Hunton Retail Law Resource

Branded keyword advertising (“BKA”)—bidding for your company’s website to feature prominently near a search engine’s results for branded or trademarked terms—has been around for over a decade. Under this practice, search engines auction off keywords, and the highest bidders receive advertising space adjacent to search results for those terms. Brand owners commonly bid on their own keywords and those of their competitors and related third parties.

Concerns that BKA runs afoul of trademark, false advertising, and unfair and deceptive trade practices laws were largely put to rest in 2013 and 2014, when a wave of court decisions held that, on its face, the practice does not constitute trademark infringement or cause customer confusion. However, a new challenge to BKA emerged earlier this year with the filing of Tichy v. Hyatt Hotels Corp., No. 1:18-cv-01959 (N.D. Ill.). In Tichy, a putative class of online consumers alleges that six major hotel chains violated antitrust laws by conspiring with each other and with third-party online travel agencies like Expedia and Priceline to refrain from bidding on each other’s branded keywords.

Have you ever seen an advertisement for a product that seemed a little too good to be true? Truth in advertising is a hotly contested issue, and advertising that may cross the line could be drawn into a dispute with the Federal Trade Commission or into court by a competitor. But did you know that there is another group that monitors and polices advertising? The National Advertising Division ("NAD") of the Better Business Bureau is an industry group set up to review false or misleading advertising and referee complaints between competitors.

This past week, several consumer actions made headlines that affect the retail industry.

First Circuit Dismisses Deceptive Advertising Claims against Two Large Retailers

The First Circuit Court of Appeals has held that consumers who brought nearly identical deceptive pricing cases against two large retailers failed to prove that they had been injured. One suit alleged that one company falsely advertised “compare at” prices on sales tags; the other suit alleged that the other company deceptively set lower prices for its exclusive and private-label products and advertised them as discounted. In both cases, the plaintiffs alleged that the mere purchase of the item itself constituted injury. The First Circuit rejected this argument, observing that the consumers (1) had not alleged that the items were poorly made, (2) had received the benefits of their bargains, and (3) that a false sense of a product’s value does not constitute injury.  

This past week, several regulatory and self-regulatory actions made headlines that affect the retail industry.

This past week, several self-regulatory actions made headlines that affect the retail industry.

NAD Finds Sherwin-Williams Claims Don’t Require Substantiation

In a challenge brought by Rust-Oleum Corporation, the NAD concluded that Sherwin Williams’s ads for its “CoverMaxx” spray paints did not require substantiation because they did not communicate a message of superior paint coverage. The NAD also found that the name, “CoverMaxx,” did not require revision because there was no reliable extrinsic evidence of consumer confusion.

This past week, several consumer actions made headlines that affect the retail industry.

Kraft Suit Stayed Pending Outcome of FDA Guidance

A federal judge in Puerto Rico granted Kraft Foods Group Inc.’s (“Kraft’s”) motion to stay pending the completion of the FDA’s inquiry into the use of the term “natural” on food labeling. The suit alleges that Kraft falsely labeled its shredded cheese as “natural” despite containing artificial food coloring. The case is stayed until the FDA provides guidance on the use of that term on food labels. 

This past week, several consumer actions made headlines that affect the retail industry.

Chairwoman Ramirez Announces Resignation

FTC Chairwoman Edith Ramirez announced that she will resign effective February 10, 2017. Chairwoman Ramirez joined the FTC on April 5, 2010, and has headed the agency since March 4, 2013. During her tenure as Chairwoman, the FTC brought close to 400 consumer protection action and approximately 100 challenges to mergers and business conduct.

This past week, several consumer and self-regulatory actions made headlines that affect the retail industry.

Court Dismisses ‘Made in USA’ Claims against Citizens of Humanity

A California federal judge dismissed claims against Citizens of Humanity alleging that it falsely labeled its products as “Made in the USA.” While plaintiffs alleged that the fabric, thread, buttons and other components were foreign-made, the court found that this was not enough to satisfy California’s standard, allowing the use of “Made in the USA” labels on products containing 5 to 10 percent of foreign materials. Significantly, the court applied the 5 to 10 percent standard found in the California rule despite the fact that the products at issue had been purchased prior to the rule’s enactments. The court also dismissed claims under the Unfair Competition Law and California Legal Remedies Act, finding that the plaintiffs failed to plead with particularity. 

This past week, several consumer actions made headlines:

Hyundai and Kia Set State Attorneys General Investigations for $42.1 Million

Hyundai Motor Co. and Kia Motor Corp. have agreed to pay $42.1 million to settle claims by the Attorneys General of 33 states and the District of Columbia that the companies misrepresented mileage and fuel economy ratings for certain vehicles. Hyundai issued a statement regarding the settlement, noting that it contains no admission of any wrongdoing. The companies previously paid $100 million to settle claims that they had misrepresented emissions to the U.S. Environmental Protection Agency, and $225 million to a consumer class for overstating the fuel efficiency of their vehicles.

This past week, several consumer, self-regulatory and regulatory actions made headlines:

Clearblue Label Not So Clear

A Second Circuit panel affirmed a district court ruling that SPD Swiss Precision Diagnostics GmbH, maker of the Clearblue Advanced Pregnancy Test with Weeks Estimator, violated the Lanham Act. While medical professionals estimate the length of pregnancy by the date of a woman’s last menstrual period, the Clearblue test estimates it by the length of time since a woman ovulated, but does not disclose this difference in measurement. The appeals court rejected Clearblue’s argument that the Lanham Act claim was precluded because it's label and marketing materials had been approved by the U.S. Food and Drug Administration. The case was brought by competitor Church & Dwight Co. Inc.

The Department of Justice has cleared Anheuser-Busch InBev’s (“AB InBev’s”) acquisition of SABMiller. Approval of the $107 billion deal came with substantial divestitures, including SABMiller’s U.S. business. That business, which includes the Miller Lite and Miller High Life products, will be sold to Molson Coors for $12 billion. As part of the approval, AB InBev is also prohibited from conducting incentive programs that would discourage independent distributors from selling competitors’ import or craft beers. According to the Department of Justice, this will preserve the ability of small brewers, such as craft brewers, to compete against AB InBev.

This past week, several consumer protection and regulatory actions made headlines:

Mars Petcare Settles With the FTC Over False Advertising Claims

Mars Petcare U.S., Inc., (“Mars Petcare”) has agreed to settle FTC allegations that the company falsely advertised its Eukanuba dog food.

The FTC’s complaint alleges that, in 2015, Mars Petcare claimed in TV, print and Internet ads that its dog food could increase a dog’s lifespan by 30 percent or more. This claim was allegedly based on a 10-year study of dogs who were fed Eukanuba. According to the FTC, the claim was false or unsubstantiated.