FTC MUSA Remedy Wars Continue

We recently wrote about the Federal Trade Commission’s (FTC’s) recent approval of a pair of Made in USA (MUSA) settlements. It is also worth noting that the approvals drew a statement and a dissent from the Commission’s Democrats and a concurrence from Chairman Simons. As is often now the case, the dispute made its way onto Twitter, and Commissioner Slaughter became something of a Twitter folk hero for declaring that comments filed in response to the proposed settlement had caused her to change her mind. (The folks who handle comments filed at the FTC may find themselves a bit busier going forward.) Continue Reading

Judge Rules That USDA’s Approval of “Natural” Label Claims Protects Same Claims Used in Advertising

On April 8, 2019, a judge in the Superior Court of the District of Columbia, Civil Division, granted summary judgment to Hormel Food Corporation (Hormel) in a case filed by the Animal Legal Defense Fund (ALDF) on the grounds of standing and pre-emption, confirming the rule established in jurisdictions across the country that the approval of “natural”-related claims by the United States Department of Agriculture (USDA) pre-empts state-law allegations of false and misleading advertising when the manufacturer has used the terms as approved. Continue Reading

20 Years Young: The Maturing of COPPA in a Privacy-Conscious Age

We cover children’s privacy and advertising weekly. However, in light of COPPA’s recent 20th anniversary, and in the wake of CARU’s biggest-yet West Coast CARU conference, ADLaw has enlisted CARU super lawyer Katie Goldsteinto help us recap the past 2.5 decades of KIDlaw.

1998: A Concern for Children’s Privacy Was Born

From the moment home computers had the capacity to connect to the Internet, or in other words about the time Al Gore invented the Internet, children had the ability to use these technologies to access websites and online services. In the 1990s, concerns about children’s privacy and safety online arose amid fears of pedophile creepers and abusive online marketing practices.

The Children’s Advertising Review Unit (CARU), founded in 1974, has always been on the forefront of the effort to safeguard children’s privacy. CARU is the self-regulatory arm of the children’s advertising industry, tasked with promoting truth in children’s advertising by reviewing and evaluating child-directed ads in all media to ensure they are truthful, accurate and appropriate. CARU also monitors online privacy practices as they affect children. Continue Reading

The Rise and Fall of Statistical Significance

Dealing with clinical studies can be one of the more challenging aspects of being an advertising/marketing lawyer, particularly if you are one of many lawyers who took the political science/econ route to law school. However, there’s one question that we all know to ask: Are the results clinically significant? If the answer is no, the conversation shuts down and the study is set aside. If the answer is yes, things are definitely looking up.

So why then are we writing a blog on statistical significance? Are we testing a cure for chronic insomnia? Bear with us if you can. We promise to try to make this interesting. And more importantly, the one thing you always thought was easy about dealing with clinical studies may be about to get hard.  Continue Reading

COPPA Safe Harbor Hit by Storm

Administrations come and administrations go, but the FTC and self-regulation have had a long-running love affair. But can there be too much of a good thing? The FTC has long been an enthusiastic cheerleader and active supporter of self-regulatory programs such as NAD. And the bloom doesn’t appear to be off that rose. However, a recent speech by Commissioner Chopra suggests there might be limits to the Commission’s appetite for self-regulation.

The object of Commissioner Chopra’s scrutiny is the safe harbor provision under the Children’s Online Privacy Protection Act (COPPA). The Safe Harbor program essentially outsources COPPA compliance and enforcement. Under the provision, an organization can seek approval from the FTC to run a COPPA Safe Harbor program. Operators of websites subject to COPPA can then pay a fee to have their COPPA compliance assessed and hopefully certified. Once the compliance is certified, operators are protected from being charged by the FTC with violating COPPA. Continue Reading

What’s In the Box? FTC Solicits Public Comments Regarding Video Game Loot Boxes Amidst Uncertainty

Imagine you are playing golf, badly, and at the fourth hole a caddy appears out of nowhere with a large box and an offer. In exchange for $20, you can open the box, which may contain high-tech clubs to improve your game, fashionable new gloves or a voucher for a free round. Perhaps you hesitate, uncertain whether paying $20 will be worth the potential reward, but those new golf clubs are tempting. Now imagine a similar offer, but digital and within one of your favorite mobile games, where items are nontangible and there is more uncertainty around reusability. In the gaming world, these offers are referred to as “loot boxes.”

On Aug. 7, 2019, the Federal Trade Commission (FTC) will hold a workshop on issues related to loot boxes. The workshop will feature industry representatives, consumer advocates, trade associations, academics and government officials. The topics to be examined include (1) loot box in-game transactions and gameplay impact; (2) behavioral research regarding digital transactions, including children’s behavior; and (3) consumer awareness and education relating to loot box transactions, mechanisms, marketing and financial commitments. Continue Reading

FDA Slow but Steady on CBD

It seems like CBD oil is all we talk about, but honestly, it’s almost all that our clients are talking about. If your marketing folks haven’t come to you yet with an idea to add CBD oil to something, they will almost certainly show up soon.

In this latest installment, the FDA giveth, and the FDA taketh away. That’s likely how the cannabidiol (CBD) industry is feeling right now in response to the FDA’ statement from April 2. We expect, however, that most sellers of the hemp-derived substance, which was legalized at the federal level in certain circumstances in the 2018 Farm Bill, will be content with this approach, considering that the agency is seeking to clarify the regulatory status of CBD products.  Continue Reading

To Ensure a Complete Release, Address California’s New Section 1542

Civil Code Sections 1541 and 1542, California laws that govern the extinguishment of certain obligations, were recently amended by Senate Bill No. 1431. The subtle amendments made to these code sections not only impact ordinary settlement agreements but also impact a variety of other releases that intend to be a complete release of all potential claims, known or unknown. These other releases include sweepstakes prize acceptance forms, liability releases for potentially dangerous activities (think zip lines), rights of publicity, life rights release for TV and releases for film and advertising.

To give some background, Section 1541 allows for a party to be released from obligations to another party. Section 1542 clarifies that a general release does not extend to claims that a party does not know about at the time a release is signed. Therefore, if parties agree to a general release but in fact intend to release all possible claims, then the release must specifically waive all known and unknown claims as well as waiving Section 1542. Continue Reading

A Quick Hit on CBD – Departing Commissioner Gottlieb Talks CBD With Congress

Picture of CBD oilDeparting Food and Drug Administration (FDA) Commissioner Gottlieb reiterated many of the things we have blogged about here recently in his testimony before a Senate subcommittee this past Thursday. Among other things, Gottlieb acknowledged that:

  • The FDA was exercising enforcement discretion with respect to the multitude of CBD oil products in the marketplace that the FDA considers to be unlawful. Gottlieb cited over-the-top claims such as those relating to cancer or Alzheimer’s, as those might prevent patients from seeking traditional therapies.
  • The FDA was actively exploring various options to create a “pathway” that makes the use of CBD oil in foods and dietary supplements lawful. As we previously blogged, the use of CBD oil in an approved drug prior to its use in food or dietary supplements creates a regulatory problem. The FDA has said it can use rulemaking to potentially solve the problem, but that could take several years.
  • Gottlieb reiterated his earlier statement that the best solution may be legislation. He said there is a high-level team at the FDA trying to think through creative solutions, including potential legislation.
  • Gottlieb noted that one potential legislative solution might be to permit CBD oil in foods and dietary supplements at specific concentration, potency and purity levels, presumably well below the levels found in its use as a drug ingredient. Gottlieb cited fish oil as an ingredient that is present in both dietary supplements and drugs, though fish oil’s “dual use” did not require legislation or FDA rulemaking because fish oil had been used in dietary supplements prior to its approval as a drug, and so was exempt from the rule barring CBD oil’s use in food and dietary supplements.

Meanwhile, another national retailer jumped on the CBD oil bandwagon, announcing that it will begin selling nonedible CBD oil products in nine states. No doubt pressure will continue to build on Congress and the FDA to find some type of regulatory or legislative solution to broaden the type of CBD oil products that can be legally sold.

CBD: Coming to a Store Near You TBD

There are both positive and negative developments regarding the likelihood of widespread legal sales of CBD oil products.  Last week, a major retailer announced that it will begin selling cannabidiol (CBD) creams and salves in eight states. As a reminder, federal law now permits hemp production under the 2018 Farm Bill if the product contains less than 0.3 percent THC, and the same legislation legalized CBD derived from that hemp. The substance is still subject to a hodgepodge of regulation at the state level, however.

However, the signals regarding imminent widespread brick and mortar sales of CBD oil products are mixed at best. At the federal level, the Food and Drug Administration (FDA) prohibits adding CBD to foods or marketing it as a dietary supplement. This limitation to over-the-counter products is one of the biggest roadblocks facing the CBD industry, and it may be a difficult one to remove. One solution to this could be new regulations from the FDA on CBD, which outgoing FDA Commissioner Scott Gottlieb suggested in his testimony before Congress in February. However, more recently, in an interview at the Brooking Institution, Gottlieb stated that it could take years for the FDA to implement regulations and that a quicker solution may instead be a new law addressing CBD. Relying on action from Congress is always risky, but that might be what it takes for CBD to legally enter the market as an ingredient in a food or supplement. (Of course foods containing CBD, while illegal, are not hard to find. Our favorite is CBD seltzer water.)

At the state level, while some states are easing restrictions other states and local communities continue to take action or threaten brick and mortar retailers of CBD oil products.  For example, in Ohio, CBD sales are prohibited outside of licensed dispensaries, and the Ohio Department of Agriculture is organizing an “embargo” of CBD products through local authorities. In other jurisdictions, such as Maine and New York City, health inspectors are focusing specifically on edible products containing CBD and removing them from shelves. We’ll keep you updated of further developments on this blog, as federal and state governments continue to figure out how they’ll approach the legalization of CBD.