The NAD recently announced a decision in which it analyzed whether consumers would interpret claims in two commercials about Perdue’s happy chickens and organic practices to apply to all of the company’s chickens or only some of them. Even if you aren’t trying to measure the satisfaction of your own poultry, the decision includes some valuable insights into the NAD’s views on “line claims.”

One commercial shows Jim Perdue and his sons, each wearing a shirt with a Perdue logo, going about their daily tasks. They talk about “organic free-range chickens” that are “non-GMO, 100% vegetarian-fed, raised with no antibiotics,” as they drive up to a barn with the Perdue Harvestland Organic logo. The general Perdue brand logo appears on screen before flipping to the Perdue Harvestland Organic logo, as a voiceover states: “Perdue. Raising more organic chickens than anyone in America.”

One key question for the NAD was whether the commercial communicated that all Perdue chickens are raised organically (which is not true) or only that Harvestland Organic chickens are raised organically (which is true). Although the advertiser provided a survey demonstrating that consumers only took away the latter, narrower, claim from the commercial, the NAD found flaws in the survey and ultimately determined that consumers could interpret the commercial more broadly.

The NAD noted that the commercial featured numerous “visual and verbal general brand references to Perdue, while presenting only momentary visual references to Harvestland Organic, the sub-brand to which Perdue’s organic claim pertains.” In addition, although “Perdue” was mentioned in the audio, the sub-brand was not. Because of this, “consumers may understand all of Perdue’s chickens to be organic, rather than only the ones it offers through its Harvestland Organic sub-brand.”

If you make a claim that applies only to some of your products, you need to be careful not to suggest it applies to your whole line products. Whether or not your ad will be read to present a “line claim” will depend on various factors, including whether you make general brand references and what products you show. This case demonstrates that the line – no pun intended – between line claims and narrower claims isn’t always very clear, so it pays to be careful.

The Grim Reaper, a mummy, a mad scientist, and a werewolf are riding together on a train after work. No, that’s not the start of a joke, but it is the start of a funny commercial for Spectrum TV. The four characters talk about their weekend plans, as a light rain pelts the train’s windows. When the Grim Reaper laments that his kids are upset because the “satellite dish went out in the rain . . . again,” the mummy asks: “How can they sell something that doesn’t always work in the rain?” The mad scientist observes: “It’s gonna rain eventually, right?” The commercial ends with the following words on the screen: “TV that cuts out in the rain is evil. Spectrum is Reliable.” Then: “Satellite TV Bad. Spectrum Good.”

DirecTV challenged the commercial before the NAD, arguing that it falsely disparaged satellite TV as being highly unreliable in rainy weather. In its defense, Spectrum provided a survey that asked satellite customers about their TV service and experience with weather-related outages. Spectrum argued that the survey demonstrated that “rain fade” is not a rare occurrence for satellite TV subscribers, that it occurs often enough to be a significant issue with satellite service, and that it is a source of frustration for subscribers, if they experience an outage.

The companies argued about how consumers would interpret the commercial. Spectrum argued that the commercial conveyed a narrow message that satellite TV doesn’t always work in the rain, and that outages can frustrate customers, two things that were proven by the survey. DirecTV, however, argued that consumers were likely interpret the commercial to more broadly suggest that satellite TV is highly unreliable, and that outages can occur with even light rain. The NAD generally sided with DirecTV, finding that statements like the “satellite dish went out in the rain . . . again” combined with phrases like “Satellite TV Bad” could convey a broader message about the unreliability of satellite TV.

The NAD determined that although the evidence submitted by Spectrum would support claims that occasional outages due to rain can be a problem, the evidence didn’t support the broader implied claims that satellite TV service is highly unreliable, in general, and that it doesn’t work in bad weather. Although the NAD “has also long recognized that humor can be an effective and creative way for advertisers to highlight the differences between products,” it cautioned that “humor and hyperbole do not relieve an advertiser of its obligation to support messages that their advertisements might reasonably convey – especially when the advertising disparages a competitor’s product.”

The case illustrates at least three key points. First, although we often vilify them, it’s important to remember that monsters can have the same types of problems as the rest of us. Second, advertisers are responsible for all reasonable interpretations of their claims, even if they didn’t intend to communicate some of them. And third, advertisers need to ensure that their claims are closely tailored to their substantiation. Even though a competitor’s product may have a problem or your product may perform better than theirs, you still need to make sure that you don’t inadvertently exaggerate the extent of the problem or the gap in performance.

Those of us who spend our days at the intersection of law and advertising of health products generally accept that the prescription drug world is a universe unto itself, overseen by the FDA pursuant to the Prescription Drug Marketing Act. As prescription drug companies have increased their direct-to-consumer outreach through social media, native advertising, and health information platforms, questions have arisen as to the role that the NAD might play in regulating these advertisements.  For those who are unfamiliar, the NAD is the National Advertising Division of the Better Business Bureau.  It is an industry self-regulatory body that is charged with hearing and rendering decisions in advertising disputes, typically among competitors.  It is commonly used amongst advertisers of consumer-directed products and services.  It is not commonly used amongst prescription drug advertisers and, until recently, many likely assumed that NAD did not have jurisdiction to hear prescription drug advertising challenges.

A relatively recent NAD decision makes clear that that body believes that it has jurisdiction over prescription product advertising, however. Late last year, the NAD evaluated advertising by Synergy Pharmaceuticals for its Trulance product, which is prescribed for chronic idiopathic constipation.  Allergan, maker of a competing product, challenged the advertising on the basis that it included false implied superiority claims, expressly false superiority claims, and undisclosed native advertising in the form of a waiting room pamphlet that allegedly was positioned as independent and impartial patient education material.  Continue Reading Think Your Prescription Drug Advertising is Beyond NAD’s Purview? NAD Disagrees.

Most Popular Ad Law Access Posts of 2017

As reported in our Ad Law News and Views newsletter, Kelley Drye’s Advertising Law practice posted 106 updates on consumer protection trends, issues, and developments to this blog in 2017. Here are some of the most popular:

Ad Law News and Views is produced every two weeks to help you stay current on advertising law and privacy matters. You can subscribe to it and other Kelley Drye Publications here and the Ad Law Access blog by email or RSS feed.

2018 Advertising and Privacy Law Webinar Series 

Please join Kelley Drye in 2018 as we continue our well attended Advertising and Privacy Law Webinar Series. Like our in-person events, this series gives key updates and provides practical tips to address issues faced by counsel as well as CLE credit. This webinar series will start again in February 2018. Please revisit the 2017 webinars here.

Benefit Cosmetics advertised that its They’re Real Mascara was the “#1 best-selling Prestige Mascara in the U.S.” and the “#1 best-selling Prestige Mascara in the U.S. for 3 years.” A disclosure linked to the first claim explained that the claim was based on NPD data from July 2015-June 2016, and a disclosure linked to the second claim explained that it was based on similar data from July 2013-June 2016.

Benefit enjoyed a good run at the top, but the most recent NPD data suggests that the top spot now belongs to Too Faced Cosmetics’ Better Than Sex Mascara. Too Faced argued that even though Benefit’s claims may have been true in the past, they no longer true now. And although the claims are qualified with the disclosures, consumers are still likely to interpret the claims to be current.

The NAD sided with Too Faced for a few reasons. First, the claims were in the present tense, suggesting that they were currently true. Second, the disclosures appeared in a “tiny, difficult to read font.” And, third, even if the disclosures had been clearer, they would have still been problematic. While a disclosure can clarify a claim, it can’t contradict it. Here, the NAD thought the disclosures would contradict a reasonable interpretation of the claim – that the mascara is currently the best-selling one in the US (and has been for the past three years).

It’s no secret that “best-selling” claims should generally be supported by current sales data. What is more complicated is how often data must be refreshed and, if new data no longer supports that claim, how fast the claim must be removed. Although there aren’t clear answers to those questions, at least one court has suggested that advertisers need to move very quickly. Companies should give this careful thought when they make temporal claims, especially on things like packages, which can take a long time to change.

On September 12, the NAD released its decision in its review of the Capillus82 hair growth device (Case #6107).  This case is unusual in that it addressed a challenge to a prescription-only medical device, and related closely to the FDA’s clearance of that product to be marketed.  The NAD took pains to emphasize that its decision did not contradict the device’s FDA-cleared indication for use, but did it really?

First, a little background on how the FDA treats medical devices of this kind.  Low-to-moderate-risk medical devices may be marketed without preapproval through what is known as the 510(k) clearance process.  Instead of being evaluated and approved by the FDA for safety and efficacy, the device can be “cleared” if it is “substantially equivalent” to a device that already is legally marketed.  The existing “predicate device” may itself have undergone full approval, or it too may be a 510(k) cleared device pointing to a yet earlier predicate device.  The device maker’s 510(k) submission must convince the FDA that the new device is technologically equivalent to the predicate device or is otherwise substantially equivalent in safety and effectiveness.  The intended use must be the same as that of the predicate device.  The process has been analogized to a generic drug approval predicated on chemical equivalence to an existing branded drug.

The Capillus82 is a hat with 82 laser diodes lining the inside.  Its intended use is to treat androgentic alopecia (i.e., slow hair loss) and promote hair regrowth in men and women having certain kinds of pattern baldness.  It received FDA 510(k) clearance in January 2017, with the predicate devices being the Hairmax Lasercomb and the iGrow II – no, I am not making these up – which used different form factors to apply laser light to the head, something that apparently promotes hair growth.  Clearance was applied for and granted on the basis that the Capillus82’s technology was the same as those of the Lasercomb, iGrow and other laser hair growth treatments, with minor differences that should have no impact on safety or efficacy. Continue Reading Does the NAD’s Capillus Decision Baldly Contradict the FDA?

More than a month after the retirement of former NAD Director Andrea Levine, the Advertising Self-Regulatory Council (“ASRC”) has announced NAD’s new Director: Laura Brett. Laura Brett, who has served as NAD’s Assistant Director since 2015, joined NAD in April of 2012. During her five years at NAD, Laura has authored several seminal decisions including NAD’s highly publicized 2015 DirecTV decision. She has also authored several monitoring decisions that deal with the intersection between social media and advertising law. (See, for example, NAD’s Kardashian and eSalon decisions.) Laura has spoken frequently about NAD and has earned a reputation for her strong judgment, rigorous analytical skills, and integrity.

Continue Reading Laura Brett Named New Director of NAD

The National Advertising Division of the Better Business Bureaus, a self-regulatory body that polices national advertising, recently gave an a-OK to certain dietary supplement immunity claims. The action was initiated under NAD’s partnership with the Council for Responsible Nutrition against dietary supplement maker Olly Public Benefit Corporation.  CRN requested that NAD determine whether Olly had a reasonable basis for the message that its Kids Mighty Immunity product helps support immune health.  In particular, NAD assessed four immunity-related claims made on the product website:

  • “Formulated to help support little immune systems in the biggest way to help keep kids healthy and happy year-round.”
  • “Wellmune. These beta glucans support immune health by helping to promote built-in cellular defense mechanisms.”
  • “Elderberry. Respect your elders – this super food has been used for centuries to support the immune systems.”
  • “Zinc. An essential mineral that helps keep immune cells functioning in tip-top shape.”

In support of its general immunity message, Olly argued that the product is a good or excellent source of vitamins C, D, and zinc and also contains Wellmune beta glucan yeast. The advertiser presented studies and literature explaining the support roles played by vitamin C, vitamin D, and zinc in the immune system.  This evidence indicated that the nutrients – when taken in sufficient doses – “help form a physical and chemical barrier to keep out pathogens, and also support specialized adaptive immune system cells that work as part of the body’s natural processes to eliminate pathogens.”  NAD found that this data was sufficient, and Olly did not need to present a clinical study on its product, because the context of the webpage and the product packaging conveyed the message that these claims were based on the supplement’s individual ingredients and not testing of the final product.

In addition, Olly provided evidence in both adults and children demonstrating that, after oral digestion, Wellmune is bioavailable and binds to immune cells. NAD found this was a reasonable basis for the Wellmune claim.  Likewise, NAD found that the elderberry claim, supported by historical accounts citing elderberry for immune support, was sufficiently limited.

Importantly, NAD appreciated that the advertiser did not make any express or implied claims regarding the common cold or other illnesses and avoided imagery that implied cold prevention or cure, such as depictions of sick children, worried parents, or visits with health care professionals. It noted that evidence presented in other NAD proceedings failed to show a relationship between regular vitamin C supplementation and the reduction in the incidence of colds.

We have seen other examples of cases where immunity claims for foods and dietary supplements have been problematic for companies. However, as shown in this NAD matter, it is possible to effectively tailor claims to the available evidence so that they withstand regulatory scrutiny.

ASRC President & CEO Lee Peeler has announced the retirement of Andrea C. Levine, Director of the National Advertising Division (NAD). During her 20year tenure, the NAD published more than 2,600 case decisions and built what has been described as the largest body of advertising precedent in the United States.

In announcing the retirement, Mr. Peeler stated that Ms. Levine will be remembered for her transformative leadership, promotion of the competitor challenge process, and development of the NAD Annual Conference.

A search for her successor has begun and a position description will soon be posted on the CBBB website.   Ms. Levine will remain in her role as Director until a successor has been hired.  Expectations are that a new Director could be in place as early as this summer. 

 

Did you know Kelley Drye’s Advertising Law practice produces a newsletter, Ad Law News and Views, every two weeks to help you stay current on ad law and privacy matters? Click here to access our Publication Sign Up and select Advertising and Marketing to subscribe. Find contents from the latest issue below:

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Recent News

Chairman Kaye Steps Down as CPSC Chair; Republican Buerkle Assumes Role of Acting Chair

CFSAN Director Anticipates “Tweaks,” Not Rollbacks Despite Administration’s De-Regulation Emphasis

Smart TV Manufacturer “Smarting” after $2.2 Million Privacy Enforcement

FTC Announces Changes at the Helm of the Bureau of Consumer Protection; Thomas Pahl to Take Over as Acting Bureau Director Following Jessica Rich’s Departure

Not a Passing Grade: FTC Settles with Company Over Alleged False Advertising for High School Diploma Program

EU Data Protection Authority Issues GDPR Action Plan, Swiss Sign Privacy Deal with U.S.

New FTC Acting Chair Maureen Ohlhausen Offers Insight into Consumer Protection Priorities

CIT Adds New Requirements for ‘Assembled in USA’ Claims Analysis

FTC Cries Foul On Breathometer Accuracy Claims

Spotlight On Our New Texas Offices

Kelley Drye & Warren LLP recently merged with Jackson Gilmour & Dobbs, P.C., a highly respected Texas law firm best known for success in environmental litigation matters. The team also brings substantial experience in sophisticated regulatory and commercial litigation matters. The merger strengthens Kelley Drye’s litigation and environmental practices, as well as extends our national presence.

The collective environmental practices broaden Kelley Drye’s nationwide capabilities in site remediation, cost recovery, natural resource damages, and related insurance litigation, creating a powerhouse firm for businesses contemplating sales and acquisitions, debt and equity financings, and real estate development and construction where environmental issues may be present.

Please read more about our Environmental Law and Environmental Litigation capabilities, as well as our new offices in Houston and Austin

Analysis 

Marketing in a Multi-Device World: Update on Cross Device Tracking

On January 25, Kelley Drye hosted a webinar on maintaining transparency and respecting consumer choice while achieving marketing objectives. Megan Cox, Attorney at the Federal Trade Commission, J. Jurgen Van Staden, Vice President, Policy & Technology at the Network Advertising Initiative, and partner Dana Rosenfeld discussed recent law enforcement activity, such as the FTC’s recent settlement with Turn Inc., as well as self-regulatory guidance and enforcement issues surrounding cross device information tracking and uses. For a copy of the slide deck, please click here.

Our next webinar will be on “Litigation is Inevitable: Update on Recent Advertising Class Actions” February 22. Please click here for more information and to register.

To sign up to receive future webinar invitations, please click here and sign up to receive communications from the Advertising and Marketing practice group.

Suing over Empty Space: Why Lawsuits over Slack Fill in Packaging Are Growing

Partner Kristi Wolff co-authored the Nutritional Outlook article “Suing over Empty Space: Why Lawsuits over Slack Fill in Packaging Are Growing.” The article discusses the rise in lawsuits regarding slack fill, or the difference between the capacity of a container and the volume of the product inside. Read more…

ABA Section of Antitrust Law Presidential Transition Report

Partner Bill MacLeod addressed the American Bar Association’s Section of Antitrust Law with an introductory note to the Section’s 2017 Presidential Transition Report. The American Bar Association Section of Antitrust Law released its 60-page eighth sequential Presidential Transition Report, which offers a retrospective of current state and federal antitrust and consumer protection law and policy, as well recommendations for ways the new Trump administration might consider further strengthening policy and enforcement to deal with new antitrust challenges on the horizon. Read more…

Has the Supreme Court’s Resolution of Spokeo Played Out as Expected?

Partner Lee S. Brenner co-authored the Bloomberg BNA article “Has the Supreme Court’s Resolution of Spokeo Played Out as Expected?” On May 16, 2016, the United States Supreme Court held in Spokeo Inc. v. Robins that a consumer cannot satisfy the injury-in-fact demands of Article III by alleging only a bare procedural violation of a statute, divorced from any concrete harm. The article examines the Spokeo decision and how that case impacted litigation in various contexts, including data privacy, the Truth in Lending Act (TILA), the Fair and Accurate Credit Reporting Act (FACTA), and the Telephone Consumer Protection Act (TCPA). Read more…

Fifty Countries and Counting, Sixty Sessions and More – at Spring Meeting: A Message From Bill MacLeod, Chair, Section of Antitrust Law

Partner William MacLeod authored his monthly address to the American Bar Association’s Section of Antitrust Law. This month’s message features The Spring Meeting of the Section of Antitrust Law. Read more…

Upcoming Events and Speeches

Toys for Sale: IoT Devices and Connected Kids
February 15, 2017 |WEBINAR
American Bar Association
Dana B. Rosenfeld

Litigation is Inevitable: Update on Recent Advertising Class Actions
February 22, 2017 | WEBINAR
Jeffrey S. Jacobson

Regulation of Cosmetics
March 3, 2017 | WASHINGTON, DC
Introduction to U.S. Food Law and Regulation
Kristi L. Wolff

Doing Data Right: Legal Best Practices for Making Your Data Work
March 16, 2017 |SAN JOSE, CA
Strata + Hadoop World 2017
Alysa Zeltzer Hutnik

Eyes on the 1-800 Prize: IP Restrictions and Online Competition
March 29, 2017 | WASHINGTON, DC
65th Antitrust Law Spring Meeting
David H. Evans

Multi-State Privacy/Security Investigations: Expert Roundtable
April 20, 2017 |WASHINGTON, DC
Global Privacy Summit 2017
Alysa Zeltzer Hutnik

Impact of the 2016 Election on Antitrust and Consumer Protection Class Actions
April 27, 2017 |SEATTLE, WA
Law Seminars International’s Litigating Class Actions
Jeffrey S. Jacobson

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