Two recent actions involving sellers and marketers of cannabidiol (CBD) and cannabis prove the "wellness" industry is not always so chill.
Clint Eastwood Sues CBD Companies over False Endorsements
In the first action, Clint Eastwood filed two lawsuits in federal court in Los Angeles against CBD companies and marketers, claiming the companies promoted false news articles about Eastwood and used his name and likeness to promote their CBD products. Eastwood seeks "millions of dollars" in damages, with claims including false endorsement, defamation, trademark infringement, and false light invasion of privacy.
The first lawsuit accuses several CBD makers of using fake quotes from Eastwood, claiming he was stepping away from the movie business to spend more time pursuing a career in wellness. Eastwood also claims the companies used false headlines for promotional purposes, including false statements that large pharmaceutical companies were "in outrage" over Eastwood's CBD products.
In one example from the complaint, Eastwood purported that the companies spread a false article with the headline "Breaking News: Clint Eastwood Exposes Shocking Secret Today." The article included links to purchase "Eastwood's CBD Products" and fake quotes from an interview Eastwood gave on the "Today" show where Eastwood stated that he was leaving the film business because he wanted to do "something bigger than the movies." According to Eastwood's attorney, no such interview ever took place. Below are examples from the complaint of the fabricated articles:
In his second lawsuit, Eastwood alleges that online marketers and CBD companies used Eastwood's name in metatags to drive search traffic and manipulate consumers into thinking he supported the products being sold, while making it easier for consumers to find the defendants' products online.
Takeaway: As with any other advertiser, CBD companies must obtain an individual's consent to use his or her name and likeness to promote its product. However, even with such consent, in no event should any advertiser use fake quotes or fabricated stories to sell its product or service.
Master P Settles Over Failed Pot Deal
Master P and Privateer Holdings, a cannabis private equity firm, recently settled a lawsuit over claims that Privateer breached its oral agreement to support Master P's cannabis brand, "Master P's Trees."
Under the agreement, the parties would split profits from the distribution of Master P's Trees, but Privateer would front the cost of the initial batch and cover all marketing costs. The parties agreed to a July 3, 2017 deadline to launch the product, which would coincide with a music festival performance by Master P. Privateer failed to meet the deadline and despite the parties' decision to delay the launch, Privateer pulled out of the agreement later that month.
According to Master P's 2017 complaint, the failed deal cost him millions in expected profits. Nearly three years later, the parties have agreed to settle the dispute, and the case was dismissed earlier this month. Under the settlement, Master P would drop his lawsuit, and Privateer would drop its bid for thousands of dollars in sanctions against Master P for skipping two depositions and using an unauthorized videographer for another one. There is no large settlement number though. Instead, neither party will admit fault, and both parties will pay their own attorneys' fees.
Takeaway: Not all partnerships are meant to be, but a written agreement governing a potential fallout is always best. When it comes to partnerships to promote and produce a product within a specified timeframe, not only are key deadlines necessary, but the agreement should indicate remedies in the event the party fails to meet such deadlines.
More resources: Cannabis entities, like all businesses, require sound and strategic legal advice. Reed Smith assisted Drake in the launch of the Cannabis Wellness Company and continues to provide counsel related to all facets of the industry and the law affecting it. Visit our website for more relevant articles and information on our cannabis experience.
Originally published by Reed Smith USA, August 2020
This article is presented for informational purposes only and is not intended to constitute legal advice.
