Transcript Slide 1

Hot Topics in Internet Law
Jeanne Hamburg, Esq.
Bradford W. Muller, Esq.
Erin T. Welsh, Esq.
The material provided herein is for informational purposes
only and is not intended as legal advice or counsel.
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Trademark and
Copyright Issues in
Advertising on the Web
Jeanne Hamburg, Esq.
Why Important?
• CMO (Chief Marketing Officer) Council May,
2009 survey
• Top IP concerns are:
– Cybersquatting (28.4 percent)
– Unlawful copying of digital media content (24.7
percent)
– Reverse engineering (21.2 percent)
– Phishing (replicating authentic web sites to steal
personal information) (19.9 percent)
– Sale of counterfeit goods online (18.2 percent)
Overview
• Common Issues Raised by Promoting a
Business on the Web:
• Developing a Web Site
• Using Third Party Content On Your Web Site
• Stopping Others from Using Your Content on the
Web
• Theft of Domain Names
• Phishing, Pop-Up Advertising, Framing,
Hyperlinking and Key Word Purchases, PPV/PPC
Advertising
Web Site Development
• Hiring of third party (independent contractor) to
develop site
• Who will own content created and the html code
used to create it?
– Usually site owner
– Must be a grant or developer will own by default
– Is web site developer using third party (nonemployee) to create content? Must be assignment to
site owner or developer.
– Is developer using third party content?
Representations and warranties.
Web Content Clearance: Fair
Use
• You are a site owner or third party owning content
appearing on third party site without permission
• Cannot assume creative content (graphic, textual,
sound recordings, etc.) are not protected by
copyright simply because available on web
• Sites claim to make material available that is in “the
public domain” (copyright has expired) but may not
be
• Example: software developer, stock images from
Getty, found them elsewhere. Getty = one of largest
stock photo agencies in world.
Web Content Clearance
• If license content from such a site look for
representations and warranties that site owner has the
rights
• Look for terms of use that may restrict use of the
licensed content. Often a one time “click through”
– E.g. Microsoft Clip Art, may not be used for
promotional purposes (incl commercial web site)
– Example client use in PPT for nutritional programs
for economically disadvantaged
• Right of publicity/privacy issues if person is depicted in
connection with promoting a business
Web Content Clearance: Fair Use
• “Fair use” codified at 17 U.S.C. 107
• Allows the user of copyrighted material to do things otherwise
exclusively the right of the copyright owner—so permission not
required
• Must be for “fair use” purposes enumerated by statute: e.g.,
criticism, comment, news reporting, teaching, scholarship, research
• Four factor test for “fair use”: (1) purpose and character of use; (2)
nature of work; (3) amount and substantiality of portion used: (4)
effect on marketplace value
• Example news summaries relevant to your industry posted on site
Cybersquatting
• Trademark, or confusingly similar mark,
is used in a web site address (e.g.
maztercard.com, tetrisforfree.com)
• Prohibited by federal law:
anticybersquatting protection act
(ACPA), part of the federal
trademark statute (Lanham Act)
• Vehicles for domain name recovery:
– Federal court litigation
– Uniform Domain Name Dispute Resolution
Proceeding
Federal Court Action for
Cybersquatting
• Rarely done unless there is also
another act of trademark
infringement, e.g. the URL links
to site content selling goods or
services under the infringing
mark
• Expensive
• Advantage is that you do not
have to prove the domain name
was registered in bad faith
Cybersquatting
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Legitimate use or interest in domain name
Noncommercial or fair use
Attempt to divert traffic
Attempt to transfer the domain name for
money
• Pattern of cybersquatting:
– history of selling other domain names; use of false
contact information; registration of multiple
domains that the person knows are identical or
confusingly similar to distinctive or famous marks
UDRP Proceedings
• Arbitration proceeding
• Not necessary to own registered mark. Must show the domain
name is identical or confusingly similar to a mark in which the
complainant has rights, the respondent has no legitimate right to the
domain name and the respondent registered the domain name in
bad faith.
– E.g. Tetrisforfree.com, maztercard.com
• ICANN (Internet Corporation for Assigned Names and Numbers)
sets rules and policy as adopted by the arbitral forum authorized by
ICANN
• Most popular forums are WIPO in Switzerland and NAF in
Minneapolis
• Complaint, Reply, and Surreply, then a single member or three
member panel will decide. All filed electronically.
DMCA: Service Provider Liability
• DMCA effective weapon for the those
whose copyrights are infringed on the
web
• Makes the host of content, who receives
notice of the infringement from the
copyright owner or its counsel, liable if it
does not take down the content
• Fantastic remedy when infringer’s identity
is not known or infringer is uncooperative
ISPs Frequently Contacted
Under DMCA
• Apple (iTunes, TETRIS infringements)
• Google
– Gadgets
– Android
• Amazon
Legislation on Phishing
• No legislation directly prohibits, but there may be
copyright and trademark remedies available since site
content and trademarks are copied
• Credit Card Fraud Act
• The Identity Theft and Assumption Deterrence Act
• Fair and Accurate Credit Transaction Act
• California's Anti-Phishing Law
– California in 2005 became the first state to enact legislation
designed specifically to deter phishing. Some victims of
phishing, including those who provide Internet access service
to the public, own a Web page, or own a trademark, may
recover up to $500,000 for each proven violation of the statute.
Other victims may recover up to $5000 for each violation of the
statute. The statute also allows the state's attorney general or a
district attorney in the state to bring an action to enjoin further
violations.
Hyperlinking: Copyright and
Trademark Infringement?
• If a hyperlink provides access to material provided
without copyright owner’s consent, is it a copyright
infringement?
– Even if the site owner provided permission, it may
itself not have authority to use the content
• Is a hyperlink using a third party trademark likely to
confuse others or imply their endorsement,
particularly if text surrounding the link says it does?
• Some courts: violates the law if it points to illegal
material with the purpose of disseminating that illegal
material
Hyperlinking Best Practices
• In an email, do not provide a “live”
hyperlink
• Beneath a hyperlink in a site, include a
disclaimer that the site owner is not
affiliated with, does not endorse or
sponsor the trademark owner’s services
Framing
Framing
• Perfect 10 v. Amazon.com: Google's in-line links were
not infringements of the copyright owner's rights to copy
and display its work. "In line linking" describes a process
by which a webpage directs a user's browser to
incorporate content from different computers into a
single window.
– Google provided HTML instructions directing a user's browser to
access a third-party website when a user conducted a search for
the content as to which copyright was claimed. Google's
computers themselves did not store the copyrighted content.
– The content was also "framed" by information from the Google
webpage on the top and bottom part of the window displaying
the link. Thus, the user's window appears to be filled with a
single integrated presentation of the full-sized image but is
actually an image from a third party website framed by
information from Google's website.
Pop Up Ads
Pop Up Ads
• Are a site owner’s copyrights or trademarks
infringed when a competitor’s pop up ad is
displayed when a consumer access the site?
• Most courts hold no when:
– No “use in commerce” of the site owner’s trademark
in the ad itself
– Not an infringement of site owner’s right of display
as the ad does not take any of the site owner’s content
or to prepare derivative work as the ad does not
constitute a preparation of a new work based on the
original (site) even though it may block some of the
site content when it appears
Key Word Purchases
• Search engines such as Google sell third
party trademarks as “key words” which
will display the purchaser’s web site on
a search by the user for the key
word/trademark
Key Word Purchases
Key Word Purchases
• US courts split on whether this is
unlawful
– Is there likelihood of confusion, trading off
on goodwill earned by the trademark
owner or is this just like a virtual
marketplace where different branded
goods are displayed on virtual “store
shelves” next to each other?
• Issue may be treated differently abroad
and in US
Pay Per View/Pay Per Click
Advertising
• Provider of PPV/PPC ad gets paid every time there
is a view or click as a result of the ad and may also
be paid a commission on any resulting sale
• PPV or PPC ads may appear when a user does a
browser search using a trademark. Is the PPV or
PPC ad of a third party (not the trademark owner)
an infringement if it does not use the trademark in
the ad? Courts have not decided the issue
• In 2006 Yahoo prohibited PPV or PPC advertisers
from bidding on third party trademarks thus
causing the display of the ads when those marks
were searched
Pay Per View/Pay Per Click
Advertising
• However, Google's AdSense program still permits
this in the form of "Sponsored Links" that are
generated on searches through the Google browser
of third party marks. Some estimate that 95
percent of Google's revenue comes from AdSense.
• "Fraudulent clicks": a competitor can deplete the
advertiser's budget by clicking so many times on
the advertiser's sponsored ad that they exhaust
their budget to pay the provider of the PPC ad.
Cloud Computing:
Pros, Perils and Pitfalls
Bradford W. Muller, Esq.
What is Cloud Computing?
• Cloud Computing Defined:
– A computer networking model that gives
users on-demand access, via the Internet,
to shared software applications and data
storage
– Examples:
» Google Apps
» Snapfish
» Salesforce
» Windows Azure
Benefits
• Cost Effective
– No need for expensive on-site data storage
systems
• Improved Disaster Recovery Efficiency
– Even if your office is destroyed, your data is safe
off-site and immediately accessible
• “Green”
– Reduce company’s carbon footprint by
eliminating much of the on-site data storage, and
the energy draining servers that come with it
Legal Pitfalls and Developments
An Overview
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Exposure to Litigation in Other States
Tech Savvy Judges and Privacy Rights
Third-Party Servers and Pre-trial
Discovery
The Cloud and Copyright Infringement
Cloud Wars: Microsoft v. Google
Exposure to Litigation
in Other States
• Forward Foods LLC v. Next Proteins,
Inc, 873 N.Y.S.2d 511 (N.Y. Sup. 2008)
– Personal Jurisdiction
• Sufficient Minimum Contacts
• Virtual Data Room
– Use of a cloud can potentially increase the
number of “contacts” a company is found
to have with a particular state
Exposure to Litigation
in Other States
• Unanswered Personal Jurisdiction Questions
– By storing documents with a cloud-based data
storage provider located in a different state, is the
company exposing itself to jurisdiction in that
location?
• Is the company “doing business” in a location, for
personal jurisdiction purposes, simply because it stores
documents with a cloud-provider based there, even if it
has no other contacts with the state?
Tech Savvy Judges
and Privacy Rights
• State v. Bellar, 217 P. 3d 1094 (Or. App.
2009)
– Privacy Rights in Data Stored in Cloud
• Expectation of Privacy
• As judges become more tech savvy, privacy
rights will increase
Third-Party Servers
and Pre-trial Discovery
• Columbia Pictures, Inc. v. Bunnell, 245
F.R.D. 443 (C.D.C.A. 2007)
– Data within the party’s control may be
discoverable
• “ability to manipulate at will”
– Increasingly difficult for companies to hide behind
their third-party data-storage providers when
fielding discovery requests
The Cloud and Copyright
Infringement
• Arista Records, LLC v. Usenet.com,
Inc., 633 F. Supp. 2d 124 (S.D.N.Y. 2009)
– Unauthorized artistic content made
available via the Cloud
• Recording Companies sued Cloud Provider
– The Cloud is not the Wild West
Cloud Wars
Microsoft v. Google
• Battling for Dominance in the Cloud
Computing Services Market
– Google v. United States
• Google Apps v. Microsoft Business
Productivity Online Suite
– FISMA Certification
• Indicative of growing competition for cloudclients
To the Cloud?
• Tremendous Business Benefits
– Cost Savings
– Improved Data Recovery
– “Green”
• Developing Legal Trends
– Only time will tell how courts will perceive Cloud
Computing in terms of privacy rights, personal
jurisdiction, and other important issues
Seminar Intermission
Endorsements and
Testimonials on Social
Networking Websites
Erin T. Welsh, Esq.
FTC Act
• Section 5 (15 U.S.C. 45) – False and misleading
advertising
• Revised Guides Concerning the Use of
Endorsements and Testimonials in Advertising
(16 C.F.R. § 255) (effective 12/1/09)
– “Advertisers are subject to liability for false or
unsubstantiated statements made through
endorsements, or for failing to disclose material
connections between themselves and their
endorsers. Endorsers also may be liable for
statements made in the course of their
endorsements.” (Section 255.1(d))
What is an Endorsement?
• Any advertising message (including verbal
statements, demonstrations, or depictions of the
name, signature, likeness or other identifying
personal characteristics of an individual or the name
or seal of an organization) that consumers are likely
to believe reflects the opinions, beliefs, findings, or
experiences of a party other than the sponsoring
advertiser
• Views expressed by endorser may be identical to
those of the sponsoring advertiser.
• Endorser may be an individual, group, or institution
What is an Endorsement?
• Whether speaker is:
– (1) acting independently (not endorsement) or
– (2) acting on behalf of the advertiser or its agent
(endorsement)
• Factors:
–
–
–
–
–
–
Compensation
Free product/service
Terms of agreement
Length of relationship
Previous receipt of products or services
Value of items/services received
Examples
• Consumer buys new, more expensive
brand of dog food and writes on her
personal blog that the change in diet
has made dog’s fur softer and shinier,
and that, in her opinion, the new food is
worth the extra money
• Not an “endorsement” under the
Guides
Examples
• Rather than purchase the dog food,
consumer gets it for free because she
used a coupon for a free trial bag from
her grocery store
• Not an “endorsement” under the
Guides
Examples
• Assume consumer joins a network
marketing program under which she
periodically receives various products
so she can write reviews on her blog.
Consumer receives a free bag of new
dog food through program.
• Consumer’s positive review would be
considered an “endorsement” under the
Guides
Examples
• Advertisers may be liable for:
– False statements made through
endorsements
– Unsubstantiated statements made through
endorsements
– For failing to disclose material connections
between themselves and their endorser
Example
• Skin care products advertiser participates in blog
advertising service
– Advertisers matched up with bloggers who will promote
advertiser’s products on personal blogs
• Advertiser requests blogger try new body lotion and
write a review on blog
• Advertiser makes no specific claims about lotion’s
ability to cure skin conditions and blogger does not
request substantiation of claim
• Blogger writes that lotion cures eczema and
recommends product to blog readers who suffer from
condition
Example (cont.)
• Advertiser subject to liability for misleading
and unsubstantiated representation made
through blogger’s endorsement
• Blogger subject to liability for misleading and
unsubstantiated representations made in
course of endorsement
• Blogger liable if they fail to disclose clearly
and conspicuously that they are being paid for
their services
Substantiation
• Advertiser must have adequate
substantiation to support claims made
through endorsements
Disclosure of Material Connections
• A connection between the endorser and seller
of advertised product that may materially
affect the weight or credibility of endorsement
must be fully disclosed
• When an endorser is neither represented in an
ad as an expert nor known to a significant
portion of the viewing public, then the
advertiser should clearly and conspicuously
disclose payment in exchange for endorsement
Examples
• Video game blogger posts entries about
gaming experiences
• Manufacturer of newly released video
game system sends blogger free copy of
system and asks him to write about it
on his blog
• Blogger tests system and write
favorable review
Examples (cont.)
• Review disseminated via consumer-generated
media and relationship to advertiser not
inherently obvious
• Readers are unlikely to know he received the
system for free in exchange for review
• Given value of system, this fact would materially
affect credibility they attach to endorsement
• Blogger should clearly and conspicuously disclose
that he received system free of charge
• Manufacturer should advise blogger that this
connection should be disclosed, and it should have
procedures to monitor his postings for compliance
WOMMA Guide to Disclosure
• Adequate disclosures must be clear and
prominent
• Placement of disclosure must be easily
viewed and not hidden deep in text or
page
• Disclosures should appear in
reasonable font size and color
Sample Disclosure Language
• Personal and Editorial Blogs
– “I received [product or sample] from [company
name]”
– “[Company name] sent me [product or sample]”
• Product Review Blogs
– “I received [product or sample] from [company
name] to review”
– “I was paid by [company name] to review”
• For product review blogs, it is recommended
that a “Disclosure and Relationship
Statement” be created and prominently
displayed
Word of Mouth Marketing Association
Sample Disclosure Language
• Microblogs
– #spon (sponsored)
– #paid (paid)
– #samp (sample)
• It is recommended that the endorser
post a link on his/her profile page
directing people to a full “Disclosure
and Relationship Statement”
Word of Mouth Marketing Association
Tweets
• Ad.ly
• Sponsored Tweets
Recent FTC Investigations
• Ann Taylor Stores
• Reverb Communications, Inc.
• “Astroturfing”
Social Networking/Blogging Policies
• FTC noted that it will consider whether company has
appropriate procedures governing social networking
websites
• Social networking/blogging policies should:
– Be clearly written and require employees to disclose employment
relationship when making online comments about company
products/services
– OR prohibit online comments by employees
– Address proper use of company’s name, trademarks and other
proprietary info on social networking websites
• Employers may require employees to submit proposed
endorsements of company products/services for approval
by company’s legal staff before posted on website
• Employees should be adequately trained on policies and
company should rigorously enforce policies
Question & Answer
Session
Thank you for coming!