All About Advertising Law

Regulatory & Litigation Developments for Advertisers and Marketers

Trademark Law Gets Creative

By Brian Tengel and Jessie Beeber on October 16, 2017

playing with Velcro Want to be a trademark lawyer? Well, you might need to have a creative streak.

In recent weeks, at least two major brands have used attention-grabbing strategies to protect their trademarks while raising awareness about the unauthorized use of their intellectual property. And these efforts are generating more than a little buzz.

The Velcro Companies released a video, “Don’t Say Velcro,” in which an ensemble of dancing, singing trademark attorneys implores consumers not to use the Velcro brand’s name as a generic noun or verb to describe a product with “hook and loop” fasteners, or those “scratchy, hairy fasteners” that you find on ~~Velcro~~ shoes, gloves, and wallets. The video, which features mostly actors, but a few real lawyers, is part of a larger campaign designed to educate consumers about the brand and the proper use of its name.

What’s the Federal Trade Commission Been Up to Recently?

By Kristen R. Klesh on October 13, 2017

A change in administration inevitably raises questions regarding the priorities and direction of federal agencies. To help set the record straight, Lesley Fair, a Senior Attorney with the Federal Trade Commission’s (FTC or Commission), Bureau of Consumer Protection, reminded us during last week’s NAD Annual Conference that the FTC has kept quite busy over the last year or so, with numerous enforcement cases arising out of the FTC’s Bureau of Consumer Protection. Ms. Fair also shared her views regarding the FTC’s key enforcement priorities that affect advertisers and marketers. Perhaps unsurprisingly, these priority areas generally relate to (i) advertising substantiation; (ii) use of social media, endorsements, and consumer reviews; (iii) matters involving privacy and data security; and (iv) allegations of financial deception. While such topics warrant serious consideration and attention for advertisers, one would be remiss in failing to mention that, in typical Ms. Fair fashion, she discussed these issues in a manner that not only kept the audience engaged, but largely entertained.

With respect to advertising substantiation, Ms. Fair took the opportunity to remind the audience that despite our obsession with smartphones—and our assumption that they can do almost anything except fold our laundry—the FTC will carefully scrutinize advertisers’ claims about their products, including health apps for smartphones, to ensure they are adequately substantiated. As an example, Ms. Fair mentioned the Commission’s January 2017 Settlement with Breathometer, Inc. and Charles Michael Yim in which the FTC alleged that marketers of two app-supported smartphone accessories, marketed to accurately measure consumers’ blood alcohol content (BAC), failed to adequately test the accuracy of the app and failed to notify customers that the app regularly understated BAC levels. In another smartphone settlement from December 2016, FTC v. Aura Labs, Inc. and Ryan Archdeacon, the FTC alleged that the marketer’s blood pressure app lacked reliable testing, and that the app’s readings were significantly less accurate than those taken with a traditional blood pressure cuff. In both of these cases, Ms. Fair suggested that FTC seemed particularly concerned due to potential safety issues arising from the lack of proper testing, especially where an intoxicated driver might get behind a wheel, or where a consumer may think his/her blood pressure does not present a health risk. These cases serve as a reminder that the FTC will evaluate substantiation with an especially critical eye where advertisers make health and safety-related claims.

FTC “Telephonic Fireside Chat” with Chief Technologist Neil Chilson

By Amy Mudge on October 13, 2017

Neil Chilson filled the position of FTC Chief Technologist in July, succeeding Lorrie Cranor. Mr. Chilson recently discussed the role of Chief Technologist with members of the ABA Antitrust Section Consumer Protection Committee in a “Telephonic Fireside Chat.” In describing his day-to-day, he broke down the role into a vertical dimension and a horizontal dimension. The vertical dimension he described as having two components: assisting FTC staff assess the legal implications of technology and serving as a conduit between the general staff and the Chairman’s office. As Chief Technologist, Mr. Chilson is in a unique position to highlight issues of particular interest to the Chairman, as well as to monitor problems that cut across several groups. The horizontal dimension of the role he described as being an interface between the FTC and the outside world, specifically industry. Mr. Chilson spoke of meeting with the tech industry both to explain the mission of the FTC and also to gather information to convey back to the Chairman and staff. When later asked about challenges from a consumer perspective, Mr. Chilson focused on the issues of identity theft and robocalling. The “chat” overall suggested that the new Chief Technologist will take a practical approach to the position. A focus on engagement with industry and actual consumer harm would be in keeping with the priorities of Maureen Ohlhausen, the Acting Chairman who appointed him.

Here Come the States—An Insider’s Look into the D.C. AG’s Office

By Chris Crook on October 12, 2017

handshake A notable Venable alum stopped by the NAD conference last Tuesday morning to give the room an insider’s view into the Office of Attorney General in the District of Columbia. After a moving moment of silence for the victims of hurricanes, the recent mass shooting in Las Vegas, and his mother who had recently had a stroke, Attorney General Racine gave the room an overview of the goings-on and priorities of his office as well as his thoughts on the priorities of AG offices around the country.

With respect to investigations, General Racine confirmed what the crowd had long suspected. With speculation that the new administration may be less active when it comes to enforcement actions related to consumer protection, General Racine said that “the states are not going to back down.” General Racine has been and continues to be in regular communication with his counterparts in other states (on both sides of the aisle) working to bring about enforcement actions to protect consumers. At least one example where states are taking a leading role is a major investigation into resort fees and drip pricing where the federal government was once an active participant but has since taken more of a background role. The 50 states involved have stepped up and are actively pursuing the investigation.

NAD Annual Conference 2017 – FTC Priorities Keynote Address

By Brian Tengel and Amy Mudge on October 11, 2017

As we previously blogged, the National Advertising Division held its 2017 Annual Conference in New York City last week. Kicking off the event was Mary Engle, the FTC’s Associate Director of Advertising Practices, who gave the keynote address on behalf of Tom Pahl, the FTC’s Acting Director of the Bureau of Consumer Protection. Tom has generously been very active in speaking at many industry conferences, but he unfortunately fell ill and had to miss this year’s NAD conference. Mary’s delivery of the address as “Tom” added a bit of levity to what was otherwise a very substantive set of remarks.

The remarks, delivered to a ballroom of advertising lawyers and industry players, were focused primarily on explaining the ways in which the FTC is implementing Acting Chairman Maureen Ohlhausen’s positive consumer protection agenda. Mary identified three key elements of this agenda.

New Director Discusses Her Plans For “Making NAD Even Better”

By Amy Mudge and Randy Shaheen on October 10, 2017

The Venable team had a great start to our week last week attending the NAD Annual Conference in New York City. For those who were not able to attend, we will fill you in on some of the highlights with this week’s blog posts. The conference started with a bang with its move to new Battery Park digs for some additional space. The hotel was home Sunday night not just to incoming advertising lawyers at firms and in-house, but also to many of the golfers in town for the 2017 Presidents Cup. Many in our bar used to meet for a quiet drink in the lounge on Sunday night to catch up before the event kickoff. In contrast to the big leather chairs and soundless TV of the old bar, the new hotel featured a (stunning) rooftop bar with thumping club music, gleaming young millennial guests, and offering $25 cocktail popsicles. Change can be hard. But this is an exciting year of change at NAD and should be embraced.

In August, NAD announced the selection of its new director, Laura Brett, who replaces Andrea Levine after a 20-year tenure. Laura is known to all who participate in the self-regulatory process as a staff lawyer at NAD since 2012 and frequent speaker at advertising conferences. She brought as monitoring cases many of NAD’s early assessments of native advertising and influencer campaigns in an effort to give industry compliance tools before the FTC issued its statements or to provide additional guidance. She has also authored some of the most important cases in the last few years looking at use of crowd sourced data and online reviews. She came to NAD an experienced attorney with both law firm experience and public service in local politics. If you have had occasion to meet Laura, you know her as being thoughtful and measured, always listening before she speaks, and approaching each challenge with an open mind. In other words, exactly the kind of person meant to lead the helm of advertising self-regulation. It was with great excitement that attendees of the conference waited eagerly for the last panel in which Laura made her directorial debut headlining the session on NAD process and coordination with the FTC. Joining Laura for this session was Devin Domond, who is Chief of Staff for the FTC’s Division of Advertising Practices and is responsible for the day-to-day coordination with the NAD.

9th Circuit Delivers Sweet Victory to Soft Drink Advertisers

By Leonard Gordon and Kathleen Sheridan on October 6, 2017

soft drink San Francisco found itself in a sticky situation after the Ninth Circuit struck down a city ordinance that would have required soda companies and other makers of sugar-sweetened beverages to place the following warning on their ads:

WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay. This is a message from the City and County of San Francisco.

Advertisers challenged the ordinance under the First Amendment and sought a preliminary injunction to halt its enforcement, but lost in the district court. The Ninth Circuit reversed, agreeing with advertisers that the ordinance unconstitutionally chilled their protected commercial speech because the warning was too one-sided and burdensome – constituting 20% of an ad’s space – and that advertisers were likely to discontinue advertising completely.

Marketplace Vendors Offered Voluntary Closing Agreement Program for State Tax Exposure

By Walter Calvert and Tammara Langlieb on October 5, 2017

As states continue their quest to compel online vendors to collect sales and use tax on sales to customers located in the state and to subject such vendors to state income tax, a current trend has been targeting vendors selling via online marketplaces. Some states assert that the presence of inventory held for a vendor or the presence of the marketplace provider/facilitator in a state acting on behalf of a vendor is sufficient nexus or connection of the vendor with the state to subject the vendor to the state’s taxing jurisdiction.

The Multistate Tax Commission (MTC), an intergovernmental state tax agency that works on behalf of the states and taxpayers to facilitate the administration of state tax laws, is coordinating a Voluntary Disclosure Settlement program (VDA program) to enable retailers that sell their products online using a third-party marketplace provider/facilitator (such as Rakuten) to register with a state for current and prospective tax compliance and at the same time settle tax obligations for prior years.

California to Gatorade – Don’t Mess with Water

By Amy Mudge and Randy Shaheen on September 29, 2017

Gatorade recently learned two timeless lessons the hard way from the State of California. First, never mess with water. Second, advertising claims are everywhere, including in what some might consider to be just fun and games. In exchange for these lessons, Gatorade paid the State of California $300,000 and agreed to injunctive relief.

So what attracted California’s attention? Gatorade in conjunction with Usain Bolt created a cellphone game called “Bolt” in which players help Bolt pick up coins. Touching a Gatorade icon made Bolt run faster, while touching a water droplet slowed the world’s fastest human down (and decreased the “fuel meter”). In case the point was too subtle, the game’s tutorial also instructed users to “keep your performance level high by avoiding water.” California alleged that the game was downloaded 2.3 million times.

The Tide Is Slowly Turning Against Food Labeling False Advertising Claims That Do Not Involve Affirmative Misrepresentations

By Dan Silverman and Elise Gabriel on September 28, 2017

Joining a growing trend in federal court jurisprudence, the U.S. District Court for the Central District of California dismissed a class action complaint because it found that the Mott’s fruit snacks at issue did not affirmatively misrepresent their contents. In short, the court held that Mott’s fruit snacks’ labels could not deceive consumers because they were literally true.

The plaintiff in the Mott’s case asserted allegations similar to claims that had successfully withstood motions to dismiss in the past. He alleged that the fruit snacks’ use of phrases like “made with real fruit and vegetable juice” misled consumers to believe the products contained more fruits and vegetables than they did, and representations like “100% of your daily value of Vitamin C” falsely conveyed to consumers that the products were healthful and nutritious. Based on these allegations, the plaintiff brought consumer protection claims and related common law claims on behalf of himself and all California consumers who purchased Mott’s fruit snacks.