Category: FTC

Twenty Years Of Proposed Audits? Learn From Facebook’S Bout With The FTC….

Scott R. Bialecki
The Wall Street Journal reported today that Facebook is close to reaching a settlement with the FTC over its concerns about unilateral, retroactive changes to Facebook’s privacy policies.  Although a final settlement has not been reached, it’s been reported that part of the settlement will require Facebook to submit to 20 years of privacy audits, which greatly exceeds the normal 5 year auditing provisions that you see in most FTC settlements.  The takeaway is simple.  If you have a privacy policy, adhere to it. Consumers don’t like to have their information shared in a manner that is contrary to their original understanding as to how such information would be used unless they’ve received adequate notice.  As the U.S. becomes more wired, consumer online privacy issues will become of even greater concern to the FTC.  Learn from how the FTC is attempting to resolve consumers’ privacy-related complaints against Facebook. Otherwise, you may have the government monitoring your business activities for years (or possibly decades) to come.

The New ACO Guidelines Are Here! The New ACO Guidelines Are Here!

Scott R. Bialecki
Yesterday, the FTC and DOJ announced the release of their Joint Policy Statement regarding the enforcement of U.S. antitrust laws with respect to Accountable Care Organizations (“ACOs”).  This is reminiscent of when the Agencies issued their Joint Healthcare Guidelines in 1994, and capitation, HMOs, PPOs and PHOs were the topics of issue.  It should be interesting to see how the industry reacts in light of these guidelines.

Learn From How The FTC Approaches Your Competitors’ Advertising!

Scott R. Bialecki
Earlier this week, the FTC approved a final Order settling charges against Beiersdorf, Inc. relating to marketing claims for its Nivea My Silhouette! skin cream product. The Decision and Order can be found on the FTC’s website along with a copy of the Complaint. What can be learned from this case?  First, don’t believe that just because your competitors’ products have not been questioned by the FTC, your products are immune from review.  Second, there can be serious financial repercussions for making questionable claims.  According to Section V of the Order, Beiersdorf is required to pay $900,000 to the FTC to settle this matter.  Third, in addition to being concerned about whether your more traditional types of marketing are compliant, you need to be careful about the types of keywords that you are purchasing to promote your products.  As noted in the Beiersdorf matter, the FTC complained about the purchase of terms, such as “stomach fat” and “thin waist.” Finally, while the matter may be over, Beiersdorf is now under Order with the FTC (the violation of which will trigger significant financial penalties) and has agreed to be monitored by the FTC for five years with regard to certain future claims.  While such monitoring provisions are not new, companies often forget about how invasive these provisions can be as it allows the FTC, “upon reasonable notice and request” to ask for, among other things, substantiation for the subject claims.  In other words, unlike in civil litigation, the matter is far from being over even though a settlement has been reached. Learn from how the FTC settled matters with others in your field and consider the significant disruptions, both financial and otherwise, that can result if your company makes unsupported or questionable claims.

Don’t Let The New FTC ALJ Rule Changes Bite You!

Scott R. Bialecki
The FTC has announced changes to several sections of its Rules of Practice used in consumer protection and competition matters before an Administrative Law Judge.  According to the FTC, they are designed to help streamline discovery and motion practices.  Details of the changes can be found at http://www.ftc.gov/os/fedreg/2011/08/110812part3frn.pdf, which reportedly address such issues as how to label "confidential" documents and the admissibility of expert reports.  The FTC's Press Release can be found at http://www.ftc.gov/opa/2011/08/part3.shtm. 

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

Scott R. Bialecki
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”

Scott R. Bialecki
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….

Scott R. Bialecki
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.