Advertising Law

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

NAD Decision Offers Reminder About Use of Before and After Pictures

“Before” and “after” photos can provide powerful imagery for advertisers. But a recent decision from the National Advertising Division emphasizes that such photos are product performance claims which must be supported by substantiation.

The issue arose in a challenge brought by Coty Inc. against competitor Ontel Products Corporation, the maker of Pink Armor nail gel. On product packaging as well as in broadcast, print, and Internet advertising, Ontel used “before” and “after” product demonstrations and made express claims such as “Rock Hard Finish” and “Guaranteed to transform cracked, brittle and weak nails into healthy, stronger, brighter nails with just one coat, once a week.”

Coty argued the “before” and “after” photographs—which featured short and visibly damaged or diseased fingernails in the “before” picture, that were transformed in the “after” picture into perfectly manicured, shiny, pink, and noticeably longer nails—deceptively misrepresented the rate at which nails grow and implied Pink Armor was capable of healing diseased fingernails.

Ontel responded that the photographs were not misleading because of a disclaimer that the images were “dramatizations,” which customers are accustomed to seeing in advertising. The other challenged statements were puffery, the advertiser said.

Reviewing the ads, the NAD noted that Ontel provided no substantiation for the “before” and “after” pictures other than customer testimonials. But endorsements and testimonials cannot replace reliable evidence—such as product testing—as support for advertising claims, the NAD said.

“Regardless of how heartfelt the testimonials of the users in the commercial (or those of satisfied customers on Amazon.com) are, they are no substitute for reliable product testing demonstrating that customers who use the product as instructed will achieve results similar to the nails depicted in the ‘after’ photos on the product packaging and in the commercial.” And while dramatizations are “an acceptable means of conveying a message, [they] must nonetheless be accurate and substantiated.”

Ontel’s use of the “dramatization” disclaimer “does not insulate it from its responsibility to provide evidence that consumers will typically achieve nails similar to those depicted in the ‘after’ photograph when using the product according to its instructions,” the NAD said. As the advertiser failed to provide any evidence in support of the “after” images, the use of the “before and “after” pictures should be discontinued, the NAD recommended.

Two other product performance claims—“Your nails won’t peel, chip or crack no matter what the attack” and “Guaranteed to transform cracked, brittle and weak nails into healthy, stronger, brighter nails with just one coat, once a week”—met a similar fate.

“Regardless of how often applied or the number of coats, the advertiser has failed to provide any product testing to support the challenged performance claims,” the NAD wrote.

On a positive note for the advertiser, the NAD said the statements “Rock Hard Finish” and “With just one coat, once a week, it’s like getting a professional nail treatment at home!” constituted permissible advertiser puffing because no consumers would expect their nails to be hard as a rock.

To read the NAD’s press release about the decision, click here.

Why it matters: The decision serves as a reminder that “before” and “after” photographs are considered product performance claims. As such, “they must be supported, accurate and representative of the level of product efficacy that a reasonable consumer can expect to achieve,” the NAD wrote. “Further, actual product testing is the most direct and affirmative means by which to assess a product’s performance capability.”

FTC Schedules “Big Data” Workshop

Mark your calendar for September 15. The Federal Trade Commission has scheduled the  “Big Data: A Tool for Inclusion or Exclusion?” workshop that will explore the use of big data and its impact, including the impact on low-income and underserved customers.

“Big Data” is a hot topic for the FTC and Chairwoman Edith Ramirez voiced her concerns regarding the growing use of analytic techniques that companies use to categorize customers and make behavioral predictions.

“As part of the FTC’s ongoing work to shed light on the full scope of big data practices, our workshop will examine the potentially positive and negative effects of big data on low income and underserved populations,” she said in a statement.

Companies ranging from retailers to lead generators to financial institutions may categorize consumers “in ways that may affect them unfairly, or even unlawfully,” the FTC noted, perhaps by offering different prices or discounts to certain consumers or tailoring advertising for specific products.

To explore these issues in greater detail, the workshop will address how big data affects various populations, including specific questions such as:

  • How are organizations using big data to categorize consumers?

  • What benefits do consumers gain from these practices? Do these practices raise consumer protection concerns?

  • What benefits do organizations gain from these practices? What are the social and economic impacts, both positive and negative, from the use of big data to categorize consumers?

  • How do existing laws apply to such practices? Are there gaps in the legal framework?

  • Are companies appropriately assessing the impact of big data practices on low-income and underserved populations? Should additional measures be considered?

In addition to the delineated questions, the FTC invited comments, reports, and original research on the issue. Although pre-workshop comments are due by August 15, the general comment period will last until October 15.

To read the FTC’s press release about the workshop, click here.

Why it matters: In the agency’s press release announcing the workshop, the benefits of big data were also noted.  They include “advances in medicine, education, and transportation” to “more effectively tailored advertisements.” But advertisers should be aware that the agency remains focused on big data and is concerned that such tailored advertisements may be illegal.

Talk to Us About Mobile Security, FTC Says

Have something to say about mobile security? The Federal Trade Commission is listening.

Following up on a June 2013 forum, “Mobile Security: Potential Threats and Solutions,” the agency is now soliciting input from the public. The forum covered a wide range of topics, such as privacy and security threats to consumers—both actual and potential—and the various roles the members in the mobile ecosystem play with regard to security concerns, which include, among others, app developers and telecommunications companies.

The FTC asked for additional feedback on four specific areas:

  • Secure platform design. The agency asked how platforms can balance development with potentially malicious or privacy-infringing third-party applications, and whether any particular design approaches have emerged as more or less effective than others in achieving consumer privacy and security.

  • Secure distribution channels. What application review and testing methods have proven effective in detecting malicious applications, the FTC wondered, and do smaller players in the mobile realm have the resources to use such techniques? The agency is also curious as to whether limiting distribution of an application to a single channel offers security benefits.

  • Secure development practices. From a development perspective, the FTC queried whether consumers have the information they need to evaluate the security of a given application and whether there are ways to make security issues more transparent to end users.

  • Security life cycle and updates. What is the security life cycle of a mobile device, the agency asked, and what factors – such as policy, business, or technical – affect its length? Can a security life cycle be extended with updates? And do consumers have expectations about the security life cycle of their mobile devices?

The FTC will accept comments on the matter until May 30.

To read the FTC’s press release, click here.

Why it matters: Members of the mobile ecosystem are already aware of the agency’s focus after last year’s forum and a seminar earlier this year on mobile device tracking, a practice used by retailers to learn about consumers’ shopping habits – such as the length of time they spend on a given aisle or the frequency of their store visits – by using the unique identifiers from mobile devices. The FTC has indicated that a report on the subject of mobile security will be forthcoming.

Elvis Has Left the Building, but Not Beretta’s Ad Campaign

Hoping to capitalize on Elvis Presley’s fame, fortune, and fondness for guns, Italian firearms manufacturer Beretta launched an advertising campaign around the King’s imagery without consent, according to a new lawsuit filed by Presley’s estate.

Beretta developed a new shotgun for sporting clays, model 692, and created an Elvis-themed campaign to introduce it to the world. Describing the new gun as the “new legend in clay shooting,” Beretta advertised that Elvis would appear at events where the weapon was unveiled, including the largest gun show in the United States. “At every venue, Beretta had Elvis impersonators appear and/or perform and greet the gun enthusiasts attending such events,” according to the complaint, filed in Tennessee federal court. “In some cases, they had the Elvis impersonators pose with the weapons.”

Advertising posters featuring an image of a performer wearing an Elvis-style jumpsuit (and shooting vest and ear protectors) also attempted to associate the Beretta product with the performer, as did postings on the company’s Facebook page and other Internet sites, the estate claimed.

Gun enthusiasts and Elvis fans are aware of his interest in firearms and target shooting and the fact that he owned a Beretta firearm, the suit contended. “Beretta made a deliberate and intentional decision to tie its new product, model 692, to Elvis and trade on his popularity to generate as much publicity as possible when introducing model 692 to the public,” the complaint alleged.

The estate – noting that the Elvis name and image have been licensed for merchandise and advertisements for almost 60 years – sent a cease-and-desist letter to Beretta and filed suit after Beretta refused to pay compensation for its use of Elvis’s name and image.

The complaint alleges violations of the Lanham Act, as well as common law and Tennessee statutory publicity rights, and demands that Beretta remove all Elvis imagery and pay treble damages. 

To read the complaint in ABG EPE IP LLC v. Fabbrica d’Armi Pietro Beretta S.p.A., click here.

Why it matters: The use of celebrity likenesses without permission is a dangerous proposition for advertisers. Like Michael Jordan – who recently won the right to move forward in his publicity rights suit against a grocery store chain that allegedly traded on his rights in an ad commemorating his induction into the Basketball Hall of Fame – and Katherine Heigl – who just filed a $6 million suit against Duane Reade after the store tweeted an image of her carrying store-branded bags – celebrities (even deceased celebrities like Elvis) are quick to protect their publicity rights.

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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