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.

ASA delivers knock-out blow to UK mobile network

The Advertising Standards Authority (ASA) has ruled that Three’s Muppet-themed ad, featuring a character victoriously punching into the air, which claimed that the mobile company was the ‘undisputed’ market leader in terms of network reliability, can no longer be shown in its current form.

In addition to a complaint made by a member of the public, mobile rival EE complained that the ad’s strapline “The Undisputed. UK’s most reliable network. Again.” was misleading and challenged Three to substantiate such claim.

Three’s claim was based on a YouGov report in which it had come top in five consecutive quarters in a comparison about network reliability. Since there is no industry-standard test for reliability, Three considered that the best way to obtain data was to ask the consumers themselves.

The ASA ruled that because the ad did not make clear that the ‘undisputed network reliability’ claim was based on subjective consumer opinions, viewers of the ad may believe that the claim is based on “robust objective measures”. As a result, the ad was likely to mislead and could not be substantiated.

The ad was found to have breached CAP Code rules concerning misleading advertising, substantiation, qualification and comparisons with identifiable competitors. Additionally, the mobile network was told by the ASA “not to state or imply that Three was the UK’s most reliable network unless they made clear that the claim was based solely on a survey of consumer opinions”.

The ruling should prompt advertisers to remember to substantiate each claim with objective evidence and to make the basis of such claim and substantiation clear to consumers. While it is not uncommon to come across this type of inter-competitors complaint in the telecoms industry, given the ASA ruling comes seven months after the Muppet ad was originally published, the ruling is only likely to affect future campaigns.

 

Advertising Accountability Program Releases First Set of Decisions Applying the DAA’s Mobile Guidance

The Online Internet-Based Advertising Accountability Program recently released decisions regarding popular app publishers’ compliance with the Digital Advertising Alliance Self-Regulatory Principles. These inaugural decisions are a significant step toward ensuring appropriate data protections exist in the context of mobile advertising. To learn more about these decisions and how they may impact the mobile advertising space, read more here.

Public Service Campaign regarding children’s online safety

The Children’s Advertising Review Unit (CARU) and the BBB are pleased to announce the launch of its second Public Service Campaign regarding children’s online safety.  CARU’s first campaign titled, “Do you know where your children are…on the Internet?” was broadcasted on the major network and cable channels, received thousands of views on social media and was nominated for an Emmy Award.  CARU’s new campaign, directed by CARU’s Wayne J. Keeley and titled “Would you know if someone was following your child online?” speaks to parents about recent changes to the COPPA law and about safeguarding children from divulging personal information online without parental consent. The campaign consists of two .30 spots and two .15 spots.

CARU will premiere its campaign at its west coast conference on May 11th Reimagining Children’s Advertising – CARU west coast conference to be followed by the IBA Accountability Program, Marina del Rey, CA (seats are still available for both).

You can get a sneak preview of the CARU’s PSA spots at:

https://www.youtube.com/watch?v=9XcTPDi_0G4

https://www.youtube.com/watch?v=mtYiJG4a_fU

Advocate General (EU) Concludes Hyperlinking to Unauthorized Content Does Not Constitute Copyright

The Advocate General of the Court of Justice of the EU (CJEU) has stated in a legal opinion that posting a link to a website that contains “freely accessible” copyright infringing content should not itself amount to copyright infringement. Fore more on this important development, please read the following Reed Smith client alert: https://www.reedsmith.com/Hyperlinking-to-unauthorised-content-does-not-itself-constitute-copyright-infringement-says-Advocate-General-04-25-2016/

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