AD-ttorneys@law – September 1, 2022

Alerts / September 1, 2022

In This Issue:

CSPI to FDA: Move to the Front!

Watchdog barks at industry efforts to highlight nutrition facts


FOPNL. It’s sweeping the globe. What is it, you ask? A new government agency? An awful skin condition? A variant of the common cold?

No, it’s something far more benign – FOPNL stands for “front-of-package nutrition labeling” and, according to the Center for Science in the Public Interest (CSPI), it’s become a bit of a fad.

“[FOPNL aims] to give consumers information about the healthfulness of foods that is clear, quick, and easy to access and understand,” the watchdog group wrote in a recent citizen’s petition to the Food and Drug Administration (FDA) advocating mandated FOPNL for food products. “Dozens of government-led FOPNL systems with a wide variety of formats are already in use ….”

The reasoning behind the petition is straightforward: “Well-designed interpretive FOPNL can significantly improve the healthfulness of foods selected by consumers and prompt product reformulation.”

But of course, there’s a twist.

Public vs. Private

The United States has lagged behind, a fact that CSPI seems to be a tad miffed about: “The United States has not yet adopted a government-led FOPNL policy,” the watchdog wrote. “CSPI first petitioned the FDA to adopt a FOPNL system in 2006. The petition called for a symbol on the principal display panel that would communicate to consumers the healthfulness of foods.” Despite hearings a year later, the FDA “never formally responded to CSPI’s petition.”

According to the petition, the National Academy of Medicine issued a report recommending that government agencies should “develop, test, and implement a single, standardized FOP system to appear on all food and beverage products.”

Perhaps sensing a shift in attitudes, the Consumer Brands Association and the Food Marketing Institute cooked up their own FOPNL system in response, called “Facts Up Front,” which, according to CSPI, “simply takes information on the calorie and nutrient content per serving from the Nutrition Facts label and places it on the front of the package.”

But the industry-sponsored FOPNL doesn’t cut it as far as CSPI is concerned. Its objection is a matter of design.

The Takeaway

“While Facts Up Front increases visibility of nutrition information by moving it to the principal display panel,” CSPI writes, “the system does not provide consumers any guidance on how to interpret this information, beyond what was already available on the Nutrition Facts label.”

If that weren’t enough, CSPI claims that the industry model “allows companies to highlight nutrients they believe show their products in a favorable light. Critics – including CSPI – have argued that this system would not do enough to influence food choice and is instead intended to forestall regulation.” Moreover, it alleges that Facts Up Front has no positive effects on consumer nutritional choices whatsoever.

CSPI advocates what it calls “interpretive FOPNL” – labels that provide evaluative judgments on the nutrient content in the food. These evaluations are often expressed through iconography – colorful symbols like red, yellow and green badges or nutrition “grade” systems – that emphasize visual cues over the pure information used by Facts Up Front (see Appendix A of the petition for examples).

We’ll see if CSPI’s petition produces any movement over at the FDA, but until then, marketers might have their creative teams flex their muscles with upfront nutrition information designs. It would be good preparation and it might boost your brand – as long as your product can stand up to the invited scrutiny.

Influencers on Notice over NFTs

TINA warns a dozen celebs, promises action against the Bieb, Witherspoon

Nobody Parties Like Truth in Advertising Parties

Ever imagine a gathering including Meek Mill, Gwyneth Paltrow, Snoop Dogg, Logan Paul and Madonna? Oh, and, we dunno, Eva Longoria and Justin Bieber, just for kicks?

We hadn’t either (and frankly, we would have been much more interested in such an affair when we were in our 20s. Now it just seems ... tiring). But you can find them all, along with a clutch of other celebs, milling about on Truth In Advertising’s (TINA) NFT influencer promotion spotlight page. What’s the occasion?

TINA, it seems, is taking a definite interest in how non-fungible tokens (NFTs) are marketed by the rogues’ gallery known as the league of celebrity influencers.

Float Like a Butterfly

TINA ain’t afraid of anyone, even the most fearsome of influencers.

Consider the letter sent by Laura Smith, TINA’s legal director, to boxing phenom Floyd Mayweather. It’s a model of understatement: “We are aware that Floyd Mayweather has promoted certain [NFT] companies on his social media channels,” Smith wrote. “While is not currently addressing a specific deceptive marketing issue pertaining to such posts, we have found that celebrity NFT promotions is an area rife with deception ….”

You can almost hear the emphasis on “currently.”

What sort of deception, you ask? “A failure to clearly and conspicuously disclose the promoter’s material connection to the endorsed NFT company,” she continued, “as well as the omission of other material information, such as the risks associated with investing in such speculative digital assets ....”

These are the general marketing failures TINA is warning about. While most of the letters contain the same cautions, two celebrities – Bieber and Reese Witherspoon – are accused of outright deception (see the Bieb’s letter here). The difference appears to be that TINA purportedly knows of existing partnerships/ownership interests between Bieber and Witherspoon and the NFT companies they tout, while for the other celebrities, they only warn that if any such connections did exist they must be disclosed. Notably, TINA is not taking the position that simply owning an NFT would constitute a material connection.

The Takeaway

Given the recent turmoil in the cryptocurrency markets – in terms of both pure value and some of the fishy marketing that has been plaguing the sector – it’s no surprise that NFTs, which are built on the same underlying blockchain technology, are receiving renewed attention.

That’s not because blockchain is inherently bad, but because its utility and scope are still being tested and proved, which means regulators have been slow to act. This lag leaves the markets that depend on the technology open for abuse.

NFTs can and should spur a revolution in the ownership of online goods, but the fundamental chaos surrounding blockchain-built technologies still needs to be tamed or the markets that represent them will continue to limp along.

And while the technology underpinning these new offerings may be new, the same old disclosure requirements apply. If someone has a material connection to a company that they’re posting about on social media, then that connection must be disclosed.

CARU Makes Over Deficient Developer

LO.L. Surprise!-inspired app was inappropriately gathering kids' information

Gag Me with a Spoon?


We took the L.O.L. Surprise! O.M.G. Fashion Doll quiz!

We described our fashion style (“All about the glam and glitter”), picked the phrase that speaks to our inner diva (“Born for the spotlight”) and picked two other answers that we didn’t understand and discovered that we were Swag: “the baddest and most fabulous B.B. on the block!”

We don’t know what any of this means. Oh, except that in the formulation of MGA Entertainment, the creators of L.O.L. Surprise! dolls, “O.M.G.” means “Outrageous Millennial Girls.” Which is confusing, because the L.O.L. Surprise! brand of dolls was released in late 2016, not exactly the sweet spot for marketing to young millennials.

In any case, L.O.L. Surprise! toys were HUGE, becoming the No. 1 toy brand for Generation Z in 2017 and spawning countless spinoffs and accessories from the original line of big-eyed, dayglo-garbed dolls.

It’s one of these spinoffs we’re interested in today — the L.O.L. Surprise! Room Makeover app.

My. Brain. Hurts.

Yes. An app. We downloaded the makeover app and tried to “play” it – at least the part of it that seemed like a game. There were jewels and balloons and jugs you had to pop, for some reason, which would hatch eggs that would yield ... things to makeover an apartment with?! But in the end, it seemed like a collection of exploding loot boxes and well, loud music, neon colors and clashing, confusing patterns.

We have a headache.

But now, Firefly Games, the owner and operator of the L.O.L. Surprise! Room Makeover app, has its own migraine, and it isn’t about gameplay.

The Children’s Advertising Review Unit (CARU) ran across the app in its routine monitoring of kiddie content and found it wanting in several areas.

First, CARU noted that Firefly’s main privacy policy conflicted with the makeover app’s specific privacy policy. The main policy does not address collection of personal information from users under age 13, while the app claimed the information it gathered from children was used to allow kids to interact with the game. When collecting personal information from kids, companies are required to comply with the Children’s Online Privacy Protection Act (COPPA). Firefly was, according to CARU, not in compliance with COPPA because while its app collects children’s information, as admitted to its privacy policy, there is no attempt to screen those users through an age gate or to obtain verifiable parental consent for users under age 13.

The watchdog group also took Firefly to task for a plethora of advertising violations, including ads that forced the user to watch a video or download an app to continue the game, video ads that mimicked the game itself – thereby encouraging direct interaction with the ads – and “some advertisements that were unsafe and inappropriate for children.”

The Takeaway

CARU found that Firefly’s missteps violated COPPA as well as CARU’s advertising and privacy protection guidelines. Firefly agreed to fix the situation.

It’s worth noting that during the course of the investigation, Firefly maintained that a significant portion of the makeover app’s audience was adults who felt nostalgia for the toys of their youth, but this fact did not absolve the company from making the app safe for kids who wanted to use it. A site or app directed to a mixed-use audience, in which personal information is collected from both adults and children, is still required to comply with COPPA.

CARU’s recommendations to the company are a handy laundry list for any developer whose audience, in whole or in part, consists of kids:

  • Provide clear and understandable notice of its children’s information collection and use practices.
  • Provide a COPPA-compliant means of obtaining verifiable parental consent.
  • Design its app with children in mind to ensure it does not deceive or manipulate them.
  • Provide clear and conspicuous disclosures of all ads.
  • Ensure any methods offered by the app to exit are clear and conspicuous.
  • Monitor and ensure advertisements are safe and appropriate for children.

Whether or not your site or app will attract a “mixed audience” depends on a variety of factors, including how it’s marketed (are cartoons involved?) and any actual knowledge of users’ ages. If you’re unsure what side of the line your site falls on, it’s worth considering that penalties for COPPA are strict: up to $46,517 per violation. Address regulations that cover kids up front and you won’t have to worry about who might download your app.

Mask Maker Buys Chinese Products, Relabels as Made in USA

Second-time offender racks up $150K in fines from FTC

In NIOSH We Trust

There’s not much to laugh about when it comes to the COVID-19 pandemic, but we may have found something.

It’s on page 9 of a 23-page complaint brought by the Federal Trade Commission (FTC) against one Adam Harmon and his two companies, Axis LED Group and ALG-Health LLC.

It’s a bald eagle holding an N95 mask in its beak.

The image is unintentionally funny, in the way that only poorly photoshopped ads are unintentionally funny.  The eagle is holding the mask by one elastic strap, but it’s slack. Which makes no sense. Because if the eagle is perched somewhere, the straps should be taut from the weight of the mask. If the eagle is flying, the mask should be dragging the bird down like a malfunctioning parachute.

In any case, it’s a bald eagle holding an N95 mask in its beak. It’s just funny. Is the eagle delivering the mask to someone? Is it heading to a masks-required eaglet gender-reveal party? Is the eagle an anti-masker who just snatched the N95 off someone’s face?

Ill Conceived

The ad is for just one of Harmon’s line of personal protective equipment (PPE) products, including masks, gowns and gloves, which the FTC alleges he and his companies began selling in – you guessed it – early 2020.

(Is there a product you should be more wary of than opportunistic PPE?)

Part of Harmon’s pitch was that his products were made in the USA – he even went so far as to name one N95 offering a “patriot mask,” which is either a bold, bipartisan attempt to make masks palatable or the most poorly conceived marketing ploy ever.

We don’t know how well the patriot masks sold, but a larger issue undermined Harmon’s marketing plan: According to the FTC, the made in the USA claims were untrue.

“In fact, in numerous instances, the products advertised … were wholly imported from China,” the FTC claimed. “Indeed, in numerous instances, Defendants received Chinese KN95s, unpacked the completed respirators, stripped off Chinese origin labels, printed ALG [Health] and NIOSH [National Institute for Occupational Safety and Health] labels on the respirators, and then re-boxed the respirators in ALG packaging with MUSA labels.”

As all our readers know, “Marketers should not claim products are [made in the USA] unless they can substantiate such products are ‘all or virtually all’ [made in the USA].”

The FTC filed a complaint against Harmon and his entities in early August, alleging violations of the COVID-19 Consumer Protection Act, the Made in USA Labeling Rule and the FTC Act.

The Takeaway

The proposed settlement isn’t particularly interesting: Harmon and his companies are required to stop making the claims, provide substantiation for future claims and fork over more than $150,000 in civil penalties. The defendants were also subject to a $2.8 million redress judgment, which was suspended based on their inability to pay.

What is noteworthy is the fact that the defendant was required to pay civil penalties. If you didn’t think the FTC could do that without an existing order, then you’re to be forgiven. After all, the FTC only gained that ability in July of last year after finalizing the Made in USA rule, which authorizes significant civil penalties. This is the third case filed since then, and we can expect Made in USA to be a hotbed of enforcement going forward.

But what’s remarkable about this case – although nothing should surprise us at this point – is that Harmon should have known better. The FTC had taken him to task once before, when it tagged him for marketing LED lights manufactured in China as made in the USA back in 2017. Enforcement only went so far as a closing letter in that case based on remedial action by the company and presumably some amount of enforcement discretion. 

In the latest case, Harmon claimed that his products were superior because of their supposed origin in the United States. “In numerous instances,” the FTC wrote, “defendants have represented, expressly or by implication, that because they are all or virtually all made in the United States, Defendants’ products are safer or provide superior protection from COVID-19.”

Cousteau Society Settles Right-of-Publicity Suit with Granddaughter

Family conflict puts name, image, vocabulary and wardrobe up for a fight

Just Say Merci

If you are under the age of, let’s say, something around 50, have we got a treat for you.

You were probably too young to remember the glories of Jacques Cousteau’s American television programs, but thanks to the magic of the Internet, they’re yours to experience today.

Cousteau was a famed oceanographer whose love for the sea was palpable and often contagious. His American TV shows – The Undersea World of Jacques Cousteau and The Cousteau Odyssey – were visually stunning, often dramatic introductions to fascinating environments and the beautiful and grotesque sea animals that populated them. If you were a nerdy kid in the 1970s or ’80s, chances are you wanted to join Cousteau on his ship, Calypso, and travel the oceans popularizing science with the rest of his scruffy, laid-back crew.

Sure, there are all sorts of high-resolution nature documentaries available today. But the saturated, old-fashioned film, coupled with Cousteau’s magisterial presence, give The Undersea World an inimitable gravitas.

Check out The Sleeping Sharks of Yucatan or Lagoon of Lost Ships. There’s tons more to watch, too. Extra bonus: They’re narrated by Rod Serling.

And if you don’t like them, or don’t care, that’s fine – just don’t stuff us in the gym locker again, okay?

Famille Contre Héritage

You can guess from the preamble how excited we were to write about a right-of-publicity case involving Cousteau. It crossed our sonar a while ago, but its recent resolution meant that we could finally say a few words about it.

The case started in 2019, when The Cousteau Society Inc. sued Cousteau’s granddaughter, Celine Cousteau, and her production companies for Lanham Act trademark infringement, false association, violations of Connecticut common law trademark and unfair competition law, and right of publicity violations under French and Connecticut law.

When Cousteau died in 1997, the complaint claims, the mariner had been estranged from his immediate family for some time, engaging in notable battles with his son over his plans to build restaurants called “Cousteau’s” in Fiji and Hawaii. The society claims that Cousteau transferred his intellectual property and publicity rights to it as a way to quell the family’s attempts to dilute his legacy.

Celine started her own documentary enterprise, founding a production company to produce “multimedia content with an emphasis on short films concerning environmental and socio-cultural issues,” according to a court ruling in the case. And that set off the family conflict once again.

The Takeaway

The parties recently settled on undisclosed terms, but there are a variety of interesting aspects to the case, regardless of its abrupt end.

The suit concerned two films made by Celine – Celine Cousteau, The Adventure Continues and Tribes on the Edge. The society argued that both films violated its marks by sounding very similar to “The Journey Continues,” which is a tag it uses in marketing materials. The company also alleged that “Celine Cousteau used images of Jacques-Yves Cousteau, used the mark JACQUES-YVES COUSTEAU, and traded off Jacques-Yves Cousteau’s legacy to market and promote the Documentary through a promotional teaser video.” Even the familiar red cap that Cousteau often wore, which Celine used in a press kit for The Adventure Continues, was an alleged violation.

In addition, the society objected to Celine’s reference to Cousteau’s legacy – namely, that her films were continuations of his explorations and her ruminations on how her explorations were related to, indeed an extension of, his. The court notes that this aspect of the films was protected by artistic expression exceptions.

The result was a sprawling ruling on a motion to dismiss, which preserved the society’s right-of-publicity claims and some of the Lanham Act allegations. Perhaps more light will be shed on the nature of the settlement, but for now, we’re not sure what drove the parties together and what shape Celine’s films will take to satisfy the agreement – or if they will ever be seen at all.

Check Out Our Latest Blog Posts

There Is Bad Press: FTC Defendant Sues the Agency Over an Over-the-Top Release

P.T. Barnum famously said, “There’s no such thing as bad publicity.” Oscar Wilde gave that quote his own spin and said, “There’s only one thing in the world worse than being talked about, and that is not being talked about.” Well, some folks most definitely disagree when a whole settlement potentially is tanked over a press release.

The Matrix of Guardrails for the Metaverse Grows (Plus Weekend Movie Viewing Recommendations)

We are not quite at the Matrix moment of a red pill/blue pill choice yet, but we are moving closer every day to the possibility of a fully immersive virtual world. And the regulators and watchdogs are already thinking about how we can protect the kids when they venture not outside into the real world but inside into the parallel online metaverse.

Recent Summary Judgment Decision in FleetCor Case Spells Trouble for CEOs and Disclaimers

A recent federal court decision found that FleetCor, a company that sells fuel card services to businesses, and its CEO had violated the FTC Act through a series of deceptive and unfair acts and practices. It is not every day that the FTC sues the CEO of a publicly traded company, and it is even less often that we see a federal court opinion on the topic, so this decision warrants a deep dive.

TINA Issues Warning Letters to Celeb NFT Endorsers

From Eminem to Snoop Dog, Tony Hawk to Lionel Messi, William Shatner to Brie Larson, music, sports and Hollywood celebrities have eagerly jumped on the non-fungible token (NFT) bandwagon. Whether launching their own collections, purchasing an expensive profile pic or simply endorsing new artists, celebrities have embraced blockchain technology and been extolling the virtues of owning a unique digital collectible across their social media platforms.

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.