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.
Disclose the relationship between the influencer and brand. Part of the appeal of hiring an influencer for a marketing campaign is the authentic feel of the endorsement. However, the FTC’s the Guides Concerning the Use of Endorsements and Testimonials in Advertising require influencers to disclose “material connections” that they have with the brand they are endorsing. A connection is deemed “material” when the relationship between the influencer and brand may materially affect the weight or credibility of the endorsement from the influencer. 16 C.F.R. § 255.5 (2009). An obvious example of a material connection is one where the brand is paying the influencer to endorse or review a product, but even friendships or familial relationships between the influencer and brand are material, as the influencer may be more likely to give a product a positive review because of this relationship.
The disclosure of the material connection must be clear and conspicuous. For example, a disclosure that consumers can only see if they click to see more of a post, or ambiguous hashtags such as “#ambassador” or “#collab,” are insufficient to meet the FTC’s disclosure requirement. On the other hand, the FTC has stated that “#ad” close to the beginning of a post is a sufficient disclosure. Both the influencer and the brand may be liable for the influencer’s failure to disclose a material connection, so brands must be sure to inform influencers of the duty to disclose and monitor the influencers’ posts to ensure compliance with the FTC Guides.
The claims in the endorsement must be truthful. Claims made by a social media influencer in an endorsement must be truthful and substantiated. This means that advertising claims cannot be misleading to the average reasonable consumer, and any statements made about a product or service must be supported by evidence. Even if the influencer makes a misleading or unsubstantiated claim about a product without consulting the brand, the brand will still be liable the influencer’s statements. Again, this highlights the importance of monitoring the influencer’s posts and providing the influencer with guidelines about what claims he or she can legally make about the product or service being advertised.
Determine who owns the intellectual property rights in the content. In a typical company/influencer relationship, the influencer will post a photograph and accompanying text exhibiting the brand’s products or services on the influencer’s social media account. If the influencer created this content, the influencer owns the copyrights to it, and the brand could be liable for copyright infringement if it reuses this content without the influencer’s permission. To avoid this issue, the brand should ensure that there is an agreement in place between with the influencer assigning the copyright to the brand.
Obey the reposting rules from each social media platform. It’s a common misconception that all of the social media platforms have the same rules regarding reposting content from another user. The reality is that reposting user content on some platforms is perfectly acceptable, while on others it constitutes infringement. For example, on Twitter you may freely repost Tweets from other Twitter users. By becoming a Twitter user, you agree to Twitter’s Terms of Service, which permit you to “Retweet” the content of other Twitter users and allows other Twitter users to Retweet your content. Instagram, on the other hand, does not include any such provision in its terms of service, and even requires users to “agree to pay for all royalties, fees, and any other monies owing any person by reason of Content you post on or through the Instagram Services.”
Make sure the content does not infringe a third party’s rights. Even if the brand and influencer have reached an agreement regarding the ownership of the content in a social media endorsement post, the post may infringe the rights of a third party if it includes a third party’s image or artwork. If someone’s image is used in the endorsement, this person may claim a violation of his or her publicity rights. Similarly, the use of another’s artwork in the content of the endorsement may constitute copyright or trademark infringement, subject to the fair use defense (which is less likely to apply to a social media post that is clearly an advertisement).
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.
The Cleaning Product Right to Know Act requires manufacturers of certain cleaning products sold in California to disclose on the product label and on the product’s Internet web site certain information related to known hazardous chemicals contained in the product. Manufacturers will have until January 1, 2020 to comply with the online disclosure requirements, and until January 1, 2021 to comply with the product label disclosure requirements. However, any intentionally added ingredient that is regulated by California’s Safe Drinking Water and Toxic Enforcement Act (commonly known as Proposition 65) will not have to be listed until January 1, 2023.
The new law applies to so-called “designated products”, which are defined as a finished product that is an air care product, automotive product, general cleaning product, or a polish or floor maintenance product used primarily for janitorial, domestic or institutional cleaning purposes. It does not apply to foods, drugs and cosmetics, trial samples, or industrial products specifically manufactured for certain industrial manufacturing processes.
The product label will be required to disclose each intentionally added ingredient contained in the product that is included on any of 22 specified designated chemical lists – including chemicals listed pursuant to Proposition 65. Alternatively, manufacturers may list all intentionally added ingredients contained in the product unless it is confidential business information. The Act also requires the disclosure of fragrance allergens greater than 0.01 percent (100 ppm). Additional requirements include the manufacturer’s toll-free telephone number and Internet web site address on the product label.
As for the online disclosure requirements, manufacturers must list all intentionally added ingredients and state their functional purpose. All nonfunctional constituents present at above 0.01 percent (100 ppm) must also be listed. The website must include electronic links for designated lists and a link to the hazard communication safety data sheet for the product. In addition, specific requirements apply for the disclosure of fragrance allergens online.
The Act also adds a section to the California Labor Code imposing an obligation on employers who are required to provide employees with Safety Data Sheets (SDS). Those employers must similarly make the printable information from the online disclosure available in the workplace.
Although it is a state law, the effect of the Cleaning Product Right to Know Act is certain to be felt by manufacturers across the country who sell their products into California, as is true of many of California’s other regulatory schemes, including Proposition 65, and will most likely result in a nationwide relabeling of covered products.
Given the Act’s numerous and in some cases highly technical requirements, manufacturers of cleaning products would be well advised to determine whether any of their products are subject to the Act, and take steps now to ensure compliance by 2020. Conkle, Kremer & Engel attorneys stand ready to help manufacturers handle all that is coming their way.
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.
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.
As a consumer, what can you do to help ensure you’re receiving the genuine article? The most obvious method is to avoid unfamiliar sources and to buy directly from the manufacturer’s website or from an authorized retailer whenever possible. If buying on websites like Amazon and eBay (where products are often actually sold by unrelated third parties), it helps to make sure that the seller of the product is the manufacturer or Amazon itself, not an unknown third party. Often times, third party sellers do not have the ability or desire to properly perform checks on the goods they are selling, and in many cases the third party sellers never actually possess the products – when they receive your order they simply forward the product from a warehouse they have never even seen. While outlets like Amazon and eBay have some anti-counterfeiting policies and procedures, experience has shown that not every fake product will be screened out. Consumers should also check the price of the goods to ensure that it is not abnormally low, and examine the packaging and presentation of the product as depicted on the website to help determine whether the product might be fake or foreign-labeled goods. Compare the look of the product offered with the same product on the manufacturer’s website – if it’s different, that’s a red flag. Consumers should also not hesitate to contact the manufacturer if they suspect that they have received counterfeit or foreign-labeled goods – in addition to being the primary victims, consumers are often the first line of defense in the fight against counterfeiting.
As a manufacturer or trademark owner, what can you do when you discover your products being sold in an unauthorized channel, with risk of counterfeiting? Conkle, Kremer & Engel has extensive experience helping manufacturers and distributors to investigate and, when necessary, litigate counterfeit and other trademark- and intellectual property-infringement claims. CK&E attorneys are well-versed in the careful initial steps that should promptly be taken when sales of illicit products are suspected. If the seller is cooperative, litigation can often be avoided. But if the seller is not, that is a strong indicator that the seller has been selling, and will continue to sell, infringing products unless stopped through litigation. Whatever you choose to do, consult experienced counsel and decide on your course of action promptly – unreasonable delays can seriously harm your ability to protect your rights.
The OEHHA has made significant changes to the safe-harbor language requirements that govern the language, text, and format of such warnings. The new regulations introduce the concept of a “warning symbol,” which must be used on consumer products, though not on food products. The “warning symbol” must be printed in a size no smaller than the height of the 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.
Warnings must now also specifically state at least one listed chemical found in the product and include a link to OEHHA’s new website www.P65Warnings.ca.gov. These are examples of the new format for more specific warnings:
Certain special categories of products, such as food and alcoholic beverages, have a specialized URL that must be used. For example, warnings on food products must display the URL www.P65Warnings.ca.gov/food.
Recognizing that many consumer products have limited space “on-product” to fit the long-form warnings, the OEHHA has enacted new regulations allowing abbreviated “on-product” warnings. This short warning is permissible only if printed on the immediate container, box or wrapper of the consumer product. An example of the required format for the abbreviated warnings is:
The new regulations also specifically address internet sales for the first time. 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.
The particular requirements for each specific product can vary, so manufacturers and resellers are well-advised to seek qualified counsel to review their situation 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.
Although the new regulations take effect August 30, 2018, and the new warning labels are required for products manufactured after that date, companies can begin using the changed labels now. It is definitely not advisable to wait until August 2018 to begin making the required changes.