Advertising & Marketing

Subscribe to Advertising & Marketing

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.

Collectively, the cost of these scams add up to big money. Earlier this year, the USPTO and the Department of Justice announced that a former Wells Fargo branch manager had been convicted of laundering well over $1 million of proceeds from fraudulent offers made to trademark applicants for registration and monitoring services using companies  misleadingly named “Trademark Compliance Center” (TCC) and the “Trademark Compliance Office” (TCO).

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.

Paul Fling writes:

Fraud, deception, and unfair business practices are problems all companies and consumers are bound to come across. That is where the Federal Trade Commission (“FTC”) comes in. The FTC enforces federal consumer protection laws—in particular, laws focused on preventing fraud, deception, and unfair business practices. Largely, the FTC enforces federal antitrust and other unfair business practice laws to encourage fair competition in the marketplace and to keep consumer prices low.

U.S. Federal Trade Commission Building, Washington, D.C.Put simply, the FTC protects America’s consumers and promotes competition. For example, the FTC credits its anti-competitive antitrust enforcement efforts with improving access to health care—first, by helping prevent anti-competitive agreements that may raise health care prices, and second, by encouraging innovation in health care. Additionally, the FTC shields consumers from internet and telemarketing scams, price-fixing schemes, and even false and deceptive advertising. According to the FTC, its efforts benefit consumers in two crucial areas: their health and their economic well-being.

The FTC enforces over 70 laws. Those laws include acts that are familiar to many companies and consumers, such as the Federal Trade Commission Act, the Telemarketing Sale Rule, the Identity Theft Act, the Fair Credit Reporting Act, and the Clayton Act. However, the FTC has some level of responsibility in enforcing laws in a much wider range of areas, such as trademarks, credit reporting, internet privacy, college scholarship fraud, money lending, underage drinking, and more. With respect to advertising, for example, the FTC keeps an especially close watch on ads regarding food, medications, dietary supplements, alcohol, and tobacco—including monitoring and writing reports that assess alcohol and tobacco marketing practices.

The Federal Trade Commission Act provides the FTC with power to prevent unfair competition and business practices, seek retributions for injuries to consumers, conduct investigations, and make legislative recommendations. Consequently, the FTC enforces many of its wide-reaching laws under the Federal Trade Commission Act. A full list of laws the FTC may enforce and other information regarding FTC enforcement can be found on the FTC’s website.

Paul Fling is a summer associate, based in the firm’s Minneapolis office.

Amid the hullabaloo over the U.S. Supreme Court’s decision this week in Matal v. Tam, a much broader and potentially more significant development might be overlooked. It shouldn’t be.

The case involved Simon Tam’s band “The Slants,” and as our Elizabeth Patton wrote earlier this week, it invalidated the Lanham Act’s prohibition on the registration of disparaging marks. The crucial development that might be missed, however, is separate from the fascination over whether this decision spells the end of efforts to invalidate the trademark registrations held by the NFL for its football team in Washington, D.C. – it does. Rather, the Slants’ case should be seen for what is lurking in the opinions of the concurring justices. That is, the Tam decision marks a potent evisceration of the First Amendment’s commercial speech doctrine, ensuring heightened constitutional protection for commercial speakers.

U.S. Supreme Court Building, Washington, D.C.
Copyright: Blakeley / 123RF Stock Photo

The commercial speech doctrine has long been invoked to allow broader, more intrusive regulation by government of speech that can be characterized as “commercial.” This is the doctrine that justifies not only the Trademark Office’s regulation of trademarks, but also the Federal Trade Commission’s regulation of social media, and a local municipality’s regulation of highway billboards. The commercial speech doctrine holds that because commercial speech is more robust – that is, because it is financially better equipped to defend itself – the government may have a freer hand in regulating such speech. Under this doctrine, a government regulation of commercial speech has heretofore been subject to a lesser degree of constitutional review – the so-called “intermediate” scrutiny of the Supreme Court’s Central Hudson test.

The Tam case dramatically undermines those prior principles.

Indeed, the various opinions in the Tam case buttress a development in the law that has been building in recent years, where the Supreme Court has been much more skeptical of government attempts to regulate the speech of businesses and other commercial actors. This latest case now solidifies a five-justice majority, and potentially a larger one, that will require rigorous, full-bore, core-speech “strict scrutiny” for government regulations of commercial speech when the regulations attempt to restrict or punish non-misleading commercial speech on the basis of the “viewpoint” expressed in the speech.

In other words, there are at least five justices, and likely more, who no longer focus on whether the speech being regulated is “commercial.” Instead, these justices are willing to apply strict scrutiny – and even a presumption of unconstitutionality – to a regulation that can be characterized as “viewpoint” based.

The nose-counting for this principle looks like this:

In his separate concurrence in Tam, Justice Thomas reiterated his long-held view, one that he persistently expressed along with the late Justice Scalia, that all government regulation of commercial speech should be subjected to strict scrutiny if the speech to be regulated is not misleading. Thus, as First Amendment scholars have long recognized, Justice Thomas already stands in the camp that rejects the rationale of the commercial speech doctrine, that commercial speech is entitled to less protection under the First Amendment.

In addition to Justice Thomas, a four-justice wing led by Justice Kennedy concurred with the outcome in Tam. Kennedy, along with Justices Ginsburg, Sotomayor, and Kagan (that is, the so-called “liberal” wing of the Court) sounded a clarion call for the highest level of constitutional scrutiny on regulations that attack a person’s speech based on the speaker’s viewpoint, regardless of whether the speaker is engaged in commercial speech. Justice Kennedy wrote that “it is a fundamental principle of the First Amendment that the government may not punish or suppress speech based on disapproval of the ideas or perspectives the speech conveys.” He then said that regardless of whether the speech in question is commercial – that is, regardless of the nuances of the commercial speech doctrine – “[a] law found to discriminate based on viewpoint is an egregious form of content discrimination which is presumptively unconstitutional.” (emphasis added)

Thus, there is a five-justice majority, between Kennedy, Thomas, Ginsburg, Sotomayor, and Kagan, that will apply full First Amendment protection against a government regulation that discriminates on the basis of a speaker’s viewpoint, regardless of whether the speaker is commercial or not.

And finally, there is reason to anticipate sympathy for this view even among the rest of the justices. The portion of Justice Alito’s principal opinion that reflected only a four-justice plurality of himself, and Chief Justice Roberts and Justices Thomas and Breyer, observed that the Supreme Court has said “time and again” that the public expression of ideas “may not be prohibited merely because the ideas are themselves offensive to some of their hearers.”

These pronouncements line up to be an eight-justice majority, and potentially a unanimous Court once Justice Gorsuch’s views become known (he did not participate in the Tam case). The Court has thus made clear that the government is barred from regulating truthful, non-misleading commercial speech where the only justification for the regulation is that the commercial speech offends the sensibilities of the listeners.

This expansion of the strict-scrutiny regime into territory once thought to be an area of more fulsome government regulation puts into play all kinds of statutory regimes. Clearly, in addition to the anti-disparagement provision of the Lanham Act, that statute’s additional prohibitions against the registration of trademarks that are “scandalous” or “immoral” soon will be invalidated. (Indeed, the Trademark Office has already signaled its recognition of the likely invalidity of these provisions in briefing it submitted to the Federal Circuit last year.) As a reuslt, trademark applicants who previously were unable to obtain registrations of marks with profanity in them or marks with sexual innuendoes now likely will be able to obtain such registrations.

Similarly, the FTC’s regulatory guidance that has required media companies to disclose whether content on their websites are “sponsored” is potentially subject to strict scrutiny because these restrictions are a regulation of commercial speech based on the viewpoint of the speaker.

Other statutory regimes are equally at risk under this now more robust protection of commercial speech. Hence, states that have enacted “veggie libel” laws that prohibit advertising that criticizes a state’s agricultural products are now likely to face a presumption of unconstitutionality and a need to justify the laws under a strict scrutiny regime.

In addition, states that have enforced restrictions on companies’ truthful, non-misleading advertising will face more legal challenges. One prime example will be the states where marijuana has been legalized but the states have also restricted how those cannabis businesses may advertise their products. Those regulations discriminate against the cannabis business’ advertising based on their viewpoint. The Tam decision means that those regulations are presumptively unconstitutional.

Similarly, municipalities that have prohibited or restricted the advertising of ride-sharing or room-sharing businesses also will find it much more difficult to defend such commercial speech regulations because they enjoin speech on the basis of the speakers’ viewpoints.

The fundamental sea change that can be seen in the Tam decision is that non-misleading, truthful commercial speech is no longer the benighted stepchild of the First Amendment. Rather, such speech now is entitled to the strongest form of constitutional protection when the government seeks to regulate such speech because of the speaker’s viewpoint – that is, when the speech is targeted “based on the government’s disapproval of the speaker’s choice of message.”

The practical effect of the Tam case, when read together with the earlier line of decisions applying the highest form of First Amendment protection against viewpoint discrimination, is that businesses now have an even stronger First Amendment basis to resist government efforts to control the way they speak to the public and their customers when their speech is not misleading.

The Food & Drug Administration (“FDA”) regulates cancer drugs and devices, both for use by humans and pets. Such drugs and devices must obtain FDA approval or clearance before they can be marketed or sold to consumers, so that the FDA can ensure each product is safe and effective for its intended use. The FDA is concerned about the marketing and selling of products that have not been approved, particularly because such products may contain dangerous ingredients or may cause harm by negatively impacting beneficial treatments. Often such products are advertised as “natural” or are labeled as a dietary supplement, which may be a tip-off to consumers that the products have not been approved by the FDA.

cancer pic
Copyright: tashatuvango / 123RF Stock Photo

The FDA has identified the following advertising phrases as “red flags” that may signify a fraudulent product:

  • Treats all forms of cancer
  • Miraculously kills cancer cells and tumors
  • Shrinks malignant tumors
  • Selectively kills cancer cells
  • More effective than chemotherapy
  • Attacks cancer cells, leaving healthy cells intact
  • Cures cancer

Additionally, the FDA has stated that the following catch phrases should tip-off consumers to a potentially bogus health-related product:

  • One product does it all
  • Personal testimonials
  • Quick fixes
  • “All natural”
  • “Miracle cure”
  • Conspiracy theories

In April, the FDA sent 14 warning letters to companies that it determined were making fraudulent claims on their websites related to purported cancer treatments. Fraudulent claims are those that deceptively promote a product as effective against a specific condition—in this instance, cancer—that has not been scientifically proven to be safe and effective for its claimed purposed. According to the FDA, if the companies to which it sent letters do not comply with its warnings, the FDA may take further legal action in order to ensure that such products do not reach consumers.

The FDA requests that consumers avoid use of potentially unsafe or unproven products and to discuss any cancer treatments with their healthcare providers (or, in the case of pets, with their veterinarian and veterinary oncologist). As always, companies that market or sell products requiring FDA approval should ensure that such products are fairly advertised, are properly labeled, are effective and safe for their intended use, and are indeed approved as required.

Retailers often use product reviews to supplement advertising and drive sales.  Such use has become more prevalent as sales shift from brick and mortar stores to internet sales, where splattering a webpage with purported product reviews is easy, cheap, and grabs eyeballs.

Online product reviews
Copyright: martialred / 123RF Stock Photo

Many major online retailers offer product reviews submitted by consumers. Many online retailers will provide product reviews on their website that the company has solicited or otherwise selected for favorability. Such reviews are supposed to be authentic and accurate. While the retailer can select which reviews are displayed, the reviews should be real and the consumer can decide how much weight to give a review.  However, purported third party website reviews exist for the specific reason that they are supposed to be independent and will give the good and the bad. Several companies and individuals recently discovered that faking a third party review website will result in action from the FTC.

The website of Trampoline Safety of America purported to use experts to give safety ratings to different trampoline brands, rating those made by Infinity and Olympus Pro the highest.  However, what was not disclosed to consumers according to the FTC was that Trampoline Safety of America was operated by Infinity and Olympus Pro and the company owners.  According to the FTC the comments and videos on the website were also not authentic customer reviews, but were created by the owners of Infinity and Olympus Pro.  Following FTC action, the parties are heading toward settlement.

While such conduct is obviously improper, it is important always to disclose conflicts regarding product reviews and to only use consumer reviews or testimonials that are actually given by customers.  All factual claims, especially medical related claims, must be supported by actual data or testing.  Not only has the FTC shown a willingness to crack down on companies that violate such requirements, consumer protection lawyers and competitor companies can also be expected to bring claims and seek damages.

The short answer is that ™ is supposed to mean someone just thinks something is a trademark. ® is supposed to mean that a government trademarking authority has agreed that it could be a trademark and has issued a registration certificate.

Registered trademark in a red background
Copyright: silvia / 123RF Stock Photo

Getting your trademark registered by a government trademarking authority always takes time and money. It is fitting that at the end of the process, if you are successful, you will receive a certificate that looks almost like a graduation certificate. In the United States, the paper certificate bears a gold embossed seal. And you deserve it! You spent time, money and often had to prove to skeptical bureaucrats the worth of your brand.

If you jump through these hoops, it can be irritating to see others wrongly proclaim that their trademark is registered with the registration symbol ® when they have not. But you can only take action against this misuse if you can prove the  symbol misuser did so deliberately–that it intended to deceive or mislead the public or the USPTO. This can be tricky to show.

For example, last month the Trademark Trial and Appeal Board dismissed an opposition in which the owners of two similar trademarks (FACETS versus PHACET) fought over which one used and had the right to register its trademark for software. The company applying for  the FACETS registration had successfully registered FACETS for several types of services but had not yet been granted a registration for the trademark in connection with software (the trademark had been registered a number of years ago for software but that registration had expired). Despite that, it used the registration symbol with the trademark In SEC filings to describe not only its services (correctly, since they had registered) but also its software (allegedly fraudulently because FACETS was not currently registered for software).

SEC filings are sworn statements but that’s not enough to make them evidence of symbolic fraud in the TTAB’s eyes, at least in this case.