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The Federal Trade Commission (“FTC”) operates a single National Do Not Call Registry at donotcall.gov for both personal land lines and cell phones.  Although the FTC notes that the Federal Communications Commission (“FCC”) regulations prohibit telemarketers from utilizing automated dialers to call cell phone numbers without a consumer’s prior consent, the FTC allows consumers to “register” cell phone numbers (in addition to land line numbers) on the Registry in order to notify telemarketers that they don’t want to receive unsolicited telemarketing calls.  Once a consumer registers a particular number, it will stay on the Registry until the consumer cancels the registration or discontinues service for that number.

If a consumer receives an unwanted sales call after more than 31 days have passed since placing a number on the Registry, the FTC encourages reporting that call.  However, the FTC notes that the Registry only prohibit sales calls, meaning that companies may still make certain calls like political calls, charitable calls, debt collection calls, informational calls, and telephone survey calls.  In addition, companies may make a sales call to a consumer if they have recently done business with the consumer or received written permission from the consumer.

In light of developing technology, the FTC has seen an increase in the last several years of illegal sales calls, particularly calls with pre-recorded messages and fake caller ID information known as “robocalls.”  The FTC prohibits robocalls that promote the sale of any good or service.  However, the FTC notes that certain pre-recorded messages are permitted — e.g. purely informational calls, political calls, calls from certain health care providers, calls related to collecting a debt, and calls made by banks, telephone carriers, and charities.

To combat illegal sales calls and robocalls, the FTC reports that it has sued hundreds of companies/individuals and obtained over a billion dollars, is coordinating with law enforcement and industry groups, and is pursuing the development of technology-based solutions.  According to the FTC, companies that violate the Registry or conduct an illegal robocall may be fined up to $40,654 per call.  Thus, companies should always make sure to follow proper procedures when making sales calls, particularly pre-recorded sales calls, to consumers.

The U.S. Food and Drug Administration (“FDA”) regulates dietary supplements as food, not as drugs.  In general, dietary supplements are taken orally and contain a dietary ingredient such as a vitamin, mineral, amino acid, herb, botanical, or other substance used to supplement the diet.  The FDA warns consumers that dietary supplements may be harmful, may contain hidden or deceptively-labeled ingredients, and are not intended to treat, diagnose, cure, or alleviate the effects of any disease.  In fact, the FDA has recalled numerous products containing potentially harmful ingredients.

Although federal law requires that dietary supplements be labeled as such (either as a “dietary supplement” or with “[ingredient description] supplement”) and that products be labeled correctly and advertised fairly, the FDA does not pre-approve dietary supplements or require that they be proven safe before they are marketed and sold.  Nor does the Federal Trade Commission (“FTC”) pre-approve any advertising related to dietary supplements.  As a result, there is no requirement that manufacturers/sellers prove that their products are safe or that all advertising claims are accurate before they market or sell the products.  Instead, it is the company’s responsibility to ensure product safety and truthful advertising, and the FDA and FTC only get involved after such products have already entered the market—with the FDA regulating safety issues and the FTC regulating advertising issues.

To bolster its ability to regulate such safety issues, the FDA requires that sellers of dietary supplements report any serious adverse events reported by consumers or health care professionals within 15 days of receipt and that the FDA monitor and investigate those reports.  Likewise, the FDA monitors and investigates any adverse event voluntarily reported by consumers or health care professionals and encourages such voluntary reports to be made directly to the FDA as soon as possible.

As always, manufacturers/sellers of dietary supplements should make sure that their products are safe, properly labeled, and advertised truthfully.  In addition, companies should make sure to report any serious adverse events to the FDA within the required time frame.

Moonlight Slumber, LLC, an Illinois company that advertised its baby mattresses as “organic,” has agreed to settle FTC charges that it misrepresented or could not support these and other claims to consumers.

The FTC’s administrative complaint alleged that in marketing and advertising its baby mattresses, Moonlight Slumber misrepresented a range of claims on its website and in its packaging.  For example, the complaint charged the company represented that two of its lines of its mattresses are “organic.”  According to the FTC, however, very little of the mattresses were made from organic material.

The proposed settlement order prohibits Moonlight Slumber from making misleading misleading representations regarding whether any mattress, blanket, pillow, pad, foam-containing product, or sleep-related product is “organic,” “natural,” or “plant-based,” among other things.  The order also requires the company to have competent and reliable evidence, including scientific evidence when appropriate, to support any claims in these areas.

This is the FTC’s first case challenging “organic” product claims, and could be a signal that more are to come.  Companies using this language to market or promote their products should take note and ensure that they can support any such claims.

Fast food (hamburger fries and drink) illustrationAdvertising comes in many forms. Although menu labeling requirements may not seem like a traditional form of advertising, menus are consumer-facing and undoubtedly contain information that affect consumer purchasing decisions. Thus, it’s important for affected companies and their advertising departments to be aware of menu labeling rules and requirements and to ensure timely compliance.

For a recent discussion on the Food & Drug Administration’s menu labeling rule, which implements the nutrition labeling provisions of the Patient Protection and Affordable Care Act of 2010, and its extension of the date for restaurants and similar retail food establishments to comply, take a look at my colleague Alexander S. Radus’ recent post on the firm’s Franchise Law Update blog.

Also, for a related discussion on the FDA’s changes to the Nutrition Facts label required for packaged foods, see my earlier post on this blog.

Customer feedback is a two-way street.  On the one hand, positive customers reviews can inspire trust in potential new customers who might otherwise be apprehensive about purchasing products or services from an unfamiliar company.  Negative reviews, on the other hand, typically have the opposite effect.  As such, businesses may be tempted to stifle or “bury” negative customer feedback in order to preserve their reputation.  Businesses that engage in such complaint suppression tactics, however, run the risk attracting the ire of federal enforcement agencies.

For example, just last week, a federal court ruled that the Federal Trade Commission (“FTC”) is likely to prevail in its case against World Patent Marketing, Inc. (“WPM”), a business that has marketed and sold research, patenting, and invention-promotion services to consumers since 2014.  According to the FTC, WPM intimidated and threatened customers to prevent them from complaining and to compel them to retract complaints, often through cease and desist letters from WPM’s lawyers frivolously insisting that such conduct constitutes unlawful defamation or even criminal extortion.

The court agreed with the FTC that WPM’s tactics likely violate Section 5(a) of the FTC Act, which proscribes any unfair act or practice that “is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.”  The court explained that complaint-suppression tactics like those employed by WPM cause substantial consumer injury “because they serve to limit the flow of truthful information” about the quality of a business’s services to prospective consumers, making it “nearly impossible for consumers to make informed decisions.”

The court also found that there are no countervailing benefits to such tactics, as “existing customers do not benefit from having their complaints suppressed and prospective consumers do not benefit from being denied access to material information.”  To the contrary, suppressing customer complaints in this manner permitted WPM  “to hinder competition and harm legitimate competitors in the marketplace.”

This case highlights a need for businesses to take special care when responding to customer complaints and negative online reviews.  However damaging a bad Yelp review may be for your business, getting sued by the federal government is certainly worse.

Trademark professionals often warn our clients to be skeptical when they receive official seeming bills or notices offering pricey and unneeded trademark related services. These scams have been around for as long as I have been practicing trademark law. There are periodic attempts to combat the practice by our community with warnings (we blogged about the issue here), information (the USPTO maintains a blacklist and encourages trademark owners to email a copy of the notice and the envelope it came in to TMFeedback@uspto.gov in order to keep the list up-to-date) and lawsuits.

Whack-a-Mole Game at a CarnivalThis summer has seen another flurry of activity against the moles.

A few weeks ago the United States Patent and Trademark Office held a roundtable on fraudulent solicitations:

Numerous owners of U.S. trademark registrations, as well as applicants for such registrations, have been targeted by unscrupulous parties who extract their names from … USPTO databases and offer them services, often holding themselves out to be acting on behalf of the USPTO. In many instances, the services are never performed, or are performed in an incorrect manner that puts the registration at risk of cancellation. In addition, inflated fees may be charged for the alleged services.

Leason Ellis, a 25-attorney IP boutique firm based outside New York City, filed a lawsuit in 2012 against a scammer called USA Trademark Enterprises, which was eventually resolved by a consent decree. The firm sued again in 2013, this time against a renewal scam called Patent and Trademark Agency LLC. Last month the firm reportedly filed a new lawsuit against the similarly-named Patent and Trademark Association Inc.

If you are victimized by one of these con artists, we encourage you to take action both for yourself and for the good of the community. If you have incurred actual damages, talk to a lawyer about how to obtain reimbursement and whether you might be a good candidate for a class action lawsuit on behalf of other victims. Although your losses may not be enough to justify incurring legal fees, a successful class action lawsuit reimburses class representatives for their reasonable costs and covers the attorney fees as well. Think about it…

An interesting case has recently been filed in the United States District Court for the Northern District of Illinois regarding the advertisement of e-cigarette liquids in flavors that seem to be directed to children under the age of 18. Here, Wm. Wrigley Jr. Company (“Wrigley”) has filed a lawsuit against Chi-Town Vapers LLC (“Chi-Town”) due to Chi-Town’s use of certain trademarks and trade dress owned by Wrigley.

little boy and dog makes a bubble from chewing gumWrigley is the producer of certain candy products, including gum and mints, and has marketed its products to consumers under certain names, including DOUBLEMINT and JUICY FRUIT. Wrigley owns several federal trademark registrations under each name for use in connection with confectionery products and certain other classes of goods. The instant lawsuit stems from Chi-Town’s sale of e-cigarette liquids under the names “Double Mint” and “Joosy Fruit”. Chi-Town has marketed its product in a way that resembles a chewing gum container. Specifically, for the “Double Mint” flavor, Chi-Town uses the same green box and double arrow design that is used in connection with DOUBLEMINT gum. For the “Joosy Fruit” flavor, Chi-Town uses the same yellow box and double arrow design that is used in connection with JUICY FRUIT gum.

Wrigley’s lawsuit first claims that Chi-Town has committed federal trademark infringement and federal trademark dilution because the acts of copying the color scheme and double arrow design are likely to cause confusion among consumers and dilute the distinctive nature of its marks. Second, Wrigley claims that Chi-Town has violated federal and common law unfair competition laws by Chi-Town’s willful acts to copy Wrigley’s trademarks and trade dress. Lastly, Wrigley claims that Chi-Town has violated the Illinois Uniform Unfair Deceptive Trade Practices Act by misleading the public as to the source or origin of its products by copying Wrigley’s trade dress.

What is most interesting is the fact that Wrigley directly references the Food and Drug Administration’s concern over the advertising of e-cigarettes in its complaint. The result of this lawsuit will be telling for the development of future advertising standards when a company shows a concerted effort to market its adult products at children using names associated with “kid-friendly” items. While it may be a marketing strategy to draw upon the nostalgia of adults in marketing products, the court may determine that there is a line that cannot be crossed.

On May 20, 2016, the Food and Drug Administration (“FDA”) announced new changes to the Nutrition Facts label required for packaged foods.  The FDA’s intent was to create a new label that would make it easier for consumer to make informed food choices and would reflect new scientific information, such as the link between a consumer’s diet and chronic diseases (e.g. obesity and heart disease).

The FDA set the original compliance deadline for the new Nutrition Facts label as July 26, 2018, with an additional year for small businesses (manufacturers with food sales of less than $10 million annually).  However, on June 13, 2017, following industry and consumer group feedback, the FDA announced that it intended to extend the original compliance deadline so that it could provide manufacturers with necessary guidance, allow manufacturers additional time to complete and print new labels for their products, and minimize the period during which consumers will see both labels in the marketplace.  The FDA has not yet indicated what the new compliance deadline will be, but industry and consumer groups will certainly be watching closely.

Detailed information regarding the new Nutrition Facts label and the FDA’s changes are available on the FDA’s website.  In addition, the FDA has developed a side-by-side comparison of the original Nutrition Facts label and the new Nutrition Facts label, making the FDA’s changes easy to spot.  For example, certain items of information–“servings per container,” “serving size,” and “calories”–will now appear in bigger and/or bolder font.  In addition, the FDA is requiring that “serving size” be updated to more realistically reflect the amount of food customarily eaten at one time, that certain changes be made for certain size packages, and that “daily values” be updated to reflect new scientific evidence.  The FDA is also requiring the addition or removal of certain items of information.  For example, in light of scientific research indicating that the type of fat is more important than the amount, the FDA has removed “calories from fat” from the label entirely.  The FDA has also removed “vitamin A” and “vitamin C” but has added “vitamin D” and “potassium” in recognition of research indicating that the lack of such nutrients is associated with increased risk of chronic disease and is requiring that manufacturers now declare the actual amount of the four required vitamins/minerals in addition to their “daily value.”  As another addition, the FDA is now requiring “added sugars” be declared directly beneath the “total sugars” listing.  The FDA has also modified the list of required nutrients that must be declared at the bottom of the Nutrition Facts label and has updated the footnote to better explain the meaning of “daily value.”

After 20 years with the current Nutrition Facts label, the FDA has determined that change is in order.  How soon that change will ultimately take effect is yet to be determined.

 

When done correctly, sweepstakes and prize contests can be an effective tool for building brand awareness and gaining customers.  However, businesses that fail to abide by applicable statutes and regulations when using these promotional devices can suffer disastrous consequences, including civil enforcement actions, government inquiries, or even criminal penalties.

For instance, earlier this month, the Federal Trade Commission (FTC) announced it had sent more than $532,000 in restitution payments to victims of a vacation prize scheme.  The scheme, conducted primarily by VGC Corp. of America between 2008 and 2011, involved a promotion offering expensive vacation packages to callers who correctly answered a simple trivia question.  All callers (regardless of whether they answered correctly) were told they had won the vacation package but had to pay an “administrative fee” before they could collect.  Callers were later informed of several limitations and restrictions to the offer, but only after they had already paid between $200 and $400 in fees.

This case serves as a reminder of the need for businesses that implement these kinds of marketing tactics to have at least a basic understanding of the statutory and regulatory framework.  A number of federal laws require that certain disclosures be “clear and conspicuous” in contest promotions, including but not limited to all rules and conditions of the promotion and the odds of winning any given prize.

Additional regulations may apply depending on the particular type of contest or giveaway at issue.  Promotions in which prizes are awarded to members of the public on the basis of skill or knowledge (“skill contests”), or where the gift or prize is available to all recipients who respond according to the companies’ instructions (“premium offers”), can typically require payment in order to participate.  However, promotions that award prizes to consumers by pure chance (“sweepstakes”) cannot require payment of any kind, as whenever a sweepstakes-style contest requires a payment, it risks crossing the line into an illegal lottery.

Any businesses considering implementing these kinds of promotional devices should take the time to understand these distinctions and abide by all disclosure requirements.  If the past is any indication, the FTC and other federal agencies will continue their strict enforcement of these rules.

Rashanda Bruce writes:

Social media megaphone cartoonIn a growing world of technology, companies are employing social media platforms to attract new customers and grow their online presence.  #Hashtags and @Handles – made popular by Twitter – have proven to be effective sources for growing business.  Hashtags label words, making it easier for customers to find themed information or specific content.  Handles create unique identifiers, making it easier for companies to create and market their brand.

Celebrities also rely on hashtags and handles to market their brands.  With followers ranging in the thousands to the millions, celebrities use these social media tools to maintain and boost engagement with fans.  Additionally, celebrities rely on social media when they enter into partnerships with companies.  The partnerships typically require celebrities to reference companies on social media platforms.  These references increase a company’s awareness and provide brand validation for celebrity followers.  Recognizing this trend, some companies have started to reference celebrities via hashtags and handles – even where the celebrity and company do not have a partnership.  Although a profitable marketing strategy, companies should understand how this strategy could lead to a celebrity claiming a right of publicity violation.

The right of publicity prevents the unauthorized commercial use of an individual’s name, likeness, or other recognizable aspects of one’s persona.  Although not governed by a federal statute, the right of publicity is actionable and protected by state common or statutory law.  The right of publicity is a property right, thereby prohibiting others from using an individual’s identity for a commercial gain.  Companies who use social media for marketing purposes should take precautionary steps to avoid possible violations.

For example, companies desiring to use a celebrity’s name for marketing purposes should consult with the celebrity.  Best practice is to obtain consent from the celebrity in writing with clearly defined language and detailed rights regarding name use on social media platforms.  Where a celebrity is unavailable or unresponsive, companies should think about whether it is better to simply refrain from using the celebrity’s name.  Companies should also develop policies for employees who use social media on behalf of the company.  Establishing protocol will help alleviate concerns and risk.

Social media marketing using celebrity names can be profitable for companies when appropriately used.  However, this same marketing tool can also prove to be burdensome and costly if celebrities feel their publicity rights have been violated.  In a growing world of technology, companies need to exercise caution and good judgment when making these marketing decisions.

Rashanda Bruce is a summer associate, based in the firm’s Minneapolis office.