False advertising

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Corporations that sell to consumers and are subject to consumer lawsuits commonly receive deposition demands for top executives. Corporations can frequently defeat these demands by showing that the executives did not participate or have control over the matter at issue. But a recent ruling from a federal trial court in California demonstrated how controlling social media content can help change that result, leaving a CEO as a defendant in a consumer class action alleging fraud and false advertising. (Kamal v. Eden Creamery, LLC, No. 18-cv-01298-BAS-AGS (S.D. Cal. June 26, 2019).)

Businesses shelling out big bucks for prime advertising space are used to paying close attention to content, for the sake of the bottom line as well as out of respect for consumer law. However, it may not feel as natural and cost-effective to apply the same scrutiny to an Instagram caption. Why invest the business resources when teenagers worldwide can master the art?

The Australian Competition and Consumer Commission (ACCC) has recently issued new social media guidelines for businesses which emphasise the answer repeatedly: as far as the regulator is concerned, businesses have the same responsibilities on social media as they do in all other marketing channels. Consumer protection laws (including, for example, the prohibition on conduct that is misleading or deceptive, or is likely to mislead or deceive), apply to Snapchat stories and ads in national broadsheets alike.

The U.S. Food and Drug Administration (“FDA”) regulates the use of social media to disseminate information about prescription drugs and medical devices. Our blog previously covered the social media guidance released by the FDA in 2014, and a sampling of Warning and Untitled Letters that the FDA has issued to drug manufacturers advertising on Twitter, Facebook, and Tumblr.

Our firm sister blog, Health Law Pulse, covered last year’s controversy surrounding Kim Kardashian’s Instagram post that endorsed the morning sickness drug Diclegis® without including relevant risk information in the text of her post. After the manufacturer of Diclegis® received an FDA Warning Letter, Kim posted a corrective ad stating the risk information associated with that drug.

It is no doubt surprising and frustrating for brand owners when they find that someone has appropriated their trademarks on social media. A few of the common scenarios include:

  • small competitors modifying logos and passing them off as their own;
  • unauthorized distributors using logos and trademarks on their social media advertising; and
  • social media users registering account names that incorporate trademarks.

Pursuing the usual enforcement techniques can be difficult on social media, particularly when the identity of the infringer is unclear or unknown. The good news for brand owners is that most social media websites prohibit the infringement of another’s intellectual property rights in their terms of service.