Retail & Consumer Products Law Observer

Retail & Consumer Products Law Observer

Legal Insight for the Retail and Consumer Products Industry

Laura Brett Named New NAD Director

Posted in Advertising & Product Risk Management

On August 1, 2017, the Advertising Self-Regulatory Council (ASRC) and Council of Better Business Bureaus (CBBB) announced that Laura Brett has been appointed as director of the National Advertising Division (NAD). Ms. Brett has served as Acting Director of NAD since Andrea Levine, former Director of NAD, retired after 20 years as NAD Director. She joined NAD as a Staff Attorney in 2012 and was later an Assistant Director. Prior to joining NAD, Ms. Brett was a litigator at Willkie Farr & Gallagher and a solo practitioner. She was also a member of the Rye City Council and Deputy Mayor of Rye, NY.

At NAD, Ms. Brett has authored decisions in numerous cases challenging the adequacy of disclosures in native advertising formats, sponsored content, and other online and social media advertising issue. Before the FTC adopted its long-awaited native advertising guidance, Ms. Brett used the NAD’s self-monitoring authority to fill a regulatory gap and bring several challenges of native advertising. In her decisions, she pushed for improved disclosures and provided detailed guidance for companies engaged in novel forms of online advertising. She has not shied away from using NAD’ s authority to challenge the advertising practices of well-known tastemakers with large social media followings, challenging the Kardashians and Kate Hudson this year.

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President Trump Nominates CPSC Acting Chair Buerkle to Serve as Permanent Chair

Posted in Advertising & Product Risk Management

On Monday, President Trump nominated Ann Marie Buerkle, who has served as Acting Chair of the U.S. Consumer Product Safety Commission since February 9, 2017, to serve as permanent Chair of the Commission.  The appointment is for a term of seven years beginning on October 27, 2018 when her current term expires.  Acting Chair Buerkle’s statement on her nomination can be read here.

This nomination must be confirmed by the Senate.  Even if confirmed expeditiously (and that is a big if), the current minority-majority political dynamic at the Commission will not change until President Trump is able to appoint a third Republican Commissioner once Commissioner Marietta Robinson’s term expires in October later this year.

Acting Chair Buerkle’s regulatory philosophy and priorities for the Commission have been well documented, including in our prior blog posts.  In fact, she reiterated some of those thoughts as they pertain to product recalls in opening remarks at the CPSC’s Recall Effectiveness Workshop yesterday, July 25.  Acting Chair Buerkle stated that the Commission and its staff:

  • need to continue engaging all product safety stakeholders and listen to ideas, problems, and solutions concerning product recalls;
  • should not have a “one size fits all” approach to product recalls;
  • should not expect recalling companies to bankrupt themselves in undertaking a voluntary product recall; and
  • should look at proportionality and risk when effectuating a product recall.

Acting Chair Buerkle concluded her remarks by stating that the most effective way to prevent consumer injury is not through product recalls, but through preventing unsafe products from entering the market in the first instance.

We expect Acting Chair Buerkle to be confirmed in the coming months and wish her congratulations on the nomination.  

FTC Focusing on Privacy Risks of Interconnected Toys

Posted in Advertising & Product Risk Management, Product Liability & Torts

© Getty Images

Fuzzy talking toys are no longer the annoying, yet benign Christmas gifts they used to be. Many of today’s toys, like refrigerators, cars, and televisions, are “smart,” and may come gift-wrapped with all of the emerging cybersecurity risks the internet has to offer. And as various government agencies grapple with the regulation and enforcement of smart products, the Federal Trade Commission (“FTC”) may be narrowing in on smart toy manufacturers as a potential target. The FBI and FTC issued separate alerts last week highlighting potential threats posed by cuddly friends that collect children’s voices and other identifying information and putting manufacturers on notice of potential enforcement actions for failure to comply with the Children’s Online Privacy Protection Act (“COPPA”), respectively.

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This Week in Digital Advertising: Fake News, Bots, and Implications for Digital Trust

Posted in Advertising & Product Risk Management

©iStock

Last December, authorities arrested Edgar Welch, a 28-year old man from Salisbury, North Carolina, who had entered Comet Ping Pong, a Washington, D.C. pizza parlor, armed with a shot gun. Mr. Welch reportedly came to Comet Ping Pong on a self-described mission to free child sex slaves that he believed might be imprisoned there at the bidding of Hillary Clinton and her campaign Chief of Staff, John Podesta. After Welch shot his gun into the ceiling, terrified employees fled the building. Then, after encountering swarms of local police, and having found no evidence of the vast conspiracy he had been led by social media to believe existed, he gave himself up peacefully to authorities.

As outlandish as the story may seem, Mr. Welch was not the only one duped by the story. For weeks, dozens of anonymous posters had fanned the flames and pursued the imaginary conspiracy theory on Reddit.com, a hugely popular social news aggregation site.

This fake conspiracy was likely fueled in part by armies of “bots,” which are fake social media accounts often purchased and organized centrally, and mobilized to push a particular opinion or agenda and sway public opinion. It is surprisingly easily to purchase bots online. For example, Russian websites, such as BuyAces, sell empty social media accounts to anyone willing to pay with digital currency. Once purchased, programmers can enable these accounts to disseminate information or respond to news stories en masse. It is widely reported that Special Prosecutor, Robert Mueller, is investigating whether the Russian government used such tactics to influence the last election.

What does this have to do with advertising, you might ask? Everything.

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Webinar: Printer Cartridges & Cheerleading Uniforms: What the Key 2017 IP Supreme Court Decisions Mean for Apparel Companies

Posted in Events, IP/Brand Protection

On July 27, 2017, Crowell & Moring will be presenting a webinar hosted by the United States Fashion Industry Association on the hottest IP Supreme Court decisions from 2017 that will affect the fashion and retail industries.  Anne Li and Preetha Chakrabarti of Crowell will be discussing Star Athletica, LLC v. Varsity Brands, Inc. and Impression Prods., Inc. v. Lexmark Intl. Inc. The Star Athletica case involving the copyrightability of cheerleader uniform designs will have a significant impact on not only the fashion industry, but other industries that rely on copyright protection, such as consumer product manufacturing and 3D printing.  And the Lexmark decision involved the doctrine of patent exhaustion, and held that a patentee cannot sue for patent infringement after the first sale of a patented item, even if that first sale is outside the United States. Thus this case too will have an impact on any retailer that deals with IP and operations abroad.

For more information and to register for this webinar, please visit Crowell.com.

 

Who “Wood” Have Thought? Plaintiffs Challenge Longstanding Lumber Labeling Practices

Posted in Advertising & Product Risk Management, Consumer Class Action

Baker’s dozen = 13 (not 12)

Easy.

Foot = 12 inches (the length of the average man’s foot)

Of course. I learned this in the second grade.

2 by 4 = 1.5 inches by 3.5 inches  

What?

4 by 4 = 3 ½ inches by 3 ½ inches

No way.

5/4 inches by 4 inches = 1 1/8 inches by 3 ½ inches

Mind. Blown… unless you’re a carpenter or in the construction industry.


In the United States, softwood lumber is governed by the American Softwood Lumber Standard which was developed by the American Lumber Standard Committee, in accordance with the Procedures for the Development of Voluntary Product Standards of the U.S. Department of Commerce. That’s a mouth full. However, the lumber standard is a government-approved codification of longstanding industry practices. And, while dimensional lumber is cut to a specific length, width, and depth, there is a difference between the nominal size (what the lumber is referred to) and its actual size.

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U.S. Supreme Court: Shaping the Personal Jurisdiction Landscape in Product Liability Cases

Posted in Consumer Class Action, Product Liability & Torts

On June 19, 2017, the U.S. Supreme Court issued a decision clarifying the circumstances in which a lawsuit “arises out of” or “relates to” a corporation’s contacts with a particular jurisdiction, such that it can be sued there. In Bristol-Myers Squibb Co. v. Superior Court, writing for an 8-1 majority, Justice Alito held that California state courts do not have jurisdiction to hear the product liability claims of non-California residents against Bristol-Myers Squibb Co., a foreign corporation. The Court reasoned that the nonresident plaintiffs “do not claim to have suffered harm in that state” from their use of BMS’ drug Plavix, and “all the conduct giving rise to the nonresidents’ claims occurred elsewhere.” The Supreme Court found insufficient BMS’ substantial sales in California, including through its use of 250 sales representatives in that state.

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How Sweet It Isn’t

Posted in Advertising & Product Risk Management

The last few years have seen a war waged on sugar. In addition to increased media attention, USDA and the Department of Health and Human Services have set recommended sugar consumption limits. In the latest Dietary Guidelines For Americans 2015-2020, one of the five “guidelines” is to limit calories from added sugars. FDA also has new recommendations on consumption of sugar, reflected in draft guidance issued January 2017.

In addition to USDA and FDA’s guidance, other groups, such as the American Heart Association, are supporting policies that help lower the intake of sugar-sweetened beverages by the American public. One such policy is to tax drinks and food sweetened with sugar. In November 2014, 75% of voters in Berkeley, California approved a tax of 1 cent per ounce on sugar-sweetened beverages, which is said to have generated more than $2.5 million for use in community nutrition and health efforts. Consumption of sugar-sweetened beverages is also reported to be down by 20%.

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Trampoline Manufacturer Can’t Bounce Away From FTC Trouble

Posted in Advertising & Product Risk Management, Product Liability & Torts

FTC Moves Ahead Enforcing Endorsement Cases

A few months ago, acting Federal Trade Commission Chairwoman Olhausen stated that the FTC should shift focus to cases of actual harm, leaving many to wonder whether FTC would still actively enforce endorsement cases. However, in April, the FTC sent out ninety letters to brand influencers and marketers reminding those influencers and marketers to clearly and conspicuously disclose their relationship to brands. On the heels of these April letters, the FTC filed a complaint and ultimately reached entered a proposed settlement order (“order”) with two brothers that relied on deceptive endorsements and misleading review websites to sell Infinity and Olympus Pro brand trampolines.

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CPSC Hears Rare Oral Argument in Zen Magnets Recall Litigation

Posted in Advertising & Product Risk Management, Product Liability & Torts

On June 7, the U.S. Consumer Product Safety Commission provided administrative law followers a fascinating case study. For the first time in two decades, the CPSC’s five Commissioners heard an appeal put on by CPSC staff in administrative litigation. In its appeal, the staff seeks to overturn an administrative law judge’s opinion finding that Zen Magnets’ controversial high powered, small rare earth magnets (SREMs) are not defective and are not a substantial product hazard when sold with appropriate warnings. Novel already, what made this argument all the more interesting was an additional wrinkle:  four of the five Commissioners who heard the appeal had voted previously to approve a final safety standard that has the practical effect of banning such magnets outright.

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