February 2014

You don’t tug on Superman’s cape.  You don’t spit into the wind.  You don’t pull the mask off that old Lone Ranger.

Thanks to the late Jim Croce, you know all that.  I know it, too.  And I’m sure the people at Jewel Food Stores know it.

But what Jewel didn’t know is that you don’t mess around with Mike – meaning basketball great Michael Jordan — by running a full-page ad in Sports Illustrated congratulating him on his entry into the Basketball Hall of Fame without paying the guy.  Because if you do, Mike will sue you for $5 million.  
Continue Reading Craig Ehlo knew it, and now Jewel Food Stores knows it: you don’t mess around with Mike

We try not to use this space for shameless self-promotion but we have an upcoming event in New York City that we’re so excited about that we just can’t help ourselves.

Venable is sponsoring a day long advertising symposium on Tuesday March 11th at the Vanderbilt Club in New York City.  Now listening to us…

The FTC scored two recent victories in advertising cases litigated in California, and, in both cases, the court accepted the FTC’s view of the world with little exception.  You can expect that the FTC will cite to these cases frequently going forward.

Lights of America

In 2010, the FTC sued Lights of America Inc. and its principals in the Central District of California alleging that the company overstated the light output and life expectancy of their LED light bulbs on the product’s packaging and in brochures, as well as falsely comparing the brightness of their LED bulbs with that of other lights.  The matter was litigated heavily over almost four years culminating in a bench trial from October – November 2012.  Prior to trial, the court granted the FTC summary judgment on defendants’ advertising claims that their bulbs provided the same or comparable light to incandescent bulbs.  In September 2013, the court entered 122 pages of post-trial findings of fact and conclusions of law.  On February 20, 2014, the court entered a $21 million judgment against
Continue Reading FTC Goes 2 for 2 in California

The motor oil wars have given us advertising lawyers much to ponder, including whether to use industry standard or proprietary testing. A recent decision from NAD is a very definitive statement against use of torture tests to support ‎comparative claims.

In this case the ad itself showed the test – two cars, each on a dynamometer running at 75 miles per hour on an incline with a 1600 pound load. After 5 days one engine is shown failing, shooting sparks into the air while the other engine continues to run, claiming to be “driven stronger.” The challenger had issues with the methodology and statistical analysis of the testing but the primary beef was that the tests were conducted under extreme conditions not representative of conditions under which consumers would use the cars. The advertiser said it was very clear visually and via disclosures the extreme conditions used in the testing. NAD concluded that “an advertiser must demonstrate that even statistically significant product improvements or differences translate to consumer meaningful benefits. Torture tests can be used to support product claims but only if they represent conditions that have real world relevance.”

This portion of the decision is being appealed
Continue Reading “Torture Tests”‎ Must Be Consumer Relevant for Claims Support per NAD

Charlie-TunaIn a recent decision it looks like the Advertiser played a bit of chicken with the NAD. The Animal Defense Fund challenged advertising by Chicken of the Sea regarding its sustainable fishing practices including “dolphin safe”. (And while maybe not a trend, we have noticed more filings in recent years by public interest groups.)

Chicken…

We have written a lot about the emerging legal issues with “native advertising” and eagerly track case development at the NAD (Qualcomm, eSalon and Shape) as well as the FTC. And so much more is covered in the marketing press about what native advertising is and how can it be scaled. Marketers agree the ideal of native advertising is to create content so compelling that consumers flock to engage, and in the process connect with the brand behind the content. Many are deeply suspicious. Publishers for one, who take passionate and almost violent pride in protecting the line between editorial and advertising content. And many question whether advertisers can be really engaging. As lawyers to the marketers, we find good marketing to be wildly entertaining and have faith this can be accomplished. And we did not have to look far to find this brilliant example. While we seek out every opportunity to bring you witty videos (and sometimes work hard to craft a legal musing around them, this may be our best link ever. Please take a moment to enjoy and we will be back with you shortly:

How awesome was that?
Continue Reading The Nirvana of Native Advertising – will Lawyers Screw It Up?

If you have not encountered the Consumer Protection Bureau odds are you will as the CFPB has authority over virtually every type of consumer financial transaction.  With a lengthy confirmation and constitutional battle over the recess appointment of its Director now behind it, the CFPB has ramped up an already active regulatory and enforcement agenda. While the CFPB initially reached several high profile settlements with several credit card issuers, more recently the CFPB has filed contested complaints rather than consent orders.  Some companies who find themselves crosswise with the CFPB may continue to be able to reach a settlement with the agency.  However, the CFPB, like the FTC, has been quite aggressive in seeking monetary relief as well as broad injunctive and oversight provisions.  As a result, some companies may find themselves unwilling or unable to settle with the agency without significantly impairing or crippling their ability to carry on.  For those companies litigation may be the only logical alternative.  Each company’s situation and strategy is unique, but if you find yourself in a situation where litigation seems almost inevitable, here are some highlights from a top ten list of things to consider (for the full list and published article click here).

1. Limit your response to the NORA letter.

When CFPB decides that an enforcement proceeding is likely, it often issues a Notice and Opportunity to Respond and Advise (“NORA”) letter. This letter sets forth
Continue Reading Top 10 Considerations In Litigating Against The CFPB

The Federal Food, Drug, and Cosmetic Act and the Nutrition Labeling and Education Act of 1990, along with all of their corresponding regulations, create a complex and uniform system of food labeling requirements.  Neither of these statutes provides for a private right of action, but more and more consumer class action and other claims are being brought, under both federal and state law, based on alleged violations of federal food labeling regulations.

This intersection between federal food labeling regulations and private suits has forced courts to consider complicated questions of preemption and statutory interpretation as well as the proper balance of authority between the federal courts and the FDA.

Two recent opinions provide a glimpse into how the courts are currently grappling with these issues.
Continue Reading Not an Easy Recipe – Courts Struggle with the Intersection of FDA Food Labeling Regulations and Private Causes of Action

We will first tell you what you need to do if you are engaged in native advertising and wish to avoid coming within the busy lens of the NAD monitoring program. For those who are interested in the debate around this issue, we will then tell you why we, respectfully, disagree with the NAD’s views on this topic, again (see here and here, prior blog posts on qualcomm and esalon).

If you are an advertiser (or an advertiser’s lawyer more likely) working with web publishers to curate, write, or edit articles that review your product or more generally you would like to see published around your advertising copy‎, you have gone native. If you have not gone down this path yet, all of your marketers are plotting to do so, and thus you will want to be proactive. NAD has previously articulated that if you sponsor articles that generally relate to your product or attributes you want associated with your product, in its view, the connection between the advertiser and publisher must be disclosed. In its most recent decision, NAD communicates that if there is such a connection it must be disclosed even if it would be obvious to reasonable readers. So unless and until the FTC provides some guidance around when it believes disclosure would and would not necessarily be required, following up from its Blurred Lines workshop, the NAD view is
Continue Reading NAD Gives Further Shape to Its Advice on Use of Native Advertising

Private Sector Schools and Third-Party Student Recruitment under FTC and CFPB Scrutiny The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) are intensifying their regulatory and enforcement focus on proprietary schools and third-party marketing companies.

In the fall of 2013, the FTC released revised Vocational School Guides (School Guides), which advise against deceptive marketing practices by businesses that offer vocational training.  While only a guide and not directly written for all degree-granting schools, the FTC’s discussion provides a useful roadmap for educational institutions for the type of conduct it may find objectionable.

The School Guides address questionable practices regarding misrepresentation of accreditation, the transferability of credit to other schools, government or employment agency affiliation, and testimonials or endorsements.  The Guides also warn against misrepresenting teacher or enrollment qualifications, the nature of courses, the availability of financial aid, and the availability of jobs for graduates.  In addition,
Continue Reading Private Sector Schools and Third-Party Student Recruitment under FTC and CFPB Scrutiny