Legal Bytes : Advertising & Media Lawyer & Attorney : Reed Smith Law Firm : Marketing & Intellectual Property : Legal Bytes Law Blog

On December 23, 2011 the U.S. Department of Justice reversed its decade long position on the applicability of the U.S. Wire Act to online gambling that does not involve sports betting. In previous years, prosecutions were brought against any form of online gambling based on their interpretation of the Wire Act. This opinion, reverses the long standing position and may well clear the way for States to become more aggressive in legislatively enabling intra-State online gaming and who knows, perhaps the Federal government will consider licensing and regulation permitted online gambling. This is not simply big news within the United States. Gaming and gambling operators around the world who may already be working with governments on their lottery initiatives and many other companies who have no presence in the United States may now be looking to establish a foothold and ultimately a major presence in the U.S. Similarly, U.S. casino and gaming operators already licensed, may sense the opportunity for foreign investment and the injection of new capital, new expertise and a more global platform.

Reed Smith and its interdisciplinary team of experienced gaming transactional, e-Commerce, payment, privacy, technology and marketing lawyers have their eye on this new development that has the potential to energize the data-intensive, multi-billion dollar online gambling industry in the U.S. market. Joe Rosenbaum, Ramsey Hanna and Joshua Marker have authored a Client Alert which you can read here:  U.S. Federal Government Reverses its Stance on Online Gaming.

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In The Wall Street Journal online, Carl Bialik, The Numbers Guy writer and blogger, analyzes the numbers behind advertised versus actual broadband Internet download speeds, and government efforts to measure what the consumer receives compared with what is promised by the ISPs.

In his posting entitled, "How Speedy Are High-Speed Internet Lines?", Mr. Bialik examines the issue of whether statistics derived from a report commissioned by the Federal Communications Commission (www.fcc.gov) are used in a way that is meaningful to consumers when evaluating the offerings of Internet service providers.

Notably, Mr. Bialik's article also compares the approach taken by the UK's Office of Communications (Ofcom) in measuring the speeds offered on the other side of the pond, which maintains the panel of tested carriers in secret to prevent any "gaming" of the test process and system.

Joseph I. ("Joe") Rosenbaum is quoted in the posting in connection with some of the legal issues that arise when statistics and factual information contained in government or other reports are used in advertising. Truth (facts) may not, as in the case of defamation, be an absolute defense.

The government may feel that consumers can't handle the truth. Or at least the truth, depending on the context and the manner in which it is used in advertising. When, for example, can statements that are literally true become false or misleading? As has been previously noted in Legal Bytes, using old facts can be deceptive and misleading when facts are outdated and new facts are available, or when the old facts clearly don’t apply.

In some cases, even current facts can be misleading. If I advertise that an article will be posted on Legal Bytes once a month and I post two, can I claim that Legal Bytes beats its own advertised promise to consumers by double? If you and I enter a race and I win, can you advertise that I came in next to last and you came in second? Is that true? Yes. Is it misleading? Yes. I've omitted facts that are material to the information quoted and that are material to the context for you to evaluate.
The truth, after all, is not always that simple and I am grateful for that. As in the words of William Jennings Bryan: "If it weren't for lawyers, we wouldn't need them."

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Many thanks to the International Law Office (ILO) for publishing a derivative of our Legal Bytes article. You can download and read a personal copy of the ILO posting FTC Targets Ads That Target Kids, or you can read the original Legal Bytes blog posting at "Mom, is it OK for them to follow me?" FTC Targets Ads That Target Kids.

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When it comes to advertising, lawyers are bound not only by laws and regulations that apply to all advertisers, but also by the rules set by the professional licensing authorities in each state in the United States, as well as by many “Bar” Associations (Bar as in Barrister, not barista or your local tavern). These authorities and associations often set more stringent advertising standards and rules, based on ethical guidelines and professional standards.

Florida has some of the most stringent restrictions on attorney advertising in the United States. For example, Florida’s rules prohibited ads that were “manipulative” (whatever that means) or that included “background sound other than instrumental music” – presumably to prevent the sounds of ambulance sirens or jail cell doors slamming.

The restrictiveness of attorney advertising, including Florida’s tough rules, has been the subject of criticism, as noted in a previous Wall Street Journal article.

Yesterday, a federal judge in Jacksonville, Fla., ruled that these restrictions are vague and violate the First Amendment rights of lawyers, and must go! The judge’s ruling noted that, “The term ‘manipulative’ is so vague that it fails to adequately put members of the Bar on notice of what types of advertisements are prohibited” – declaring the standard void. The judge also overturned the prohibition on background sounds, noting that such a rule violates the free speech rights of attorneys. Here is the entire Harrell v. Florida Bar decision [PDF] if you are interested.

In honor of the occasion, one clever individual decided to create a “lawyer ad” parody, which, by the way, has sounds previously banned by the Florida regulations. Enjoy.

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I have to thank Carl Bialik, The Numbers Guy writer and blogger for The Wall Street Journal, for including a quote in his recent (September 23, 2011) column, Bag Battle Takes a Statistical Turn.

The column focuses on the use of statistics by competitors and analysts alike – in this case statistics that related to claims made by Chicobag about the environmental impact of reusable plastic bags that many retail stores use to bag items, from groceries to clothing, when you check out with your purchases. It seems that Chicobag made some claims – citing statistics – about its products. Mr. Bialik's column notes that Hilex Poly and some other competitors challenged the claims being made by Chicobag, and were unable to come to grips with either the numbers or the claims; litigation ensued.

Although Mr. Bialik focuses on the way numbers are used and the difficulties inherent in accumulating and using statistics – often when the subject matter may actually be a moving target – the legal issue is similarly complex. More often than not, false, misleading, deceptive advertising claims challenge the explicit veracity of a claim and whether that claim can be substantiated or whether the "net impression" or implicit claims (e.g., pictures or activities) can mislead or potentially deceive consumers. This claim, brought as an action under the Lanham Act – seeking an injunction and damages for false advertising and unfair competition for both a violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and under a state statute (South Carolina Unfair Trade Practices Act, South Carolina Code Annotated § 39-5-10, et seq.) – really revolves around whether the veracity or inaccuracy of claims (even if they can be substantiated or derived from facts that were believed to be true when stated) makes any difference at all in the minds of consumers. 

Without giving away The Numbers Guy's secrets (or forgetting the Federal Trade Commission Act that prohibits "unfair or deceptive acts or practices in or affecting commerce"), the legal claim, in my view, hinged not on whether the statistics claimed by Chicobag were incorrect or even in some cases materially inaccurate, but whether the particular claims as made using those statistics, were material to a consumer. Whether a consumer was likely to make a different purchasing decision – or might at least be informed enough to consider doing so – based on the degree of inaccuracy.

So when you think of my blog Legal Bytes, I'll close with a claim that everyone sees on those pizza cartons around the country – maybe the world: "You've tried the rest. Now try the best!" Can you say "puffery"?

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Many of us remember when kids were actually worried about being caught misbehaving. Back in those days, parent’s concern over children’s behavior dealt with whether the kids were ‘fresh’ or ‘mischievous’ or talked too much in school. I was perennially the subject of “he would do so much better in class if he just stopped horsing around and paid attention.” Dear Mrs. Frohman, Mrs. Handel, Mrs. Flynn and Mrs. Bernstein – thanks! It took me several decades, but I finally got the message. Today, however, when we hear the terms children and behavior – well, at least according to the FTC, it ain’t the children that are misbehaving.

In a proposed amendment to rules that have been in effect since 2000, the Federal Trade Commission (“FTC”) is proposing amendments to COPPA (the Children’s Online Privacy Protection Act”) that “would require parental notification and consent prior to the collection of persistent identifiers where they are used for purposes such as amassing data on a child's online activities or behaviorally targeting advertising to the child." In describing the proposed changes (the proposed  Amendment runs 122 pages long), the FTC notes that these new rules would apply to any identifying or tracking technology (cookies) that would link a child’s browsing behavior across multiple web pages and services – ostensibly including advertising networks and metric/measurement/analytical service providers who routinely have access to such information.

Although a ‘safe harbor’ for compliance with self-regulatory programs is included within the FTC’s proposal, it did suggest that these programs (and individual company compliance with these programs) be more closely monitored and supervised – including mandatory audits every 18 months and reports detailing actions taken by the self-regulatory body against the companies that do not comply. Clearly, one of the FTC’s objectives is to not only ensure a mandatory review of compliance, even for those companies that have not been subject to proceedings, but also to create a record-keeping and reporting system that gives the FTC the ability to obtain detailed information about the proceedings and the compliance efforts of individual companies.

Comments, which are due by November 28, 2011, may be filed with the FTC using it’s COPPA Rule Review Form. If you are interested, concerned, want your voice heard, or otherwise need to be guided by experienced counsel in this area, please feel free to contact me, Joseph I. Rosenbaum, or the Reed Smith lawyer with whom you regularly work. We would be happy to help!

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Late this past June, the Federal Trade Commission indicated it was launching an investigation into Google’s search engine technology and whether it pushes consumers to Google’s other services in a manner that is unfair to competition.

That also means that the FTC will not only be asking Google for records and information about the way it conducts its business, but it will also be asking for information from Google’s competitors (presumably who would provide information gleefully, except that they best be careful about celebrating too prematurely when they hand over information to the government), AND – here it comes – lots of companies who do business with Google: The host of third parties that are advertising and marketing networks, publishers, services, sponsors and, yes, even advertisers and agencies themselves. 

What should you do? Well we’ve prepared a handy reference guide – What Should You Do When the FTC Calls About Google? to explain what the FTC can ask, to explain a few of the basic legal principles that apply to the "asking" the FTC may engage in and, frankly, a warning that you should be calling your lawyers—lawyers knowledgeable in this process—and protecting your interests. For you in-house lawyers out there, if you aren’t familiar with handling these inquiries and third-party requests, perhaps you should consider engaging the services of outside lawyers who know how to help. So whether you know you need help, before or after receiving an inquiry from the FTC – formal or informal – or if you aren’t sure, you might just want to call Joseph I. Rosenbaum, Rachel A. Rubin or the Reed Smith lawyer with whom you regularly work. We would be happy to help!

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