Hot Topics in Digital Advertising – Guidance for In-House Counsel (Part II)

ACCA Advertising Practice Group

October 2nd, 2014

Ellie Boragine, Christopher Chase, Sean F. Kane, Rick Kurnit, Michael Schiffer and Hannah Taylor

Topic 1

"Ambush" or "Associational" Marketing – Are We Concerned?

Christopher Chase

What is “Ambush” Marketing?

“Ambush Marketing” generally refers to marketing and promotional activities by parties unaffiliated with a Property/Event that seek to take advantage of or misappropriate the goodwill and popularity generated by the Property/Event.

Two General Forms

1) By Association: where an unaffiliated marketer (a) directly associates itself with a Property/Event by using the Property/Event’s logo or name or (b) indirectly associates itself by using generic references to the Property/Event.

Two General Forms

2) By Intrusion: where an unaffiliated marketer seeks to obtain exposure during an Event, whether inside the arena or within its vicinity, with the goal of obtaining broadcast or other media coverage.

Examples of “Ambush” by Association

Examples of “Ambush” by Intrusion

Nation’s Hamburgers

Who Cares and Why Do They Care?

• Properties/Events

• Official Sponsors

• Unaffiliated Marketers

“Ambush” marketing is perfectly legal…sort of

Potential Claims

• Event Specific Legislation: Brazil’s General World Cup Law of 2012

• Event Specific Legislation: UK’s London Olympic Games and Paralympic Games Act of 2006

• Event Specific Legislation: The Olympic and Amateur Sports Act (“Ted Stevens Act”) in the US

Potential Claims

• Lanham Act

- Trademark Infringement

- False Association/False Endorsement

• Breach of Contract (ticket backs)

• Violation of “clean zone” ordinances

• Right of Publicity

Recent, Interesting Examples

Decolar –Brazilian Travel Website

Beats – 2014 World Cup

Jordan v. Jewel Food Stores, Inc.

But It’s Just Twitter…

Bud Light and the 2014 US Open

Oiselle and US Track and Field

The Luis Suarez "Incident"

What’s Working For the “Associative Marketer”

What’s Working for the “Associative” Marketer

• It’s not an “ambush” if you have rights to some official rights holder

• Reluctance to take legal action:– Short campaigns

– Costly

– Potential defenses

– Effective use of disclaimers

– Fear of adverse precedent

What Can You Do as an Official Sponsor?

Official Sponsors Protecting Their Own Rights

• Be proactive and creative

• Leverage the official assets

- Marketing assets

- Use of official logos

- Access to tickets and VIP events

• Buy advertising time and space – assets beyond the official sponsorship

Official Sponsors Protecting Their Own Rights

• Have the Property/Event work for you

– Have them work with host locations to establish clean zones

– Have them send “reminder” letters to non-sponsors

– Have them engage in PR activities

– Have them maintain control over event ticketing

Official Sponsors Protecting Their Own Rights• Incorporate specific reqs. into the sponsorship agreement:

- “The Parties agree and acknowledge that Sponsor has paid valuable consideration for the rights and benefits contained herein and that any dilution or diminution of said rights and benefits seriously impairs Sponsor’s valuable rights. Accordingly, in the event a competitor of Sponsor attempts to associate its name, brand, products, or services in any way with the Event, the Event-Holder will endeavor to stop such actions and take steps it deems reasonably necessary (including but not limited to sending cease and desist notices to the violating party, issuing private and public cease and desist announcements, and filing of appropriate legal actions including but not limited to seeking temporary and permanent injunctive relief) to protect Sponsor’s rights herein.”

Topic 2Video Games: How Advertisers are Using Games to Reach Consumers

Sean F. Kane

Advertising of Games

False Advertising

FTC Enforcement

Aliens: Colonial Marines

• Class-action lawsuit firm Edelson LLC filed suit against publisher Sega and developer Gearbox

– False Advertising

– Trade show demo looked drastically different from released game

Damion Perrine v. Sega of America, Inc., et. al., N.D. Cal, Case No. C: 13-1962 MEJ (2013)

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Killzone: Shadow Fall

• Edelson LLC filed a lawsuit alleging “deceptive marketing” because the PlayStation 4 game's multiplayer mode does not run at the resolution advertised.

– Ladore v. Sony Computer Entertainment America, LLC, N.D. Cal, 3:14-CV-03530-EMC (2014).

Disclosures Required

FTC Endorsement Guidelines

– Endorsements must be truthful and not misleading

– Material connection should be disclosed• Reverb Communications Inc.

had employees pose as consumers posting positive game reviews at the iTunes store. $250,000 fine

Advergames

- FTC concerned about impact

on kids- Do players realize it is

advertising?- Created Admongo.gov to

educate

Advertising in Games

• May be similar to product placement– request approval rights

• Rights of Publicity– Sufficiently transformative?

• Use of Trademarks– First Amendment protection if

minimum of artistic expression and not misleading – Rogers Test

eSports and Sponsorship

eSports is Increasing

Brands Flocking to eSports

• Major League Gaming has become one of the most prestigious eSports organizations in the world

• Amazon Purchased Twitch for $1 Billion

• Nissan has partnered with Team Curse

• Relativity used MLG.tv to promote its movies

• Coke Zero and Riot Games

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Take home Points

• Its not all fun and GAMES!!

• Need to be as concerned with video game advertising as in any other media

• Regulators are waking-up to this space

Topic 3Text Messaging

Hannah Taylor

Applicable Law

• Telephone Consumer Protection Act (“TCPA”), 47 USC Section 227

• FCC Regulations, 47 CFR Section 61.1200 et seq.

• FCC 2012 Report and Order

• Case law holding that text messages are “calls” for purposes of TCPA compliance

Restrictions (inter alia…)

• TCPA prohibits a caller from using an automatic telephone dialing system (“ATDS”) to call (or text) a wireless phone service without the called party’s prior express consent.

ATDS

• Defined as equipment which has the capacityto store or produce telephone numbers to be called using a random or sequential number generator and to dial such numbers.

• “ATDS” defined very broadly.

And now (per 2012 Order)…

If the caller is sending an advertisement or engaging in a telemarketing communication to a wireless phone using an ATDS, then the caller needs to called party’s prior written express consent.

“Telemarketing”

• The term telemarketing means the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person. Note that “telemarketing” calls can include those that offer free goods or services that are part of an overall marketing campaign to sell property, goods, or services.

• Telemarketing does not include informational calls, such as calls by or on behalf of tax-exempt non-profit organizations, calls for political purposes, including those than delivery purely informational messages such as school closings.

• Calls that have both an informational component and a telemarketing purpose (aka “dual purpose” calls) are usually deemed telemarketing, regardless of the customer service element to the call.

Prior express written consent

The caller must obtain a signed written agreement from called party sufficient to show that called received clear and conspicuous disclosure that:

• By signing the agreement, the called party authorizes the seller to deliver, to the designated number, telemarketing calls (text) using an ATDS; and

• The consumer is not required to sign the agreement as a condition or purchasing goods or services from the seller

“Written Agreement”

The required “signature” can be obtained in compliance with the E-SIGN Act, including via email, website form (with unchecked check box), text message (initiated by consumer in response to non-text call-to-action with appropriate disclosures), telephone key press or voice recording

Sample Disclosure

Message & data rates may apply. 10 msgs/month. By providing my mobile number, I agree to receive marketing text messages generated by an auto dialer from XXX to this number. I understand that consent is not required to make a purchase. Text STOP to XXXX to cancel. Text HELP to XXXX for info/help. Program terms apply at URL.

And don’t forget MMA Guidelines1. Name of the program the individual is opting in to receive texts (This is

usually part of the actual copy; if it is part of the copy, it doesn’t need to be repeated in the disclosures)

2. Sponsor of the program

3. “Message & Data rates may apply.”

4. Frequency of the text messages (e.g., 10 msgs/month)

5. How to STOP receiving messages (e.g., to stop, text STOP to SHORTCODE)

6. How to get HELP about the program (e.g., for HELP, text HELP to SHORTCODE)

7. If there are terms and conditions for the program, a link to those should also be provided. (Note: You are not required to have terms for a text message program but many companies do have them for protective purposes.)

New Developments

• On October 1, 2014, Connecticut’s new telemarketing law, Conn. Gen. Stat. §42-288a goes into effect.

• The new law significantly expands Connecticut’s existing “do not call” law and arguably departs from TCPA.

New Developments

• Connecticut’s new law covers not only phone calls and SMS or MMS messages, but also “text or media messages.” – “Text or media message” is defined as “a message that

contains written, audio, video or photographic content and is sent electronically to a mobile telephone or mobile electronic device telephone number…” It does not include email sent to an email address.

• Unclear whether Connecticut intended to reach a broader category of messages than the TCPA with this additional language.

New Developments

• Connecticut may fine marketers up to $20,000 for each violation of its provisions. – The statute is silent on whether each

individual message or voice call would be considered a separate violation.

• New law also allows individuals to sue for violations.

New Developments

• Exemptions in some cases for calls or messages sent “to an existing customer.”

• Could provide more leeway to a marketer

– TCPA generally applies regardless of whether a marketer and consumer have an existing business relationship or the consumer is an “existing customer.”

Topic 4Agency-Client Agreements – Big Lookouts!

Michael Schiffer

Quick-Hit Topics

• What you want in an SOW

• Termination

• 3P Subcontractors v. Suppliers

• Indemnification Watchouts

Rights Truth

The World of Liability

What belongs in an SOW

• Description of Agency’s services

• Description of the deliverables

• Money:

– Fees to Agency

– Expenses (OOPs)

– Payment Schedule

• The COUNTRIES in which the materials will

be used – if beyond the US

• Timetable (start date, end date, milestones, review periods and stages … )

Termination

• How many days?

• With or Without Cause?

• Ability to stop work?

• Agency paid during notice period?

Third Parties

• Is the Agency responsible for actions of those it engages?

• Will Brand enter into agreements with third parties directly?

• Is Agency entering into agreements “as agent for”?

• Is Agency supervising third parties?

• Is the third party more of a “supplier” or a “subcontractor”?

Indemnification

• Agency indemnifies for deliverables, with exceptions:

– Brand’s modifications?

– Brand’s existing/new trademarks?

– Use of licensed deliverables outside terms of licenses?

– Industry-specific issues?

– Patents?

– Worldwide?

– Product Claims/Product Liability?

– Risks Apprised?

FTC v. Nissan & TBWA

FTC v. Nissan & TBWA

• FTC charges Nissan and TBWA with showing a false demonstration

– “The demonstration is portrayed in a realistic, “YouTube” style, as if shot with a mobile phone video camera”

– Both the truck and the dune buggy were dragged to the top of the hill by cables

– Sand dune was made to appear steeper than it actually was

• Commercial included the disclaimer: “Fictionalization. Do not attempt.”

• Consent orders for twenty years

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Topic 5Native Advertising Developments

Rick Kurnit

From Product Placement to Native Advertising

Editorial Content: “no quid pro quo”

Reasonable Relationship

Stephano v. News Group (N.Y. 1984)

Adjacency

Stewart et. al. v. Rolling Stone

(Cal. Ct. App. 2010)

The “WALL" btw Content and Advertising

• Differences

– In graphic design

– In background

– In content

• Only nexus is the overall subject

• No elements of the feature in the ad

• No elements of the ad in the feature

The “WALL" btw Content and Advertising

• A wall between the editorial staff and the advertising staff:

– no advertiser influence or pressure on editorial

– no advertiser knowledge of the specific content

• No evidence any concern by the media that the advertisement and the feature be perceived as an integrated whole

• Knowledge of subject of editorial content adjacent is ok

Product Placement

• The brand does not control the message

• Payment may vary based on how prominent

• Brand may be able to remove itself

• OK to specify will not disparage

Infomercials

Program length commercials

• “The program you are watching is a paid

advertisement”

• The FTC has prosecuted advertising disguised

as programming

Sponsored Documentary?

Facenda v. NFL Films

(542 F.3d Cir. 2008)

Documentary=advertising= publicity rights claim

• Talent agreements specified advertising use

• Timed to air within weeks of release of game

• Included a “countdown” to release date

"I don't really feel like it's an ad. I feel like it's contextual, non-invasive editorial content."

- Karina Kogan, EVP of Marketing, Buzz Media

Endorsements & Transparency

FTC Endorsement Guides

• “Material connections” between the endorser and the advertiser must be clearly and conspicuously disclosed

– A connection not reasonably expected by the audience, that might affect the weight or credibility of the endorsement

– For example, a paid consumer endorsement, a Tweet by a celebrity spokesperson, or a sponsored blog post

Disclosure of Connection:

Brought to you by

Sponsored by

Commissioned by

Approved by

Promotion

Brand voice

Sponsor content

Connection

Association

Approval

Disclosures

FTC’s Operation Full Disclosure

• In September 2014, FTC announced it conducted a sweep of TV and print advertising

• Contacted about 60 national advertisers, warning them about their advertising practices

FTC’s Operation Full Disclosure

• Disclosures should be:– Close to the claims they relate to and not hidden or buried

in footnotes or in blocks of text

– In a font that is easy to read and at least as large as other fonts the advertiser uses to convey the claim

– In a shade that stands out against the background

– For video ads, on the screen long enough to be noticed, read, and understood

– For oral disclosures, read at a cadence that is easy for consumers to follow

– In words that consumers will understand

FTC’s Dot-Com Guidance

• In March 2013, FTC issued new guidance for online advertising

– .com Disclosures: How to Make Effective Disclosures in Digital Advertising

– Updates guidance from 2000

– Released because of “dramatic changes inthe online world”

FTC’s Dot-Com Guidance

• Disclosures must be “as close as possible” to the claims they qualify

• Disclosures are more effective when they are:

– On the same screen (not page)

– Unavoidable

• Hyperlinks should convey the importance and relevance of the information

FTC’s Dot-Com Guidance

• The rules are the same for space-constrained ads

– If you can’t make the disclosure effectively, then don’t make the claim

• You’re responsible for ensuring that disclosures are effective, regardless of device

– Make sure websites are mobile-optimized

Qualcomm on Mashable(Sponsored By)

NAD Sept. 2013

• Mashable free to take “Sponsored by” label off articles after the sponsorship expired. – 20 articles that explored the technology behind

everyday things

– None of the articles addressed mobile phones or devices that contained the Qualcomm’s Snapdragon.

Editorial Content and eCommerce

• “Clear and conspicuous” disclosure of any revenue-sharing arrangement (including “affiliate” relationships) or other benefit the publisher of editorial content receives for using editorial content as a vehicle for the sale of products or services.

Vogue.com

Commercialization of Content

• Labeled as connected to a brand = advertising?

• Trigger publicity rights?

Identity/Persona

• Name, Picture, Photograph, Image, Likeness, Voice, Signature, or Distinctive Performance or Gesture

• Used for advertising

$150,000 publicity (not parody) + $253,000 Lanham Act (Endorsement)

Lanham Act: Likelihood of Confusion

• Affiliation

• Connection

• Association

• Approval

Moving forward

• Expect enforcement: FTC and State A G

• Right of Publicity Claims

– Disclosure of material connections

– Typicality, particularly in high interest areas

– Disclosure triggers Right of Publicity claims

Additional Resources

• Frankfurt KurnitAdvertising Law Alerts

– Sign up at fkks.com

– On Twitter @frankfurtkurnit

• The GALA Gazette

– Sign up at galalaw.com

– On Twitter @galamarketlaw

Thank You!

Frankfurt Kurnit Klein & Selz

488 Madison Avenue

New York, NY 10022

www.fkks.com

Ellie BoragineChristopher ChaseSean F. KaneRick KurnitMichael SchifferHannah Taylor