Stay ADvised: Brand Protection & Advertising Law News
In This Issue:
- Kardashian Kopycat? Energy Drink Company Claims Competitor Stole Kim's Copyrighted Look
- Yo (No) Quiero False Advertising, Plaintiff Says About Taco Bell's "Overstated" Portions
- Coca-Cola Fails to Convince NAD of the Power Backing Its "50% More Electrolytes" Claim
- That's a Bunch of Hot Air: SoCalGas Settles With California AG Over Misleading "Renewable Gas" Claims
- Some Tortilla Maker Carb Claims OK, But Zero Carbs Means Zero Carbs, NAD Holds
- The Best Part of Waking Up Is … Realizing Your Lawsuit Is Proceeding?
- Attorneys General From 31 States Find Little to Adore in AdoreMe Dark Patterns – Company to Settle for $2.5 Million
- NAD Green-Lights Wall Street Journal's Cancellation Policies
Kardashian Kopycat? Energy Drink Company Claims Competitor Stole Kim's Copyrighted Look
The Instagram posts look nearly identical, in a blink-and-you'll-miss-the-difference kind of way—or so says the complaint filed by Alani Nutrition. In each photograph, a blonde woman stands in a Barbie-pink gym beside lifting equipment and a pack of pink-branded energy drinks. But only one is Kim Kardashian, and the company that ran the original ad featuring Kardashian has sued the alleged copycat for copyright infringement, false advertising, and unfair competition.
Alani Nutrition markets energy drinks under the brand name Alani Nu, including limited edition drinks like "KIMADE," the one featured in the Instagram ad campaign partnership with Kardashian. Alani Nutrition claims its advertising campaigns have caused it to achieve "widespread recognition" as a premium health and nutrition brand.
The complaint alleges that both Ryse Up Sports Nutrition and influencer Paige Hathaway, the model in the competing ad, who has multiple millions of followers in her own right, infringed on Alani Nu's copyright with what it claims is a nearly identical Instagram post featuring Hathaway beside Ryse Up's own pink-branded energy drink.
According to the complaint, Alani Nu invested a substantial amount of time and resources creating the distinctive photograph of a blonde Kardashian donning white bathing suit and heels at the gym and subsequently registered the photograph with the U.S. Copyright Office. Ryse Up then recreated the photo, and it and Hathaway posted it on social media with the "willful intent" to infringe on Alani Nu's copyright.
The similarities of the photos and the potential copyright infringement did not escape consumers, notes Alani Nu. Some online comments included on the photo included: "This is Alani Nu's ad!" "Rip off of @alaninutrition collab with Kim k," "omg it's copied."
"Defendants knew that the Alani Nu Kimade promotion incorporating the Copyrighted Works was catchy and effective advertising, and that by deliberately copying that advertising, defendants would generate more recognition and sales of the competitive Ryse Up energy drink," argues Alani Nu in its complaint.
According to the plaintiff, Ryse Up knew that "consumers would mistakenly believe that the Ryse Up advertisement was associated with … Alani Nu," which would also increase sales of Ryse Up's competing energy drink products. Alani Nu alleges that Ryse Up's conduct constitutes false advertising and unfair competition in addition to copyright infringement because the allegedly infringing image copies the Alani Nu advertisement and uses it to promote a competing product. The complaint alleges that the image is likely to mislead consumers about the products and to "influence consumers' purchasing decisions and/or encourage consumers to purchase Ryse Up products instead of Alani Nu products."
The company seeks a permanent injunction and damages accounting for Ryse Up's alleged "exploitation and capitalization of a costly advertising campaign that Defendants did not invest in."
This could be a tough one for Ryse Up to defend. On one hand, the company might argue that the photo is a parody meant to show that Kim Kardashian is not really "fitness," which is likely what it was going for with the captions making that point, but this'll be a tough sell given the ample black and white evidence of both consumer awareness of the infringement and consumer confusion. On the other hand, for the false advertising claim, Alani Nu will have to show that the reasonable consumer would be misled by the remarkably similar photograph and, based on the evidence included in the complaint, it seems that the consumers were aware of the differences.
Yo (No) Quiero False Advertising, Plaintiff Says About Taco Bell's "Overstated" Portions
Speaking of side-by-side images, they make a different kind of appearance in a recently filed case. This complaint features side-by-side photos of advertised versus actual Taco Bell products to make the case that the fast-food company is falsely advertising the quantities of certain ingredients in its foods.
The class action suit alleges that Taco Bell engages in unfair and deceptive trade practices by falsely advertising how much beef and other ingredients are actually featured in its various Crunchwraps and Mexican Pizzas.
The complaint alleges that on ads both online and in brick-and-mortar locations, Taco Bell advertises its products with images of overflowing beef, ample tomatoes, and layers upon layers of cheese and sour cream. In sharp contrast, the complaint pictures the items received as flattened out tortillas, a lonely tomato square here and there, and a receding line of beef.
The complaint alleges that the advertisements overstate the amount of ingredients actually received, "misleadingly, inaccurately, and deceptively." They are "unfair and financially damaging to consumers as they are receiving a product that is materially lower in value than what is being promised."
Couching the complaint in this economic moment, plaintiff alleges that the wide discrepancy between what Taco Bell advertises and what it actually serves is especially troublesome considering how hard inflation is hitting the consumer. As plaintiffs tell it, lower income consumers struggling financially in this inflationary economy see the ads and on that basis decide to eat at Taco Bell expecting a hefty meal.
Plaintiff says that the proof is in the pudding (or the taco, as the case may be), with multiple online food influencers and commenters noting the allegedly misleading advertising. Traditional press sources have also noted that the Taco Bell products in real life don't match how they are depicted in ads.
According to the complaint, Taco Bell's false advertising drives customers away from other establishments which "fairly" advertise their portion sizes, "unfairly diverting millions of dollars in sales that would have gone to competitors."
As for the named plaintiff, he alleges that he bought a Mexican Pizza expecting it to have "similar amounts of beef and bean filling as contained in the pictures … in Taco Bell's advertisements." Instead, he got "approximately half of the beef and bean filling."
The complaint alleges violations of New York's Deceptive Acts and Practices Act.
False advertising in the food space is growing, perhaps thanks, in part, to the online review space having created much food for class action thought regarding all types of alleged advertising versus real-world discrepancies. Time will tell if this case passes the puffery bar to claims of this type.
Coca-Cola Fails to Convince NAD of the Power Backing Its "50% More Electrolytes" Claim
Picture this: two competing sports drink makers duke it out for years in the sports and electrolyte drinks market. One—Gatorade—is the number one selling sports drink worldwide. The other—Powerade—has the benefit of being owned by the largest and perhaps most iconic soft drink brand in the world—Coca-Cola. In an effort perhaps to reach the top spot, Coca-Cola released a new version of Powerade promoting the drink on its label, in commercials, and on social media as containing "50% more electrolytes than the leading sports drink."
Stokely-Van Camp (SVC), the maker of Gatorade, challenged Coca-Cola's claims about its Powerade product before the National Advertising Division (NAD). SVC argued that Coca-Cola's "50% more claims" were not only inconsistent with FDA regulations but conveyed a misleading and unsupported superior performance message.
Specifically, SVC argued that FDA regulations state that a "'more' nutrient claim can be used to describe the level of that particular nutrient only if the product contains at least 10 percent more of the daily value of that nutrient"—which apparently the new Powerade did not. SVC further argued that given the significance of electrolytes to purchasing decisions of sports drink consumers, Coca-Cola's "50% more claims" convey the misleading message that Powerade provides "superior health, hydration and performance benefits," when Coca-Cola has provided no evidence to that effect. And, argued SVC, by pairing the "more" claim with advertising claims such as "better than ever" and a strong-arm emoji, Coca-Cola's commercials and social media promotions reinforced the unsupported message that Powerade provides better hydration and performance.
Coca-Cola countered that its "50% more claims" were not misleading and that FDA regulations were irrelevant because there are no established daily values for electrolytes. Further, Coca-Cola argued that its electrolyte claims didn't convey any "concrete" hydration or performance messages and, importantly, were literally true. Finally, Coca-Cola claimed that its advertising didn't convey a superiority message about electrolytes since "there is no universally optimal electrolyte concentration and … for various reasons, some consumers prefer sports drinks with high electrolyte content." In other words, Coca-Cola's advertising was merely truthfully informing consumers about an "important point of differentiation for its products," not making a performance claim.
Starting off its analysis, NAD noted that while the NAD doesn't enforce FDA regulations, it does consider them "instructive when analyzing the truthfulness of a claim." FDA regulations provide insight into how a claim is used in the market and provide consistent standards for advertisers. Referencing the FDA, NAD concluded that Coca-Cola's promotion of its new Powerade formula mischaracterized "the significance of Powerade's electrolyte load and in so doing, conveyed misleading messages about the benefits of its new product."
"Here, both the FDA's relative content rules and its policy regarding the limits of nutrient claims for which there are no established daily values guide advertisers to avoid misleading labelling claims and affirm a core principle underlying both FTC policy and NAD precedent which is that nutrient content claims should not overstate the significance of a nutrient difference," wrote NAD.
In elaborating on how the "50% more claim" mischaracterized the significance of Powerade's additional electrolyte content, NAD noted that although the claim was literally true, the increase only amounted to an increase of 3% of the daily value of sodium and 2% of the daily value of potassium per drink. This rendered the claim misleading as to the effect of the increase considering FDA regulations. The disclosure of nutrient amounts on the Powerade back label failed to cure the deficiency because the disclosure only listed the weights of the nutrients, as opposed to the relevant daily value.
"It is reasonable for consumers to conclude that a product that contains more of a key nutrient will deliver more of the benefits associated with that nutrient," concluded NAD. Electrolytes are a "core" ingredient in sports drinks, so it follows that consumers would reasonably take away the message from this claim that the drink "delivers superior performance and hydration" compared to Gatorade.
Likewise, NAD agreed with SVC that the superiority message conveyed was reinforced in the commercials and social media, with narratives and visuals depicting Powerade as providing increased performance because it has "more" electrolytes.
Conversely, Coca-Cola had not presented evidence that the 50% increase in electrolytes was material to the performance of the drink, nor that the drink actually provided superior performance thanks to the added electrolytes.
Coca-Cola has said it will appeal to the NARB.
The trap of literally true but impliedly false has caught many an advertiser. Next stop, NARB which may or may not agree that Coca-Cola violated that principle.
That's a Bunch of Hot Air: SoCalGas Settles With California AG Over Misleading "Renewable Gas" Claims
California has procured a settlement from natural gas giant Southern California Gas Company (SoCalGas) over allegations that the company misled consumers by characterizing its gas as "renewable."
California Attorney General Rob Bonta announced the settlement, which resolves allegations that the company violated California's Unfair Competition Law and False Advertising Law by falsely advertising its natural gas as "clean, affordable, and renewable" without qualifying the claims.
The claim appeared on the company website as well as on a webpage titled "Smart Energy" calling its gas "Clean; Energy-efficient; Renewable." The company also promoted these claims at conferences and community events, charged AG Bonta.
In fact, the vast majority of SoCalGas's product is derived from fossil fuels and is not renewable, though the company set targets to increase its renewable natural gas or biomethane use, according to the AG. Biomethane is considered renewable when it comes from landfills and dairy operations and is converted to a useable fuel.
The company's claims were an attempt to appeal to consumers increasingly concerned about the environmental impacts of products they use. According to the complaint, by referencing "renewable" energy, SoCalGas implied that its gas was derived from re-used fuel or biomethane, which "is perceived to be environmentally superior to natural gas." Accordingly, California brought the suit to "protect California consumers' right to make informed decisions about products or services they purchase by preventing dissemination of false environmental marketing claims."
The settlement obligates SoCalGas to pay $175,000 in penalties, with half going to the Environmental Justice Small Grants Program of the California Environmental Protection Agency, and it also prohibits the company from making claims that its gas is renewable until the statements comply with the Federal Trade Commission (FTC)'s Green Guides. The settlement also requires SoCalGas to publish a statement correcting its claim on its website within 14 days of settlement.
This case is replete with important messages regarding green and aspirational claims. One, pay attention to the Green Guides, regardless of whether the company is based in California where compliance with the Guides is a defense to claims. Two, consider the consumer takeaway from advertising claims and qualify and carefully tailor environmental claims accordingly. Three, it is not enough to want to do good and set goals—advertising should be clear about where in that process of achieving those goals the company actually is.
Some Tortilla Maker Carb Claims OK, But Zero Carbs Means Zero Carbs, NAD Holds
Taco bout a (carb) loaded question! Did the makers of a tortilla marketed as "zero" carbohydrates have a reasonable basis for their carb-centric claims? The National Advertising Division (NAD) wrapped up its findings: net carbs and total carbs were substantiated, but zero carbs and "carb lean" claims, not so much.
NAD considered this question in a challenge to claims made about Ole Mexican Foods' La Banderita and Xtreme Wellness lines of tortillas, whose advertising focused on the products' carb content.
Gruma Corporation, also a manufacturer of tortillas, challenged the express claims made by Ole about the products' total carbohydrate claims and net carbohydrate claims, including the "Total Carbohydrate" information on the products' Nutrition Facts Label, the "Carb Lean" claim on the product front label, and claims like "0 Net Carbs. 100% Taste" made on the company website.
Referencing Food and Drug Administration regulations (FDA), NAD held that Ole had provided a reasonable basis for its "total carb" and "net carb" claims, but not its "zero carb" claims, which face a stricter calculus at the FDA, nor its "carb lean" claims.
Considering whether Ole had a reasonable basis for the "total carbohydrate" claim, NAD noted that though it was not bound by FDA law on this issue, it "routinely considers such regulations that define nutrients or ingredients as instructive." Taking this into account, NAD noted that the FDA allows for a "20% variance" between the amount of carbs listed on a product label and the actual amount of carbs. Ole's expert testing reports showed that though its actual product carb amounts differed from the advertised carbohydrate amounts, these "differences fall within the range" which both the FDA and industry standards deem reasonable. For that reason, NAD found the claims supported.
NAD found the "net carbohydrate" claim supported for similar reasons, holding that the advertiser's testing showed that net carb amounts fell within the variance permitted by the FDA with the NAD recognizing that "in advertising claim substantiation, perfection is not required."
The "0 net carb" claims did not fare as well. That's in large part because FDA regulations are stricter when it comes to what it considers absolute claims. FDA permits claims of "zero" nutrients if there are .5 grams or less of that nutrient. Consumers would thus reasonably expect that a product labeled "0 grams" of carbs would contain .5 grams or less of carbs, reasoned NAD. Hewing to this reading leaves the advertiser with significantly less wiggle room, so NAD recommended it discontinue any claim that did not fit this bill.
As for the "carb lean" claims, Gruma argued they were misleading because FDA regulations only allow the use of the word "lean" to describe fat content of foods regulated by the FDA, not carbs. NAD disagreed with this argument, noting that just because the FDA applies the term "lean" in one food category, it does not make its use misleading when used to refer to a different category of foods. Nevertheless, noting several possible consumer interpretations of "carb lean," NAD found that the claim conveyed the message that the product is low in carbs, and nothing in Ole's offered evidence explained what constitutes a low total or net carb amount. Therefore, NAD held Ole should discontinue the "carb lean" claims.
NAD is not bound by but it does try to "harmonize" its decisions with the guidance and decisions of regulatory bodies—but with NAD's own special spin about reasonableness and advertising substantiation. Advertisers making claims about food before NAD should take note that FDA regulations will play a significant role in NAD's analysis—but compliance with those regulations won't carry the day.
The Best Part of Waking Up Is … Realizing Your Lawsuit Is Proceeding?
Just as a potent cup of coffee keeps a tired human going, plaintiffs in a multistate class action litigation against Folgers Coffee alleging the company misrepresented the quantities of coffee in its products have kept their litigation rolling along. Plaintiffs have survived a third attempt by the company to dismiss the suit.
Plaintiffs in the In re Folgers Coffee, Marketing Litigation allege that Folgers misled consumers by misrepresenting the number of cups of coffee that its coffee canisters can brew. Calling the advertised cups of coffee yields "arbitrary," plaintiffs allege that Folgers sells coffee packaged and labeled to "prominently" advertise that it will brew a certain number of cups, when in fact it is impossible to brew the advertised number of cups of coffee. According to plaintiffs, Folgers' advertising claims are false, misleading, and deceptive.
In its third motion to dismiss, Folgers argued that product testing conducted by both parties' expert witnesses showed that plaintiffs' "core allegations" are "implausible" because Folger's canisters contain enough ground coffee to brew the advertised number of cups of coffee. The company urged the court to take judicial notice of the experts' test results given that the plaintiffs' own experts' findings directly contradict their own claims, rendering their claims implausible. Folgers further moved to strike the class allegations and dismiss a warranty claim.
But Judge Beth Phillips of the Western District of Missouri disagreed on all counts. At the outset, the court noted that the Third Amended Complaint neither contains any allegations related to the expert witness reports nor attaches any such reports. Instead, the expert reports were produced during ongoing discovery. In declining to dismiss the complaint, the Court found that it was procedurally improper to consider expert reports in deciding whether to dismiss a complaint when those reports were not "alleged in that pleading or attached to it."
The Court distinguished cases Folgers cited in support of its argument that it should take judicial notice of the expert reports, reasoning that the cited cases involved courts taking judicial notice of reports in the public record of a separate lawsuit, rather than the ongoing lawsuit as was the case here. Further, the Court noted that it may only take judicial notice of a "fact that exists independent of the litigation at issue."
Proving that everyone is entitled to at least the possibility of maximizing their morning Joe, this case continues. The lesson for advertisers: labeling claims matter, and vague preparation instructions will not help the cause.
Attorneys General From 31 States Find Little to Adore in AdoreMe Dark Patterns – Company to Settle for $2.5 Million
Victoria's Secret-owned lingerie brand, AdoreMe, has agreed to pay $2.5 million to settle allegations that it engages in a dark pattern of deceptive marketing on its website.
The settlement resolves a joint action taken by the Attorneys General of 31 states, including North Carolina, Tennessee, Washington, D.C., New Jersey, and Florida, that alleged the company deliberately and repeatedly signs up unwitting consumers for VIP Program subscriptions and then makes it exceedingly difficult for them to cancel.
AdoreMe was accused of enrolling users in its VIP Program without clearly and conspicuously disclosing the terms of the program, which included a cost to consumers of almost $40 a month once enrolled. In a type of bait-and-switch, AdoreMe offered discounted pricing for enrolling in the VIP Program, then stuck consumers with the steep monthly bill.
The company apparently offered a convoluted and time-consuming way to avoid those fees, requiring consumers either to make a purchase from the site or to log on to their accounts and "skip" the charge before the sixth of each month.
In a classic tactic, when consumers tried to cancel the membership, AdoreMe made it difficult for them to do so, including by erasing earned credits. According to sources, the company also used a fake "countdown clock" to mislead consumers into thinking discounts were limited time offers.
Aside from the monetary component which will go to affected consumers, the settlement imposes a number of restrictions on AdoreMe. chief among them, the company—broadly speaking—must cease making misrepresentations that mislead consumers and must clearly and conspicuously disclose any monthly charges. Additionally, AdoreMe must promptly honor cancellation requests and cease making consumers go through hoops like taking online quizzes and surveys in order to cancel their membership. The company must also make only one attempt to keep customers enrolled in the VIP Membership program once they indicate they want to cancel.
This is not AdoreMe's first rodeo with similar allegation—in 2017, the company paid $1.4 million to settle charges brought in that case by the FTC that it was engaging in similar conduct—making it hard for consumers to cancel memberships. It is very clear that these kinds of "dark patterns" are front and center on the regulatory radar whether at the FTC, the state AGs or the NAD.
NAD Green-Lights Wall Street Journal's Cancellation Policies
Sometimes the advertiser gets it right. Here, the National Advertising Division (NAD) held the Wall Street Journal's "cancel anytime" claims were substantiated by the newspaper's cancellation procedures.
In response to an NAD self-monitoring challenge (where the NAD and not a competitor questions claims), the advertiser—Dow Jones & Company, parent company of the WSJ—successfully defended the newspaper's subscription cancellation policy claims.
Considering whether the WSJ's "cancel anytime" express claim was supported, NAD answered a definitive yes. Likewise, it found the implied claim that consumers can cancel their WSJ subscriptions using the method which they used to sign up was supported as well. This case is another in the canon of dark pattern inquiries regarding subscription-related procedures.
The NAD has taken particular note of the Federal Trade Commission (FTC) recent guidance regarding dark patterns and negative option plans, which counsels that advertisers provide subscription cancellation mechanisms that are "as least as easy to use as the method for subscribing." The FTC Dark Patterns Staff Report "has been interpreted to mean that consumers who … subscribe to a service online, should be able to cancel the subscription online without the need for direct, non-automated personal contact with the company."
NAD brought the self-monitoring challenge because the WSJ had claimed that consumers could indeed cancel their subscriptions "anytime." NAD concluded that the claim "cancel anytime" reasonably conveyed the message that cancelling the subscription is easy and that a reasonable consumer might expect that cancelling the subscription would be as easy as subscribing.
Interestingly, at the time it initiated the challenge, according to the NAD the WSJ offered online cancellations to certain subscribers, but other subscribers could cancel only by calling the company on the phone.
After analyzing the WSJ's revised cancellation procedures, NAD determined the claim "cancel anytime" was supported, since consumers can cancel subscriptions automatically online directly from the website. NAD found the remainder of the procedures appropriate as well: consumers are presented with an offer to either "Consider keeping your subscription with one of these exclusive offers," or pause the subscription. If consumers choose to cancel, all it takes is the push of a button.
The advertiser noted that this was a "planned expansion of its cancellation procedures to allow for automated online cancellations globally" and "that its global modification had been in development prior to the initiation of the proceeding, and had been rolling out in stages for some time."
The case is yet another helpful guide to subscription plan advertising and cancellation procedures. It behooves all to take notice.