FTC, CFPB, and States Collaborate to Clamp Down on Illegal Debt Collection

On November 4, the Federal Trade Commission announced an unprecedented coordinated federal-state enforcement effort targeting deceptive and abusive debt collection. This sweeping initiative, termed “Operation Collection Protection,” coordinates federal, state, and local actions under the FTC, the CFPB, 47 state attorneys general, and other enforcement officers and agencies.

As the top source of complaints to the FTC and the Consumer Financial Protection Bureau, illegal debt collection practices have long been in the agencies’ crosshairs. “Operation Collection Protection” began with 30 new coordinated law enforcement actions targeting debt collectors using illegal methods such as harassing phone calls and false threats of litigation, arrest, and wage garnishment. With the involvement of state attorneys general and variations on state laws, banks and other creditors should have the new initiative on their radars as well.

Although the FTC does not have jurisdiction over banks, they should pay close attention to the initiative because of the involvement of the CFPB and state attorneys general, and variations on state laws under which attorneys general may investigate banks and other financial institutions.

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Gambling Companies Hit a Triple Bogey

Gambling companies Hillside (UK Sports) LP t/a Bet365 (“Bet365“), Coral Interactive (Gibraltar) Ltd (“Coral“) and Petfre (Gibraltar) Ltd (“Totesport”) were recently challenged by the UK advertising regulator, Advertising Standards Authority on using images of Jordan Spieth, US Open champion, on their Twitter feeds to promote betting.

Under the UK non-broadcast advertising industry code (the CAP Code), marketing communications (which include tweets) must be socially responsible; and must not include people aged 25 or under, or someone who appears to be so, if such person plays a “significant role” in promoting gambling and betting. An exception to this rule was introduced in 2013 for instances where an individual under the age of 25 appears in a bet directly or alongside “specific betting selections”. This is allowed so long as the image used shows them “in the context of the bet and not in a gambling context” ( see. rules 16.1 and 16.3.14 of the CAP Code (Gambling)).

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Facebook Posts Important Advertising Law Win

On October 30, 2015, Facebook, Inc. posted an important win in the Ninth Circuit Court of Appeals. In a non-precedential decision, the court upheld the federal district court’s dismissal of a complaint filed by a proposed class of minor Facebook users. The plaintiffs alleged that Facebook’s terms of use—specifically, a provision granting Facebook the right to use the plaintiffs’ names and likenesses—as applied to the proposed class, was void under California law. By ruling for Facebook, the Ninth Circuit’s stance in this case reminds us that courts will treat online terms and conditions as binding agreements between website owners and its users, and resolve disputes falling within such terms’ governance using traditional contract law principles.

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The Second Circuit Turns the Page on Plaintiffs’ Google Books Copyright Suit

Another important copyright decision is in—this time from the Second Circuit Court of Appeals in Authors Guild v. Google, Inc. Plaintiffs—authors of copyright protected books—brought an action for infringement against Google, claiming that its digitization of millions of books without Plaintiffs’ permission violated copyright law. The court on appeal, acknowledging that this dispute “test[ed] the boundaries of fair use,” ruled in favor of Google, allowing the search-engine to shelve this case in the W column. Below are my key takeaways from the court’s decision. First, here’s what you need to know about the case: Google scanned millions of books—without permission from the rights holders—and made them accessible to Internet users, who in turn, could search and view randomized pages (snippets) of the books on Google’s site (Google Books) for free. Google did this as part of its Library Project. With nearly twenty million books digitized from some of the world’s largest libraries, Google Books is a powerful research tool that provides users with information not “obtainable in lifetimes of searching.” So why did the court conclude Google’s unauthorized copying of millions of books didn’t violate copyright law? Fair use, of course! Here are the key legal takeaways from the decision: Continue Reading

Making a Good Thing Better? NAD’s Plans to Modify Its Procedures

The National Advertising Division (NAD) has for more than 40 years been the premier avenue for self-regulation in the advertising industry. Born in the ’70s at a time when there was pressure from government and consumer advocates to regulate advertising, the industry stepped up and promised to regulate itself. Under the auspices of the Council of Better Business Bureaus, the industry associations formed the NAD.

At the annual NAD Law Conference held in New York September 28-29, the NAD announced that some procedural changes would be made in response to an ABA assessment of NAD process.

Here are the highlights of the NAD’s proposed new procedures:

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Copyright Protection Goes ‘To the Batmobile!’ says the Ninth Circuit

While the Caped Crusader drives around in his Batmobile protecting Gotham from its fringe, copyright law protects the Batmobile from infringers—this, according to the Ninth Circuit in DC Comics v. Towle. The Batmobile is more than just Batman’s ride; it is its own comic-book character worthy of copyright protection. In reaching this conclusion, the Ninth Circuit articulated a “three-part test for determining whether a character in a comic book, television program, or motion picture is entitled to copyright protection.” Read below for an analysis of this test in action (POW!).

Here are the facts: DC Comics, the plaintiff, claimed to own a copyright in the Batman comic-book series, which included the Batmobile. It entered into two licensing agreements that allowed for the creation of the 1966 Batman television show and the 1989 motion picture Batman (the one with Michael Keaton). Versions—importantly, different versions—of the Batmobile appeared in both the TV show and the movie. Both versions, however, maintained a “bat-like physical appearance” and were “equipped with futuristic technology and crime-fighting weaponry.”

As part of his business at Gotham Garage, the defendant, Mark Towle, created replicas of the Batmobile as it appeared in the TV show and movie. Towle admitted that he designed his vehicles to replicate the Batmobile. Indeed, he advertised the Batmobile look-a-likes for sale via his website: batmobilereplicas.com.

DC Comics sued. After the District Court granted summary judgment in favor of DC Comics’ copyright infringement claim, and a final stipulation was entered, Towle appealed to the Ninth Circuit.

The Ninth Circuit’s analysis (worth reading in its entirety because of the humorous Batman references) largely focused on the issue of whether the Batmobile is copyrightable. It began with a discussion of precedents supporting the proposition that characters, including comic book characters, are afforded copyright protection, despite their omission from the Copyright Act. These precedents, it said, gave rise to a three-part test:

  1. The character must generally have physical as well as conceptual qualities;
  2. The character must be sufficiently delineated to be recognizable as the same character where it appears; and
  3. The character must be especially distinctive and contain some unique elements of expression.

In short, under this framework, the Ninth Circuit concluded that the Batmobile was a character deserving of copyright protection. First, the court found that the Batmobile—having appeared graphically in comic books and in three-dimension on TV and motion pictures—had physical and conceptual qualities (as opposed to being a mere literary character). Second, the court found that the Batmobile’s core features—bat-like appearance, high-tech weaponry and crime-fighting purpose—were recognizable traits traceable through DC Comics’ original comic books through the ’66 TV show and the ’89 movie. This portion of the analysis was derived from precedent considering the copyrights of characters like James Bond and Godzilla. Third, and finally, the court said the Batmobile is unique; it is more than just a stock character.

Holding that the Batmobile was copyright-protected, the court turned to the issue of infringement. Towle’s principal argument was that DC Comics lacked standing to sue because, if he had indeed infringed, such infringement related to the TV show and movie, not DC Comics’ comic books. The court was unpersuaded. Instead, DC Comics, as the original copyright owner of the Batmobile, owned exclusive rights in all work underlying any licensed derivative work (the TV show and movie). It necessarily followed then, as the Ninth Circuit had held in a 1994 case, that an original copyright owner has standing to sue for any infringement of work underlying authorized derivative work.

In light of this conclusion, the court ultimately determined that Towle’s replicas unequivocally infringed upon DC Comics’ copyright in the Batmobile. Now, Batman can continue fighting crime, knowing that no one can steal his ride (at least figuratively, without paying . . . ).

Just a Fantasy? Toeing the Line between Fantasy Sports and Illegal Online Sports Betting

It’s fall. And in the professional sports world, that means the National Football League  is back and Major League Baseball is gearing up for its playoffs.

But there are other leagues garnering increased attention as the crisp air rolls in. These are the leagues where no one faces career-ending hits or 100 mile-per-hour fastballs, yet the leagues’ players have the potential to earn professional athlete paychecks. Yes, we’re talking about fantasy sports. And yes, the potential for a big payout is real.

As of late, it is fair to say the fantasy sports industry is both hot and in the hot seat. Hot because an estimated 57 million people in the United States and Canada play, with several million paying entry fees in hopes of winning cash prizes. In the hot seat because some think it is time for regulators to bring fantasy sports leagues—where cash prizes are the objective—back to reality.

Specifically, critics of fantasy sports leagues are concerned that the game has devolved into one of chance, not knowledge and skill; a criticism that strikes at the very core of the law governing online fantasy sports. If these critics are in fact correct, under the Unlawful Internet Gambling Enforcement Act (“UIGEA”) fantasy sports players are simply ‘betting’ or ‘wagering’ on the outcome of a sporting event, which is unlawful.

The renewed scrutiny is not without base. Traditional fantasy sports leagues, for instance one based on the NFL, require season-long time commitments, statistical analysis, and knowledge of positions, players, coaches, and teams. Winning takes skill, which is why the UIGEA exempted “participation in any fantasy or simulation sports game” from falling under the umbrella of unlawful Internet betting or wagering.

Now, with the advent of Daily Fantasy Sports (“DFS”) leagues—short term, easy entry and play games—some say no such knowledge and skill are necessary to win cash prizes. Indeed, in a letter dated September 14, 2015, United States Representative Frank Pallone (D-NJ) asked the House Energy and Commerce Committee to ”review the legal status of fantasy sports and sports betting.” Fred Upton (R-Mich.), the chairman of the committee, says a hearing is likely.

Fantasy sports leagues are facing similar scrutiny from state legislators and regulators.  While California proposed a bill that included new regulations for fantasy sites, such as licensure and fee requirements, Massachusetts Attorney General, Maura Healey, announced her office will investigate whether DraftKings, a DFS operator, is running a business in violation of state gambling laws.

Can fantasy sports hold the line against its critics or has the luck run out? Check back with AdLaw By Request for an update on this important topic.

Today: ANA Webinar – The FTC’s “Start With Security” Initiative: Where To Start?

Join John Feldman and Lesley Fair of the FTC Bureau of Consumer Protection for a webinar on the FTC’s “Start With Security” initiative, which is aimed at providing businesses with new guidance to better protect consumer information and maintain trust.  The initiative will include conferences around the country, with two scheduled in the coming months.

Today’s webinar will cover why the FTC is taking the show on the road, what issues might arise (privacy by design principles, app security, the Internet of Things, and more), and the overall trends in data security enforcement.

Visit the ANA website to register.

Date and Time:
Tuesday, September 22, 2015
1:00 p.m. EDT

Judge Orders Yelp to Identify Anonymous Negative Commenter

This post was written by Kimberly R. Chow and John P. Feldman.

On September 15, a judge in Boston ruled that Yelp must reveal the identity of an anonymous commenter who wrote a negative review of a jeweler on the online review site.

The order to non-party Yelp in the attempted defamation suit of the jeweler against the commenter is the latest in a series of attempts by libel plaintiffs and the government to force content hosts to unmask anonymous commenters.  Content hosts have argued that the First Amendment protects the right to speak anonymously, and that identifying online commenters threatens to chill freedom of expression on the Internet.  Boston Municipal Judge Robert J. McKenna Jr.’s ruling that Yelp must reveal a commenter’s identity stands in contrast to a recent Virginia Supreme Court case holding that a subpoena to Yelp for reviewers’ identities could not be enforced.

After the commenter, identified in the suit as Linda G. Doe, left a negative review of Pageo, a jewelry store in Boston, on Yelp, claiming that the owner had maliciously paid her a price much less than the worth of the jewelry she sold him, the owner, George Pelz, sued Doe in Boston Municipal Court and issued a subpoena to Yelp to discover Doe’s true identity.  Pelz argued that he could tell that Doe was not an actual customer of his store because she claimed to have been a frequent customer and he was familiar with his longtime clients.

Yelp argued that, under the First Amendment, protection of anonymous commentary is vital to encouraging contributions to the public marketplace of ideas.  Additionally, Yelp challenged the court’s jurisdiction over the case, maintaining that California was the proper forum for adjudication.  In California, at least one court has found that the right to comment anonymously is protected under the state constitution.

In April, the Virginia Supreme Court ruled in the case Yelp v. Hadeed Carpet Cleaning, Inc. that, while a local court could exercise personal jurisdiction over out-of-state, nonresident parties to Virginia actions, it could not force those parties to produce documents located out of state.  Thus, since Yelp was headquartered in California, the subpoena for the identities of Yelp commenters must be issued there and not in Virginia, where the plaintiff’s business was based.  The court did not reach the First Amendment implications of the subpoena.

This latest holding that Yelp must release the identities of anonymous commenters heralds possible difficulties for content hosts in the future if courts are beginning to discount First Amendment and jurisdictional reasons to deny subpoena enforcement.  However, other courts around the country have quashed these subpoenas, and Yelp and other content hosts are fighting hard for that trend to continue.