Allergan, Inc. v. Athena Cosmetics, Inc. (Fed. Cir. 2013) -- FDCA Does Not Preempt State Unfair Competition Laws

AllerganIf you have ever wondered how popular eyelash enhancers like RevitaLash and Latisse produce their effects, Allergan, Inc. v. Athena Cosmetics, Inc. provides the answer:  these products comprise prostaglandin derivatives.  The questions raised in this case involved whether these products were regulated as drugs or cosmetics, and whether Athena's sales of its RevitaLash product in California violated that state's unfair competition law "by marketing, distributing and selling, without regulatory approval, products that qualify as drugs."

RevitalashThe case arose when Allergan, whose Latisse product is approved by the FDA, sued Athena (whose RevitaLash product is not) under California's UCL.  The violation of California law underlying the suit was that Athena's sales of RevitaLash contravened the provisions of California's Health and Safety Code (California Health Code) § 1115501 by "marketing, selling, and distributing [its] hair and/or eyelash growth products without [a new drug] application approved by the FDA or California State Department of Health Services."  The District Court denied Athena's motion for judgment on the ground that Federal Law (specifically, the Food, Drug and Cosmetic Act) preempted California state law, and granted summary judgment to Allergan.  The Court also entered a permanent injunction having nationwide scope, precluding Athena from selling RevitaLash throughout the U.S.

The Federal Circuit affirmed summary judgment (although it lifted the injunction with instructions to limit it to California) in an opinion by Judge Moore, joined by Chief Judge Rader and Judge Wallach.  Before reaching the substantive issues, the panel first considered whether it had jurisdiction over the appeal, because there were no patent issues presented (although Allergan had asserted a patent infringement allegation in an amended complaint, the District Court had dismissed these allegations in the complaint without prejudice after entering summary judgment of noninfringement based on claim construction).  The Court resorted to the principle that the Federal Circuit has exclusive appellate jurisdiction "when 'patent law is a necessary element of one of the well-pleaded claims' in the complaint," citing Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 809 (1988), and 28 U.S.C. § 1295(a)(1).  The opinion further applied the rubric that the Federal Circuit maintains jurisdiction when "the parties were not left in the same legal position as if the [] patent claim had never been filed."  Here, dismissal of the patent infringement allegations "without prejudice" satisfied this criterion, according to the opinion, because the District Court did not vacate summary judgment of non-infringement which would bind the parties should Allergan reassert the patent infringement allegations.

Turning to the issue of preemption, the Court noted that, while the California Health Code contained several provisions also found in the FDCA it also provided for private cause of action not available under Federal law.  Moreover, the panel's assessment was limited to what it termed "implied preemption," because the parties agreed that the FDCA did not "expressly preempt Allergan's claim."  The legal basis for implied preemption was set forth in Buckman Co. v. Plaintiffs' Legal Committee, 531 U.S. 341 (2001), requiring that the claim does not "implicate a traditional state law tort principle and exists solely by virtue of a federal statute."  Here, Athena argued that California law was preempted because permitting Allergan to pursue its state law claim would "interfere[] with the FDA's discretionary authority whether to regulate an article in interstate commerce as a drug."  Allergan countered that when the FDCA preempts state law it does do expressly (and only for "certain narrow topics" not relevant here), and that the preemption issue is governed by Wyeth v. Levine, 555 U.S. 555 (2009), insofar as "simultaneous compliance with state and federal law is possible, and the state law is not an obstacle to the realization of federal goals."

The Federal Circuit agreed with Allergan, based on the presumption that "the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress," citing Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996).  The panel cites the language from the Buckman decision concerning "the historic primacy of state regulation of matters of health and safety," and the need for "a clear purpose by Congress" to preempt which the panel does not find under these facts.

The panel then addressed Athena's argument that its RevitaLash product does not fall within the scope of the California Health Code because it is not a drug.  The state law defines a drug as "any article other than food that is used or intended to affect the structure . . . of the body of human beings," Cal. Health Code § 109925(c), and that the "intended use" was determined based on "the objective intent of the persons legally responsible for the labeling of drugs," citing 21 C.F.R. § 201.128.  The evidentiary basis for making such a determination of "objective intent" to be considered include "labeling claims, advertising matter, or oral or written statements by such persons or their representatives."  Because the District Court granted summary judgment against Athena the Federal Circuit assessed whether there was any genuine issue of material fact regarding whether Athena's conduct demonstrated objective intent.  The District Court considered Athena's marketing behavior, which the panel characterizes as marketing its RevitaLash product "to affect the structure of the eyelashes" and that this evinced an objective intent to market the product as a drug:

The court found that Athena's founder, a physician, developed an initial formulation using a prostaglandin derivative with the intent to cause users' eyelashes to grow longer and fuller.  It found that Athena's marketing of subsequent formulations containing different derivatives continued to discuss eyelash growth.  The court acknowledged that Athena's marketing of the most recent formulation discussed eyelash appearance, but concluded this did not negate an objective intent to cause growth.

(Emphasis in opinion)

Athena conceded that earlier marketing efforts could be so construed, but that it had changed its marketing to be limited to eyelash appearance and not to be directed to improved eyelash growth.  Athena also alleged that it instructed resellers that its RevitaLash product should be sold as a cosmetic and not marketed for its eyelash growth promoting properties.

The Federal Circuit was not impressed by these arguments, based on Athena's marketing behavior and materials:

Athena's marketing of the products at issue consistently discusses physical changes to eyelashes.  There is no dispute that Athena made drug-related claims about an early formulation -- and it never expressly disavowed such claims as it reformulated its products.  Instead, the company continued to suggest that the products at issue change eyelash structure.  For example, the company's website contained a message from the founder referring to his wife's "fragile, sparse and thin" eyelashes, and his development of a formula to achieve "the look of renewed health, strength and beauty."  (emphasis added).  An advertisement about the most recent formulation states that the product is "both dermatologist and ophthalmologist reviewed," and describes "improved appearance" of eyelashes in the context of a "clinical study."

(citations to the record omitted)

The panel also cited evidence on Athena's instructions to resellers that are contrary to its representations that those instructions focused on the cosmetic aspects of its product, saying "Athena's claims invariably link eyelash appearance to physical changes caused by the products at issue."  Accordingly, the Court affirmed summary judgment that Athena violated the relevant provisions of the California Health Code and that this violation constituted a violation of California's UCL.

Finally, the Federal Circuit panel vacated the permanent injunction as an abuse of discretion based on its nationwide scope.  The District Court justified this scope based inter alia on evidence that California residents could obtain the RevitaLash product from Internet sales.  The panel held that this extraterritorial assertion of California law violated both the Commerce Clause of the U.S. Constitution as well as other states' sovereignty.  The panel illustrated the impermissible scope of the injunction by example:  "[t]his injunction is so broad that it would bar Athena from making its product in Idaho, distributing it from a facility in Nevada, and selling it to Connecticut consumers."  This power resides in "[t]he FDA – and the FDA alone" in enforcing the FDCA, and "California does not have the authority to stand in the shoes of the FDA to determine whether Athena's sale of the products at issue amounts to the sale of an unapproved drug under the FDCA.  This enforcement authority relies exclusively with the FDA."  And if the District Court was concerned that Athena would use out-of-state sources to continue to sell RevitaLash in California, "Allergan's remedy lies in a contempt proceeding" not the exercise of the Court's injunction power to extraterritorial effect.

The Federal Circuit finding no other defect in the injunction, the opinion contains an instruction to "limit the scope of the injunction to regulate conduct occurring within California."

Allergan, Inc. v. Athena Cosmetics, Inc. (Fed. Cir. 2013)
Panel: Chief Judge Rader, and Circuit Judges Moore and Wallace
Opinion by Circuit Judge Moore


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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