The FTC Social Media Consent Order Against SmartClick

Posted in False Advertising

The FTC continues its efforts to combat deceptive social media advertising. Recently, the FTC brought an enforcement action against SmartClick Media LLC and its owner. The FTC alleged that SmartClick engaged in the following deceptive and misleading conduct:

(1)        operating a “Doctor Trusted” certification program under which “Doctor Trusted” seals were sold for use on websites that indicated to consumers that products were evaluated by doctors using their medical expertise although doctors they hired did nothing more than a superficial and cursory review of the products online; and

(2)        hosting websites that were formatted to appear as independent lifestyle blogs and health product review sites when they were in actuality paid promotions or placements.  Continue Reading

FTC Acts Against Warner Bros.’ YouTube Promotion Campaign

Posted in False Advertising

Last week, the FTC announced an agreement containing a consent order, subject to final approval, resolving its claims against Warner Bros. Home Entertainment Inc. (Warner Bros.) for the company’s misleading use of social media influencers to promote one of its video games before its official release in violation of Section 5(a) of the Federal Trade Commission Act. This represents another example in a series of recent enforcement actions brought by the FTC against companies for their misleading use of native advertising campaigns to promote, market and/or advertise their products. For example, the FTC brought an action against retailer Lord & Taylor for its alleged misleading and deceptive use of a native advertising campaign, utilizing Instagram fashion influencers and an online magazine to market−and ultimately sell-out−a dress from one of its fashion lines. Continue Reading

Second Circuit In Vimeo Narrows The Red Flag Knowledge and Willful Blindness Exceptions To DMCA Safe Harbors

Posted in Copyrights, DMCA

The Second Circuit recently decided Capitol Records, LLC, et al. v. Vimeo, LLC (2d Cir. June 16, 2016) (“Vimeo”), a landmark decision concerning the interpretation of the Digital Millennium Copyright Act of 1998 (the “DMCA”).  The DMCA gives qualifying internet service providers a safe harbor (protection) from copyright liability with respect to user-posted material.  In this case, Plaintiffs, a group of record labels and music publishers owning copyrights in sound recordings and musical compositions, brought suit against Vimeo, an internet service provider, which operates a website for the storage and exhibition of user-posted videos. Plaintiffs alleged that Vimeo was directly, contributorily and vicariously liable for the copyright infringements identified in approximately 200 videos. Vimeo, at 18. Continue Reading

The Importance of Being Earnest and Objectively Reasonable

Posted in Copyrights

Kirtsaeng v. John Wiley & Sons, Inc. continues to make controlling copyright law, visiting the U.S. Supreme Court for the second time on an issue of great importance to copyright owners and litigants. This time, the issued raised for consideration was whether the lower court properly exercised its discretion in denying a $2 million fee application by Kirtsaeng who had been the prevailing party on the novel and, at that time, undecided issue of copyright law raised before the U.S. Supreme Court the first go-around – of whether the first sale-doctrine applied to works manufactured abroad.  Continue Reading

Ninth Circuit “Strikes A Pose” For Madonna And Music Sampling In “Vogue” Copyright Dispute

Posted in Copyrights

In a copyright decision that rocks the music industry and splits from the Sixth Circuit, the Ninth Circuit recently held that Madonna’s mega-hit “Vogue” did not violate copyright rights by sampling a 0.23-second horns segment of the 1980’s song  “Love Break.” In VMG Salsoul v. Ciccone, the divided appellate court affirmed the Central District of California’s ruling that “de minimis” copying does not constitute copyright infringement, even if the plaintiff proves actual copying.

Applying this standard, and after listening to the audio recordings, the majority agreed with the district court that Vogue did not infringe Love Break because an average audience would not “recognize the appropriation of the horn hit” in Madonna’s 1990’s dance song. The majority further reasoned that “[i]f the public does not recognize the appropriation, then the copier has not benefitted from the original artist’s expressive content” and, therefore, there is no infringement. Continue Reading

The FTC’s Analysis of Lord & Taylor’s Social Media Marketing Campaign

Posted in False Advertising

New ways of monetizing digital media has brought challenges in regulating advertising. The FTC has recently issued guidelines to provide businesses and advertisers with insights as to how to comply with the FTC Act. Despite the new context, the governing legal standard remains fact specific and quite familiar.

In December 2015, the FTC issued its “Enforcement Policy Statement on Deceptively Formatted Advertisements.” Among other things, the FTC concluded that “native advertising”, that is, online advertising which is often indistinguishable from non-commercial content such as news, feature articles and product reviews, has become a business model for companies to easily and inexpensively mask the signals consumers have come to recognize as advertising or promotional content in order to capture the attention of ad-avoiding consumers online. Consequently, the FTC’s deceptive format policy requires companies to clearly, conspicuously and contemporaneously disclose sponsorship of natively formatted ads. Although doing so may detract from the perceived effectiveness of the ads, ignoring the FTC’s guidance may result in enforcement actions that include cease and desist orders, fines, and injunctions. Continue Reading

The 2015 FTC Policy Statement: An Advertisement Can Be Deceptive Based On Formatting

Posted in False Advertising

Starting a few years ago, the FTC began increasing its efforts to address online disclosures in new media. For example, in 2013, the FTC issued .com Disclosures: How To Make Effective Disclosures in Digital Advertising, which provided new guidance for mobile and other online advertisers on how to make online disclosures clear and conspicuous to avoid deception.  In 2014, the FTC launched an initiative called Operation Full Disclosure to ensure that advertisers comply with federal law and avoid misleading consumers.  As part of that initiative, the FTC sent warning letters to more than 60 undisclosed companies in a wide range of industries that failed to make adequate disclosures in their television and print ads.  The inadequate disclosures for which warning letters were sent fell into many different categories, including where advertisements:

  • quoted a price for a product or service but did not disclose the conditions for obtaining that price;
  • did not adequately disclose an automatic billing feature;
  • claimed an accessory was included but did not explain that they first had to buy or obtain an additional product or service;
  • claimed a product was unique or superior in a product category but did not adequately disclose how that category was defined or the basis for the comparison;
  • promoted a “risk free” or “worry free” trial period without disclosing that consumers would have to pay for initial/return shipping; and
  • made absolute or otherwise broad statements having inadequate disclosure explaining exceptions or limitations.

Continue Reading

Nominative Fair Use: The Second Circuit Joins Neither The Third Nor Ninth Circuits In Its Approach

Posted in IP Litigation, Trademarks

In an important decision delineating the boundaries of fair use of another person’s trademark, the Second Circuit announced a standard by which nominative fair use of a trademark will be evaluated in that Circuit in International Information Systems Security Certification Consortium, Inc. v. Security University, LLC. Because the Court ruled that the district court made several legal errors in throwing the case out, the Court vacated the district court’s grant of summary judgment on the infringement, false designation of origin and false advertising, and unfair competition claims, and remanded the case for further proceedings. Continue Reading

Generic Churrascos at the Federal Circuit

Posted in Trademarks, TTAB, USPTO

The Federal Circuit recently provided additional guidance concerning whether an applied-for mark is generic in In re Cordua Restaurants, Inc., (May 13, 2016).  This case stemmed from the United States Patent and Trademark Office’s refusal to register the trademark CHURRASCOS (Stylized) in connection with “bar and restaurant services; catering.”  Applicant Cordua Restaurants, LP (“Cordua”) has long owned and operated a chain of restaurants branded as “CHURRASCOS.” Those restaurants serve a variety of South American dishes, including grilled meats.  Indeed, the CHURRASCOS menu describes chargrilled “Churrasco Steak” as “our signature.”  In or around 2008, Cordua obtained U.S. Trademark Registration No. 3,439,321 on the Principal Trademark Register for mark CHURRASCOS (in standard character format) for use of the word in connection with “restaurant and bar services; catering.” On January 10, 2011, the Applicant filed U.S. Trademark Application Serial No. 85/214,191 for a stylized version of the mark

Churrascos

for the nearly identical services “bar and restaurant services; catering.” Continue Reading

En Banc Reconsideration Sought in FLANAX Case

Posted in IP Litigation, Trademarks

Belmora LLC filed a petition for reconsideration en banc of the Fourth Circuit’s FLANAX decision in Belmora LLC v Bayer Consumer Care AG, Appeal No. 15-1335 (4th Cir. March 23, 2016). As we previously have blogged [here], the 4th Circuit reversed the Eastern District of Virginia’s dismissal for lack of standing, and found that use of the mark in the US is not a prerequisite to suit under § 43(a) for unfair competition or false advertising, or under § 14(3) for cancellation.

In its petition for reconsideration en banc [copy here], Belmora argues that the 4th Circuit panel decision warrants en banc review because “it (i) overlooked material facts and legal considerations; (ii) conflicts with decisions of the United States Supreme Court, this Court, and other U.S. circuit courts of appeal; and (iii) raises questions of exceptional importance regarding the scope of 15 U.S.C. §§1051 et. seq. (“the Lanham Act”). Continue Reading

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