Proskauer on Advertising Law
Proskauer on Advertising Law

Foreign Importer Hanging by a Thread, but International Trade Commission Cuts It Off

The International Trade Commission recently issued a general exclusion order barring the importation of bed sheets with falsely advertised thread counts as a remedy for Section 337 violations.  The decision in In re Certain Woven Textile Fabrics and Products Containing Same demonstrates the potential reach of Section 337, which prohibits unfair practices related to the importation of foreign goods into the United States.  While violations ordinarily involve intellectual property infringement, the underlying unfair act can also include false advertising.

The ITC institutes investigations pursuant to Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337), which forbids the following practices in connection with the importation or subsequent sale of goods in the United States: infringement on a U.S. patent, copyright, or registered trademark, as well as “unfair methods of competition and unfair acts” that cause harm to a U.S. industry.  Once a Section 337 violation has been found, the statute authorizes the issuance of exclusion orders and cease-and-desist orders to prevent the offending goods from entering the United States.  An exclusion order is typically limited to specifically identified persons or entities found in violation of Section 337, but a general exclusion order may be issued if the ITC finds it necessary to prevent circumvention of an exclusion order limited to products of named persons, or if there is a pattern of Section 337 violations and it is difficult to identify the source of infringing products.  In making this determination, the ITC must consider whether a general exclusion order would negatively affect the public health and welfare.

The complainant in this matter alleged violations of Section 337 by fifteen respondents, and all but one settled.  The remaining respondent was accused of overstating the thread count of bed sheets made in India and imported and sold in stores in the United States.

Concluding that the sheet labeling was false, misleading, deceptive and material to consumers in determining sheet quality, the Administrative Law Judge found that respondent falsely advertised its products in the United States in violation of the Lanham Act, and that it imported and sold the products in the United States.  This caused substantial injury to complainant, who is a developer and licensor or woven textile technology and sole owner of a textile design studio.

The ALJ recommended issuance of a general exclusion order barring from importation not only respondent’s, but all falsely advertised bed sheets, due to a widespread pattern of Section 337 violations and difficulty identifying the source of the goods.  With respect to the pattern of violation, the ALJ cited evidence that foreign-made bed sheets with a lower thread count than advertised are widespread in U.S. stores.  Indeed, the ALJ cited evidence that some imported sheets sold in a major retail chain were advertised as having a thread count of 1000 but had a true thread count of 236. As for difficulty identifying the source, the ALJ explained that the seller’s identity is often absent from import records and product packaging, and U.S. retailers are also unable to identify the products’ source.  Moreover, a general exclusion order would impose no undue burden on the public health and welfare or competition in the U.S. economy.

The ITC upheld the ALJ’s findings and issued the general exclusion order, demonstrating that false advertising can fall squarely into the type of unfair act or method underlying such an order.  Unlike a Lanham Act litigation, however, the complainant’s remedy was even stronger than an injunction against the false advertising—the product at issue can no longer be sold in the United States.


Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at /212-969-3240 or /212-969-3671. We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

Fourth Circuit Tells District Court Not to Abstain in False Ad Holy War

At the heart of this unique Lanham Act case is a dispute between the Episcopal Church (the “Church”) and one of its “disaffiliated” districts, the Diocese of South Carolina (“Diocese”).  In 2012, led by its Bishop Mark Lawrence, the Diocese withdrew from the Church, but the Church did not recognize the withdrawal, and appointed Bishop Charles vonRosenberg to replace Bishop Lawrence as the head of the Diocese.  Lawsuits ensued, and the dispute raised an interesting question:  when a federal court confronts false advertising claims that are related to issues of intellectual property ownership that are being litigated separately in state court, should the federal court abstain from hearing the false advertising claims?

The Diocese fired the opening salvo by suing the Church in state court, and seeking a judgment resolving the ownership of various property rights, including intellectual property rights.  The Episcopal Church counterclaimed for, among other things, trademark infringement and dilution.

Thereafter, the newly appointed Bishop vonRosenberg filed a federal lawsuit claiming that Bishop Lawrence falsely advertised himself as the Bishop of the Diocese despite having been removed from that post after the Diocese withdrew from the national church.  Bishop Lawrence maintained that he acted properly in continuing to represent himself as the Bishop of the Diocese  because the Diocese existed as an independent entity following its withdrawal from the Church.

Initially, the federal court agreed to abstain under the Brillhart/Wilton doctrine, which provides that when a complaint seeks only declaratory relief, federal courts have broad discretion to decline jurisdiction.  Bishop vonRosenberg appealed. While the federal appeal was pending, the state court held that the disassociation was valid and that the Diocese, not the Church, owned the property at issue, including trademarks.  The Church then appealed the state court order.

On the appellate front, the Fourth Circuit acted first, holding that the district court applied the wrong abstention doctrine.  Because the federal complaint sought both declaratory and non-declaratory relief, the Fourth Circuit held that Colorado River, not Brillhart/Wilton, was the appropriate doctrine.  Under Colorado River, a federal court may decline jurisdiction only under exceptional circumstances.  The Fourth Circuit remanded for a determination of whether such exceptional circumstances existed.

On remand, the district court abstained again, and Bishop vonRosenberg appealed again.  The Fourth Circuit once again ruled that the district court had erred, and that abstention was not appropriate under Colorado River because the state and federal cases, while raising overlapping issues, were not duplicative.  Because neither vonRosenberg nor Lawrence (the federal parties) was a party to the state action, resolution of the state court case would not resolve all claims at issue in the federal litigation.  Additionally, the false advertising claims were not in front of the state court.  Thus, the Court determined that abstention was inappropriate.  The Court did acknowledge, however, that both proceedings involved the same central issue – the validity of the Diocese’s withdrawal – and remanded the case again for the district court to determine whether the federal claims were collaterally estopped by the state court’s decision.

The state court decision remains on appeal and Bishop vonRosenberg’s case is back in federal district court for the third time.  Last month, he filed an amended complaint in the federal action, and Bishop Lawrence has answered.  The district court cannot abstain this time, but could apply collateral estoppel if it wants to stay out of the religious fray.  Whatever the outcome, the Fourth Circuit may not have seen the last of these dueling bishops.

The case is vonRosenberg v. Lawrence, 849 F.3d 163 (4th Cir. 2017).


Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at /212-969-3240 or /212-969-3671. We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

Larry Weinstein and Brendan O’Rourke Named to the Inaugural Class of the Legal 500 Hall of Fame

Larry Weinstein and Brendan O’Rourke, co-chairs of our False Advertising and Trademark Practice, were recently named to the inaugural class of the Legal 500 Hall of Fame.

This award honors individuals who have, according to Legal 500, received constant praise by their clients for continued excellence. The Hall of Fame highlights the law firm partners who are at the pinnacle of the profession. The criteria for entry is to have been recognized by The Legal 500 as one of the elite lawyers in their field for six consecutive years. Fewer than 500 partners across the entire United States were included in the inaugural Hall of Fame class.

Visit The Legal 500 Hall of Fame site to learn more.


Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at /212-969-3240 or /212-969-3671. We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

The Institute for Perception’s 2017 Advertising Claims Support Course

Alexander Kaplan is a featured instructor for The Institute for Perception’s upcoming course, Advertising Claims Support: Case Histories and Principles. The course takes place on April 18–20, 2017, at the Greenbrier Resort in White Sulphur Springs, West Virginia. This is a professional development course for attorneys specializing in advertising law, market research managers, product developers, in-house counsel, sensory and consumer scientists, and packaging/product testing specialists. The course is intended to raise awareness of the issues involved in surveys of product performance and advertising to provide solid evidentiary support needed in the event of a claims dispute.

Specific course topics include:

  • ASTM Claims Guide; Methods and Data
  • Consumer Relevance
  • Consumer Takeaway Surveys
  • Test Methodology and Design

For an event agenda, please see the course brochure.


Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at /212-969-3240 or /212-969-3671. We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

Michigan District Court Won’t Hear Lanham Act Claim Against Tinnitus Treatment Certifier

Last week, we covered a summary judgment decision holding that posts on the “Science-Based Medicine” blog were not “commercial speech” under the Lanham Act, and therefore the defendant in that case was not liable for false advertising in violation of that statute. In a similar recent decision, a judge in the Eastern District of Michigan dismissed a suit alleging that “Tinnitus Care Provider Certificates” given by the defendant to attendees of a two-day tinnitus treatment training program constituted false advertising in violation of the Lanham Act.  The District Court dismissed the suit on the ground that the certificates were not “advertising” within the meaning of the Lanham Act.

Tinnitus is the perception of sound when no actual external noise is present, such as a ringing in the ears. Treatment options for tinnitus include the use of special hearing aids.  Such treatment is within the licensed scope of practice of audiologists and otolaryngologists, and some types of hearing aids are available by prescription solely from these practitioners.  But hearing aid dealers also are licensed to sell or fit hearing aids.  Most state statutes are silent as to whether hearing aid dealers may provide tinnitus care extending beyond hearing aids.

Defendant International Hearing Society (IHS), whose membership consists largely of hearing aid dealers, planned to provide the certificates to individuals who completed a two-day workshop on helping patients with tinnitus. The plaintiff, the Academy of Doctors of Audiology (ADA), alleged that the certificates IHS planned to issue deceptively communicate the message that hearing aid dealers who completed the IHS training program are legally permitted and competent to provide tinnitus care.

The court held that ADA failed to plead a commercial injury caused by IHS’s “advertising,” because ADA did not allege that IHS itself engaged in any advertising. Rather, ADA alleged that IHS planned to issue certificates to nonparties to the litigation who would in turn use the certificates to advertise the nonparties’ business interests, and the court declined to recognize the existence of a claim for contributory false advertising. Moreover, the certificates had not yet been created, so ADA could not point to any specific deceptive statement in the certificates.

The case is Acad. of Doctors of Audiology v. Int’l Hearing Soc’y, 2017 WL 679354 (E.D. Mich. Feb. 21, 2017).


Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at /212-969-3240 or /212-969-3671. We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

No Scrubs Permitted: Eleventh Circuit Affirms Blog Post Is Not Advertising Actionable Under Lanham Act

In an interesting recent opinion, the Eleventh Circuit held that a doctor’s blog post criticizing another doctor and his clinical practice could not form the basis of a Lanham Act claim because the blog posts were not commercial advertising or promotion. This case thus involves a rare circumstance in which a communication did not qualify as “commercial speech” under the Lanham Act even though it was disseminated on a website that generated revenue from ads or subscriptions. The case is Edward Lewis Tobinick, MD v. Novella, 848 F.3d 935 (11th Cir. 2017).

Dr. Edward Tobinick, a medical doctor who practices dermatology and internal medicine in California and Florida, sued Dr. Steven Novella, a neurologist based in Connecticut. Dr. Tobinick uses the drug Etanercept to treat strokes and Alzheimer’s disease, even though the drug has not been approved by the FDA for this purpose. Dr. Novella is an executive editor of the Science-Based Medicine (“SBM”) blog, which examines issues related to science and medicine and is operated by the New England Skeptical Society, a non-profit entity.

In May 2013, Dr. Novella published an article on the SBM blog criticizing Dr. Tobinick’s clinic, asserting that it had the typical characteristics of “quack clinics” or “dubious health clinics” and questioning the plausibility of the evidence supporting Dr. Tobinick’s allegedly effective off-label use of Etanercept. Dr. Novella also quoted a portion of a Los Angeles Times article which reported that Dr. Tobinick’s claims about the efficacy of his treatments led to an investigation by the Medical Board of California. The Board had placed Dr. Tobinick on probation for unprofessional conduct and mandated that he take classes in prescribing practices and ethics. Dr. Tobinick sued, claiming that the blog posts were false advertising directed at Dr. Tobinick’s clinical practices in violation of § 43(a) of the Lanham Act. Thereafter, Dr. Novella published a second blog post titled “Another Lawsuit to Suppress Legitimate Criticism – This Time SBM,” reiterating his original criticisms of Dr. Tobinick and setting forth details about the Medical Board’s investigation. Dr. Tobinick then amended his complaint to add allegations related to the second blog post.

In October 2015, a district judge in the Southern District of Florida held that Dr. Novella’s blog posts did not constitute advertising under the Lanham Act because they were not acts of commercial speech or promotion, and granted summary judgment in favor of Dr. Novella. The Eleventh Circuit affirmed, holding that in order to be the subject of a false advertising claim, the statements at issue must be in the context of proposing a commercial transaction that includes, among other things, commercial speech. The court pointed out that the “core notion” of commercial speech extends to speech that proposes a commercial transaction, and looked to three non-dispositive factors to guide its determination: (1) whether the material was “conceded to be advertisements,” (2) whether it contained a “reference to a specific product”; and (3) whether the speaker “has an economic motivation” for distributing the material.

The court held that Dr. Novella’s articles did not propose a commercial transaction, and thus did not fall within the core notion of commercial speech. In fact, the articles instead resembled non-commercial speech, since they had a primarily educational purpose. Moreover, the articles were not conceded to be advertisements, did not reference the author’s own practice except briefly for context, and did not demonstrate economic motivations sufficient to transform them into commercial speech.

On the last point, the court noted that placement of the articles next to revenue-generating ads or on a subscription-based website did not establish economic motivation for the informative articles. Even if Dr. Novella received some profit from his publications, the articles themselves did not become commercial speech simply because extraneous advertisements and subscription links may generate revenue. A contrary holding would imply that newspaper editorials and scholarly publications on any website that generates advertising revenue may be commercial speech. While the court’s treatment of what constitutes advertising could be a tough pill for Dr. Tobinick to swallow, it may be just what the doctor ordered.


Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at /212-969-3240 or /212-969-3671. We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

Elsevier Wins Summary Judgment Over Use of 3-D Medical Animations in Copyright Case

Although this blog typically focuses on legal developments in marketing and false advertising, its authors and editors are of course active legal practitioners in related areas of IP and other creative industries. Proskauer recently received a favorable summary judgment decision for the defendant, its client Elsevier, Inc., a leading publisher in the fields of science, health and nursing, in a copyright infringement case involving 500+ 3-D medical animations, in which plaintiff sought over $80 million dollars in statutory damages. Archie MD, Inc. v. Elsevier, Inc., No. 16-cv-6614 (JSR), 2017 U.S. Dist. LEXIS 37141 (S.D.N.Y. Mar. 13, 2017).

From 2005 to 2015, Plaintiff Archie MD, Inc. licensed a catalog of 3-D medical animations to Elsevier for use in Elsevier’s online learning management system, known as Evolve. As a free supplement to its nursing textbooks, Elsevier provides its customers access to digital content through Evolve.  Each textbook has a companion website on Evolve that provides supplemental content, including 3-D medical animations.  In 2015, Elsevier opted not to renew the license agreement with Archie, though continued to make available many of the animations using what it believed to be its post-termination rights.  Elsevier also created its own 3-D animations to use on Evolve.

In response, Archie sued, bringing claims of copyright infringement, breach of contract and violation of the Defend Trade Secrets Act. Archie alleged two subsets of copyright infringement claims, alleging that Elsevier (i) continued to use 500+ Archie animations on Evolve after termination of the license agreement without authorization and (ii) copied more than 50 Archie animations in developing its own, thus creating unauthorized derivative works.

After both parties filed dueling motions for summary judgment, Judge Jed Rakoff of the Southern District of New York denied Archie’s motion in its entirety and found for Elsevier on all counts. Judge Rakoff held that Elsevier utilized Archie’s animations within its post-termination rights, Archie’s animations were not trade secrets and, for all but one of the allegedly copied animations, no reasonable jury could find the animations substantially similar.

Specifically, Judge Rakoff denied Archie’s claims based on unauthorized continued use of its animations after termination of the license agreement. The court found that the license agreement permitted Elsevier to continue to use the Archie animations under certain conditions and that there was no evidence Elsevier had not complied with those conditions.

Similarly, Judge Rakoff dismissed all but one of Archie’s 50+ copyright claims alleging that Elsevier impermissibly copied Archie’s animations in creating its own on similar or the same subjects. Under the merger doctrine, the Court found that many of the alleged similarities between the animations were depictions of non-copyrightable medical concepts and anatomy. The Court also found that many of Archie’s allegations of similarity—such as allegedly similar camera angles and monochromatic backgrounds—were not original to Archie to begin with or were unprotectable ideas.  Finally, the Court recognized that the overall concept and feel between the animations was “markedly different” because Elsevier’s animations were brighter with more vibrant colors, and contained more lifelike human figures. As a result, Judge Rakoff dismissed all of Archie’s 50+ derivative work allegations, with the exception of one.  Since Elsevier challenged the validity of that lone animation’s copyright registration, Judge Rakoff stayed the litigation as to that animation pending a validity opinion from the Copyright Office under the PRO IP Act.

Judge Rakoff also dismissed all breach of contract claims alleged against Elsevier, finding they either were duplicative of the copyright infringement claim, and thus preempted or, where based on the disclosure of confidential information of Archie, unsupported by any evidence. Lastly, the Court dismissed Archie’s Defend Trade Secrets Act claim, finding that the Archie animations were not trade secrets because Archie did not take reasonable measures to keep the animations secret and the animations were ultimately distributed to consumers.


Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at /212-969-3240 or /212-969-3671. We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.