As we head into 2022, the dietary supplement industry will have plenty of legal issues that will be important to consider. The most concerning one is the rapid growth of shake-down letters, complaints, and class actions concerning regulatory compliance, especially those implicating the Food, Drug & Cosmetic Act and advertising under state consumer laws.
Plaintiffs’ lawyers are increasingly attacking claims related to:
- structure/function benefits
- protein content
- “zero” and “no sugar”
- “no artificial flavor”
- fruit flavor (variant on vanilla suits)
- “no artificial colors”
- ingredient permissibility (alleging products are not “dietary supplements” where no new dietary ingredient notification was filed for the ingredient)
- product classification (ie. CBD supplement/food challenges).
To mitigate risk, companies should only make claims that match the science and are substantiated with competent and reliable scientific evidence, and review labeling and marketing materials from the vantage point of the “reasonable consumer” (not merely technical labeling compliance). The reasonable consumer standard considers the “probability that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled” – Moore v. Trader Joe’s Co. (9th Cir. July ] 15, 2021).
We expect in 2022 for other states to follow California’s lead of legalizing CBD in dietary supplements, foods, beverages and cosmetics, and we are hopeful the federal government will expedite its efforts to do the same.
The Trademark Modernization Act (TMA) was implemented by the U.S. Patent & Trademark Office (USPTO) on December 18, 2021. Businesses and the USPTO now have faster, more efficient, and less expensive tools to clear away unused registered trademarks from the federal trademark register, and the USPTO will have the ability to move applications through the registration process more efficiently as of December 1, 2022. This is all especially important as trademark applications from U.S. and foreign applicants have surged to unprecedented levels in the last two years, in part due to an increase in e-commerce during the pandemic.
The USPTO reported that the surge has doubled the number of applications waiting to be examined, and increased waiting times exist at various stages in the trademark registration process. Trademark applications are coming in faster than the USPTO has historically been able to examine them, and the backlog is increasing. The USPTO is aware of this challenge and has taken steps to increase productivity, and is hopeful the TMA will assist.
Due to this situation, companies can sharpen strategies to manage portfolios such as expediting trademark searches and filings of intent-to-use trademark applications as early as possible to gain priority for protection. Accelerate the pace of filing responses to USPTO office actions/objections—generally, file responses quickly and do not wait until the allotted deadline date unless circumstances exist for a different strategy. This all will help companies obtain their trademark registrations sooner rather than later to bolster brand strength, scope of protection, and add value, including access to Amazon Brand Registry benefits.
Retailer compliance standards will continue to evolve in 2022, so GMP compliance and entering into supply chain agreements with detailed quality components will be more important than ever. If you don’t write the rules, someone else will.
An ounce of prevention is worth 10 pounds of cure nowadays, and developing war chests filled with strong defensible positions is important for long term sustainable growth. With businesses needing to deploy capital efficiently, decrease cash burn, increase profitability, and be investment-ready to scale and succeed, leaning into legal initiatives continues to make cost-benefit sense in 2022.
Understand that legal fees can be a substantial business cost to protect a company’s high-value assets, but that such fees generally cost more when they’re used to “contain and extinguish” problems as opposed to preventing them in the first place. It is worth considering counsel who provide value-added/value-enablement services beyond competitive rates and rendering of legal services. For instance, request legal counsel for relevant CLE and team-support & development training most often provided at a reduced charge; attorney hotlines; and reduced fee associate secondments for special projects and short-term assignments. These strategies may assist with goals, initiatives, and budgets of time and money.
I am humbled to be part of our better-for-you community. Best wishes in 2022.
In our 2022 Success Toolkit, industry experts share their insights and expertise on top issues to know to set you up for greater success in 2022, from trend forecast to merchandising issues, regulatory updates, and more. Start where you’d like, or read straight through:
- 2022 Overview, by Maggie Jaqua, WholeFoods Magazine Content Director
- Exploring 2022 Trend Drivers, by Scott Dicker, SPINS Senior Market Insights Data Analyst
- 2021 in Review & What’s Ahead for the Natural Products Industry, by Scott Steinford and Len Monheit, both with Trust Transparency Center
- What Happened Last Year… and 4 Predictions for 2022, by Jay Jacobowitz, President and Founder of Retail Insights
- Calls to Action for 2022, from leading industry associations
- Better-For-You in ’22, by Rakesh Amin, Partner at Amin Talati Wasserman
- Before You Speak, Consider These Critical Communication Steps, by Amy Summers, Founder of Pitch Publicity