FTC Aims To Understand Disclosures Through Consumer Testing – Announces Workshop Agenda

WorkshopThe Federal Trade Commission (FTC) just released its agenda for its September 15th workshop, “Putting Disclosures to the Test,” a full-day event aimed at improving the testing of disclosures by industry, academics, and the FTC.

The workshop will review testing methodologies and examine how consumers perceive disclosures. Information will also be presented on how to test disclosure effectiveness and what types of testing are most appropriate for a given disclosure type or medium. There will also be discussion on the costs and benefits of disclosure testing.

The full agenda can be viewed here.

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The Seventh Circuit’s Robinson-Patman Decision: What Does “Promote” Really Mean?

We know that many of you not only deal with advertising but are also proud to count yourself as among the elite few who wrestle with the intricacies of the Robinson-Patman Act. If that sounds like you, read on as our own Rob Davis analyzes a recent 7th Circuit decision. If not, then stand at ease and remain blissfully ignorant of price discrimination, “like grade and quality,” promotional allowances and other such terms.

The Seventh Circuit’s Robinson-Patman Decision: What Does “Promote” Really Mean?

It might surprise many in the “real world” (which for these purposes means everyone other than antitrust/competition lawyers), but to the antitrust bar, the Robinson-Patman Act is the red-headed stepchild of competition law. Whereas competition law is now focused entirely on consumer welfare and the preservation of competition rather than the profits of competitors—even the small ones—the Robinson-Patman Act is almost obstinately about protecting the little guy. Thus, for years antitrust lawyers and the FTC have been tying themselves into knots to make the Act play well with the other antitrust laws, to varying levels of success.

Enter Clorox Bleach and the Seventh Circuit’s awkward decision in Woodman’s Food Market v. Clorox Company and Clorox Sales Company.

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Golden Rules: Counterfeits and the Olympics

Demand for Olympic merchandise in the United States is resurrected every 4 years by the fervor of the televised Games. Officially, authorized and licensed gear is readily available in stores and on the Internet; however, every iteration of the Games brings with it a flood of counterfeit Olympic goods as well. The broadcasting of this year’s Olympics in Rio de Janeiro has, as expected, beckoned all sorts of counterfeit Olympic items to the U.S. market. From t-shirts illegally emblazoned with “Team USA”, to phony gold medals inscribed with the Olympic Rings. This blog post explores the laws that protect consumers and Olympics rights-holders in the United States from counterfeit Olympic goods.

Under 15 U.S.C. § 1127, a counterfeit is an article that includes unauthorized use of a logo, name, or other trademark that is “identical with, or substantially indistinguishable from” a registered trademark. The widely recognizable signs, symbols, and words affiliated with the Olympics, Paralympics, and Pan-American games are all registered trademarks. This includes, but is not limited to, the torch, the five interlocking rings, and the words “Team USA.”

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No Concrete Injury or Tendering Payment = Moot?

TCPA Dismissal Raises More Questions Than It Answers

Treadmills and WeightsThe U.S. District Court for the District of New Jersey recently dismissed a putative class action alleging violations of the Telephone Consumer Protection Act (TCPA) on grounds that the Court lacked subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1). Yet, the one-page dismissal order leaves more questions unanswered than it resolved.

In Susinno v. Work Out World, Inc., No. 3:15-cv-5881 (D.N.J. Aug. 1, 2016), the plaintiff alleged that Work Out World, a gym offering paid memberships, left an unsolicited voicemail message on her cell phone in violation of the TCPA. She alleged that the defendant’s actions caused her “aggravation and annoyance” and deprived her of phone time. She also claimed that putative class members may have incurred cellular telephone charges or reduced minutes as a result of the unauthorized calls.

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FTC Looks to Influence Disclosures

DJ Khaled’s Snapchat account has quickly risen in profile over the past year, with his continuous snaps about meals, music, and the keys to success. But the tone of many celebrity social media posts, including Snapchat, may soon need to change. In recent days, the FTC has made clear that it will begin to more vigorously enforce celebrity endorsements where there was insufficient disclosure that the influencer was paid to post.

But, given the prevalence of these influencers with hundreds of thousands of followers, aren’t consumers starting to realize that they are being subjected to ads? Not according to the FTC. Unlike traditional media such as television, where the audience is likely to understand that the content is an advertisement, celebrities’ and influencers’ persistent tweets and snapchats may not be understood by consumers to be marketing content that the author was paid to post. In the case of many celebrities the line between personal and professional is not always so clear. For example, DJ Khaled often snaps his healthy meals and shoe collection, thus blurring the line between those products he was paid to endorse versus those that he simply wants to share with his audience, no strings tied.

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Celebrity Endorsement Disclosures on Social Media

We’ve blogged several times about the need to disclose when social media posts by endorsers, particularly celebrities, have been paid for. And there has been lots of guidance and discussion about how best to do that, particularly in shorter form media such as Twitter. For example, “The FTC’s Endorsement Guides: What People Are Asking” provides broad direction. While the FTC does not mandate specific disclosure language, it suggests directing influencers to use “#sponsored,” “#promoted,” “#paidad,” or “#ad,” which eat up as few as 3 of your 140 characters. The FTC’s goal is for companies to provide clear and conspicuous disclosure of sufficient information for consumers to evaluate the true source of sponsored native advertising content.

Leave it to the Kardashian clan, however, to come up with an even more novel way of complying with the FTC’s disclosure requirements. This social media post by Scott Disick, the father of Kourtney Kardashian’s children caught our eye and we couldn’t resist blogging about it.

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Golden Rules: Diving Into Rule 40

winner-1445797_640The next issue in our series of blog posts about the Olympics considers “Rule 40,” which can get both advertisers and athletes into trouble. We think Rule 40 deserves a gold medal for generating buzz in the advertising world, and a silver for generating confusion.

Rule 40 restricts participants in the Olympic Games (i.e., competitors, coaches, trainers, and officials) from allowing their “person, name, picture or sports performances to be used for advertising during the Olympic Games.” The advertising blackout period for the Rio 2016 Olympics is from July 27th through August 28th, which is from 9 days prior to the Opening Ceremony until  3 days after the Closing Ceremony.  Continue Reading

FTC’s Increase in Civil Penalties May Be Less than Meets the Eye

towelsThere has been a lot of press about the fact that the Federal Trade Commission (FTC) recently increased the civil penalties from $16,000 to $40,000 for each violation of certain trade regulations and final Commission orders. In some cases this change may have a dramatic impact — penalties for some antitrust violations may increase significantly because many antitrust violations tend to be single in nature — e.g. failure to make an HSR filing. However, on the consumer protection side the actual impact is less clear because of how “per violation” is calculated. For example, suppose you sold 100,000 towels labeled in violation of the Textile Act. At the old penalty level the maximum penalty would be $1.6 billion. The recent increase brings that to $4 billion. Few companies could realistically afford either figure, nor would the FTC ever likely insist on such an astronomical penalty for this type of violation. (As many of you undoubtedly know the FTC exercises a great deal of discretion in fixing the amount of any penalty and can require a penalty well short of the maximum depending upon the nature of the violation, whether consumers derived some benefit from the product, the degree of intent, etc.) But what about your run of the mill deceptive advertisement that violates an existing order? Is each ad one violation? Unfortunately, from the FTC’s perspective the answer is “no.”

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For Whom The TCPA Bell Tolls . . . Not the Federal Government Says the FCC

At the outset of one of his most well-known novels, For Whom the Bell Tolls, Earnest Hemingway quoted part of a meditation from Seventeenth Century poet John Donne (from which the book is titled):

No man is an Iland, intire of it selfe; every man is a peece of the Continent, a part of the maine; if a Clod bee washed away by the Sea, Europe is the lesse, as well as if a Promontorie were, as well as if a Mannor of thy friends or of thine owne were; any mans death diminishes me, because I am involved in Mankinde; And therefore never send to know for whom the bell tolls; It tolls for thee. (Emphasis added.)

Based on a recent Federal Communications Commission (FCC) decision, however, it appears that the Commission believes that the federal government, in fact, is an island entire of itself. Despite tightening regulations over the years to limit the ability of companies to make robocalls, the FCC, on July 5, 2016, issued a ruling that exempted robocalls from the federal government from Telephone Consumer Protection Act (TCPA) coverage. The FCC thinks it knows what kind of calls you like, and wants to make sure you get them.

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Golden Rules: Lowering the Uneven Bars on Likelihood of Confusion

With the opening ceremony for the Rio 2016 Olympic Games less than 1 month away, Olympic sponsors and non-sponsors alike are thinking about how they may be able to capitalize on the event’s popularity. Brands must, however, beware of using Olympic trademarks (as discussed in our previous blog post, Golden Rules: Wrestling with the Use of Trademarks), in large part, because of the relative ease with which Olympic rights-holders, such as the United States Olympic Committee (USOC), can take legal action. In the United States, under the Ted Stevens Amateur Sports Act (Ted Stevens Act), the USOC has exclusive rights to use “Olympic,” “Olympiad,” the interlocking rings, event mottos and other Olympic trademarks. The Ted Stevens Act also prohibits use of any word, symbol, or combination thereof that “tends to cause confusion or mistake, to deceive, or to falsely suggest a connection with the user and the Olympics”. In practice, this is a very broad prohibition.

For example, the interlocking ring design is a trademark owned and controlled by the USOC. Unauthorized use of the image of the rings is not permitted on the basis of copyright defenses, such as the public domain or fair use, despite popular misconceptions to the contrary. The rings, and other Olympic trademarks, including the word “Olympics,” are also not generic. Use of the word “Olympics” can be protected by free speech in narrow circumstances, but if you are an advertiser reading this blog, it’s highly unlikely that you will be able to fit your uses into that “protected speech” category, even if you can credibly claim that your use is expressive.

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