GALA to Host Forum on U.S. and Canada Advertising Law

Join members of the Global Advertising Lawyers Alliance (GALA) for a free program on important advertising law issues to consider when advertising in the United States and Canada.  Reed Smith’s Stacy Marcus will be part of a list of featured speakers, which includes representatives from the National Advertising Division and Advertising Standards Canada, covering key areas of regulatory enforcement, advertising in social media, sweepstakes and promotions, talent and talent union issues, and other important advertising law developments in the United States and Canada.

The program will offer CLE credit and will be held on separate dates in New York City and Toronto:

Toronto Program
April 20, 2015
2:00 p.m. to 4:30 p.m. (Cocktail reception to follow)

New York City Program
April 23, 2015
9:00 a.m. to 11:30 a.m.  (Breakfast will be served starting at 8:30 a.m.)

For program details and to RSVP, visit GALA’s event page.

Is Your Social Media Influencer or Blogger an Employee or an Independent Contractor? What Companies Need To Know Before They Engage Bloggers and Other Independent Contractors

With the first quarter of 2015 behind us, many companies are already deeply engaged in social media campaigns.  Many of these campaigns include the engagement of professional bloggers or other persons with social media influence to promote corporate brands through social media.  These individuals are typically classified as independent contractors, but are they really employees? This article describes the risks and rewards of classifying bloggers (and any other workers) as independent contractors instead of employees, and ways to manage that risk.

Background:  What Is an Independent Contractor?

Broadly speaking, a worker may be classified as either an “employee” (an individual to whom statutory wage payment and other legal protections apply) or an independent contractor (to whom such protections generally do not apply).  Although the vast majority of the U.S. workforce falls into the former category, independent contractors serve an important function in the economy and offer businesses many upsides over employees.  To take advantage of these benefits without risking the downsides, including “misclassification” litigation and other pitfalls, it is important for companies to understand the differences between employees and independent contractors from a legal standpoint.

Typically, a company should engage independent contractors for a discrete period of time to perform a task or series of tasks outside the scope of expertise of the regular, employee-workforce.  Unlike employees, contractors should not complete employment applications or W-4 forms, and they should not receive the company’s employee handbook.  In addition, contractors should not be shackled by the same restraints that encumber employees:  companies should ensure that their independent contractors remain free from direct supervision and control, may negotiate their own rates, retain latitude to perform their assigned task(s) in any manner and on any schedule they choose (so long as their work product is delivered by company-required deadlines), and are permitted to perform work for multiple businesses at any given time.  Where applicable, independent contractors also should provide their own tools, transportation, and the like.

Despite these general principles, determining whether a worker is properly classified as a contractor warrants a forum- and fact-specific analysis, as is more fully discussed below.

Continue Reading

2013 SAG-AFTRA Contracts are Here!

At long last, the 2013 contracts are available. Although hard copies of the books are still being printed, the first digital versions of the Commercials Contract and Radio Recorded Commercials Contract are available. The digital documents will be updated with an index and reposted by the JPC and Union in the coming weeks.

Two Rights of Publicity Decisions Explore the Boundaries of Commercial Speech in Commemorating Public Figures

Two recent rights of publicity cases illustrated the parameters of using a public figure’s name, likeness, identity or image for commercial purposes, without consent for commemorative purposes. But when does commemoration cross the line into unlawful use of one’s right of publicity?

Jordan v. Jewel Food Stores, Inc., No. 10-c-340 (N.D. Ill. Mar. 12, 2015)

In the more recent case, Jordan v. Jewel Food Stores, Inc., the grocery chain Jewel-Osco featured an ad in a Sports Illustrated’s commemorative issue congratulating basketball legend Michael Jordan on his 2009 induction into the Hall of Fame. Though the ad did not feature an image of Jordan, it depicted his #23 sneakers with the text, “Jewel-Osco salutes #23 on his many accomplishments as we honor a fellow Chicagoan who was ‘just around the corner’ for so many years,” referencing its slogan, which was reprinted below its logo: “Good things are just around the corner.” Jordan sued Jewel-Osco for violation of his statutory right of publicity, and Jewel-Osco sought contribution from Time Inc., which solicited the ad.

In a previous ruling for the case, the Seventh Circuit conclusively held the Jewel-Osco ad had a commercial purpose under the First Amendment because it prominently featured Jewel-Osco’s logo and marketing slogan, “which are creatively and conspicuously linked to Jordan in the text of the ad’s congratulatory message.” However, the Seventh Circuit remanded for consideration of the substance of the claims and made clear that it wasn’t resolving the state law issues. In the current case, Jordan merely asserted that the Seventh Circuit had resolved the issue, thus, his motion for summary judgment failed. As for Jewel-Osco’s third-party contribution claim, Time argued that the grocery store chain had no right of contribution because the right of publicity is an intentional tort, and Illinois law prohibits intentional tortfeasors from seeking contribution. Though Jewel-Osco claimed that its violation of Jordan’s right was not malicious (and thus was unintentional), the court disagreed and awarded Time with summary judgment. In other words, the court clarified that advertisers have the potential to violate someone’s right of publicity with a use that is intentional but innocent.

Rosa and Raymond Parks Institute for Self Development v. Target Corp., No. 2:13-CV-817 (M.D. Ala. Feb. 9, 2015)

In an earlier opinion, Rosa and Raymond Parks Inst. for Self Dev. v. Target Corp., the court held that retailer Target Corp. was protected under the First Amendment for selling plaques bearing the name and image of civil rights icon Rosa Parks. In 2009, Target began to sell collage-style plaques commemorating the Civil Rights movement, depicting various photos and quotes of Rosa Parks. The Parks Institute, a nonprofit that owns the name and likeness of Rosa Parks, alleged that Target was using her name and likeness for its own commercial advantage in violation of state laws against violation of the right of publicity, misappropriation and unjust enrichment. In response, Target moved for summary judgment, using the First Amendment as a defense.

Under the fair use doctrine, the First Amendment protects the unauthorized use of a person’s name and likeness if the use has a redeeming public interest, news, or historical value. In rendering its decision, the Alabama court stated, “as both parties agree, one cannot talk about the Civil Rights movement without including Rosa Parks,” and that “by including a picture of Rosa Parks and Martin Luther King, Jr. alongside stylized renderings of the words ‘Civil Rights’ and ‘Change,’” the plaque’s creator sought to educate and inspire, “while telling the important story of Rosa Parks’ courage during the Civil Rights movement.” Thus, the court awarded Target summary judgment and upheld the fair use doctrine of the First Amendment.

Social and historical context made a difference in the Rosa Parks case, but it played no role in the Jordan case. Both Jewel-Osco and Target attempted to gain commercially from commemorating past icons, and the context of that commercial association made all of the difference.

Facebook Revamps Community Guidelines By Cracking Down on Hate Speech, Graphic Violence and Nudity

Sensitive to the expanding diversity of the online community, the world’s largest social network has taken a step to curb highly contentious postings.

On March 16, Facebook revamped its community guidelines, detailing what is and is not acceptable behavior on the site. With social media playing an ever-increasing role in the news and current events, Facebook’s decision to adopt specific standards is an attempt to balance the freedom to share ideas with its responsibility to protect users from content deemed universally unacceptable.

The new guidelines address everything from hate speech to nudity, making it clear that things like revenge porn, bullying, terrorist affiliations, graphic images of violence, and posts that threaten self-harm or harm to others are explicitly prohibited. Users who engage in these now-prohibited activities run the risk of having their post removed or entire account blocked. Users may also self-regulate content by flagging certain pages, profiles or individual posts by clicking the “Report” link and giving a short explanation about why they think the content violates Facebook standards.

Though these determinations of “unacceptable” content may seem highly subjective – a shared video may be hilarious to one user but offensive to another, etc. – the guidelines go into explicit detail to clarify the differences within each group of prohibited posts. For example, graphic images of nudity for the purpose of sexual exploitation will be removed, but images of a woman breastfeeding or showing post-mastectomy scarring will be allowed on the site to promote breast cancer awareness. Under Facebook’s new guidelines, context matters.

Facebook seems to be following suit with other major social networks – earlier this year, both Twitter and Reddit explicitly banned “revenge porn,” the posting of sexually explicit images of a person without his or her consent.

With Facebook users around the world generating billions of shares and posts every day, the updated guidelines are likely just the beginning of an ever-evolving struggle to create a more inclusive online community.

“Blurred Lines” but Clear Verdict: Jury Awards Gaye Estate $7.3 Million in Damages for Copyright Infringement

In a verdict on March 10, a Los Angeles federal jury decided “Blurred Lines,” written by Robin Thicke and Pharrell Williams, substantially borrowed from Marvin Gaye’s 1977 classic “Got To Give It Up” without permission. As a result, the jury awarded the family of the late soul singer more than $7.3 million in damages.

In October, a U.S. district judge ruled that the Gayes’ copyrights extend only to the written sheet music, or a “deposit copy” filed with the Library of Congress in 1977, and not to the actual sound recording (which was not registered) that was mainly in contention. Thicke and Williams argued that the copyrighted sheet music did not contain many of the musical elements they were accused of infringing (e.g., Gaye’s voice, backup vocals and percussion). Thus, the judge ruled that the Gayes would not be able to play the sound recording of “Got To Give It Up” in court because it may sway the jury. Instead, the eight jurors were instructed to compare “Blurred Lines” and “Got To Give It Up” only on the basis of their sheet music versions (i.e., their fundamental chords, melodies and lyrics). Nevertheless, the jury ruled that there were substantial similarities throughout the two compositions.

The legal battle started in August 2013, while the song was still No. 1 on Billboard’s Hot 100, when the songwriters formally launched a preemptive case against the Gayes, seeking a declaratory judgment that their song was not an infringement of “Got To Give It Up.”

During the trial, jurors listened to testimony from musicologists, as well as Thicke and Williams. Thicke performed both songs (along with various other songs by U2 and Michael Jackson) on a keyboard to demonstrate similar chord progressions to the jury. Also presented were statements made by both Thicke and Williams in interviews, allegedly referencing Gaye in regards to their writing process.

The case has prompted heated debate in both the music and IP industries about the “blurred line” between plagiarism and paying homage. It is still unclear what practical impact the verdict may have on how musicians write and create songs.

Incentivized Reviews Without Disclosure Get Panned by FTC

In the latest iteration of the Federal Trade Commission’s (FTC) approach to testimonials and endorsements in the context of online advertising, the Commission alleged that AmeriFreight, a company that arranges the shipment of consumers’ cars through third-party freight carriers and its owner posted customer reviews without disclosing that it had provided a financial incentive for the reviews and for affirmatively representing that the reviews were unbiased.  The consent order underscores that incentivized reviews generally must be accompanied by some form of disclosure of the incentive.  The order also touches on an aspect in the growing jurisprudence of customer reviews, namely the use of contractual provisions between service companies and customers that restrict the nature of reviews published by those customers.  The FTC suggests that any such contractual provision is a material connection that must be disclosed if a resulting review is used in advertising.

When signing up for service, customers of AmeriFreight were offered a $50 discount for providing an online review.  The offer was presented to prospective customers up front in the written sales quote and the order confirmation form.  In fact, the $50 discount was baked into the deal.  The discount was described as a contingent “Instant Discount” that would disappear if the consumer did not leave a review within seven days from delivery of the customer’s vehicle.  One could opt out of the deal by simply indicating a desire to pay the additional $50 and not worry about writing a review.  Thus, writing a review was made part and parcel of the service contract.

It’s not entirely clear that that baked-in deal alone should have been sufficient for the FTC to allege a section 5 violation.  The FTC’s standard for determining whether a disclosure of material connection is required is that omitting the disclosure is deceptive if “there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience)….”  16 C.F.R. § 255.5 (2014).  The FTC in the complaint implicitly alleges that people would not reasonably understand that a service contract might have a provision that contractually obligates the purchaser to leave feedback.  Further, the FTC presumes that finding out that there was a contractual provision requiring feedback – good or bad – would affect the weight one gives to the review.

None of the examples in the FTC’s Guides Concerning the Use of Endorsements and Testimonials contemplates a contractual provision that per se constitutes a “material connection.”  The closest example is that of the “college student” who is provided with free video games by the advertiser, “as it has done in the past,” and then the student is asked by the advertiser to write a review.  In that case, the scenario implies that there is some sort of quid pro quo whereby the student blogger will only continue to receive the free games to review if he is kind in his reviews.  But, in the case of AmeriFreight, there is no such requirement.

Or is there?

The FTC alleged that AmeriFreight presented customers with “Conditions for receiving a discount on reviews.”  In this written document, AmeriFreight stated that potential customers were also eligible for an award of $100 for the “Best Monthly Review Award” for the most “creative ‘Subject Title’” as well as “informative content.”  What was AmeriFreight communicating to those who take advantage of the Instant Discount?  AmeriFreight seemed to be offering a skill contest that invited customers to vie for a monthly prize of $100 based on the advertiser’s determination of the “best” review. AmeriFreight did not tell customers they had to write positive reviews; however, the terms of the “Best Monthly Review Award” contest certainly suggested that a positive review would have a better chance of winning, particularly since AmeriFreight was the judge.  Thus, in the context of this user-generated content (UGC) contest, according to the FTC, the sponsor implicitly promised customers a prize for positive reviews.  That sort of incentive is contemplated in the FTC Endorsement Guides and is clearly something that should have been disclosed along with the reviews.

Thus, the FTC alleged that both the contractual provision that required a customer review in order to save $50 and the chance to win $100 in exchange for the “best” review were violations of section 5.  While the UGC contest entry is probably not that much of a surprise (especially after the Cole Haan closing letter from a year ago), the articulation of a separate “material connection” arising from contractual provisions concerning feedback generally is new and it may be a stretch for the FTC to take the position that such a provision is the same as payment for an endorsement.  One fact that the FTC has chosen not to emphasize in its complaint or press release is that the “Conditions for receiving a discount on reviews” exhorts the customer to write a “fair” review but not necessarily a “positive” review.  This is interesting because a slew of cases across the country have dealt with contractual provisions that seek to impose liquidated damages on customers who write nasty reviews.  The validity of those provisions is generally addressed through common law principles of unconscionability and unenforceability.  In this case, AmeriFreight probably went too far in its instructions as to what was a “fair” review.  As stated in the written materials attached as an exhibit to the FTC complaint, AmeriFreight defined a “fair review”:

A fair review implies that customer will base the review mainly on the services of AmeriFreight acting as an agent on behalf of customer to arrange and assign a carrier to ship the customer’s vehicle. Errors and/or damage caused by carriers should not be considered in the review. Instead a seperate [sic] review can and should be left regarding the carrier’s services in such a case. A fair review does not indicate that a customer is required to leave a positive only review.

The molding of the customer review probably had something to do with the FTC’s discomfort with this practice, notwithstanding the statement that a “fair review” does not necessarily mean a positive one.

In the consent order, AmeriFreight and its principal agreed to the following:

  • To not misrepresent that reviews are unbiased
  • To disclose material connections between endorsers and themselves

Despite the simplicity of the order, the case is important because:

  • It represents an enforcement action that didn’t occur in the Cole Haan situation.  It is now clear that offering a prize in exchange for UGC reviews and then failing to disclose that the reviews resulting from that UGC contest were sponsored or incentivized, will expose you to liability under section 5.
  • It effectively creates a new “example” under the FTC Endorsement Guides.  Where the contractual relationship between an advertiser and a customer includes a provision that ties a monetary benefit (only monetary?) to writing a review, and where the instructions to the customer suggest what kind of review is expected., i.e., “fair”;  then failure to disclose that contractual benefit exposes you to liability under section 5.

There may be ways to contractually limit customers from writing nasty reviews.  But, if you want to go down that road, combining such methods with a customer review generation strategy becomes very tricky and requires some careful review and drafting.

Stay in Tune with SAG-AFTRA – Town Hall Meeting in Miami

Join us on Thursday, March 5, for the Joint Policy Committee’s Miami Town Hall Meeting, hosted by ALMA.  Our discussion will include:

  • Resolution of SAG-AFTRA CBA issues
  • Overview of the audit process
  • Recent SAG-AFTRA arbitrations
  • Discussion of the experimental waiver for “made fors”
  • AFM update
  • Ad-idMiami Town Hall Invite

Register now:
RSVP to Adriana.Hoak@AlmaAd.com (space is limited)

Date and Time:
Thursday, March 5th
9:30 am – 10:00 am  |  Breakfast & Networking
10:00 am – 11:30 am  |  Stacy Marcus, Miami Town Hall
11:30 am – 12:00 pm  |  Questions & Answers

Location:
ALMA
2601 South Bayshore Drive, 4th Floor
Coconut Grove, FL 33133
Map and Directions

Today’s Hot Topic: Network Clearance Top Ten Tips

From time to time, I like to remind clients about the simple things they can do to help facilitate the network clearance process.

A few years ago, we published a list of helpful tips advertisers and agencies should keep in mind when clearing commercials with the networks.  Below is an updated version of the previous list adapted for today’s standards:

  1. Be sure to send supporting documents (e.g., claim substantiation, product labeling, date of national distribution, etc.) in one packet whenever possible.  The network editors prefer to review all supporting documents at once rather than in piecemeal.  This also helps expedite the clearance process.
  2. Be sure to include scripts when clearing rough-cuts.  The editors need to see the copy when reviewing rough-cuts.
  3. Ensure final commercials are properly slated with an ISCI/Ad ID Code.
  4. Be sure to clear 15-second versions of approved 30-second spots. 
  5. If you will be running both the standard (SD) and high definition (HD) versions of the same commercial, you only need to submit the HD version for final network approval.
  6. Avoid sending compressed video files for clearance via e-mail.  While they may be easy to send, they are usually poor quality, thus making legal disclaimers/supers difficult to read.  It is best to send a link to an FTP site where a large video file can be downloaded and viewed.
  7. Be sure to clear “non-new” versions of approved “new” spots.
  8. Be sure to pre-clear substantive revisions to existing spots. 
  9. Ensure as-produced scripts include the name of the advertiser and the product being advertised, as well as the title, ISCI/Ad Id Code, length and date of the commercial.  They should also include all legal disclaimers/supers appearing in the commercial. 
  10. When in doubt, ask questions.  This can save a lot of time and effort down the road.

Marilyn Colaninno is Director of Rights and Clearances for Reed Smith and is responsible for clearing commercials for the firm’s many clients in the advertising industry.  If you have specific questions, please contact Marilyn directly at 212-549-0347 or at mcolaninno@reedsmith.com

Disclosures Become a Focal Point for Regulators

In a recent Compliance Week article, Keri Bruce and Kevin Madagan discuss the FTC’s and FDA’s increased attention to disclosure practices, reminding companies to review their existing measures.  The article underscores the importance for companies to reeducate themselves and reevaluate approval processes to help avoid enforcement.

LexBlog