Ronnie London, Esq .

PATROLLING ADVERTISING FRONTIERS: FIGHTING AND DEFENDING CLAIMS IN RECENT ADVERTISING CASESPrivate Challenges Ronnie London, Esq.

Lanham Act Burck v. Mars Inc., 571 F.Supp.2d 446 (S.D.N.Y. 2008)

Lanham Act Burck v. Mars Inc., 571 F.Supp.2d 446 (S.D.N.Y. 2008) (“The Naked Cowboy versus the Blue M & M”) • NYC street entertainer alleged candy manufacturer and advertising agency violated right to privacy under New York law and infringed trademark under the Lanham Act • Right to Privacy action dismissed because manufacturer’s creation and display of a cartoon character dressed in street entertainer’s signature costume did not amount to use of entertainer’s “portrait or picture” as required to establish a violation of New York right of publicity statute • Allegation that an animated cartoon created by defendant featuring a blue ‘M&M’ dressed exactly like Naked Cowboy was sufficient to state a claim for false endorsement under the Lanham Act • Court would not strike parody, fair use and First Amendment affirmative defenses raised by manufacturer; parties ultimately settled

Lanham Act Board of Supervisors for La. State Univ. Agric. & Mech. Coll. v. Smack Apparel Co., 550 F. 3d 465 (5th Cir. 2008)

Lanham Act Board of Supervisors for La. State Univ. Agric. & Mech. Coll. v. Smack Apparel Co., 550 F. 3d 465 (5th Cir. 2008) • LSU, Okla. U., OSU, USC & Collegiate Licensing Co. sued sportswear manufacturer alleging violation of Lanham Act through infringing schools’ trademarks by selling t-shirts with their color schemes, logos and designs • District & Circuit Courts held for universities on infringement, despite non-registration of marks, because colors, plus other identifying indicia, were protectable and had acquired secondary meaning under traditional test • Universities’ use of the marks satisfied non-functionality test

Lanham Act North Am. Med. Corp. v. Axiom Worldwide, Inc. 522 F.3d 1211 (11th Cir. 2008) • Suit for false advertising and trademark infringement over Axiom’s use of two federally registered NAM marks for traction devices (for treating back pain) as metatags to influence Internet search engine results • Searches for NAM “IDD Therapy” and “Accu-Spina” marks returned Defendant’s website as second result, which provided a brief description of Axiom’s website that listed and highlighted Plaintiff’s marks • District court preliminarily enjoined use of plaintiff’s marks within metatags because they created a likelihood of confusion • 11th Cir.: Metatag use of NAM marks to promote and advertise Axiom products was “use in commerce” in connection with advertising goods, and district court did not clearly err in finding a likelihood of confusion • Distinguished 1-800 Contacts because Second Circuit found defendant used the plaintiff’s website address or URL, not its exact marks, while display of Axiom’s website in search results also yielded description that included NAM’s marks • Also called 1-800 Contacts “use” analysis “questionable”

Class Actions Jamster Mktg. Litig., 2008 WL 4858506 (S.D. Cal. 2008) • In suit for wrongful placement of charges on wireless bills for mobile content via ads by Jamster, defendant T-Mobile moved as to certain Md., Miss. & Ill. plaintiffs to compel arbitration, which acted as class action waiver as well • Class action waivers are unconscionable/unenforceable under Cal. law, while Md., Miss., & Ill. routinely enforce such waivers • T-Mobile service agreement had choice of law provision specifying law for state of subscriber’s billing address in T-Mobile records • Court applied choice of law provision for each state and held that Md., Miss. & Ill. law, rather than Cal. law, applied and that in each state waiver provision was enforceable

Class Actions Mazur v. eBay, Inc., & Hot Jewelry Auctions.com,2008 WL 618988 (N.D. Cal. 2008) • Plaintiff alleged harm in HJA live auction, in which eBay enabled its users to participate, from “shill bidding” despite eBay T&Cs prohibiting the practice on all auctions operated through its site • eBay sought immunity under CDA § 230 • HJA sought to compel arbitration under HJA T&Cs that eBay required it to post and users had to accept in order to participate in live auction • Court granted § 230 immunity to the extent plaintiff sought to hold eBay liable for information provided by HJA, but not for eBay’s own statements regarding safety, circumstances and caliber of live auctions operated through eBay site

Class Actions Mazur v. eBay, Inc./Hot Jewelry Auctions.com (cont’d) • Applying California law, arbitration provision in HJA T&Cs were both procedurally and substantively unconscionable • Procedural unconscionability: found both “oppression” and “surprise” • T&Cs were contract of adhesion, drafted by HJA with no opportunity for negotiation • Presented as “impenetrable text” in format allowing only a few lines of block text at a time to be visible, with no paragraph, section or heading breaks (and printed out in the same kind of “single-spaced, massive block of text”) • Substantively unconscionable due to limited procedures, including apparent inability to discover key facts, and individual damages likely to be small so only effective way to litigate would be as a class, but limited procedures were de facto bar (triggering Cal. rule unconscionability/unenforceability of class action waivers)

Class Actions Goddard v. Google, Inc., 2008 WL 5245490 (N.D. Cal. 2008) • Claiming she and similarly situated class were injured by clicking web-based ads from allegedly fraudulent mobile service subscription providers (offering ringtones, sports scores, etc.), Goddard sued Google for receiving funds from fraudulent ads • Court dismissed all claims under “robust” immunity for providers of interactive computer services, who only publish but do not create online content, i.e., are not “information content providers,” under CDA § 230 • Relying on Fair Housing Council v. Roomates.com, held that “providing third parties with neutral tools to create web content is squarely within the protections of § 230 … even if a service provider knows that third parties are using [the] tools to create illegal content,” and “the fact that a website elicits online content for profit is immaterial; the only relevant inquiry is whether the interactive service provider ‘creates’ or ‘develops’ th[e] content” • § 230 thus provided immunity for California Unfair Competition Law claim, as well as contract and negligence claims attempting to invoke third-party beneficiary status for contracts between Google and advertisers • “[A]iding and abetting claims,” which even plaintiffs admitted would hold Google liable for advertisers’ content, “are simply inconsistent with § 230”

Class Actions Williams v. Gerber Prods. Co., 552 F.3d 934 (9th Cir. 2008) • Class action challenging as deceptive features on packaging of “Fruit Juice Snacks” in Gerber’s “Graduates for Toddlers” line: • Use of “Fruit Juice” juxtaposed with images of oranges, peaches, strawberries and cherries, because product has no fruit juice from any fruits pictured but rather only white grape juice from concentrate • Description (on side panel) as made “with real fruit juice and other all natural ingredients” even though corn syrup and sugar were most prominent ingredients • Description of product as “one of a variety of nutritious Gerber Graduates foods and juices” • Labeling as a “snack” rather than “candy,” “sweet,” or “treat” • Type-size requirements for phrase “naturally flavored” • Reversed grant of motion to dismiss on grounds plaintiffs alleged facts sufficient for claim that reasonable consumers would be deceived • Claims under Cal. Unfair Competition Law and Cal. Consumer Legal Remedies Act governed by reasonable consumer test that prohibits not only “falsity” but also true ads that actually mislead or have capacity, likelihood or tendency to deceive • District court relied on its own review of packaging, whereas California courts hold deception under UCL and CLRA is a fact question not generally not decidable on motion to dismiss • While claim of being “nutritious” standing alone could be puffery, since nutritiousness difficult to measure, contributed here to deceptive context as a whole • Accurate, FDA-prescribed ingredient list did not remedy potential deception

NAD Highlights - 2008 • Green Claims • Testimonials/Endorsements • Dietary Supplements • Non-Traditional Media/Viral Videos/Online Travel • Other Selected Cases

NAD Green Claims • Green marketing standard is well-established • “Competent and reliable evidence” in green marketing means “scientific evidence” backed by tests and research • Types of claims range from general environmental benefit, to claims of being “natural,” “bio-based,” and/or “biodegradable”

NAD Green Claims Clorox “Green Works” Product Line • Claim: Various iterations of Clorox claims that its “Green Works” cleaners worked “just as well as“ or “as well as or better than” and/or “cuts greasy mess” or “cuts grease, grime and dirt” “as well as” “traditional” or “conventional” cleaners and/or “leading spray” (but during proceeding modified to discontinue “better than” claims) • S.C. Johnson & Son, maker of fantastik, challenged Clorox claims, submitting comparative testing that showed Green Works did not perform as well on the “toughest grease” and did not disinfect, unlike “many traditional cleaners” • Held: Clorox testing provided a reasonable basis for claims Green Works line were comparable to traditional products for most soils for which they are intended • However, statement was a “broad and unqualified parity claim” that “requires broad support,” and since Green Works did not clean “tough grease” as well as some other products, evidence did not support Clorox’s “unqualified parity claim” • NAD also found consumers would reasonably think Green Works had “disinfectant properties,” based on Clorox’s advertisements • NAD recommended Clorox discontinue its claims or modify them to state a “more qualified message”

NAD Green Claims PolyGreen Plastic Bags • Broad, unqualified claims of environmental benefit must be supported by competent and reliable evidence • GP Plastics made print and online claims that its PolyGreen bags are “100% oxo-biodegradable,” that they are “disposable through ordinary channels” and “go from front lawn, to waste bins to the landfill,” as well as other general environmental claims, and claims of being “completely recyclable” • Challenged by competitor Mexico Plastics/dba Continental Products (plastic bags for delivery of newspapers) under FTC Environmental Marketing Guides • NAD recommended discontinuance of biodegradability claims as not adequately substantiated by competent and reliable evidence • Though advertiser may tout elements of its product that are desirable (and that can be supported by competent and reliable evidence), a single environmental benefit or attribute is not the proper basis for an advertiser to refer to a product as “green” or “environmentally friendly” without consideration of the broad environmental impact of the product as a whole • NAD recommended discontinuance of “recyclable” claims because there was no testing and no evidence of recyclability • G.P. appealed to NARB, but later withdrew appeal and indicated it would consider NAD’s recommendations in future ads and make modifications

NAD Green Claims Nestle Purina Pet Promise Dog & Cat Food • NAD found that advertiser Nestle Purina provided a reasonable basis for its “natural” and “pure” advertising claims and for claims that its product used “chicken or beef sourced from U.S. family farmers and ranchers committed to eco-friendly practices and the humane treatment of farm animals”

NAD Green Claims Nestle Purina Pet Promise Dog & Cat Food (cont’d) • NAD examined ads as part of its ongoing monitoring and requested substantiation for “eco-friendly practices” claim and: • “We promise only pure and natural ingredients – made without animal byproducts, rendered meat or chicken meals or anything artificial” • “Our most plentiful ingredient is a pure protein source like naturally raised chicken or beef” • AAFCO (Association of American Feed Control Officials) standards for what constituted “natural” animal feed and Nestle Purina’s own animal processing standards for evidence provided sufficient substantiation for the claims • NAD specifically noted that “eco-friendly” advertising claims “send an attractive message to consumers who, in increasing numbers, are concerned about the impact their purchasing decisions may have on the environment”

NAD Testimonials/Endorsements Neutrogena – Various Hair, Face & Skin Products • Unilever challenged Neutrogena’s claims that its various products were “#1 Dermatologist Recommended” and that each product was “one more reason why Neutrogena is recommended most by dermatologists” • Unilever argued claims implied each product was most recommended in its specific category and thus required “well-conducted physician surveys” • Neutrogena responded that its claims referred to brand, rather than specific product, and that it surveyed dermatologists every 3 months to ensure accuracy • Given absence of evidence on the point, NAD “stepped into consumers’ shoes” and decided phrase “#1 Dermatologist Recommended” could be reasonably interpreted to refer to individual product categories, rather than overall brand

NAD Testimonials/Endorsements Neutrogena – Various Hair, Face & Skin Products • NAD recommended Neutrogena remove the claim on products in categories in which Neutrogena is not the #1 brand (as to which NADfound Neutrogena’s surveys adequately proved many of its products were most often recommended in their categories) • NAD also determined Neutrogena had established no basis or specific reason for dermatologists’ recommendations and advised it to discontinue the “One more reason . . .” claim • Similar “No wonder …” claim, especially with Neutrogena’s voluntary addition of word “brand” to claim, was colloquial and unlikely to be misinterpreted as an objective reason for brand recommendation

NAD Testimonials/Endorsements FRSEnergyProducts • NAD found FRS Company provided a “reasonable basis” for claims that the FRS product “boosts energy” and “increases focus,” but claim that FRS energy “enhances metabolism” was not supported with sufficient evidence • NAD recognized that clinical testing on product itself is the gold standard for supporting ad claims • Lance Armstrong Endorsement – NAD reviewed the reasonable takeaway from the advertising and found an implied claim; NAD recommended that the FRS Company clarify in its advertising that Lance Armstrong is endorsing the product not as Lance Armstrong the professional cyclist, but as Lance Armstrong, a current celebrity • When an endorser is commonly known to the public as an expert and is endorsing a product as a celebrity, the advertising must make it clear that he or she is endorsing as a celebrity

NAD Testimonials/Endorsements Nutro Natural Choice Complete Care Dry Cat Food • Hill’s Pet Nutrition challenged Nutro’s “Veterinarian Recommended” packaging and POP claim; NAD sought substantiation for “Everything Your Cat Needs in One Bag” • “Veterinarian Recommended,” like “Doctor Recommended,” carries great weight with consumers, conveys powerful message, and consequently requires highly reliable supporting evidence • NAD concluded evidence was insufficiently reliable to provide reasonable basis for the advertiser’s online/point of purchase material/packaging “Veterinarian Recommended” claims and recommended that they be discontinued • However, NAD concluded advertiser provided a reasonable basis for its claim “Everything Your Cat Needs in One Bag”

NAD Dietary Supplements Gabatrol • NAD requested substantiation for print, Internet and labeling claims for Gabatrol dietary supplement sold by Pure Life, LLC, including: • “Get Quick Relief from Stress, Anxiety and Depression – Guaranteed” • “Enhance ambition, motivation, and libido” • “Gabatrol is the only 100% all natural product that effectively gives you fast relief from the feelings of STRESS, ANXIETY, and DEPRESSION” • NAD determined advertiser’s performance, speed-of-action and exclusivity claims were unsupported and requested modification, since product had not been tested in the aggregate – only ingredients had been tested individually – and such limited testing had been performed on animals, not humans • NAD also recommended clear disclosure that the claims were based on limited animal studies

NAD Dietary Supplements Thyodine • Counsel for Responsible Nutrition challenged The Green Willow Tree’s print and online claims that Thyodine offers “superb” thyroid support, promises to stimulate underactive thyroid glands (hypothyroidism), and claim that “many prefer [Thyodine] to synthetic thyroid medications” on grounds they conveyed impression that Thyodine could be used to treat hypothyroidism

NAD Dietary Supplements Thyodine (cont’d) • Held: Phrase “superb thyroid support” was acceptable based on the products’ ingredients to the extent they support thyroid health, but claims go further than general thyroid health • Messages suggesting dietary supplement can serve as replacement for prescription medications are potentially dangerous and must be supported by clear and convincing evidence • Product performance claims cannot be substantiated by anecdotal evidence such as consumer testimonials in the absence of competent and reliable scientific evidence • Claims based on generally accepted benefits of ingredients only, not product itself, must be clearly stated as such and cannot suggest or imply that the product has been tested or proven beyond the claimed benefits • NAD recommended discontinuing consumer testimonials and also found advertised message to be a dangerous claim that encouraged the use of Thyodine as alternative to prescription medication

NAD Dietary Supplements Cinnergen • eFoodSafety.com made numerous online claims about its “Cinnergen” dietary supplement, including that it was: • “Clinically proven” to control blood sugar • A “Natural Part of a Diabetics’ [sic] Diet!!!” • “Guaranteed to Control Blood Sugar Levels” • “Insulin work more efficiently!” • “Doctor Recommended” • Health-related claims must be supported by “competent and reliable scientific evidence”; the nature and extent of claims should mirror the “precision and specificity of the data” relied upon • NAD found Cinnergen claims were “product performance claims” that could not be sufficiently supported by ingredient studies • Claims of “doctor recommended” must be supported by “well-conducted physician surveys”; the testimony of one doctor is not sufficient • eFoodSafety’s advertising improperly (and dangerously) implied that Cinnergen was a substitute for insulin

NAD Dietary Supplements SlimShots • NAD challenged IdeaVillage Products' print and online claims for its liquid appetite suppressant to the effect: • “Eat up to 30% less every day without feeling hungry” • “Works by triggering your body’s natural appetite suppression mechanism … so you feel full” • “Unlike other products … all-natural active ingredients … won’t cause jitters or embarrassing side effects” • “Demonstrated to work in 4 published clinical studies” • NAD found published studies substantiated claims that key SLIMShots ingredient, the fat emulsion FABULESS, can reduce appetite by up to 30%, but recommended removal of the phrase “every day” • Studies on key ingredient may support claims for the product itself, when the product is essentially no more than that key ingredient

NAD Dietary Supplements BioSil • Natrol, Inc. advertised that BioSil promotes health of women’s skin, hair, nails and bones, citing various studies in support • NAD found: • Published, randomized, double-blind study with large number of participants that found statistically significant improvement in hair strength and thickness substantiated claim that product created thicker, stronger hair • Ample substantiation for claim that the product was “safe” because none of the studies found any side effects • However, Natrol should discontinue general and unqualified claim that product reduces fine lines and wrinkles by 19% as testing was on forearm not face, and there is no evidence results would be same had testing been on face

NAD Non-Traditional Media/Viral Videos/Online Travel Cardo Systems • Viral video on YouTube used cell phones to pop popcorn kernels:

NAD Non-Traditional Media/Viral Videos/Online Travel Cardo Systems (cont’d) • NAD held: viral video ad claims are subject to the same standards of truth and accuracy as ads in traditional media • Although video was fanciful and perhaps implausible, to the extent it could be reasonably be construed as communicating information about the safety/use of cell phones without headsets, an advertiser would be required to substantiate it with competent and reliable evidence • Plan to treat as only “buzz” ad to generate hits, and follow up with marketing message about Cardo’s Bluetooth headset, did not absolve advertiser from substantiation obligation for objectively provable (or disprovable) claims • Because advertisers also must avoid material omissions that may mislead, NAD noted issue also was raised by failure to disclose that video was part of commercial message, given duty of advertisers making claims to do so in a clear and unambiguous format that allows consumers to understand that what is communicated is advertising • But NAD concluded here that claims fell outside its jurisdiction given timing of discontinuance of video before commencement of NAD’s monitoring inquiry, and did not rule on the merits

NAD Non-Traditional Media/Viral Videos/Online Travel Priceline.com • Expedia challenged Priceline.com claim in TV and online ads that it does not charge booking fees for airline reservations, when in fact “no booking fee” applies only to published price flights and not Name Your Own Price bookings • NAD held that, because Priceline.com offers two distinctly different services, any advertising feature that applies to only one must be clearly limited to that service • Main message conveyed throughout commercial cannot be negated by a disclaimer, as Priceline.com attempted with bottom-of-screen text at end of ad • In response to the challenge, Priceline.com modified web, MySpace and TV spots to clarify that “no booking fees” claim applied only to published price flights on Priceline.com, not to Name Your Own Price bookings • NAD was satisfied with Priceline.com’s modifications to website and MySpace page, especially since the two different booking services are clearly separated online, but found Priceline.com’s TV ad still misleading • Recommended avoiding consumer confusion by setting up commercial to make clearer it is about published price service and that “no booking” applies only to that service

Other NAD Cases Ultraviolet “UV-ST” Vacuum • Competitor Bissell challenged numerous Halo’s express and implied health-related and superiority claims in print, product packaging, and Internet (including YouTube) advertising: • uses ‘Germicidal Light, also known as UV-C light • safely kills dust mites, fleas, mold, bacteria, and viruses • “Powerful. Instant” • “World’s Only Germ-Killing Vacuum” • has a germicidal ultraviolet light chamber that kills germs, viruses, dust mites, and other parasites on contact

Other NAD Cases Ultraviolet “UV-ST” Vacuum (cont’d) • Held: Given absence of comparative testing, NAD recommended Halo discontinue superiority claims, as performance claims based on technological innovations must reflect scope of product testing • Halo should expressly qualify “germ killing” claims by explaining UV-C light had ability to kill certain bacteria and allergens (dust mite eggs and flea larvae) on surface of carpeting if they were exposed to the light for sufficient time, but avoid communicating unsupported message that vacuum could instantly kill germs and dust mites embedded in carpet, could reduce or eliminate incidence of allergies, or provide any health benefit • Recommended discontinuance of allergist’s endorsement & consumer testimonial • After Halo indicated it would take NAD recommendation into consideration, NAD found steps taken to comply with decision were “grossly inadequate” and referred Halo to FTC for possible enforcement action – however …

Other NAD Cases

Other NAD Cases Castrol GTX Motor Oil • Pennzoil-Quaker State challenged BP America, Inc. TV, website, and brochure claims for Castrol GTX motor oil that “Engine sludge can strike anyone. So get Castrol GTX. It’s superior sludge protection, 57% better than the leading 5W-30. Tests prove it." with on-screen super stating “In M271 Sludge Test” • As to “57% better” claims, NAD recommended: • Castrol should discontinue in TV ads because it is a medium not ideally suited for the type of extensive and detailed explanation required to sufficiently modify the claim • For online claims and technical bulletin more suited to nuanced and elaborated claims, Castrol should either discontinue its “57% better” claim or modify to expressly limit superiority claim to oil’s performance in certain European Mercedes-Benz vehicles, as measured by a European automaker’s proprietary testing

Other NAD Cases Verizon FiOS • CSC Holdings, Inc. (i.e., Cablevision) challenged Verizon claims for FiOS regarding superior sound and picture quality claims • NAD found some claims were substantiated but recommended modification or discontinuance, as unsupported by evidence, of claims that “Channels came on quicker,” “colors were more vivid” and “People think High Definition is High Definition, but it’s not” • With respect to “no pixilation” claim, NAD recommended Verizon modify to more accurately reflect findings of its study, i.e., “less pixilation” • As to FiOS subscriber’s statement “I was blown away,” NAD found claim, in context presented, was puffery, not objectively provable • NAD recommended that “Pure Uncompressed High Definition” claim be used in a monadic context

Other NAD Cases Hunt’s Tomato Sauce • Stanislaus Food Products, Inc., maker of al Dente Premium Food Sauce, challenged ConAgra Foods claims that Hunt’s Tomato Sauce’s “signature recipe is always … packed full of Hunt’s 100% natural vine-ripened tomatoes” and is “made from all-natural, vine-ripened tomatoes, with salt, spices and natural flavors for seasoning” in conjunction with pictures on can • Stanislaus argued ConAgra’s ad was implied claim that Hunt’s tomato sauce contains fresh tomatoes that have not been thermally processed • Held: “Hunt’s Tomato Sauce is made from all-natural, vine-ripened tomatoes” was accurate and not likely to be understood to mean that the final tomato sauce product was made directly from fresh unprocessed tomatoes • However, “Packed full of Hunt’s 100% natural vine-ripened tomatoes” claim implied finished product was made directly from fresh unprocessed tomatoes and recommended that it be discontinued

Ronnie London, Esq .