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Monday
Jul102017

Trimming the Fat: Restaurant Menu Labeling Rule Under Further Review

Franchise LawyerChair, Franchise & Distribution Practice Group

 

by Barry Kurtz

818-907-3006

 

In 2010 as part of the Patient Protection and Affordable Care Act a/k/a “Obamacare”, the federal government set provisions mandating restaurant chains provide nutrition information for menu items. The U.S. Food and Drug Administration (FDA or Agency) was supposed to come up with guidelines for compliance.

FDA Menu Rules for Coupons

The Agency did so, issuing its final rule in December 2014. Certain parties requested extended compliance deadlines in July 2015, the FDA announced the following December that concerned restaurants should meet requirements by December 1, 2016; however, on December 30, 2016 the Agency decreed menu labeling enforcement was to begin May 5, 2017.

Or not. In May, the FDA extended the menu labeling compliance deadline once again, pushing everything back to May 7, 2018 to give the Agency time to “consider how we might further reduce the regulatory burden”. Interested franchisors have until August 2, 2017 to weigh in on the interim final rule.

Current Menu Label Requirements

As the FDA Interim Final Rule for restaurants stands now (see: 2016 Labeling Guide for Restaurants), succinctly covered in a mere 58 pages, menu labeling will be required of all covered establishments – restaurants and similar retail food sellers with 20 or more locations doing business under the same name and selling substantially similar menu items. 

Covered establishments may include bakeries, coffee shops, convenience stores and concession stands that meet the above criteria. Eateries that are not considered covered establishments generally don’t meet the 20 location rule. But there are also exemptions for hospitals, schools, transportation carriers (food services on planes and trains), food trucks and sidewalk carts.

Restaurant nutrition labeling will be required on standard menu items, combination meals, variable menu items, side dishes and beverages. Foods that will not require labeling under the current rule include alcoholic beverages (unless they appear on a menu or menu board), condiments, daily specials, temporary market items, custom orders and market-test menu items.

In house and takeout menus and menu boards should include: 

  • Number of calories for each menu item for sale, adjacent to the item or the item’s price, and listed as “cal” or “calories”.

  • Statement similar to: “2,000 calories a day is used for general nutrition advice, but calorie needs vary.”

  • Statement similar to: “Additional nutrition information available on request.” 

More Food for Thought (and Rule Commenting)

FDA Nutrition LabelingMany of the provisions in the menu labeling rule have to do with remote points of sale and consumer impulse choices. Generally, these situations occur on premises.

But offsite, the general thinking is this: if a consumer sees restaurant marketing that lists menu items and provides info like a phone number or web link for the consumer to order immediately, nutrition information should be provided for that menu item. For example: 

  • If a pizza chain offers a discount or BOGO (Buy One Get One) offer attached to a takeout menu that already provides nutrition labeling, no further information for that discounted food item is needed on the coupon. On the other hand, if the offer is a “stand alone” coupon, e.g. paper flier without nutrition info affixed to a pizza delivery box, that coupon could be in violation of the menu labeling rule as currently written.

  • Topping options, e.g. mushrooms for pizza, chocolate sprinkles for ice cream, etc. should also have calories listed.

  • Restaurants that offer appetizer or catering platters, should consider listing calories for the entire platter, or per discrete serving unit: “appetizer sampler: 80 cal/buffalo wing, 5 wings”.  

If you plan to weigh in on these or other aspects of the Agency’s proposed plans for nutrition labeling, follow these FDA commenting instructions for written and electronic submissions. Again, input should be properly delivered to the Agency before August 2, 2017.

Barry Kurtz is a Certified Franchise & Distribution Law Specialist in California.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
Jul062017

Tomato Tweaking: Genetically Engineered Crops May Be Safe for Consumption, Environment

Litigation AttorneyEnvironmental Litigation

Stephen T. Holzer

818.907.3299

 

Most of us remember the Jack and the Beanstalk story. In this 18th century fairy tale, a young, poor, every-day Jack trades an old cow for magic beans which makes his mother very angry. But in the end, Jack manages to bring home untold riches, ending all of their worries – barring a potential blood feud with a murdered giant’s wife – all because of these special beans. (Never mind that Jack was technically a housebreaker. That’s another area of law entirely.)

Worker weeding farm fieldGenetically-engineered crops (or GECs) may very well be like Jack’s magic beans, based on the fear and anger they seem to sprout among environmentalists and the health conscious.

But before we get into that, let’s narrow the field of villains by first defining GECs, which should be distinguished from genetically modified organisms, or GMOs.

Some experts contend that GECs are actually a type of GMO. Genetic modification has been going on since the dawn of agriculture – almost all of our food has been modified over the centuries. Such modifications allow for corn digestible by human stomachs, or the thousands of known varieties of tomatoes cropping up globally.

Engineered agriculture on the other hand, was first developed in the 1990s and has a specific goal of adding new traits to an organism. These traits might include making a papaya virus-resistant, or rice harvests more nutrient-rich. If we believed in castles in the sky, scientists might engineer a beanstalk to get there, making it grow taller and sturdier.

So how safe are GECs?

Try the Beans. They’re Not Bad.

Researchers published a report last year that may allay some of the aforementioned fear-based anger.

The study released in May, was conducted by members of the Board of Agriculture and Natural Resources, the Division on Earth and Life Studies, and the National Academies of Sciences, Engineering and Medicine. (Click this link to read: Genetically Engineered Crops: Experiences and Prospects.) The authors drew conclusions based on “the National Academies consensus-study-process”: relying on field studies conducted since the 1990s, input from over 700 experts and organizations, and both peer-reviewed and non-peer-reviewed literature.

They contend that scientists have been developing GECs “to express novel traits” since the 1980s, though they weren’t available for commercial use until the 1990s. But at the conclusion of their data gathering in 2015, only two varieties of GECs were in wide-spread use: those that have been engineered for insect resistance, and those engineered for herbicide resistance. 

Based on their research, the authors concluded that these engineered plants are safe for both human and livestock use and consumption:

. . . long-term data on livestock health before and after the introduction of GE crops showed no adverse effects associated with GE crops. The committee also examined epidemiological data on incidence of cancers and other human-health problems over time and found no substantiated evidence that foods from GE crops were less safe than foods from non-GE crops.

GEC Agronomy and the Environment

Further, the research committee also indicated there is no conclusive proof that GECs have negative effects on the environment – though the authors do amend that conclusion with a warning that measuring long term environmental effects is a complicated process.

There have been strong claims made about the purported benefits and adverse effects of GE crops. The committee found little evidence to connect GE crops and their associated technologies with adverse agronomic or environmental problems. 

The research cites mixed evidence regarding increased or decreased crop yields and biodiversity. For example, “The quantitative contribution of GE crop traits themselves to yield in experimental plots was sometimes difficult to determine because the GE and non-GE varieties could differ in other yield-associated traits.”

Agri-industry Commercial farm field

Additionally, further studies need to be conducted to account for differences in soil characteristics, irrigation and tilling frequency, and a host of other factors like the use of glyphosates or a farmer’s financial resources. Over a decade of research was available to the authors – but they conclude more targeted testing is needed.

Lettuce Legislate GM Labeling

It seems GECs may not be as bad as some environmentalists believe. So why then, have six counties in California, most recently Sonoma County in the November election, banned genetically engineered agriculture? Our state has the largest GEC-free growing zone in the country.

It seems that despite the National Academies of Science study, the giants of environmental concern are still feeling threatened by GM agronomy.

Last July, President Barack Obama signed a law that modifies the Agricultural Marketing Act of 1946 – it directs the Secretary of Agriculture to devise a system for labeling food that had its DNA modified by scientists (as opposed through conventional breeding or by nature).

The US Department of Agriculture had two years as of the enactment of the law to establish the rules, and the Department recently posted 30 questions for interested parties to answer to facilitate in drafting those GMO labeling rules. The USDA says there will be an additional period for comments once the Department compiles input acquired via the questions and proposes a labeling rule.

 

Stephen T. Holzer is the Chair of our Environmental Practice Group and a business litigation attorney. 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Friday
Jun302017

Will Minimum Wage Hikes Kill Restaurant Jobs?

Franchise LawyerChair, Franchise & Distribution Practice Group

by Barry Kurtz

818-907-3006

 

In 1981 “Video Killed the Radio Star” was the first music video MTV broadcast in the United States. The song was actually written a couple of years earlier, appeared on an album entitled The Age of Plastic by the Buggles, and raised questions regarding new technological advances in the music business.

Which brings us to the point:

Restaurant owners may be blindly reaching out to embrace technology, but at a high cost to humans, most notably their employees. Unfortunately, this move to team up with new tech isn’t entirely because of choice.

Robotic Handshake

Rise of Restaurant Machines

On July 1st, employers in Los Angeles and in many other metro areas across the nation are required to raise minimum wages. The mandate is the result of numerous campaigns initiated by labor unions to improve the lives of low-wage workers, by raising hourly rates to $15 per hour.

The restaurant industry is struggling with such a drastic increase, even though the daunting $15 pill is mostly being swallowed in smaller bites – gradual increases over a period of five years in Los Angeles County, for example. So what’s the industry’s survival instinct response?

Many are being forced to cannibalize their work forces, by investing in machines to replace human workers.

Former McDonald’s CEO Ed Rensi described the situation in a guest column on restaurant tech published in Forbes Magazine last November:

In 2013, when the Fight for $15 was still in its growth stage, I and others warned that union demands for a much higher minimum wage would force businesses with small profit margins to replace full-service employees with costly investments in self-service alternatives. At the time, labor groups accused business owners of crying wolf. It turns out the wolf was real.

Economists at the University of Washington also find the minimum wage increase to be detrimental – they are claiming low-wage earners have actually lost $125 per month because of the city’s minimum wage hike. (Study published by the National Bureau of Economic Research – NBER Working Paper No. 23432.) The economists concluded Seattle’s wage increase of $11 per hour in 2015, and then to $13 per hour eight months later, had a negative impact on hours worked. Employers reduced labor costs by about nine percent.

Restaurant waiter taking customer orderPeer review for the University of Washington study is pending, and another study contradicts the economists’ conclusions.

Nation’s Restaurant News for example, cites the Washington study as well as another research project from the University of California at Berkeley’s Center on Wage and Employment Dynamics. Berkeley researchers found no loss for low-income earners in Seattle as a result of minimum wage increases.

It looks like we’ll have to rely on time to let us know which researchers submitted the more accurate findings. Either way though, we see the handwriting on the digital wall: quick serve and fast casual restaurants are buying or contemplating buying more computers and kiosks, beefing up websites and apps, and generally eliminating the human factor to the furthest extent possible.

But chew on this:  Researchers at Harvard Business School conducted yet another study, this one centered in over 100 cities in the San Francisco Bay area. According to these authors, Bay Area cities saw 21 minimum wage hikes between 2008 and 2016. Which restaurants went bust because of these wage bumps? The lower quality restaurants with lower Yelp ratings seemed to be the ones most likely to close:

"Our point estimates suggest that a one dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating), but has no discernible impact for a 5-star restaurant (on a 1 to 5 star scale)."

Based on this study, it appears restaurant owners may now either choose to close their doors or be forced to close their doors because of the increase in labor costs. Whether that decision to shut down is a result of having to devote financial resources to paying workers rather than making improvements to food, facilities or other areas – or some other factor – remains to be seen. The authors of this study say a purely causal relationship has not been determined.

But what recourse do restauranteurs have? When it comes to minimum wage increases already in place, we refer back to The Buggles:

“We can’t rewind, we’ve gone too far…”

 

Barry Kurtz is a State Bar of California Certified Specialist in Franchise & Distribution Law.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Monday
Jun262017

Disparaging, Degrading, Derogatory Trademarks: They're Now Enforceable Says Supreme Court

 

Franchise and Trademark LawyerIntellectual Property Lawyer

 

 

by Tal Grinblat

(818) 907-3284

 

You may remember that several national sports franchises are under fire for trademarks and branding that is seen to be racially disparaging. The Washington Redskins are the first team to come to mind, and it wasn’t too long ago that we all thought they had an uphill, and probably losing legal battle to keep their name registered.

Trademark Law

That battle is likely over now that the U.S. Supreme Court weighed in on a trademark dispute for a rock band.

At issue? First Amendment rights. And the Court decided definitively and unanimously to uphold those rights, though the individual justices cited different reasons for doing so.

The Slants Challenge USPTO

Simon Tam is the lead singer for The Slants – a name the all Asian-American, Portland group was unable to register with the U.S. Patent and Trademark Office (USPTO) because the agency found the moniker to be disparaging, if not outright racist. In reaching its decision, the USPTO found that the word “slants” is a derogatory term for persons of Asian descent and that a substantial composite of persons would find the mark to be offensive.

It therefore refused registration relying on the Trademark Act provision, which allows for trademark registration refusals if a mark:

Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute; . . .

Tam appealed the refusal to the Trademark Trial and Appeal Board. When the Board sided with the Examining Attorney at the agency, Tam filed a lawsuit, which took him on a seven year trek through the justice system, and ultimately to the Supreme Court. “This journey has always been much bigger than our band: it’s been about the rights of all marginalized communities to determine what’s best for ourselves,” Tam said.

Why did the Supreme Court Side with The Slants?

Band members contend that though “Slants” is a racially-charged term to describe persons of Asian descent, using the term for the name of their band would dilute the denigrating aspects of the word. The Court Opinion said the band hoped to “reclaim” and “take ownership” of stereotypes about people of Asian ethnicity.

In delivering their opinion, Justices Samuel Alito, Clarence Thomas and Stephen Breyer sided with the Band and against the government, ruling:

We now hold that this provision violates the Free Speech Clause of the First Amendment. It offends a bedrock First Amendment prin­ciple: Speech may not be banned on the ground that it expresses ideas that offend. . .

Procedurally, trademark examiners were required to use a two part test to determine if a mark is disparaging. They considered the likely meaning of the mark, including dictionary definitions, relationship of the matter to other elements in the mark, nature of the goods and services and manner in which the mark is used in connection with the goods and services.

If the mark refers to specific persons, institutions, beliefs or national symbols, the examiner then was required to consider whether or not the mark is disparaging to a substantial composite of persons given contemporary attitudes. If that proves to be true, the trademark applicant must prove the mark is not disparaging to continue with registration, generally an uphill battle.

In defending the claim that the USPTO’s decision did not violate the Band’s First Amendment free speech rights, the Government contended that:  

  1. Trademarks are government speech, not private speech;

  2. Trademarks are a form of government subsidy; and

  3. The constitutionality of the disparagement clause should be tested under a new ‘government-program” doctrine. 

The Supreme Court rejected all three USPTO arguments.

Regarding the first argument, the Supreme Court explained that “[t]rademarks have not traditionally been used to convey a Government message” and that trademarks are private (coined by individuals to name their products and services) and not government speech. They explained:  

Holding that the registration of a trademark converts the mark into government speech would constitute a huge and dangerous extension of the government-speech doctrine. For if the registration of trademarks constituted govern­ment speech, other systems of government registration could easily be characterized in the same way. . .

As to the USPTO’s second argument, the Court found that trademarks are not a form of government subsidy, as the USPTO is not paying trademark applicants to register their marks, but rather it is the applicant who must pay a filing fee as well as renewal fees to keep the trademark on the Register.

As to the USPTO’s third argument, Justice Alito stated the U.S. Supreme Court has already ruled repeatedly that “the public expression of ideas may not be prohibited merely because the ideas are themselves offensive to some of their hearers,” and that “government may not prohibit the expression of an idea simply because society find the idea itself offensive or disagreeable”.

Therefore, the disparagement clause in the Trademark Act could not be saved by viewing it as a type of government program in which some content and speaker-based restrictions are permitted.

Disparagement Clause Found Overbroad and Unenforceable

free-speech-trademark-lawThe next matter the court considered was under what standard the band’s free speech rights should be viewed – specifically, whether trademarks should be viewed under the more relaxed scrutiny of commercial speech (whereby speech may be more easily restricted) or expressive speech which warrants a higher level of scrutiny.  

The Court found that it did not need to resolve this debate because the “disparagement clause” could not withstand either level of scrutiny. For commercial speech to be curtailed, it must serve a “substantial interest” and must be “narrowly drawn”.

Here the Supreme Court found that the disparagement clause failed this requirement as the “clause reaches any trademark that disparages any person, group or institution.”  In other words, the Clause goes further than necessary to serve the interest asserted. If the government could curtail any speech by labeling it a commercial speech, free speech would be endangered.

Accordingly, the Court held that the disparagement clause violated the Free Speech clause of the First Amendment resulting in the band finally being able to register their mark.  

Practical Implications for Brands Like The Slants

This seminal Supreme Court decision changes trademark law in a significant way.

The Disparagement Clause was part of the original Trademark Act passed by Congress in 1870, nearly 150 years ago. It has been used by the USPTO to block what the agency deemed offensive marks for over a century.

The Supreme Court’s decision now will allow both individuals and companies to register expressive brands regardless of whether the message is offensive, hateful or inappropriate. But that is a little price to pay to protect our freedom of expression. As the Court indicated, “the proudest boast of our free speech jurisprudence is that we protect the freedom to express ‘the thought that we hate’”. 

 

Tal Grinblat is an Intellectual Property Attorney and a Certified Franchise & Distribution Law Specialist.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Monday
Jun192017

Trademark Law & Genericide: Google's Not Dead Yet

 

Intellectual Property and Franchise Agreement LawyerTrademark Attorney

by Tal Grinblat

(818) 907-3284

 

Domain name registration is usually a good first step to cement trade name and mark ownership. In a previous blog we reminded readers that possession, even in Intellectual Property matters, is nine-tenths of the law (read Why Register a Domain Name? for more info).

Trademark logo designerSo when Chris Gillespie registered over 700 web domain names, we would normally applaud his ambition as well as his efforts.

Except for one problem: Gillespie registered various domain names that included the word “google”. For example, Gillespie registered: “googlenewtvs.com”, “googledisney.com”, and “googlebarackobama.net” without Google’s permission. The REAL Google, who is the registered owner of the mark, filed a complaint with the National Arbitration Forum (NAF), which decides domain name disputes.

Google complained Gillespie: 

  1. Violated the Uniform Domain Name Dispute Resolution Policy (via trademark infringement, also known as cybersquatting); and

  2. Registered names that were confusingly similar to Google’s trademark, in bad faith. 

The agency agreed – NAF transferred the domain names to the web service company in 2012.

Not long after the NAF decision, David Elliott filed a petition in an Arizona Court to cancel the Google trademark registration under the Lanham Act, arguing “google” is now a generic verb for internet searching. Gillespie joined in the action. In September, 2013, the parties filed cross motions for summary judgment. Google prevailed and plaintiffs appealed.

But before we can deconstruct the respective parties' positions and the courts' decisions in Elliott v. Google, Inc., we must first understand the basics of genericide.

What is Trademark Genericide?

Trademark Infringement AttorneyGenericide is a term used when a trademark begins with strong trademark significance, but over time becomes generic and no longer identifies the source of products or services. Some examples of marks that started out as strong trademarks but later lost their significance include Aspirin and Escalator.  

These marks at one point were protectable as arbitrary or fanciful marks because they were primarily understood by the public to refer to specific products—a brand of headache reliever and a specific brand of moving stairs, respectively. But over time, these words became generic and the public now understands these words to describe the actual goods rather than the source of the goods.

Failing the Trademark Genericide Test

On June 14, 2017 the Ninth Circuit Court of Appeals upheld the lower court’s decision and found that appellants’ arguments regarding the genericizing of “google” had two flaws: 

  1. “A claim of genericide must always relate to a particular good or service.”

  2. Appellants “erroneously assumed that verb use automatically constituted generic use.” 

The Appellate Court noted:

If there were no requirement that a claim of genericide relate to a particular type of good, then a mark like IVORY, which is “arbitrary as applied to soap,” could be cancelled outright because it is “generic when used to describe a product made from the tusks of elephants.” Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 n.6 (2d Cir. 1976).

As to the Appellants’ second argument, the Court decided it contradicted fundamental trademark protection principles, in reference to source identification.

Elliott contended that trademarks perform source-identifying functions only when used as adjectives. The court disagreed and upheld the lower court’s ruling that the relevant inquiry is not whether the public used “google” as a verb indiscriminately, but rather whether the primary significance of the word “google” to the public was a generic name for internet search engines (in which case the word became generic) or as a mark identifying Google’s search engine in particular (in which case was still protectable as a trademark). 

In other words, the court held that a word could be used as a verb, yet retain trademark significance.

Citing the terms “indiscriminate” and “discriminate” coined by the District Court in this case, the 9th Circuit said:

We have already acknowledged that a customer might use the noun “coke” in an indiscriminate sense, with no particular cola beverage in mind {in which case the mark was likely generic}; or in a discriminate sense, with a Coca-Cola beverage in mind. In the same way, we now recognize that an internet user might use the verb “google” in an indiscriminate sense, with no particular search engine in mind; or in a discriminate sense, with the Google search engine in mind.

The relevant question to ask is how the relevant public primarily understands the word itself. The court therefore denied appellants’ claims, holding that based on the evidence presented, even though some members of the public used “google” in a generic manner, the relevant public still primarily understood the word to refer to the Google search engine in particular.

Generic Lessons Learned

Intellectual Property Litigation

So what can budding business owners establishing trademarks learn from this case?

The evidence to prove a mark is generic must be overwhelming. Elliott provided three consumer surveys to bolster his claim that “googling” simply means performing internet searches, but some were not conducted by qualified companies or individuals, and two were rejected by both courts out of hand.

Additionally, both Google and Elliott provided competing evidence as to the public’s use of the word “google” and “Google” as generic terms and trademarks. Since there were enough examples of trademarked use, Elliot lost this argument as well.

Last, Elliot failed to show “google” was used to describe internet search engines generally, such as Bing and Yahoo. This demonstrated to the Court that the death of Google as a trademark was greatly exaggerated.

Tal Grinblat is an Intellectual Property Attorney, Certified Franchise & Distribution Law Specialist, and a Shareholder at our firm. 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

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