Food Law: Advertising & Marketing Concerns for Food EntrepreneursApril 26, 2016
From food subscription services to mobile food trucks, food is on the go, liberated from traditional kitchens. Food law has grown with this thriving industry. For food entrepreneurs launching or growing their businesses, here are ten advertising and marketing law issues to consider.
- Trademark. Your food is your product, but your brand name is your lifeblood. Do appropriate due diligence with legal counsel to ensure that it will work for you. This means clearing the trademark to ensure not only that it will have strength in the marketplace, but also that it will not infringe any other users’ marks. A Google search is insufficient for this purpose. Expert trademark counsel can help you determine whether your mark is available for use, and then also help you navigate the tricky process of obtaining a registration with the United States Patent & Trademark Office.
- Copyright and Patent. While you are speaking with your intellectual property counsel, determine if there are any other intellectual property protections available to you. For instance, you may wish to copyright aspects of your marketing materials and product labeling. If there is something in the production or manufacturing process that is particularly unique, you may wish to explore patent protection. In addition, you will want to ensure that you actually own this intellectual property and that ownership does not lie in the hands of the agency or independent contractor who created it. A handshake or oral agreement is not sufficient in the eyes of the law.
- Food as Medicine. More and more, we are seeing food entrepreneurs making health claims with regard to their products. These advertising messages are under a high level of scrutiny by authorities at federal and state levels. All your advertising and marketing claims require substantiation, and if the claims are scientific, they may require competent, double-blind studies to support them. These claims also may expose you to a challenge from a competitor. In short, any health claims related to your product are a red flag for legal review and clearance.
- Advertising Claims on Food Labels. We have seen an uptick of class action lawsuits and competitor challenges relating to food labeling. Despite any clearance of your label from the FDA, you still may face false advertising or unfair competition claims if your label overplays the presence of certain ingredients in the food. The danger comes not only from the words on your food label but also from pictorial representations. If the overall net impression of your label misrepresents some quality of your food, you could face substantial legal risk with a high price tag attached. Best practices dictate that you have your label reviewed by advertising counsel to avoid these substantial legal risks. This review should include consideration of legal trends regarding expiration dates on foods, currently the subject of legislative inquiry across the country.
- Mobile Food Vending. Many food entrepreneurs are using food trucks to facilitate their distribution and reach consumers quickly. In addition to licensing issues, there are many other legal issues associated with food trucks. Some cities, like Boston, have established formal guidance for creating food trucks. From establishing the appropriate intellectual property protection to determining how to speak lawfully in social media, your advertising attorney can alert you to the legal issues and help you to minimize legal risk.
- “Green” or Sustainable Marketing. With the rise of interest in organic and natural foods, food entrepreneurs are increasingly making “green” claims about either their food or their production process or their containers. In all cases, marketers should be aware of and compliant with the Federal Trade Commission’s Green Guides. These Guides require, in part, brands to avoid unqualified general claims regarding environmental benefits, have appropriate substantiation, use specific claims, and tread carefully with seals of approval or certifications. In addition, they regulate a host of terms, including recyclable, biodegradable, compostable, non-toxic, renewable, ozone safe, and “free-of” claims. If your company is making any claims about the benefits you offer to the environment or the sourcing of your ingredients, legal counsel should review these claims.
- Cause Marketing. Because many food entrepreneurs align with social consciousness, they may find themselves aligning with charities. Cause marketing is a popular technique for promoting sales. Brands frequently advertise that they donate a percentage of sales to a charitable cause, particularly using social media to spread the word of their good deeds. In so doing, brands become a co-venture with the charity and have certain legal obligations under a wide variety of charitable solicitation laws. If you decide to connect your brand with a charity, you will want to review the concept and the wording of your advertising to ensure you are making appropriate legal disclosures under 50 states’ laws and that you have registered and bonded your campaign with the states that have those requirements.
- Endorsements. The FTC is watching social media and digital campaigns carefully that use influencers to spread awareness. It is now regularly enforcing its Guidelines on Endorsements and Testimonials. These guidelines require that if a brand offers an influencer something of value in exchange for a review of any kind, the brand must ensure that the influencer discloses the material connection and still offers a truthful review. “Something of value” has been defined as money, product samples, or even a mere sweepstakes entry. State Attorneys General have followed the FTC’s example, pursuing the deceptive practice of “astroturfing” or fake paid influencer campaigns. The results have been financial penalties and mandated compliance programs that can have regulators watching your activity for twenty years. If you are planning any engagement with influencers, including ordinary consumers, you should ensure compliance with these legal mandates. Compliance is not difficult, but all too often, start-ups and even established companies are unaware of the requirements.
- Native Advertising. Influencer marketing often overlaps with native advertising campaigns in the digital environment. Native advertising is content that takes the form of the editorial platform on which it exists. From sponsored or promoted content to repurposed content, consumers may be confused as to whether they are looking at advertising or editorial content. At the end of 2015, the FTC issued an enforcement policy and guidelines requiring transparency and disclosure. The fundamental premise of the FTC’s documents is that consumers view advertising differently from editorial content, assuming it is more likely to be biased. As such, the FTC makes recommendations concerning the form and content of this kind of advertising and its disclosures. The guidance mandates “clear and conspicuous” disclosures and specifically designates how to make them across a variety of digital platforms, including websites, apps, and entertainment content. The FTC has already begun enforcing its disclosure requirements. If you are planning on drawing customers in with editorial-like content that you either create, pay for, or repurpose from others, you should explore the FTC’s new requirements to avoid being the subject of investigation and possible enforcement activity.
- Pricing Issues. Consumers do not like being deceived about the price of an offer, and neither do regulators. If you are offering something for “free,” regulators take that seriously. “Free” offers that have limitations require detailed and conspicuous disclosures. Discounts and rebates also need to be spelled out clearly to the consumer to avoid deceptive advertising. We have also seen a proliferation of food subscription services offering “free trial” or “negative option” or “loyalty” type programs. Other types of programs advertise one price to lure in a consumer, but then add on features along the way. “Drip pricing”, as it is called, may expose a business to legal risk. All of these structures implicate pricing, and consumers are often confused as to what they are paying, how they can opt out, and when they have to part with their cash. Of course, none of these structures is illegal, but to implement them requires careful planning. On April 18, 2016, the FTC released a series of blogs and alerts on pricing issues. These documents remind brands that regulators, whether federal or state, will act decisively with enforcement actions against advertising campaigns that deceive as to price.