The Conkle Firm is Featured in April 2014 Beauty Industry Report

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Conkle, Kremer & Engel is proud to again be the subject of a feature interview in the industry-leading publication, Beauty Industry Report (BIR).  BIR is a monthly 24-page executive newsletter for professionals that focuses on the emerging trends affecting the beauty industry.  CK&E’s feature interview assessed the latest legal trends, based on CK&E’s decades of experience in the industry.  Topics covered included trademark and brand protection, both international and domestic, regulatory compliance issues such as California’s Proposition 65 and the Safe Cosmetics Act, issues in manufacturer-distributor relationships, and more.

The attached article includes links to topical blog posts and websites referenced in the interview.  CK&E wishes to thank BIR’s Mike Nave for taking the initiative to disseminate information about these important industry issues.  BIR proved again that working in the beauty industry without reading BIR is like working in finance without reading The Wall Street Journal.

BIR Feature Interview of CK&E

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Smells Like Trademark Registration

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Brand owners are increasingly tapping into the powerful realm of olfactory memory by using scent as a brand identifier.  Conkle, Kremer & Engel, a pioneer in brand protection strategies, registered one of the only three fragrance trademarks ever on the U.S. Patent and Trademark Office Principal Register.  In fact, CK&E registered the first ever U.S. fragrance trademark for personal care products.

Scent can evoke strong emotional reactions and create long-lasting memories, so a signature scent can be a critical element of an overall brand identity.  As recently reported in The Los Angeles Times, retail clothing stores and hotels are beginning to use scent diffusers to greet consumers with their custom-made fragrances.  Signature scents can also be introduced with products, such as Brazilian designer Melissa’s bubblegum scented plastic shoes or GM’s use of semisweet scented leather in Cadillac automobiles.

While brand owners often focus on traditional trademarks like brand names (word marks and stylized word marks) and logos (design marks), nontraditional trademarks like scent, sound and color may also be eligible for protection.  In the United States, a scent mark can be registered as a trademark if it is used as a brand identifier, but only if it is neither functional nor naturally occurring in the goods or services.  For example, the scent of elderflower cannot be protected as a trademark for use with perfume, as it would be functional, or for use with elderflower cordial, as it is naturally occurring.  However, the scent of elderflower could be used as a trademark with stationery.

The next hurdle to registration on the Principal Register is secondary meaning.  A brand owner must show that consumers associate the scent with the source of goods or services through evidence such as extensive use of the scent in commerce, advertising expenditure, affidavits from consumers, or surveys.  In order to establish a signature scent as a registrable trademark, it is especially useful to provide evidence of advertising that specifically identifies the scent in connection with the goods or services (e.g., “stationery distinguished by its unique elderflower scent” or “always with our signature fragrance”).

As noted in Gilson on Trademarks, CK&E presented the USPTO with strong evidence that its client’s fragrance mark was not functional when used with hair care products, and CK&E submitted substantial, well-focused evidence of secondary meaning.  As signature scents continue to develop as key elements of brand identities, more brand owners will seek trademark protection for their chosen fragrances.  Brand owners should consider methods of protecting and enforcing their rights in nontraditional trademarks such as fragrance, color and sound.

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The Conkle Firm Participates in California Pavilion at Cosmoprof Bologna

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CK&E attended Cosmoprof Worldwide in Bologna, Italy, the international professional beauty industry trade show, in April 2014.  Cosmoprof Bologna is a preeminent global conference for the personal care products industry, with over 207,000 visitors and 2,450 exhibitors from 69 countries, and participation by manufacturers, distributors and industry organizations.  Highlights included the dynamic USA Pavilion and California Pavilion, orchestrated by the California Trade Alliance.  CK&E joined Beauty Industry Market Access (BIMA) directors Patty Schmucker and Cesar Arellanes, and several graduates of the BIMA program, as they put into practice the concepts taught at the intense educational program designed for entrepreneurs entering international markets.  To learn more about the BIMA program in which CK&E attorneys participated, click here.

As developed in discussions at Cosmoprof, a critical issue for many U.S. exhibitors entering the EU market is the July 2013 Cosmetics Regulation (EU Reg. 1223/2009) that overhauled the European Union’s regulatory landscape for personal care products.  The Regulations introduced a number of new requirements, including labeling for nanomaterials such as titanium dioxide, claim verification standards and an EU-wide ban on animal testing.  As a brief introduction to the new requirements, the EU distilled the July 2013 Cosmetics Regulation into the simplified infographic shown here.

Under the new Regulation, each manufacturer selling cosmetic products into the EU must designate a person or business entity physically located in the EU that will serve as the manufacturer’s designated “responsible person” for compliance with the Regulation.   CK&E has strong working relationships and regularly works with such “responsible persons” who can be engaged to assist businesses seeking to expand into the EU.  CK&E is pleased to participate in industry events such as Cosmoprof Bologna and programs such as BIMA, to help U.S. entrepreneurs expand into the EU and to assist foreign manufacturers develop and secure markets for their products in California and throughout the United States.

 

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China Finds Parallel Imports Constitute Trademark Infringement

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Chinese trademark law has no specific prohibitions against sale of gray market products diverted into the Chinese market, also known as parallel importation.  An important breakthrough occurred recently when the Suzhou Intermediate Court enforced trademark holders’ rights against an unauthorized reseller of gray market goods imported into China.

Pernod Ricard China (Trading) Co., Ltd. is the exclusive trademark licensee of Absolut Vodka (Images II-IV) in China.  Pernod Ricard and the trademark owner, Absolut Company Aktiebolag, brought a lawsuit in China against a local retailer of parallel imports of Absolut Vodka products, asserting trademark infringement and unfair competition.  The key facts were that the imported products had manufacturers’ identification codes removed and had added labels bearing Chinese characters for “Absolut” (Image I) and identifying an unauthorized importer and distributor.  The code removal and label addition infringed consumers’ right to know about the product origin, interfered with the trademark owners’ ability to track products to maintain product quality, and undermined the integrity and beauty of the genuine product.   The removal of the manufacturers’ identification code violated Article 52.5 of China’s Trademark Law, which is a catchall term prohibiting impairment of an exclusive right to use a registered trademark, and constituted unfair competition.  The addition of unauthorized labeling violated Article 52.1 & 52.2, prohibiting use of an identical or similar mark on the same or similar goods without the permission of the owner of the registered trademark, and infringed the exclusive right to use the registered trademark.

Absolut Vodka Images

Absolut Vodka Images

Conkle, Kremer & Engel works to protect its clients’ brands in the United States and abroad.

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Organic products? Really?

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Are your personal care products really organic? There is no federal regulation of cosmetics sold as “organic,” other than a voluntary USDA certification process, but California takes use of the term “organic” seriously.

The California Organic Products Act (COPA), requires that multi-ingredient cosmetics labeled or sold as organic contain at least 70% organically produced ingredients.  The Center for Environmental Health (CEH) sued 40 cosmetics manufacturers in 2011 and 2012 in Alameda County for violating COPA. One of the defendants in CEH’s first lawsuit was Todd Christopher International, dba Vogue International, (Vogue) the manufacturer of Organix brand products.  While the Organix products contained less than 10% organic ingredients, Vogue contended that the “active” ingredients in its products were organic.  Vogue argued that COPA did not apply to its Organix hair care products because hair care products are not “cosmetics” and that “Organix” is not a grammatical variation of the term “organic.”  The court rejected Vogue’s arguments.  In September 2012, Vogue agreed to either change its packaging and stop using “Organix,” or change the ingredients of its products to comply with COPA.

CEH then brought another lawsuit against Vogue.   This time, it was a class action aimed at stopping Vogue’s use of “Organix” nationwide – not just in California.  CEH claimed that Vogue’s labeling is unfair and deceptive under each state’s consumer protection laws because Vogue’s Organix products are not composed of predominately organic ingredients.  In October 2013, the federal court for the Northern District of California preliminarily approved a settlement of the class action in which Vogue would pay $6.5 million and stop using “Organix” for cosmetics that did not contain at least 70% organic ingredients.  The final approval hearing is set for April 3, 2014.  Vogue has already begun to transition its packaging and advertising to the more defensible “Ogx”.

Conkle, Kremer & Engel stays current on federal and state regulatory issues and helps its clients avoid the kind of labeling problem that befell Vogue.

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CK&E Attends ISSE to Help Beauty Industry Clients

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Conkle, Kremer & Engel attorneys recently attended the International Salon and Spa Expo (ISSE).  Held annually in Long Beach, California in January, ISSE is the biggest beauty expo on the West Coast, and attracts hundreds of beauty industry companies from around the world.  ISSE is sponsored by the Professional Beauty Association (PBA).

CK&E attorneys attended ISSE to meet with beauty industry clients, and to stay abreast of the latest trends and developments in the industry.  Attending trade shows helps CK&E maintain its unparalleled legal expertise on such matters as intellectual property protection, manufacturer-distributor relations and government regulatory and compliance issues that affect personal care product companies.

One highlight of this year’s ISSE was the launch of Glycelene, a line of natural, organic and vegan beauty ointments by CK&E client Borio Beauty.  Glycelene was named to PBA’s “Hot List” of products.  As part of CK&E’s  practice of assisting emerging companies for costs reasonably scaled to their needs, resources and business plans, CK&E helped to protect the Glycelene brand from its inception by initiating federal trademark registration and consulting on the packaging.

The breadth and depth of CK&E’s industry experience allows the firm to accomplish client objectives efficiently and effectively.  CK&E continuously builds on its decades of experience representing client interests in every facet of the personal care product industry by continuing to stay up to date on all matters of concern to its industry clients.

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Safe Cosmetics Act Database to Go Public in 2014: Watch for More Lawsuits

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In a previous blog post, we referred to the Safe Cosmetics Act as a “sleeper” because it has been in existence for several years but has been little noticed and seldom used.  That is likely to change in 2014.

The Safe Cosmetics Act was enacted in 2005 and became effective January 1, 2007.  Businesses manufacturing cosmetics sold in California were required to make their initial report to the California Department of Public Health by December 15, 2009.  Reporting must be made on a continuous basis, such as when formulation changes add a “suspect” chemical to an existing cosmetic product.  The Safe Cosmetics Act is so little-known that many manufacturers may have missed the reporting requirements, or complied as to some products but failed to update their reporting as product formulations changed.  So far, those omissions have rarely had any significant impact on manufacturers, but that is likely to start changing now.

The relative quietude may change in 2014 because by December 31, 2013 the CDPH must make a publicly accessible database available on its website containing all of the information collected pursuant to the Safe Cosmetics Act.  The information included in the database could be used by enterprising Prop 65 bounty hunters searching for products that contain chemicals that are subject to the warning requirements of Prop 65.  And the failure to report required information timely or accurately may be the basis for future unfair competition lawsuits by private parties, including consumers and competitors.

As a harbinger of the potential consequences for manufacturers, in January 2012 the California Attorney General’s Office announced the first law enforcement action taken under the Safe Cosmetics Act against a manufacturer of “Brazilian Blowout” products.  But the manufacturer’s failure comply with the Safe Cosmetics Act’s reporting requirement was only one of many business acts and practices alleged to violate California’s Unfair Competition Law.  The Attorney General also alleged violations of California’s False Advertising Law and Proposition 65.  The end result was a consent judgment that required the manufacturer to pay $300,000 in attorneys’ fees and costs and an additional $300,000 civil penalty for violation of Prop 65.  The manufacturer was also subject to numerous injunctions, including a requirement that it report in compliance with the Safe Cosmetics Act.  Private claimants such as Prop 65 bounty hunters are likely to take notice of the newly available information and any failures to comply.

Conkle, Kremer & Engel stays up to date on regulatory compliance matters to provide continued expert legal guidance to clients.  Conkle, Kremer & Engel has decades of experience representing clients in the personal care products and cosmetics industry, and understand the unique regulatory compliance concerns facing manufacturers, distributors and retailers.

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Naked Juice Labels to be Stripped of "All Natural" and "Non-GMO" Claims in False Advertising Settlement

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PepsiCo has agreed to pay $9 million to settle a class action battle over its use of the words “All Natural” and “Non-GMO” (non-Genetically Modified Organism) on its Naked Juice drink products.  As part of the settlement, PepsiCo agreed to change its labeling.

If approved by the district court, the settlement would resolve five separate class action lawsuits, which were consolidated with the lead case Pappas v. Naked Juice Co. of Glendora, Inc., in March 2012.

The case against PepsiCo stems from allegations that statements on the Naked Juice labels constitute false advertising.  The plaintiffs sued for violation of a number of California statutes – the Consumer Legal Remedies Act (CLRA) and False Advertising and Unfair Competition Laws.

According to the plaintiffs, independent testing revealed genetically modified soy protein in some Naked Juice products.  The plaintiffs also alleged that several ingredients in the Naked Juice products are non-natural, including ingredients like beta carotene and biotin which do occur naturally but are produced synthetically when added as supplements to foods, and a fiber ingredient that is produced by chemically rearranging corn starch molecules.  All of these ingredients are listed in the ingredient panel, but according to the plaintiffs, a reasonable consumer wouldn’t scrutinize the ingredient list for information contradicting the plain, conspicuous statements “All Natural” and “Non-GMO.”

The settlement in the PepsiCo case is likely to lead to many more class action lawsuits against businesses that advertise their products as “natural” or “all natural.”  Unlike use of the word “organic,” use of the word “natural” is not explicitly regulated by federal or state law, leaving the door open for claims of false or misleading advertising by consumers.

What’s the moral of this story?  An ounce of prevention is worth a pound of cure.  It is important to scrutinize health-related language used in advertising, especially on food products, and ensure there is documentation to back up claims.  CK&E routinely works with clients to evaluate the language on product packaging and in advertising as part of a comprehensive risk analysis so they can make informed choices for their businesses.  CK&E also has extensive experience defending clients against consumer false advertising claims.

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Starting a Fire: "Tris" Listing Increases Risks of Prop 65 Claims

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Tris / TDCPP is a common flame retardant additive used in the manufacture of polyurethane foam, resins, plastics, textile coatings and rubber. Tris / TDCPP is found in a wide variety of common products such as upholstered furniture and padding. California’s Office of Environmental Health Hazard Assessment (OEHHA) recently added the chemical Tris(1,3-dichloro-2-propyl) phosphate (chlorinated Tris or TDCPP) to its ever-growing list of chemicals “known to the State of California to cause cancer or reproductive toxicity.” As a result, Tris / TDCPP is now subject to Proposition 65, California’s Safe Drinking Water and Toxic Enforcement Act of 1986.

Prop 65 has a well-earned reputation as a “bounty hunter” statute, and is presently the subject of reform legislation, AB 227. This notorious “right to know” law does not ban any particular chemical from being used in products. In most cases it simply requires a generic warning label if a product contains chemicals found on the OEHHA’s Prop 65 list.

Because of the recent addition of Tris / TDCPP, products containing that chemical now must have a warning label in order to comply with Prop 65. Manufacturers and distributors who use outdated labeling and inadvertently fail to include the required warning are likely to be targeted by lawyers and claimants looking for violations on which they can capitalize. The penalties imposed by Prop 65 include fines as well as liability for the plaintiff’s attorney’s fees and costs.

Prospective Prop 65 plaintiffs are required to serve a “Notice of Violation” and wait at least 60 days before they can file a lawsuit. (California Health and Safety Code section 25249.7(d)) A review of the 159 Notices of Violation with respect to Tris / TDCPP served in the past 6 months reveals that just two law firms are actually behind the onslaught of Prop 65 notices regarding Tris / TDCPP:

  • The Chanler Group of Berkeley, California, through attorney Josh Voorhees and the firm’s “usual plaintiffs” (Peter Englander, Laurence Vinocur, Russell Brimer and John Moore) – 146 of the 159 Notices (92%).
  • Lexington Law Group of San Francisco, California, through attorney Mark N. Todzo and the firm’s plaintiff, Center for Environmental Health – 13 of the 159 Notices (8%).

The products identified in these notices have included foam-cushioned upholstered furniture, such as chairs, ottomans, stools and benches, foam-cushioned mattress toppers, back and seat cushions, car seats, and foam mats and pads for children and infants.

Manufacturers and distributors should promptly assess whether their products contain Tris / TDCPP. CK&E’s lawyers are experienced in helping clients take action to protect themselves from Prop 65 liability, and to help put out the fire if a Notice of Violation is delivered.

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