Advertising Law - Jan 25, 2013

by Manatt, Phelps & Phillips, LLP
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In This Issue:

Energy Drink Draws the Ire of the NAD

The National Advertising Division is wading into the controversy surrounding energy drinks.

The story began when The New York Times ran an article documenting a study that found 24 percent of drinkers of Living Essentials’ 5-Hour Energy drink experienced a “moderately severe” crash after consuming the beverage despite the company’s “no crash later” claim. In defending itself, the company said that the NAD reviewed its advertising in 2007 and found it substantiated the claim.

In that review, Living Essentials argued that because 5-Hour Energy contains no sugars, it does not have a “crash” effect like its competitors. The company submitted a randomized, three-arm comparative, controlled, double-blinded, independent study comparing 5-Hour Energy with other energy drinks, including Red Bull and Monster. According to Living Essentials, the study’s results supported its “no crash” claims by establishing that its drink had a “gentler letdown” than competing products.

However, the NAD disagreed.

“NAD found that this study is sufficient to support a clearly qualified claim that 5-Hour Energy results in less of a crash effect than Red Bull and Monster. NAD, however, noted that this study did not support the advertiser’s unqualified claims that 5-Hour Energy results in ‘no’ crash effects. Accordingly, NAD recommended that the advertiser discontinue those claims.”

Although Living Essentials said it intended “to modify its advertising to accommodate NAD’s concerns” in its advertiser’s statement, the company continued to use the “no crash later” claim.

When contacted by the Times about the consumer study, a spokesperson for Living Essentials said the company had amended its “no crash” claim after the 2007 review by including an additional label disclaimer that said “no crash means no sugar crash.” The spokesperson told the paper that the NAD “found all of our claims to be substantiated” based on the modification.

But the NAD responded that Living Essentials “mischaracterized” the 2007 decision. Andrea Levine, Director of the NAD, told the Times that the group plans to reopen a review of the company’s advertising claims and potentially refer the company to the Federal Trade Commission. “We recommended that the ‘no crash’ claim be discontinued because their own evidence showed there was a crash from the product,” she said.

Companies “are not permitted to mischaracterize our decisions or misuse them for commercial purposes,” Levine added.

Why it matters: With dozens of lawsuits pending and calls for regulatory action by consumer groups and legislators alike, the makers of energy drinks have found themselves on the defensive lately. By mischaracterizing the NAD’s findings, Living Essentials now faces a review of its advertising claims by the self-regulatory body and the potential for a referral to the FTC if the company fails to adequately respond.

User Files TCPA Suit Against Yahoo

An unwanted text message is the subject of a new class action lawsuit filed against Yahoo.

According to the complaint, San Diego resident Rafael David Sherman received a text message from Yahoo on January 7 at 11:07 a.m. The message read, “A Yahoo! user has sent you a message. Reply to that SMS to respond. Reply INFO to this SMS for help.” Moments later, Sherman received a text from a Yahoo user reading, “hey get online i have to talk to you.”

Sherman, “unaware” that Yahoo would send him unsolicited text messages, filed a nationwide class action suit the next day on the grounds that Yahoo’s message violated the Telephone Consumer Protection Act. The class, if certified, would consist of consumers who received similar unwanted messages sent without prior, express consent within four years prior to the filing of the complaint.

The suit, filed in California federal court, alleged both negligent and willful violations of the Act and requested statutory damages ranging from $500 to $1,500 per violation, respectively, as well as injunctive relief.

To read the complaint in Sherman v. Yahoo, click here.

Why it matters: Yahoo is the most recent target of a TCPA class action. Tempted by the statutory damages, plaintiffs have filed dozens and dozens of suits over the last few years alleging the receipt of unwanted text messages. Seeking to avoid the potential of up to $1,500 in statutory damages per violation, companies have settled similar suits for amounts ranging from $10 million (Lucky Jeans) to $24 million (Sallie Mae) to $47 million (Jiffy Lube).

Yogi Can’t Bend the Law for Copyright Protection

A series of yoga poses and breathing exercises cannot be copyrighted, a federal court judge in California recently ruled.

In 1971, Bikram Choudhury developed a series of 26 yoga poses and 2 breathing exercises that are performed in the same order for exactly 90 minutes in a room heated to 105 degrees Fahrenheit. Choudhury claimed his sequence helps avoid, correct, cure, heal, and alleviate the symptoms of a variety of diseases and health issues.

Choudhury offers classes and training to others to teach his system; he also wrote books describing and depicting his yoga sequence.

But when two instructors opened a number of yoga studios offering the same sequence in the same manner without his permission, Choudhury sued. He alleged trademark and copyright infringement as well as unfair competition and breach of contract.

Finding that the series of poses is “a system or procedure,” the court granted partial summary judgment for the defendants, ruling that Choudhury’s sequence is not copyrightable. “Copyrights cover an author’s creative expression of facts and ideas – the facts and ideas themselves are not protected,” U.S. District Court Judge Otis D. Wright, II, wrote.

Only certain categories of works may be copyrighted, and Choudhury’s sequence did not fall into any of the protected categories, such as, literary works; musical works; dramatic works; pantomimes and choreographic works; pictorial, graphic, and sculptural works; motion pictures and other audiovisual works; sound recordings; and architectural works.

Choudhury contended that his series could be a pantomime or choreographic work because it consists of “significant gestures without speech.” But the court said that a “mere compilation of physical movements does not rise to the level of choreographic authorship unless it contains sufficient attributes of a work of choreography.”

Choudhury’s poses “hardly seem to fall within the definition of a pantomime or choreographic work because of the simplicity of the sequence and the fact that it is not a dramatic performance,” Judge Wright concluded.

Compilations of exercises also are not copyrightable, he added. “It is not enough that the collection was selected, coordinated, and arranged in such a way that makes the work as a whole an original work of authorship,” the court said. “The Copyright Office made clear that ‘exercise is not a category of authorship in section 102 and thus a compilation of exercises would not be copyrightable subject matter.’ Thus, even if the manner in which Choudhury arranged the sequence is unique, the sequence would not be a copyrightable subject matter because individual yoga poses are not copyrightable subject matter.”

To read the complaint in Bikram’s Yoga College of India v. Evolation Yoga, click here.

Why it matters: Although Judge Wright granted partial summary judgment, he reserved for a later date the issue of whether the defendants may be infringing Choudhury’s copyright by orally reciting the words contained within his copyrighted book to their yoga students. “For instance, if a novel is read out loud to a public audience (assuming that the portions read are original), this might be considered copyright infringement,” he wrote.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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