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MEAD JOHNSON MUST DROP RICELYTE NAME FROM ORAL ELECTROLYTE SOLUTION

Executive Summary

MEAD JOHNSON MUST DROP RICELYTE NAME FROM ORAL ELECTROLYTE SOLUTION by Nov. 16 and in the meantime must cease all "rice"- related marketing promotions for the product under an Aug. 18 preliminary injunction granted to Abbott Labs in Indianapolis federal court. The decision by Judge William Streckler orders the Bristol-Myers Squibb subsidiary to "immediately cease the use of any claims that Ricelyte has or contains rice or rice carbohydrate, that Ricelyte is 'rice-based,' or that 'rice makes a difference.'" Mead Johnson has 90 days from the date of the injunction to stop marketing its oral electrolyte maintenance solution under the Ricelyte name. Under the injunction, Mead Johnson is free to adopt a new name for the product "so long as it does not utilize the phrase 'rice.'" The company was directed by the court to limit product shipments during the 90-day period to "actual customer orders." The injunction forbids Mead from accelerating distribution "in anticipation of the expiration of the 90-day period." The court victory for Abbott follows an 18-month legal battle with Mead Johnson over Ricelyte superiority claims to Abbott's Pedialyte and trade dress infringement. The decision effectively protects Pedialyte's dominant position in the $45 mil. U.S. infant nutritional replenishment market. Abbott's lawsuit, filed in February 1991 ("The Pink Sheet" March 4, 1991, T&G-7), maintains that Ricelyte and Mead Johnson's promotion of the product infringes the trademark and tradename of Abbott's Pedialyte. In addition, Abbott has argued that the Ricelyte name is misleading since the product is based on rice syrup solids derived from rice carbohydrates, but does not actually include rice carbohydrates. Products based on rice carbohydrates have been shown in studies conducted by the World Health Organization to be more effective than glucose-based oral electrolytes products. However, two attributes of rice-based products -- rice grain powder's insolubility in water and short shelf life -- have limited their commercial viability. Abbott's request for a preliminary injunction was initially denied by the federal court in October 1991 ("The Pink Sheet" Oct. 28, 1991, T&G-13), although the court found that Mead Johnson's promotions for Ricelyte were false and misleading. The court based its denial of the injunction on a ruling that harm to Abbott by Ricelyte promotions could be adequately compensated with monetary damages and that taking Ricelyte off the market would be contrary to the public interest since it would restore Abbott's virtual monopoly. However, a federal circuit court ruled on July 23 that the district court had erred in finding that Abbott would not be irreparably harmed by Mead Johnson's misleading promotions and similar trade dress. The appellate court vacated the lower court's initial denial of the preliminary injunction and remanded with directions to commence a full trial within 60 days or revisit the issue of preliminary relief. Judge Streckler noted in the injunction that "for various reasons," including his health and the time involved in preparing for a jury trial, he decided to enter a preliminary injunction instead of proceeding to trial. The injunction notes that Mead Johnson has "offered to consent to certain of the preliminary relief [but] has opposed other elements of relief, particularly an order directing it to change the name of its product Ricelyte." In an Aug. 18 statement, Mead Johnson said it "has every intention of appealing this ruling." Mead added that it "believes Judge Streckler's interpretation" of the appellate court opinion "is incorrect." A Mead Johnson spokesman said the company is considering its options, which include an appeal, going to trial, changing the product's name, and withdrawing the product. If Bristol-Myers Squibb proceeds to relaunch its electrolyte maintenance solution under another name, the company will also have to change the packaging of the product under the court order. The new labeling of the product will have to be "significantly different in appearance from the Pedialyte label" and the shrink wrap seal cannot be similar to the Pedialyte seal, the injunction states. In addition, the court ordered that future product labeling must "clearly identify the product as containing 'glucose polymers derived from rice' or 'rice syrup solids.'" Under the injunction, Mead Johnson must also issue a statement to physicians within 60 days stating that Ricelyte does not contain rice or rice carbohydrate and that the product has not been shown to be superior to Pedialyte. In addition, Mead cannot make any promotional claims of superiority based on a study published in the Feb. 21, 1991 issue of The New England Journal of Medicine.
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