Retail & Consumer Products Law Observer

Retail & Consumer Products Law Observer

Legal Insight for the Retail and Consumer Products Industry

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

By Christopher A. Cole on Posted in Advertising & Product Risk Management

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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

By Preetha Chakrabarti on 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

By Chalana Williams on 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

By Rebecca Baden Chaney on 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

By Michelle Gillette and Josh Foust on 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

By Danielle Rowan and Lauren B. Aronson on 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

By Scott L. Winkelman, Cheryl A. Falvey, Matthew Cohen and Carolyn Wagner on 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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Join Us: ABA Food & Supplements 7th Annual Workshop

By John Fuson on Posted in Advertising & Product Risk Management, Events, Product Liability & Torts

2017 continues to be the year of the Food Safety Modernization Act, as the U.S. Food and Drug Administration, having completed its roll-out of the major rules implementing this land-mark food safety legislation, moves in earnest with inspections to check on compliance.

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To help manufacturers prepare for this and other issues confronting the food industry, on Tuesday, June 13th, the American Bar Association Food & Supplements Subcommittee is hosting a Workshop in Hershey, Pennsylvania. One topic of discussion will be FSMA inspection preparedness as a panel of industry representatives will talk about what they’re seeing from the latest FDA inspections, and what manufacturers should expect when agency investigators come knocking this summer and fall.

In addition to talking about how to prepare for an FDA inspection, the panel plans to examine what FDA has said about its expectations during its first round of visits focused on FSMA compliance. It will also talk about how manufacturers can have their FSMA documents in order for investigator review, and how to prepare for the flurry of environmental samples FDA is likely to take. Crowell & Moring partner John Fuson will be presenting as part of the panel. Additionally, Laura Cordova will be speaking on a panel regarding ethical issues in parallel criminal and civil proceedings. Michelle Gillette is one of the program organizers for the workshop.

For more information, visit the ABA website.

Trolls and Tall Tales: How to Protect Your Company’s Online Reputation

By Carolyn Wagner and Laura Aradi on Posted in Advertising & Product Risk Management

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In today’s social media and internet focused world, tracking online reviews and commentary from consumers is essential for product manufacturers and retailers. Savvy online participation can provide companies with important quality feedback and bolster customer relations when consumer concerns are handled quickly and sensitively. But even companies are not immune to cyber trolls. What happens when an online comment or review contains false information about your product or brand, or accuses your company of offering poor customer service or selling defective goods? And, as is commonly the case, how can the truth of the matter be verified if the comment is posted anonymously? Here are some suggestions to follow as you work through the issue:

  1. Step One: Arm yourself with information by reviewing the basic elements of defamation law.
  2. Step Two: Assess whether action is necessary.  Sometimes ignoring the issue can be the right answer.
  3. Step Three: Take informal action, such as responding to blog comments on your own with your side of the story or requesting a retraction from the author or website host.
  4. Step Four: Assess goals and risks of litigation or formal action. 
  5. Step Five: If necessary, strategically draft a defamation complaint to initiate litigation.
  6. Step Six: Stand your ground and litigate aggressively through discovery challenges and other potential obstacles.

For more details, see the full article:  Six Steps to Protecting Your Reputation Online. 

Long Live the King (Bio)

By Josh Foust on Posted in Advertising & Product Risk Management

Ninth Circuit Follows King Bio Decision in Confirming Private Plaintiffs May Not Challenge “Lack of Substantiation” Under California Law

To view the full version of this article, visit the latest version of our Recent Happenings in Advertising & Product Risk Management newsletter.

When it comes to prosecuting false advertising, what is the appropriate division of labor between government authorities acting on behalf of the public, on the one hand, and members of the public themselves?

Most states have answered this question by enacting consumer protection laws that allow private plaintiffs to step into the shoes of government prosecutors to challenge allegedly false advertising. These private enforcement mechanisms supplement the roles played not only by state agencies and prosecutors but also by the Federal Trade Commission and Food and Drug Administration at the federal level. At the same time, most of these states have reserved exclusively to government actors the power to demand that advertisers produce evidentiary support, or “substantiation,” for their advertising claims—especially when they are not definitively “false,” but rather relate to new technologies undergoing testing, or to areas of scientific controversy.

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Even in California—which has an especially robust statutory scheme allowing consumer “attorneys general” to bring suit for false advertising—courts have long held that the state legislature deliberately entrusted the power to demand substantiation only to “prosecuting authorities,” not private plaintiffs. As one California Court of Appeal explained in the seminal decision in National Council Against Health Fraud v. King Bio Pharmaceuticals, the policy rationale is that this division of labor is “the least burdensome method of obtaining substantiation for advertising claims” and limits “undue harassment of advertisers.” Yet that has not stopped the plaintiffs’ bar from filing suit after suit—often class actions—alleging that companies lack sufficient scientific support for their advertising claims.

For more, see the full article.