Alerts

AD-ttorneys@law - March 1, 2018

Alerts / March 1, 2018

In This Issue:

Thelonious Monk Estate Hornin’ In on Right of Publicity Trial

Jazz great’s heir sues craft brewery for using dad’s likeness on merchandise

Monk’s Dream

In an art form already brimming with intense personalities, jazz great Thelonious Sphere Monk stood out from the crowd.

His talent, at first eclipsed by the mainstream artists of his time, turned jazz from an art form associated with dance and popular entertainment into something else altogether. Disjointed, angular and cerebral, Monk’s music was music for its own sake ‒ music for the serious listener. He holds the distinction of being the second-most-recorded composer in jazz, just behind Duke Ellington. Although he composed only a handful of works next to Ellington’s prodigious output, Monk’s impact on the genre is unmistakable.

And as much as any contemporary pop star, Monk crafted an inimitable persona: shaggy, pointed beard, distinctive fezzes and berets, the round glasses of a professor.

“I don’t imitate anybody,” he once said in an interview. “I have my own way of walking and talking.”

Well, You Needn’t

Monk’s son, Thelonious Monk Jr., took exception to what he alleges is the appropriation of that persona by North Coast Brewing Co., a California-based craft brewer. Among other brands, the company produces Brother Thelonious Belgian Style Abbey Ale, which, Monk Jr. claims, uses the likeness, name and image of his father as the primary artwork on its packaging ‒ and not just its packaging. North Coast, Monk Jr. alleges, uses Monk’s image on all of its advertising for the brew, as well as “at least seventeen (17) other items including cups, hats, hoodies, iron on patches, soap, t-shirts, tap handles, metal and neon signs, pins, playing cards, mouse pads, posters, and food products.”

Although Monk Jr., as head of his father’s estate, had once given the company permission to use the likeness for the purpose of promoting a charity, he claimed that he rescinded that permission in January 2016, forbidding the company from continued use without some sort of merchandising agreement.

Monk Jr. sued North Coast in the Northern District of California in August 2017, claiming that the company continued using his father’s likeness after he forbade them from doing so. He seeks damages for trademark infringement, unjust enrichment, violations of the California Civil Code and violations of the New Jersey Common Law Right of Publicity.

Straight, No Chaser (The Takeaway)

North Coast moved to dismiss; the court denied the motion and kept the parties on track for a trial.

In its motion, North Coast attacked the complaint by offering a contrasting theory of Monk Jr.’s claim ‒ labeling the complaint as essentially a trademark rights dispute rather than a false endorsement claim. The court disagreed, noting that the argument, while inspired by confusion within the amended complaint, was not valid: “While the FAC does not use the term ‘false endorsement,’ it does make clear that Plaintiff is seeking relief for Defendant’s alleged infringement of the Monk name, image, and likeness ‒ not for some asserted interest in the Brother Thelonious brand itself.”

“Notwithstanding the parties’ failure to engage with the relevant doctrine,” the court went on to define how Monk Jr.’s complaint qualified as a false endorsement claim under the Lanham Act, citing an eight-factor test to determine whether the representations were likely to cause confusion regarding the estate’s affiliation with the brand. In addition to the similarity of the likeness used by the defendant to the actual plaintiff, criteria include recognition enjoyed by the plaintiff among the “segment of society for whom the defendant’s product is intended” and the relevance of the plaintiff’s fame to the product.

Monk Jr.’s other claims ‒ right of publicity under New Jersey law and unjust enrichment under California law ‒ survived as well.

Enterprises can take away the fact that a right of publicity cause of action may be more difficult to shake off. Courts may also be more reluctant to determine whether a trademark license or mere consent was given before facts are more fully developed with further discovery. Finally, this case also highlights the need to get agreements in writing.

FTC Continues Inexorable Diet-Supplement Crusade

Commission joins with Maine to fine old-hand marketing company

Dragnet

The Federal Trade Commission (FTC) and the Office of the Maine Attorney General are rounding up alleged offenders one by one.

In 2014, Sensa Products, maker of weight-loss products, signed on to a whopping $26 million dollar settlement with the FTC, which alleged that the company had failed to provide competent and reliable scientific evidence to back up its advertising.

Then, in 2016, the Maine AG teamed up with the FTC to go after two companies, Direct Alternatives and Original Organics, both weight-loss supplement marketers. The companies were accused of violating the FTC Act and Maine consumer protection laws by making deceptive claims about their supplements. The companies “told a blizzard of lies,” according to the surprisingly poetic then-director of the FTC’s Bureau of Consumer Protection. Direct Alternatives and Original Organics settled the case as well.

Both cases were part of the FTC’s ongoing program of enforcement against allegedly phony weight-loss products.

Dominoes

The next related lawsuit dropped in early February 2018 ‒ a joint Maine/FTC action targeting Marketing Architects, an advertising agency that worked for Direct Alternatives. According to the FTC, pushing weight-loss supplements was a bit of an obsession for Marketing Architects; the FTC’s complaint cites the company’s work for the above-mentioned Sensa as well as MI6 Holding, distributor of weight-loss product Neu Garcinia Cambogia.

The plaintiffs accused Marketing Architects of crafting allegedly deceptive radio ads for Direct Alternatives’ products, replete with fictitious product endorsers, bogus news features, negative-option enrollments and dramatic weight-loss claims lacking any tie to an actual product study.

The Takeaway

Marketing Architects settled shortly after the complaint was filed, and faces a number of restrictions and directives. The company is no longer allowed to make any of the always-false “gut check” weight-loss claims advised against by the FTC; it must present scientific evidence to support its claims; it must forgo misrepresenting case studies and their results; and, similarly, it must reject the use of false testimonials and bogus “independent” programming.

Marketing Architects is also ordered to pay a $2 million judgment to the FTC and the state of Maine.

Ken’s Foods Sued for Slippery Olive Oil Claims

Plaintiffs claim packaging misleads consumers into canola conspiracy

Labels, Labels

This February, two consumers brought a class action against Ken’s Foods Inc. in the Central District of California over packaging claims regarding the use of olive oil in some of its salad dressings.

Erikka Skinner and Anne Kenney claim to have purchased bottles of three of Ken’s Foods’ salad dressings – Greek with Feta Cheese, Black Olives, and Imported Olive Oil; Olive Oil & Vinegar; and Italian with Extra Virgin Olive Oil. The purchases were motivated partly because the products boasted “olive oil” prominently on the packaging – a misrepresentation, the women allege.

Sub-Parsley?

According to the plaintiffs, soybean and canola oil made up more than 90 percent of the dressings in question (the plaintiffs do not note in their complaint where this information comes from).

The plaintiffs also took the company to task for allegedly claiming that the olive oil used in the salad dressing was “extra virgin” olive oil, which is priced higher than standard olive oil because of its appealing taste and reported health benefits.

The Takeaway

This dust-up is a cautionary tale about the need to harmonize marketing messages across product packaging – and to ensure that ingredients are given appropriate real estate that matches their relative importance to the whole product.

Ultimately, the plaintiffs accused Ken’s of violating the California Consumers Legal Remedies Act, the California False Advertising Law and the California Unfair Competition Law. But for reasons not made clear in the docket, the plaintiffs voluntarily dismissed the lawsuit just four days later.

Only a Little Quibble With the Kibble

NAD: Blue Buffalo not in doghouse over spot

Puppy Love

Blue Buffalo came up with a great script.

The pet food manufacturer put together a commercial taking on rival dog food brands Pedigree and Cesar. In the spot, two pet-owner-and-dog pairs sit on either side of a split screen. One dog owner feeds the dog Pedigree or Cesar; the other owner feeds the dog Blue Buffalo. An off-screen interviewer asks the owners to read the ingredients label; the owner on the Blue Buffalo side of the screen appears confident and happy through the read, while the other owner seems perplexed by the list on the Pedigree or Cesar can.

In one iteration of the commercial, the Cesar-eating dog crossed the split screen and retrieved the Blue Buffalo food to give to its owner. In the Pedigree version, the dog crossed to the Blue Buffalo side, put one paw on the leg of the owner with the Blue Buffalo and then ate the Blue Buffalo food alongside the other dog.

Seriously cute.

Then a voice-over stated, “While both foods provide complete and balanced nutrition, nine out of 10 Cesar feeders (or eight out 10 [Pedigree feeders]) chose/prefer the ingredients in Blue Buffalo.”

Given Paws

The National Advertising Division (NAD) reviewed a challenge to the ad and related marketing materials. Before NAD’s review, Blue Buffalo permanently discontinued the original version of the commercial and created a new version with an added super that read “Both foods provide complete and balanced nutrition.” NAD based its decision on the revised advertisement.

Pointing to a prior challenge in which NAD determined that Blue Buffalo’s advertising falsely disparaged the competition, the challenger, Mars Petcare US, argued that this commercial was a continuation of the same practice.

NAD, however, determined that the new ad, as well as related print and internet advertisements, reasonably conveyed the truthful and accurate message that consumers should compare the ingredients of different dog foods and decide which is best. NAD also determined that the ads did not falsely denigrate the competition but instead “communicated a parent preference claim that was supported by a consumer-preference study comparing the first five ingredients” of the products. NAD did, however, recommend that Blue Buffalo modify the commercial to make clear that the pet parent preference claims were based on a comparison of the first five ingredients of each product.

As to the alleged implied claims regarding the dogs’ preferences, NAD determined that only the Pedigree version of the commercial communicated the implied message that the dog preferred Blue Buffalo over Pedigree because the dog ate the food. In contrast, in the Cesar version of the commercial, the dog simply brought the Blue Buffalo bag of food over to its owner, which did not imply that the dog preferred Blue Buffalo.

According to NAD, Blue Buffalo’s “canine palatability study,” which compared dogs’ reactions to Pedigree and Blue Buffalo products, supported the implied dog preference claim. However, NAD recommended that Blue Buffalo modify the Pedigree version of the ad to explicitly identify the specific dog food variants compared in the study.

The Takeaway

As in other recent decisions regarding comparative claims, NAD’s message was loud and clear: NAD expects advertisers to be loud and clear about the objects of their comparisons.

Michigan Consumer Hurls the TCPA at Medical Supplier

Class action against One Source Medical hits all the essentials

Distillation

It’s a triple-header, according to Frances Ewing: no consent, no relationship, no end.

Despite the fact that Michigan-based Ewing claimed she had never required the services of durable medical equipment provider One Source Medical Supply and never asked them to call her, the calls kept coming, again and again.

She claims in her recently filed class action that when she called to ask the company to stop, the representatives who answered the line were able to provide her name and address.

Ewing’s Telephone Consumer Protection Act (TCPA) class action, filed in the Eastern District of Michigan, Southern Division, is based on two sales calls she claims were made on Sept. 8, 2017, but she alleges there were many more. Ewing maintains that she has been listed on the National Do Not Call Registry since November 2012.

The Takeaway

Ewing seeks statutory damages and attorneys’ fees and expenses, alleging violations of the TCPA as well as unfair and deceptive acts and practices under the Michigan Compiled Laws.

The complaint is perhaps most interesting for its brevity; its 12 terse, sparse pages contain almost two pages of direct quotations from the Code of Federal Regulations and the TCPA itself.

Consider it a sign of how standardized (and commonplace) TCPA complaints have become.

Platform Changes Cause Influencer Anxiety

Facebook, YouTube and Instagram rules challenge the influencer marketplace

Shifting Terrain

For influencers – individuals who through fame, expertise or charisma are able to affect the purchasing decisions of others – the platform is everything. Who they can reach and how they reach them all depend on the set of rules unique to their chosen marketing platform.

And when the structure of the underlying service changes, influencers must recalibrate to exploit opportunities – or simply survive.

Recent changes to three of the most important online platforms for influencers – Instagram, YouTube and Facebook – are forcing them to rethink their strategy and approach.

Just Because You’re Paranoid …

Despite public denials by the company, some influencers and small businesses are feeling a cold wind of change blowing from Instagram. The company switched to a Facebook-style algorithm feed back in 2016. And although this was the last publicly announced change to Instagram’s feed, community members believe that the service is making behind-the-scenes changes to prioritize posts that become very popular very fast. The concern, as well as some pushback, is outlined in a recent Business Insider article.

“The new Instagram algorithm is hurting the artist community, small brands, and even those with lots of followers as most posts are hidden unless they spike in engagement right away,” claims Anastasia Beverly Hills, a beauty company in an Instagram post that has received hundreds of thousands of likes. The (presumed) new algorithm tweaks are, according to some influencers, cutting growth in half. Other outlets report that Instagram users are joining in groups to like each other’s content, thereby driving all the posts toward more visibility.

Focus on the Personal

Facebook has gotten a lot of attention for its alleged role in the 2016 election. Although it considers itself a neutral platform that held little sway on the outcome of the election, Facebook announced big changes back in January 2017, changes intended to blunt the effect of the now-notorious “fake news” and promote “meaningful” content – posts from friends and family.

This uptick in more personal fare on user feeds comes, as Facebook readily admits, at the expense of Facebook Pages, including content from publishers and businesses.

Some outlets saw this as a boon to influencers – after all, their personal messages about products would be given broader exposure in the absence of business content, right? Not so fast, say others; influencers also use Facebook Pages for their analytics and other tools, so the overall effect is likely to hit them as well.

Entry Barrier

Finally, over at YouTube, a recent change to the platform’s Partner Program, which allows content creators to monetize advertisements associated with their content, is also causing some concern.

Creators must now amass “4,000 hours of watchtime within the past 12 months and 1,000 subscribers” in order to join the program. The raised threshold is predicted to have a chilling effect on fledgling influencers and brands that are working hard to get their numbers up.

The Takeaway

It may be easy to forget, but online influencers are a new creature in the marketing bestiary, no older than the platforms that nurtured them. Their old ancestors – the sonorous radio pitch man, the home shopping host and the infomercial personality – evolved to meet the disruptive introduction of social media; the current crop of online influencers will surely do the same.

Mattress Company and Reviewing Site Hit With Sanctions

Court: Retailer GhostBed hid deep relationship with reviewer

Hit Where It Hurts

Part of a burgeoning online bed-in-a-box mattress market, Purple Innovations is considered an up-and-comer in the industry. Like many of its peers, Purple’s lack of conventional showrooms means that the brand lives or dies based on its online reputation.

In January 2017, honestmattressreviews.com (HMR) went online. Owned and operated by Ryan Monahan, the site began taking shots at Purple Innovations in negative reviews on the site. The claims were fairly serious, including an alleged link between materials used by Purple Innovations and incidents of cancer. In addition, the site reviewed Purple Innovations products poorly, while other mattress companies, including competitor GhostBed, fared well.

Throughout, HMR maintained that it was entirely independent.

Topsy-Turvy

Purple Innovations wasn’t so sure. The company filed a complaint in late February 2017, alleging a thick packet of grievances, including ”false advertising and false association under the Lanham Act and Utah common law, tortious interference with economic relations, defamation, trade libel and injurious falsehood, civil conspiracy, and violation of the Utah Truth in Advertising Act.”

Key to the complaint was Purple’s assertion that the website’s claims of independence were malarkey and that Monahan was, in fact, in bed with GhostBed (sorry – couldn’t resist).

Drama ensued. Purple moved for an ex parte temporary restraining order to keep HMR from making further false claims about the company. The court denied the TRO but later granted it on March 2, when it determined that the defendants seemed to be avoiding service of process. The very next day, Purple moved to hold HMR in contempt, claiming that the site was not abiding by the temporary restraining order.

GhostBed CEO Mark Werner joined Monahan in filing declarations reiterating their independence – maintaining that Monahan had never held a position at GhostBed, had never been a member of GhostBed’s marketing team and had never had so much as an email address issued by GhostBed. Monahan and GhostBed’s counsel reiterated these claims in a hearing held in mid-March.

Surprise Witness!

On the basis of these assertions, the court dissolved the restraining order. But in a further dramatic twist, Purple returned in late June 2017 with a surprise declaration from one Calisha Anderson, former director of marketing at GhostBed. Anderson’s declaration contradicted Monahan, Werner and GhostBed’s assertions, and she claimed that she had very little actual authority for GhostBed’s marketing and that Monahan was the real director of marketing.

The entire mess wound up in an evidentiary hearing the following September. After listening to Werner, Monahan and Anderson, the court “found the testimony of Ms. Anderson to be credible and persuasive, and … not seriously challenged by cross-examination.” About a month later, Purple moved for sanctions against the defendants, arguing that their “willful misrepresentations prejudiced Plaintiff’s case and interfered with [the] proceedings.”

The Takeaway

In February 2018, this rather dramatic phase of the suit came to its close, with the court finding that the defendants had substantially interfered with the judicial process and granting the plaintiff’s motion for sanctions against GhostBed. The court also struck down GhostBed’s counterclaims, awarded Purple attorneys’ fees and noted that it would “also issue an adverse jury instruction if deemed appropriate when this case goes to trial.” However, the court must still consider the defendants’ motion to dismiss, which was filed on Jan. 23, 2018, so there is sure to be more drama from these two competitors.

When Obscurity Is Not a Defense

Many organizations facing a data-security incident struggle to understand how or why their organization was targeted in an attack. Most simply believe they are too small or too obscure to be targeted by malicious cyber actors. Even larger, well-known businesses are lulled into complacency, mistaking years without a major security incident as evidence that their business is an unlikely target, or believing that a small corner of their business, perhaps the new cloud instance they’re testing, will go unnoticed. Understanding how attackers target victims is critical to proper network defense and to accurately assessing an organization’s risk scenarios. We explore the issues in our latest Data Privacy Monitor blog post.

Avoiding Legal Hot Water

In the Feb. 15 issue of Chief Outsiders, BakerHostetler partner Alan Friel discusses the latest regulations and other legal concerns that may impact marketing initiatives using customer information. Read the full story here

Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you written information about our qualifications and experience.

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