A US district court judge prohibited Athena from marketing or selling RevitaLash in March last year after its competitor Allergen, claimed the company had an ‘unfair competition on the marketplace’ by marketing its product in the way it did.
The judge overseeing the appeal noted that Judge James V. Selna had erred by imposing a nationwide injunction on Athena's products after granting summary judgment at the time. Because the case involved a violation of a state law, an injunction that applies outside of California violates the U.S. Constitution's Commerce Clause.
Thus, the Court of Appeals ruled the original injunction to be based exclusively on a violation of California state law and that the case had no bearing on international sales of the product.
"Neither the California courts nor the Legislature are permitted to regulate commerce entirely outside of the state’s borders. To do so would violate the Commerce Clause, which precludes such extraterritorial application of state law," it ruled.
Nature of the case
Allergan's own product, Latisse is approved by the FDA as a prescription drug to treat a condition that affects eyelash growth. Its' suit against Athena alleged that RevitaLash, which contains a similar ingredient to Latisse, was being sold as a drug in California without government approval.
When Athena argued that it marketed RevitaLash only as a cosmetic, not a drug, the Federal Circuit pointed to statements made by the brand that the product improves the health and strength of eyelashes.
At the time the court had granted summary judgment to Allergan, ruling RevitaLash was being marketed as a drug, thus violating the state unfair competition law because the product did not have government approval.
Months later in appellate briefs Athena argued that the California law simply incorporates provisions of the federal law and that Allergan's suit interferes with the FDA's authority to regulate products. The FDA has not taken any action regarding RevitaLash.
It also emphasized that the District Court did not make any findings that the product was unsafe or defective at the time.
The judge has now agreed with Athena that the DC went too far in issuing a nationwide injunction for a violation of state law and ordered that the injunction be limited to California.