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Retail Law Advisor

Claims about Biodegradable Plastics Breakdown Under FTC Scrutiny: Marketers Beware!

Posted in Compliance, Environmental, Green, Litigation, Retail

http://www.dreamstime.com/stock-photo-green-plastic-bag-recycle-symbol-image18698520In the recent administrative proceeding before the Federal Trade Commission (FTC) against ECM Biofilms, Inc. (ECM), the FTC’s presiding chief administrative law judge (ALJ) ruled that the plastics additive manufacturer ECM violated the FTC Act by deceptively claiming, and providing others with the means to claim, that plastics treated with ECM’s additives would completely biodegrade in a landfill within 9 months to 5 years and by claiming that tests proved this “green” or environmental marketing claim.

The order accompanying the FTC’s decision barred ECM from representing that any product or package will completely biodegrade within any time period, or that tests prove such a representation, unless: 1) the representation is true and not misleading, and 2) at the time it is made, ECM possesses and relies upon competent and reliable scientific evidence that substantiates the representation. This order also bars ECM from providing others with the means to make such deceptive marketing claims.

Despite siding with the FTC on the specific claims noted above as being false, unsubstantiated, and, therefore, violating the FTC Act, the ALJ rejected several other assertions by the FTC against ECM.  Specifically, the AJC found that the FTC failed to prove that ECM’s biodegradability claims conveyed the implied claim that ECM Plastics would “completely break down into elements found in nature in a landfill within one year” – as required under the FTC’s Green Guides.  Revised in 2012, the FTC’s Green Guides are designed to help marketers ensure that their claims about the environmental attributes of their products are truthful, non-deceptive and comply with the FTC Act.

The FTC’s lawsuit against ECM is part of the FTC’s ongoing crackdown on false and misleading environmental claims, and part of its program to ensure compliance with its Green Guides.  Other lawsuits filed by the FTC charge companies that represented plastics treated with additives are biodegradable, despite the lack of reliable scientific tests to back up those claims.  Specifically, the FTC filed a lawsuit against American Plastic Manufacturing (American Plastic), which advertised its plastic shopping bags as being biodegradable, based on additives sold by ECM, and sold them to distributors nationwide. The FTC’s lawsuit against American Plastic was settled in 2014.  The FTC’s final order prohibits American Plastic from making biodegradability claims, unless such claims are true and supported by competent and reliable scientific evidence.  Further, this final order requires that American Plastic have evidence that the entire plastic product will completely decompose into elements found in nature within one year after customary disposal (defined as disposal in a landfill, incinerator, or recycling facility) before making any unqualified biodegradable claim, as set forth in the FTC’s Green Guides.

While the ALJ’s recent 2105 decision in EMC calls into question the applicability of the FTC’s Green Guides standard for one year biodegradability after customary disposal, other legal commenters caution against crossing-off any implied one-year claim standards included in the current version of the FTC’s Green Guides or changing any substantiation practices regarding biodegradable claims.  Notably, given the importance that the FTC gives to its Green Guides regarding a reasonable time frame for biodegradability, the FTC may well review the ALJ’s 2015 decision on ECM in the Commission’s capacity as an appellate body.  And, if the Commission reaches a different result, the matter may be appealed up to the DC Circuit.  So stayed tuned and make sure to keep your green marketing practices in line with the FTC’s current version of its Green Guides.

The Future Starts Now… Gearing Up For the ICSC RECon Global Retail Conference

Posted in Real Estate, Retail

d36faa060a1fe99d9fc4ec28b1eb7d31The annual ICSC RECon Global Retail conference is just around the corner. This year’s conference takes place from May 17-20th at Las Vegas Convention Center. With over 34,000 attendees, RECon provides networking, deal making and educational opportunities for retail real estate professionals from around the world. With the mood among retail professionals being decidedly upbeat, we expect a lot of positive activity.

This year’s theme is “The Future Starts Now”. We expect to hear conversations that forward the globalization of retail. The conference will present programs on a wide range of retail topics, including specialty and traditional leasing, marketing, operations, asset management, retailing, public sector issues, real estate development and more.

We will have our ear to the ground at the conference– listening and participating in a variety of conversations. Stay tuned for the post-conference follow-up here in early June. We’ll let you know about all that was new and exciting in Vegas this year!

See you at RECon!

INTA 2015 Annual Meeting Recap

Posted in Intellectual Property, Retail

imagesLast week, members of Goulston & Storrs joined over 9,900 attendees from around the world who converged on San Diego for the 2015 Annual Meeting of the International Trademark Association (INTA).  This 137th meeting of INTA was its largest ever and assembled a remarkably diverse group of brand owners, legal advisors, consultants, exhibitors, and sponsors. As the Annual Meeting returned to San Diego for the first time in 10 years, participants raved about the comfortable weather, the ease of getting around, and the vibrant night life. All of these factors enhanced the trademark industry’s premier educational and networking event.

Although approximately 3,500 registrants hailed from the United States, INTA is a truly international affair. For example, registrants included over 1,500 from East Asia and the Pacific, 208 from the Middle East and North Africa, 295 from South Asia, and 184 from Sub-Saharan Africa. The top 10 countries represented were the U.S., the U.K., China, Germany, Canada, India, France, Japan, Mexico, and Brazil.  As a result, we were able to connect with clients and fellow lawyers from the U.S. and many other nations.

For us, a highlight was attending the annual meeting of the Intellectual Property Practice Group of Meritas, a worldwide network of law firms in which our firm serves as the Boston member. This meeting enabled us to see old friends, make new connections, and hear presentations on new developments in trademark law. But there was so much more to do at INTA.

In addition to attending numerous receptions and other networking events, we and others were able to take in a wide range of exhibits, presentations, committee meetings, and legal education sessions. Hot topics of discussion in both formal sessions and informal conversation included counterfeiting and piracy, trademark fair use, the expansion of generic Top-Level Domains, best practices in trademark licensing, and ways in which in-house and outside counsel can work together in a cost-effective and harmonious manner. One of the most interesting and useful aspects of our many conversations was to compare the legal systems of the U.S. and other jurisdictions where our clients do business.

We look forward to seeing our friends again next year in Orlando for the 138th Annual meeting of INTA. Mark your calendars for May 21-25, 2016.

Blowdryers and Flatirons: The Real Estate Market Heats Up with Salon Suites

Posted in Landlords, Leasing, Real Estate, Retail, Tenant

health and beautyFor years the price of entry for solo entrepreneurs in the health and beauty category was high. With similar fixed startup costs as any professional practice would have, such as real estate, insurance, supplies, but with much slimmer profit margins, stylists and aestheticians were often relegated to renting chairs from established salons or working for well-established day spas. In both these business models, practitioners are completely tied to the hours and the mode of operation of the employer, often left with little room for creativity or the ability to really drive brand loyalty with customers.

However, these existing business models are changing: a new option in commercial real estate is popping up across the U.S. and in Canada, capitalizing on the increasing health and beauty concerns of consumers in cohorts ranging from Millennial men to aging baby boomers. They’re called “salon suites” and these new spaces offer practitioners from hair stylists to massage therapists to aestheticians the opportunity to pursue their dreams of entrepreneurship. For landlords, salon suites capitalize on the spending and leisure habits of a population on-the-go, working more (or less) hours and seeking to de-stress with greater frequency.

According to industry trend watchers, health and wellness is becoming intertwined with the conversation about beauty and appearance. Fewer consumers are buying high-end makeup products from department store counters in favor of seeking out the personal experience and the ability to unplug and recharge a bit. Many are seeking the undeniable boost that comes from a good facial, a rigorous massage, a challenging yoga class or a pampering hair treatment. And as consumers make these activities increasingly a regular part of their routine, it’s only natural that these services become integrated into weekly activities and need to be more accessible. Rather than a special “trip to a luxury spa”, consumers need to know they can get in to see their favorite practitioner without hassle and then resume the rest of their day.  Responding to this growing demand enters the salon suite – a place where budding entrepreneurs can service their clientele without the tangle of bureaucracy or the layers of corporate involvement.

Most of the facilities called salon suites are move-in ready, and depending on what the landlord has projected for the mix of occupancy (hair stylists to yoga instructors to aestheticians) there are usually different options from which the lessees can choose. Each business has its own concerns for lighting, ventilation, soundproofing, and equipment so within a complex, there may be multiple options priced at different points. For a hair stylist out on his or her own for the first time, it can be as easy as turning the key and flipping a light switch to find a fully-appointed salon. While it may be plain vanilla décor, it will be complete with proper lighting, mirrors, a washing station, stylist chair and basic amenities – in addition to a concierge to greet and direct clients on their way to the appointment. Veteran practitioners seeking a more sophisticated way to express a personal brand can take what the landlord has offered and customize it in a variety of ways from paint to minor renovations, such as knocking down walls to create larger stations and other cosmetic changes.

While the salon suite is a new and growing trend and some of the work is already done for tenants, potential lessees and landlords still need to treat the conversation with the same due diligence they would if it were starting from scratch. Read our team’s point-of-view on how to prepare to negotiate a first commercial lease from a recent article in BusinessNews Daily.

Salon suites are taking hold quickly. The health and beauty obsession does not seem to favor one geography either; from the largest urban centers in the southeastern U.S. to midsized cities and major markets, developers are working hard to satisfy consumers’ growing interest in self-improvement. Industry sources say salon and spa businesses are well-positioned for revenue growth in 2015, so it appears this trend isn’t vanishing as quickly as the fine lines will after a great facial!

[Insert Your Trademark Here].sucks – Is Your Brand at Risk?

Posted in Intellectual Property, Retail, Technology

imagesIn recent years, the Internet Corporation for Assigned Names and Numbers (ICANN), the non-profit entity responsible for maintaining the Domain Name System of the Internet, has begun to introduce hundreds of new top-level domains.  Top-level domains (TDLs) are the last part of a domain name, some of the most common being .com, .org, and .edu.  Now, ICANN and affiliates are garnering serious criticism for a highly controversial new top-level domain – .sucks – that is currently being rolled out.

Although the .sucks TDL allegedly provides an avenue for consumers to provide valuable feedback and criticism to companies, there are widespread accusations that the .sucks TDL is really just a way to shakedown holders of valuable trademarks.  The outcry stems from the complex and exorbitant pricing structure for .sucks domains.

Vox Populi, the company that purchased the right to register .sucks from ICANN, has decided to offer domain registration in two initial waves, and to levy a surcharge on the holders of the most valuable trademarked domain names.  First, Vox Populi has opened a “sunrise” period for registering trademarked .sucks domains.  During the March 30 – May 29 sunrise period, only holders of trademarks registered with ICANN’s Trademark Clearinghouse, which researches and validates trademark owner’s intellectual property rights for all TDLs, can apply to register a domain.  However, Vox Populi is charging a minimum price of $2,500 for trademarked .sucks domains, and is charging above and beyond that for an undisclosed list of “Premium” trademarked domains, which are almost certainly the most valuable trademarked domains.  That fee also automatically renews at the cost of $2500 per year.  That fee is hundreds of times the cost to register a trademarked domain for other TDLs that are being rolled out; for example, the .nyc TDL for trademarked domains only cost $15 more than a non-trademarked domain.

Adding to the coercive feel of the pricing structure, as of June 1, when Vox Populi moves into the second wave of general availability, the public can register a trademarked domain for either $250 per year or a subsidized cost of $10 per year if they opt to host the domain at everything.sucks (which Vox Populi describes as a central clearinghouse for consumer complaints, but otherwise has provided no details about).  Finally, anyone during the general registration period can pay $199 per year to block the use of a trademarked domain.  However, the cost for the most valuable trademarked domains will stay high for even the general public, with yet another list of undisclosed “Sunrise Premium” domain names that cost $2,500 per year in perpetuity.

Therefore holders of trademarked domains are put in the unsavory position of giving into what could be categorized as extortion – paying $2500 or more per year – rather than taking a risk that a disgruntled employee or customer will register their trademarked .sucks domain.

One of the most interesting sources of pushback to this pricing structure has been a letter written by the Intellectual Property Constituency of ICANN, dated March 27, 2015, which disclosed that Vox Populi paid ICANN a large sum for the right to register the .sucks TDL.  In response, ICANN has stated that it required financial protections given the parent company of Vox Populi’s history of defaulting on payments to ICANN, and has in fact asked the Federal Trade Commission to determine whether Vox Populi is violating any laws or regulations.  To date there has not been a response from the FTC.

Given the on-going controversy and complexity around the .sucks registration, and the additional questions it raises around the next wave of controversial TDLs, trademark holders are well advised to discuss their options with counsel.

Retail Innovation Districts: The Community Outfitters

Posted in Municipalities, Real Estate, Retail

districtFor many decades, the downtown, metropolitan area of a city was considered the central breeding ground for innovation and economic development. Establishing a retail chain within a metropolitan hub was considered the benchmark of success and the most sure-fire means to increase exposure and boost sales. However, a new model, commonly referred to as the “retail innovation district”, has emerged allowing startup companies and progressive retail chains to explore countless opportunities in neighboring areas beyond your classic downtown hub. As Bob Dylan famously wrote, “The times they are a changin’.”

Large scale demographic migrations – the product of millenials entering the workforce in droves and moving to once isolated or less desirable areas of the city – have caused businesses to change their corporate calculus and reassess the value of opening shop in downtown areas. In recent years, there has been an incredible uptick in businesses choosing to move to the amenity-rich surrounding neighborhoods of major cities. Given the fact that these new markets are abounding with residents that have disposable income, many retail chains have taken a leap of faith and moved to these once forgotten urban locales in hopes of squeezing out greater profits. As retail chains blueprint forward looking strategies, they should consider the value that these emerging neighborhoods will provide.

Recognizing that retail follows the market, municipalities should aim to foster increased residential and workforce density within surrounding urban areas to entice retailers to move into these neighborhoods. There should be continuous, open dialogue between local government officials and residents to ensure that the community’s desires and needs are met. In the same breath, however, local governments should impress upon retailers that, once they open up shop, they are a part of the community, and, are therefore, expected to meet the needs of the newly-minted retail innovation district. In this respect, the social impact of retail innovation districts cannot be underscored enough. As new retail entrepreneurs and established retail chains move into these neighborhoods, they can create the emerging geographical community. More importantly, by moving to these communities, retailers can ingratiate themselves to the residents and increase brand loyalty. And, in light of the high turnover rates among retail establishments, in general, maintaining a stable core of loyal denizens will be crucial to a retailer’s long-term success.

Creating an environment and atmosphere in which residents can work, live and play is the primary objective of an innovation district. A retail innovation district should be an “experience destination” that offers a blend of dining, entertainment, and shopping. Look no further than the Seaport District to see the merits of a retail innovation district. This walkable retail area has attracted numerous consumers from beyond the immediate walking radius and invigorated the community beyond all expectations. The rise of retail innovation districts is just beginning and one can only hope that the proliferation of these districts will spur continued economic development and urban revitalization beyond the downtown central business districts.

Bite Kite Rides into Town: Cambridge Start-Up Tests New Trends in Fast Food Delivery

Posted in Restaurants, Retail

take-out-boxTake-out customers want quality food without complication and want it fast – with an emphasis on fast.  In a service market increasingly focused on instant gratification, fast food providers are striving to reinvent delivery services to meet the demands of customers who have very little time to spare but desire healthier, sustainable food options.  In the San Francisco Bay area, start-ups like Sprig and SpoonRocket have seized the opportunity by introducing a fast food delivery model that promises the delivery of warm, healthy meals in 20 minutes or less.  So far, they have garnered some success.  Sprig recently announced it will be expanding its hours and areas of delivery, and both entities have raised millions in seed money.

Bite Kite,” a start-up based in Cambridge, Massachusetts recently threw its hat into the ring by promising one of the fastest food delivery services in the greater Boston area.  The first to bring the Sprig/SpoonRocket business model to the northeast, Bite Kite hopes to replicate the success of its western counterparts.  Like Sprig and SpoonRocket, Bite Kite’s speed of delivery intends to attract diners pressed for time by offering delivery of low priced, healthy cuisine to one’s home or office within 25 minutes or less.  Focused on simplicity, Bite Kite provides only three meal choices a day for lunch and dinner in Cambridge, Somerville, and sometime this month, Boston.  Customers select meals through an iPhone app and within minutes, their orders arrive.  In order to provide products as swiftly as possible, Bite Kite has taken a page out of Uber’s playbook; drivers are placed in strategic locations in their respective market areas with pre-prepared meals on-hand so that orders can be delivered almost immediately after receipt.

At first glance, it appears Bite Kite has a viable approach to delivering on its promise of promptness.  But in an emerging era of customers seeking organic and local food sources, satisfaction with the quality of Bite Kite’s product may ultimately determine whether patrons come back for more. The websites for Sprig and SpoonRocket use words like “simple,” “wholesome,” and “fresh” to describe their products.  Likewise, Bite Kite’s website provides that there are “no shortcuts on quality” with their meals.  While quick service will be the bedrock of the Bite Kite model, quality will greatly influence their likelihood of success.  In the end, only time will tell if Bite Kite can meet the taste test.

Small Retailers Again Face Increased Health Insurance Costs

Posted in Healthcare, Insurance, Retail

Healthcare costsThe owners of small retail businesses in Massachusetts have come to expect to pay higher health insurance costs than their counterparts in the rest of the country, and unfortunately last year was no exception. According to a recent survey by the Retailers Association of Massachusetts (“RAM”), premiums for small retailers in Massachusetts rose an average of 11 percent last year across 3,500 of its members.

This increase, which matches an 11 percent increase from the previous year, is attributed to a combination of the federal rules under the Affordable Care Act (the “ACA”) and state health insurance mandates that both appear to target small businesses, as well as the rising costs of healthcare in general, according to RAM. The latest increase is the continuation of a trend over the past decade – an average annual increase of 12.3% for RAM members, which is three to four times the average increase for other common state benchmarks (e.g., the Group Insurance Commission and taxpayer subsidized plans available through the Massachusetts Health Connector).

Jon Hurst, the current president of RAM, thinks that the situation for small retailers has come to a breaking point, saying in the press release that accompanied the results of the survey: “When we set out on reforming health care both in Boston in 2006, and in Washington DC in 2010, the politicians sold us by saying the laws were designed to make sure we were all paying our fair share for our own health care costs. But today, employees of small businesses are forced into a system in which they [must pay] for coverage levels they don’t want, will never use, and can’t afford. In other words, they must pay for costs that are simply someone else’s. That’s not health insurance at all; it’s more accurately labeled a health care tax.”

As the costs to comply with the ACA increase and the maze of state-level mandates expands for small retail businesses, RAM is asking the Baker administration to advocate for a full small business waiver from the ACA. RAM is also pursuing fixes in Washington, D.C., asking both the Obama administration and the Massachusetts congressional delegation to craft changes to the ACA so small businesses are no longer categorized in a way that compels them to provide certain levels of coverage.

Small retail business owners don’t have many options at this point – they must comply with the current state and federal health insurance laws until a political solution arrives. After a historically harsh winter in Massachusetts, they still feel like they’ve been left out in the cold.

It’s Time to Give Your Hiring Processes a Check-up. Are They Compliant?

Posted in Employment, Litigation, Retail

List CheckingAs your prospective employees are brushing up on their interview skills, it’s also a good time to ensure your hiring practices and procedures are in order.  A regular review of employment application processes will keep them up-to-date. Scheduling time with hiring managers and Human Resources to freshen up interviewing procedure helps keep the entire organization on track.

Hiring laws and regulations are continually evolving. Employment applications must be consistently updated to reflect current law.  Part of this is defensive — there are few claims easier for a disgruntled rejected applicant to bring than a claim that the application was not in compliance with governing law.  These issues are particularly acute for the retail and hospitality industries, which experience high turnover and utilize seasonal employees.

This year — numerous states have adopted legislation barring prospective employers from including the question “Have you ever been arrested or convicted of a felony?” on employment applications. These laws are commonly referred to as “ban the box” initiatives.  According to the National Law Employment Project (NELP), fourteen states have adopted ban the box legislation.  A complete list can be found on the NELP website. The initiatives reflect a growing belief in rehabilitation, a sense that some felony convictions reflect circumstance more than character, and unwillingness to sentence former felons to a life of unemployment.

For example, New Jersey’s “ban the box” law took effect in February of this year. The new law states that Garden State employers with fifteen or more workers cannot inquire about a job applicant’s criminal history until completion of an initial interview.  This imposes two important requirements.  First, the application can’t contain the question.  Second, the question should not be asked during an initial interview.  Employers thus need not only update their forms, but make sure that they conduct interviews in conformity with the new law.

Massachusetts’ Criminal Offender Record Information (CORI) reform changed the rules in Massachusetts effective in 2010. In 2012, employers were given access to a new online tool through which they could request CORI forms for potential applicants.  As in other states with changing laws, the Commonwealth’s CORI laws require careful navigation during the hiring process.  Again, not only applications warrant review; employers must take care to comply with governing law and regulations during the interview process.

As employers navigate the many changing employment regulations concerning the hiring process, the United States Equal Employment Opportunity Commission (EEOC) website is a good place to start.

Climate Change Adaptation: Massachusetts Releases New Policies to Address

Posted in Environmental, Retail

Globe in SpaceIn one of our prior posts, we reported on efforts by Boston and New York City, in the wake of Hurricane Sandy, to undertake comprehensive climate change preparedness planning to review the vulnerabilities of each city’s built environment and to assess potential measures to enhance the resilience of both public and private infrastructure.

Today, we highlight new state policies, recently released for public review and comment, which also seek to assess and mitigate the likely impacts of climate change, specifically for proposed projects that are subject to review under the Massachusetts Environmental Policy Act (or MEPA).

The Massachusetts Executive Office of Energy and Environmental Affairs (EEA) recently released a draft policy on Climate Change Adaptation and Resiliency (the Policy) under MEPA.  This Policy, roughly a year in the making and initially outlined in EEA’s 2011 Massachusetts Climate Change Adaptation Report, would require a proponent of a proposed project subject to MEPA to address the impacts of climate change on a project and the project’s impacts on climate change.

Once this Policy becomes effective (on a date yet to be determined) a proponent would be required to include a “Climate Impact Assessment” in their Environmental Notification Form submitted under MEPA.  The proposed Climate Impact Assessment is intended to evaluate the potential impacts of climate change on a proposed project, including sea level rise, coastal flooding, storm surge, and changes in precipitation and temperature, and to assess the effectiveness and feasibility of measures to reduce hazards and increase the project’s resiliency.  The assessment would also evaluate how a project could contribute to (or reduce, as applicable) climate change impacts.

Under the proposed Policy, project proponents are encouraged to identify specific measures that would reduce greenhouse gas emissions and/or serve as effective climate change adaptation.  A project that completes the Climate Change Resiliency Questionnaire as part of Boston’s Article 80 Large Project Review would likely comply at least in part with this new state-level Policy. The Policy also indicates that the MEPA office would be receptive to off-site mitigation (including payments in lieu) when on-site mitigation is not feasible.

In moving toward adopting a policy on Climate Change Adaptation and Resiliency, Massachusetts builds on the work of the federal government, which in 2010 published guidance on how federal agencies should analyze the environmental effects of climate change when reviewing projects or other undertakings subject to review under the National Environmental Policy Act.  Often a forerunner in environmental legislation and related initiatives, Massachusetts’s implementation of its currently proposed Policy will be one to watch and continue to review, particularly as other states consider how to prepare for and respond to the issue of climate change adaptation – which is both a significant environmental and economic development issue, and should be a shared responsibility between the public and private sectors.