In April, ChromaDex was sued for false advertising by a Utah supplement company called "Novex," which sells a supplement called "Oxydrene." Novex was represented by a small (8-attorney) law firm ("Price, Parkinson, & Kerr").
The lawsuit came to our attention when ChromaDex removed the case to federal court and a troll who seems to be aligned with Elysium mentioned it.
I took a look at the complaint -- you can read it, too:
and decided it was insignificant. I still think so.
It seemed insignificant because it appeared to be a copycat lawsuit, reciting some of the allegations that Elysium asserted in New York (e.g., Niagen does not raise NAD, and the dosage on the bottle doesn't match the dosage in the studies).
I get the theory that if ChromaDex has committed a civil wrong that improperly harms competitors, as opposed to consumers, then multiple competitors (and their trial attorneys) might want to assert the same cause of action.
The problem, of course, is that I don't think much of the allegations in New York, so I also don't think much of the allegations in Utah.
Moreover, ChromaDex hired Sidley Austin to defend the Utah action.
Sidley is a very, very prestigious firm.
Sidley is the 6th largest firm in the AmLaw 100 (right after Skadden). It has 2,000 attorneys.
Sidley is the firm at which future-first-couple Barack Obama and Michelle Robinson were both employed when they met.
I think Sidley is capable of dispensing with a bogus copycat lawsuit. And perhaps so does Price, Parkinson, & Kerr.
The New York allegations are nonetheless worth covering because they are part of the broader ChromaDex-Elysium dispute, but I don't see value in covering clone lawsuits elsewhere in the country.
However, for some reason, the anonymous Troll-Apparently-Aligned-with-Elysium -- who promotes a never-ending campaign of Fear, Uncertainty, and Doubt (FUD) on the Yahoo Finance discussion forum for CDXC -- asserts that ChromaDex investors should be aware of what's going on in Utah.
The pleasure is mine!
Although Novex's complaint in Utah is not very interesting-- the Troll is incorrect -- ChromaDex's answer and counterclaims are instructive.
My read is that the developments in Utah are highly favorable to ChromaDex and also validate ChromaDex's legal strategy. See if you agree.
You can read the full text of ChromaDex's Answer and Counterclaims here:
ChromaDex's legal strategy of hiring very high-powered law firms like Sidley to answer complaints like this is apparently designed not only to ensure that ChromaDex "Owns the Science," but also to dissuade would-be opportunist raiders from pursuing frivolous lawsuits.
So although I suspected that ChromaDex would prevail on these claims just like I suspect it will prevail in New York, it did not occur to me that ChromaDex would fire back hard, potentially leaving Novex and its attorneys in a worse place than they started if Novex's claims fail and ChromaDex's counterclaims hit their mark.
The two interesting points in the Answer and Counterclaims are: (1) ChromaDex refutes/denies Novex's allegations by comparing its own scientific validation with that of its accuser, Novex, and (2) ChromaDex builds a strong case that it is Novex, not ChromaDex, that is the false advertiser.
For example, on its own behalf, ChromaDex notes that:
28. NIAGEN and TRU NIAGEN have been extensively studied and proven to be safe and effective. To make sure it is always at the very cutting edge of this scientific development, ChromaDex supports many of the world’s leading research institutions and scientists who are working to understand the full potential of NAD and its impact on human health.
29. ChromaDex currently has over 140 partnerships with leading universities and research institutions around the world including the National Institutes of Health, Cornell, Dartmouth, Harvard, Scripps Research Institute, and the Mayo Clinic.
30. The scientific support for nicotinamide riboside, NIAGEN and TRU NIAGEN is voluminous. There are more than 100 studies published about nicotinamide riboside on PubMed, a leading medical and scientific database.4 ChromaDex has also completed four human trials on NIAGEN. See e.g., Trammell, S.A., et al., Nicotinamide riboside is uniquely and orally bioavailable in mice and humans. Nat Commun, 2016. 7: p. 12948. Most recently, an eight-week randomized, double-blind, placebo-controlled, human clinical trial that is currently being peer reviewed for publication affirmed that consumption of nicotinamide riboside significantly increased whole blood NAD and other NAD metabolites within two weeks.
31. More than 16 human clinical trials of NIAGEN are registered on clinicaltrials.gov, which will further examine the efficacy of nicotinamide riboside. In total, there are currently over 140 pre-clinical and clinical studies either in progress or completed on nicotinamide riboside.
32. These scientific studies have been conducted by the world’s leading scientific and medical institutions, including the NIH Institute of Aging, Harvard Medical School, Massachusetts Institute of Technology, The University of Cambridge, Mayo Clinic, University of California at Davis, and Washington University in St. Louis.
33. ChromaDex’s research and development work is supervised by ChromaDex’s Scientific Advisory Board, whose members hold positions at leading medical institutions, such as Stanford University Medical School, Harvard Medical School, and Massachusetts General Hospital...
40. All of ChromaDex’s marketing claims go through a careful vetting and review process before they are made public. Company experts review each claim to ensure that the claims are scientifically valid and substantiated with competent and reliable scientific evidence. No claim is made unless the scientific team affirms that the claim is proper.
ChromaDex suggests a contrast with the practices of its accuser:
B. Novex’s Claims For Oxydrene Are False And Misleading
49. Novex’s claims for Oxydrene Elite are false and misleading. They deceive consumers for a number of reasons.
i. Oxydrene Is Not Revolutionary, New, Or Proprietary
50. While Novex claims that “Crenulin-RCC2” is “revolutionary” “new” and “proprietary,” it is in reality comprised entirely of garden variety commodity ingredients that have been on the market for years. There is nothing new, revolutionary, or proprietary about it.
51. The name “Crenulin-RCC2” is nothing more than a scientific-sounding list of letters and numbers that deceives and misleads consumers into thinking the product contains some special ingredient or process, not just ginkgo biloba extract and rhodiola rosea.
52. Upon information and belief, Novex must be aware that its product is not new or “proprietary” because it has never submitted a new dietary ingredient notification to the FDA for approval.
ii. Oxydrene Does Not Provide The Promised Benefits
53. Oxydrene also fails to provide any of the health benefits that Novex promises. There is no scientific substantiation for Novex’s claims. To the contrary, the available scientific evidence shows that the ingredients in Oxydrene, whether by themselves or in combination, do not provide the promised health benefits. The claims are simply false.
54. The ingredients in Oxydrene do not and cannot make people “run faster.” Nor do they “increase endurance,” “maximize aerobic power,” “improve physical performance” or “optimize muscle recuperation cycle.” Even if the ingredients could provide some exercise benefits, the dose in the product is entirely too low to see any meaningful benefit.
55. There is no scientific evidence to support Novex’s claims. In fact, the “science” section of Novex’s website exclusively discusses research regarding one of its other products and does not include any studies or discussion of Oxydrene.
56. Finally, Novex’s claim that its product is “clinically validated” through a “double- blind, placebo-controlled clinical trial” is false. A search of published literature for “Crenulin- RCC2” or a search for a blend of the ingredients listed on the supplement facts for Oxydrene Elite revealed no studies at all, let alone scientific studies that back its sweeping claims of efficacy. Upon information and belief there is no scientifically valid human clinical trial on Oxydrene that supports its claims.
Below is a larger excerpt from ChromaDex's pleading, but you'll do better to click through to the underlying document so you can see all the embedded images, including reproductions of the claims on Oxydrene's packaging and advertisements.
Novex last week moved to dismiss ChromaDex's counterclaims. You can read that motion here:
I absolutely love Novex's first defense, which is that ChromaDex's claim that the two products Oxydrene and Niagen don't actually compete deprives ChromaDex of standing to challenge Novex's advertising:
ChromaDex's Allegation:
If Novex and ChromaDex compete—as alleged by Novex—Novex’s false claims have harmed ChromaDex in the marketplace, in an amount to be proven at trial. Indeed, by bringing this lawsuit, Novex has asserted that NIAGEN competes with Oxydrene and that the products are comparable. These allegations further harm ChromaDex because NIAGEN and Oxydrene are not even remotely comparable products.
Novex's Response:
ChromaDex defends itself against Novex’s complaint by alleging that the products don’t even compete in the first place and fails to allege in its Counterclaim that the products actually compete. Indeed, ChromaDex goes so far as to allege facts that, if true, would mean that the products do not compete at all. Thus, ChromaDex lacks standing to bring its Counterclaim under Article III, the Lanham Act, and California law. (Citations omitted, emphasis added)
That's a beautiful thing, because if Novex is relying on and asserting that the products don't compete in order to eliminate ChromaDex's false advertising claims, that would eliminate Novex's own false advertising claims, too, for the same reason -- a doomsday assertion that would kill the entire lawsuit right from the start.
I don't see how Novex can get ChromaDex's claim dismissed with prejudice on this ground and still assert its own claim based on the contrary premise.
And Novex goes on for almost four pages asserting that ChromaDex's allegation of non-competition dooms its claims, and even urges the court not to allow ChromaDex to amend its complaint to allege that the products compete:
To any extent that CromaDex may appear to try and claim the products do in fact compete, ChromaDex should be prohibited “from deliberately changing positions according to the exigencies of the moment,”
LOL. Novex has found a way out of the lawsuit, and sounds desperate to prevent that exit door from slamming shut.
[PICTURED: Whoops, there's been a terrible misunderstanding here! We don't compete with each other -- you said so yourself! I'll just be on my way now!]
As we'll see in a moment, it makes perfect sense that Novex would want to scuttle the entire case.
After arguing that ChromaDex lacks standing to complain about Oxydrene's advertising, Novex goes on to assert that ChromaDex has failed to allege that Novex's advertising is false:
ChromaDex offers 3 theories under which it asserts that “Novex’s Claims For Oxydrene Are False and Misleading.” The first is that “Oxydrene is Not Revolutionary, New, Or Proprietary.” The second is that “Oxedrene Does Not Provide the Promised Benefits.” And the third is that “Oxydrene’s Claims Are Not Clinically Validated Through A Human Trial.” (citations omitted)
The first claim -- that Oxydrene is not revolutionary, new, or proprietary -- Novex characterizes as "puffery," which is legally permissible lying. I think that's most likely true with respect to "Revolutionary," which is very subjective. Whether "new" and "proprietary" count as puffery seems like a closer call, but it might, and Novex cites a couple cases.
And in any case, says Novex, it is not claiming to offer a new ingredient, but only a new formula or compound made up of old ingredients.
It is sad to see an advertiser defend itself against false advertising claims by arguing just how little it is in fact claiming for its product.
And it may be a weakness in US false advertising law that language seeming to make a claim -- and intended to be effective for marketing -- can be immunized from legal liability by showing that the apparent claim is an illusion.
As for Oxydrene's alleged lack of efficacy, Novex notes that ChromaDex only alleged that Oxydrene does not work, but failed to prove it with evidence.
I would think that ChromaDex's allegations were sufficient to state a claim, but Novex says no:
These assertions “are no more than conclusions” and “are not entitled to the assumption of truth.” ChromaDex just asserts that the product does not work, does not make people run faster, does not improve physical performance, etc., is disproven by science, and is too low in dosage, without a single factual explanation to support any of these vague and conclusory allegations...The Counterclaim does not plead any facts showing that the clinical research relied on by Novex is unreliable or does not support Novex’s claims. (citations omitted)
Specifically, I would think that THESE allegation were sufficient under 12(b)(6):
"...The available scientific evidence shows that the ingredients in Oxydrene, whether by themselves or in combination, do not provide the promised health benefits. The claims are simply false.
54. The ingredients in Oxydrene do not and cannot make people “run faster.” Nor do they “increase endurance,” “maximize aerobic power,” “improve physical performance” or “optimize muscle recuperation cycle.” Even if the ingredients could provide some exercise benefits, the dose in the product is entirely too low to see any meaningful benefit.
55. There is no scientific evidence to support Novex’s claims. In fact, the “science” section of Novex’s website exclusively discusses research regarding one of its other products and does not include any studies or discussion of Oxydrene.
56. Finally, Novex’s claim that its product is “clinically validated” through a “double- blind, placebo-controlled clinical trial” is false..." (emphasis added)
That strikes me as a very particular pleading, not a conclusory allegation, of exactly what ChromaDex thinks is false and why it believes it is false.
ChromaDex says that an alleged clinical trial referred to in Novex's advertising "does not seem to exist," because (1) ChromaDex can't find it on Novex's website; (2) ChromaDex couldn't find it by searching for the product name or the product's ingredients, and (3) a supplement watchdog group says that the alleged clinical trial does not seem to exist.
It is almost humorous that Novex's response, instead of offering or linking to the alleged study, is to point out that just because "one blogger and ChromaDex itself claim they were unable to find" the study doesn't mean that the study does not exist.
Novex seems to think that 12(b)(6) not only requires evidentiary proof (which it does not), but that the plaintiff must prove a negative! That surely isn't the standard.
On the other hand, if I were the judge in this case, I would happily accept Novex's invitation to throw the entire thing out on the standing issue.
I would tell Novex that it had committed itself in its brief to the proposition that ChromaDex lacked standing, and that it thereby argued itself out of court because it could not simultaneously on its own behalf assert the contrary proposition, that the products did compete after all. And might the crocodile tears flow!
That's what I would do.
We'll see what the judge does.
__________________________
Larger Excerpt
23. ChromaDex’s NIAGEN began with research into the vital cellular resource known as NAD, which is found in every living cell in the body. NAD turns food into energy through cellular metabolism, and is crucial to cellular life. NAD is one of the basic building blocks of every human cell. Sufficient levels of NAD are important for healthy aging.
24. But NAD levels naturally decline as humans age. Increased stress and poor diet cause further decreases in NAD. Evidence shows that NAD levels decline by more than 50% from young adulthood to middle age, and continue to decline as humans grow older. When NAD levels drop, the body’s cells do not function well and cells can die. Low NAD or NAD- deficiency is associated with many health-related problems of aging (e.g., Alzheimer’s, hypertension, obesity, diabetes, and more). The following figure shows how NAD changes during aging.
25. To help address decreased NAD levels associated with aging, ChromaDex developed NIAGEN, which contains nicotinamide riboside. Nicotinamide riboside is a potent and bioavailable pre-cursor to NAD. While nicotinamide riboside has been studied for decades, there was a breakthrough in 2004, when scientist Dr. Charles Brenner demonstrated that nicotinamide riboside is converted to NAD within living cells and extends the lifespan of these cells.
26. Since 2011, ChromaDex has committed itself to building on Dr. Brenner’s research to further understand how nicotinamide riboside works and how it could be produced and sold as a dietary supplement to increase NAD in humans.
27. After years of research and development, in 2013 ChromaDex developed the first sustainable and reliable way to produce nicotinamide riboside and began selling NIAGEN. NIAGEN is a patented, proprietary dietary ingredient. In June 2016, ChromaDex launched TRU NIAGEN, its first dietary supplement for direct sale to consumers.
28. NIAGEN and TRU NIAGEN have been extensively studied and proven to be safe and effective. To make sure it is always at the very cutting edge of this scientific development, ChromaDex supports many of the world’s leading research institutions and scientists who are working to understand the full potential of NAD and its impact on human health.
29. ChromaDex currently has over 140 partnerships with leading universities and research institutions around the world including the National Institutes of Health, Cornell, Dartmouth, Harvard, Scripps Research Institute, and the Mayo Clinic.
30. The scientific support for nicotinamide riboside, NIAGEN and TRU NIAGEN is voluminous. There are more than 100 studies published about nicotinamide riboside on PubMed, a leading medical and scientific database.4 ChromaDex has also completed four human trials on NIAGEN. See e.g., Trammell, S.A., et al., Nicotinamide riboside is uniquely and orally bioavailable in mice and humans. Nat Commun, 2016. 7: p. 12948. Most recently, an eight-week randomized, double-blind, placebo-controlled, human clinical trial that is currently being peer reviewed for publication affirmed that consumption of nicotinamide riboside significantly increased whole blood NAD and other NAD metabolites within two weeks.
31. More than 16 human clinical trials of NIAGEN are registered on clinicaltrials.gov, which will further examine the efficacy of nicotinamide riboside. In total, there are currently over 140 pre-clinical and clinical studies either in progress or completed on nicotinamide riboside.
32. These scientific studies have been conducted by the world’s leading scientific and medical institutions, including the NIH Institute of Aging, Harvard Medical School, Massachusetts Institute of Technology, The University of Cambridge, Mayo Clinic, University of California at Davis, and Washington University in St. Louis.
33. ChromaDex’s research and development work is supervised by ChromaDex’s Scientific Advisory Board, whose members hold positions at leading medical institutions, such as Stanford University Medical School, Harvard Medical School, and Massachusetts General Hospital.
III. NIAGEN Complies With FDA’s Rigorous Requirements
34. ChromaDex’s products are also safe and comply with the FDA’s regulatory requirements.
35. ChromaDex has provided the FDA with the technical and manufacturing details of NIAGEN, defined its purity, impurities, residual solvents, and contaminants, and established the safety of the ingredient. The FDA’s acceptance of ChromaDex’s notifications recognized that NIAGEN is safe and that ChromaDex had defined the identity of, and manufacturing process for, commercial nicotinamide riboside in accordance with FDA standards and regulations.
36. NIAGEN was also subject to a comprehensive toxicology program that included genotoxicity and mutagenicity studies, acute toxicity, a 14-day dose range finding study, sub- chronic toxicity, and a human study. These studies were conducted in accordance with good laboratory practices as well as preclinical studies following accepted protocols.
37. Moreover, ChromaDex employs an ongoing, comprehensive quality-assurance program that ensures all of its commercially available NIAGEN conforms to its specifications. This assures consumers and regulators alike that all NIAGEN sold in commerce is safe for consumption.
38. Furthermore, NIAGEN was also found to be “Generally Recognized As Safe” (i.e., it has achieved “GRAS” status) for food use by independent experts in the field and ChromaDex submitted a comprehensive GRAS report to FDA. The FDA provided ChromaDex
39. ChromaDex has also submitted a notification letter to the FDA to inform the agency of its structure/function claims for its dietary supplement products. These letters are required so that the FDA has an opportunity to review and object to any claim that it finds to be improper or unlawful.
IV. ChromaDex Makes Scientifically Valid And Responsible Claims
40. All of ChromaDex’s marketing claims go through a careful vetting and review process before they are made public. Company experts review each claim to ensure that the claims are scientifically valid and substantiated with competent and reliable scientific evidence. No claim is made unless the scientific team affirms that the claim is proper.
41. NIAGEN is sold nationwide and ChromaDex has customers in all 50 states.
V. Novex Biotech Sells An Inferior Product Known As Oxydrene Elite
42. Novex markets a product called Oxydrene Elite through multiple online sources, including its own website (https://www.novexbiotech.com/oxydrene.html), Amazon.com, Walmart.com, vitaminshoppe.com, bodybuilding.com, supplementwarehouse.com, luckyvitamin.com, and facebook.com. On information and belief, Novex also advertises and sells Oxydrene through print advertisements and in retail stores. Novex sells Oxydrene in all 50 states, including California.
43. An image of the Oxydrene package is shown below.
44. Novex claims that this product contains a “revolutionary new compound” and “proprietary formula” that it calls “Crenulin-RCC2.” The product claims to contain the following ingredients:
A. Novex Promises That Its Oxydrene Will Provide A Number Of Health and Exercise Benefits
45. Novex widely advertises its products online and through print ads, including through advertisements directed at customers in California. Novex promises consumers that they will obtain a number of health benefits if they take the product. As seen in the image above and throughout its marketing materials, Novex promises that Oxydrene will:
“increase endurance”
“improve aerobic power”
“increase VO2 Max”
“improve physical performance”
“increase oxygen transport to active muscle tissue”
give you the ability to “push yourself to the next level to see gains unlike anything you have ever achieved before”
“maximize Aerobic Power and Performance During Exercise”
“optimize Muscle Recuperation Cycle”
achieve “faster race times”
“decrease perception of efforts”
46. As seen in the image below, Novex claims that Oxydrene can “maximize the
effects of your exercise regimen” and “increase endurance.”
47. In fact as shown in the advertisement below, Novex goes as far as promising that consumers will actually run faster after taking Oxydrene. It claims that subjects “not only cut 24 seconds off their 6-mile timed-trial ride, but rated the workout as feeling significantly easier after they consumed the extract.”
48. Oxydrene does not state that these results are merely possible, but rather promises that the results are “clinically validated” and “clinically proven” in a “double-blind placebo controlled clinical trial.” Each of these claims were made to consumers around the country, including those in California.
B. Novex’s Claims For Oxydrene Are False And Misleading
49. Novex’s claims for Oxydrene Elite are false and misleading. They deceive consumers for a number of reasons.
i. Oxydrene Is Not Revolutionary, New, Or Proprietary
50. While Novex claims that “Crenulin-RCC2” is “revolutionary” “new” and “proprietary,” it is in reality comprised entirely of garden variety commodity ingredients that have been on the market for years. There is nothing new, revolutionary, or proprietary about it.
51. The name “Crenulin-RCC2” is nothing more than a scientific-sounding list of letters and numbers that deceives and misleads consumers into thinking the product contains some special ingredient or process, not just ginkgo biloba extract and rhodiola rosea.
52. Upon information and belief, Novex must be aware that its product is not new or “proprietary” because it has never submitted a new dietary ingredient notification to the FDA for approval.
ii. Oxydrene Does Not Provide The Promised Benefits
53. Oxydrene also fails to provide any of the health benefits that Novex promises. There is no scientific substantiation for Novex’s claims. To the contrary, the available scientific evidence shows that the ingredients in Oxydrene, whether by themselves or in combination, do not provide the promised health benefits. The claims are simply false.
54. The ingredients in Oxydrene do not and cannot make people “run faster.” Nor do they “increase endurance,” “maximize aerobic power,” “improve physical performance” or “optimize muscle recuperation cycle.” Even if the ingredients could provide some exercise benefits, the dose in the product is entirely too low to see any meaningful benefit.
55. There is no scientific evidence to support Novex’s claims. In fact, the “science” section of Novex’s website exclusively discusses research regarding one of its other products and does not include any studies or discussion of Oxydrene.
56. Finally, Novex’s claim that its product is “clinically validated” through a “double- blind, placebo-controlled clinical trial” is false. A search of published literature for “Crenulin- RCC2” or a search for a blend of the ingredients listed on the supplement facts for Oxydrene Elite revealed no studies at all, let alone scientific studies that back its sweeping claims of efficacy. Upon information and belief there is no scientifically valid human clinical trial on Oxydrene that supports its claims.
57. Indeed, one supplement watchdog group recently reviewed Oxydrene Elite and concluded that the “cons” of the product included “misleading advertising which quotes a clinical trial that does not seem to exist.”5
58. Consumers that purchase Oxydrene, including those in California, never achieve the promised benefits.
C. Oxydrene Fails To Follow FDA Requirements
59. In light of the false and unsubstantiated claims that Novex makes for Oxydrene, it is no surprise that Novex also fails to meet basic FDA requirements for its products.
60. First, despite prominently claiming on its labels and in marketing that Oxydrene or Crenulin-RCC2 is “proprietary” and “new,” Novex has not filed a new dietary ingredient notification under 21 U.S.C. § 350b(a)(2).
61. Second, Novex has not submitted, and upon information and belief, does not have a GRAS submission for Oxydrene or “Crenulin-RCC2”.
62. Third, Novex has not submitted the required 30-day notification letters to the FDA to inform the FDA of the claims it intended to make for the product, as it is required to do under 21 U.S.C. § 343(r)(6)(C).
63. On information and belief, Novex has skirted these regulatory requirements because it recognized that if it informed the FDA of what it is doing, the FDA would take action to put an end to Novex’s misconduct.
VI. Novex’s Sale Of Oxydrene Harms Consumers And ChromaDex
64. On information and belief, many consumers have purchased Oxydrene in reliance on Novex’s claims about efficacy, including in California and around the country. On information and belief, based on Novex’s claims, consumers expect they will be able to run faster, have increased endurance, have greater oxygen consumption, and have faster muscle recovery. Yet the product fails to perform as advertised. It provides none of these benefits. Customers have suffered financial harm.
65. If Novex and ChromaDex compete—as alleged by Novex—Novex’s false claims have harmed ChromaDex in the marketplace, in an amount to be proven at trial. Indeed, by bringing this lawsuit, Novex has asserted that NIAGEN competes with Oxydrene and that the products are comparable. These allegations further harm ChromaDex because NIAGEN and Oxydrene are not even remotely comparable products.
66. Any consumer who has purchased or will purchase Oxydrene based on its false marketing statements and incorrect comparisons to NIAGEN is a lost customer for ChromaDex. ChromaDex is harmed by Novex’s distortion in the marketplace.
67. Unfortunately, this is not the first time Novex and its sister companies have brought this type of lawsuit to harass others. Unable to stand on its products and compete in the marketplace, Novex and its sister companies have systematically used litigation as part of their business strategy.