FTC Tip Of The Day: Don’t Bury Damaging Documents

Receiving an inquiry from a government agency, like the FTC, is different than being involved in civil litigation. Your client is dealing with the government, which does not have the same motivation or pressure points to settle as a private litigant. Having worked at the FTC, it’s my impression that most of the lawyers working there are passionate about making a difference and protecting consumers.  As such, if they get a sense that someone is playing games or being less than forthright, they have the luxury of devoting a substantial amount of time to a single matter and turning over every rock possible. During my tenure, some companies attempted to bury damaging documents in massive document productions with the hope that they would go unnoticed. The problem is that by putting documents in places that you wouldn’t normally expect to find them (e.g., placing a random memo in the middle of financial data), it only highlighted the document’s potential importance.  Once a company loses its credibility, it’s hard to get it back. What can be done about  producing damaging documents?  If they are clearly relevant to the FTC’s inquiry and cannot be withheld based on confidentiality concerns or some applicable privilege, don’t bury them in other documents. Rather, disclose them as the are kept in the ordinary course of business and deal with them as a matter of law.  If your company somehow ran afoul of the applicable regulations, look to prior FTC Orders to see how others in your circumstance were treated. Generally speaking, my experience with the FTC was that it tried to be consistent in its approach to dealing with issues.  In short, deal with the issues and don’t play games.  In the end, it’s been my experience that you’ll achieve better results.

FTC Investigation Suspended But No “Stamp Of Approval”

It’s been reported that the FTC has “dropped” its investigation of a start-up that searches the Internet for employees’ and job applicants’ past bad acts.  While the FTC may have suspended its investigation relating to potential Fair Credit Reporting Act violations, it never gives a “stamp of approval” as is being reported. Read the alleged copy of the FTC’s letter.  In any event, it’s an interesting intersection of social media and regulatory issues.

Take Your IP To The Next Level….

Companies often do not seek a coordinated strategy when approaching their IP and regulatory needs. Can this come back to haunt a company? Perhaps. We’ve all seen the following scenario. Many companies choose scientific-sounding names for their products to create an air of credibility with consumers. These products allegedly have been developed after or are based on “years of scientific research.” Understanding the value of a registered trademark, these companies instruct their counsel to file a trademark application with the U.S. Patent and Trademark Office for the product’s name.  After receiving an office action indicating that the mark is rejected because the mark is viewed as being descriptive, the company counters that the mark is fanciful and really doesn’t have any meaning in order to get the registration. Then, there is an FTC investigation over substantiation for some of the efficacy claims about the product. The company could be in a predicament. It needs to show the FTC that it has “competent and reliable scientific evidence” for its product’s claims.  However, it has now admitted to another government agency that it made up the name.  While this is certainly not damning evidence of deception, this may not help the company’s chances of convincing the FTC that it has complied with the law. You can see how this innocent act may be viewed by the FTC.  Not only did the company make up the suspect claims, it even made up the scientific sounding name to further deceive consumers. Certainly, companies should not forego making valid arguments to get trademark registrations. However, they should make sure that nothing is being said that could later detract from any arguments that they need to make should an FTC investigation arise.  Companies should harmonize their IP and regulatory strategies in order to minimize any later issues.