Copyright Office Ringer Fellow Opportunities

Posted on October 12, 2016 by rtushnet
From the Copyright Office: The Copyright Office’s Barbara A. Ringer Copyright Honors Program is an eighteen to twenty-four month paid fellowship designed for attorneys in the early stages of their career with a dedicated interest in copyright law.  During this program, Ringer Fellows work closely with senior attorneys in the Copyright Office on cutting-edge issues of copyright law and policy before Congress, the courts, and with other government agencies.  A current Ringer Fellow is listed on the cover of the government’s Supreme Court brief in the Star Athletica v. Varsity Brands case, “a well-deserved recognition of her contributions.”
The application period for fall 2017 spots in the program is closing on October 17th. 
Interested applicants can visit http://ift.tt/sCvtqQabout/special-programs/ringer.html for more information.  If any of your students have any questions, they can send an email to RingerHonorsProgram@loc.gov.

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biased survey dooms “ask your doctor” ad campaign for 5-Hour Energy

Posted on October 12, 2016 by rtushnet
Washington v. Living Essentials, LLC, NO. 14-2-19684-9 (King
County Super. Ct. Oct. 10, 2016)
The state sued Living Essentials seeking injunctive and
declaratory relief under Washington’s Consumer Protection Act.  While the court found that some of the
challenged 5-Hour Energy claims had not been shown to be unsubstantiated
(specifically, claims that the vitamins in the product offered benefits and
that the product wouldn’t cause a sugar crash), the court found violations of
the CPA relating to claims that (1) 5-Hour Energy lasts longer than a cup of
coffee because of the synergistic or interactive effects of caffeine, B vitamins
and nutrients in the product; (2) Decaf 5-Hour Energy would provide energy,
alertness and focus that lasts for hours; and (3) doctors recommended 5-Hour
Energy.
Vitamin claims included the tag lines “B Vitamins for
Energy; Amino Acids Focus & Better Mood.” The ads expressly claimed that the
vitamins and nutrients in 5-Hour Energy played a role in providing energy,
alertness and focus and worked synergistically with caffeine to make the
biochemical or physiological effects last longer than caffeine alone.  The court found that Living
Essentials didn’t downplay or minimize the effects of caffeine. Rather, Living
Essentials claimed that the duration of the recognized physiological benefits
of caffeine would be extended because of the non-caffeine ingredients in 5-Hour
Energy.
Vitamins/amino acids taglines
vitamin claims

 

more vitamin claims
In addition, Living Essentials introduced a decaf version, marketing it with a press release claiming that the decaf
product provides “a sustained energy boost” for people sensitive to caffeine. The
Living Essentials website claimed that Decaf 5-Hour Energy “gently” works to
provide alertness, which it attributes to the presence of choline. These were
objective claims about physiological benefits.
Decaf claims
And Living Essentials also claimed to avoid the “crash”
effect of combining sugar and caffeine, leading consumers to experience a
glucose drop when they consumed competing, sugary caffeinated beverages.  After NAD investigation, Living Essentials
modified its advertisements to qualify the “no crash” language by including an
asterisk directing consumers to a small print disclaimer saying “No crash means
no sugar crash.”
Does your energy drink make you crash?

 

sugar and caffeine are to blame!

 

Finally, Living Essentials created an “Ask Your Doctor” ad
campaign.  Living Essentials retained
Thomas Maronick, Ph.D., a professor of marketing at Towson University in
Maryland and the former Director of Impact Evaluation in the Bureau of Consumer
Protection at the FTC to create an online survey of 503 physicians. Instead of
asking doctors their general opinions about energy drinks/supplements, the
survey asked whether they’d recommend a low calorie/low sodium energy drink for
patients who already consumed such products. “Not surprisingly, the majority of
doctors said ‘Yes’”—73.6%, to be exact.
The survey also showed respondents a 5-Hour Energy label and a brief
description of the product, and asked them if they would recommend 5-Hour Energy
to their healthy patients who use energy drinks; 47.7% of the doctors said yes,
while about 25% said no.
Living Essentials also conducted a follow-up paper survey done
in connection with sales staff’s in-person promotional visits to doctors’
offices, in which they’d leave samples of the product and brochures describing
5-Hour Energy’s ingredients. Dr. Maronick wasn’t involved in the paper survey
process and had concerns about whether such a method would suffer from biased
responses.  Living Essentials received 2,659
paper surveys in which about 90% of the respondents indicated that they would
recommend a low-calorie energy supplement to patients who use energy
supplements, and 74% would specifically recommend 5-Hour Energy. Living
Essentials created ads with scripts such as:
We asked over 3,000 doctors to
review 5-Hour Energy. And what they said was amazing. Over 73 percent who
reviewed 5-Hour Energy said they would recommend a low calorie energy
supplement to their healthy patients who use energy supplements. Seventy-three
percent. 5-Hour Energy has four calories and it’s used over nine million times
a week. Is 5-Hour Energy right for you? Ask your doctor. We already asked
3,000.
Placed next to the ad spokeswoman was a large stack of
papers, which she flipped through or gestured to while speaking.  ABC and NBC refused to run the ads without
some changes, and consumers also complained.
Ask your doctor ad
The court considered evidence about the effects of the
various ingredients, including evidence developed after the ads aired, which
could “shed light on pre-claim studies” used to substantiate claims. The state
argued that caffeine was the sole active ingredient in 5-Hour Energy, in the
sense of having a physiological effect on the human body. The court disagreed,
because B vitamins, taurine, tyrosine and choline are bioactive.  However, that didn’t mean that these bioactive
ingredients, in the amounts found in 5-Hour Energy, would provide the
advertised benefits of “energy, alertness, and focus.” There was disagreement
among the experts about whether healthy, well-nourished adults could benefit
from the vitamins and amino acids or whether they’d simply be excreted.  The court found that the state hadn’t shown
there was no benefit whatsoever from these ingredients.  However, the state did show that claims that
the other ingredients had a synergistic effect with caffeine for the promised
benefits of “energy, alertness and focus” were unsubstantiated; the evidence
Living Essentials offered was incapable of distinguishing the effects of
caffeine from the overall effects of the product.  Likewise, the study of the decaf product was
insufficiently reliable to substantiate Living Essentials’ claims.
Living Essentials presented evidence that it complied with
industry standards in substantiating its ad claims, first, by having its
advertising director conduct internet research on the formula’s ingredients,
then by instituting a process for legal and regulatory review by an outside law
firm, followed by retaining others to perform literature reviews, and finally
by commissioning clinical studies.  The
advertising director’s internet research was not adequate substantiation
because he “had no ability or training to assess the scientific reliability of
anything he read online.”  Nor was
regulatory or legal review reasonable substantiation.  “There is simply no evidence in the record
that anyone with any science training ever assessed the ad claims and the
science backing up those claims against the FTC substantiation guidelines.”  Nor was there any evidence that anyone in the
company ever looked at the literature reviews.
Living Essentials did act reasonably in undertaking clinical studies,
but the key question was whether the studies were adequate to support the ads’
claims.
Living Essentials also submitted the expert testimony of J.
Howard Beales, III, the former Director of the Consumer Protection Division of
the Federal Trade Commission.  He testified
that the claims in Living Essentials’ ads were all subjective, rather
than objective, and thus could not be deceptive.  The court disagreed:
The company intentionally promoted
the product’s ingredients as changing the way the body functioned. It promoted
the product as a healthy way to achieve these physiological results. The
company spent a significant amount of money on clinical studies to establish
that 5-Hour Energy was having a biochemical or physiological effect on the
bodies of its consumers. As Dr. Beale admitted, if an advertiser claims that a
product will change or affect the physiological functioning of the body, that
is an objective claim for which scientific substantiation [can] exist.
The Washington CPA follows FTC interpretations, including
the substantiation requirement.  “Where
implied claims are conspicuous and reasonably clear from the face of the
advertisement, extrinsic evidence is not required to prove the existence of
implied claims.”  Also, the FTC can show
misleadingness either through showing (1) actual falsity of express or implied
claims; or (2) that the advertiser lacked a reasonable basis for asserting that
the message was true. And here we get a little weird, because the court cited a
case relying on the execrable In re GNC (not
an FTC case) for the proposition that the FTC could show literal falsity “if
all reasonable scientists would agree that the claims do not provide the
benefits as asserted. The FTC may do this by showing the advertiser’s expert
opinions are unreasonable or that no expert believes in the assertion.”
But the state was relying on the lack of reasonable basis theory, so the In re GNC dicta gets just a little worse
without affecting this case, because the court declined to apply the “all
reasonable scientists” standard to Living Essentials’ substantiation
evidence.  “The advertiser has the burden
of establishing what substantiation it relied on for a claim, and the State has
burden of establishing that that substantiation is inadequate.”
Under FTC guidance to advertisers of dietary supplements,
claims about the efficacy of dietary supplements must be supported by
“competent and reliable scientific evidence,” defined as “tests, analyses,
research, studies or other evidence, based on the expertise of professionals in
the relevant area, that have been conducted and evaluated in an objective
manner by persons qualified to do so, using procedures generally accepted in
the profession to yield accurate and reliable results.” The FTC weighs multiple
factors to establish the appropriate substantiation, including type of product,
type of claim, benefits of truthful claims, costs of false claims, expert opinion
about what substantiation is reasonable, and the cost or feasibility of
developing substantiation. The court noted that “[t]his does not mean, however,
that an advertiser can make any claim it wishes without substantiation, simply
because the cost of research is too high.”
The FTC also tells advertisers not to cherry-pick studies
and to ensure that studies are relevant to the claims made in ads, including
consideration of the dosage and formulation of the advertised product compared
to what was studied.
Under this standard, Living Essentials’ claims that that B
vitamins promote energy and amino acids promote alertness and focus were not
deceptive. However, it was deceptive to claim that these ingredients worked
synergistically with caffeine to enhance caffeine-derived energy, alertness,
and focus.  None of the studies Living
Essentials submitted reliably tested that question. Likewise, the decaf ads
were deceptive in claiming that the decaf product would generate energy and
alertness that “lasts for hours.”  Living
Essentials’ substantiation relied on studies involving daily dietary
supplementation of taurine in 3000 mg or more; Decaf 5-Hour Energy contains
only 483 mg of taurine.  And studies of
the actual product didn’t show significant benefits at the 3-hour mark.
The “no crash” claims were ok, though, because Living
Essentials switched to specifying “sugar crash,” and there was no empirical
evidence of caffeine-related crashes in habituated users.
The “ask your doctor” ads were deceptive, because they were
misleading.  An expert in the science of
consumer behavior and persuasion tactics testified credibly that the clear
takeaway from these ads was that “doctors would recommend” 5-Hour Energy. But
the surveys didn’t ask doctors if they thought 5-Hour Energy was healthy or
safe. Instead, they told doctors that 5-Hour Energy was a low fat, low calorie,
low sodium, sugar-free drink and asked if the doctors would recommend 5-Hour Energy
for healthy patients who already use energy supplements. These questions were  “biased, leading, and designed to elicit a
limited response. Due to the phrasing of the questions that preceded this
question, a ‘no’ response to this question suggested that the responding doctor
would instead recommend a high fat, high calorie, or high sodium energy
supplement, rather than allowing doctors the option of saying they do not
recommend energy supplements at all.”
question to doctors

 

Another problem was that the 73% claim in the ad was based
on the online survey of 503 doctors, but the reference to “3,000 doctors” was a
combination of both surveys. The survey methods used for the online survey and
the paper survey “differed so dramatically that the surveys could not
reasonably be combined and represented as the same survey.” The doctors who
participated in the paper survey weren’t randomly selected.

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court says product reformulation might be deceptive if survey supports claim

Posted on October 11, 2016 by rtushnet
Nutrition Distribution LLC v. Driven Sports, 2015 WL
12645002, No. LA CV13-06195  (C.D. Cal.
Jan. 15, 2015)
Nutrition sued defendants over their sales of a nutrition
supplement product called “Craze.” In July 2013, defendants discontinued the
sale of the initial version of Craze after it was reported that the ingredients
included amphetamine, amphetamine analogues and/or methamphetamine analogues,
none of which was identified on the product label. The FDA sent a warning
letter and defendants discontinued sales. 
Defendant DS intends to sell Craze again with about 75% similarity to
the prior formula.
Although the prior label was materially false, plaintiff
couldn’t show irreparable injury with respect to that version, since there was
no evidence the prior formula would be used again. Injunctive relief wasn’t
justified; it would serve only a hypothetical public interest.
Plaintiff also sought to prevent defendants from using the
Craze trademark in any new product.  Again,
plaintiff couldn’t show irreparable harm; among other things, it couldn’t show
that money damages would be inadequate if the revised Craze improperly diverted
sales from plaintiff’s products.
The court also didn’t accept theory of misleadingness, which
was that: (1) some members of the public are aware that the old version of
Craze contained the prohibited substances, and will assume that the new version
will as well, and for that reason will purchase it; or (2) some members of the
public were unaware that the old version contained the prohibited substances,
liked its effect and will, therefore, assume that the new version will be the
same, and for that reason will purchase it. “Although these theories may have
some equitable appeal, neither is supported by any evidence.” One could also
hypothezie that “another group of those who used the earlier version of Craze
learned that it was taken off the market because it contained the Substances,
as a result, does not trust DS products, and will not purchase the new version
of Craze even if DS represents that it does not contain any improper component.”
A consumer survey could help validate plaintiff’s theories, but plaintiff
offered none at this point in the case.

In a footnote, the court analogized to a cancellation
request, which requires a plaintiff to “show a real and rational basis for his
belief that he would be damaged by the registration sought to be cancelled,
stemming from an actual commercial or pecuniary interest in his own
[trade]mark.” As noted above, that evidence was missing.  Also, plaintiff didn’t show that such a
request would be deemed timely under § 1064(1), which requires that a
cancellation request be made within five years of a registration.  [NB: Cancellation on the basis of
deceptiveness is not subject to the five-year limitation.]

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Dual use of same mark on customized Jeeps not confusing, court rules

Posted on October 11, 2016 by rtushnet
Moab Indus. v. FCA US, LLC, No. 3:12-cv-8247, 2016 WL
5859700 (D. Ariz. Oct. 6, 2016)
Moab sued FCA, aka Chrysler, for trademark infringement (via
reverse confusion) and state-law dilution based on Chrysler’s use of MOAB on a
limited edition version of its Jeep brand. 
Chrysler counterclaimed for infringement and dilution because Moab customizes
and “upfits” Jeeps and applies its Moab mark without removing Chrysler’s marks;
the expansiveness of this claim caught my eye, though unfortunately the court
doesn’t give a clear statement about just how implausible and dangerous that
claim is.  The court conducted a bench
trial and rejected everyone’s claims.
 

Chrysler’s Moab Special edition

Moab Industries’ customized Jeep

Moab has a registration for the service mark MOAB INDUSTRIES
to plaintiff for “automotive conversion services, namely, installing specialty
automotive equipment.” In 2012, Chrysler filed an ITU application for the
trademark MOAB for use in connection with “[m]otor vehicles, namely, passenger
automobiles, their structural parts, trim and badges.”  A 2012 trademark search revealed plaintiff’s
MOAB INDUSTRIES mark, as well as MOAB TAXI for “taxi transport”; in Class 39
and MOAB STAR for “lights for vehicles,” as well as, inter alia, MOAB standing
alone for “bicycles”; “retail store and online retail store services in the
fields of clothing, camping gear, sporting goods”; “juices and fruit drinks”;
and “eyewear; namely, eyeshields for use in sports activities.” The search
results also included common law uses like MOAB 4X4 OUTPOST and MOAB
OFFROAD,  both auto conversion businesses—the
former actually located in Moab.  The PTO
refused Chrysler’s application because of likely confusion with two registered
marks, one of which was Moab’s.  The
application has been suspended in light of the current lawsuit, filed in late
2012.  (Given B&B, it turns out that Moab might have been better off waiting—query
whether there’s any reason to apply preclusion in the other direction!)
For model year 2013, Chrysler introduced a JEEP WRANGLER
MOAB Special Edition vehicle and sold about 3,375 of them.  (Chrysler also sells a MOAB branded,
after-market wheel, and has done so since before Moab began selling upfitted
vehicles. The wheels themselves do not bear the MOAB mark and there was no
evidence of likely confusion between the wheels and Moab’s services.)
Relevant factors: the MOAB mark was “relatively weak,”
somewhere between suggestive and arbitrary; for these purposes, suggestive
marks are conceptually weak, and Moab produced no evidence of commercial
strength of either mark. Chrysler didn’t use MOAB on its vehicles any
more.  This conceptual and commercial
weakness decreased the likelihood of reverse confusion.
The goods were closely related, sold to the same class of
purchasers for similar uses and functions, though Moab’s version had “a more
robust stance,” whatever that means.  The
marks were highly similar; both versions placed the MOAB mark in large letters
on both sides of the hood of their vehicles, suggesting potential confusion.
Actual confusion: Moab produced witnesses testifying that web
searches for “Moab” regularly turned up first a link to Chrysler.  But such searches did not suggest any
connection between the parties, and Moab’s website expressly disclaimed any
connection.  Two witnesses bought Moab
upfitted Jeeps and later encountered Chrysler’s Moab special edition, but they
weren’t potential customers; they both knew they owned Moab-upfitted vehicles.
Another witness was clear that she knew that both parties were selling
different Moab branded Jeeps, and she was in a client-banker relationship, not
a buyer-seller relationship with Moab. 
Leading questions caused some other witnesses to express “confusion,”
but they simply had questions about the source of the Moab Special Edition, and
there was no evidence linking their questions to any potential or actual effect
on customers’ purchasing decisions.  [NB:
Materiality is not usually required!] For example, one witness was a buyer for
a dealership that bought and sold Moab-upfitted Jeeps. When he saw a Moab
Special Edition, he recognized that it wasn’t a Moab Industries vehicle, so he
went online and found information about the Special Edition.  “The lack of substantial evidence of actual
confusion suggests little likelihood of confusion.”
The parties use very different marketing channels: Chrysler
sells new vehicles through authorized dealers, while Moab buys those vehicles,
upfits them, and then resells them through auction and resale dealers, “in some
instances the used car lots of defendant’s authorized dealers. This factor
suggests little likelihood of confusion.” Though Moab has aspirations to make
vehicles, these are mere aspirations, and the parties are unlikely to expand
into each other’s goods.
The parties’ goods are expensive and intended for off-highway
use under difficult to extreme circumstances. “These are not purchases likely
to be made without careful consideration and investigation of the product.”
Intent: Chrysler chose the Moab mark “largely in
consideration of defendant’s long-standing participation in off-road jamborees
at Moab, Utah.” There was no evidence of prior knowledge of Moab Industries by
top management.  Chrysler’s Arizona VP
knew about Moab Industries, as did Chrysler’s audit group; Chrysler designated
Moab Industries as a fleet purchaser, but there was no evidence that this
knowledge was ever conveyed to the legal department or top management before
Chrysler’s CEO approved the Moab Special Edition.  The PTO’s finding of likely confusion was “entitled
to very little weight inasmuch as the USPTO would not have had access to most
of the evidence which is before the court.”
Overall, lack of actual confusion, marketing channels used, and
degree of care weighed strongly in favor of finding confusion unlikely.
Chrysler counterclaimed to cancel the MOAB INDUSTRIES based
on its use on vehicles manufactured by Chrysler, which Chrysler argued misrepresented
the source of Chrysler’s vehicles. There was no evidence that Moab was claiming
to have manufactured the Jeeps it resold. Moab’s advertising clearly advised potential
customers that Moab’s MOAB vehicles weren’t endorsed by Chrysler, or that the
sales had caused any economic harm to Chrysler or damaged its goodwill in any
way.
Dilution: Again, there was no evidence of tarnishment,
despite Chrysler’s “bold” assertions of inferior quality and speculation about
the stability of upfitted vehicles. Owners of Moab-upfitted vehicles who
testified were “well satisfied with their vehicles and plaintiff’s follow-up
services.”

Trademark infringement: True, “the use of MOAB by both
parties – and in particular, the fact that both plaintiff’s and defendant’s
MOAB vehicles display defendant’s registered JEEP, JEEP GRILLE, and WRANGLER
registered marks – gives rise to questions (some say confusion).” But there was
no evidence of confusion, and Chrysler’s trademark attorney testified that she
was not “aware of anybody in the world who expressed a belief that [plaintiff]
was actually manufacturing Jeeps.”

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Court deems Uber’s safety claims to be puffery

Posted on October 11, 2016 by rtushnet
XYZ Two Way Radio Service v. Uber Technologies, Inc., No. 15-cv-3015
(E.D.N.Y. Sept. 30, 2016)
Two black-car companies sued Uber for false advertising,
false association, and tortious interference with contractual relations between
them and their drivers. The court rejected all the claims.
The court found that the challenged statements were
generally puffery, such as:
Wherever you are around the world,
Uber is committed to connecting you to the safest ride on the road. This means
setting the strictest safety standards possible, then working hard to improve
them every day. The specifics vary depending on what local governments allow,
but with each city we operate, we aim to go above and beyond local requirements
to ensure your comfort and security—and what we’re doing in the US is an
example of our standards around the world.
… Unlike the taxi industry, our
background checking process and standards are consistent across the United
States and often more rigorous than what is required to become a taxi driver. .
. . We’ll continue innovating, refining, and working diligently to ensure we’re
doing everything we can to make Uber the safest experience on the road.
Although “these statements are intended to convey the
impression that Uber takes the safety of its passengers seriously,” they did so
in ways that were clearly puffery:
The overall tone is boastful and
self-congratulatory. Many of the statements are couched in aspirational
terms—“committed to,” “aim to,” “believe deeply”—that cannot be proven true or false.
Others are vague and hyperbolic; if Uber literally set the “strictest safety
standards possible” at the outset, it could not “improve them every day.” In
sum, the Court concludes that the challenged statements cannot reasonably be
understood as specific representations of objective facts.
Query whether taxi companies, like Domino’s Pizza, can exploit this ruling to their own advantage.
Plaintiffs focused on the background check, which they
alleged was not “more rigorous than what is required to become a taxi driver,”
because it does not require fingerprints, a medical clearance or a drug test,
all of which NYC requires.  But the court
found Uber’s background check claims to be not false.  First, they were qualified with “often,” and
Uber’s website acknowledged that “[t]he specifics vary depending on what local
governments allow,”  and that, “[i]n New
York City, DMV and criminal background checks are conducted by the Taxi and
Limousine Commission (TLC) according to their licensing standards.” Though
drivers for UberX don’t need a commercial driver’s license in Connecticut or
New Jersey, the website is clear that “[i]n order to drive with Uber in New
York City, you need a TLC (Taxi and Limousine Commission) License,” and that
Connecticut and New Jersey Drivers “CANNOT pick up anywhere in New York State.”
Plaintiffs also challenged Uber’s statements about its
drivers as “partners,” some of which were clearly directed at potential
drivers, not customers.  Plaintiffs
alleged that “partners” was false because Uber considers its drivers
independent contractors and expressly disclaims liability for their actions.
But there was no reason to think that customers took “partners” as a legal term
of art.  The term, “as used on Uber’s
website, reads like euphemistic adspeak devoid of any inherent meaning.”  Thus it wasn’t actionable.
False association: some of plaintiffs’ drivers signed up as
Uber “partners,” and used plaintiffs’ cars bearing plaintiffs’ service marks for
Uber pickups. However, the court ruled, “[w]hen a driver employed by one of the
plaintiffs decides to make an Uber pickup in a car bearing one of the
plaintiffs’ services marks, it is the driver—not Uber—who is ‘using’ the mark.”  Interesting ruling—wonder how contributory
infringement might go.

Tortious interference: nope. 
Although drivers’ contracts were at-will, that didn’t make tortious
interference with prospective contract impossible.  But tortious interference with business
relations “requires a showing of malice or wrongful conduct,” which means
something rising to the level of fraud, threats, or breach of fiduciary duty:
“as a general rule, the defendant’s conduct must amount to a crime or an
independent tort.” Plaintiffs didn’t allege those things.

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Peter Jaszi lecture and festschrift upcoming at AU WCL, Nov. 17 and 18

Posted on October 11, 2016 by rtushnet

Link to Lecture
Link to Festschrift Event

I’ll be participating in the latter.

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Trademark pun of the day

Posted on October 11, 2016 by rtushnet

Seen at the local coffee shop.  “A Tribe Called FloydFest” coffee.  Apparently it was a theme at this year’s FloydFest in Virginia.

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Straightforward deference to FTC substantiation rules dooms gray hair treatment

Posted on October 7, 2016 by rtushnet
Federal Trade Commission v. COORGA Nutraceuticals Corp., —
F.Supp.3d —- , 2016 WL 4472994, No. 15-CV-0072 (D. Wyo. Aug. 15, 2016)
The FTC sued COORGA over its claims that its Grey Defence product
reversed/prevented gray hair and that there was scientific proof of this.  Defendant Coore, COORGA’s principal, is a
soi-disant “applied scientist” with degrees in economics and no post-secondary
chemistry or biology courses.  He developed
the Grey Defence formula over a 9-month period by conducting “comparative
scientific research” of various journal articles, studies related to Vitiligo
(a disease that causes the loss of skin color), and various “therapeutic
compounds.”  He also spoke with
scientists about their laboratory work unrelated to Grey Defence specifically
and tested the product on himself (“seeing re-pigmentation of some of my own
hair follicles after 3 months in the range of around 3%”).
From 2011 to June 10, 2016, COORGA had $433,848.93 in gross
sales to U.S. consumers, of which it refunded $29,608.26.  Coore intends to sell a new product, Grey
Defence Xtreme 3.0, as soon as this case concludes, and defendants have
developed other products, including brain JOLT! (to “boost working memory”),
TumorDefence (to cure cancer), FatBLOKKER! (now known as mealBUDDYZ!), Endura,
and Sodhalose-C (to fight neurogenerative diseases). These products have
likewise been developed through Coore’s own “research and review of journal
articles and discussions with ingredient suppliers without consulting any medical
professionals or scientists.”
Um, no.  Anyway, the
case provides a straightforward review of the standards for substantiating
efficacy and establishment claims; where the products are health-based, any
efficacy claim may functionally be an establishment claim.  Substantiation requires a “reasonable basis,”
and reasonability is assessed considering “the type of product,” “the type of
claim,” “the benefit of a truthful claim,” “the ease of developing
substantiation for the claim,” “the consequences of a false claim,” and “the
amount of substantiation experts in the field would consider reasonable.” If an
establishment claim “states a specific type of substantiation,” however, the
“advertiser must possess the specific substantiation claimed.” And if an ad
conveys a non-specific establishment claim—e.g., “medically proven”—the
advertiser “must possess evidence sufficient to satisfy the relevant scientific
community of the claim’s truth.”
“For both efficacy and non-specific establishment claims,
then, like those at issue in this case, it is appropriate to consider the
amount of substantiation required by the relevant scientific community in
determining whether the advertiser’s claim is false, misleading, or
unsubstantiated.”  The FTC submitted the
testimony of Dr. George Cotsarelis, a Doctor of Medicine and Professor of
Dermatology at the University of Pennsylvania School of Medicine and Director
of the Hair and Scalp Clinic at the University of Pennsylvania Health System.  He opined that substantiation for claims about
reversing or preventing the formation of gray hair would require at least one
well-designed, randomized, placebo-controlled, and double-blinded human
clinical trial. Coore’s testimony to the contrary was inadmissible because he
wasn’t and couldn’t be qualified as an expert. “Simply reading articles over a
nine-month period does not impart the knowledge, skills, experience, training,
or education one needs to competently interpret and evaluate scientific journal
articles, opine on what constitutes scientific proof, and weigh the evidence
related to the cause or prevention of gray hair.”
So, the efficacy and establishment claims were
unsubstantiated.  Coore’s research could
be “potentially useful in generating hypotheses for future studies,” but they
weren’t enough for these claims, nor was feedback from 20 Grey Defence users
out of 100 contacted.  Defendants argued
that they only claimed to rely on their own “observational study,” so they did
possess the level of substantiation they claimed.  But defendants actually went beyond that:
they claimed that their product was “based upon a foundation of scientific
evidence,” using phrases such as “scientifically shown.”
The court found injunctive relief proper, both for consumer
redress (in an amount to be determined) and to prevent future violations of the
law.  Given Coore’s further marketing
plans, there was a cognizable danger of recurring violations.  The court noted that injunctive relief under
the FTCA can “fence in” offenders by enjoining more than the specific misconduct
previously engaged in, as long as there is “a reasonable relation to the unlawful
practices found to exist,” but sought further input from the parties on the
scope of the injunction.
Coore was also personally liable for consumer redress.  He actually knew about the material
misrepresentations, or was at a minimum recklessly indifferent to the truth or
falsity of the misrepresentations:

Coore was intimately involved with
Grey Defence’s development and advertising, yet chose not to consult any
medical professional to evaluate his purported substantiation or conduct any
well-designed clinical trial to investigate Grey Defence’s efficacy. Instead,
he arrogantly relied on his own internet research, knowledge from high school
biology and chemistry classes, a test on himself, and conversations with
researchers who did not actually evaluate Grey Defence’s efficacy. This type of
evidence constitutes reckless indifference. 

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membership in swingers club not (yet) disclosed in Lanham Act case

Posted on October 5, 2016 by rtushnet
Edmondson v. Velvet Lifestyles, LLC, No. 15-24442-CIV, 2016
WL 5682591 (S.D. Fla. Oct. 3, 2016)
I don’t get to blog discovery disputes often; that this one is unresolved is frustrating, but the court asks useful questions.  “May Plaintiffs pursuing a false advertising Lanham Act
claim obtain in discovery the member list and email distribution list from a ‘unique’
and ‘private’ clothing-optional swingers’ club for ‘men and women who enjoy nudity
and sexual activity’ and who are directed to practice ‘safer sex’ at the club …?”  Maybe!
Plaintiffs are 32 professional models who alleged that
defendants “pirated and altered their images to advertise their swinger’s club
business interests on websites and social media accounts,” and put their
images/altered images “next to, or in very close proximity to, photos of
explicit, hardcore pornography which are too obscene and offensive to include
as exhibits to a publicly-filed complaint.” 
Plaintiffs sought information about defendants’ membership and email
distribution lists.  Defendants sought a
protective order, arguing that their members’ associational rights and their
own trade secrets would be threatened by disclosure.  The court sought more information before
ruling.
The parties disagreed about whether inquiries using the lists
would provide useful or even vital information. 
Ordinarily, you could survey likely swinger club customers, rather than
existing customers, though a large enough sample might be hard to get even with
an internet survey.  However, plaintiffs
sought “relevant sociographic and demographic evidence” from the lists so that
a representative sample could be constructed. They also argued that courts
routinely permit discovery of customer lists for these purposes; they sought to
reach out to customers via targeted email to see if they were confused;
customers who didn’t want to testify could seek protective orders. They also
offered to sign a confidentiality agreement to prevent misuse of the
information.
The court considered their request less pressing because it
furthered “a private agenda, not public-type goals” such as a criminal
investigation.
The judge was also uncertain about the strength of defendants’
asserted interests.  The club at issue
did have a strict confidentiality agreement, but half of the club’s members
were “not shy” about their association with the club; some club members “voluntarily
chose to self-disclose their affiliation and membership by being prominently
featured on the Club’s website.”  Nor did
the club promise its members confidentiality—it just made them promise
confidentiality to each other.
Was this information even within the permissible scope of
discovery? The rules allow discovery of “any nonprivileged matter that is
relevant to any party’s claim or defense and proportional to the needs of the
case, considering the importance of the issues at stake in the action, the
amount in controversy, the parties’ relative access to relevant information,
the parties’ resources, the importance of the discovery in resolving the
issues, and whether the burden or expense of the proposed discovery outweighs
its likely benefit. Information within this scope of discovery need not be
admissible in evidence to be discoverable.”  Proportionality requires an assessment of the marginal
utility of the discovery sought, and thus is highly related to relevance.  Since actual confusion is powerful evidence
of likely confusion, I would have thought that the baseline marginal utility
was pretty high.
So, would the requested lists be important in determining
damages (etc.) for the Lanham Act claim? 
Mere speculation as to the information’s utility won’t suffice.  The judge hearing the case initially
dismissed the Lanham Act claim sua sponte, though she offered them the opportunity
to refile.  They did, but they were thus
on notice that their claim was dubious, so the court also considered “whether
the requested discovery would be relevant if the sole claim is subject to
significant challenge.”
In theory, using targeted email surveys based on the list would
be a good idea, but the judge was dubious about the practical utility
thereof.  Respondents would be providing “relevant
demographic and sociographic characteristics” “in response to unsolicited
emails from a large law firm representing Plaintiffs who filed a lawsuit
against the club they attend to pursue their unusual, arguably-provocative,
lifestyle.”  But, the court asked, why would
anyone respond?
If the poll recipients understand
that they are not obligated to respond and further realize that responding
might cause them to be served with a deposition subpoena, then would they
likely complete and return the survey? What percentage response rate would an
expert need to receive to reach any meaningful conclusion about customer
confusion? Would members be likely to even remember whether they saw a
photograph of a model on a website before attending the Club? Would receiving a
simple online poll request generate anxiety or concern among the club members
or email recipients?
To proceed, plaintiffs would have to provide more
information, but defendants would have to disclose the number of members, the
number of people on its email marketing list, and other details about the list.  Plaintiffs, if they wished to proceed, would
have to provide more details from a survey expert showing that a survey would be
likely to work in this context.

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misbranding is still a thing despite First Amendment, court rules

Posted on October 4, 2016 by rtushnet
United States v. Vascular Solutions, Inc., No. SA-14-CR-926,
— F.Supp.3d —-, 2016 WL 5475999 (W.D. Tex. Jan. 27, 2016)
Defendants sell a medical device which permanently closes varicose
veins using a laser, allowing healthier veins to move blood.  The device is approved for treatment of
superficial veins only, not perferator veins. 
The government indicted defendants for misbranding: they failed to
provide the FDA with required notification of a new intended use, and the
devices’ labeling lacked adequate directions for that new intended use.
Defendants argued that the government’s case threatened the
First Amendment.  The court (Royce
Lamberth, which means that the government was treading lightly indeed!)
disagreed, in part because the government limited its claims.  Under Wisconsin
v. Mitchell, “[t]he First Amendment … does not prohibit the evidentiary
use of speech to establish the elements of a crime or to prove motive or
intent.”
Misbranding requires that the device have an “intended use”
other than that approved by the FDA.  The
regulations say that “intended use” means
the objective intent of the persons
legally responsible for the labeling of devices. The intent is determined by
such persons’ expressions or may be shown by the circumstances surrounding the
distribution of the article. … [I[f a manufacturer knows, or has knowledge of
facts that would give him notice that a device introduced into interstate
commerce by him is to be used for conditions, purposes, or uses other than the
ones for which he offers it, he is required to provide adequate labeling for
such a device which accords with such other uses to which the article is to be
put.
The government represented that it didn’t plan “to use
promotional speech to doctors to prove the intended use of the devices for
perforator vein ablation,” and will instead rely on conduct alone. “Should the
government change its plan and decide to use promotional speech to prove
intended use, or should the Court become concerned that the government is
indeed pursuing a theory that the FDCA prohibits even truthful non-misleading
off-label promotion, the Court will address this issue at that time.” 
The government did plan to rely on statements to doctors to
prove the conspiracy charge because a lawful act may serve as the “overt act”
in furtherance of a conspiracy. The speech might be truthful, but it could
still serve as an act taken to effect the object of the conspiracy without
violating the First Amendment.  Moreover,
a jury instruction could make clear that speech about off-label use is not
misleading merely because the FDA has not approved that off-label use or
reviewed or approved the speech.
Defendants also wanted the court to hold that “to prove that
a communication was actually misleading, the government must prove that the
communication misled a substantial subset of its intended audience.” This is
the Lanham Act standard, not the FDCA standard, and there’s no indication in
the case law that this is the First Amendment floor for misleadingness.

Defendants also moved to exclude any evidence of their
subjective intent.  However, the
governing law requires manufacturers to provide appropriate labeling “if the
manufacturer has reason to believe that its medical device might be used for
purposes different from the purposes for which the device is approved.”  That makes their knowledge and subjective intent
relevant.  Moreover, statements need not
be published to the marketplace to show objective intent, as long as they
manifest “oral or written statements.” A hypothetical manufacturer “who learns
over the phone from a customer-physician that the physician is ordering a
device approved for use A but intends to use it for use B, and must now
consider whether he can legally fill the order … would face no peril from such
a rule because he made no oral or written statement from which objective intent
could be proven.”

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