Stay ADvised: What's New This Week, August 30
In This Issue:
- NAD Sticks It to SharkNinja's Cookware
- 1-800 Contacts Gives Warby Parker the Side Eye
- End of the Road for Hyundai Assist Marketing Matter
- Plaintiffs Fail to Craft Sufficient Allegations in Miami Beer False Ad Claim
NAD Sticks It to SharkNinja's Cookware
The National Advertising Division (NAD) has asked a maker of "NeverStick" non-stick cooking pans to adhere to less aggressive claims. Sunbeam Products challenged SharkNinja's claims that food cooked in its Ninja™ Foodi™ NeverStick™ Cookware will "never stick," and that the products will "never chip" and "never flake." NAD found such claims both comparative to other non-stick cookware and unsupported by SharkNinja's testing.
In response to the challenge to both the "NeverStick" name and related advertising claims, NAD first determined that there was no need for SharkNinja to change the name of the product line in the absence of sufficiently reliable consumer perception evidence showing consumers are misled. Under NAD precedent, extrinsic evidence here was necessary because in NAD's view, the name NeverStick standing alone did not convey an express claim "that SharkNinja's cookware would literally never stick. NAD has consistently found that consumers appreciate the hyperbolic nature of product names."
Accordingly, NAD turned to the parties' evidence of consumer confusion. It determined no name change was necessary after an in-depth review of the parties' dueling consumer perception surveys examining whether consumers took away the message that "the cookware will never stick, chip or flake over any amount of time," given the product name and advertising claims.
NAD ultimately found Sunbeam's survey fatally flawed, largely because in NAD's view it did not sufficiently separate the name from the marketing claims and used language that allowed consumers to parrot back the marketing materials without a way to confirm the responses meant consumers were in fact misled. NAD cautioned SharkNinja, however, that it not use the NeverStick name in a way that communicates a superiority message versus other brands.
NAD came to a different conclusion regarding some of the closely related marketing claims, many of which were not directly addressed by the surveys. There, unlike when considering a requested product name change, NAD regularly steps into the shoes of the consumer to determine the "reasonable" takeaway. NAD determined that a number of claims—e.g., showing the pristine NeverStick pan on the left and a degraded unnamed pan on the right—were indeed presented in a comparative context.
To support the comparison, SharkNinja submitted testing simulating three years of use with a "traditional" pan versus with its pan which carried a much-touted "NeverStick Lifetime Guarantee." SharkNinja also submitted laboratory abrasion testing as well as affirmations explaining how the pans were designed versus other "traditional" pans. Sunbeam submitted its own comparative testing, relying at least in part on so-called industry standards for cleanability, which it argued was akin to releasability.
NAD found that the reasonable consumer would interpret the ads as conveying a message that NeverStick would keep its non-stick properties far longer and better than traditional products. NAD further determined that SharkNinja's testing was insufficiently reliable to support such comparative claims, although it determined the "substantiation could support ordinary monadic nonstick claims." More specifically, NAD recommended that SharkNinja discontinue the "never" claims because the evidence provided didn't support comparative claims due to "the choice of food tested" and "inconsistent methodology."
NAD also recommended SharkNinja discontinue its "lifetime" guarantee claim because the guarantee was limited to a five-year period, and the claim reasonably conveyed the message that the cookware would last far longer than that. A disclaimer clarifying that the company equated lifetime with five years didn't remedy the problem, either, because as NAD has said many times before, disclaimers that directly contradict the main message don't cure defects with the advertisement.
Two well-respected survey experts provided competing consumer perception surveys here. NAD's decision is worth a read to provide additional guidance as to how best to design the survey and frame appropriate questions to tease out an often elusive consumer takeaway.
1-800 Contacts Gives Warby Parker the Side Eye
Not wasting any time following its June victory before the 2nd Circuit, 1-800 Contacts Inc. has sued upstart Warby Parker in New York federal court, alleging that the eyeglass company uses keywords like "1-800 Contacts" to divert business to Warby Parker's website, which 1-800 Contacts claims amounts to trademark infringement, unfair competition, and deceptive advertising.
This latest filing follows 1-800 Contacts' successful petition to the 2nd Circuit to overturn an order by the Federal Trade Commission (FTC) finding that 1-800 Contacts violated antitrust law through settlements in trademark litigation that barred rivals from buying certain keywords for search engine advertising. 1-800 Contacts had entered into more than a dozen settlement agreements with other online contact sellers after sending cease-and-desist letters claiming their use of keywords in online ads was trademark infringement.
The 2nd Circuit found that while trademark settlements are not immune from antitrust scrutiny, the agency went too far in viewing the settlement agreements as "inherently suspect." The court said that under a more lenient standard, the FTC could have considered whether anti-competitive harms were outweighed by pro-competitive benefits of preventing confusion in the marketplace.
The court then went on to state that "[i]n light of the strong procompetitive justification of protecting petitioner's trademarks, we conclude the challenged agreements merely regulate and perhaps thereby promote competition." It further wrote that "[f]orcing companies to be less aggressive in enforcing their trademarks is antithetical to the procompetitive goals of trademark policy." On August 26, 2021, the 2nd Circuit denied the FTC's petition seeking a rehearing or rehearing en banc of the June decision.
In its latest complaint, 1-800 Contacts avers that Warby Parker is infringing on its trademark by using keywords such as "1-800-contacts" on search engine ads that "unfairly and deceptively confuse and divert" customers to Warby Parker. According to 1-800 Contacts, Warby Parker almost daily outbids 1-800 Contacts for its keywords, causing Warby Parker's ads to appear first in search results for "1-800 Contacts."
As alleged by 1-800 Contacts, these deceptive "source-ambiguous" ads are designed to "knowingly and intentionally" appear to be from 1-800 Contacts and lead customers to a Warby Parker page that also mimics 1-800 Contacts' own brand— down to the company's telltale light-blue color.
Despite typically being doomed in court, competitive keyword advertising cases seemingly persist. There have been few victories for plaintiffs in such cases absent evidence of use of keywords in the advertising itself. And while the 2nd Circuit's decision seemingly permits the use of threats of trademark infringement actions to pursue settlement agreements, that decision did not address the merits of such suits. Given how often these types of cases settle, one wonders whether this latest suit will result in yet another settlement for 1-800 Contacts—something the FTC will no doubt point to as another example of the conduct it sought to stop.
End of the Road for Hyundai Assist Marketing Matter
A putative nationwide class action lawsuit claiming that carmaker Hyundai falsely marketed its Ioniq hybrid and electric vehicles as protective against collisions is no more, as the parties have stipulated to dismiss the case.
Though the matter is now garaged, it began at a Hyundai dealership in Tallahassee, Fla., where plaintiff Howard Barnett alleged he went to purchase a replacement car for his wife. There he saw a Hyundai Ionic model for sale, featuring a sticker advertising that the car's features included a "Blind-Spot Collision-Avoidance Assist (BS Assist)" and a "Rear Cross Traffic-Collision-Avoidance Assist (RCT Assist)" systems.
According to plaintiff's complaint, the RCT Assist system is a feature that uses radar sensors to cause the car to break in an emergency to prevent a cross-traffic collision. The BS Assist feature uses radar sensors to activate the emergency break to stop an accident in the driver's blind spot. Seeing these two features advertised, Barnett alleged he decided to buy the car, since these safety features were "very important" to his wife and him.
So it was with much chagrin that Barnett discovered a few months after he purchased the car—via a letter from Hyundai—that it only contained BS and RCT "warning" systems that would warn of approaching cars and blind spots, but not the advertised "assist" systems that would automatically break the car. After contacting Hyundai seeking relief for these alleged misrepresentations and finding none, plaintiff brought the lawsuit against the company.
The lawsuit filed in the U.S. District Court for the Central District of California alleged that Hyundai misrepresented these safety features in the Ionic and deceptively marketed and advertised the car, in violation of California's Consumer Legal Remedies Act (CLRA), the Unfair Competition Law (UCL), and the False Advertising Law (FAL). Barnett alleged he wouldn't have purchased the car had he known Hyundai's representations were false, and that "there is no practicable way" for a consumer to test whether the BS Assist and RCT Assist actually work—short of getting into an accident involving cross traffic or blind spots.
In June 2021, the parties informed the court that they agreed to resolve the matter during an all-day mediation. Now, Barnett and Hyundai have stipulated to dismiss the case. They say they've reached a settlement and Barnett is dropping the claims, though the terms of the settlement are not publicly available as of this writing.
As collision prevention and mitigation systems become more common, consumers may find it difficult to differentiate among the marketing terms used to name and describe these systems, given—experts say—that the systems don't all have the same capabilities. In fact, it's gotten to the point that the American Automobile Association (AAA) recommended that "drivers should not rely on advertisements alone to gauge how well a system will perform in the real world" but, rather, look at their owner's manual. Yet as these systems proliferate and become more common, advertisers may face a push to standardize the names to provide more clarity in the marketing.
Plaintiffs Fail to Craft Sufficient Allegations in Miami Beer False Ad Claim
Allegations that Anheuser-Busch deceived by marketing its Veza Sur brand beer as a "Miami-born craft beer with Latin American roots" were not specific enough to evidence wrongdoing and will not proceed, a Florida federal court ruled.
Plaintiffs Bryon Jackson and Mario Mena, Jr., filed a class action lawsuit alleging that Anheuser-Busch misled them by marketing its Veza Sur beer as a craft beer with deep Miami roots. Relying on the Brewers Association definition of craft beer, Plaintiffs allege that it is false advertising to call a giant beer manufacturer's local brewery installation a "craft" brewery. They further allege that it is false advertising to promote the beer as #HechaenMiami, or "Made in Miami," because the Anheuser-Busch brewery at issue makes a portion of its beer elsewhere in Florida.
Anheuser-Busch successfully moved to dismiss the second amended complaint, arguing that plaintiffs failed to state a viable claim and had no standing to sue. Judge Beth Bloom ruled that although plaintiffs had standing to sue because they alleged a possibility of future harm, they failed to sufficiently allege any "detailed or particularized facts" tending to show that Anheuser-Busch's marketing fraudulently deceived or misled plaintiffs.
More specifically, plaintiffs failed to include other salient details of the brewer's conduct beyond describing their experiences imbibing the beer. The court found that the "broad, generalized statements about ... 'misleading advertisements' and 'marketing and information provided to patrons'" hardly met the heightened pleading requirements of the Florida Deceptive and Unfair Practices Act (FDUTPA) and other fraud-based causes of action. Even those allegations in the complaint regarding the brewer's conduct—such as those alleging deceptive bottle labels or statements on websites—failed to allege when or even whether plaintiffs had viewed these misrepresentations.
Further, the court ruled that a safe harbor provision applied to plaintiffs' FDUPTA claim and precluded it. The U.S. Treasury's Alcohol and Tobacco Tax & Trade Bureau (TTB) provides certain labeling requirements for alcoholic beverages, and it allows the "name or trade name of the brewer" to be included on bottle labels, said the court. Additionally, Florida law permits the use of fictitious business names, provided the name is properly registered with the state.
Because TTB determined that Anheuser-Busch's label, including the "Veza Sur Spanglish Latin Lager" name, met the requirements of the law, the court determined that the safe harbor provision applied and supported dismissal of the case. Plaintiffs' FDUPTA argument that the marketing was misleading also failed because it was unlikely to deceive a reasonable consumer since "the beer is, in fact, brewed in part in Miami," said the court.
As to claims for misleading advertising, plaintiffs were once again felled by heightened pleading requirements. The court held that plaintiffs failed to "allege with any degree of specificity the precise fraudulent conduct or material representation at issue." Claims for fraudulent misrepresentation, misleading advertisement, and breach of warranty also went flat.
Though Judge Bloom ruled that plaintiffs' allegations were negated by the safe harbor provision of the FDUTPA, other courts may disagree. As Judge Bloom noted, courts "reached different conclusions" as to whether the TTB Certificate of Label Approval (COLA) "process is sufficient to trigger the applicable safe harbor provisions under state consumer protection actions," but she sided with the Northern District of Florida's ruling in one case that it did.