Merck Eprova AG v. Brookstone Pharmaceuticals, LLC
2013 U.S. Dist. LEXIS 13616
S.D.N.Y.2013Background
- Merck alleges Acella mislabeled folate products (Xolafin/Xolafin-B) to mimic Merck's Metafolin, causing database links and improper substitution.
- Merck’s Metafolin is a substantially pure L-5-MTHF; Acella’s products are D,L-methylfolate mixtures with L and D forms.
- Databases (e.g., First DataBank) linked Acella products to Merck’s products to promote substitution and broaden market share.
- Merck presented consumer surveys showing pharmacists/physicians believed Acella products contained substantially pure L-5-MTHF.
- Merck seeks Lanham Act false advertising and contributory false advertising claims, plus NY Deceptive Trade Practices; Acella seeks declaratory relief and asserts counterclaims.
- Court finds Acella liable for false advertising and contributory false advertising; NY claims fail; damages awarded with trebling; injunctive relief ordered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Lanham Act false advertising | Merck argues Acella mislabeled Xolafin products as L-methylfolate to imply purity and sameness to Metafolin. | Acella contends labeling reflects active L-isomer with D-isomer as impurity and is not literally false. | Acella liable for implied false advertising; literal falsity not proven. |
| Materiality and deception | Mislabeling was material; databases linked products and physicians/pharmacists were misled. | Any deception was not material or was not proven to influence decisions. | Labels were material and likely to affect purchasing decisions. |
| Contributory false advertising | Acella induced databases to describe Acella as pharmaceutically equivalent to Metafolin products. | No direct inducement to false advertising alleged. | Merck prevails on contributory false advertising; Acella liable. |
| State-law claims (NY GBL 349/350) | Claims allege consumer-oriented deceptive practices harming the public; reliance shown. | Insufficient public-harm and reliance proof; competitive context weakens claims. | Section 349/350 claims fail. |
| Individual liability of Deas and Bryant | Officers were the moving forces behind labeling and marketing decisions. | Liability should be limited to corporate actions. | Deas and Bryant individually liable under the Lanham Act. |
Key Cases Cited
- S.C. Johnson & Son, Inc. v. Clorox Co., 241 F.3d 232 (2d Cir. 2001) (elements and reliance in Lanham Act false advertising; injury proof)
- Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144 (2d Cir. 2007) (literal falsity vs. implied falsity framework; extrinsic evidence requirements)
- Johnson & Johnson Merck Consumer Pharm. Co. v. Smithkline Beecham Corp., 960 F.2d 294 (2d Cir. 1992) (standard for implied falsity and consumer confusion; presumption where egregious conduct)
- Resource Developers, Inc. v. Statue of Liberty-Ellis Island Found., Inc., 926 F.2d 134 (2d Cir. 1991) (presumption of deception when defendant acts with egregious intent)
- George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532 (2d Cir. 1992) (discretion in granting/limiting profits in Lanham Act cases; deterrence and windfall considerations)