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

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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