Age-Gating Your Website: Do Not Make it a Scandal

‎”Gates” as scandals probably started with Watergate but many other embarrassments followed suit with a similar gating moniker. Nipple-gate or Janet Jackson’s Superbowl wardrobe malfunction, Zoe Baird’s Nanny-gate are just a few. Age-gating your website to make sure it is COPPA-compliant should not give rise to messy press and finger-pointing. ‎Web designers and marketers need to remember that kids are smart and make reasonable efforts to thwart their efforts to evade your controls. A few recent CARU cases are instructive.

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Website Owners: No Safe Harbor from Copyright Liability for Infringing Content Posted by Third Parties on Your Site If You Are Not Following DMCA Formalities

Did you know that, under the U.S. copyright law, if a third party uploads or posts copyrighted material to your website, and the third party did not have authorization to do so from the copyright owner or exclusive licensee of that material, your organization can be held strictly liable for copyright infringement as the operator of the website where it was posted or uploaded?

This is alarming but true – there is strict liability in copyright law.  This means that, even if your organization did not put the infringing content on your website, or did not even know it was there, you can be held strictly liable for infringing content uploaded to your website by another.

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FCC Releases Long-Awaited TCPA Ruling

On July 10, 2015, the Federal Communications Commission (“FCC”) released its much-anticipated Telephone Consumer Protection Act (“TCPA”) declaratory ruling, expanding on the positions announced at its June 18 Open Meeting on important TCPA issues.  The ruling resolves 21 requests for clarification, and, in particular, confirms that an “automatic telephone dialing system” (i.e., an autodialer) includes devices that do not “currently” or “presently” have the capacity to dial random or sequential phone numbers without human involvement.  This will be a controversial ruling.  In fact, ACA International immediately filed a lawsuit in the U.S. Court of Appeals of the D.C. Circuit following the release of the ruling, alleging that the ruling expands the scope of the TCPA further than Congress intended.  Over the next week, we will be exploring the ruling in more detail, but today we analyze arguably the most controversial issue:  the definition of autodialer.  Continue Reading

Court Grants Class Cert. in Deceptive Pricing Action Against Clothing Retailer

We all love a good bargain, but sometimes a good deal seems too good to be true.  In 2011, Cynthia Spann went bargain-hunting at a California J.C. Penney, and walked out convinced that she had saved over 30%.  However, she later discovered the products she bought at a “bargain” price had never really been sold at full price.  As we have written previously, pricing and discounting claims are a frequent target of FTC enforcement actions, competitive challenges at the National Advertising Division, and plaintiffs’ attorneys.   After learning about the alleged false discounting, Spann brought a class action on February 8, 2012, alleging violations of California’s Unfair Competition Law, California’s False Advertising Law, and California’s Consumers Legal Remedies Act.  On May 18, 2015, the United States District Court for the Central District of California granted certification of the class action, serving as a timely reminder for retailers and businesses everywhere that businesses must carefully monitor pricing practices to ensure compliance with state and federal law regarding false and deceptive pricing.

According to Spann’s complaint, J.C. Penney’s false advertising campaign was “massive, years-long, pervasive[,] [and] consistent across all” private and exclusive brands of apparel and accessories.  The essential aspects of the advertising campaign are familiar to many American shoppers: J.C. Penney stores and websites would feature both an “original” or “regular” price and a substantial dollar/percentage discount, reinforcing the message that the customer had received a bargain by including a line for “Total Savings Today” on receipts.  As the FTC notes in its Guides Against Deceptive Pricing, this is a totally legitimate form of advertising as long as the original/regular price is genuine; that is, “the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time.”  However, if “the former price being advertised is not bona fide but fictitious”—in other words, if an “inflated price was established for the purpose of enabling the subsequent offer of a large reduction”—then “the ‘bargain’ being advertised is a false one.”  California law is also rather clear on this topic:  “No price shall be advertised as a former price of any advertised thing, unless the alleged former price was the prevailing market price as above defined within three months next immediately preceding the publication of the advertisement.”

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When Your Brand Name is a Claim—NAD Cleans and Straightens Without Support from Advertiser

There is lore that the beauty industry does not challenge itself sufficiently before NAD, and for this reason NAD brings more monitoring challenges in this area. After the recent decision in a case brought by Unilever, we would not be surprised if we see more competitor challenges in this area. And advertisers on the receiving end of these challenges might not find them cruelty free.

OGX makes shampoos, conditioners and related hair care products with a variety of what NAD termed “exotic” ingredients:  lines with argan oil from Morocco, coconut water, ‎keratin oil, biotin, cherry blossom ginsing, etc. Unilever said the product names were listed next to product benefits in a way that implied the benefit was due to the exotic ingredients. Unilever alleged the exotic ingredients were present at levels that would not deliver these benefits. OGX and its maker Vogue International did not provide evidence of what the exotic ingredients did. Instead, they said that the benefits were due to the formulas as a whole, that shampoo and conditioner clean hair generally, which make hair soft, fuller, etc. It voluntarily committed to redoing its packaging to separate the product benefits in the romance copy from the product name.

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Court Attempts to Smooth out ROSCA Violations

Risk-Free-TrialAs we’ve mentioned before, and as this year is unfolding, it looks like the Federal Trade Commission (“FTC”) is even more desperate to enforce the Restore Online Shoppers’ Confidence Act (“ROSCA”) than we are to find good skin care products.  The FTC has begun expanding its enforcement of ROSCA into various industries, including now the skin care industry.  Perhaps more importantly, the FTC is increasing the stakes on what constitutes adequate disclosures, forcing many marketers to spend less time looking in the mirror and more time looking at their online disclosures.

Last week, the Central District of California entered a Temporary Restraining Order and the FTC issued a complaint, alleging that since at least 2010, a number of defendants had marketed and sold skin care products on a variety of websites that ran afoul the ROSCA, the FTC Act, and the Electronic Funds Transfer Act (“EFTA”).  Continue Reading

“Judicially Found to Help Prevent False Advertising Litigation”: Fourth Circuit Clarifies Requirements for Pleading a Dietary Supplement False Advertising Claim

On June 19, 2015, the U.S. Court of Appeals for the Fourth Circuit issued its decision in In re GNC Corporation; Triflex Products Marketing and Sales Practices Litigation (No. II), — F.3d –, No. 14-1724, 2015 WL 3798174 (4th Cir. June 19, 2015), handing a significant victory not just to the defendants in that multidistrict false advertising class action litigation, but to dietary supplement manufacturers nationwide that face false advertising claims brought under state consumer protection laws.  More specifically, the Fourth Circuit’s decision made clear that, in order for a false advertising case to proceed beyond the dismissal stage, the complaint must allege that there is not a single qualified expert who would opine that the challenged representation is truthful.  The ruling should prove a useful tool to any dietary supplement manufacturer finding itself the defendant in a class action alleging unfair, deceptive, or misleading advertising or marketing.

In In re GNC Corporation, the plaintiff-consumers had purchased glucosamine- and chondroitin-based joint health supplements manufactured and sold by the defendants, GNC Corporation and Rite Aid Corporation.  The defendants alternately advertised on the supplements’ labels that the products “promote[] joint mobility & flexibility”; “protect[] joints from wear and tear of exercise”; “rebuild[] cartilage and lubricate[] joints”; “promote[] joint health”; and provide “[m]aximum strength joint comfort.”  The product label for GNC’s “Triflex Fast-Acting” product also represented that the supplement was “[c]linically studied” by means of a randomized, double-blinded, placebo-controlled trial, which concluded that the supplement was “shown to improve joint comfort and function.”  The plaintiffs alleged that the defendants violated the false advertising statutes and consumer protection acts of California, Illinois, Florida, Ohio, and New York by marketing their supplements as promoting joint health, even though many scientific studies purportedly have shown that glucosamine and chondroitin are “no more effective than placebo” in providing the advertised health benefits.  In essence, the plaintiffs asserted that the various health representations made by the defendants were false because the vast weight of competent and reliable scientific evidence indicate that glucosamine and chondroitin do not provide the promised health benefits.  Continue Reading

NAD Doesn’t Trim Back Humor with a Razor – Important New Ruling on Puffery

We just read one of our favorite NAD decisions ever. And it just so happened to involve one of our favorite recent ad campaigns. We have blogged before about Dollar Shave Club, as a vehicle to talk about Restore Online Shopper’s Confidence Act (“ROSCA”) and a reminder of the legal issues with negative option plans. But we really just wanted to share the web ads because they are hilarious. If you have not seen them, stop reading this blog (yes, you read that right) and have a look.

And even if you have seen it before, you need to refresh your memory to put the NAD’s holding in context. (We promise we are in no way affiliated with the Dollar Shave people and get no pay-per-click revenues. We would like to have a beer with these guys, however.).

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Beastie Boys Win Sizeable Attorney’s Fee Award

By WikiLaurent (CC BY-SA 3.0)

Last week’s sizeable attorney’s fee award in the lengthy Beastie Boys v. Monster Energy Company legal battle is an important reminder of how critical it is to clear third party IP rights in your advertising materials and the financial risks of not doing so.  Last week, a New York federal court ordered Monster Energy to pay the Beastie Boys’ parties $667,849.14 in attorney’s fees, in addition to the $1.7 million in damages that a jury previously awarded—all because Monster Energy ran a promotional video on its website that used portions of five Beastie Boys songs as the soundtrack and included other references to the group without proper permission.

The Beastie Boys originally sought $2,385,175.50 in fees.  The court awarded fees under the Copyright Act but not under the Lanham Act.  In arriving at the final fee award, the court relied on a number of factors, including, (a) some of the work on the case was on the Lanham Act claims, for which attorney’s fees were not recoverable in this case because this case was not “exceptional”; (b) some of Monster Energy’s positions were reasonable whereas other positions taken were unreasonable; (c) certain legal work on certain specific issues should not be borne by Monster; and (d) the Beastie Boys’ bills were higher than typical because the case was staffed heavily with senior lawyers.  The court opined that the still very substantial fee award furthers the goals of the Copyright Act.  Specifically, the court determined that the fee award, coupled with the $1.7 million damages award, serves to compensate the Beastie Boys for their reasonable attorney’s fees in litigating their claims.  The court also noted that such a fee award serves the purpose to deter future would-be infringers and should lead future parties contemplating infringement or “designing corporate protocols with respect to the handling of intellectual property to think twice before disrespecting others’ copyright interests.”  The Beastie Boys’ parties are also seeking roughly $100,000 in costs from Monster Energy from this litigation, and the court directed the Beastie Boys to submit their Bill of Costs to the Clerk of Court for initial review.

The original post regarding the facts of this case and jury award is here.

*Picture by WikiLaurent [CC BY-SA 3.0], via Wikimedia Commons

FDA Gives Food Industry Three Years to Cut Out Trans Fat

The debate over the use of trans fats has been ongoing for years.  Despite claims that trans fats are unhealthy, the Food and Drug Administration historically considered them safe for use in food.  Many of our favorite foods contain the ingredient, including Popeyes fried chicken and Betty Crocker frosting and cake mix.

On June 16, 2015, FDA banned the use of partially hydrogenated oils (“PHOs”), the primary source of artificial trans fat, unless and until a company gets food additive approval from FDA for use of the ingredient.  FDA’s final determination found that PHOs are no longer generally recognized as safe (“GRAS”) because there is no longer a consensus among experts that PHOs are safe for use in food.  The ban only applies to artificial trans fats, not naturally occurring trans fats.  Food manufacturers and distributors have until June 18, 2018 to make sure they remove trans fat from their foods.

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