The panel’s presentation is available here for review. Contact John Conkle to discuss the latest issues affecting the state of the personal care products and cosmetics industries.
The panel’s presentation is available here for review. Contact John Conkle to discuss the latest issues affecting the state of the personal care products and cosmetics industries.
While the main theme of the Conference was solidarity and cooperation between independent craft brewers and their networks, prominent legal and business issues discussed among attendees often focused on the increasingly crowded space of the craft beer market. This increasing competition has resulted in intellectual property conflicts and disputes (for example, regarding trademarks for brewery names or branding for particular beers) that craft brewers need to plan around when starting their business and expanding their portfolios. CK&E has attorneys like Mr. Page and Mr. Pitchford who are experienced in assisting clients in selecting, registering, and enforcing trademarks and trade dress in many consumer product industries.
Another hot business topic concerned distribution models for small breweries. In several states (including California), self-distribution is available for small breweries (California allows for self-distribution regardless of volume), but as our previous blog noted, oftentimes a small brewery reaches a point where it cannot handle its own distribution and must seek out a distributor. And, of course, in many other states, self-distribution is not permitted at all, necessitating the involvement of a distributor when a brewery wishes to sell draught beer or package their products. Many small breweries are concerned not only with the myriad choices of distributors, but also with finding a distributor that is the right fit and will actively promote their portfolio, and with the often restrictive laws that are involved in manufacturer-distribution relationships. Breweries should certainly be choosy about their distributors when possible, and in many jurisdictions there are an array of potential contractual provisions (for example, regarding sales goals, chain vs. independent accounts or other account stratification, marketing, plans for brand growth, audits, etc.) that can help shape a distributor relationship before it starts. It pays to consider and discuss as many contractual parameters as possible before signing a distribution agreement.
Additional hot topics at the Craft Brewers Conference included new Tax and Trade Bureau funding for enforcement, government regulations of taprooms and brewpubs, off-premise sales, and licenses for short-term out-of-state sales (e.g. for festivals or competitions). As the craft brewing industry continues to grow in footprint and sophistication, look for business and legal issues to be pushed even further to the forefront of the discussion.
Contact Conkle, Kremer & Engel for assistance with your brewery business or distribution needs.
States have come to recognize that, with the U.S. Congress largely gridlocked and federal regulatory agencies in a deregulation mood, the path is open for the states to regulate consumer industries in manners that they deem fit. The result is a continuously evolving patchwork of laws and regulations that can be difficult for industry participants to navigate.
Issues to be discussed at the May 9, 2018 panel presentation include California’s infamous Proposition 65, slack fill laws, and labeling and ingredient disclosure regulations that include even public databases disclosing products’ ingredients found by state governments to be detrimental. Further, state regulations can include ingredient phase-out requirements and outright bans, volatile organic compound limitations to protect air quality, and even animal testing regulations that can affect industry participants’ ability to compete in international trade.
A lively discussion is inevitable given the rich and topical subject matter and the vital industry interests affected. The rest of the Legal and Regulatory Conference program should be just as engaging, covering topics such as employment law, cannabis (THC, CBD, marijuana extracts and hemp) in cosmetics and personal care products. The many other topics to be covered in the three-day conference in Savannah, Georgia can be found in the conference program.
Mr. Pitchford and Mr. Page will attend to take meetings and keep abreast of the latest industry trends, including legal developments, craft brewing distribution and business issues, and evolving beer styles. Conkle, Kremer & Engel brings its expertise to bear on a number of beer industry-specific issues, such as brand protection and intellectual property, distribution and vendor relations, regulatory issues, advertising and labeling, employment law, and litigation and alternative dispute resolution in state and federal courts.
If you’re an industry professional or craft beer-related business who will be at the Craft Brewers Conference and would like to connect with Mr. Pitchford and Mr. Page before, during, or after the event, please contact them at email@example.com and firstname.lastname@example.org. They would be happy to arrange initial discussions about particular issues you may be facing.
At the very least, counterfeit products are frauds – they are not from the manufacturer whose trademark appears on the product, so the consumer is cheated out of the quality that the brand represents. But in reality, the consumer has absolutely no idea what the contents and construction of a counterfeit product may be – it is a product of unknown origin, regardless of whether the consumer purchased from a known reseller. Because virtually any product a consumer can purchase can be counterfeited, consumers can be placed in great danger from unknowingly purchasing substandard products. A couple of recent events in the news highlight the extreme risks of counterfeit products.
In April 2018, the Los Angeles Police Department announced that it had raided sellers of supposedly discount brand name cosmetics, and seized $700,000 of counterfeits. Consumers had complained to the brand manufacturers that makeup products they purchased were causing rashes and bumps on their skin. The products were determined to be counterfeits that tested positive for high levels of bacteria and animal waste. This is undoubtedly because the counterfeits are not manufactured with any quality controls or regulatory oversight – they are the result of a black market, pirate operation. LAPD Detective Rick Ishitani was quoted in the press as saying, “Those feces will just basically somehow get mixed into the product they’re manufacturing in their garage or in their bathroom — wherever they’re manufacturing this stuff.” One of the brands asserted to be counterfeit was Kylie Cosmetics. Kylie Jenner’s sister, Kim Kardashian West, tweeted: “Counterfeit Kylie lip kits seized in LAPD raid test positive for feces. SO GROSS! Never buy counterfeit products!”
The risks to consumers of counterfeits unfortunately do not stop even there. An even more extreme case of product counterfeiting hit the press a few days later. Tragically, famed rock artist Prince died in April 2016. It was soon determined that he had died from an overdose of fentanyl, an extremely powerful and dangerous synthetic opioid. But in April 2018, local prosecutors announced that Prince had consumed the fentanyl by taking tainted counterfeit Vicodin, a brand name medication of AbbVie, Inc. There was no determination as to how Prince obtained the counterfeit Vicodin pharmaceuticals. “In all likelihood, Prince had no idea he was taking a counterfeit pill that could kill him. Others around Prince also likely did not know that the pills were counterfeit containing fentanyl,” Carver County, Minnesota Attorney Mark Metz was quoted as saying at a news conference.
Some believe that counterfeits can be identified by the price alone, and warn against buying brand name products at steep discounts. While an inexplicably low price is certainly a red flag of a potential counterfeit, in fact counterfeit products are often sold to consumers at prices very close to those of the brand name product. This is often because many intermediaries have handled the product, taking a profit with each transaction, in the course of a murky gray market distribution process.
The popularity of online sales make the risks even worse for consumers, as it is nearly impossible for the consumer to inspect the product before purchase and delivery, and it is often very difficult for consumers to determine who is actually selling the product online. For example, many popular online sellers act as marketplaces for innumerable third party sellers, and a purchaser cannot always determine which seller will actually deliver the product purchased.
If you are a consumer, you really need to exercise great caution when considering purchases of brand name products from sellers who are not in that manufacturer’s authorized distribution channels. It generally matters little whether the seller is known to the consumer – it only matters where the seller obtained the product.
If you are a brand name manufacturer or trademark holder who suspects that unauthorized parallel market sellers may be offering counterfeit products, you are well advised to promptly contact counsel well-versed in the issues and methods of enforcement of your intellectual property rights.
Exhibitors showed strong cross-cultural influences, with many products and flavors from around the world, all emphasizing the trend toward fewer and more recognizable ingredients in simple formulations. Businesses clearly demonstrated they are responding and catering to the adventurous interests and palates of health-conscious, worldly, and informed consumers. Countless product lines were customized for consumers committed to paleo, vegan, and gluten-free diets. Another popular trend is toward products and businesses that are dedicated to championing charitable causes, so consumers can use their purchases to support causes they are passionate about and can feel loyal to brands that are as committed as they are.
Mirroring recent cultural trends, women-owned and managed businesses were very notable throughout the Expo. Many entrepreneurs proudly advertised their Women’s Business Enterprise National Council (WBENC) certifications. The WBENC certification “validates that the business is 51 percent owned, controlled, operated, and managed by a woman or women.”
In the beauty arena, there were a refreshing number of brands actively encouraging women to maintain an open dialogue with the product manufacturer to address issues they regularly face. The trend of businesses expending great effort to establish dialogue and long-term relationships with their consumers through social media and direct contacts has become clear. These overlapping trends resulted in prominent presentation of many products “made for women, by women,” ranging from beautifully packaged feminine hygiene products to natural pre-natal and post-natal products promoted as safe for use by pregnant women and around infants.
CK&E attorneys provide full service to businesses in the beauty, food, and beverage industries. They regularly attend important trade shows to help their clients stay abreast of trends, new regulations, and developments in the law and the marketplace affecting these industries.
Unless there is a swift settlement, one can assume that Stone Brewing will make good on the threat in its complaint that it will move for a preliminary injunction in order to stop the sale of Coors’ “KeySTONE” branded products during the pendency of the lawsuit. A motion for a preliminary injunction is often a critical juncture in such trademark infringement lawsuits, and Stone Brewing will need to show that it will be “irreparably harmed” if the injunction is not granted. This showing has in recent years become more difficult, as courts no longer presume irreparable harm when the plaintiff shows that consumers are likely to be confused by trademark infringement, but rather require an additional showing of likely irreparable harm. “Irreparable harm” (also known as “irreparable injury”) generally means injuries that cannot be readily compensated by money damages, and since money damages are usually available for trademark infringement this standard presents special hurdles for infringement plaintiffs that can be difficult to overcome early in a case.
To show irreparable harm, one argument Stone Brewing will likely make is that its “premium brand” is being tarnished by confusion with Coors’ “value brand.” This argument is presaged throughout Stone Brewing’s complaint (referring to Keystone’s beers as “watered down” and “fizzy yellow offerings,” as opposed to Stone Brewing’s “bold” and “artisanal” products). The argument, which has been judicially adopted in relatively few cases, is essentially that the premium or niche brand is irreparably harmed by the association with the value, mass-market brand, which usually is of lesser quality.
Conkle, Kremer & Engel, which has experience in both trademark litigation and issues specific to beer production, distribution, and marketing, has succeeded in making this premium-vs.-value argument in federal courts in California. For example, in Moroccanoil, Inc. v. Zotos International, Inc. (230 F. Supp. 3d 1161 (USDC C.D. Cal. 2017)), a 2017 trademark infringement case with similarities to the dispute between Coors and Stone Brewing, CK&E represented the manufacturer of Moroccanoil Treatment, a luxury oil-infused hair care product sold in distinctive packaging. The defendant Zotos, part of a large personal care products conglomerate, had created a low-cost “value” hair oil product called “Majestic Oil” that, in addition to its similar name, used packaging that was a close likeness of Moroccanoil’s trade dress.
CK&E, in its successful motion for preliminary injunction, argued that sales of low-cost “value” Majestic Oil products would erode Moroccanoil’s carefully-built premium image. The presentation included evidence establishing that once a product is no longer perceived by consumers as “premium,” it is difficult or even impossible for the seller to regain that perception. The court agreed with CK&E and Moroccanoil, finding a likelihood of irreparable harm and granting a preliminary injunction against further sale of the Majestic Oil products.
Preliminary injunctions can be dramatic turning points in infringement cases. In Moroccanoil’s case, the court’s preliminary injunction prevented Zotos from any further sales, advertisement or distribution of its infringing products, and required Zotos to recall all of its infringing products already in the market. As could be predicted, the case settled swiftly thereafter and Zotos made permanent substantial changes to its product name and packaging to avoid infringing Moroccanoil’s intellectual property rights.
Click here to learn more about CK&E’s Moroccanoil v. Zotos matter or contact CK&E attorneys who work on beer industry matters, such as the brand protection that can make or break participants in the crowded craft beer market, including John Conkle, Evan Pitchford and Zachary Page.
A major point of discussion involved the impact of the Supreme Court’s recent Varsity Brands v. Star Athletica decision, a copyright case that concerned design features on cheerleading uniforms. Historically, articles of clothing have not generally afforded copyright protection because they are considered “useful articles.” But the Supreme Court held that the design features of the uniforms in issue were protectable because they were works of art which could be imagined separately from the useful article into which they were incorporated. Many have suggested that the holding in Star Athletica signals that broad copyright protection would be available for articles of clothing. But the USC panel discussion made clear that Star Athletica affirmed that copyright protection is available for design elements as distinct from “useful articles,” and the recognized protection is not available to clothing in general.
The panel addressed the unique intellectual property issues that the fashion industry faces. There was a broad discussion about the economic and moral impact of “copycat” designs on society and the effects of “knockoffs” on innovation. Since fashion designs are not specifically protected under U.S. law, the conversation highlighted how attorneys skilled in fashion law use a combination of available forms of protection, including copyright, trademark, trade dress and design and utility patents. A recent example is the pending case of Puma SE v. Forever 21, Inc., USDC Central District of California Case No. 2:17-cv-02523, in which Puma asserts that it has distinctive shoe designs in a line called Fenty Shoes that is promoted by singer Rhianna. Puma contends that Forever 21 engaged in deliberate copying of some of its Fenty Shoes designs, notably the popular “Creeper”, “Fur Slide” and “Bow Slide” models. To protect its designs, Puma alleged infringement of design patents, trade dress and false designation of origin under the Lanham Act, and copyright. Puma’s copyright claims attempt to leverage the Star Athletica decision by contending that certain elements of the Fenty Shoes “can be perceived as a two- or three-dimensional works of art separate from the Fenty Shoes” and “would qualify as protectable pictorial, graphic, or sculptural works – either on their own or fixed in some other tangible medium of expression.” Under the Star Athletica standard, to allow this type of copyright infringement claim, the court will have to determine that “the separately identified feature has the capacity to exist apart from the utilitarian aspects” of the shoe. “If the feature is not capable of existing as a pictorial, graphic, or sculptural work once separated from the useful article” – the shoe – then it is a utilitarian feature and not subject to copyright protection.
The attorneys at Conkle, Kremer & Engel have years of experience navigating the complex legal and intellectual property issues faced by clients in the fashion industry. Our attorneys help clients protect their brands to ensure their continued success in this demanding and fast-paced industry.
Sheet masks and other Korean beauty products continued to be as popular as they have been in the past few years. But more palpable this year at ISSE was the recent movement towards “inclusive beauty,” emphasizing a range of culturally enlightened products that appeal to a wider range of consumers of different ethnicities, ages, genders and abilities. Exhibitors displayed a wide range of products intended for people with all skin and hair types and colors. Many brands showcased hypoallergenic and natural products with few ingredients, suitable for use on consumers with allergies or medical conditions. There were also more personal care products geared towards men than there have been in previous years.
ISSE offered a wide array of complimentary educational programs related to the beauty industry, including classes regarding the importance of social media presence for artists and brands. CK&E attorneys remain ready to provide their clients with legal assistance in the ever-changing world of social media by keeping up to date on developments in social media. At ISSE, attorneys Evan Pitchford and Desiree Ho attended “Getting It Right On Instagram,” a seminar hosted by long-time beauty industry executive and social media guru Gordon Miller, CEO of Hairbrained, an online community for craft hairdressers and colorists to connect and share their work.
For next year, PBA has already announced that it will launch STYL on January 26-28, 2019, a new event that PBA promises is not an expo or convention, but rather “STYL is an experience where the leaders, learners, students, owners and the beauty industry come together from across the country.”
CK&E is proud to be a member of the PBA and other professional beauty organizations, and is delighted to be in its third decade of helping domestic and international businesses of all sizes grow and evolve to meet their goals in an efficient and cost-effective manner.
As more companies hop onboard the “organic” and “natural” train, beauty brands should be careful about their advertising and labeling to avoid drawing adverse attention of regulators and others policing the market. Conkle, Kremer & Engel has published multiple blog posts throughout the years concerning “natural” and “organic” product claims. Selling “natural” products in California can be particularly hazardous without the right guidance – “natural” ingredients may be subject to Proposition 65, as CK&E has explained in the past. Manufacturers would do well to remember that the California Supreme Court has warned, particularly in claims of organic contents, “labels matter.”
With decades of beauty industry experience helping companies grow and protect their businesses, CK&E attorneys routinely guide clients through the process of complying with Proposition 65 and other complex regulatory schemes.