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Swimming With Piranhas:                    Hiring  Competitor’s  Top  Talent  &  Being  Fiercely                       Com...
InsertSponsorLogohere        Swimming with Piranhas:   Avoiding False Advertising & Unfair          Competition Claims    ...
InsertSponsor          GOLDEN GLOW Sunscreen 2013Logohere      Marketing Campaign“The Set-Up”  - Marketing Proposal:     ...
InsertSponsor          GOLDEN GLOW Sunscreen 2013Logohere      Marketing CampaignComparison to competitors:     – Direct:...
InsertSponsor          GOLDEN GLOW Sunscreen 2013Logohere      Marketing CampaignGeneral claims about GOLDEN GLOW product...
InsertSponsorLogohere          False Advertising          2013 ACC-SoCal In-House Counsel Conference                #IHCC1...
InsertSponsor          False Advertising – FederalLogohere      Statutory BasisLanham Act Section 43(a)(1)(B):“Any person ...
InsertSponsor          False Advertising – Lanham ActLogohere      ClaimElements: A false statement of fact by defendant ...
InsertSponsor          False Advertising – Lanham ActLogohere      ClaimUnder Section 43(a) of the Lanham Act, a falsestat...
InsertSponsorLogo      False Advertising StatementhereLiterally false statements may be:A statement that is or appears to...
InsertSponsorLogo      False Advertising StatementhereProving that a statement is literally false:If based on testing, th...
InsertSponsorLogo      False Advertising StatementhereProving that a statement is literally false:If NOT based on testing...
InsertSponsor          Legal Analysis Of GOLDEN GLOWLogohere      CampaignGet tanner faster with no burn!What does the ad...
InsertSponsor          Legal Analysis Of GOLDEN GLOWLogohere      CampaignPlaintiff must produce evidence (survey, survey...
InsertSponsor          Legal Analysis Of 2013 GOLDENLogohere      GLOW Campaign“Get 30% tanner over the leading sunscreen!...
InsertSponsorLogohere          Puffing                2013 ACC-SoCal In-House Counsel Conference                #IHCC13   ...
InsertSponsorLogo      What Is Puffing?hereGeneral or vague claims of superiority understood as opinions rather than fact...
InsertSponsor          Legal Analysis of GOLDEN GLOWLogohere      Campaign – Puffing?“For a healthier looking tan!”Specif...
InsertSponsor          Legal Analysis of GOLDEN GLOWLogohere      Campaign – Puffing?“Get  More.  Use  Less.”Vague?Highl...
InsertSponsor          Legal Analysis of GOLDEN GLOWLogohere      Campaign – Puffing?“Get  more.  Use  50%  less.”Specifi...
InsertSponsorLogo      Real World Examplehere               2013 ACC-SoCal In-House Counsel Conference                #IHC...
InsertSponsorLogo      Legal Analysis of Real World ExamplehereLiterally True:Tester:  “Ready  to  see  the  results.  So ...
InsertSponsorLogo      Legal Analysis of Real World ExampleherePuffing:     – “The  thing  that  is  most  amazing  about ...
InsertSponsorLogo      Claims Under State LawshereConsider state laws – trademark infringement, unfair competition and di...
Other Avenues for ClaimsPICTURE OF PUFFER FISH                  2013 ACC-SoCal In-House Counsel Conference                ...
InsertSponsorLogo      Federal Trade Commissionhere16 C.F.R. Section 14.15(b)-(c):     “Commission  policy  in  the  area...
InsertSponsorLogo      FTChereProhibits false, unfair or deceptive advertisingAdvertisement does not have to be literall...
InsertSponsorLogo      FTChere49 Fed. Reg. 30999 (Aug. 2, 1984):     – “As a matter of law, firms lacking a reasonable   ...
InsertSponsorLogo      FTC v. SKECHERShere               2013 ACC-SoCal In-House Counsel Conference                #IHCC13...
InsertSponsor          National Advertising DivisionLogohere      (NAD) Set up by the Council of Better Business Bureaus...
InsertSponsor          Other Federal RegulatoryLogohere      Agencies Food and Drug Administration (FDA)   – food product...
InsertSponsorLogo      Dangers of Social MediahereStatements made on Facebook, Twitter and other social media forums coul...
InsertSponsor          Other Mitigation Strategies:Logohere      InsuranceGeneral business liabilityAdvertising injury c...
InsertSponsorLogo      Take-Away PointshereUnderstand all claims made by your advertisement, both express and impliedEst...
Insert Sponsor Logo         Panelists here Moderator:   – Harrison Perla, Esq.            Harrison Perla, Director of Wo...
9th Annual In-House Counsel Conference   January 23, 2013 (Los Angeles, CA)       www.acc.com/chapters/socal/             ...
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Avoiding Trade Secret Misappropriation, False Advertising & Unfair Competition Claims

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On Wednesday, January 23, Knobbe Martens Partners Jeff Van Hoosear, Susan Natland, Diane Reed and Lynda Zadra-Symes participated in the Association of Corporate Counsel (ACC) - Southern California In-House Counsel Conference. This all day CLE program was just for in-house counsel and panels included: Social Media & Privacy; New Developments in California Employment Law; Lawful Interception; Millennial Engagement in the Workplace; and Helping Sales & Marketing Avoid Defamation/Unfair Competition.

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Transcript of "Avoiding Trade Secret Misappropriation, False Advertising & Unfair Competition Claims"

  1. 1. Swimming With Piranhas: Hiring  Competitor’s  Top  Talent  &  Being  Fiercely   Competitive Without Exposing Your Company Avoiding Trade Secret Misappropriation, False Advertising & Unfair Competition Claims January 23, 2013 Los Angeles, California Moderator: Harrison Perla, Esq. Panelists: Lynda Zadra-Symes, Jeff Van Hoosear, Susan Natland and Diane Reed @KnobbeMartens at TwitterThe recipient may only view this work. No other right or license is granted. #IHCC12 #IHCC13 2013 ACC-SoCal In-House Counsel Conference
  2. 2. InsertSponsorLogohere Swimming with Piranhas: Avoiding False Advertising & Unfair Competition Claims 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_27 27
  3. 3. InsertSponsor GOLDEN GLOW Sunscreen 2013Logohere Marketing Campaign“The Set-Up”  - Marketing Proposal: – “Get  tanner faster with no burn!”    With picture of bikini model throwing her bottle of Hawaiian Tan into the trash) – “Get  30% tanner with Golden Glow over the leading sunscreen!” – “#1  recommended  sunscreen  by  dermatologist” – “For  a healthier looking tan!” – “Get  more. Use Less.” – “Get  more. Use 50% Less.” 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_28 28
  4. 4. InsertSponsor GOLDEN GLOW Sunscreen 2013Logohere Marketing CampaignComparison to competitors: – Direct: “Get  tanner  faster  with  no  burn!” GET TANNER FASTER WITH NO BURN! – Implied: “Get  30%  tanner  with  GOLDEN  GLOW  over   the  leading  sunscreen!” 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_29 29
  5. 5. InsertSponsor GOLDEN GLOW Sunscreen 2013Logohere Marketing CampaignGeneral claims about GOLDEN GLOW product: – “#1  recommended  sunscreen  by   dermatologist” – “For  a  healthier  looking  tan!” – “Get  more.    Use  less.” – “Get  more.    Use  50%  less.” 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_30 30
  6. 6. InsertSponsorLogohere False Advertising 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_31 31
  7. 7. InsertSponsor False Advertising – FederalLogohere Statutory BasisLanham Act Section 43(a)(1)(B):“Any person who, on or in connection with any goods orservices, uses in commerce any false or misleadingrepresentation of fact, which . . . in commercialadvertising or promotion, misrepresents the nature,characteristics, qualities or geographic origin or his orher  or  another  person’s  goods,  services  or  commercial  activities.” 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_32 32
  8. 8. InsertSponsor False Advertising – Lanham ActLogohere ClaimElements: A false statement of fact by defendant in a commercial advertisement  about  its  own  or  another’s  product; The statement actually deceived or has a tendency to deceive a substantial segment of the audience; The deception is material; Defendant caused its false statement to enter interstate commerce; and Plaintiff has been or will likely be injured as a result. 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_33 33
  9. 9. InsertSponsor False Advertising – Lanham ActLogohere ClaimUnder Section 43(a) of the Lanham Act, a falsestatement of fact occurs when the statement iseither:  Literally false; or  Literally true but likely to mislead or confuse*HOWEVER, “puffery”  (general, vague statements ofsuperiority understood as opinion and not facts) isNOT actionable 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_34 34
  10. 10. InsertSponsorLogo False Advertising StatementhereLiterally false statements may be:A statement that is or appears to be based on testing (30% tanner)A statement that is not based on testing but makes a claim as to some specific or absolute characteristic of  the  product  (“#1  sunscreen  recommended  by   dermatologist”  or  “organic”)Visual elements in the ad can change implication 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_35 35
  11. 11. InsertSponsorLogo False Advertising StatementhereProving that a statement is literally false:If based on testing, the Plaintiff must – Attack  the  validity  of  Defendant’s  testing directly: Test not sufficiently reliable Test did not support the claim or implication made – Show  the  Defendant’s  tests  are  contradicted  by   other scientific tests Rely on other testing Conduct own testing 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_36 36
  12. 12. InsertSponsorLogo False Advertising StatementhereProving that a statement is literally false:If NOT based on testing – Need evidence to prove literally false – Example: Ad showing orange squeezed directly into orange juice carton was held to be literally false 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_37 37
  13. 13. InsertSponsor Legal Analysis Of GOLDEN GLOWLogohere CampaignGet tanner faster with no burn!What does the ad imply?Is the claim true?Fact: Tests were conducted only on people with olive skin over a 3 hour period in March: – Does the data support the claim? – Was the test appropriate? Is the testing faulty? – Was the test sufficiently reliable? – Does it help to qualify the claim? 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_38 38
  14. 14. InsertSponsor Legal Analysis Of GOLDEN GLOWLogohere CampaignPlaintiff must produce evidence (survey, survey, survey!) of the message consumers take from the adIssue must be material (does it pertain to an inherent quality or characteristic of the product or service?)Commercial advertising or promotion required (this may not cover salespeople statements) 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_39 39
  15. 15. InsertSponsor Legal Analysis Of 2013 GOLDENLogohere GLOW Campaign“Get 30% tanner over the leading sunscreen!”How do consumers interpret the advertisement?Specific and measurable claim?Is it true? 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_40 40
  16. 16. InsertSponsorLogohere Puffing 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_41 41
  17. 17. InsertSponsorLogo What Is Puffing?hereGeneral or vague claims of superiority understood as opinions rather than factual representationsExaggerated advertisingBlustering or boastingNo reasonable buyer would rely upon the claimA subjective claim (puffery) is not actionable under Lanham Act false advertising 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_42 42
  18. 18. InsertSponsor Legal Analysis of GOLDEN GLOWLogohere Campaign – Puffing?“For a healthier looking tan!”Specific or absolute characteristics?Vague?Highly subjective? 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_43 43
  19. 19. InsertSponsor Legal Analysis of GOLDEN GLOWLogohere Campaign – Puffing?“Get  More.  Use  Less.”Vague?Highly subjective?Does it misdescribe specific or absolute characteristics? 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_44 44
  20. 20. InsertSponsor Legal Analysis of GOLDEN GLOWLogohere Campaign – Puffing?“Get  more.  Use  50%  less.”Specific?Measurable claim of product superiority?Apparently based on testingIs  there  a  comparison  to  a  competitor’s   product? Which competitor? 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_45 45
  21. 21. InsertSponsorLogo Real World Examplehere 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_46 46
  22. 22. InsertSponsorLogo Legal Analysis of Real World ExamplehereLiterally True:Tester:  “Ready  to  see  the  results.  So  that  is  the  photo  on  your  iPhone  5.”  Male  Diner:  “a  little  dark”Tester:  “That’s  the same photo on the Lumia 920. Bigdifference  right?” Deceptive? – Depends on testing methodology (was flash used for one and not the other?) – Appropriate  qualifiers  in  the  ad  as  to  the  “test”? 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_47 47
  23. 23. InsertSponsorLogo Legal Analysis of Real World ExampleherePuffing: – “The  thing  that  is  most  amazing  about  this   phone  is  the  camera.” – “The  camera  on  this  phone  is  better  than  the   camera  on  your  phone  [iPhone].” – “The  best  camera  phone  ever  built  period  .  .  .   takes  beautiful  photos  in  lowlight.” 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_48 48
  24. 24. InsertSponsorLogo Claims Under State LawshereConsider state laws – trademark infringement, unfair competition and dilution – Generally, the same analysis applies as that of federal claims – But may have additional requirementsTrade Libel (CA): the publication of a false statement of fact that is an intentional disparagement  of  the  quality  of  the  plaintiff’s   services or products, and the publication results in pecuniary damages 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_49 49
  25. 25. Other Avenues for ClaimsPICTURE OF PUFFER FISH 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_50 50
  26. 26. InsertSponsorLogo Federal Trade Commissionhere16 C.F.R. Section 14.15(b)-(c): “Commission  policy  in  the  area  of  comparative   advertising encourages the name of, or reference to competitors, but requires clarity, and, if necessary, disclosure, to avoid deception of the consumer  .  .  .  ” 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_51 51
  27. 27. InsertSponsorLogo FTChereProhibits false, unfair or deceptive advertisingAdvertisement does not have to be literally falseAn ad is considered deceptive if it contains a misrepresentation or omission that is likely to mislead consumers, and this deception is material to  the  consumer’s  choiceCompetitor or consumers may notify FTC to induce agency to take action 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_52 52
  28. 28. InsertSponsorLogo FTChere49 Fed. Reg. 30999 (Aug. 2, 1984): – “As a matter of law, firms lacking a reasonable basis before an ad is disseminated violate section 5 of the FTC Act and are subject to prosecution.”Substantiation required for express and implied claimsPre-existing data necessary 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_53 53
  29. 29. InsertSponsorLogo FTC v. SKECHERShere 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_54 54
  30. 30. InsertSponsor National Advertising DivisionLogohere (NAD) Set up by the Council of Better Business Bureaus Private, self-regulation of advertising industry There can be no pending lawsuit or issued judicial order in order to use this forum Resolved in a matter of weeks, rather than months or years Cheaper than litigation “Appeal”  process  available  to  the  advertiser If  the  “infringing”  advertiser  does  not  comply  with  the  NAD   recommendation, the NAD can submit to the FTC for review 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_55 55
  31. 31. InsertSponsor Other Federal RegulatoryLogohere Agencies Food and Drug Administration (FDA) – food product labeling, prescription drugs and cigarettes Securities and Exchange Commission (SEC) – stocks, bonds and financial instruments Department of Transportation (DOT) – air carriers and travel agencies Treasury Department (Bureau of Alcohol, Tobacco and Firearms) – alcoholic beverages 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_56 56
  32. 32. InsertSponsorLogo Dangers of Social MediahereStatements made on Facebook, Twitter and other social media forums could be considered false advertising in certain situationsAdopt a specific and expansive Social Media PolicyEducate your employees again and again 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_57 57
  33. 33. InsertSponsor Other Mitigation Strategies:Logohere InsuranceGeneral business liabilityAdvertising injury coverage – May cover defense of trademark infringement, false advertising, product disparagement claimsAdvertising nexusBeware of exclusions!Tender immediately 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_58 58
  34. 34. InsertSponsorLogo Take-Away PointshereUnderstand all claims made by your advertisement, both express and impliedEstablish the veracity of all claimsEnsure substantiation of all claims is reliable and appropriatePlan  ahead  and  have  a  “Plan  B,”  including   alternative ads if risk is unacceptable 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_59 59
  35. 35. Insert Sponsor Logo Panelists here Moderator: – Harrison Perla, Esq.  Harrison Perla, Director of Worldwide Legal Affairs at CEVA, Inc.  @HarrisonEsquire on Twitter Presenters: – Susan M. Natland, Esq. – Diane M. Reed, Esq.  Partner at Knobbe Martens  Partner at Knobbe Martens  Susan.Natland@knobbe.com  Diane.Reed@knobbe.com – Lynda Zadra-Symes, Esq. – Jeff Van Hoosear, Esq.  Partner at Knobbe Martens  Partner at Knobbe Martens  Lynda.Zadra-Symes@knobbe.com  Jeff.VanHoosear@knobbe.com 2013 ACC-SoCal In-House Counsel Conference #IHCC13 090701_‹#› 090701_60 60
  36. 36. 9th Annual In-House Counsel Conference January 23, 2013 (Los Angeles, CA) www.acc.com/chapters/socal/ #IHCC13 @KnobbeMartens 61 000000_61
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