Recent trends indicate that consumers and the U.S. government are paying more attention to where products are sourced from.  

The Biden administration, for example, has made efforts to raise federal procurement standards for products “Made in America.” Specifically, the administration in March announced a final rule that outlined gradual increases to the “Made in America” requirement. As of October 25, the rule requires that federally procured products under the Buy American Act must have 60% of the value of their component parts manufactured in the United States. Under the prior rules, the Buy American Act only required that products contain 55% component parts manufactured in America in order to qualify for federal procurement. The threshold will further increase to 65% in 2024 and 75% in 2029.

Continue Reading An Update to “Made in USA” for Federally Procured Products and FTC’s “Made in USA”

The FTC is off to the races with another proposed rulemaking. On June 23, the FTC, by a 4-1 vote, issued a notice of proposed rulemaking (NPR) to combat what it perceives as “junk fees” and “bait-and-switch advertising tactics” in the auto sales industry. Congress gave the FTC the authority to write rules governing the retail sale of automobiles, using APA rulemaking and not the more cumbersome Magnuson Moss rulemaking that the FTC normally must follow in consumer protection rulemakings. This authority is no small matter, as on June 30, the Supreme Court issued its decision in West Virginia v. EPA, which will make rulemakings by the FTC and other government agencies more challenging.

The FTC’s proposed rule would prohibit certain misrepresentations, require certain disclosures, prohibit certain “add-ons,” and require more thorough recordkeeping. First, among a whole host of potential misrepresentations, the proposed rule includes prohibiting misrepresenting regarding vehicle costs; terms of purchasing, financing, or leasing; and the availability of vehicles at an advertised price.

Continue Reading FTC Starts the Engine on Car Sales Fees and Advertising Rulemaking, but Other Rulemaking Faces Major Questions

Agency Denies Industry Petition and Publishes Revised Draft Guidance

The U.S. Food and Drug Administration (FDA) appears set to ramp up enforcement efforts against companies selling homeopathic products. Since 1988, FDA’s enforcement decisions have been made within the framework of Compliance Policy Guide (CPG) § 400.400. Under this policy, the agency generally limited enforcement actions to products that were either inappropriately labeled or manufactured in violation of good manufacturing practice (GMP) regulations. Publication of the new draft guidance document, which officially withdraws CPG 400.400, is the latest signal that the regulatory landscape is changing – perhaps dramatically.

The agency first revealed a new attitude toward homeopathic drugs with the issuance of a draft guidance in December 2017, which laid out a new “risk-based” model of enforcement that would guide agency decisions on homeopathic products. As we previously reported, this effectively rolled back the permissive framework of the CPG, although the agency noted that the CPG would not be withdrawn until the draft guidance is finalized. Not surprisingly, the homeopathic industry pushed back. One group (Americans for Homeopathy Choice) filed a petition urging the retention of the Compliance Policy Guide and the preservation of FDA’s pre-guidance homeopathy framework.

Continue Reading FDA Puts Homeopathic Industry on Notice – No More Lax Enforcement

Every brand that has designed a product label has felt the call of the asterisk. Visual real estate on packaging and in advertisements is limited, and marketing departments often groan at the piles of clumsy language that legal departments insist make it onto the page. But the elegant solution—dropping an asterisk and including the disclaimers, clarifications, or required disclosures in tiny print at the bottom—has traditionally drawn the ire of regulators or private plaintiffs who complain that such disclosures are ineffective because nobody actually reads them. Now, a line of California federal court cases has begun taking the plaintiffs’ argument at their word, and not in a way that class plaintiffs like: by using Federal Rule of Civil Procedure 9(b) to dismiss complaints that don’t specifically allege whether or not a consumer followed an asterisk and weighed the information in the disclaimer.

In Anthony v. Pharmavite, No. 18-CV-02636-EMC, 2019 WL 109446 (N.D. Cal. Jan. 4, 2019), the court examined a purported class action by consumers allegedly misled into buying biotin supplements labeled with the claim, “May help support healthy hair, skin and nails.” According to the plaintiffs, the average human already obtains a surfeit of biotin in his or her daily life and any amount beyond what can be synthesized is automatically flushed from the body. Indeed, according to the plaintiffs’ studies, “99.9962 percent of people have no possibility of benefiting” from biotin supplements. Only those with exceedingly rare genetic disorders, the plaintiffs explained, could possibly derive any material benefit from supplemental biotin.

Continue Reading Think Asterisks Don’t Matter?*

“On August 30, 2018, businesses will be required to provide revised “clear and reasonable” warnings under California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (known as Proposition 65 or Prop 65) if they would like to avail themselves of the safe harbor provided by the implementing regulations of the Office of Environmental Health Hazard Assessment (OEHHA or the Agency). Retailers and manufacturers/distributors alike should ensure that they are in compliance with the new rules, keeping in mind that there are specific requirements related to products sold via the Internet and product catalogs.

Under Prop 65 and the implementing regulations, businesses with 10 or more employees must provide “clear and reasonable” warnings to Californians before exposing them to a chemical listed by OEHHA as a carcinogen or reproductive toxicant (more than 900 chemicals are now on the list). The current regulations, adopted in 1988, established criteria for what OEHHA considered to be a “clear and reasonable” warning, including specific language that, if used, would be deemed compliant with the regulations (known as “safe harbor” warning language).

In 2016, OEHAA adopted new safe harbor warning regulations that become effective later this month. The new regulations place a significantly heavier burden on manufacturers/distributors to provide consumer product warnings. Specifically, manufacturers/distributors must provide revised warnings on the labels of their consumer products or provide notice and materials to retailers so that retailers can post the revised warning on signs or shelf tags at the point of purchase. Manufacturers/ distributors must update the notice to retailers periodically and obtain electronic or written confirmation from the retail seller that it received the notice.

Continue Reading Are You Ready? California’s New Proposition 65 Warning Requirements Take Effect August 30

video projectorMany of you are no doubt familiar with ANSI testing, which is often touted as the gold standard in assessing product performance. However, other types of third-party tests exist, even if they have not risen to the level of being an “industry standard.” A recent NAD decision sheds some light on when and how advertisers can use such tests in their advertising.

Epson America, Inc. was challenged by Texas Instruments, Inc. (TI) for advertising its 3-chip 3LCD projectors as superior to TI’s 1-chip DLP imagers. 3LCD and 1-chip DLP are the two leading types of projectors and compete based on a number of attributes. TI alleged that Epson improperly relied upon Color Light Output (CLO) as a measure of brightness performance. (CLO is a relatively new method of assessing the brightness of individual colors which can then be compared to the overall lumens, or white brightness of a projector. (Still with us?)). TI also alleged that Epson made overall image superiority claims even though it only tested specific performance attributes. Finally, TI also alleged that Epson inadequately disclosed its affiliation with native advertising websites.

Continue Reading NAD Okays Use of Non-Industry Standard Test

orange splashJoining 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.

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

James Bond Goes to CourtJames Bond is best known for the cars, the adventures, the spy gadgets, and the villains he (generally) defeats by the end of the movie. And, like most big-screen heroes, James Bond is only as good as the unique adversaries, from men with golden guns to odd fellows, he faces in the 26 24 all the franchise’s movies. One particular adversary however, Mary Johnson, a self-described Bond fan, may be James Bond’s biggest rival to date.

In April, Johnson filed a class action suit in Washington State against several entertainment companies that own the rights to the James Bond franchise, including MGM Holdings, Inc. and 20th Century Fox Home Entertainment. Johnson claims that she and other members of the class purchased two James Bond DVD boxed sets that promise: “[ALL] the Bond films gathered together for the first time in this one-of-a-kind boxed set – every gorgeous girl, nefarious villain and charismatic star from Sean Connery, the legendary actor who started it all, to Daniel Craig.” (Emphasis Added). The problem is that the sets don’t include 1967s Casino Royale or 1983s Never Say Never Again films. Some Bond connoisseurs would argue that the two excluded films are not part of the franchise because Casino Royale was a spoof produced by a different movie studio and Never Say Never Again was the result of a complicated rights dispute between MGM and the movie’s writer, Kevin McClory. Nevertheless Johnson claims, the fact that the box sets don’t include literally “all” of the franchise’s movies, the use of the word is deceptive and therefore constitutes a violation of Washington’s Consumer Protection Act. Johnson seeks class certification, an award of damages, including punitive damages, and court costs and attorneys’ fees.

Continue Reading Fan Was Expecting Goldfinger, but Instead Got Oddjob: Woman Sues Movie Studios over James Bond Movie Collection

diamond ringsTiffany & Co., a world-renowned jeweler and specialty retailer, successfully won a judgment that Costco was appropriating its Tiffany® trademark. Federal Judge Laura T. Swain ordered Costco to pay Tiffany & Co. $19.4 million for trademark infringement and trademark counterfeiting under the Lanham Act, as well as unfair competition under New York state law, in the latest round in a long-running legal battle over the sale of engagement rings bearing the mark “Tiffany” as a standalone term. The decision reaffirms the strength of the Tiffany® trademark and will likely have a drastic effect on the way Costco and other wholesalers conduct business.

The world-famous Tiffany® mark has been used in commerce in the United States since 1868. In 1886, Tiffany & Co. introduced an engagement ring that highlights the diamonds by lifting the stone off the band. This famous ring was named the Tiffany®. This six-prong configuration has been called the “Tiffany setting” by other jewelers.

Continue Reading Tiffany Setting the Standard