Rare Enforcement Notice Issued by UK Advertising Regulator for “Hot Air” Ads

On 9 March 2023, the Advertising Standards Authority (ASA) took the rare step of issuing an Enforcement Notice against any advertiser distributing ads for electric plug-in mini-heaters that claim – directly or indirectly – that such products are a viable alternative to central heating.

As noted in our previous blog, the ASA recently banned a number of ads which suggested that electric plug-in mini heaters would save consumers money while quickly and efficiently heating a room. The regulator considers such claims to be materially misleadingly and a clear-cut breach of the mandatory CAP Code that all UK advertisers must comply with. The watchdog has urged all advertisers operating in this area to take immediate action to ensure that all advertising complies with the rules.

The ASA has threatened the use of a referral to its legal backstop: Trading Standards, should any advertiser fail to comply with its requirements. It is very rare for the ASA to refer an advertiser to Trading Standards, such measures being reserved for only the most serious issues of non-compliance where the ‘teeth’ of court fines and criminal penalties are necessary to secure a level playing field for consumers. This is because the ASA itself does not have the power to issue fines or impose criminal sanctions.

The continued focus in this area alongside greenwashing claims, shows that the UK advertising regulators are on the look out to protect consumers during the cost-of-living crisis.

For more information contact the Global Head of our Advertising, Media and Brands practice, partner Carlton Daniel, or associate, Sera Kaplan.

National Advertising Division’s 2022 Annual Report: An Advertising Compliance Roadmap for the Year Ahead

By Katy Spicer, Marisol Mork, Kyle Dull, Eleanor Hagan and Ekaterina Long on March 20, 2023 Posted in Advertising, Data Protection, Healthcare, Internet, Marketing, Privacy, Social Media, US

“[N]o legacy is so rich as honesty”¹ might fairly summarize the Federal Trade Commission (FTC)’s theme to the advertising industry for 2023, as gleaned from the National Advertising Division (NAD) 2022 Annual Report. “FTC leadership,” the NAD Report elaborates, “sent a consistent, strong message that national advertisers should take a hard look at their own advertising” to create marketing from a consumer protection and truth-in-advertising standpoint. Nothing less will do.

The NAD Report makes clear the FTC’s focus on ensuring that advertisers improve consumer trust in their practices going forward. Consistent with this message, the FTC has been busy rulemaking to address data protection and privacy, disclosures, endorsements and reviews, children’s advertising, and health-related product claims. And while this rulemaking is underway, NAD continues to ensure its self-regulatory process is consistent with FTC priorities and the evolving rules of the road.

If you are part of the advertising industry or have been tasked with ensuring your company’s advertising compliance, this post will be useful in highlighting NAD’s guidance to use as roadmap for the year ahead.

Spell Out Percentages in Your Stipulated Judgments

By Joseph Grasser on March 9, 2023 Posted in Copyright, IP Litigation, US

An all too typical fact pattern involves a small-time ne’er-do-well infringing on the rights of a much bigger corporation. When the corporation is forced to bring a lawsuit, the “little guy” infringer cries poverty and seeks a settlement. An oft-used tactic of corporations is to settle the matter quickly (and before too much in attorneys’ fees has been incurred) for a relatively modest sum (or even no money at all) while also including a mechanism by which any breach of the settlement agreement triggers the filing of an agreed judgment for a large sum of money.

A recent Ninth Circuit decision, In Re Richard L. Priddis, 2023 WL 2203562 (9th Cir. 2023) (Unpub.), highlights an under-examined issue with those judgments – specifically, the ability of the judgment holders to enforce them via involuntary bankruptcy when there are multiple plaintiffs/claimants.

Too Good a Deal? JC Penny Hit with Class Action Suit Over False Reference Pricing

By Marisol Mork and Eleanor Hagan on March 6, 2023 Posted in Advertising, Consumer Law, e-Commerce, Internet, Social Media, Technology, US

Competition in the world of online sales is intense, but companies that used inflated original prices to lure customers face consequences.

JC Penny, for example, has been hit with a class action lawsuit in the Southern District of California over its alleged advertising practice of using “false reference pricing.” The three-count complaint claims the nationwide retailer violated California’s Unfair Competition Laws, False Advertising Laws, and Consumer Legal Remedies Act because of its supposed sale pricing practices. Do the claims have merit?

The plaintiff, Maria Carranza, contends that JC Penny is engaging in a scheme to fabricate false “original” (or “reference”) prices before offering products for sale at a supposed “discount.” Carranza claims that JC Penny falsely advertises its products on its e-commerce website by listing a high reference price and the corresponding sale price. The issue? The products, Carranza claims, were never sold at the listed reference price as advertised. Rather, as stated in the Complaint, the “original” prices are “false or severely outdated reference prices, utilized only to perpetuate Defendant’s false discount scheme.” JC Penny faced a similar “price anchoring” class action suit in 2015. Part of that proposed settlement provided for “improvements” to the retailer’s price comparison advertising policies and practices, including “periodic monitoring and training programs” designed to ensure compliance with California’s advertising laws.

Beware Trademark Squatters: The New Draft of the Chinese Trademark Amendment Aims at You!

By Paolo Beconcini on February 27, 2023 Posted in China, Trade Mark, Trademarks

Is this the time we can really see a change in the fight against Chinese trademark squatters, or are we just adding burdens to legitimate right holders?

The China National Intellectual Property Association (CNIPA) has recently published a draft amendment to the Chinese Trademark Law. The document is still under examination and has been disclosed to the public for comments. If adopted in its current version and without further modifications, this amendment would have a considerable impact on many aspects of trademark law and practice in China. One of those aspects is the never-ending fight against trademark squatters.

Trademark squatters are Chinese individuals or companies that hoard the trademarks of others without their consent. Relying on the online database of the Chinese IPO (online since 2005) and the first-to-file principle where prior use does not grant trademark rights in China and the first-to-file wins the right, they have built a huge industry based on theft and blackmail. Various attempts have been made in the past versions of the Chinese Trademark law to reduce the impact of this phenomenon. Among them are: the recognition of trademark hoarding as a ground for invalidation, the non-use of the stolen mark as a defense against possible trolling, the increase of recognition of bad faith in opposition proceedings, just to name the most relevant. However, none of them was able to reduce the level of squatted filings.

Now, with this amendment, the CNIPA seems to take a closer aim at trademark squatting by introducing revolutionary legal concepts in the trademark filing and maintenance process, such as actual or imminent use at the time of filing an application and proof of use to maintain a registration.

Reining in The Western District of Texas? Recent Developments Affecting That Court’s Status As A Patent Infringement Filing Hotbed

By Nicholas Zalany on February 15, 2023 Posted in IP Litigation, Patent Litigation, Patents, Uncategorized, US

In a unanimous February 1, 2023 Order, a Federal Circuit panel granted Google LLC’s petition for a writ of mandamus directing the U.S. District Court for the Western District of Texas to vacate its order denying transfer of patent infringement claims to the Northern District of California. As discussed here, this precedential decision signals the Federal Circuit’s intent to support the transfer of cases that have little to no connection with the forum where filed and has implications for litigants and their strategies, particularly in light of recent standing orders issued by the Western District of Texas on the assignment of patent cases.

The Federal Circuit Decision

The Federal Circuit found that the District Court clearly abused its discretion in denying Google’s motion to transfer. Looking at the private and public interest factors that the Fifth Circuit has considered in the transfer context, all of them either weighed in favor of transfer or were, at best, neutral.

Intellectual Property Strategies for Development of AI in China

By Paolo Beconcini on February 15, 2023 Posted in Artificial Intelligence, China, Cybersecurity, Technology

China is at the forefront of the AI development race. While many see China’s AI policies as a cover to curb freedoms and control society, the reality is that China is an active AI developer in a thriving market for AI applications in both the trade and industrial sectors.

There are, however, several challenges related to obtaining IP protection for algorithms in China. Lack of IP protection may expose the development to theft, infringement and misuse by Chinese competitors and it may result in huge economic losses for the developers. Navigating these challenges in the proper way will be key to the selection of the appropriate business model for the exploitation and commercialization of the algorithms (e.g. licensing, assignment, JVs, cooperation and co-development etc.) in China.

Before entering into cooperation agreements with businesses, developers and government institutions, including R&D centers or universities in China, foreign rights holders should conduct proper due diligence of their future partners and the related projects should be secured by registration of any relevant IP (patents and trademarks in primis) and written agreements to ensure that joint ownership, licensees, pledges or transfer of IP rights derived from the cooperation are properly regulated. This will help avoid surprises from the application of unfamiliar Chinese laws and regulations.

Greenwashing: A new UK Regulator Investigation and Further Guidance for Businesses

By Carlton Daniel and Dannielle Jones on February 13, 2023 Posted in Uncategorized

The authors wish to thank Eben Kurtz for his contributions to this post.

In the first few months of 2023, the UK Regulator – the Competition and Markets Authority (“CMA”) – continues to be active in cracking down on misleading green claims, this time targeting the fast-moving consumer goods industry (“FMCG”).

At the end of January, the CMA announced that it is investigating FMCG for the use of green claims in labelling, advertising and marketing material. In particular, the CMA is concerned with “broad eco-statements“, misleading claims about the recyclability of a product and brands labelling themselves as “sustainable.” A wide range of products potentially fall within the remit of the investigation, with the CMA describing FMCG as “essential items used by people on a daily basis and repurchased regularly, such as food and drink, cleaning products, toiletries, and personal care items.”

WEBINAR: How to Make the Best Out of Your Employees Inventions – Applicable Rules and Best Practices for Global Companies

By Janice Rice on February 8, 2023 Posted in Europe, France, Germany, Patents, US, Webinar

As the global economy continues to integrate, companies are wrestling with how to manage innovations across borders. Given that most patentable inventions are developed in-house, can a global invention policy help attract and keep the most innovative employees? Are assignment agreements with employees appropriate regardless of where the innovation originates?

Join our panelists Catherine Muyl, Marion Cavalier, Jens Petry, Janice Rice and Dr. Sandra Mueller on Wednesday, March 1 at 11:30 a.m. – 12:30 p.m. EST for a timely webinar on the key differences between countries – including France, Germany, the US and Japan – and how to work across business units and boundaries to avoid the pitfalls that may arise from complex local rules.

Key topics will include:

Applicable rules for employees’ inventions in major R&D jurisdictions
Best practices at local and global levels
How to deal with inventions developed by contractors and founders
Managing local patent office’s filing requirements

For additional information and to register, click here.

UK Regulator Bans Misleading “Hot Air” Ads

By Carlton Daniel and Sera Kaplan on February 1, 2023 Posted in Advertising, ASA, UK, UK Advertising Standards Authority

The cost-of-living crisis is a concern for all consumers, with many carrying out research to understand ways that spending can be reduced. One major issue during the cold winter days is the cost of heating bills.

The Advertising Standards Authority (ASA) has banned four separate adverts which relate to electric plug-in mini heaters. All the ads suggested that mini heaters are a viable replacement to conventional heating via gas. The ads implied that the products would save consumers money while quickly and efficiently heating a room.