5-Hour Energy under pressure to reveal valuable ‘trade secret’


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Picture Credit: Austin Kirk/Flickr
Picture Credit: Austin Kirk/Flickr

Related tags United states

Oregon attorney general Ellen Rosenblum is demanding that America’s top-selling energy shot 5-Hour Energy surrender unredacted documents on precise ingredient levels.

Rosenblum initially filed a Civil Investigative Demand (CID) for information on the drink’s formulation last January under Oregon law, as part of a 33-state investigation into its safety and advertising, where her state is part of a five-state executive committee.

But she claims that data provided thus far by the brand has been redacted, and that her demand for unaltered documents has been “steadfastly refused”.

Thus, Rosenblum filed a petition against 5-Hour brand owner Living Essentials on December 23 in Multnomah County Court in Portland, Oregon, seeking to force the company to provide further information (including specific ingredient amounts) to the state’s health fraud unit by February 15.

Last April the company provided the unit with data on ingredients used (detailed in the article here​) and amounts of caffeine and the limited range of other ingredients, but Oregon’s chief law officer is not satisfied.

Rosenblum's petition seeks to enforce Oregon's earlier civil investigative demand for information over potential violations of the state's Unlawful Trade Practices Act (UTPA).

Oregon keen to probe ‘no crash’ claim

She is demanding further information to probe 5-Hour’s claim that drinkers experience ‘no crash’ after using 5-Hour, and last April Oregon assistant AG David Hart (who is leading the state investigation) said that omission of the amounts “makes it difficult, if not impossible, to evaluate the strength of the experts’ opinions”.

But 5-Hour fears that disclosure of ingredient levels to the Oregon Justice Department (and by extension, the 33 US states party to its suit) raises the risk of disclosure and public information requests under the US Freedom of Information Act that could benefit industry rivals.

This is despite the fact that 5-Hour negotiated a confidentiality agreement with the Oregon DOJ last February 26, and Rosenblum insists the agreement gave the brand no right to amend documents.

She says she has reason to believe that 5-Hour made misleading statements about the drink in relation to the ‘no crash’ claim, a ‘Doctors Recommend’ advertising campaign and the drink’s suitability for children.

All three heads fall potentially fall under the Oregon Unlawful Trade Practices Act, and Rosenblum claims the doctors’ campaign incorrectly implied that 73% of 3,000 doctors surveyed nationwide recommend 5-Hour by name.

Moreover, despite an American Medical Association (AMA) support for a ban on marketing stimulant drinks to under 18s, Rosenblum said a statement on 5-Hour bottles – ‘Do not take if you are pregnant or nursing, or under 12 years of age’ – implies the product is suitable for adolescents aged 12-18.

5-Hour Energy slams 'scattershot fishing expeditions'

5-Hour Energy was unavailable for comment today, but responded on December 27 with a petition of its own (seen by BeverageDaily.com) to set aside, abate or modify Rosenblum's investigative demand.

Slamming Oregon DOJ's repeated "scattershot fishing expeditions"​ for more information every time a new news article "attacks or questions energy products"​, Innovation Ventures (Living Essential's holding company) said the original CID did not request highly confidential formula information and that it did not anticipate this kind of disclosure when it signed the confidentiality agreement.

Calling for the court to set aside the CID and/or extend the deadline for reply past December 29, 5-Hour said it was prepared to supply Oregon with the same information it had supplied Ohio (the lead state in the multi-state investigation) and said it had been forced to respond to multiple subpoenas across multiple states "just to preserve its rights"​, a costly and time consuming process.

The dispute dates back to early last year, and on June 13 2013 Innovation Ventures (Living Essentials’ holding company) filed a complaint against Rosenblum in Marion County Circuit Court in Oregon.

Judge 'shocked' by court's inability to protect brand

The firm sought a declaration that specific amounts of ingredients in 5-Hour are a trade secret that cannot be disclosed by the justice department, and issuance of a protective order that it need not provide the body with these amounts.

On September 23 Circuit judge Geyer denied 5-Hour declaratory relief under Oregon law (on the grounds that he could not overrule state statutes), but said he was "frankly shocked that the court does not have discretion to issue a protective order".

Innovation had argued that precise ingredient amounts are not necessary for Oregon assistant AG Hart’s investigation, and that full disclosure was “wholly unnecessary and unfair”​, also that ‘no crash’ clearly refers to ‘no sugar crash’ on labels and advertising since 5-Hour contains no sugar.

“There is no need to look at the exact amount of ingredients in the energy blend to confirm this simple truth,”​ Innovation Ventures said in its June filing, where the line of argument reflects that of its December 27 petition.

Nine million bottles of 5-Hour Energy are sold every week, and the company claims its proprietary formula is “one of Living Essentials’ most valuable assets”.

Oregon DOJ spokesman Michael Kron told BeverageDaily.com that the department did not comment on "ongoing matters"​, but supplied us with copies of its legal filings.

Related topics Regulation & safety Soft drinks

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