Hot Topics in Internet LawHot 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 Trademark and Copyright Issues in Copyright Issues in

Advertising on the WebAdvertising on the WebJeanne Hamburg, Esq.

Why Important?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)

OverviewOverview• 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 DevelopmentWeb 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 (non-

employee) to create content? Must be assignment to site owner or developer.

– Is developer using third party content? Representations and warranties.

Web Content Clearance: Web Content Clearance: Fair UseFair 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 ClearanceWeb 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 Web Content Clearance: Fair UseUse

• “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

CybersquattingCybersquatting• 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 Federal Court Action for CybersquattingCybersquatting

• 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

CybersquattingCybersquatting• 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 ProceedingsUDRP 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 DMCA: Service Provider LiabilityLiability

• 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 ISPs Frequently Contacted Under DMCAUnder DMCA

• Apple (iTunes, TETRIS infringements)• Google

– Gadgets– Android

• Amazon

Legislation on PhishingLegislation 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 Hyperlinking: Copyright and Trademark and Trademark Infringement?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 Hyperlinking Best PracticesPractices

• 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

FramingFraming

FramingFraming• 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 AdsPop Up Ads

Pop Up AdsPop 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 PurchasesKey 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 PurchasesKey Word Purchases

Key Word PurchasesKey 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 Pay Per View/Pay Per Click AdvertisingAdvertising

• 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 Pay Per View/Pay Per Click AdvertisingAdvertising

• 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: Cloud Computing: Pros, Perils and Pros, Perils and

PitfallsPitfalls

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 DevelopmentsAn Overview

• 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 cloud-clients

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 Seminar IntermissionIntermission

Endorsements and Endorsements and Testimonials on Testimonials on

Social Networking Social Networking WebsitesWebsites

Erin T. Welsh, Esq.

FTC ActFTC 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 What is an Endorsement?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 What is an Endorsement?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

ExamplesExamples• 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

ExamplesExamples• 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

ExamplesExamples• 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

• 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

ExamplesExamples

ExampleExample• 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.)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

SubstantiationSubstantiation

• Advertiser must have adequate substantiation to support claims made through endorsements

Disclosure of Material Disclosure of Material ConnectionsConnections

• 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

ExamplesExamples• 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.)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 WOMMA Guide to DisclosureDisclosure

• 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 Sample Disclosure LanguageLanguage

• 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 Sample Disclosure LanguageLanguage

• 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

TweetsTweets• Ad.ly• Sponsored Tweets

Recent FTC Recent FTC InvestigationsInvestigations

• Ann Taylor Stores • Reverb Communications, Inc.• “Astroturfing”

Social Networking/Blogging Social Networking/Blogging PoliciesPolicies

• 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 Question & Answer SessionSession

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