Ad Law Access : Washington D.C. Advertising Lawyer & Attorney : Kelley Drye & Warren Law Firm : New York, Chicago, Connecticut, New Jersey, Brussels

Facebook has agreed to pay $10 million and make various changes to its terms in order to settle a lawsuit alleging that the company's Sponsored Stories violates members' rights of publicity.

With Sponsored Stories, when a Facebook member "likes" a company, checks-in at one of its stores, or performs certain other actions, that member's profile picture and name may appear as an ad for the company in the right-hand column of Facebook, along with other paid ads. Facebook Chief Executive Mark Zuckerberg called Sponsored Stories the "Holy Grail" of advertising because the implied endorsement from consumers leads to more clicks. The plaintiffs were less enthused, however, and alleged that Facebook had unlawfully misappropriated their names and likenesses without their consent, in violation of California's right of publicity laws.

In addition to paying $10 million, Facebook agreed to make certain changes to its site for at least two years. Among other things, the company agreed to (a) revise the Facebook Statement of Rights and Responsibilities to clarify that members' names and likenesses may be used as sponsored stories, (b) provide a mechanism to allow members to see and control which actions will lead to their being featured in Sponsored Stories, and (c) take steps to ensure the company secures consent from the parents of minors before using the minors names and likenesses.

This settlement serves as a reminder that you should obtain consent from individuals before using their names or images in ads. You should also be aware that Facebook isn’t the only company that has been challenged over Sponsored Stories -- some plaintiffs have also targeted advertisers who use the service. Once Facebook implements its changes, it may be harder for plaintiffs to bring these challenges, but you should discuss the risks with your counsel before moving forward. 

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In working with brand owners large and small, I find a surprising number of instances where independent contractors are hired to create content without a proper work for hire or other agreement to protect the company. In the rush to complete projects, get product to market and move on to the next task, even sophisticated brand owners often neglect to obtain the appropriate work for hire or assignment agreements from contractors who create photographs, graphic designs, web design, text and logos.

A recent case in New York demonstrates that independent contractors can and will contest a company’s ownership of such copyrightable works. In Buday v. New York Yankees Partnership, the niece of a man who designed the Yankee’s Top Hat Logo claimed (among other things) that her uncle retained all copyrights in the design and the Yankees’ use infringed upon those rights. Luckily for the Yankees, Ms. Buday’s copyright claims were dismissed by the Second Circuit on the bases of formalities and the employer-friendly work for hire provisions of the 1909 Copyright Act, which governs works made at the time the logo was created.

Nevertheless, this case should be a cautionary tale for brand owners, particularly because the work for hire requirements of the 1976 Copyright Act (which apply to all works created today), include provisions which presume ownership by the independent contractor in the absence of an appropriate written agreement to the contrary. Only certain categories of works are eligible for work for hire status, and a company cannot claim it owns a graphic or other work without a written work for hire agreement.

Brand owners: listen to your copyright attorneys, they are not just being overcautious! You must ensure you have the appropriate agreements in place, particularly for brand logos, product packaging, and advertisement graphics, because everyone is not as “lucky” as the NY Yankees. (Just ask my husband, who is a Boston fan!)

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Last week, President Obama's campaign committee filed a trademark infringement lawsuit against a company for allegedly using the campaign’s trademarked “Rising Sun” logo without permission. According to the complaint, the company is “using the Rising Sun Trademarks on merchandise in a deliberate and willful attempt to draw on the goodwill and commercial magnetism of the Rising Sun Trademarks and the Obama Campaigns.” Although the campaign sent several cease-and-desist letters to the company, the company did not stop using the logo. The company’s CEO stated in an interview that he didn’t understand why the campaign was attempting to enforce its trademark against his company when “there are hundreds, if not thousands, of companies selling material with the Obama sunrise on it” without official permission.

This suit holds at least two important lessons. First, it’s usually a bad idea to use another entity’s logo without permission. If you do, you could find yourself on the wrong end of an infringement suit. Second, one of the most frequent comments lawyers hear when they advise their clients against doing something is that other people are doing the same thing. This demonstrates that just because other people are doing something, doesn’t mean that it’s OK or that you won’t get in trouble.  

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Just when you thought domain name enforcement couldn't get more expensive, ICANN presents: the New gTLDs! Starting January 12, 2012, ICANN began accepting applications for new generic top level domain ("gTLD") names, only now some will not be so "generic." In addition to the gTLDs we are familiar with, such as .com, .org, .net, and .mobi, available gTLDs may include brand names such as ."kelleydrye. " or ".yourbrand," or community or industry identifiers such as ".beauty" or ".basketball."

Even if your company decided not to apply for a new gTLD, there are important steps you should take to protect your company’s brands.

• On June 13, 2012, ICANN is scheduled to publish information regarding the new gTLD applications, including who filed applications and which .brand or .generic strings each seeks to register.
• Brand owners and other potentially affected parties have a limited time to raise concerns and objections regarding a gTLD application after the publication date via ICANN’s dispute resolution procedures and Public Comment Period.

All brand owners should prepare themselves accordingly:

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Yesterday People for the Ethical Treatment of Animals ("PETA") announced that it will pull ads featuring the likeness of first lady Michelle Obama. The image was used without Michelle Obama's permission and created the impression that she endorses PETA. The ads also featured Oprah Winfrey, Carrie Underwood, and Tyra Banks and began appearing on New Year's Day in subway stations in Washington, DC, and on PETA's van and website.

PETA admitted that it did not have authorization, but thought that the first lady's announcement in June that she had sworn off fur justified including her in the campaign. PETA claims that it is not selling a product (or otherwise using the image for commercial purposes); rather, it is honoring beautiful women who do not wear fur.

As with Weatherproof's use of President Obama's image, PETA's predicament is a good reminder that organizations should evaluate the circumstances before using images of public figures or celebrities in ads.  An individual's statement that he or she uses a product (or, in this case, does not use a product) may not be a significant basis to use the individual's image or to imply that he or she endorses the product.
 

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Last week, the White House asked Weatherproof to remove a Times Square billboard that featured President Obama wearing a Weatherproof jacket in front of the Great Wall of China. According to the White House, the billboard was misleading because it suggested that the clothing was endorsed by the President and that the White House had approved the ad.

The photo was taken by a photographer from The Associated Press and Weatherproof subsequently purchased the right to use the photo from AP Images. According to The AP, their agreement with Weatherproof required the company to seek any necessary clearances before using the picture. The company's president, however, said he did not believe permission was necessary because the billboard did not explicitly say Obama endorses the jacket. News reports indicate that two newspapers and one magazine refused to publish the Weatherproof ad without evidence of the President's approval.

Be careful about using an image of an individual for advertising purposes unless you have permission from that individual. Simply having permission from the photographer is not enough. If you use the image of an individual in an ad without the individual's permission, you could face a lawsuit under right of publicity laws. Although the White House simply requested that Weatherproof remove the billboard for now , some companies have had to pay millions of dollars to settle these types of unauthorized or implied endorsement issues.

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