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Advertising: Misleading? Deceptive? What Do Consumers Think?

I have to thank Carl Bialik, The Numbers Guy writer and blogger for The Wall Street Journal, for including a quote in his recent (September 23, 2011) column, Bag Battle Takes a Statistical Turn.

The column focuses on the use of statistics by competitors and analysts alike – in this case statistics that related to claims made by Chicobag about the environmental impact of reusable plastic bags that many retail stores use to bag items, from groceries to clothing, when you check out with your purchases. It seems that Chicobag made some claims – citing statistics – about its products. Mr. Bialik’s column notes that Hilex Poly and some other competitors challenged the claims being made by Chicobag, and were unable to come to grips with either the numbers or the claims; litigation ensued.

Although Mr. Bialik focuses on the way numbers are used and the difficulties inherent in accumulating and using statistics – often when the subject matter may actually be a moving target – the legal issue is similarly complex. More often than not, false, misleading, deceptive advertising claims challenge the explicit veracity of a claim and whether that claim can be substantiated or whether the “net impression” or implicit claims (e.g., pictures or activities) can mislead or potentially deceive consumers. This claim, brought as an action under the Lanham Act – seeking an injunction and damages for false advertising and unfair competition for both a violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and under a state statute (South Carolina Unfair Trade Practices Act, South Carolina Code Annotated § 39-5-10, et seq.) – really revolves around whether the veracity or inaccuracy of claims (even if they can be substantiated or derived from facts that were believed to be true when stated) makes any difference at all in the minds of consumers.

Without giving away The Numbers Guy’s secrets (or forgetting the Federal Trade Commission Act that prohibits “unfair or deceptive acts or practices in or affecting commerce”), the legal claim, in my view, hinged not on whether the statistics claimed by Chicobag were incorrect or even in some cases materially inaccurate, but whether the particular claims as made using those statistics, were material to a consumer. Whether a consumer was likely to make a different purchasing decision – or might at least be informed enough to consider doing so – based on the degree of inaccuracy.

So when you think of my blog Legal Bytes, I’ll close with a claim that everyone sees on those pizza cartons around the country – maybe the world: “You’ve tried the rest. Now try the best!” Can you say “puffery”?

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When Online Games, Health & Life Sciences and Crowd Sourcing Combine

This time, the law of unintended consequences is bringing scientists and online gamers together in a crowd sourcing manner hitherto unimaginable.

An article in this month’s edition of the journal Nature Structural & Molecular Biology has announced (citing both research scientists and online gamers as co-authors of the article) that through a 2008 purpose-oriented video game developed at the University of Washington in 2008 – Foldit – the structure of an enzyme, one used in complicated customizing of retroviruses, was accurately modeled. 

Who cares and how does this affect us? Well, as a former biochemist wannabe, if you can model the structure of these proteins, you can better understand how diseases are caused and correspondingly develop drugs to block or stymie the progress of those diseases.

Amazingly, gamers were able to produce an accurate model of an enzyme whose structure had eluded scientists for a very long time in only three weeks and the report notes, referring specifically to medication against the human immunodeficiency virus (HIV) for which an understanding and design of antiretroviral drugs is absolutely critical. Seth Cooper, one of the creators of Foldit noted that "Games provide a framework for bringing together the strengths of computers and humans. The results in this week’s paper show that gaming, science and computation can be combined to make advances that were not possible before."

If you thought the intellectual property, licensing, user generated content, crowd sourcing, cloud sourcing, social media legal issues were already enough arising from scientific research, online gaming and crowd sourcing alone were enough to make your head spin, conjure up the implications when the term ‘convergence’ is applied to any two or three of these disciplines. Isn’t it time you had legal counsel and representation who can seamlessly help navigate them while your teams are busy solving the health care and medical problems of the world?

If you want to know more about how lawyers who understand can help your business, feel free to contact me, Joe Rosenbaum, or any of the Rimon attorneys with whom you regularly work.

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“Mom, is it OK for them to follow me?” FTC Targets Ads That Target Kids

Many of us remember when kids were actually worried about being caught misbehaving. Back in those days, parent’s concern over children’s behavior dealt with whether the kids were ‘fresh’ or ‘mischievous’ or talked too much in school. I was perennially the subject of “he would do so much better in class if he just stopped horsing around and paid attention.” Dear Mrs. Frohman, Mrs. Handel, Mrs. Flynn and Mrs. Bernstein – thanks! It took me several decades, but I finally got the message. Today, however, when we hear the terms children and behavior – well, at least according to the FTC, it ain’t the children that are misbehaving.

In a proposed amendment to rules that have been in effect since 2000, the Federal Trade Commission (“FTC”) is proposing amendments to COPPA (the Children’s Online Privacy Protection Act”) that “would require parental notification and consent prior to the collection of persistent identifiers where they are used for purposes such as amassing data on a child’s online activities or behaviorally targeting advertising to the child.” In describing the proposed changes (the proposed  Amendment runs 122 pages long), the FTC notes that these new rules would apply to any identifying or tracking technology (cookies) that would link a child’s browsing behavior across multiple web pages and services – ostensibly including advertising networks and metric/measurement/analytical service providers who routinely have access to such information.

Although a ‘safe harbor’ for compliance with self-regulatory programs is included within the FTC’s proposal, it did suggest that these programs (and individual company compliance with these programs) be more closely monitored and supervised – including mandatory audits every 18 months and reports detailing actions taken by the self-regulatory body against the companies that do not comply. Clearly, one of the FTC’s objectives is to not only ensure a mandatory review of compliance, even for those companies that have not been subject to proceedings, but also to create a record-keeping and reporting system that gives the FTC the ability to obtain detailed information about the proceedings and the compliance efforts of individual companies.

Comments, which are due by November 28, 2011, may be filed with the FTC using it’s COPPA Rule Review Form. If you are interested, concerned, want your voice heard, or otherwise need to be guided by experienced counsel in this area, please feel free to contact me, Joseph I. Rosenbaum, or the Rimon lawyer with whom you regularly work. We would be happy to help!

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BNA Highlights Health IT Issues Raised by Rimon Attorneys

The August 29, 2011 issue of BNA’s Health IT Law & Industry Report (Vol. 3, No. 36), describes some of the major legal and contractual issues raised when health care industry companies and professionals are considering moving to a cloud computing environment. Joseph I. (“Joe”) Rosenbaum was interviewed by the author, Kendra Casey Plank, for her article, entitled, “Attorney: Cloud Services Offer Affordable Solutions but Raise Privacy, Security Risks.” The article not only quotes Rosenbaum extensively, but also refers to Rimon’s White Paper series “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing,” which began in June 2010 (see "Transcending the Cloud" – Rimon Announces White Paper Series & Legal Initiative on Cloud Computing). The series is updated regularly with individual articles on topics ranging from government contracting and state tax, to the most recent White Paper entitled, “Health Care in the Cloud – Think You Are Doing Fine on Cloud Nine? Hey, You! Think Again. Better Get Off of My Cloud,” which Rosenbaum and Rimon Associate Vicky G. Gormanly wrote and which was posted on the Legal Bytes blog August 5, 2001 (Transcending the Cloud – Health Care on Cloud 9? Are You Doing Fine?). What’s the state of your health care compliance? Are you doing fine?

Read the White Paper and, if you have any questions or need help, contact Joe Rosenbaum or Vicky Gormanly, or the Rimon attorney with whom you regularly work.