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Consumer Law: Reasonable Basis
Claim interpretation -- context counts
A recent decision by the District Court for the Eastern District of Wisconsin is a reminder that advertising claims must be evaluated in context and from the perspective of the intended audience, especially ads that target industry professionals rather than consumers. Schering-Plough Healthcare Products, Inc. v. Schwarz Pharma, Inc., 2008 WL 582738 (E.D. Wis., Feb., 29, 2008). The relevant facts were not in dispute. Schering-Plough and Schwartz Pharma both market Polyethylene Glycol 3350 laxatives. Because of Food and Drug Administration regulations, Schering-Plough had the exclusive right to sell the product over-the-counter, while Schwarz Pharma had to market its product as prescription-only, and placed "Rx only" and "prescription only" on the label.
In a lawsuit alleging false advertising under federal Lanham Act, Schering Plough asserted that the Rx Only and Prescription Only labels communicated the message that "all Polyethylene Glycol 3350 laxatives" were prescription-only. Examining the claims in the context of the entire label and from the viewpoint of the intended audience, licensed pharmacists, the Court concluded that a reasonable fact finder would conclude that the statements referred to the products on which they appear, not the entire category of Polyethylene Glycol 3350 products. Even though this was a ruling on summary judgment and all reasonable inferences were drawn in favor of the non-moving party (Schwarz), Schwarz had the better side of this argument. Reasonable consumers would be unlikely to interpret the claim as Schering-Plough alleged, and it would be unreasonable for a licensed pharmacists to read a product label and believe that statements on that label pertain to the products of some other manufacturer.
Rebecca Tushnet has a detailed discussion of the decision here.
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