In recent years, the FTC has ramped up efforts to deter deceptive marketing practices on social media and customer review websites by issuing guidelines that apply to marketers and influencers alike and instituting enforcement actions against the guidelines’ most blatant violators.  These actions have largely placed the onus on brands and companies to ensure that any material relationships with influencers and reviewers who endorse or recommend their products or services are clearly disclosed, even if that means monitoring influencers’ social media accounts and review websites to confirm that all necessary disclosures have, in fact, been made.

Just this month, the FTC approved final settlements in enforcement actions against a PR company and a publisher in relation to a media campaign which used the mosquito-borne Zika virus outbreak and the 2016 Summer Olympics in Brazil to promote a mosquito repellant product.  According to the complaint, the companies hired athletes to promote the mosquito repellant on Instagram and other social media platforms.  The athletes’ social media posts failed to disclose that they were paid for their endorsements, and the companies themselves reposted many of the endorsements, again without any disclosure.  The complaint also alleged that the companies reimbursed employees and “friends” for posting positive reviews on ecommerce websites like Walmart.com.  According to the FTC, these practices constitute unlawful unfair or deceptive acts or practices.

The case highlights the FTC’s continuing interest in deterring deceptive marketing practices on social media by aggressively pursuing brands and companies that fail to ensure compliance with FTC guidelines.  Companies engaged in social media marketing can protect themselves by reviewing the FTC’s Endorsement Guides, which provide guidance for marketers and influencers alike.  Some takeaway points include:

  • Material connections must be disclosed.  Any “material connection” between an endorser and an advertiser must be disclosed unless it is already clear from the context of the communication.  A “material connection” is one that might affect the weight or credibility that consumers give the endorsement.  This could be a business or family relationship, a monetary payment, or the gift of a free product.
  • Disclosures must appear clearly across all devices and platforms.  Disclosures must be clear and prominent regardless of the device or platform that a consumer uses to view the post.  Understanding how consumers interact with posts differently depending on these variables is important because what works in one context might not in another.  For example, consumers viewing Instagram posts on mobile devices typically see only the first three lines of a longer caption unless they click “more,” which many users do not do.  As a result, any material connections must be disclosed above the “more” button.
  • Use plain, straightforward language.  The language used must also Disclosures are not effective unless they communicate the nature and existence of the material connection to reasonable consumers.  As such, disclosures should be in plain language that is as straightforward as possible.  Acceptable terms include “Ad,” “Advertisement,” “Paid Advertisement,” and “Sponsored Advertising Content.”  Commonly used terms that do not satisfy FTC guidelines include “#sp,” “Thanks [Brand],” and “#partner.”

Much like the sphere they are meant to regulate, the FTC’s rules for social media endorsements are still evolving.  Companies can protect themselves by keeping informed of changes to the Enforcement Guides and by regularly auditing their social media practices.

Yesterday the Food & Drug Administration (“FDA”) Commissioner announced a new plan for increased oversight over dietary supplements.  In his statement, the Commissioner noted how much the dietary supplement market has grown and how many consumers now take a dietary supplement on a regular basis, stating that “consumers need to have access to safe, well-manufactured, and appropriately labeled products.”

As a reminder, the FDA does not pre-approve dietary supplements like it does new drugs; however, it does require that dietary supplements be safe for their intended use and be properly labeled/advertised.  It is clear that the FDA is concerned with products being marketed as dietary supplements but being advertised as new drugs that can cure certain diseases or health conditions.  Indeed, the Commissioner’s statement indicates that, as part of this new effort, the FDA just sent a multitude of letters to companies whose products claim to prevent, treat, or cure Alzheimer’s, diabetes, or cancer.

While the FDA has numerous priorities related to dietary supplements, the first and foremost being consumer safety, advertising and labeling appear very important.  As always, manufacturers/sellers of dietary supplements should make sure that their products are safe, properly labeled, and advertised truthfully.

For a thorough discussion of the FDA’s increased dietary supplement oversight and resulting reactions, read the Washington Post’s recent article here.  As a reminder of the industries the FDA regulates and how, including dietary supplements, see my prior blog posts here and here.

The United States Patent and Trademark Office (“USPTO”) approved Campbell Soup Company’s (“Campbell’s”) application to trademark the word “chunky.”  Campbell’s filed an application with the USPTO back in May 2018.  In its application, Campbell’s cited to “massive unsolicited media coverage of chunky,” according to the Philadelphia Business Journal.  The word “chunky” has been parodied by pop culture on various outlets, including programs like Saturday Night Live, The Simpsons, Family Guy, and The Daily Show.  Campbell’s has also maintained a twenty-year partnership with the NFL.

According to the Philadelphia Business Journal, Campbell’s said the “chunky” trademark will be limited to connection with soups.  Using “chunky” in connection with other types of food will not be an issue.  “’Non-prominent, descriptive’ uses of the word — like ‘chunky-style’ — that aren’t a trademark or brand name also pose no issues.”  Campbell’s first used the word “chunky” back in 1969.  Since that time, Campbell’s said it has spent more than $1 billion in advertising soup products under the word “chunky.”  About 75 percent of consumers associate “chunky” with Campbell’s.

From beer to snacks to cars to tech, we love them all. Or, we love judging them all. Each year, we tune in to see which companies—both the old staples and the new blood—will shell out the cash for a Super Bowl ad.

Top 10 IllustrationThroughout breaks in the game (or cheating with an online search), we intently watch for laugh-out-loud quips, emotional storylines, and cringe-worthy moments, knowing “which was your favorite?” will be an office topic of conversation the following morning. There are things we anticipate (cute animals promoting products having nothing to do with animals), and things we don’t (our favorite celebs feeling like sell-outs). But that’s all part of keeping us entertained. And keeping us guessing.

Whether the advertisers ultimately yield a return on their investment matters none to we consumers who have come to expect—even demand—high-quality and creative commercials we love to hate every other day of the year. This is advertising at its finest. Particularly when the game itself is, well, rather boring.

 

We live in an era where news, information, and trends move very quickly. Words, phrases, or ideas that were obscure or non-existent yesterday can be the top trending story tomorrow. These overnight trends are now routinely used by opportunists in trademark applications. But trademarks are meant to be used to identify the source of and to distinguish the goods and services of one seller or provider from those of another. Indeed, as the USPTO recently reiterated, “[t]he Trademark Act is not an act to register mere words, but rather to register trademarks…. The more commonly a phrase is used, the less likely that the public will use it to identify only one source and the less likely that it will be recognized by purchasers as a trademark.” For example, when the President tweeted out the word “covfefe” on May 31, 2017, the internet’s use of the word in social media, public discourse, and merchandise exploded. The word was not only used in memes, but was displayed on hats, t-shirts, jewelry, bodysuits, and mugs. See id. Accordingly, when an opportunist attempted to trademark the term, the USPTO rejected it: “the market is awash in products that display the term [covfefe]…” And as such, “the public will not understand ‘#covfefe’ to identify one, and only one, source of clothing and to recognize [the] applicant as that source when it appears on [the] applicant’s goods.”

If you want to get rich covfefe using the trending word or phrase of the moment, you might be able to sell some swag but you probably will not be able to trademark the trend.

Of late, multiple authors of this blog have followed the legal landscape around “scandalous” trademarks. In particular, this post follows up on the USPTO’s petition to the Supreme Court, which we previously covered.

A “scandalous” or “immoral” trademark is one which a member of the public would likely find “shocking to the sense of truth, decency, or propriety; disgraceful; offensive; disreputable,” and generally offensive to one’s conscience or morality. Until recently, trademarks that were “scandalous” or “immoral” were prohibited. However, in December of 2017, the Federal Circuit, in In re: Erik Brunetti, found that the portion of the Lanham Act prohibiting scandalous trademarks unconstitutionally restricted free speech.

On January 4 of this year, the Supreme Court of the United States agreed to hear the appeal of In re: Erik Brunetti to conclusively determine whether the “immoral” or “scandalous” portion of the Lanham Act is in fact invalid under the First Amendment’s Free Speech Clause. In Iancu v. Brunetti, the Court is set to hear argument in April of 2019, with its final decision to come shortly thereafter. If the Supreme Court upholds the lower court’s decision, new and previously “scandalous” trademarks will likely be in front of the Trademark Office. Only time will tell what new and interesting trademarks consumers may start seeing if scandalous trademarks are no longer widely prohibited.

Earlier this month, the U.S. Supreme Court refused to review a California court’s dismissal of actress Olivia de Havilland’s lawsuit against FX Networks.  The decision sustains First Amendment protection to expressive works and free speech rights of the creators.

De Havilland had accused FX of violating her right of publicity and depicting her in a false light in the FX miniseries “Feud: Bette and Joan.”  She claimed that actress Catherine Zeta-Jones’s portrayal of De Havilland created “a public impression that she was a hypocrite, selling gossip in order to promote herself at the Academy Awards, criticizing fellow actors, using vulgarity and cheap language with others.”  De Havilland also alleged that FX’s “misappropriation” caused her harm, and she sought a permanent injunction restraining FX “from continuing to infringe [her] right of publicity.”

A California trial court initially concluded that De Havilland had met her burden on her right of publicity and false light claims.  This decision was later reversed by a California Court of Appeal, which concluded that these types of claims were precluded by the First Amendment.  De Havilland petitioned both the California Supreme Court and the U.S. Supreme Court.  Both courts refused to review the decision.

One of our Fox Rothschild partners, Lincoln Bandlow, was featured in a Daily Journal article about this decision.  Bandlow told the Daily Journal that had the trial court’s decision been upheld, “it would have had a severe creative chilling effect.”  The California Court of Appeal decision was “one of the best First Amendment decisions on rights of publicity out there,” according to Bandlow.

Read the California Court of Appeal’s full decision here.

Nothing is as it seems. I previously blogged about the marketing of non-dairy products as “milk” – now it’s meat’s turn.  According to a recent article in the Star Tribune, multiple states are either already regulating or considering regulating use of the term “meat” on product labels.

As explained in the article, supporters of a potential regulation in Nebraska, a large producer of meat products, believe the measure is necessary to protect consumers from being misled and to promote truth in advertising. The concern is that consumers making purchasing decisions may be unable to distinguish between farm-grown meat products and lab-grown products labeled as “meat.”  According to a Food Safety News article, the proposed 10-page bill would amend the Nebraska Deceptive Trade Act to make it illegal or advertise or label any insect-based, plant-based, or lab-grown food product as “meat.”

Again, nothing is at it seems.  As lab-grown food products increase in volume and popularity, we are likely to consider to see proposals and regulations like these.

The Second Circuit Court of Appeals returned a favorable ruling for major record companies in a copyright infringement case on December 12, 2018.  The ruling came down in Capitol Records, LLC v. ReDigi Inc., a lawsuit involving an online platform (“ReDigi”) designed to enable the lawful resale of purchased digital music files.  The Second Circuit concluded that ReDigi infringed the record companies’ exclusive rights under Section 106 of the Copyright Act.

ReDigi is an online platform created to enable the lawful resale of lawfully purchased digital music under the first sale doctrine.  ReDigi hosts a space online that allows users, who lawfully purchased files from iTunes, to resale those same files online.  In order to resale the files, the user who owns the digital music must first download and install ReDigi’s Music Manager software program (“Music Manager”).  After installation, Music Manager analyzes the digital file intended for resale, verifies that the file was originally lawfully purchased from iTunes, and scans it for indications of tampering.  If the file was lawfully purchased, Music Manger considers it an eligible file that may be resold.  Once the file has been verified, the user transfers the eligible file to ReDigi’s server.  While the file is being transferred, ReDigi breaks the music into small blocks of data, creates a temporary copy of each block, and then sends a command to delete the block of data of the digital file from permanent storage on the initial user’s device.

ReDigi tries to guard against a user’s retention of duplicate digital music files after they are sold through ReDigi by continuing to search the user’s connected device for duplicate.  Major record companies pointed out that ReDigi’s protections do not prevent the retention of duplicates after resale through ReDigi.  According to the record companies, prior to resale, a user could retain duplicates of the digital music file on devices not linked to the computer that hosts Music Manager, and access those duplicates post-resale.  ReDigi’s efforts were not sufficient to prevent the user from retaining sold files.

The US District for the Southern District of New York concluded that ReDigi’s online platform infringed the record companies’ copyrights by unauthorized reproduction and distribution of copyrighted works.  In June 2016, the district court entered a stipulated judgment awarding damages to the record companies for $3.5 million and permanently enjoining ReDigi from operating their online platform.  ReDigi appealed the judgment, but the Second Circuit affirmed the district court’s decision.

In its decision, the Second Circuit found that ReDigi’s temporary copy of the digital file created a new phonorecord which was an unauthorized reproduction.  The Court also found that the making of the reproduction was not a fair use under Section 107 of the Copyright Act where the creators made no change to the copyrighted sound recordings, the system made identical copies of the whole of the recordings, and the reproductions were made for the purpose of resale in competition with the record companies.  The Court made no decision whether ReDigi also infringed the record companies’ exclusive rights under Section 106(3) to distribute their works.

Chances are you have seen rumblings of creative, even (dare I say) funny cease-and-desist letters, particularly those aimed towards trademark or copyright infringement, popping up in the news. You know the ones: an actor playing a town crier pops in on a local brewery to read a cease-and-desist letter in ‘ye olde English; or a popular fast food joint sends a pun-filled letter to a local brewery demanding they cease from using the restaurant’s trademarked image. These kinds of cease-and-desist letters, especially in the copyright and trademark context, are becoming all the more prevalent.

But is this the best way to demand an entity stop infringing on your trademark? As anything goes, such a strategy can have very real pros, and very real cons.

First, a little background into what exactly cease-and-desist letters are, and the purposes they serve. Generally, a cease-and-desist letter is a notice to the entity receiving it that the activity they are participating in may be illegal, or more particularly in the case of copyright and trademark infringement, that their activity infringes. Although a cease-and-desist letter has no immediate legal effect, the entity receiving the letter may not use the excuse that it did not know the sending party believed its behavior was illegal, as the letter put it on notice of its potentially illegal activity. Notably for the sake of copyright and trademark infringement, if the entity persists in its illegal behavior after receiving the letter, such notice may aid in proving intent, willfulness, and bad faith.

Although cease-and-desist letters are often thought of as sternly worded letters from stuffy attorneys, creative and humorous cease-and-desist letters can have real benefits for a company. As alluded to above, creative cease-and-desist letters have received especially beneficial PR as of late. As companies become more and more of an open book in this age of social media and online news, crafting creative ways to assert a company’s legal rights helps show that the company is amiable, fair, and all in all fun. Not to mention, such exposure can turn in to free and hopefully beneficial press.

However, creative cease-and-desist letters must be drafted the right way, as they also carry credible risk. For one, if the creativeness is taken over the top, the recipient of the letter may not take it seriously. Ultimately, cease-and-desist letters are meant to be taken seriously and cause the recipient to stop its infringing action—if the recipient thinks the letter is simply a joke, it may continue on engaging in its infringing behavior. In that same vein, if the humor placed in the letter misses the mark, or muddles the issue, the recipient may have an argument that it was in fact not on notice of its allegedly infringing behavior. Finally, straightforward cease-and-desist letters are often quiet and discrete. By issuing a humorous letter, a company is taking a risk and opening itself up to potential public scrutiny. However, if a company is able to strike that perfect balance between informative and humorous, it is potentially a worthwhile risk to take.

All in all, creative and humorous cease-and-desist letters, if done right, are largely beneficial in the copyright and trademark infringement context. If you decide to send such a letter, make sure to do it right, and of course try to have the wittiest attorney you know write the letter for you (although some say witty attorneys are few and far between).