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Home | BakerHostetler

Ready or Not, CMMC Is Here: DoD Issues Final Rule Establishing Contract Clauses Implementing CMMC Program

ADventures in Law

Scams, Screens and Subscriptions: FTC’s Meador Lays Down the Law

Life Sciences Newsletter – Issue No. 3

Health Insurance Kickback Cases Signal Greater Government Focus (Law360)

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<a href="#EX">Ex-Reality Star Sues To Protect His Likeness Against AI</a>

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<a href="#Sure">Sure, Unsupported Health Claims Pair with Unsupported Earnings Claims</a>

<a href="#International">International Telecom Gateway Provider Faces FCC Ninja Attack</a>

<a href="#Levi">Levi Strauss to Fashion Line: Stop Ripping Off Our Jeans</a>

<a href="#Tampax">Tampax’s ‘Purity’ Is Up to a Jury To Decide</a>

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<a href="#Check">Check Out Our Latest Blog Posts</a>

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Ex-Reality Star Sues To Protect His Likeness Against AI

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‘Big Brother’ runner-up’s fame may be in doubt, but his case has legs

Let’s turn our attention to <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/10/face-comp.pdf">Kyland Young v. NeoCortext, Inc.</a>, an interesting counterpoint to the raft of recent copyright-themed AI lawsuits – especially the class action launched by <a href="https://www.bakerlaw.com/insights/ad-ttorneyslaw-july-28-2023/#Sarah">Sarah Silverman</a> and two other authors against OpenAI back in July.

As we noted in our coverage, the basis of Silverman’s suit – that the training of AI systems on her autobiography, a copyrighted text, violates copyright protections on her work – may doom her efforts in the end. Is training on text a violation of copyright? And if there is no final competitive product generated by the AI system in question, is the activity of scraping her text legally troublesome?

Now comes Kyland Young, a reality TV celebrity and the plaintiff in today’s case, suing NeoCortext on what the court in that case believes is firmer ground – that the company’s use of his likeness in its AI-driven “Reface” app violates his rights under California’s right of publicity statute.

Surely you’re dying for some background, right?

Who on earth is Kyland Young, and why is he a celebrity? By 21st-century standards, i.e., lower than a limbo bar at a contortionist convention after-party, Young is a celebrity, dammit. He was the fourth runner-up on the 23rd season of “Big Brother,” where he most notably <a href="https://bigbrother.fandom.com/wiki/Kyland_Young">helped drive the Cookout faction to the final six before ultimately losing to his former ally Xavier Prather</a>.

(We have no idea what that last sentence means, but he has 100K+ followers on Insta and, at one time, appeared on TV. So he’s a celebrity. Settle down.)

<a href="https://apps.apple.com/us/developer/neocortext-inc/id1450802200">NeoCortext</a> is a developer that publishes Reface, a smartphone app that does ... well, a number of somewhat creepy things, one of which involves swapping a user’s face with a face in another photograph, including pics of celebrities.

Young alleges that NeoCortext uses “images and videos often depicting individuals’ physical bodies in the roles for which they are famous.” He maintains that, in his case, “the Reface application allows users to swap their face on his body from scenes on CBS’s ‘Big Brother’” and related publicity shots, uses for which he did not give consent.

NeoCortext moved to dismiss Young’s suit, which was filed in California’s Central District in April. The company challenged the suit under California’s anti-strategic lawsuit against public participation (Anti-SLAPP) law and failed.&nbsp;

In a recent <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/10/face-ord.pdf" target="_blank" rel="noreferrer noopener">order</a> denying the company’s motion to strike, the court held that NeoCortext had failed to satisfy one of the tests required by Anti-SLAPP motions. While the company had proved that the activity it was being sued for occurred in “furtherance of the right of petition or free speech,” it had failed to establish that Young hadn’t “shown ‘a probability of prevailing on the claim.’”

To wit, NeoCortext’s arguments that Young’s lawsuit was preempted by federal copyright law failed because Young “is not seeking to ‘merely’ restrict the reproduction or distribution of the original photographs/works …,” but is disputing whether their use was permitted at all. Likewise, the company failed to prove that the new images combining users’ faces with Young’s photographs were sufficiently altered to be protected by the First Amendment as a matter of law. “While it may ultimately be deemed transformative as a matter of fact, that does not entitle NeoCortext to the defense as a matter of law.”

While we’re waiting for the Northern District of California to weigh in on a motion to dismiss Silverman’s suit on the basis of fair use, Young is bringing an altogether different type of AI-related complaint. And for now, at least, it seems to be enough to take the case to a jury.

Sure, Unsupported Health Claims Pair with Unsupported Earnings Claims

Supplement maker provokes DSSRC on multiple fronts

Dietary supplements. What is it, precisely, about this industry that seems to encourage negative attention from regulators and watchdog groups?

It isn’t a hard question to answer, at least on the surface.

A deeper analysis, however, might query why this quasi-medical mission seems to morph and metastasize into lifestyle offerings.

We think we have an idea. And an example.

Here goes: The $150-plus billion supplement market, which experiences only minimal standardized regulation and guidance in comparison with the pharmaceutical industry, was bound to be glutted with products ranging from the <a href="https://www.insider.com/supplements-you-should-or-should-not-take-2022-9">beneficial </a>to the downright <a href="https://www.bakerlaw.com/insights/ad-ttorneyslaw-march-23-2020/#2">dangerous</a>. And in response to all that competition, some supplement makers were bound to test the fences of legal product claims, like so many raptors planning a breakout. Those efforts were also likely to incorporate subject matter that had little to do with their underlying health claims.

A prime example: Zallevo Technologies, which drew the focus of the Direct Selling Self-Regulatory Council (DSSRC) last month. And in this case, the company was responsive to the self-regulatory inquiry and made significant efforts to address its concerns.

The subject matter of the DSSRC’s inquiry included a challenge to the company’s health-related product claims and earnings claims it made for the burgeoning salesforce it hopes to attract to sell the supplements whose claims were being challenged.

Zallevo offers products that address nearly every aspect of health – weight management, mood balance, daily energy, sports and fitness, and wellness and vitality. As the company’s inspirational <a href="https://shopzallevo.com/corporphan">background video</a> states, the products that improve the “five health tracks” listed above must be combined with “financial success and security” to ensure “personal growth and development.” By providing all three of these “essential elements,” Zallevo “empowers you to elevate your life in ways that at first may seem impossible ... [and] with Zallevo, people are doing the seemingly impossible every day.”

One can see how innocuous health claims can come to embrace an aesthetic, an entire way of life. How else is a manufacturer – even one that produces effective products – expected to distinguish itself in a glutted market?

Perhaps there’s a supplement out there that grants consumers the wisdom to understand that there’s no one-stop shop for living well outside their own experience and judgment. We’d sell that product.

The DSSRC’s concerns are far more prosaic than our fantasies, however, and Zallevo’s claims that with the “consistent intake of these [three] products, [a child’s] skin condition is nearly gone [and] her hair is growing back strong and healthy” and “incredible results from weight loss to weight maintenance[] to lean mass gains, energy, stamina, performance, libido, gut health, cardiovascular health, cognitive health …” inspired the watchdog’s curiosity.

After querying the company, “[the] DSSRC determined that Zallevo did not provide sufficient evidence to support the claims or could not demonstrate that the claims represent results that would be generally expected by users of the products,” the group said.&nbsp;

And eerily anticipating our use of the “Takeaway” subhead, the DSSRC continued: “It is a fundamental principle of advertising law that an advertiser is responsible for any reasonable interpretation of the claims that it communicates in an advertisement and must be able to substantiate its claims ….” And in Zallevo’s case, that included salesforce earnings claims.

It’s not enough to get healthy or to produce a product that advances health. There’s a whole lifestyle vision to go along with the pills.

The DSSRC applauded Zallevo’s “responsiveness” to the inquiry, but noticed that the earnings claims, which were made by a salesforce member, had yet to be removed. “[The] DSSRC recommended that Zallevo continue its efforts to have the claim removed,” the watchdog wrote, “including taking disciplinary action and, if necessary, ultimately terminating the salesforce member who disseminated the post.”

In the meantime, perfect your products and advertise them the right way. In the world of dietary supplements, isn’t getting one core product offering right difficult enough?

International Telecom Gateway Provider Faces FCC Ninja Attack

Commission’s robowarriors take aim at scam call enabler

We like to imagine the Federal Communication Commission’s (FCC) Robocall Response Team as a crack band of swinging-sixties-era, bodysuit-wearing secret agents led by Uma Thurman, but the truth is more prosaic.

The team, formed by <s>the FCC’s own Charlie-from- “Charlie’s-Angels”</s> FCC Chairwoman Rosenworcel, “serve[s] as an FCC staff working group that pulls together expertise from across the agency to leverage the talents of enforcers, attorneys, policymakers, engineers, economists [] and outreach experts to combat the unyielding menace of illegal spoofed, scam[] robocalls and robotexts.”

We’ve reported on the team’s efforts before, including its <a href="https://www.bakerlaw.com/insights/ad-ttorneyslaw-august-25-2023/#fcc">recent fine</a> of robocall scammers that dwarfed the GDP of Palau, Kiribati and several other countries.

But the team’s latest effort is <a href="https://docs.fcc.gov/public/attachments/DOC-397023A1.pdf">billed</a> as an “acceleration.” Of what?

We covered the FCC’s efforts to stem robocalls at the source ... or rather, at a primary source, back in <a href="https://www.bakerlaw.com/insights/ad-ttorneyslaw-june-17-2022/#FCC">June of last year</a>. That source – international “gateway” telecom providers – represents more than 60 percent of the robocall traffic coming into U.S. households.

“Gateway providers will be required to (i) participate in robocall mitigation (including blocking efforts), (ii) take responsibility for illegal robocall campaigns on their networks, (iii) cooperate with FCC enforcement efforts and (iv) quickly respond to efforts to trace illegal robocalls to their source,” we noted in our signature sparkling prose. “Failure to comply with these rules could subject the provider to mandatory blocking of any calls placed through its service by other network participants, which would effectively cancel its operations.”

The latest target – the bizarrely named One Owl Telecom<a> – </a>stands accused by the FCC of operating “as a gateway provider for international robocalls ... [acting] as either the originator or gateway provider for the calls.” One Owl’s activities were revealed when an allied company, Illum Telecommunication <a>Ltd.</a><a href="#_msocom_1">[CD1]</a>&nbsp;, with which it shares organizational and operational DNA, was <a href="https://docs.fcc.gov/public/attachments/DOC-376749A1.pdf">investigated by the FCC</a>.

As of now, One Owl is under threat that the FCC’s enforcement bureau may “cut off traffic from One Owl if it does not comply” by shutting down illegal traffic. “It’s not right when illegal robocalls flood our phones,” chairwoman Rosenworcel stated <s>over a crackling voice transmission from her hidden FCC lair</s> in an FCC press release. “We need to stop them in every way we can. Today’s action takes out a carrier responsible for these scam calls. But we won’t let up here. We have to keep at it until we get all [] this junk off the line.”

Levi Strauss to Fashion Line: Stop Ripping Off Our Jeans

We meant trademarks, okay? Stop giggling

Greatest Artists of the Century?

We’re not proud of it, but we prefer sweatpants, cargo shorts and the occasional square-toed shoe to haute couture. We’re not contrarian, we’re just honest; we can’t get our look together – or even a look together.

But that doesn’t mean we’re philistines.

We understand that fashion is art. It started for us with Stanley Tucci’s <a href="https://www.youtube.com/watch?v=rAIOUO0plTc">bracing speech</a> in “The Devil Wears Prada” and culminated in visits to the Met’s Costume Institute whenever there’s an exhibition (seriously, <a href="https://www.metmuseum.org/about-the-met/collection-areas/the-costume-institute">check it out if you can</a>). We recognize, and appreciate, people who take great fashion seriously, even if we’re wearing crocs with long socks.

This preamble is designed to inoculate us against accusations of barbarism when we ask: <a href="https://coperniparis.com/collections/bottoms/products/hybrid-flare-denim-trousers-black-washed-blue">What the hell is this</a>?

Billed as “inventive, daring and playful ... at once fusionist and futuristic,” these bizarre pantaloons consist of “stretch black jersey at the top for a smooth fit around the hips and thighs” that “fall into a looser silhouette from the knees down thanks to a lower section cut from washed blue denim that pools around the ankles.”

What the overwrought copy neglects to mention is that Coperni, the high-end maker of these trousers, used Levi’s jeans to fashion the bottom half of the ensemble that “pools around the ankles.” And that’s where things get interesting.

Levi’s is, of course, one of the most iconic brands in the world. As its recently filed <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/10/denim-comp.pdf">complaint</a> against Coperni states, the company has been “manufacturing and selling apparel for over 150 years ... and exhibits at institutions such as the Smithsonian and Museum of Modern Art display photographs underscoring that Levi’s products are a ‘staple of American culture, symbolizing youth, freedom[] and effortless cool.’”

(That’s not an overstatement. Check out the complaint for a surprisingly deep dive into the two marks referenced in the suit.)

But we’re getting ahead of ourselves. How did Levi Strauss &amp; Co. feel about the Coperni jean-leggings-Frankenstein monster?

First, the leggings – along with other products – utilize fabric tabs that, although they bear the “Coperni” name, allegedly infringe Levi Strauss’ marks. They also bear stitching patterns that resemble the arcuate design made famous by the American clothier.

These infractions are exacerbated, the company claims, by “Coperni [selling infringing products] alongside unauthorized ‘reworked’ versions of LS&amp;Co.’s authentic apparel.” If we wanted to score points for sophistication, we’d mention that “reworked” apparel is something akin to changing the minor details of someone else’s art and hanging it on a gallery wall with your own signature. In any case, the complaint argues that the reworked products retain “the Arcuate trademark and Tab trademark in a manner that is likely to confuse consumers about the source of Coperni’s products and/or a relationship between Coperni and LS&amp;Co.”

Coperni is being sued for trademark infringement, unfair competition and dilution of famous marks, with the final two charges occurring under federal law and California state law. Levi Strauss seeks judgment that its trademarks have been infringed alongside injunctive relief banning the infringing activity.

Our advice to anyone in the business of creating products that are adjacent to iconic fashion brands is simple and obvious: Steer clear of anything that could tie your designs to the original.

Tampax’s ‘Purity’ Is Up to a Jury To Decide

Product-claim plaintiff is up to old tricks, some of which ... worked?

Vanilla-flavored ice cream snacks, teas, charcoal briquettes, cookies. What latest product class has plaintiffs’ bar provocateur Snack Dragon added to its repertoire this time?

This go-round, it’s feminine hygiene products – specifically tampons, and even more specifically, Tampax brand tampons, which are manufactured by corporate mega-giant Procter &amp; Gamble.

As we’ve noted previously, Snack Dragon’s approach is generally uniform, even across a diverse array of products. The firm’s clients sue to exploit the difference between supposed consumer expectations for premium ingredients and lack of the same in the final product. It’s the firm’s signature template.

In this case, Palmer v. Procter &amp; Gamble Co., Illinois resident Stephanie Palmer is <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/10/tamp-comp.pdf" target="_blank" rel="noreferrer noopener">suing</a> the consumer goods behemoth for thwarting her expectation for products that “contain pure components, which she understands to refer to substances which have not been significantly altered from their initial state[] and have no possibility of harm ... and are better for the environment than alternatives.”

She relied, she claims, on Tampax product packaging that declares parts of the tampons within are “pure cotton” and “90% Plant Based.”

Unfortunately, “despite the front label promise the Product was ‘Pure Cotton,’ the non-core ingredients are not pure because they are significantly altered from their original or natural state.” Likewise, the suit alleges, the “plant-based” plastic that makes up the Tampax applicator is made up of compounds that, while plant based, are no different in their biodegradability from “regular” plastic.

Like many a Snack Dragon client, Palmer brought a passel of charges, including claims for injunctive relief, violations of Illinois’ Consumer Fraud and Deceptive Business Practices Act, consumer fraud acts of various state jurisdictions, breach of warranty, negligent misrepresentation, fraud and unjust enrichment.

The court <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/10/tamp-ord.pdf" target="_blank" rel="noreferrer noopener">knocked out</a> a bunch of the charges, but let others survive – a contrast that should make every potential defendant justifying “green” advertising nervous.

Injunctive relief was booted by the court, which noted that “Palmer does not allege that she continues to purchase Defendant’s product. To the contrary, she confirms that she does not purchase these products anymore .... Thus, she faces no real and immediate threat anymore.” Similarly, the negligent misrepresentation, fraud and unjust enrichment claims died on the vine, slain by the economic loss doctrine.

However, legitimate questions for the jury did survive, in the court’s estimation. Ingredient lists delineating the exact use of cotton in the product notwithstanding, “the statements taken together [with] the associated imagery ... seeks to evoke a connection between [the] Product and pure cotton,” the court wrote. “Of course, Defendant is free to develop and present evidence that a reasonable consumer would not make this connection. But at this stage, it is plausible that objective consumers could be misled by Defendant’s labeling.”

And so the case limps forward, yet another cautionary tale for companies wishing to associate themselves and their products with a greener future: There may be arguments to be made for this sort of marketing, but at least some of them will be answered in court.

<a href="https://bakerlaw.zoom.us/webinar/register/WN_B1THCfzxQse3z6sWqMy8Cw#/registration">What Brands Need to Know About NFTs</a>

Join us for an overview of today’s Web3 ecosystem and a discussion on how brands use NFTs to engage customers and expand into new markets. Topics include how NFTs are used in reward, loyalty, and membership programs, how trademark laws apply to NFTs, and strategies for protecting your brand’s reputation.

<a href="https://www.adventures-in-law.com/blogs/district-court-decision-digs-deep-into-the-ftc-and-agency-law/">District Court Decision Digs Deep into the FTC and Agency Law</a>

If we look at recent Supreme Court decisions, the Federal Trade Commission (FTC) has a pretty dismal record, with well-publicized losses in AMG and Axon. At the district court level, however, things are quite different; we come across very few FTC losses. Although there are some recent litigations that are raising questions about the bounds of the FTC Act and other laws that the agency enforces, we are generally seeing courts being at least receptive to many of the theories raised by the agency. (It remains to be seen whether and how all of this will shake out.)

<a href="https://www.adventures-in-law.com/blogs/naughty-or-nice-five-tips-for-cause-marketing-legal-compliance-this-holiday-season/">Naughty or Nice: Five Tips for Cause Marketing Legal Compliance This Holiday Season</a>

Fall is in the air, and that means brands are planning holiday promotions. The season of buying is also the season of giving, and Q4 is prime time for brand + charity partnerships and cause marketing campaigns. Often, a for-profit brand – known as the commercial co-venturer (“CCV”) – donates a portion of proceeds from the sale of goods or services to a charitable organization (known as a “charitable sales promotion”). Several states have laws that specifically address CCVs and charitable sales promotions to protect against fraud and help ensure companies carry out the promised benefit. Companies need to navigate the requirements carefully to avoid legal missteps or loss of consumer trust. Here are five tips to keep your company on the Nice List this holiday season:

<a href="https://www.adventures-in-law.com/blogs/brand-collaboration-at-its-best-pacsun-met-its-goals-via-metropolitan-museum-of-art-collaboration/">Brand Collaboration at Its Best: PacSun ‘Met’ Its Goals via Metropolitan Museum of Art Collaboration</a>

I haven’t used the words “shopped,” “purchased,” and “PacSun” in the same sentence for more than a decade. So now, in an existential daze, I’m wondering how I arrived at the “Thanks for shopping PacSun, here is your order confirmation” page. No, I’m not between the ages of 13 and 16. No, I didn’t happen to set foot in my local mall, even though a Cinnabon does sound good. Lastly, yes, I did check my calendar, and we’re definitely still in 2023 and not 2003.

AD-ttorneys@law – October 6, 2023

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