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.

Increased Scrutiny on Notice and Choice for Use of AD Profiling, Especially Using Mobile Location Data

If your marketing department’s app-etite for serving geotargeted ads via mobile app is growing, read this article from our privacy colleagues Taylor Bloom, Alan Friel, and Niloufar Massachi.  Self-regulators and local law enforcement expect clear notice before a customer downloads an app to make sure the Minority Report ad delivery treatment is accepted and seen as a feature and a benefit. Their article gives new best practices on how to accomplish clear and conspicuous disclosure and reviews some current enforcement activity if your marketing friends are like ours and ask “yeah what’s the real risk here?”

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Judge Sours on Natural Class Action Lawsuit Against Starbucks Gummies

Class action lawsuits alleging misleading advertising of food and beverage products show no sign of abating anytime soon. So we have to give a shout out once in a while when the good guys score a win and common sense appears to prevail.

This happened recently in a class action alleging that Starbucks had misleadingly claimed that its sour gummy candies were only naturally flavored. To Starbucks’ credit, the gummies are actually naturally flavored. Plaintiff, however, purported to be outraged by the fact that the gummies contained fumaric acid, an artificial ingredient that helps make the gummies sour. This, in turn, led to the question debated by philosophers reaching as far back as Aristotle – “is sour a flavor?” Continue Reading

The Scope of CDA and DMCA Protection for Online Services Continues to Evolve

The Communications Decency Act (CDA) and Safe Harbor provisions of the Digital Millennium Copyright Act (DMCA) give some protections to operators of websites and other online services from some third-party claims arising out of user generated content.  The law is continuing to evolve.  Click here to see a terrific summary of notable cases and legislation posted on the BakerHostetler Copyright, Content, and Platforms blog written by Alan Friel and Zoe Steinberg.  In short, online services that permit users to post and display messages, photos, profiles, reviews and other content should carefully administer user content programs to try to qualify, as much as practical, for the protections available under the CDA and DMCA. While there are gaps in the scope of protection and not all eligibility requirements may be met in all instances, these protections are important tools for online services to reduce their user content risks.

Supplement Sellers Beware

Recognizing the rapid growth and penetration of dietary supplements into all demographics of American consumers, the Food and Drug Administration (FDA) is viewing at least some dietary supplements as belonging to “the Wild West,” and intends to be Wyatt Earp. Or supplements are the Wild Wild West and the FDA is Will Smith, if that’s your thing. Recently, the agency announced an initiative to increase regulation of dietary supplements, reacting to what it describes as “the growth in the number of adulterated and misbranded products” on the market. At the same time, the agency was careful to say that “most players in this industry act responsibly.” Adding bite to its bark, the FDA took action the same day it made this statement, issuing 12 warning letters and five online advisory letters to offending companies. The enforcement effort specifically targeted dietary supplements that make unlawful drug claims related to treating Alzheimer’s and other diseases.  Continue Reading

Welcome.

Change, they say, helps keep you young. We certainly hope so. We are very excited about our new home at BakerHostetler and the opportunity to add a blog to the Advertising, Marketing and Digital Media team’s highly regarded weekly newsletter. (If you aren’t already receiving the newsletter, you should be. Click here to subscribe.) Anchored by partners Linda Goldstein and Amy Mudge, BakerHostetler’s adlaw team has decades of experience and knowledge. Many of the team’s members will contribute timely, in-depth and insightful analysis of some of the more interesting developments in advertising and marketing law.

Our BakerHostetler colleagues are also serial bloggers, covering topics such as privacy, intellectual property and class actions, and we hope you’ll follow some of them as well. We look forward to rekindling our blogging relationship with many of you and to attracting new readers.

— Amy Mudge and Randy Shaheen

I Just Want to Say One Word to You – Just One Word: CBD

Picture of CBD oilIf the movie The Graduate were rebooted today, this would undoubtedly be the advice that Mr. McGuire would give the young Benjamin. However, a lot of legal and regulatory questions still swirl around the future of cannabidiol (CBD) oil products. At the GMA Conference earlier this week, Sharon Mayl, senior advisor for policy at the Food and Drug Administration (FDA) – and one of the individuals tasked with overseeing the FDA’s efforts with regard to marijuana and related products – gave an assessment of where things currently stand with regard to CBD.

Mayl noted that the issues regarding CBD products can be complex and confusing and that currently there is an interagency team at the FDA meeting regularly on marijuana issues. She acknowledged that the December 2018 Farm Bill eased legal impediments to the marketing of hemp-related products but nothing in the bill removed these products from FDA authority or oversight, so any type of therapeutic benefit claim associated with CBD oil would be considered a drug claim by FDA. Continue Reading

Are Reports of the Federal Trade Commission’s Death Greatly Exaggerated?

Federal Trade Commission Doorway SignThe multiverse is abuzz about the recent Third Circuit ViroPharma decision and other like-minded courts that have placed significant limitations on the ability of the Federal Trade Commission to obtain an injunction in federal court against allegedly unlawful behavior that companies have already ceased.

The FTC Act as originally written required that the agency bring any enforcement action in an administrative proceeding. However, as anyone who has ever been involved in an administrative proceeding knows, such proceedings can move slowly (think “watching paint dry”) and do not provide for preliminary injunctive relief before any final order is issued even in situations where there could be considerable harm to consumers from an ongoing practice. Continue Reading

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