College Athletes Appeal to Seventh Circuit Against FanDuel’s and DraftKings’ Use of Images

A proposed class of approximately 3,000 former college athletes recently filed an appeal in the Seventh Circuit against FanDuel and DraftKings. The players are reviving their proposed class action, claiming that FanDuel’s and DraftKings’ use of the players’ images on their websites does not fall within the newsworthy or public interest exceptions to Indiana’s right of publicity statute.

FanDuel and DraftKings used the players’ images, names, and statistics on their sites to operate their fantasy sports contests. According to the players, the companies wrongfully profited off of the use of their likeness without obtaining prior consent from the players.  Specifically, they argued that the players themselves were the very subject of the companies’ gambling operations and that the sites themselves could not have operated without using their likeness.  The players even compared themselves to playing cards in the FanDuel and DraftKings “online casinos.”

The case was previously dismissed in September 2017 in federal district court, whereby the judge broadly interpreted the newsworthy exception to Indiana’s right of publicity statute. The judge found the players’ likenesses, images and statistics fall with the newsworthiness exception under a broad interpretation of the exception combined with the huge media attention given the sports. In her dismissal, the judge broadly interpreted the exception to avoid creating any conflict with free speech protection under the Constitution.  However, in the recent filing to the Seventh Circuit, the players argue that the district court cannot apply free speech protection where the defendants’ businesses are fundamentally illegal under Indiana law.

The players also cited another Seventh Circuit decision involving the use of Michael Jordan’s likeness, where a local grocery store used an advertisement that congratulated the former Chicago Bulls player. In that case, the Seventh Circuit held that the store’s use of Jordan’s likeness violated Indiana’s right of publicity statute.  According to the players, FanDuel’s and DraftKings’ actions are even more egregious, since they assigned price tags to the players and accepted actual payments from gambling customers to “purchase” the players in their fantasy contests.

In their response, defendants FanDuel and DraftKings argue that newsworthiness should be determined by the content, not the disseminator of information, and that the players’ statistics are regularly analyzed and debated by sports fans. Accordingly, the defendants argue that use of the players’ likeness is both newsworthy and of public interest.

TAKEAWAY: If the court finds FanDuel’s and DraftKings’ use to be newsworthy or of the public interest, the result could open the door for other companies to make use of such exceptions and chip away at an individual’s control over the use of their likeness.

What Marketers Need to Know to Prepare for the GDPR

ANA Magazine recently published an article discussing the upcoming regulatory changes as a result of new EU privacy regulations.  Please click here for the article.  You will need an free ANA account to access the content.  Just sign up and you will have immediate access.

District judge in the SDNY: Embedding links to third –party web content is copyright infringement

What is the legal difference between embedding an image on a website and displaying a copy of the image? News organizations and other website publications have relied on the Ninth Circuit’s opinion in Perfect 10, Inc. v. Inc., which established a bright-line server test for determining whether a website displayed a copy of an image, and thus potentially infringed upon the owner’s copyright in that image for the past ten years. According to the server test, a website operator displays an image if it sends a copy of the image from its server to the end user’s browser, but does not display an image if it merely embeds instructions (HTML) in its webpage that enable the end user’s browser to request the image from a third party’s server.

On February 15, 2018, District Judge Katherine B. Forrest of the Southern District of New York opened the door to new copyright infringement suits in the Second Circuit and beyond with her ruling in Goldman v. Breitbart News Network, LLC.

Click here to view the article.

FTC Refunds Victims of Tech Support Scam

The Federal Trade Commission (FTC) mailed over $668,000 in the form of 3,791 refund checks to victims of a tech support scam last month.

In July 2016, the FTC and the state of Florida alleged Big Dog Solutions LLC (doing business as Help Desk National and Help Desk Global) and related defendants operated a telemarketing scheme that deceived consumers into purchasing unnecessary computer security or technical support services for problems that did not actually exist by misrepresenting to consumers that their computers were compromised and falsely claiming they were authorized by companies such as Microsoft and Apple to service their products. Tactics included generating pop-ups that in some cases rendered web browsers unusable and instructing consumers to call a toll free number for technical assistance. Paid internet advertisements placed by affiliate marketers often drove traffic to the websites that generated these pop-ups.

The complaint alleged consumers that called the numbers were routed to call centers where supposedly “certified” technicians would run “diagnostics” and notify the consumer that resolution of the issues would cost $200-$300 and sometimes an extra $200-$500 to replace antivirus software. The FTC has taken action against such tech support operations since 2010 and launched an international effort to crack down on the scams called “Operation Tech Trap” in May 2017.  The defendants settled with the FTC and the state of Florida that month and are currently banned from offering tech support and engaging in deceptive telemarketing practices.

Takeaway: Advertisers should be aware that the FTC continues to jointly file enforcement actions with state attorneys general in an effort to protect consumers.


Throwing Shade: Upscale Manhattan Bar Calls Out “Basic” Would-be Infringer

Not since Mariah Carey claimed “I don’t know her” about Jennifer Lopez has such supreme shade been thrown on public record.

Filo Promotions owns a self-described “premier, well-appointed bar/lounge with a posh upscale atmosphere and a focus on high quality drinks, creative new sounds and a small plates menu with exceptional tapas” named Bathtub Gin in Manhattan’s Chelsea neighborhood. It brought suit under the Lanham Act against a Mooresville, North Carolina bar of the same name for two counts of trademark infringement.  Filo owns an incontestable trademark for “BATHTUB GIN” and seeks damages and injunctive relief.

Interestingly, the complaint delivers premium farm-to-table shade: “FILO employs first rate cocktail mixers and servers so that the customers’ experience is nothing less than amazing.  Defendant’s ‘The Bathtub Gin’ is a basic bar with none of the same attention to quality and décor attended to by Plaintiff.” Oh, Filo went there. Filo Promotions doubled down last week, filing a certificate of default when Bathtub Gin’s motion to appear pro hac vice was deemed deficient.  We will have to wait to see if Bathtub Gin resubmits its motion before Filo Promotions moves for default judgment later this month.

Takeaway: Although this action represents a relatively standard trademark infringement lawsuit, it offers a masterclass in the art of throwing shade.  The case is Filo Promotions Inc. v. Bathtub Gins Inc., case number 1:17-cv-10246, in the U.S. District Court for the Southern District of New York.  Get your hands on a copy of Filo Promotions’ complaint and enjoy.

Telemarketing Giant to Pay $250,000 Penalty to FTC

InfoCision, Inc., an Akron, Ohio-based company, agreed last month to pay a $250,000 civil penalty and implement recordkeeping and monitoring practices to settle Federal Trade Commission (“FTC”) charges brought by the Department of Justice on the FTC’s behalf. The FTC alleged that since at least 2013 InfoCision conducted hundreds of telemarketing campaigns on behalf of charitable organizations that violated the FTC’s Telemarketing Sales Rule (“TSR”).  The TSR requires telemarketers calling on behalf of a charity to promptly inform the call recipients of the solicited charity and that the purpose of the call is to seek a donation.

According to the FTC, InfoCision’s telemarketers told some recipients at the start of the call that they were not calling to ask for a donation, but then asked the recipients to deliver materials requesting donations to family members, friends, or neighbors. The FTC further alleged that InfoCision’s telemarketers then did ask some recipients to donate money.  The proposed order settling the FTC’s charges bars InfoCision from making any false or misleading statements in connection with its telemarketing activities designed to induce anyone to pay for goods or services or make a charitable contribution.

Takeaway: Advertisers who have charitable partners as part of corporate giving or commercial co-ventures should ensure that their partners who use telemarketing campaigns to solicit charitable donations inform recipients promptly that the purpose of the call is to seek donations for the charity.

Don’t Have a Cow! Court Dismisses GMO Labelling Suit Against Dannon

Last month, a New York federal judge dismissed a proposed class action that alleged Dannon Company, Inc. unlawfully labelled its yogurt products as “natural” when in fact the cows that produced the milk that produced the yogurt may have eaten feed made from corn that was genetically modified or were raised using hormones or antibiotics. The plaintiff, Polly Podpeskar, sued Dannon under four Minnesota state consumer protection statutes, New York common law fraud, breach of express warranty, and a consolidated claim for violations of 40 other states’ consumer protection statutes.

The Court, however, noted numerous holes in Podpeskar’s complaint. Most glaring was that she “alleges very little about Dannon’s specific practices; she does not allege that a single ingredient in the yogurt is not natural.”  Dannon also pointed out that the thrust of the complaint was based on unsupported conjectures and “[Podpeskar’s] own speculation that if the cows that produced the milk that Dannon used to make its yogurt ate food with GMOs or were fed antibiotics, that their milk is necessarily not natural, nor is the yogurt that is made from it.”  Such speculation was insufficient to survive Twombly’s plausibility pleading standard.  Finally, the Court noted that the FDA is currently reviewing the proper regulation of the term “natural” and that the current policy is informal and defines “natural” as “nothing artificial or synthetic . . . is included in, or has been added to, the product that would not normally be expected to be there.”

Takeaway: Current federal law does not require that, in cases where animals have been fed with GMO feed, their end product should be labeled as “GMO.”  Such allegations, without more, are also insufficient to qualify those products as “unnatural” for purposes of labelling.

FTC Settles With Hotel Room Resellers Over Alleged Misrepresentations

Reservation Counter, LLC and its parents companies have settled Federal Trade Commission charges that they misrepresented hotel bookings and credit card charges to consumers.

The proposed order bars the defendants from future conduct including leading consumers to believe incorrectly that they are communicating directly with hotels to book rooms. As a result, the defendants may not use hotel logos in advertising in a misleading way or put their own phone number near a hotel’s name, logo, or address so as to imply that the consumer is calling the hotel. The defendants must also be clear and not misleading about when consumers’ credit cards will be charged, and disclose if they will be charged immediately rather than upon arrival at the hotel.

While the proposed order does not include a monetary penalty, the defendants must comply with the injunctive provisions as well as recordkeeping and reporting requirements.

The FTC lodged the complaint as part of its efforts to ensure that consumers receive clear, accurate information about hotel bookings in order to make informed choices.

Takeaway: Advertisers and marketers should be aware that the FTC is keeping a close watch on deceptive implied claims, which include misleading juxtaposition of logos, false implied associations, and not being sufficiently clear about who the advertiser truly is. We recommend being aware of and ensuring the accuracy of possible implied claims as part of any advertising claim review.


Maine Supplements FTC Weight-Loss Enforcement Action

Marketing Architects, Inc. (“MAI”), an advertising agency specializing in direct response radio and television ads, will pay $2 million in equitable relief to the Federal Trade Commission (“FTC”) and the Office of the Attorney General of Maine for allegedly creating and disseminating deceptive radio ads for weight-loss products AF Plus and Final Trim. The joint complaint alleges violations of the FTC Act and Maine’s Unfair Trade Practices Act, including false advertising, deceptive format, and failure to adequately disclose automatic enrollments in continuity plans.

MAI creates weight-loss ads for its client, Direct Alternatives (“DA”), such as Puranol, Pur-Hoodia Plus, PH Plus, Acai Fresh, AF Plus, and Final Trim. MAI previously created similar weight-loss radio ads for Sensa Products, LLC (“Sensa”), which was the subject of a similar FTC action in 2014.  DA settled with the FTC and Maine for making false and unsubstantiated weight-loss claims and deceptively marketing risk-free offers two years later.  The joint complaint against MAI alleges MAI had acknowledged receipt of the Sensa order and was also warned by DA and radio stations of the importance of substantiating health claims.   

The order prohibits MAI from misrepresenting the existence or outcome of tests and studies, customer testimonials, the true nature of paid commercial advertising, and facts material to the sale of products related to return or cancellation policies, “free trials,” and auto-billing subscriptions. It also requires MAI to substantiate its weight-loss claims and to obtain express informed consent from consumers.  MAI will deliver a copy of the order to all parties related to MAI and its advertising, marketing, distribution, and sale of dietary supplements, food, and drugs for the next twenty years.

Takeaway: The FTC occasionally brings joint enforcement actions with state attorneys general, so advertisers should be wary of violating “little FTC Acts” of states in addition to the FTC Act. In particular, advertisers should be especially cautious when making identical or similar claims for future clients that were previously found to be unsubstantiated in connection with former clients.



Kentucky Fried Justice: Court Dismisses KFC Bucket Dispute

A New York District Court dismissed the complaint of Anna Wurtzburger against fast food staple KFC over the size of KFC’s $20 “fill up” bucket. Wurtzburger alleged she purchased KFC’s “fill up” bucket meal advertised as consisting of “an eight piece bucket of chicken,” relying on the advertisement’s depiction of a bucket that may have appeared to be overflowing with chicken.  However, when she received the meal and discovered that the bucket’s eight pieces of chicken did not fill the bucket to the rim, she sued KFC under New York’s General Business Law §§ 349, 350 and the federal Food, Drug, and Cosmetic Act for purportedly misleading consumers.  She claimed that KFC either should have used a smaller bucket such that the eight pieces of chicken would have filled it to the rim, or given her more chicken than the bargained-for eight pieces to fill the larger bucket.

The Court balked at Wurtzburger’s allegations and granted KFC’s motion to dismiss for failure to state a claim. It held that the Complaint’s assertion that the bucket of chicken Wurtzburger purchased could hold more chicken than the eight pieces she paid for was simply insufficient under the statutes.  Using an objective reasonable consumer standard, the Court found KFC’s alleged practice of using a larger than necessary bucket is not materially deceptive or misleading “especially when the consumer ordered, purchased, and received the precise number of items requested.”  As consumer protection actions go, this one flew the coop.

Takeaway: Allegations that product packaging could hold more product than they actually contain, without more, are insufficient to state a claim under New York’s consumer protection statutes.