Tuesday, November 27, 2012

Cyber Monday is a "banner" day for 132 sites selling counterfeit goods

By Sue Ross

Brand owners look forward to Cyber Monday with high hopes of strong online sales. Cyber Monday can also be extremely lucrative for counterfeiters. This year, however, dozens of counterfeiters received an unwelcome surprise.

The Homeland Security Investigations (HIS) directorate of the U.S. Immigration and Customs Enforcement (“ICE”) agency, worked with the European Police Office (Europol), to lead an international law enforcement effort to seize domain names selling counterfeit merchandise. See Nov. 26, 2012 ICE Press Release.

Dubbed “Project Cyber Monday 3,” the global endeavor resulted in the seizure of 132 domain names and the arrest of one U.S. resident. See Nov. 26, 2012 U.S. Attorney Press Release.

The web sites at the seized domain names offered a wide variety of goods, ranging from professional sports jerseys, to jewelry, to DVDs, to luxury goods. See the National Journal List of 101 domestic websites.

Seizure Banner Greetings to Counterfeit Websites

Visitors attempting to reach the affected web sites are now greeted with this banner that notifies the visitor of the government seizure and educates the visitor about the federal crime of copyright infringement:

Europe and the UK Join Forces with ICE

Although this effort was the third consecutive year for ICE’s Cyber Monday initiative, it marked the first time that European law enforcement was involved. In addition to the European Police Office (Europol), law enforcement agencies from Belgium, Denmark, France, Romania, and the United Kingdom participated. The European agencies seized 31 of the 132 affected domain names. See U.S. Department of State Briefing with John Morton, Director of U.S. Immigration and Customs Enforcement (ICE).

U.S. Warrants Issued for Domain Names

The U.S. seizure effort resulted from warrants issued by U.S. Attorney’s Offices in the Districts of Colorado, Maryland, New Jersey, and the Central District of California, the Southern District of California, the Western District of New York, and the Western District of Texas.

How did law enforcement know which domain names to seize? From leads they received from the brand owners.

Undercover officers made purchases of the allegedly infringing goods. If the copyright holder confirmed that the purchased goods were counterfeit or otherwise illegal, law enforcement sought seizure orders from federal magistrate judges.

The U.S. Attorney for the Western District of New York William J. Hochul Jr. underscored that counterfeit goods adversely affect not only brand owners:

Victims of these crimes include not only those who create intellectual property and the employees of the legitimate businesses who turn the ideas into products. Consumers are also hurt by unknowingly obtaining inferior or potentially harmful products, as are taxpayers who are unable to rely on taxes from legitimate sales to fund programs which benefit the community.

See ICE Update and Nov. 26, 2012 U.S. Attorney Press Release.

Monday’s seizure was part of ICE’s “Operation in Our Sites,” a program that targets websites distributing counterfeit and pirated goods on the internet. “Operation in Our Sites” is managed by The National Intellectual Property Rights Coordination Center (IPR Center) in partnership with Homeland Security Investigations.

According to ICE, since the operation began in the middle of 2010, more than 1,600 domains have been seized many of which have been forfeited to the federal government.

In addition to the domain name seizure, officials have targeted for seizure PayPal accounts utilized by the allegedly infringing web sites. As reported by NetworkWorld, these account balances are reportedly in excess of $175,000.

Sources: U.S. Immigration and Customs Enforcement website; European Police Office website; The United States Attorney’s Office, Western District of New York; Ribeiro, “US, European Agencies Seize 132 Domain Names for Selling Counterfeit Merchandise,” NetworkWorld, Nov. 27, 2012; http://www.nationaljournal.com/tech/101-u-s-websites-blocked-on-cyber-monday-20121126.

This article was prepared by Sue Ross (sross@fulbright.com / 212 318 3280) of Fulbright’s Intellectual Property and Technology Practice.

Monday, November 26, 2012

‘Eco-friendly’ claims found not to be so green after all

By Erika Brown Lee 

On November 19, 2012, the National Advertising Division declared that GreenPan, maker of non-stick cookware, should either change or discontinue advertising its products as “eco-friendly.” See NAD Recommendation.
The National Advertising Division, which is part of the self-regulatory system administered by the Council of Better Business Bureaus, issued a case report and press release in response to a complaint filed by DuPont, which manufacturers Teflon® products.

As we previously wrote in an earlier post regarding the Federal Trade Commission’s revised Green Guides, the FTC has raised the level of scrutiny on what it terms “unqualified general environmental benefit claims” such as 'Eco-friendly,' and recommends that marketers take several steps to avoid misleading advertisements.

In its complaint to the NAD, DuPont claimed GreenPan’s statements about the composition of its products conveyed unsubstantiated superiority of GreenPan products in comparison to DuPont cookware.

DuPont uses a coating system containing polytetrafluoroethylene (PTFE), which historically contained perflurooctanoic acid (PFOA).

However, DuPont has committed to eliminating PFOA entirely from its process and no longer uses it for its cookware coatings.

In contrast, GreenPan employs a different coating technology called Thermolon. NAD noted that GreenPan ads stated that all PTFE non-stick coatings were made with PFOA and were unsafe, and that GreenPan’s Thermolon coating was safer and healthier than all PTFE products.

NAD determined that GreenPan messages concerning all PTFE products were unsupported, as were its claims that Thermolon-coated products were better for the environment and safer than all PTFE products. 

NAD recommended that while GreenPan could advertise its products as “PFOA-free” or “PTFE-free,” GreenPan should discontinue its superiority and eco-friendly claims.

The NAD decision, which requires voluntary adherence to its recommendations, also directed GreenPan to follow FTC guidelines in developing future marketing statements with regard to the recyclability of its product packaging.

GreenPan could appeal the NAD’s decision to the National Advertising Review Council. The NAD could refer any non-compliance with its recommendations to the FTC.

Source: Council of Better Business

This article was prepared by Erika Brown Lee (ebrownlee@fulbright.com / 202 662 0398) of Fulbright’s Privacy, Competition and Data Protection Practice and Health Care Practice.

Friday, November 16, 2012

Two top legal brands join forces

The Brand Protection Blog focuses on developments affecting brands and the companies that own them. We believe we would be remiss if we did not report on a significant branding development of our own.

Yesterday, Fulbright & Jaworski (which sponsors The Brand Protection Blog) and Norton Rose announced they will combine to create a global top-ten law firm by revenue and attorney head count. See Fulbright's News Announcement.

Fulbright was recently described by BTI as a Brand Elite firm—one of 18 U.S. law firms that enjoy “substantially better brand perception” among clients. See The BTI Brand Elite.

In 2011, Norton Rose was recognized by Acritas’ Sharplegal 2011 Global Elite Brand Index as a top 15 global elite legal brand. See The Sharplegal Global Elite Brand Index

The combined firm will have 3,800 lawyers in 55 offices across the United States, Europe, Asia, Australia, Canada, Africa, the Middle East and Latin America.

Thursday, November 15, 2012

Branding and “Cause” Marketing

By Sue Ross

“A company’s or charity’s brand is its most valuable asset.” So said the New York Attorney General (“NYAG”) on October 18, in a guidance document (“the Guidance”) relating to companies that support charities by promising donations from the sale of their products or use of their services—called “cause” marketing. See NYAG Website and Oct. 18 Press Release.

The NYAG provided five “best practices” relating to cause marketing, generally focused on transparency to consumers. Five Best Practices.

Step 1: “Clearly Describe the Promotion”

The Guidance states that advertisements and web sites used in the cause marketing campaign, and product packaging, should “clearly and prominently” disclose the terms of the promotion, including the charity’s name, what the charity will receive, what the consumer needs to do, whether there are any minimum or maximum amounts guaranteed to be paid to the charity, and the start and end dates of the cause marketing campaign.

The Guidance provides an example:

Step 2: “Allow Consumers to Easily Determine Donation Amount”

The NYAG advises against using terms like “profits” or “proceeds.” Instead, the cause marketing campaign should indicate the amount per item/service to be donated or indicate the fixed percentage of the retail purchase price.

Step 3: “Be Transparent About What Is Not Apparent”

The Guidance recommends specifying where there will be a flat donation made to the charity regardless of any consumer action, whether the donation will be in-kind or in cash, and whether there is a cap on the total amount donated as part of the cause marketing campaign. In addition, the NYAG advises: “If a ribbon, color, logo or other indicia commonly associated with a charitable cause is used in a cause marketing campaign, clearly and prominently disclose whether the purchase of a product or use of a service will trigger a charitable donation.”

Step 4: “Ensure Transparency in Social Media”

The Guidance extends the best practice recommendations list above to cause marketing campaigns conducted on social media. But the interactive nature of social media led to an additional recommendation: “Companies should also have a system in place to track donations in real-time for the duration of the campaign, to make transparent to users the progress of the campaign.”

Step 5: “Tell the Public How Much Was Raised”

The Guidance recommends that companies and charities “should maintain on their websites key information about all active and recently closed cause marketing campaigns.” At the end of each campaign, the website “should clearly disclose the amount of the charitable donation” that the campaign generated for the charity.

Sources: Office of the New York Attorney General

This article was prepared by Sue Ross (sross@fulbright.com / 212 318 3280) of Fulbright’s Intellectual Property Practice.

Wednesday, November 14, 2012

K-V Pharmaceuticals Calls Upon the ITC To Defend Its Makena® Brand

By Bob Rouder and Saul Perloff

In February, 2011, K-V Pharmaceuticals received FDA approval to market its branded pregnancy drug, Makena® as an orphan drug. Makena’s active ingredient, the hormone 17 HPC, aids at-risk expectant mothers in carrying their child to term.

As we previously reported, K-V sued the FDA demanding that it prevent compounding pharmacies from continuing to supply a compounded version of 17 HPC. The FDA successfully moved for dismissal on the grounds that courts must defer enforcement decisions to the agency charged with that enforcement. See Sep. 6, 2012 Opinion. On October 23, 2012 K-V filed a complaint with the International Trade Commission (ITC) seeking similar relief under the 1930 Tariff Act. See USITC Complaint.

K-V Seeks Relief Under The 1930 Tariff Act

The 1930 Tariff Act, as amended, empowers the ITC to grant relief if it finds, inter alia, “unfair methods of competition and unfair acts in the importation” of goods whose sales threaten “to destroy or substantially injure an industry in the United States.” See 1930 Tariff Act.

In its complaint, K-V alleges that its 7-year orphan drug exclusivity makes it the sole lawful, domestic purveyor of 17 HPC. According to K-V, compounders are acting illegally because they are behaving as drug manufacturers rather than fulfilling their lawful role of responding to a prescribing physician’s custom order for a unique therapy tailored to a specific patient. See USITC Complaint.

K-V named 7 Chinese manufacturers, 3 domestic distributors and 36 compounders, as Proposed Respondents but their request for relief applies much more broadly. Specifically K-V wants a ban on the importation of all 17 HPC “except as authorized by [K-V]” and to prevent the sale or solicitation of 17 HPC within the United States from any imported source unless authorized by K-V. See USITC Complaint at § X.(b)(i) and § X.(b)(ii)]

K-V Also Moves For Temporary Relief

In addition to permanent restraints, K-V has also requested a temporary general exclusion order and a temporary cease and desist order to halt immediately the damage they claim is being done to them by the importation and compounding of 17 HPC. K-V asserts that without relief, it may not be able to re-organize under Chapter 11 of the Bankruptcy Code and might cease as a going concern. K-V’s Oct. 23, 2012 Motion for Relief.

In order to be granted temporary relief, the Commission must conclude that (1) without it, K-V will suffer irreparable harm; (2) K-V is more likely than not to prevail upon the merits of its complaint; (3) the public interest will be served in granting the temporary relief; and (4) the hardship suffered by K-V without the relief outweighs the hardship suffered by the Respondents with the temporary relief. See K-V’s Oct. 23, 2012 Mem. in Support of Motion for Relief at ¶ 16.

The Commission Seeks Immediate Comment

The Commission invited the Proposed Respondents and the public at large to comment on K-V’s Complaint primarily as it pertains to the impact a ruling in K-V’s favor would have on the public’s health, safety and welfare as well as on the American competitive arena and domestic consumer interests. See Trade Commission Notice of Receipt and Fed. Reg. Notice.

Thus far, several interested parties have weighed in, many making the same arguments. A sampling:

  • The Alliance for Natural Health USA, points out that when Makena was approved, K-V set a per-dose list price of $1,500 compared to $10 and $20 per dose for compounded 17 HPC. The Alliance argues that if K-V is placed in a position to control the market, “it can be expected to resume such price gouging.” See Alliance Comments.
  • Alere, a provider of home healthcare services to pregnant women, suggests the Commission reject K-V’s requested relief because the K-V complaint is little more than an attempt “to evade the absence of a private right to enforce the FDCA.” Therefore, Alere “urges the Commission to defer to the FDA’s expert opinion” that it is important to preserve “the availability of compounded 17P to pregnant women.” See Alere Statement.
  • The March of Dimes, although offering no opinion “on the legal merits of the complaint,” urges the Commission to ensure that any action it takes makes provision for compounded 17HPC and avoids shortages by granting enough time for states and insurers to adjust their policies that currently give preference to compounded 17HPC. See March of Dimes Comments.
  •  A statement by 11 OB/GYN specialists and academicians on behalf of concerned physicians urges the Commission to “maintain the availability of compounded 17P.” They argue that Makena’s approval covers indications that apply to only 140,000 of the 500,000 at-risk patients. They also note that the presence of 2% benzyl alcohol in Makena makes it less safe than “a preservative-free formulation.” The physicians therefore conclude that a decision in K-V’s favor will impose upon doctors “a ‘Sophie’s Choice.’” See Statement of Concerned Physicians.
  • Twenty-one Proposed Respondents alert the Commission to the fact that even among the one-third of at-risk women covered by Makena’s approved labeling, doctors prescribe compounded 17HPC for dosing not offered by K-V, for women whose IM administration requires different oils, and most importantly for fear of the association between benzyl alcohol and “gasping syndrome” in infants. Describing K-V’s request as a “terrifying prospect,” the compounders suggest that a company teetering on bankruptcy, who sought “extortionist profits,” and who was “shut down in 2009 by FDA for substandard manufacturing practices,” cannot be entrusted with “the nation’s entire supply of 17P.” See Compounding Pharmacies Comments.

What Happens Next?

After the motion for temporary relief is decided, the ITC will announce a projected time frame to complete its investigation. The Commission may make a determination or issue a consent order without a determination. Once a determination is finalized any party adversely affected may appeal for review by the U.S. Court of Appeals, Federal Circuit. In addition, in certain instances, the President of the United States may render a determination inoperable for policy reasons. See 1930 Tariff Act at §1337(b – j).


K-V Pharma. Co., et al. v. U.S. Food and Drug Admin., Case No. 1:12-cv-01105-ABJ (D. Columbia) (Sep. 6, 2012 Opinion); United States International Trade Commission Investigation No. 337-2919; Office of the Law Revision Counsel, U.S. House of Representatives 19 USC Sec. 1337, Jan. 3, 2012 (112-90); Federal Register.

This article was prepared by Bob Rouder (rrouder@fulbright.com / 512 536 2491) and Saul Perloff (sperloff@fulbright.com / 512 536 7166) of Fulbright’s False Advertising Practice.