Navigating Five Key Legal and Regulatory Hurdles to Get and Keep Your Product on the Market

Navigating Five Key Legal and Regulatory Hurdles to Get and Keep Your Product on the Market

Food and beverage, drug, medical device, cosmetics, and consumer products companies must navigate a maze of legal and regulatory challenges in order to get and keep their products on the market — from concept, to development, to manufacture, to market, to post-market, and in between. Here are five key areas that companies must address or may encounter:

1. Complying with federal, state, and local laws and regulations. While complying with federal laws enforced by, and regulations promulgated by, the U.S. Food and Drug Administration (FDA), the U.S. Department of Agriculture, the Federal Trade Commission (FTC), and the U.S. Consumer Product Safety Commission (CPSC), among others, is a priority, complying with state and local laws and regulations is also very important. The FDA regulates the products mentioned above, and others, but companies also need to be aware of the roles played by state attorneys general, local district attorneys, and self-regulatory bodies, e.g., the National Advertising Division of the Council of Better Business Bureaus. For example, state attorneys general and local district attorneys have targeted dietary supplement companies over their advertising practices, alleging that their conduct violates state unfair or deceptive trade practices laws, sometimes referred to as "Little FTC Acts." Navigating the federal agency alphabet soup to determine which agency or agencies regulate(s) your product is critical before going to market, as is understanding state and local compliance obligations.

2. Protecting your intellectual property. Utility patents, design patents, trademarks, trade dress, copyrights, and trade secrets all help companies protect their products from imitation and misappropriation. Often the companies with the most protection success are those who plan ahead for and integrate these different forms of IP. Some helpful IP strategies to consider include:

  • Before investing in bringing a product to market, conducting a freedom-to-operate search as a first step helps to assess the risk that others have patent claims that may expose your company to legal risk for patent infringement.

  • Conduct a trademark and domain name clearance search to make sure that the company name, brand and domain name under consideration are not being used by someone else.

  • Determine your product’s trade secrets early on by pinpointing what gives you a competitive advantage from which you derive profit, and then treat that information as a secret by restricting employee access to it and establishing safeguards. These steps will enhance your defense in court if competitors or former employees try to steal those trade secrets.

  • Keep your patent family pending through continuation applications so that you can pursue additional claims later as competitors come out with slight variations to your product.

  • Maintaining consistency with your product design and packaging and also advertising its unique brand features will help establish your product’s acquired distinctiveness and help bolster your trade-dress protection case down the line when competitors encroach on your product’s brand features.

  • Filing a design patent is a quick way to help protect your product’s design, which can also include fonts, user interfaces and icons, without having to establish acquired distinctiveness. Consider filing design patents along with following the above trade-dress strategies to help increase your walls of defense.

  • Keep in mind that you only have one year to file your patent in the U.S. after disclosing your invention or design through sales or advertisements and that public disclosures may extinguish patent rights in most other jurisdictions.

  • Include provisions in employment or consulting agreements that require employees or contractors to transfer to the company any rights in IP they develop.

3. Developing compliant labels, labeling and promotional material. The FTC and the FDA have overlapping jurisdiction with respect to the advertising, labeling and promotion of foods (including dietary supplements), over-the-counter drugs, cosmetics and medical devices. Under a long-standing liaison agreement between the agencies, the FDA exercises primary responsibility for regulating the labeling of these products, while the FTC has primary responsibility for enforcing laws against false or misleading advertising. For example, the FDA evaluates whether claims on dietary supplement product labels and other packaging materials are true and accurate, and it also oversees manufacturing, content, purity and safety of these products. The FTC evaluates the truth and accuracy of any claims made in dietary supplement advertising and marketing. While the FDA will inspect your facility to determine compliance with current good manufacturing practice and take enforcement action if non-compliance is observed, the FTC will do the same if you make a statement about your product that has not met its competent and reliable scientific evidence standard for health and safety, or efficacy claims. Complying with statutes and regulations enforced by the FDA, the FTC, and others will help your company avoid stiff criminal and/or civil penalties and/or product seizures in pursuit of your ongoing goal to keep your company in business, your executives out of jail and your product on the market.

4. Reducing risks for product liability litigation and handling product liability claims, if they arise. Once on the market, companies should engage in due diligence to protect against product liability litigation. Review of labels to determine whether they are understandable and whether there are any recent developments that necessitate an update should be undertaken periodically. Warranties also should be examined to determine if they need to be modified and to ensure they comply with federal laws. In addition, customer complaints should be reviewed to evaluate whether any safety signals can be identified and to determine whether a voluntary recall is appropriate. Upon receipt of a customer complaint or demand letter, a review of possible exposure and an initial consult with counsel may be appropriate even if a suit has not yet been filed, depending on the nature of the complaint. Counsel may also assist in analyzing whether a litigation hold should be issued, determining what data should be preserved and identifying any key witnesses. Companies should also review their insurance policies to confirm adequate product liability coverage, particularly if new product lines have entered the market.

5. Submitting required product safety reporting and implementing recalls, if necessary.

Various agencies require the companies they regulate to submit post-market safety reporting. For example, the FDA enforces reporting requirements across a number of the industries it regulates, e.g., reportable food registry, medical device reporting and drug adverse event reporting. The CPSC requires manufacturers, importers, distributors, and/or retailers of consumer products to report on a large array of information, including certain product defects, products that create unreasonable risk of serious injury or death, products that fail to comply with applicable standards, certain child choking incidents, and certain types of lawsuits. If the need for a recall arises, many companies will opt for a voluntary recall rather than having the agency of jurisdiction mandate one. In addition, similar to product liability insurance, ensure that your company has adequate product recall insurance.