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Federal Judge Sides with Schulman Bhattacharya in Ongoing False Advertising Dispute, Holds Pharma Companies in Contempt for “Blatant” Violations of Permanent Injunction

Jul 31

In a decision issued yesterday, Judge Theodore D. Chuang of the United States District Court for the District of Maryland ruled in favor of Schulman Bhattacharya’s client, ExeGi Pharma, LLC, holding its competitors Alfasigma USA, Inc. and VSL Pharmaceuticals, Inc. in contempt of the Permanent Injunction entered last year aimed at halting false advertising of the probiotic medical food VSL#3. This is the latest round in the ongoing legal battle over the highly successful, proprietary probiotic formulation invented by Schulman Bhattacharya’s client Professor Claudio De Simone, which had been previously sold under the brand name “VSL#3” but is now sold in the United States through ExeGi Pharma as “Visbiome.” Following a decisive jury verdict in November 2018 in which ExeGi and Professor De Simone together were awarded more than $18 million in damages, Judge Chuang entered the Permanent Injunction prohibiting Alfasigma from linking the current VSL#3 product with the original De Simone Formulation (now Visbiome), including by citing the more than 70 clinical studies that were, in fact, performed only on the De Simone Formulation.

Notwithstanding the clear directive in the Permanent Injunction for Alfasigma to refrain from citing the clinical history performed using the De Simone Formulation as applicable to VSL#3 or otherwise equating the current VSL#3 product with the De Simone Formulation/Visbiome, Judge Chuang found that Alfasigma and VSL Pharmaceuticals have persisted in violating the injunction via advertising messages on Facebook, in YouTube Videos, on the VSL#3 website, and in a letter from VSL Pharmaceuticals’ CEO. He concluded that such violations “were designed to create a false continuity between Italian VSL#3 and the De Simone Formulation so that VSL#3 could keep its prior customers and potentially poach new ones,” causing harm to ExeGi and Professor De Simone. Judge Chuang further held that “customer confusion over whether VSL#3 still contains the De Simone Formulation has caused ExeGi to lose business because customers who rely on the De Simone Formulation continued to purchase VSL#3 for a period of time until they realized that Italian VSL#3 no longer contained that formulation.” Judge Chuang stated that “certain violations, such as the September 2019 Facebook statements, were blatant violations of the Permanent Injunction, and other violations, such as the claims that VSL#3 is ‘clinically proven’ persisted over an extended period of time.” He found that the “number of different violations demonstrates that [Alfasigma and VSL Pharmaceuticals’] efforts to avoid violations of the Permanent Injunction were notably deficient.”

Judge Chuang ordered Alfasigma and VSL Pharmaceuticals to promptly remove all of the offending statements from their marketing materials and reimburse ExeGi for its reasonable legal fees incurred in bringing the contempt motion. He also cautioned the defendants that further violations of the Permanent Injunction “will likely result in more severe sanctions.”

Commenting on today’s actions, Schulman Bhattacharya’s managing member, Jeremy W. Schulman, stated: “We are very pleased with the Court’s rulings and proud of the continuing success we have had defending the integrity of Professor De Simone’s important scientific invention. We will continue to vigorously protect Professor De Simone and ExeGi’s legal rights and ensure that false advertising of the VSL#3 product is brought to an end permanently.”

Judge Chuang’s decision and order issued July 30, 2020 can be found here. A Law360 article about the contempt citation against Alfasigma and VSL Pharmaceuticals can be found here.

Schulman Bhattacharya is an international law firm based in the Washington, D.C. area focused on resolving the most complex and challenging commercial disputes facing its clients— through litigation, arbitration, mediation, and informal negotiation. The Firm’s attorneys have vast experience representing clients in nearly every industry sector. The Firm represents companies of all sizes, locally, regionally, nationally, and internationally, and it represents individuals with valuable commercial and personal interests to protect.