CAFC Judges Question Differences Between 'Adapted' Foods and Medicaments
The U.S. Court of Appeals for the Federal Circuit held oral argument in importer Nutricia's customs suit on the classification of various of the company's medical foods with Judges Sharon Prost, Richard Taranto and Leonard Stark probing Nutricia's claim that its products are "medicaments" and not "food preparations." During the argument, which was held on Oct. 8 in Boston as part of the court's efforts to schedule arguments outside Washington, D.C., Taranto stressed that the case largely turns on the definition of the term "dietetic" (Nutricia North America v. U.S., Fed. Cir. # 24-1436).
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The case is an appeal of the Court of International Trade's decision finding that four of Nutricia's branded medical foods -- MSUD Lophlex LQ, Periflex Infant, Periflex Junior and Ketocal Liquid -- fall under Harmonized Tariff Schedule heading 2106 as food preparations rather than heading 3004 as medicaments (see 2312050028). Central to the case is Chapter 30's note 1(a), which excludes foods, such as "dietetic, diabetic or fortified foods," not intravenously administered from classification under any chapter 30 heading.
During argument, Taranto pressed Amanda Berman, counsel for Nutricia, on her definition of dietetic. Berman challenged the government's definition of the term, which said "dietetic" means "food adapted for special use." When Taranto asked what the word "adapted" means, suggesting it could mean taking a food, such as an apple, and adding to or removing something from it, Berman distinguished foods that been modified, such as those in the judge's example, and items "specifically manufactured" or "compounded in a lab."
Prost picked up on this point, noting that there are items that are "dietetic" or "diabetic" foods, yet are used for the prevention or treatment of disease. In response, Berman said that diabetic foods don't prevent the disease. Rather, they are foods "adapted for a particular health benefit," distinguishing such foods from insulin, which would be a medicament under Chapter 30 despite being used to address diabetes.
When pressed to present the government's definitions of the line between medicaments and foods used as "nutritional therapies," DOJ attorney Luke Mathers said dietetic foods are those that have been "specially formulated for the management or treatment of a particular condition." He said a "prime example" of such a food is a diabetic food in which the sugar has been removed.
Mathers added that the court need not make Berman's suggested distinction between "adapted" foods and medical foods synthesized in a lab, primarily because "there's nothing in the text of note 1(a) to suggest that the manner of preparation matters." To this, Taranto asked if adapted and medical foods could be distinguished based on whether the food in question falls under the FDA regulatory regime for medical foods. Mathers said in response that it wouldn't change the analysis, since the FDA's definition of a medical food "is essentially the same as what's covered by a dietetic food."
Throughout the argument, Taranto also pressed Berman on her methodological approach, which involved a claim that the court had to square "competing" exclusionary notes found in Chapters 21 and 30. The judge said he didn't see the notes as competing, since the note in Chapter 21 says the chapter isn't invoked if Chapter 30 applies. In response, Berman argued that the notes are in conflict, since the note in Chapter 21 explicitly says products made solely from nutritional substances, including yeast, can fall under Chapter 30 as medicaments.
The attorney said the example of "yeast put up as a medicament is fatal to the government's case," adding that there are "competing notes in the sense that" Chapter 30's note 1(a) doesn't specifically cover medical foods by name.
Taranto also pressed Berman and Mathers on whether both sides are properly giving "dietetic" a meaning that's "most akin" to the meaning of the other terms found in note 1(a). Mathers said he thinks the government wins "either way," that is, if dietetic is interpreted "more akin to diabetic and fortified foods," or if it's given its broader dictionary definition.
In response, Taranto said this distinction "might be a crucial think," noting that Nutricia's distinction between adapted foods and medicaments "has a certain intuitive appeal." For adapted foods, you start with a "normal food and maybe change it a little," and on the other hand, "you create Soylent Green," the judge quipped.
Prost asked the government, what if the court sides with Nutricia, are there concerns that a "swath of goods that the government has classically not treated under" Chapter 30 would then fall under this chapter? In response, Mathers said this certainly could be an issue, pointing to items such as protein products where importers could argue that it's a "nutrient-enhancing product" and thus a medicament.
The court also pressed the parties about Nutricia's alternative argument that its goods fit under secondary subheading 9817.00.96 as nontherapeutic "articles" for the "handicapped." In response, Mathers argued that this provision isn't broad enough to cover "nutritional preparations."