On April 10, 2013, Florida revised several provisions of its game promotion statute, which will likely change how for-profit brands and non-profit entities offer contests and sweepstakes within the State and to its residents. In particular, these revisions include:

• A game promotion can only be operated by a for-profit organization on a limited and occasional basis as an advertising or marketing tool in connection with and incidental to bona fide sales of consumer products or services, if no purchase is necessary to play; and

• Non-profit entities and charitable organizations cannot operate a game promotion.

On the flip side, Florida still requires registration and bonding with the Florida Department at least seven (7) days prior to the start date for sweepstakes offering prizes over $5,000. Further, Florida still requires that the full Official Rules are clearly posted in all retail outlets, material terms are published in all advertising, winners list are available by request at no charge, and that sponsors file a list of all winners with the Florida Department for prizes more than $25 within sixty (60) days after the winners are selected.

For violations, Florida may impose a civil penalty of up to $1,000 per violation, an injunction, and/or referral for criminal prosecution (in rare cases).

For more information about Florida’s revised game promotion law or other advertising and promotions issues, please contact Radiance Harris or your DLA Piper attorney.

By Scott W. Pink

On March 12, 2013, the Federal Trade Commission issued its long-awaited update to its 2000 guidance on disclosures in online marketing and advertising.

The guidance, entitled .com Disclosures: How to Make Effective Disclosures in Digital Advertising, not only reaffirms many of the FTC’s longstanding principles for effective online disclosures, but also provides guidance as to how those principles will be applied to new technologies that have emerged since 2000, such as mobile phones and tablets with more limited space, banner ads and multimedia messaging, and social media platforms such as Facebook and Twitter.

The FTC has broad powers under Section 5 of the FTC Act to protect consumers from “unfair and deceptive acts or practices.”i Under the FTC Act, the FTC has long required effective disclosures for claims that would otherwise be deceptive or misleading without them. .com Disclosures is designed to help businesses comply with the FTC Act by providing examples and direction on how to avoid unfair and deceptive practices through appropriate disclosures in their online and mobile marketing.

Application of advertising principles to online marketing

One of the key questions confronting the FTC when it was updating its guidance was whether it needed to develop any new principles for the new devices and forms of communications that have emerged since 2000. As an initial matter, the FTC emphasizes that the same basic principles of advertising law that apply to other forms of advertising equally apply to the new forms of online marketing: that is, advertising must be truthful and not misleading or deceptive, advertisers must have substantiation for their claims, and advertising must not be unfair.

The general rules relating to the use of disclosures also apply to online marketing.

Disclosures are required when an express or implied advertising claim is likely to be misleading without qualifying information. The disclosure can only qualify or limit the claim; it cannot contradict the claim. Moreover, the disclosure must be presented “clearly and conspicuously” such that the consumer is likely to view it. The question for advertisers is how to satisfy this requirement given the unique features and limitations of online ads, including advertising delivered via social media platforms or on mobile devices.

Factors to be used in evaluating online disclosures

The FTC incorporated and expanded its previous factors for determining whether a disclosure is clear and conspicuous to account for online advertising on devices such as mobile phones. The FTC now considers:

- The placement of the disclosure in the advertisement and its proximity to the claim it is qualifying

- The prominence of the disclosure

- Whether the disclosure is unavoidable

- The extent to which items in other parts of the advertisement might distraction attention from the disclosure

- Whether the disclosure needs to be repeated several times in order to be effectively communicated, or because consumers may enter the site at different locations or travel through the site on paths that cause them to miss the disclosure

- Whether disclosures in audio messages are presented in an adequate volume and cadence and visual disclosures appear for a sufficient duration

- Whether the language of the disclosure is understandable to the intended audience.

Marketers should consider whether their disclosures are adequate from the perspective of a reasonable consumer. If a certain disclosure cannot be adequately conveyed on a specific device such as a mobile phone, the FTC recommends discontinuing the claim on that device. The FTC also encourage marketers to monitor disclosures to make sure they are actually reaching consumers.

Application of factors to online marketing

The following is some specific guidance from the FTC as to how these factors will be applied:

Proximity and placement

The basic principle is that a disclosure must be near the claim in order to be clear and conspicuous.

The following are some principles to guide advertisers in satisfying this requirement:

- A disclosure is therefore more effective if it is viewed simultaneously with the triggering claim on the same screen.

- The FTC discourages burying disclosures at the bottom of a page or after a substantial gap where they are likely to be missed.

- If a consumer must scroll in order to view a disclosure, the FTC recommends using text or visual cues to let users know where the disclosure is. Those prompts should be labeled to indicate the relevance and importance of the disclosure. For example, “See below for additional fees” is specific enough to be considered sufficient, whereas “details below” is likely to be considered too general.

- Advertisers should consider optimizing their websites for mobile devices to ensure that disclosures that might be sufficient on a computer are not too small or require scrolling when viewed on a mobile device.

- Disclosures in connection with an online transaction should appear before the consumer purchases a product or service.

Prominence

The advertiser must also make sure disclosures are prominently placed so as to draw attention. Disclosures should be in a font at least as large as the claim they are related to and in a color that noticeably contrasts with the screen background.

Advertisers should also consider how the disclosure will be viewed on different devices – what is viewable on a desktop device may not be as prominent on a smartphone. If a disclosure is too small to read on a phone, or the text doesn’t wrap, then the disclosure is probably not adequate for mobile devices.

Merely providing disclosures on an online ordering or check-out page is not adequate if consumers can purchase the same product at a bricks-and-mortar store or third-party online retailer without ever viewing the disclosure.

Finally, you need to make sure you provide the disclosure prominently in all forms of media in which the claim is presented.

Hyperlinks

Advertisers have long relied on the use of hyperlinks to provide disclosures. The FTC recognizes that hyperlinks can be effective, but cautions they should not be used when the disclosure is an integral part of the claim or conveys important information such as material additional cost, health, and safety information. Moreover, if you need to use a hyperlink, the following are some basic principles to follow:

- Make the link obvious.

- Label it appropriately so as to convey its true nature and importance. For example, general terms such as “disclaimer,” “more information,” “details,” “terms and conditions,” and “fine print” are likely to be insufficient. By contrast, specific references such as “Get Service Plan Pricing” or “Restocking fee applies to all returns” convey the specific nature and importance of the hyperlink and are probably adequate.

- Be consistent in the use of hyperlink styles, make getting to the disclosure easy.

- Place the hyperlink as close as possible to the relevant information it is qualifying.

- Make sure the page that is hyperlinked contains the relevant disclosures in a manner that is easy for the consumer to find.

- Monitor click-through rates and modify the link if consumers are not frequently accessing the disclosure.

Space-constrained ads

Some online advertisements such as banner ads and tweets are by definition space-constrained and offered as a teaser to encourage consumers to click through to the website to get more information. Even if the ad on a mobile device is small, claims that require qualification are not excused from the disclosure requirements, and so if those requirements cannot be satisfied the claim should not be made or should be modified.

The FTC recommends including disclosure language in the ad when possible, such as “Ad” or “Sponsored” to inform consumers the message was sponsored by an advertiser, and providing an obvious hyperlink when the disclosure won’t fit. The FTC also encourages creativity in using scrolling text or rotating panels to inform consumers about the location of a disclosure.

Pop-up disclosures

Pop-up disclosures can alert consumers to disclosures, but also present their own set of challenges. The FTC warns that advertisers should not disclose necessary information in pop-ups that can be blocked by pop-up software. Even if the pop-ups cannot be blocked, some consumers may not read the information because they don’t associate information in a pop-up with a certain claim or product.

Advertisers can avoid these problems by requiring a consumer to take an affirmative step in order to proceed past the pop-up, such as requiring consumers to choose between “yes” and “no” buttons.

Distracting factors in ads

The FTC reiterates the principle that an entire ad will be viewed in its entirety in evaluating whether a disclosure was adequate. The FTC recommends that elements such as sound, graphics, links and “add to cart” buttons do not distract the consumer from viewing the disclosure.

Multimedia messages

Online ads often contain audio, video and animated segments with claims that require qualification. The disclosure should accompany the claim in whichever media the claim is originally made:

- For audio claims, advertisers should make sure the audio disclosure is at a volume and cadence that a reasonable consumer would hear and understand.

- For written or printed claims, disclosures should be in writing, not solely in an audio or video clip where they could be missed if a device is on silent.

- Video disclosures should be displayed for a duration that allows consumers to notice, read, and understand them.

For advertisers and marketers

All advertisers and marketers, and their agencies, should review and apply the guidance in .ecom Disclosures to their online marketing activities. This requires careful planning and creativity in applying these principles to the continually changing and evolving world of online communications, including the creation of new techniques and tools to ensure effective disclosures.

For more information about the .com Disclosures, please contact Scott W. Pink.

The Conference consisted of sessions on alternative fee arrangements, business development, diversity and pro bono projects, social media brand building, and team building. Of course, the highlights of the Conference were the very humorous group commercials on the DLA Piper IPT brand and the entertaining Karaoke night. We look forward to next year’s Conference!

The Council for Responsible Nutrition this week released a searchable database of every National Advertising Division decision since 2007 involving advertising for dietary supplements. The database includes the decision date, challenger, advertiser, product, category of supplement, type of claim, examples of the challenged claims, and referral status. There are 140 cases included in the database, 13 of which were referred to a government agency for enforcement. The database does not otherwise include the outcome of the case, which can be obtained through subscription access to the online archive.

This helpful tool is available to the public on the Council for Responsible Nutrition's website.

To avoid being classified as an illegal lottery, one of the three elements must be eliminated. Naturally, the “prize” element cannot be removed.  Therefore, legal compliance means eliminating either consideration or chance.  However, since prizes and chance are central to sweepstakes where the winners are randomly drawn, companies should not require consideration (whether monetary or non-monetary).  Accordingly, a legal sweepstakes should not require participants to pay or exert significant effort (i.e., high volume tweeting or sharing) for eligibility or entry, or purchase a product or service to improve their odds of winning.

By Alexander S. Birkhold (New York)

The recent formation of the Model Alliance, an organization seeking to enforce and expand existing legal protections for models in the United States, has prompted increased US scrutiny of employment and image rights issues in the fashion industry.

On top of New York’s laws, organizations such as the Model Alliance and the Council of Fashion Designers of America have articulated aspirational guidelines for working with models, including:

■ Do not hire models under the age of 16 to walk in runway shows

■ Do not allow models under the age of 18 to work past midnight on fittings or shoots

■ Models may refuse non-paying jobs and jobs that pay only in “trade”

■ No model under the age of 17 shall be asked to pose nude or semi-nude

■ All jobs and castings involving full or partial nudity must be subject to informed, prior consent

For more information, visit: http://labor.ny.gov/workerprotection/laborstandards/workprot/specoccs.shtm#childmodel.

In addition to following the legislative and recommended regulations, brand owners working with models (whether in the US or elsewhere) should also prepare model releases before work begins in order to avoid subsequent conflict with their client. Any person who knowingly uses another’s name, photograph or likeness without the person’s consent may be liable for damages sustained by the injured person. A model release, however, provides the authority to use an individual’s name, voice, visual likeness, photographs or other stipulated terms. When drafting a model release, at least three factors should be considered:

■ Purpose. Will the image be used in advertising, an editorial or for art?

■ Duration of use

■ Nature of use. What is the medium in which the images will be published? Not all models will agree to allow their image used in certain media, so it is especially important to negotiate this term before use

To avoid disagreement later, make sure to discuss these factors up front, before your model walks on set or down the runway.

By Radiance Walters and Debbie Rosenbaum

In 2012, marketing teams will spend less time defining the term “social media” for corporate executives and more resources justifying increased expenditures in cyber platforms that have questionable returns on investment. Despite the unknown value of social media, conventional wisdom seems to suggest that companies require some form of social media presence. Frankly, a lack thereof sends red flags to consumers that a brand is unsophisticated or out of date.

While the marketing teams may not give much thought to product giveaways or contests, corporate counsel must be vigilant in overseeing how these campaigns are conducted. Such contests, sweepstakes, and giveaways in the social media space involve heightened responsibilities and potential pitfalls that can often be overlooked due to lack of experience or available resources.

Federal and State Laws Apply

It is important to understand the difference between contests and sweepstakes: contests are games of skill; sweepstakes are games of chance. This distinction is fundamentally important, because what a state might require for contests might be different from what it would require for sweepstakes. (Note that lotteries are prize drawings where people must make a purchase for a chance to win. Lotteries are highly regulated and are usually only legal if they are run by the state.)

Just like traditional sweepstakes and contests, social media promotions are still governed by federal and state laws, which can require registration, prohibit certain practices, and carefully define the limits of permissible promotions. Companies must be familiar with these laws and regulations, and ensure their careful compliance with them.

For example, some states require sponsors of a contest or sweepstake to register with the state before conducting the contest. Specifically, New York and Florida require registration with the Secretary of State where the approximate retail value of the prize exceeds $5,000. Similarly, in Rhode Island registration is required where the retail value of the prize exceeds $500 and the contest is run by a retail store. Other states, such as California, have laws or regulations that restrict sweepstakes in highly regulated industries including, but not limited to, alcohol, tobacco, weapons, motor fuel, and time-shares.

If you have neither the time nor resources to become familiar with these laws and regulations, it is imperative to hire or find someone with this expertise. For instance, in light of the recent question as to whether Twitter followers have “value,” requiring a user to “retweet” a tweet or “like” a brand on Facebook in order to win a prize could be construed as an illegal lottery. Unfortunately, ignorance of the law could result in government inquiries, civil enforcement actions, or—even worse—criminal penalties.

Respect Your Platform’s Terms of Use

Social media platforms, such as Facebook, Twitter, and Google+, each have their own set of strict promotion rules and guidelines. For instance, Twitter’s guidelines forbid “the creation of multiple accounts” and “posting the same tweet repeatedly,” while Facebook’s Promotions Guidelines prohibits using the “like” function as a method of entry in contests and requires that promotions be administered “within Apps on Facebook.com, either on a Canvas Page or an app on a Page Tab” and not on the wall of one’s Facebook Fan Page. Violating these guidelines could get your company banned from the platform and/or expose your brand to bad publicity.

Always Include Official Rules

Most importantly, official rules are a must. To accompany their social media contests, companies must properly develop detailed and written official rules, which must be available prior to entry and cannot be changed once the promotion begins. The official rules should include the following information:

• Promotion start and end date
• How to enter
• Who is eligible
• How the winner is selected
• Description and retail value of the prize(s)
• Odds of winning
• Where to obtain a winners’ list
• Judging criteria (if a skills-based contest)
• Limitations of liability
• Name and address of the sponsor

In addition, since social media contests can include various components, including sharing user-generated content (e.g., video contests, photo contests, and text submissions), companies should be sure to include representations and warranties in their official rules to protect themselves from liability exposure due to privacy, publicity, security, and intellectual property issues. On any Web site that displays user-generated content, best practices include not only having a prominently featured “report abuse” functionality, but also Digital Millennium Copyright Act (DMCA) procedures and policies in place.

Conclusion

Giveaways, sweepstakes, and contests can be an innovative way for marketing teams to engage consumers and introduce new customers to their products and services. Just be careful not to let the excitement sweep you off your feet.

By: Caroline Olstedt Carlström (Stockholm)

The new digital landscape and its embrace by the corporate world create new challenges for all marketing professionals at a pace that has never before been encountered.  In fact, organisational procedures and legal standards are struggling to keep up.  Few jurisdictions have marketing regulations in place that are up-to-date with the latest digital possibilities.  Social media can be an effective tool for marketing and brand awareness, but it also poses great challenges for marketing professionals navigating new issues. 

On September 15th, the International Chamber of Commerce (ICC) presented its new 2011 Consolidated ICC Code of Advertising and Marketing Communication Practice (the “Code”). The Code raises the standards for consumer protection globally and also includes new online rules.  It is recognised as the gold standard for self-regulation and now offers best practice guidance across all sectors, technologies and platforms and guides marketing professionals as they deal with many of the most challenging topics, such as Online Behavioural Advertising (OBA), marketing in digital interactive media, privacy protection, environmental claims and marketing to children.  

The Code adds another layer of protection for consumers’ personal data by providing clear guidance on consumers’ rights, including the right to know what information is acquired by a marketer and the standards for the collection, use and security of personal data when it is collected.  There are also specific restrictions on disclosure of a child’s personal data to third parties.

Responsible marketing and advertising is becoming increasingly difficult and even more important in this viral era.  Internal communication tools and legal consideration of new market initiatives on a regular basis are important factors in creating successful and compliant campaigns.  The new ICC Code is an important step in order to streamline international marketing and meet its new challenges. 

By: Michelle Schaefer and Alexandra Marzelli (Washington, DC)

In September,  the U.S. Federal Trade Commission (“FTC”) — the consumer protection agency tasked with regulating U.S. advertising practices for consumer goods — warned companies selling apparel and footwear in the U.S. that all health and fitness claims must be substantiated by competent and reliable scientific evidence.  This warning came from the FTC’s lawsuit against Reebok International Lmtd. (“Reebok”), for alleged deceptive practices related to certain footwear including running sneakers, walking sneakers and flip-flops.  Reebok was charged with making “unsubstantiated claims” that the footwear provides extra tone and strength to key muscle groups (including the buttocks, hamstrings and calves) and strengthens various muscle groups by a certain percentage.  Under the settlement, Reebok agreed to pay $25 million in refunds to consumers.  Reebok has stated that the settlement does not indicate agreement with the FTC’s allegations and it will continue to sell the products at issue, but will market them differently.   

Through this action, the FTC cautioned the industry that it will pursue companies that make health and fitness claims without an adequate basis, and impose substantial penalties on them, including restitution to consumers.  As is often the case with U.S. regulatory action, FTC’s enforcement activity comes on the heels of class action lawsuits filed across the U.S. against several footwear companies.  Generally, these lawsuits allege that the companies falsely represented the physical benefits of their “toning” shoes by promising consumers tighter and stronger bodies.  Notably, the FTC’s lawsuit against Reebok appears to have prompted further class action lawsuits, with plaintiffs relying on the FTC’s action against Reebok as a basis for their complaints. 

Implications for Footwear and Apparel Industry

Toning shoes are not going anywhere.  These shoes have proven to be one of the footwear industry’s smash hits generating more than $1 billion in revenue in 2010.  Companies will surely continue to introduce new shoes and apparel with toning or strengthening attributes.  The FTC’s pursuit of Reebok signals its focus on the burgeoning market and its intent to require companies to have an adequate level of proof if they make such claims.

Who’s Next?  

Shapewear is another fashion category with a growing market that FTC may start focusing its attention on.  Shapewear is reportedly $812.5 billion business.  “Shapers” are being worn every day by women and men of all ages and sizes who are hoping they will help smooth the silhouette and make clothes fit better.  The category includes undergarments that come in all sorts of shapes and forms, from tank tops and body suits with layers of support lining, to tights and pants with heat-sealed control panels and briefs with engineered stomach control.  Many of these products make “calorie burning,” “shaping, toning and slimming,” “anti-cellulite,” and “posture support” claims.  FTC’s approach to the footwear market makes scrutiny of claims related to Shapewear likely.

Best Practices

As the FTC continues to focus on health and fitness claims, footwear and apparel companies should have policies in place to ensure that their product claims are substantiated by the proper level of science before marketing their products. 

The settlement with Reebok identifies the FTC’s newly articulated evidence standards and key compliance guidance for companies that wish to make health and fitness related claims.  In light of these standards, companies should consider the following strategies:

• Develop marketing strategies focused on compliance by standardizing, streamlining and establishing best practices across all departments.
• For quantifiable health related claims, (e.g. walking in these shoes will lead to x% more strength), possess substantiation in the form of at least one adequate and well-controlled human clinical study that is randomized, blinded, of at least six weeks duration, and that uses an appropriate measurement tool or tools (e.g., a dynamometer if measuring strength).
• For general health or fitness benefit representations about a product, have substantiation in the form of tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons, and that are generally accepted in the profession to yield accurate and reliable results.
• Review the content of all marketing and promotional materials related to the sale, manufacturing, labeling, advertising, promotion, distribution, packaging and advertising of products to identify all potential claims and to ensure adequate substantiation of those claims exists.  Include all marketing outlets, such as print, television, movies, the Internet, social media, endorsements, depictions, illustrations and displays. 
• Assess relevant products currently in inventory, on store shelves, or on order and determine whether any of the products are subject to FTC’s newly articulated standards.  

Though the required protocol for particular products may vary, consideration of and attention to these standards will assist in ensuring that footwear and apparel companies are headed in the right direction and will not run afoul of the FTC’s latest articulated guidelines.  

By: Bartolome Martin (Madrid)

Some decades ago, the Spanish Tourism Authority’s advertisements across Europe proudly touted that “Spain is different.”  In reality, this may indeed be true.  Spain is an idiosyncratic country where universality and localism are good friends, crisis and luxury seem to have a passionate relationship, and customs from the past walk hand in hand with the latest trends.  This self-contradicting spirit, cultural individuality and inherent diversity are without a doubt reflected in the Spanish fashion market. 

The Spanish retail market is similarly situated.  Louis Vuitton’s Fashion Director recently referred to Zara, Spain’s world renowned fast fashion retailer, as “possibly the most innovative and devastating retailer in the world.”  Zara’s success is a reflection of the Spanish consumer.  Spanish consumers have constantly evolving preferences; yet the fashion market is not without its difficulties.  Product moves slowly (attributed to today’s hard economic times), product lifecycles are short and there is constant pressure to follow the latest fashion trends.  This makes the Spanish retail business (and, by comparison, the European market in general) a serious strategic and logistical challenge where only the fittest can survive.  

Spanish consumers themselves exhibit conflicting behavior and are the source of many of these idiosyncrasies.  Consumers are fashion conscious and strive to follow the trends, but at the same time, are hardly inclined to pay a premium for the inherent value of such creativeness.  This leads to the lavish availability of fake products in the streets of Madrid and Barcelona, and likewise across the country, particularly rampant are knock-off accessories, including handbags, belts, wallets, etc.  These products are welcomed by the masses, whose pockets have been fiercely punished by today’s economy, but not enough to warrant renunciation of their consumptive habits.  The market will likely continue to evolve, particularly due to the E.U.’s prospective consideration of joining in the Anti-Counterfeiting Trade Agreement.  

Similar issues emerge when you consider the applicable legal framework.  Despite best efforts by E.U. authorities to offer a harmonized environment to European players, Spain’s regional configuration, formed by a bouquet of seventeen autonomous regions and two autonomous cities, results in a multiplicity of overlapping legal regimes that affect and influence commerce, consumer protection, environmental and many other related matters. Leading political figures have admitted the need for an improved structure that favors business endeavors, but to date these plans are merely well intentioned blueprints or openly wishful thinking.  

Notwithstanding these troubles, the Spanish fashion market remains intimate and charming for many of the players, who manage to rise above these challenges and have lived to tell their story of immense commercial success in Spain. 

By: Michael K. Barron, Sarah Phillips and Nadea Taylor (Boston and London)

“AdWords,” the paid, subscription-based Google referencing service which allows users to advertise their companies alongside Google search results, has recently been the subject of much legal scrutiny.  In late September, the European Court of Justice (ECJ) gave a preliminary ruling on questions referred to it by the English High Court in the case between Interflora and Marks & Spencer (“M&S”), regarding the purchase by M&S of the Google AdWord “Interflora” and other similar AdWords. 

In answering the questions referred to it, the ECJ repeated much of the recent jurisprudence in this area, in particular from the Google France case.  Previous cases established that purchasing a third parties’ trademark as an AdWord would only amount to trademark infringement if such use would have an adverse effect on one of the functions of the trademark.  

• The origin function is adversely affected if the advertisement does not permit reasonably well-informed and reasonably observant Internet users to recognize the source of the goods or services referred to by the advertisement as the owner of the trademark. Alternatively, the adverse effect can be established if the Internet user encounters great difficulty in making such a determination, or the Internet user believes the advertisement originates from a third party.  
• With regard to the advertising function, the mere fact that the use obliges the owner of that trademark to intensify its advertising in order to maintain or enhance its profile with consumers is not a sufficient basis, in every case, for concluding that the trademark’s advertising function is adversely affected.  
• When the use substantially interferes with the owners’ use of its trademark to acquire or preserve a reputation capable of attracting customers and retaining their loyalty, the third party’s use must be regarded as adversely affecting the trademark’s investment function. This is the most significant aspect of the ECJ decision, as any “substantial interference” with the “investment function” of a trademark constitutes infringement.

Interflora operates through a large commercial network, so while the ECJ recognised that consumers could be led to believe that M&S is part of this network, the final determination will be made by the English High Court.  It will be interesting to see how the High Court applies this guidance and, in particular, whether the guidance in relation to the investment function will open up new lines of argument for brand owners.  

Similarly, under U.S. law, purchasing a third party’s trademark, even a famous trademark, which is accorded heightened protection under the Lanham Act, as an AdWord does not necessarily constitute per se trademark infringement.  Some U.S. courts have, however, found that such use could be considered trademark infringement if an owner has a valid protectable trademark for commercial use and there is a likelihood that a third party’s use of the trademark will cause confusion in the marketplace.  

The Ninth Circuit recently determined in Network Automation, Inc. v. Advanced Systems Concepts, Inc. that there was an insufficient likelihood of confusion resulting from a third party’s use of the owner’s trademark as an AdWord to support a preliminary injunction against such use.  However, courts may be more likely to find trademark infringement by the purchase of AdWords for use by a third party to trigger a sponsored link through Google’s AdWords service, which implies an association with the trademark to advertise a third party’s competing products.  

For example, in Rosetta Stone Ltd. v. Google Inc., the Eastern District of Virginia court found no trademark infringement where Rosetta Stone sued Google for allowing use of its trademarks.  However, in Hearts on Fire Company, LLC v. Blue Nile, Inc., the District of Massachusetts court found, on a motion to dismiss, that the use of a competitor’s trademark as a keyword to trigger sponsored links could create a likelihood of confusion under the facts of the case.

As the international debate for trademark ownership in cyberspace continues, trademark owners should be vigilant and continue to be cognizant and knowledgeable of new media and advertising platforms, so that they can adequately protect the value of their trademarks and brands.

Members of the U.S. editorial board include Ann K. Ford, Gina Durham, Tamar Duvdevani, Kiran N. Gore, Melissa Reinckens, Debbie Rosenbaum, Michelle Schaefer, Radiance A. Walters, and Job Seese (New York, Washington DC, and Chicago).  

The magazine is available here.

We welcome your thoughts and comments on our latest edition.  

Editorial Team: Nick Fitzpatrick, Duncan Calow and Patrick Mitchell

Ed Vaizey has addressed the Internet Advertising Bureau ("IAB") on issues regarding advertising and privacy, including the implementation of the e-Privacy directive, "Do Not Track" (a technology and policy proposal that enables users to opt out of tracking by websites they do not visit) and the upcoming revision of the Data Protection Directive.

During his speech to the IAB on 3 November this year, Ed Vaizey, Minister for Culture, Communications and the Creative Industries, outlined the importance of the relationship between online advertising and concerns about privacy, stressing the need to achieve a careful balance between protecting users' privacy online and encouraging continued innovation in advertising.

With this in mind, Vaizey defended the UK's approach to the implementation of Article 5.3 of the amended Privacy and Electronic Communications Directive 2009/136/EC ("E-Privacy Directive"). Article 5.3 states that storing and accessing information (for example "cookies") on users' computers is only lawful if "the subscriber or user concerned has given his or her consent, having been provided with clear and comprehensive information...about the purposes of the processing". The UK implemented the amended E-Privacy Directive in May 2011 through the introduction of Regulation 6 of The Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011. This amended the provisions in The Privacy and Electronic Communications (EC Directive) Regulations 2003 on the storage of or access to information on users' computers and made provision for the signification of consent which must be sought as a result of the changes to the E-Privacy Directive.

Vaizey praised the IAB's Online Behavioural Advertising Framework ("OBA") as an example of "the willingness of industry to work together to find solutions which suit both business and users" but stressed that it is not the only part of the UK's package of compliance with the E-Privacy Directive. He called for Publishers (website owners) and Browsers to realise their responsibilities towards users. In conclusion, Vaizey suggested that the OBA, together with the work of Publishers, Browsers and the self-regulatory code, established by the IAB Europe ("IABE") and European Advertising Standards Alliance ("EASA"), will not only ensure compliance with the new regulatory framework but also "give users the increased access, information and control over their data and privacy that reflects the original intention of the legislation".

In the same speech, Vaizey questioned the practicalities of introducing a 'right to be forgotten' into a revised EU Data Protection Directive and discussed the June 2012 deadline for an industry wide standard on Do Not Track to be agreed. 

by Louis Puts (Brussels)

Online marketplaces such as auction sites are often used as platforms for selling unlawful fashion products. On 12 July, 2011, the CJEU rendered an important decision concerning the unlawful offers of cosmetic products with L'Oréal's trademarks on eBay. For the first time, the decision has clarified the circumstances under which online marketplace operators may be held responsible for unlawful trade-marked products offered for sale on their platform site, under trade-mark law, the E-Commerce and the IP Enforcement Directives.

When a private person sells an unlawful trade-marked product through an online marketplace, the trademark holder will not be able to invoke its trademark rights to oppose such sale if the sale takes place in the context of a private activity (e.g. a person that sells its fake designer handbag on an online marketplace). An infringement requires that the trademark is used in the context of an economic activity with a view to an economic advantage. This requirement will be fulfilled if, considering the volume, the frequency or other characteristics, the sales by the individual "go beyond the realm of a private activity". 

Operators of online market places

There may be an infringement by an operator of an online marketplace if the marketplace is operated using search engine keywords that correspond to certain trademarks and such keywords lead an internet user interested in the products of a particular trademark to a sponsored link of the online marketplace. Two situations have to be distinguished: 

by Jean-Louis Kerrels and Julie De Bruyn (Brussels)

On June 23, the European Parliament adopted the Consumer Rights Directive.* Among the changes is a 14 day EU-wide right for consumers to change their mind about their online purchases, as well as new information requirements.

The original Proposal for the Consumer Rights Directive was submitted by the European Commission in 2008 and contained some controversial provisions, which could have had a significant adverse impact on online (fashion) traders. In this respect, the Council did not accept provisions requiring traders to refund the return cost of goods of 40 € or more from anywhere in the EU. The Council also rejected the controversial plan to force online retailers to ship to every EU Member State, provided that merchants specify early in the purchasing process to which countries they ship and explain why they do not ship to others.

Online retailers will be in compliance with the provisions of the new Consumer Rights Directive if they obey the following 10 commandments:

by Emma Greenow (Brussels)

With what can seem to be an overwhelming increase in the quantity and complexity of EU regulation facing the fashion industry, understanding and taking action in this area can seem as if you are navigating a tangled web of issues and stakeholders.

The recent EU regulatory agenda has included policy reviews in relation to the intellectual property framework, the Digital Agenda, Online Behavioural Advertising, Consumer Rights and redress amongst others. Each of these developments has a direct impact on business activities in the fashion industry in Europe and, for this reason, interaction from rightsholders into the creation of the regulatory framework is essential.

An effective example of the need and value of increased dialogue was shown in the drafting of the recent recommendations for Online Behavioural Advertising, where industry, consumer groups and legislators worked together through dialogue to develop a series of best practice principles which all parties supported.  As a result of this process, the contributors may well have diverted a further regulatory burden for all stakeholders.

Following the changes brought about by the Lisbon Treaty, it is vital for all fashion industry participants to engage and input into all 3 key EU institutions, the European Commission, the European Parliament and the Council of the European Union. 

Legislative advocacy by rightsholders can take many forms - from the traditional methods such as meet and greet sessions with key stakeholders, press releases and local media, to the more sophisticated and targeted advocacy including social media campaigns, video messaging and awareness raising. All methods have definite advantages however it is key to know when to link each method into your activities. 

The face of the regulatory framework for the fashion industry is changing rapidly and this trend is likely to continue into 2012 - what is of key importance is your inclusion and input into these forthcoming discussions.

This settlement illustrates the importance of carefully evaluating not only product claims, but also product names, and determining the level of substantiation required. In the case of health and fitness claims, the manufacturer may be required to conduct the type of clinical study outlined in the Reebok settlement. This requires careful planning and preparation to ensure the substantiation will withstand scrutiny by the FTC and other regulators. Such substantiation must be obtained before the claim is made.

The FTC imposed additional disclosure requirements next to the opt-out mechanism. ScanScout is required to clearly and prominently disclose that it collects information about users’ activities on certain websites in order to deliver third-party advertising targeted to users’ interests; that if the user implements the mechanism,ScanScout will not collect this information for the purpose of delivering advertising targeted to the user’s interests; the current status of the user’s choice (e.g., “not opted out” or “opted out”); and any circumstances that, if initiated by the user, would disable the mechanism or require the user to implement the mechanism again in order to maintain the user’s choice (e.g., use of a different browser, use of a different device, or deletion of cookies).

This settlement shows the FTC's clear interest in providing consumers' clear notice and control over the information collection activities of online advertisers. It is advisable for companies to carefully review their policies to ensure they are in compliance with them with respect to cookies, and to consider making adequate disclosures of their use of all types of cookies, including flash cookies, and how consumers can opt out of their use by the advertiser.

Editorial Team: Nick Fitzpatrick, Duncan Calow and Patrick Mitchell

Authorities in New Zealand are using the Major Events Management Act 2007(MEMA) to combat ambush marketing at this year's Rugby World Cup (RWC).

The RWC has been declared a "Major Event" for the purposes of MEMA (under the Major Events Management Act (Rugby World Cup 2011) Order 2007) - as such, parties that are not official commercial partners of the RWC are prohibited from marketing their goods and services in any way that suggests they are official sponsors or otherwise associated with the event. The MEMA attempts to prevent ambush marketing by prohibiting the use of key event emblems and words, including phrases such as "Rugby World Cup" and "Webb Ellis Cup", as well as the use of the RWC logo or image of the Web Ellis Cup, in any advertising or promotional activity. Furthermore, the MEMA seeks to provide areas and routes around the stadia where unauthorised advertising and street trading are prohibited.

Authorities in New Zealand have taken a varied approach to enforcement of MEMA. On the one hand, Rugby World Cup Limited initiated a number of educational initiatives, including television infomercials, in a bid to raise awareness about rights protection. On the other hand, The Ministry of Economic Development in New Zealand, Customs and Rugby World Cup Limited were keen to send a warning message to potential offenders in September 2010 with the investigation and ultimate conviction of a man for importing RWC 2011 merchandise, which resulted in a fine of NZ$20,000. The aim of any conviction is to secure victories against high-profile ambush marketing attempts in order to deter others from attempting similar activity.

Although there is much precedent of host nations integrating legislation to combat ambush marketing, New Zealand is the first country in the world where non-event specific legislation has been introduced to deal with ambush marketing. This is largely because New Zealand's successful bids to host the 2011 Rugby World Cup and the 2015 ICC Cricket World Cup included commitments to ensure adequate provisions would be in place to protect event sponsors.

Editorial Team: Nick Fitzpatrick, Duncan Calow and Patrick Mitchell

The Advertising Standard Agency ("ASA") order that an advertisement for thetrainline.com be removed due to its misleading content.

The television advertisement for thetrainline.com, which was broadcast on 9 May 2011, featured people carrying placards that stated "Save 43% on average" and "Save up to 6pm the day before travel". On-screen text stated "Advance fares and selected routes only. Subject to availability".

• the claim "Save 43% on average" was misleading and could not be substantiated;
• the claim "Save up to 6pm the day before travel" was misleading and could not be substantiated; and
• the advert was misleading because it failed to state that thetrainline.com charged a booking fee, which they believed meant their tickets were more expensive than those bought at other outlets.

In response to the challenges, trainline.com Ltd provided data collated for the period between 1 March 2009 and 27 March 2011 in support of the claims. This data supported the argument that the customers' average saving had actually been higher than the 43% and that a significant number of customers had made savings when purchasing a ticket before 6pm on the day before travel. The savings claims had been calculated by comparing the amount paid by customers buying Advance tickets from thetrainline.com with the price of the cheapest non-Advance ticket available for the same journey. "Advance fares and selected routes only" appeared as text on the screen.

Taking such data into account, ASA did recognise a saving of more than 43% on average for customers who had bought Advance tickets from thetrainline.com in comparison to the price of the cheapest available non-Advance tickets for the same journeys. However, it considered that "Advance" and "non-Advance" were different types of ticket and therefore clear information that explained the basis of the claims was necessary.

The information provided by thetrainline.com, in the form of the text that appeared on screen: "Advance fares and selected routes only", was considered to be inadequate. ASA suggested  that some viewers may understand the text to mean that thetrainline.com had compared their Advance tickets against Advance tickets available from other outlets.  On this basis, ASA concluded that, "some viewers would infer that, when compared with the same type of ticket available from other outlets, thetrainline.com were 43% cheaper on average and could be cheaper until 6pm on the day before travel."

ASA therefore made an adjudication that the advert was in breach of BCAP Code rules 3.1 and 3.2 (Misleading advertising), 3.9 (Substantiation), 3.10 (Qualification) and 3.12 (Exaggeration); "we considered that the evidence provided did not substantiate the implied claims and we concluded the ad was misleading".

With regards to the third challenge, that the advert was misleading because it failed to state that thetrainline.com charged a booking fee, the ASA did not find any breach of BCAP Code rules. It noted that thetrainline.com had based their claims on calculations that included the booking fee and therefore concluded that it had not been necessary to refer to the booking fee separately.