AD-ttorneys@law – Nov. 18, 2022 – Advertising, Marketing & Branding

In This Issue:

Made-in-USA Shootout Leads to Jury Trial, $3.1 Million Judgment

Novelty glassware manufacturer weaponizes FTC guidance against rival

Is Half Bulletproof Really a Thing?

For the uninitiated, the shot glass in question—along with similar products offered by Wisconsin-based manufacturer BenShot—is, well, a shot glass, with a bullet “embedded” in its side. Here’s an image.

“Embedded” is one way to describe how the bullet is attached to the glass, but to our eye it looks as if the bullet was pressed into the glass when it was in its original, molten state—and the glass then cooled and hardened around it.

Okay.

So is the glass really “bulletproof”? The bullet, after all, is making a dent in its side. Wouldn’t a bulletproof glass product come with a glass that had been shot by a gun and remained unchanged, perhaps with the bullet used in the shot included in the box? Or is it an art piece, meant to capture the moment that the bullet hits the glass? No, that won’t work—that would still mean the glass was not bulletproof.

Shots in the Dark

Despite our (arguably) persnickety analysis, this article is not about a false advertising case, although we admit that such a claim would be fun to take apart. No, BenShot is the plaintiff in the present dispute, which is aimed at (forgive the pun) a competitor that produces similar glasses.

Yes, the American fascination with firearms means that there is a wide enough market for two companies producing glass-pierced-by-bullet novelty glasses (actually, make that nearly ten such companies).

And no, this isn’t a trademark infringement case brought against a competitor—an enterprise named Lucky Shot USA. No, we imagine that the “bullet-buried-in-a-shot-glass” craze happened too fast for anyone to stake credible IP claims.

No, this case is a made-in-the-USA suit, brought in part under the Lanham Act. And what’s interesting is that it went to trial. And—even more interesting—plaintiff BenShot won. big.

Poor Aim

BenShot sued back in 2018, eventually filing an amended complaint with three counts—one Lanham Act charge of false designation of origin against Lucky Shot USA and its parent company, an identical charge against both companies’ president, Douglas Ingalls, and a third against the companies for common-law unfair competition. The bulk of the complaint is an exhaustive discourse on the myriad ways Lucky Shot and Ingalls ran afoul of the Federal Trade Commission’s (FTC) made-in-the-USA guidelines—missteps that, if true, were often comic.

Lucky Shot, BenShot argued, consistently advertised its products as “made in the USA” on purchase displays, packaging, company newsletters and online product listings. “BenShot became increasingly concerned Lucky Shot branded products, and more specifically the Lucky Shot Bullet Shot Glass and the Lucky Shot Whiskey Glass were not in fact made in the USA despite being such as claimed,” BenShot wrote.

Here’s where things get comic. “In March of 2017,
[BenShot founder] Ben Wolfgram…had a phone conversation with Ingalls…about their copying of BenShot’s…designs and competitive behavior,” the complaint states. “During the conversation, Ingalls admitted the drinking glass with the indentation for the bullet already formed in the glass…of the Lucky Shot [products] were made in China and not made in the USA.” A second, similar conversation followed a year later.

Not brilliant strategy on Ingalls’ part.

The Takeaway

Furthermore, in the count against Ingalls—remember, company officers can be sued for false designation under the Lanham Act—BenShot maintains that “Mr. Ingalls directed the Chinese glass manufacturer to take close up photos and videos of the glass making process.”

“Mr. Ingalls informed the Chinese manufacturer that it is ‘very important to our media/advertising’ that the photos and videos ‘do not show faces of workers or any words or writing in Chinese,'” the complaint states. “‘We want our customers to think this product could be made in the USA.'”

Yikes.

Unlike almost all the made-in-the-USA cases we report on,
BenShot LLC v. 2 Monkey Trading LLC et al. was a private action. And unlike almost all the advertising cases we report on at all, it went to trial. The upshot? An unlucky day for Lucky Shot: The company lost on all three counts and was hit with $3.1 million in damages.

According to the complaint, BenShot is motivated by righteous indignation against Lucky Shot’s claims. Both companies’ products are aimed at “firearm enthusiasts, military personnel, veterans, patriots,” all of whom are “customers who highly value products made in the USA.”

But in the absence of patent or trademark charges, it seems likely that made-in-the-USA claims were also a convenient—not to mention ironic—way to weaponize the law against a rival.

Alongside tougher action from the FTC, which we covered back in April, business-on-business made-in-the-USA litigation should have a chilling effect on anyone who wants to make a profit on a falsely professional patriotism.

FTC Promised to Hit the Books on EdTech Data Abuse

But with one case under its belt, what does the promise mean?

Scrutiny Cometh?

Back in September, we covered the International Digital Accountability Council’s (IDAC) post regarding the education technology sector and its repeated missteps in handling user data. IDAC checked out “nearly 500 global ed tech apps” that were gaining popularity with the advent of COVID-19-inspired school closures.

“We found that some apps shared personal user information, such as email addresses, names, cities[] and [G]google advertising IDs[,] in the query parameters of the URL,” IDAC stated in its report. And while most of the slips weren’t “egregious or intentional misconduct,” the overall situation involved the exposure of sensitive data describing millions of children across the country—a sad record indeed.

Toward the end of our report, we noted the FTC had turned its Eye of Sauron gaze on the same industry. “In investigating potential violations of COPPA by providers of ed tech and other covered online services,” it wrote, “the Commission intends to scrutnize compliance with the full breadth of the substantive prohibitions and requirements of the COPPA Rule and statutory language.”

Guess what?

The Takeaway

The Commission’s promised scrutiny arrived in the form of a complaint aimed at “education technology provider” Chegg, which bills itself as “the leading student-first connected learning platform”—whatever that means.

According to the Commish, Clegg, despite suffering four data breaches since 2017, “failed to fix problems with its data security.” The company had compromised “sensitive information about millions of its customers and employees, including Social Security numbers, email addresses and passwords.” The lion’s share of the information was lost due to phishing scams that targeted Chegg employees.

The proposed order settling the matter requires Chegg to document data collection and deletion policies, provide consumers with access to data and the ability to delete it, provide multi-factor identification, and create a security program “that addresses the flaws in the company’s data security practices,” including encryption policies.

So should the edtech sector consider itself on notice? “The action against Chegg is part of the FTC’s aggressive efforts to ensure education technology companies protect and secure personal data they collect and do not collect more information than is necessary,” the Commission press release concludes.

But does one case in six months a crusade make?

California Court Adopts Sound Formula Formula

Dismisses class action claiming front label corn syrup switcheroo

Mother’s Syrup?

Here’s a bit of relief from California’s Central District: a ruling that brings some sanity to a tiny corner of the product-labeling universe.

it’s Cecilia Martinez v. Mead Johnson and Co. LLC—that’s right, Mead Johnson, a company that could use some good news right about now.

Martinez sued the infant formula giant in February, claiming that the company was deceiving parents by labeling its Enfamil-brand products as “milk-based” on the front label, when the formula’s main ingredient was listed as “corn syrup solids” on the back . Martinez’s issue wasn’t simply that the main ingredient was not what it seemed; she also seems to be on a bit of a jag when it comes to corn syrup.

The amount of corn syrup in Mead Johnson’s products “for an infant is highly concerning, particularly considering that ‘[a]lmost 40% of a baby’s carbohydrate calories come from baby formula (just like breast milk).’ For these reasons,
[a doctor at the Morehouse School of Medicine] recommends that ‘corn syrups should be banned in babies’ formula as sweetener.’ This ban has already been implemented through most of Europe….”

Martinez sued the Mead Johnson under California’s Consumers Legal Remedies Act, False Advertising Law and Unfair Competition Law, among other charges.

The Takeaway

Mead Johnson moved to dismiss, which is how it earned its much-needed good news; the court its motion and the company shook itself free from Martinez.

The order begins with one of the most rarely heard sentences in legal writing: “This case can be distilled to a simple question,” the court announced.

“Would a reasonable person believe it to be deceptive or misleading for a manufacturer of powdered baby formula to call its products ‘milk-based’ when milk is one of the ingredients, but not the primary ingredient by weight?”

The answer, as we mentioned, was a resounding “no.”

“While reasonable consumers are not ‘expected to look beyond misleading representations on the front of the box,’ Martinez has not done enough to allege that calling a product ‘Milk-based’ is, in fact, deceptive when milk is patently one of the named ingredients. Indeed, FDA guidance suggests that labels should identify or describe ‘the basic nature of the food or its characterizing properties or ingredients.'”

If that weren’t enough, “[The FDA then illustrates that
point by using ‘milk-based’ or ‘soy-based’ as
examples of proper labels that identify characterizing ingredients.
Importantly, the FDA Guidance says nothing to the effect that a
product’s characterizing ingredient should be conflated with
the product’s primary ingredient by weight.”

There it is, folks: A commonsense and business-friendly (in the
best sense) decision that should clarify things for the
label-making set.

Hopefully it’s a trend!

Organic Oil Company Spills $1.6 Million to End Class
Action

Barlean’s was targeted for dubious coconut oil health
claims

It Ain’t Gospel, But Still…

Listen, we scan Wikipedia before we write a story. Sometimes for
a basic overview on an esoteric subject, sometimes to get an
unexpected angle. And sometimes for fact-checking—making sure
we’re not making arguments that are way outside the common
consensus.

Don’t product managers do the same before launching a
marketing tag?

Take coconut oil. Good old sturdy Wikipedia
is quite clear about how the scientific and medical communities
feel about its supposed health benefits:

Many health organizations advise against the consumption of
coconut oil owing to its high levels of saturated fat, including
the United States Food and Drug Administration, World Health
Organization, the United States Department of Health and Human
Services, American Dietetic Association, American Heart
Association, British National Health Service, British Nutrition
Foundation, and Dietitians of Canada.

Marketing of coconut oil has created the inaccurate belief that
it is a “healthy food.” Instead, studies have found that
coconut oil consumption has health effects similar to those of
other unhealthy fats, including butter, beef fat, and palm
oil.

Slippery Stuff

By way of background, Barlean’s claims to be “on a
mission to make premium natural supplements and functional foods
that feed the mind and body,” among other things. Part of that
entails selling coconut and other oils as substitutes for
conventional cooking oils. While user reviews touting the health benefits of
its coconut oil products remain on Barlean’s
site—”It is so healthy” enthuses one—the
company’s own claims are somewhat more staid.

And that’s because of the settlement.

Barlean’s recently spooned out $1.6 million to settle a class action lawsuit brought by New York and
California consumers who took exception to the company’s
breathless—and allegedly false—health claims.

We recommend that you quickly flip past the complaint’s
morbid summary of the role of cholesterol in coronary heart disease
and stroke, and simply note that cholesterol is bad for you, and
that coconut oil has it. We’d rather focus on the claims
Barlean’s used to make. Here are a few: “Nature’s Most
Versatile Superfood,” “Harvested at the peak of flavor
and nutritional value,” “supports the heart and immune
system and provides quick energy,” and “smart fat.”
The complaint goes into detail regarding how each of these claims
is untrue or misleading. But the important thing is that they are
gone—from the website, at least.

The Takeaway

The settlement terms are interesting—there are the usual
reimbursements ($3 to $7 back for each purchase, limited to five
per consumer), dough for the named plaintiffs ($7,500 each) and
more than half a million in attorney’s fees for the class
counsel—but that’s not the unusual part. Under the
proposed agreement, Barlean’s will cease using the offending
health claims for five years, “except to the extent they are
modified to conform with the requirements for nutrient content or
health claims that are, at that point in time, applicable under
federal and state law.”

Lots can happen in five years.

In any case, our takeaway here is something so simple that it
shouldn’t have to be said, but apparently needs to be shouted
from the rooftops: No matter how trendy your product is, do the
research and conform your claims to what you find.

And while we were glib with our skimming of Wikipedia, remember
that research has to be competent and reliable scientific evidence.
And that means what nutrition experts believe is required. If you
base your claims on emerging science, you may have some leeway but
need to make the status of the research clear.

Otherwise, you might find yourself eating coconut pie.

FCC Forces Caller ID to Stand in The Gap

To stymie robocallers, protocols must embrace non-IP
networks

DARPA Giveth…

The very features that made IP an attractive vehicle for
telephony are super-spreaders for robocalls.

Because IP is ubiquitous, decentralized and flexible enough to
transmit many forms of information simultaneously, it added
enormous possibilities for services compared with the previous
digital network protocols.

But the problems presented by IP telecommunications piggyback on
its virtues: IP makes robocalls easy to disguise, easy to automate
and hard to track. And the people who make them take advantage of
geographic and legal borders to evade punishment.

We’ve covered the government’s efforts to rein in the
worst abusers of the IP telephone network—spoofers and
robocallers—for a while now. As we noted
last summer, robocalls took a hit from the COVID pandemic, but
then staged a comeback. Now that we have final numbers for 2021, we can see that
we’re almost back to where we were before the pandemic shutdown
took its toll.

It seems like ancient history now, but the passage of the TRACED Act has also likely
taken a toll on the scammers (but nowhere near as effectively as a
global pandemic). Central to that Act was the mandate for networks
to adopt the STIR/SHAKEN framework to eliminate IP-based call
spoofing without additional charges to customers, a mandate
that’s been going into effect in irregular leaps and
bounds.

The Takeaway

The most recent lurch forward concerns one of the remaining
holes in the Federal Communications Commission’s (FCC) attempt
to spread STIR/SHAKEN throughout the telecommunications universe:
non-IP networks.

That such networks persist in an age when IP has sucked up every
form of mass communication like a relentless, morphing blob from a
horror movie may come as a surprise. But such networks are out
there, and since STIR/SHAKEN is an IP-only protocol, legacy non-IP
networks could easily become a refuge for robocallers fleeing
IP.

The FCC recently announced a “formal review” of how to apply
STIR/SHAKEN-level caller ID protections to these wayward networks.
“The Notice of Inquiry adopted today seeks comment
on the prevalence of non-IP technology in the country’s phone
networks generally and the impact this technology has on the
problem of illegal robocalls.” Both are things that we
imagined that the FCC would already know about, but….

Additionally, the Commission “seeks input on alternative
technological or policy solutions to enable caller ID
authentication over non-IP networks,” including one protocol
that would send call information over an internet track parallel to
the non-IP call itself. Learning about the solutions that will be
developed to solve the problem will be fun (at least to nerds like
us).

Comments are due to the FCC by December 12.

Check Out Our Latest Blog Posts

The 15th Commission Meeting Brings Us Back to the
1970s with More Rulemaking

If there were any question whether the current FTC was
reenacting the 1970s, that question has been put to rest. And
unfortunately, it’s not about seeing Grace Jones, Liza Minnelli
and Andy Warhol at Studio 54 or wearing our finest velour shirts;
the 1970s also saw quite a lot of rulemaking at the FTC.

Brought to You by the FTC: Event on Digital
Marketing and Blurred Advertising to Kids


Yesterday, the FTC hosted an event to look at kids’ digital
marketing. Here is a rough transcript; and if you have a spare five
hours, you can watch the videos, which will soon be posted on the
event page. The big question is whether the FTC will update its
updated Testimonial & Endorsement Guides (or issue other
mandates) with kid-specific requirements based on this event. (As
an aside, these things used to be called “workshops.” For
reasons that escape us, that term appears to be passe at the
current FTC. Wouldn’t it be more festive to call them soirees,
galas, thought raves or to dos if you wanted to rebrand?)

FDA Issues Proposed Rule Updating
“Healthy” Food Claim Definition


On September 28, 2022, the U.S. Food and Drug Administration (FDA
or Agency) issued a proposed rule to update the criteria for when
foods can be labeled with the nutrient content claim
“healthy” on their packaging. The proposed change aims to
modernize and align the definition with current nutrition science;
the Dietary Guidelines, 2020-2025; and the updated Nutrition Facts
label. The FDA first established a definition for
“healthy” in 1994, and at that time nutrition science and
federal dietary guidance focused more on the individual nutrients
contained in food. In 1994, the Agency amended
Section 101.65(d) to define the term “healthy” as
an implied nutrient content claim under Section 403(r) of the
Federal Food, Drug, and Cosmetic Act. The definition in
Section 101.65(d) establishes parameters for use of the
implied nutrient content claim “healthy” or related terms
(such as “health,” “healthful,”
“healthfully,” “healthfulness,”
“healthier,” “healthiest,”
“healthily” and “healthiness”) on the label or
in the labeling of a food that was useful in creating a diet that
is consistent with dietary recommendations, if the food meets
certain nutrient conditions. Under the existing regulation, these
conditions include specific criteria for nutrients that must be met
in the food for it to bear such claims.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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