FAA Approves Limited Drone Use in Film and TV Production

On September 25, 2014, the Federal Aviation Administration announced its approval of limited commercial use of drones for film and TV production.  The entertainment industry sees this as a leap in the right direction for competing with international markets where commercial use of drones is growing.  Consider the implications of this approval.  What other commercial uses might arise?  How does this change the advertising and media marketplace?  Read our recent client alert to see if sky's the limit.

Fred Meyer Guide Revisions Are Friendly Reminder to Suppliers to Check Their Current Practices

This post was written by Keri Bruce and Hilary St. Jean.

Last week, the Federal Trade Commission (“FTC”) approved final changes to its Guides for Advertising Allowances and Other Merchandising Payments (the “Guides”), also known as the Fred Meyer Guides.  The Guides were originally issued in 1969, and subsequently revised in 1990, to help businesses comply with sections 2(d) and (e) of the Robinson Patman Act (the “Act”).  The Act generally prohibits certain forms of price discrimination between suppliers and the merchants who resell their products.  Sections 2(d) and (e), which are the focus of the Guides, are designed to prohibit disguised price discrimination in the form of promotional payments or services.  In other words, a supplier is prohibited from paying allowances or furnishing services to merchants to promote the resale of the supplier’s products, unless the allowances or services are offered to all competing merchants on proportionally equal terms.  The Act aims to help small businesses compete against chain stores by prohibiting anticompetitive price discrimination by suppliers, and certain other kinds of business discrimination.  In December 2012, the FTC sought public comment on the Guides, and input on the overall costs and benefits and continuing need for the Guides.

In response to the comments solicited, the FTC approved moderate changes to the Guides in order to update them with respect to current technological developments, changes in marketing methods (such as widespread online marketing), and FTC enforcement priorities. The changes also reflect jurisprudential developments since the last revision of the Guides.

All of the comments provided to the FTC indicated a continuing need for the Guides.  The following list is a general summary of the changes to the Guides. For additional information, read the Federal Register, which details the comments received and the FTC’s final changes.

Changes to the Guides (effective November 10, 2014):

  • General:  The FTC added references to the Internet to the lists of promotional media dispersed throughout the Guides to address and account for new methods of commerce associated with the growth of the Internet since the Guides were revised in 1990.
  • Section 240.7 (Services and Facilities).  This section of the Guides identifies the types of services and facilities offered to merchants covered by sections 2(d) and 2(e) of the Act.  This section has been modified to provide an example of how to distinguish between services and facilities that are offered for a product’s initial sale to the merchant seller versus its resale to the end consumer. The following new example was added:

    Example 1: A seller offers a supermarket chain an allowance of $500 per store to stock a new packaged food product and find space for it on the supermarket’s shelves, and a further allowance of $300 per store for placement of the new product on prime display space, an aisle endcap. The $500 allowance relates primarily to the initial sale of the product to the supermarket chain, and therefore should be assessed under section 2(a) of the Act. In contrast, the $300 allowance for endcap display relates primarily to the resale of the product by the supermarket chain, and therefore should be assessed under section 2(d).

Two additional examples were added to this section to address whether special packaging or package sizes are for promoting a product’s resale versus its initial sale.

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REMINDER: Catch Up with SAG-AFTRA - Town Hall Meeting in Atlanta

This is a reminder to please join us next week on Tuesday, October 7, for the Joint Policy Committee’s Atlanta Town Hall Meeting, sponsored by 22squared.   

A new arbitration decision was received last week and will be discussed.  Our discussion will also include:

  • Resolution of the SAG-AFTRA CBA Issues
  • Overview of the audit process
  • Recent SAG-AFTRA arbitration
  • Ad-ID
  • Discussion of the Experimental Waivers for Made Fors
  • AFM update

Register Now:
RSVP to Aaron Kooden at aaron.kooden@22squared.com (space is limited)

Date and Time:
Tuesday, October 7th
9:30 - 10:00 am:  Breakfast
10:00 am - 12:00 pm:  Stacy Marcus, JPC Atlanta Town Hall

1170 Peachtree St NE, 14th Floor
Atlanta, GA 30303
Map and Directions

Brand Owners: Do You Know Your Social Media Ownership Rights?

A recent district court case reminds companies and brand owners to establish clear guidelines or contractual rights with respect to brand-related social media pages’ administration and ownership.

Plaintiff Stacey Mattocks independently ran an un-official Facebook fan page which focused on the TV show the “Game”.  After Black Entertainment Television network (BET) acquired rights to the TV show, it hired Mattocks to promote and grow the brand on the page and provided exclusive content and IP to Mattocks.  During Mattocks’ employment, the number of page “likes” grew from 2 million to 6 million. Mattocks had granted BET full access to the page to update content but later, during a dispute involving Mattocks’ terms of employment, Mattocks demoted BET’s ability to access the page without her approval and claimed ownership of the page.  BET approached the social media platform to regain control and Mattocks filed suit for various claims against BET (such as breach of contract and tortious interference with contract).  

While social media platforms offer certain protections to companies and some include official or verification procedures, this kind of litigation and expense could have been avoided with more careful planning with respect to allocation of rights and ownership up front. For additional details on the case and the measures companies should take to assure their ownership rights, please read the latest post on our firm's Employment Law Watch blog. 

FTC Warns More Than 60 National Advertisers in 'Operation Full Disclosure'

This post was written by Sulina D. Gabale and Stacy K. Marcus.

In letters sent to more than 60 companies, including 20 of the top 100 TV and print advertisers in the country, the FTC warned companies to review specific ads to ensure their disclosures are “clear and conspicuous,” and that they comply with federal advertising regulations.

In a press release on Tuesday, the FTC explained the initiative – Operation Full Disclosure – as the agency’s latest effort to guide companies to follow proper disclosure standards and avoid misleading consumers. Specifically, the agency targeted disclosures made in fine print or that were easy to miss by the average consumer. The FTC explained that disclosures should be in proximity to the claims to which they relate and in easy-to-read font color, size, and style, so consumers have access to all relevant information. For TV ads, disclosures “should be on the screen long enough to be noticed, read, and understood, and other elements in the ads should not obscure or distract from the disclosures.”

The FTC is keeping the names of those companies targeted secret in an effort to allow them a chance to adhere to disclosure laws. However, without getting too specific, the agency hinted toward recurring problems. For example, the FTC explained in some ads, “the advertiser claimed that a product was unique or superior in a product category, but did not adequately disclose how narrowly the advertiser defined the category, while other comparative ads did not adequately disclose the basis of their comparisons.”

What does this mean for other advertisers?  Though the letters only addressed certain companies, the initiative is essentially a warning shot signaling others to follow suit. The FTC cautioned, “advertisers who did not receive a letter should not assume that their advertisements are fine.”

While Operation Full Disclosure may act as just a warning, here are a few things that advertisers should keep in mind:

  • Don’t bury the details – disclosures must be in unambiguous language, clear and conspicuous, and placed in proximity to relevant claims
  • Focus on the font – disclosures should appear in a font that is easy to read and in a size and shade that stands out against the background
  • Disclose all conditions, terms, and limitations

Operation Full Disclosure has so far been limited to TV and print ads; however, crackdown over online advertisements may be just around the corner, following the FTC’s recent “.com Disclosures” guidelines published in March 2013.

Transformative Use: Danger Is in the Definition

This post was written by Hilary St. Jean and Brad R. Newberg.

In April, 2013 the 2nd Circuit concluded that certain works of the well-known appropriation artist, Richard Prince, which used Patrick Cariou’s photographs in a series of collages, constituted fair use. In Kienitz v. Sconnie Nation LLC, U.S. Circuit Judge Frank Easterbrook joins in on criticism that courts, such as in the Cariou case, are placing too much emphasis on the transformative use factor in considering fair use. However, Law360 (subscription required) quotes Reed Smith’s Brad Newberg who zeroes in on a deeper danger for authors’ derivative rights: “The issue with Cariou is not that it gives great weight to a transformative use, but how it defines transformative use.”

Latest FTC Settlement Determines Yelp Had 'Actual Knowledge' of Collecting Children's Info

Yelp recently settled allegations made by the FTC that it violated the Children’s Online Privacy Protection Act (COPPA) Rule, and has agreed to pay a $450,000 civil penalty for the violation, according to an FTC press release.  The Yelp case underscores that online services that ask for users' ages in the registration process will be deemed as having “actual knowledge” of that information.  Therefore, whether a site is directed to children or not, a registration process including an age field effectively turns the process into an “age filter,” and may put the site at risk of violating COPPA.  For more information on this case, please read our recent client alert authored by John Feldman.

FTC Focuses on Data Brokers at Big Data Workshop

The Federal Trade Commission held a workshop on September 15, entitled “Big Data: A Tool for Inclusion or Exclusion?” where FTC Commissioner Julie Brill emphasized the push to place more scrutiny on data brokers, reaffirming ideas and objectives expressed in the FTC’s May 2014 report on transparency and accountability.  For additional details on the workshop and what was covered, please read the recent post on our Global Regulatory Enforcement Law Blog.

Catch Up with SAG-AFTRA - Town Hall Meeting in Atlanta

Join us on Tuesday, October 7, for the Joint Policy Committee’s Atlanta Town Hall Meeting, sponsored by 22squared. Discussion will include:

  • Resolution of the SAG-AFTRA CBA Issues
  • Overview of the audit process
  • Recent SAG-AFTRA arbitration
  • Ad-ID
  • Discussion of the Experimental Waivers for Made Fors
  • AFM update

Register now:
RSVP to Aaron Kooden at aaron.kooden@22squared.com (space is limited)

Date and Time:
Tuesday, October 7th
9:30 - 10:00 am:  Breakfast
10:00 am - 12:00 pm:  Stacy Marcus, JPC Atlanta Town Hall

1170 Peachtree St NE, 14th Floor
Atlanta, GA 30303
Map and Directions

ANA Webinar - Protecting Brands in the Event of a Data Breach

Data breaches are increasingly posing massive risks to brands.  On Tuesday, September 16 at 1:00 p.m. EDTMark Melodia, head of our firm's Global Data Security, Privacy & Management Group will be presenting a webinar, hosted by the ANA, to discuss strategies companies must implement to mitigate risk and damage to brands.  He will examine the crucial ways for brands to work effectively with outside counsel – from initial indications and preparedness to litigation, reporting and resolution.  Mark also will touch upon effective management of external support vendors to maintain privilege and confidentiality and, as appropriate, how to interface with law enforcement (including the FTC), state attorneys general and others.  
REGISTER NOW. Visit the ANA website to register for this webinar.
Protecting Brands in the Event of a Data Breach
Tuesday, September 16 ,2014
1:00 p.m. EDT (Length is 60 minutes)

New Paperwork Required for NY Employers Engaging Child Performers

In an October blog post, we reported on the New York labor law amendments enacted specifically to protect runway and print models under the age of 18, providing them with the same protections that other young performers had received.  Furthering the requirements of the amended laws, the New York Department of Labor recently released updated forms that employers must use when engaging child performers, including models.  For additional details on the new mandate and forms, read the latest post on our firm’s Employment Law Watch blog.

Help Reed Smith Get to SXSW 2015

Stacy Marcus and Barbara Bispham recently submitted a proposal to present a panel session entitled “Make it Rain: Prep for Acquisitions, IPOs & More” at South by Southwest (SXSW) 2015, the leading annual film, interactive, and music festival/conference held in Austin, TX.

Part of getting selected is determined by a public voting component, which accounts for 30 percent of the decision-making process.

We are asking for your votes to help ensure that Stacy and Barbara’s panel is chosen, and we have outlined below three easy steps to submit your vote (which should take approximately 2-3 minutes of your time).  Voting closes on Friday, September 5.

How to vote for their panel:

1.) Visit the SXSW site and create a login.
2.) Confirm your account and sign in.
3.) Search for “Make it Rain: Prep for Acquisitions, IPOs & More” and cast your vote.

Announcements regarding the selected panels will be made after October 20, and with your assistance we hope that theirs will be one of them.  Thank you in advance for your support!

Reed Smith Teleseminar - Get to Know Wisconsin Attorney General J.B. Van Hollen

Join our partner, Divonne Smoyer, on Tuesday, September 9, 2014, for a teleseminar featuring Wisconsin Attorney General J.B. Van Hollen.

Van Hollen, Wisconsin's Attorney General since 2007, will discuss how AGs generally approach legal and policy issues and work either alone or together to resolve complex issues.

Register now for this teleseminar.

Tuesday, September 9, 2014
12:00 p.m. ET / 11:00 a.m. CT / 9:00 a.m. PT (Teleseminar length is 60 minutes)

Dial-in information:
Details will be provided via e-mail to all registered attendees prior to the teleseminar.

But I Thought They Really Liked Me! Facebook's Prohibition on Like-Gating Apps

This post was written by Keri S. Bruce and Matthew Y. Kane.

A recent Facebook Platform Policy change may affect the way many promotions are run on Facebook.  The change, effective November 5, 2014, prohibits Facebook Page owners from requiring a user to “like” their Page in order to access content, such as entry into a contest or sweepstakes, via a Facebook application (“App”).  Advertisers often use this technique, known as “like-gating,” as a way to increase the amount of likes their Pages receive. 

Facebook believes that a prohibition on like-gating will benefit both advertisers and consumers.  In announcing the change, Facebook stated in a blog post: “[T]o ensure quality connections and help businesses reach the people who matter to them, we want people to like Pages because they want to connect and hear from the business, not because of artificial incentives.” 

A like can be valuable to an advertiser, regardless of whether it is generated organically or artificially. When a user likes a Facebook Page, the like may appear on the user’s Timeline, stories from the Page may show up on the user’s news feeds, and users may also appear in advertisements for that Page.

While the implications of the change are yet to be seen, here are a few things that advertisers should keep in mind:

  • The new prohibition is part of the Facebook Platform Policy that applies to Apps on Facebook Pages.  Facebook’s Page Terms require that all Page Apps comply with the Platform Policy.  Although Facebook has not yet updated its Page Terms to prohibit like-gating for on-Page promotions that don’t use Apps, advertisers – given Facebook’s rationale for the Platform Policy change, and given the FTC’s recent guidance on social media promotions – should not be surprised to see Facebook amend its Page Terms even further to address incentivizing likes for on-Page promotions and other benefits, such as discounts or free items. 
  • For now, though, if an advertiser plans to run a Facebook promotion via an App that will extend past November 4, 2014, the advertiser should no longer require a Facebook user to like its Page in order for the user to participate. 
  • The prohibition on like-gating applies to all content provided by an advertiser via an App – not just an entry into a contest or sweepstakes.  Thus, if an advertiser is offering songs, brochures, or any other custom content where access is through an App, it should not require a user to like its Page in order to download or access this content.
  • Although incentivizing Page-likes will be prohibited, advertisers are still permitted to incentivize users in other ways, such as to log in to the advertiser’s App, enter a promotion through an App, and check-in to a location via an App. 

Facebook's Platform Policy change is just another reminder that the terms and conditions of using social media platforms such as Facebook, Twitter, Instagram, Pinterest and the like are constantly evolving.  In order to ‎take advantage of the opportunities presented in social media, advertisers, agencies and mobile app developers must stay abreast‎ of these changes and ensure their activities remain in compliance with the applicable platform's terms and conditions of use.

New SIFMA Guidance May Ease Accredited Investor Verification Worries, Assist Reg D Offerings Using General Solicitation

This post was written by Robert K. Morris.

One of the goals of the federal JOBS Act, enacted in 2012, was to expand the ability of companies (both operating companies and funds) to make non-registered securities offerings using general solicitation and advertising.  Offers made through general solicitation and advertising have been prohibited under the SEC’s private offering safe harbor ever since Regulation D was adopted in 1982, and many have complained that the restriction was pointless where all purchasers were accredited investors as defined in Regulation D.  However, the SEC believed a change required legislation.

The JOBS Act made that change.  However, the Act, and the new rule adopted in 2013, imposed a new requirement – the issuer of the securities must take reasonable steps to “verify” that all the purchasers in a general solicitation offering are accredited investors. Failure to take reasonable verification steps would violate the rule even if it turned out that all purchasers actually were accredited.

For an individual to be an accredited investor, he or she must have net worth excluding principal residence of at least $1 million, or net income of $200,000 ($300,000 with spouse) in each of the two most recent years and a reasonable expectation of achieving the same in the current year.  Under the new rule, reasonable steps by the issuer to verify these criteria would include reviewing tax returns, bank statements, brokerage statements and consumer reports from recognized agencies.  To date, these steps have not seen significant use, as issuers have found them burdensome, and investors have asserted privacy concerns.  Critically, the SEC has made it clear that an issuer may not simply rely on the investor’s own representation that he or she is an accredited investor.

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