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.
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.
John Conkle will attend the conference on behalf of CK&E to address current legal trends and developments in the cosmetic and personal care products industry. This 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. The presentation this year will include a particularly timely focus on international trade issues affecting the cosmetics industry, including appearances by industry representatives from Canada and Mexico.
This year’s conference is particularly topical panel discussion entitled “2016 Elections: What happened and what it means for you!” The panel included Dan Schnur, a leading political strategist and Director of Jesse Unruh Institute of Politics at University of Southern California, which runs the USC-Los Angeles Times Daybreak Poll that was one of the few polls to correctly predict Donald Trump’s election. In comments during their PCPC presentation, the panel noted that if President Trump follows through with pledges such as environmental regulation rollbacks, it is likely that California will respond by enacting its own additional rules and regulations.
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.
Businesses will once again be required to report detailed product ingredient information and annual sales for products sold in California during 2015, as they were required to do for chemically formulated consumer and commercial products sold or supplied for use in California during the 2013 and 2014 calendar years. ARB requires the ingredient and sales information to be reported through its online Consumer Products Reporting Tool. Veterans of the two prior Surveys may notice that ARB no longer refers to the mandatory reports as “Surveys,” apparently because that name suggested to some that the reports were somehow optional. They are not optional. Non-compliance will draw letters from ARB and persistent non-compliance will result in referral to ARB’s Enforcement Division.
Reports must be filed by each “responsible party” listed on the label of a consumer or commercial product that was sold or supplied for use in California during the calendar year, if the product falls into one of the many categories listed for 2015. The general categories of consumer products that are subject to reporting are personal care products, adhesives, sealants and related products, household and institutional products, pesticide products, solvent and thinning-related products, vehicle and marine vessel aftermarket products, and aerosol coating products. But for the 2015 Report, ARB has exempted 232 categories of consumer products due to its assessment that the products contain low or no volatile organic compound (VOC) emissions – less than 0.05 tons per day of emissions. A number of beauty products, including facial cleansers and soaps, nail glues and gel nail polishes, are now exempt from reporting for 2015, even though they were required to be reported for 2013 and 2014 Surveys. ARB’s full list of exempt consumer products is available here.
Conkle, Kremer & Engel attorneys assist clients with achieving compliance with California’s many regulatory requirements, including the Consumer and Commercial Products Survey, so that clients can focus on expanding their businesses in valuable markets.
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.
May 2016 Article in Beauty Industry Reports: Cosmoprof Bologna Sets Records
CK&E regularly works with clients to identify and protect their intellectual property both in the United States and abroad, and participates in industry conferences like INTA’s Annual Meeting and others to stay abreast of the developing issues affecting the firm’s clients.