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`UNITED STATES INTERNATIONAL TRADE COMMISSION
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`MEMORANDUM
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`WASHINGTON, DC 20436
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`December 14, 2023
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`CO87-VV-005
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`TO:
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`FROM:
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`Office of the Secretary
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`Jason E. Kearns, Commissioner
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`SUBJECT:
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`Complaint of R.J. Reynolds Tobacco Company and R.J. Reynolds Vapor Company
`Concerning Certain Disposable Vaporizer Devices and Components and Packaging
`Thereof (Docket No. 3700)
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`I agree with my colleagues’ decision today to institute an investigation into certain
`alleged violations of section 337 of the Tariff Act of 1930, as amended (19 U.S.C. § 1337), based
`on the above filed complaint. I write separately, however, because I would also investigate the
`allegations under section 337(a)(1)(A) based on false advertising under the Lanham Act “that
`Disposable Vapes are Authorized and/or ‘Allowed’ for Sale in U.S.” Compl. ⁋⁋ 120-36
`(“Authorization Claims”). I also write separately to explain why, in my view, it is appropriate to
`deny institution as to the allegation based on unfair competition and unfair acts through
`violations of Customs laws and regulations. Compl. ¶¶ 326-348 (“Customs Claims”).
`Authorization Claims
`The majority finds that the Authorization Claims are precluded by the Food, Drug and
`Cosmetic Act (“FDCA”), and that the Food and Drug Administration (“FDA”) is charged with
`the administration of the FDCA. This rationale is expounded upon in a letter submitted by the
`FDA requesting that the Commission decline institution based on the Authorization Claims.
`EDIS ID No. 807175 (“FDA Letter”). I respectfully disagree.
`The FDA has analogized the Authorization Claims in this case to the claims that were
`denied institution by the Commission in Certain Synthetically Produced, Predominantly EPA
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`Omega-3 Products in Ethyl Ester or Re-esterified Triglyceride Form, Dkt. No. 3427 (Oct. 27,
`2017), aff’d sub nom. Amarin Pharma, Inc. v. ITC, 923 F.3d 959 (Fed. Cir. 2019) (“Amarin”). I
`recognize that in Amarin, the court held that Lanham Act allegations “based entirely on
`violations of the FDCA . . . are precluded . . . at least where the FDA has not yet provided
`guidance as to whether violations of the FDCA occurred.” 923 F.3d at 965. In Amarin, the
`underlying issue that the Commission would have needed to resolve was whether the
`respondents misrepresented their accused products as dietary supplements (which do not require
`premarket approval), rather than drugs (which do require prior FDA approval). The question of
`whether the omega-3 products qualified as dietary supplements or drugs was squarely within the
`expertise of the FDA.
`No such expertise of the FDA is required to assess the Authorization Claims here. As
`acknowledged by the FDA, the accused vapes products require premarket authorization, and the
`Complaint alleges that those products are on the market without that authorization. The only
`question that the Commission would need to resolve is whether the proposed respondents have
`misrepresented their authorization status through the labels they have placed on those products.
`The Commission has previously instituted section 337 investigations based on similar Lanham
`Act claims. See Certain Products Containing Tirzepatide and Products Purporting to Contain
`Tirzepatide, 337-TA-1377 (instituted investigation that included allegation based on false and
`misleading advertising that confuses consumers about FDA approval); Certain Clidinium
`Bromide, Inv. No. 337-TA-1109 (same); Certain Potassium Chloride Powder Products, Inv. No.
`337-TA-1013 (same).
`The FDA letter further suggests “the Commission would need to determine if the
`[accused] product is marketed to youth or lacks adequate restrictions on youth access.” FDA
`Letter at 5. Although the Complaint does allege that the accused products “i) [] do not have a
`timely filed premarket tobacco product application pending with FDA, or a marketing denial
`order that has been stayed by FDA or a court, (ii) [] are marketed toward youth, and/or (iii) the
`manufacturer of the product has failed to take (or is failing to take) adequate measures to prevent
`youth access” (Compl. ¶ 127 (emphasis added)) as alternative reasons why the products are
`“unlawful,” Complainants have clarified that they “do not contend that proof that the accused
`products are marketed towards youth, or that the manufacturer of the product has failed to take
`(or is failing to take) adequate measures to prevent youth access, is necessary to establish the
`accused products are ‘unlawfully on the market.’” EDIS ID No. 809498 (Complainants’
`response to Commission’s letter seeing clarification regarding Authorization Claims).
`Moreover, while the FDA’s own enforcement priorities have focused on unauthorized
`youth-marketed or youth-accessible products, the FDA has also made clear that its enforcement
`“guidance does not in any way alter the fact that it is illegal to market any new product without
`premarket authorization.” See Ctr. for Tobacco Prods., Enforcement Priorities for Electronic
`Nicotine Delivery Systems (ENDS) and Other Deemed Products on the Market Without
`Premarket Authorization (Revised) at 3 (Apr. 2020), available at https://www.fda.gov/regulatory-
`information/search-fda-guidance-documents/enforcement-priorities-electronic-nicotine-delivery-
`system-ends-and-other-deemed-products-market (Compl. Ex. 8). Thus, leaving aside whether a
`determination that the accused products are marketed towards youth or lack adequate restrictions
`on youth access is uniquely within the FDA’s expertise, the Commission need not make such a
`determination to evaluate the Authorization Claims.
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`The Supreme Court has recognized that “[t]he Lanham Act and the FDCA complement
`each other in major respects,” and thus claims based on false or misleading labeling of products
`that are also subject to FDA regulations are not necessarily precluded. POM Wonderful LLC v.
`Coca-Cola Co., 573 U.S. 102, 114 (2014). Consistent with this recognition, courts have held
`that Lanham claims based on misrepresentation of FDA approval status are not precluded by the
`FDCA. See Azurity Pharm., Inc. v. Edge Pharma, LLC, 45 F.4th 479, 501 (1st Cir. 2022)
`(finding no FDCA preclusion and distinguishing Amarin, where the Lanham Act claim merely
`alleges a violation of the “plain text” of a “clear” requirement in the statute); Belcher Pharms.,
`LLC v. Hospira, Inc., 1 F.4th 1374, 1381 (11th Cir. 2021) (finding that “the FDCA does not
`categorically preclude Lanham Act claims” where “[t]he only question at issue here is whether
`Hospira’s package inserts falsely imply that its epinephrine products or the package insert claims
`that go along with them are FDA-approved. Nothing in the FDCA prohibits a competitor from
`bringing that kind of claim.”); Alpharma, Inc. v. Pennfield Oil Co., 411 F.3d 934, 939 (8th Cir.
`2005) (holding that, under the “primary jurisdiction” doctrine, a Lanham Act claim was
`permissible based on a false assertion of FDA approval of an animal feed product because “[t]he
`question of whether Pennfield’s BMD has been approved as safe and effective is much different
`from the question of whether Pennfield’s BMD should be approved as safe and effective, and it
`is only the latter that requires the FDA’s scientific expertise” (emphasis added)). In
`PhotoMedex, Inc. v. Irwin, 601 F.3d 919, 924-25 (9th Cir. 2010), which was followed by the
`Federal Circuit in Amarin, the court noted “[i]f, for example, it was clear that an affirmative
`statement of approval by the FDA was required before a given product could be marketed and
`that no such FDA approval had been granted, a Lanham Act claim could be pursued for injuries
`suffered by a competitor as a result of a false assertion that approval had been granted.” That is
`precisely the allegation presented in the complaint.
`I recognize there are certain unique aspects to the Authorization Claims, but none of
`those justify a denial of institution in my view. First, as noted by the FDA, the allegedly
`misleading statement on the accused products (“Sale Only Allowed in the United States”) is
`required to be placed verbatim on the labels and packaging of all tobacco products sold in the
`United States by the FDCA. FDA Letter at 4 (citing 21 U.S.C. § 387t(a)). The FDA contends
`“[i]f all tobacco products—authorized or not—must bear the word ‘allowed,’ then under
`Complainants’ theory, every one that is not in fact ‘allowed’ by FDA is apparently false or
`misleading under the Lanham Act.” Id. Whether the label on the accused products is actually
`false or misleading is a question on the merits that should be fully evaluated based on a complete
`record after institution. Indeed, placing a government-required label on unauthorized products
`may be even more problematic insofar as it might give a false impression of the safety of those
`products. At this preliminary stage, however, I do not consider that mandatory labeling
`requirement as somehow sanctioning otherwise unauthorized products that, at least arguably,
`mislead purchasers into believing they are in fact allowed for sale in the United States, which is
`the crux of the allegation here.
`Second, the FDA notes that the Authorization Claims would require the Commission to
`determine whether an accused product has a marketing application before the FDA, but this is “a
`fact that FDA is required to keep confidential unless the manufacturer has publicly revealed it.”
`FDA Letter at 5. At this point, there is nothing to suggest that any of the accused products have
`a pending premarket application. But to the extent that any of the proposed respondents wish to
`raise that as a possible defense, it is of course possible for the Commission to keep that
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`information confidential within the confines of a protective order entered in an instituted
`investigation. And, in any event, this does not strike me as a reason to not even initiate an
`investigation.
`Third, I respect the FDA’s expertise concerning the health and safety of these products
`and recognize the FDA’s stated policy reasons against the immediate enforcement of the FDCA
`towards unauthorized Electronic Nicotine Delivery Systems (ENDS) products, i.e., to strike a
`balance between the risk those products pose to youth and the potential benefit of those products
`in helping adults transition from combustible cigarettes. FDA Letter at 2. However, given the
`mandatory language in section 337(b)(1), I do not believe the Commission has discretion to deny
`institution of an otherwise cognizable claim based merely on the FDA’s policy justifications for
`its enforcement priorities. See 19 U.S.C. § 1337(b)(1) (“The Commission shall investigate any
`alleged violation of this section on complaint under oath or upon its initiative.”) (emphasis
`added); SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1354 (2018) (“The word ‘shall’ generally
`imposes a nondiscretionary duty.”). Instead, the Commission should consider those policy
`reasons as part of its statutorily required public interest analysis after institution.
`Customs Claims
`I agree with the Commission’s decision not to institute a section 337 investigation based
`on the Customs Claims. I find the nature of the allegations and the potential remedy
`encompassed by the Customs Claims to be distinguishable from the Authorization Claims
`discussed above. In particular, these claims are based on allegations that certain accused
`products have been misclassified under the Harmonized Tariff Schedule of the United States
`(HTSUS). As noted by U.S. Customs and Border Protection (CBP), CBP is responsible for
`classifying merchandise imported into the United States and has the sole authority to bring
`enforcement action for violations of the Customs laws. See EDIS ID No. 807525 (CBP Letter).
`For example, CBP may initiate an administrative action under 19 U.S.C. § 1592 to recover
`penalties and lost revenue for alleged violations of the Customs laws. Unlike with the Lanham
`Act, private parties do not have a separate cause of action under the Customs laws. Whether a
`complainant can link an alleged unlawful act to a private right of action under that law is one
`factor to consider (although it is unclear whether it should be dispositive or how much weight it
`should carry) in assessing whether there is a cognizable cause of action under section 337. CBP
`further notes that the remedy of an exclusion order directing CBP to exclude goods that are
`misclassified would be inconsistent with 19 U.S.C. § 1592(d). Taking all this into account, I find
`that the Customs Claims are not cognizable under section 337(a)(1)(A).
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