California’s SB 574 and AB 495 Would Expand Regulation of Cosmetics Labeling and Ingredients

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California’s SB 574 and AB 495 Would Expand Regulation of Cosmetics Labeling and Ingredients

California has always led the way when it comes to regulating cosmetic products, and bills recently introduced by Senator Connie Leyva (Senate Bill No. 574 or SB 574) and Assemblymembers Al Muratsuchi and Buffy Wicks (Assembly Bill No. 495 or AB 495) is in keeping with California’s reputation as a trailblazer in the cosmetics regulatory space.

SB 574, the “Toxic Fragrance Chemicals Right to Know Act of 2019”

SB 574, the “Toxic Fragrance Chemicals Right to Know Act of 2019,” was introduced last month. It would require cosmetic manufacturers, starting July 1, 2020, to disclose whether any of their cosmetic products contains a toxic fragrance or flavor ingredient.

Fragrance or flavor ingredients that appear on any one of 27 “designated lists” would be subject to public disclosure. The designated lists include chemicals listed as known to cause cancer or reproductive toxicity pursuant to California’s Proposition 65; chemicals classified by the European Union as carcinogens, mutagens or reproductive toxins; chemicals included in the European Union Candidate List of Substances of Very High Concern; and Group 1, 2A or 2B carcinogens identified by the International Agency for Research on Cancer (IARC) among many others.

Existing law – the California Safe Cosmetics Act of 2005 (“Safe Cosmetics Act”) – requires cosmetic manufacturers to disclose to the California Department of Public Health (CDPH) Safe Cosmetics Program whether any of their cosmetic products contain chemicals known or suspected to cause cancer or reproductive toxicity. The Safe Cosmetics Act’s list of reportable ingredients is compiled from a more far limited set of five designated lists. This self-reported information, in turn, is publicly available through the CDPH’s Safe Cosmetics Database.

While the Safe Cosmetics Act does not exempt fragrances and flavorings from being reported, the reportable chemicals in those cases are often identified simply as “trade secrets.” The proposed legislation would require the disclosure of the identities of the reportable chemicals or ingredients, but for trade secret purposes, would not require the weight or amount of a fragrance or flavor ingredient to be disclosed or any disclosure of how the fragrance or flavor is formulated. In addition, a manufacturer would not have to disclose any fragrance or flavor ingredients that are not found on any of the 27 designated lists. It is important to note that SB 574 as proposed would not ban or otherwise regulate the use of any fragrance or flavor ingredients.

AB 495, the “Toxic Free Cosmetics Act”

AB 495, also introduced in February 2019, would amend both California’s Sherman Food, Drug and Cosmetic Law and the Safe Cosmetics Act.

California’s Sherman Food, Drug and Cosmetic Law prohibits the manufacture, sale, delivery, holding or offer for sale of adulterated cosmetics. AB 495 would greatly expand the definition of an “adulterated cosmetic” to include cosmetics that contain specific ingredients. Any cosmetic that contains lead or asbestos or any of the following 13 intentionally added ingredients – without regard to the amount or exposure levels – would be banned from sale in California:

  • Butylparaben
  • Carbon black
  • Dibutyl phthalate
  • Diethylhexyl phthalate
  • Formaldehyde
  • Formaldehyde releasers
  • Isobutylparaben
  • Isopropylparaben
  • Mercury and related compounds
  • Per- and Polyfluoroalkyl substances (PFAS)
  • Propylparaben
  • Toluene
  • Triclosan

The bill would also amend the Safe Cosmetics Act by requiring referrals to be made to the Department of Justice for any sale of adulterated cosmetics, as well as any violation of the Safe Cosmetics Act.

If passed, the legislation would have the effect of requiring companies doing business anywhere in the United States to reformulate their cosmetics to remove these ingredients, effectively creating a nationwide ingredient ban. The bill comes as the FDA confirmed that cosmetic products sold in 2017 by Claire’s and Justice tested positive for asbestos.

It has become clear that California’s leadership position on cosmetic regulation has effectively driven changes in cosmetic products and labeling throughout the United States. Conkle, Kremer & Engel will continue to follow and update these important developments affecting the cosmetics industry.

Update on AB 495 as of April 9, 2019

Efforts to pass AB 495 have temporarily stalled.  On April 9, 2019, the Assembly’s Environmental Safety and Toxic Materials Committee postponed a scheduled vote to move the bill to the Assembly Health Committee due to lack of support.  The bill is not expected to be brought back again until next year. It is anticipated that the bill will be in a revised form when reintroduced.  Conkle, Kremer & Engel will continue to monitor the developments of AB 495.

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30
MAR
0

Advertising and Labeling, Beauty Industry, California Trade Regulations, Manufacturing, Personal Care Products, Regulatory Compliance, Safe Cosmetics Act

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Manufacturers, Suppliers and Resellers Must Plan for California’s New Cruelty Free Cosmetics Act

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Manufacturers, Suppliers and Resellers Must Plan for California’s New Cruelty Free Cosmetics Act
Almost no one favors animal testing for cosmetics.  The beauty market trend has been strongly away from animal testing, as demonstrated by the recent announcement of Coty, Inc.’s CoverGirl brand being certified cruelty free.  That’s why the personal care products industry supported California’s new Cruelty Free Cosmetics Act, SB 1249, which was unanimously passed by the California State Assembly and signed into law by Governor Brown on September 28, 2018.  The new Act does not take effect until January 1, 2020, but compliance will require cosmetics businesses to plan ahead.  The new Act may present some thorny and perhaps unexpected issues and risks for importers, manufacturers, distributors and resellers of beauty products and ingredients in California.

The new Act is found at Section 1834.9.5 of the California Civil Code, immediately following the existing animal testing law that has been in effect since 2000.   That existing law, Section 1834.9, continues to prohibit manufacturers and testing facilities from using animal testing when alternative methods have been scientifically validated and recommended by responsible agencies.  But the existing law has limited application, and the new Act significantly expands on the prohibitions of animal testing for cosmetics and their ingredients.

Generally, the Act prohibits a manufacturer from importing, offering or selling in California any cosmetic that “was developed or manufactured using an animal test that was conducted or contracted by the manufacturer, or any supplier of the manufacturer, on or after January 1, 2020,” with specified exceptions.  The first observation must be that the new Act will not apply to any manufacturer’s cosmetic or ingredient that was previously subject to animal tests.  The natural effect is that the Act generally does not apply to a manufacturer’s existing cosmetic ingredients and product formulations, even if the cosmetic or ingredient is manufactured after January 1, 2020.

However, manufacturers and importers need to note that the Act certainly can affect development of new cosmetic formulations, and so it will have a strong impact on use of innovative cosmetic ingredients in new or reformulated products.  This can impede participants in the personal care products industry who strive to develop new ingredients to improve and differentiate their products.  Scientifically-reliable alternative non-animal test methods can be slow to develop and receive approval by regulatory agencies, so the inability to conduct animal testing could inhibit the introduction of new cosmetic ingredients, particularly potentially complex ingredients such as new surfactants or polymers.

There are some exceptions to application of the new Act, but they may defy easy workaround solutions.  The first major exception is a multi-step assessment that exempts application of the Act if the manufacturer can establish all of these elements:

  1. An animal test is required by a U.S. federal or state regulatory authority, and no non-animal alternative testing method is acceptable;
  2. The ingredient tested is in wide use and cannot be replaced by another ingredient with similar function; and
  3. The need to conduct animal tests is justified to address a specific substantiated human health problem and supported with a detailed research protocol.

The multiple elements required for this exception are so demanding that its practical utility is doubtful.  But there are two additional exceptions that on first blush appear deceptively simple to apply:  First, if animal testing is required by a foreign regulatory authority for export to that country, the animal-tested product does not for that reason violate the new Act.  This was an important exception favored by the industry, because without it cosmetic products could not be readily exported to foreign markets, like China, that require animal testing.  The second exception applies if animal tests were required to be performed on an ingredient for non-cosmetic purposes.  In other words, if some animal testing was done on the ingredient for non-cosmetic purposes, or was required for exporting the product, that animal testing in itself will not preclude use of that ingredient in a cosmetic product.

On their face, these last two exceptions seem like they create large loopholes in the Act.  But looks can be deceptive.  Both of these exceptions are narrowed by an additional term that prohibits the manufacturer from relying on evidence of the animal testing to substantiate the safety of cosmetics sold in California.  California and the FDA require that “Each ingredient used in a cosmetic product and each finished cosmetic product shall be adequately substantiated for safety prior to marketing.”  (21 CFR 740.10(a))  There are few meaningful guidelines about what “adequate substantiation” of safety means, or exactly what records are required to be maintained to show such substantiation, but it is clear such substantiation must exist “prior to marketing.”

So the effect of the new Act is to prohibit manufacturers offering products in California from relying on animal testing as part of their “adequate substantiation of safety” before selling their products, even though the animal testing itself did not violate the Act due to the noted exceptions.  This limitation effectively requires manufacturers to somehow show separate, non-animal testing to have adequate substantiation of the safety of their ingredients and products prior to marketing.  That in turn renders the animal testing that was permitted under the exceptions useless to support the safety of cosmetic sales in the California market.

The safety substantiation requirement has yet another twist that may present a significant risk to manufacturers selling cosmetics in California after the new Act becomes effective:  Although no federal or California state law specifies how or what documentation of safety must be maintained, the new Act both permits and motivates district attorneys and city attorneys, upon their determination of “a reasonable likelihood of a violation,” to “review the testing data upon which a cosmetic manufacturer has relied in the development or manufacturing” of the product sold in California.  Given that violators can be fined $5,000 initially plus $1,000 per each day that a violation continues, which fines are payable directly to the city or county attorney’s office, district attorneys and city attorneys have powerful motivation to aggressively pursue possible violations.

It seems the legislature was sufficiently concerned about this “adequate substantiation” issue that it was felt necessary to specify in the Act that a manufacturer “is not prohibited from reviewing, assessing or retaining evidence from an animal test conducted” for non-cosmetic purposes (though, oddly, the Act says nothing about that for the separate “foreign regulatory” exception).  So just having an animal test in the manufacturer’s file may not violate the Act, but the manufacturer still cannot rely on those tests when a DA or city attorney comes calling.  Manufacturers must determine how they will maintain records to show adequate substantiation of the safety of all of their ingredients and product formulations, prior to marketing, without running afoul of the Cruelty-Free Cosmetics Act.

The new Act does not itself create a new private legal claim, which means that (unlike some other California consumer protection statutes like Proposition 65) bounty-hunter plaintiff lawyers will not have direct motivation to pursue claims under the Act.  However, that has not stopped creative plaintiffs’ attorneys from bootstrapping other consumer product regulatory violations as bases for civil lawsuits, such as “Unfair Business Practices” claims under Business & Professions Code Section 17200 et seq., and even class actions under the Consumer Legal Remedies Act (CLRA), California Civil Code Section 1750.  It is also not difficult to imagine competitors making claims of unfair competition based on allegations that a competing cosmetics brand violated California’s animal testing laws, perhaps including false advertising claims for good measure.

Cosmetics manufacturers and their suppliers have a little over a year to ensure that their cosmetics and ingredients made, imported or sold in California will be compliant with the Cruelty Free Cosmetics Act.  More challenging still, manufacturers, importers and ingredient suppliers will have to plan for development of new cosmetics and ingredients, with adequate substantiation of their safety that does not depend on animal testing results. Conkle Kremer & Engel attorneys stay up to date on important regulatory developments affecting their clients in the manufacturing and resale industries, and are ready to help clients navigate California’s fast-changing regulatory landscape.  If you have questions in this or other consumer product regulatory areas, contact CK&E at counsel@conklelaw.com or 310 998-9100.

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1
NOV
0

Advertising and Labeling, Beauty Industry, California Trade Regulations, Personal Care Products, Unfair Competition

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What do Goop, Sexual Energy, Jade Eggs and CBD Have in Common?

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What do Goop, Sexual Energy, Jade Eggs and CBD Have in Common?

Answer: Unproven Health Claims

Goop, a life-style branding company founded by Gwyneth Paltrow, was recently fined $145,000 by a consortium of California Counties for making exaggerated and false advertising claims about its products.  The makers and distributors of everything from clothes to perfume, and face cream to condoms, Goop has a well-documented history of over-the-top marketing claims.  In the action brought by the County District Attorneys, the government took exception to the claim made by Goop regarding its Jade Egg product.  Goop claimed among other things that the egg product, when inserted into the vagina, prevented uterine prolapse and improved sex.  In the parlance of the regulators, this was an unsubstantiated or unapproved new drug claim.

In similar fashion, cannabidiol oil or “CBD” products are at the forefront of aggressive (sometimes overly aggressive) health and medical claims. Everyone knows about “medical” marijuana, and CBD is one of several “active” ingredients found in marijuana and hemp plants which is often associated with the beneficial effects of the plant: pain relief, stress or anxiety relief, anti-nausea, and anti-inflammatory.  This phenomenon has lead to a budding market in consumer products featuring CBD, accompanied by assertive health claims.  The CBD market already covers a wide range of products, including cosmetics (skin creams), food products  (edibles), and even CBD laced beer.  To add to the confusion, a compound found in marijuana was recently approved by the FDA for treatment of a rare seizure disorder.

And this highlights the problem, especially for marketers of cosmetics.  The only FDA-approved medical claim for marijuana compounds is directed to a rare seizure disorder, and this is a tiny market. To make a valid advertising claim that a  skin cream product treats, for example, eczema, psoriasis or a rash, the company or brand would need to have FDA approval of the active ingredient for that particular disease or condition at issue.  Absent such approval, the marketing claim would likely be regarded as an unapproved new drug and subject to regulatory fines and seizure.  Thus, for example, if you want to make a skin-protectant claim for your product, you would need to use one of the FDA approved ingredients for such claims, and limit the claim to the language approved in the FDA monograph for skin protectants.  To illustrate the point, witch hazel is one of the FDA approved skin protectant active ingredients. If you use witch hazel as an ingredient in your product, in the correct percentage, it would allow you to make the claim “[r]elieves minor skin irritations due to either i) insect bites, ii) minor cuts, and/or iii) minor scrapes”.

The point of all this is to make sure that your advertising claims are reviewed and approved by experienced legal counsel.  This is a common area for regulatory action, as well as private class actions.  The FDA routinely polices the internet looking for unsubstantiated and unapproved new drug claims. When the FDA finds a violation, it sends out a warning letter that will look something like this.  You do not want to be the first one on your block to own one of these.  Consult your CK&E attorney before you put a label on your product, make an advertising claim on your website, press send on an email blast promotion, or even drop a product catalog in the mail.  Yes, even old school mailers can get you in trouble.

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1
OCT
0

Advertising and Labeling, Beauty Industry, California Trade Regulations, Class Actions, Fashion, Food, Craft Beer and Nutrition, Personal Care Products, Regulatory Compliance

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New Law Requires Professional Cosmetics Labels to List Ingredients

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New Law Requires Professional Cosmetics Labels to List Ingredients
Professional cosmetics sold in California must have full ingredient labeling in the same manner as consumer cosmetics, if the products are manufactured after July 1, 2020.  The California legislature unanimously approved AB 2775, introduced by Assembly Member Ash Kalra.  The bill was signed into law by Governor Brown on September 14, 2018 and enacted as new Section 110371 to the Health and Safety Code.

There are over 312,000 professional cosmetologists who are licensed to provide nail and hair services, most often in salons.  The legislature found that “[i]nformation on the ingredients in professional salon products is essential to ensuring that workers and owners can make safer product choices and take steps to protect themselves and their customers against harmful exposures.”

The new law will establish that professional cosmetics must have a label affixed on the container that satisfies all of the labeling requirements for any other cosmetic pursuant to the federal Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 301, et seq.), and the federal Fair Packaging and Labeling Act (15 U.S.C. Sec. 1451, et seq.).  In other words, professional cosmetics must have the same ingredient labeling as consumer cosmetics.

The law already defines the term “cosmetic” as “any article, or its components, intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to, the human body, or any part of the human body, for cleansing, beautifying, promoting attractiveness, or altering the appearance.”  (Health and Safety Code Section 109900)  The newly-enacted law introduces a new definition of “professional cosmetic,” meaning a cosmetic “that is intended or marketed to be used only by a professional on account of a specific ingredient, increased concentration of an ingredient, or other quality that requires safe handling, or is otherwise used by a professional.”  In turn, “professional” is defined for this purpose as “a person that has been granted a license by the State Board of Barbering and Cosmetology to practice in the field of cosmetology, nail care, barbering, or esthetics.”

There is arguably some ambiguity in that the new statute could be read to define a “professional cosmetic” in a circular manner as including a cosmetic that “is … used by a professional.”  Such an ambiguity is not likely a concern in this particular Act.  This is because the effect of this new law is just to require the same type of ingredient labeling for both consumer and professional cosmetics, so it should not matter whether a licensed professional uses a resalable consumer or professional cosmetic for purposes of compliance with this law.  However, if in the future the same definition of “professional” is incorporated into other enactments (much like “the definition of cosmetics” was incorporated here from a different statute), the circular definition may become more problematic.

The new law was enacted with widespread industry support, including the Personal Care Products Council, the Professional Beauty Association, California Chamber of Commerce, and Unilever.  Many manufacturers have already listed product ingredients on their professional cosmetic lines in a manner consistent with that required for retail cosmetics, and so may already be in compliance.  But manufacturers should review their professional cosmetic product labeling well ahead of the July 1, 2020 effective date in order to determine whether they comply.  Further, manufacturers should be aware that there is no specific “professional cosmetic” exception to other warning label requirements, such as Proposition 65, which requires warnings if use of a product on a consumer in California would result in significant exposure to identified chemicals that are known to cause cancer, birth defects or other reproductive harm.

Manufacturers are well-advised to seek qualified counsel to review their circumstances before committing to potentially costly label changes, to be sure they comply with all legal requirements.  Conkle, Kremer & Engel attorneys stay up to date on important regulatory developments affecting their clients in the professional salon products industry, and are ready to help clients apply navigate the changing regulatory landscape in California and elsewhere.

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19
SEP
0

Advertising and Labeling, Beauty Industry, California Trade Regulations, Manufacturing, Personal Care Products, Proposition 65

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CBD is Turning Up Everywhere – But is it Allowed?

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CBD is Turning Up Everywhere – But is it Allowed?
One of the hottest trends in many industries is the addition of cannabis-derived extracts to consumer product formulas.  This is likely driven by the widespread popularity of local and state attempts to legalize medical or recreational marijuana use.  The personal care product industry is no exception to the trend, as any number of new product lines from moisturizers to mascara are being released with cannabis extracts in their formulations.  Cannabidiol (CBD) is turning up in all types of consumer food and drink products, from honey to craft beers.Honey with CBD

The cannabis plant contains over 113 known cannabinoids, or naturally-occurring compounds that interact with receptors in the human body, including cannabidiol (CBD) and THC. Since psychoactive effects are often attributed to the THC ingredient, it is generally avoided in consumer products, but CBD is considered to have no psychoactive properties and is becoming a popular ingredient, as is its cousin, hemp seed oil.  Some believe CBD can have health benefits – but more about that later.  In the current confusing state and federal legal environment concerning marijuana, many consumer product companies are wondering, is it legal to include CBD in my products?  The short answer is no. The long answer is “it’s complicated.” And the most important answer is that the environment is changing fast, so in the near future the question may become moot.

To understand the current complications, a little background on cannabis extracts is essential.  First, hemp and marijuana are both varieties of the cannabis sativa plant.  Various cannabis extracts can be sourced from different parts of the cannabis plant in a variety of ways. The most common cannabis extracts used in personal care and many other products are hemp seed oil and CBD oil. Hemp seed oil is produced by cold-pressing the seed of a hemp plant, while CBD oil is generally produced from the leaves and flowering tops of either a marijuana plant or a high-CBD hemp plant. Marijuana has high amounts of THC, the psychoactive ingredient that produces the “high” of marijuana. Hemp, on the other hand, typically contains only trace amounts of THC, but can be bred to have high amounts of CBD. While hemp seed oil differs from CBD oil, the legality of the two are intertwined. In short, hemp seed oil imported from abroad is legal, while hemp seed oil sourced from hemp grown in the United States may be legal in certain circumstances. CBD oil, on the other hand, is at present illegal under federal law under all circumstances.

Sterilized seeds and oil and cake made from the seeds of the cannabis plant (we’ll refer to these as “Hemp Oil” for the sake of simplicity) do not fall under the purview of the Controlled Substances Act (the CSA), which regulates federal U.S. drug policy. Hemp Oil is not deemed to be a controlled substance, so the production, distribution and possession of Hemp Oil is legal.  However, there are heavy regulations on the cultivation of “industrial hemp” (cannabis plants with THC concentration <0.3% by dry weight) from which Hemp Oil is derived. In simplified terms, Hemp Oil must be either imported into the U.S. or derived from industrial hemp legally grown pursuant to a 2014 Farm Bill. Pursuant to the 2014 Farm Bill, industrial hemp may only be grown for commercial purposes under specific pilot programs that have been adopted in particular states.

Unlike Hemp Oil, CBD is most easily derived from the leaves and flowering tops of cannabis plants.  CBD sourced from the leaves and flowering tops of the marijuana plant is illegal under the CSA, because the leaves and flowers of cannabis plants are not exempt from the definition of the CSA. But CBD can also be derived from industrial hemp, and since the passage of the 2014 Farm Bill it was commonly believed that CBD derived from legally grown industrial hemp would be legal. But it’s not that simple.  In 2017 the DEA implemented a final rule specifically targeting cannabinoid extracts, which includes CBD extract, regardless of its source. The final rule defined a new category of “marihuana extract” under the CSA that specifically rendered cannabinoid extracts a controlled substance illegal in general distribution and use. The DEA reiterated that any such cannabinoid extracts substance “will continue to be treated as Schedule I.”

The legality of the DEA’s new “marihuana extract” definition is questionable, but at present the new category of “marihuana extract” stands under the CSA, making CBD illegal under federal law. Hemp Oil is still legal and available for use in personal care products if imported into the US or grown pursuant to the state-licensed commercial hemp grower pilot programs. In May 2018, the DEA issued an internal directive acknowledging that products and materials made from the cannabis plant that fall outside of the CSA’s definition of marijuana (such as “sterilized seeds incapable of germination, and oil or cake made from the seeds”) can be “sold and otherwise distributed throughout the United States without restriction under the CSA or its implementing regulations.” But this directive does not make CBD legal in the DEA’s view.

Despite the dubious legal status of CBD oil and to a lesser extent Hemp Oil, many companies are choosing to forge ahead and add cannabis extracts to their products. Many such risk-takers believe that DEA enforcement against CBD-containing products is virtually nonexistent, and demand for consumer products containing CBD is high, so the potential risk is outweighed by perceived market benefits.

That conclusion is reinforced because there is a widespread perception that soon all these concerns could go up in smoke. Congress has begun action to remove industrial hemp from the definition of marijuana under the CSA. Such a move would also remove any extracts derived from hemp from the new definition of “marihuana extract.” Reports indicate that Congress may pass the bill before the end of 2018, effectively making CBD oil derived from hemp legal across the United States.  If that comes to pass, the product manufacturers who decided to jump the market and add CBD to their products even when it was legally dubious to do so may feel vindicated.

Honey with CBD Benefits ClaimedBut CBD is not a magic elixir that relieves brand owners from overreaching in their labeling and advertising.  In a future blog post, we’ll address the hazards of claiming health benefits from use of non-medical products, including those containing CBD.

Conkle, Kremer & Engel attorneys stay up to date on important regulatory developments affecting their clients in the manufacturing and resale industries, and are ready to help clients navigate the fast-changing regulatory federal and state landscape.  If you have questions in this or other consumer product regulatory areas, contact CK&E at counsel@conklelaw.com or 310 998-9100.

 

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10
SEP
0

Advertising and Labeling, Alcoholic Beverages, Beauty Industry, California Trade Regulations, Food, Craft Beer and Nutrition, Manufacturing, Personal Care Products, Regulatory Compliance

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Making Your Mark in the Craft Beer Business, Part One – Identifying and Protecting Your Trademarks

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Making Your Mark in the Craft Beer Business, Part One – Identifying and Protecting Your Trademarks
According to the Brewer’s Association there were over 6,000 craft breweries operating in the United States at the end of 2017. In an increasingly crowded market, how do you ensure that the craft beer consumer is able to distinguish your brewery from your competitors? You should begin by identifying your trademarks.

A trademark is any word, phrase, symbol or design that uniquely identifies the source of one company’s goods from those of other companies. While the law in the United States recognizes a broad range of “source identifiers” as trademarks, most companies focus their intellectual property protection efforts on brand names, slogans and logos. Especially at the early stages of your business, it is important to focus your protection efforts on the essential elements of your brand. For example, your brewery may have a dozen regular varieties of beer, plus several small release or seasonal brews throughout the year. Seeking trademark registrations for each of your beers may quickly deplete your legal budget, and so a more focused approach is usually the best course of action. For most breweries, their primary protection efforts should focus first on their brewery name and logos, and then on the names of one or two of their flagship beers.

In the United States, a brewery’s trademark rights arise at the time it starts using the mark in commerce. This means that the first person to begin using a trademark in connection with the sale of beer owns that mark, and may be able to prevent others from using confusingly similar marks on beer and beer-related goods and services. That is, a registration with the United States Patent and Trademark Office (USPTO) is not necessary to own a trademark. However, these “common law” rights are limited in that they can only be applied to the geographic area in which you are selling your beer. Any business that is serious about protecting its brand should seriously consider applying for registration of the essential names and logos.

Some of the benefits that federal trademark registration provides to the trademark owner include:

(1) Preventing infringement problems before they begin by making your marks easy to find in a search of marks registered with the USPTO;

(2) Getting the USPTO to do a degree of enforcement on your behalf by preventing the registration of other marks found to be confusingly similar by the USPTO’s examiners;

(3) Giving you nationwide priority when your marks might otherwise be limited to the geographic area in which you are using the mark;

(4) Putting other companies on notice of your trademark rights so that they cannot claim that their subsequent use of your mark was in “good faith;”

(5) Creating a presumption of validity and ownership of your mark in the event that you need to sue another company for infringing your trademark rights;

(6) Providing the ability to recover treble damages and attorney’s fees in “exceptional” cases of trademark infringement;

(7) Providing the ability to recover statutory damages in cases involving counterfeiting;

(8) Giving you the ability to file for “incontestability” after five years of registration, which severely limits other companies’ ability to invalidate your trademark;

(9) Empowering Customs and Border Protection to block imports that infringe your trademark rights, including counterfeit products, once you record your trademark registration with Customs; and

(10) Granting you the right to use the ® symbol in connection with your beer, further putting your competitors on notice of your trademark rights.

Even if you’re in the planning process, and have not begun selling your beer yet, you may apply on an “intent-to-use” basis, meaning that you have concrete plans to begin using your mark in connection with the sale of beer. An intent-to-use application allows you to claim priority over other companies who might begin using your mark or a confusingly similar mark in the period between your application date and the date you start actually using the mark.

Keep in mind that you may not be able to establish exclusive trademark rights in a mark that is generic or descriptive of your products. For example, if you’re selling an IPA called “Hoppy IPA,” you will likely be unable to stop other breweries from using the name “Hoppy” in connection with their hop-forward beers. The “Hoppy” mark would be deemed descriptive because it describes a characteristic of the beer. The only way to establish trademark rights in a descriptive mark is to show that consumers associate the mark with your company. In the “Hoppy IPA” example, that means that consumers who hear “Hoppy” would need to immediately connect that term with your brewery.

On the other hand, you can reference a characteristic of your beer with a suggestive mark that requires consumers to use some imagination to connect your mark to the product. For example, consider Deschutes’ “Fresh Squeezed” mark for their IPA brewed with Citra hops, which alludes to the citrus notes in their beer. Stronger still are arbitrary names that have no direct connection to your beer or its characteristics (think “Stone Brewing” or “Rogue Ales”) or fanciful names you made up that have no literal meaning (like “Mikkeller” or “CANarchy”).

Stay tuned for Part Two of our brewery-focused trademark posts, in which we will discuss considerations regarding coexistence agreements.

Conkle, Kremer and Engel has assisted its clients in securing and protecting their trademarks for over thirty years. Whether you’re in the planning stages or already operating your brewery, contact Zachary Page or CK&E’s intellectual property team for help identifying or protecting your trademarks.

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5
SEP
0

Advertising and Labeling, Brand Protection, Food, Craft Beer and Nutrition, Trademarks

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Conkle Firm Attorneys at Craft Beer Summit

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Conkle Firm Attorneys at Craft Beer Summit
Conkle, Kremer & Engel attorneys Evan Pitchford and Zachary Page will attend the California Craft Beer Summit September 6-8, 2018 in Sacramento, California.  The Summit is presented by the California Craft Brewers Association, the preeminent craft beer trade group and legislative advocate in California, which is in turn one of the most progressive states in terms of its policies towards the craft beer industry.  The Summit is one of the largest West Coast craft beer-oriented industry events, with thousands of industry professionals and exhibitors in attendance each year.

Mr. Pitchford and Mr. Page will attend to meet with industry professionals and keep current on the latest industry trends, including legal developments, craft brewing distribution and business issues, and evolving beer styles.  For example, this year’s Summit seminars include the cutting-edge topic of brewing, selling, and advertising products with cannabis-derived ingredients such as hemp and cannabidiol (CBD) oil, creative uses of ABC licenses, updates on the Tax and Trade Bureau’s guidelines and requirements, and discussions on the changing and more competitive retail environment in California.

Conkle, Kremer & Engel brings its decades of experience to bear on a number of beer industry-specific issues, such as brand protection and intellectual property, distribution and vendor relations, state and federal 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 California Craft Beer Summit and would like to connect with Mr. Pitchford and Mr. Page before, during or after the event, please contact them at e.pitchford@conklelaw.com and z.page@conklelaw.com.  They would be happy to arrange free initial discussions about particular issues you may be facing.

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29
AUG
0

Advertising and Labeling, Alcoholic Beverages, Brand Protection, California Trade Regulations, Food, Craft Beer and Nutrition

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Cosmoprof North America Features Challenging CBD, Natural and Organic Product Lines

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Cosmoprof North America Features Challenging CBD, Natural and Organic Product Lines
On July 29 and 30, 2018, Conkle, Kremer & Engel continued its annual firm attendance at Cosmoprof North America in Las Vegas, visiting with longtime and new clients and observing new brands and trends in the personal care industry.  This year’s edition of Cosmoprof had over 36,000 attendees with a record-breaking 1,278 exhibitors from 45 countries.  CK&E attorneys attend to connect with clients and others in the cosmetics, personal care, packaging, labeling and professional beauty markets, to help clients secure distribution agreements, and to learn about the newest industry innovations and issues.

This year, trends included substantial expansion of the mens’ care and beard care sector, along with CBD-infused cosmetics and hair care products and natural and organic hair regrowth formulas.  Organic products sold in California must meet strict requirements, and Products with “natural” claims can present special challenges and risks, as CK&E has addressed in previous blog posts, such as “What are Natural Products Anyway?”  A new twist has been recent growth (no pun) in “hair regrowth” products labeled as “natural” or “organic” .  Those classes of products face special issues in addition to whether they can fairly be called “natural” or “organic,” in that hair regrowth claims can at times run afoul of federal prohibitions on products that make drug-like claims without FDA approval, as well as federal and state labeling and advertising regulations.  Finally, a new class of beauty and hair care products are based on Cannabidiol (CBD) content, taking advantage of increased acceptance of cannabis-based products.  Yet CBD products continue to pose their own special issues, which will be the subject of an upcoming www.conklelaw.com blog post.  CK&E is well-versed in counseling clients on all such issues, from brand protection, vendor and distribution issues to the latest CBD, natural and organic product concerns.

Lastly, foremost on the minds of many manufacturers and distributors who sell in California were the new requirements for Proposition 65, the well-known California law requiring “Prop 65” warnings for products which contain chemicals known to cause cancer or reproductive harm.  New warning label requirements go into effect on August 30, 2018, which CK&E has already summarized on its blog.  CK&E is actively advising manufacturers about the most efficient and effective ways to address the changes and avoid the risks of inadvertent violations.

CK&E’s attorneys continue to pride themselves on keeping abreast of developments in the personal care market, along with assisting clients of all sizes with growth and protection of their brands and interests.  CK&E is an active member of the Professional Beauty Association, the Personal Care Products Council, and other important industry trade organizations.

 

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7
AUG
0

Advertising and Labeling, Beauty Industry, Brand Protection, California Organic Products Act, California Trade Regulations, Copyrights, Manufacturing, Personal Care Products, Proposition 65, Trademarks

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It’s Time: New Prop 65 Warnings are Required August 30, 2018

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It’s Time: New Prop 65 Warnings are Required August 30, 2018
In November 2017, we advised readers of Conkle, Kremer & Engel’s blog that products sold in California would become subject to new Proposition 65 warning requirements beginning August 30, 2018.  The new “Clear and Reasonable Warning Regulations” from California Office of Health Hazard Assessment (OEHHA) significantly changed warning requirements for affected products that are manufactured on or after August 30, 2018.  Among other changes, the new regulations affect the safe-harbor warning requirements that govern the language, text, and format of such warnings, and also impose downstream warning mandates through retail, online and catalog sales channels. Generally, some of the major changes that companies selling consumer products should be aware of include:

  • The “warning symbol” :  A graphic “warning symbol” is now required on consumer products, other than food products. The “warning symbol” must be printed in a size no smaller than the height of the bolded word “WARNING,” and should be in black and yellow, but can be in black and white if the sign, label, or shelf tag for the product is not printed using the color yellow. The entire warning must be in a type size no smaller than the largest type size used for other “consumer information” on the product, and in no case should be smaller than 6-point type.
  • Listing of a specific chemical:  Warnings must now specifically identify at least one listed ingredient chemical for each toxicological endpoint (cancer and reproductive toxicology) and include a link to OEHHA’s new website P65Warnings.ca.gov. Certain special categories of products, such as food and alcoholic beverages, have a specialized URL that must be used instead.
  • New warning language:  Warning language must now warn of an exposure to a chemical or chemicals from the product, rather than just warn that the product contains the chemical or chemical. For example, “ WARNING: This product can expose you to diethanolamine, which is known to the State of California to cause cancer. For more information go to www.P65Warnings.ca.gov.”
  • Internet and catalog requirements:  For internet sales, warnings must be provided with a clearly marked hyperlink on the product display page, or otherwise prominently displayed to the purchaser before completion of the transaction. It will not be sufficient if the product sold on the internet bears the required label, but the internet point of purchase listing does not. For catalog sales, a warning must be provided in a manner that clearly associates it with the item being purchased.
  • Short-form warnings:  The regulations allow the use of certain abbreviated “short-form” warnings, which may omit the identity of any specific chemical, only if the warning is printed on the immediate container, box or wrapper of the consumer product or is affixed to the product.  For example, “ WARNING: Cancer – www.P65Warnings.ca.gov.”  If a short-form warning is used on the product, the same short-form warning may be used for internet and catalog sales.

The regulations seek to minimize the burden on retail sellers of consumer products, but there are some obligations affecting resellers. Manufacturers, producers, distributors, and other upstream businesses comply with warning requirements if they affix a clear and reasonable warning to the product, or provide written notice and warning materials to an authorized agent of a retailer, among other requirements.  Retailers who receive products with a Proposition 65 warning on the label, or who receive proper notice that a warning is required, are responsible for placement and maintenance of internet warnings for those products before selling to consumers in California.  Retailers should only be liable for Proposition 65 violations under limited circumstances, such as if they cover, obscure, or alter a product’s warning label, or if they receive notice and warning materials but fail to display a warning, including catalog and internet warnings preceding consumer sales into California.

The particular requirements for each specific product can vary, so manufacturers and resellers are well-advised to seek qualified counsel to review their circumstances before committing to potentially costly label and website changes that may not comply with the new requirements.  Conkle, Kremer & Engel attorneys stay up to date on important regulatory developments affecting their clients in the manufacturing and resale industries, and are ready to help clients navigate the changing regulatory landscape in California and elsewhere.

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October 2018 Update

H. Kim Sim of CK&E was interviewed and quoted extensively in ChemicalWatch about the difficulties manufacturers face in implementing the “very confusing and very complex” requirements of the new warning label requirements of Prop 65.  For example, as Kim said, “The requirement that manufacturers name at least one substance for which they are providing warning has proven particularly challenging. Determining which one to include ‘can be tricky for companies to decide’, she said. ‘Is one more scary to the public than another?'”

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12
JUL
0

Advertising and Labeling, Alcoholic Beverages, Beauty Industry, California Trade Regulations, Fashion, Food, Craft Beer and Nutrition, Green Chemistry Initiative, Manufacturing, Personal Care Products, Proposition 65, Regulatory Compliance, Sales, Technology

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GDPR is Coming: If Your Business is Online, Beware the New EU Privacy Regulation

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GDPR is Coming: If Your Business is Online, Beware the New EU Privacy Regulation
If you sell or offer goods to EU residents, even from the U.S., it is now necessary to re-examine your data processing and privacy procedures. There is a new EU privacy law that will go into effect on May 25, 2018, with significant penalties for violations. The EU General Data Protection Regulation, or “GDPR,” covers any website, including a U.S.-based website, selling to EU residents and processing personal data of those EU residents.  Here are some basic questions and issues to address concerning your online presence:

Do you collect, store, or use Personal Data? You are subject to this regulation if your website collects, organizes, stores, disseminates, uses or otherwise processes personal data of EU residents, regardless of where your website keeps or uses such information.

“Personal Data” will likely be broadly interpreted. The GDPR defines “Personal Data” very broadly to include any information that can be used to identify an individual. This can include all sorts of data, like names, e-mail addresses, office addresses, and even IP addresses.

Can your users easily revoke consent? The GDPR takes consent seriously. The GDPR requires you to demonstrate consent was “freely given, specific, informed and unambiguous” by a “clear affirmative action” on the part of the user for the processing of personal data. When you ask for the user’s consent, you must articulate “specified, explicit, and legitimate purposes” for processing the data. Limit the data you collect to what is necessary to achieve these articulated purposes. Be extra careful if you are collecting sensitive personal data – the GDPR raises the bar for obtaining consent to process “special categories of personal data.” And make sure it is as easy for the user to withdraw consent as it is to give consent.

Can you respond quickly and effectively when the user exercises rights under the GDPR? The GDPR grants users, or “data subjects,” quite a few rights, including but not limited to knowing where and why you are taking the data and anything that happens to it, objecting to its collection or use, obtaining a copy of it, correcting or erasing it, or restricting its use. Make sure you have procedures in place to respond appropriately in the event a user exercises rights under the GDPR.

Penalties for failure to comply can be steep. Failure to comply with the GDPR can expose companies to administrative fines of up to 20 million Euros or 4% of the total worldwide annual turnover of an “undertaking” of the preceding financial year, whichever is greater. Even if you use vendors to process your data, you are still responsible for monitoring compliance. You are required to “implement appropriate technical and organizational measures to ensure and to be able to demonstrate that processing is performed in accordance with this Regulation.”

The EU GDPR is a minefield of regulatory requirements that require a close examination of your data processing and privacy procedures. Some companies, such as Microsoft, are implementing a single system worldwide to comply with the EU’s requirements, effectively granting greater-than-required  rights to non-EU residents.  There will likely be considerable uncertainty and confusion as the GDPR requirements are implemented and enforcement begins.  Contact Conkle, Kremer & Engel to help bring your data processing and privacy procedures into compliance.

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23
MAY
0

Advertising and Labeling, Banking and Finance, Beauty Industry, California Privacy Rights Act, California Trade Regulations, Fashion, Food, Craft Beer and Nutrition, Manufacturing, Privacy Rights, Real Estate & Construction, Regulatory Compliance, Sales, Technology

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