Schering-Plough Healthcare Pro v. Schwarz Pharma, Incorporated

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 09-1438, 09-1462, 09-1601
S CHERING-P LOUGH H EALTHCARE P RODUCTS, INC.,
Plaintiff-Appellant/Cross-Appellee,
v.
S CHWARZ P HARMA, INC. and K REMERS U RBAN, LLC,
Defendants-Appellees,
B RECKENRIDGE P HARMACEUTICALS, INC. and P ADDOCK
L ABORATORIES, INC.,
Defendants-Appellees/Cross-Appellants.
Appeals from the United States District Court
for the Eastern District of Wisconsin.
No. 2:07-CV-00642-JPS—J.P. Stadtmueller, Judge.
A RGUED S EPTEMBER 15, 2009—D ECIDED O CTOBER 29, 2009
Before P OSNER, FLAUM, and R OVNER, Circuit Judges.
P OSNER, Circuit Judge. The parties to this Lanham Act
suit are manufacturers of an oral laxative the chemical
name of which is polyethylene glycol 3350. Schering, the
2 Nos. 09-1438, 09-1462, 09-1601
plaintiff, sells its version under the trade name “MiraLAX.”
MiraLAX is an over-the-counter drug. The four defendants
sell the generic version of the drug under its chemical
name (except that defendants Kremers and Schwarz
also use the name “GlycoLax”), but their version may
be sold only if it is prescribed.
MiraLAX was originally a prescription drug too.
After the patent on it expired, the Food and Drug Adminis-
tration approved defendants’ ANDAs (Abbreviated New
Drug Applications), which authorized them to sell a
generic version of the drug. Later the FDA approved an
over-the-counter version of MiraLAX but required that
the label contain a warning to “use [for] no more than
7 days.” Constipation that lasts longer than that may be
symptomatic of a serious medical condition, so a
consumer who wants to use a laxative longer should do
so under a doctor’s supervision.
The Food, Drug, and Cosmetic Act requires that
the labeling of the generic drug be the same (with im-
material exceptions) as that of the original drug—the
“pioneer” drug, as it is called, which in this case was the
prescription-only version of MiraLAX. 21 U.S.C.
§ 355(j)(2)(A)(v); 21 C.F.R. § 314.127(a)(7). And if the
generic drug is approved for use as a prescription drug, the
label of the generic drug must “bear, at a minimum, the
symbol ‘Rx only.’ ” 21 U.S.C. § 353(b)(4)(A). The labels of
the defendants’ generic versions of MiraLAX do bear that
symbol. The generic drug must also (though again with
immaterial exceptions) be bioequivalent to the pioneer
drug and have the same active ingredients, route of
Nos. 09-1438, 09-1462, 09-1601 3
administration, dosage form, and strength. 21 U.S.C.
§ 355(j)(2)(A); see Eli Lilly & Co. v. Medtronic, Inc., 496
U.S. 661, 676 (1990); Andrx Pharmaceuticals, Inc. v. Elan
Corp., 421 F.3d 1227, 1230-31 (11th Cir. 2005). There is no
contention that the defendants’ drugs fail to satisfy
these requirements.
Section 43(a)(1)(B) of the Lanham Act, 15 U.S.C.
§ 1125(a)(1)(B), under which this suit was brought,
forbids the use of any “false or misleading description
of fact, or false or misleading representation of
fact, which in commercial advertising or promotion,
m isrepresents the nature, ch aract eristics, [or]
qualities . . . of [the seller’s] or another person’s
goods . . . .” There is no exemption for labels.
Schering argues that the labels, shown below, on the
containers for the polyethylene glycol 3350 sold by the
two principal defendants, Breckenridge and Paddock, are
false. (The labels of the other two defendants’ generics
are similar, but the briefs focus on Breckenridge and
Paddock.) The labels say that polyethylene glycol
3350 is sold only by prescription, whereas in fact, since
over-the-counter MiraLAX by definition does not require
a prescription, not all polyethylene glycol 3350 may be
sold only by prescription. The statement in the label is
repeated in the patient information that is included in
the container in which the product is sold (the “package
insert,” which is deemed a part of the labeling of the
product).
4 Nos. 09-1438, 09-1462, 09-1601
P ADDOCK’S AND B RECKENRIDGE’S LABELS
P ADDOCK’S AND B RECKENRIDGE’S
P ATIENT INFORMATION INSERTS
Nos. 09-1438, 09-1462, 09-1601 5
Although many prescription drugs are sold to the
consumer in a plastic vial or other container supplied and
relabeled by the pharmacist, polyethylene glycol 3350,
whether sold by Schering or by the defendants, is sold to
the consumer in its original container. This means that
no one will see the labels on the defendants’ product
unless a physician has written a prescription for it, al-
though one might see the label in an advertisement for
the product. And should the patient’s condition change,
so that he didn’t need to use a laxative for more than
seven days, he might be unaware that he could switch
to an over-the-counter version of the laxative that had
been prescribed for him.
The FDA is conducting a proceeding to determine
whether the defendants’ drugs are misbranded now that
there is an over-the-counter version of the drug. And
because the Food, Drug, and Cosmetic Act does not
permit both by-prescription-only and over-the-counter
versions of the same drug to be sold at the same time,
21 U.S.C. § 355(b)(4); “Opportunity for Hearing on
a Proposal to Withdraw Approval of Prescription Polyeth-
ylene Glycol 3350 Abbreviated New Drug Applications,”
73 Fed. Reg. 63491, 63491-92 (FDA Oct. 24, 2008), the
proceeding encompasses the issue of whether there is a
“meaningful difference” between the pioneer drug and
the generic drug or whether they are really “the same”
drug. “Advance Notice of Proposed Rulemaking, Cir-
cumstances Under Which an Active Ingredient May Be
Simultaneously Marketed in Both a Prescription Drug
Product and an Over-the-Counter Drug Product,” 70 Fed.
6 Nos. 09-1438, 09-1462, 09-1601
Reg. 52050, 52051 (FDA Sep. 1, 2005). The defendants
argue that they are different drugs because their version
is not subject to the 7-day warning.
If the FDA determines that they are “the same,” the
result will be that the generic drug can no longer be
sold, but even if it determines that they are different, it
may decide that the labeling of the generics has to be
changed. A drug is misbranded within the meaning of the
Food, Drug, and Cosmetic Act “if its labeling is false or
misleading in any particular,” 21 U.S.C. § 352(a), and
Schering argues that the defendants’ labels occlude, in the
mind of the consumer, the existence of its over-the-counter
version of the drug. But maybe the FDA doesn’t care
whether the labeling of the generic products obscures the
existence of an over-the-counter equivalent; maybe all it
cares about is that the labeling leads consumers to use
the product safely, an objective that conceivably can be
achieved just by making sure that doctors and
pharmacists are accurately informed about the drug that
they are prescribing, which of course is not the over-the-
counter version. It is not obvious that the goal of pro-
tecting consumers is furthered by making sure that they
are aware of the existence of an over-the-counter equiva-
lent, and, if it is not, there would be no conflict between the
FD&C Act and the Lanham Act. But we do not know, and
see no need to guess while the misbranding proceeding
is wending its way through the FDA.
The Director of the Office of Generic Drugs in the FDA’s
Center for Drug Evaluation and Research wrote the
defendants that their products are misbranded because
Nos. 09-1438, 09-1462, 09-1601 7
the label says “Rx only” even though polyethylene glycol
3350 can also be sold without a prescription—thus
MiraLAX. The letters are not final agency action. To
rescind approval of the sale of a drug because of
misbranding, the FDA must provide the manufacturer
with “due notice and opportunity for hearing to the
applicant.” 21 U.S.C. § 355(e). The agency is proceeding
on that path, but no hearing has yet been scheduled,
nor has the agency even decided whether a hearing will
be necessary—it has as yet merely provided the partici-
pants with an opportunity to request a hearing. “Oppor-
tunity for Hearing on a Proposal to Withdraw Approval
of Prescription Polyethylene Glycol 3350 Abbreviated
New Drug Applications,” supra.
The district court dismissed the suit without prejudice,
suggesting that Schering could refile it if and when the
FDA decided that the defendants’ drugs were indeed
misbranded. Schering has appealed, arguing that no
reasonable trier of fact could fail to conclude that the
terms “Rx only” and “a prescription only laxative,” which
appear on the labels of the defendants’ drugs, are “literally
false” and therefore violate the Lanham Act irrespective
of the FD&C Act. And so it asks us to enter judgment in
its favor rather than remand the case for evidentiary
proceedings. The defendants have cross-appealed, con-
tending that the suit should be dismissed with prejudice
because Schering has no possible claim under the
Lanham Act. They argue that a finding by the FDA that
their products are not misbranded will mean that they
are not falsely advertised, while if the agency finds that
8 Nos. 09-1438, 09-1462, 09-1601
the product is misbranded they will of course change the
labeling to whatever the agency orders. This is an argu-
ment about mootness rather than about the merits, and
not a good one, since it is merely speculation concerning
what the defendants would do in response to a finding
by the FDA of misbranding.
The defendants further suggest that the fact that the
suit was dismissed without prejudice deprives us of
appellate jurisdiction. The suggestion is made rather half-
heartedly because they are strong for their cross-appeal,
which argues that the dismissal should have been with
prejudice. Making a dismissal without prejudice can be
challenged by the winner (the defendant) because a
litigant has a significant interest in the preclusive effect
of a judgment in its favor. Disher v. Information Resources,
Inc., 873 F.2d 136, 138-39 (7th Cir. 1989); LaBuhn v.
Bulkmatic Transport Co., 865 F.2d 119, 121-22 (7th Cir. 1988);
H.R. Technologies, Inc. v. Astechnologies, Inc., 275 F.3d 1378,
1381-82 (Fed. Cir. 2002). But the challenge can be
mounted only if the dismissal is appealable. We have an
independent duty to determine our jurisdiction, so the
defendants’ lack of enthusiasm for a dismissal of the
appeal is not a ground on which we can disregard the
issue.
There is no general rule that dismissals without prejudice
are nonfinal orders and therefore nonappealable under
28 U.S.C. § 1291—if they were, dismissals for want of
jurisdiction would not be appealable, and of course
they are. South Austin Coalition Community Council v. SBC
Communications Inc., 191 F.3d 842, 844 (7th Cir. 1999). The
Nos. 09-1438, 09-1462, 09-1601 9
typical case in which such a dismissal is nonfinal is a
dismissal on the basis of an error that the judge expects
will be corrected by the filing of an amended complaint.
The judge thus has not finished with the case, and appeal
would therefore be premature. Hoskins v. Poelstra, 320
F.3d 761, 763 (7th Cir. 2003); Furnace v. Board of Trustees
of Southern Illinois University, 218 F.3d 666, 669-70 (7th
Cir. 2000); Ordower v. Feldman, 826 F.2d 1569, 1572-73 (7th
Cir. 1987); Borelli v. City of Reading, 532 F.2d 950, 951-52
(3d Cir. 1976) (per curiam); B. Willis, C.P.A., Inc. v. BNSF
Railway, 531 F.3d 1282, 1296 n. 15 (10th Cir. 2008). But when
the case does end in the district court, the dismissal is
ripe for appeal even if a similar case may be filed in the
future because the dismissal was without prejudice. United
States v. Wallace & Tiernan Co., 336 U.S. 793, 794-95 n. 1
(1949); South Austin Coalition Community Council v. SBC
Communications Inc., supra, 191 F.3d at 844; Gray v. County
of Dane, 854 F.2d 179, 182 n. 4 (7th Cir. 1988); Ohio River
Co. v. Carrillo, 754 F.2d 236, 238 (7th Cir. 1985) (per curiam);
Lichoulas v. City of Lowell, 555 F.3d 10, 12-13 (1st Cir. 2009);
De Tie v. Orange County, 152 F.3d 1109, 1111 (9th Cir. 1998);
Linn v. Chivatero, 714 F.2d 1278, 1280 (5th Cir. 1983).
We grant that some opinions suggest that unless
the plaintiff will be unable to bring a further suit in federal
court (perhaps because the statute of limitations has run),
a dismissal without prejudice is not appealable. E.g., Doss
v. Clearwater Title Co., 551 F.3d 634, 639 (7th Cir. 2008);
Mostly Memories, Inc. v. For Your Ease Only, Inc., 526 F.3d
1093, 1097 (7th Cir. 2008). But the holdings of those
cases (as distinct from their dicta—statements inessential
to the holdings) are consistent with the proposition that a
10 Nos. 09-1438, 09-1462, 09-1601
dismissal without prejudice is appealable unless the
reason for the dismissal is an easily fixable problem; for
the dismissals in those cases were found to be appeal-
able even though they were without prejudice. Likewise
in South Austin we concluded that “there was nothing
tentative about the district court’s dismissal; no one is
trying to achieve an interlocutory appeal without meeting
the statutory requisites. This case has come to a close in the
district court.” 191 F.3d at 844. Ohio River held that “though
the dismissal order contemplates that appellant may
eventually refile its admiralty complaint, the court, by
dismissing the action, has terminated its jurisdiction over
the original complaint. This is enough to render the
order appealable.” 754 F.2d at 238. And in Lichoulas,
555 F.3d at 13, the court pointed out that dismissals for
lack of ripeness are appealable, citing Bateman v. City of
W. Bountiful, 89 F.3d 704, 705-06 (10th Cir. 1996), even
though they are likely to be refiled at some future
date—and the district judge in our case said he was
dismissing it because it was unripe for decision.
In short, only if the defect that required dismissal is
immediately curable is the dismissal nonappealable
(though we are unclear why Schering did not ask for a
preliminary injunction, the denial of which would have
been appealable even if the dismissal was not, 28 U.S.C.
§ 1292(a)(1)). A dismissal without prejudice that is “con-
clusive in practical effect” is certainly appealable, as
held in American States Ins. Co. v. Capital Associates of
Jackson County, Inc., 392 F.3d 939, 941 (7th Cir. 2004), but
a dismissal without prejudice is not rendered unap-
pealable merely by its not preventing the suit from being
refiled.
Nos. 09-1438, 09-1462, 09-1601 11
The judge did not stay the suit pending action by the
FDA, as he might have done, Cheyney State College Faculty
v. Hufstedler, 703 F.2d 732, 737-38 (3d Cir. 1983); cf. Landis
v. North American Co., 299 U.S. 248, 254-55 (1936) (Cardozo,
J.); American States Ins. Co. v. Capital Associates of Jackson
Country, Inc., supra, 392 F.3d at 941; Tice v. American
Airlines, Inc., 288 F.3d 313, 317-18 (7th Cir. 2002), by
analogy to the doctrine of primary jurisdiction. United
States v. Western Pacific R.R., 352 U.S. 59, 63-64 (1956); In re
StarNet, Inc., 355 F.3d 634, 639 (7th Cir. 2004); Arsberry v.
Illinois, 244 F.3d 558, 563-64 (7th Cir. 2001). Such a stay
would not have been appealable unless its practical
effect was to end, not merely interrupt, the judicial pro-
ceeding, as in Moses H. Cone Memorial Hospital v. Mercury
Construction Corp., 460 U.S. 1, 10 (1983). The stay issued
in Cone was in favor of a state-court proceeding, the
final judgment in which would operate as res judicata
in the federal proceeding. The Court held that a stay is
appealable if it has the same effect as a dismissal that
would be appealable; for it is the effect of a judicial order,
rather than what the judge calls it, that matters in deter-
mining appealability.
Primary jurisdiction, as we explained in the Arsberry
case, sometimes involves reference of an issue to an
agency that has exclusive jurisdiction to resolve it. If the
issue is dispositive and its resolution by the agency is
reviewable in another court, the case will never return to
the referring court and therefore a stay of the initial
judicial proceeding to permit the reference would have
the same effect as a dismissal. But as we noted earlier, it
12 Nos. 09-1438, 09-1462, 09-1601
is unclear whether that will be the result when the FDA
completes its misbranding proceeding.
We turn at last to the merits. We can set aside the
letters from subordinate officials of the FDA; the letters
are not final agency action binding on the district court, as
there has been no final agency action, let alone action that
has been or could be judicially reviewed. We can also
set aside any argument that the defendants’ drugs are
misbranded because they are labeled prescription
drugs—they are prescription drugs, so their labels have
to say that, even if a close substitute (over-the-
counter MiraLAX) is not. Schering tacitly concedes this,
and just argues that the labels need a disclaimer
indicating that not all drugs of which polyethylene
glycol 3350 is the active ingredient require a prescription.
Nor do we think that just because the provision of the
Lanham Act on which Schering’s suit is based is
intended to protect competitors from the effects of false
advertising or labeling, while the misbranding provision
of the Food, Drug, and Cosmetic Act is intended to
protect the consumers of drugs, Sandoz Pharmaceuticals
Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 230 (3d Cir.
1990), there can be no conflict between the statutes,
hence no occasion for delaying this litigation to allow the
FDA to weigh in. A disclosure required to protect a
competing seller might mislead a consumer, in which
event the drug would be mislabeled and could not be
sold, so that the seller’s concern with unfair competition
would be moot; it would have no competitor because
there would be no competing product. The case would be
Nos. 09-1438, 09-1462, 09-1601 13
like SmithKline Beecham Consumer Healthcare, L.P. v. Watson
Pharmaceuticals, Inc., 211 F.3d 21 (2d Cir. 2000), where
copyright law would have forbidden a manufacturer of
a generic drug to copy the pioneer manufacturer’s
labels, but failing to copy them would have violated the
requirement of the FD&C Act that the label of a generic
drug be the same as the pioneer’s label, and so
would have precluded generic manufacturer from legally
marketing its product. The court resolved the conflict
by allowing the FD&C Act’s labeling requirement to
trump copyright law. See also Zenith Electronics Corp. v.
Exzec, Inc., 182 F.3d 1340, 1347, 1352-54 (Fed. Cir. 1999);
Vornado Air Circulation Systems, Inc. v. Duracraft Corp.,
58 F.3d 1498, 1507-10 (10th Cir. 1995).
Courts try to give as much effect to both statutes as
possible, and in that vein Schering argues that the FD&C
Act shouldn’t be interpreted to forbid the defendants
to make a disclaimer that would cure the misrepresenta-
tion upon which Schering’s Lanham Act suit is predi-
cated. But Schering has been coy about what it thinks the
disclaimer should say, and its coyness makes us doubt
that this is a matter that can be resolved intelligently
without a decision by the FDA. At argument Schering’s
lawyer seemed to concede that if the defendants’ labels
said “Paddock’s Polyethylene Glycol 3350, Rx Only” and
“Breckenridge’s Polyethylene Glycol 3350, Rx Only,” it
would be content. Its briefs do not propose a wording,
however, and we hesitate to hold a lawyer to a con-
cession made in the heat of oral argument in response to
rapid-fire questions from the bench.
14 Nos. 09-1438, 09-1462, 09-1601
We can imagine the FDA worrying that the wording
that Schering’s lawyer suggested at the argument would
make some consumers think that only Paddock’s or only
Breckenridge’s polyethylene glycol 3350 is prescription
only, or would make consumers wonder whether the
two brands might be chemically different products. The
FDA should be given a chance to opine on the proper
labeling before a Lanham Act suit is filed, Sandoz
Pharmaceuticals Corp. v. Richardson-Vicks, Inc., supra, 902
F.2d at 230-31; compare Alpharma, Inc. v. Pennfield Oil Co.,
411 F.3d 934, 937-39 (8th Cir. 2005), since it has more
experience with consumers’ understanding of drug
labels than judges do. Alpharma, in contrast, was a case
in which the complaint under the Lanham Act was
simply that the defendant had said that the FDA had
approved its drug for a number of uses for which it had
not been approved. Evaluating such a charge did not
draw on the agency’s insights into the understanding of
consumers of drugs; allowing the suit to proceed without
reference to the agency was therefore not objectionable
as an attempt to use the Lanham Act as a vehicle for
enforcing the Food, Drug, and Cosmetics Act, which does
not authorize a private cause of action. Sandoz
Pharmaceuticals Corp. v. Richardson-Vicks, Inc., supra, 902
F.2d at 231; Mylan Laboratories, Inc. v. Matkari, 7 F.3d 1130,
1139 (4th Cir. 1993); cf. Dial A Car, Inc. v. Transportation,
Inc., 82 F.3d 484, 488-90 (D.C. Cir. 1996); Cottrell, Ltd. v.
Biotrol International, Inc., 191 F.3d 1248, 1254-55 (10th
Cir. 1999).
Or suppose the label on the container of Paddock’s
polyethylene glycol 3350 had said that it was the only
Nos. 09-1438, 09-1462, 09-1601 15
polyethylene glycol 3350 that won’t make hair grow on
the palm of your hand, or that each container contains
727 grams of the drug, when in fact it contains only
527 grams, like its competitors’ containers. As in the
Alpharma case, there would be no need to delay the
Lanham Act suit to await the outcome of an FDA hearing
on misbranding. Cf. Cottrell, Ltd. v. Biotrol International,
Inc., supra, 191 F.3d at 1254-57; Marriott Corp. v. Great
America Service Trades Council, 552 F.2d 176, 180-81 (7th
Cir. 1977). This case is subtler, however, because it is
unclear how the “Rx only” representations on the con-
tainers are understood by consumers and how a dis-
claimer should be worded to improve that understanding.
Schering invokes regulations under the FD&C Act that
allow the seller of a drug to make “a change in the labeling
concerning the description of the drug product or in the
information about how the drug product is supplied, that
does not involve a change in the dosage strength or
dosage form,” 21 C.F.R. § 314.70(d)(2)(ix), and “an
editorial or similar minor change in labeling.” 21 C.F.R.
§ 314.70(d)(2)(x). In neither case must the seller obtain
the agency’s approval, though it must notify the agency
of the change. These are what are called “minor
changes.” “Moderate changes”—changes that strengthen
warnings or delete false, misleading, or unsupported
indications for use or claims for effectiveness—also don’t
require pre-approval. 21 C.F.R. § 314.70(c)(6)(iii). But a
supplemental application must be filed, and the FDA
can disapprove the application and order the manu-
facturer to stop distributing the drug with the change.
16 Nos. 09-1438, 09-1462, 09-1601
“Major” changes, described at length in 21 C.F.R.
§ 314.70(b)(2)(v), require pre-approval. (The tripartite
scheme is described in Wyeth v. Levine, 129 S. Ct. 1187,
1196 (2009), and Colacicco v. Apotex, Inc., 521 F.3d 253,
259 (3d Cir. 2008), vacated on other grounds, 129 S. Ct.
1578 (2009).) “Major” changes are the residual category,
because they are defined to include “changes in
labeling except those described in” the provisions
dealing with minor and moderate changes. 21 C.F.R.
§ 314.70(b)(2)(v)(A). “Any proposed change in the
labeling, except changes designated as moderate or
minor by regulation or guidance, must be submitted as
a prior approval supplement.” FDA Center for Drug
Evaluation and Research, “Guidance for Industry:
Changes to an Approved NDA or ANDA, Revision
1 ” 2 4 (2 0 0 4 ), w w w .f d a . g o v/ d o w n l o a d s / D r u g s /
GuidanceComplianceRegulatoryInformation/Guidances/
ucm077097.pdf (visited Oct. 8, 2009). Just to confuse
matters, minor changes are said to “include, but are not
limited to [a list of 10 changes, of which (ix) and (x) refer
to labeling changes].” 21 C.F.R. § 314.70(d)(2) (emphasis
added). But it makes more sense to regard major changes
as the residual category, as otherwise the regulations
would have a dangerous loophole.
So the changes Schering wants the defendants to make
in their labeling, since they do not fit the definitions of
minor or moderate changes, are major changes, requiring
the FDA’s approval. This inference is strengthened by the
fact that the FDA would probably want to require pre-
approval of a disclaimer that might mislead consumers.
Otherwise it might take years for the agency to get around
to prohibiting a misleading label.
Nos. 09-1438, 09-1462, 09-1601 17
A further complication arises from the requirement that
the label of a generic drug must be the same as that of the
pioneer drug. Does this mean that the “changes” regula-
tions have no application to generic labeling? That seems
hardly likely, but to our surprise this appears to be an
open question. One case suggests that the regulations are
applicable to generic labeling, Foster v. American Home
Products Corp., 29 F.3d 165, 169-70 (4th Cir. 1994), but in a
footnote to a recent proposal to amend the regulations
the FDA said that “CBE changes are not available for
generic drugs approved under an ANDA under 21 U.S.C.
§ 355(j).” 73 Fed. Reg. 2848, 2849 n. 1 (Jan. 16, 2008). CBE
changes (“Changes Being Effected”) are in the “moderate”
category, which may be implemented upon the agency’s
receiving a supplemental new drug application that
documents the changes. It isn’t clear whether the FDA
was referring in the footnote to all changes that a generic
manufacturer might make to its labels, but if it applies
to moderate changes presumably it applies to major ones
as well. Fortunately, the issue need not be resolved to
decide this appeal.
We agree with the district court, therefore, that Schering
jumped the gun by suing before the FDA addressed the
misbranding issue. We think there is force, too, to the
defendants’ contention that the district court was correct
to deny Schering’s motion for partial summary judg-
ment on its Lanham Act claim regardless of how the
FDA rules. Schering argues that the defendants’ labels
contain a “literally false” statement, and invokes cases that
say that a plaintiff who can prove that the defendant’s
advertising or labeling is “literally false” is entitled to
18 Nos. 09-1438, 09-1462, 09-1601
judgment even though it has no evidence that anyone was
misled. Avila v. Rubin, 84 F.3d 222, 227 (7th Cir. 1996);
Abbott Laboratories v. Mead Johnson & Co., 971 F.2d 6, 13-14
(7th Cir. 1992); Time Warner Cable, Inc. v. DIRECTV, Inc.,
497 F.3d 144, 153 (2d Cir. 2007); Castrol Inc. v. Pennzoil Co.,
987 F.2d 939, 943 (3d Cir. 1993); Allsup, Inc. v. Advantage
2000 Consultants, Inc., 428 F.3d 1135, 1138 (8th Cir. 2005).
As far as we know, the only consumers who see the
labels and package inserts in the defendants’ polyethylene
glycol 3350 drugs are persons who have been prescribed
the generic drug by a physician. Maybe they saw the
warning on the over-the-counter MiraLAX and decided
to consult a physician rather than buy the over-the-
counter product and he prescribed the generic—he knows
there’s an over-the-counter product that contains the
same active ingredient but he decided to go the prescrip-
tion route with this patient. Or someone might see the
defendants’ products on the shelf in a pharmacy and
go running to his physician. But if the physician thought
the patient would do fine with the over-the-counter drug,
he would presumably suggest that drug to the patient.
Prescription drugs are sometimes advertised, but
Schering does not complain about the advertising by the
defendants, and the advertisement for Breckinridge’s
drug, posted on its website, contains just the sort of
disclaimers that Schering is seeking:
Nos. 09-1438, 09-1462, 09-1601 19
20 Nos. 09-1438, 09-1462, 09-1601
At any rate, whether our speculation about the effect of
the labels on consumer choice is right or wrong, Schering
has made no attempt to prove that anyone was misled,
because it thinks that all it needs to show is “literal falsity.”
This is an unfortunately common example of a litigant
misled by general language in judicial opinions.
Opinions would be even longer than they are if judges
couldn’t use short phrases to denote what may be
complex legal doctrines. When those phrases are taken to
be exhaustive statements of entire doctrines with all
necessary qualifications, the result is likely to be a misap-
prehension of the law. William Blake declared that “to
Generalize is to be an Idiot. To Particularize is the Alone
Distinction of Merit.” That is a bit extreme; but uncritical
generalization is a path to error. One form of uncritical
generalization, ironically in view of Schering’s invocation
of the doctrine of “literal falsity,” is reading general
language literally.
The purpose of the false-advertising provisions of the
Lanham Act is to protect sellers from having their cus-
tomers lured away from them by deceptive ads (or labels,
or other promotional materials). Many literally false
statements are not deceptive. When the Soviet Union in
the 1930s declared that “2 + 2 = 5,” it was not deceiving
anyone; it was announcing a slogan designed to spur
workers to complete the Five-Year Plan in four years. If one
opened the New York Times “literally” at random one
might find an ad that calls Graff Diamonds “The Most
Fabulous Jewels in the World.” That is literally false
because the jewels sold by Graff are no more fabulous than,
say, the Crown Jewels of England, or the Hope Diamond.
Nos. 09-1438, 09-1462, 09-1601 21
But no one is deceived, so there is no injury, and a suit by
a competitor of Graff would fail. See Time Warner Cable, Inc.
v. DIRECTV, Inc., supra, 497 F.3d at 159-61; Johnson &
Johnson * Merck Consumer Pharmaceuticals Co. v. Smithkline
Beecham Corp., 960 F.2d 294, 298 (2d Cir. 1992); Castrol Inc.
v. Pennzoil Co., 987 F.2d 939, 945 (3d Cir. 1993); Pizza Hut,
Inc. v. Papa John’s International, Inc., 227 F.3d 489, 496-97
(5th Cir. 2000); United Industries Corp. v. Clorox Co., 140 F.3d
1175, 1180 (8th Cir. 1998); cf. Muha v. Encore Receivable
Management, Inc., 558 F.3d 623, 627 (7th Cir. 2009). The
cases that reject liability do so in the name of
“puffery”—meaningless superlatives—but the principle
cuts deeper; if no one is or could be fooled, no one is
or could be hurt. Cf. Hahn v. Triumph Partnerships LLC,
557 F.3d 755, 757-58 (2009); Wahl v. Midland Credit Manage-
ment, Inc., 556 F.3d 643, 645-46 (7th Cir. 2009).
The other side of this coin is that a representation may
be so obviously misleading that there is no need to
gather evidence that anyone was confused. See, e.g.,
Abbott Laboratories v. Mead Johnson & Co., supra, 971 F.2d at
13-14; PPX Enterprises, Inc. v. Audiofidelity Enterprises, Inc.,
818 F.2d 266, 271-73 (2d Cir. 1987). And it is often clearer
that a claim is misleading than that it is literally false,
because what is “literally” false is often a semantic ques-
tion.
What the cases mean when they say that proof of literal
falsity allows the plaintiff to dispense with evidence that
anyone was misled or likely to be misled is that the
seller who places an indisputably false statement in his
advertising or labeling probably did so for a malign
purpose, namely to sell his product by lies, and if the
22 Nos. 09-1438, 09-1462, 09-1601
statement is false probably at least some people were
misled, and since it was a lie why waste time on costly
consumer surveys? See PPX Enterprises, Inc. v. Audiofidelity
Enterprises, Inc., supra, 818 F.2d at 272-73; Castrol Inc. v.
Pennzoil Co., supra, 987 F.2d at 951 (dissenting opinion).
When this is stated as the doctrine of “literal falsity,”
“literal” must be understood in the common colloquial
sense in which Americans (not realizing, or perhaps not
caring, that they are making Fowler turn in his grave) say
things like “I am literally out of my mind.” A “literal”
falsehood is bald-faced, egregious, undeniable, over the
top.
We know this is what the cases are driving at because
they add to “literal falsity” such qualifiers as that the
meaning of the alleged literal falsehood must be consid-
ered in context and with reference to the audience to
which the statement is addressed. Avis Rent A Car System,
Inc. v. Hertz Corp., 782 F.2d 381, 385-86 (2d Cir. 1986)
(Friendly, J.) (“fundamental to any task of interpretation
is the principle that text must yield to context”); see also
Castrol Inc. v. Pennzoil Co., supra, 987 F.2d at 946-47; Pizza
Hut, Inc. v. Papa John’s International, Inc., supra, 227 F.3d at
495 n. 5; Southland Sod Farms v. Stover Seed Co., 108 F.3d
1134, 1139 (9th Cir. 1997). That is how one obtains an
understanding of the real meaning of “2 + 2 = 5” in Soviet
propaganda.
The proper domain of “literal falsity” as a doctrine that
dispenses with proof that anyone was misled or likely to
be misled is the patently false statement that means what
it says to any linguistically competent person, unlike the
Nos. 09-1438, 09-1462, 09-1601 23
examples we have given. So suppose the labels on the
defendants’ products stated: “All polyethylene glycol
3350, by whomever made, can be sold only by prescription;
there is no over-the-counter version of this drug.” That
would be false and misleading per se; there would be
no need to consider context or audience.
But that is not what the labels say. There is no state-
ment in the ordinary sense, because there is no verb. There
is the manufacturer’s name at the top, the name of the
active ingredient, the symbol “Rx only,” and some other
information. Obviously this product, the product of the
named manufacturer, is prescription only, but it is not
obvious, as Schering contends, either from the labels or
from the package inserts (which say “Polyethylene Glycol
3350 NF Powder for Oral Solution is a prescription only
laxative which has been prescribed by your physician to
treat constipation”), that every other product containing
polyethylene glycol 3350 is prescription only. Schering
cannot just intone “literal falsity” and by doing so prove
a violation of the Lanham Act. But we think the district
court was right nevertheless not to dismiss the suit with
prejudice; findings by the FDA in the misbranding pro-
ceeding may cast the issue of consumer confusion in a
different light.
A FFIRMED.
10-29-09