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Google and the FTC

An Open IMHO Letter to Google

Dear Google:

I’ve heard that the FTC has served you with a civil investigative demand in connection with your search-advertising business. They have raised the question as to whether your search engine technology pushes consumers to your other services in a manner that is unfair to your competition.

Now the FTC will try to determine if your market power is dominant because your practices are unfair and whether consumers are harmed, either directly or by not having competitive choices in the marketplace. Of course, the FTC has taken into account the complaints of your competitors. That is significant because I’ve heard a rumor that companies rarely try to incite trouble for their competitors at a regulatory agency.

So what happens next? Senior executives scramble. Lawyers do research and prepare briefs. Finance people set up cost centers and budgets. Evidence is gathered. Experts are retained. Distraction will be pervasive, invasive, consistent and persistent – until a settlement is reached. It won’t be pretty. It won’t be fun. It never is. But it’s here and at least the sword of Damocles is not hovering above. The issues will be confronted and the scope will be expanded – government always uses what it finds as a basis for going farther than originally planned (it’s great leverage). Then the serious business of trying to reach an accord will begin.

This isn’t about winning or losing. It’s about making a point. But it’s de facto, a recognition that you are thriving at what you do and have grown large and successful as a result. True, this action is probably not the recognition you prefer, but when the government wants everyone to believe you might be too big, too dominant, too much in control at the expense of competition and the detriment of consumers, the target is painted on you and it’s just a question of how much pain is inflicted before a settlement is reached.

Now I am not an economist or a market dominance expert, I’m a lawyer and blogger; but I thought I might help out by offering some observations you can bring to the attention of the FTC that might give the government (maybe others in the industry and even your competitors), pause to question whether their analysis, their efforts, their investigation, is correct or necessary. I’ve taken the liberty of including an attachment to this letter (see Attachment A) that provides some tips. Feel free to use them and tell your lawyers to back them up with lots of research and briefs – those are always impressive and useful.

Sincerely,

Joe Rosenbaum at Legal Bytes.

P.S. If your people end up spending hours, days and months with government regulators, working through lunches, late nights pouring over documents, huddled around conference tables, it may give you an opportunity to point the officials to their next target. You know who.

P.P.S. Feel free to use these and other quotes from the FTC if you like:

“And, as the information industry is still emerging, quite dynamic, and not yet well understood, plausible efficiency benefits should, perhaps, weigh heavily in the balance against asserted risks of decreased competition, especially when the technology is changing so fast that adverse effects on competition are likely to be transitory.”

“Antitrust and Technology: What’s On The Horizon?” Prepared Remarks of Federal Trade Commissioner Christine A. Varney, before the American Society of Association Executives, Legal Symposium, Washington, D.C., October 6, 1995

“A less confrontational approach suggests that because of the robust pace of innovation in high-tech industries, government should not intervene ‘unless certain that doing so will benefit consumers and the economy.’ (See, Priest, The Law and Economics of U.S. v. Microsoft, AEI Newsletter, August 1998).” Antitrust Analysis in High-Tech Industries: A 19th Century Discipline Addresses 21st Century Problems, Prepared Remarks of Robert Pitofsky, Chairman, Federal Trade Commission, to the American Bar Association Section of Antitrust Law’s Antitrust Issues in High-Tech Industries Workshop, February 25-26, 1999, Scottsdale, Arizona

You really need to see Attachment “A” so if it isn’t already displayed, point whichever browser you are using and click the “Continue Reading” text on the left below.

Continue reading “Google and the FTC”

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Useless But Compelling Facts – May 2011 Answer

Our last UBCF quiz asked you to identity each of the following U.S. presidents and the year involved in response to a series of "first" questions. Here are the answers:

(a) The first to have his inauguration photographed: JAMES BUCHANAN in 1857

(b) The first inauguration to be recorded by a movie camera: WILLIAM McKINLEY in 1897 (watch it on YouTube.)

(c) The first inauguration to be aired on radio: CALVIN COOLIDGE in 1925

(d) The first inauguration to be televised: HARRY S. TRUMAN in 1949

(e) The first inauguration to be televised in color: JOHN F. KENNEDY in 1961

Kudos to Samuel J. Dressler for not only getting them all right, but giving us an ‘extra credit’ or bonus round tidbit . .The first inaugural website: BILL CLINTON in 1997! Thank you.

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FTC Launches Mobile App Information Page

Earlier today, the FTC established a web page on its Website entitled, “Facts from the FTC: What You Should Know About Mobile Apps.”

The FTC web page contains a link to the U.S. federal government’s website OnGuardOnline, which provides government and industry-related information about how to protect and secure the information that may be available when you are online (and now when you are "app" happy on your wireless and mobile devices).

Are you in the online or mobile advertising industry? Do you create, use, share or obtain data from "apps"? Expect more, not less, regulatory and government agency activity in this area in the months and years ahead.

If you need help from lawyers with decades of experience, Rimon is the place to look. Feel free to call me, Joseph I. (“Joe”) Rosenbaum, or any of the lawyers within the Advertising Technology & Media law practice group, or any of the Rimon attorneys with whom you regularly work. We will be happy to help you.

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Protection of Minors Doesn’t Trample Free Speech in Online Games

In 2005, California enacted a ban on the sale or rental of violent video games (defined as a game that depicts killing, maiming, dismembering or sexually assaulting an image of a human being) to minors. The stimulus for the law was the stated belief that violent videogames are likely to make minors become more aggressive and violent. The penalty for retailers who violate the ban? As much as $1,000 per violation.

As you might imagine, the legal challenge started almost immediately – from publishers, distributors and sellers; and today, in a 7–2 vote, the U.S. Supreme Court upheld a ruling by an appeals court that held the California law unconstitutional. I believe (although I didn’t go back and check yet) that California now becomes the seventh state to have such a law struck down. Justice Scalia, in summarizing the decision, is reported to have said, “Our cases hold that minors are entitled to a significant degree of First Amendment protection. Government has no free-floating power to restrict the ideas to which they may be exposed"; and in his written opinion for the majority noted, "Even where the protection of children is the object, the constitutional limits on governmental action apply."

We will try to bring you more details once we analyze the 18-page opinion handed down today, but if you have questions, feel free to call me, Joseph I. ("Joe") Rosenbaum, or any of the Rimon attorneys with whom you regularly work.

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ICANN. You Can. We All Can: Own Your Own gTLD, Of Course!

A few days ago, Legal Bytes announced that the International Corporation for Assigned Names and Numbers (ICANN) approved a plan to allow virtually unlimited new top level Internet domain names – each is referred to as a gTLD (Nightmare on Brand Street: ICANN Adopts Unlimited gTLDs).

In response to numerous questions and requests for more information, here is some additional material for your consideration.

First, you can download a copy of the current gTLD Applicant Guidebook.

Second, you can read or download a copy of a brief, executive-level presentation entitled, “The New gTLDs: What Does It Mean for Brand Owners?” describing the changes, the implications and some additional information that may be relevant to brand owners in evaluating the implications of the new scheme.

As always, if you have further questions, you can contact me directly or any member of our gTLD team: Douglas J. Wood, John L. Hines, Joseph I. Rosenbaum, Cynthia O’Donoghue, Dr. Alexander R. Klett, LL.M., Steven J. Birt and Brad R. Newberg.

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Payment Card Industry Takes a Swipe at Virtual Security

Someone in the payment instrument, payment processing, or payment systems environment must be living under a rock if he or she has not heard of or been affected by the Data Security Standards (DSS), or “PCI-DSS” as it has been referred to in the industry, promulgated and released by the Security Standards Council of the Payment Card Industry Association (PCI). Although the original impetus for the credit-card-driven security standards was combating identity theft and credit card fraud in the wake of the data breaches and compromised (or potentially compromised) databases containing sensitive consumer payment account information, the standards have become the de facto starting point for any compliance security standard in the payment industry.

Last week, the PCI Security Standards Council released new comprehensive guidelines for PCI compliance in virtual card holder data environments dealing with consumer payment system and payment transaction security in a virtual environment. Rimon lawyers who work in this area consistently and who have a wealth of experience with information security and financial services, have put together a client alert entitled: "Is the PCI Security Standards Counsel Preparing for Cloudy Weather?"

Credit, debit and prepaid cards; smart cards and chip cards; gift cards and stored value cards; co-branded cards and loyalty rewards programs; corporate cards, fleet cards and purchasing cards; data protection and privacy; information security, identity theft and data breaches; micro, digital and virtual payment systems – E Commerce; The Fair Credit Reporting Act; Regulation E; Regulation Z; Credit Card Act of 2009 (see Credit Card Act of 2009: Act I, Scene 1 or just search the Legal Bytes blog)! Do any of these terms apply to you? Talk to us. It’s what we do. Contact any of the lawyers listed in the Alert, contact me, or contact the lawyer at Rimon with whom you routinely work, and we will make sure we help you or connect you to someone at Rimon who will be happy to do so.

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Nightmare on Brand Street: ICANN Adopts Unlimited gTLDs

The International Corporation for Assigned Names and Numbers (ICANN) has approved the plan for unlimited new gTLDs (i.e., top level Internet domain names) and will soon start taking applications. Brand owners dreading the adoption of a system permitting unlimited gTLDs now face the reality of this dramatic change to the domain name system.

While the domain name system is currently limited to 22 “generic” gTLDs (.com, .org, .net, .info, .biz, etc.), country codes (e.g., .us, .uk, .cn), and certain special community-sponsored domains (e.g., the .xxx for adult entertainment), the new rules permit entities anywhere in the world to apply for and, if granted rights by ICANN, to operate a gTLD for virtually any term, word or phrase, including your names, trade names, trademark terms, brand and product names.

My partner, John L. Hines, has been following this occurrence and is about as close to these developments and their implications as any legal advisor can be; but we have a global team of lawyers – Douglas J. Wood, Cynthia O’Donoghue, Dr. Alexander R. Klett, LL.M., Steven J. Birt and Brad R. Newberg – who, with John, have put together a Client Alert entitled “.anything On Its Way: New Generic Top Level Domains Will Launch January 12”.

Of course, if you need additional information or guidance, or both, please contact any of them. They will be happy to help.

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Transcending the Cloud – Advertising & Marketing Make Rain

This post was written by Joseph I. Rosenbaum and Keri S. Bruce.

As part of our ongoing commitment to keeping abreast of legal issues, concerns and considerations in the legal world of cloud computing, most of you know we have been publishing regular topical updates to our Cloud Computing initiative – new chapters and white papers intended to provoke thought, stimulate ideas and, most of all, demonstrate the thought leadership Rimon attorneys bring to bear when new and important trends and initiatives in the commercial world give rise to new and interesting legal issues. If you didn’t know, re-read the previous run-on sentence!

So here, from Joe Rosenbaum and Keri Bruce, is a glimpse at some issues that apply to the world of advertising and marketing arising from Cloud Computing. This next chapter in Rimon’s on-going series, “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing,” is titled “Cloud Computing in Advertising & Marketing: Looking for the Silver Lining, Making Rain.” This white paper tries to examine the considerations and concerns that arise within the advertising and marketing industries in the wake of complex and evolving regulation and scrutiny. We hope it provides some insight into the issues and the factors that apply, even as the industry and the regulatory landscape continue to evolve.

As we do each time, we have updated the entire work so that, in addition to the single "Advertising & Marketing" services’ white paper, you can access and download a PDF of the entire “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing” compendium, up to date and including all the previous chapters in one document.

Of course, feel free to contact Joe Rosenbaum or Keri Bruce directly if you have any questions or require legal counsel or assistance related to advertising and marketing. Make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information. And if you ever have questions, you can always contact any Rimon attorney with whom you regularly work.

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The New Robocop in Town: TCPA, When ‘ALL’ Really Means ALL

This post was written by Judith L. Harris, James M. Duchesne, and Joseph I. Rosenbaum.

It’s Election Night 2010 in Maryland, where a high-profile gubernatorial race is coming to a close. The telephone rings once again, but this time, the message is not “go out and vote before the polls close.” Instead, a recorded message tells the voter, “Relax. Everything is fine. The only thing left is to watch [election results] on TV tonight.” The automated call with a recorded message (a “robocall“) ends with no indication as to who made it or where it came from. This was what actually happened to more than 112,000 African-American voters in Maryland on November 2, 2010. While these “robocalls” may have violated Maryland election laws (criminal charges were recently issued), they may also have violated the TCPA – the Telephone Consumer Protection Act of 1991 (47 U.S.C. 227).

The TCPA amended the Communications Act of 1934 and is the primary law regulating telemarketing in the United States. Subsection (d) of the TCPA, entitled “Technical and procedural standards,” requires the Federal Communications Commission to create minimum technical and procedural standards for making calls using an artificial or prerecorded voice system (a “robocall”) and makes it a violation of the law if an individual ignores those standards. As part of those minimum standards, one must, at the beginning of the robocall, clearly disclose the identity of whoever initiated the call and at some point during the call, disclose the telephone number or address of that business, individual or entity.

The TCPA allows each state attorney general to enforce the law in federal court, and Maryland brought an action against the company that initiated the offending calls, as well as one of its owners, and one of its employees, claiming they violated the TCPA’s disclosure requirements in an effort to confuse voters and suppress voter turnout (Maryland v. Universal Elections). In response, Universal filed a motion to dismiss the suit, and just a few weeks ago (May 25, 2011), in its opinion dismissing that motion and allowing the suit to proceed, the U.S. District Court for the District of Maryland made some noteworthy observations regarding TCPA liability:

Purpose Doesn’t Matter. The defendants claimed that making “political robocalls” exempted them from the requirements of the TCPA. Nope. While the FCC may have exempted political robocalls from the requirement of obtaining prior consent, neither Congress nor the FCC exempted political robocalls from the minimum disclosure standards of the TCPA – the plain language of the rule states: “all artificial or prerecorded telephone messages.” Any robocall, for any purpose – commercial, political, or charitable – must contain a disclosure regarding who initiated the call and where that entity or individual can be contacted.

Individuals Can Be Liable. The plain language of the statute, cited in the court’s opinion, states: “It shall be unlawful for any person . . .” to violate the robocall disclosure requirement. Whether an owner of the company or an employee acting on behalf of the company, the court noted several instances in which individuals acting on behalf of corporations could be held personally liable for violating the TCPA (e.g., if they, “had direct, personal participation in or personally authorized the conduct found to have violated the statute”). The owner and employee here could be found liable not because they worked for Universal Elections, but because they were directly involved in initiating the calls that may have violated the TCPA. In other words, if an individual causes a corporation to act in a way that violates the TCPA, that individual can be found liable for the corporate action. Corporate, political campaign and nonprofit decision makers should be aware of this personal liability when they plan their calling campaigns.

One Who Initiates the Call, Not Just Makes It, Can Be Liable. In its motion, Universal argued that because it did not physically make the robocalls, it was not subject to the procedural disclosure standards of the TCPA. It hired a third party to place the robocalls and only recorded the message and uploaded it, and the 112,000 telephone numbers to be called, into the vendor’s system. Guess what the court said? “As the persons and entity responsible for recording the message, the defendants,” and not the conduit that distributed the message, “were in a position to ensure that the content of the message complied with the TCPA.”

If you are making pre-recorded calls, compliance is cheaper than the risk of damages. Maryland is seeking not just to enjoin the defendants from ever violating the TCPA again, but is also seeking monetary damages of $500 per TCPA violation (i.e., each call); and since the state alleges the violations were made willfully and knowingly, it claims the defendants were trying to deceive voters by failing to disclose who made the call, and is also asking the court to triple the damages and require the defendants pay the state’s attorneys’ fees.

A special thank you to James M. Duchesne, a legal intern at Rimon and one of the primary authors of this post. His contribution is greatly appreciated. If you need legal advice and representation on issues related to telemarketing, look no farther than Judith L. Harris and her team, working with our Advertising Technology & Media law practice group. Experienced. Knowledgeable. Seamless. Responsive. Cost Effective. We are happy to help.

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Friends on Facebook – Hold Them Close, Get Held in Contempt of Court!

Since 2009, Legal Bytes has been blogging off and on about the implications of social media to the legal profession and the legal process. Whether it’s judges being "Friends" with lawyers (see, Florida Judges Can’t Have Friends), or jurors networking about evidence or cases as they deliberate (see, When Pressing Suits, Judges Tell Jurors Neither Social Nor Media is OK), or reporters "tweeting" from the courtroom (see, Freedom of the Press = Freedom to Tweet), social media is a force to be reckoned with—and the legal process also needs to reckon with it.

The latest blip on the radar comes from the UK, where Joanna Fraill, a juror, has been tried and convicted of being in contempt of court in what is being widely reported as the first Internet-related contempt of court prosecution in the UK (and perhaps anywhere). So in addition to judges, prosecutors and plaintiffs’ lawyers being wary about managing their online relationships, and jurors being admonished for searching online for information regarding the facts, parties, or issues in a case, add communication between jurors and parties in the legal proceedings to the list. Ms. Jamie Sewart, a defendant in a trial in Manchester involving billions of BPS’ worth of drugs, was contacted by Ms. Fraill, one of the jurors in the trial, through Facebook while the jury was deliberating.

Ms. Sewart admitted knowing Ms. Fraill was one of the jurors when she "accepted" the request to be friends, and the case collapsed when their communication through the social networking medium was uncovered. Ms. Sewart’s partner was convicted and is currently in prison, but Ms. Sewart was acquitted as a result of this trial. In one exchange between them – the text has now been made public – Ms. Fraill sent a message to Ms. Sewart regarding the jury deliberations stating: "cant get anyone to go either no one budging pleeeeeese don’t say anything cause jamie they could all miss trial and I will get 4cked to0."

Now before everyone rants about the evils of social media, bear in mind that the same result would be obtained if the juror had written a letter, called by phone or sent a coded message by carrier pigeon. The fact that a new means of communication – the Internet – was involved doesn’t change the admonition, the rules, or the consequences of the conduct. Indeed, with Facebook’s user population at approximately 700 million, the relatively lax attitude toward anyone monitoring their millions of followers on Twitter (or who they follow – I generally just automatically reciprocate), isn’t it likely one of you is already "Friends" with a criminal, or you will be, or you are following someone who may be appearing in court any day now?

Communication between participants in legal cases has long been the subject of ethical rules, professional guidelines and rigorous policing. Issues relating to privilege and work product, attorney-client communication, and relationships between lawyers, judges, plaintiffs and defendants, are not new. But jurors wanting to be "friends" with a defendant in the midst of a trial – well that’s one I haven’t heard before.

Rimon has teams of lawyers knowledgeable in digital evidence and discovery, employment and social media, privilege and litigation, in the age of the Internet and mobile communication. So as I’ve said before, keep your browser tuned (or bookmarked) to www.LegalBytes.com for breaking news, and if you do need help, contact me, Joe Rosenbaum, or any of the lawyers at Rimon with whom you work.

OMG B KEWL and call (or SMS) if you need help.