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Study's Conclusions Are Protected Speech, Not False Ad Claims, Second Circuit Says, BNA's Life Sciences Law & Industry Report

July 17, 2013

Reproduced with permission from Life Sciences Law & Industry Report, 7 LSLR 727 (July 12, 2013). Copyright 2013 by The Bureau of National Affairs, Inc. (800-372-1033) <http://www.bna.com>

By Dana A. Elfin

Conclusions in a scientific journal article comparing the effectiveness of surfactants cannot support claims for false advertising under the Lanham Act, the U.S. Court of Appeals for the Second Circuit ruled June 26 ( ONY Inc. v. Cornerstone Therapeutics Inc., 2d Cir., No. 12-2414-cv, 6/26/13).

A law firm's commentary issued after the decision said it has importance to advertisers of pharmaceuticals.

Affirming a district court decision dismissing a false advertising complaint brought by Ony Inc., a producer of surfactants, against the corporate sponsors, authors and publishers of the scientific article (11 MRLR 358, 6/6/12), the appeals court said Ony failed to state an actionable claim.

"[A]s a matter of law, statements of scientific conclusions about unsettled matters of scientific debate cannot give rise to liability for damages sounding in defamation," Judge Gerard E. Lynch wrote.

"The district court correctly concluded that plaintiff has failed to state a claim based on publication of the article itself because the challenged statements are protected scientific opinion," the appeals court said.

Surfactants are biological substances that line the surface of human lungs and often are used to help premature infants breathe. Ony and Chiesi Farmaceutici S.p.A. Chiesi make competing surfactant products.

Chiesi, an Italian pharmaceutical firm, contracts with Cornerstone Therapeutics Inc. to distribute and market Curosurf, a surfactant derived from porcine lung mince, in the United States. Chiesi sponsored a scientific study comparing Curosurf with other surfactants, including Ony's product, Infasurf. Chiesi later hired several physicians to present the study findings at medical conferences and, in 2011, the physicians published the study's findings in the Journal of Perinatology.

In December 2011, Ony sued Chiesi, Cornerstone, corporate sponsors, and authors and publishers of the article in the U.S. District Court for the Western District of New York, alleging that the study constituted false advertising under the Lanham Act, deceptive practices under New York General Business Law §349, and tortious injurious falsehood and interference with prospective economic advantage.

Specifically, Ony alleged that the study was inaccurate because it failed to include data about the length of patients' hospital stays that would have shown the effectiveness of Ony's Infasurf drug.

In May 2012, Judge William M. Skretny of the Western District of New York tossed Ony's complaint in its entirety, holding that it failed to state a claim because the conclusions in the study were protected free speech.

Ony appealed to the Second Circuit, which affirmed the district court, holding it correctly concluded that Ony failed to state a claim.

Not only did the Second Circuit find that statements of scientific conclusions about unsettled matters of scientific debate cannot give rise to liability for damages sounding in defamation, but it also held that the secondary distribution of excerpts of the article cannot give rise to liability as long as the excerpts do not mislead readers about the article's conclusions.

"We . . . conclude that to the extent a speaker or author draws conclusions from non-fraudulent data, based on accurate descriptions of the data and methodology underlying those conclusions, on subjects about which there is a legitimate ongoing scientific disagreement, those statements are not grounds for a claim of false advertising," Lynch wrote. "Here, Ony has alleged false advertising not because any of the data presented were incorrect but because the way they were presented and the conclusions drawn from them were allegedly misleading," the opinion said.

Moreover, the appeals court observed, "Even if the conclusions authors draw from the results of their data could be actionable, such claims would be weakest when, as here, the authors readily disclosed the potential shortcomings of their methodology and their potential conflicts of interest."

Implications for Drug Marketing

In an alert issued June 28, Paul Llewellyn, Richard De Sevo, and Kyle Gooch, of Kaye Scholer LLP in New York, said the Second Circuit's decision has important implications for drug companies and pharmaceutical product marketing.

"While the court's opinion signals that the conclusions of a scientific study can be subject to significant First Amendment protection, it does not foreclose false advertising claims based on the use of a study in promotional materials (or based on studies that use fabricated data, for example)," Llewellyn, De Sevo, and Gooch wrote. "A defendant that misstates a study's conclusions or data or omits material data in promotional or advertising materials could still be subject to a false advertising claim," they said.

In addition, they observed, the Second Circuit's opinion leaves open the question of "whether a defendant that promotes the conclusions of one scientific study by expressly or impliedly stating that the conclusions were ‘proved' by the study, without mentioning contrary results of other, more rigorous or more numerous studies, would be subject to a so-called establishment claim."

In 2012, the Food and Drug Administration, in an "untitled" letter warned Ony itself that its web pages and videos for Infasurf are false or misleading because they present unsubstantiated superiority claims, omit and minimize important risk information, and present unsubstantiated claims for the drug product.

In addition to Lynch, Judges Ralph K. Winter and Guido Calabresi also were on the panel that heard oral argument in the case.

Mitchell Jan Banas Jr., of Jaeckle Fleischmann & Mugel LLP in Buffalo, N.Y., argued the case for Amherst, N.Y.-based Ony .

J. Kevin Fee, of Morgan Lewis & Bockius LLP in Washington, argued on behalf of defendant/appellees Cornerstone Therapeutics Inc., based in Cary, N.C., Italian company Chiesi Farmaceutici S.p.A., Philadelphia-based Premier Research Services, and physicians Rangasamy Ramanathan, Jatinder J. Bhatia, Krishnamurthy C. Sekar, and Frank R. Ernst. With him on the brief were Kristin H. Altoff and Jordana S. Rubel, also of Morgan Lewis & Bockius LLP in Washington.