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Brand Protection & Advertising

Stay ADvised: What's New This Week, September 23

By Marc Roth, Nancy J. Felsten, and Robert J. Driscoll
09.25.19
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Led by Texas Attorney General Ken Paxton, a coalition of 50 attorneys general has opened an investigation into whether Google’s advertising practices violate antitrust laws. Top prosecutors from 48 states plus the District of Colombia and Puerto Rico—all but California and Alabama—have joined the investigation into Google’s parent company, Alphabet.

The bipartisan coalition will examine what Attorney General Paxton characterized as Google’s “overarching control” of online advertising and search markets and whether Google is illegally diminishing competition. The group will investigate possible violations of state and federal antitrust law.

Attorney General Paxton emphasized the bipartisan nature of the investigation, saying it will focus on whether Google used anticompetitive business practices to gain a market advantage. To make that determination, investigators will assess the “competitive conditions for online services” to ensure that Americans have access to “free digital markets.”

Stressing that Google’s dominance in the market is not in itself illegal if it is a result of “free market competition,” Paxton said there was evidence that Google violated antitrust laws and that “Google’s business practices may have undermined consumer choice, stifled innovation, violated users’ privacy, and put Google in control of the flow and dissemination of online information.” He added that the coalition “intend[s] to closely follow the facts we discover in this case and proceed as necessary.”

To obtain these facts, investigators served Google with a 29-page investigative demand requesting over 230 explanations or documents dating from 2014 about Google’s products, including Chrome, YouTube and others. While there have been past investigations into Google’s advertising practices—specifically, whether it allowed advertising for illegal drugs—Attorney General Paxton said they did not “fully address the source of Google’s sustained market power and the ability to engage in serial and repeated business practices with the intention to protect and maintain that power.”

Beyond Google’s advertising practices, the antitrust probe will delve into whether Google’s data collection practices might be harming competition as well. For example, the demand letter asks Google for information on the “business justification” behind the login tool allowing users to sign in to third-party sites through a Google account. Another question asks for information on the types of data Google collects on the Chrome browser.

This development comes as Google—which commands an estimated 75 percent of the search advertising market—faces a number of challenges to its competitive power from Europe and Australia. The Department of Justice has also launched a separate investigation into whether Google’s online advertising practices and search operations have stifled competition in the market.

That investigation responds to “widespread” public concerns about the effect on competition of Google’s search and retail services, though the DOJ will not join the states’ investigation.

Key Takeaways

Google has become the subject of intense legal scrutiny on several fronts and recently paid the largest fine in FTC history for alleged violations of the Children’s Online Privacy Protection Act by Alphabet-owned YouTube. Despite the record-breaking amount, that fine was heavily criticized for having a minimal impact on Google’s bottom line given the company’s huge revenue.

Google’s stock dropped more than one percent following the announcement of the antitrust investigation, and its bottom line may suffer a stronger hit still if the investigation proceeds in any significant way. Antitrust actions have the potential to pose a serious challenge for Google as the company could face new competition in a way that will erode its market share—such as by being forced to even the playing field for search results to give equal treatment to the competition or by spinning off popular business units.

NAD Recommends Pfizer Discontinue Claims that Advil Lasts Longer, Citing New Study

Advil may soon experience some marketing pains. Following a challenge by competitor Bayer, the National Advertising Division (NAD) recommended that Advil manufacturer Pfizer discontinue its long-standing marketing claims that Advil provides pain relief just as long as other products on the market.

NAD assessed Pfizer’s claims that “Nothing’s been proven to last longer than Advil” and “Nothing works…longer than Advil.” Challenger Bayer sells competing over-the-counter anti-pain medication Aleve.

The drugs utilize different ingredients to fight pain—Advil contains Ibuprofen and Aleve contains naproxen sodium. Advil has made these marketing claims since 2007. However, a new study submitted by Bayer has changed that.

Since 1993, Pfizer relied on a series of studies conducted by the original manufacturer of Aleve to support its parity claim (ie. “nothing works longer”). Those studies, which compared naproxen sodium against ibuprofen, “found no statistically significant differences in how long the two drugs provide pain relief.” These tests were submitted by Aleve’s manufacturer in connection with its approval as an over-the-counter medication.

In this challenge, Bayer provided NAD with a clinical study conducted in 2018 showing that Aleve lasts longer than Advil, and given this new scientific data, Advil’s parity claims cannot be substantiated.

NAD agreed with Bayer, noting that although “the (older) studies submitted by Pfizer served as a reasonable basis for its claims…the progress of scientific study necessitates review of new evidence to determine whether it represents an improved understanding of the underlying truth of a given claim.”

NAD said its review determined that the 2018 study represented an “improved understanding” of the claim, showing that there were “actual differences in the duration of analgesia between the two medications,” thus invalidating Pfizer’s longstanding claim about Advil. After considering differences between the studies related to inpatient versus outpatient use, study length, and pain level, NAD found that based on “the totality of the evidence,” Pfizer’s claim about the duration of Advil’s pain relief could not be substantiated and therefore recommended it be discontinued.

In response, Pfizer said it would comply with NAD’s recommendations.

Key Takeaways

Although Advil had been using the marketing claim since 2007, NAD found the new scientific methodology warranted a new look at the claim. This matter serves as a reminder to advertisers that relying on old studies may be fine for substantiating claims, but is vulnerable to new data that may contradict or call into question historical studies.

Ariana Grande Sues Forever 21 over Right of Publicity, Trademark

Pop star Ariana Grande recently filed suit against retailer Forever 21 in a Los Angeles federal court, alleging the clothing retailer violated her right of publicity when it ran a marketing campaign mimicking Grande’s music video—complete with lookalike model, color scheme, and fashion.

The lawsuit centers on Grande’s music video for 7 Rings, which features Grande and her friends partying in a pink house while wearing distinctive clothes, jewelry and hairpieces.

In her 76-page complaint, Grande alleges that Forever 21’s social media campaign and advertisements swiped the look and feel of Grande from the music video in order to create an impression that Grande endorsed Forever 21 products. The complaint alleges trademark and copyright infringement as well as state and common law claims for violation of Grande’s right of publicity. It also asserted a false endorsement claim, which is a cause of action for the unauthorized use of a person’s likeness for commercial gain.

Grande claims in her complaint that the parties had been negotiating an endorsement deal, but after talks fell through, the defendant copied Grande’s look and tried to give the impression she endorsed the brand. Because Forever 21 would not agree to Grande’s fee, she alleges, it appropriated her likeness to trick consumers into believing she endorsed the brand.

Among the aspects of the Forever 21 campaign that smacked of the pop star were a Grande lookalike wearing her trademark high-ponytail and hairpieces bearing a significant similarity to the bejeweled products worn by her in the 7 Rings video. The campaign also featured the same pink and purple color scheme, models posing like Grande and her friends do in the music video, and even captioned the posts similarly to the lyrics in the video.

Grande’s attorneys claim the company “stole her name, likeness, and other intellectual property to promote their brands for free.” The complaint argues that Forever 21’s actions are particularly egregious given Grande’s stature as one of the world’s most successful pop stars with the ability to command hundreds of thousands of dollars for “even a single social media post.”

Going beyond impersonating Grande’s image, Forever 21 “falsely suggested Ms. Grande’s endorsement” and then kept the campaign on social media for 14-weeks even after being contacted by Grande’s attorney, according to the complaint.

The lawsuit seeks at least $10 million in damages from the troubled retailer, which is reportedly on the brink of bankruptcy. The suit also names Riley Rose, Forever 21’s jewelry company, as a defendant.

Key Takeaways

The suit does not claim infringement of Grande’s clothing or hairstyle but rather a general appropriation of her likeness and of Grande’s “personal brand.” These actions, claims Grande, resulted from Forever 21’s recent financial troubles and was a “desperate attempt to stay relevant and profitable.”

Suits of this kind are nothing new. In 2011, Kim Kardashian sued Old Navy for using a lookalike of her in its TV ads. Before the age of social media, Vanna White sued Samsung over an advertisement featuring a robotic model who looked like the Wheel of Fortune star, and Bette Midler sued Ford for airing a 1985 ad for its cars using an actor who looked—and sounded—much like the singer.

Plaintiffs in Hershey False Ad Suit Seek Class Certification

There’s nothing sweet about artificial flavors in Hershey’s chocolate, claim plaintiffs in a class action lawsuit accusing the iconic chocolate maker of falsely labeling its products as containing no artificial flavors. The current action seeks to certify a class of purchasers residing in New York and California.

The complaint, filed in California federal court in October of 2018, claims Hershey falsely labels its line of Brookside dark chocolates, acai, and blueberry flavors as containing no artificial flavoring. The lawsuit asserts violations of California and New York state law, including California’s Consumers Legal Remedies Act, Unfair Competition Law and False Advertising Law, and New York’s General Business Law §§ 349 and 350, all of which generally prohibit the dissemination of false or misleading advertising.

According to the allegations, Hershey deliberately failed to disclose its chocolate is artificially flavored when, in fact, laboratory testing has revealed that the blueberry-flavored chocolates contain a chemical called malic acid, an artificial flavoring that “tastes like fresh fruit.” In support of their claim, plaintiffs allege that evidence obtained during discovery showed Hershey referred to malic acid when discussing product flavoring and that these documents also show that internal personnel said they do not consider the flavor to be natural.

The complaint avers that, in accordance with federal and state law requirements, Hershey should have clearly included labeling on the front and back of the package disclosing the artificial flavorings:

“Defendant painstakingly and intentionally designed this product label and the other labels for the Products to deceive consumers into believing that there are no artificial ingredients, including artificial flavoring agents or artificial chemicals contained in the products.”

Plaintiffs seek certification of two classes of consumers, purchasers residing in New York and California. The proposed classes would be comprised of individuals in those states who purchased the product containing the deceptive “no artificial flavors” label. Plaintiffs say the number of individuals who did so is large enough to justify class certification.

The motion for class certification claims all plaintiffs who bought the allegedly deceptively labeled chocolate purchased the same misleading label, suffered the same harm, and were injured by the misrepresentation in the packaging in the same way. Therefore, plaintiffs claim, there is a common question of fact among the classes.

Key Takeaways

According to the complaint, although the back label of the product lists malic acid as an ingredient, the product is mislabeled and in violation of the law for two reasons. First, California law requires that the front label of a product disclose the additional flavors “rather than misleadingly suggest that the product is flavored only by natural fruit juices.” Second, the general inclusion of malic acid as an ingredient is misleading because a consumer reading the label could reasonably assume that the reference is to the naturally-occurring malic acid and not to the synthetic malic acid which is found in the product.

 

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