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Coats and Bennett to host viewing of Professor David Nimmer's lecture titled "Infringement 2.0"

Coats and Bennett, PLLC will be hosting a meeting to view a replaying of Professor David Nimmer's lecture titled "Infringement 2.0" May 28th, 2014. If you would like to register for this event please contact This email address is being protected from spambots. You need JavaScript enabled to view it. .

Coca-Cola Has a Rough Day at the Supreme Court

When a Supreme Court Justice suggests your product’s label “cheats consumers” it is probably not a good sign for your position on the merits.  When your brand is famous for slogans like “Can’t Beat the Real Thing” the observation likely carries a special sting.

During oral arguments yesterday, the Supreme Court appeared poised to breathe new life into POM Wonderful’s false advertising claim against Coca-Cola’s Minute Maid pomegranate blueberry juice.  The Justices expressed varying degrees of skepticism that Coca-Cola’s compliance with the Federal Food, Drug, and Cosmetic Act (“FDCA”) could insulate it from Lanham Act liability.

Coca-Cola argued that the FDCA precludes POM’s Lanham Act claim.  Coca-Cola pointed to provisions in a 1990 amendment to the FDCA that preempt state laws related to food labeling.  The goal of that preemption provision, Coca-Cola counsel Kathleen Sullivan argued to the Court, was to create uniform national food labeling standards.  Coca-Cola explained that “it cannot be that Congress meant to preempt these [state law] claims” that require more than just compliance with the federal standard while leaving similar theories based on federal law untouched.  In Coca-Cola’s view, since its label complies with the FDCA, POM’s false advertising claims are barred as a matter of law.

In a telling exchange, Justice Kennedy pushed Coca-Cola’s attorney on her client’s preemption rationale.  “Is it part of Coke’s narrow position that national uniformity consists in labels that cheat the consumers like this one did?” he asked Sullivan.  After Sullivan explained “[t]here is no [evidentiary] record” in the case, Justice Kennedy responded that if “Coca-Cola stands behind this label as being fair to consumers, then I think you have a very difficult case to make.”  He then expressed concern about how Coca-Cola’s position is that even if the label is misleading to consumers, “there’s nothing we can do about it.”

Justice Ginsburg put her finger on POM’s competitive plight.  “The consumer is able to buy the Coke product much cheaper and the POM product costs more; the consumer thinks that they are both the same, so they’ll buy the cheaper one,” she said.

Coca-Cola tried to diminish the impact on consumers by hinting at how an adverse ruling could open a Pandora’s box.  Sullivan explained that allowing Lanham Act claims against labeling like Coca-Cola’s would create “burdens and inefficiencies of having constantly shifting labeling standards imposed by juries, which will ultimately cost more to the consumer.”

Justice Sotomayor pressed Coca-Cola on how this case is any different from Wyeth v. Levine, 555 U.S. 555 (2009).  In Wyeth, the Supreme Court held that FDA approval of a medication and its label did not automatically insulate a drug manufacturer from liability under state tort law. 

“How is Wyeth any different?” Justice Sotomayor asked.  “The FDA here—it’s even worse, this case.  The FDA doesn’t approve the [juice] labels.  It never looks at them and says they are okay or not okay unless they decide to enforce the statute.”

Coca-Cola offered two potentially unconvincing reasons why Wyeth does not apply.  First, while Coca-Cola admitted the FDA did not preapprove the juice labels at issue in this case, “they couldn’t have gotten closer here” with the specificity of the regulations.  How this distinguishes Wyeth from this case is unclear.

Second, Coca-Cola maintained Wyeth was an implied preemption case.  By contrast, “the express preemption provision here . . . says that Congress wanted nationally uniform labeling regulations.”  The trouble with this position is that earlier in its argument Coca-Cola conceded that its case is not based on express preemption.  Coca-Cola earlier explained that since the “express preemption provision would make POM’s claims expressly preempted under State law, it follows a matter of inference from the national uniform scheme that Congress set up, that Lanham Act claims are precluded . . . to the extent the state claims would have been preempted.”

The Court may be unwilling to draw that inference.  “You are asking us to take what [the FDA] has said about juice as blessing this label, saying it’s not misbranding, when its regulations aren’t reviewed by the Court, when there is no private right of action, and say that that overtakes the Lanham Act,” Justice Ginsburg said.  “[I]t’s really very hard to conceive that Congress would have done that.”

Justice Kennedy echoed Justice Ginsburg.  “[Y]ou want us to write an opinion that . . . Congress enacted a statutory scheme because it intended that no matter how misleading or how deceptive a label it is, it if it passes the FDA . . . there can be no liability,” he said.

Another of Coca-Cola’s arguments backfired.  In attacking POM’s false advertising claim, Coca-Cola appealed to the ability of ordinary consumers to determine the content of its juice.  “[W]e don’t think that consumers are quite as unintelligent as POM must think they are,” Coca-Cola’s counsel explained.

“Don’t make me feel bad because I thought that this was pomegranate juice,” Justice Kennedy quipped.

“He sometimes doesn’t read closely enough,” Justice Scalia jokingly added.

The Court will issue an opinion in the case this summer. 

Katherine Heigl Sues Duane Reade. #LanhamAct #RightofPublicity

Take Twitter and Facebook and add a recognizable brand and some paparazzi pictures of a celebrity.  What do you get?  A lawsuit at the intersection of social media, trademark law, the right of publicity, and the First Amendment.

Katherine Heigl is an actress well-known for her roles in films like 27 Dresses and TV’s Grey’s Anatomy.  Duane Reade is a pharmacy chain with 250 stores in and around New York City.  Duane Reade maintains an active presence on social media, including on Twitter and Facebook.  In March, paparazzi captured Heigl carrying Duane Reade bags in New York City.  Duane Reade sent out the tweet below featuring one of those pictures.

duanereadeheigltweet

That tweet may prove costly for Duane Reade.  Last Wednesday, citing the tweet and Duane Reade's use of the photograph on Facebook, Heigl filed suit against Duane Reade in federal court.  Heigl’s fifteen-page complaint charges Duane Reade with (1) violating section 43(a) of the federal Lanham Act, (2) misappropriating Heigl's right of publicity under New York law, and (3) committing common law unfair competition.

Heigl's lawsuit could help set the rules for how brands use social media.  Many legal questions around social media are unsettled.  There is not much case law on the subject.  The murkiness is also a function of the medium.  Brands use social media to advertise.  But not every tweet or Facebook post from a brand is an advertisement.

"Twitter is a marketer's dream come true," Gary Vaynerchuk writes in his book Jab, Jab, Jab, Right Hook, "because it allows you to initiate a relationship with your customer."  The key to building a strong relationship is authenticity.  According to Vaynerchuk, brands leverage social media effectively when they carry on conversations like real people.  Brands squander the medium's potential when they bombard their followers with a steady stream of advertisements and coupons.

The outcome of this case will likely turn on whether the court sees Duane Reade's tweet and related Facebook post as a conversation starter or an advertisement.  On what side of that line does Duane Reade's content fall?

Throughout Heigl's complaint, her attorneys labor to paint Duane Reade's content, to include the tweet above, as advertising.  They write that "[t]he purpose of [Duane Reade's] social media activities is commercial advertising aimed at attracting customers and revenue."  The conversations Duane Reade initiates with its customers through social media are incidental to that overarching purpose.  In particular, Heigl's complaint points out how Duane Reade called itself New York City's "favorite drugstore" and "most convenient drug store" in its Heigl tweet and Facebook post.  The complaint also alleges that Duane Reade took the paparazzi photograph from celebrity gossip news site JustJared.com, "eliminating all news reporting aspects" of the post from the original source.

Duane Reade will try to distinguish the disputed content from commercial advertising.  To refute Heigl's social-media-as-advertising narrative, Duane Reade can cite to the exhibits Heigl attached to her complaint.  Exhibit A to her complaint is a 36-page print out of Duane Reade's Twitter feed.  Heigl's exhibit shows that Duane Reade's twitter feed contains links to products and coupons.  However, it also shows Duane Reade routinely distributing content that is unrelated to pharmacies and the products they sell.  For example, one tweet shows Duane Reade asking its followers “[i]nquiring minds want to know…What would be your dream car?”  In another tweet Duane Reade invites its followers to “[l]earn more about Greek culture at the Greek Independence Day Parade” in New York City.  Heigl’s exhibit also shows Duane Reade tweeting inspirational quotes at its followers from thinkers like C.S. Lewis.

Set against that backdrop, Duane Reade might be able to characterize the tweet as something akin to news reporting.  Duane Reade could argue that it was informing its followers of the fact that a celebrity visited one of its stores.  Duane Reade followers and other consumers might be more likely to think “that’s interesting” instead of “if Katherine Heigl shops there so am I.”  In that way, Duane Reade’s content becomes more about informing the public—which strikes at the heart of the First Amendment—than trading on Heigl’s fame.

If Duane Reade’s content is advertising, then the court will apply the Lanham Act and New York’s right of publicity statute.  Even if Duane Reade is successful in defending the Lanham Act claim by showing that consumers viewing the content are not likely to believe Heigl endorses or is otherwise affiliated with its products, its defense would likely falter on the New York right publicity claim.  All a violation of that statute requires is a use of a person’s “name, portrait, picture, or voice” in New York “for advertising purposes or for the purposes of trade” without written consent.  N.Y. Civ. Rights Law § 51.  If Duane Reade’s content is advertising, then Heigl will be able to hold it liable under New York law.

So what will happen?  My guess is that cooler heads will prevail and prevent resolution of an interesting legal question.  Look for the parties to settle and for Duane Reade to issue a press releasing announcing a donation to a charity of Heigl’s choice.  Whether Duane Reade shares the press release with its followers on Twitter or its Facebook friends may be a different story.

Larry Coats Gets Legal Elite Nod from Business NC Magazine

Chosen by the state’s lawyers, the legal elite listing recognizes NC's top attorneys

Coats and Bennett, P.L.L.C. is proud to announce that partner, Larry Coats, has been recognized as one of Business North Carolina's 2014 Legal Elite in Intellectual Property Law.  The honor, voted on by the state’s lawyers, recognizes the top attorneys in business-related categories and provides every active lawyer in the state the opportunity to participate. In addition, Coats received the most votes from area lawyers, ranking top in the Intellectual Property category.

With over 35 years of experience in intellectual property, including patent and trademark infringement ligation and patent preparation and prosecution, Coats has written and prosecuted over 1,000 patent applications.

"I am extremely proud of my friend and business partner, Larry Coats, for receiving this honor,” said David Bennett, managing partner Coats and Bennett, P.L.L.C. "Larry is always striving to provide the highest quality work for the benefit of his clients. That his peers recognize this and selected him among the 2014 Legal Elite for IP Law is a testament not only to the service he provides his clients, but to his standing in the legal community."

Coats is an engineering graduate of North Carolina State University and obtained his law degree from the University of North Carolina at Chapel Hill. He is a member of the American Intellectual Property Association, North Carolina Bar Association and Wake County Bar Association. Coats also serves on the Advisory Board for North Carolina State University's Biological and Agricultural Engineering Department.

For more information about the Legal Elite click here

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