Twitter Sued For Right of Publicity Violations Over Profile-Trading Game

A class action lawsuit was filed in California yesterday against Hey, Inc. and Twitter regarding Hey’s online trading game in which players collect profiles of (and use virtual currency to invest in) real-life people as if they were baseball cards. App users may purchase virtual currency to buy and trade these profiles. According to the complaint, the majority of the individuals displayed in the app did not agree to participate. Instead, Hey used Twitter’s API to obtain the users’ profiles, including their names and profile images, without Twitter users’ consent.

This data practice concerned Congresswoman Katherine Clark (D-MA), who sent a letter to Twitter asking it to cease this practice “until nonconsenting profiles are removed and safeguards are implemented to ensure that no Twitter profile may be used by the application without clear, express consent.” The plaintiff is seeking damages and an injunction that would require Hey to remove personal identities from the app and enjoin Twitter from granting Hey access to Twitter’s API.

TAKEAWAY: Companies who wish to use the Twitter API for their own business purposes should determine whether they will need to obtain separate permissions for use of the data received. Depending on the nature of the proposed use, companies may wish to consider separately negotiating for the use of the Twitter API directly with Twitter.

Pinterest Updates its Promotion Guidelines

Last week, Pinterest updated its Acceptable Use Policy, which governs its policies for conducting a contest and sweepstakes. Pinterest policy previously:

  • Prohibited brands from running a sweepstakes where each Pin, board, like, or follow represents an entry;
  • Prohibited brands from requiring entrants to Pin from a selection; or
  • Prohibited brands from requiring a minimum number of Pins to enter.

The new policy eliminates these old requirements, and recommends that brands “encourage authentic behavior, keep Pinterest spam-free and be sure to comply with all relevant laws and regulations.” The policy was simplified with three rules. Brands should:

  • Not require participants to Pin a specific image, but brands may give Pinners the ability to choose Pins based on their tastes and preferences, even if it’s from a selection or a given website;
  • Not allow more than one entry per participant; and
  • Not suggest that Pinterest sponsors or endorses the promotion.

Pinterest’s new policy is effective immediately.

TAKEAWAY: The new Pinterest guidelines give brands the ability to let entrants Pin from a selection of Pins. Additionally, the guidelines clear up any ambiguity regarding the limit of contest or sweepstakes entries.

Mars Settles With FTC Over Dog Lifespan Claims

Last week, Mars Petcare U.S., Inc. (“Mars”) settled its case with the Federal Trade Commission (“FTC”) over certain advertising claims. In 2015, the FTC initiated an investigation of Mars’ advertising claims for its Eukanuba dog food. Its advertising claimed that dogs that ate Eukanuba lived 30% longer than their typical lifespan and that Eukanuba brand dog foods enable dogs to live exceptionally long lives. Below is an example of a Mars advertisement:

Eukanuba

In its settlement, Mars agreed that it would discontinue these claims, and deliver copies of the FTC’s order to all employees. Next year, Mars must submit a compliance report to the FTC, and must keep certain records for five years. The order is valid for 20 years.

TAKEAWAY: Efficacy and establishment claims require a high level of substantiation, especially when the claims relate to the lifespan of our pets. When making these claims, advertisers should ensure they are based upon competent and reliable scientific evidence. That evidence—when considered in light of the entire body of relevant and reliable scientific evidence—should be sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields to substantiate that the claims are true.

FTC Sends Warning Letters to Companies Making Zika Virus-Protection Claims

Last Friday, the Federal Trade Commission (“FTC”) sent warning letters to ten online marketers that were making Zika virus-protection claims.  The Center for Disease Control believes that the Zika virus is spread primarily through the bite of infected Aedes species mosquitoes.  The marketers in focus are currently advertising that their products repel Zika virus-carrying mosquitoes.  In its warning letters, the FTC reminded those marketers that all claims, including Zika virus-protection claims, must be supported by competent and reliable scientific evidence at the time the claims are made.

According to the FTC, these marketers must be able to demonstrate their products’ claimed effects—Zika virus protection—are as advertised.  To do so, they must support their claims through well-controlled human clinical testing, using the species of mosquitoes (Ae. aegypti or Ae. albopictus) that carry Zika.  These marketers were urged to immediately review their claim substantiation.  If their claims are not supported by reliable scientific evidence, the FTC is demanding that the marketers discontinue making them.  The FTC is requiring that each marketer in receipt of the FTC’s warning letter provide notice (within 48 hours) of specific actions taken to rectify the issues raised.

Takeaway: Marketers should ensure that virus-protection claims are substantiated by well-controlled human clinical testing that demonstrates the advertised benefits.  The substantiation should be in the marketer’s files at the time the claims are made.

NAD Determines 5-Star Ratings Claims Unsubstantiated

The advertising industry’s self-regulatory arm, the National Advertising Division (“NAD”), recently reviewed certain advertising messages made by Vapore, LLC.  In both television and internet advertising, Vapore claimed that its “MyPurMist” handheld steam inhaler had “more 5-star reviews than any other steam inhaler.”  In connection with the 5-star review message, Vapore focused on certain attributes of the inhaler, including that it was handheld, versatile, and that it delivered fast and effective relief.

Vapore asserted that its advertising message was substantiated by capturing rating of different retailer websites on a single day in March 2016.  Its data included 85 percent of the marketplace for steam inhalers.  NAD was satisfied with the data as representative of the marketplace for inhalers, and was satisfied that the data supplied was from verified purchasers of MyPurMist.

That said, NAD was concerned that the advertiser did not account for the potential for double counting of reviews.  Specifically, NAD noted that consumers were able to post reviews on the advertiser’s website, and on a retailer’s website.  NAD was also troubled by the fact that Vapore relied on reviews which were dated.  NAD found that some of the reviews dated back five years ago, while other reviews were nearly two years old.  Finally, NAD took issue with the fact that consumers who left 5-star ratings did not communicate why such a rating was given.  Although Vapore made the 5-star rating message in connection with specific attributes discussed above, NAD determined that consumers may have given MyPurMist a 5-star rating for reasons other than the advertised attributes.  Accordingly, NAD recommended that Vapore discontinue its unqualified 5-star rating claim.

Takeaway:  Advertisers that wish to rely on consumer ratings should ensure that the ratings collected are not double counted, are from recent consumer ratings, and are directly related to the attributes communicated in the advertisement.

Riding the Initial “Pokémon Go” Phenomenon: Branding Basics

Pokémon Go, released July 6, has unleashed a swarm of hopeful Pokémon trainers into the world, seeking to, as Pokémon famously says, “catch ‘em all.” And while Pokémon Go users are traversing cities, towns and hamlets to catch Pokémon, advertisers want to catch a little of that Pokémon magic.

Brands and local businesses are recognizing the consumer engagement potential associated with Pokémon Go. The app – available on both iPhone and Android devices – uses real-time location data to create an augmented reality for users to catch Pokémon in their own homes and in and around public places like libraries, parks and landmarks.  App creator Niantic, Inc. set pre-established locations throughout the world (“PokéStops”) where Pokémon Go users can obtain special in-game items, and now users are descending on those areas in masses.

Ever seeking to engage their customers, businesses are asking what the legal ramifications of engaging users may be. Since neither Niantic, Nintendo nor Pokémon has released any guidance for marketers to follow, below is a set of guard rails for businesses that may be useful.

  • Avoid creating a false impression that the business or brand is associated or connected with or authorized or approved by Pokémon.
  • Do not use words or phrases that state explicitly that your business is an “official” PokéStop or use other messaging that connotes a special relationship between your brand and Pokémon.
  • Do not use pictures of Pokémon characters or any of the other copyright elements owned by Nintendo. For example, you do not need to show a Pikachu on a sign that communicates that your establishment is or is near a PokéStop.
  • You also do not need to use the distinctive design of the word mark POKÉMON to communicate the fact that Niantic placed a PokéStop at or near your store. In short, do not use more of the distinctive character of the trademarks referring to the mobile phenomenon than is necessary.
  • If you use a “lure module” and want to create a promotion (“Hey! We’re a PokéStop! Come down to the Shoe Store between 2 pm and 4 pm. We’ll be activating our lure modules during that time to attract lots of Pokémon!”), be sure you think about crowd control and safety in and around your store. Many users will be focused on their phones, not their surroundings. Also, be sure your business can accommodate the increased foot traffic. Will the influx of consumers impact your ability to service customers? Failure to anticipate significant spikes in business could result in negative customer reviews.

In the near future more formalized sponsorship programs will be available for businesses. Indeed, the Financial Times reports that Pokémon Go will soon offer the ability to sponsor PokéStops. In an interview with Niantic CEO John Hanke, the Financial Times learned that the sponsorship relationships will be charged on a “‘cost per visit’ basis, similar to the ‘cost per click’ used in Google’s search advertising.” No additional details were revealed, but expect them soon. Speculation abounds as to how “cost per visit” will be measured. For example, a Pokémon Go player can access the various virtual gifts at a PokéStop (e.g., eggs, balls, berries, potions, etc.) as often as once every five minutes. Does a “visit” occur each time a person spins the PokéStop icon to release an item?

Until such time as sponsorship details are made public, the Pokémon Go phenomenon is something special and businesses should be able to talk about it, even in a commercial context, so long as the advertising does not create confusion or mistake as to the nature of the relationship between the business and Pokémon.

Big Leaguers: Daily Fantasy Sports Scores Major Legislative Victory in New York

From the Stanley Cup to the NBA Championship, there were some major sports victories these last few weeks.  Championship cities celebrated with fans flooding their streets for victory parades.  But one sports victory—a win that without question affects far more fans than those in the Steel City and Cleveland—did not occur on the court or ice (nor have fans taken to the streets to celebrate… yet).  This win, instead, transpired on the Assembly floor of the New York State Legislature.

Indeed, on June 17, the final day of legislative sessions for this year, the New York State Assembly (and later the Senate) passed a bill that will legalize and regulate Daily Fantasy Sports (“DFS”) in the state.  The bill, which Governor Cuomo has yet to sign, could be the type of (Cleveland) Cavalier-comeback DFS operators needed in a state that was one of the first vilify the industry.

Over the course of a year, DFS operators faced ever-increasing scrutiny about whether their games constitute unlawful gambling.  State governments embarked on vigorous investigations of notable DFS operators’ practices, resulting in legal battles across the country in both the courts and legislatures.  New York Attorney General Eric Schneiderman (“NYAG”) led the charge in October with cease-and-desist letters demanding that DFS operators DraftKings and FanDuel end their DFS contests.  This set off a firestorm: 10 states declared DFS illegal and many more agreed to investigate DFS operators and their contests.  Amidst the storm of controversy, the advertising industry took shelter—steering clear of associating with DFS operators.

Just recently, DraftKings and FanDuel decided to eurostep the courts by entering into settlement agreements with the NYAG, which stayed their litigation and permitted them to focus their efforts on lobbying the state’s legislature.  New York was a bellwether battleground for DFS operators win the fight to regulate, rather than eliminate, their contests.

And DFS prevailed (in part).  The bill—when signed—legalizes DFS contests and provides much needed stability for the DFS industry and its future.  New York joins the ranks of 10 other states that legalized the contests, as Virginia did not long ago.  Uncertainty, however, still persists.

Although the New York bill is relatively permissive, some burdens might make it cost prohibitive for DFS operators, at least until it is clear they can manage the bill’s requirements and any subsequently promulgated regulations. Take, for example, the bill’s prohibition on a class of “prohibited players” who may not participate in DFS contests.  “Prohibited players” include DFS employees, athletes and officials who could influence the outcome of contests, and minors.  Establishing necessary controls to comply with the “prohibited player” requirement could prove difficult and costly.  The law, like most states to legalize the contests, also requires:

  • Registration: DFS operators may not hold contests or charge players an entry fee unless they register with and obtain a license from the New York State Gaming Commission.
  • Annual Reports: Registrants must submit potentially pervasive annual reports that include “any…information that the [New York State Gaming] Commission deems necessary.”
  • Taxes and Additional Regulatory Costs: Registrants will also be on the hook for a 15-percent tax on in-state generated revenue and “additional regulatory costs” based on the proportion of revenue generated by each registrant.

Though the new bill should end the debate about the legality of DFS in New York, DFS operators are still trying to close out this best of 50-states series. Operators are litigating (including still-pending claims of false advertising and consumer fraud which the NYAG has not dropped) and lobbying throughout the country.  Given the new regulatory hurdles in place and continued nationwide challenges, members of the advertising industry might choose to remain spectators until DFS operators are only concerned with following the rules as opposed to fighting for survival.

Music Sampling Back in “Vogue”

With its decision in VMG Salsoul v. Ciccone, the Ninth Circuit Court of Appeals created a circuit split that could greatly impact copyright infringement claims based on unlicensed music sampling.  For the advertising industry, this decision affects the risk assessment involved when creating or using music that contains “samples”.  Read on for more.

On June 2, 2016, the Ninth Circuit concluded that the unauthorized use of a .23-second “horn blast” sampled from the song “Love Break” and incorporated in Madonna’s 1990 hit, “Vogue”, did not constitute copyright infringement. Despite technical copying, the court determined that the sampling did not amount to infringement because it was “de minimis,” or, so minimal that a general audience would not recognize it.

VMG Salsoul—the plaintiff—claimed that the horn blast sample was deliberately hidden within the famed Madonna song so as to avoid detection. The sample was so deeply integrated within the song that it took software to uncover it.  Indeed, the  plaintiff’s own expert witness—a trained musician specifically listening for infringement—originally misidentified where in the song the alleged copying of the horn blast occurred.

Because the alleged copying was nearly unidentifiable, Madonna and her co-defendants argued any copying was de minimis.  Under the de minimis exception, copying does not amount to infringement if the copying was not identifiable by an average audience.  Prior to 2005, the exception was generally available as a defense against all copyright infringement claims, regardless of the artistic medium involved.

In its 2005 Bridgeport Music, Inc. v. Dimension Films decision, however, the Sixth Circuit determined that the exception did not apply in the context of sound recordings.  That is, under the Sixth Circuit’s approach, any sample included in a subsequent sound recording, no matter how unrecognizable, would amount to infringement if the artist failed to obtain a license from the appropriate rights holder.

Since Bridgeport, entertainment industry advisors approached music samples with heightened scrutiny: every sample, no matter its prominence in a sound recording, was likely being licensed.  The legal and cost implications of using samples appear to have had a chilling effect on the practice—one which was common in music for decades before Bridgeport, and which played a crucial role in the rise of certain music genres.  But the tides may be turning.

Prior to the Ninth Circuit’s decision, many district courts throughout the country did not adhere to the Bridgeport decision; courts viewed Bridgeport as inconsistent with the universal judicial acceptance of the de minimis exception in all other forms of art.  Last week, the Ninth Circuit adopted that position.

Now, because the federal circuits are split on this issue (i.e., the Sixth and Ninth circuits disagree on whether the de minimis exception is available in sound recording copyright cases), advertisers should approach music licensing with added caution.  Music licenses should always include language requiring the licensor to warrant against third party infringement and provide indemnification for such if a third party claim arises.  Advertisers should also review and potentially revise their music licenses’ governing law provisions so the law governing those agreements is one that looks favorably upon the de minimis exception.

Till Death Do Us Part? How to Deal With Celebrity Publicity Rights When That Celebrity Passes

The tragic death of renowned recording artist Prince left many reminiscing about his meticulously crafted public image. In life, the law allowed Prince to control the commercial exploitations of his image.  At death, however, that control was lost.

Celebrities routinely harness their “images” as a means of generating revenue, relying on intellectual property and right of privacy laws, including the right of publicity, to monetize their likenesses, performances, images, voices and identities in connection with advertisements.  Often overlooked, however, is the question of who controls celebrities’ publicity rights upon death. The short answer, unsurprisingly, is that it depends.

The right of publicity is the right to control the use of one’s identity, including his or her name, voice, image and likeness, or other indicia of identity.  There is no federal statute regarding the right.  The analysis therefore turns on a state-by-state inquiry.  At least 30 states have established the personal right of publicity, either by statute or under their respective common law, or both.  However, the same can’t be said when it comes to the inheritability or one’s ability to transfer the right of publicity at death.  In this regard, there is great variance amongst the states, ranging from having the ability to fully transfer the right of publicity at death, to being silent on the issue.  This is clearly different from other intellectual property rights such as trademarks, patents and copyrights which can be passed on to the rights holder’s beneficiaries.

The state statute (or common law) post mortem right of publicity (if any) of the state in which the celebrity was domiciled at death governs under the majority approach.  There are state statutes like Indiana’s, however, which apply the right irrespective of the individual’s domicile at death.  California, for example, a state known for its celebrity-friendly laws, has an express post mortem statutory right.  The California statute provides that a deceased personality’s various indicia of identity may not be used in advertising without prior consent from the beneficiary for 70 years.  While there are some requirements, such as registration for post mortem rights and that the identity must have some commercial value at death, the beneficiary still enjoys the right to control the celebrity decedent’s post mortem right of publicity under California law.  There are various celebrities who were California domiciles that have taken advantage of this flexible transferability of their publicity rights, including Michael Jackson, whose right of publicity was valued at more than $400 million, and Robin Williams, who was able to confer his publicity rights to a charitable organization.

On the other hand, there are states such as New York and Minnesota with no express post mortem statutory right.  New York courts do not recognize any post mortem inheritability or transferability rights, which means that the publicity rights terminate when the celebrity dies.  Minnesota courts have not yet addressed the issue.  Admittedly, Minnesota seems to be a rather obscure state for discussing celebrity publicity rights.  The death of Minnesota domiciliary, Prince, however, has spurred an effort by the state legislature to introduce the transferability of publicity right in that state.  Despite his careful efforts for maintaining artistic control over his image and persona, without a Minnesota statute or case law that codifies his right of publicity as an inheritable and/or transferable property right, Prince’s beneficiaries may ultimately lose control over his unique image and identity.

In practice, this patchwork of statutes and cases poses legal issues, especially for the ad industry. Advertisers and their agencies should  look upon the most restrictive state as the “rule” as the baseline for considering whether they can use a celebrities image rights without consent or at least operate under the assumption that the right of publicity exists for at least 50 years following the celebrity’s death.  Nevertheless, state-by-state research is imperative to determine whether permission from an heir is necessary before using the image or some kind of indicia of the identity of a deceased celebrity in an advertisement.

A New “Wrinkle” in Native Advertising: NAD Embraces FTC’s “Deceptive Door Opener” Theory

Last week, the National Advertising Division (“NAD”) issued a decision in the realm of online native advertising.  In the action against Joyus, Inc., the NAD was concerned that the company’s advertising for certain products appeared in a format that blurred the line between editorial content and advertising in a way that may confuse consumers.  Joyus is an e-commerce platform that embeds advertising for certain products within editorial content on People Magazine’s online articles.  The embedded advertising in question was featured on the website’s “Style Watch” section in a regular feature called “Stuff We Love,” which contains a list of items for sale through the Joyus platform, with descriptions of the items.  Along with the description of products, consumers can click to watch a list of videos, produced jointly by Joyus and People Magazine, which advertise products for sale.

Joyus argued that by including its logo in the beginning of the video and on the frame throughout the video, the company made it clear to consumers that this was an ad for Joyus products and not editorial content.  Joyus also contended that many of its videos include text describing discounts for its website, in addition to featuring product prices and a shopping bag icon.  Thus, Joyus argued that, when evaluated as a whole and in context, the company is disclosing a material connection between People Magazine and Joyus.

In its decision, however, the NAD expressed its concern that consumers may review the products on “Stuff We Love,” with the expectation that it represents independent editorial selections by People Magazine editors and staff, rather than paid-for advertising for Joyus.  The NAD agreed with Joyus that the videos themselves contain visual and audio cues that sufficiently make it clear that consumers are viewing a shopping video advertisement.  However, the NAD took issue with the pages and links the consumers see before the viewing a Joyus video because they reasonably convey the message that the linked content is editorial content.  Specifically, the “Style Watch” page that links to the “Stuff We Love” page did not disclose that the “Stuff We Love” feature is a partnership between People Magazine and Joyus, and promotes products for purchase.  Thus, the NAD recommended that Joyus (in collaboration with People Magazine) revise the link so that it is clear that by clicking on the “Stuff We Love” link, a consumer will be taken to a list of items for sale by Joyus.  In addition to the implied claim, Joyus made express claims in the promotional videos that the NAD alleged lacked adequate substantiation.  These claims were discontinued by the company after commencement of the NAD challenge.

Why this matters:  If anyone was wondering how the FTC’s Policy Statement might be enforced, the wait is over.  The NAD has indicated that it is prepared to bring actions on its own, if necessary, to give life to the notions floated by the FTC in the Policy Statement.

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