This post is authored by Fox Rothschild associate Rashanda Bruce.

The National Advertising Division (NAD) announced revisions to its procedures governing advertising industry self-regulation during its Annual Conference on September 24-25. The revisions are in response to recommendations by the ABA Antitrust Section’s Working Group.

NAD is a branch of the Council of Better Business Bureaus (CBBB) responsible for monitoring the truthfulness and accuracy of all media advertising. NAD works to increase and maintain the public’s confidence in advertising by independently examining advertising claims that breach these standards. In addition to its independent review, NAD accepts consumer complaints about misleading advertisements and provides a forum for competitors to resolve advertising disputes.

The most recent revisions relate to NAD’s handling of competitors’ advertising claims that were previously recommended for modification or discontinuation. In the past, when NAD found that an advertising claim was unsubstantiated, it issued a decision recommending discontinuation or modification of the claim. NAD refused to reopen a case if an advertiser later proved its claims and wanted to resume advertisement. Under the new revisions, advertisers who believe they have developed new substantiation for their original advertising claims may now either resume use of the disallowed claim and request that NAD consider the new evidence, or the advertiser may seek NAD’s review of the new evidence prior to resuming the claims.

NAD made additional revisions to its procedures including: (1) identifying who should be contacted about a pending or closed case; (2) increasing the filing fee for challengers who have been National Partners of the Council of Better Business Bureaus for less than one year; (3) amending the construction of the Advertiser’s Statement to remove the option for advertisers to state that they will not comply with NAD’s recommendations; and (4) adding language to the section governing compliance decisions.

Laura Brett, the National Advertising Division Director, said NAD believes “the change balances allowing advertisers to make truthful, substantiated claims with the need for speed and finality in the self-regulatory process for competitive challenges.” Read the full text of revisions here.

This post is authored by Fox Rothschild associate Paul Fling:

Met with widespread support, the Music Modernization Act was signed into law on October 11, 2018. The Music Modernization Act (“MMA”) largely came about as a reaction to music streaming services’ domination of the music consumer market. In fact, streaming services such as Spotify and Pandora have more than doubled in revenue since 2015. As a result, a new system for distributing royalties was sorely needed.

So what does the MMA do? Generally, the MMA will set up a new, and (hopefully) more efficient way of paying mechanical royalties to songwriters when a musical composition is reproduced. Prior to the MMA, no central database or organization existed to facilitate music services filing for and obtaining a mechanical license to use a particular song. Because the growth of streaming services has led to a drastic increase in entities seeking mechanical licenses, the pre-MMA system no longer met the needs of songwriters/owners and streaming services alike. Essentially, services claim it is too difficult to find and pay the correct author for every song, while song owners claim services use such an excuse to avoid paying royalties.

To address these issues the MMA will set up a centralized entity to collect royalties and distribute them to the proper songwriter or owner. This group, for the time being, is called the Mechanical Licensing Collective. To participate in this system, digital services will pay the MLC and receive a blanket license allowing them to use any song without threat of infringement. In turn, the MLC will then seek to find the proper owner of songs that are played and pay those owners in accordance with the volume services have used the owner’s song.

Ultimately, musicians and music consumer services are hoping the MMA succeeds in creating an efficient and fair way of providing mechanical licenses and distributing royalties to the proper owners.

You can read the act in its entirety here.

As I previously blogged about, there is a circuit split as to whether, when a trademark owner/licensor files for bankruptcy, the licensee of the trademark can legally continue use of the mark or whether the trademark owner/licensor can reject its obligations under the licensing agreement and effectively prohibit the licensee’s continued use of the mark.  A case arising from the First Circuit, Mission Product Holdings, Inc. v. Tempnology, LLC N/K/A Old Cold LLC, involves this precise question and has made its way to the United States Supreme Court.

At the end of last week, following the submission of briefs from the parties and others, the Supreme Court decided to grant certiorari in the case.  According to SCOTUS blog, the issue presented is: “Whether, under Section 365 of the Bankruptcy Code, a debtor-licensor’s “rejection” of a license agreement—which “constitutes a breach of such contract,” 11 U.S.C. § 365(g)—terminates rights of the licensee that would survive the licensor’s breach under applicable non-bankruptcy law.”

Not surprisingly, the Supreme Court did not provide any reasoning or insight into its decision to grant cert.  Nor did it directly respond to the parties’ positions regarding a recent order in Tempnology’s underlying bankruptcy case, which Tempnology argued (and Mission Product Holdings disagreed) may have a bearing on the Court’s decision to do so.

 

 

Over the past year, including in my blog post last month, we’ve traced the progression of the Coachella/Filmchella lawsuit, which was scheduled for trial earlier this month.  Approximately a week before trial, the parties settled the case and the Court entered a stipulated order as a result.  The order contains a permanent injunction prohibiting the Filmchella defendants from using the Filmchella marks, the Coachella marks, and any confusingly similar marks and requiring them to transfer certain domain names.  Like many trademark cases, this interesting and contested one did not make it to a jury.

The Food & Drug Administration (“FDA”) has published a Consumer Update with a reminder regarding the implementation of the new Nutrition Facts label.  According to the FDA’s Update, at least 10% of food packaging already carries the new label and therefore consumers are, and will be, seeing two different versions of the Nutrition Facts label on the shelf.  As I previously blogged about, the FDA announced in 2016 that there would be changes to the label required for packaged foods starting in 2018.  However, the FDA has extended the deadline to comply until 2020 for manufacturers with $10 million or more in annual food sales and 2021 for manufactures with less than $10 million in annual food sales.

In a nutshell, the FDA’s Update describes the new Nutrition Facts label as reflecting “updated scientific information, including our greater understanding of the links between diet and chronic disease” (e.g. obesity and heart disease) and as being “more realistic about how people eat today.”  The changes that the FDA has highlighted in its Update are provided verbatim below:

1. The new label makes it easier if you or a member of your family is counting calories by putting the calories, the number of servings, and the serving size in larger, bolder type. We thought it was important to better highlight these numbers because nearly 40 percent of American adults are obese, and obesity is associated with heart disease, stroke, certain cancers, and diabetes.

2. FDA is required to base serving sizes on what people actually eat and drink, so serving size requirements have been adjusted to reflect more recent consumption data.  This way, the nutrition information provided for each serving is more realistic. For certain packages that contain more than one serving, you will see nutrition information per serving as well as per package. That means for a pint of ice cream, calories and nutrients are listed for one serving and the whole container.

3. Added sugars are now listed to help you know how much you are consuming. The 2015-2020 Dietary Guidelines for Americans recommends you consume less than 10 percent of calories per day from added sugars. That is because it is difficult to get the nutrients you need for good health while staying within calorie limits if you consume more than 10 percent of your total daily calories from added sugar.

4. Good nutrition means that you are getting the right amount of nutrients for your body to function correctly and to fight chronic diseases like obesity, heart disease, certain cancers, and type II diabetes. The FDA has updated the list of nutrients required on the label to include Vitamin D and Potassium because Americans today do not always get the recommended amounts of these nutrients. Conversely, Vitamins A and C are no longer required, because deficiencies in these vitamins are rare today, but they can be listed by manufacturers voluntarily.

5. The old label lists calories from fats, but the new label does not. The FDA made this change because research shows the type of fat consumed is more important than total fats. For example, monounsaturated and polyunsaturated fats, such as those found in most vegetable oils and nuts, can reduce the risk of developing heart disease when eaten in place of saturated and trans fat.

6. Daily values for nutrients like sodium, dietary fiber, and Vitamin D have been updated and are used to calculate the % Daily Value (DV) that you see on the label. The % DV helps you understand the nutrition information in the context of a daily diet. The footnote at the bottom of the label has changed to better explain the meaning of the % DV.

See FDA Consumer Update, available at https://www.fda.gov/ForConsumers/ConsumerUpdates/ucm620013.htm?utm_campaign=Nutrition%20Facts%20Label%20Reboot%3A%20A%20Tale%20of%20Two%20Labels&utm_medium=email&utm_source=Eloqua.

What does “natural” mean in the context of product advertising?  Consumers see phrases like “natural,” “all natural,” and “100% natural” over and over again in modern marketing.  The trouble is that “natural” may not mean what consumers expect it to mean, thereby opening companies up to claims of false or misleading advertising.

Two recent lawsuits against Pret A Manger, the sandwich company, provide a cogent illustration.  One complaint was filed by two consumers as a class action.  The other was filed by three non-profit organizations (including the Organic Consumers Association) on behalf of their members and the general public.  Both complaints assert that Pret A Manger has deceptively labeled, marketed, and sold certain bread and other baked goods as “Natural Food” when the products contain trace amounts of a chemical biocide.  According to the non-profit plaintiffs, consumers are willing to pay more for “natural” products and consumers expect such products to be free of pesticides.

This isn’t the first time the Organic Consumers Association, the Federal Trade Commission, or others have gone after companies advertising their products as “natural.”  Companies should be mindful when marketing their products using that term, and should be prepared to defend the claim with substantiation if necessary.

 

The Coachella/Filmchella trademark infringement case, which we have previously covered herehere, and here, is headed to trial in California this October.  Last week, the federal judge assigned to the case denied Coachella’s partial summary judgment motion and ruled that a jury, not the judge, must ultimately decide whether the Filmchella founder committed trademark infringement by way of his movie festival.  The standard the judge had to apply was whether a reasonable juror could find that the two festivals are not similar enough to cause confusion, which is exactly what the judge determined.

As a result, the case will head to trial and will be decided by jury verdict.  Until then, the court’s preliminary injunction in favor of Coachella, which currently prohibits the use of Filmchella, remains in effect.

 

Earlier this year, I authored a blog post about the so-called “Monkey Selfies” after the Ninth Circuit ruled that animals cannot sue for copyright infringement because, as nonhumans, they lack the required standing under the Copyright Act.  Recently, following a single judge’s request for a vote, the Ninth Circuit did not vote in favor of an en banc hearing (a full panel rehearing of the case).

Therefore, the Ninth Circuit’s earlier ruling against the People for the Ethical Treatment of Animals, Inc., on behalf of a monkey named Naruto, stands.  At least for now.

Just when we thought the unconstitutionality of the ban on disparaging and scandalous trademarks had been resolved, the United States Patent and Trademark Office (“USPTO”) is shaking things up.  As a reminder, and as previously covered on this blog here and here, there were two important rulings in 2017 related to the trademark ban set forth in section 2(a) of the Lanham Act.  First, in June 2017, the United States Supreme Court ruled that the disparaging trademark ban is unconstitutional under the First Amendment’s free speech clause and later, in December 2017, the Federal Circuit found that the Supreme Court’s ruling also applies to the ban on immoral and scandalous trademarks.

Refusing to accept the latter ruling, the USPTO has now petitioned the Supreme Court to review the Federal Circuit’s decision and to essentially reinstate the ban on scandalous trademarks.  Although the unconstitutionality of the disparaging trademark ban is settled law from the Supreme Court, the USPTO views the scandalous trademark ban as different and as not violative of the First Amendment.  Whether the Supreme Court will hear the case and will agree with the USPTO remains to be seen.

 

66567075 - ketogenic diet with nutrition diagram written on a note.Yesterday the Trademark Trial and Appeal Board (“TTAB”) affirmed the refusal by the United States Patent and Trademark Office (“USPTO”) to allow a Florida company to register trademarks containing the word “Keto.”  In its ruling, the TTAB explained that the term “keto” is descriptive for ketogenic dietary products, even when combined with the other words making up the company’s trademark registrations.  With the popularity in ketogenic dieting and products, this may serve as an informative ruling going forward.