Alerts

AD-ttorneys@law – December 5, 2019

Alerts / December 5, 2019

In This Issue:

AD-ttorneys@law Webinar – NAD: 2019 Year in Review

The countdown is on!

We're just weeks away from the end of 2019. Don't miss out as we recap the year's most important NAD issues, outcomes, and procedural changes and look ahead to what's in store for 2020. Register here for our next AD-ttorneys@law CLE webinar taking place at 2 p.m. EST on Thursday, Dec. 12.

TINA.org Sets Up Neurocore for an FTC Investigation

Noggin-training company somehow misses stark enforcement trend

Brain in Vain

When we report about brain-improvement therapies, we’re usually sharing news about dietary supplements. But over the past five years or so, brain-training apps and in-person treatments have experienced a surge in popularity. And this popularity, predictably, has attracted the attention of regulators.

In 2016, the Federal Trade Commission (FTC) engaged in two high-profile investigations – of LearningRx, a brain-training center franchisor, and Lumosity, an online service featuring apps and games. In both cases, the FTC claimed that the companies were deceptively advertising their products and were unable to substantiate their claims of cognitive improvement. Worst of all, the FTC alleged, the companies had specifically targeted ads toward consumers dealing with age-related cognitive problems and other serious mental impairments.

Both cases were settled – Lumosity for $2 million, and LearningRx for $200,000.

Big Brother Is Adjusting You

That’s why we wonder about the folks at Neurocore.

The company offers therapies based on “neurofeedback,” which measures various aspects of brain performance through a headband monitor as users react to stimuli. The user watches a video or plays a game, which responds to their brainwaves and breathing patterns, supposedly fine-tuning cerebral performance. One package of such sessions costs around $2,000.

Terrifyingly, the service, which was formerly available only in the company’s in-person centers, is now available through a smartphone app, which is downloading consumer brainwaves. “All of your data is then stored and displayed within the app,” Neurocore’s website says, allowing “your brain coach to monitor your progress.”

Orwellian paranoia aside, Truth in Advertising Inc. (TINA) maintains that neurofeedback is unsubstantiated hogwash. In a letter sent to the FTC in mid-November, the watchdog group pillories Neurocore for “deceptive marketing … used to attract vulnerable consumers, many of whom struggle with difficult psychiatric disorders, are caring for children who struggle with such disorders, or are seniors dealing with age-related memory loss, to its Brain Performance Centers.” It recommends the FTC open an investigation and “take appropriate enforcement action.” TINA sent a similar letter to the Food and Drug Administration, and the press release is available here.

Given the FTC’s record in this space, didn’t Neurocore see this coming?

The Takeaway

Additionally, TINA’s campaign against the company isn’t Neurocore’s first time at the rodeo.

In August 2017, the National Advertising Division (NAD) came down on the company like a ton of bricks, recommending that it “discontinue challenged advertising claims … related to Attention Deficit/Hyperactivity Disorder (ADHD), autism, migraines, memory issues, sleep disorders and stress.” Perhaps unsurprisingly, Neurocore appealed the decision to the National Advertising Review Board, which affirmed NAD’s ruling in June 2018 (the company agreed to cooperate with the final results of the appeal).

Ben and Jerry’s Hit With Two Sticky Suits

Caring dairies and happy cows called into question

Rocky Road

Ben & Jerry’s – we don’t have to tell you what that is, right? – has traded on a ’60s-inspired environmentally and community-conscious brand identity since it was founded in 1978 by two scruffy ne’er-do-wells named Ben Cohen and Jerry Greenfield. The duo parlayed that identity into a $325 million-plus empire by the time they sold their baby to Unilever in 2000.

Predictably, the new ownership put a ding in the company’s do-gooder profile. But things have been especially bumpy of late, with a one-two punch of very similar lawsuits designed to challenge the origins of the company’s bedrock ingredients.

Double-Baked

Most recent is a consumer class action filed in late October in the great state of – you guessed it – Vermont. Plaintiff James Ehlers took aim at Ben & Jerry’s marketing tags (and supporting art) that claim the company uses milk from “Caring Dairies” and “Happy Cows.” “Contrary to the message knowingly conveyed by Unilever to consumers,” his complaint states, “only a minority percentage of the milk and cream in the Products actually is sourced from these ‘happy cows’ on ‘Caring Dairy’ farms; the remaining milk and cream originates from factory style, mass-production dairy operations, [which are] exactly what consumers who choose Ben & Jerry's Products would like to avoid.”

The Takeaway

The bosses over at Unilever – Ben and Jerry didn’t retain any control over the company – must have done a double take, because the suit covered much of the same territory as a July 2018 complaint filed by the Organic Consumers Association (OCA) in District of Columbia Superior Court. (This earlier suit included additional claims that Unilever was including glyphosate, “a synthetic biocide suspected … to have detrimental environmental effects” in several Ben & Jerry’s flavors.)

The OCA suit was filed on behalf of the same law firm that’s handling Ehler’s class action, and the timing makes sense too – it seems that the D.C. case was something of a trial balloon, since it survived a motion to dismiss on both the dairy and glyphosate claims in January of this year.

The double trouble for Ben & Jerry’s is a portent of things to come; as environmental and social consciousness becomes de rigeur for companies in a wider and wider range of industries, the language expressing such commitments is coming under heavier scrutiny.

Lanham Designation Claim Makes Coffee Sellers and Distributors Jittery

Coffee growers surf over Boyer’s motion to dismiss

Kona Craze

Back in September 2017, we brought you a story about a class action dispute between two California citizens and Kona Brewing Co. At issue: whether the brewer, which crafts its suds on the mainland, was engaging in deceptive marketing when it festooned advertising for its island-themed brands – “Longboard Island Lager,” “Wailua Wheat Ale,” “Hanalei Island IPA” and so forth – with labeling that appealed to the consumer taste for all things Kona.

What is it about Kona, a district on the big island of Hawai’i? In this original case, which is currently being settled, the plaintiffs claimed Kona’s brewmaster stated that the Hawaiian water used in the original brews contributed positively to the taste and the quality of the beer – the company allegedly installed a water treatment system on the mainland designed to mimic the original Hawaiian water.

And that magical Kona water is now flowing through another class action. This case, brought under the Lanham Act by coffee growers “who grow the entire worldwide supply of authentic Kona coffee,” boasts that the Kona coffee crop is “renowned for its distinctive flavor and aroma … one of the most famous and revered specialty coffees in the world.” Why? “The volcanic soil, the elevation, and the humidity of this region combine to give Kona coffee its distinctive characteristics,” the growers write.

Whodunit!?

The growers are incensed over alleged efforts by several defendants – including companies such as Costco and Bed Bath & Beyond – to mislead the public “by marketing, distributing or selling coffee products bearing the term ‘Kona.’” “Even though only 2.7 million pounds of authentic green Kona coffee is grown annually,” they write, “over 20 million pounds of coffee labeled as ‘Kona’ is sold at retail. That is physically impossible; someone is lying about the contents of their ‘Kona’ products.”

Guess who the growers are accusing of lying? “Defendants sell packaged coffee products that are presented to consumers as Kona coffee, but that actually contain cheap commodity coffee beans. Some packages contain trace amount of Kona coffee, while other packages contain no Kona coffee at all.”

Kona, Colorado

The effect of this alleged chicanery, the growers assert, is to depress the price of all Kona-labeled products, and to devalue by association their perceived quality in the market.

The plaintiffs brought charges before the Western District of Washington in an amended complaint last May, alleging such violations as false designation of origin, false advertising and unfair competition under the Lanham Act.

Recently, Boyer’s, a coffee product manufacturer, moved to dismiss, making several arguments against the case: first, that the growers did not hold a protectable trademark in the word “Kona” to sue under the Lanham Act; second, that the packaging of its products dispelled any confusion that the “Kona” tag indicated Hawaiian origin, because it clearly showed that Boyer’s is a Colorado company; and third, that “the mere presence of a geographic reference on its packaging cannot give rise to claim for false designation of geographic origin,” in the words of the court.

The Takeaway

The court brushed aside the motion in its order released on Nov. 12.

“Boyer’s first argument, that one or all of the plaintiffs must have a protectable trademark in the word Kona in order to bring a Lanham Act claim, is incorrect in the context of this case,” the court wrote, because false designation claims allow “persons and businesses in a specific locality or region to sue outsiders who falsely designate the origins of their products.” Essentially, the issue here is unfair competition and not trademark protection.

On the second argument, the court held that while Lanham Act violations could arise from confusion regarding the identity of the manufacturer, “the statute also applies if Boyer’s use of a word ‘is likely to cause confusion … as to the origin … of his or her goods,’” which was the only argument the growers were making.

Finally, and most interestingly from the standpoint of product packaging, the court dismissed Boyer’s third argument – so quickly, in fact, that one might miss it if one were just skimming the order. “If, in the context of the entire accused packaging or promotion, the inclusion of the word Kona is misleading as to the geographic origin of the coffee, the claim may proceed,” the court wrote. “For all of the foregoing reasons, Boyer’s motion to dismiss is DENIED.”

Boyer’s counsel, and counsel for two other sets of retailer and supplier defendants that also lost their motions to dismiss on the same day, had better brew up a big pot of Colorado coffee to make it through the rest of the case.

Ad Agency Loses Copyright Infringement Attack on Pepsi

Beverage giant accused of copying agency Super Bowl halftime spot

One in a Million

When you spend countless hours each week combing through normally staid complaints, orders and motions, you’re not sure if you should laugh or cry over sentences like this: “Pepsi employees testified [the commercial] felt dark, given the warehouse setting, the heavy metal music, and how it ends on singers standing around a trash can fire.”

We love strings of words like this that will likely never be reassembled in English again. They keep our eyes open.

But let’s discuss the ad in question, and the splash it made – and didn’t make.

Pitched Battle

The commercial in question was a spot pitched by advertising company Betty, one of 14 agencies bidding on work for Pepsi’s prime spot in the 2016 Super Bowl halftime show. By way of background – and for those of you who don’t know or who forget every year right after the game ends – Pepsi has sponsored the show for a long while now, and has featured recurring themes in its Super Bowl spots, including a “dancing through the ages” conceit that it has used several times (see here for a Britney Spears-helmed masterpiece from 2001).

When Pepsi started holding auditions for its 2016 ad, Betty produced several spots, including one titled “All Kinds/Living Jukebox,” which the quote above describes. In the commercial, a man plays the “Joy of Pepsi” theme on an acoustic guitar while the camera pans through a “Brooklyn(like)” (whatever that means) warehouse. The various scenes in the warehouse span musical styles from various eras, ending on a group of doo-wop singers standing around a trash fire.

And the Winner Is…

The ad never made the airwaves, as you may have guessed, but it did spark a lawsuit filed in the Southern District of New York in 2016. Betty alleged that the commercial Pepsi eventually aired ripped off their proposed spot, triggering copyright infringement and breach of contract.

The winning ad, produced by competing agency TMA, was thematically aligned with previous Pepsi ads, including the Britney vehicle. After passing over Christopher Walken and Pharrell Williams for the lead, the company created a spot centered on Janelle Monáe, who dances across three separate rooms, each representing a different musical era – the ’50s, the ’80s and the ’90s/oughts. Her clothes and hairstyle, like those of her background dancers, change appropriately.

The Takeaway

Pepsi moved for summary judgment, arguing that the facts demonstrated no infringement had taken place. The court found in Pepsi’s favor in an opinion issued on Nov. 13.

At the center of the ruling was the argument that “a ‘principle fundamental to copyright law’ is that ‘a copyright does not protect an idea, but only the expression of an idea.’” On that score, the court noted, the winning TMA ad was different from the Betty ad in “overall concept, feel, setting, themes, characters, pace, and sequence.”

“[E]lements that follow naturally from a work’s theme rather than from an author’s creativity,” the court wrote, “do not enjoy copyright protection.” Likewise, the district held that “where an element occurs both in the defendant’s prior work and [in] the plaintiff’s prior work, no inference of copying can be drawn.”

And with that, Betty’s suit made its exit.

TCPA Cruise Ship Finishes Its Last Voyage

Norwegian, Carnival and Royal Caribbean telemarketing settlement didn’t sink

No Three-Hour Tour

Here’s an update on a case we covered more than two years ago: Philip Chavrat’s Telephone Consumer Protection Act (TCPA) class action against three of the biggest names in the luxury cruise business.

It was a whale of a case, taking seven years all told. The last two years were consumed with settlement negotiation wrangling, but by the time the parties began talks, the case – originally filed in 2012 – had ballooned into a leviathan. The suit spawned three amended complaints, 3,000 pages of briefings, 30 discovery hearings and 15 depositions in four states. As if that weren’t enough, it was even interrupted by a stay of proceeding in 2013 when the Federal Communications Commission (FCC) began debating whether plaintiffs could sue for vicarious liability under the TCPA.

The Takeaway

Chavrat was seeking to hold Travel Services (the telemarketer) and three cruise lines – Norwegian, Carnival and Royal Caribbean – liable for four allegedly unsolicited calls he received between 2011 and 2012. When the FCC ruled in favor of vicarious liability, his case was revived.

Even the settlement took forever, just wrapping up this November with a final approved agreement. Class members will get their share of a settlement fund that will range between $7 million and $12.5 million, depending on the number of claims filed; members are entitled to $300 per unsolicited call for up to three calls per contacted telephone line.

We report on TCPA suits regularly, and significant settlements are common. TCPA violations can be avoided by obtaining necessary consent, properly effectuating opt-outs and timely removing reassigned numbers from marketing lists. Use of arbitration provisions with class action waivers in consent terms can also be an effective way to deter litigation. This illustrates not only the need for a good TCPA compliance program, but also the need to manage vendors that help facilitate text marketing campaigns.

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