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<a href="#blessing">“Blessing Loom” Scheme Unravels in FTC Settlement</a>

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<a href="#photog">Photog Tries to Dress Down Bella Hadid</a>

<a href="#class">Class Action Face-Off for Coppertone Maker</a>

<a href="#openai">OpenAI Sues Someone Else for Trademark Infringement</a>

<a href="#fcc">FCC’s Elite Robocall Response Team Levies $300 Million Fine</a>

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“Blessing Loom” Scheme Unravels in FTC Settlement

Esoteric trappings can’t save pyramid-scheme-by-another-name

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By certain ironclad laws of demography, we aren’t allowed to add terms to the contemporary slang lexicon, but we’re going to give it a try.

Our entry is based on a pyramid/multilevel marketing scheme known as Blessings in No Time, or BINT. We <a href="https://www.bakerlaw.com/insights/ad-ttorneyslaw-july-21-2021/#1">covered a suit brought against BINT </a>back in the summer of 2021 by the Federal Trade Commission and the Arkansas Attorney General (ARAG). That complaint resolved last month with a <a href="https://www.ftc.gov/news-events/news/press-releases/2023/07/operators-blessing-loom-scheme-banned-multi-level-marketing-result-pyramid-scheme-charges-brought">settlement </a>that smacks BINT and its owners, married couple LaShonda and Marlon Moore, with all sorts of lifetime bans and nearly half a million dollars in payments.

BINT sold itself as a “blessing loom,” or an informal community savings club. There’s a good <a href="https://en.wikipedia.org/wiki/Airplane_game">Wikipedia article</a> detailing the pedigree of these schemes; they go by many names and have been around for a while. But despite being a modern avatar, BINT has a thoroughly arcane flavor.

BINT features a system of “levels” that participants buy into, with positions that correspond to classical elemental theory (earth, fire, water, wind). The boards split in two when they’re filled by payees and then split again as the scheme metastasizes, growing the pyramid scheme fractally. The public side of the scheme involves a collection of mandala-like “boards” that would make any New Ager feel at home.

In its original complaint, the FTC and the ARAG claimed that “BINT has solicited money from consumers and promised them investment returns as high as 800 percent.” “These promises are false. The supposed investment returns Defendants have promised members they would receive have been, in reality, merely funds other members paid to participate in the scheme.” New participants could join the loom with as little as $1,400, but since many were told they would earn more with higher contributions, some contributed upward of $60,000.

Perhaps BINT received special attention from the Feds because of the little touches that made it special—for instance, the fact that BINT forbade participants from “using certain payment apps to send their payments due to those processors having previously flagged BINT transactions” and ordered members to refrain from “POSTING ANYTHING BINT RELATED ON SOCIAL MEDIA REGARDLESS [of whether] YOU SAY ‘BINT’ OR NOT.” This led to a prohibition on the “use of review-limiting and related contract terms” in the order and perfectly demonstrates why the FTC is paying such close attention to customer reviews. Here, if reviews had been unimpeded, they could have served as a bellwether and warning of the unlawful conduct.

Also, LaShonda Moore told the BINT flock that their ranks included employees of the Federal Bureau of Investigation and the Internal Revenue Service—a claim she apparently felt inoculated the company from possible wrongdoing.

All this chicanery led to BINT’s demise, which leads us to the definition of our new pyramid-scheme-inspired slang:

1. Promising great returns under the guise of elaborate quasi-spiritualist trappings but delivering no value at all: Dan Brown’s novels are bint! Fun, but bint for sure.

But neither will the IRL BINT, which is now defunct. The settlement signed by the Moores spooned up the usual stew of bans on activities: They’re forbidden to engage in multilevel marketing, operating any “chain referral scheme,” and making deceptive or unsubstantiated income claims or misrepresentations.

The real teeth in the settlement, though, is the minimum $450,000 in refunds the Moores will be required to offer up to make affected BINT acolytes whole. Notably, the monetary remedy comes from the state of Arkansas and is not part of the FTC’s order. This reflects how the FTC has changed its approach to monetary judgments since the AMG Capital decision.

Alleges copyright violation for post of casual snapshot

“Scary Dragon Lady, or Some Kind of a Sexbot”

Here’s a suit that must be especially galling for the defendant: Chosen Figure LLC v. Bella Hadid. Yes, that Bella Hadid, the one and only, influencer, model, she of the icy stare—and the <a href="https://www.vogue.com/article/bella-hadid-cover-april-2022">surprisingly, almost heartbreakingly, vulnerable</a> interview.

Plaintiff Chosen Figure is a New Jersey-based “photojournalist” who, back in 2020, took a snap of Hadid walking out of a... well, a plain old doorway.

For a picture of one of the great supermodels, it’s rather low key: Hadid’s spectacular silhouette is on display, of course, but her outfit—a pair of sweatpants, a cropped tee, and a dark brown overshirt—is kinda-sorta drab. Her famed visage is hidden by a COVID-era face mask and a pair of shades. One might not even know it’s her.

But Hadid loved the shot enough to post it as an Instagram story shortly after it was taken, according to <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/08/had-comp.pdf" target="_blank" rel="noreferrer noopener">Chosen Figure’s complaint</a>, lodged in the Southern District of New York in early August.

That didn’t sit well with Chosen Figure. “Without permission or authorization from Plaintiff, Defendant volitionally selected, copied, stored and displayed Plaintiff copyright protected Photograph,” the complaint reads.

The charge? A single count of copyright infringement.

Live by the image, die by the image; every snapshot of a famous mug is a potential battleground for photographer and subject alike.

We’re speculating here, but we imagine Hadid—who by all accounts has methodically directed and shaped her own career—feels possessive of her own image and entitled to use it as she pleases. Or maybe she didn’t think about it at all? It doesn’t feel like a particularly iconic or well-crafted image of her, which may be why she liked it enough to repost it.

Whether or not we have any right to read Hadid’s mind, Chosen Figure represents another example of a famous person getting sued for using a photograph someone else took—<a href="https://www.billboard.com/pro/miley-cyrus-instagram-paparazzi-photo-lawsuit-explainer/">of them</a>. The law is weighted toward the photographer, not the subject, and aside from combating false endorsement, there’s little right Hadid or anyone of her stature can exercise over an image taken by the paparazzi or anyone else. This case highlights the line between right of publicity and copyright. The law protects Hadid in the event anyone tries to exploit her image for commercial gain, but she doesn’t inherently have rights in any image of her.

Class Action Face-Off for Coppertone Maker

Consumer alleges the company marketed the same product at different prices

We’re not trying to provoke the <a href="https://www.ctvisit.com/">Connecticut Office of Tourism</a>, which doubtless engages in brutal retaliation against its enemies, but we’re just going to say it out loud: The Land of Steady Habits (yes, that’s one of the state’s nicknames) isn’t famous for its beaches. It isn’t <a href="https://www.hawaiicommunityfoundation.org/maui-strong">Hawaii</a>, or California, or Florida. It isn’t even New Jersey. So why did Fresno, California, resident Tonya Akes sue Beiersdorf, Inc., maker of Coppertone sun care products, in the District of Connecticut?

The easy answer is: Well, that’s where Beiersdorf is headquartered, so what?

As for the deeper, more ominous question—why is Coppertone headquartered in Connecticut? —we’ll leave it to your fevered conspiratorial minds to determine why a cabal of stodgy New Englanders, who doubtless dress in tweed three-piece suits when they go down the shore, are secretly in charge of the sunniest company on earth.

The case, <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/08/cop-comp.pdf" target="_blank" rel="noreferrer noopener">Akes v. Beiersdorf, Inc.</a>, originally filed in July of last year, shouldn’t be of interest solely to conspiracists, though; even the surface is interesting.

We’ve Heard of Targeted Marketing, but This Is Ridiculous

According to her complaint, Akes grew suspicious of the price differential between two supposedly different varieties of Coppertone Sport Mineral sunscreen. The first, “regular” variety was sold in Walmart in 5-ounce containers for $9.98, or $1.99 an ounce. The second variety, festooned with the word “FACE” in large font on the front of the label, and including the tags “Won’t Run Into Eyes” and “Oil Free,” was sold by Walmart in 2.5-ounce containers for $9.98 as well—or $3.99/ounce.

Which might be fine. But Akes claims that the contents of the containers are identical and explains in her complaint that the price difference reinforces the “reasonable” belief “that the lotion is specifically formulated for use on the face. In other words, reasonable consumers believe that there is something different about the Coppertone Sport Mineral FACE lotion that makes it better suited for use on the face, as compared to regular Coppertone Sport Mineral lotion.”

By “putting the same sunscreen into two different bottles with different labels and charging more for one of them,” she claims, Coppertone is responsible for the fact that “consumers are being deceived and overcharged.”

Akes hit Beiersdorf with a class action suit alleging violations of California’s Unfair Competition Law, Consumers Legal Remedies Act, and False Advertising Law, along with unjust enrichment charges. Beiersdorf replied with the inevitable motion to dismiss, making several arguments that the court swatted away in a recent <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/08/cop-ord.pdf" target="_blank" rel="noreferrer noopener">order</a> that kept Akes’ hopes alive.

The company maintained that the “FACE” product wasn’t specifically marketed for use on the face exclusively, an argument that on the face of it...oh, well, never mind. “[T]here is nothing deceptive about emphasizing different but equally true aspects of a product to different market segments,” the company claimed, “or pricing products differently when sold to different market segments or in different retail channels.”

The court wasn’t having it. “Defendant argues that the challenged label at issue merely conveys that the product may be used for the face and not that it is specifically made for facial use,” the court noted. “Here, however, the word ‘FACE’ is prominently displayed front and center and Plaintiff’s claimed interpretation is plausible based on particularized facts alleged, and is thus sufficient to survive a motion to dismiss.”

In this case, the plaintiff hadn’t even seen both bottles at the time of the purchase, but since the “FACE” label alone might have convinced Akes to purchase the product for use on her face, the case can move forward to discovery where the questions raised by her complaint—whether or not the two products were identical or whether either was formulated specifically for facial use—could be answered.

Assuming that Akes is right, and that Beiersdorf is selling the same product and marketing it at a premium price, we come to the deepest question of all: Why invite this sort of legal challenge?

OpenAI Sues Someone Else for Trademark Infringement

Irony is preventing us from writing a subtitle

As anyone living adjacent to or above a rock knows, the fledgling AI industry is being <a href="https://www.bakerlaw.com/insights/ad-ttorneyslaw-july-28-2023/#Sarah">pummeled</a> by trademark and copyright lawsuits. What a delicious turn, then, that OpenAI—which has been accused of hoovering up trademarked and copyrighted images and texts to train its model, and then spitting them back out again in its output—is <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/08/open-comp.pdf" target="_blank" rel="noreferrer noopener">suing another company</a> for trademark infringement.

To be fair, you can see why Sam Altman and company are miffed. The defendant, sued in California’s Northern District, goes by the name Open Artificial Intelligence, Inc., which is kind of on-the-nose, if you ask us. OpenAI claims that “it was only after OpenAI’s first use of one of the OpenAI Marks that Defendants began using their confusingly similar mark, ‘Open AI’...the only difference with the OpenAI Marks being a space between ‘Open’ and ‘AI.’”

That one space gap is going to <a href="https://www.youtube.com/watch?v=f1N5lZw7e78">generate some billable hours</a>. &nbsp;

The Oldest Established Permanent Crap Game

To avoid confusion with OpenAI, and a consequent descent into madness, we’ll refer to defendant Open Artificial Intelligence, Inc., as “the defendant” from here on out.

According to OpenAI, Guy Ravine, president of the defendant, whose name clearly indicates that he is the lead zoot-suited antagonist in a 1950s musical, filed the offending trademark application with the United States Patent and Trademark Office in 2015—the day that OpenAI publicly announced its founding and $1 billion in funding. He sought registration on the USPTO Principal Register.

The original specimen they submitted to the USPTO was rejected for failing to show the mark used in commerce. OpenAI claims the defendants then submitted two new specimens that purported to show the mark in commercial use at the time the original application was filed—but which consisted of content pulled from GitHub and developed almost a year after the application was submitted.

The sleuthing OpenAI engages in to prove its point is interesting but too long to replicate here. Read the complaint!

Despite the shaky evidence, the USPTO, after denying the original application to the primary register, eventually added the defendant’s mark to the Supplemental Register—where it will sit, presumably gathering force through commercial use until it’s ready for another attempt to register on the Principal Register. Or until OpenAI ponies up some dough.

All the while, OpenAI claims, the defendants redirected their company’s URL—<a href="https://open.ai/">open.ai</a>—to OpenAI’s website—<a href="https://openai.com/">openai.com</a>.

When OpenAI contacted Ravine, inquiring about purchasing the redirecting domain name, Ravine allegedly replied, “Elon Musk paid $11 million for the Tesla domain and trademark in 2017. As we both know, OpenAI holds the potential to become larger than Tesla, and in either event, will become one of the largest companies in the world in a relatively short period of time. So the ultimate value of the domain and the brand are substantial.”

There’s more chicanery outlined in the complaint, which, in all fairness, is only a few weeks old and has yet to be responded to by the defendants. We’re eagerly awaiting the next step in this battle, but for now, we can’t help but speculate that OpenAI used ChatGPT to write the complaint.

(On second thought, <a href="https://www.nytimes.com/2023/05/27/nyregion/avianca-airline-lawsuit-chatgpt.html">probably not</a>.)

FCC’s Elite Robocall Response Team Levies $300 Million Fine

American greatness and unity restored in defeat of common robocall enemy

A decade ago, satirical news site The Onion <a href="https://www.theonion.com/last-american-who-knew-what-the-fuck-he-was-doing-dies-1819573021">bemoaned Steve Jobs’ death</a> (using language we cannot repeat in a family newsletter) as the passing of “the only person in this country who actually had his [redacted] together and knew what the hell was going on.” It was a funny piece, and sad, and had a fleck of truth in it.

But we’re here to announce that American competence is alive and well and is enshrined in, of all places, the Federal Communications Commission. More specifically, the FCC’s Robocall Response Team, which just wrapped up a doozy of an investigation with a fine so large that it <a href="https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)">dwarfs the GDP of several nations</a>.

“The Federal Communications Commission today issued a record-breaking $299,997,000 fine for auto warranty scam robocalls made by the largest illegal robocall operation the agency has ever investigated,” the Commission <a href="https://docs.fcc.gov/public/attachments/DOC-395728A1.pdf">crowed in an August 3 announcement</a>. The investigation targeted an interrelated network of companies that “executed a scheme to make more than five billion robocalls to more than 500 million phone numbers during a three-month span in 2021.”

As we <a href="https://www.bakerlaw.com/insights/ad-ttorneyslaw-aug-15-2022/#FCC">noted at the time</a>, that’s a lot of calls. Chances are, you received one of them—don’t you remember the endless auto warranty calls? The Commission characterized them as “a complex scheme designed to facilitate the sale of vehicle service contracts under the false and misleading claim of selling auto warranties.” We all got them; they were the last monocultural event <a href="https://www.sciencedaily.com/releases/2022/04/220418093957.htm">(not counting Taylor Swift</a>).

The various companies, helmed by individuals named Roy Cox and Aaron Michael Jones, allegedly used “neighbor spoofing” techniques to appear to be placing calls from companies in the same area code as the victims, making recorded voice calls to mobile phones without consent, making telemarketing calls without consent, dialing listed numbers from the National Do Not Call Registry, and more.

The FCC’s response centered on a court order mandating that all telecom carriers track down calls coming from the defendants and ban them from their wires. It then waived reporting to speed bans on what would amount to 8 billion phone calls. The result? “These illegal auto warranty robocalls dropped by 99%.”

And now, the villains are being hit with an unheard-of fine, worth almost a third of a billion dollars. Though the odds of the agency recovering any significant portion of that amount are pretty small.

<a href="https://bakerlaw.zoom.us/webinar/register/WN_GKgzTuvNSFGIkhTTILNnbQ#/registration" target="_blank" rel="noreferrer noopener">Session 9: Where the FTC is Heading on Privacy Issues and Why it Matters to Advertisers</a>

Even though Congress has yet to enact broad federal privacy legislation, recent FTC actions demonstrate that the agency is not waiting on Congress to act. They are taking a much closer look at how companies are collecting and using data in a wide variety of contexts and negotiating injunctions that more narrowly restrict how companies can use data and suggest the agency may be moving the goalposts considerably. The agency is particularly focused on data used for advertising purposes. Join Randy Shaheen and Daniel Kaufman as they explain the development and evolution of the FTC’s privacy and security authority, the new approaches that we are seeing, and where it might be heading.

<a href="https://www.adventures-in-law.com/blogs/updated-ftc-endorsement-guides-hold-virtual-influencers-to-actual-standards/" target="_blank" rel="noreferrer noopener">Updated FTC Endorsement Guides Hold Virtual Influencers to Actual Standards</a>

In-house Legal Friends: If you haven’t received this email yet, you will soon. The use of hyper-realistic virtual influencers to endorse products is no longer fringe; it’s the next chapter of influencer marketing, and the Federal Trade Commission (FTC) wants brands to know the guides apply to all influencers, human and humanoid alike. The FTC’s newly-updated&nbsp;Guides Concerning the Use of Endorsements and Testimonials in Advertising&nbsp;(mercifully nicknamed the “Endorsement Guides”) broadened the definition of “endorser” to include what “appear[s] to be&nbsp;an individual, group, or institution.” Brands and agencies should approach the trend with clear eyes and a plan to both mitigate legal risk and protect brand integrity.

<a href="https://www.adventures-in-law.com/blogs/an-interesting-new-proposal-on-obtaining-coppa-verified-parental-consent/" target="_blank" rel="noreferrer noopener">An Interesting New Proposal on Obtaining COPPA Verified Parental Consent</a>

Whether your focus is privacy, advertising or both, there is a good chance that you have bumped into some thorny issues involving the Children’s Online Privacy Protection Act (COPPA). In general, COPPA prohibits websites or apps from collecting “personal information” from children under the age of 13 without first obtaining verified parental consent (VPC). Through rulemaking, the Federal Trade Commission (FTC) has modified the definition of personal information over the years to include a wide array of information, including precise geographical information and persistent identifiers that are used for, among other things, behavioral advertising.

AD-ttorneys@law – August 25, 2023

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