The Conkle Firm Featured Panel of 2017 PCPC Legal & Regulatory Conference

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Conkle, Kremer & Engel attorney H. Kim Sim was on the featured panel of this year’s Legal & Regulatory Conference sponsored by the Personal Care Product Council.  The featured panel, called “California: The Wild, Wild West,” explored the changes and challenges of the new business landscape in California, which boasts an economy that would place it sixth among the world’s nations.  The panel discussion was held on May 10, 2017 at Hilton La Jolla Torrey Pines in San Diego, California.   John Conkle, the CK&E attorney originally scheduled to speak on this panel, was unable to appear due to a federal court trial conflict.

 

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What are “Natural” Products Anyway?

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Personal care products that claim to be “natural”, “all natural” or “100% natural” continue to draw scrutiny from consumer advocates and regulatory agencies such as the FTC. Perhaps surprisingly, there still is no clear definition of the word “natural” for personal care products.  It’s no small concern, as consumers and manufacturers can have different expectations of what “natural” means, which can lead to confusion and accusations of false or misleading advertising.

Despite the uncertainty, “natural” product claims matter to consumers. According to a 2015 Nielsen report, 53% of consumers surveyed said that an “all-natural” description was moderately or very important to their purchasing decision. The worldwide natural products industry is estimated at $33 billion – and it’s growing.  “Naturally,” companies want to capitalize on this trend.

But what exactly is a “natural” product? Is it plant-derived? Is it made from ingredients found in nature?  Is it free of preservatives? Is it made without synthetic ingredients?  There are no FDA regulations regarding use of the word natural. However, the FDA has issued non-binding guidance that states it will not contest food products labeled as “natural” if the product does not contain added color, artificial flavors or synthetic substances. Though this provides a limited understanding of the term “natural”, the guidance is as to food, pertains only to FDA enforcement and is not a legal requirement.

In a recent complaint filed with FTC, California Naturel’s sunscreen was alleged to be not “all natural”, as it claimed, because 8% of it was Dimethicone, a synthetic ingredient. Following the FTC complaint, California Naturel put a disclaimer on its website, which was later ruled as ineffective in a 2016 FTC decision.

Starting in 2015, the Honest Company also found itself in court for false advertising in regard to their “natural” products.  Though the Honest Company markets its products as “natural”, the products contain a number of synthetic ingredients. Consumers argued that their understanding of “natural” was a product free of synthetic or artificial ingredients, and the court held that the Honest Company’s  “natural” claims for its products is misleading.

The current trend is that the surest way to avoid complaints when products are advertised as “natural” or “100% natural” is to make certain they are free of synthetic ingredients.  Next to that, disclosure of what you mean by “natural” as used on your product can be an important measure to avoid consumer confusion.

Conkle, Kremer & Engel attorneys help their clients navigate these tricky currents by staying up to date on developments affecting the personal care products industry.

 

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The Conkle Firm Wins Injunction Prohibiting Trade Dress Infringement by Zotos

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In September 2016, Conkle, Kremer & Engel attorneys filed a case on behalf of Moroccanoil against Zotos International, Inc. for trademark infringement by its “Majestic Oil” products. Just four months later, CK&E obtained a Preliminary Injunction against Zotos’ competing products, and within days the case was over.

A Preliminary Injunction is a powerful litigation tool that can immediately stop a defendant from selling products during the litigation. Securing a Preliminary Injunction at the beginning of the case often brings a prompt settlement, as the defendant must decide whether to settle or to fight over the product packaging that it cannot sell.

Getting a Preliminary Injunction can be challenging because the plaintiff must show that it is likely to win the case, and that it will be irreparably harmed if the defendant’s products are allowed in the market while the case proceeds to trial. Recently, courts have made Preliminary Injunctions tougher to get by raising the standards for showing irreparable harm.

In Moroccanoil’s case, the Preliminary Injunction prohibited Zotos from selling its Majestic Oil products in packaging that was confusingly similar to Moroccanoil’s distinctive trade dress. Zotos is a subsidiary of Shiseido America.  Drawing on its knowledge of the beauty industry, CK&E’s presentation of irreparable harm to Moroccanoil’s reputation proved effective – the Court found that continued sales of Majestic Oil products would erode Moroccanoil’s premium position in the hair care market as a professional brand. The Court’s Order granting Moroccanoil’s Motion for Preliminary Injunction is available here, and is published at Moroccanoil, Inc. v. Zotos Int’l, Inc., 230 F. Supp. 3d 1161 (USDC C.D. Cal. 2017).

On the heels of the Preliminary Injunction, the parties settled the case with Zotos agreeing to pay a substantial portion of Moroccanoil’s attorneys’ fees and to drop the confusingly similar trade dress of the Majestic Oil products. In total, the case was fully resolved within 6 months of filing, and the only litigation activity was CK&E’s Motion for the Preliminary Injunction.

To learn more about the case, contact the CK&E attorneys who lead the team for Moroccanoil, Mark Kremer, Evan Pitchford and Zachary Page.

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At Critical Juncture, CK&E Defeats Consumer Class Action Against Charity

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On October 13, 2016 Conkle, Kremer & Engel attorneys Eric S. Engel and Zachary Page successfully defended a charitable organization faced with an attempted consumer class action.  In Delgado v. Cars 4 Causes, a charity that accepted donations of vehicles was charged with fraud, false advertising, unfair competition and violation of the California Consumer Legal Remedies Act (CLRA).  Plaintiff Delgado had donated a boat and trailer to Cars 4 Causes, and later complained that Cars 4 Causes did not adequately disclose its fees before providing a portion of the net proceeds from sale of the donation to Delgado’s designated third party charity.

In a class action, a critical juncture is reached when the plaintiff files a motion to ask the court to certify a class.  Without a class certification, the action is just an individual claim, often with little value on its own.  In Delgado v. Cars 4 Causes, CK&E was able to present compelling evidence and legal arguments that the claims of the prospective class members did not have sufficient common issues of fact, and that the proposed class members were not sufficiently ascertainable, to permit class certification.  When class certification is denied, courts often allow the plaintiff a second or third chance to modify his class definition or otherwise amend his claims in order to meet the class certification requirements.  But in Delgado v. Cars 4 Causes, CK&E was able to present such solid evidence and legal argument that the court was convinced of the futility of any such additional chances for the plaintiff.  As a result, the court denied Delgado’s motion for class certification
“with prejudice.”  This permanent denial of class certification ended the plaintiff’s effort to pursue a class action against Cars 4 Causes.

CK&E attorneys have substantial experience and success in defending class actions ranging from consumer unfair competition, false advertising and CLRA claims, to employment wage and hour claims.

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The Conkle Firm Advises BIMA Participants on IP and Regulatory Issues

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Once again, Conkle, Kremer & Engel attorneys Mark Kremer and Kim Sim have been honored to participate in and contribute to the revolutionary Beauty Industry Market Access (BIMA) program, led by beauty industry guru Patty Schmucker of American Made Beauty.  BIMA is a multi-day intensive domestic and international trade and business education program taught by leading health and beauty industry experts. BIMA participants focus on key principles essential to expand their personal care products businesses both in the U.S. and overseas.

Mark contributes to the BIMA educational program by teaching modules on domestic and foreign intellectual property protection and international distribution agreements.   Participants are particularly advised about cost-effective methods of protecting their intellectual property internationally, such as international trademark registrations through the Madrid System, which can offer a centralized application process for trademark registration in over 90 countries based on a brand owner’s domestic application or registration.  Kim adds her expertise in domestic regulatory compliance, including Prop 65, California Organic Products Act (COPA), Safe Cosmetics Act, California Air Resources Board (CARB) regulations and survey requirements, and federal and state Made in the USA regulations.

BIMA is sponsored by Universal Companies, which has been in the beauty industry for over 18 years and is an important distributor of more than 300 brands in the spa, salon, esthetics and massage market, as well as their own proprietary brands.

In partnership with the California Trade Alliance (CTA), access to international trade shows are available to companies that participate in the BIMA programs. BIMA participants can exhibit in the popular California Pavilion regularly sponsored by CTA at Cosmoprof Bologna and Cosmoprof Hong Kong, among the world’s largest and most important beauty industry trade shows.

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PCPC’s California Lobby Day was a Great Success

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On April 12, 2016, Conkle, Kremer & Engel attorney John Conkle flew to Sacramento to be part of Personal Care Products Council’s delegation for California Lobby Day. The Personal Care Products Council (PCPC) advocates for the personal care products, beauty and cosmetics industry at federal, state and local levels on legislative priorities and regulatory issues.

Conferences held in the Governor’s Council Room featured presentations by Nancy McFadden (Executive Secretary to Governor Edmund G. Brown), Graciela Castillo-Krings (Deputy Legislative Secretary to Governor Edmund G. Brown, Jr.), Dr. Meredith Williams (Deputy Director of Safer Products and Workplaces Program Director, Department of Toxics & Substance Control), and Elise Rothschild (Deputy Director of the Hazardous Waste Management Program, Department of Toxics & Substance Control).  John joined teams of PCPC staff and member companies who met with legislative offices to discuss the economic impact of the industry and legislation pending before the California legislature. The day’s events were capped with a reception at which PCPC staff and members were joined by California State Legislators.

Conkle, Kremer & Engel is a proud and active member of the Personal Care Products Council.  CK&E attorneys are glad to lend their legal expertise to the PCPC and its member companies by participating in PCPC conferences and industry advocacy efforts..

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Labels Matter: Consumer Class Actions are Available for Organic Labeling Violations

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The California Supreme Court has affirmed that “labels matter” to both buyers and sellers of consumer products. “They serve as markers for a host of tangible and intangible qualities consumers may come to associate with a particular source or method of production.” California protects consumers from mislabeling through a number of laws, including possible class action lawsuits under the Consumers Legal Remedies Act (Civil Code §§ 1750 et seq.), unfair competition laws (Bus. & Prof. Code §§ 17200 et seq.) and false advertising laws (Bus. & Prof. Code §§ 17500 et seq.)

Aside from California’s general false labeling laws, there are specific laws and regulations regarding organic product labeling. The California Organic Products Act (COPA), generally requires that multi-ingredient cosmetics labeled or sold as organic contain at least 70% organically produced ingredients. But COPA is designed to work in concert with Federal regulations that direct baseline standards for production, labeling and sale of organic products. The California Supreme Court recently addressed whether the Federal regulations of organic products in some manner preempt or supersede California’s consumer protection laws, so that only the very limited Federal remedies can be pursued when there are alleged violations of organic labeling laws.

In Quesada v. Herb Thyme Farms, Inc., the California Supreme Court determined that California’s general laws prohibiting labeling misrepresentation do not conflict with the Federal laws concerning organic production, labeling and sale, but rather complement those Federal laws by allowing additional remedies to be pursued when those laws are broken by fraudulent organic product labeling. The Supreme Court observed that “permitting state consumer fraud actions would advance, not impair” the goals of providing “a level playing field” to manufacturers of organic products and “enhance consumer confidence in meaningful labels and reduce the distribution network’s reluctance to carry organic products.” From this perspective, where products are fraudulently mislabeled as organic, “the prosecution of such fraud, whether by public prosecutors where resources and state laws permit, or through civil suits by individuals or groups of consumers, can only serve to deter mislabeling and enhance consumer confidence.”

The result for manufacturers, distributors and resellers is that organic product labeling can create concerns at multiple levels, including federal and state regulatory liability, and class actions under strong state consumer protection laws. All those involved in the chain of manufacturing and distribution of products labeled as organic should consult with experienced counsel to protect themselves from potential adverse outcomes that can come from several directions. Conkle, Kremer & Engel attorneys are well versed in helping their clients proactively avoid and resolve such problems.

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CK&E to Present on Emerging Legal Issues at PCPC Emerging Issues Conference

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Conkle, Kremer & Engel attorneys John Conkle and Kim Sim will once address current legal trends and developments in the cosmetic and personal care products industry at the Personal Care Products Council (PCPC)’s Emerging Issues Conference on November 18, 2015 at the Ritz Carlton Hotel in Marina Del Rey, California.

John and Kim will present on “Emerging Legal Issues in the Cosmetic and Personal Care Products Industry.”  The topics to be discussed include recent developments involving enforcement of prohibitions on container slack fill, trends in lawsuits and agency action concerning advertising, an update on the California Air Resources Board’s ongoing Consumer and Commercial Products Survey, as well as a discussion about protecting companies from counterfeiting and cybersquatting in the digital age.

CK&E’s presentation from last year’s Emerging Issues Conference can be found here.

The annual event by the PCPC – the leading national trade association for the cosmetic and personal care products industry – is a must-attend for beauty companies across the country, with its unique focus on the many challenges that are on the horizon for the beauty industry.

This year’s agenda will also include updates from the PCPC on key issues for the industry and from the California Department of Toxic Substances Control on the California Safer Consumer Products and Workplaces regulations, as well as presentations on emerging issues in the Americas, safety standards for cosmetics, current and future challenges for Proposition 65.  In addition, Deputy Attorney General Robert Sumner is slated to speak at the conference.

CK&E is pleased to once again participate in this annual event and to offer its experience and insight into legal issues affecting the industry to the PCPC and its members.

 

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The Conkle Firm to Present on Emerging Legal Trends in Personal Care Products Industry

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On November 19, 2014, Conkle, Kremer & Engel attorneys John Conkle and Kim Sim will speak on emerging legal trends in the cosmetic and personal care products industry at the Emerging Issues Conference in Santa Monica, California.  Their topics will include recent developments concerning hazardous waste regulation, trends in advertising and class action litigation affecting the personal care products industry, and an update on California’s regulation of volatile organic compounds in consumer products.

The Emerging Issues Conference is an annual presentation by the Personal Care Products Council.  The PCPC is the leading national trade association for the cosmetic and personal care products industry and represents the most innovative names in beauty today.  For more than 600 member companies, the PCPC is the voice on scientific, legal, regulatory, legislative and international issues for the personal care product industry. The PCPC is a leading and trusted source of information for and about the industry and a vocal advocate for consumer safety and continued access to new, innovative products.

Please join CK&E at the conference to hear important information on the latest legal trends affecting the industry.

 

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Timed Out vs Youabian: The Conkle Firm Establishes that the Right of Publicity is an Assignable Property Right

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It is virtually impossible to get through a day without seeing the “right of publicity” in action.  Everywhere, there are advertisements featuring photographs of professional models and celebrities of every variety published to sell all types of products and services.  It is strange, then, that no statute or case precedent in California specifically established that models and celebrities have the ability to assign or license those publicity rights for proper use and for enforcement if their likenesses are misused.  Until now.

On September 12, 2014, the California Court of Appeal agreed with the arguments of Eric Engel of the Conkle Firm (working with co-counsel at Hall & Lim), and established the first published precedent in California that explicitly holds that the right of publicity is assignable.  In Timed Out, LLC v. Youabian, Inc., Case No. B242820, the Second District Court of Appeal finally settled a long-simmering dispute that had confused many lower courts:  Whether the right of publicity is a “personal right” that can only be exercised during lifetime by the individual owner, or whether the right of publicity is a form of intellectual property that can be freely assigned and licensed to others for use and enforcement.

The dispute had its origin many years ago, when an influential tort law treatise by famed Professor Prosser observed that the right of publicity historically derived from the “right of privacy.”  The classic form of the “right of privacy” is protection against hurt feelings and injury to personal reputation that can occur when personal information about a private individual is published without her consent.  That type of injury is considered personal in nature and cannot generally be assigned.  But, as the Timed Out decision observed, the right of publicity has evolved away from its origin into a distinctly commercial and non-personal interest.

The right of publicity is now virtually the opposite of the original right of privacy:  The right of publicity is the ability of a person to control the commercial value of the use of her image and information.  Timed Out recognizes that a person’s likeness, voice, signature or other identifying characteristics can have substantial commercial value, regardless of whether the person is a celebrity and regardless of whether the commercial value of the identified person’s “persona” is created by happenstance or by investment of great time and effort.  Timed Out finally establishes that the value created is a form of property, freely assignable by the person who owns it.

The Court of Appeal also resolved a separate important issue that is frequently in dispute in right of publicity actions:  Whether federal copyright law subsumes and preempts right of publicity claims.  Timed Out v. Youabian established that the right of publicity is distinct from copyright interests in a photograph or image, and that right of publicity claims generally are not preempted by federal copyright laws.

The effect of Timed Out LLC v. Youabian, Inc. for models, celebrities, manufacturers, advertisers and resellers is to finally establish that the right of publicity can be licensed and assigned to third parties, and enforced by third parties such as Timed Out, and that such rights are independent of federal copyright interests.  That means models and celebrities no longer have to make the difficult decision whether it is worth their time, expense and effort to pursue claims when their publicity rights are violated – they can assign the affected publicity rights to agencies such as Timed Out to pursue the claims.  Manufacturers, advertisers and resellers will no longer waste effort and time attempting to determine whether the publicity rights were assignable.  They can and should instead focus on establishing whether they had the necessary rights to use the image, photograph, likeness, voice or other identifying characteristic of the “persona” of the model or celebrity.  This puts a premium on making sure that any “model releases” obtained prior to advertising are well-written and appropriate for each particular use of the model or celebrity’s photograph, image, likeness or other identifying features.

Conkle, Kremer & Engel counsels and helps clients avoid these kinds of issues with effective model releases, licenses and assignments.  Timed Out v. Youabian demonstrates that CK&E is also at the forefront of enforcing the right of publicity when model and celebrity rights are violated.

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