Based on a recent restitution submission prepared by Faegre Drinker, a federal judge in Harrisburg, Pa. awarded Eli Lilly and Company $1.9 million in restitution from an individual convicted of trafficking in drugs bearing counterfeit trademarks of Lilly and other pharmaceutical companies. The defendant in this matter was sentenced to 70 months in prison and ordered to pay $3.6 million in restitution, the remainder split between the other companies based on the defendant’s conduct involving their trademarks. In this instance, crime clearly didn’t pay for the defendant and success was achieved by partnering with our client to fight counterfeiting and illegal importing. So how does this work?
Ever since the artist known as Beeple1 sold an NFT of a digital collage for over $69 million at Christie’s mid-March 2021 auction, everyone in the art world — and in other communities — has been talking about NFTs. Depending on whom you listen to, NFTs are the future of art and will bring long-hoped-for transparency and accountability to the art market. Or they are a dangerous fad. Or they are “nothing sandwiches” that provide something to purchase with cryptocurrency that otherwise just sits unused in digital wallets.
So what the heck is an NFT? NFT is short for “nonfungible token”; an NFT has been defined as a digital certificate of ownership or a digital record of a transaction. The record is “minted”, i.e. created, using blockchain technology that is stored over a decentralized computer network rather than in a centralized registry. And NFTs are purchased using cryptocurrency, most often Ethereum.
You’ve done the work of securing a federal trademark registration and now face the matter of enforcement against a potential infringer. Are the classes and goods specified in that registration now a double-edged sword?
Say your business, Company A, sells a premium line of clothing for chefs, widely recognized in the restaurant industry for both its durability and stylish design. You’ve worked hard to build the brand and made sure to protect its reputation by registering Company A’s trademarks with the USPTO—in particular, Class 25 for clothing. Much to your dismay, however, a customer has brought to your attention Company B’s new line of kitchen utensils that uses a conspicuously similar name and logo. While initially sold at retail outlets, this new line of cutlery has grown in popularity with some of the nation’s top restaurants. When you reach out to Company B for an explanation, they direct you to your own now-glaring lack of any registration for goods in Class 21 for household utensils. Your brand, despite taking the cooking world by storm, is not quite famous enough to pursue a dilution claim. Are you out of luck in pursuing a claim for infringement?
It’s April, which means it’s time for Earth Day. But for so many consumers, sustainability is top of mind all year. Consumers are constantly seeking out products and services that they can feel good about using and purchasing. And marketers want to tout what their company is doing to be good to the environment. As a result, the marketplace is flooded with claims that our household cleaners are “non-toxic” and our packaging is “recyclable” along with many other environmental benefit statements for products and services.
To avoid what’s commonly known as “greenwashing,” marketers need to ensure that statements made about the environmental benefit of their products or services are clear, truthful, and evidence-based. A top resource in this area is the Federal Trade Commission’s “Green Guides,” which can help companies avoid making environmental benefit claims that can attract regulators and mislead consumers. While the Green Guides are not FTC regulations, they provide detailed guidance on the types of claims that the FTC considers deceptive under Section 5 of the FTC Act, which broadly prohibits “unfair or deceptive acts or practices in or affecting commerce.” (15 U.S.C. § 45(a)(1).) Although these Guides have not been updated in almost 10 years, they remain instructive when it comes to a review of environmental benefit claims.
Even before COVID-19 had turned each of us into an amateur epidemiologist, companies in nearly every industry had begun to recognize the magnetic appeal of health and wellness claims in consumer advertising. Marketers of everything from cleaning products to apparel to furniture to homes were suddenly making claims touting the health and wellness benefits of their products. It wasn’t just better, it was better for you and your family. It will surprise no one to learn that the pandemic year of 2020 only intensified this trend, as consumers focused as never before on the ways that their purchases might not only help them live better lives, but perhaps even keep them alive.
Predictably, competitors, regulators and the plaintiff’s bar have all taken notice of this trend, and moved aggressively in response. In 2020, for example, the BBB National Programs’ National Advertising Division (NAD), the nation’s premier forum for competitor initiated advertising challenges, recorded an extraordinary 50% uptick in challenges to health-related advertising. Similarly, the Federal Trade Commission (FTC), Food and Drug Administration (FDA), Environmental Protection Agency (EPA), and state regulators across the country have focused intense scrutiny on companies claiming to offer health benefits to consumers often desperate for help. It is natural to predict that class actions and Lanham Act activity will soon reflect these trends as well.
So with the undeniable power of these claims balanced alongside the risks of a misstep, how should brand messaging communicate the health and wellness benefits of a product in the “right” way? And what are the red flags to look for in the advertising of your competitors? Here are a few hints:
- Identify the Claims. Advertisement and marketing claims are intended to communicate characteristics of a good or service designed to entice a purchase. Claims are present in all forms of branded communication, from TV commercials, to print ads, radio announcements, pop-up ads, and social media influencer posts. Keep in mind it isn’t just about what you are saying, but what can be implied from the images, graphics and pictures.So whether looking to substantiate your own claims, or to challenge the claims of a competitor, the first step is to systematically identify the statements that actually qualify as a “claim.” For many marketers this can seem daunting, but in fact this initial analysis involves asking just a simple question: what exactly are you promising? Claims are promises and comparisons presented as facts: you should buy this product because it will improve your memory. You should buy this chair because it will reduce your back pain. You should use this cleaning product because (unlike the products sold by our competitors) it does not contain toxic chemicals. Performance claims, superiority claims, comparative claims – all of them are, in the end, statements which are either true or false, accurate or misleading. And it isn’t enough to say “everybody knows X is true” – all claims must be substantiated before you make them. And remember, it isn’t just what you say directly: you can be held accountable for what your spokesperson or influencer says, too.
- Substantiation. What kind of evidence would substantiate the claim? How much data is necessary? Do I need a clinical trial? Is my evidence enough?The simple answer is…it depends. The level of scientific evidence necessary to support a claim always depends on the claim that is being made. Moreover, specific regulatory requirements may apply depending on the claim. If the product claims to ‘sanitize,’ for example, then it is possible that EPA approval may be necessary or it must meet certain FDA requirements. Of course, if the product is not regulated, the standard may differ. This is where talking things through with your counsel is most critical: the same type of claim on a different kind of product may not be subject to the same requirements. In any event, the science must closely match the requirements of the claim language. Don’t let your claim outpace the science – anecdotes from happy customers, or enthusiasm for your product, can never substitute for systematic evidence.
- Magic Language. We all love puffery – and we all think we know it when we see it. But, that isn’t always the case. Statements that are specific, quantifiable or purport to describe objective facts may not constitute puffery, regardless of how over the top the language may seem. Claims about the ‘safest’, ‘best’, ‘highest quality,’ can all require substantiation under certain circumstances. Perhaps it is just enough to merely offer the “finest” of all puffery….
- Is this a Regulated Claim? Is it possible that the product “sanitizes”, has “antimicrobial” properties, or somehow prevents or reduces the likelihood of contracting COVID-19?These statements are important ones as they may transform the product from an ordinary consumer product to a regulated product. Sanitizing and antimicrobial properties may trigger EPA review and treatment or prevention of a disease may render a product a ‘drug’ regulated by the FDA. Of course, the FTC may also assert its authority particularly if these statements are disseminated on a product website or in other forms of advertisement. It is possible that the mere existence of these words invite enforcement activity.
- Is this a Comparative Claim? The most, the best, the mostest, the bestest, the… mostest bestest? We all want to be on top, but sometimes that means a “head-to-head” comparison is necessary to substantiate the claim. Even then, it is necessary to understand that an unqualified comparison may trigger a greater level of substantiation because consumers may understand it to mean “as compared to all leading products nationwide.” Our advice: “Think before you compare” and determine the basis for your comparison – don’t just assume that everyone will understand it in the same way.
While health and wellness claims are subject to an increasingly intense level of scrutiny by competitors and regulators alike, there is little question that consumers want to know whether the products they buy are in alignment with the health and wellness goals they have set for themselves and their family. A well-crafted campaign supported by properly substantiated claims is not only a way to stay out of trouble, but a way of building deeper and more lasting engagement with educated consumers.
Sometimes the quickest way out of something is straight through it. This advice holds true in life, and in trademarks.
Those who deal with trademarks are familiar with obstacles to registration based on similar third-party marks. It’s frustrating, and especially so if you had conducted a clearance search beforehand in an effort to avoid such obstacles and see no reasonable basis for the Trademark Office’s refusal. Other times, the Trademark Office may approve your application for publication, but a third party will oppose registration during the opposition period. Or maybe you haven’t even applied for registration in the Trademark Office, but you receive a letter threatening legal action if you do not cease and desist from the use of your mark.
On April 5, 2021, the U.S. Supreme Court decided Google LLC v. Oracle America, Inc., holding that Google’s copying of a portion of an Application Programming Interface (API) for Java SE, in which Oracle was presumed to have a copyright for purposes of the Court’s decision, to enable programmers familiar with Java programming language to work with Google’s Android platform constituted “fair use” of Oracle’s software as a matter of law because it copied only those portions of computer code that were needed to allow programmers to work in Google’s new and “transformative” Android platform.
In 2005, Google acquired Android, Inc., and began developing a software platform for use on smartphones. Its developers wrote millions of lines of new code to build that platform. Google hoped to attract software developers to create applications for use on its new Android platform. Many software developers were already proficient with the Java programming language, and were specifically familiar with Oracle’s Java SE platform, which was primarily directed to programs for use in desktop and laptop computers. To allow those programmers to be able to easily work with the new Android platform, Google copied approximately 11,500 lines of code from the Java SE program — specifically from a tool called an “Application Programming Interface,” which allows programmers to use prewritten code to enable their software to perform certain functions.
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So you’re thinking about changing your company name, brand, or both. We usually like to allow at least a few months to identify the new name and initiate protection. To help you plan, here’s a high-level overview of significant steps in the process. Happy rebranding!
Faegre Drinker is actively recruiting a trademark prosecution associate to join the Trademark, Copyright, Advertising and Media (T-CAM) Team for our thriving Intellectual Property practice. This position offers the opportunity to play a key role in growing our existing trademark, copyright, and advertising practice in our Chicago, Indianapolis, Minneapolis, Washington D.C., San Francisco or Denver offices.
We’ve all been there. Maybe we find it in reviewing the chain of title for trademarks during due diligence. Maybe it’s something that another company filed that has nothing to do with us. Or maybe someone on your team made a typo (yup, no one is perfect!). But, however it happened, it’s there, in the USPTO records: an assignment inadvertently recorded against a registration that was not actually part of the assignment; a security interest recorded against the wrong application number; or a name change was erroneously recorded as a merger. Regardless of why or what, the bottom line is the same: there is an error in the chain of title for the application or registration. Oops! Now what? How do we get that error fixed and removed from the USPTO trademark records?