Summary: Americans spend upwards of $30 billion a year on nutraceuticals, and the disputes over claims of a “fountain of youth” via natural supplements are age-old. In this case, ChromaDex, a nutraceutical company, files a false and deceptive advertising suit against Elysium Health, a competitor nutraceutical company, for stealing trade secrets and promoting their product as superior.
ChromaDex is a developer of dietary supplements to improve cellular function through the use of an ingredient called Niagen, marketed as Tru Niagen. Tru Niagen contains a molecule called nicotinamide riboside (“NR”), a form of vitamin B, which ChromaDex says can increase NAD+, a nicotinamide adenine dinucleotide (NAD) that according to the National Library of Medicine is linked to boosted energy metabolism and mitochondrial function, thereby reducing effects of aging. Elysium is a dietary supplement manufacturer whose product, Basis, contains NR. ChromaDex was the original supplier of NR to Elysium, but the relationship between the two companies declined around 2016, and ChromaDex began selling its own NR product, Tru Niagen, which directly competes with Basis.
Elysium sued, claiming that following the decline of its business relationship with ChromaDex, ChromaDex entered the market with the product Tru Niagen, which also contains NR. Elysium accused ChromaDex of false advertising, trade libel, deceptive business practices, and tortious interference with business relations, for allegedly making an alleged sham citizen petition with the United States Food & Drug Administration (“FDA”).
A countersuit from ChromaDex alleged that Elysium used research conducted by ChromaDex to market its Basis product, improperly obtaining ChromaDex personnel, proprietary information, and trade secrets in order to develop an alternate source of NR and gain control of the NR market. ChromaDex’s false advertising lawsuit took issue with the following claims made by Elysium:
- Elysium was the “first” to market, and the only supplement clinically proven effective.
- Elysium was materially involved in the research and science behind NR.
- The FDA has endorsed or approved its product, Basis.
- Basis was backed by clinical studies, which were originally conducted by Chromadex, and no studies were conducted with the NR manufactured by Elysium.
- Elysium holds the exclusive license for the use of NR in “dietary supplement applications in the slowing of aging and age-related diseases.”
MMR Materiality Survey Design
ChromaDex retained MMR Strategy Group to measure the materiality of Elysium’s messaging to the purchasing behavior of consumers. Dr. Bruce Isaacson, President of MMR Strategy Group, designed and conducted a survey that measured the impact of these communications. The materials surveyed included marketplace communications from the 2019 Elysium website home page, the 2017 Elysium website home page and mission page, a video posted to its Facebook page, and a social media post.
The survey measured what was implied by the messages and how they might affect consumer decisions to purchase. It used control advertisements, randomly assigning survey respondents to see either the control materials or the test materials. Survey respondents were those who had purchased, or were likely to purchase, dietary supplements to improve cellular health, provide anti-aging benefits, and boost overall health in the past 12 months, and were heavily weighted toward older adults.
Respondents were shown advertising materials and asked two open-ended questions about what they believed the marketing messages communicated or implied. They then were shown a series of statements, such as “clinical trials have demonstrated that the supplement described on the webpage is safe,” and asked whether the materials communicated these statements.
The fourth and fifth questions asked respondents whether they were less or more likely to purchase products based on the truth of the statements.
Survey Says! Were These Marketing Communications Material to Consumer Purchases?
MMR Strategy Group found that a substantial number of respondents in each group–the 2019 home page, the 2017 home page and mission statement, the Facebook page and video, and the social media post–answered that they would be less likely to purchase the Basis supplements they saw if they learned certain information in the advertisements wasn’t true. That is, they indicated that the disputed statements would be material to their purchases. For example, 57.5% of those who saw the 2019 home page answered that if they found out that the statement regarding the safety of clinical trials was not true, it would impact their purchase behavior. Once the 14.2% of control group members who gave the same answer were subtracted, the net measure–which subtracts false positives and other survey “noise”–was 43.3%.
Similarly, respondents also reported that they believed the materials they saw communicated certain messages that were disputed in the underlying litigation. For the Facebook page and video, a net of 38.9% replied that they understood the video to communicate that Elysium conducted 25 years of research on aging. For the 2017 home page and mission page, 21.9% responded that the materials communicated or implied that Elysium made regulatory filings about Basis to the FDA. For the social media post, a net 32.4% of respondents answered that the materials communicated or implied that Basis was clinically proven to slow the effects of aging. And for the 2019 home page, a net 13.0% of respondents answered that it communicated or implied that clinical trials showed that Basis was safe.
Were These Claims Material to the Purchase of Products?
Dr. Isaacson submitted a report concluding that:
- A substantial percentage of respondents indicated that the materials they were shown communicated or implied certain messages.
- A substantial percentage of respondents answered that, if they learned that a certain statement is not true, it would change their likelihood of purchasing the supplement.
- A substantial percentage of respondents answered that, if they learned that a certain statement is not true, they would be less likely to purchase the supplement.
This case went to trial following the submission, and this survey was accepted as evidence.
MMR Strategy Group Materiality surveys to measure consumer preferences again were accepted by courts. If you are involved in a false advertising or patent infringement litigation matter, contact MMR Strategy Group to discuss research design.