It should come as no surprise that making a false statement about a competitor’s product or service is actionable. Similarly, albeit slightly less obvious, repeating a false statement that someone else makes about a competitor also may be actionable if you have reason to believe that the statement is false or if you recklessly repeat it without making any effort to determine if that statement is true or false. In Genzyme Corp. v. Shire Human Genetic Therapies, Inc., however, the District of Massachusetts took the concept of holding someone liable for republishing another’s unbiased statement to a whole new level.
The Genzyme case arose out of the competition between rivals Genzyme and Shire in connection with their respective drugs for the treatment of Gaucher disease. In June 2012, data presented at a meeting of the European Working Group on Gaucher Disease showed that VPRIV (Shire’s drug) was superior to Cerezyme (Genzyme’s drug). Not surprisingly, Shire seized on this opportunity and issued a press release to capitalize on what amounted to an implicit endorsement by an independent and well-respected group. Among other things, the press release stated:
In a head-to-head trial between VPRIV and Cerezyme…. only patients treated with VPRIV experienced statistically significant improvement in lumbar spine bone mineral density at 9 months.
The press release was posted on Shire’s website, distributed to various media outlets and the clinical findings were reported in several news articles. Shortly thereafter, Genzyme wrote to Shire, outlining what Genzyme believed to be flaws in the underlying study at issue and demanding that Shire retract the press release and the claim that VPRIV was superior to Cerezyme. When Shire refused, Genzyme sued, alleging that Shire had engaged in false advertising in violation of the Lanham Act.
Shire moved to dismiss the case, initially arguing that because the press release constituted “scientific speech” protected by the First Amendment, it could not be held liable. The District Court quickly disposed of this argument, noting that a press release that selectively culled out and re-published specific information from a study and which was designed to promote a commercial product was competitive speech and not scientific speech. Shire then retreated to what seemed to be a solid fall-back position, i.e., that, regardless of all else, the press release accurately reported the underlying scientific analysis and results. Nevertheless, the District Court refused to dismiss the case on this basis, reasoning that it could not determine at the pleading stage whether the underlying study, in fact, was reliable.
What does this mean for in-house counsel? For starters, you should at least inform your head of sales and/or marketing that there is risk in blindly repeating what even an independent and unbiased third party might say that favors your company or undermines your competitors. Further, in-house counsel may want to suggest that the company implement some sort of a vetting process to analyze third-party statements before anyone is allowed to republish them. Finally, keep in mind that the danger here is not limited to written materials or formal sales pitches. Republishing false or misleading information via forwarding a post on Facebook, Twitter, a blog, etc. is just as actionable. Indeed, because almost every company has its own such outlets, and many employees have their own personal accounts, in-house counsel should consider developing a policy tailored to their business that can limit the risk of republishing liability.