Adlaw By Request : Advertising & Marketing Lawyer & Attorney : Reed Smith Law Firm : AdLaw By Request & KidAdLaw

No matter how many times I’ve been told that “it’s always been done this way,” I still have difficulty getting my head around the seemingly eternal practice of agencies whipping up near-complete ads, concepts and campaigns entirely on spec (or for a de minimis amount of fees) to win the business of a potential client, and agree to hand over all rights to such materials whether the agency receives the work or not. Case in point: an article that appears in Advertising Age this week. In what other industry does this practice exist?  As attorneys, we may provide some general direction or insight to a prospective client for purposes of demonstrating our competence within a particular area of the law, but I don’t know very many attorneys that would agree to draft a complaint on spec. The same goes for accountants, architects, consultants, developers, and on and on…

Well, the times may be changing – slowly, but changing nonetheless. Having the distinct privilege of representing both advertisers and agencies alike, we are often able to see trends on both sides of the table. Let me offer a few observations:

            (i) As more young professionals take on leadership roles within both agencies and the marketing departments of advertisers, there seems to be a greater sense of fairness and equity within the fabric of the client-agency relationship.

            (ii) As the nature of advertising continues to skew digital, the traditional cross-media campaign is likewise evolving. A digital (whether Web, ITV or mobile) advertising and media strategy is as much about monitoring and optimization on the fly as it is well-thought-out-planning. 

            (iii) Agencies are waking up to the reality that there is a benefit to developing their own portfolio of assets – ranging from creatives, to digital tools that have the ability of transcending a particular client or campaign but which can be used in various forms on multiple occasions.

This last point is deserving of greater extrapolation. As consolidation continues to exist within the agency universe, there is a growing spirit of discontent over the way these deals have traditionally been structured and the multiples employed to arrive at a purchase price. Essentially, agencies have always been viewed as service entities, and there’s only so much one will pay for services and good will. If, however, an agency becomes the composite of services, good will and proprietary technology, tools and/or creatives, then the traditional valuation methodologies may quickly cease being the only value indicators, and agencies may have greater and inherently more “valuable” value propositions to offer a potential acquirer. As a first step in this direction, agencies should seriously consider reaching out to their attorneys to explore intellectual property protection and monetization strategies and programs, which may include better monitoring of work product, reworking of both internal and external agreements, intellectual property registration initiatives and global coverage considerations.

One area in which I’m seeing this dynamic play out is in agency service agreements. It’s almost commonplace now to find a Pre-Existing Property clause in the intellectual property section of these agreements. Whether I’m on the agency or advertiser side of the deal, agencies are increasingly seeking to ensure that, to the extent they utilize tools, applications and content which pre-date their engagements, they retain ownership rights over those elements. A typical clause might read as follows:

Each of Client and Agency agrees and acknowledges that all software applications, databases, computer programs (including source code and object code for any such programming), and executable code (collectively "Code") as well as other creative content, methodologies and materials in existence prior to this Agreement (or created outside the scope of this Agreement) and all Code or portions thereof provided to Client by Agency hereunder, excluding any materials provided by Client (“Agency Property”), shall remain the sole and exclusive property of Agency. Agency hereby grants a fully paid-up, perpetual, non-exclusive, non-transferable license to Client to use the Agency Property to the extent integrated into the Advertising Materials and without modification, and solely for the benefit of Client. For clarity, it is understood that (i) Agency shall own all modifications, improvements or enhancements to the Agency Property and (ii) any and all Code utilized by Agency, or made available by Agency for use by Client, that is not integrated within the Advertising Materials, may not be used by Client after the term of this Agreement (or applicable Scope of Work) except pursuant to a separately negotiated license agreement.

…and if you’re the advertiser that is being asked to agree to one of these provisions? Make sure the following points are in place:  (i) you receive a royalty-free license to use such pre-existing tools, (ii) the licensing language is broad enough that you can use the pre-existing tools as may be necessary to craft and run your campaigns (both in the United States and elsewhere, if applicable), (iii) the agency is willing to give you a representation that such tools do not violate the rights of third parties, and if a problem should arise the agency will indemnify you, and (iv) to the extent these tools and/or creatives are inextricably integrated within yours, the license should be perpetual and will not expire if and when the agreement or the engagement terminates. Lastly, be sure that you, as the advertiser, own anything and everything that is custom created or developed by the agency for you, and that the agreement contains the requisite language which allows that to happen.

Hopefully, this provides readers with some valuable food for thought. We certainly welcome a healthy debate and discussion over the issues presented, and we’d like to know what our readership is experiencing. Finally, we’re always available to answer any questions or assist in structuring any of the ideas presented.

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This post was written by Rachel Rubin.

If it looks like fruit and sounds like fruit, it must be fruit. Well, not exactly, and please don’t waste our time, says a California court. Ray Werbel recently filed a lawsuit in San Francisco federal court claiming that he bought and ate Froot Loops cereal, believing it was healthy . . . for four years. Upon discovering that it was in fact a sugary children’s cereal, Werbel claims he was misled by Toucan Sam’s claims about “the flavor of froot.” He seeks unspecified punitive and actual damages to be paid to all consumers who, like him, bought Froot Loops under the same mistaken belief.   

The “Froot” in Kellogg’s Froot Loops cereal is not real fruit. Eating the “froot” does not provide the same health benefits of real fruit. We expect the court to dismiss this complaint just as it has recently dismissed similar complaints – and there have been a few of them lately. Though Werbel claims otherwise, he may be a serial cereal litigant. He also brought suit against Pepsi, the maker of Cap’n Crunch with Crunchberries cereal, not realizing that a nearly identical case had been dismissed by the court earlier this year. In May, a judge in the U.S. District Court in the Eastern District of California dismissed a complaint by a woman who claimed she had purchased Cap'n Crunch with Crunchberries because she believed "crunchberries" were real fruit. The plaintiff, Janine Sugawara, alleged that she had only recently learned to her dismay that the "berries" were in fact simply brightly colored cereal balls. Though the colorful “berries” did contain a small amount of strawberry fruit concentrate for color and flavor, it was not enough to be considered an actual strawberry. Judge Morrison England, Jr. stated that:

This Court is not aware of, nor has Plaintiff alleged the existence of, any actual fruit referred to as a "crunchberry." Furthermore, the "Crunchberries" depicted on the [box] are round, crunchy, brightly-colored cereal balls, and the [box] clearly states both that the Product contains "sweetened corn & oat cereal" and that the cereal is "enlarged to show texture." Thus, a reasonable consumer would not be deceived into believing that the Product in the instant case contained a fruit that does not exist. . . . So far as this Court has been made aware, there is no such fruit growing in the wild or occurring naturally in any part of the world. 

Noting that normally the loser on a motion to dismiss would get a chance to amend the complaint, that was not going to happen here:

In this case, . . . it is simply impossible for Plaintiff to file an amended complaint stating a claim based upon these facts. The survival of the instant claim would require this Court to ignore all concepts of personal responsibility and common sense.  The Court has no intention of allowing that to happen.

More on the decisions here, here, and here.   

In other breakfast news, consumers filed a $5 million class action suit against General Mills over its claims that Cheerios helps to lower cholesterol. Suits by consumers in three states were consolidated in federal court in New Jersey last week. The suits were prompted by a warning the FDA issued to General Mills in May on the claims that Cheerios “can lower your cholesterol 4 percent in 6 weeks” and has been “clinically proven to lower cholesterol.” As we previously reported, the FDA said that Cheerios’ claims regarding its benefits in the prevention and treatment of a disease (hypercholesterolemia) likely make it a drug under FDA standards. Cheerios responded to the FDA, arguing that its claims are not unlawful disease claims, and that the claims are consistent with the FDA’s health claim regulations. General Mills says it is in talks with the FDA to resolve the issue. General Mills’ answer to the complaint is due at the end of the month.

Why This Matters

Besides setting the media and blogosphere abuzz with bad puns and witticisms (nor could we help ourselves), this case is interesting from an advertising perspective. It reminds us that the court has a sense of humor, and, more importantly, addresses the “reasonable person” standard. It affirms two important points: (1) that the “reasonable person” is expected to have some common sense, some perspective, and to not take things so literally, but (2) companies are still accountable for the content of their advertising, especially when statements cross the line from marketing messages to health- or scientific-related claims. 

As always, you can contact the author, Rachel Rubin, Adam Snukal or any other Reed Smith attorney with whom you regularly work, for more information or assistance.

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In what could be a watershed case between a pharmaceutical company and the FDA, Allergan has filed suit against the FDA in the U.S. District Court for the District of Columbia, seeking a ruling from the court that would allow Allergan to share relevant information about the safe use of BOTOX with the medical community for non-FDA approved uses (i.e., off-label uses). Under current law, the FDA restricts its approvals on pharmaceuticals for very specific uses and treatments. Although physicians have quite a bit of maneuverability and flexibility to prescribe drugs for off-label uses, both the FDA and the Justice Department have taken the hard-line position that federal law prohibits pharmaceutical companies from proactively providing information (including advertising) to the medical community regarding off-label uses, even when such information is accurate, complete and beneficial. For the reasons mentioned in the article below, this is particularly problematic for Allergan.

This is a case we'll be following closely on Adlaw by Request, and we'll make every effort to keep you updated on all important developments.The press release is available on Allergen's website.

Read the full complaint (PDF).

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The World Federation of Advertisers, in conjunction with Nielsen, has published a major survey on consumer attitudes on the value of advertising. The results show a significant appreciation among consumers worldwide of the important role advertising plays in communicating valuable and useful information. For an overview of the survey, click here.

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General Mills is the Food and Drug Administration's ("FDA") latest target. In case you think that you misread the previous statement, General Mills—manufacturer of the popular cereal "Cheerios"—received a letter addressed to its Chairman from the FDA May 5 claiming that the FDA has reviewed various Cheerios labels and found they contain "serious violations" of federal regulations. Cheerios is the best-selling cereal brand in the United States, with sales of $1.4 billion last year, according to General Mills.

In recent years, the FDA has begun cracking down on manufacturers who overstate the benefits of their products, amid increased demand for healthy foods. According to the FDA, General Mills is breaking federal regulations on two counts: they are marketing Cheerios like an "unapproved new drug" and misbranding the product by making "unauthorized health claims." What, in particular, has caught the ire of the FDA? The FDA said that the Cheerios product label promotes it like a drug intended for use in the "prevention, mitigation, and treatment of disease." The FDA's letter drew particular attention to phrases that say the product lowers cholesterol by "4 percent in 6 weeks," that it can also reduce bad cholesterol by 4 per cent, and that it is "clinical proven" to lower cholesterol. The letter does not address the veracity of General Mills' claims, but simply the point that by making such claims, the product is being touted and advertised as having the same medicinal effects as other cholesterol-lowering drugs, and therefore should go through the proper channels for obtaining drug approval.

On the positive side, the FDA's letter acknowledges that General Mills had observed regulations correctly in respect of a health claim associating "soluble fiber from whole grain oats with a reduced risk of coronary heart disease," but the two claims about lowering cholesterol go beyond that which constitutes permissible advertising. The FDA said that even if the cholesterol-lowering claim could be argued to be part of an otherwise permissible claim, the wording disqualifies it from use in the soluble fiber health claim.

An important development in this matter is the fact that the FDA cites text on one of General Mills' company websites (www.wholegrainnation.com) as constituting misbranding. According to the federal Food, Drug, and Cosmetic Act (the "Act"), an advertiser's website is considered to be part of the product labeling. The website in question says "heart-healthy diets rich in whole grain foods, can reduce the risk of heart disease." According to the FDA, the claim does not meet the requirements of the Act, which requires such assertions to state that "diets low in saturated fat and cholesterol and high in fiber-containing fruit, vegetable, and grain products may reduce the risk of heart disease." The Cheerios' labeling neither mentions fruits, vegetables and fiber, nor the need for the diet to be low in saturated fat and cholesterol.

The FDA's letter also refers to another labeling claim about reduction in cancer risk. The FDA said Cheerios' claim, which includes the statement "regular consumption of whole grains as part of a low-fat diet reduces the risk for some cancers, especially cancers of the stomach and colon," fails to meet the authorized format because, for example, like the aforementioned claim, it does not mention fruits and vegetables and fiber content, and again denies the public the chance to see the overall context of the healthy diet. The agency has also taken issue with the added phrase "especially cancers of the stomach and colon," which goes beyond what an authorized claim is allowed to say.

In a statement, General Mills spokesman Tom Forsythe defended the cereal's claims. "Cheerios' soluble fiber heart health claim has been FDA-approved for 12 years, and Cheerios' 'lower your cholesterol 4% in 6 weeks' message has been featured on the box for more than 2 years," he said. "The science is not in question. The scientific body of evidence supporting the heart health claim was the basis for FDA's approval of the heart health claim, and the clinical study supporting Cheerios' cholesterol-lowering benefit is very strong. The FDA is interested in how the Cheerios cholesterol-lowering information is presented on the Cheerios package and website. We look forward to discussing this with FDA and to reaching a resolution."

General Mills has been given 15 days to reply with an explanation of how they intend to "correct the violations" and to ensure that "similar violations do not occur." Will the day come when consumers need a prescription to purchase their next box of Cheerios?

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This post was written by Michael Venditto and Andy Rahl.

During the first quarter of 2009, business bankruptcy filings were at the highest levels since 2001. If the pace of bankruptcies of large corporations continues at the current rate for the balance of the year, the number of large business bankruptcies will be the highest in history. Last week, the auto industry was the latest victim when Chrysler filed for bankruptcy in New York.

In January, we advised our advertising and media clients to prepare for this unprecedented environment by reviewing their credit policies and limiting their exposure to businesses in troubled industries. And with financial problems spreading to so many sectors of the economy, it is almost inevitable that you will be a creditor by a bankruptcy. While that’s certainly better than being the company filing a petition for bankruptcy, managing the financial impact can be just as devastating. When it happens, you will have many questions. What will happen to outstanding billings? How long will it be until we are paid? How can I get to the front of the line? The questions are endless.

The Chrysler chapter 11 case, although not typical of every bankruptcy, provides some useful lessons. The filing by Chrysler was long-anticipated, since the United States government had set a deadline for an out-of-court restructuring, and the negotiations with the various creditor groups were widely reported in the media. Yet when the petition was filed, advertising agencies and media companies—even those who had taken prophylactic measures—were left exposed to millions of dollars of potential losses. So now, quick action is key to limiting, or even eliminating, those losses.

Creditors who took a proactive approach to Chrysler’s bankruptcy had an opportunity to affect how they would be treated. On the day that Chrysler filed the case, it also filed a number of applications with the court seeking permission to take certain action with respect to its unpaid bills. These applications were filed in the middle of the night and were heard by the court at a hearing early the following morning. By noon, the court had entered orders granting Chrysler the discretion to give special treatment to those providers it considered critical to Chrysler’s future. The orders were not clear whether advertising or media suppliers could benefit from these procedures. More importantly, to some degree the court gave Chrysler the freedom to pick and chose how to deal with each of its creditors.

After this early effort to protect its trading partners, Chrysler turned its attention to a well-publicized battle with a group of dissident lenders, followed by efforts to consummate a sale of its business to a new company that will be controlled by the U.S. government, the United Autoworkers, and Fiat. Could there ever be an odder set of shareholders? This left many advertising and media companies wondering whether and when they would be paid. But, some creditors were in a better position because they got involved in the process and elevated their visibility before the attention of Chrysler and the bankruptcy court was diverted.

How is this possible if the Bankruptcy Code is intended to ensure that similarly situated creditors are treated equally?  The reason, to paraphrase George Orwell, is that all creditors are equal, but some creditors are more equal than others.

Creditors that are denominated as “critical vendors” are routinely accorded special treatment, earning the right to have their billings paid in the ordinary course, while other creditors may have to wait months or years until the case concludes. And since some other creditors are accorded payment priority by several provisions of the Bankruptcy Code, obtaining a special classification is the key to surviving the process with as little downside as possible.

To be one of the “more equal” creditors in any bankruptcy case, you must understand the Bankruptcy Code, as well as the orders the court may have entered authorizing special treatment for certain creditors. Most of these special treatments have time deadlines, so a lack of diligence can be costly. Timely and expert legal advice is critical to benefitting from any special priorities that might be available.

So finding a law firm with experience to assist you through the minefield is essential. While Reed Smith, with its experience in advertising, media and bankruptcy law, is available to assist you whenever these cases arise, our best advice to you is to get qualified counsel, whether it’s Reed Smith or another top firm. As the saying goes, the clock is ticking …

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On April 22, the FTC issued a Report concerning consumer protection issues arising in the mobile commerce marketplace, entitled “Beyond Voice: Mapping the Mobile Marketplace.”  The Report followed several public meetings involving the FTC since 2000, including those held on May 6-7, 2008 and in November of 2006. In concluding that “the FTC staff is committed to policing the wireless space to ensure consumer protections are in place,” several key findings included:

• Cost disclosures about mobile services continue to generate consumer complaints. The FTC staff will monitor cost disclosures, bring law enforcement actions as appropriate, and work with industry on improving its self-regulatory enforcement.
• The FTC and its law enforcement partners should continue to monitor the impact on consumers of unwanted mobile text messages, malware, and spyware, and take law enforcement action as needed.
• Although spyware and malware have not yet emerged as a significant problem on mobile devices, that situation can change as consumers increasingly use mobile devices for a wide variety of applications, including Internet access. The FTC staff encourages stakeholders to continue developing strategies that prevent or minimize the spread of spam, spyware, and malware on consumers’ mobile devices.
• The increasing use of smartphones to access the mobile Web presents unique privacy challenges, especially regarding children. The FTC will expedite the regulatory review of the Children’s Online Privacy Protection Rule to determine whether the rule should be modified to address changes in the mobile marketplace. This review, originally set for 2015, instead will begin in 2010. An opportunity for public comment will be provided.

Given the numbers of wireless and mobile devices in the hands of individuals under the age of 18 (and 13), and the increasing proliferation of mobile devices, this will become a hotter topic in the months and years ahead. As if this point needed to be emphasized, it has been reported that as of January 2007—two years ago—there were approximately 800 million cars, 850 million personal computers, 1.5 billion television sets, but already 2.7 billion (yes, billion) wireless and mobile devices in use around the globe, with more than 800 million e-mail and 1.8 billion SMS text-messaging users.

For more information on this topic, also check out the Legal Bytes blog.

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This post was written by Avv. Felix Hofer.

1. When I came around 'game advertising' for the first time my attitude as a lawyer, not necessarily familiar with what I – snobbishly – considered as basically being “kid's or nerds' stuff”, was obviously extremely skeptic. Running more and more frequently into articles published on the topic, I very soon had to realize that this was already a definitely “hot” topic to a number of industry sectors, involving an incredible amount of investment as well as offering truly exciting business perspectives.

According to an interesting US study, published in June 2007 on in-game ad spending targeted to digital homes in the period 2006–2012, companies had already invested 370 mln. of USD and were expected to increase such figure up to 2.051 mln. USD in year 2012.

Fairly impressed by the forecast exposed in the US study I got curious about how feelings would be in Europe about potential business development with respect to the specific area. Again surprise, surprise: according to a study performed on behalf of the EU Commission total revenues from on-line content sales will reach 8,3 bln. on Euro by 2010 (at an increase rate of a growth of over 400% in five years!) and on-line games will contribute with a significant share to that quite remarkable pie. In Fall 2007 another study showed that the Internet had already become the most popular communication tool among youngsters aged between 16 and 24; in the specific target group 82% affirmed to go on-line at least 5 days per week for entertainment and information purposes, while 46% declared that they preferred the Internet over (and used it more than) TV.

With the final blow I was provided when I had to realize that 9,8 bln. Euro had been spent for game consoles only during the 2007 Christmas period, that even traditional community venues (as sports arenas, shopping centers) were arranging specific gaming areas and organizing new entertainment events (e. g. “disc burn” sessions) attractive for gamers, that digital platforms did score important come-backs for popular past-time games and that in France the gaming sector had surpassed the entertainment industry for the first time in annual revenues.

Click here to learn more.

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The U.S. District Court for the Southern District of New York recently issued a “first-of-its-kind” opinion in a case with potentially wide-ranging implications for anyone engaged in the online dissemination of news. (See, The Associated Press v. All Headline News Corp., et al., 08 Civ. 323 (PKC), Memorandum and Opinion, dated Feb. 17, 2009). By denying a motion to dismiss in the matter, the court has cleared the way for a possible showdown between old and new media.

In its complaint, the AP alleges that online venture AHN enlisted “poorly paid individuals” to cull the Internet for news, including AP stories, and then either rewrote or cut-and-pasted those stories, and disseminated them to the websites of its own paying customers in the form of news reports and breaking news—thereby freeloading on the great effort expended, and great expense incurred, by “one of the world’s oldest and largest news organizations,” self-described as the “gold standard of objective journalism.”

This appears to be the first case to apply an old principle known as the “hot news” doctrine to Internet content. However, in this era of greatly reduced advertising, subscriber revenues, and life-or-death challenges for even the most venerable newspapers and other newsgathering organizations, it is not likely to be the last attack on alleged online “freeloaders.”

The “hot news” doctrine invoked by AP and relied on by the court goes back to a 1918 U.S. Supreme Court decision (International News Service v. Associated Press, 248 U.S. 215), which found breaking news to be “quasi property,” subject to protection from free-riding, or misappropriation, by competitors. In International News Service, the Supreme Court held that allowing one news agency to appropriate and profit from the work of another would “render publication profitless, or so little profitable as in effect to cut off the service by rendering the cost prohibitive in comparison with the return.” (Id., at 241.) As the Court explained, news gathering carries with it “the expenditure of labor, skill and money,” and its appropriation by another “is endeavoring to reap what it has not sown.” (Id., at 239-40.)

Although the common law origins of this doctrine render it non-binding now in federal courts (where it has been preempted by the federal Copyright Act), the doctrine is still recognized in various states, including New York, the state law found by the court to govern AP’s claims. In New York, the court ruled, a cause of action for misappropriation of “hot news” remains viable and has not been preempted.

The court also allowed AP’s claims under the Digital Millennium Copyright Act (for “intentionally altering or removing copyright management information”) and under New York State unfair competition common law to go forward, but dismissed two counts of AP’s complaint based on the Lanham Act (for trademark infringement and for unfair competition under the statute).

The court’s docket does not yet reflect when an answer will be due, but the case bears further monitoring by anyone engaged in the gathering and/or dissemination of news.

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This Alert compares the current recession to prior cycles, and summarizes precautions and protections that advertisers, agencies and media can employ to reduce their exposure to today’s risks.

Background of the Credit Crunch

It is generally understood that the ongoing credit crunch has led to a shortage of financial liquidity. We now seem to be entering a new phase as businesses and consumers retrench.

• Loss of Confidence. One of the cornerstones of business is the confidence we have in the ability of those we contract with to pay us what they owe. For most, that means having the ability to pay debts as they come due and be financially solvent on a balance sheet basis. The model for our major financial institutions is quite different. As long as confidence prevails, their business continues as usual; but if there is a sudden loss of confidence in an institution’s ability to repay or return its customers’ deposits and assets, then a run on the firm ensues and, absent intervention, a financial failure quickly follows.
• Government Backstop. The Federal Reserve, the FDIC and the U.S. financial regulatory scheme were created to provide a backstop and capacity for intervention in order to forestall the possibility of a systemic financial breakdown. It appears, however, that financial engineering and the growing complexity of the financial system may have outstripped our backstop.
• The Bankruptcy Process. Bankruptcy does not work well for financial service companies because of the confidence factor—an insolvency proceeding will not stem a run on a bank but only exacerbate it. Bankruptcy historically has worked well outside of the financial sector, particularly in manufacturing, distribution, retail, and many entertainment and other service businesses; entire industries such as steel and the airlines have been restructured in bankruptcy in past recessions. There appears, however, to have been an erosion of confidence in the effectiveness of the bankruptcy process, as reflected in the widespread view that bankruptcy is not a good idea for the U.S. auto industry.

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A ban on fast-food advertising in the United States could reduce the number of overweight children by as much as 18 percent, according to a study conducted for the National Bureau of Economic Research.

The study, funded by the National Institutes of Health, is being published in the University of Chicago's Journal of Law and Economics. Led by a professor from Lehigh University, researchers measured the number of hours of fast-food television advertising messages viewed by children on a weekly basis.

Lehigh University Professor Shin-Yi-Chou and her colleagues found that a ban on fast food advertisements during children's programming would reduce the number of overweight children aged 3-11 by 18 percent, and lower the number of overweight adolescents aged 12-18 by 14 percent.

Though the researchers concluded an advertising ban would be an effective method of reducing the number of overweight children, they also questioned whether such onerous government involvement and the costs of implementing such policies made an advertising ban a practical option in the United States.

Access information regarding the study at journals.uchicago.edu and lehigh.edu.

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Children who are obese or who have high cholesterol also show early signs of heart disease, according to a new study. Results of the study were unveiled at a recent American Heart Association conference. The study, conducted by researchers from the University of Missouri Kansas City School of Medicine, has not yet been published.

The study was small, involving 70 children ages 6 to 19, and experts said the results would need to be replicated to be considered conclusive. But the researchers' method of measuring artery wall thickness, using ultrasound technology, is considered to be a reliable indicator of heart disease risk.

"I think this is a red flag," said the study's lead author, Dr. Geetha Raghuveer, a cardiologist and associate professor of pediatrics at the University of Missouri Kansas City School of Medicine. "These kids are more similar to middle-aged adults."

The study is considered by many to be part of a growing body of research that childhood obesity in the United States likely will result in increased incidents of heart disease as children age.
 
Read more about the study and surrounding issues at nytimes.com.

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Often clients will ask what the networks' requirements are for supers. 

The networks' production guidelines for supers are as follows:

Visual disclaimers:

1.  Must be clearly legible against a contrasting background and appropriately drop-shaded.
2.  Must be at least 22 scan lines, with letters, words, and lines spaced so as to be easily read.
3.  Must be three seconds for the first line plus one second for each additional line.

The use of supers or visual disclaimers in commercials is very common.  Often they provide the viewing audience with important information.  Supers can vary from "Use as directed" in commercials for over-the-counter medications to "Professional driver on a closed course.  Do not attempt" in car commercials.  Certain categories, such as commercials for contests and sweepstakes, also have specific requirements regarding supers. 

Supers are often used to qualify claims that are being made in the commercial.  In some cases, the inclusion of a super can make the difference between a commercial that is not approved and one that is approved.  

This is why it is so important that supers be readable.  Clients should make every effort to be sure the supers that appear in commercials are easy to read.  Production techniques, such as the use of white lettering on a light background, should be avoided. 

There are times when clients send me commercials with supers that are difficult to read, and ask me if I think the editors at the networks will be able to read them.  In these instances I usually encourage clients to use their own judgment by asking the question, "Can you read the supers?"  If the client is unable to read the supers, chances are the editors will be unable to read them; and if the editors are unable to read them, they will not approve the commercial.  So, if you are concerned that the editors will have a difficult time reading the supers, chances are they will.

It's important to remind clients, when clearing commercials with the networks, to make sure that all supers comply with the networks' production guidelines. 

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 relating to network clearance, feel free to contact Marilyn directly at +1 212 549 0347 or by e-mail at mcolaninno@reedsmith.com.

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A Federal Communications Commission official is pushing a proposal to ban interactive ads targeting children. FCC Commissioner Jonathan S. Adelstein's call for regulation came amid the latest in a series of public meetings to address childhood obesity and its alleged link to food advertising.

"With the growing convergence of TV and the Internet, we need to set the rules before interactive advertising becomes an established business model," Commissioner Adelstein stated, speaking at the Vanderbilt Forum on Pediatric Obesity in October. The FCC "tentatively" concluded in 2004 that interactive ads targeting children should be banned, he noted. "[W]e need to act quickly ... to implement sensible restrictions on interactive ads targeting children."

Commissioner Adelstein dished up some harsh criticism of the food marketing industry. "The facts show that a vast majority of the food marketed to children are high in calories, high in sugar or salt, and low in nutritional value," he stated. He pointed to the recent campaign for Frosted Flakes featuring Olympian Michael Phelps. "Trying to make Frosted Flakes this generation's ‘breakfast of champions' is symptomatic of this age of hyper-commercialism, which has contributed to childhood obesity."

Parents feel inundated by the "seemingly relentless march of material that is too commercial, unhealthful, violent, or sexual for their children," charged Commissioner Adelstein, himself a parent. In addition to banning interactive marketing efforts (such as TV ads that point kids to websites), Commissioner Adelstein suggested the FCC should clarify its guidelines concerning what constitutes "educational content" for purposes of children's television regulations, and allocate resources toward educating the public on health and media issues.

FCC Commissioner Deborah Taylor Tate, who also spoke at the Vanderbilt conference, did not call for regulation but instead urged the private sector to continue to make self-regulatory strides. A member of the public-private Joint Task Force on Childhood Obesity, Commissioner Tate noted with approval efforts such as the Children's Food and Beverage Advertising Initiative, under which advertisers voluntarily agree to limit their advertising to primarily healthier food and beverage products.

Read Commissioner Adelstein's remarks, Commissioner Tate's remarks, and FCC Commissioner McDowell's remarks at the same conference at fcc.gov. 

Read more about the issue at broadcastingcable.com. 

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This post was written by Carolyn E. Pepper and Tina Sany-Davies. 

OFCOM, the UK media regulator, published rules regarding advertising food and drink products to children.

A consumer watchdog in the UK, Which?, has said that the rules, which aim to curb advertising foods assessed as high in fat, salt and sugar ("HFSS") to children, are not working.

Which? conducted a two-week analysis and found adverts for products such as Coca-Cola, which reportedly contains 13 teaspoons of sugar per 500 ml, and Kellogg's Coco Pops, which is more than one-third sugar, were broadcast during programmes popular with children and were not caught by recent restrictions.

The OFCOM rules state that adverts for HFSS foods are not allowed to be shown in or around programmes of particular appeal to under-16s. If the proportion of those under 16 watching a programme is 20 percent higher than the general viewing population, then the programme is considered to be of particular appeal to under-16s.

Which? revealed through its report that none of the programmes with the five highest child audiences is covered by the restrictions imposed by OFCOM in January.

Therefore, while shows such as "The Simpsons" and "SpongeBob Square Pants" are caught by the rules, other shows such as "Beat The Star" and "Animals Do The Funniest Things" are not, despite being watched by thousands more children.

According to the two-week analysis conducted by Which?, "Animals Do The Funniest Things," a home video show where viewers send in amusing clips of their animals, was viewed by 370,600 children under 16, and included adverts for Cadbury's Creme Egg Twisted, Maryland Chocolate Chip Cookies, Nachos and Kraft's Dairylea Dunkers.

By contrast, "Shaggy and Scooby Doo get a clue" and "SpongeBob Square Pants", which are both caught by OFCOM's restrictions, did not have adverts for HFSS foods.

Which? food campaigner Clare Corbett said, "The ad restrictions may look good on paper but the reality is that the programmes most popular with children are slipping through the net. If these rules are going to be effective, then they have to apply to the programmes that children watch in the greatest numbers."

Chief executive of the Advertising Association, Baroness Peta Buscombe, called the Which? report "sensationalist, unconstructive and missing the point." She added, "Their list includes programmes clearly not aimed at children and films screened after 10 p.m. There clearly has to be an element of parental responsibility on which programmes they allow their children to view."

A Department for Culture, Media and Sport spokesman said, "Although children still see some of these advertisements, the current OFCOM regulations mean that the viewing of these adverts by children is reduced by an estimated 50%, an impressive amount. We appreciate that there are calls for further restrictions on UK TV advertising but these should be considered once we have had a chance to assess the impact of current measures."

OFCOM is set to report on the success of its restrictions in December this year.

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The Children's Advertising Review Unit (CARU) has referred ads for yet another PG-13 movie to the Motion Picture Association of America (MPAA) for being advertised during children's programming. The move is the latest in what appears to be an increasingly tense stand-off between CARU, the advertising industry's self-regulatory arm, and the motion picture industry.

CARU said it referred TV advertising for the Warner Bros. film, "Sisterhood of the Traveling Pants 2" to the MPAA for being shown on Nick 1 during children's programming. The movie was rated PG-13 by the MPAA for "Mature material and sensuality," noted CARU. Similarly, CARU has referred ads to the MPAA for PG-13 rated movies such as "The Incredible Hulk," "Indiana Jones," "Get Smart," "The Mummy: Tomb of the Dragon Emperor" and "The Rocker" for being shown during kids' shows.

CARU's Self-Regulatory Program for Children's Advertising states that advertisers "should take care to assure that only age appropriate videos, films and interactive software are advertised to children, and if an industry rating system applies to the product, the rating label is prominently displayed."

The referrals fall under an agreement struck by CARU and the MPAA, which cover ads for films rated PG-13, R or NC-17 that run in any medium primarily directed to children under 12. CARU agreed to first attempt to determine whether an ad placement was intentional, and if it was found to have been unintentional, to ask the advertiser to pull its ad and ensure the placement did not reoccur.

If an ad placement in children's media was deemed to have been intentional, CARU agreed to refer the matter to the MPAA Advertising Administration, which pledged to determine whether the film at issue "is appropriate to be advertised to children."

Read previous KidAdLaw coverage of the issue:  "CARU Rulings: Movie Referrals", "CARU Rulings: Movie Referrals" and "CARU Strikes Agreement With MPAA".

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The use of ad-blocking programs has recently received considerable attention in the media, brought about in large part by the proliferation of various plug-ins or configurational ad-ons that, in one manner or another, enable the blocking of some or all advertising (or content that seems like advertising) by Internet web browsers (e.g., Adblock Plus” plug-in Firefox). In addition, most of the popular commercially available anti-virus, anti-adware and anti-malware programs also provide ad blocking capability. By implementing and using ad-blocking software and extensions, the user is able to remove or block some or all advertisements from being viewed on web pages.

There has always been a natural balance (some would say ‘tension’) between the consumer’s right to privacy and the marketer’s desire to know more in order to reach the right customer. Although clearly context and culturally sensitive, consumers tend to cling to various degrees and aspects of privacy as a means of protecting themselves from unwanted intrusion into their lives. Consumers, however, often willingly and knowingly give up certain privacy protections – although they may not view it that way – in order to receive the benefits and advantages of offers and purchasing opportunities more tailored to their needs, and to avoid receiving “junk.” Marketers, on the other hand, always want better, more timely, and more accurate segmented data, so that advertising can be focused and can cost-effectively reach those who are more likely to have an interest in buying. But marketers know that reaching too far into the minds and hearts of consumers, without their permission, can backfire and cause mistrust and disdain – not a good thing when you are trying to convince a customer to buy your product or service. Witness the public reaction to the launch of the “Beacon” feature by Facebook in our recent past.

Thus, while there has always been a balance and some tension, the increasing direct intersection of these issues, resulting from the rise of consumer and commercial use of the Internet, has spawned a degree of heat over these issues, never before seen in history. The complexity has also created a good deal of emotion and rhetoric.
 

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