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

The year 2012 is certain to reflect U.S. consumers’ continued love affair with sophisticated smartphones and tablets. One of the driving forces in the popularity of these devices is their ability to run mobile apps using wireless location-based services (LBS). Among other benefits, LBS allow access to real-time and historical location information online – whether to facilitate a social interaction or event, play games, house-hunt or engage in many other activities.

However, with these benefits also come privacy risks. And it is not uncommon for some popular LBS-enabled tools to lack clear disclosure about personal information collection, how that data is used, and the process for consumer consent.

Our article posted recently on Mashable, "5 Privacy Tips for Location-Based Services," discusses several privacy "do's and don'ts" for designing mobile apps.

For a more in-depth discussion of these issues, plus other privacy law trends, join us on February 16 for Kelley Drye’s seminar and teleconference, “Privacy in 2012: What to Watch Regarding COPPA, Mobile Apps, and Evolving Law Enforcement and Public Policy Trends.”

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As we've noted in previous posts, if a company provides incentives to a consumer in order to encourage the consumer to promote the company's products, the consumer is required to disclose those incentives. It's not just the consumer's problem, though. The FTC has stated that a company can be held liable for a consumer's failure to make the disclosure. Fortunately, though, there are easy steps that a company can take to protect itself in case consumers don’t comply.

The FTC recently investigated a promotion conducted by one of Hyundai’s advertising agencies in which bloggers were given gift certificates as an incentive to include links to Hyundai videos in their posts or to comment on Hyundai’s upcoming Super Bowl ads. Many of the consumers did not disclose that they had received the gift certificates. After reviewing the promotion, however, the FTC decided not to pursue the case for a few reasons.

First, the FTC determined that Hyundai did not know about the incentives, that a small number of bloggers were involved, and that some of them did disclose they had received an incentive. Second, although advertisers can be held responsible for the actions of their agents, the actions in this case ran counter to both Hyundai’s and the agency’s social media policies. Moreover, the agency promptly took action after it learned that some bloggers hadn’t made the appropriate disclosures.

This case serves as a reminder that companies who engage in social media should have a policy that provides endorsers with guidelines about what they can, can’t, and must do. It’s not just enough to have the policy in place, however. Companies must also monitor to ensure endorsers comply with the policy, and take action against those who don’t. 

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Social media has revolutionized the way companies run sweepstakes, contests, and other promotions. Not only does social media make it possible to do things that weren’t done a few years ago, it also makes it easier. Maybe too easy. Because of that, some companies forget that these promotions are subject to various laws, special requirements, and unique risks. Click here for an article that gives an overview of what you need to know before you run a social media promotion.

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This week, Google launched Google+ Pages, a place where companies can post content and interact with consumers. In many ways, Google+ Pages is similar to Facebook Pages, but it also includes some unique functionality and integrations with Google’s search engine. Companies that are considering establishing a presence on Google+ should note, however, that Google imposes at least one limitation that Facebook does not: Google prohibits companies from offering various types of promotions on the site.

The Google+ Pages Contest and Promotion Policies states, in part: “You may not run contests, sweepstakes, offers, coupons or other such promotions (“Promotion”) directly on your Google+ Page. You may display a link on your Google+ Page to a separate site where your Promotion is hosted so long as you (and not Google) are solely responsible for your Promotion and for compliance with all applicable federal, state and local laws, rules and regulations . . . .”

Google reserves the right to block or remove pages that violate the Policies, so companies should be careful to ensure they comply.

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The rise of smartphones, wifi hotspots, and high-speed data networks has spurred new technology-based business models and the exponential growth of consumer information online. Chief among new technologies, the use of mobile applications—“apps”—has exploded in the past few years. From near-constant posts on Facebook to attacking the green pigs on Angry Birds, consumers have opened their hearts and wallets to mobile apps. While the upside is great, companies and developers considering a mobile app should also be mindful of the legal and business pitfalls of mobile apps and implement a process to sidestep common challenges.

A new article from E-Commerce Law & Policy, “Avoiding Trouble When Adding an App to the Business Model,” outlines several of these potential pitfalls and the best practices to avoid them.

For more information about this uncharted legal territory and emerging "rules for the road" for developing and marketing mobile apps, click here to view and listen to a recording of the Kelley Drye webinar, “Mobile Applications: Privacy and Data Security Considerations.”

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Most companies appreciate the importance of having a presence in the social media space, but not every company also appreciates the legal risks that can lurk there. As a result, many companies have run into problems and have been forced to defend their social media campaigns in public, in front of regulators, or in courts. All of this, however, can be mediated with a little knowledge and forethought.

Although each social media campaign should be evaluated individually, there are at least five legal considerations every company should note.  Read my article on Mashable to learn more.

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You’ve seen and heard the benefits of social media marketing campaigns. But are you adequately managing the legal risk?

In recent months, companies have found themselves in hot water over video contests, online content posted by consumers, and fake reviews on blogs. Understanding the FTC’s priorities and recent court decisions involving social media is important to ensuring compliance with applicable laws and avoiding liability.

Join Kelley Drye on August 9 from 12 noon - 1pm EST for a webinar about the important legal issues and best practices for leveraging social media. Topics of discussion will include:

• Common legal problems that companies have encountered by engaging consumers through social media including sweepstakes, contests, blogs, and other promotions.
• Objectionable content and how FTC guidance affects testimonial advertisements, bloggers, and celebrity endorsements.
• Intellectual property concerns, including copyright infringement and right of publicity.
• Practical tips to minimize legal liability associated with social media campaigns.

Kelley Drye Speakers:

David J. Ervin
Partner, Advertising and Marketing Practice

Gonzalo E. Mon
Partner, Advertising and Marketing Practice

Christopher M. Loeffler
Associate, Advertising and Marketing Practice

Email dcevents@kelleydrye.com to register.

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Recently, one of Twitter’s business partners announced that it had been contacted by the Federal Trade Commission (“FTC”) and planned to comply with the agency’s request for information. The company, UberMedia, develops software which helps users access and organize Twitter content through smart phones and desktop computers. While the FTC has not disclosed the scope of its inquiry, sources familiar with the investigation say that the FTC suspects Twitter of pressuring UberMedia and other partners which have developed features Twitter wants to offer itself, in a way that harms competition. Over time, Twitter has purchased some developers, and the company recently asked its existing developers to refrain from imitating Twitter’s own mobile device applications and web interface, in the interest of standardizing the user experience.

Although the nature of the investigation remains to be seen, marketers should be aware that a company’s business relationship with an app developer may not merely be a contract issue between the two parties; in some cases, it can give rise to concern from a regulatory agency about whether consumer choice is being impacted.

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This month, the New York Court of Appeals ruled that website operators were not liable for allegedly defamatory comments posted by a third party on the website’s blog, even though the operators reposted those comments.

As we’ve noted before, Section 230 of the Communications Decency Act essentially provides that website operators may not be held liable for content provided by third parties. An operator may lose immunity, however, if it is responsible for creating or developing that content, in whole or in part. In this case, the plaintiff argued that the operators should not be entitled to immunity because they created a website that implicitly encouraged users to post negative comments and because the operators reposted some of the comments.

The court noted that it was joining “what may fairly be called the national consensus” and held that the defendants were immune under the CDA. The court determined that creating an open forum to post content -- including negative content -- is at the core of what Section 230 protects. Moreover, the defendants did not become providers of the allegedly defamatory content by reposing it. This, the court determined, is well within a publisher’s traditional editorial functions. This decision goes further than some recent decisions because, as the dissent noted, the defendants may have embellished some of the defamatory statements.

Companies that invite consumers to post content on their sites can breathe easier as a result of some of this, and other similar decisions. But it's important to remember that companies may lose their immunity if they play a role in developing the problematic content and that there can be a fine line between simply inviting content and developing it. Companies should consult with their legal counsel to ensure they stay on the right side of that line.  

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Kelley Drye partner Alysa Hutnik and associate Christopher Loeffler's article, “4 Legal Considerations for Building a Mobile App,” was recently featured on Mashable.com, a top source for news in social and digital media, technology and web culture. The Mobile Apps article explores the mobile app business and provides practical considerations for app developers (or for those partnering with app developers) to keep in mind to help reduce legal risk in this area.

For more information about this uncharted legal territory and emerging "rules for the road" for developing and marketing mobile apps, click here to view and listen to a recording of the Kelley Drye webinar, “Mobile Applications: Privacy and Data Security Considerations.”

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Yesterday, Facebook modified the Guidelines that govern how companies can run or advertise sweepstakes, contests, and other promotions on the Facebook platform. Following is a summary of the key provisions:

• Promotions on Facebook must be administered within Apps on Facebook.com, either on a Canvas Page or an app on a Page Tab. You cannot use Facebook features or functionality as an entry mechanism. For example, you cannot give people entries simply by liking a page.
• You must make certain disclosures. For example, you must disclose that the promotion is not sponsored by Facebook, that entrants are not providing information to Facebook, and that entrants release Facebook of liability. You cannot use Facebook’s name or trademarks other than to make those disclosures.
• You cannot condition entry upon a person taking any action using Facebook features or functionality, other than liking a Page, checking in to a Place, or connecting to your app. For example, you cannot condition entry upon a person uploading a photo on a Wall.
• You cannot notify winners through Facebook, such as through Facebook messages, chat, or posts on profiles or Pages.

The complete Guidelines are available here. Keep in mind that complying with the Guidelines does not guarantee that a promotion will be lawful. As Facebook points out, “promotions are subject to many regulations and if you are not certain that your promotion complies with applicable law, please consult with an expert.”

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On May 10, 2011, the U.S. Senate Judiciary Subcommittee on Privacy, Technology and the Law held a hearing to examine industry practices concerning the collection, retention, and use of consumer mobile device location information. The hearing, “Protecting Mobile Privacy: Your Smartphones, Tablets, Cell Phones and Your Privacy,” was spurred by recent investigative news reports that Apple and Google have been secretly collecting and storing users’ mobile device location information. Two panels of witnesses, including representatives from the FTC, Department of Justice, Apple, and Google, briefed subcommittee members on the legal, enforcement, and technological aspects of the mobile location data issue.

The Senate hearing is the latest event during a particularly active period for consumer privacy and data security-related Congressional activity. In addition to hearings, a growing number of federal bills have been introduced in response to privacy and data security concerns.

Click here for a summary of the hearing, as well as a chart summarizing the various federal bills on point.

If this topic is of interest, don't miss the Kelley Drye & Warren LLP webinar, "Mobile Applications: Privacy and Data Security Considerations," on May 16 at 12:00pm Eastern.

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This post was written by Gonzalo E. Mon and Christopher M. Loeffler.

A federal court in California recently held that messages sent by Facebook users to their Facebook friends’ walls, news feeds, or home pages can constitute “electronic mail messages” under the CAN-SPAM Act. The case was filed by Facebook against a company that allegedly engaged in a deceptive marketing campaign that affected a large number of Facebook users. In denying the defendant’s motion to dismiss, the court rejected the notion that CAN-SPAM applies only to messages that are sent to an address that contains a user name, followed by an @ symbol and a domain.

Based on the language of the statute, the court determined that the only requirement for a message to be considered an “electronic mail message” is a “destination . . . to which an electronic mail message can be sent.” Accordingly, messages posted to destinations such as another user’s Facebook wall, news feeds, or home pages can be covered by the statute. The court also noted that the messages involved “routing activity on the part of Facebook” and concluded that a broad interpretation was consistent with Congress’ intent to mitigate the number of misleading communications that overburden the internet.

CAN-SPAM requires, among other things, that commercial e-mail messages be identified as ads, and that the messages include a postal address and mechanism for opting out of future commercial messages. (Click here for more details about what CAN-SPAM requires.) As any Facebook user knows, including these thing on a Facebook post would be extremely burdensome. Although it is unlikely that Facebook or regulators would bring a suit against a Facebook marketing campaign that is not deceptive, companies with Facebook pages should pay close attention to this case as it develops.
 

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Google has agreed to settle Federal Trade Commission (“FTC”) claims alleging that the 2010 launch of Google Buzz, a social networking feature linking Gmail users with other people on Google’s network, involved deceptive tactics and violated Google’s privacy policy. The proposed settlement includes two firsts for the FTC:

• First FTC settlement that requires a company to implement a comprehensive privacy program
• First FTC settlement involving alleged violations of the U.S.-EU Safe Harbor Framework privacy requirements

The FTC Complaint

In its administrative complaint, the FTC alleged that: (1) some Gmail users who declined to enroll in Google Buzz were enrolled anyway; (2) Gmail users that enrolled in Google Buzz were not adequately informed that the people they email most frequently would be publicly disclosed through the “following/followers” function; and (3) the identities of Gmail users that later “turned off” Google Buzz were not removed from the social network. Google’s privacy policy stated that information would never be used “in a manner different than the purpose for which it was collected” without the user’s prior consent; however, the FTC alleged that use of information provided to Gmail was used for another purpose, the Google Buzz social networking feature, without the users’ consent.

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The Food and Drug Administration (FDA) is expected to issue guidance and possibly regulations regarding use of social media. These policies will only be enforceable on marketers of prescription drugs and restricted medical devices; however, industry can expect that the rationale and policy behind the guidance and regulations will apply across the board to consumer health products generally, including over-the-counter (OTC) drugs, food, dietary supplements and cosmetics.

FDA and the Federal Trade Commission (FTC) have demonstrated interest in marketers' online content, including social media, as a means of investigating product claims. As social media proliferates, marketers of consumer health products should take specific steps to be sure that their companies' use of it does not raise red flags for regulators.

For more on this issue, see the Food and Drug Law Institute Update article, “FDA’s Policy on Social Media: Why It Matters for Marketers of OTC Drugs, Food, Dietary Supplements and Cosmetics.”

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Last week, we posted about a settlement in a lawsuit over comments made in Twitter posts. This week, we’ve learned about three other instances in which tweets have gotten people into trouble.

NBA referee William Spooner filed a lawsuit against the Associated Press and one of its writers, alleging that a comment posted by the writer on Twitter "mischaracterized a conversation" between Spooner and the Timberwolves coach during a recent game. Spooner argues that the tweet was defamatory, and is seeking more than $75,000 in damages.

Chrysler recently decided not to renew its contract with an agency two days after an agency employee tweeted from the @ChryslerAutos account: “I find it ironic that Detroit is known as the #motorcity and yet no one here knows how to [expletive deleted] drive.” And, this week, Insurance company Aflac announced that it had fired Gilbert Gottfried, the voice of the company’s mascot, after Gottfried posted some tweets with insensitive jokes about the tsunami in Japan.

These cases contain at least three lessons for marketers. First, remember that statements in social media are subject to the same laws and consequences as statements in traditional media. Second, companies should take steps to guard against posts from rogue agents and employees. And, third, companies should consider including morals clauses in endorsement contracts to address the risk of inappropriate comments by celebrity endorsers.
 

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This morning, the FTC announced a settlement with a company that sells guitar lesson DVDs using social media. According to the complaint, the company recruited affiliates to promote its courses through endorsements. In exchange, affiliates received commissions on sales resulting from referrals. The FTC charged that the company disseminated deceptive ads by representing that the endorsements reflected the views of ordinary “independent” consumers, without clearly disclosing that the affiliates were compensated. To settle the case, the company must pay $250,000 and monitor affiliates to ensure they are disclosing the commissions.

This isn’t the first case a regulator has brought against this type of campaign. For example, last year, the FTC entered into a similar settlement with a company that failed to disclose that endorsers were connected to the company. And the New York Attorney General recently also challenged a company whose employees wrote reviews while posing as independent consumers.

As we have noted in previous posts, endorsers are required to disclose any material connections to the companies whose products they endorse. Companies would be well-advised to establish written policies designed to ensure that their employees, bloggers, and other agents make the required disclosures. In addition, companies should closely monitor bloggers and take actions against those that do not comply with their policies.
 

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While the entertainment world is talking about Charlie Sheen’s posts on Twitter, another celebrity’s Twitter posts are getting attention in the legal world. This week, Courtney Love agreed to pay more than $430,000 to settle a lawsuit filed by fashion designer Dawn Simorangkir. In a series of tweets, Love had accused Simorangkir of theft and of having a criminal background. The case had been scheduled to go to trial in February, and was expected to be the first trial to explore whether a celebrity's Twitter posts could be considered libel.

Putting aside the drama of the lawsuit, this case holds at least one important lesson for marketers. Although there is a tendency to think that traditional laws don’t apply in more casual and fast-paced world of social media, that’s clearly not true. Statements made in social media are subject to the same laws as statements that are published in traditional media. Among other things, that means that what marketers say must be true. Indeed, both the FTC and the NAD have held that content in social media is subject to traditional truth in advertising requirements.

Accordingly, advertisers should take the same care when they post on their Facebook pages or tweet, as when they place an ad in traditional media.
 

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Last month, consumers filed a class action lawsuit against Groupon, alleging that the company’s deals violate California and federal gift certificate laws. This month, a similar lawsuit was filed against LivingSocial, alleging that the company’s deals violate Washington and federal gift certificate laws.

Approximately half the states have laws that either restrict or prohibit expiration dates. In addition, a recent federal law requires gift certificates to be valid for at least 5 years. The plaintiffs in these cases are arguing that the Groupon and LivingSocial deals constitute gift certificates and that the expiration on the deals violate federal and state laws. In addition, the plaintiffs in the LivingSocial lawsuit are arguing that the no cash back provision on the company’s deals violates a Washington law that requires issuers to give cash back, under certain circumstances.

These lawsuits demonstrate that plaintiff’s lawyers are attempting to stretch gift certificate laws to cover various types of offers that don’t fit the traditional mold of gift certificates. 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. 

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Advertisers beware. Anti-corporate activists, no longer content to ask for petition signatures on a street corner, are using guerilla tactics to sabotage corporate communications and advertising campaigns. In recent months, such groups have launched various advertising hoaxes designed to challenge the advertiser’s message and its brand.

It is difficult for advertisers to combat such attacks given the myriad marketing outlets provided by the web. Advertisers should not just accept this new reality without action, though. From a legal perspective, advertisers can take some proactive steps prior to and following an advertising campaign launch to help minimize their risks.

• Insist on confidentiality. Confidentiality provisions are common in agreements with advertising agencies, but many advertisers rely solely on their advertising agencies to handle talent and vendor agreements during a campaign. Insist that any person involved in the creation or execution of the campaign, including a participant in a casting call, is required to maintain confidentiality. 
• Don’t forget about social media. Social media outlets are convenient, free ways for anyone to spread their message. In an agency, talent or related contractor agreement, include restrictions on sharing information via social media in confidentiality clauses. Further, include a take down provision to require anyone who breaches their confidentiality obligations to immediately remove the offending content.
• Examine agency agreements. In any major advertising campaign, things can go wrong. The advertiser and the agency are better off knowing up front who is responsible for the costs should such events occur. This is easily addressed in the agency agreement between the parties and can help minimize disruption to both businesses and the business relationship overall should such an incident occur. 
• Monitor and Address. Set up alerts to monitor fake or unauthorized advertising. Anyone can set up a Twitter or Facebook account that appears to be legitimate corporate content. Advertisers should monitor the web for this behavior either actively or passively through a tool such as Google alerts. In addition, have an action plan in place to address fake or unauthorized content, which should include filing complaints with service providers used by the wrongdoers.

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Last year, Facebook introduced Promotions Guidelines that governed how companies can run sweepstakes and contests on the Facebook platform. Among other things, the Guidelines stated that a company could not administer a promotion -- in other words, collect entries, conduct drawings, judge entries, or run any other aspect of a promotion -- on the platform unless the company first obtained written permission from Facebook. Written permission was only granted to companies that spent money advertising on Facebook.

Yesterday, Facebook updated the Promotions Guidelines. The most significant change is that companies no longer need to obtain written permission before administering a promotion on the Facebook platform.

Companies still have to comply with a number require requirements, though. For example: (a) people can only enter on the canvas page of an application or the application box in a tab on a Facebook Page; (b) companies have to include specific disclosures on the entry form and in the official rules; (c) companies cannot condition entry on taking certain actions on Facebook; and (d) promotions cannot be open to people who are under 18 or to residents of certain countries. The complete Guidelines and a list of do’s and don’ts are available on the Facebook site.

The revised Guidelines -- particularly the absence of requirement that Facebook approve promotions -- will make it much easier for companies to run promotions on the platform.
 

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Hot off the presses -- registration for the ABA Consumer Protection Conference (Feb. 3, 2011, Washington DC) is now open! There is limited seating, so early registration is encouraged.

The all-star line-up of speakers includes:

• FTC Commissioners Julie Brill, Edith Ramirez, and J. Thomas Rosch
• Canada Privacy Commissioner Jennifer Stoddart
• Tony West, Assistant Attorney General, DOJ
• David Vladeck, Director, Bureau of Consumer Protection, FTC
• Joel Winston, Associate Director, Division of Financial Practices, FTC
• Sarah Mathias, Associate General Counsel, FTC

And representatives from the California and Texas Attorneys General Offices, the National Advertising Division, the Center for Democracy & Technology, Electronic Frontier Foundation, the American Bankers Association, among others.

Hot topics to be addressed include privacy, CP enforcement priorities, new substantiation rules, third party liability, social media, and more.

The full program brochure and registration information are available at the ABA's website. Space is limited so register soon to secure your spot, and please spread the word!

Kelley Drye partner Alysa Hutnik is a Conference Co-Chair.

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A public relations agency hired by a video game developer agreed to settle FTC charges that it engaged in deceptive advertising by having employees pose as independent consumers and post favorable reviews of the games. When posting the reviews, the employees did not disclose that they worked for a firm that was hired by the developer.

Under the proposed settlement, the agency is required to remove previous posts that misrepresent the authors as independent consumers. The agreement also bars the agency from misrepresenting that an individual is an independent consumer in the future, and from making endorsements unless the authors disclose any relevant connections they have with the seller.

As we have noted in previous posts -- click here and here, for example -- endorsers are required to disclose any material connections to the companies whose products they endorse. Companies would be well-advised to establish written policies designed to ensure that their employees, bloggers, and other agents make the required disclosures. In addition, companies should closely monitor bloggers and take actions against those that do not comply with their policies.  

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In previous posts, we noted that the FTC's new Guides Concerning the Use of Endorsements and Testimonials in Advertising contain various provisions that apply to messages in social media, and that the FTC recently investigated whether Ann Taylor Stores violated Section 5 of the FTC Act in connection with a blogging promotion. eCommerce Law Report recently published an article that explains in more detail how the Guides apply in the context of social media, why the FTC closed its investigation into Ann Taylor's blogging promotion, and how companies can take steps to reduce the risks inherent in using social media. The article -- available here -- should prove useful for both markters and legal practitioners.

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This post was written by Gonzalo E. Mon and David J. Ervin.

This week, a federal court in New York granted Google’s motion for summary judgment in a landmark copyright infringement case that tested the boundaries of the Digital Millennium Copyright Act (the “DMCA”). In 2006, Viacom filed a $1 billion lawsuit against Google, claiming that tens of thousands of videos on YouTube violated Viacom’s copyrights and that Google should be liable for the infringement. Google moved for summary judgment, arguing that it was entitled to take advantage of the DMCA’s safe harbor provisions. The DMCA essentially holds that a service provider may not be liable for copyright infringement by third parties. A service provider can lose this safe harbor, however, if it has “actual knowledge” that material is infringing or is “aware of facts or circumstances from which infringing activity is apparent” and, having such knowledge or awareness, does not act “expeditiously” to remove the material.

The record demonstrates that Google acted expeditiously to remove specific videos when Viacom notified Google that the videos were infringing. Viacom argued that Google was nevertheless not entitled to take advantage of the safe harbor because Google knew that infringing material was posted on YouTube. The court noted that the critical question was whether the phrases “actual knowledge” that material is infringing, and “facts or circumstances from which the infringing activity is apparent” mean a general awareness of infringement, or mean an actual knowledge of specifically identifiable infringement. The court determined that these phrases “describe knowledge of specific and identifiable infringements of particular individual items. Mere knowledge of the prevalence of such activity in general is not enough.” If a service provider needs to conduct an investigation of facts and circumstances to determine whether material is infringing, those facts and circumstances alone do not constitute knowledge or awareness of infringement.

Although copyright holders may object to be burden of having to identify every instance of infringement on a third party site, companies that work with user-generated content will undoubtedly be happy that they can take advantage of the DMCA safe harbor without having to actively monitor their sites. Nevertheless, these companies must take steps to comply with the DMCA, including setting up a mechanism whereby copyright holder can notify them of infringement and, upon receiving notice of infringement, moving quickly to address the complaints.

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This post was written by Christopher M. Loeffler and Alysa Z. Hutnik.

On Tuesday, April 26, 2010, the Federal Trade Commission (FTC) announced that it intends to develop Internet privacy guidelines. The guidelines will examine social networking sites' data handling practices and create a framework to guide social networks and others going forward. Given the FTC's recently concluded Privacy Roundtables (see our posts here, here and here) and pending action items from the roundtables, the guidelines for social networks may provide a foundation for further FTC privacy guidance for businesses down the road.

The FTC's recent announcement follows complaints by US and international lawmakers and regulators regarding the privacy practices of several online companies. Senators Schumer (D-NY), Franken (D-MN), Bennet (D-CO), and Begich (D-AK) sent a letter to Facebook, expressing concern about the changes Facebook made to its privacy policy that make more user information publicly available, permit third parties to store users' information indefinitely, and allow for Facebook technology to be integrated with other websites. The Senators also called on the FTC to issue rules or guidance in this area. As noted previously, international regulators also recently sent a letter to Google expressing concern about its privacy practices.

While privacy laws have been in flux for some time, these events underscore how rapidly the regulatory environment for online businesses is changing, and a close watch on the FTC's actions and guidance will be critical to navigate the compliance road ahead.

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In previous posts, we noted that the FTC's new Guides Concerning the Use of Endorsements and Testimonials in Advertising contain numerous provisions that apply to messages in social media, such as blogs, word-of-mouth marketing, and other promotions in which companies encourage consumers to speak on their behalf. Among other things, the Guides require bloggers to disclose if they have received a gift from, or have any other material connection to, a company whose products they write about. Although the companies themselves may be liable if bloggers fail to make the required disclosures, the FTC has suggested that the Commission would not hold a company liable if the company instructs bloggers about their requirements and takes steps to ensure the bloggers comply.

Earlier this week, the FTC announced that it was closing an investigation into whether Ann Taylor Stores violated Section 5 of the FTC Act in connection with a promotion in which the company provided gifts to bloggers who the company expected would blog about the company's LOFT division. According to the FTC's letter, some of the bloggers failed to disclose that they had received free gifts from LOFT, as required by law. After conducting an investigation, the FTC ultimately determined not to recommend enforcement action because, in part, "LOFT adopted a written policy . . . stating that LOFT will not issue any gift to any blogger without first telling the blogger that the blogger must disclose the gift in his or her blog." The FTC also noted that they expect the company to "monitor bloggers' compliance with the obligation to disclose gifts they receive from LOFT."

The FTC's investigation holds a number of important lessons for marketers. First, it is clear that the FTC is paying attention to whether bloggers and companies comply with the new Guides. Second, companies would be well-advised to establish written policies designed to ensure that their employees, bloggers, and other agents comply with the Guides. And, third, companies should closely monitor bloggers and take actions against those that do not comply with their policies. If companies fail to take these steps, they are more likely to be held liable for the actions of bloggers.

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This week, Twitter unveiled “Promoted Tweets,” a platform that will allow advertisers to purchase key words that will link to their ads. Not only does the platform promise to be a significant source of revenue for Twitter, it will also give advertisers a lot more flexibility to promote their brands.

One of the frustrations advertisers have had on Twitter is that their Tweets can quickly get lost in the flow of real-time conversation. Promoted Tweets will allow advertisers to stand apart from that flow. For example, when a Twitter user searches for a word that an advertiser has purchased, the promoted message will appear at the top of the results, even though it had been written earlier. As the following example on Twitter’s blog demonstrates, the Tweet will disclose that it is promoted by the advertiser.

Twitter notes that one significant difference between a Promoted Tweet and a regular Tweet is that Promoted Tweets must resonate with users to stay on the system. “That means if users don't interact with a Promoted Tweet to allow us to know that the Promoted Tweet is resonating with them, such as replying to it, favoriting it, or Retweeting it, the Promoted Tweet will disappear.” The possibility that ads will disappear is built into the platform’s pricing model.

Promoted Tweets will offer companies more flexibility to advertiser on Twitter than ever before. As with most new advertising platforms, though, Promoted Tweets will also offer some challenges. For example, advertisers must be vigilant to ensure that their competitors don’t purchase the advertiser’s trademarks as search terms. Moreover, as we’ve described in other posts (click here, for example), ads that appear in social media platforms like Twitter will be subject traditional advertising laws. Complying with those laws can often be challenging, especially given Twitter’s 140 character limit.
 

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In 2007, Quiznos launched the “Quiznos v. Subway TV Ad Challenge” and invited consumers to create videos demonstrating why Quiznos is better than Subway. To encourage submissions, Quiznos posted four sample videos on the contest site. After the contest, Subway sued Quiznos arguing, in part, that some of the videos submitted by consumers included false claims. Quiznos countered by arguing that it was immune from challenge under § 230 of the Communications Decency Act, a law that essentially provides that certain websites may not be held liable for content provided by third parties. A site may lose immunity, however, if it is responsible for creating or developing that content.

A federal court recently denied Quiznos’ motion for summary judgment. The court stated that the critical inquiry with respect to immunity is “whether the Defendants merely published information provided by third parties or instead were actively responsible for the creation and development of disparaging representations about Subway contained in the contestant videos.” The court noted a few factors that could destroy immunity: (a) Quiznos invited contestants to submit videos demonstrating why Quiznos is better than Subway; (b) the domain name for the Contest (meatnomeat.com) implies that Subway sandwiches have no meat; and (c) the sample videos may contain false claims. The court determined a jury should decide whether Quiznos is entitled to immunity.

This decision interprets CDA immunity more narrowly than other recent decisions in this area and serves as a reminder that there are circumstances in which companies may be held liable for content created by consumers. In a presentation this week, David J. Ervin and Gonzalo E. Mon will discuss strategies that companies can employ to help guard against liability.

Update:  Quiznos and Subway agreed to settle the case.

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On March 10, Kelley Drye will host an encore presentation of the seminar, "A New Legal Frontier for Social Media," at our New York office.

The legal landscape for social media and user-generated content is changing. Make sure you understand the risks and rewards. Companies engaged in blogs, social networking, and other types of interactive marketing campaigns face increased scrutiny in light of recent cases and sweeping changes to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising. These developments have increased the scope of activities and content for which advertisers may be liable.

Join the Association of Corporate Counsel and Kelley Drye for a discussion about the important legal issues and best practices for leveraging social media. Topics will include:

• Ways that companies are using social media in the form of sweepstakes, contests, blogs, wikis, and other promotions involving user-generated content;
• Legal risks and the impact of recent cases and the FTC Guides on your advertising and marketing campaigns; and
• Practical advice on how to minimize legal liability associated with social media websites and campaigns with user-generated content.

SPEAKERS:

David J. Ervin
Partner, Kelley Drye & Warren LLP
Advertising and Marketing Practice

Gonzalo E. Mon
Associate, Kelley Drye & Warren LLP
Advertising and Marketing Practice

Josephine Belli-Marinos
Associate General Counsel & Litigation Counsel
Combe Inc.

Reginald M. Rasch
General Counsel
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WHEN:  March 10, 2010, from 3:00 - 5:00 PM

WHERE:  Kelley Drye, 101 Park Avenue, 27th floor, New York, NY, 10178

REGISTER:  email admin@accgny.com
 

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On February 24, 2010, an Italian court convicted three Google executives for violation of Italy's privacy laws resulting from a video that was posted to Google Video showing a group of teenagers bullying another teenager with disabilities. Judge Oscar Magi sentenced Google Global Privacy Counsel Peter Fleischer, Chief Legal Officer David Drummond, and former Google CFO and board member George Reyes to six-month suspended jail sentences and fines. The executives were acquitted of criminal defamation charges. This appears to be one of the first cases in which a privacy executive is held personally liable for the actions of a site's users

The prosecutors alleged that the executives did not take sufficient actions to keep the video off of Google's site, despite the fact that Google received only two complaints about the video, and it was taken down less than 24 hours after being posted.  Prosecutors stated that Google should have obtained consent from each party involved before permitting the video to be posted.  European law provides a safe harbor for ISPs and does not hold them liable for third party content, provided the ISP takes down any content that someone complains about and is considered offensive.

Members of the technology and privacy communities have described the decision as "terrible," "astonishing," and "troubling."  One commenter stated: "It is like prosecuting the post office for hate mail that is sent in the post."

If upheld on appeal, this decision could dramatically affect internet freedom.  It appears to continue Italy's strong consumer protection stance and attempted regulation of social media. In a previous post, we noted the recent draft decree issued by the Italian government that would require social media sites to screen all posted content that may be harmful to minors.

Although the Google executives will appeal the conviction, the case demonstrates that the Internet makes it easy to take actions globally, but what is permitted in the U.S. does not always work everywhere.

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This post was written by Gonzalo E. Mon and David J. Ervin.

In a previous post and article, we discussed how the FTC's new Guides Concerning the Use of Endorsements and Testimonials in Advertising include various provisions that apply to messages in social media, such as blogs, word-of-mouth marketing, and other promotions in which companies encourage consumers to speak on their behalf. Among other things, bloggers and other endorsers are required to disclose whether they have any materials connection to the company whose products they are writing about, including whether the company has given them any free products or samples. In some cases, however, that may be easier said than done.

In an attempt to provide some guidelines about how to make the required disclosures, this week, the Word of Mouth Marketing Association ("WOMMA") released a Guide to Disclosure in Social Media Marketing. The WOMMA Guide provides sample disclosures for a variety of contexts, including messages on blogs, online discussions, microblogs (such as Twitter), and status updates on social networks. The WOMMA Guide should not be used as a replacement for an individualized company social media policy, but it does provides good examples that companies may want to incorporate into their policies.
 

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This week, the Direct Marketing Association announced new changes to their Guidelines for Ethical Business Practice for endorsements and testimonials.

Among other things, the new Guidelines require marketers to do the following: (a) clearly and conspicuously disclose the generally expected results of an advertised product or service, if the results described in a testimonial are not typical; (b) disclose any material connections between marketers and their endorsers that a consumer would not expect; and (c) ensure that celebrity endorsers disclose their relationships with marketers when making endorsements outside the context of traditional ads. The DMA also clarified that the Guidelines apply not only to traditional of marketing, but also to marketing in social media, such as blogs and word-of-mouth marketing campaigns.

These amendments bring Guidelines into alignment with the Federal Trade Commission’s latest Guides Concerning the Use of Endorsements and Testimonials in Advertising. As we explained in a post last month, the FTC’s new Guides pose various challenges for many companies, particularly in the context of social media. Click here for an article (starting on page 19) that provides some tips for dealing with these challenges.
 

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The Italian government recently drafted a decree that would require owners of social media sites to review all videos posted on their sites in order to screen out any content that could be harmful to minors, including pornography and excessive violence. Internet providers would be required to shut down any site that does not comply with the decree, or face fines ranging from €150 to €150,000 (approximately $210 to $210,860 USD).

The decree inherently challenges the business models of social media sites such as YouTube that allow users to upload videos without any review by the site owners. Opponents of the decree say that it would erode freedom of expression and make it burdensome -- if not impossible -- to monitor what consumers post on the internet. Google and other companies are working with the government to change the scope of the decree.

Although the internet makes it easy for American companies to promote their brands across borders, stories like this one -- as well as recent news about internet censorship in China -- demonstrate that just because a promotion may be lawful in the United States does not mean that it will be lawful in other countries. Check with your legal counsel before running a promotion outside of the United States.

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On Tuesday, January 19, 2010, the Electronic Privacy Information Center (EPIC) publicly posted a copy of a letter from the Federal Trade Commission (FTC) that responds to a complaint filed by 10 privacy rights organizations regarding Facebook's changes to its privacy settings.  In the letter, David Vladeck, director or the FTC's Bureau of Consumer Protection, noted that the "complaint raises issues of particular interest for us at this time," and referenced the privacy roundtables that the FTC is hosting to explore consumer privacy protection challenges, existing fair information practices, and the creation of a new privacy regulatory framework.  A summary of the first privacy roundtable is available here.

While there is no indication as to whether the FTC is currently investigating Facebook, as any investigation would remain non-public until the FTC files a complaint or closes the investigation, this is not the first time Facebook has come under fire for its privacy practices.  In 2008, a class action complaint was filed against Facebook alleging violations of various federal privacy and computer fraud laws, as well as California consumer protection and computer crimes laws, arising out of Facebook's Beacon program.  It was alleged that under the Beacon program, information about Facebook users' online purchases with Facebook's partners was shared with the users' network without the users' consent and used in targeted advertising.  A $9.5 million settlement agreement is pending approval by the court.

If your company maintains information about your customers, check with your legal counsel before adjusting privacy practices that could result in new or different customer information being shared.

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On February 9, Kelley Drye will host the seminar, "A New Legal Frontier for Social Media," at our New York office.

The legal landscape for social media and user-generated content is changing. Make sure you understand the risks and rewards.  Companies engaged in blogs, social networking, and other types of interactive marketing campaigns face increased scrutiny in light of recent cases and sweeping changes to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising. These developments have increased the scope of activities and content for which advertisers may be liable.

Join the Association of Corporate Counsel and Kelley Drye for a discussion about the important legal issues and best practices for leveraging social media. Topics will include:

• Ways that companies are using social media in the form of sweepstakes, contests, blogs, wikis, and other promotions involving user-generated content;
• Legal risks and the impact of recent cases and the FTC Guides on your advertising and marketing campaigns; and
• Practical advice on how to minimize legal liability associated with social media websites and campaigns with user-generated content.

SPEAKERS:

David J. Ervin
Partner, Kelley Drye & Warren LLP
Advertising and Marketing Practice

Gonzalo E. Mon
Associate, Kelley Drye & Warren LLP
Advertising and Marketing Practice

Josephine Belli-Marinos
Associate General Counsel & Litigation Counsel
Combe Inc.

Reginald M. Rasch
General Counsel
LinkShare

WHEN: February 9, 2010, from 3:00 - 5:00 PM

WHERE: Kelley Drye, 101 Park Avenue, 27th floor, New York, NY, 10178

REGISTER: email nycle@kelleydrye.com

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Last month, we posted an entry that discussed the new Promotions Guidelines issued by Facebook. The Promotions Guidelines specify what types of promotions can and cannot be run on the Facebook platform, as well as what types of activities will require companies to obtain prior written approval from Facebook.

This month, Metropolitan Corporate Counsel published an article by Gonzalo E. Mon, Christopher M. Loeffler, and David J. Ervin that discusses the Guidelines in more detail. Click here for a PDF copy of the article.

If your company wants to take advantage of Facebook to publicize or administer a promotion, you need to make sure that you comply with the Facebook Promotions Guidelines, as well as all applicable laws. Failure to do so can result in termination of your company’s rights on Facebook.
 

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The Federal Trade Commission recently released a new version of its Guides Concerning the Use of Endorsements and Testimonials in Advertising. The new Guides, which are effective as of December 1, 2009, contain numerous provisions that apply to messages in social media, such as blogs, word-of-mouth marketing, and other promotions in which companies encourage consumers to speak on their behalf. If your company uses social media to advertise, you need to pay close attention to the Guides because your company may be liable not only for its failure to comply with the Guides, but also for the failures of consumers you work with.

Click here for an article (starting on page 19) that addresses some of the key issues under the new Guides.

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As Facebook continues to grow in popularity, more companies have started to run various types of sweepstakes, contests, and other promotions on the Facebook Platform. Whenever a company runs — or even advertises — a promotion on a third-party platform, such as Facebook, the company must ensure that the promotion complies not only with applicable laws, but also with the platform’s terms and conditions. Up until recently, though, there wasn’t any clear guidance on what companies could or could not do on the Facebook Platform. That all changed in November when Facebook issued a detailed set of Promotions Guidelines.

The Promotions Guidelines specify what types of promotions can and cannot be run on the Facebook platform, as well as what types of activities will require companies to obtain prior written approval from Facebook. If your company wants to take advantage of the popularity and reach of Facebook to publicize or administer a promotion, you need to make sure that you comply with the Facebook Promotions Guidelines, as well as all applicable laws. Failure to do so can result in termination of your company’s rights on Facebook.

Click here for a summary of the Promotions Guidelines and here for a copy of the Promotions Guidelines themselves.
 

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