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Reed Smith Attorney Hits a Double With Social Media

Adam Snukal — Mon, 15 Mar 2010 11:09:28 -0500

Reed Smith partner John Hines recently hosted in our Chicago office a panel discussion on the topic of "Managing Social Media Risks, What your Company Needs to Know." John and some of his Reed Smith colleagues were joined by Blair Klein, Director of Emerging Communications for AT&T, and Brent Franson of Reputationdefender.com and CEO of the newly formed Online Reputation Management Association. In addition to Blair and Brent, the panel consisted Sarah Wolff, Carolyn Rosenberg and Jim Burns of Reed Smith. Sarah, Jim and Carolyn did a fantastic job in imparting their practical wisdom relating to insurance, public companies and the SEC, employment, and the new FTC guidelines. Blair spoke about some of the interesting internal social media sites that AT&T has created to capture employee ideas and creativity, and Brent fielded a series of questions and issues relative to reputation management. The feedback from the event has been very positive.

In addition, on March 4, John Hines was a featured speaker on social media at a general session of the 2010 AT&T Legal Conference, a four-day conference in Dallas attended by 550 AT&T lawyers worldwide and other AT&T managers. John's presentation focused on "The Threat and Promise of Social Media," namely:

The Threat: it's viral, its transparent, self-correction often doesn't work (Cass Sunstein--OMB), permanence/infinite searchability; data capture and spread is, according to some, "out of control." Our personal and corporate reputations are in the hands of others; everyone is in the ratings game; etc.

The Promise: huge opportunities to leverage good messages; power to harness collective intelligence; Rifkin new book--The Empathic Civilization: Showing Connectivity is a Basic Human Desire--social media is a model to solve really big problems like energy sharing, etc.; new IP models, crowd sourcing, open source, creative commons; wikis; virtual worlds; etc.

John has graciously provided us with a copy of his AT&T Deck. If you have any questions about the Deck or how social media may be affecting your company, please contact John Hines, Doug Wood or your local Reed Smith attorney.

What We're Reading 03/15/2010

Marilyn Colaninno — Mon, 15 Mar 2010 10:53:42 -0500

Excite News: 'Wardrobe malfunction' fine to be reconsidered

A federal appeals court will re-examine the FCC fine it threw out against CBS over Janet Jackson's "wardrobe malfunction" during the 2004 Super Bowl halftime show.

Adage: How Jeff Bridges Voice-overs Imperiled Hyundai's Oscars Blitz

Kim Basinger, Richard Dreyfuss and Others Helped Hyundai Comply With Oscars Rules at the Last Second

Hyundai Motor America was all ready to bombard this year's Oscars with a raft of commercials -- seven different spots were locked, loaded and ready to go. With just a few weeks to go before the March 7 ceremony, however, the company was told its commercials were unfit for air.

Atlanta Journal-Constitution: New York soda tax proposal pours a big glass of controversy

At first glance, it doesn't sound like much: A tax of one cent per ounce on sodas in New York. But the line item in New York Governor David Paterson's budget reverberates from Albany, N.Y., to Washington, D.C., and down to Atlanta. Ripples could be felt across the country.

NY Times: A Cover Ad That Mimics a Newspaper’s Front Page

The entire first page of The Los Angeles Times on Friday was an ad that looked, in part, like the front page of The Los Angeles Times, as the newspaper again tested the accepted limits on where ads can be published and how they can blur the boundary with news.

Increase in NAD Fee for CBBB Members

John P. Feldman — Mon, 08 Mar 2010 09:39:02 -0500

Effective March 15, 2010, the Council of Better Business Bureaus (CBBB) will be raising the CBBB Corporate Partner filing fee to $3,500 from $2,500 for filing a NAD challenge.

This is the first increase in the Corporate Partner filing fee since 2005 and continues to represent a very significant discount to the filing fee charged to companies that are not CBBB corporate partners. Non-CBBB Corporate Partners pay between $6,000 and $20,000, depending on size of the company in terms of gross annual revenue. The CBBB states that the increase in the Corporate Partner filing fee will help it ensure that the NAD staff can continue to provide a high level of service to its users.

Why This Matters

This increase is likely to have no impact on a company’s decision whether to bring an action before the NAD. Using the NAD is a uniquely efficient way to resolve advertising disputes that cannot be resolved by a cease-and-desist letter. The cost of arbitration through commercial arbitration sources is far more expensive generally and does not offer the experience the NAD has with advertising cases. A civil action could cost three or four times as much just to get to a preliminary injunction hearing. There are many reasons why one might choose civil litigation under 43(a) of the Lanham Act rather than the NAD, but cost isn’t one of them.

Adam Snukal to Speak at DMA's Mobile Marketing Day Conference

Adam Snukal — Thu, 04 Mar 2010 11:01:27 -0500

Adam Snukal is participating as a co-presenter on the topic of Legal Do's and Dont's in Mobile Marketing at this year's Mobile Marketing Day Conference on March 4, 2010, sponsored by the Direct Marketing Agency.

PleaseRobMe.com - Highlighting the Perils of Location-Aware Social Networking

Andrew R. Boortz — Wed, 24 Feb 2010 14:25:16 -0500

FourSquare, Loopt, Twitter, and even Google Buzz are testing the intersection between social networking online and real world, location-dependent activities. For example, you can use Loopt to see which of your friends are nearby, or you can earn points and badges on FourSquare by visiting locations around you. Even some companies are starting to specialize in helping advertisers prepare location-aware advertisements, which has created some (humorous) responses by the public.

But location-aware social networking has a dark side as well. Podcaster Israel Hyman was robbed after he posted a tweet on his Twitter feed saying he had arrived safely in Kansas City. The problem was that he did not live in Kansas City.

So it may not come as a surprise that a new site is trying to raise awareness of this problem. The site – available at PleaseRobMe.com – aggregates postings from various social media sites that involve the poster being away from home. The result is a laundry list of people who are not in their homes, and where those homes are located.

According to the sites’ operators:

The danger is publicly telling people where you are. This is because it leaves one place you’re definitely not… home. So here we are; on one end we’re leaving lights on when we’re going on a holiday, and on the other we’re telling everybody on the Internet we’re not home. It gets even worse if you have "friends" who want to colonize your house. That means they have to enter your address, to tell everyone where they are. Your address.. on the Internet.. Now you know what to do when people reach for their phone as soon as they enter your home. That’s right, slap them across the face.

As an attorney, my mind immediately jumps to what level of liability PleaseRobMe.com may face for its work. After all, it could be assisting would-be robbers with their nefarious activities, which can raise aider/ abettor liability.

Professor Rebecca Tushnet raised the interesting question of whether the Communications Decency Act (47 U.S.C. § 230) would insulate PleaseRobMe.com from liability. As discussed on this blog in the past, the CDA (as 47 U.S.C. § 230 is commonly called) immunizes interactive computer service providers from liability arising out of the speech of another. The immunity also extends to reposting speech by another (see, e.g., Barrett v. Rosenthal).

However, reposting immunity can be lost under two exceptions. First, under the Roommates.com decision, CDA immunity can be lost if the interactive computer service provider contributed to the speech in a material way. Second, CDA immunity can be lost if the information that was reposted was illegal (see, FTC v. AccuSearch). Here, it would be hard to argue that the information being reposted by PleaseRobMe.com is illegal. But the Roommates.com material contribution exception is less clear. Does data aggregation materially contribute to the individual data points that make up the aggregate? In other words, is a fact (e.g., Drew is in the office) changed in some way if it is presented within a list of other people who are (or are not) in certain places? If so, then CDA immunity may be lost.

Certainly, this question is difficult to answer, and I anticipate that if a case is brought against PleaseRobMe.com, it will turn upon the facts at hand. One can only hope that if a case is brought against PleaseRobMe.com, it will not be a situation where bad facts make bad law.

What We're Reading 02/23/2010

Marilyn Colaninno — Tue, 23 Feb 2010 11:32:06 -0500

NY Times: Anger Leads to Apology From Google About Buzz

Google moved quickly over the weekend to try to contain mounting criticism of Buzz, its social network, apologizing to users for features that were widely seen as endangering privacy and announcing product changes to address those concerns.

Adweek: Gauging Customer Loyalty

Consumers approve of rewards programs ... sort of

Getting new customers is expensive, which is why sensible marketers toil to keep the ones they've already got -- and to get them buying as often as possible. As such, loyalty programs have become a conspicuous part of the marketing landscape. But how do consumers feel about such programs? A recently released survey by the Chief Marketing Officer (CMO) Council takes a close look.

Excite News: Privacy group files FTC complaint on Google Buzz

A privacy watchdog group complained to federal regulators on Tuesday about Google's new Buzz social networking service, saying it violates federal consumer protection law.

Brandweek: Behavioral Targeting to Grow

With the effective mixing and mining of audience data becoming increasingly important to online advertisers, the role of behavioral targeting has grown more central, according to eMarketer.

How Much Are You Worth?

Adam Snukal — Fri, 19 Feb 2010 11:57:40 -0500

As many of our readers are likely aware, the Credit Card Accountability, Responsibility and Disclosure Act (the “CARD Act”) largely becomes effective in just a few days – February 22, 2010. The CARD Act was signed into law in May 2009 to establish new regulations, standards and disclosure requirements for open-end consumer credit plans. In addition to several entirely new regulations that card issuers will be required to follow and implement in the course of their issuing processes and procedures, the CARD Act amends the Truth-in-Lending Act.

One particular regulation contained within the CARD Act requires that a card issuer take into account a consumer’s ability to pay before opening a new consumer credit account and/or increasing the person’s pre-existing credit limit. While the spirit behind this regulation is certainly admirable, how is this supposed to play out in the marketplace?

In October 2009, the Federal Reserve Board (“FRB”) proposed regulations that would have required an issuer (like a Macy’s or Home Depot, that issues its own department store cards) to consider a consumer’s income, assets and current financial obligations. The FRB further proposed that the issuer would be permitted to rely on information provided by the consumer, as well as information in a credit report.

Understandably, retailers expressed serious reservations over these proposed regulations. The mere thought of asking a consumer to disclose his/her income or asset worth at a check-out counter (where most store-brand credit cards are issued) made these retailers shudder. Moreover, there was even concern that a consumer who wished to apply for a store-branded credit card may be required to provide underlying substantiation and documentation, like a tax return, pay stub or W2 to verify such person’s income. Besides the embarrassment this would inevitably cause a consumer in having to show intimate, personal records to essentially complete strangers, retailers expressed concern over the likelihood of consumers abandoning purchases at the point of sale, and the delay that would result from a significantly more involved application and approval process.

Fortunately for retailers, the FRB provided further guidance (and a touch of reality) to clarify its proposal when it finalized the CARD Act regulations in anticipation of the looming February 22, 2010, effective date. Essentially, under the regulations, a card issuer must still review any reasonably available information regarding a consumer’s income, assets or current obligations before issuing or increasing credit. However, an issuer may “consider information obtained through any empirically derived, demonstrably and statistically sound model that reasonably estimates a consumer’s income or assets.” While the regulation still requires some heightened level of checks and balances in determining a consumer’s credit-worthiness when issuing credit at a point of sale, the regulation seemingly allows the issuer (aka retailer) to rely upon a credit report or some other third-party verification without having its team of accountants, bookkeepers and credit analysts pore over a consumer’s tax return in the midst of a President’s Day Sales Bash.

Why this Matters: Based on the FRB’s revised guidance and the allowance of a retailer to make credit decisions on the basis of credit reports and the like, little will probably change on a day-to-day basis, except that what was previously good business practice will soon be law. Certainly retailers and consumers should be pleased with the outcome of this legislation, though the real question will now be what additional measures retailers will adopt and integrate into their credit review process in this climate of consumer protectionism to avoid not simply having bad debt on its books, but also a lawsuit or investigation.

What We're Reading 02/19/2010

Marilyn Colaninno — Fri, 19 Feb 2010 09:25:59 -0500

NY Times: FTC Moves May Signal Start of 'Greenwashing' Crackdown

The Federal Trade Commission is expected to crack down on "greenwashing" when it updates its environmental marketing guidelines for the first time since 1998.

MSNBC: Weight Watchers, Jenny Craig settle over ad

A weighty battle between the two companies over ad campaign

Jenny Craig has agreed to end an ad campaign featuring actress Valerie Bertinelli as part of a legal settlement with Weight Watchers International, the dueling companies said Friday.

NY Times: Of Dr. Seuss and Coal Gasification

The company that protects the copyrights on the works of Theodor Geisel, better known as the children’s book author Dr. Seuss, has sent a cease-and-desist letter to a Massachusetts company looking to get into the coal business under the name Lorax — the title character of a story published in 1971.

Portfolio.com: NFL: The Kia Ad Should Have Stayed in Vegas

The casino conglomerate MGM Mirage pulled off an end run around the NFL’s ban on Las Vegas advertising during Sunday’s Super Bowl thanks to a Kia Motors ad—and the NFL is not pleased.

DIRECT Mag: Digital Marketing Growth Will Be Fueled By Social, Mobile, E-mail: Study

The boom areas for marketing should come as no surprise: Mobil, e-mail and search engine marketing growth will spur a 17% increase in digital marketing spending, according to a study from e-mail and marketing firm ExactTarget.

There is an 'I' in Behavioral Advertising

Adam Snukal — Thu, 11 Feb 2010 13:42:29 -0500

Coming soon to many websites near you (possibly…), you may find a slew of little blue “I” icons populating the Internet. This icon represents the latest collaboration between the Federal Trade Commission, Congress and the advertising industry to create a standardized icon, known as the “Power I,” intended to notify consumers of the online behavioral advertising practices and policies that are followed by specific websites and advertisers. Online behavioral advertising is essentially the practice carried out by some advertisers to collect and use consumers’ surfing history, demographic profiles and other personal data to deliver ads tailored to their unique and individual interests. More formally, online behavior advertising is “the collection of data from a particular computer or device regarding Web viewing behaviors over time and across non-Affiliate Web sites for the purpose of using such data to predict user preferences or interests to deliver advertising to that computer or device based on the preferences or interests inferred from such Web viewing behaviors.”

The “I” is intended to essentially function as both a trusted standard in the area of behavior advertising that consumers will immediately identify, and also as a link that, when clicked on, will take a user to a separate web page detailing why particular ads are being shown to him or her. Although websites or ads are not legally required to post the “I,” the leading trade associations behind this initiative are clearly hoping that the advertising industry will adopt this new measure, and thereby avoid the need for further government action and regulation. A detailed description / PR campaign of the “Power I” initiative has already been launched and can be accessed here, and a second PR campaign is underway.

While it’s far too early to gauge the effects of the Power I, its rate of adoption among industry players, and its success in staving off governmental action, this program is certainly an important step in the right direction, namely, a step toward further transparency and consumer education. This author wants to know if we’re likely to see a “Power C” for user consent and/or a “Power R” for data retention practices.

What We're Reading 02/09/2010

Marilyn Colaninno — Tue, 09 Feb 2010 09:26:20 -0500

NY Times: A Little ‘i’ to Teach About Online Privacy

A LITTLE blue symbol is carrying big implications.

Trying to ward off regulators, the advertising industry has agreed on a standard icon — a little “i” — that it will add to most online ads that use demographics and behavioral data to tell consumers what is happening.

Forbes: FTC To Silicon Valley: Tech Companies Should Protect Consumer Data

Washington wants to know: Why can't technology protect consumers' privacy instead of violating it?

The Federal Trade Commission met today in Berkeley, Calif., with corporate technology leaders and privacy advocates, challenging them to create ways to protect consumer privacy online. The FTC is encouraging technology companies such as Facebook and Apple to come up with self-regulatory tactics that will protect consumers without squashing corporate innovation.

NY Times: F.D.A. Aims at Doctors’ Drug Pitches

In the rarefied world of fashion magazines, beauty editors have often relied on a coterie of prominent dermatologists and plastic surgeons to keep them current on advances in cosmetic medicine. This symbiotic relationship has benefited magazines eager for beauty scoops and doctors seeking visibility — and patients.

But now the Food and Drug Administration has cracked down on one of the most widely quoted cosmetic doctors, sending shudders through the ranks of opinion leaders in fashion publishing and vanity medicine.

Multichannel Merchant: Live from NRF: Consumers Want Cross-Channel Synergy

As a merchant, you may consider yourself to be multichannel. But the customer views your bricks-and-mortar stores and Website as one entity, according to a survey shown Monday at the National Retail Federation's Annual Convention and Expo.

ABC News: Google's Digital Book Settlement Still Under Fire

Google's digital book settlement ripped by rivals, critics trying to get judge to reject deal

Google Inc.'s bid to secure the digital rights to millions of books remains under attack from rivals and other critics trying to block a revised legal settlement that would unlock a vast electronic library.

Finnair's Eco Ad Has Its Wings Clipped

John P. Feldman — Tue, 02 Feb 2010 11:45:04 -0500

This post was written by Alun J. Jones and John P. Feldman.

On January 6, 2010, the UK's advertising watchdog, the Advertising Standards Authority (the ASA), issued a decision upholding complaints it received against a poster that promoted the Finnish airline, Finnair. The poster featured an image of an Airbus flying above Finland's coastline and stated, "Be eco-smart. Choose Finnair's brand new fleet."

Finnair supported its statement on the basis that it had a new fleet of planes and it structured its flight routes with an eye toward increasing fuel efficiency. The ASA did not find that support very compelling. ASA decided that readers were likely to interpret "eco-smart" as analogous to "environmentally friendly," implying that flying Finnair would have little or no detrimental effect on the environment. Furthermore, the ASA required robust substantiation for the fuel efficiency claims beyond Finnair's emissions data. ASA even questioned whether the ad was clear enough in defining the nature of the comparison: Was Finnair comparing its old fleet with its new fleet, or its new fleet with other airlines?

That general environmental claims lead to serious headaches at the ASA is nothing new. Consider the ASA's September 2009 decision upholding complaints against the Malaysian Palm Oil Council's "Palm Oil-The Green Answer" article. But, how specific do you need to go in order to be clear of a "general environmental claim"?

In a decision involving the carrier EasyJet, the ASA reviewed the claim "Because we operate Europe's most modern fleet, our planes emit 30% fewer emissions per passenger mile than traditional airlines. So you can enjoy your holiday safe in the knowledge you'll have done more for the environment than Gordon's taxes ever could." Similar to the Finnair ad, to be sure, but in the case of EasyJet, ASA held that the ad did not mislead consumers into believing that traveling with EasyJet was environmentally friendly. According to ASA, consumers were likely to understand that all airlines would cause environmental damage. There had also been a great deal of press regarding the doubling of Air Passenger Duty by the British government, and the advertisement would likely be read in that context. However, EasyJet based its calculations for the "30% fewer emissions" claim primarily on the number of passengers they could carry in their planes. Because they could carry more passengers than most other airlines, it followed, according to EasyJet, that the CO2 emissions per passenger were 30 percent less. There was no evidence that supported the claim that EasyJet's younger planes had 30 percent fewer emissions per passenger mile. Thus, ASA found the ad to be partially substantiated and partially in breach of the CAP Code.

That ASA hates open-ended, general environmental claims is clear. But, it is too easy to conclude that "green" claims are impossible for industries that are inherently big contributors to greenhouse gases. As the EasyJet decision shows, careful casting of the claim can make a world of difference. In another example, ASA accepted the substantiation of EDF Energy, which promoted itself in conjunction with "Green Britain Day," using the advertising line, "Brought to you by EDF Energy, sustainability partner of London 2012." Even though this advertisement produced far greater public outcry than the Finnair advertisement (149 complaints versus 4), ASA found the promotional line to be permissible.

Why This Matters

Specificity and clarity is the key. All of the relevant guidance in the UK on environmental marketing – the CAP Code, the ICC Code, Clearcast Guidance and DEFRA's Green Claims Code, all of which are informed by the ISO's standard 14021 – make it very difficult to use broad, general "green" claims. Linking vague descriptions, such as "friendly" or "kind" with words such as "eco," "ozone" and "nature," is to be avoided according to the Codes, as is the use of terms such as "sustainable," "green" or "non-polluting." This is in line with the detailed guidance given on the use of some specific terms, such as "biodegradable" and "recyclable" by ISO 14021.

So, why did Finnair fail when EasyJet flew (in part)? Finnair's use of "eco-smart" was probably just too general and too vulnerable to multiple interpretations. Somewhat ironically, if Finnair had been more comparative in its advertising, comparing the age of its fleet with that of other airlines, and drawing a direct environmental benefit claim from that fact, ASA might have been less critical. The more hard-hitting but specific claim could have given Finnair the cover, whereas the general "eco-smart" claim did not. We often see comparative claims given more leeway than absolute environmental benefit claims, which can be misinterpreted as communicating a greater "green" message than may be intended. And, finally, as the EasyJet and EDF Energy cases suggest, placing an environmental message into a context that touches on current affairs can help to demonstrate that the public is cognizant of the limited environmental message.

What We're Reading 02/02/2010

Marilyn Colaninno — Tue, 02 Feb 2010 10:10:13 -0500

Environmental Leader: 72% of UK Consumers: Give Us Carbon Footprint Labels on Food

New research from the Newcastle Business School at Northumbria University suggests that nearly three-quarters of UK shoppers are in agreement with government plans to go forward with a voluntary carbon footprint label on food items.

Environmental Leader: Taiwan Working on Carbon Footprint Labeling for CPGs

Taiwan is the latest nation to float a plan to label the carbon footprint of common consumer packaged goods, following in the footsteps of the UK and Sweden.

TV Week: Longform Ads Pull in Revenue but Raise Ethics Questions

The package is presented like something you’d see on the local news rather than like a traditional infomercial. Sometimes it resembles a lengthy feature story; other times it’s an interview with a local doctor or businessman, or a roundup of local tourist destinations.

Excite News: 4 nations clear hurdle for non-Latin Web names

Egypt, Russia, Saudi Arabia and the United Arab Emirates are the first countries to win preliminary approval for Internet addresses written entirely in their native scripts.

Environmental Leader: Wal-Mart, Best Buy, HP, Dell, Toshiba Establish ‘Green’ Electronics Label

Retailers Wal-Mart and Best Buy, together with electronics suppliers Dell, HP, Intel and Toshiba, have banded together to create a system to help consumers identify “green” electronics, according to a press release.

What We're Reading 01/27/2010

Marilyn Colaninno — Wed, 27 Jan 2010 11:17:34 -0500

NY Times: Judge Lifts Some Tobacco Ad Limits

A federal judge in Kentucky issued a mixed ruling Tuesday in the first significant legal challenge to the new federal law regulating tobacco products.

DIRECT: Smartphone Users Will Buy, If Site Allows: Survey

Here’s good news for marketers who have invested in mobile marketing platforms: Smartphone users will make purchases using their handheld devices. But here’s some bad news: Potential customers will hang up if a retailer’s mobile site functionality is poor.

NY Times: Coat Maker Transforms Obama Photo Into Ad

A garment company in New York known for publicity stunts has seized the attention of the Obama administration.

Environmental Leader: UK Government Calls for Food Labels to Show Carbon Footprint

Supermarket food in the UK will be labeled to show its carbon footprint, country of origin and animal welfare standards as part of the government’s new food strategy for the next 20 years, reports the Telegraph. The voluntary “green” food labels will show how much carbon was produced in the manufacture and transportation of food, according to the article.

Environmental Leader: Finnair Green Ad Banned

The Advertising Standard Authority (ASA), the UK’s advertising watchdog, has banned a Finnair ad claiming that it is eco-smart for travelers to use the Finnish airline, reports Electric News. ASA also recommends that airlines choose their ad words carefully when promoting their green credentials, according to the article.

Arms' War in Italy: Aggressive Marketers Versus Privacy Watchdog

Adam Snukal — Fri, 22 Jan 2010 12:50:59 -0500

This post was written by Avv. Felix Hofer, and first appeared in Volume V of the Gala Gazette.

1. Implementing both, EU Directive 2002/58/EC of July 12th, 2002 (Directive on privacy and electronic communications) as well as Directive 2000/31/EC of June 8th, 2000 (Directive on electronic commerce) the Italian legislator decided that unsolicited commercial communication must always to adopt a strictly “opt-in” approach. The choice clearly didn’t drive marketers into a state of happiness: they felt that their business was unnecessarily harassed by complex and costly burdens. Therefore they decided initially not to care too much about the requirements set by the new regulations and to continue in their proven aggressive marketing techniques.

In doing so they nevertheless had underestimated a couple of factors: on one hand, consumers’ reaction (who became more and more annoyed by SPAM and behavioural targeting and were no longer tolerant of disturbing intrusions into their sphere of personal intimacy), on the other hand, the role of a Special Authority (the Privacy or Information Commissioner - DPA) in charge – in all countries members to the EU - of supervising proper compliance with the key principles of protection of personal data (and quickly focusing on the purpose of achieving a correct balance between consumers’ privacy and electronic marketing.

Click here to read the full article as published in Volume V of the Gala Gazette.

2010 ANA Advertising Law & Public Policy Conference

Adam Snukal — Fri, 22 Jan 2010 12:47:42 -0500

Join top legal professionals and government regulators March 17-18, 2010 in Washington, D.C., at the 2010 Annual ANA Advertising Law & Public Policy Conference, where you will hear from Jon Leibowitz, Chairman of the FTC and Doug Gansler, Maryland attorney general, as well as leading legal experts both from law firms and client-side marketers.

Connect with key industry leaders and policymakers as we discuss the most volatile and fast-moving legal and political environment for advertising and marketing in decades. Learn about the new regulations, legislation and major court cases that are fundamentally changing the business environment, and how you can keep up!

For the full agenda and to register, go to http://www.ana.net/adlaw2010.

The Study That Never Was - A Lesson in Comparative Advertising

Steven M. Getzoff — Thu, 21 Jan 2010 14:37:47 -0500

This post was written by Steven Getzoff and Adam Snukal.

On Jan. 19, 2010, Weight Watchers International Inc. of New York sued its rival, Jenny Craig, Inc., in the U.S. District Court for the Southern District of New York. The suit alleged that the latter's ads were misleading and deceptive, claiming they reference a comparison study carried out by Jenny Craig between the two companies' competing products--Weight Watchers' current weight-loss program and Jenny Craig's pre-packaged meals system. Apparently, no such study was ever conducted. Weight Watchers' suit asked for injunctive relief and damages. The next day, Jan. 20, 2010, Weight Watchers announced that the court had issued a Temporary Restraining Order (TRO) against Jenny Craig. TROs are generally issued when the court believes the plaintiff's claims would likely succeed on their merits in a preliminary injunction proceeding, and that to do nothing in the interim would unfairly prejudice the plaintiff. The TRO forbids Jenny Craig from broadcasting, publishing or disseminating claims of superiority over the Weight Watchers program. In other words, they cannot use the ads at issue or any other ads containing these claims.

The comparative advertising doctrine allows one party to use the trademarks of another without permission if truthful and verifiable facts presented provide a valid factual comparison that helps consumers decide which product is better. On the other hand, a comparative advertisement that falls short of substantiation and validation, as in the foregoing case, could very well give the harmed party a claim of trademark tarnishment, in addition to deceptive advertising.

One e-columnist claims the lawsuit was and is a waste of time. We wonder, if it were that columnist's trademarks or those of his e-journal that were being exploited by a competitor, would he be so philosophical.

What We're Reading 01/12/2010

Marilyn Colaninno — Tue, 12 Jan 2010 14:29:12 -0500

Environmental Leager: 85% of Americans Expect to Reduce Household Energy Use in 2010

As New Year’s Day 2010 approaches, more Americans say they are resolved to improve household energy consumption and recycling, according to a survey by Tiller LLC.

Environmental Leader: Survey Reveals Ethical Sales Tripled over Decade in UK

Consumer spending on “ethical” products ranging from Fairtrade goods to “green” products for the home has almost tripled in the UK in the past decade, according to the Co-operative Bank’s Ethical Consumerism Report 2009, which measures ethical spending in Britain, reports The Guardian.

Brandweek: BrandShield Tool to Debut

As the Web becomes more fragmented, and as more and more online advertising is sold through third and fourth parties via networks and exchanges, major brands are taking extra steps to ensure that their campaigns run exactly as planned.

FTC.gov: FTC Approves Two Reports to Congress on the National Do Not Call Registry

The Federal Trade Commission, as required by The Do-Not-Call Registry Fee Extension Act of 2007, has approved two reports to Congress: a biennial report focusing on the use of the Do Not Call Registry by both consumers and businesses, as well as the impact that new technologies have had on the Registry, and a one-time report on enforcement efforts and consumers’ perceptions of the Registry’s effectiveness.

Environmental Leader: Save the Earth Sues Honda Over Trademark Infringement

Environmental group Save the Earth Enterprises, claiming that a Honda Civic commercial infringes upon its logo, filed suit Dec. 23.

Déjà Google

Adam Snukal — Tue, 12 Jan 2010 10:00:00 -0500

Give Google credit that when it announced its acquisition of AdMob, a leading provider of mobile advertising services and technology, in November 2009, it proactively addressed the likelihood of a Federal Trade Commission (FTC) investigation into the transaction. Google even went as far as posting a web page that the media, regulators and other interested parties alike could access that explained why it believed the deal did not pose any “competitive” (note: antitrust) concerns. Whether it was a self-fulfilling prophesy or just an inevitable step whenever Google makes an acquisition in the digital advertising space, Google last week announced it received a second request for information from the FTC on the AdMob acquisition. This, however, is familiar territory for Google, which has been the target of government scrutiny over previous deals. The FTC held an eight-month investigation into Google's plan to buy DoubleClick Inc. in 2007 before approving that transaction, and last year Google walked away from a search deal with Yahoo after the U.S. Justice Department indicated that it would consider blocking the agreement and strategic alliance.

What Google may not have expected is the data privacy and consumer protection industry group backlash that has taken up the not-yet-completed transaction as a struggle to protect consumer data and the mobile advertising market. At least two prominent consumer groups reportedly approached the FTC, asking it to block the acquisition, arguing that a Google/AdMob combination would put “significant amounts of data for tracking, profiling and targeting” of U.S. mobile consumers into the hands of a single advertising network. Google and AdMob combined will form the largest mobile-advertising company, with 30 to 40 percent of the market, according to Karsten Weide, an analyst with researcher IDC in San Mateo, California. These groups want the FTC to consider whether Google's access to AdMob's technology will give it an unfair advantage in selling mobile advertising.

Understandably, Google has asserted that the economic/market impact of such an acquisition would be almost impossible to measure against the dozens of other mobile ad networks that compete with AdMob on a daily basis. Moreover, a spokesperson for Google has suggested the deal will provide users with more free mobile applications, in some cases as an alternative to pay-to-download apps, since it will allow developers to subsidize their products through better and more targeted mobile advertising.

One interesting issue that has arisen from this and other similar transactions over the past couple of years is whether and how consumer privacy fits into an FTC antitrust analysis. It is well documented that the FTC primarily rests its antitrust analysis on two categories: (i) agreements that are per se illegal, and (ii) agreements that are analyzed under the Rule of Reason. Types of agreements that have been held per se illegal include agreements among competitors to fix prices or output, rig bids, or share or divide markets by allocating customers, suppliers, territories, or lines of commerce. On the other hand, agreements not challenged as per se illegal are analyzed under the Rule of Reason to determine their overall competitive effect. A Rule of Reason analysis entails a flexible inquiry and varies in focus and detail, depending on the nature of the agreement and market circumstances. While this analysis still begins with a review of the primary agreement (e.g., merger, joint venture, license, etc.) driving the FTC’s analysis, it will then extend to other external factors.

Largely until 2007 and the Google/DoubleClick transaction, the issues and types of analysis described above were primarily centered on consolidations and combinations of goods and services, and not privacy or consumer information. During the FTC’s review of Google’s acquisition of DoubleClick, however, all five FTC commissioners who reviewed that transaction agreed that data privacy can constitute a form of non-price competition under a Rule of Reason analysis and, where/when appropriate, should be considered as one of many pieces in their study and review of a prospective transaction. In fact, the FTC, in its decision approving the Google/DoubleClick transaction, provided, “We investigated the possibility that this transaction could adversely affect non-price attributes of competition, such as consumer privacy.” At the core of the FTC’s review was whether, given the nature and economics of online and digital advertising, the concentration of user information that results from a Google/DoubleClick combination meant that no other company would be able to buy, target and optimize ads as profitably, thereby substantially reducing the ability of other ad networks to compete.

On what basis, then, is consumer privacy evaluated? Proponents have successfully argued that privacy harms can reduce consumer welfare, which is a principal goal of modern antitrust analysis. In addition, these same groups have argued that privacy harms can lead to a reduction in the quality of a good or service, which is a standard category of harm that results from excessive market power. On the other hand, those who oppose the incorporation of a privacy review in any antitrust analysis generally rest their argument on two points: (i) they disagree that privacy is a competition-related issue and point to precedents in which non-competition issues (like pollution) have not been traditionally factored into an antitrust analysis, and (ii) these transactions have proved themselves to create market efficiencies and improved offering/technology that ultimately benefit consumers with a more personalized online experience. This latter opinion may best be summarized in a Yahoo statement from 2008: “The advertising model has made Internet content and services available to millions of people in the United States and around the world—for free. The business model of relying on advertising revenue to fund websites has meant that vast amounts of information on the Internet has been fully accessible to people of all ages and income levels.”

Why this Matters:

Those who ignore history are doomed to repeat it. Our economy today is flush with companies that have been created to essentially trade in almost every aspect of behavioral advertising and consumer data. In fact, one might argue that consumer data has become a currency of sorts in the digital advertising and media industries. As consumer privacy becomes, on the one hand, increasingly protected by both legislation and self-regulatory initiatives (leaving aside the even more complex discussion of the implications of cross-border transactions and acquisitions where the same piece of consumer data may be subject to varying laws), and also a valuable commodity that is highly sought after, companies should be more aware of the legal implications associated therewith in all spheres of their business – including the arena of mergers and acquisitions. Whether one agrees that consumer privacy should be factored into an FTC antitrust analysis or not, it seems unlikely that the FTC will shift from the position it seems to have taken (as evidenced by the Google/AdMob transaction) over the past couple years, and therefore, companies that are contemplating mergers or acquisitions in the digital media and advertising arenas should at least consider the implications that consumer privacy may have on their deals.

Chilly Reception at the White House

Steven M. Getzoff — Mon, 11 Jan 2010 10:59:35 -0500

On January 6, 2010, The Weatherproof Garment Company (a division of David Peyser Sportwear) put up a billboard (actually two, a diptych) in New York's Times Square. The advertiser used an Associated Press (AP) licensed photo of President Barack Obama during his visit to China's Great Wall back in autumn wearing a Weatherproof jacket. Legal pundits have long discussed and opined whether the First Amendment trumps the commercial product endorsement (commercial free speech being more limited than free speech per se). One thing is VERY clear--the AP's contract required that "the necessary clearance" be obtained prior to the Weatherproof Garment Company's use of the image. Weatherproof president Freddie Stollmack blandly told the media he had not bothered to obtain the clearance. The White House legal team has already been in contact with both AP and Weatherproof's parent company.

…and what about the Wall? It will be interesting to see if the Chinese Consulate complains about the advertiser's unauthorized use of that country's GI--geographical indication--namely the image of The Great Wall of China. For those who may not be aware, this is a growing and interesting area of international IP law, which extends protection to countries over the commercial use of their cultural icons.

Bottom line, agencies and advertisers alike need to consider which rights (image, voice, video, etc.) need clearance--whether it’s the Chief of Staff in a wind slicker or a protective barrier built in the 7th Century B.C.

Maine Introduces COPPA Extension Bill

John P. Feldman — Fri, 08 Jan 2010 16:30:12 -0500

This post was written by John P. Feldman and Andrew R. Boortz.

Last year, the Maine Legislature adopted 10 MRSA c. 1055, which, among other things, attempted to extend COPPA-like protection to all minors (that is, children under the age of 18). The law was plagued by a number of issues, including questions regarding its constitutionality, and ultimately caused the Maine attorney general to promise not to enforce the law as written. Based on this, it was generally understood that the Maine Legislature would revisit the law in the 2010 legislature session.

The legislature did not wait long. On January 7, 2010, a new children's privacy bill was referred to the Maine Senate Committee on Business, Research, and Economic Development. The new bill, currently listed as LD 1677, would repeal the existing children's privacy law, but would enact a new prohibition on the collection and use of personal information that is: (a) collected and used on the Internet; (b) about a minor; or (c) for the purposes of pharmaceutical marketing.

Although this bill is narrower in scope than the law it seeks to replace, there are still problems with it. First, the bill applies to any personal information about a person under the age of 18, regardless of whether that information is related to health. Therefore, any information about a minor, including name, e-mail address, etc., would be covered. Second, the law seems to apply only to information collected on the Internet; it is unclear whether this information would apply to information collected through other means such as offline collection, mobile device, etc. Third, the text of the prohibition is poorly worded. The prohibition states that "any person may not collect and use information collected on the Internet ..." (emphasis added). Thus, by a literal reading of the text of the bill, a company could collect information about a minor for the purpose of pharmaceutical marketing and avoid liability if it does not use the information. Alternatively, a company could use information that is collected on the Internet by someone else since it would neither have collected nor used the information.

Of course, it is unlikely that the Maine attorney general would interpret the law in this way because this would create a substantial loophole. Instead, it is more likely that the law would be interpreted as creating two strict liability offenses—one for collection of information if the reason for the collection is to promote pharmaceutical sales, and one for the use of any information about a minor to promote pharmaceutical sales, whether or not the information was originally collected for that purpose.

Why This Matters: If enacted, this bill would place a higher burden on companies that sell either over-the-counter or prescription drugs, including pharmaceutical manufacturers and retailers. Such companies will have to be very careful with any marketing program that could conceivably collect or use information about a minor. For example, an e-mail blast with weekly offers that includes discounts on over-the-counter products could violate the bill's prohibition on marketing to children if a minor's e-mail address was included in the recipient list. Companies that sell pharmaceutical products should watch the progress of this bill closely to determine what kinds of systems should be created to avoid liability. There may be an opportunity to comment on rules that must be promulgated by the Maine attorney general within a year after enactment of the law.