Nearly every week it seems as though the Federal Trade Commission (FTC) is sending out a new round of warning letters to companies marketing products and therapies as effectively treating or preventing COVID-19.  We previously wrote blog posts here and here about sets of such letters, and our colleague, Marissa Koblitz Kingman, recently wrote an alert about the Department of Justice (DOJ) and Food & Drug Administration (FDA) closely monitoring such conduct as well.  In that alert, Marissa discusses a DOJ complaint against a Utah man and two companies for allegedly selling a fake cure for COVID-19 and the DOJ’s plan to work closely with the FDA to shut down schemes to promote and sell COVID such products.

These federal agency actions serve as a cautionary reminder for any company contemplating the sale of products or the use of promotional materials that connect products to COVID-19. If doing so, or intending to do so, legal counsel should be consulted.

This week, the United States Supreme Court may have made it considerably easier for a trademark owner to recover lost profits from a trademark infringer. Specifically, the Court answered the question, posed in Romag Fasteners, Inc. v. Fossil Grp., Inc., of whether the Lanham Act requires a “categorical” rule that only a willful infringer must disgorge its “ill-gotten profits.” In a unanimous 9-0 decision, the Justices determined that the Lanham Act includes no such requirement, and a trademark owner need not show that a trademark infringer willfully infringed on the plaintiff’s trademark in order to recover profits from the infringer.

In a short seven-page decision written by Justice Gorsuch, the Court analyzed whether a showing of willful trademark infringement is a precondition to recovering profits under section 1117(a), the provision governing remedies for trademark violations, for violations of section 1125(a) of the Lanham Act, the provision governing false or misleading use of trademarks. In its opinion, the Court relied on the text of the Lanham Act. Specifically, the Court pointed out that while the Lanham Act specifically requires willfulness to recover profits in trademark dilution cases, “the statutory language has never required a showing of willfulness to win a defendant’s profits” in claims of false or misleading use of trademarks. All the more telling, the Court said, is that the “Lanham Act speaks often and expressly about mental states,” including multiple adjustments in remedies for willful violations, but the remedies provision at issue, section 1117(a), includes no reference to willfulness or a mental state of any kind for recovering remedies from violations of section 1125(a). Noteworthy as well, the Court rejected Fossil’s argument that the purported willfulness requirement was required by “principles of equity,” historical trademark law, and public policy. Ultimately, the Court acknowledged that its “limited role is to read and apply the law those policymakers have ordained,” and in doing so held that the text of the Lanham Act, and as a result Federal Trademark law, does not require willfulness to recover profits for the false or misleading use of trademarks.

On the other hand, although willfulness is not expressly required for such claims,  the Court made clear that an alleged infringer’s state of mind is still important in assessing violations and potential trademark remedies. For instance, in his opening paragraph, Justice Gorsuch expressed: “Without question, a defendant’s state of mind may have a bearing on what relief a plaintiff should receive. An innocent trademark violator often stands in very different shoes than an intentional one.” Likewise, his opinion notes that “a defendant’s mental state is relevant to assigning an appropriate remedy” and “a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate.” Similarly, in his concurrence, Justice Alito, joined by Justice Breyer and Justice Kagan, acknowledged the distinction that willfulness remains important, but not a prerequisite, in awarding profits. Thus, trademark owners should be aware that, although willfulness is not required to obtain profits, it is still appears to be an immensely important factor courts may consider.

In a break from issues relating to the coronavirus, the Better Business Bureau’s National Advertising Division (NAD) has recently instituted a quicker dispute resolution process, called Fast-Track SWIFT, with SWIFT standing for “Single Well-defined Issue Fast Track”.

As put by the NAD, Fast-Track SWIFT is an “expedited process for resolving simple, single-issue advertising disputes” that the NAD developed to address “industry concerns that the timeline for standard track cases can be too long to adequately address highly repeatable but simple issues.”  The NAD has stated the claims that are appropriate for a Fast-Track SWIFT challenge, at least for now, fall into three categories:

  1. The prominence or sufficiency of disclosures, including disclosure issues in influencer marketing, native advertising, and incentivized reviews
  2. Misleading pricing and sales claims
  3. Misleading express claims that do not require review of complex evidence or substantiation such as a review of clinical or technical testing or consumer perception evidence

For all matters that qualify for Fast-Track SWIFT, the NAD has indicated that its decision will be issued in around a month, far faster than the standard NAD process which takes around 4-6 months.  Additional information relating to the Fast-Track SWIFT process can be found in NAD’s FAQs on the topic here as well as in the rules of procedure that apply to NAD’s proceedings, which can be downloaded here.

The NAD is a non-governmental, voluntary self-regulatory body that considers challenges to advertising from competing advertisers and consumers and will issue recommendations to advertisers. If an advertiser does not engage in the NAD process or declines to follow NAD’s recommendation, the NAD will often refer the matter to the relevant government agencies, usually the Federal Trade Commission (FTC).  And as previously noted on this blog, NAD has stated that the majority of cases it refers to the FTC result in a FTC investigation, or the advertiser ultimately returning to NAD’s regulatory process.

 

On April 2, 2020, the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) issued a final rule, Modernization of the Labeling and Advertising Regulations for Wine, Distilled Spirits, and Malt Beverages.  While it does not require any current labels or advertisements to be changed, the rule is intended to give more flexibility to industry members and provide clarity to existing requirements.  The final rule will be effective May 4, 2020.

There are a variety of interesting proposals adopted in the final rule:

  • The final rule removes previous vodka classification requirements such that Vodka products are no longer prohibited from having a “distinctive character, aroma, taste, or color.”
  • The final rule no longer prohibits malt beverage labels and advertisements from using the term “strong” and other indications of alcohol strength.
  • The TTB removed a limitation on the way distilled spirits producers may count the distillations when making optional “multiple distillation” claims on their labels.
  • The final rule creates a new class within the standards of identity called “agave spirits,” which encompasses two classes: “Tequila” and “Mezcal.”
  • The TTB has established an approval process for creation of personalized labels (think weddings, promotional events) that do not require individualized submission and approval by TTB.
  • The final rule increases the tolerance for the alcohol content of distilled spirits products to plus or minus 0.3 percentage points above or below the labeled alcohol content.
  • The final rule clarifies that all imported alcoholic beverages (distilled spirits, malt beverages, and wine) must display a country of origin statement if the beverage is the product of a country other than the U.S.
  • The final rule clarifies which wine and malt beverages meet the statutory definitions under the Federal Alcohol Administration Act. Products not meeting the definitions are not subject to the TTB labeling regulations and are instead subject to FDA labelling regulations.
  • The final rule allows advertisements for wine, distilled spirits, and malt beverages to bear the advertisers phone number, website, or email address rather than currently-required city and state.

The TTB also declined to adopt certain proposals.  The TTB rejected a proposal to incorporate a definition of an “oak barrel,” which would have limited it to a “cylindrical oak drum of approximately 50 gallons capacity used to age bulk spirits.”  The TTB received a large amount of opposition to the proposal, with many arguing that the definition conflicts with innovative industry practices of using oak containers of various shapes and/or sizes to age bulk spirits.  The TTB likewise rejected a proposal that would have required whiskey be designated with a name where it meets the standard for one type of whisky.  For example, a whisky that meets the standard for “bourbon” would have been required to be designated a bourbon.  The TTB received opposition by many who stated that this change would require many current labels to change.  The TTB rejected the proposal and distillers will continue to have the option of using the general class “whisky” or one of the type designations that applies.

To see more information on all the adopted and rejected proposals, see here.  The TTB is still considering many regulatory changes that may be addressed in the future—including a proposal to establish a new section of the alcohol beverage regulations relating to advertising.

 

 

The Federal Trade Commission (FTC) recently announced that it had sent warning letters to ten additional companies for making claims that their products could treat or prevent coronavirus, which included 1) Bioenergy Wellness Miami, 2) Face Vital LLC, 3) LightAir International AB, 4) MedQuick Labs LLC, 5) New Performance Nutrition, 6) PuraTHRIVE LLC, 7) Resurgence Medical Spa, LLC, 8) Rocky Mountain IV Medics, 9) Suki Distribution Pte. Ltd., and 10) Vita Activate.

The advertisements in question included ones for a “Corona Virus Immune System Boost COVID-19,” which was developed by the “Man Who Cured Cancer” and apparently used sound frequencies to “penetrate cells ‘thousands of times more than chemical information,'” and the “Face Vital Sonic Silicone Facial Brush” which could “fight off Coronavirus” by “Ramping Up [the user’s] Beauty and Cleansing Regimen.”

The FTC warned the companies that their coronavirus claims were unsubstantiated by scientific evidence and demanded that the recipients immediately cease making all claims that their products can treat or cure coronavirus.

As covered by this blog, this is merely the latest set of letters the FTC (often partnering with the U.S. Food and Drug Administration) has sent out warning companies about making unsubstantiated coronavirus-related claims.  The FTC has now sent out more than 25 such letters since early March; a full list can be found here.

The FTC has clearly made coronavirus claims a focus of its enforcement actions, with its Director of its Bureau of Consumer Protection stating it was “shameful to take advantage of people by claiming that a product prevents, treats, or cures COVID-19,” and that “anyone who makes [those claims] simply has no proof and is likely just after your money.”  Any company thinking of making corona-virus related claims about its products should be extremely cautious and make sure it can scientifically substantiate those claims, as the FTC is scrutinizing any such claims closely.

The COVID-19 pandemic has resulted in dozens or hundreds of city, county, and state stay-at-home/shelter-in-place orders requiring closure of non-essential businesses across the county.  Most if not all such orders exempt particular types of businesses, including stores selling groceries, medical supplies, and other necessities.  Many also require specific social distancing, hygiene, and sanitization procedures for stores remaining open.

The most recent order from the State of Michigan, effective April 9 – 30, has a unique requirement related to advertising. For stores of more than 50,000 square feet (think the big box stores), the order requires “refrain[ing] from the advertising or promotion of goods that are not groceries, medical supplies, or items that are necessary to maintain the safety, sanitation, and basic operation of residences.”

This requirement leaves some questions.  Can a state’s governor restrict advertising of non-essential products as part of his or her emergency powers?  Is such a requirement constitutional?  What are businesses with pending advertising promotions supposed to do – e.g. can a store effectively pull an ad in response to an order signed at 2:07pm and effective at 11:59pm that same night? These, and other questions, are likely flooding the marketplace in Michigan and will be until the expiration of the order.

My colleague, Bridget Short, recently drafted an alert regarding an option for trademark owners seeking to avoid cancelation of a registration due to a temporary interruption in use and inability to file a declaration of use.

Due to circumstances beyond their control, trademark owners may file a declaration of nonuse setting forth (1) the date when such use of the mark in commerce stopped; (2) the approximate date when such use is expected to resume; and (3) facts to show that nonuse as to those goods, services, or classes is due to special circumstances that excuse the nonuse and is not due to an intention to abandon the mark.  This option may prove useful to trademark owners suffering from disruptions due to the economic effects of the coronavirus.

Read the full alert here.

Whether it is a typo in a president’s tweet or simply the word “The,” trademark hopefuls are quick to jump at the opportunity to obtain a trademark in virtually any and all phrases. Recently, the terms “Coronavirus” and “Covid-19” are no different.

As the Covid-19 pandemic sweeps across both the world and the United States, many onlookers may be considering whether to apply for trademarks in Coronavirus, Covid-19, or any number of related phrases. In fact, some companies and individuals have already submitted Covid-19 related trademark applications. For instance, multiple applicants have already sought use of Covid-19 or Coronavirus to place on apparel, and one company even registered for a Coronavirus phrase to use on magazines focused on the pandemic.

However, just as the USPTO ultimately determined with “Covfefe” and “The,” terms using Coronavirus and Covid-19 likely will not be given trademark protection. Put simply, one of the most basic tenants of trademark law is to identify the source or origin of goods or services through use of a mark. When anyone sees the term “Covid-19” or “Coronavirus,” they likely will not think immediately of an apparel line or other product; rather, they will think of the virus itself. As a result, the USPTO is unlikely to grant any trademarks in Coronavirus or Covid-19. Thus, anyone considering seeking such trademarks should closely evaluate their likelihood of success.

For up to date information on the Coronavirus, including webinars, articles, and various resources created by Fox Rothschild attorneys, visit the Fox Rothschild Corona Resources page here.

As the effects of coronavirus continue to ripple across the globe, the Federal Trade Commission (FTC) and Food and Drug Administration (FDA) have warned seven companies for purportedly “making deceptive or scientifically unsupported claims about their ability to treat coronavirus (COVID-19).”   The FTC press release is located here.  The FTC and FDA alleged that the companies were advertising products such as “teas, essential oils, and colloidal silver” as being able to treat or prevent coronavirus.   The letters warned the companies against making unsubstantiated claims, told the recipients to immediately cease making all such claims, and stated that the FTC was prepared to seek a federal court injunction and order requiring the consumer’s money to be refunded.

The FTC indicated that it was paying close attention to companies that advertised products as cures or treatment for the coronavirus given the “high level of anxiety over the potential spread,” and that the FTC was “prepared to take enforcement actions against companies that continue to market this type of scam.”  In the press release, the FTC warned that it and the FDA would “continue to monitor social media, online marketplaces, and incoming complaints” to protect consumers from companies that fraudulently market products.

The FTC and FDA’s actions in sending the letters provide a strong cautionary message to companies marketing products relating to the coronavirus — if they make unsubstantiated claims, they can face government scrutiny and litigation.  To avoid this, companies should not make claims they cannot scientifically substantiate, especially claims relating to the coronavirus.

On Friday, the United States Patent & Trademark Office (USPTO) announced that it was cancelling all in-person meetings — including all examiner interviews, all meetings between examiners and applicants, and all hearings before the Patent Trial & Appeal Board (PTAB) and Trademark Trial and Appeal Board (TTAB). The USPTO noted that parties will receive further instructions on participating via video or telephone in advance of any such interview, meeting, or hearing.

Last Thursday, the Federal Circuit announced that, with an exception for cases where all counsel is local, it is cancelling April oral arguments in favor of resolving the cases on the briefs or conducting the hearings via telephone at the previously-scheduled time.  Today, the United States Supreme Court announced that it is postponing oral arguments currently scheduled for the March session (March 23-25 and March 30-April 1). The U.S. Copyright Office has also announced that it is closed to the public until April 1.