Ad Law Access

Myspace Settles FTC Charges of Misleading and Deceptive Statements in its Privacy Policy

Sharon Kim Schiavetti — Tue, 08 May 2012 22:28:41 -0500

On May 8, 2012, the Federal Trade Commission (FTC) announced its settlement with social networking service Myspace on charges that it misrepresented its protection of users' personal information in violation of federal law. Like many of its social media counterparts who were recently the target of FTC enforcement actions, Myspace is charged with espousing strict privacy measures and then failing to do as promised.

The Myspace social network comprises millions of users who create and customize online profiles. Myspace assigns a persistent unique identifier, called a "Friend ID," to each profile created. Though users have the ability to upload extensive personal information to their profile, Myspace designates a subset of personal user data as "basic profile information," which include the user's profile picture, Friend ID, location, gender, age, display name, and full name. According to the complaint, this basic profile information is publicly displayed by default and is outside the scope of the privacy settings. The only piece of basic information that users can hide from public view - provided that they change the default setting - is their full name. As of July 2010, only 16% of users had actually changed the default setting to hide their full name.

Under its privacy policy, Myspace promised that it would not share users' personal information or use it in a way that was inconsistent with the purpose for which it was submitted without their consent. In addition, Myspace promised that customized ads would not individually identify users to third parties and would not share non-anonymized browsing activity. According to the complaint, Myspace in fact shared the Friend ID, age, and gender of users with third-party advertisers. Advertisers used the Friend ID to locate the user's Myspace profiles to obtain personal information, including in most instances the user's full name. Advertisers could also combine the user's real name and other personal data with additional information to link broader web-browsing activity to a specific individual. In addition, Myspace certified in its privacy policy that it complied with the U.S.- EU Safe Harbor Framework, which provides a method for U.S. companies to transfer personal data lawfully from the European Union to the United States. These statements of compliance were false, according to the FTC.

The proposed settlement order bars Myspace from misrepresenting the extent to which it protects the privacy of users' personal information or the extent to which it belongs to or complies with any privacy, security, or other compliance program, including the U.S -EU Safe Harbor Framework. The order also requires that Myspace establish a comprehensive privacy program designed to protect users' information, and to obtain biennial assessments of its privacy program by independent, third-party auditors for twenty (20) years. This agreement will be subject to public comment for thirty (30) days through June 8th, after which the FTC will decide whether to make the proposed consent order final. Interested parties are strongly encourage to submit written comments prior to this date.

Insights from the FTC's Mobile Payments Workshop

Dana B. Rosenfeld — Tue, 01 May 2012 16:24:20 -0500

On April 26, 2012, the Federal Trade Commission (FTC) held a public workshop entitled "Paper, Plastic . . . or Mobile?" to examine the use of mobile payments in the marketplace and the impact of emerging technologies on consumers. Three consumer issues surrounding mobile payments were highlighted: (1) the lack of clear consumer redress and dispute resolution processes, (2) data security, and (3) consumer privacy.

A Keley Drye client advisory, "Insights from the FTC's Mobile Payments Workshop: Potential Roadmap for Industry Best Practices," summarizes the FTC's workshop and the discussion on these three issues. For industry participants that are involved in the mobile payments ecosystem – or wish to be – having a clear understanding of these components and emerging best practices makes good business sense, and can help keep a company from becoming an enforcement or litigation target.

Recent Decision Applies Prior Substantiation Doctrine to Bar False Advertising Claims Based on Lack of Substantiation

Daniel S. Blynn — Mon, 30 Apr 2012 09:53:20 -0500

Continuing with the recent trend of dismissing false advertising complaints premised on a "prior substantiation" theory or granting summary judgment to defendants in such cases where the plaintiff fails to demonstrate affirmatively that a challenged advertising statement is false, in Stanley v. Bayer Healthcare, LLC, No. 3:11-cv-00862, 2012 WL 1132920 (S.D. Cal. Apr. 3, 2012), the Southern District of California held that an alleged lack of substantiation for an advertising representation is not sufficient to state a claim for violation of the California Unfair Competition Law ("UCL") or Consumer Legal Remedies Act ("CLRA"), or for breach of express warranty.

In Stanley, the plaintiff asserted that Bayer’s advertising claims for its “Phillips’ Colon Health Probiotic” (“PCH”) line of supplements, including that the products supported a healthy immune system, violated the UCL and CLRA because the health benefit claims “are not substantiated by the vast majority of generally accepted scientific literature currently available relating to probiotics.” The plaintiff also alleged that PCH labeling and advertising constituted express warranties and that Bayer breached those warranties. Bayer moved for summary judgment, arguing that “Plaintiff has not offered any evidence supporting her claim that [Bayer’s] advertising and packaging of [PCH] is deceptive, untrue, or misleading.” Bayer also argued that the plaintiff’s complaint was based entirely upon an alleged failure to substantiate, which is not actionable under California law. The Southern District of California agreed with Bayer and granted summary judgment on all of the plaintiff’s claims.

Chief Judge Gonzalez held that “a Plaintiff may not pursue a claim under the UCL or CLRA based upon a lack of substantiation.” Rather, the court confirmed that the burden was on the plaintiff to present affirmative evidence that the advertising claims are actually false or misleading, and because the plaintiff failed to meet her burden, summary judgment was appropriate. More specifically, the court explained that the plaintiff’s two scientific experts, who concluded that the current body of science did not did not support Bayer’s advertising claims, could not save the plaintiff from summary judgment because neither explained why Bayer’s claims “[were] actually false, or . . . how those statements might mislead a reasonable consumer.” Rather, they “repeatedly assert[ed] the statements are rendered false or misleading due to a lack of substantiation.” Nor did the plaintiff’s experts opine “that probiotics, or PCH in particular, are ineffective” for providing the promised health benefits. Finally, the court found that the plaintiff had failed to provide evidence that the product did not work for her or that the product did not work for the purposes for which it was advertised. The court concluded that, absent affirmative evidence demonstrating that the advertising claims were false and misleading, or that Bayer’s probiotic supplement did not provide the advertised health benefits, the plaintiff had failed to meet her burden under California law and that summary judgment on the UCL, CLRA, and breach of express warranty claims was warranted.

The recent Stanley decision underscores the importance for defendants in consumer class actions and false advertising litigation to inform the courts of the prior substantiation doctrine and take advantage of its strong defense. For more on this issue, reference the article, “The ‘Prior Substantiation’ Doctrine: An Important Check on the Piggyback Class Action.”

3 Must See Sessions on Privacy Enforcement, Litigation and Insurance Coverage

Kelley Drye & Warren — Fri, 27 Apr 2012 10:16:09 -0500

It’s not too late to view content from Kelley Drye’s Privacy Law Symposium, which was hosted in Los Angeles on Monday. The program included presentations on privacy enforcement, consumer class action litigation, and insurance recovery in the data privacy context, including:

Avoiding an FTC Privacy Investigation and What To Do When You Find Yourself the Target of One
Top Issues in Class Action Lawsuits Arising Out of Privacy, Data Security, and New Media Technology
Insurance Coverage for Data Privacy Liability – Do You Already Have It, and If Not, Can You Buy It?

Click here to view the webinar recording.

Planning a Social Media Campaign? Consider These Legal Risks

Kelley Drye & Warren — Tue, 24 Apr 2012 14:07:20 -0500

This five-minute video from the Bloomberg BNA Internet Law Resource Center provides an overview of some of the legal issues companies should consider before they engage in social media. Kelley Drye partner Gonzalo E. Mon discusses the FTC’s view of consumer endorsements, how companies can avoid liability for user-generated content, and options for structuring contests.

Foreign Territory: Dietary Supplement Clinical Trials Conducted Abroad

Katie Bond — Mon, 23 Apr 2012 16:34:44 -0500

The Federal Trade Commission ("FTC"), in the last couple of years, has made clear that it expects advertisers making strong cause-and-effect claims (e.g., “Lose weight,” “Helps prevent irregularity”) to possess, at a minimum, at least one well-designed and reliable clinical study. Yet, at the same time, FTC staff—those who conduct FTC investigations—have made statements that suggest a growing skepticism of clinical trials conducted abroad.

A recent article by John E. Villafranco and Katie Bond, published by Nutritional Outlook, "Foreign Territory: Dietary Supplement Clinical Trials Conducted Abroad," discusses this dilemma and provides practical pointers on minimizing risk, whether a company seeks to commission a trial abroad or rely on an existing study for claims.

NARC Announces Re-Branding and Increase in NAD Filing Fee

Gonzalo E. Mon — Thu, 19 Apr 2012 13:41:16 -0500

The National Advertising Review Council announced that, as of April 23, 2012, it will be re-branded as the Advertising Self-Regulatory Council and have a new web address. Also as of that date, the CBBB National Partner filing fee for cases before the NAD will increase from $3,500 to $5,000. Non-partner filing fees are still: (a) $6,000 for a challenger whose gross annual revenues is less than $400 million; (b) $10,000 for a challenger whose gross annual revenue is more than $400 million and less than $1 billion; and (c) $20,000 for a challenger whose gross annual revenue is $1 billion or more.

Click here to learn more about our team’s experience before the NAD.

Appellate Court Vacates Summary Judgment for Google in Copyright Infringement Suit

Christopher M. Loeffler — Tue, 10 Apr 2012 12:30:59 -0500

Last week the Second Circuit Court of Appeals issued an opinion in the ongoing copyright dispute between Viacom and YouTube/Google. In 2006, Viacom filed a $1 billion lawsuit against Google, alleging that tens of thousands of videos submitted by users and displayed on YouTube violated Viacom's copyrights, and that Google should be liable for the infringement.

In 2010, a federal district court granted Google's motion for summary judgment, holding that Google was entitled to take advantage of the safe harbor provision under the Digital Millennium Copyright Act ("DMCA"). The DMCA safe harbor provision limits the liability of online service providers for copyright infringement that occurs due to a third party's storage of infringing material on the online service provider's system, provided that certain requirements are met. The service provider (1) must not have knowledge of the infringing activity (actual knowledge or "red flag"--awareness of facts or circumstances from which infringing activity is apparent); (2) must not receive a financial benefit directly attributable to the infringing activity; and (3) upon notice from the copyright owner, must take down the infringing content.

Viacom appealed the District Court decision, claiming that Google did not satisfy all of the requirements under the DMCA safe harbor. In its ruling, the Second Circuit vacated the order granting summary judgment, stating that a reasonable jury could find that Google had actual knowledge or awareness of specific infringing activity on its website based on emails and internal documents at Google. The Second Circuit remanded the case back to the District Court.

The Second Circuit's opinion identifies three types of knowledge that may cause a service provider to lose protection under the safe harbor:

Actual knowledge or awareness of specific infringing material--Based on the subjective knowledge of specific infringement;
"Red Flag" knowledge--Based on awareness of facts that would have made the specific infringement objectively obvious to a reasonable person; or
Willful blindness to specific infringing activity--The Court held that the willful blindness doctrine could be applied in appropriate circumstances to demonstrate knowledge or awareness of specific instances of infringement

The Court also addressed the issue of whether Google had the right to control and benefit from the infringing activity, concluding that the standard requires something more than the ability to remove or block access to materials posted on a service provider's website, but remanding the issue for the District Court to determine what is "something more."

The Second Circuit's opinion continues to define the scope of the DMCA safe harbor, while key issues are yet to be resolved by the District Court. Companies engaging in social media, especially the use of user-generated content, should continue to watch this case.

Groupon Reaches Settlement in Gift Card Lawsuits

Gonzalo E. Mon — Thu, 05 Apr 2012 11:52:08 -0500

Last year, we discussed a class action lawsuit against Groupon alleging that the company’s deals violate California and federal gift card laws. The plaintiffs argued that Groupon’s deals constitute gift cards, and that the expiration on the deals violate federal and state laws that restrict expiration dates. Although Groupon denies they violated any law, the company recently reached a proposed settlement of several consolidated lawsuits in California.

Under the proposed settlement, class members who purchased Groupon vouchers between November 2008 and December 1, 2011 will be able to redeem expired vouchers, and if they are unable to do so, obtain a refund from an $8.5 million settlement fund. If a merchant refuses to redeem a settlement voucher, the class member will be entitled to receive a refund of the purchase price plus 20% of the promotional value.

Groupon also agreed to make changes to how it structures and advertises its deals. For example, Groupon agreed to clearly and conspicuously that any expiration dates apply only to the promotional value of the deal, and that the purchase price portion of the deal does not expire until the voucher is redeemed or refunded. And they agreed to limit the number of its annual Daily Deals that expire less than 30 days from the date of issuance.

Gift cards and deal vouchers may be subject to a patchwork of laws that are spread out across all states and the federal level, and it’s not always easy to figure out which laws apply or how to comply with them. Plaintiff’s lawyers are taking advantage of this confusion and filing lawsuits against these types of deals. Accordingly, companies should take a close look at any offers that combine pre-payment with an expiration date in order to evaluate their risk of being a target of these types of suits.

Insurance Coverage for Lanham Act False Advertising Claims

Richard D. Milone — Mon, 02 Apr 2012 16:19:21 -0500

A recent article, “Insurance Coverage for False Advertising Claims,” which was published in the March 2012 issue of Insurance Coverage Law Bulletin, discusses some of the caselaw holding that insurance companies are obligated to provide coverage for false advertising claims, particularly under the advertising injury section of a CGL policy.

Companies in a wide variety of industry sectors increasingly face lawsuits by competitors and customers alike under Section 43(a) of the Lanham Act, and similar statutes, based upon false advertising claims. These lawsuits typically allege that the defendant’s representations about its own product or a competitor’s products are false, misleading, or disparaging, and frequently include additional common law or statutory claims for unfair competition and disparagement.

It is vital that companies look to their standard liability insurance policies as a potential source of payment not only for judgments or settlements that might be incurred, but also for the legal fees and related costs of defense. Insurers frequently contend that no coverage exists by claiming that their policies do not cover business risks such as “false advertising,” and further contend that if there is any doubt whether the insuring clauses cover such claims, then policy exclusions eviscerate coverage in any event. All too often, policyholders accept the insurer’s position at face value and fail to pursue coverage. This is a costly mistake, as courts have often found coverage for these types of claims for companies who have chosen to fight the insurers' denials. The only way to determine whether a particular false advertising claim is covered is to examine closely the underlying lawsuit, the policy, and the caselaw in the relevant jurisdiction. The article referenced above discusses the general framework for advertising injury coverage under CGL policies, arguments in favor of coverage, and arguments against the applicability of the exclusions most frequently asserted by insurers to deny coverage.

For additional information on insurance recovery issues, don't miss the session, "Insurance Coverage for Data Privacy Liability -- Do You Already Have It, and If Not, Can You Buy It?", which will be presented at the Kelley Drye Privacy Law Symposium: Enforcement, Litigation and Risk Management event on April 23 in Los Angeles and via webinar.

FCC Seeks Comment on Petition to Rule on Text Messages

Bridget M. Richardson — Mon, 02 Apr 2012 11:56:38 -0500

The FCC has issued a notice seeking public comment on a petition filed in February by SoundBite Communications seeking a declaratory ruling on text messaging. SoundBite asked FCC to issue a ruling that sending a one-time text message to confirm a consumer’s request that no further messages be sent does not violate the Telephone Consumer Protection Act (“TCPA”) or the FCC’s implementing regulations.

Under the TCPA, a person is prohibited from making non-emergency calls, including sending text messages, with an automatic telephone dialing system or an artificial or pre-recorded voice to a cell phone without prior consent. Industry best practice includes confirming receipt of an opt-out request via text message. However, several companies, including SoundBite, are the subject of class action lawsuits for sending the confirmations. SoundBite has asked FCC to expedite a declaratory ruling on the matter on the grounds that the confirmation messages are sent within the grace period established by FCC and that SoundBite does not use an automatic dialing system, as that term is defined in the TCPA. All companies that follow the same practice of sending confirmation of an opt-out request via text message should review the FCC notice and decide whether to comment on the petition. Comments are due to FCC by May 15, 2012.

Maureen Ohlhausen Unanimously Confirmed as an FTC Commissioner

Lee Istrail — Fri, 30 Mar 2012 12:56:47 -0500

On Thursday, March 19, 2012, the United States Senate unanimously confirmed Maureen Ohlhausen as a Commissioner of the Federal Trade Commission (“FTC”). Ms. Ohlhausen is a seasoned attorney who has handled consumer privacy and data security issues in public service and private practice, and her confirmation suggests that the FTC will continue to emphasize these areas of the law.

Ms. Ohlhausen, currently a partner with Wilkinson Barker Knauer LLP, was nominated by President Obama in July 2011 to replace Republican William Kovacic, whose term expired in September 2011. As one of five Commissioners, Ms. Ohlhausen will have a seven-year term.

Ms. Ohlhausen returns to the FTC, where she served for eleven years, including a four-year tenure as Director of the Office of Policy Planning. In this role, Ms. Ohlhausen addressed a variety of high-tech legal and policy issues, including barriers to electronic commerce, and online merchants’ use of consumer data. In addition, she headed up the FTC’s Internet Access Task Force. Previously, Ms. Ohlhausen clerked for current Chief Judge David B. Sentelle of the U.S. Court of Appeals for the D.C. Circuit, and clerked at the U.S. Court of Federal Claims for Judge Robert Yock. Ms. Ohlhausen is a graduate of George Mason University Law School, and received her undergraduate degree from the University of Virginia.

Pinterest Updates Terms of Service to Address Confusion

Gonzalo E. Mon — Fri, 30 Mar 2012 12:44:51 -0500

Last week, we posted a link to an article that examines some of the common myths about Pinterest’s Terms of Service. Most of the myths could be filed under the heading of “who owns what.” For example, some people had (incorrectly) opined that Pinterest owns everything that is posted on the site. Pinterest has apparently been paying attention to the confusion because it recently announced that it would change its Terms of Service, effective April 6, 2012.

A blog post on the Pinterest site states: “When we first launched Pinterest, we used a standard set of Terms. We think that the updated Terms of Service . . . are easier to understand and better reflect the direction our company is headed in the future.” Among other changes, Pinterest: (a) clarified that that members retain their rights to the content they post; (b) narrowed the scope of the license people grant to Pinterest; and (c) shortened the duration of the license.

These changes are relevant to anyone who uses Pinterest. But they also hold a broader lesson to companies regarding the use of “standard” terms. Although using a standard set of terms (or agreement or privacy policy or sweepstakes rules) may seem like an easy way to get things done, it doesn’t help much if the standard isn’t relevant to you. It’s always important to ensure your terms are closely tailored to your business practices and goals.

The FTC's Final Privacy Report

Alysa Zeltzer Hutnik — Mon, 26 Mar 2012 16:12:13 -0500

Today the Federal Trade Commission released its much anticipated final Privacy Report, entitled Protecting Consumer Privacy in an Era of Rapid Change: Recommendations for Businesses and Policymakers. The final report calls on companies to implement best practices to protect consumers’ private information (both on- and off-line), Congress to enact baseline privacy and data security legislation with civil penalties, and industry to accelerate the pace of self-regulation. The Report also supports legislation to provide consumers with access to information stored by data brokers and the opportunity to dispute the accuracy of such data.

The final Privacy Report applies to “all commercial entities that collect or use consumer data that can be reasonably linked to a specific consumer, computer, or other device, unless the entity collects only non-sensitive data from fewer than 5,000 consumers per year and does not share the data with third parties.” For companies that fall within such scope, the FTC recommends that companies implement the following best practices, and adds that, to the extent such recommended practices go beyond existing law, the privacy framework is not intended to be a template for law enforcement actions or regulations currently enforced by the FTC.

Privacy By Design: Promote consumer privacy throughout the organization and at every stage of development of products and services, including through data security, reasonable data collection limits, sound retention and disposal practices, data accuracy, and accountability.
Simplified Choice for Businesses and Consumers:
- Businesses do not need to provide choice to consumers before collecting and using their data for practices “consistent with the context of the transaction or the company’s relationship with the consumer, or where required or specifically authorized by law.”
- Businesses should provide consumers with choice for all other practices, and offer the choice at a time and in a context in which the consumer is making a decision about his or her data.
- Affirmative express consent should be obtained before using consumer data in a materially different manner than claimed when the data was collected, or collecting sensitive data for certain purposes.
Greater Transparency: Privacy notices utilized by companies should be clearer, shorter, and more standardized to enable better comprehension by consumers and comparison of privacy practices.

The Privacy Report also explains that policymakers have a role in assisting with the implementation of self-regulatory principles in the following five key areas, which the FTC will focus on over the next year:

Do Not Track: The FTC will be working with relevant stakeholders in completing implementation of an easy-to-use, persistent, and effective Do Not Track system.
Mobile: The FTC calls on companies providing mobile services to work towards improved privacy protections, including the development of short, meaningful disclosures. As part of this effort, FTC staff will host a workshop on May 30, 2012 that will address, among other issues, mobile privacy disclosures, and how these disclosures can be short, effective, and accessible to consumers on small screens. The Commission hopes that the workshop will spur further industry self-regulation in this area.
Large Platform Providers: To the extent that large platform providers, such as ISPs, operating systems, browsers, and social media, seek to comprehensively track consumers’ online activities, the FTC notes its privacy concerns. FTC staff will host a public workshop in the second half of 2012 to further explore privacy and other issues related to this type of comprehensive tracking.
Promoting Self-Regulatory Codes: FTC Staff will work with the Department of Commerce in facilitating the development of industry-sector specific codes of conduct. To the extent that robust privacy codes of conduct are developed from such efforts, the Commission will view adherence to such codes favorably in connection with its law enforcement work, and will also enforce actions under Section 5 of the FTC Act where companies fail to abide by self-regulatory programs they join.
Data Brokers: The Commission calls on data brokers that compile data for marketing purposes to explore creating a centralized website where data brokers could identify themselves to consumers and describe how they collect and use consumer data, and detail the access rights and other choices they provide with respect to the consumer data they maintain.

Kelley Drye will release a more detailed advisory with analysis of the privacy report in the coming days.

Register Today for Kelley Drye's Privacy Law Symposium and Webinar

Dana B. Rosenfeld — Wed, 21 Mar 2012 15:43:33 -0500

Live in Los Angeles or via webinar, please join Kelley Drye & Warren LLP on April 23 for an afternoon program covering privacy-related trends in enforcement, class action litigation, and insurance recovery. Click here to register for the webinar.

Privacy Law Symposium and Webinar: Enforcement, Litigation and Risk Management

Avoiding an FTC Privacy Investigation and What To Do When You Find Yourself the Target of One
A number of data practices are clearly catching the FTC’s eye. Kelley Drye privacy attorneys Dana B. Rosenfeld and Alysa Z. Hutnik will discuss which business practices are most likely to draw the FTC’s attention, and practical steps that businesses can take to reduce their risk of becoming the next target of an FTC privacy investigation or improve their defenses if businesses are investigated. And for those companies that do find themselves at the center of an investigation, learn key practice pointers that should go into every business’s strategy when determining how best to respond to the investigation.

Top Issues in Class Action Lawsuits Arising Out of Privacy, Data Security, and New Media Technology
California is a hotbed for consumer class action lawsuits, and business practices involving the collection and use of personally identifiable information can often prompt class actions. Kelley Drye litigators Keri E. Campbell and Lauri A. Mazzuchetti will discuss the top issues at play in class action suits involving privacy, information security, mobile applications, and related areas.

Insurance Coverage for Data Privacy Liability - Do You Already Have It, and If Not, Can You Buy It?
Companies suffering data security breaches have had varying degrees of success in their efforts to obtain insurance coverage for their liabilities and costs of defense. Kelley Drye insurance recovery lawyers Edward E. Weiman and Richard D. Milone will provide an overview of the types of insurance coverage potentially available in the data privacy context, focusing on which types of policies might apply, which arguments are likely to prevail to establish coverage, and what practical steps a company should take to maximize its insurance recovery in the event of a data breach.

Date:
Monday, April 23, 12:00 – 3:00 PM Pacific
Lunch begins at noon, with formal program to start at 12:30 PM.

Location:
Kelley Drye & Warren LLP
10100 Santa Monica Blvd.
Twenty-third Floor
Los Angeles, CA 90067
(301) 712-6199

RSVP:

To attend live in LA, email adlaw@kelleydrye.com or contact Cassidy Russell at 202.342.800.

To attend remotely by webinar, click here to register.

Common Legal Myths and Realities about Pinterest

Gonzalo E. Mon — Wed, 21 Mar 2012 09:43:47 -0500

Although Pinterest launched just two years ago, the site already boasts over 10 million users and a staggering number of page views every day. Both numbers are growing quickly. Companies are paying attention to this rapid growth and — much like the early days of Facebook — many are wondering whether it makes sense to establish an early presence on the site.

This rush to join Pinterest has been somewhat tempered by concerns over the Pinterest Terms of Use and questions that can be filed under the heading of “who owns what.” For example, some people have (incorrectly) opined that Pinterest owns everything that is posted on the site. And others have (correctly) pointed out that posting other people’s pictures without permission could be problematic.

Before a company joins Pinterest, it’s important to separate the myths from the realities. This article addresses some of the key issues.

Introducing the Food and Drug Law Access Blog

Sarah Roller — Wed, 14 Mar 2012 17:16:49 -0500

We are proud to announce a new blog from Kelley Drye & Warren LLP: Food and Drug Law Access.

This sister blog to Ad Law Access provides news and commentary concerning food and drug law and public policy developments, including legislative, regulatory, enforcement, and case law developments relating to the federal laws administered by the FDA, USDA, and related state laws. It also provides timely reports concerning the international programs and policies of the FDA and USDA, and foreign governments.

To receive new blog posts via email, click here to subscribe, or add Food and Drug Law Access to your RSS reader.

Mobile Privacy: 5 Legal Concerns for Developers

Gonzalo E. Mon — Wed, 14 Mar 2012 08:21:56 -0500

If you work with mobile apps, you may already know that privacy is a hot issue. Regulators are pushing companies to improve their privacy practices, Congress is contemplating new laws, and class action lawyers are suing companies that don’t clearly disclose their practices. In the past few weeks, this focus on privacy intensified as the FTC, the California Attorney General, and even the White House weighed in with new announcements.

Two things are clear from this recent burst of activity. First, regulators are putting pressure on everyone in the mobile app ecosystem to improve their practices, so you can’t just assume that it’s your partner’s responsibility to comply. And with the number of regulators focusing on these issues, it’s going to be a lot harder for companies to hide. No matter what role you play in the mobile app ecosystem, you should pay attention to these developments. Gonzalo Mon and John Heitmann summarize what you need to know in a new article published by Mashable, "Mobile Privacy: 5 Legal Concerns for Developers."

Has the FTC Replaced Its Old Standard for "Up to" Claims?

Katie Bond — Mon, 12 Mar 2012 10:08:27 -0500

The Federal Trade Commission (“FTC”) recently announced five settlements with companies that had made energy savings claims for replacement windows. Those five settlements may change the standard for making “up to” claims.

Both the FTC and the National Advertising Division (“NAD”) have long held that advertisers must support “up to” claims with evidence that an “appreciable number” or “significant percentage” of consumers can achieve the maximum results. Examples of past cases and settlements include the following:

CableVision Sys. Corp., NAD Case No. 5412 (Jan. 06, 2012) (“Up to” claims about internet speed “must be supported by evidence demonstrating that the maximum level of performance claimed can be achieved by an appreciable number of consumers under circumstances typically encountered by consumers”);
Biological Solutions, Inc., NAD Case No. 5368 (Aug. 24, 2011) (the claim, “look up to 15 years younger,” required a cosmetic maker to possess “evidence demonstrating that that the maximum level of performance claimed can be achieved by an appreciable number of consumers under real world circumstances”);
Nutronics Corp., FTC Docket C-3281 (Jan. 16, 1990) (consent order) (“up to” claims for fuel savings must be supported by evidence showing that “the maximum level of savings or performance claimed can be achieved by an appreciable number of consumers”);
GCS Electronics, Inc., FTC Docket C-3202 (Oct. 30, 1986) (consent order) (“up to” claims about the range of “radiotelephone communications devices” – i.e., really old cell phones – must be supported by substantiation showing that the maximum range claimed “can be obtained by an appreciable number of consumers”); and
Plaskolite, Inc., 101 F.T.C. 344, 350 (1983) (energy-related “up to” claims for storm windows must be supported by evidence showing that “the maximum level of performance claimed can be achieved by an appreciable number of consumers under circumstances normally and expectably encountered by consumers”).

What constitutes a “appreciable number” or “significant percentage” of consumers has generally depended on the relevant facts. In the recent settlement cases, the FTC had challenged energy and costs savings claims including, “Guaranteed to reduce your heating and cooling use by up to 49%”; and “the triple-paned design of some replacement windows, such as [brand name] windows, can also produce energy savings of up to 50% a year.” The resulting orders prohibit each named party from claiming that consumers “will achieve ‘up to,’ or a specified amount or percentage of energy savings” unless the named party “possesses and relies upon competent and reliable scientific evidence to substantiate that all or almost all consumers are likely to receive the maximum represented savings” (emphasis added).

Although still a factual question, “all or almost all” certainly sounds more stringent than an “appreciable number” or “significant percentage” of consumers. The new settlement orders apply only to the named parties. However, FTC orders are often an indication of the level of support that the FTC expects, in general, for certain types of claims. Over time, the standards announced in settlements can, in effect, become the law for everyone. Those making “up to” claims should stay up to speed on developments.

Commerce Department Kicks off Multistakeholder Process for Consumer Privacy Codes of Conduct

John J. Heitmann — Mon, 05 Mar 2012 12:12:01 -0500

In the wake of the White House's February 23, 2012 release of Consumer Data Privacy in a Networked World: A Framework for Protecting and Promoting Innovation in a Global Digital Economy ("Framework"), the Commerce Department's National Telecommunications and Information Administration (NTIA) published in today's Federal Register a request for public comments from all interested stakeholders on consumer data privacy issues to be addressed through enforceable voluntary codes of conduct. Comments are due on March 26, 2012.

Although any topic is fair game, NTIA opens the process by signaling that implementation of the Framework's transparency principle in privacy notices for mobile applications is among the agency's highest priorities. Also listed as a specific topic on which NTIA seeks comment are other issues associated with mobile apps, including location based services. Cloud computing, online services directed toward teens and children, trusted identity systems, and the use of multiple technologies such as browser-based cookies to collect personal data also are highlighted as areas for comment.

NTIA also seeks comment on how the multistakeholder process should be conducted so as to best ensure openness, transparency, and consensus building. These comments are the first part of this process aimed at developing voluntary industry codes of conduct that eventually be enforced by the Federal Trade Commission.