FTC Testimonial and Endorsement Guides Stimulate Industry Comment

Rimon acts as counsel to many of the advertising industry’s leading trade and membership associations – The Association of National Advertisers, The Word of Mouth Marketing Association, the Interactive Advertising Bureau, to name only a few. As you may have notices, a recent Legal Bytes blog post noted that just last month the FTC supplemented its December 2007 “Self-Regulatory Principles for Online Behavioral Advertising” report.

Well the FTC has been busy in re-examining it’s policies regarding testimonials and endorsements in this digital age. As previously reported in Legal Bytes, the FTC indicated it was revising it’s Testimonial and Endorsement Guides (the first time since the 1980s). Well comments have now been submitted and we strongly recommend that anyone in the advertising and marketing business take a look at some of them. In fact, to help you, Legal Bytes has a couple you can look at right now – Comments for The Association of National Advertisers and Comments for The Word of Mouth Marketing Association – and when you finish reading them ask yourself:

  • Now that public comments are in, what do we think will happen?
  • What is in front of the FTC that might affect its decision making?
  • How would self-regulation differ from the way the FTC has been operating?
  • What does the new FTC Chairman think about self-regulation?
  • Do we expect the new administration to shift direction? If so, which way?
  • How is all this likely to affect advertising and marketing using product placements, branded entertainment, blogs, consumer generated content, buzz, viral and word of mouth marketing?

If you need to know, you need to contact John Feldman, Douglas Wood or Joseph Rosenbaum – or your favorite Rimon attorney – who will be more than happy to help you.

Behave Yourself – FTC Behavioral Ad Guidelines Promote Self Regulation, BUT . . .

FTC Releases Revised Ad Guidelines: Are New Marketing Practices in Your Wallet?

On February 12, 2009, the FTC supplemented its December 2007 “Self-Regulatory Principles for Online Behavioral Advertising” report, highlighting the FTC’s voluntary best practices for the behavioral advertising industry. While continuing to support self-regulation, that should not be taken as a vote of confidence for continuing the status quo. Change is in the air and you may well need to:

  • develop more consumer education concerning behavioral advertising;
  • develop internal privacy protections for anonymous data profiles;
  • create opt-in notice mechanisms for collection of sensitive information; and
  • create opt-in notice mechanisms for retroactive changes to privacy practices.

. . . and if you think your privacy policies are ok, as is, think again. The FTC has taken a broad brush to paint a picture of what it considers personally identifiable information (PII) and what ‘sharing’ of that information may require. Our experts Amy S. Mushahwar and John P. Feldman have written an alert that describes what you need to know in more detail. To read the full alert, with links to the FTC releases, click here.

All the News In Print We Fit!

This post was written by Judith L. Harris.

On Feb. 17, 2009, the U.S. District Court for the Southern District of New York issued an opinion in a case with potentially wide-ranging implications for anyone engaged in the online dissemination of news (Associated Press v. All Headline News Corp., et al., 08 Civ. 323 (PKC). In denying a motion to dismiss the suit, the court cleared the way for a possible showdown between old and new media. 

The lawsuit by AP stems from an allegation that AHN enlisted “poorly paid individuals” to cull the Internet for news, including AP stories, and then either rewrote or cut-and-pasted those stories and disseminated them to the websites of its own paying customers in the form of news reports and breaking news, thereby freeloading on the great effort expended, and great expense incurred, by “one of the world’s oldest and largest news organizations,” self-described as the “gold standard of objective journalism.”

This appears to be the first case to apply an old principle known as the “hot news” doctrine to Internet content. However, in this era of greatly reduced advertising and subscriber revenues, and life-or-death challenges for even the most venerable newspapers and other news-gathering organizations, it is not likely to be the last attack on alleged online “freeloaders.”

The “hot news” doctrine invoked by AP and relied on by the court goes back to a 1918 U.S. Supreme Court decision (International News Service v. Associated Press, 248 U.S. 215), which found breaking news to be “quasi property,” subject to protection from free-riding, or misappropriation, by competitors. In International News Service, the Supreme Court held that allowing one news agency to appropriate and profit from the work of another would “render publication profitless, or so little profitable as in effect to cut off the service by rendering the cost prohibitive in comparison with the return.” (Id. at 241.) As the Court explained, news gathering carries with it “the expenditure of labor, skill and money,” and its appropriation by another “is endeavoring to reap what it has not sown.” (Id. at 239-40.) 

Although the common law origins of this doctrine render it non-binding now in federal courts (where it has been preempted by the federal Copyright Act), the doctrine is still recognized in various states, including New York, the state law found by the court to govern AP’s claims. In New York, the court ruled, a cause of action for misappropriation of “hot news” remains viable and has not been preempted.

The court also allowed AP’s claims under the Digital Millennium Copyright Act (for “intentionally altering or removing copyright management information”) and under New York State unfair competition common law to go forward, but dismissed two counts of AP’s complaint based on the Lanham Act (for trademark infringement and for unfair competition under the statute).

The court’s docket does not yet reflect when an answer will be due, but the case bears further monitoring by anyone engaged in the gathering and/or dissemination of news.

Google Inoculated Against Fraudulent Advertisers

The Communications Decency Act (CDA) appears to have immunized Google from liability associated with advertisements placed through its “AdWords” program by some allegedly fraudulent mobile service providers. Because the allegations did not claim that Google was an “information content provider” itself, Google could take advantage of the statutory immunity granted by the CDA. That said, the federal court in San Jose did note that the plaintiff claimed Google assists customers in picking keywords and drafting AdWords, and if the plaintiff can amend its complaint and substantiate the fact that those activities constitute providing or creating content, this case may take a different turn. Let’s see how the cookie crumbles.

Better to Lose Face Than Facebook

Facebook, the very informal and ostensibly open social network, hinting at an apology for what its CEO acknowledged were “overly formal and protective” Terms of Service, did an abrupt about-face recently, retracting them and reverting to its old Terms of Service—presumably reacting to a sea of complaints from just about everyone. Complaints? Over legal terms—does anyone still read them? Well, they do, and they didn’t like what they read—particularly the part that claimed unrestricted, perpetual ownership of your personal data, even if you decide to delete your entire account and go away. 

While we respect Facebook’s right to better manage, control, and disclose to consumers how and for what purpose it treats and handles personal data, it highlights a number of things the online world continues to teach us. First, don’t assume those innocuous changes buried somewhere in terms of service, terms of use, privacy policies, codes of conduct, rules of the road, or whatever you choose to call them, aren’t being scrutinized—by consumers, by your customers, by the media and, lest we forget, by regulators and legislators. While Facebook has not admitted it was caught a bit red-faced, it is taking your feedback in a “Facebook Bill of Rights and Responsibilities” group to which you can contribute your thoughts. For those in the know, Facebook’s population has grown to more than 175 million users—does that make it the sixth-largest country in the world? Hmm, I wonder if that country has a growing budget deficit too; we’ll have to wait for the State of the Reunion speech, when results are posted, to find out.

Franklin Delano Roosevelt, 1932

“If the process of concentration goes on at the same rate, at the end of another century we shall have all of American industry controlled by a dozen corporations and run by perhaps a hundred men. Put plainly, we are steering a steady course toward economic oligarchy, if we are not there already.”

Useless But Compelling Facts – February 2009

This month, we would like you to identify a place that is made up of one main island and a few smaller islands, and that is partially owned by two different countries (including the main island, which remains divided to this day). All of the original native inhabitants died from disease brought by explorers many years ago, and while the native language was so guttural it did not have an alphabet, those who studied the original tribal culture believe it actually had more words than the English language. Last hint—it was first discovered by Magellan in 1520. What is the name of this place?  Think you know the answer, send it to me.

Useless But Compelling Facts – November 2008 Answer

Shari Gottesman and Richard Fine, long-time Legal Bytes’ readers, were essentially tied in getting me the correct answer to the last trivia question about what Gene Rodenberry, Smithers on The Simpsons, the sci-fi film Hangar 18, and the block-building game Jenga!, all have in common. Well, Star Trek’s Lieutenant Uhuru’s name means “freedom” in Swahili; Smithers speaks Swahili (Marge’s resume says she speaks Swahili, but she’s lying); the speech system on the alien spaceship in Hangar 18 is a Swahili phrasebook; and Jenga comes from the Swahili word “kujenga,” which means “to build.” Swahili is a Bantu language spoken by thousands of people on the southeastern coast of Africa.

Margaret Mead (1901-1978)

“If we are to achieve a richer culture, rich in contrasting values, we must recognize the whole gamut of human potentialities, and so weave a less arbitrary social fabric, one in which each diverse human gift will find a fitting place.”

Thank You!

I want to thank our loyal readers who use ever-increasingly sophisticated search technology to find answers to Useless But Compelling Facts. If you are a winner, you will get a prize—I promise! To those who actually read the articles and send us work—thank you. I promise you high-quality, responsive, knowledgeable legal support—when and where you need it.

To clients, colleagues, prospects, friends—all who have enriched my life and helped me continue to learn—thank you for a challenging and interesting 2008. May the new year bring us health, success, new challenges and more fun. A 2009, filled with wonder and excitement. Let us have the patience to deal with what we cannot change, and let’s resist the temptation to think there is little we can change. Let us know tolerance to accept others who may be different, and wisdom to learn from them—there is both beauty and strength in diversity. Thank you.