’s motion for summary

(continued...)

13

On June 14, 2004, Pamlab launched a new version of

Foltx with twice the amount of vitamin B12 (i.e.,

2 mg.).18 Pamlab asserts that it developed the new

formulation after studies indicated that additional

vitamin B12 could be superior to other methods in

addressing the nutritional requirements of Pamlab’s

targeted patient population.19

Meanwhile, Red River Pharma Manufacturing L.L.C., a

company apparently founded in 2003 to develop and

manufacture medical foods, began advertising itself as

the “sole authorized generic licensee for FOLTX.”20 The

president and CEO of Red River is also the president and

CEO of Pamlab, L.L.C. and Pan American Laboratories,

L.L.C.21 Red River claims that its products--Folbalin and

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 13 of 87
21. (...continued)

judgment on defendants’ counterclaim (Doc. No. 61),

deposition of Barry D. LeBlanc, pp. 11-12.

22. LeBlanc declaration, p. 3.

23. Exhibit 9 to Pamlab’s motion for summary judgment

(Doc. No. 56), new Foltx label.

14

Folbalin Plus, which contain the same active ingredients

in the same quantities as original and new Foltx,

respectively--are manufactured by the same company with

the same formula and specifications as Foltx. In

essence, these products are the Foltx manufacturers’ own

‘generics.’ 

At the same time that Pamlab launched the new Foltx,

it discontinued the original formulation and recalled the

remaining stock of original Foltx for exchange with new

Foltx.22 The label of new Foltx indicates the change by

stating in red letters “IMPROVED” and “New Strength,” and

by stating “2 MG CYANOCOBALAMIN [vitamin B12].”23 Pamlab

implemented an ‘action plan’ for introducing new Foltx

that included four mailings of an explanatory letter to

approximately 53,000 pharmacists and one mailing of the

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24. Exhibit 4 to Midlothian’s motion for summary

judgment on count I of its complaint (Doc. No. 58), Foltx

2mg action plan. 

25. Exhibit 3 to Midlothian’s motion for summary

judgment on count I of its complaint (Doc. No. 58), Dear

Pharmacist letter.

26. Id.

15

letter to approximately 57,000 physicians, as well as

publishing the letter and other materials in industry

media such as Pharmacy Times.24

The publicity letter explained the product change in

the following terms: “Pamlab, L.L.C. is excited to

announce an important improvement to FOLTX®

. ... The

significant change to FOLTX is based upon 2 significant

principles: SAFETY and EFFICACY.”25 The letter also

stated: “All new and refill FOLTX prescriptions should be

filled with the NEW STRENGTH FOLTX.”26 The parties agree

that new Foltx has a different amount of active

ingredient than both original Foltx and Midlothian’s

product. The parties also agree that this change

prevents the two products from being interchangeable at

pharmacies. 

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 15 of 87
27. Harvey declaration, p. 3.

28. Id.

16

One month after the introduction of new Foltx, the

Eckerd Drugs pharmacy chain ceased purchasing

Midlothian’s product.27 CVS Pharmacy continued purchasing

Midlothian’s product for approximately nine months after

the introduction of new Foltx, and then ceased.28

On September 3, 2004, Midlothian filed this lawsuit,

and Pamlab later counterclaimed. 

III. MIDLOTHIAN’S LANHAM ACT CLAIMS

The Lanham Act was intended to make “actionable the

deceptive and misleading use of marks” and “to protect

persons engaged in ... commerce against unfair

competition.” 15 U.S.C. § 1127. As originally enacted,

§ 43(a) of the Act established federal remedies for using

“‘a false designation of origin’ or a ‘false description

or representation’ in connection with any goods or

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 16 of 87
29. The version of § 43(a) of the Lanham Act now in

force and applicable to the claims raised in this suit

states, in relevant part:

“(1) Any person who, on or in connection

with any goods or services, or any

container for goods, uses in commerce

any word, term, name, symbol, or device,

or any combination thereof, or any false

designation of origin, false or

misleading description of fact, or false

or misleading representation of fact,

which–-

(A) is likely to cause confusion,

or to cause mistake, or to deceive

as to the affiliation, connection,

or association of such person with

another person, or as to the

origin, sponsorship, or approval of

his or her goods, services, or

commercial activities by another

person, or

(B) in commercial advertising or

promotion, misrepresents the

nature, characteristics, qualities,

or geographic origin of his or her

or another person’s goods,

services, or commercial activities,

shall be liable in a civil action by any

person who believes that he or she is or

(continued...)

17

services.” Two Pesos v. Taco Cabana, 505 U.S. 763, 777

(1992) (Stevens, J., concurring in the judgment).29

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29. (...continued)

is likely to be damaged by such act.”

15 U.S.C. § 1125(a).

18

Although originally interpreted narrowly, “the 1988

revision of § 43(a) confirmed its application to both

misrepresentations of source and other deceptive

representations made in connection with the marketing of

goods and services.” Rest. 3d Unfair Competition § 2

(1995). The statute “now is considered to confer

protection against a myriad of deceptive commercial

practices.” Resource Developers, Inc. v. Statue of

Liberty-Ellis Island Foundation, Inc., 926 F.2d 134, 139

(2d Cir. 1991). 

Section 43(a) of the statute encompasses two distinct

causes of action. Claims of “product infringement”

(trademark or trade-dress infringement) are brought under

subsection A of § 43(a)(1) and are subsumed in the more

general concept of a false designation of origin or

source. In a typical product-infringement case, a

plaintiff with rights to a particular mark alleges that

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19

the defendant adopted the “same or confusingly similar”

mark for its goods or services. SunAmerica Corp. v. Sun

Life Assurance Co., 77 F.3d 1325, 1334 (11th Cir. 1996)

(citing Conagra, Inc. v. Singleton, 743 F.2d 1508, 1512

(11th Cir. 1984)). The test for liability for any such

claim is the “likelihood of confusion.” Two Pesos, 505

U.S. at 780 (“Whether we call the violation infringement,

unfair competition or false designation of origin, the

test is identical--is there a ‘likelihood of

confusion?’”) (quoting New West Corp. v. NYM Co. of

California, Inc., 595 F.2d 1194, 1201 (9th Cir. 1979));

Hyman v. Nationwide Mut. Fire Ins. Co., 304 F.3d 1179,

1187 (11th Cir. 2002). 

 Subsection B of § 43(a)(1) prohibits false or

misleading descriptions or representations in the

advertising and promotion of goods and services,

including misrepresentations of the “nature,

characteristics, qualities, or geographic origin” of

goods or services. 15 U.S.C. § 1125(a)(1)(B). Claims

arising under this subsection are commonly known as

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30. 15 U.S.C. § 1119 reads, in relevant part: “In any

action involving a registered mark the court may

determine the right to registration, order the

cancelation of registrations, in whole or in part,

restore canceled registrations, and otherwise rectify the

register with respect to the registrations of any party

to the action.” 15 U.S.C. § 1064(3) permits the filing

of a petition to cancel the registration of an abandoned

mark by any person who believes he is or will be damaged

(continued...)

20

“false advertising” claims. See Resource Developers, 926

F.2d at 139. 

The Lanham Act also provides a cause of action for

trademark abandonment, pursuant to 15 U.S.C. § 1127. For

ease of analysis, the court will address Midlothian’s

claims out of order, beginning with the abandonment

claim.

A. Count VI: Abandonment

In count VI of its complaint, Midlothian alleges that

Pamlab has abandoned the FOLTX mark because original and

reformulated Foltx are too different to be legitimately

sold under the same mark. Midlothian asks that the

registration for the mark be cancelled pursuant to 15

U.S.C. § 1119.30 According to 15 U.S.C. § 1127, “a mark

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 20 of 87
30. (...continued)

by the registration of the mark.

21

shall be deemed ‘abandoned’ if either of the following

occurs:

“(1) When its use has been discontinued

with intent not to resume such use.

Intent not to resume may be inferred

from circumstances....

“(2) When any course of conduct of the

owner, including acts of omission as

well as commission, causes the mark to

become the generic name for the goods or

services on or in connection with which

it is used or otherwise to lose its

significance as a mark....”

Midlothian seemingly desires for the court to analyze

Pamlab’s conduct as causing the mark “otherwise to lose

its significance,” since Midlothian alleges neither that

the FOLTX mark has been discontinued nor that it has

become the generic name for products with the same

ingredients. 

The question before the court at the summary-judgment

stage is whether doubling the amount of active ingredient

in Foltx is a change significant enough to create a

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22

triable issue of fact as to whether the mark has lost its

significance. “The caselaw is uniform that the

discontinuity in product that works a forfeiture or

abandonment of a trademark is an extreme one.” Bambu

Sales, Inc. v. Sultana Crackers, Inc., 683 F. Supp. 899,

906 (E.D.N.Y. 1987) (Ross, M.J.) (collecting cases). 

Those instances in which a trademark has been deemed

abandoned have historically involved changes or

substitutions that result in a “wholly different product

which is palmed off on the public in place of that upon

which the good will has been established....” Mulhens &

Kropff v. Ferd Muelhens, Inc., 38 F.2d 287, 295 (S.D.N.Y.

1929) (Mack, Circuit J.) (the assignee of trademark

rights to a line of cologne and toiletries enjoyed

exclusive rights to the trademark, where the product,

though different from the original, is “not wholly

inferior”), rev’d in part, 43 F.2d 937 (2d Cir. 1930)

(assignee was not protected in its deceptive use of the

mark where it did not use an original “secret formula,”

as advertised).

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23

In Pepsico, Inc. v. Grapette Co., 416 F.2d 285 (8th

Cir. 1969), the appellate court invalidated the

assignment of a mark long associated with a cola syrup

when the assignee applied it to a new and different

‘pepper’-type beverage, finding that “any assignment of

a trademark and its goodwill ... requires the mark itself

be used by the assignee on a product having substantially

the same characteristics.” 416 F.2d at 288. Similarly,

trademark rights have been deemed forfeited when an

assignee substituted alum baking powder for phosphate

baking powder, Independent Baking Powder Co. v. Boorman,

175 F. 448 (C.C.D.N.J. 1910) (Cross, J.), and when the

owner of a trademark for whiskey attempted to include

beer under the mark, Atlas Beverage Co. v. Minneapolis

Brewing Co., 113 F.2d 672 (8th Cir. 1940).

By contrast, courts have repeatedly held that some

variation in a product sold under a trademark is

inevitable, “necessitated by trade discoveries, newer and

more economical methods of making the same product, or

changed manufacturing conditions....” Mulhens, 38 F.2d

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24

at 295. In E.I. DuPont de Nemours & Co. v. G.C. Murphy

Co., 199 U.S.P.Q. 807 (Trademark Tr. & App. Bd. 1978),

the Patent and Trademark Office Trademark Trial and

Appeal Board held that a change in the quality of a paint

would not interrupt the continuity of the mark, when both

products contained “substantially similar chemical

ingredients,” were the same type of paint (washable,

water-base, flat finish), were applied in the same ways,

and were distributed through the same trade channels.

199 U.S.P.Q. at 813. In sum, the mark remains valid so

long as “the inherent and identifiable character of the

goods remains the same.” Id. 

Likewise, the continuing use of a trademark after

assignment has been upheld in cases involving a change in

the blend and formula of tobacco, Beech-Nut Packing Co.

v. P. Lorillard Co., 299 F. 834, 849 (D.N.J. 1924)

(Lynch, J.); a change in the thickness of cigarette

paper, Bambu, 683 F. Supp. 899; and a change in the breed

of chicken sold under a mark, Hy-Cross Hatchery, Inc. v.

Osborne, 303 F.2d 947 (C.C.P.A. 1962).

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25

Here, Pamlab doubled the amount of an active

ingredient in its product. This change does not

represent an “extreme discontinuity” in the product,

Bambu, 683 F. Supp. at 906, either in type or in quality.

Increasing the amount of an ingredient cannot be compared

to substituting one ingredient for another in the absence

of evidence that the amount, rather than the nature, of

the ingredient can work a transformative change in the

product. No such evidence is before the court. Indeed,

the two products marketed as Foltx do not have

“substantially similar chemical ingredients,” Dupont, 199

U.S.P.Q. at 813; their ingredients are identical. 

Midlothian argues that standards for gauging the

propriety of trademark continuance for non-pharmaceutical

products may not be applicable in this case, because a

change in the formulation of a prescription product could

result in severe consequences for patients. Midlothian

frames this argument with reference to the FDA: “Pamlab

has not cited a single example where the FDA allowed a

manufacturer to market two prescription products with

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 25 of 87
31. Midlothian’s opposition to defendants’ motion for

summary judgment (Doc. No. 71), p. 12 n.2. 

32. In finding that the evidence presented in this

case does not create a triable issue of fact as to

whether the FOLTX mark has been abandoned for purposes of

the Lanham Act, this court does not infringe upon the

FDA’s independent and exclusive authority to find that a

medical food has been misbranded, and Midlothian may

petition the FDA to investigate alleged labeling

violations under the FDCA. Sandoz Pharms. Corp. v.

Richardson-Vicks, Inc., 902 F.2d 222, 231 (3d Cir. 1990)

(declining to “usurp administrative agencies’

responsibility for interpreting and enforcing potentially

ambiguous regulations,” and suggesting that plaintiff

petition the FDA to investigate alleged labeling

violations that were not actionable under the Lanham

Act). Moreover, Midlothian’s own expert refutes the

claim that Pamlab’s change could result in severe

consequences for patients: “There is no evidence to

suggest that a multi-vitamin formulation containing 2mg

B12 would present any special risks as compared to a

multi-vitamin formulation containing 1mg B12. Vitamin

B12 has a high margin of safety and no known adverse

effects have been described in this dose range and

(continued...)

26

different amounts of active ingredients under the same

name.”31 There is no dispute that the FDCA creates no

private right of action, 21 U.S.C. § 337, and this court

has no authority to determine presumptively whether the

FDA would consider the Foltx product misbranded under 21

U.S.C. § 343.32

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 26 of 87
32. (...continued)

above.” Exhibit 19 to Pamlab’s motion for summary

judgment (Doc. No. 56), Expert Report of Ralph Green,

M.D., p. 10.

27

Midlothian has not presented evidence that the change

wrought by Pamlab’s doubling of vitamin B12 renders new

Foltx anything less than substantially similar to

original Foltx for trademark purposes. Summary judgment

is therefore granted in favor of Pamlab on count VI of

Midlothian’s complaint. 

 

B. Count I: Improper Use

Count I of Midlothian’s complaint asserts a claim of

‘improper use’ of the FOLTX mark under the Lanham Act.

The locution ‘improper use’ does not appear in the

statute or in case law as a distinct cause of action.

Midlothian describes the behavior giving rise to this

generalized claim as: (1) Pamlab’s use of the mark FOLTX

to indicate both its original and new product and (2)

Pamlab’s letter to pharmacists stating: “All new and

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 27 of 87
33. In its own motion for summary judgment on count

I of its complaint (Doc. No. 58), Midlothian asks the

court to treat both of the behaviors alleged in count I

as false advertising. Similarly, while Midlothian

reasserts a claim under subsection A in its opposition to

Pamlab’s motion for summary judgment (Doc. No. 71), it

also concludes that “Pamlab’s sale of a 2mg. Vitamin B12

product under a mark that symbolizes a 1 mg. product

constitutes a false and deceptive trade practice that is

actionable under section 43(a)(1)(B) of the Lanham Act.”

Midlothian’s opposition to defendants’ motion for summary

judgment (Doc. No. 71), p. 9. As will be shown, the

court agrees that the alleged behavior should be analyzed

as false advertising.

28

refill FOLTX prescriptions should be filled with the NEW

STRENGTH FOLTX.” 

In its opposition to Pamlab’s motion for summary

judgment, Midlothian clarifies its claim by asserting

that the use of the same mark for both products is a

violation of subsection A of § 43(a)(1) of the Lanham

Act, whereas the letter to pharmacists constitutes false

advertising in violation of subsection B.33

1. Analysis Under Subsection A

Midlothian alleges that new Foltx represents a

substantial change from original Foltx such that the use

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29

of the mark FOLTX for both products is fraudulent,

creating confusion in violation of subsection A of 15

U.S.C. § 1125(a)(1). Midlothian correctly notes that,

“[s]ince a trademark is not only a symbol of origin, but

a symbol of a certain type of goods or services and their

level of quality, a substantial change in the nature or

quality of the goods sold under a mark may so change the

nature of the thing symbolized that the mark becomes

fraudulent and/or that the original rights are

abandoned.” 3 J. Thomas McCarthy, McCarthy on Trademarks

and Unfair Competition § 17:24 (4th ed. 1996).

It is well settled that a company can be liable under

unfair-competition laws, including the Lanham Act, not

only when it infringes upon the mark of a second company,

but also when it ‘passes off’ one of its own products for

another of its products. Royal Baking Powder Co. V.

Federal Trade Commission, 281 F. 744 (2d Cir. 1922)

(holding, in a pre-Lanham Act context, that a

manufacturer of baking powder unlawfully deceived the

public and engaged in an unfair method of competition

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 29 of 87
34. Midlothian’s Vice President of Sales testified:

“A. Is there confusion about the source

of FOLTX?

“Q. Right.

“A. Not that I know of.

“Q. As far as you know, people still

associate FOLTX, whatever

formulation, with Pamlab, correct?

“A. I would say yes.”

(continued...)

30

when it substituted a key ingredient in its well-known

brand of powder to create an inferior powder while

continuing to use a similar label). In this context,

however, such use of a misleading label is actionable as

false advertising. Id.

Here, Midlothian has produced no evidence that

Pamlab’s use of the mark has created confusion as to the

“origin, sponsorship, or approval” of the Foltx product.

It is undisputed that both versions of Foltx are

produced, marketed and sold by Pamlab, and that the mark

is associated with Pamlab alone.34 By asserting its claim

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 30 of 87
34. (...continued)

Exhibit 10 to Pamlab’s motion for summary judgment (Doc.

No. 56), Deposition of James D. McEachern, p. 122.

31

under subsection A of § 43(a)(1) of the Lanham Act,

Midlothian essentially asks this court to find that

Pamlab has infringed upon Pamlab’s own trademark.

Instead, the behavior alleged in Midlothian’s count I,

which involves a company’s purported misuse of its own

mark, is properly analyzed as false advertising or

trademark abandonment.

2. Analysis Under Subsection B

The court must therefore determine whether Pamlab has

falsely advertised by using the same FOLTX mark for both

the original and reformulated product or by sending a

letter to pharmacists stating that “All new and refill

FOLTX prescriptions should be filled with the NEW

STRENGTH FOLTX.” To succeed on a false-advertising claim

under § 43(a)(1)(B) of the Lanham Act, Midlothian must

establish that (1) the advertisements of the opposing

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 31 of 87
32

party were false or misleading; (2) the advertisements

deceived, or had the capacity to deceive, consumers; (3)

the deception had a material effect on purchasing

decisions; (4) the misrepresented product or service

affects interstate commerce; and (5) the movant has been,

or is likely to be, injured as a result of the false

advertising. Hickson Corp. v. Crossarm Co., 357 F.3d

1256, 1260 (11th Cir. 2004) (citing Johnson & Johnson

Vision Care, Inc. v. 1-800 Contacts, Inc., 299 F.3d 1242,

1247 (11th Cir. 2002)).

a. Use of the same mark for

 original and new Foltx

Midlothian’s first false-advertising argument, that

original and reformulated FOLTX are too different to be

sold under the same mark, is the same argument underlying

count VI of Midlothian’s complaint discussed above, that

Pamlab has abandoned its FOLTX mark such that it should

be cancelled pursuant to 15 U.S.C. § 1119. The legal

inquiries relevant to the first false-advertising claim

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 32 of 87
33

and the abandonment claim overlap but are not

coterminous; that is, while certain forms of false

advertising could cause a mark to lose its significance,

a mark might also lose its significance for the purposes

of abandonment even if there has been no false

advertising of the goods or services in connection with

which the mark is used. However, if a mark has not been

abandoned, then as a logical matter, a company’s rightful

continuing use of that mark, alone, cannot constitute

false advertising, because no deception is involved in

that continuing use. 

Midlothian’s first false-advertising claim is

precisely this: that the continuing use of the mark

FOLTX, alone, constitutes false advertising. The court

finds that Midlothian has not presented evidence that

Pamlab has forfeited or abandoned its FOLTX mark.

Therefore, Pamlab’s continuing use of the mark for both

the original and reformulated versions of the product

cannot, alone, constitute false advertising under

43(a)(1) of the Lanham Act, and summary judgment is

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 33 of 87
34

granted in favor of Pamlab on this portion of

Midlothian’s complaint.

b. Pamlab’s letter to pharmacists

Midlothian also asserts that the letter Pamlab sent

to pharmacists stating “All new and refill FOLTX

prescriptions should be filled with the NEW STRENGTH

FOLTX” constitutes false advertising. The first Hickson

element--the statement must be false or misleading--is

satisfied if the challenged statement is literally false,

or if it is literally true or ambiguous but “implicitly

convey[s] a false impression, [is] misleading in context,

or likely to deceive consumers.” Hickson, 357 F.3d at

1261. If the statement is deemed literally false, “the

movant need not present evidence of consumer deception.”

Vision Care, 299 F.3d at 1247.

Midlothian claims that the statement “all new and

refill FOLTX prescriptions should be filled with the NEW

STRENGTH FOLTX” is literally false because it instructs

pharmacists to fill refill prescriptions with the new

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 34 of 87
35. LeBlanc declaration, p. 3.

35

product when physicians undoubtedly wrote the original

prescriptions with the original Foltx product in mind.

Pamlab responds that the statement is a suggestion and

therefore incapable of literal truth or falsity. While

the statement can hardly be classified as a mere

suggestion, given that Pamlab recalled all stock of the

original Foltx,35 the statement does not “misrepresent the

nature, characteristics, qualities, or geographic origin”

of the product. 15 U.S.C. § 1125(a)(1)(B). 

Valid safety concerns may be raised by the total

substitution of an existing prescription product by a new

version of the product that contains double the amount of

an active ingredient. However, the Lanham Act protects

the commercial interests of a plaintiff harmed by a

competitor’s false advertising, and does not permit a

plaintiff to act as a “‘vicarious avenger’ of the

public’s right to be protected against false

advertising.” Sandoz Pharms. Corp. v. Richardson-Vicks,

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 35 of 87
36

Inc., 902 F.2d 222, 230 (3d Cir. 1990) (quoting Am. Home

Prods. Corp. v. Johnson & Johnson, 672 F. Supp. 135, 145

(S.D.N.Y. 1987) (Conner, J.)). 

In other words, while Pamlab’s instruction to

pharmacists may raise concerns, it is not misleading

about Foltx as a product, and therefore is not actionable

as false advertising under the Lanham Act. Moreover, the

very fact that Pamlab recalled the original version of

the product calls into question whether the statement can

be considered misleading in any way, since new Foltx was

the only version of the product available to pharmacists.

Because Pamlab’s instruction to pharmacists to fill all

Foltx prescriptions with new Foltx cannot support a claim

of false advertising, Pamlab’s summary-judgment motion

should be granted and Midlothian’s denied on count I of

Midlothian’s complaint, with the result that summary

judgment should be entered in favor of Pamlab on count I.

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 36 of 87
37

C. Count II: False Advertising

Midlothian claims in its second count that two other

statements by Pamlab constitute false advertising under

15 U.S.C. § 1125(a)(1)(B): (1) pharmacists violate the

law when they dispense Midlothian’s product in response

to prescriptions written for new Foltx and (2) new Foltx

is safer and more effective than original Foltx.

Midlothian argues this count in the alternative to count

I; that is, the success of Midlothian’s first count is

dependent on the court finding that new Foltx differs

from original Foltx. In count II, Midlothian argues that

if the court should find that Pamlab’s new product does

not differ from the original to an extent that would

allow Midlothian to prevail on its first count, then any

advertising of new Foltx as “different” must be

considered false.

This either-or argument fails to acknowledge that

change in a product may be irrelevant for trademark

continuity but relevant for product substitution in a

pharmaceutical context, such that advertising the product

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 37 of 87
36. The president of Midlothian testified:

“A. ...I’ve had patients somehow find

us, call us up and ask us why they

can no longer get our product, the

Midlothian product.

...

The reason they call is because

their insurance provider wouldn’t

pay for it anymore. They said it’s

no longer a generic to Foltx.

“Q. Okay. And was that true?

“A. That was true.

“Q. There was no longer a generic to

Foltx, correct?

“A. Not to the new strength Foltx.”

Harvey deposition, p. 204.

38

as “different” would not compromise the mark but would

also not constitute false advertising. It is not

disputed that new Foltx is not considered the ‘generic

equivalent’ of either original Foltx or the Midlothian

product.36 While new and original Foltx are different,

this fact does not end the inquiry into whether

advertisements for new Foltx were false or misleading.

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 38 of 87
37. With respect to potential generic substitution

for original Foltx, Midlothian’s president testified:

“Q. Sir, do you know of any letters

that Pamlab has sent to any

pharmacists telling them that they

would be breaking the law if they

dispensed a generic version of

original Foltx?

“A. No.”

Harvey deposition, p. 283. No testimony or other

evidence before the court indicates that such a statement

was made with respect to new Foltx.

39

Midlothian alleges that Pamlab made representations

to the effect that pharmacists violate the law when they

dispense Midlothian’s product in response to

prescriptions written for new Foltx. Although this

statement may be literally true, Midlothian has presented

no evidence that Pamlab actually made this

representation.37 Midlothian does not respond in any way

to Pamlab’s motion for summary judgment on this portion

of the claim, much less come forward with specific facts

showing a genuine issue for trial. Fed. R. Civ. P.

56(e). Therefore, summary judgment will be granted on

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 39 of 87
38. Exhibit 3 to Midlothian’s motion for summary

judgment on count I of its complaint (Doc. No. 59), Dear

Pharmacist letter.

40

count II of Midlothian’s complaint to the extent it is

based on the allegation that Pamlab told pharmacists they

would break the law by dispensing Midlothian’s product.

See Fitzpatrick, 2 F.3d at 1115-16 (“For issues ... on

which the non-movant would bear the burden of proof at

trial, ... the moving party [for summary judgment]

simply may show[]--that is, point[] out to the district

court--that there is an absence of evidence to support

the non-moving party’s case.” (citations and quotation

marks omitted)).

The second statement contested in this count is:

“Pamlab, L.L.C. is excited to announce an important

improvement to FOLTX®

. ... The significant change to FOLTX

is based upon 2 significant principles: SAFETY and

EFFICACY.”38 Midlothian alleges that this statement

advertises new Foltx as safer and more efficacious than

original Foltx.

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 40 of 87
41

Here, the court does not need to determine whether

the statement makes a claim of increased safety and

efficacy, nor whether such a statement is false, because

Midlothian cannot in any case satisfy the third Hickson

element: that the alleged deception had a material effect

on purchasing decisions. Hickson, 357 F.3d at 1260. In

the Eleventh Circuit, “[a] plaintiff may establish this

materiality requirement by proving that ‘the defendants

misrepresented an inherent quality or characteristic of

the product.’” Vision Care, 299 F.3d at 1250 (quoting

Nat’l Basketball Ass’n v. Motorola, Inc., 105 F.3d 841,

855 (2d Cir. 1997). In many circumstances, questions of

safety and efficacy are likely to satisfy automatically

the materiality prong of the Hickson test. See

Performance Indus., Inc. v. Koos, Inc., 1990 WL 161253 at

*5 (E.D. Pa. 1990) (Gawthrop, J.) (granting preliminary

injunction and finding that totality of representations

regarding “safety, effectiveness, environmental hazard,

and the cost” of two de-icing products are material and

“likely to influence purchasing decisions”). This must

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42

certainly be so in the context of drugs and medical

foods, where safety and efficacy are perhaps the primary

concerns of consumers.

In this case however, consumers cannot base

purchasing decisions on Pamlab’s representations of

safety and efficacy, whether true or false, for the

simple reason that new Foltx is the only version of

Pamlab’s product on the market, and Midlothian’s product

is not a market competitor. Midlothian’s product,

marketed to pharmacists and not to prescribing

physicians, depends for its success on pharmacists’

ability to substitute it for Foltx. Midlothian does not

dispute that its product is no longer substitutable for

the new Foltx. Therefore, to the extent consumers of

Midlothian’s product (drug wholesalers and retailers such

as pharmacy chains) have ceased purchasing the product,

those purchasing decisions must have been made

independently of Pamlab’s advertising, because there is

no longer any product (original Foltx) for which

Midlothian’s product may be substituted. This is true no

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43

matter whether Pamlab’s advertising of new Foltx is

accurate, false, misleading, or nonexistent. Summary

judgment should therefore be granted in favor of Pamlab

on Midlothian’s count II.

D. Count III: Inducement

Midlothian claims that Pamlab should be held liable

for inducing pharmacists to violate § 43(a) of the Lanham

Act. Because the court has found no evidence to support

claims of primary violations of the Lanham Act, secondary

or “contributory” violations must fail as a matter of

course. See Societe des Hotels Meridien v. LaSalle Hotel

Operating P’ship, L.P., 380 F.3d 126, 133 (2d Cir. 2004)

(reversing district court’s dismissal of claims of

primary violations of the Lanham Act, and reinstating

secondary claims asserted under theory of contributory

liability).

Even if the court were to find that Midlothian’s

primary claims survive, summary judgment is due to be

granted on the secondary-inducement claim. Societe

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44

involved a claim of trademark infringement against a

hotel chain; the secondary ‘inducement’ claims were

asserted against the hotel chain for publicizing its

hotels under the disputed trademark in a hotel directory.

The hotel directory, therefore, unwittingly advertised

the hotels under a disputed mark. In the instant case,

Midlothian claims that pharmacists, in the act of filling

a prescription with new Foltx, have impliedly represented

to prescription holders that they have resolved any

confusion about whether the physician intended new or

original Foltx. Even if this is so, physicians and

pharmacists act as the ‘consumers’ of the products at

issue in this case, not prescription holders, and a

pharmacist’s act of filling a prescription for a

prescription holder does not advertise Pamlab’s product

and cannot sustain a Lanham Act claim of false

advertising. 

Summary judgment should therefore be granted in favor

of Pamlab on Midlothian’s count III.

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 44 of 87
39. Midlothian’s opposition to defendants’ motion for

summary judgment (Doc. No. 71), p. 22.

45

IV. MIDLOTHIAN’S ALABAMA

STATE-LAW CLAIM: COUNT IV

Alabama law does not recognize a common-law tort of

‘unfair competition’ pleaded in Midlothian’s complaint,

but this alone will not defeat a claim that alleges facts

sufficient to establish a cause of action under the

Alabama tort of ‘interference with business relations.’

L.A. Draper & Son, Inc. v. Wheelabrator-Frye, Inc., 813

F.2d 332, 335 (11th Cir. 1987). 

Midlothian never enumerates the specific actions

challenged under this count. In defending against

Pamlab’s summary judgment motion, Midlothian frames its

Alabama state-law claim as involving “intentionally false

advertising.”39 Alabama’s tort of interference proscribes

advertising that is “intentionally false and which

occupies a causal relationship with the claimed damage.”

City Ambulance of Alabama, Inc. v. Haynes Ambulance of

Alabama, 431 So.2d 537, 540 (Ala. 1983). 

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46

Pamlab’s replacement of original Foltx with a new

formulation is not an act of advertising that can be

challenged as intentionally false. Any damages suffered

by Midlothian result from this act of replacement, which

prevented Midlothian’s product from being substituted for

Foltx, and not from Pamlab’s statements about the new

product. Therefore, irrespective of the truth or falsity

of any statements Pamlab made about new Foltx, Pamlab’s

statements do not bear a causal relationship to

Midlothian’s claimed damages. Furthermore, because there

is no primary violation of Alabama common law, there is

accordingly no secondary ‘inducement’ violation. Summary

judgment should therefore be granted in favor of Pamlab

on count IV of Midlothian’s complaint.

V. PAMLAB’S COUNTERCLAIM

In a counterclaim asserted under § 43(a)(1) of the

Lanham Act, 15 U.S.C. § 1125(a)(1), Pamlab alleges that

Midlothian’s use of the terms ‘bioequivalent’ and

‘generic equivalent’ in marketing its product is

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47

actionable as false advertising. The reasoning of

Pamlab’s claim can be summarized as follows: the terms

‘generic equivalent’ and ‘bioequivalent’ have specific

meanings under the FDCA and in industry practice; any

representation of generic equivalence or bioequivalence

implies that tests prove such equivalence; Midlothian

failed to perform any of the tests that would support

such representations when it began marketing its product;

it is therefore literally false to call Midlothian’s

product generically equivalent or bioequivalent to

original Foltx; and, if not literally false, the

statements are at best misleading because they cause

pharmacists to violate state laws governing prescription

substitution.

Midlothian has moved for summary judgment on this

claim, asserting that Pamlab has no evidence that the

industry expects more or different testing than what

Midlothian performed. Midlothian also asserts that the

FDCA preempts Pamlab’s claim to the extent that it is

based on Midlothian’s failure to perform the tests and

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48

secure the rating that the FDA would require were the

products at issue in this case regulated as drugs.

A. Regulatory Background

The regulatory system governing drug marketing,

though not directly applicable to the products at issue

in this case, nonetheless forms the backdrop for the

parties’ arguments about the level of substantiation

required for generic substitution of medical foods. The

power to regulate drug marketing is vested “jointly and

exhaustively” in the FDA and the Federal Trade

Commission. Sandoz Pharms. Corp. v. Richardson-Vicks,

Inc., 902 F.2d 222, 231 (3d Cir. 1990). Before a new

drug may be marketed, the FDA must approve a “new drug

application.” 21 U.S.C. §§ 331(d) & 335(a). In general,

a product similar to an approved drug may be approved and

marketed based on an “abbreviated new drug application.”

Id. § 355(j). 

An abbreviated new-drug application “requires the

manufacturer of the similar drug to demonstrate that the

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49

two drugs are therapeutically equivalent, that is

pharmaceutically equivalent and bioequivalent.” Solvay

Pharms., Inc. v. Ethex Corp., 2004 WL 742033 at *2 (D.

Minn. 2004) (Tunheim, J.); 21 U.S.C. § 355(j)(2)(A)(i)-

(viii). Two drugs are “pharmaceutically equivalent” if

they share the same active ingredients, strength, and

dosage. 21 C.F.R. § 320.1(c); Food & Drug Admin.,

Approved Drug Products with Therapeutic Equivalence

Evaluations (Orange Book) v-vi (27th ed. 2007), available

at http://www.fda.gov/cder/ob. Two drugs are

“bioequivalent” if they do not have significantly

different rates and extent of absorption in the body. 21

U.S.C. § 355(j)(8)(B); 21 C.F.R. § 320.1(e); Orange Book,

supra, at vii.

In order to facilitate the appropriate substitution

of generic products for brand products, the FDA publishes

Approved Drug Products with Therapeutic Equivalence

Evaluations, or the Orange Book. Some States permit drug

substitution only when a purported generic appears in the

Orange Book. Certain other States require therapeutic

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 49 of 87
40. In Alabama, for example, state law requires that

a generic substitution be therapeutically equivalent, but

not necessarily that it appear in the Orange Book: “A

licensed pharmacist in this state shall be permitted to

select for the brand name drug product prescribed by a

licensed physician or other practitioner who is located

in this state and authorized by law to write

prescriptions, hereinafter referred to as ‘practitioner,’

a less expensive pharmaceutically and therapeutically

equivalent drug product containing the same active

ingredient, or ingredients, and of the same dosage form

strength, in all cases where the practitioner expressly

authorizes such selection....” 1975 Ala. Code

§ 34-23-8(1).

50

equivalence for substitution, but do not require the

products to appear in the Orange Book.40 As discussed

above, the products at issue in this case are medical

foods, not drugs. Foltx (both original and new) and

Midlothian’s product have been marketed without

undergoing any of the FDA-required testing for drugs, and

the products do not appear in the Orange Book.

B. Preemption

While the protections of the Lanham Act overlap to a

degree with the exclusive regulatory authority of the

FDA, “[c]ourts have come to the general conclusion that

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51

the FDA's enforcement of the FDCA is primarily concerned

with the safety and efficacy of new drugs, while the

Lanham Act is focused on the truth or falsity of

advertising claims.” Solvay, 2004 WL 742033 at *3; see

also Sandoz, 902 F.2d at 230. 

Courts have held that a false-advertising claim based

on a representation of product equivalency--marketing a

product as a ‘generic’ version of a branded product--may

be maintained when “the truth or falsity of the

statements in question can be resolved through reference

to standards other than those of the FDA,” but not “where

a claim requires interpretation of a matter that is

exclusively within the jurisdiction and expertise of the

FDA and FDCA....” Solvay, 2004 WL 742033 at *3.

A federal court may not “determine preemptively how

a federal administrative agency will interpret and

enforce its own regulations.” Sandoz, 902 F.2d at 231;

Summit Tech., Inc. v. High-Line Med. Instruments Co., 933

F. Supp. 918, 933 (C.D. Cal. 1996) (Collins, J.).

Therefore, a plaintiff may not claim, for example, that

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 51 of 87
52

the mere act of placing a non-FDA-approved product on the

market implies FDA approval and thereby constitutes false

advertising under the Lanham Act, because to do so would

“necessarily intrude on the FDA’s exclusive right to

grant, deny, or otherwise regulate such approval.”

Solvay, 2004 WL 742033 at *3 (discussing Mylan Labs.,

Inc. v. Matkari, 7 F.3d 1130, 1139 (4th Cir. 1993)).

By contrast, an open assertion of FDA approval in

advertising a product for which such approval has not

been obtained can be proven literally false--either a

product has been approved or it has not--and is therefore

actionable under the Lanham Act. Mylan, 7 F.3d at 1139

(upholding a trial court’s dismissal of a “falseapproval” claim for failure to state a claim when

plaintiffs did not allege any affirmative representation

of FDA approval in defendant’s advertising). Similarly,

an advertising statement of bioequivalence between two

products is actionable under the Lanham Act because such

a statement can be proven literally false if, for

example, tests supporting such a statement are falsified,

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 52 of 87
41. Pamlab’s response in opposition to Midlothian’s

(continued...)

53

unreliable, or non-existent. Id. at 1138 (reversing

trial court’s dismissal of Lanham Act claim for false

representation of bioequivalence).

Thus, in Solvay, faced with facts nearly identical to

those at issue in the instant case, the district court

denied a motion to dismiss the plaintiff’s falseadvertising claim, finding that the plaintiff could prove

under the Lanham Act that the defendant’s drug product

was not substitutable, and that any advertising of the

defendant’s drug as ‘generic’ could therefore be proven

literally false. The claim survived because the

plaintiff did not allege that the advertising implied FDA

approval or endorsement based on FDA standards, which the

FDA alone has authority to define. Solvay, 2004 WL

742033 at *4.

Here, Pamlab explicitly disavows any suggestion that

Midlothian’s advertisements falsely imply that

Midlothian’s product is FDA-approved.41 However, at the

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 53 of 87
41. (...continued)

motion for summary judgment on defendants’ counterclaim

(Doc. No. 76), p. 2. 

42. Id., pp. 1-2.

43. Such a finding should not come as a surprise to

Pamlab. The court notes that an advertisement for

Folbalin, the product produced as an alternative to Foltx

by Red River, which shares a president and CEO with

(continued...)

54

same time, Pamlab repeatedly supports its claim by

asserting that the Midlothian product “is not listed as

therapeutically equivalent to FOLTX” in the Orange Book.42

This statement is both true and irrelevant: only FDAapproved products appear in the Orange Book; it is

undisputed that the products at issue in this case are

not subject to FDA-regulated drug-approval processes; and

any false-equivalency claim based on the fact that

Midlothian’s product does not appear in the Orange Book

is preempted by the FDA’s exclusive authority to approve

products pursuant to the FDCA. The simple fact that

Midlothian’s product does not appear in the Orange Book

cannot support a valid claim of false equivalency under

the Lanham Act.43

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 54 of 87
43. (...continued)

Pamlab, states that Red River is the “sole authorized

generic licensee for FOLTX®

,” while at the same time

explicitly recognizing that the product has not been

tested for therapeutic equivalence by the FDA (and by

extension, cannot appear in the Orange Book). Folbalin

advertisement, p. 1 (emphasis added). The advertisement

states that “the FDA has not required that FOLBALIN, nor

other products labeled as containing the same active

ingredients and quantities, be rated for therapeutic

equivalence. As such, neither FOLBEE nor Midlothian’s

product should be considered a generic of FOLBALIN or

FOLTX.” Id. The advertisement explicitly links

therapeutic equivalence to generic substitutability,

states that Red River’s product should not be considered

generic to Midlothian’s product and that Midlothian’s

product should not be considered generic to Foltx, but

fails to explain how Red River’s product may properly be

considered generic to Foltx, since no representation is

made that it has been tested as therapeutically

equivalent. In essence, it appears from the record that

Red River (which seemingly is nothing more than Pamlab’s

own operation to create a generic product to Foltx) is

attempting to market its own product in the regulatory

loophole occupied by medical foods, while at the same

time--and in the same advertisement--attempting to close

that loophole to exclude competitors by suggesting that

their products must be rated therapeutically equivalent

to be considered generic. 

55

Pamlab also asserts that Midlothian’s representation

of generic equivalence, in the absence of therapeutic

equivalence testing, is literally false, and misleads

pharmacists into believing that Midlothian’s product is

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 55 of 87
56

therapeutically equivalent to Foltx. Of course, in

framing its claim in this way, Pamlab begs the question

of whether therapeutic equivalence, as defined by the

FDCA, is the standard by which legitimate generic

substitution of medical food products must be judged.

Midlothian argues that it is not.

This articulation of the claim makes reference to

standards of generic equivalence that only the FDA can

define, but it does not require interpretation of those

standards. A plaintiff “may use the FDA regulations

listing definitions of bioequivalence, pharmaceutical

equivalence, and therapeutic equivalence to establish the

appropriate standard by which to judge the literal

falsity of [defendant]’s advertisements.” Solvay, 2004

WL 742033 at *4. See also Grove Fresh Distribs., Inc. v.

Flavor Fresh Foods, 720 F. Supp. 714, 716 (N.D. Ill.

1989) (Bua, J.) (nothing prohibits a plaintiff from

relying on an FDA regulation “merely to establish the

standard or duty which defendants allegedly failed to

meet”). 

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 56 of 87
57

Pamlab’s claim that Midlothian’s assertion of

bioequivalence is false advertising is not preempted by

the FDA because this assertion can be proven literally

false. Similarly, Pamlab’s claim that Midlothian’s

assertion of ‘generic equivalence’ is false advertising

is not preempted by the FDA to the extent that Pamlab

seeks to prove its claim with evidence that pharmacists

understand ‘generic equivalence’ to imply therapeutic

equivalence (or some other standard of equivalence),

rather than with evidence that FDA regulations require

therapeutic equivalence (a matter that only the FDA can

decide).

C. Merits of the Counterclaim

Pamlab, as counterclaimant, must be able to establish

the five Hickson factors in order to prevail on its false

advertising claim at trial. That is, Pamlab must show:

(1) the challenged statement was false or misleading; (2)

the statement deceived, or had the capacity to deceive,

consumers; (3) the deception had a material effect on

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 57 of 87
58

purchasing decisions; (4) the misrepresented product or

service affects interstate commerce; and (5) Pamlab has

been, or is likely to be, injured as a result of the

false advertising. Hickson, 357 F.3d at 1260. The

presence of the fourth element in this case is not

disputed by the parties. As noted above, if the

challenged statement is deemed literally false, “the

movant need not present evidence of consumer deception.”

Vision Care, 299 F.3d at 1247.

Pamlab does not differentiate in its arguments

between the ‘bioequivalence’ representation and the

‘generic equivalence’ representation: both statements are

offered in support of the idea that Midlothian’s

advertisement as a whole is false or misleading.

Midlothian asserts that the two statements are

essentially synonymous in this context and require the

same level of substantiation. Pamlab argues that

bioequivalence alone does not establish generic

equivalence for medical foods, and that, in any case,

Midlothian does not have evidence to support either

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 58 of 87
44. Pamlab states that it “is not arguing that the

statements made in Midlothian’s challenged advertisements

are ‘tests show’ claims....” Pamlab’s response in

opposition to Midlothian’s motion for summary judgment on

defendants’ counterclaim (Doc. No. 76), p. 44. However,

(continued...)

59

statement. The court will analyze each statement

separately.

1. Bioequivalence

The parties agree that two products are understood to

be bioequivalent if they do not have significantly

different rates and extent of absorption in the body. 21

U.S.C. § 355(j)(8)(B); 21 C.F.R. § 320.1(e); Orange Book,

supra, at vii. Pamlab’s claim is that the assertion of

bioequivalence in Midlothian’s advertisement is literally

false. 

a. Literal truth or falsity

In asserting the literal falsity of Midlothian’s

bioequivalence statement, Pamlab makes what is known as

a ‘tests prove’ or ‘establishment’ claim.44 Such a claim

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 59 of 87
44. (...continued)

elsewhere in the same document, Pamlab states that

Midlothian “concedes” the nature of Pamlab’s “‘tests

prove’ type claim,” id., p. 9, and analyzes Midlothian’s

advertisement under the ‘tests prove’ standard. 

60

may be asserted when a challenged advertisement cites

tests or studies on which the representations made by the

advertisement rely. To prevail on an establishment

claim, a party need only prove that the “tests did not

establish the proposition for which they were cited.”

Vision Care, 299 F.3d at 1248; see also C.B. Fleet Co. v.

SmithKline Beecham Consumer Healthcare, L.P., 131 F.3d

430, 435 (4th Cir. 1997); Rhone-Poulenc Rorer Pharms.,

Inc. v. Marion Merrell Dow, Inc., 93 F.3d 511, 514-15

(8th Cir. 1996); BASF Corp., v. Old World Trading Co., 41

F.3d 1081, 1090 (7th Cir. 1994); Castrol, Inc. v. Quaker

State Corp., 977 F.2d 57, 62 (2d Cir. 1992). By

contrast, “where the claim is made baldly, with no

assertion of test or study validation, its literal

falsity may only be proven by proof that the favorable

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 60 of 87
61

fact baldly asserted is false.” C.B. Fleet Co., 131 F.3d

at 435.

The Midlothian advertisement challenged by Pamlab

makes no reference to tests or studies. Vision Care, in

which the Eleventh Circuit adopted the reasoning of other

circuits in applying a different burden of proof to

establishment claims than to ‘bald’ claims, involved an

express, rather than implied, reference to tests. Other

circuits have accepted that a valid establishment claim

may arise from an advertisement that only implies the

approval of tests or studies. See, e.g., C.B. Fleet

Co., 131 F.3d at 435 (“When an advertising claim of

favorable fact either expressly or impliedly asserts that

the fact is testor study-validated, the fact of the

validation becomes an integral and critical part of the

claim.” (emphasis added)). 

This court sees no reason why a similar

interpretation should not govern the instant case: the

parties agree that the term ‘bioequivalence’ has a

specific meaning--both in the FDCA and in industry

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 61 of 87
45. “Bioequivalence is a crucial element of the

ultimate standard of therapeutic equivalence that

underlies public confidence in generic prescription

products.” Pamlab’s response in opposition to

Midlothian’s motion for summary judgment on defendants’

(continued...)

62

practice--that implies substantiation. It follows that

if some form of testing does not establish bioequivalence

within accepted parameters, then the statement entirely

lacks substantiation and may be considered false.

Nonetheless, the distinction is irrelevant at this stage

of the case because, as shown below, Pamlab has presented

evidence both that Midlothian’s tests did not establish

bioequivalence and that Midlothian’s product was not, in

fact, bioequivalent, such that a triable issue of fact is

created under either standard. 

Because Pamlab conflates the ‘bioequivalence’ and

‘generic equivalence’ representations, it discusses

bioequivalence only as an element of therapeutic

equivalence (the “ultimate standard” that Pamlab argues

is required for permissible generic substitution in this

case).45 Pamlab refers to the FDA regulations that govern

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 62 of 87
45. (...continued)

counterclaim (Doc. No. 76), p. 13.

46. 21 C.F.R. § 320.1(e) provides as follows:

“Bioequivalence means the absence of a significant

difference in the rate and extent to which the active

ingredient or active moiety in pharmaceutical equivalents

or pharmaceutical alternatives becomes available at the

site of drug action when administered at the same molar

dose under similar conditions in an appropriately

designed study. Where there is an intentional difference

in rate (e.g., in certain extended release dosage forms),

certain pharmaceutical equivalents or alternatives may be

considered bioequivalent if there is no significant

difference in the extent to which the active ingredient

or moiety from each product becomes available at the site

of drug action. This applies only if the difference in

the rate at which the active ingredient or moiety becomes

available at the site of drug action is intentional and

is reflected in the proposed labeling, is not essential

to the attainment of effective body drug concentrations

on chronic use, and is considered medically insignificant

for the drug.”

47. Pamlab’s response in opposition to Midlothian’s

motion for summary judgment on defendants’ counterclaim

(Doc. No. 76), p. 13.

63

bioequivalence,46 and asserts that Midlothian has no

evidence that it conformed to those regulations,

including evidence of the in vivo testing “typically

required” for a determination of bioequivalence.47

Midlothian correctly responds that Pamlab bears the

burden of showing that such tests are required for the

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 63 of 87
48. The CEO’s testimony is as follows:

“Q. What’s your understanding of what

it takes to be bioequivalent?

“A. I believe you have to be within 85

to 125 percent of the–-of the

innovator’s pharmacokinetic profile

over the same period of time.

“Q. And how is that determined? What

kind of test or study would be used

to determine that?

“A. They’d lock patients up or lock

subjects up for 24, 48 hours. They

dose them and then they draw blood

(continued...)

64

medical foods at issue in this case; simply asserting

that Midlothian has falsely advertised because it has not

conformed to FDA regulations presupposes without basis

that the regulations apply to the product in question,

thereby intruding upon the FDA’s exclusive jurisdiction.

Solvay, 2004 WL 742033 at *3. The only evidence on the

record relating to in vivo testing is contained in the

deposition testimony of the CEO of Midlothian’s parent

company, who apparently does not believe that such

testing was required for Midlothian’s product.48 Pamlab

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 64 of 87
48. (...continued)

and measure the active–-measure the

level of the active drug in the

bloodstream.

“Q. That’s not–-I think that’s referred

to as in vivo testing?

“A. I believe you’re correct.

“Q. And there’s been no type of in vivo

testing as far as you know on the

Midlothian product?

“A. No. It’s very expensive.”

Exhibit 4 to Pamlab’s response in opposition to

Midlothian’s motion for summary judgment on defendants’

counterclaim (Doc. No. 76), Deposition of Carl Whatley,

pp. 78-79.

49. 21 C.F.R. § 320.22 is entirely devoted to

establishing “criteria for waiver of evidence of in vivo

bioavailability or bioequivalence.”

65

fails entirely to address the fact that the relevant

regulations themselves exempt numerous drugs from the

type of bioequivalence testing, including in vivo

testing, that Pamlab insists is required for Midlothian’s

unregulated product.49 

Absent other evidence, Pamlab’s failure to establish

the testing standards under which the court should judge

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 65 of 87
50. Midlothian’s reply in support of its motion for

summary judgment on defendants’ counterclaim (Doc. No.

85), p. 5. 

66

an advertising representation of bioequivalence for a

medical food would entitle Midlothian to summary judgment

on this claim. However, in moving for summary judgment,

Midlothian asserts that “the only evidence in this case

is that pharmacists can and do presume that two products

are bioequivalent based upon their pharmaceutical

equivalence.”50 In other words, Midlothian itself posits

pharmaceutical equivalence as the standard by which its

advertising claim of bioequivalence must be judged, and

the court must look to see if Pamlab, as the non-moving

party, has come forward with evidence to demonstrate why

summary judgment would not be proper under this standard.

Celotex, 477 U.S. at 323.

Midlothian presents evidence that the manufacturer of

its product performed chemical analyses on each batch of

product and produced a certificate of analysis indicating

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 66 of 87
51. Yeater deposition, p. 98.

52. Yeater testified as follows:

“Q. When Midlothian was developing this

particular product--or when Chemins

was developing this particular

product, do you recall ever being--

there ever being a request from

Midlothian or ProEthic that this

product be pharmaceutically

equivalent to FOLTX?

“A. I don’t recall.

“Q. Do you believe that this product is

pharmaceutically equivalent to

FOLTX?

“A. Yes.

“Q. And that’s because what?

...

“A. Because I believe they have the

same active ingredients at the same

levels and were manufactured under

the good manufacturing practices.”

(continued...)

67

the amounts of active ingredients present in each batch.51

Midlothian has also shown that, based on those tests, the

manufacturer believed the Midlothian product to be

pharmaceutically equivalent to Foltx,52 although

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 67 of 87
52. (...continued)

Exhibit 1 to Midlothian’s reply in support of its motion

for summary judgment on defendants’ counterclaim (Doc.

No. 85), Yeater deposition, pp. 124-25.

53. Yeater testified:

“Q. And that certificate of analysis is

going to tell them the results of

various tests performed on the end

product?

“A. That is correct.

“Q. Prior to the time that you started

sending a certificate of analysis

with every lot, how did Midlothian

know what the results were of the

test on the end product?

“A. We did not send that information to

Midlothian prior to the creation of

the certificates of analysis.”

Yeater deposition, pp. 101-02. 

68

Midlothian apparently never requested confirmation of

this fact from the manufacturer until after this

litigation was instigated, over 14 months after the

product appeared on the market.53 Finally, Midlothian

presents evidence suggesting that, in this case,

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 68 of 87
54. Exhibit 4 to Midlothian’s reply in support of its

motion for summary judgment on defendants’ counterclaim

(Doc. No. 85), deposition of Roger Graben:

“Q. How about the term bioequivalent?

If Midlothian were to market or

authorize someone to market on its

behalf that its product is

bioequivalent to Foltx, is that

implying something different than

pharmaceutical equivalence?

“A. We’ve said earlier that for this

product we believe pharmaceutical

equivalence to be bioequivalence.

“Q. Okay. That’s your opinion in this

case; correct?

“A. Correct.

“Q. So in your opinion, then, there’s

no difference between a marketing

claim that the product is

bioequivalent to Foltx to a

marketing claim that it’s

pharmaceutically equivalent to

Foltx.?

“A. To me it’s the same term.”

Graben deposition, pp. 130-31.

69

pharmaceutical equivalence is sufficient to establish

bioequivalence.54

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 69 of 87
55. Exhibit 10 to Exhibit D to Pamlab’s unified

supplemental response to Midlothian’s motion for summary

judgment on counterclaim and reply in support of

defendants’ motion for summary judgment (Doc. No. 82),

product analysis report appended to the deposition of

Roger Graben. The test did not show the presence of

Vitamin B6, one of the active ingredients in Foltx.

Because Pamlam’s unified supplemental response was filed

on the same day as Midlothian’s reply in support of its

motion for summary judgment on defendants’ counterclaim

(Doc. No. 85), Midlothian has not challenged this test

result.

56. Pamlab also produces evidence that the proportion

of active ingredients to inactive ingredients in

Midlothian’s product changed from 7.2 % to 38 % over the

course of its presence on the market, indicating, in the

opinion of Midlothian’s own expert, that the formulation

of the product has changed. Graben deposition, p. 98.

However, Pamlab has presented no evidence that a change

in the proportion of active to inactive ingredients--as

(continued...)

70

However, at least one test of Midlothian’s product

revealed the presence of only two of the three active

ingredients found in Foltx.55 This evidence alone

indicates that Midlothian at some time marketed a product

that was not pharmaceutically equivalent to Foltx, a

standard that Midlothian itself argues is required for

the representation of bioequivalence made in its

advertisement.56 Therefore, the evidence before the

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 70 of 87
56. (...continued)

opposed to, for example, a change in the actual amounts

of active ingredients in the product--has any bearing on

the determination of pharmaceutical equivalence to Foltx.

71

court, when viewed in the light most favorable to Pamlab

as the non-moving party, creates a triable issue of fact

as to whether Midlothian’s tests established

pharmaceutical equivalence (the standard for a ‘tests

prove’ claim), as well as whether Midlothian’s product

was in fact pharmaceutically equivalent to Foltx (the

standard for a ‘bald’ claim of literal falsity).

b. Materiality

Because Pamlab has presented evidence of literal

falsity of Midlothian’s statement of bioequivalence, it

is not required to show actual consumer deception.

However, a complaining party must establish materiality

even when the challenged advertisement is literally

false. Vision Care, 299 F.3d at 1250. “The materiality

requirement is based on the premise that not all

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 71 of 87
72

deceptions affect consumer decisions.” Id. Materiality

may be established by a misrepresentation of “an inherent

quality or characteristic of the product.” Id. (citing

Nat’l Basketball Ass’n, 105 F.3d at 855). Here, it is

precisely the bioequivalence of Midlothian’s product to

Foltx that would permit consumers (physicians and

pharmacists) to prescribe the Midlothian product to

patients. In other words, bioequivalence is not only

relevant to the consumer decision, but in fact

constitutes the only basis for that decision, and

materiality is easily established.

c. Injury

The analysis of injury resulting from false

advertising is in many circumstances “more speculative

than in an ordinary case where market forces (or

independent explanations for a drop in sales) can be

analyzed separately from the wrongful conduct.” BASF

Corp., 41 F.3d at 1094. Factors such as declining prices

and increased competition can account for a drop in sales

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 72 of 87
57. Harvey declaration, p. 4. Midlothian’s president

(continued...)

73

independent of a Lanham Act violation. Id; see also

Nikkal Industries, Ltd. v. Salton, Inc., 735 F. Supp.

1227, 1230-32 (S.D.N.Y. 1990) (Tenney, J.) (defendant’s

lost sales of ice cream makers not necessarily caused by

plaintiff’s advertising in a market characterized by an

increasing number of participants and declining prices);

Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410,

415 (7th Cir. 1992) (in a misappropriation of trade

secrets case, plaintiff attempted to attribute all lost

sales to violation, when sales drop was attributable to

personnel changes and entry into market of a powerful,

legitimate competitor).

Midlothian argues that Pamlab cannot prove that the

marketing of Midlothian’s product was the actual cause of

any lost profits, because Pamlab cannot show that other

distributors of generic versions of Foltx would not have

captured Midlothian’s sales in the absence of

Midlothian’s product.57 This argument misapprehends both

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 73 of 87
57. (...continued)

testified that, “[I]n my opinion, if Midlothian had not

introduced its generic version of Foltx, Pamlab would

have lost practically the identical number of sales to

generic competitors that it lost with Midlothian in the

market. The purchasers of generic prescription products

would have uniformly turned to other versions of generic

Foltx, marketed by Breckenridge and Red River, if

Midlothian’s product was not available.” Id.

58. Exhibits 5 and 8, respectively, to Pamlab’s

response in opposition to Midlothian’s motion for summary

judgment on defendants’ counterclaim (Doc. No. 76),

Reports of Brian C. Reisetter, pp. 21-23 (reviewing

prescription data and finding that approximately 80 % of

prescriptions filled with the Midlothian product were

originally written for another product, presumably

Foltx), and Denise T. Dauphin, p. 7. See also McEachern

deposition, p. 90:

(continued...)

74

the nature of the evidence on record and the burden under

which it must be analyzed at this stage of the

proceedings.

Pamlab has submitted expert reports detailing the

percentages of Midlothian’s sales resulting from

prescriptions written directly for Midlothian’s product

as opposed to sales resulting from prescriptions that

were filled with Midlothian’s product but written for

another product.58 Because Foltx was the only competitor

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 74 of 87
58. (...continued)

“Q. So to the extent that the

Midlothian product is being

dispensed at a pharmacy, your

expectation is it’s being dispensed

as a substitute for FOLTX.

“A. Correct.”

75

marketed directly to prescribing physicians, the report

presumes that when Midlothian’s product was substituted,

it was substituted for Foltx, and calculates the

resulting estimated damages to Pamlab. 

In other words, unlike many products that compete

through advertising for a share of the market,

Midlothian’s product relied for its sales on the

willingness of pharmacists to substitute it directly and

transparently for another product--in this case Foltx.

The direct substitution of one product for another in the

generic-prescription industry can therefore allow for a

clearer picture of damages than in other industries where

a drop in sales of one product can be linked only

circumstantially to the presence of a competing product

in the market. 

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 75 of 87
59. Harvey declaration, p. 4.

76

It is true that Pamlab’s report does not factor into

its analysis the possibility that some (or, as Midlothian

argues, all) of Pamlab’s lost sales would have been

captured anyway by other generic competitors. However,

this means only that there is a factual dispute regarding

the amount of damages for which Midlothian might

ultimately be held responsible should its advertisement

be proven at trial to have violated the Lanham Act. It

does not mean that no injury was sustained. In fact,

Midlothian’s president concedes that sales of

Midlothian’s product led directly to losses for Pamlab

even as he argues that those losses would have occurred

anyway: “Pamlab would have lost practically the identical

number of sales to generic competitors that it lost with

Midlothian in the market.”59

Because Pamlab has provided evidence of actual

injury, it does not, as the non-moving party, bear an

added burden of showing a hypothetical negative: that

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 76 of 87
60. Midlothian ascribes the (possibly insurmountable)

burden of proving a negative to Pamlab, without any

attempt to produce positive evidence that would support

its motion for summary judgment on damages. For example,

although Midlothian insists that other generic products

would have captured its sales, it does not come forward

with any evidence to support even such a foundational

question as whether the competing generic products were

available in every market occupied by Midlothian’s

product. The court cannot simply assume this is the

case, particularly at the summary-judgment stage when all

evidence must be construed in favor of the non-moving

party.

77

other generic products would not have captured

Midlothian’s sales had Midlothian’s product not entered

the market.60 Midlothian’s argument essentially asks this

court to hold that no otherwise-valid false advertising

claim can be sustained when there are more than two

competitors in a market unless the plaintiff overcomes a

presumption that other competitors would have taken its

profits even in the absence of the defendant’s

advertising or market presence. This court declines to

so hold.

The evidence shows that Midlothian’s product was

marketed as a substitute to Foltx, and that the product

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 77 of 87
61. The Orange Book gives therapeutic-equivalence

ratings to pharmaceutically equivalent products based on

whether they can be expected to have the same clinical

effect and safety. Exhibit 2 to Pamlab’s response in

opposition to Midlothian’s motion for summary judgment on

defendants’ counterclaim (Doc. No. 76), Expert report of

Richard R. Abood, p. 2. The expert report relied upon by

(continued...)

78

was in fact substituted for Foltx to the detriment of

Pamlab’s sales. Pamlab has affirmatively set forth

specific facts showing a genuine issue for trial on the

question of damages. Fed. R. Civ. P. 56(e).

Consequently, summary judgment should be denied on

Midlothian’s bioequivalence representation. 

2. Generic Equivalence

Pamlab also asserts that Midlothian’s representation

of generic equivalence is false advertising. Pamlab

argues that a representation of generic equivalence here

requires the same showing as that required for drugs to

receive ratings of therapeutic equivalence in the Orange

Book: both pharmaceutical equivalence and

bioequivalence.61 

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 78 of 87
61. (...continued)

Pamlab states that, “Bioequivalent products are presumed

to be therapeutically equivalent.” Id.

62. Reisetter report, p. 17. In fact, Foltx is

categorized as a “medical food.”

79

In the context of over-the-counter drugs, the Third

Circuit Court of Appeals has found that, “The law does

not presume that consumers assume that all [over-thecounter] drug advertising claims are substantiated.

Accordingly, a plaintiff must produce consumer surveys or

some surrogate therefor to prove whether consumers expect

an advertising claim to be substantiated and whether they

expect the level of substantiation to be greater than

that which the defendant has performed.” Sandoz, 902

F.2d at 229. In support of its claim, Pamlab offers an

industry survey indicating that “[p]harmacists do not

differentiate the fact that FOLTX is categorized by the

FDA as prescription dietary food product rather than a

prescription drug.”62

However, the survey itself does not isolate industry

opinions about the standards relevant for the

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 79 of 87
63. Reisetter testified:

“A. ...my experience is and the

research I’ve done in area is that

when people talk about therapeutic

equivalence, there [sic] talking

about AB rating. So if they do

talk about a food product being

therapeutically equivalent, it

might be because they assumed that

the product is a prescription drug,

and therefore assume that the

product is a generic equivalent.

“Q. Have you done any market studies to

determine how pharmacists evaluate

the equivalence of two medical

foods?

...

“A. No. Other than the fact that these

products were presented as

prescription products. But no, I

(continued...)

80

substitution of medical foods. Instead, the survey

collects and analyzes opinions about the general category

of “prescription products.” Pamlab’s expert and author

of the survey admits that he has not performed studies to

determine how pharmacists evaluate the equivalence of

medical foods as opposed to prescription products

generally.63 From this survey the expert apparently draws

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 80 of 87
63. (...continued)

have not studied specifically that

issue.”

Exhibit 3 to Pamlab’s response in opposition to

Midlothian’s motion for summary judgment on defendants’

counterclaim (Doc. No. 76), deposition of Brian C.

Reisetter, pp. 165-66.

64. Reisetter testified:

“Q. ...I would like to ask you, though,

do you have any information to

prove that the Midlothian product

is not therapeutically equivalent

to Pamlab’s product?

...

“A. The fact that it’s not an Orange

Book product means that there isn’t

clinical evidence that fits the FDA

standard that has allows them to

call it therapeutically

equivalent.”

Id., p. 93.

65. It is undisputed that pharmacists are confused or

(continued...)

81

the conclusion that Midlothian’s product must be FDArated in order to be considered therapeutically

equivalent to Foltx.64 

Indeed, as a result of this conflation of

categories,65 Pamlab suggests repeatedly in its briefs and

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 81 of 87
65. (...continued)

unaware of the category into which the products at issue

in this case fall. The CEO of Midlothian’s parent

company testified: “I think, probably, you know, 95 % of

the physicians and pharmacists out there don’t realize

[the Midlothian product]’s a nutritional supplement

either. I mean, they don’t know what it is.” Whatley

deposition, p. 73. The physicians and pharmacists are

not alone. Whatley himself describes the Midlothian

product as a “nutritional supplement,” which is a

category separate from medical foods under the FDCA. The

term dietary supplement--apparently used synonymously

with nutritional supplement--is defined at 21 U.S.C.

§ 321(ff).

66. For example, Abood writes: “It is therefore my

opinion that although a medical food may not be a drug

for the purposes of regulation under the FDCA, it is a

drug for the purposes of state substitution laws.” Abood

report, p. 5. Reisetter’s refers repeatedly to FDA

ratings:

“[Midlothian’s advertisements]

constitute a false statement and are

misleading to pharmacists because they

lead pharmacists to believe that the

products are therapeutically equivalent

and/or AB-rated, and therefore

substitutable without calling the

(continued...)

82

through its expert witnesses that pharmacists expect

Midlothian’s product to be assigned a rating by the FDA

permitting substitution without approval from the

prescribing physician.66 As discussed at length above,

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 82 of 87
66. (...continued)

physician.”

Reisetter report, pp. 4-5.

“A vast majority of pharmacists expect

the generic products marketed to them to

be equivalent products as deemed by the

FDA (e.g. AB-rating). I believe this is

true regardless of whether the

prescription product in question is a

drug or is categorized by the FDA as a

medical food.”

Id., p. 12.

“In fact, this research identified that

over 85 % of pharmacists agreed or

strongly agreed that products being

substituted for FOLTX without calling

the physician should be bioequivalent,

AB-rated, and of the same quality and

purity of FOLTX.”

Id., pp. 18-19.

67. Reisetter hints at a different sort of claim than

(continued...)

83

the products at issue in this case are not required to

undergo FDA-approved testing, and any claim that

Midlothian should have obtained FDA approval for its

product or that its advertisements imply such approval is

preempted by the FDCA.67 

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 83 of 87
67. (...continued)

the one made by Pamlab in this litigation when he writes

“It would seem intuitive that Midlothian would make its

lack of FDA rating or any other important product

differences ... clear to pharmacists so that the products

could be properly dispensed and administered.” Reisetter

report, p. 13. Whether a false-advertisement claim based

on a company’s failure to advertise its product’s lack of

FDA approval can be sustained under the Lanham Act, or

whether it is simply the inverse of the preempted “false

approval”-type claim, is a question not before the court.

68. Midlothian’s president does not appear to draw

any distinction between the various terms at issue in

this litigation:

“Q. So would it be fair to say that

your definition of the word

‘generic’ as it relates to

prescription vitamin products, such

as B6, B12, folic acid, is

synonymous with your understanding

of the terms ‘pharmaceutically

equivalents,’ ‘bioequivalents,’

‘therapeutic equivalents’?

“A. I do feel like in this case they’re

(continued...)

84

Midlothian asserts that it has evidence of

pharmaceutical equivalence, from which bioequivalence may

be presumed, meaning that its product can be considered

therapeutically equivalent to the extent that

determination is required for generic substitution.68

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 84 of 87
68. (...continued)

basically all one and the same.”

Harvey deposition, p. 35. By contrast, Midlothian’s Vice

President of Sales, apparently forgetting that he had

marketed the Midlothian product as ‘bioequivalent,’

testified that his understanding of ‘generic equivalent’

meant ‘pharmaceutically equivalent,’ and that

bioequivalency was not required for generic substitution

of medical foods: 

“Q. Do you have an understanding of

what it means to be therapeutically

equivalent?

“A. No.

“Q. Do you have an understanding of

what it means to be

pharmaceutically equivalent?

“A. My understanding of pharmaceutically equivalent and generic

equivalent probably are the same.

“Q. When you stated that bioequivalent

does not apply to these dietary

supplements, what is the basis for

you to say that?

“A. Because they are not--the drugs

we’re talking about here today--the

drugs. The dietary supplements

we’re talking about here today are

not drugs.”

(continued...)

85

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 85 of 87
68. (...continued)

Exhibit 7 to Pamlab’s response in opposition to

Midlothian’s motion for summary judgment on defendants’

counterclaim (Doc. No. 76), Deposition of James D.

McEachern, p. 36.

86

However, as discussed above with respect to Midlothian’s

representation of bioequivalence, there is evidence

suggesting that Midlothian at some time marketed a

product that was not, in fact, pharmaceutically

equivalent to Foltx. Therefore, summary judgment is due

to be denied on Pamlab’s false-advertisement claim

relating to the “generic equivalent” statement for the

same reasons that it was denied on the “bioequivalent”

statement.

****

For the reasons given above, summary judgment will be

entered in favor of Pamlab on Midlothian’s federal and

Alabama state-law claims, and summary judgment will be

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 86 of 87
denied on Pamlab’s counterclaim. Pamlab’s counterclaim

will go to trial. An appropriate order will be entered.

DONE, this the 28th day of August, 2007.

 /s/ Myron H. Thompson 

 UNITED STATES DISTRICT JUDGE

Case 2:04-cv-00836-MHT-SRW Document 158 Filed 08/28/07 Page 87 of 87