Consumer Advertising Law Blog

FTC Holding Green Packaging Workshop Tomorrow

On Wednesday, April 30, the FTC will hold a one day workshop to examine green packaging claims. Consumer products frequently contain claims about the packaging’s environmental attributes. In the past, these were usually claims about the packaging’s recyclability or biodegradability. More recently, new green claims such as “sustainable” and “renewable” have emerged, and the use of environmental seals and certifications has become more frequent. As part of the workshop, marketers and marketing and environmental experts will discuss trends in green packaging claims. The workshop will also examine how consumer’s perceive green packaging claims.

You can attend tomorrow’s workshop at the FTC’s Conference Center at 601 New Jersey Ave., N.W. in Washington starting at 9:00 a.m. You can also view a live webcast of the workshop from the workshop’s website, where you’ll also find links to public comments and other information.

The workshop is part of the FTC’s review of its Guides for the Use of Environmental Marketing Claims, or “Green Guides.” Thus, the workshop will also explore whether the FTC should revise the Green Guides’ guidance on using traditional green packaging claims and whether it should expand the Green Guides to cover more recent and emerging packaging claims. In addition, the workshop will examine substantiation issues raised by green packaging claims and environmental seals and certifications. An agenda for the workshop can be found here.

In November 2007, the FTC announced its review of the Green Guides and its intention to hold public workshops in connection with this review. The first workshop, on carbon offsets and renewable energy certificates, was held in January 2008. You can find a write-up of this workshop here. We will send out a similar summary after tomorrow’s green packaging workshop. In addition to tomorrow’s workshop, the FTC has indicated it may hold a third workshop on consumer perception of green marketing claims, but the FTC has not announced a date for such a workshop.

Update: Feathers Fly in Maryland Federal District Court

A Maryland Federal District Court judge granted a request by Sanderson Farms and Perdue Farms that it enjoin advertising by their rival Tyson Foods that Tyson's chicken was "Raised without antibiotics" and "Raised without antibiotics that impact antibiotic resistance in humans."  A previous blog discussed the fact that the court had earlier rejected Tyson's motion to dismiss which argued that the Lanham Act claims were preempted because the Department of Agriculture had approved both claims for Tyson's chicken labels.   

Plaintiffs had argued that the "raised without antibiotics" claim, which Tyson was phasing out of the marketplace at USDA request, was literally false because Tyson injected its eggs with antibiotics several days before hatching and also used ionophores, a type of antibiotics with its chickens.  The court agreed and questioned whether Tyson had moved with sufficient speed to remove advertising materials with this claim after USDA withdrew its label approval.

Plaintiffs also argued that the new claim approved by USDA for use on Tyson's label, "Raised without antibiotics which impact disease resistance in humans," was misleading based upon survey evidence which showed that consumers believed the claim meant the product was antibiotic free and that the reason it was antibiotic free was that the use of antibiotics in chicken can impact disease resistance in humans.  In other words, the disclaimer didn't disclaim. Plaintiffs' survey evidence also showed that consumers believed that Tyson's chicken was better for them even though, in truth, all three chicken producers use ionophores, although Perdue has a premium chicken brand, Harvestland, that is totally antibiotic free.

The case demonstrates again the ability of internal marketing documents to impact how courts or regulators interpret advertising claims.  The court quoted internal Tyson documents which attempted to summarize how the campaign made consumers feel through the use of consumer quotes such as "it is safer chicken than others" and it "has made me very happy as I am a cancer survivor and I believe that all the antibiotics and artificial ingredients contribute to this major disease."  The court also quoted from other Tyson documents which stated that the campaign had "wrecked Perdue's overall enterprise strategy" and that "elevating the Tyson brand with RWA had also devalued the Perdue brand."

Tyson has said it intends to appeal. 

I'll Be Watching You: Comments on FTC Behavioral Advertising Principles

Late last year the FTC released for public comment a staff report on possible self-regulatory principles for behavioral advertising, essentially the practice of providing content-specific advertisements to internet users based upon their viewing patterns.  The comment period on that report recently closed, and the comments have been made public as the Staff considers its final recommendations. 

The FTC's principles encompassed four areas:

     (1) Transparency and Consumer Control - Clear and concise statement that consumers' online activities are being tracked for the purpose of providing relevant advertising and how consumers can choose not to have their surfing activity tracked.

     (2) Reasonable Security and Limited Data Retention - Data should be secured commensurate with factors such as data sensitivity and risks faced by the company.  Retention should be no longer than necessary.

     (3) Consumer Affirmative Consent to Material Changes to Privacy Promises - If a company's use of consumer data is going to materially change it should obtain affirmative, express consent to such a change.  This can include changes as the result of a merger.

     (4) Affirmative Express Consent to Use Sensitive Data for Behavioral Advertising - Sensitive Data potentially includes information relating to health, sexual orientation and kids. 

Not surprisingly the comments often suggested the Staff had gone too far or not far enough.   Consumer groups suggested that the definition of behavioral advertising was too narrow, leaving consumers unprotected for certain types of data collection practices.  One group even suggested a "Do Not Track" registry similar to the Commission's wildly popular (at least among consumers) "Do Not Call" registry.  Congressman Markey suggested that the Commission consider banning tracking of internet usage patterns by kids as an add on to the protection already afforded to kids under COPPA.

Advertisers, on the other hand, often thought the Staff's recommendations were too broad.  Some suggested a sliding scale of protection depending upon the type or purpose of the usage collection.  With respect to type, the suggestion was made, for example, that the Commission should only be concerned about the tracking of internet viewing when it leads to the collection of information that facilitates identity theft.  With respect to purpose, it was suggested that the Commission distinguish between 1st party and 3rd party usage.  For example, Amazon tracking what books you purchase and making book recommendations would be 1st party usage and subject to less regulation.  If, however, weatherchannel.com tracks your viewing patterns which then prompts an ad for a location for which you just checked the forecast that would be 3rd party usage and subject to greater disclosure and consent requirements.

With few exceptions, however, the comments embraced Staff's suggestion of self-regulation.  Given this Commission's seeming overall preference for self-regulation, it would seem a safe bet that at least in the short term any principles that do emerge will be voluntary.  Oh, and in case you were wondering, this blogsite does not engage in behavioral advertising.   

Competitors Cry Fowl Over Antibiotics Claim

A federal judge last Thursday refused to dismiss a Lanham Act claim brought by two poultry processors, Perdue and Sanderson Farms, against competitor Tyson Foods.  Plaintiffs, who were represented by the law firm of Arnold & Porter, alleged that Tyson's claims that its chicken was "raised without antibiotics" or "raised without antibiotics that impact resistance in humans" were false and misleading.

In the Spring of 2007, the United States Department of Agriculture mistakenly approved Tyson's use of a "raised without antibiotics" claim on its chicken label.  USDA rescinded approval in the Fall of 2007 because Tyson uses ionophores in its chicken feed; ionophores are a type of antibiotic.  USDA later approved the use of a qualified claim, "Raised without antibiotics that impact resistance in humans" and gave Tyson several months to remove the old claim from its label.

Plaintiffs' lawsuit alleges two violations of the Lanham Act.  First, that Tyson continues to advertise the old claim in commerce.  Second, that the new qualified claim is also misleading.  Plaintiffs allege the "RWA" claim is literally false because Tyson (1) injects its chicken eggs with antibiotics at the hatchery; and (2) feeds its chickens antibiotic feed after hatch and prior to slaughter.  Plaintiffs also allege that the RWA claim falsely implies that Tyson chicken is safer for human consumption compared to competing brands.

Tyson sought to dismiss the case, arguing that the USDA process immunized Tyson from the lawsuit. The judge permitted the case to go forward, distinguishing precedents involving the Food and Drug Administration on several ground, including that unlike FDA, USDA only has authority to approve product labels and labeling and not advertising.  The extent to which federal oversight or approval of marketing claims preempts Lanham Act litigation has bedeviled courts.  Expect this decision to be added to the litany of case cites that proponents on either side of the question can muster. 

A ruling on Plaintiffs' motion for a preliminary injunction is expected shortly.

Proposal to Expand FTC Authority

The FTC often argues that various products won’t give you six pack abs or turn you into the next Mr. Universe, but when it comes to Congress apparently the Commission believes there’s substantiation for the claim that Congress can “pump the FTC up.”

Tuesday two key Senate Commerce Committee members introduced an FTC Reauthorization Act (none has passed since 1996) that would expand the FTC’s authority in a number of respects. Several commissioners spoke at the hearing in support of the proposed legislation. Among the highlights the bill would:

•  Allow the FTC to litigate civil actions under Section 5 (including civil penalty cases) without involving the DOJ
• Permit civil penalties for any violation of Section 5 not just for consent or existing rule violations
•  Expanded authority to challenge aiding and abetting a violation of Section 5
• Repeal the exemption under Section 5 for certain nonprofits
• Permit the FTC to engage in speedier rulemaking via Section 553 of the APA
• Repeal the common carrier exemption

At the hearing on the bill, the FTC indicated expanded civil penalties would be particularly valuable in cases where the FTC’s usual monetary remedies -- restitution and disgorgement -- are inadequate, such as where the wrongdoer’s profits were slim and where the wrongdoer did not benefit financially from the conduct. An example cited was in cases where customer’s data security was not protected. The identity thief rather than the company with lax security measures benefited, but the FTC would like the ability to fine the latter.

Even without this new authority the Commission has become increasingly aggressive in collecting redress and civil penalties. From March 2007 through February 2008 the FTC Bureau of Consumer Protection obtained judgments and orders for an astounding $161 million in consumer redress and $11 million in civil penalties. The “one free bite” rule seems increasingly inapplicable at the Commission. Should the proposed legislation pass, expect the above numbers to grow, probably significantly.

Eco-Fur

The Wall Street Journal recently ran an article on Eco-Fur. Eco-Fur is fur from the brushtail possum, a native of Australia that is currently wreaking havoc amongst New Zealand’s native species. So, the theory is, you’re buying fur from an animal that is causing environmental harm, thereby benefiting the environment.

The use of the term “eco-fur” serves to illustrate why the FTC in its green guides steers companies away from general environmental claims. If a consumer opposes the use of animals for fur because those animals are environmentally benign, then a claim that brushtail possum fur from New Zealand is “eco” addresses that concern. By the same token, the squirrels that strew the contents of my garbage can all over the neighborhood could be sold as “eco-protein.”

But people oppose fur for lots of other reasons. Some think that the way the animals are treated is often cruel, while others oppose the killing of any animal to keep people warm or to look fashionable. For those folks, there may be nothing “eco” about brushtail possum fur. It’s often easier to explain more fully the use of general terms such as “eco” on websites, as is the case with eco-fur, but it is sometimes more difficult to do so in other more abbreviated forms of product advertising. The other problem that often crops up with general environmental claims is the implied perception that there may be nothing about the product whatsoever that is harmful to the environment. Thus, the FTC in its guides warns against the use of terms such as “environmentally friendly,” “eco-safe,” and “environmentally safe.” Bottom line, as the FTC suggests, is be wary of making general environmental benefit claims.

FTC Staff Releases Next Tech-Ade Report

The FTC released last Friday a staff report on its "Protecting Consumers in the Next Tech-ade" hearings held this past November. Given the rapid pace of technological change and convergence it was perhaps wishful thinking, though catchy, to coin the term "tech-ade."  "Tech-year" might have been more appropriate.  Staff's report does not break any dramatic new ground or propose significant new initiatives.  Instead it largely concludes that the Commission's time-honored law enforcement and bully pulpit tools are up to the job, no matter how novel the advertising medium. 

The report largely focuses on four areas -- (1) protecting consumer privacy in the face of increasing technological ability to store and retrieve information, sometimes even without consumer knowledge; (2) ensuring that advertising is clearly identified, as the traditional 30-second commercial break is replaced by techniques that blur the line between content and advertising, such as viral marketing, seeded message boards, fake blogs (flogs) and paid search engine rankings; (3) continued international law enforcement cooperation; and (4) continued emphasis on industry self-regulatory efforts. 

Perhaps the most striking statement in the report is that consumers accepting advertising on a website may not understand their "responsibility to screen such advertisements."  Although this sounds ominous, the Commission has not to date imposed a legal obligation on the media to screen advertisements, though it has certainly cajoled for such screening on many occasions.  What the report does not discuss is the contentious issue of how marketers make appropriate disclosures in an increasingly high tech world.  As wireless devices more and more become instruments of commerce via which consumers can make almost any type of purchase, advertisers are faced with multiple challenges in making necessary disclosures.  Small screen sizes raise issues relating to scrolling and the use of text messaging.  In addition, given that there may be multiple users of wireless devices a debate has arisen over who bears responsibility for ensuring that the primary account holder is aware of such purchases.  Industry has begun to address questions such as these through self-regulation. The Florida AG has also entered into several consent orders --  a consent with Azoogle in late 2007 permits the company to use "shorthand" messaging but it must be "commonly understood" and the company is required to take steps to encourage consumers to scroll down to view disclosures.  An even more recent settlement with AT&T requires, among other things, that the company clearly disclose third party charges on wireless subscriber bills so that, for example, parents can monitor their kids use of wireless devices for purchases. No doubt it is only a matter of time before the FTC adds a few notches to its belt in this area as well. 

Being Green Is So Yesterday

Now that it seems like almost all marketers are touting their environmentally sensitive practices, it seems that being green isn’t enough.  Or, to paraphrase Kermit the Frog, “it’s not easy being [just] green.  Marketers are now touting themselves not just as green but as “white.”  Companies such as Unilever, Procter & Gamble Co, Coca Cola and numerous others are promoting the ways in which they are bettering the world through so-called “ethical marketing.”  Dove has promoted women’s self esteem through its real beauty ads, Coca Cola has undertaken several initiatives relating to clean and available water and P&G has a program to make its new Pur water purification packets widely available in Africa.

There might have been a time when many marketers felt that such efforts did little to sell product but clearly that attitude seems to be changing.  But does it present legal risks?  The FTC in the past has not bothered with “feel good” corporate image advertising but could that practice change as such ads become more prevalent?  Perhaps.  Certainly the express claims associated with such ads seem easy enough to substantiate.  A company either is or isn’t donating a certain amount of money to a particular cause or donating goods or services in a particular area.  Substantiating such claims shouldn’t be so difficult.  But are there implied claims lurking in the weeds (or the lily pads).  Perhaps.  The FTC has long held that it you make a claim about a product benefit but the product potentially increases the risk of harm in a related area then it is misleading not to disclose the increased risk as well.  For example with respect to food health claims the FTC has stated in its Enforcement Policy Statement that the “unqualified claim that a food is low in saturated fat and cholesterol, and therefore compatible with a diet designed to reduce the risk of cardiovascular disease, would be deceptive if the food contained so much sodium that it might increase the risk of hypertension and thus, cardiovascular disease.”

How might this doctrine be applied to corporate “white” claims?  Well, if a company promotes its efforts to find a cure for breast cancer, might they have to disclose that their manufacturing facilities expose women to a chemical thought by some to be a potential carcinogen?  Or, what if a company advertises its efforts to eradicate childhood disease.  Does it have to disclose that it employs child labor overseas?  For a large, multinational corporation doing such a top to bottom assessment of whether any of its practices are sufficiently related to a “white” claim could be a fairly daunting task.  Fortunately, it seems unlikely that the FTC will bring such a case anytime soon, at least not without some warning to the business community.  However, an upsurge in such claims may, at a minimum, provide more fodder for corporate activists.

A Blog is Born

Welcome to the Arnold & Porter Consumer Advertising Law Blog.  April Fools may not be a great day for a launch but that’s just how things worked out.  Some of you may be already familiar with us and may even be receiving our newsletter.  For those of you who are not, we hope to get to know you.  You can find out a bit more about what we do by clicking on the link in the left hand margin.  Blogging will give us the chance to more quickly point out and comment on developments in the field of advertising that we find interesting and hope you do as well.  We plan to draw on the talents of many folks at our firm and blog on a diverse range of topics, including FTC and State AG developments, Lanham Act and consumer class action litigation, green claims, advertising and obesity issues, advertising to kids and whatever else strikes us in the area of advertising law as interesting and relevant to all of you.  So, welcome.  We hope you’ll come back and check us out often.