Page 3 - Litigation

NYLJ.COM |
Litigation | MONDAY, NOVEMBER 14, 2016 | S3
BY NANCY J. FELSTEN
T he National Advertising Division of the Council of Better Business Bureaus (NAD) has long been establishing claim
substantiation and disclosure standards for marketers of all types of products and ser- vices. With thousands of decisions spanning 45 years, this industry self-regulatory body has produced jurisprudence regarding every- thing from the size, content and placement of disclosures to the adequacy of consumer and product-performance test protocols to
the de nition of national advertising itself. Participation is voluntary. NAD cannot award damages and has no injunctive or enforce- ment power. Nonetheless, working closely with the Federal Trade Commission (which provides the teeth necessary to encourage a more than 93 percent compliance record), NAD has routinely resolved competitive chal- lenges, interpreted FTC Guidance, and acted in advance of FTC enforcement. Endorsement, testimonial and social media marketing disclo- sures, advertising for cosmetics and dietary supplements and native advertising are just a few areas where NAD has been industry’s
primary source for formulating legally com- pliant marketing programs.
Against this backdrop, there is a lesser- known arena where NAD has been establish- ing standards which are arguably less clear: When is the name of a product or service also an advertising claim within NAD’s juris- diction, such that NAD can “recommend” a name change despite the absence of the full evidentiary record that would be the main- stay of a federal court action. Although NAD decisions do not have the force of law, an NAD decision requiring a name change has far-reaching consequences for an advertiser.
Nonetheless, it can be difficult to predict when and whether NAD will consider a name hyperbolic puffery, an implied claim requiring extrinsic evidence of consumer deception, or an express claim requiring substantiation without which NAD will ask the advertiser to change its name—even in the absence of evidence that consumers may be misled.
In evaluating advertising, and where the parties have failed to submit reliable consum- er perception surveys (which is invariably the case), NAD will step into the shoes of the con- sumer to determine for itself all reasonable consumer take-aways—meaning all claims reasonably communicated by the advertis- ing both express and implied. An advertising claim is only misleading if an advertiser is unable to support all reasonable interpreta- tions. One limited exception to NAD’s willing- ness to substitute its perceptions for those of the consumer has been with respect to product names. There, NAD has for decades noted that “[a]bsent extrinsic evidence that consumers have been confused or misled, NAD is reluctant to require an advertiser to change the name of a product simply because the challenger speculates that it might be misleading.” See Kraft Foods Global (All-Out Squeeze Kraft Products), NAD Case Report No. 4994 (April 2009). NAD’s level of reluctance, however, has diminished over time.
Cases where a challenger asks NAD to recommend a name change are relatively unusual, about 20 decisions in the last decade and perhaps another 20 in the decades prior, but they demonstrate NAD’s increasing will- ingness to make decisions which result in upending every aspect of a brand’s marketing strategy, affecting not only all advertising, but product packaging and the company’s very trademarks. NAD’s earlier decisions uphold the “no change without extrinsic evidence rule” quite uniformly, even when nding arguably related adver- » Page S14
NANCY J. FELSTEN is a partner with Davis Wright Tremaine and head the rm’s advertising, market- ing and promotions practice. She sits on the board of the Brand Activation Association.
What’s in a Name: The NAD Knows
S4 NYDFS Cybersecurity
Requirements
For Financial Services Companies:
Are You Prepared? BY ROBERT D. OWEN, MATT GATEWOOD
AND TREVOR J. SATNICK
S6
In Bankruptcy, Attorney-Client Privilege
Is Not Absolute BY ERIC SNYDER AND ELOY PERAL
Inside
S8 Preservation Of Issues Is
A Prerequisite For Appellate Review
BY JOSEPH P. SULLIVAN
S10 Arbitration Of Workplace
Sexual Harassment and Discrimination Claims
BY MARTIN S. HYMAN AND MATTHEW C. DALY
S12 Rule Governing O ers of Judgment Should Be Clari ed Following Split SCOTUS Decisions
BY ALEXANDER PILMER
COVER ILLUSTRATION: BIGSTOCK
Litigation
Je Storey, Executive Editor Rebecca Baker, Managing Editor Angela Turturro, Sections Editor Rafal Pytel, Design
© 2016 ALM MEDIA PROPERTIES, LLC.
THE NEW YORK LAW JOURNAL ® IS A REGISTERED TRADEMARK OF ALM MEDIA PROPERTIES, LLC.
SHUTTERSTOCK
S
S
S
S