David is a shareholder at Weintraub Tobin. He is a trial lawyer and represents production companies, infomercial companies, direct response companies, and multi-level marketing organizations as to both operational and compliance matters. In particular, David is focused on advertising and compliance issues, including FTC counseling and litigation, class actions, and multi-agency governmental compliance involving the marketing and sale (over multiple media platforms) of various products including educational and health-related products.

As someone who has litigated extensively against federal regulators on advertising issues, I have first-hand knowledge of how difficult it is to prevail in a case brought by the feds. For example, the FTC’s “win percentage” is astonishing; some have rated it over 99% of all cases brought. It is fair to say that the deck is stacked against the target of any such litigation.

Typically, in order to prevail against a case brought by a federal regulator, it takes deep pockets and patience. The deck is stacked. Not only does the federal government, including regulators such as the FTC, have the power to freeze assets on a pretrial basis – thereby potentially depriving their targets of the funds to right to counsel – but the legal standards limiting the FTC’s powers are significantly lower than the standards for other non-government civil litigants. For example, the standard for the FTC to obtain a civil preliminary injunction is lower than that used for other federal litigants. For a more detailed discussion of the history and background of the FTC’s powers and the lax injunction standards it enjoys, see http://anantitrust.wordpress.com/2014/04/09/the-ftc-at-100-now-doj-jr/.

Although the linked article, directly above, deals with the FTC’s considerable antitrust powers under section 13(b) of the FTC Act, its powers under Section 5 of the FTC Act (covering nebulous and elastically worded “unfair or deceptive acts or practices”) are no less. Additionally, government “enforcers” acting under Section 5 often trumpet the filing of a lawsuit in public PR releases, which alone is often enough to put a target out of business. The take-away is that advertisers and manufacturers need to be careful when making advertising claims because if the federal regulators decide to target you or your company, there is relatively little that can be done without deep pocketbooks and the will to take on a massive and powerful bureaucracy that has the legal power to inflict crippling litigation costs — win or lose.
Continue Reading “Buckyballs” and The Perils of Challenging Federal Powers Of Advertising Regulation

David Gabor is a shareholder at Weintraub Tobin. He is a trial lawyer and represents production companies, infomercial companies, direct response companies and multi-level marketing organizations as to both operational and compliance matters. In particular, David is focused on advertising and compliance issues, including FTC counseling and litigation, class actions, and multi-agency governmental compliance involving the marketing and sale (over multiple media platforms) of various products including educational and health-related products.

A recently filed in New York federal court lawsuit between Kind, LLC (the maker of the Kind Energy Bar) and Clif Bar & Co. (the maker of various iterations of the Clif Energy Bar), has all the makings of a classic trade dress dispute. In that case, Kind has sued Clif over the evolution of the packaging of Clif’s sub-brand, known as the “Mojo” Bar.

The case went before the District Court on April 28, 2014 for a one day “mini-trial” on Kind’s motion for injunctive relief. At that hearing, Kind argued that the transformation of the packaging of the Mojo Bar from a fairly standard “fat” opaque package into a slimmed down version featuring a transparent window and lettering on a black side panel, knocked off virtually every element of its own product, known as the Kind Bar.

Clif countered that the transparent window in a slim-size bar with certain lettering on it does not have even a single element of protectable packaging, nor does it duplicate the overall look of the Kind Bar.  In raising such arguments, Clif was relying on the general rule that if trade dress is determined to be legally functional it cannot be protected as a trademark even if the public attributes that appearance or design to a single source (de facto secondary meaning) and even if there is confusion between the parties’ products or their sources among members of the public. American Greetings Corp. v. Dan-Dee Imports, Inc., 807 F.2d 1136, 1141 (3d Cir. 1986).

Kind predictability responded that, under the standards of trade dress, the individual components were not as important as the overall “look and feel” of the product. Indeed, trade dress is the total image and overall appearance of a product as reflected in such features as size, shape, color or color combinations, design of a label, texture, or graphics. John J. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 980 (11th Cir. 1983). In determining the specific trade dress of the product and determining whether infringement has occurred, consideration is given only to an aggregation of all such features.
Continue Reading Kind Bar or Clif Bar: A Transparent Trade Dress Dispute

A case filed on April 9, 2014 in New York Federal District Court highlights the tension between celebrity endorsements and ordinary First Amendment communications in the digital age. The actress Katherine Heigl, who starred in various middlingly-successful motion pictures, has sued the drugstore chain Duane Reade Inc. for $6 million in damages for tweeting a paparazzi photo of her leaving one of its stores holding Duane Reade shopping bags, with Twitter the tag line: “Love a quick #Duane Reade run? Even @KatieHeigl can’t resist shopping #NYC’s favorite drugstore.”

In her complaint, which alleges deceptive advertising in violation of the federal Lanham Act as well as a New York civil rights statute protecting the use of a person’s likeness, the actress argues that Duane Reade has tried to trick consumers into believing that she has made an endorsement of the company’s brand. The complaint further argues that the image and text has stripped the “story” of any viable news content. To that end, Heigl’s legal team argues that Duane Reade is attempting to obtain what essentially amounts to free advertising at Miss Heigl’s expense – without paying her – by turning her random shopping excursion into an advertisement.

The case raises a number of interesting questions for the advertising industry. It is well-known that the industry has moved to adapt itself quickly to the digital age. For many years now, advertisers and their agencies have moved well past print, radio and video images to which they were formerly limited. For example, it is now common practice for advertisers to run lifestyle blogs that cover topics of general interest but often focus on the latest company news or brand releases cleverly embedded within ordinary content to make it look informal or even off-the-cuff. It is the age of the non-advertisement advertisement. In many cases, readers don’t even know that an entire blog may be a paid “product” that exists solely to advertise a particular brand or item. Often, the blog, twitter feed, or other digital medium is not even connected to the company’s primary “.com” website.
Continue Reading Tweet, Tweet, Sue, Sue: Corporate Twitter Feeds and The Lanham Act

David Gabor is a shareholder at Weintraub Tobin. He is a trial lawyer and represents production companies, infomercial companies, direct response companies and multi-level marketing organizations asto both operational and compliance matters. In particular, David is focused on advertising and compliance issues, including FTC counseling and litigation, class actions, and multi-agency governmental compliance involving the marketing and sale (over multiple media platforms) of various products including educational and health-related products.

Thomas Jefferson once famously warned that, “The natural progress of things is for liberty to yield and government to gain ground.” In the current political climate, this certainly seems to be the case. Businesses are being encroached by increasing regulatory scrutiny of what they can and cannot do. This manifests itself most readily in consumer protection laws and proposed regulations that affect, among other things, the way products need to be advertised and disclaimed.

As anyone who read Upton Sinclair’s The Jungle in grade school can readily attest, some regulation is necessary as a reasonable check on unfettered commercial forces and the often unfortunate “race to the bottom” in terms of public health and safety. This article does not mean to suggest that all regulation is inherently wrong.

However, as anyone who runs a business today, particularly in California, is acutely aware, the tendency of government regulators to regulate in what is already seen as a “nanny state,” is increasing. To a certain degree, this is only logical: if a regulator’s job is to regulate, the regulator will aggressively seek to enlarge her portfolio by offering ever increasing and ever more detailed regulations. It’s a matter of self-created job security.
Continue Reading Regulation Creep In The Nanny State:The Proposed Not-So-Safe-Harbor Enactment In Proposition 65 Advertising Regulations

For those of us old enough to remember, the bars, restaurants and salons of Europe were once literally awash in smoke so thick you could cut it with the proverbial knife. Starting at least a decade ago, however, certain EU countries began requiring extremely large, graphic health warnings on all tobacco products that were 60% of the packaging, as well as ensuring that cigarette packaging be childproof. These warnings included (and still do) pictures of people with their teeth falling out, or torn-out tracheas, or printed warnings stating that smoking will make users impotent, etc. Not a pretty picture. Literally. Such EU-sanctioned warnings went well beyond the generalized “surgeon general” warnings applied in small print to US cigarette packaging.


Continue Reading No E-Smoking Please, We Are European!