Archive for June, 2009

As others have reported, a review of Judge Sonia Sotomayor’s jurisprudence reveals familiarity with intellectual property and marketing law issues, but little indication that her positions will anything far outside the mainstream. Although two are fairly well known*, what might be of most interest to PMA members are her 1997 remarks on “word of mouth” advertising in Avon Products v. S.C. Johnson & Son, Inc., 984 F. Supp 768 (S.D.N.Y. 1997). As lawyers consider a company’s possible liability for viral marketing campaigns and off-label claims, this is a case worthy of another reading for some guidance on a company’s obligations, if any, to halt false or unsubstantiated claims from circulating.

The case involved claims by S.C. Johnson that Avon falsely advertised and promoted Skin-So-Soft (”SSS”), as an insect repellent, even though it was not registered with the EPA. The Judge found that Avon’s “official policy” was to market SSS only as a bath oil product and to inform callers to its help line that “there is no ingredient or combination of ingredients in [SSS] that could be considered an insect repellent.” Still, some Avon independent sales representatives circulated hand-printed or typed lists of “uses” for SSS. At least some members of management endorsed internally the idea of reinforcing SSS’s positive word-of-mouth.

(I remembered, reading the case, a golf course in South Carolina that had bottles of the stuff at each tee box—didn’t help my game, but I came to rely on SSS as an insect repellent, except for biting flies in the middle of Lake Michigan!)

Survey evidence was also presented, and Judge Sotomayor concluded that three times as many people learned about insect repellency from friends or the media than from an Avon-related source. In sum, she found that “word-of-mouth”–and not Avon advertising–was the “most important source of the repellency folklore than Avon’s advertising and promotion.”

As a matter of law, however, she said that Avon had played some part in the distribution of the lists sufficient for S.C. Johnson to have stated a claim under the Lanham Act for false advertising. She then reviewed the claims allegedly made by Avon, and found them not to be false; consumers believed that SSS worked, and the science showed it did—not as well as DEET, the active ingredient in S.C. Johnson’s Off! product, but Avon had made no comparative claim, and thus no false claim. Moreover, and this is perhaps the most interesting dicta, Judge Sotomayor said, “Avon cannot be held liable for failing to state publicly that it is not an insect repellent.” She found that the Lanham Act imposes no affirmative duty of disclosure, and failing to do so was not a per se violation of the Act.

The case suggests that companies do not have an obligation to search the internet for exaggerated claims that others might be making about their product, but the case also serves as a warning that any management activity that could be construed as endorsement of those claims, including a failure to warn the sales force, might well cause the company to be in violation of the Lanham Act.

*Sotomayor wrote the first decision in the Tasini case, in which a group of freelance journalists filed suit against the New York Times Co. and others for including their free lance stories in electronic databases. She granted summary judgment to the publishers in 1997, but was later overruled by the Second Circuit and the Supreme Court, on the grounds that the electronic versions did not simply copy the freelance stories as part of the collective transferred to that medium.

* Also in 1997, Sotomayor wrote the opinion for the court in Castle Rock Entertainment v. Carol Publishing Group, Inc., 955 F. Supp. 260 (S.D.N.Y. 1997), granted summary judgment for the producers of the popular Seinfeld show, who claimed that a book of trivia testing readers’ knowledge of the show’s events and characters infringed their copyright. While Sotomayor called it a difficult decisions, she was persuaded that the book was not a fair use; that the show was a work of fiction and so the defense of copying only “facts” was not available to the publisher, which had usurped a derivative market which most properly should be the producers’ to control.

These materials have been prepared by Winston & Strawn for informational purposes only. These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.