Reposted from DLA Piper’s Law à la Mode Edition 4 – Winter 2011

By:  Michael K. Barron, Sarah Phillips and Nadea Taylor (Boston and London)
“AdWords,” the paid, subscription-based Google referencing service which allows users to advertise their companies alongside Google search results, has recently been the subject of much legal scrutiny.  In late September, the European Court of Justice (ECJ) gave a preliminary ruling on questions referred to it by the English High Court in the case between Interflora and Marks & Spencer (“M&S”), regarding the purchase by M&S of the Google AdWord “Interflora” and other similar AdWords. 
In answering the questions referred to it, the ECJ repeated much of the recent jurisprudence in this area, in particular from the Google France case.  Previous cases established that purchasing a third parties’ trademark as an AdWord would only amount to trademark infringement if such use would have an adverse effect on one of the functions of the trademark.  
The ECJ gave the following guidance on how national courts should assess whether the use by a third party of a sign identical with a trademark in relation to identical goods or services has an adverse affect on one of the functions of the trademark:

By: Michelle Schaefer and Alexandra Marzelli (Washington, DC)

In September,  the U.S. Federal Trade Commission (“FTC”) — the consumer protection agency tasked with regulating U.S. advertising practices for consumer goods — warned companies selling apparel and footwear in the U.S. that all health and fitness claims must be substantiated by competent and reliable scientific evidence.  This warning came from the FTC’s lawsuit against Reebok International Lmtd. (“Reebok”), for alleged deceptive practices related to certain footwear including running sneakers, walking sneakers and flip-flops.  Reebok was charged with making “unsubstantiated claims” that the footwear provides extra tone and strength to key muscle groups (including the buttocks, hamstrings and calves) and strengthens various muscle groups by a certain percentage.  Under the settlement, Reebok agreed to pay $25 million in refunds to consumers.  Reebok has stated that the settlement does not indicate agreement with the FTC’s allegations and it will continue to sell the products at issue, but will market them differently.   

Class Action Lawsuits Pre-date the FTC’s Enforcement Action

Through this action, the FTC cautioned the industry that it will pursue companies that make health and fitness claims without an adequate basis, and impose substantial penalties on them, including restitution to consumers.  As is often the case with U.S. regulatory action, FTC’s enforcement activity comes on the heels of class action lawsuits filed across the U.S. against several footwear companies.  Generally, these lawsuits allege that the companies falsely represented the physical benefits of their “toning” shoes by promising consumers tighter and stronger bodies.  Notably, the FTC’s lawsuit against Reebok appears to have prompted further class action lawsuits, with plaintiffs relying on the FTC’s action against Reebok as a basis for their complaints. 

Implications for Footwear and Apparel Industry

Toning shoes are not going anywhere.  These shoes have proven to be one of the footwear industry’s smash hits generating more than $1 billion in revenue in 2010.  Companies will surely continue to introduce new shoes and apparel with toning or strengthening attributes.  The FTC’s pursuit of Reebok signals its focus on the burgeoning market and its intent to require companies to have an adequate level of proof if they make such claims.

Who’s Next?  

Shapewear is another fashion category with a growing market that FTC may start focusing its attention on.  Shapewear is reportedly $812.5 billion business.  “Shapers” are being worn every day by women and men of all ages and sizes who are hoping they will help smooth the silhouette and make clothes fit better.  The category includes undergarments that come in all sorts of shapes and forms, from tank tops and body suits with layers of support lining, to tights and pants with heat-sealed control panels and briefs with engineered stomach control.  Many of these products make “calorie burning,” “shaping, toning and slimming,” “anti-cellulite,” and “posture support” claims.  FTC’s approach to the footwear market makes scrutiny of claims related to Shapewear likely.

Best Practices

As the FTC continues to focus on health and fitness claims, footwear and apparel companies should have policies in place to ensure that their product claims are substantiated by the proper level of science before marketing their products. 

The settlement with Reebok identifies the FTC’s newly articulated evidence standards and key compliance guidance for companies that wish to make health and fitness related claims.  In light of these standards, companies should consider the following strategies:

  • Develop marketing strategies focused on compliance by standardizing, streamlining and establishing best practices across all departments.
  • For quantifiable health related claims, (e.g. walking in these shoes will lead to x% more strength), possess substantiation in the form of at least one adequate and well-controlled human clinical study that is randomized, blinded, of at least six weeks duration, and that uses an appropriate measurement tool or tools (e.g., a dynamometer if measuring strength).
  • For general health or fitness benefit representations about a product, have substantiation in the form of tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons, and that are generally accepted in the profession to yield accurate and reliable results.
  • Review the content of all marketing and promotional materials related to the sale, manufacturing, labeling, advertising, promotion, distribution, packaging and advertising of products to identify all potential claims and to ensure adequate substantiation of those claims exists.  Include all marketing outlets, such as print, television, movies, the Internet, social media, endorsements, depictions, illustrations and displays. 
  • Assess relevant products currently in inventory, on store shelves, or on order and determine whether any of the products are subject to FTC’s newly articulated standards.  

Though the required protocol for particular products may vary, consideration of and attention to these standards will assist in ensuring that footwear and apparel companies are headed in the right direction and will not run afoul of the FTC’s latest articulated guidelines.