By Sarah Everhart
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The U.S. Department of Agriculture (“USDA”) oversees multiple federal programs promoting certain agricultural commodities, funded by “checkoffs” or mandatory assessments that producers and importers pay on the sale or import of the commodity. The assessments are used to pay for research and marketing of the commodities, and they subsidize well-known advertising campaigns, such as “Got Milk?” “Beef: It’s What’s for Dinner,” and “The Incredible, Edible Egg.” Last month, the U.S. District Court for the District of Columbia issued a decision in a case involving the pork checkoff program and the trademarks associated with the slogan “Pork: The Other White Meat.”
The Secretary of Agriculture appoints the National Pork Board (“NPB”), which is responsible for administering the pork checkoff program. In 2006, with the Secretary’s approval, the NPB entered into an agreement (the “purchase agreement”) to buy the trademarks associated with “Pork: the Other White Meat” from the National Pork Producers Council (NPPC) for approximately $34.6 million, financed over 20 years at an interest rate of 6.75%. According to the terms of the purchase agreement, the NPB agreed to pay NPPC $3 million annually for 20 years.
Pursuant to the Pork Promotion, Research, and Consumer Information Act, 7 U.S.C. § 4801 et seq. (“Pork Act”) which established the pork checkoff program, the Secretary of Agriculture is required to approve the NPB’s annual budget each year. Through that process, the Secretary has approved the $3 million payment every year since the NPB purchased the trademarks.
In 2012, the Humane Society of the United States and other plaintiffs brought a lawsuit in the U.S. District Court (originally filed against former U.S. Secretary of Agriculture Tom Vilsack) to challenge the decision to approve the NPB’s purchase of the trademarks and the subsequent payments to the NPPC. The plaintiffs claimed the Secretary’s approval of the initial purchase of the trademarks and the subsequent approval of the annual payments resulted in the use of pork checkoff dollars to influence legislation, which is prohibited by the Pork Act. The plaintiffs also claimed the sale price of the trademarks was inflated and the Secretary’s actions were arbitrary, capricious, and contrary to law. The case has an interesting legal history, check out this past post to learn more.
USDA conducted a review of the purchase of the trademarks and, based on its review, re-approved the annual payments to the NPPC. On February 1, 2018, Judge Amy Berman Jackson concluded that the Secretary’s “decision to continue to approve the annual payments based on the review of the purchase agreement that was undertaken in 2016 was arbitrary and capricious and unmoored from the facts and circumstances before the agency…” The Court noted the “fundamental problem is that the three trademarks that include The Other White Meat slogan have been declared to be obsolete, and they have been retired from active use. So their value is minimal, or at best, undetermined.” The Court’s ruling enjoins or prevents the USDA from approving any future payments to the NPPC connected to the purchase agreement for the trademarks.
The Court, however, did agree with the USDA that the plaintiffs’ challenge to the approval of the 2006 purchase agreement was untimely and that their claims concerning the approval of any annual payments made in the past were moot.
According to this recent article by Jacqui Fatka, “[a]n attorney on the case, Matthew Penzer, special counsel in the HSUS Animal Protection Litigation department, said, ‘We hope this case signals a future of greater scrutiny and accountable operation of these massively funded government programs.'”
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