And the Oscar Goes to . . . the FTC?

February 22, 2015, marked the 87th Academy Awards ceremony.  Some people tuned in because they love the movies, others for the fashion and celebrities, but, as for me, I watched it with my wife and was simply counting the minutes until “The Walking Dead” came on.  As I watched the celebrities work the red carpet, I did my best to feign interest in cut-away dresses, plunging necklines, jumpsuits matched with capes, and Emma Stone’s wardrobe malfunction, which caused her to accidentally flash the crowd (actually, I can’t lie, that gaffe did grab my attention).  I listened to the interviews that the A-listers gave, describing their dresses or tuxedos, and extolling the responsible designers’ brilliance, daringness, and/or overall fashion IQ.  They were effusive.  Heck, they made me feel like rushing out and buying a new trendy suit myself.

But, then, the advertising and marketing attorney side of me took over – did these actors, actresses, and the designers whose fashion they were shilling violate the Federal Trade Commission’s (“FTC”) Guides Concerning the Use of Endorsements and Testimonials in Advertising by not explicitly disclosing their relationships?  I started stepping through the issues.  First, were the celebrities even providing endorsements for their respective designers’ products?  Absolutely.  Under the Guides, an “endorsement” is broadly defined as “any advertising message . . . that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser[.]”

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Court Rules That Dialing Equipment Must Have “Present Capacity” to Autodial to Come Within the Telephone Consumer Protection Act

On February 4, 2015, in Glauser v. GroupMe, Inc., No. 4:11-cv-02584, the U.S. District Court for the Northern District of California struck a blow to class action plaintiffs asserting claims under the Telephone Consumer Protection Act (“TCPA”), interpreting the TCPA’s definition of “automatic telephone dialing system” (“ATDS”) narrowly to mean equipment that has the “present capacity” – as opposed to “potential capacity” – to perform autodialing functions.

In GroupMe, the plaintiff received several text messages that were sent through GroupMe’s group messaging application, which allows users to create a “group” of personal contacts and transmit text messages to all members of the group at the same time.  One of the plaintiff’s friends had created a group and sent a text to the group members seeking to arrange a poker game; group members, in turn, began responding via text message to all other members about the game through GroupMe’s platform.  After receiving these messages, in May 2011, the plaintiff filed a putative class action, alleging that GroupMe violated the TCPA by sending text messages using an ATDS without his prior express consent.  The TCPA defines ATDS as equipment that “has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.”

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A Recent Win for Helmet Marketer, But Anti-Concussion Claims May Continue to Cause Advertisers Headaches

A federal judge in New Jersey recently denied false advertising claims brought under the consumer protection laws of New Jersey, California, Arizona, Illinois, and Florida against Riddell, the leading manufacturer of football helmets in the U.S.  Standing alone, this is a welcome development for marketers.  But our loyal readers know that health claims attract enormous scrutiny from the Federal Trade Commission (“FTC”) that often results in the filing of piggyback class action suits by private plaintiffs.  Advertising claims involving brain function generally  and concussion prevention specifically are certainly under the microscope, as we have noted previously.

In this case, the plaintiffs challenged Riddell’s claims that its Revolution-brand helmet reduced concussion rates by 31% when compared with traditional helmets. Riddell had stopped making this particular claim in 2012, incidentally, following an FTC investigation. The judge tossed plaintiffs’ claims for a different reason, however. It was unclear precisely what was false about Riddell’s ad claims: was it that the helmets could not prevent concussions at all? That they could not reduce concussions by 31% when compared with competitors’ helmets? And, if the latter, which competitors? Without describing the precise nature of Riddell’s alleged misrepresentations, the plaintiffs’ claims were not allowed to move forward. Before running a victory lap, though, advertisers should note the following:   Continue Reading

BBB Updates Advertising Code to Keep Pace with Technology

The Better Business Bureau (BBB), known for being the home of NAD, CARU and other advertising self-regulatory forums, is now also the proud owner of an updated advertising code.  The BBB announced earlier this month significant updates to its Code of Advertising for the first time since 1985 (when the number one single was “Careless Whisper” by Wham.)

In a press release, the BBB indicated that changes to the Code were made “to reflect the many new ways that advertisers reach consumers via websites, social media, texting and other channels.” Continue Reading

Returned to Sender: New Jersey Repeals Zip Code Collection Requirement for Gift Card Sellers

The gift card saga in New Jersey looks like it has finally wrapped up with Governor Chris Christie tying a bow on the proceedings by signing NJ S-2235, eliminating data collection requirements for sellers of qualifying gift cards and gift certificates.  Those who have followed this story may recall that back in 2010 New Jersey passed a new gift card law, which made a number of changes including shortening the abandonment period and requiring gift card sellers to collect address information, or at a minimum zip codes, from gift card purchasers.  The law was the first of its kind and led many companies, such as Blackhawk Network and InComm, to pull their gift cards from the state.  In 2012, we reported that the Third Circuit upheld the law, including the data collection provision, but as we advised later that year, the state subsequently amended the law, extending the abandonment period to 5 years and delaying the collection requirement until July 1, 2016.  Continue Reading

The Battle of the Two Flanax’s and the Power of the Mexico-United States Border

Flanax Belmora LLC

Flanax Belmora LLC

There are two Flanax’s.  Belmora LLC (“Belmora”) distributes Flanax, a brand of pain relief medicine, in the United States while Bayer has distributed a brand of pain medicine, Flanax, in Mexico for decades.  Bayer sought to cancel Belmora’s registered trademark for Flanax in the Trademark Trial and Appeal Board (“TTAB”).  Bayer won in that venue.

Then, the parties sought review of that decision and brought additional causes of action in the Eastern District of Virginia.  Belmora filed a motion to dismiss Bayer’s counterclaims, which the District Court had granted, and a motion to reverse the TTAB opinion.

In its counterclaim, Bayer alleged that Belmora’s early packaging was “virtually identical” to Bayer’s, and that Belmora’s marketing messages often suggested a historical connection between Belmora’s Flanax and Latino customers.  For instance, Bayer alleged that Belmora tried to link itself with Bayer’s Flanax by saying that Belmora’s was a brand that Latinos had turned to “for generations.”  Continue Reading

“Glory Days”: New Jersey Allows Certain Telemarketing Calls to Cell Phones

New Jersey traditionally has had the most onerous state Do Not Call law, which prohibited all telemarketing sales calls to cell phones.  The law did not even allow such calls to be made with the consumer’s consent.  With 90% of Americans owning cell phones and 58.8% of households being either entirely or predominantly wireless today, that was particularly bad news for telemarketers.

However, on January 29, 2015, New Jersey Governor Chris Christie signed into law state Senate bill 1382, which significantly loosens the state’s restrictions on telemarketing to cell phones.  The bill clarifies the state’s Do Not Call law to prohibit only unsolicited telemarketing sales calls from being made to cell phones.  The amended law – which took in effect immediately upon Governor Christie’s signing – defines “unsolicited telemarketing sales call” as any telemarketing sales call other than a call made (1) in response to the express written request of the consumer called or (2) to an existing customer.  The New Jersey Senate Commerce Committee clarified that the latter carve-out from the state Do Not Call law permits the placement of collection calls and calls to follow up on customer’s contractual obligations “unless the customer has stated to the telemarketer that the customer no longer desires to receive the telemarketing sales calls of the telemarketer.”

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Some Senators Make an Unsolicited Call to the FCC

It seems as if every few weeks, a new court decision weighs in on how to interpret the Telephone Consumer Protection Act (“TCPA”), especially the meaning of “automatic telephone dialing system” (“autodialer”) and “called party.”  Trade associations and telemarketers have petitioned the Federal Communications Commission (“FCC”) for clarification, hoping to reduce the compliance burden and prevent lawsuits from aggressive plaintiff’s attorneys (See TCPA Update for recent filings).  Now, fourteen United States Senators have provided their two cents, not on the specific meaning of any definitions, but rather the general direction the FCC should take when clarifying the rules. The Senators’ clear message:  Don’t weaken the TCPA’s protections for consumers.

On January 28th, fourteen Senators signed a letter to Chairman Wheeler at the FCC expressing “deep concerns” that the proposed changes being considered by the FCC would “undermine the intent and spirit of the TCPA.”  The letter discussed the purpose of the TCPA, indicating that it was passed by Congress to protect consumers from intrusions into the home by telemarketers.  Emphasizing the importance of broader protection for consumers, the letter explained that “by banning autodialing and pre-recorded calls to land lines and mobile phones, with certain exceptions, and establishing the National Do Not Call Registry, the law created a zone of privacy that remains hugely popular with consumers to this day.”  In closing, the letter reiterated:  Continue Reading

Beastie Boys Win $1.7 Million Verdict, Underscoring the Importance of Clearing IP Rights

Launching an advertisement, production, or publication without obtaining the necessary third-party intellectual property (IP) rights can have costly consequences. A jury recently awarded the Beastie Boys and related plaintiffs $1.7 million in a lawsuit against Monster Energy for using Beastie Boys music and references to the Beastie Boys in a promotional video on Monster’s website without proper permission after finding Monster Energy’s actions to be willful copyright infringement and a false endorsement under the Lanham Act.  The court recently denied Monster Energy’s post-trial motions for judgment as a matter of law, a new trial, and a reduction in damages. The Beastie Boys are now seeking an additional $2.4 million in attorneys’ fees and costs. Capitol Records, LLC, and Universal-Polygram International Publishing, Inc., have now sued Monster Energy in a related case.

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