The FTC voted today to issue revised proposed Guides Concerning the Use of Endorsements and Testimonials in Advertising, aka, the “Endorsement Guides.” In a 5-0 vote, including a yes vote from the FTC’s newest Commissioner, Alvaro Bedoya, the FTC agreed to publish their proposal in the Federal Register and will take comment on the updates from the public. In addition, the FTC announced that it will hold a virtual event on October 19, 2022, in which it will consider the special challenges presented by advertising to children, especially children under 12 years of age.Continue Reading FTC Votes to Issue Revised Endorsement Guides for Public Comment
The FTC continues its pursuit of deceptive Made in USA claims, this time with allegations that company Lions Not Sheep and its owner, Sean Whalen, marketed apparel as being “Made in USA,” “Made in America,” “100% AMERICAN MADE,” and “BEST DAMN AMERICAN MADE GEAR ON THE PLANET” when in fact the products were made in China. According to the FTC, Whalen appeared in social media posts claiming he could conceal the fact that his politically-themed hats, t-shirts, sweatshirts, and other apparel were of Chinese origin by removing the labels and replacing them with express markings that they were “Made in USA.”
The Recall Roundup is a monthly survey of regulatory activity affecting the manufacture, distribution, and sale of consumer products. Subject matter may include the latest product recalls, major federal agency developments, and proposed or new federal rules. The blog’s goal is to provide an overview, rather than a comprehensive report on every development that could potentially affect businesses or consumers. Nothing herein constitutes legal advice. If you have questions or comments about the blog, please reach out to the authors.
Trade dress is a sub-category of trademarks traditionally reserved for product packaging. However, it can also include product design itself if the design elements claimed are distinctive and allow the consumer to recognize a single source as the producer or seller of the goods. Well known product design cases include high heels with contrasting red soles, iconic electric guitar shapes, and the green color of night-time cold medicines.
On March 31, 2022, the staff of the Division of Corporation Finance and the Office of the Chief Accountant of the SEC issued Staff Accounting Bulletin (SAB) No. 121 (SAB 121), which “adds interpretive guidance for entities to consider when they have obligations to safeguard crypto-assets held for their platform users.” SAB 121 highlights the enhanced technological, legal and regulatory risks associated with safeguarding digital assets, as compared with more traditional asset classes. Specifically, SAB 121 asserts that a company is subject to “significant increased risks… including an increased risk of financial loss” when that company controls the cryptographic keys associated with a user’s digital assets. As a result, the staff believes that reporting companies should quantify and disclose that obligation, and record a liability and corresponding asset on their balance sheets at fair value. Continue Reading SEC Issues SAB 121 Providing Accounting Guidance for Companies that Safeguard Digital Assets
On April 25, 2022, the United States Supreme Court agreed to hear the plaintiff’s appeal in Mallory v. Norfolk Southern Railway Company, 266 A.3d 542 (Pa. 2021), in which the Pennsylvania Supreme Court struck down the increasingly contentious “consent-by-registration” theory of personal jurisdiction. The theory deems corporate defendants to have consented to general personal jurisdiction (also known as “all-purpose” jurisdiction) in a forum based solely on its registration to conduct business there. As we reported in our February 2022 article—Mitigating Risks of Consent-by-Registration Personal Jurisdiction—four state high courts recently weighed in on the constitutionality of this theory, with one endorsing the theory and three rejecting it. The United States Supreme Court will now have the opportunity to resolve this “broad and entrenched split among both state and federal courts on this fundamental and recurring question of federal constitutional law,” as the Mallory certiorari petition describes it, in the October 2022 Term.
On April 14, 2022, the United States Environmental Protection Agency released an updated draft risk assessment for formaldehyde, in which it links long-term, low-dose inhalation of the common chemical to leukemia and various cancers involving the head and neck. EPA has also identified potential links to non-cancer health outcomes, including sensory irritation, respiratory problems, reproductive and developmental toxicity, and nervous system effects. The risk assessment associates these potentially adverse health effects with lifetime doses even lower than those identified by EPA in its 2010 draft, which EPA had agreed to revisit after the scientific community and industry stakeholders criticized its methodology.
The FTC entered into a consent order with Lithionics Battery LLC and its General Manager, settling allegations the company misrepresented its lithium ion cells are made in the United States. This is the first case the FTC has brought under its new civil penalty authority provided in the Made in USA Labeling Rule, which we wrote about last summer.
Several retailers recently settled cases with the FTC over allegations they deceptively marketed “bamboo” textiles. These cases come as some of the first, if not the first, instances of the FTC using its revived civil penalty authority to punish initial offenses by retailers.
Last week, the Securities and Exchange Commission (SEC) revealed its much-anticipated proposal to require that public companies disclose climate-related information. The proposed rule is significant because, for the first time, the SEC would mandate that companies (including foreign companies) publicly traded in the US disclose climate-related risk and greenhouse gas (GHG) emissions information beyond the information currently required by existing SEC rules applicable to registration statements and annual reports.