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FDA CBD Docket Closed, Agency to Soon Provide Status Report

The Food and Drug Administration (FDA) has increased its efforts to follow through on its commitment to provide guidance to stakeholders on the regulatory landscape for products containing CBD. On May 31, 2019, the FDA held a public hearing to obtain scientific data and information about the safety, manufacturing, product quality, marketing, labeling and sale of products containing cannabis or cannabis-derived compounds. Following the hearing, the FDA established a docket to allow the public to submit additional comments, research and information to the Agency. The docket closed on July 16 and received nearly 5,000 comments. On July 12, FDA Chief Information Officer and Principal Deputy Commissioner Dr. Amy Abernethy confirmed via Twitter that the Agency is “expediting its work to address” questions surrounding CBD and plans “to report on [its] progress around end of summer/early fall.” Due to the significant number of comments to the docket, it remains to be seen whether FDA will provide any material development that impacts the regulation of CBD products beyond a progress report on its review of the docket.




Winds of Change Blowing for Craft Brewers

For those who follow developments in the law and craft brewing with equal passion, every year has its share of substantial issues. This year has been no exception, with a pending Supreme Court case; a substantial upswing in federal trade practice enforcement activity; a massive rewrite of US Tax and Trade Bureau (TTB) labeling and advertising regulations; and prospects for extending the biggest cuts in the excise tax on beer since the repeal of Prohibition.

As these developments play out over the next year, we may see changes translate into the marketplace. Find out what you can expect.

Access the full article.

Originally published in The New Brewer, May/June 2019.




TTB Spring 2019 Updates to Semi-Annual Regulatory Agenda

The spring edition of the federal government’s semi-annual Unified Agenda of Federal Regulatory and Deregulatory Actions (Regulatory Agenda) has been published. Like other federal agencies, the Alcohol and Tobacco Tax and Trade Bureau (TTB) uses the Regulatory Agenda to report on its current rulemaking projects.

The Regulatory Agenda provides glimpses into TTB’s policy focus and aspirations. But, readers should recognize that TTB rulemaking moves very slowly, and the Agency often does not meet the aspirational dates published in the Regulatory Agenda.  (more…)




FDA Releases Warning Letters to CBD and Hemp Oil Companies

Last week the Food & Drug Administration (FDA) made public three new warning letters to Cannabidiol (CBD) and hemp oil product companies sent by FDA and the Federal Trade Commission (FTC). FDA has previously targeted cannabis product companies.

The new warning letters are consistent with FDA Commissioner Scott Gottlieb’s recent statements that the FDA will go after manufacturers of CBD products that make health and wellness claims that FDA views as egregious. For example, the CBD companies in question allegedly marketed their products for Alzheimer’s disease, fibromyalgia, inflammation, skin conditions, autoimmune disorders, anxiety, cancer pain, PTSD and depression, to name a few symptoms. These companies are making food, dietary supplements, and cosmetic products, as well as products for pets (CBD for dogs). (more…)




Washington Court of Appeals Upholds Multi-Million Dollar Fine for 5-Hour Energy Advertising Claims

On March 18, 2019, the Washington Court of Appeals upheld a trial court’s decision that three advertising campaigns for 5-Hour Energy® made by Living Essentials, LLP and Innovative Ventures, LLP (collectively, Living Essentials) violated the Washington Consumer Protection Act (CPA) by making deceptive advertising claims.

Living Essentials makes and markets the energy drink 5-Hour Energy®. The three advertising claims at issue involve claims about the efficacy of the drink. Living Essentials claimed or implied that: (1) 5-Hour Energy® was “Superior to Coffee” (Superior to Coffee claim); (2) decaf 5-Hour Energy® was effective “for hours” (Decaf claim); and (3) 73 percent of doctors would recommend 5-Hour Energy® (Ask Your Doctor claim). The trial court found all three advertising claims in violation of the CPA. It also assessed a civil penalty against Living Essentials of $2,183,747 and awarded the State $1,886,866.71 in attorney fees and $209,125.92 in costs. The court of appeals affirmed.

Living Essentials argued on appeal that the trial court (1) erred by adopting the Federal Trade Commission’s (FTC) prior substantiation doctrine; (2) that the prior substantiation doctrine violates article I, section 5 of the Washington State Constitution and the First Amendment to the United States Constitution; (3) that Living Essentials’ claims were mere puffery which did not require substantiation; (4) the trial court applied the wrong standard for necessary substantiation; and (5) the trial court erred in concluding that Living Essentials’ Ask Your Doctor claim was deceptive. Living Essentials also challenged the trial court’s penalty and award of attorney fees. (more…)




Massachusetts’ Highest Court Upholds Record Fine Against Beer Distributor for Pay-To-Play Scheme But Overturns Fine for Bar that Accepted Kickbacks

Last week, the Massachusetts Supreme Judicial Court upheld a $2.6 million fine against beer wholesaler Craft Brewers Guild (a Sheehan family-owned company) for violating anti-price discrimination statutes and commercial bribery regulations. In the same decision, the Court overturned a fine lodged against a bar that received such kickback payments, holding that Massachusetts retailers do not violate commercial bribery regulations by accepting kickback payments.

Beginning in 2013, Craft Beer Guild, LLC d/b/a Craft Brewers Guild (CBG), a licensed wholesaler, implemented a “pay-to-play” scheme involving alcohol beverage suppliers, retailers, and various management and marketing companies associated with licensed retailers. CBG paid “rebates” to these third-party companies in exchange for their associated retailers agreeing to sell CBG products at their bars and restaurants. To hide these unlawful payments to retailers, the third-party companies billed CBG for various unperformed services such as “marketing support” and “promotional services.”

CBG did not offer these rebates to all retailers, and rebate amounts differed among the retailers involved. Rebel Restaurants, Inc. d/b/a Jerry Remy’s (Rebel), a licensed retailer, received a $20 rebate for each keg sold in exchange for carrying CBG-distributed brands. Rebel received the payments through its associated third-party company, Rebel Marketing. Rebel Marketing was not a licensed retailer.

(more…)




What’s New in US Constitutional Law Developments

During the International Wine Association’s 2018 Conference, Marc Sorini presented on the latest law developments, including the Commerce Clause and First Amendment.

The topic was made particularly timely by the Supreme Court’s September 27 decision to grant certiorari review of the Byrd v. Tennessee Wine and Spirits Retailers Association decision.

View the full presentation.




Distilling Lessons from Recent Trademark Cases

Craft distillers know the value of a good trademark. The name of a particular spirit, a logo, or a label design can be vitally important to a brand’s identity (and a distiller’s bottom line).  They also know how complicated—and legally fraught—branding can be. For better or worse, trademark disputes involving alcohol beverage products are becoming increasingly common. The disputes that make it to court provide valuable insight that could prevent future legal headaches surrounding the selection, protection, and enforcement of alcohol beverage trademarks.

Read the full article.

Originally published in Artisan Spirit: Fall 2018.




Latest Stage in Missouri Tied House First Amendment Litigation Could Change Economics of Industry Advertising

The latest development in a lengthy legal challenge to advertising restrictions in Missouri’s tied house laws and regulations raises practical economic issues for the alcohol beverage industry and significant legal and policy issues for legislators and regulators at all levels of government. On June 28, Judge Douglas Harpool of the US District Court for the Western District of Missouri filed a decision in Missouri Broadcasters Association vs. Dorothy Taylor. The Missouri Broadcasters Association (MBA) is a trade association representing media outlets. Two licensed Missouri retailers were also plaintiffs in the lawsuit. Ms. Dorothy Taylor is the Supervisor of the Missouri Division of Alcohol and Tobacco Control (DATC).

The basic issue in the case is whether several Missouri alcohol beverage advertising restrictions violate the plaintiffs’ commercial speech rights protected by the First Amendment to the US Constitution.

The June District Court decision follows a bench trial held in February 2018. The trial occurred as the result of prior legal proceedings culminating in a 2017 decision by the US Court of Appeals for the Eighth Circuit, which found that the MBA’s amended complaint “plausibly demonstrates that the challenged provisions [of Missouri’s tied house law] do not directly advance the government’s asserted substantial interest, are more extensive than necessary and unconstitutionally compel speech and association.”

Perhaps the most important Missouri law challenged in this litigation is an exception in the tied house laws that authorizes a manufacturer to pay for advertising that lists “two or more affiliated retail businesses selling its products” subject to four conditions:

(a) The advertisement shall not contain the retail price of the product;

(b) The listing of the retail businesses shall be the only reference to such retail businesses in the advertisement;

(c) The listing of the retail businesses shall be relatively inconspicuous in relation to the advertisement as a whole; and

(d) The advertisement shall not refer only to one retail business or only to a retail business controlled directly or indirectly by the same retail business.

This language may be familiar to many practitioners and regulators as a nearly identical provision appears in the Federal Alcohol and Tobacco Tax and Trade Bureau (TTB) tied house regulations. Laws and regulations of several states include similar express exceptions and TTB regulations are incorporated by reference in the trade practices regulations of other states. Innumerable TTB and state tied house laws and regulations restrict advertising in similar ways and may be invalidated if the analysis in Missouri Broadcasters is applied by other courts and ultimately upheld by federal appellate courts.

Other Missouri laws and regulations that were successfully challenged by MBA in the trial court prohibit (a) media advertising of price discounts, (b) beer and wine coupons, (c) outdoor advertising of discounts by retailers and (d) below cost advertising.

Unlike many cases based solely on theoretical legal arguments and the text of laws and regulations, the trial in the Missouri case resulted in [...]

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