Antitrust Law Daily Wrap Up, ADVERTISING—C.D. Cal.: Failure to list products in database was not Lanham Act violation, (Sep 23, 2015)

By Jeffrey May, J.D.

The Lanham Act was not the appropriate vehicle for challenging a publisher's refusal to include products in a database of pharmaceutical information. The exclusion of the products did not amount to a material false or misleading description or statement of fact, essential to a Lanham Act claim. Therefore, the federal district court in Los Angeles has granted First Databank, Inc.'s motion to dismiss a prescription compounding kit manufacturer's Lanham Act claim based on either a false designation of origin/false endorsement or false advertising theory (Alexso, Inc. v. First Databank, Inc., September 21, 2015, Pregerson, D.).

The Lanham Act issue arose in a dispute between Alexso, Inc., a manufacturer of kits used by pharmacies to compound topical cream prescription drug products, and First Databank, a publisher of databases that provide information about drug products to the health care industry. Alexso sued First Databank after the defendant refused to publish eight of Alexso’s kits in on its database. There was a disagreement over whether the plaintiff's kits were approved by the Food and Drug Administration (FDA) or could be marketed without FDA approval.

Alexso claimed that, by excluding its kits from the database, the defendant violated Section 43 of the Lanham Act and the California state law. According to Alexso, not being in the defendant’s database, which included other kits, placed it at a “fatal competitive disadvantage.”

The court distinguished Lanham Act claims under 15 U.S.C. §1125(a)(1)(A) for false designation of origin or false endorsement from claims under 15 U.S.C. §1125(a)(1)(B) for false advertising. While the elements of the claims differed, these differences were not pertinent, the court noted, because any claim under Section 43(a) of the Lanham Act required some sort of material false or misleading description or statement of fact. Alexso, however, failed to allege that First Databank made any representation about Alexso’s products.

The court rejected Alexso's contention that First Databank's omission of Alexso's products, combined with the listing of competitors' products, constituted the affirmative misrepresentation of fact that the competitors kits were FDA-approved while Alexso’s were not. The complaint did not identify any representation that the database was an exhaustive listing of FDA-approved products or any suggestion that products not listed in the database were not FDA-approved, the court explained.

Because Alexso did not indicate how it might properly allege that the decision not to list its products constituted a false misrepresentation, the Lanham Act claim was dismissed with prejudice. State law claims that raised issues of free speech and public policy were dismissed, without prejudice, for lack of jurisdiction, so that they might be addressed in state court.

The case is No. 2:15-cv-01893-DDP-JC.

Attorneys: Paul D. Bauer (Quarles and Brady LLP) for Alexso, Inc. Nicolas A. Jampol (Davis Wright Tremaine LLP) for First Databank, Inc.

Companies: Alexso, Inc.; First Databank, Inc.

Cases: Advertising CaliforniaNews