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May 26, 2005

FedEx and UPS go "Groin to Groin" in False Advertising Claim

The National Advertising Division, a self-regulatory agency that review and sometimes mediates disputes between competitors has referred a complaint to the FTC, after Federal Express refused to cooperate.

At issue is a commercial, aired by FedEx during the SuperBowl (and immensely popular), in which the company spoofs ad tactics used to get people to remember television advertising. In the commercial, the company lists Burt Reynolds, groin kicks, dancing bears, and 7 other things that research shows get people's attention.

Evidently, it worked, because it caught the attention of Fedex competitor, UPS. UPS filed a complaint with NAD saying that the tagline at the end of the commercial, The Most Reliable Way To Send Your Package, constituted false advertising. But when NAD requested that FedEx participate in the inquiry and hand over documentation to substantiate the company's claim, FedEx refused. NAD had no choice but to turn over the complaint for investigation by the FTC, which has the power to secure the necessary documentation needed to review the claim. The FTC, however, does not have to take the case, so UPS may have no choice but to bring a claim under Section 5 of the FTC Act for false advertising. Ouch... that really could hurt.

Practice Pointer: While each set of facts is different and there may be sound reasons for not participating in certain regulatory activities, clients should be counseled to participate in informal self-regulatory processes. Not only does it reduce the cost of resolving the matter, but it keeps Congress from interfering and enacting legislation that could impose even stricter requirements on advertisers.

Legal Side Note: In light of the recent decision holding that the ad claim, "AMERICA'S FAVORITE" was mere puffery, is "most reliable" on its way to being used by everyone?

Posted by Tsan Abrahamson at 10:57 AM

Viral Marketing Association Agrees Kids Should "Buzz Off."

The Viral & Buzz Marketing Association has aligned itself with Massachusetts representative Mike Festa, who has introduced a bill that, if passed, would require that children get parental permission before participating in Buzz marketing efforts. The Bill focuses on online word-of-mouth programs that encourage children to "talk up" products or services to their friends in exchange for free gear.

Although the Children's Online Privacy Protection Act (COPPA) does not directly address viral marketing issues, it does require that marketers seek verifiable parental permission prior to marketing to children under the age of 13. The current bill would likely affect marketers who want to use children in their viral campaigns because it would effective increase the age -- by three years -- for which marketers would have to seek permission (at least for viral campaigns).

The growth of the Internet and increasing legislature to curb spam have given rise to an increase in viral marketing campaigns as a way of getting the message out without violating the CAN-SPAM Act, which went into effect in 2004. Although many companies do not use children to spread the word online, they do use children (often called "influencers") to share products at school and with their friends. If the bill passes, it could mark a sea-change in the way companies appealing to kids market their products.

Posted by Tsan Abrahamson at 10:29 AM

"Date Lonely Wife" Invitation Turned Down by FTC

U.S. District Court Judge Amy St. Eve has, at the request of the FTC, frozen the assets of Clevelink Trading and Real World Media after receiving complaints that the companies were driving traffic to their sites in violation of the recently enacted CAN-SPAM Act.

The FTC alleges that the spam sent out by Defendants contained a "date lonely wife" subject line and a brief message containing a hyperlink to Defendants' website. The methods used by the Defendants to send the messages violated a number of provisions of the CAN-SPAM Act, including a provision requiring marketers to adequately label messages containing adult sexual content.

The FTC alleges that the Defendants operate close to 200 websites, many of which falsely claim to be registered with other entities around the world. In addition, defendants use offshore payment processors, have foreign bank accounts, route the messages through other people's computers (to throw off enforcers), have false contact email addresses, and don't allow people to unsubscribe. Perhaps most importantly for some consumers, there were no lonely housewives to date at all. That's just plain wrong.

Practice Pointer: The CAN-SPAM Act, which went into effect January 1, 2004, covers email transmission where the primary purpose of the email is commercial in nature. Operators of websites should familiarize themselves with the basic provisions of the Act. In its most basic form, the Act bans the use of false or misleading headers, prohibits deceptive subject lines, and requires that commercial emails have an "opt-out" mechanism so consumers do not have to receive future emails.

Posted by Tsan Abrahamson at 10:08 AM

McDonald's Settles Trans Fat Lawsuit, and Loses Some Green of its Own.

In the wake of growing concerns over the expanding waistlines of children and adults across the country, McDonald's has agreed to cut the fat, or at least the trans fat, from its cooking oil.

As part of a settlement with a number of plaintiffs, including consumer watch group called Ban Trans Fats, McDonald's has agreed to pay plaintiffs $1.8 Million in damages (that's 2.3 million hamburgers, for those keeping score), plus attorneys fees. In addition, McDonald's has agreed to transition to oils with less transfat (which it has evidently already done). Finally, McDonald's will give a $7 Million donation the American Heart Association, and spend a Million-plus on public notices about the status of the trans-fat situation at McDonald's.

Ban Trans Fat has also been successful in encouraging Kraft to make health-conscious changes to its offerings, including increasing the size of nutrition labels and reducing the fat content in certain "junk foods."

As consumer awareness grows regarding the growing health problem in the U.S. and Congress continues to pressure watchdog groups and regulatory agencies to crack down on food manufacturers, we can expect to see food companies making changes to their formulas, all of which will be reflected in advertising (how else is the word going to get out). This may translate into tougher analysis -- from competitors and regulatory agencies -- when it comes to claims made in advertising. Look out, consumers, truth in advertising is coming back.

Posted by Tsan Abrahamson at 09:42 AM

CARU Squeezes Mattel for New JUICE BOX Ads.

Mattel's new television commercial, which advertises its new JUICE BOX personal video-stereo system caught the eye (or ire) of the Children's Advertising Review Unit (CARU), which monitors advertising directed at children.

The JUICE BOX is a media player that allows children to play music, look at digital photoes, and even watch programming. The JUICE BOX, which contains a proprietary software, plays software called 'JUICE WARE." While the commercial adequately informed children of all the cool things the JUICE BOX could do, it was less clear that in order to do those things, additional purchases would be required. Indeed, in addition to purchasing the JUICE BOX player, parents still had to plunk down ducats for the Juice Ware Chips and Jice Box MP3 Starter Kit if they wanted the player to be used to its full potential.

Mattel was not inclined to change the JUICE BOX commercials, maintaining that their disclosures were adequate and complied with CARU guidelines, but did thank CARU for helping to "ensure responsible advertising practices" . . . . especially when it comes to the competition.

Posted by Tsan Abrahamson at 09:20 AM

May 05, 2005

Pine Tree Car Freshener Company Smells Trademark Infringement at Urban Outfitters

Car-Freshner, the company that makes those little pine-scented cardboard trees that dangle from many an automobile, has sued Urban Outfitters and Cordog Cards for trademark infringement in U.S. District Court.

The suit claims that the defendants have been unjustly enriched by the use of the trademark pine-tree on holiday cards that feature the tree with the words "Season's Greetings," as the message.

Dale Detwiler, spokesman for Corndog Cards, acknowledges that the company did use the image on the cards, but claims his use is parody. "The parody's humor resides in the fact that instead of using just any pine-tree fo its Christmas tree, the card uses Plaintiff's tree -- a tree with no connection whatsoever to Christmas."

Um, Dale? For the record, parody is not a defense to trademark infringement. . . at least not an absolute defense. Your attorney will still have to show no confusion. Oh, and it wasn't even all that funny. We know one company that's not laughing, anyway.

Posted by Tsan Abrahamson at 10:43 AM

Be Careful What You Download; A Boy Scout Might Be Watching.

The Los Angeles Times reports that the Motion Picture Association, in conjunction with the Japan Boy Scouts, has created the world's first merit badge awarded for "respect and protection of intellectual property."

Evidently, the Motion Picture Association of America has approached the Boy Scouts several times in an attempt to persuade the Boy Scouts of America to create a similar badge. Thus far, the Boy Scouts are not considering the badge. The appropriately named spokesman for the National Council of the Boy Scouts, Greg Shields, has suggested that such a badge would be a departure from the other badges, which generally relate to career skills or lifelong interest. Well, Greg, the way things are going, a viable career choice in the U.S. will be National Police. Then the badge could be part of the invasion of privacy skill set.

Posted by Tsan Abrahamson at 10:22 AM