Centers of Excellence: Marketing Law
NEWS: PMA protects sweepstakes industry in North Carolina law battle
Posted by Rob Fields in Marketing Law, Sweepstakes on July 15th, 2010
The North Carolina Senate and House last week ratified House Bill 80, a law that is designed to close loopholes in the state’s ban on video poker machines by prohibiting “the use of electronic machines and devices for sweepstakes purposes.” The bill is expected to become law with an effective date of Dec 1, 2010. An earlier version of the bill contained language that could have banned instant win sweepstakes and other forms of sweepstakes conducted for marketing purposes, but the bill’s sponsor eliminated that language, after hearing from PMA & others.
The bill bans the use of electronic machines owned by the sponsor or promoter and intended to be used by sweepstakes entrants. It is not aimed at the consumer’s PC, laptop, or mobile device, or at a server or other device for the consumer’s use. It also requires, for the statute to apply, the use of an “entertaining display”, which is basically defined as encompassing the uses associated with video poker and gambling devices.
The intent of the bill was to prevent gambling businesses from hiding behind the veil of electronic sweepstakes, but not to penalize legitimate sweepstakes operations.
PMA was instrumental in helping to modify the language of the proposed bill, protecting our industry. Linda Goldstein and Ed Kabak of the PMA Governmental Activities Council were actively involved in the revision of the law. Thanks also to Ed Chansky, Brian Heidelberger, and Scott Schleifstein for their help in the process.
Upcoming: PMA Entertainment Law Seminar–April 29 (LA)
Posted by Rob Fields in Entertainment Marketing, Marketing Law on April 7th, 2010
Designed for both marketers and attorneys, this new half-day offering at the LA offices of Manatt, Phelps & Phillips will help practitioners navigate the ever-evolving convergence of branded entertainment, social media and music marketing. The agenda:
2:00pm - 3:15pm Social Media: Will the Buzz Make You or Break You?
3:15pm - 4:15pm Music Download: Talent, Labels, and Numerous Rights Holders
4:15pm - 4:30pm Break
4:30pm - 5:45pm Branded Entertainment: Managing the Issues
5:45pm - 7:30pm Cocktails
Ownership of Advertising Agency-Developed Software
Posted by Rob Newman in Agency-Client Relations, Marketing Law on March 31st, 2010
The American Association of Advertising Agencies (“4A’s”) recently published a position paper regarding advertising agency ownership of the software and software tools agencies use and develop on behalf of its clients. In short, the 4A’s recommends that agencies include provisions in their agency-client agreements that preserve agency ownership and agency right to use all agency developed software and tools.
The 4A’s is troubled by the fact that many agency-client agreements continue to grant the client ownership of all agency-created material. These broad grants may unwittingly transfer ownership of software and software tools that the agency never planned to relinquish. The 4A’s argues that advancements in technology have rendered such broad license grants overbroad because granting clients rights in the ownership of the technology underlying the developed creative materials such as software and software tools could inhibit an agency from using those tools for its other clients. The 4A’s believes that unlike “a commercial or other advertisement that likely has not applicability beyond the value to the specific client, software will likely have applicability beyond the project for which it was originally produced.”
Analogizing software tools to the camera or editing equipment used to create a film, the 4A’s argues that agencies’ clients should not expect to own the tools that are used to create the ultimate digital end product. Generally speaking, the client is not interested in inhibiting their agency’s ability to work for other clients, and as long as the client retains the right to use the software tools necessary to exploit the creative, the 4A’s believes that the client is arguably not harmed by allowing the agency to retain ownership of the software tools. The 4A’s recommends that agencies should consider investing in agency-owned software and technologies separate from any software created during the scope of services for a specific client.
The 4A’s also believes that the advent of these new technologies has increased the risks that advertising agencies face for potential patent infringement claims. The 4A’s cites the rise of so-called patent trolls and believes that agency-client agreements that place the entire burden on the agency to indemnify the client for intellectual property claims may no longer be appropriate allocations of risk. At a minimum, the 4A’s believes that agencies should include a limitation on their liability in agency-client agreements particularly in light of the often exorbitant costs of patent infringement litigation.
These materials have been prepared by Winston & Strawn for informational purposes only. These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
Supreme Court Holds Law Prohibiting Corporate Funding of Political Speech Unconstitutional
Posted by Jason Gordon in Marketing Law on February 17th, 2010
For the first time in our history, a President of the United States criticized the Supreme Court in the State of the Union address. Equally as surprising was Justice Alito’s response to the President’s criticism. The controversy involves a landmark 5-4 decision in Citizens United v. Federal Election Commission.
The case held that laws prohibiting corporate funding of independent political broadcasts in primary elections are an unconstitutional prohibition on free speech in violation of the First Amendment.
The case centers around section 203 of the Bipartisan Campaign Reform Act of 2002 (”BCRA”) (also known as McCain-Feingold campaign finance reform), which prohibits corporations and unions from using their general treasury funds to make independent expenditures for speech that is an “electioneering communication” or for speech that expressly advocates the election or defeat of a candidate. An electioneering communication is “any broadcast, cable, or satellite communication” that “refers to a clearly identified candidate for Federal office” and is made within 30 days of a primary election, and that is “publicly distributed,” which in “the case of a candidate for nomination for President…means” that the communication “[c]an be received by 50,000 or more persons in a State where a primary election…is being held within 30 days.” Corporations and unions may establish a political action committee (”PAC”) for express advocacy or electioneering communications purposes. In Austin v. Michigan Chamber of Commerce, the Supreme Court held that political speech may be banned based on the speaker’s corporate identity.
In January 2008, Citizens United, released a documentary critical of then-Senator Hillary Clinton, a candidate for the Democratic party’s Presidential nomination. Anticipating that it would make the documentary available on cable television through video-on-demand within 30 days of primary elections, Citizens United produced television ads to run on broadcast and cable television.
Concerned about possible civil and criminal penalties for violating the BCRA, Citizens United sought declaratory and injunctive relief, claiming that the law was unconstitutional as applied to the documentary; and (2) the BCRA’s disclaimer, disclosure, and reporting requirements were unconstitutional as applied to the documentary and the ads. The District Court rejected Citizens United’s arguments, and it appealed.
The Supreme Court held that Austin is overruled, and thus provides no basis for allowing the Government to limit corporate independent expenditures. Accordingly, the BCRA’s restrictions on such expenditures are invalid and cannot be applied to Citizens United’s documentary. Given this conclusion, the BCRA’s restrictions on independent corporate expenditures were also overruled. Some believe that foreign corporations may arguably be able to advertise and influence the nation’s political process until Congress passes a new finance reform law.
However, the Court held that BCRA’s disclaimer and disclosure requirements are valid as applied to the ads for the documentary and for the documentary itself. Section 311 requires that televised communication must display (1) “the name and permanent street address, telephone number, or World Wide Web address of the person who paid for the communication,” and (2) a statement “that the communication is not authorized by any candidate or candidate’s committee.” 2 U.S.C. 441d(a)(3); 11 C.F.R. 110.11(b)(3). The televised communication must also include a statement that the entity funding the communication “is responsible for the contact of this advertising,” and that the statement must be both (1) made orally by a representative of the entity making the communication and (2) printed “for a period of at least 4 seconds” in text meeting specified size and contrast requirements. 2 U.S.C. 441d(d)(2); 11 C.F.R. 110.11(c)(4).
Although the court noted that disclaimer and disclosure requirements may burden the ability to speak, they impose no ceiling on campaign-related activities and provide the electorate with information about election-related spending sources.
Additionally, the BCRA disclaimer and disclosure requirements insure that the voters are fully informed about who is speaking. At the very least, they avoid confusion by making clear that the ads are not funded by a candidate or political party.
These materials have been prepared by Winston & Strawn for informational purposes only. These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
Soliciting Charitable Donations Through Text Message
Posted by Monique Bhargava in Digital Marketing, Marketing Law, Mobile/Wireless on January 28th, 2010
Charitable organizations soliciting funds for Haiti earthquake relief are taking advantage of a new way of soliciting donations from consumers: text messages. Charities are encouraging consumers to text a phrase, for example “Haiti” or “Earthquake,” to a short code to make a donation in a set amount that will be added to the consumer’s monthly cellular bill.
Charitable organizations may use text-to-donate campaigns to directly solicit donations. Charities looking to engage in such campaigns on a nationwide level should ensure that they are registered in every state in which they will be conducting the campaign. Furthermore, any related advertising is likely to be subject to state law requirements. Many states require specific disclosures in both advertising and point-of-solicitation materials, including:
- the solicitor’s name and address;
- the charitable organization’s name and address;
- a fair and accurate description of the purpose of the solicitation;
- that a financial statement of the charitable organization will be provided upon request and who to contact to obtain that information;
- the amount of the contribution that is tax deductible;
- the approximate annual percentage paid to maintain, service, or collect the contributions raised by the solicitation;
- whether the person maintaining, servicing, or collecting the contributions is a volunteer or is paid for the services;
- the net percentage or sum of the contribution going to the specific charitable purpose; and
- each organization, or fund, on behalf of which all or any part of the money collected will be utilized for charitable purposes.
For profit companies may also utilize text-to-donate campaigns to solicit donations for the benefit of a charitable organization. Companies engaged in cause marketing campaigns are regulated by state laws as commercial co-ventures. A typical example of a commercial co-venture is where a company advertises that the company will donate a certain amount of money to a charity for every purchase of the company’s goods or services. Some states require companies to register and bond with state authorities when conducting commercial co-ventures/solicitation campaigns. Although some states only require registration and bonding if the company is promoting a sale of its own product or service by stating that a purchase will benefit a charitable organization, other states require registration for any type of commercial consideration.
Where for profit companies are merely advertising that the consumer can directly donate to a charitable organization by sending a text message, state commercial co-venturer obligations are unlikely to apply. However, a company may also engage in a promotion whereby the company advertises that the company will make a donation to a charitable organization for every text message sent by a consumer. With regards to such a promotion, it is possible that even though the company is merely encouraging consumers to send a text to increase the amount the company will donate, the advertising benefit and goodwill that that the company receives from conducting a text-to-donate campaign may be deemed “commercial consideration,” triggering some state’s registration and bonding requirements.
Entities may also use the text-to-donate model to establish a direct marketing connection with consumers by allowing the consumer to opt-in to receive more information or periodic updates about the charity via text message. This new method of charitable solicitation can implicate several issues, including what kinds of disclosures will be necessary such as disclosing of how many text messages are required to be sent or received to complete the transaction, if more than one, and ensuring consumers are provided the proper opt-out and opt-in choices.
If an entity would like to establish a direct marketing connection with a consumer via text message whereby consumers will receive general advertising or marketing messages, the entity should be aware that it should clearly disclose this to consumers and that merely asking the consumer to text “yes” to accept may not be sufficient consent. Specifically, depending on the type of technology used to send the text message (e.g., if the text message address references a domain name), the text message may need to adhere to more stringent requirements including a more stringent electronic signature requirement, proper identification of the entity that is sending the message, that the message is for advertising or marketing purposes, and how the consumer can opt-out of receiving future messages.
These materials have been prepared by Winston & Strawn for informational purposes only. These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
NEWS: FCC Seeks Comments on Privacy Issues
Posted by ekabak in Marketing Law, data protection/privacy on January 20th, 2010
In a recent public notice, the FCC announced that it is seeking comments on privacy issues raised by the Center for Democracy and Technology. The notice states:
The Center for Democracy and Technology recently filed a letter with significant questions about
the use of personal information and privacy in an online, broadband world.3 The Commission seeks
public comment on the questions and topics raised by the Center for Democracy and Technology in its letter, available at: http://webapp01.fcc.gov/ecfs/document/view.action?id=7020365402, and attached to this Public Notice.
Further, the Commission seeks further comment on how tobest meet consumer expectations of privacy, including the following points:
- What principles and standards should be considered to help articulate existing consumer expectations of privacy?
- What can federal agencies do to help ensure that consumer expectations of privacy are met as new technologies platforms are developed?
- Are there industry best practices or regulatory models that are useful in helping to ensure that can be adapted across technology platforms to ensure that users are protected while allowing for the proper use of personal information?
Comments should be to the FCC by March 26, 2010.
On the 2010 Marketing Law Horizon
Posted by ekabak in Gift cards, Marketing Law, marketing to children on January 19th, 2010
- The Maine Predatory Marketing To Minors legislation, passed last year and then called “unconstitutional” by the Maine Attorney General, in response to a coalition effort in which PMA played a role, is now the subject of a new bill. This new bill would repeal the original and enact a radically reshaped one, restricted its scope to pharmaceutical marketing to minors.
- Several FTC and FTC initiatives/workshops and the like are focusing on marketing to children, food standards and empowering parents to control what content is presented on TV and the internet. It appears there is a joint effort of both agencies to treat minors , even beyond COPPA, as a specially protected class with respect to advertising
- A new proposed federal regulation under the Credit Card Act of 2009 clarifies rules concerning expiration dates and dormancy charges of gift cards.
- New state legislation is aimed at Advance Consent Marketing,including in Kentucky, Maine and New Hampshire. These are, in the judgment of some, part of efforts for greater transparency in dealing with consumers, but also have the effect of making sales, even with legal disclosure, harder to close.
Canadian Company Fined For Misleading Promotional Contests
Posted by Rob Newman in Marketing Law, Promotion tactics, contests on December 8th, 2009
Canada’s Competition Bureau recently announced that Manitoba-based Elkhorn Ranch & Resort Ltd. agreed to pay $170,000 to settle charges that it conducted misleading promotional contests. The company used the contests to promote its time share business and consumers were solicited for participation by phone, at trade shows, and at time share presentations.
The Competition Bureau found that Elkhorn Ranch & Resort failed to fairly disclose the accurate odds of winning, failed to ensure that winners were selected on a random basis, failed to disclose the number and value of prizes, and failed to disclose the end dates and drawing dates. Additionally, the Competition Bureau concluded that the company overstated the value of the grand prize in its contests.
For example, the company advertised that the grand prize was a new SUV, when the prize was actually a one or two-year lease on an SUV for which the contestant was required to pay a security deposit and pledge to return the SUV in “immaculate condition.” In addition, certain participants were contacted and told that they had won a prize, and although the advertising indicated that there was no obligation to do anything in order to claim a prize, the participants had to attend a sales presentation in order to find out the prize they won.
In addition to the $170,000 penalty, Elkhorn Ranch & Resort is required to publish corrective notices in newspapers and on its website and maintain a Corporate Compliance Program. The order also lays out specific requirements with which Elkhorn Ranch & Resort must comply. These requirements serve as useful reminders of some of the key aspects of contest and sweepstakes rules that can help ensure that promotional contests and sweepstakes are run legally and fairly. Specifically, the Consent Agreement requires that Elkhorn Ranch & Resort: i) fairly and adequately disclose age and income requirements; ii) award all contest prizes offered; iii) determine winners on the basis of skill or as the result of a random draw; iv) provide a fixed closing date; v) have contest rules accompany entry materials at all points of entry; and vi) indicate the true value and benefits of the prizes.
These materials have been prepared by Winston & Strawn for informational purposes only. These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
Plaintiff Goes To The Mattresses By Filing A Lawsuit Against Mafia Wars Producer and Facebook
Posted by Jason Gordon in Marketing Law, Social Media, advertising law, video games on December 2nd, 2009
While I cannot say that I’m an avid player of Farmville or Mafia Wars, I have noticed that several of my Facebook friends spend hours at work playing these games. What do my friends receive by selling their brothers to a mob family for $1M in Mafia Wars? How do my friends get Farmville badges or ribbons? It appears that the obtaining ribbons and selling your brother comes with a price.
Facebook and Zynga, Inc, producer of “Mafia Wars” and “Farmville,” were sued in Federal court last week for false and deceptive advertising in violation of the California Unfair Competition Law §17200.
The class-action complaint alleges that Facebook and Zynga engaged in a fraudulent scheme to lure users to sign up for services and goods. Although consumers are allowed to play Zynga’s games free of charge, the complaint alleges that the games are designed to allow players to earn “virtual currency,” to purchase online goods, unlock new levels of the game, or otherwise make the games more enjoyable. Although “virtual currency” can be obtained by playing these games, Zynga also allegedly permits consumers to purchase “virtual currency” by participating in “special offers” made available to users.
For example, one offer allows consumers to participate in an IQ test. To take the test, a consumer must provide his or her cell phone number, and they are allegedly told that the results of the test will be send to them via text message. However, the advertisement allegedly subscribes users to an SMS service that bills consumers on a monthly basis on their cellular phone bill. According to the complaint, users must allegedly go through several steps to unsubscribe for the service and obtain a refund. In this case, the plaintiff was allegedly charged nearly $200 for “a risk-free Green Tea Purity Trial” consisting of a package of 30 green tea pills and three tea bags while playing the game YoVille!
Interestingly, Zynga’s CEO was quoted publicly as stating that “[I] did every horrible thing in the book to just get revenues right away…[by giving my] users poker chips if they downloaded this wiki toolbar…[and] we did anything possible just to get revenues so that we could grow and be a real business.” Facebook’s new policies prohibit online advertisements embedded within computer games that are otherwise permissible on Facebook.
Despite the CEO’s statements and the plaintiff’s misfortunes, Facebook may be able to obtain safe harbor protections under the Communications Decency Act (“CDA”). Facebook may be able to argue that because it did not create the allegedly deceptive ads, it may be deemed an interactive computer service shielded by the CDA safe harbor provision, which states that “no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” 47 U.S.C. § 230(c)(1). Facebook’s defense may likely succeed, because Facebook simply permitted the games to appear on its website without engaging in additional activity. Zynga may also claim this defense alleging that they simply provided the forum for the ads to appear. Zynga’s defense would likely turn on whether Zynga created the content, or if it merely provided the forum. Notwithstanding, even if Zynga provided the forum, we would think that the FTC would take a long hard look at someone who knowingly provided the forum for allegedly false and deceptive ads on their video games.
These materials have been prepared by Winston & Strawn for informational purposes only. These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
Upcoming Webinar: Behavioral Advertising
Posted by Rob Fields in Behavioral Advertising, Digital Marketing, Marketing Law on November 20th, 2009
EVERYTHING YOU NEED TO KNOW ABOUT BEHAVIORAL ADVERTISING — DECEMBER 8 @ 2PM EST
This Webinar will address the hottest issues and latest developments that have altered the legal landscape and best practices for online behavioral advertising including:
- FTC Online Behavioral Advertising Principles
- Industry self-regulatory guidelines
- Developments in federal / state legislation
- Best practices for notice and choice for consumers
- Privacy issues and concerns
- Recent enforcement actions, and
- The challenges facing businesses using behavioral models today
Presenters
Richard Eisert, Esq. (left) and Gary Kibel, Esq. are partners in the Advertising, Marketing and Promotions Practice Group of Davis & Gilbert LLP. Richard’s practice includes advising on specific legal/regulatory issues that affect e-commerce, including online data collection, privacy and limitations on behavioral advertising. Gary regularly counsels clients regarding complex technology and intellectual property issues such as software and content licensing, wireless services and entertainment, interactive advertising, search marketing, enterprise technology implementations, behavioral advertising, privacy, data security, internal information management controls, copyrights, trademarks and laws affecting the Internet.
This PMA Webinar is FREE for PMA members. For non-members, the cost is $75.
-
-
SPONSORS:
-
SUBSCRIBE:
-
You are currently browsing the archives for the Marketing Law category.