Advertising & Marketing

What comes to mind when you hear the term “LifeProof”? Does it immediately make you think of something that protects from all of life’s hazards or does it merely suggest that something can withstand various accidents? That is what the Ninth Circuit in California is deciding in Seal Shield LLC v. Otter Products LLC, et. al. after hearing oral arguments on the topic in January. The issues central to the case hammer home the importance of using your trademarks in the right way—as a trademark identifying a brand—or a source—and not as term that merely describes the product.

In this case, Seal Shield and Otter Products both claim rights to the same term—LIFEPROOF. Seal Shield argues that it was the first to use it, so it should have the rights. Otter Products counters and argues that Seal Shield did not use it in the right way—that Seal Shield only used it to describe the product and not as a trademark.

Copyright: 91foto / 123RF Stock Photo
Copyright: 91foto / 123RF Stock Photo

Seal Shield sued Otter Products and TreeFrog Developments (which was acquired by Otter Products) after TreeFrog Developments obtained a federal trademark for LIFEPROOF in 2010. Seal Shield brought a suit in 2013 and argued that it had senior rights to the name LIFEPROOF and requested that the court cancel Otter Products’ trademark as a matter of law. In ruling in favor of Otter Products, the district court held that as a matter of law Seal Shield did not have proprietary rights to the LIFEPROOF name because the way Seal Shield used the name (as a tagline or slogan with its Klear Kase protective cases) was merely descriptive.

Seal Shield appealed the district court decision arguing that its use of LIFEPROOF is not merely descriptive but is suggestive. Specifically, Seal Shield argued that LIFEPROOF falls short of explicitly describing the various features that are included under the mark LIFEPROOF and it takes a mental leap to associate the word LIFEPROOF with a protective case that protects from all of the elements and human error, meaning the mark is suggestive. Seal Shield also argued the mere fact that the USPTO granted TreeFrog Developments federal registration of LIFEPROOF demonstrates that such mark is protectable.

For its part, in addition to a myriad of other arguments, Otter Products contends that Seal Shield’s use of the LIFEPROOF mark is merely descriptive and that it failed to show any consumer evidence of secondary meaning—such as a survey showing that consumers associate their use of LIFEPROOF with the goods of one maker rather than merely describing the product. And to address the seeming inconsistency, Otter Products contends that Seal Shield cannot rely on Otter Products’ federal registration as evidence that the mark LIFEPROOF is distinctive because, as Otter Products argues, it uses the mark as a trademark and not merely to describe the goods.

The court will rule on this appeal later this year. You may think it’s counter-intuitive for Otter Products to argue that Seal Shield’s use of the LIFEPROOF mark is merely descriptive while at the same time maintaining a federal registration for that same mark that is inherently distinctive and suggestive; however, this demonstrates that the way you use mark is a key component on whether a mark will obtain trademark protection.

The FTC recently cracked down on Breathometer, Inc., the maker of an app-supported smartphone breathalyzer, for false and deceptive advertising.

The advertised purpose of the product is to keep people safe—to let someone know when he/she has had too many to drive, and provide an estimate on when sobriety will return.  The device, which connects to an app on a smartphone, allows the user to blow into it and receive a blood-alcohol content reading on their phone.  The accuracy of the reading, however, is in dispute – and it appears the advertisements may have overstated the accuracy of the BAC reading.

In its advertising, Breathometer touted “FDA registered, Law enforcement grade accuracy” and “‘police grade’ precision.”  The advertising went on to claim that the accuracy was proven by “government-lab grade testing.”  According to the FTC’s complaint, these claims were not supported, or outright false.  The FTC alleged that the product was not adequately tested for accuracy and that the company was aware that the device regularly understated users’ BAC – in other words, informing drunk people that they were sober to drive.

Now a settlement with the FTC has imposed strict restrictions on the conduct of the company and its founder going forward.  The company and its founder are prohibited from making claims regarding the accuracy of the product without the support of specifically outlined testing demonstrating it “meets the accuracy specifications set for evidential breath alcohol testers that have been approved by the Department of Transportation.”  In fact, without such testing support, the company cannot advertise that the product detects BAC at all, and is prohibited from “re-enabling the Breathometer app’s breathalyzer functions” which were previously shut down.

In addition, the company must give a full refund to everyone who bought the product – wiping out approximately $5.1 million in revenues.  The company is required to specifically notify its customers by email of their right to a refund, and post refund information on its website.

Registering your brand name as a trademark domestically or internationally can be a long, confusing process involving obscure governmental agencies requiring various fees at seemingly random intervals. Some of these demands are legitimate (International Bureau of the World Intellectual Property Organization notification that payment of a 2nd part fee is due in Swiss francs): but many others are NOT (WPAT s.r.o. invoice for 2738$ “on or before”, 2798$ “after”).

These solicitations arrive because the process of registering a trademark creates a public record. This means that anyone who infringes a registered trademark is not allowed to complain they did not know about the trademark but it also lets potential scam artists know that you have a trademark you care enough about to spend money registering.

But be careful not to be misled by the flurry of official looking invoices! Like this one:

Don't pay this invoice!
Don’t pay this invoice!

The United States Patent and Trademark Office warns against such scams, listing a number of examples (the above image was taken from their website).

If you have hired a trademark attorney to register your brand name for you, you need never pay any of the invoices yourself. Trademark attorneys will pay the legitimate ones on your behalf. In the United States and in most other countries, legitimate communications will be directed only to the trademark attorney and not to the trademark owner. When in doubt, just forward the communication to your trademark attorney.

If you are trying to negotiate the process yourself or just want to be able to spot wrongdoers, here is our list of red flags:

  1. Who dd it come from? Scammers like to use slight deviations from the correct names of the legitimate agencies. For example instead of “The United States Patent and Trademark Office”, the notice will come from entities such as the “Trademark and Patent Office” or the “United States Trademark Registration Office”.
  2. Where dd it come from? The real United States Patent and Trademark Office is located in Alexandria, Virginia. Beware of solicitations directing funds be sent to an address in New York or Philadelphia Pennsylvania. And, especially not Slovakia!
  3. Read the fine print. Some of the communications helpfully state that they are not legitimate (in a tiny difficult-to-read font, embedded in the middle of a long paragraph with otherwise unalarming factual information): “THIS PUBLICATION IS AN ELECTIVE SERVICE WHICH NEITHER SUBSTITUTE THE REGISTRATION NOR PROLONGS THE VALIDITY OF THIS TRADEMARK OR PATENT WITH U.S.P.T.O.”
  4. Watch the grammar! Typos, grammar and spelling errors are common in these types of scams. See the example in our red flag number 3…
  5. Check the website address. The real United States Patent and Trademark Office operates from the address USPTO.gov. Addresses such as patenttrademarkoffice.org, on the other hand, take you to a website that explains, in the “About Us” tab: “Headquartered in New York City, the Patent Trademark Office is the nation’s premier Trademark and Patent renewal service.” (ha!). Likewise, World Intellectual Property Organization (WIPO) operates from the address WIPO.int. Be suspicious of any address ending in a .com, .org or .us.
 Don’t fall prey to these confusing communications!

 

 

Sunscreen
Copyright: farakos / 123RF Stock Photo

Earlier this month, the Federal Trade Commission (“FTC”) issued a decision against California Naturel, Inc. related to its advertising of “all natural” sunscreen on both its website and the product packaging itself. On its website, California Naturel was not only advertising its sunscreen as “all natural” but was describing the sunscreen as containing “only the purest, most luxurious and effective ingredients found in nature.” The FTC found that this advertising conveyed that California Naturel’s sunscreen contains only ingredients that are found in nature.  But because California Naturel admitted that eight percent of its sunscreen formula consists of a synthetic ingredient, the FTC determined that California Naturel’s advertising constituted false and misleading advertising and that such advertising is likely to materially impact consumers’ purchasing decisions.

In response to California Naturel’s arguments, the FTC decided that the product’s ingredient list and the disclaimer on California Naturel’s website were insufficient to cure the deceptive advertising. With respect to the ingredient list, the FTC noted that the synthetic ingredient was buried within a list of over 30 ingredients and that nothing identified the ingredient at issue as synthetic. With respect to the website disclaimer, the FTC found that it was not prevalent enough given its location at the bottom of the website—particularly in contrast to the prevalence of the “all natural” advertising elsewhere on the website and on the product packaging itself.

Under its authority to issue a remedy for false and misleading advertising, the FTC issued an order prohibiting California Naturel from advertising its products as “all natural” or making other similar representations. More information about the FTC’s decision against California Naturel can be found here.

Ever been skeptical of symptom relief claims made by medicine made of things like crushed bees or poison ivy?  It seems you are not alone–the FTC is skeptical too, and a recent FTC announcement may leave marketers scrambling to change the claims made on homeopathic drugs.

Homeopathy, dating to the 1700s, is based on the theory that disease symptoms can be treated by minute doses of substances that produce similar symptoms when provided in larger doses to healthy people.  While many people believe in these remedies, the efficacy claims for these products are generally not supported by modern scientific methods and are generally not accepted by modern medical experts.

Last week, the FTC released an Enforcement Policy Statement on Marketing Claims for OTC Homeopathic Drugs.  In the statement, the FTC provided specific guidelines for marketing the efficacy of homeopathic remedies.  The FTC acknowledged it has historically not pursued many enforcement actions against homeopathic marketers, but stressed that the same rules apply to marketing homeopathic drugs as other health-related products, and indicated its lax enforcement may be a thing of the past.

Copyright: <a href='//www.123rf.com/profile_kerdkanno'>kerdkanno / 123RF Stock Photo</a>Generally, an advertiser is required to have adequate substantiation for any claim, but the substantiation that qualifies as “adequate” is more demanding for health-related claims.  For health-related claims, an advertiser must have “competent and reliable scientific evidence” to support the claim.  And for claims that a product can treat or prevent a disease or its symptoms, the FTC has required support in the form of well-designed human clinical testing.  This is a real problem for homeopathic drugs—most have absolutely no scientific support for their treatment claims (let alone the human clinical testing required).

So what is a marketer to do – how can you identify what the homeopathic drug supposedly treats without saying (expressly or implicitly) that it is effective at doing so?  After all, for the vast majority of homeopathic drugs, the case for efficacy is based solely on traditional homeopathic theories and there are no valid studies using current scientific methods showing the product’s efficacy.  So just making a treatment claim could violate the regulations.  The answer according to the FTC: disclaimer, disclaimer, disclaimer.

The FTC is recommending that homeopathic drug marketing include disclaimers that consist of at least two components: (1) a statement that there is no scientific evidence that the product works and (2) a statement that the treatment claims are based only on theories of homeopathy from the 1700s that are not accepted by most modern medical experts.  And it is not enough to put these disclaimers in the fine print.  As stated by the FTC any disclaimer “should stand out and be in close proximity to the efficacy message; to be effective, it may actually need to be incorporated into the efficacy message.”  The FTC also warns against marketers attempting to spin this into a positive; says the FTC: “Marketers should not undercut such qualifications with additional positive statements or consumer endorsements reinforcing a product’s efficacy.”

The FTC’s new guidance helps define clear rules and puts marketers on notice of the pitfalls of marketing homeopathic products.  If in doubt about whether a advertising message is misleading, consider consulting an attorney and obtaining consumer surveys to ensure the advertisement is clear and not misleading.

This week eight of the nine states voting on the issue said yes to cannabis decriminalization but the USPTO continues to say no.

Trademarkland takes a hard line against drugs, refusing to register any trademarks linked to cannabis. If anything, it has gotten even stricter on this issue over time. The law animating the USPTO, the federal Lanham Act, bars the registration of trademarks that are connected to “unlawful” uses.

While the USPTO seemed to invite companies to apply to register these types of trademarks in 2010 when it created a new trademark category: “processed plant matter for medicinal purposes, namely medical marijuana”, it quickly reversed course. Trademarks for marijuana, which is still illegal on the federal level (under the Controlled Substances Act), can’t be federally registered.

This summer the board overseeing the USPTO decided it could conclude from photographs submitted by a Washington dispensary that its “Herbal Access” trademark was being used for illegal services despite the fact that the owner never mentioned pot in his application. Then, a few weeks ago, the board issued another ruling refusing to register “JuJu Joints” as a trademark for marijuana vaporizers.

Trademarkland has jurisdiction over the entire United States but obeys its own set of rules.

When is a trademark not a trademark?  When it no longer performs the source identification function for which it was adopted.  In a recent decision of the Trademark Trial and Appeal Board of the United States Patent and Trademark Office, the Board cancelled the trademark registration (and refused a currently pending application) for the logo “I♥DC” covering various merchandise ranging from clothing to tote bags to stuffed animals.

I (Heart) DC 1

I (Heart) DC 2

As grounds for the cancellation, the Board found that the mark no longer served its purpose of identifying the source of the goods, but instead was perceived as an expression of enthusiasm rather than a source indicator for the goods. In finding the wording no longer functioned as a trademark, the Board relied upon widespread ornamental use of the logo by third parties for a long period of time and evidence showed that consumers associated the slogan “as an expression of enthusiasm, affection or affiliation with respect to the city of Washington, D.C.” – even despite extensive use of the slogan on product hang tags (traditional indicators of trademark use).  Here the Board went so far as to recognize that many other “I ♥…” expressions also fail to function as a trademark (but instead simply imply an expression of enthusiasm).

Of course, the trademark owner did herself no favors, admitting that she did not create the design, that she was aware of other third party vendors using the slogan when she originally filed; that her rational for filing the application was to prevent copying of the products affixed (not necessarily the trademark); and when asked what the logo meant, she responded that “they love D.C” and that the customers buy the goods “to remember that they’ve been there”.  All candid responses, and all overwhelming support for a finding that “I♥DC” failed to function as a trademark.

Curiously, while no love exists for I♥DC trademarks, some 200 miles up I-95, we find ourselves in an alternate universe, where I♥NY has for decades stood as the focal marketing piece and perhaps one of the most famous brands associated with the State of New York.  In fact, the brand is so well known, aggressively enforced, and strategically licensed, that its owner, the New York State Department of Economic Development has its own website dedicated to the brand and licensing opportunities.  What a difference!

Although the facts overwhelmingly tipped against I♥DC (and its individual owner), the decision raises questions about “I♥[insert geographic location]” trademarks generally.  Don’t they all act as an “expression of enthusiasm, affection or affiliation with respect to the [insert geographic location]” – New York being no different?  And apparently affixing the logo onto hang tags is not enough to show “trademark use”.  So where is the line?

While the New York State Department of Economic Development may withstand challenges based on historic policing efforts, use on a wide range of goods and services, and developing an entire licensing program; owners (public and private) with smaller budgets and shorter histories likely face the same dangers and attacks as I♥DC.  Police your mark, keep ornamental use to a minimum and have a documented history of how you use your mark as an indicator of source of the product, not just as a cute slogan that you love a particular city.  And for those looking to enter the “I♥[insert geographic location]” branding market (whether entrepreneur or local government), check the registry, investigate your marketplace for preexisting use, and study this case for what to do (and not to do) in your use of the brand – as opportunities exist as both first adopter or simply on the coattails of prior owners failing to treat their brand as anything more than a slogan showing “enthusiasm” for the location.

The Food and Drug Administration recently invited public comment on an updated definition of what constitutes a “healthy” food.  An updated definition is not merely fodder for food policy gurus.  This will have a very real impact on advertisers and consumers alike because the new standard will set the stage for what brands will label and advertise as “healthy.”

What is “healthy” under the current definition—which reflects decades old views on nutrition—may no longer be “healthy” after the FDA’s final determination. Perhaps that is a good thing.  Take, for example, that some sugary breakfast cereals and pastries could be considered “healthy” under the current guidelines—which focus on overall fat content rather than sugar content—but things like fresh avocados and nuts are not considered “healthy” because of their fat content.

Copyright: dole / 123RF Stock Photo
Copyright: dole / 123RF Stock Photo

The FDA’s new guidance will likely force many brands to rethink and retool how they advertise their previously “healthy” (but suddenly not “healthy” anymore) products. On the flip side, the new definition could well breathe new life into a languishing product or push emerging products to even greater market prowess that will be suddenly considered “healthy” by the FDA.  According to the FDA, many consumers make their purchasing decisions in 3-5 seconds.  So, by that data, most folks are not loitering in the florescent lights of a big box supermarket comparing nutrition tables.  While the details may not be a focus to consumers, a big catchy label clearly stating that something is “healthy,” could make the difference between buying Brand X or Brand Y.

Perhaps most importantly, brand owners and the public will have a say on the final definition of “healthy.” The FDA is currently seeking input on a variety of questions about what “healthy” should mean – both from a nutrition standpoint and from a consumer’s understanding standpoint.  The public comment period opened on September 28, 2016, and comments can be submitted through the FDA’s website.

It makes complete sense that a brand owner shouldn’t be able to lie to the Trademark Office when it tried to register its brand name as a trademark. Let there be consequences for making false statements! But it is not always that easy to avoid the fraud cow pie.

For example, when you file an application to register a trademark you are supposed to list the goods and/or services associated with that trademark. Cow pie alert!

In 2002, a medical device company stepped in the cow pie when it filed a required declaration stating it had used its brand name on “neurological stents and catheters” but it had in fact only been using the name on catheters. Penalty: its trademark registration was cancelled, even though the company attempted to come clean by amending it to delete the offending language (“stents”).

For the next six or seven years, fraud was all the rage.  Litigants brought successful cancellation actions — or threatened to bring them — against all sorts of trademark registrations, triumphantly arguing fraud had been committed against the Trademark Office. Suddenly there were cow pies everywhere.

In 2009, a higher court tried to clean the field up, emphatically stating that proof of intent to deceive is required to establish fraud against the Trademark Office.

You would think that would put an end to the mess, but no. Fraud is still alive and well as a potential cow pie. The Trademark Office is willing to, and often has, concluded that some sneaky strategic behavior by brand owners can amount to an intent to deceive. And litigants are still trying to prove that trademark applicants intended to deceive the Trademark Office.

Just this month, a trademark registrant escaped stepping into the pie (but no doubt had to spend a pretty penny doing so).

A car dealership using its brand name in southeastern Massachusetts accused a Maine car dealership of fraud when it failed to disclose the Massachusetts outfit’s use of the same name in its application to federally register the trademark.

A federal registration entitles its owner to the exclusive right to use the registered name in the United States. Because of this, applicants are required to swear they believe “no one else, to the best of his or her knowledge and belief, has the right to use” a confusingly similar name. The board reviewing the case decided that though the Maine car dealership was wrong (the board kindly termed it “mistaken”) when it made this statement, there wasn’t enough evidence to show it was actually fraudulent. Phew!

Fraud continues to be an issue that brand owners (and we lawyers) must keep an eye on.

 

One likely result is that companies will get sued by its competitors. Such a lawsuit will cost money to defend, cause a distraction to the company, and has the potential to embarrass the company with consumers.

Another potential result is more troubling – an enforcement action by the FTC. Such actions, like competitor lawsuits, are expensive to defend, cause distraction, and have the added problem of communicating to consumers that the government thinks the company is making false statements.

A recent FTC enforcement action decision reinforces the necessity for companies to validate the advertising claims made about their products, particularly if such claims relate to health benefits.

In May 2015, the FTC filed a lawsuit against COORGA Nutraceuticals Corporation and its owner claiming that the Defendants violated the law in claiming that their “Grey Defense” dietary supplements reversed or prevented gray hair. The United States District Court for the District of Wyoming recently granted summary judgment in favor of the FTC, issued an injunction against the company and its owner, and asked the Defendants to pay nearly $400,000.

COORGA marketed Grey Defense to consumers as not only a product that could stop, reverse and prevent the natural graying of hair, but also that it was scientifically proven to do so. The Court found that the COORGA did not have the required scientific evidence to support such claims.  In addition to finding that the company was liable, the Court also found the owner liable because he controlled COORGA’s advertising.  The Court took COORGA’s owner to task for “arrogantly” relying on internet research to validate the company’s claims.  The Court found that this conduct constituted “reckless indifference” and issued an injunction against the company relating to advertising claims across a broad range of products in addition to finding Defendants liable for $391,335.

As this and other FTC enforcement cases make clear, a company must ensure that if it makes scientific claims about its products that it has the testing to back up those claims.