mHealth - The Future of Mobile Health Care

Last month, I had the privilege of being invited to attend and make a presentation at an mHealth and the Law Workshop in Washington, D.C., convened by the American Association for the Advancement of Science, and supported by a grant from the Robert Wood Johnson Foundation. As part my presentation (October 7), I was asked to prepare a brief corresponding paper prognosticating the future of mobile medicine and health care. With permission of the AAAS, I am happy to share that paper with readers of Legal Bytes, and you can read the paper or download a copy for your personal use, right here: mHealth: Looking Forward [PDF].

As always, if you have questions, or need advice or guidance, just contact me, Joe Rosenbaum, or the lawyer with whom you regularly work at Reed Smith.
 

What One Lawyer Has Learned About Social Media (But There Are Still 5 Days Left)

Last week I received a novel invitation - call it a ‘dare’ from a long-time colleague and friend in a faraway land. He and I have never actually met, but we have interacted so often professionally and we keep trying to figure out how and when we can end up at the same conference, perhaps even sharing a speaking opportunity or panel so we can finally say ‘Hello’ in person - even split a bottle of wine. The invitation was a novel twist on attracting speakers to a professional conference - specifically the 2014 Webit Global Conference to be held in Istanbul.

Although the agenda was pretty full already, the organizers decided to create some ‘buzz’ by allowing people to vote for a few speaking slots as “Audience Choice” selections. Imagine that, a professional conference with a ‘power to the people’ format. While obviously hoping to increase attendance and excitement for the conference, the balloting is online and you don’t have to be registered to vote.

Now I’m wise enough, with enough experience, to appreciate that a practicing lawyer will NEVER win a popularity contest. I mean seriously - who normally says “I love my lawyer and really want to hear him talk!” I believe this to be true, even if we aren’t charging by the hour!

But I do love a good challenge and I thought it would be a good opportunity to conduct an informal, completely unofficial and invalid experiment. So I sent requests to people I’m connected to on LinkedIn, tweeted on Twitter and provided a link, with ‘Please vote for my presentation’ on my email signature block. Here is what I know and what I learned so far:

1. On this Legal Bytes blog, there have been more than 120,000 visitors, with 76,000 of them unique. So far just this month, there have been more than 2,500 visits. My own contacts - friends, family, professional colleagues, adversaries and people I have met over the years - number well over 6,000. As of this morning, I had 3,677 direct connections on LinkedIn. That means, according to the platform, there are 18,240,386 professionals in my network. That’s more than 18 million people! Eat your heart out Ellen and Ashton! Who’s ‘trending’ now?

2. Although Legal Bytes gets posted on Facebook, I don’t use Facebook otherwise and I only have a little over 480 ‘followers’ on Twitter (most of whom I don’t know), but that may simply be because my tweets, like my Facebook posts, are simply feeds from my blog. Perhaps those other 76,000 people are getting their information here and don’t need to duplicate it on Facebook or Twitter. Further study may be required (not really).

3. If you don’t have a Facebook profile, the organizers won’t let you vote - an interesting condition for a professional conference. Not sure why they didn’t pick a different platform or not require any pre-condition of membership in a network.

4. The organizers apparently won’t let you vote even if you are registered with Facebook, if you don’t have enough ‘friends’ on your profile (a few of my lawyer friends tried to vote and they are just as unpopular as I am). I’m guessing the conference organizers only want people who can spread the word to lots of others.

5. As of this morning I had 92 (yes, 92) votes. See for yourself. Although I can’t really tell how many total potential speakers entered the contest, I am number 234 and some people have almost 1,000 votes already.

So far, my little experiment has led me to the following observations:

(a) My connections don’t vote, don’t want to vote or are out of the office and will get back to me as soon as they return;
(b) My connections really don’t like lawyers;
(c) My connections either don’t like this lawyer; prefer not to vote for this lawyer; prefer not to vote at all; didn’t qualify to vote (I may ask for a recount); or didn’t like the description.
(d) My thousands, hundreds of thousands and even millions of linked and networked connections don’t mean that much - it’s the people who know me that really count.


Perhaps there are or will be other lessons. After all, there are still 5 days left and if I ultimately end up with more than 18 million votes, I will be forced to admit I was totally wrong about the real power of social networks.

Bot Fraud - Brand New Ways to Protect Your Brand

Next Tuesday, May 13, 2014 at 1 p.m. EDT, the Association of National Advertisers (ANA) will be providing a complimentary webinar entitled:

Bot Fraud: How to Protect Your Company and Brand

Bots—computer-generated, phony website visitors designed to mimic real traffic and trick advertisers into paying for non-human traffic—are a serious problem for digital marketers, causing damage in terms of CPM, revenue, and reputation. As this problem grows more prolific (and the bot technology more sophisticated), it’s imperative for advertisers and marketers to learn how to protect their companies and their brands.

To register and learn more, visit the ANA's website.

Date and Time: Tuesday, May 13, 2014, 1 p.m. EDT

Bot Fraud: How to Protect Your Company and Your Brand is part of a series of complimentary webinars from the ANA Government Relations group focused on legal and regulatory issues currently affecting the marketing community.

Social & Mobile & Clouds, Oh My!

Joe Rosenbaum recently authored an article that has been published in the Small Business Journal highlighting some of the key issues that have arisen for small to medium-size businesses as a result of the emergence and convergence of these rapidly evolving technological platforms. Joe’s article, "Social & Mobile & Clouds, Oh My!" appears in the March 2014 issue of the Small Business Journal, and you can read "Social & Mobile & Clouds, Oh My!" [PDF] here as well.

If you require legal guidance, support or representation on the issues highlighted in the article, or on any other matters, you can contact Joe directly at jrosenbaum@reedsmith.com; or you should get in touch with the Reed Smith attorney with whom you regularly work. We are happy to help.

Looking Forward to 2014

As we say goodbye to 2013 . . . .

For those of you who are loyal readers and followers of Legal Bytes, you know this is the time of year when I break tradition and write a non-legal, more personal and philosophical post for Legal Bytes. I am figuring that if the ancient Babylonians, who celebrated the New Year upon seeing the first new moon after the vernal equinox, could start a tradition that lasted for about 4,000 years – the least I could do was to try to keep up. Although my tradition doesn't date back nearly that far, this posting will contain no hypertext links to distract you; it will not have citations to provide you with reference or background information; nor will it dazzle you with factoids or intrigue you with today's news – legal or otherwise. This is my one chance each year to philosophize and dispense my thoughts and opinions – with absolutely no credentials, qualifications or expertise to do so.

There are, however, two traditions I will continue to perpetuate even though I did not originate either one. First, let me take this the opportunity to wish each of you, your families, friends, loved ones and yes, even an enemy or two, an enchanting and joyous holiday season and a healthy, happy new year, filled with enchantment and magic, health and joy, and prosperity and success. Second, as many of you know, for numerous years I have avoided a tradition of sending out mass mailings of cards and gifts – which are often lost in the flurry of the season, and delayed by the strain on the mail and package delivery services; and while we delude ourselves into believing it "personalizes" the warmth of the season – whether displayed for a few weeks and then put in a drawer, tossed in the trash bin immediately, or relegated to a closet filled with decades of Lucite, there was nothing really personal about that process. So as many of you may already know, I decided years ago to borrow a tradition an old friend told me about and I started making a contribution to a charitable organization for all the family, friends, loved ones, colleagues and acquaintances I want to honor, in memory of those we have lost this past year, near and far, and in recognition of those who have given me a reason to celebrate – clearly far too many to list. In that spirit, as I have done for a number of years, I have made a donation to the St. Jude Children's Research Hospital. My way – perhaps naively – of trying to help some children in need, benefit from the kindness of a stranger.

So now, won't you please pull up a chair, put your other distractions away for just a moment, pour a glass of your favorite beverage, sit back and enjoy . . . and as always, thank you.

When I thought about this year's "philosophical" posting, my first inclination was to offer my humble opinions about the woeful state of intellectual property law and the challenges faced with the onslaught of digital technology. I thought about data breaches and wondered if what people really care about is privacy or data protection, or rather the inability to control information about us so that we can actually get a benefit from sharing information about ourselves. After all, I don't really care if anyone knows I like popcorn, but at least give me a discount coupon for sharing that information with someone I don't know! So many legal challenges – but then I thought, wait, this isn't supposed to be a "legal" posting . . .

So I remembered just recently someone told me that everyone should listen to the Michael Jackson song "Man in the Mirror" at least once every month. I thought about what that meant – really listen to the words. Coincidentally, I keep hearing the John Lennon song "Imagine" playing at surprisingly frequent intervals this time of year. It occurred to me the entire season has a genre of music dedicated to the holiday spirit and the new year. Since I promised no hypertext links, I will resist – but did you ever wonder about the universal power of music that transcends culture, ethnic background, race, religion and all the things we believe separate and segregate us. Why is it that music can have such a powerful and magical effect on us – no matter what age or part of the world we are from.

Although no one asserts that music arose or was derived from the study of mathematics, mathematics is ultimately the basis of sound, being rooted in the frequency of vibration that is audible to the human auditory senses. Tone and pitch all can be expressed as mathematical frequencies. This is hardly new – ancient Chinese and Egyptians studied the mathematical properties of sound, and one of the earliest Greek mathematicians and philosophers, Pythagoras, actually correlated the length of the string to the vibrational frequency, and even expressed musical scales in terms of numerical ratios. In Plato's time, one of the key branches of physics was "harmony," and early studies in India and China sought to show that mathematical laws of harmonics and rhythms were fundamental to our understanding of the world, as well as to our well-being. This time of the year, my interest in music is not in its mathematical properties, but rather in its ability to bring harmony to the world – one musical composition at a time.

Every culture on the planet has folk songs, musical instruments and rhythms, whether or not they include song or dance. Indeed, we launch music into space with explanatory mathematical symbols and algorithms in the belief that if there is life out there, they will view us as friendly and harmonious because of our music, rather than because of our unmanned space craft smashing into their planet!

Consider how important music is in almost every aspect of our lives. Although there are obvious examples of music put to nefarious uses – remember the 1971 Stanley Kubrick film, "A Clockwork Orange" – in most cases, music sets the mood, captivates us, and engages us in ways both explicit and implicit. If memory serves, the only television programming since the beginning of time that doesn't have a theme song is the news program "60 Minutes" – announced only with a ticking clock (unless you consider that music). When the theme song to our favorite program announces the beginning of the program, everyone comes running to the screen (for years I thought the words "Hi Ho Silver" were actually part of the "William Tell Overture"). Who does not remember a wide variety of jingles and catchy tunes advertising products in advertisements of all kinds – from being stuck on Band Aids, to "loving it" at McDonald's (which replaced "you deserve a break today").

Certainly in motion pictures, music has introduced us to aliens ("Close Encounters of the Third Kind"), has been the background for our investigation of the cycle of life and birth and the mysteries of the universe (witness Strauss and Wagner in "2001: A Space Odyssey"). Who doesn't remember the stirring music from "The Magnificent Seven" or instantly recognize the introduction to every James Bond movie. Think about all the different types of music from around the world. Type "musical genres" into Wikipedia and you will get a listing of literally hundreds of types and styles of music. Every major (and some minor) city, town and village has a musical group – marching bands, barbershop quartets, street minstrels, symphony orchestras, rock groups and school recitals. Ever wonder why?

I'm happy to send you the link (not here) but one day, take a look at the clip on YouTube of a homeless young man making the audience (and the judges) cry on "Korea's Got Talent," or 6-year-old Connie singing "Somewhere Over the Rainbow" on "Britain's Got Talent," and making even Simon Cowell melt. Take a peek at the clip from the Andre Rieu concert at Parkstad Stadium in the Netherlands as he introduces 3-year-old violinist Akim, or a YouTube video of Ryan, only 11 years old, playing Chopin like a master.

These are obvious musical "tear jerkers" – sympathetic or extraordinarily young people with amazing talent. But my belief is that music and its universal appeal are deeply rooted in our human DNA and that music – a universal language that has transcended and often defied borders for centuries – has the unique ability to cross artificial boundaries and barriers that far too often seem to separate us and perhaps, bring us together. We humans, all of us, love music. I have no scientific evidence, but music is important. The power of music is too ubiquitous, has been around far too long and is simply too amazing to ignore. We associate life events with music that was playing at the moment. We love concerts, and while musical groups and styles may wax and wane, the one constant is that music in one form or another continues to fill stadia, concert halls and our lives. Music can make us calm or can call us to action; it can stir us and make us smile or melancholy. Its rich contours and seemingly endless complexity can make us feel happy when we are blue, and smile, even when we are walking in the rain.

In recent days, smart mobs around the world (sometimes referred to as "flash mobs" when they gather for seemingly random and pointless activities, only to disperse as quickly as they appear), have grown increasingly popular as expressive outlets for music of all kinds – from symphonic pieces to hip hop and recreation of theatrical production numbers. While the first modern-day, non-musical "flash mob" was the invention of Bill Wasik, a senior editor at Harper's Magazine who, in June 2003, surreptitiously arranged for more than 100 people to gather on the 9th floor of Macy's surrounding an expensive rug – everyone was told to tell the advances sales help that they were a group shopping for a "love rug," that they made purchases as a group and that they all lived together in a warehouse just outside New York City. Imitators soon popped up, but the most recent trend has been around music – sometimes accompanied by dance, marriage proposals, reunions and celebrations – but always celebrations of life.

I admit to being mesmerized by the coordination and harmonious talent of these seemingly unconnected people, even though I realize someone has coordinated (and often rehearsed) the effort. While I am happy to send you links (not here) if you don't believe it, I have vicariously collected musical memories of a crowd in a food court singing Handel's "Hallelujah Chorus," to a crowd singing Michael Jackson songs in Bucharest, Romania; from a flash mob in Central Station, Sydney, performing Riverdance on St. Patrick's Day, to the a flash mob in Springfield, Illinois, performing Les Misérables; from a Bollywood performance on the streets of São Paulo, Brazil, to a Greek festival flash mob in Ottawa, Canada; and yes, a medley of ABBA songs from "Mama Mia" performed on an Israeli beach, to Norwegian Soldiers dancing to Michael Jackson's "Thriller."

I want to take this opportunity to wish family and friends, colleagues and acquaintances, clients and adversaries, those who know me far too well and even those who don't have a clue how they got on this email list, health, peace, comfort and joy this holiday season and in the year ahead. May those who love you come closer and those who dislike you forget why. Most of all, I wish all of you the extraordinary feelings of joy and harmony that come with music, whether sitting alone with your headphones or next to someone on a park bench, perhaps through music we can change the world . . . one noisy note at a time.

So as 2013 comes to an end, I will break my own rule and share a link in this column – or perhaps not a link, but a gift. The gift of music. I leave you with the "Ode to Joy" from Beethoven's 9th Symphony. Instantly recognizable, incorporating the words of the poet Friedrich Schiller: Alle Menschen werden Brüder, Wo dein sanfter Flügel weilt (All men shall become brothers, wherever your gentle wings hover). Take five minutes out of your busy day because, just as the lyrics of "Man in the Mirror" suggest, "no message could have been any clearer. If you want to make the world a better place, take a look at yourself and then make that Change!"

Warm regards for the holidays and best wishes for the new year. Sincerely - Joe Rosenbaum
 

Thank You For 2013 - Best Wishes for 2014

At this time of year, many of us are celebrating holidays and spending time with family, friends and loved ones. Getting ready to bid farewell to 2013 and looking forward to the coming of 2014 – a new year. Some of us even hope we can keep those new year resolutions that might last longer than a week or two.

Although we shouldn’t take it for granted at any time of year, this is one of those seasons we seem to use to pause and reflect on where we have been and where we are going. We think of those who have touched us; those we missed and some we would prefer to forget. We remember those no longer with us and marvel at the miracle of each life born into the world this year. We reflect on friendships through which we have grown, and appreciate those who have helped us on our journey through 2013. This time of year also gives me an excuse to say thank you and to express appreciation to those who have enriched my life. If you are reading this, you are part of my audience – part of the fabric of my professional life; and like the threads of that fabric, I am grateful for your readership and, in some cases, your friendship. I am always appreciative when you take a moment to read, hopefully gain some insight, and perhaps be a little entertained.

I especially want to thank the people at Reed Smith who support my efforts – people like Erin Bailey, Lois Thomson and Rebecca Blaw who make this blog happen. You don't see them; but I do. They help make Legal Bytes come alive. They are amazing professionals and awesome people. Thank you so much. You make it look easy and I could not do this without you!

I would also like to thank Carolyn Boyle at the International Law Office (ILO) – the force behind motivating me to push content into the U.S. Media and Entertainment Newsletter; and while I can take credit for the substance and for nagging my colleagues to contribute, without her, thousands of readers who enjoy the links and insights would be waiting far too long for Legal Bytes content. Thank you.

So as 2013 comes to a close, please accept my appreciation and gratitude to each of you – staff, support, contributors and, most of all, the readers of Legal Bytes. My best wishes to each of you, your families, friends and loved ones, for a wonderful holiday season and a terrific new year, filled with health, happiness and success.

Trending Towards Service of Process via Facebook!

This post was written by Keri Bruce and Lisa Kim.

Just a few weeks ago Legal Bytes updated its reporting (which has been going on since 2009) noting that the U.S. District Court for the Southern District of New York in Fortunato v. Chase Bank USA (S. D.N.Y June 7, 2012) declined to permit a plaintiff to effect service of process on a defendant via Facebook (see,Service of Process by Facebook? Not Just Yet!). However, it seems that legislators and courts alike are opening up to the idea of allowing service through social media where it would be reasonably likely for the defendant to receive actual notice. In the fast-paced world of digital technology and social media, the courts are indeed moving just a wee bit faster (do they have a choice?).

Last month, Rep. Jeff Leach, R-Plano, introduced a Texas bill (H.B. 1989) that would allow courts to approve the use of substituted service of process through a social media website. Specifically, this law would allow the court to prescribe substituted service through a social media website if: “(1) the defendant maintains a social media page on that website; (2) the profile on the social media page is the profile of the defendant; (3) the defendant regularly accesses the social media page account; and (4) the defendant could reasonably be expected to receive actual notice if the electronic communication were sent to the defendant’s account.”

Similarly, last week, in FTC v. PCCare247 Inc., S.D.N.Y, the U.S. District Court for the Southern District of New York granted the Federal Trade Commission (FTC) permission to effect service of process (although not the summons and complaint) via Facebook and email upon five defendants based in India. You can read the entire Order No. 1:12-cv-07189-PAE issued March 7, 2013 here.

In the PCCare247 case, the FTC alleged that the defendants operated a scheme, largely out of call centers located in India, that tricked American consumers into spending money to fix non-existent problems with their computers. FTC served the defendants through the Indian Central Authority as required by the Hague Convention and also sent the summons and complaint to the defendants via email, Federal Express, and personal service via a process server. Although the Indian Central Authority (after more than five months) still had not responded to the FTC confirming that defendants had been served, the defendants received notice through the process server.

The request for service of process via Facebook and email came into play later when the FTC requested permission to serve additional documents on the defendants. The court granted the motion, holding that service via email and Facebook are not prohibited by the Convention or any other known international agreement. In addition, the court held that service via email and Facebook comports with due process as the FTC demonstrated the likelihood service via email and/or Facebook would reach the defendants. The court cited the fact that email addresses for service were used for various tasks in the alleged scheme to defraud consumers and defendants had used some of the emails to email the court.

The common thread between the Texas Bill and PCCare247 appears to be the high likelihood that service through these electronic means would give actual notice to the defendant. Indeed, in distinguishing Fortunato, the PCCare247 court specifically noted the FTC provided the court with “ample reason for confidence that the Facebook accounts identified are actually operated by defendants.” The Facebook accounts had been registered with email addresses known to be the email addresses of the defendants; the defendants listed their job titles at the defendant company as professional activities on their Facebook accounts and two of the defendants were shown to be “friends” with a third defendant.

The evolution of judicial precedent and thinking in this area will not only be interesting to watch but may also transform the manner in which the law, the courts and judicial systems around the globe confront and attempt to deal with legal professional and ethical issues (see generally, Friends on Facebook - Hold Them Close, Get Held in Contempt of Court!) Social media and technology, wired and wireless, continues to challenge every industry and profession and neither the law nor the legal profession are immune. Don’t hesitate to contact Keri Bruce, Lisa Kim if you want to know more about these issues, and, of course, you are always free to contact me, Joseph I. Rosenbaum, or any of the attorneys at Reed Smith with whom you regularly work. We would be happy to help.

Identity Theft? Victim and Alleged Thief ID Each Other.

Digital or Analog, identity theft is frightening, anxiety provoking, and tedious - even if you aren’t in danger of losing money or at risk of physical injury. But it’s often not that simple - for the victim or the perpetrator. As an Applebee’s waitress in Lakewood, Colorado, found out, identity theft in the real world can be more frightening than digital theft.

A few weeks ago, the waitress, Brianna Priddy, while out with some friends (not while working), apparently lost her wallet with all of her credit cards, her checks, and her driver’s license, as well as the cash. She dutifully went through the time-consuming and sometimes frustrating process of calling, writing and notifying everyone she could remember, alerting them to stop transactions that may involve the lost instruments and identification, and asking for replacements. Not fun. Even when her bank called, alerting her to forged checks being issued, she probably resigned herself to living with some frustration, anxiety and pain for a while. But if you think digital identity theft is frightening, read on.

Fast forward, Ms. Priddy is now back at work, waiting tables. A group of young people at her station order drinks. She asks for ID. How amazing to find that one of the women at the table ordering a drink is none other than herself! Cloning? Not really. The woman in the group had offered the victimized waitress’ ID as proof, and I confess she must have been a lot calmer than I would have been. She didn’t let on and, according to reports, said to the patron, handing her back the ID, “I'll be right back with your Margarita." The waitress called police and despite what must have been a nerve racking eternity, she tried to appear calm and collected waiting for the police to arrive. They did and promptly arrested the woman patron on suspicion of theft, identity theft and criminal impersonation.

Not all criminals are as unwitting or as helpful as the alleged thief in this case. Not all identity thieves are that cooperative, even by accident. Most digital identity theft, compromises of personally identifiable information, and data breaches are more complex, and involve more than one individual and often cross-state and national borders - with multiple statutory and regulatory schemes that apply to you, the “victim.” Reed Smith has an entire group dedicated and experienced to help companies deal with identity theft - from preventive policies to defense of legal rights with respect to consumers and regulators. If you need more information about the complex legal and regulatory involved, contact me, Joseph I. Rosenbaum, or the Reed Smith attorney with whom you regularly work.

Nevada Authorizes Interstate Online Gambling Arrangements

While New Jersey Governor Chris Christie vetoed an online gambling bill earlier this month, the Governor of Nevada has signed legislation (Nevada 2013-AB114) [PDF] that enables and authorizes Nevada to make arrangements and enter into agreements with other States that legalize interstate online poker conducted across those state lines. The United States Department of Justice (DOJ) still holds that sports betting is illegal under the Interstate Wire Act of 1961 and there has been no move to repeal or amend the Unlawful Internet Gambling Enforcement Act of 2006 or, for example, the corresponding compliance obligations applicable to financial institutions imposed by the FDIC [PDF]. However, at the end of 2011, the DOJ released a memorandum indicating it no longer believes that non-sports related online betting and wagering (e.g., online poker) is prohibited by the Wire Act, essentially paving the way for States to act in the arena of intra-State online gambling – including sports wagering solely within the State.

Technically, the Nevada statute eliminates a provision in the existing law that would require either approval from the U.S. DOJ or some Federal enabling legislation and the effect is that the Gaming Commission in Nevada may now adopt regulations that authorize the State (ostensibly through the Governor’s office), to enter into agreements with other States. Obviously, each other State would require similar enabling legislation and New Jersey is poised to again send another bill to the Governor’s office in the hopes they can craft legislation Governor Christie is willing to sign.
Nevada has traditionally had a strong regulatory environment and the bill includes the following language expressing the intent and basis for the new legislation. The bill notes that “The state of Nevada leads the nation in gaming regulation and enforcement…” and “ … is uniquely positioned to develop an effective and comprehensive regulatory structure related to interactive gaming.” .

If you need more information about the complex legal and regulatory issues that relate to online or interactive gaming or gambling and the payment and e-Commerce implications and requirements, not only in the United States, but internationally, feel free to contact me, Joseph I. Rosenbaum or the Reed Smith attorney with whom you regularly work. 

What You Don't Know Can Hurt You

Multiple Choice Question: What do the following have in common:

“Privacy & Data Protection: Distinctions Between Surveillance and Secrecy”

“Ethics, Process, Privilege, Discovery and Work Product in the Digital Age”

“When Worlds Collide: Old Ethics and New Media”

“Outsourcing: The Law & Technology”

“The Changing Legal Landscape: Evolution or Revolution”

“Growing Your Business Internationally - What to Know Before You Go”

“Social Media, Mobile Marketing, Clouds and Crowds: (modules)

  • Advertising & Marketing in a Digital World
  • Media & Entertainment: Digital Rights and Wrongs
  • Financial Services, Payments & E-Commerce
  • Online Gaming, Gambling & Virtual Worlds
  • Apps & M-Commerce
  • Context & Geo-Marketing: Wi-Fi, Bluetooth, SMS, RFID, QR Codes & Augmented Reality
  • Operations & Performance, Security, Compliance and Interoperability
  • Wired & Wireless: Sweepstakes, Contests, Product Placement & Branded Entertainment
  • Anti-Social? Communication & Public Relations for Companies, Employees & Investors
  • Behavioral Advertising, Endorsements, Blogs, Buzz, Viral, Street Teams & Word of Mouth
  • Labor & Employment Policies in a Networked Age: The Good, The Bad & The Ugly
  • Crowd Sourcing, Crowd Funding, Crowd Investing: Today & Tomorrow

“Privacy, Data Protection & Globalizing Technology: Digital Commerce Brings Legal Challenges”

“Comparative Advertising Issues: Multinational Brands; Global Challenges”

“Direct to Consumer: Legal Challenges in the Digital Marketplace”

“Out of Control? Challenges to Privacy & Security in a Big Data World.”

 

Answers: (a) Seminars & Presentations Given; (b) Seminars & Presentations Available; (c) Targeted at Lawyers; (d) Targeted at Commercial and Business Management; (e) Relevant to Small-to-Medium Size Business; (f) Relevant to Multinational, International & Global Companies; (g) None of the Above; or (Y) All of the Above.

If you guessed (Y), you are correct. Let us know if any of these, a combination of these or a customized version of these or any other presentations might be right for you. Hey, you never know, but what you don’t know, can hurt you. For more information, contact me, Joe Rosenbaum, or the Reed Smith attorney with whom you regularly work.

A New Twist to Chubby Checker - Oh No, Not an App for That!

Chubby Checker, whose real name is Ernest Evans, is suing Hewlett Packard for trademark infringement. Chubby Checker, an iconic music entertainer, rose to fame when his song “The Twist” first reached No. 1 on the charts in 1960 and his appearances on the "Ed Sullivan Show" and "American Bandstand" helped spawn a national, if not international, dance frenzy. His 2008 song “Knock Down the Walls” reached the top of the dance charts and sparked a brief comeback for the music legend.

Ernest Evans Corporation, one of Mr. Checker’s companies, was originally granted trademark rights for the use of his name in connection with musical performances. Later, The Last Twist Inc., another of his companies, was granted trademark rights for “Chubby Checker’s” in connection with food products, based on the release of a line of snack foods.

The mobile “app” named “The Chubby Checker” – no, we couldn’t possibly make this up – ostensibly enabled users who downloaded it to calculate the size of a male penis based on the individual’s shoe size. The development shop named Magic Apps, now non-existent, had touted the international appeal of the app, noting “The Chubby Checker” allows calculations based on U.S., UK and European shoe sizes.

Lawyers for Mr. Checker had sent HP a cease-and-desist letter last September and apparently the app was removed from all HP or Palm-hosted websites later that month. In the lawsuit filed in the U.S. District Court for the Southern District of Florida, lawyers for Mr. Checker, now 71 years old, claim that "irreparable damage and harm" has been done to the entertainer’s name and reputation, are seeking an injunction, and are asserting claims of millions of dollars in damages arising from “The Chubby Checker” app that Hewlett Packard Co. made available on Palm mobile devices starting in 2006. You may recall that HP acquired Palm in 2010, and a year later opted to shutter the production of Palm hardware, although it continued to provide technical support to existing Palm users.

The suit alleges that purchasers of the app, as well as anyone simply browsing the webpage, had been misled into believing that Chubby Checker had endorsed the app, and that the use of his name would confuse users who might reasonably conclude the singer had some association with the app bearing his name.

The lawsuit alleges that the defendants made millions of dollars exploiting the name of one of the greatest musical entertainers of our time, and claims the "Defendants' use of the name 'Chubby Checker' in its app is likely to associate the plaintiffs' marks with the obscene, sexual connotation and images evoked by defendants' app 'The Chubby Checker.'” You can read the filing in its entirety right here at Evans, et al. v. Hewlett Packard Company, et al., Case 2:13-cv-14066-JEM.

The Advertising, Technology & Media Law Group at Reed Smith has lawyers with decades of experience in working with advertisers and agencies, marketing and promotional companies, online, mobile, and traditional, handling matters involving celebrity endorsements – good, bad and sometimes ugly. Let us know if you need us. Call me, Joe Rosenbaum, or any of the Reed Smith lawyers with whom you regularly work. We are happy to help.

Service of Process by Facebook? Not Just Yet!

Back in 2009 (yes, 2009), Legal Bytes reported that the British High Court agreed to allow the service of a court order to an individual through Twitter (see, British High Court is for the Birds? Actually, for Twitter!). In that same article, we noted an Australian Supreme Court Judge allowed service of legal papers through Facebook. Increasingly, U.S. courts are confronting similar questions.

New York law, for example, has an enumerated set of mechanisms by which one can effect service of process. But the law also notes that if the enumerated methods are impracticable, service can be made “in such manner as the court, upon motion without notice, directs." In other words, if you are trying to sue someone in New York and none of the traditional methods works, you can petition the court and request some other method, and, assuming the court agrees, that will be effective to constitute service of process. But the standards remain high for the use of social media and other technology-enabled mechanisms. Witness the recent decision by the U.S. District Court for the Southern District of New York, in Fortunato v. Chase Bank USA (11 Civ. 6608), which in June of last year, denied the bank’s petition to allow service of process using Facebook.

The case started when Lorri J. Fortunato (Lorri) sued Chase, alleging that another person fraudulently opened a Chase credit card account in her name and incurred debts without her knowledge or authorization. When the debt went unpaid, Chase initiated collection proceedings against Lorri. In 2009, Chase obtained a default judgment and in 2010 began proceedings to garnish her wages – a process by which Chase eventually collected the full amount of the default judgment. But Lorri claimed she never lived at the address at which Chase attempted to serve her notice of the action and, during the course of the lawsuit, Chase discovered that Nicole Fortunato (Nicole), the plaintiff’s estranged daughter, had opened the account in her mother's name, listed her address in the account application, and made the charges – the amount Chase ultimately received from garnishing Lorri’s wages.

Chase requested, and was granted permission, to bring Nicole into the case as a third-party defendant, but despite hiring an investigator to locate her, Chase was unable to determine exactly where Nicole lived. The investigator did, however, find a Facebook profile that was believed to be hers, and so Chase petitioned the court to allow it to effect service of process on Nicole in a number of ways, among which were service through Facebook and a message to the email address listed on the profile page.

Although the court did conclude that Nicole’s pattern of "providing fictional or out of date addresses” made service of process upon Nicole using traditional methods impracticable, the court went on to reason that Chase had not been able to assert "any facts" that could substantiate, among other things, that the Facebook profile was actually that of the Nicole Fortunato in this particular case. The court noted anyone can create "a Facebook profile using real, fake, or incomplete information," so how could they be sure it was the person they intended to serve! Feel free to read the Court’s Memorandum Opinion & Order (PDF) yourself.

The lesson from this and other cases so far: Whatever method of service of process is requested, one must be able to substantiate, with some degree of certainty, that the person intended to be served is likely to receive the summons and complaint and, thus, be apprised of the pendency of legal proceedings involving that person. Social media and technology, wired and wireless, is turning the legal world upside down. If you want to remain upright or need to know more, feel free to contact me, Joseph I. Rosenbaum, or any of the attorneys at Reed Smith with whom you regularly work.

2012 Thank You 2013

This is the time of year when many of you are celebrating holidays, spending time with family, friends and loved ones, bidding farewell to the end of 2012, and celebrating the coming of a New Year – 2013. A time when many of us take a moment to reflect on the year gone by and perhaps wonder what the New Year will bring. There are people who have touched us and with whom we’ve gotten closer; those who we have missed and resolve to try to be better than we were this past year; and perhaps a few we might like to forget. We also pause to remember some who are no longer with us and take comfort in knowing that by remembering them, we keep their spirit – all we have learned from them and all they have meant to us – alive. As 2012 comes to an end, we all should reflect on the friendships and experiences that helped us grow, and take a moment to thank those who have helped us get through tough times, and those who have shared the joys of good ones.

For me it’s a time to resolve to keep doing some of the good things I’ve done this past year, and to try to do some things better next year. As the year draws to a close, it also gives me an excuse to say thank you and express appreciation to all those who have enriched my life. If you are reading this, you are part of my audience, part of the fabric of my professional life; and like the threads of that fabric, you have helped me weave the patterns and textures you read in these digital pages. I am grateful for your readership and in some cases, your friendship. I am always appreciative when you take a moment to read and maybe gain some insight, while being a little entertained. Thank you.

I especially want to thank a few people at Reed Smith like Erin Bailey and Lois Thomson and Rebecca Blaw who make this blog happen. These are the people you don't see, but I do – they help make Legal Bytes come alive. They are awesome and amazing, and there aren't sufficient words to express how grateful I am – especially when they get my email that says "please can we get this posted ASAP." Thank you so much. You make it look easy and I could not do this without you!

I would also like to thank Carolyn Boyle at the International Law Office (ILO) – the force behind motivating me to push content into the U.S. Media and Entertainment Newsletter; and while I can take credit for the substance and nagging my colleagues to contribute, without her, the thousands of readers who enjoy the links and insights would be waiting far too long. Thank you.

So as the year comes to a close and we look forward to the next, let me express my appreciation and gratitude to each of you. You motivate me to keep this interesting and exciting – even when I get lazy about posting. My best wishes to each of you, your families, friends and loved ones, for a wonderful holiday season and a terrific new year, filled with health, happiness and success.

2012 Season's Greetings & Happy New Year 2013

This is the time of year when season's greetings, holiday and new year's wishes, regardless of religion, culture, ethnic background or heritage, fill the air. A period when we spend lots of time and attention on cards, gifts, attending or hosting parties, dinners and otherwise gaining the 10 pounds we resolve to lose in the new year. I don’t want to ruin those traditions, so among the flurry of well-wishers, holiday revelers, frosty noses and smiling faces, let me join with others and wish you an enchanting and joyous holiday season, and a healthy, happy new year filled with wonder, challenge and excitement.

As many of you know, in years past I use to agonize over gifts to clients, colleagues, family and friends. A number of years ago, rather than sending people trinkets they never want or need; rather than feeling guilty I’ve forgotten someone or perhaps given the same thing I gave last year or, worse – gave you the gift you gave me!!! – I started my own tradition of sending a personalized note and making a contribution to a charitable organization of my choice in honor of family, friends, colleagues and acquaintances, and in memory of those we have lost. In that spirit, as I have done for some, I have made a donation to the St. Jude Children's Research Hospital, and this year it seems somehow to be even more meaningful. Perhaps it is my way – my attempt – to find ways to let our children know there is more good than evil in the world. That good people don't give up; won't give up. That the battle may never end, but we will never resign ourselves to the way it is; never stop believing it can and will be better. At a time when so many of us might feel helpless to comfort each other.

To help, we need to find ways to make a difference – one step at a time. I know we can't all change the world. But we might just be able to change a life or two or three. Yes, it's corny. So what? We are already cool and so hip. We speak to each other in "tweets" and text messages, in language that accommodates the limitations of the technology – OMG that is sew kewl! So for the record, I'm OK with being traditional. Perhaps a little old-fashioned. We talk about random acts of kindness as if it were only a bumper sticker. Why be kind? Why help others? Why give? Not just this time of year, but as a part of who we are. Part of who we should be. Part of who we need to be to change the world.

Sure, maybe the homeless man will spend it on a beer – but maybe not. Yes, it's true that someone may be embezzling money from the battered women's shelter – but maybe they are not. What if – yes what if, each of us shows a little faith and kindness to others less fortunate – those who have so little. What if taking a moment to care pays more dividends than we care to believe; more than we know. The real inconvenient truth is that we often use failure as an excuse not to give or to help others who have less. Think about every person we honor because of their selfless dedication to helping others. We admire them not because they gave; we honor them because they never gave up. They don't seek rewards or even recognition. They keep going, even when it seems impossible to make a difference. Our heroes often have little themselves, yet they give unselfishly to others. Adversity. Challenge. Humiliation. Their belief in helping others is steadfast. Beat them down, they get up and go on.

This year, we have been confronted by unspeakable images of horror – man's inhumanity to man. I feel helpless to comprehend the tragedy in Newtown, Connecticut. Helpless against unimaginable sorrow. But we have also seen people caring for each other. As a community. The prayer vigils and outpouring of love and support in the hearts and minds of so many across the nation and the globe continues unabated. Don't stop. When the cameras leave and the news coverage moves on – there are people who will still need your help, your love and support. We have seen or heard about natural disasters with unparalleled fury. But we have also seen the firefighters, ambulance personnel, emergency medical services, and so many others routinely risk their lives, no matter what the conditions, to rescue and save the lives of others – far too often at the risk of their own. And then there are the small acts of kindness, caught on camera unbeknownst to the good Samaritan – the image of a New York City police officer, giving shoes to a homeless man, shoes bought with his own hard-earned money.

Each of us should make a little more of an effort to help others. To give to those who are less fortunate, the thoughtfulness and help we would hope someone might give us if we needed it. Yes, even if we are not sure they will use it wisely or turn their lives around. Yes, even if we are disappointed or skeptical. Even if we are sure they won’t appreciate it. Have a little faith – this isn’t about religion. It is about tolerance and understanding and a willingness to accept that we may not know why some people are what they are, but we can help nonetheless. I don't pretend to be a paradigm of virtue. I have walked past my share of homeless people, huddled in corrugated cardboard boxes, pretending to look the other way – avoiding their eyes so I'm not shamed into giving them a few dollars. But as I realized last year and each year that goes by, I spend more on a newspaper subscription or Starbucks or the new smart phone, than I am willing to give someone who is hungry or cold or alone . . . . . and I feel terrible. So now I’ve started to go back to those homeless, often helpless people – maybe not often enough, but when I do I feel better. It feels right. I like that feeling. Stupid me, I still don't do it often enough. My father did, rest his soul. I should have learned from him. Hopefully it's not too late. So I'm starting to pay more attention to what he never said, but always did. I've gotten better – but only a little. In this age of digital miracles, when communicating across the globe is as simple as the push of a few buttons, let's not forget the miracles that happen face to face, person to person. The gift of kindness and compassion; of charity and community; of helping the needy and giving hope to the hopeless. This coming year, I will try again to be better. I will keep trying. I will also try to keep in touch in a more meaningful way and take the time that you need. Time is a precious gift. Something I value when it is given to me.

I also value the diversity of wonderful people I've come to know and care about over the years and throughout the world – you know who you are, and if you aren't among those I’ve met, just send a signal and say "hello" – please. There is so much I still have to learn from each of you and so much we have to share with each other. So to family and friends, colleagues and acquaintances, clients and adversaries, those who know me far too well and those who don't have a clue how they got on this email list, let me close by wishing each of you health, peace, comfort and joy this holiday season and in the year ahead. May those who love you come closer and those who dislike you forget why. Most of all, I wish all of you the extraordinary feelings of inner warmth and goodness that come with helping another . . . maybe changing another person's life for the better . . . a person to whom you owe nothing and who expects nothing from you. Think what the world would be like if we all did that.

Warm regards for the holidays and best wishes for the new year. Sincerely,

- Joe Rosenbaum

The NLRB Shops at Costco. Says Dish Network Can't Stop Employee 'Dissing'

This post was written by Joel S. Barras and Eugene K. Connors

Employers, what do you need to do NOW? You need to scrutinize your social media policies!

Employers cannot forbid employees from disparaging their employers – at least not with overly broad and sweeping restrictions. An NLRB Administrative Law Judge, following the lead of the NLRB from its recent decision in Costco Wholesale Inc., invalidated social media and other employment policies of DISH Network, Inc. The invalidated policies (1) prohibited employees from disparaging the company on social media sites; (2) required preapproval from management before speaking about the company to the media or at public meetings; and (3) limited employee communication with government agencies. You can read the actual decision here.

President Obama's re-election will undoubtedly translate into increased scrutiny on employer social media and other personnel policies. For example, under continued attack will be certain types of at-will employment status, classification of independent contractors, requiring confidentiality during investigations of alleged workplace misconduct, the viability of class action waivers and agreements to arbitrate in employee handbooks, and individual employment agreements.

You can read our full Social Media White Paper on the impact of Social Media on the business community. In addition, some of our previous blog posts containing more in-depth analyses of these issues and other recent NLRB attacks on employer policies, including our update on employment issues, can be found here.

So what are you waiting for . . . dust off those social media policies, read these materials and make sure your policies aren't the next ones "dissed" by the NLRB. As always, if you need help or more information, contact Joel S. Barras or Eugene K. Connors. Of course, you can always contact me, Joseph I. Rosenbaum, or any of the Reed Smith lawyers with whom you regularly work.

Old Ethics and New Media: Reconciling Legal Ethics with New Technology

Colleagues and clients: Join us tomorrow, Friday, September 21 at Noon EDT (9 a.m. PDT; 11 a.m. CDT) for our timely seminar “When Worlds Collide: Old Ethics and New Media” discussing the ethical issues and implications arising from social media, cloud computing, mobile and wireless technology, and the latest in legal thinking, bar association rules and judicial rulings, among other things. Think you know the rules about metadata, discovery on social networks, litigation holds in cyberspace, and much more? Not sure? Join us for this one-hour session focusing on lawyers, law firms and the legal and regulatory processes that are being turned upside down by technology. Join us as the worlds of ethics and technology collide. Registration is open to all and, for licensed attorneys, attendance will provide 1.0 hour of Ethics CLE/CPD credit for UK, California, Pennsylvania, Illinois, New Jersey, and experienced New York lawyers, and we can file applications in Delaware, Virginia and elsewhere as needed. Clients can register by contacting Joe Maguire at jmaguire@reedsmith.com or +1 202 414 9484, as the registration link below will not work for anyone outside Reed Smith.

Registration link: Click here to register for this course.

IAPP Privacy Presentation - Is the Wizard of Oz Still Behind the Curtain?

On May 10, 2012, I had the privilege of making a presentation at the IAPP Canada Privacy Symposium 2012. The title of my presentation was "Social and Mobile and Clouds, Oh My!" and it addressed some of the emerging issues in privacy, data protection and surveillance that arise as a result of globalizing technology and the convergence of social media, mobile marketing and cloud computing.

As part of that presentation (and as I have started to do for some time now in other presentations), I raised the issue of how lawyers, the law, legislators and regulators often use words to describe activities – words rooted in tradition or precedent – that are no longer applicable to the activity in today's world. "Privacy" is such a word, although "not applicable" perhaps is too harsh. Obviously the word has significant applicability in a wide variety of situations. But "invasion of privacy" has become a knee-jerk reaction to virtually every information-gathering activity, even information readily and publicly available and, in some cases, posted, disclosed or distributed by the very individual whose privacy is alleged to have been "invaded."

Please feel free to download a PDF of my presentation, "Social and Mobile and Clouds, Oh My!" [PDF] (Note: Embedded video file sizes are too large to include), and let's start a conversation about how we use words and how they wind up in laws and regulations. Lawyers work with words. Use them artfully and they provide powerful structures within which society, commerce and all forms of human endeavor function. Use them improperly and they cause confusion, uncertainty, inconsistency and inherently inequitable outcomes.

Seems like I am not the only one to point this out. Take a look at the insightful comments by John Montgomery, COO of GroupM Interaction, North America, as reported in a MediaPost RAW posting on Social Media entitled: If Marketing Terms Could Kill.

Kudos John. I'm with you. Let's get it right.

FYI, Reed Smith has teams of lawyers who have experience and follow developments in privacy and data protection, information security and identity theft. If you want to know more, if you need counsel or need help navigating, or if you require legal representation in this or any other area, feel free to call me, Joseph I. ("Joe") Rosenbaum, or any of the Reed Smith lawyers with whom you regularly work.

German Court Requires Facebook to About Face

This post was written by Katharina Weimer.

A German Court thinks it may be time to de-friend Facebook. On 6 March 2012, the Regional Court in Berlin took a rare opportunity to rule on several features available on the social media platform Facebook, and not surprisingly opined that Facebook needs to provide more transparency and ask for consent when using users’ information. Worded in the form of consents, the German Court held:

  • Consent No. 1: Facebook may no longer make available one of its most used features, the “friend finder,” without proper information of the user and consent of the user’s contacts who are invited to join Facebook via email
  • Consent No. 2: The exploitation of user content that is protected by intellectual property rights requires affirmative and specific user consent. The language purporting to grant Facebook a comprehensive, worldwide, royalty-free license that is incorporated into Facebook’s existing terms of use is not sufficient.
  • Consent No. 3: Facebook needs to reword its consent regarding the use of personal data for advertising purposes

Although the judgment is technically not legally binding as yet, Facebook announced it will carefully review the consequences and consider legal remedies once the judgment is available in full length. This decision may lead the way to more transparency and user control over social media and the use of information in Germany. Having a world of information at your fingertips and incorporating user content in Web 2.0 services is a great tool for user interaction and learning more about them, but the court’s ruling suggests that Facebook not forget for whom their service was created – the users, not the advertisers. As Facebook edges closer to an IPO and looks to monetize its services and features, the German Court’s view is that Facebook needs to continue to give its users control over their content and information. Stay tuned to Legal Bytes for more details as the court proceedings continue.

Vielen dank (many thanks) to Katharina Weimer for the insights and the update. If you need legal or regulatory counsel, contact Katharina directly, or you can always contact me, Joseph I. (“Joe”) Rosenbaum, or the Reed Smith lawyer with whom you regularly work.

Online Gambling. Time to Change Legal Bytes to Legal Bets?

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.

Happy New Year Wishes for 2011

 

About 4,000 years ago, the ancient Babylonians celebrated the New Year upon seeing the first new moon after the vernal equinox. Today, festivities in New York's Times Square are televised around the world. Although my traditions don't date back nearly as far as either of these, each year at this time I try to create a Legal Bytes piece intended to be more thoughtful and philosophical. So this posting will contain no hypertext links to distract you; it will not have citations to offer more information about a snippet; nor will it dazzle you with factoids or intrigue you with today's news. It's just me philosophizing, about where we've been and where we're going. My one chance during the year to simply ramble about where we've been and where I think we might be headed – without any credentials, qualifications or expertise to do so.

So, loyal Legal Bytes' readers, just pull up an easy chair, put away your other distractions for a moment, pour a glass of your favorite beverage, sit back and enjoy . . . and again, thank you.

Much has been written about social media. Whether it's the Facebook phenomenon, now with 1 billion "friends" in sight, or the Twitter tweets that either rock or knock the world – everyone's talking about it. I just read an interesting blurb from a powerhouse of a social media strategist I follow on Twitter, describing the social media and corporate world as an example of "orthogonal bliss," and I thought, that's interesting, but not quite right. Why, you ask? (You did ask, right?) Hang on.

Much has also been written about privacy and data protection. Online behavioral advertising, geo-targeting and location-based services, tracking, identity theft, the buzz words go on and on. I keep reading how advertisers capable of more accurately determining my preferences represent a massive invasion of my privacy and my rights. Wait a minute. That's not quite right either. Why, you ask? (You did ask again, right?)

Well, let's put these in perspective, because all of these inter-relate with cloud computing and mobile and wireless technology and, yes, drive-up windows! When Henry Ford introduced mass-production assembly lines in the early 1900s, prices of automobiles dropped, making personal transportation more affordable. Closed body construction, first available on General Motors' Cadillac Model Thirty in 1910, as well as the first use of an electric starting motor (invented by Charles Kettering), also in the Cadillac sold in 1912, made the automobile easy for anyone to start and capable of being used in all sorts of weather.

More than just trivia, society as we know it in the industrial age has largely been based on the rapid increase in personal transportation: Drive-up windows, shopping malls, suburbs, gasoline/petrol stations, rumble seats, not to mention paved roads, interstate highways and so much more. Try to imagine not just the vehicles themselves, but also the lifestyles that have changed, the culture and society that has arisen around personalized transportation. The airplane has shrunk the globe, and the automobile has enabled us to go where and when we like on it!

Thirty years ago, computers were largely mainframe monoliths, connected to dumb terminals requiring rocket scientists with punch cards and a working knowledge of Boolean algebra to do anything. Raised floors for cabling, sophisticated air conditioning cooling systems – 1 megabyte of memory in 1978 cost more than $30,000. Why would anyone ever need more than 64K!

Today, personal information systems are transforming our society and our culture as well: Everything from how we work, play, game, learn, research, find things and, yes, interact with each other and the world around us. Rapidly. Our appetite for personalized capabilities has created successful companies that have learned the skills of "mass customization" – yes, there's an app for that! Devices become smaller and more powerful. I can take my toolkit, my work, my school books, my roadmap, my address book, my email and my phone with me wherever I go. I can keep in touch and shop with one device. "Clouds" and wireless devices proliferate – in the next year or so, estimates indicate there will be more than 5 billion active mobile phone contracts, most Web enabled and most with GPS tracking capability.

Continue Reading...

Whatz Gnu

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.

MMA Releases Mobile App Privacy Guidelines - Appy Days Are Here Again

A few days ago (October 17), the Mobile Marketing Association released its MMA Mobile Application Privacy Policy, which the MMA asserts is the first industry guideline to deal with data protection and privacy specifically related to mobile and wireless applications. The guideline being made available for comment is slated to be finalized sometime after November 18, 2011, when the MMA’s comment period is scheduled to close. The press release notes that there are currently more than 425,000 iPhone/iPad apps available from Apple’s App Store, and more than 200,000 available for Android.

The document is intended to deal with some of the basic privacy principles and text that developers should consider incorporating into mobile apps to let consumers know how their data is collected and used, as well as information regarding confidentiality and the security of information that becomes available when a consumer installs and uses a mobile app. Obviously, legal disclaimers and disclosures and issues related to privacy and data protection are quite jurisdiction-specific, and compliance will always require consultation with legal counsel to be sure mobile, and all other online and other applications and processes, conform to the legal requirements of each jurisdiction that applies to consumers for that application or process.

Reed Smith’s offices around the world are open, coordinating with our Advertising Technology & Media law practice group, ensuring that lawyers knowledgeable in data protection and privacy, as well as in mobile technology and marketing, are available to help you. As always, if you want to know more about how lawyers who understand can help your business, feel free to contact me, Joe Rosenbaum, or any of the Reed Smith attorneys with whom you regularly work.

When Online Games, Health & Life Sciences and Crowd Sourcing Combine

This time, the law of unintended consequences is bringing scientists and online gamers together in a crowd sourcing manner hitherto unimaginable.

An article in this month’s edition of the journal Nature Structural & Molecular Biology has announced (citing both research scientists and online gamers as co-authors of the article) that through a 2008 purpose-oriented video game developed at the University of Washington in 2008 – Foldit – the structure of an enzyme, one used in complicated customizing of retroviruses, was accurately modeled. 

Who cares and how does this affect us? Well, as a former biochemist wannabe, if you can model the structure of these proteins, you can better understand how diseases are caused and correspondingly develop drugs to block or stymie the progress of those diseases.

Amazingly, gamers were able to produce an accurate model of an enzyme whose structure had eluded scientists for a very long time in only three weeks and the report notes, referring specifically to medication against the human immunodeficiency virus (HIV) for which an understanding and design of antiretroviral drugs is absolutely critical. Seth Cooper, one of the creators of Foldit noted that "Games provide a framework for bringing together the strengths of computers and humans. The results in this week's paper show that gaming, science and computation can be combined to make advances that were not possible before."

If you thought the intellectual property, licensing, user generated content, crowd sourcing, cloud sourcing, social media legal issues were already enough arising from scientific research, online gaming and crowd sourcing alone were enough to make your head spin, conjure up the implications when the term ‘convergence’ is applied to any two or three of these disciplines. Isn’t it time you had legal counsel and representation who can seamlessly help navigate them while your teams are busy solving the health care and medical problems of the world?

If you want to know more about how lawyers who understand can help your business, feel free to contact me, Joe Rosenbaum, or any of the Reed Smith attorneys with whom you regularly work.

"Mom, is it OK for them to follow me?" FTC Targets Ads That Target Kids

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!

The FTC vs. Google: Who Are You Going to Call?

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!

New Jersey Finds Media Companies Taxing

New Jersey recently announced an initiative that offers certain tax and penalty abatements to media companies that come forward voluntarily to bring themselves into compliance with the state's tax laws. New Jersey's policy is that any media company with New Jersey-based subscribers or that advertises in the state of New Jersey is subject to New Jersey state tax. But New Jersey officials believe that many media companies are not currently in compliance. So they are offering an abatement program, noting that any non-compliant company that does not come forward within the next 90 days will be treated much worse.

Reed Smith has one of the largest New Jersey state tax practices of any major firm, with extensive experience negotiating these types of tax agreements with New Jersey tax officials; and members of the practice always recommend that discussions with the New Jersey taxing authorities be done through qualified counsel to preserve taxpayer confidentiality. You can read our State Tax Alert on the subject, and if you are interested in learning more, contact David J. Gutowski or any of the Reed Smith lawyers with whom you regularly work. We would be happy to help.

Transcending the Cloud - Health Care on Cloud 9? Are You Doing Fine?

If you are a music aficionado, you will remember that years ago, The Temptations sang “I’m Doing Fine on Cloud Nine.” 

 

 

If you are a health care provider paying attention to the buzz about cloud computing, you may be concerned about migrating your technology, your data and your applications to a cloud environment.  Or, let’s say you are just confused about the implications. You are not alone.

That’s precisely why our Cloud Computing initiative exists. To provide you with a guidance system – navigational tools to allow you to see sunshine, even on a cloudy day. So, as part of our ongoing commitment to keeping abreast of legal issues, concerns and considerations in the legal world of cloud computing, here, from Vicky G. Gormanly and Joseph I. Rosenbaum, is the next chapter in Reed Smith’s on-going series, “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing,” entitled “Health Care in the Cloud – Think You Are Doing Fine on Cloud Nine? Hey, You! Think Again. Better Get Off of My Cloud.” This white paper examines the considerations and concerns that arise for the health care industry and the industry’s associated suppliers, vendors and providers in the wake of complex and evolving regulation and scrutiny – most notably, in the privacy and data protection of medical information – of electronic health records.

As we do each time, we have also updated the entire work, so that in addition to the single ‘Health Care in the Cloud’ white paper, you can access and download a PDF of the entire “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing” compendium, up to date and including all the previous chapters in one document.  After reading the article, instead of doing fine, you just may want to take the advice of The Rolling Stones and "Get Off of My Cloud" until you consult your legal advisors.

 

 

Of course, feel free to contact Vicky Gormanly or Joe Rosenbaum directly if you have any questions or require legal counsel or assistance related to this white paper. Make sure you subscribe via email or get the Legal Bytes RSS feed so you are always in touch with our latest information. Of course, if you ever have questions, you can always contact any Reed Smith attorney with whom you regularly work.

Google and the FTC

An Open IMHO Letter to Google

Dear Google:

I’ve heard that the FTC has served you with a civil investigative demand in connection with your search-advertising business. They have raised the question as to whether your search engine technology pushes consumers to your other services in a manner that is unfair to your competition.

Now the FTC will try to determine if your market power is dominant because your practices are unfair and whether consumers are harmed, either directly or by not having competitive choices in the marketplace. Of course, the FTC has taken into account the complaints of your competitors. That is significant because I’ve heard a rumor that companies rarely try to incite trouble for their competitors at a regulatory agency.

So what happens next? Senior executives scramble. Lawyers do research and prepare briefs. Finance people set up cost centers and budgets. Evidence is gathered. Experts are retained. Distraction will be pervasive, invasive, consistent and persistent - until a settlement is reached. It won’t be pretty. It won’t be fun. It never is. But it’s here and at least the sword of Damocles is not hovering above. The issues will be confronted and the scope will be expanded – government always uses what it finds as a basis for going farther than originally planned (it’s great leverage). Then the serious business of trying to reach an accord will begin.

This isn’t about winning or losing. It’s about making a point. But it’s de facto, a recognition that you are thriving at what you do and have grown large and successful as a result. True, this action is probably not the recognition you prefer, but when the government wants everyone to believe you might be too big, too dominant, too much in control at the expense of competition and the detriment of consumers, the target is painted on you and it’s just a question of how much pain is inflicted before a settlement is reached.

Now I am not an economist or a market dominance expert, I’m a lawyer and blogger; but I thought I might help out by offering some observations you can bring to the attention of the FTC that might give the government (maybe others in the industry and even your competitors), pause to question whether their analysis, their efforts, their investigation, is correct or necessary. I’ve taken the liberty of including an attachment to this letter (see Attachment A) that provides some tips. Feel free to use them and tell your lawyers to back them up with lots of research and briefs – those are always impressive and useful.

Sincerely,

Joe Rosenbaum at Legal Bytes.

P.S. If your people end up spending hours, days and months with government regulators, working through lunches, late nights pouring over documents, huddled around conference tables, it may give you an opportunity to point the officials to their next target. You know who.

P.P.S. Feel free to use these and other quotes from the FTC if you like:

“And, as the information industry is still emerging, quite dynamic, and not yet well understood, plausible efficiency benefits should, perhaps, weigh heavily in the balance against asserted risks of decreased competition, especially when the technology is changing so fast that adverse effects on competition are likely to be transitory.”

Antitrust and Technology: What’s On The Horizon?” Prepared Remarks of Federal Trade Commissioner Christine A. Varney, before the American Society of Association Executives, Legal Symposium, Washington, D.C., October 6, 1995

“A less confrontational approach suggests that because of the robust pace of innovation in high-tech industries, government should not intervene 'unless certain that doing so will benefit consumers and the economy.' (See, Priest, The Law and Economics of U.S. v. Microsoft, AEI Newsletter, August 1998).” Antitrust Analysis in High-Tech Industries: A 19th Century Discipline Addresses 21st Century Problems, Prepared Remarks of Robert Pitofsky, Chairman, Federal Trade Commission, to the American Bar Association Section of Antitrust Law's Antitrust Issues in High-Tech Industries Workshop, February 25-26, 1999, Scottsdale, Arizona

You really need to see Attachment "A" so if it isn't already displayed, point whichever browser you are using and click the "Continue Reading" text on the left below.

Continue Reading...

FTC Launches Mobile App Information Page

Earlier today, the FTC established a web page on its Website entitled, “Facts from the FTC: What You Should Know About Mobile Apps.”

The FTC web page contains a link to the U.S. federal government’s website OnGuardOnline, which provides government and industry-related information about how to protect and secure the information that may be available when you are online (and now when you are "app" happy on your wireless and mobile devices).

Are you in the online or mobile advertising industry? Do you create, use, share or obtain data from "apps"? Expect more, not less, regulatory and government agency activity in this area in the months and years ahead.

If you need help from lawyers with decades of experience, Reed Smith is the place to look. Feel free to call me, Joseph I. (“Joe”) Rosenbaum, or any of the lawyers within the Advertising Technology & Media law practice group, or any of the Reed Smith attorneys with whom you regularly work. We will be happy to help you.

Protection of Minors Doesn't Trample Free Speech in Online Games

In 2005, California enacted a ban on the sale or rental of violent video games (defined as a game that depicts killing, maiming, dismembering or sexually assaulting an image of a human being) to minors. The stimulus for the law was the stated belief that violent videogames are likely to make minors become more aggressive and violent. The penalty for retailers who violate the ban? As much as $1,000 per violation.

As you might imagine, the legal challenge started almost immediately – from publishers, distributors and sellers; and today, in a 7–2 vote, the U.S. Supreme Court upheld a ruling by an appeals court that held the California law unconstitutional. I believe (although I didn’t go back and check yet) that California now becomes the seventh state to have such a law struck down. Justice Scalia, in summarizing the decision, is reported to have said, “Our cases hold that minors are entitled to a significant degree of First Amendment protection. Government has no free-floating power to restrict the ideas to which they may be exposed"; and in his written opinion for the majority noted, "Even where the protection of children is the object, the constitutional limits on governmental action apply."

We will try to bring you more details once we analyze the 18-page opinion handed down today, but if you have questions, feel free to call me, Joseph I. ("Joe") Rosenbaum, or any of the Reed Smith attorneys with whom you regularly work.

Transcending the Cloud - Advertising & Marketing Make Rain

This post was written by Joseph I. Rosenbaum and Keri S. Bruce.

As part of our ongoing commitment to keeping abreast of legal issues, concerns and considerations in the legal world of cloud computing, most of you know we have been publishing regular topical updates to our Cloud Computing initiative – new chapters and white papers intended to provoke thought, stimulate ideas and, most of all, demonstrate the thought leadership Reed Smith attorneys bring to bear when new and important trends and initiatives in the commercial world give rise to new and interesting legal issues. If you didn’t know, re-read the previous run-on sentence!

So here, from Joe Rosenbaum and Keri Bruce, is a glimpse at some issues that apply to the world of advertising and marketing arising from Cloud Computing. This next chapter in Reed Smith’s on-going series, “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing,” is titled “Cloud Computing in Advertising & Marketing: Looking for the Silver Lining, Making Rain.” This white paper tries to examine the considerations and concerns that arise within the advertising and marketing industries in the wake of complex and evolving regulation and scrutiny. We hope it provides some insight into the issues and the factors that apply, even as the industry and the regulatory landscape continue to evolve.

As we do each time, we have updated the entire work so that, in addition to the single "Advertising & Marketing" services’ white paper, you can access and download a PDF of the entire “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing” compendium, up to date and including all the previous chapters in one document.

Of course, feel free to contact Joe Rosenbaum or Keri Bruce directly if you have any questions or require legal counsel or assistance related to advertising and marketing. Make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information. And if you ever have questions, you can always contact any Reed Smith attorney with whom you regularly work.

Friends on Facebook - Hold Them Close, Get Held in Contempt of Court!

Since 2009, Legal Bytes has been blogging off and on about the implications of social media to the legal profession and the legal process. Whether it's judges being "Friends" with lawyers (see, Florida Judges Can't Have Friends), or jurors networking about evidence or cases as they deliberate (see, When Pressing Suits, Judges Tell Jurors Neither Social Nor Media is OK), or reporters "tweeting" from the courtroom (see, Freedom of the Press = Freedom to Tweet), social media is a force to be reckoned with—and the legal process also needs to reckon with it.

The latest blip on the radar comes from the UK, where Joanna Fraill, a juror, has been tried and convicted of being in contempt of court in what is being widely reported as the first Internet-related contempt of court prosecution in the UK (and perhaps anywhere). So in addition to judges, prosecutors and plaintiffs' lawyers being wary about managing their online relationships, and jurors being admonished for searching online for information regarding the facts, parties, or issues in a case, add communication between jurors and parties in the legal proceedings to the list. Ms. Jamie Sewart, a defendant in a trial in Manchester involving billions of BPS' worth of drugs, was contacted by Ms. Fraill, one of the jurors in the trial, through Facebook while the jury was deliberating.

Ms. Sewart admitted knowing Ms. Fraill was one of the jurors when she "accepted" the request to be friends, and the case collapsed when their communication through the social networking medium was uncovered. Ms. Sewart's partner was convicted and is currently in prison, but Ms. Sewart was acquitted as a result of this trial. In one exchange between them – the text has now been made public – Ms. Fraill sent a message to Ms. Sewart regarding the jury deliberations stating: "cant get anyone to go either no one budging pleeeeeese don't say anything cause jamie they could all miss trial and I will get 4cked to0."

Now before everyone rants about the evils of social media, bear in mind that the same result would be obtained if the juror had written a letter, called by phone or sent a coded message by carrier pigeon. The fact that a new means of communication – the Internet – was involved doesn't change the admonition, the rules, or the consequences of the conduct. Indeed, with Facebook's user population at approximately 700 million, the relatively lax attitude toward anyone monitoring their millions of followers on Twitter (or who they follow – I generally just automatically reciprocate), isn't it likely one of you is already "Friends" with a criminal, or you will be, or you are following someone who may be appearing in court any day now?

Communication between participants in legal cases has long been the subject of ethical rules, professional guidelines and rigorous policing. Issues relating to privilege and work product, attorney-client communication, and relationships between lawyers, judges, plaintiffs and defendants, are not new. But jurors wanting to be "friends" with a defendant in the midst of a trial – well that's one I haven't heard before.

Reed Smith has teams of lawyers knowledgeable in digital evidence and discovery, employment and social media, privilege and litigation, in the age of the Internet and mobile communication. So as I've said before, keep your browser tuned (or bookmarked) to www.LegalBytes.com for breaking news, and if you do need help, contact me, Joe Rosenbaum, or any of the lawyers at Reed Smith with whom you work.

OMG B KEWL and call (or SMS) if you need help.
 

Facebook Faces Yet Another Minor Case - Ads Add Added Woes

Facebook is facing another class-action, this time in Federal Court in Illinois, charging it used minors in its advertising. Although I haven't done a search, there are at least two or three others – federal actions in California and New York and at least one state lawsuit filed in Southern California. In each of these cases, the allegations are essentially the same. Facebook takes user names, pictures and preferences, using the "Like" buttons, and then mashes or moshes (that word is the pits) them with paid sponsorship and advertising to target specific ads – sometimes referred to as "enhanced" or "premium" advertisements. The user's name or likeness can be "pushed" to their Facebook friends – presumably people who the user has specifically permitted to be able to see such information; and also presumably by becoming a "friend," they, in turn, have manifested a desire or interest to know what the individual is doing, what she or he likes, opinions, where they are and what they are doing.

Aside from issues of free speech, voluntary opt-in and parent consent, especially where the individual is a minor and their name, image or likeness is used in an "ad" (and it's not clear or settled that these are all "advertisements"), a question arises as to whether section 230 of the 1996 Communications Decency Act insulates Facebook from liability as a neutral communications platform that doesn't control what each individual does or offers – so long as they act in accordance with Facebook's terms and conditions. Some commentators point out, however, that in 2007, a Federal Appeals Court in California (9th Circuit Court of Appeals) held that Roommates.com was not immune when their users posted ads that were illegal under the Fair Housing Act (See, Fair Housing Council v. Roommates.com LLC [PDF]. That said, in the Roommates case, the ads were, to some extent, structured, and categories of content and information for the ads encouraged, if not solicited, populating the database of advertising for roommates using the website. Facebook may well argue that simply providing a "Like" button and making it available for use, is no different from a brand owner making a gadget or widget icon available should a user want to place it on their site. The "platform" – in this case Facebook – has no part in the user's decision, nor is it offering to customize the user's "Like" decision in any way that could be construed as editing or adding new content as a publisher.

One thing is very clear. Nothing is clear. Stay tuned!

Welcome to Disco via SMS - Google Finds Itself Dancing in Court

This post was written by Judith L. Harris, with assistance from Reed Smith Summer Interns James Duchesne and Linda Shim.

A new trend is quickly taking hold. In recent months, a sizeable number of class action lawsuits have been filed involving unsolicited text messages. A messaging system called "Short Message Service," better known as "SMS", allows individuals to receive text messages on mobile phones.  Consumers unhappy with bulk, unsolicited SMS marketing messages are filing suit under the Telephone Consumer Protection Act 47 U.S.C. § 227 ("TCPA") in alarming numbers. You can read a summary of the TCPA Rules [PDF], but to recap for these purposes, the TCPA prohibits any call from an automatic telephone dialing system to any mobile telephone service or any service for which the called party is charged. Since most mobile phone service plans charge on a message received/sent basis, the fact that SMS is subject to the TCPA's prohibitions (just like land line phone calls), has caught many by surprise - including many of the most sophisticated operators in the mobile marketing space.

Lusskin v. Google [PDF] is one of the latest of these cases to be filed (Federal Court in California) and takes aim at Disco, launched by Google just this past March. In Lusskin, the plaintiffs are claiming that the Disco app gives Google the ability to "harvest all phone numbers" added by consumers so that Google "can independently send its own text message advertisements" promoting the Disco application. Individuals can use Disco to input names and mobile phone numbers (into groups); however, no permission or consent is required from someone whose name and number are added! When the group starts, Disco sends a message to members welcoming them, instructing them how the service works and how they can opt out. Once the groups are formed, messages can be sent from a single source, for a single charge, to all group members. Each member of the group receives the message and each can respond and, you guessed it, each response is sent to every other group member – an SMS mobile "chat room."

Unbeknownst to Mr. Lusskin, he was added to one of these Disco groups and his mobile phone notified him of a text message from an unfamiliar number – the "welcome" message from Disco. Unfortunately, the "chat room" quickly turned into an angry and confused barrage of messages from the other unsuspecting group members responding to Disco's first, unsolicited message. Messages poured in so rapidly and voluminously that Mr. Lusskin claims he was unable to use his mobile phone until the alleged 105+ SMS messages had all been received. Mr. Lusskin has filed as a class action, seeking relief for all persons who received the unsolicited initial welcoming text message from the Disco service. Mr. Lusskin also wants to include, as plaintiffs in the action, anyone who opted-out of the Disco service within 24 hours of receiving an unsolicited welcoming text message, or who was a member of a Disco group that was closed within 24 hours of its creation.

With a potential penalty of $500 in damages for each TCPA violation - each unsolicited message (and triple that number if a plaintiff can show the violation was willful or knowing) – no wonder consumers are seeking to use the TCPA to get some attention, or rather seeking to avoid getting unsolicited attention.

Are you in the mobile marketing arena? Need to understand the rules and regulations surrounding the medium? If you are an advertiser, marketer or sponsor involved in promotions, the message (content), we can help you keep abreast of Lusskin and its brethren as they seek to carve out a place under TCPA regulation. If you need help, contact Judith L. Harris, or me, Joe Rosenbaum, or any of the Reed Smith attorneys with whom you regularly work.

The Rise of Digital Outdoor Billboards - Signs of the Times

Although it might be intuitively obvious when you think about it, most people have simply overlooked billboards as a growing advertising medium. Did I say "growing"? Well yes, I did. More and more highways and roads are being built. More vehicles are on the road, fuel costs and mass transit subsidies notwithstanding. Stuck in traffic? Sitting on a commuter rail or waiting at the shelter for the next public bus to whisk you off to work? Guess what. You're staring at an advertisement. Increasingly, outdoor space is being used to serve multiple advertisements – tri-fold slat advertising, roll-away-screen advertising. But in case you haven't noticed, digital billboards are beginning to pop up everywhere – New York City has them on the sides of buses and the tops of taxi cabs.

Makes sense. As consumers have taken more control over the advertising they see on the devices they use, what better place to capture attention than on a billboard you are simply staring at while you are waiting, traveling or driving to your next destination. So yes, digital billboards are growing even faster (see, for example, an article posted by the BBC news service in the UK entitled, Outdoor Advertising Goes Digital).  Not only that, but digital billboards provide the ability to alter messages at will and can be interactive – with QR Codes, Bluetooth sensors, RFID tags, SMS Text message promotions (to see some examples, take a look at the slides from my recent presentation at the 10th Annual SME Digital Forum - Rosenbaum Presentation).

Legal issues? Well first, there is the intrinsically public nature of billboard advertising generally – which means you have to be more sensitive to standards, community norms and specific regulations applicable to categories of advertising (e.g., municipal ordinances regarding tobacco advertising near schools, etc.). Plug number 1 – you should always consult your legal advisors when reviewing billboard advertising. For example, could this have been approved? The disclosures are there, after all!

OK, just kidding. But that said, a new issue has arisen regarding the safety of digital advertising for drivers. Flashing lights, moving images, animated sequences can be distracting. Well the debate isn't all that new. (Digital Billboards Spark Safety Debate (2007); Digital billboards: Good business or danger to drivers? (2010)). Nor is it limited to the United States (e.g., Do digital billboards add to danger on UAE roads? (2009)).

Perhaps the increased number of digital billboards is raising concern that every roadway, bus shelter and available space outdoors will be consumed with Times Square-like illumination all the time. So far, studies report that digital outdoor advertising is safe. For example, see the March report of Watchfire Digital Outdoor entitled, "Digital Billboard Safety Confirmed". The safety issue likely will continue to rear its head periodically, along with questions about propriety of certain types of ads served on digital billboards, and I assume the inevitable claim that the lights are keeping everyone in the neighborhood up at night – although on a long drive late at night, perhaps flashing lights are a good thing.

In any event, outdoor billboard advertising isn't dead. It's being transformed, along with all other forms of advertising and marketing. Need help from lawyers who understand both advertising and digital transformation? Reed Smith is the place to look. Feel free to call me, Joseph I. ("Joe") Rosenbaum, or any of the Reed Smith attorneys with whom you regularly work.

FTC Proposes to Update Dot Com Disclosure Guide to Online Advertising

"Dot Com Disclosures" [PDF], the Federal Trade Commission's (FTC) guidance for online advertisers, was issued in May 2000.

Yesterday, the FTC issued an announcement [FTC Staff Invites Comments Regarding "Dot Com Disclosure" Business Guidance Publication [PDF]] asking for comments and suggestions from interested parties regarding updates to the online advertising guidance, based on the fact that when Dot Com Disclosure was first released, social media, mobile marketing, "apps" and similar innovative advertising and content distribution mechanisms either did not exist, or were in their infancy.

The online world and the online and mobile world of advertising has changed radically and continues to evolve dynamically since 2000, and if you want your comments to be considered, the FTC must receive them by July 11, 2011. Comments will generally become matters of public record at http://www.ftc.gov/os/publiccomments.shtm.

Are you in the online or mobile advertising industry? Do you create, use, share or obtain data from "apps"?   Do you want your views to be considered – whether as part of an industry association or individually, or both? Need help crafting your submissions and comments?

If you need help from lawyers with decades of experience, Reed Smith is the place to look. Feel free to call me, Joseph I. ("Joe") Rosenbaum, or any of the lawyers within the Advertising Technology & Media law practice group, or any of the Reed Smith attorneys with whom you regularly work. We will be happy to help you.

10th Annual SME Digital Forum - Rosenbaum Presentation

As we’ve done in the past, Legal Bytes is happy to post, in addition to charts and references and links to valuable sources of information, a copy of the presentation given by Joseph I. (“Joe”) Rosenbaum at the 10th Annual SME Digital Forum hosted by La Asociación de Ejecutivos de Ventas y Mercadeo de Puerto Rico (SME) (Association of Sales and Marketing Executives of Puerto Rico).

The presentation, in PDF format, can be read and downloaded right here, “Social and Mobile and Clouds, Oh My! The Brave New World of Marketing in the Digital Age,” with only the audio/visual clips and commercials having been omitted because of their file size. Of course, if you want further information about the presentation or any of the materials covered or referred to, please don’t hesitate to contact Joe directly at jrosenbaum@reedsmith.com.

Twitter Buys TweetDeck

Although unconfirmed directly, CNN and CNET are reporting that Twitter has acquired London-based TweetDeck for a reported $40 million. TweetDeck is a desktop application that uses Adobe Air and is attempting to create a user interface in columnar form to entice users to display and ostensibly manage their social media connections.

SME Puerto Rico Hosts the 10th SME Digital Forum

Joseph I. ("Joe") Rosenbaum has been invited to speak at the prestigious SME Digital Forum hosted by La Asociación de Ejecutivos de Ventas y Mercadeo de Puerto Rico (SME) (Association of Sales and Marketing Executives of Puerto Rico).

This 10th edition of the Forum will be held Wednesday, May 25, and includes the presentation of the "2011 SME Digital & Mobile Behavioral Study" and the "Digital SME Awards." From what we understand, this is the first time the Forum has been expanded to include concurrent seminars and lectures on topics such as legal, digital marketing and emerging trends. An honor to be invited; a privilege to attend; an exciting opportunity to learn and network with other professionals. See you there!

Deep Throat Gains Respectability in the Digital Age

Check out the International Law Office to see its authorized, customized article, “Investigative journalism enters the digital era”  of our prior blog posting, “Dear WikiLeaks, Here We Come. Sincerely, The Wall Street Journal.” Thanks, ILO!

Mobile Advertising & Marketing - Myths & Miffs

Thanks to the Digital Marketing Committee of the Association of National Advertisers for having me attend and give a presentation on mobile advertising and marketing yesterday. A copy of the presentation is available for your reading enjoyment right here: “Mobile Marketing or I Know Where You Will Be Next Summer & Other Mobile Marketing Myths.” (PDF)

Do Not Track - Diving Deeper Into the Quicksand

Coming on the heels of a bill aimed at preventing children from being tracked, introduced by Rep. Ed Markey (D-Mass.) (see, Rep. Markey Releases a Kids Do Not Track Discussion Draft Bill): Today, Jay D. Rockefeller (D-W.Va.), Chair of the Commerce, Science & Transportation Committee in the U.S. Senate, introduced a Do Not Track Online bill that would empower the FTC to promulgate rules "that establish standards for the implementation of a mechanism by which an individual can simply and easily indicate whether the individual prefers to have personal information collected by providers of online services, including by providers of mobile applications and services . . . "

A copy of the proposed legislation is available here for you to download and read Do Not Track Online Act of 2011 – Proposed Rockefeller Bill (PDF). Of course, if you need legal guidance, advice or representation as these bills are introduced and make their way through the legislative process, don’t hesitate to call us. We are here to help.

The Tip of the Iceberg - 'Do Not Track' Kids Bill Proposed

After several months of anticipation, Rep. Ed Markey (D-Mass.) released his Kids "Do Not Track" discussion draft bill. At face value, this bill appears to have a narrow focus of online behavioral activities toward children, which we normally define under the Children's Online Privacy Protection Act ("COPPA") as any individual younger than 13. However, such is not the case. This bill would amend COPPA to expand some marketing provisions to teens under age 18, and may, in effect, require better age screens, given teen savvy (and their propensity to lie about their age).

If enacted, this bill has the potential to create complications when marketing to the crucial college age and young adult market as more sophisticated age screens will require all to enter information that they might not want to share online.

To read the entire Reed Smith Alert and find out more, just check out Rep. Markey Releases a Kids Do Not Track Discussion Draft Bill.

FDA Examines Social Media: Food, Drugs and, Yes, Social Disease

Although it might not be obvious from the way the memorandum and discussion topic listing is phrased, the FDA Risk Communication Advisory Committee of the U.S. Food & Drug Administration is examining the use of social media, networking and new technology in assessing its Risk Communication protocols. The memorandum lists some publicly available background materials as reference points for the committee meeting yesterday (Background, May 5, 2011 Risk Communication Advisory Committee Meeting), and there is an associated list of discussion topics for the meeting (FDA Risk Communication Advisory Committee, Discussion Topics).

As we all appreciate, communication and dissemination of information about food and drugs affects the health and safety of literally millions of people. Preventing misinformation, as well as the timely availability of helpful, relevant and important information, is critical to any communication strategy. The Risk Communication Advisory Committee clearly appreciates the fact that technology (including social networking and mobile communication channels) can often quickly provide and make available accurate and helpful information to health and medical professionals, as well as to the population that might be at risk or individuals who need to know in any given situation – whether they are or are not on social networks or online. That said, like any other new technology or new application, implementing a system that optimizes the benefits of the use of technology, while minimizing the risks inherent in such adoption, is not a trivial or simple task.

If you are interested in following the proceedings, or have an interest in the use of social networking, cloud computing or any number of new technologies as they relate to legal, regulatory and compliance obligations and requirements, don’t hesitate to contact me or the Reed Smith attorney with whom you regularly work. We will make sure you get the help you need.

Celebrity Endorsements - The Fame, Blame or Shame Game

In January, Ace Metrix released a report questioning the relative value of celebrity endorsements ("Celebrity Advertisements: Exposing A Myth Of Advertising Effectiveness"). Just last month, a new study, co-sponsored by Ketchum and conducted by the Nielsen Company and BlogHer, took a look at social media trends among women and found online women were almost twice as likely to be influenced to consider a product based on a blogger they follow, rather than a pitch from a celebrity (2011 Social Media Matters Study).

Most of us understand that a few seconds of exposure on Oprah can mean the top of the best seller list, but celebrity steps and mis-steps can often pose, shall we say, "challenges," for a brand. Celebrities such as Tiger Woods, Charlie Sheen, Lindsay Lohan and a host of others have seen their ups and downs. Correspondingly, advertising-endorsement considerations when dealing with any celebrity can be a mixed bag, depending on timing, relevance, image and a host of other factors—many outside the sponsor's control. Sometimes neutral and other times negative, these recent studies suggest there are fewer success stories than one might otherwise assume.

Does this mean the end of celebrity endorsements? Probably not. But it may mean advertisers and agencies will become more selective and objective in evaluating the cost of promotions involving celebrities. Someone suggested celebrities should be compensated based on the "performance" of the advertising. First of all, that's nothing new. However, in case you are wondering—and to throw in a quick legal byte—if a celebrity has a financial interest in the outcome of advertising involving that celebrity, yes, Legal Bytes has already noted that the FTC has an "app"etite for that: FTC (Revised) Endorsement Guides Go Into Effect.

The Advertising Technology & Media law practice group at Reed Smith has lawyers with decades of experience in working with advertisers and agencies handling matters involving celebrity endorsements—the good, the bad and, sometimes, the ugly. Let us know if you need us. We are happy to help.

Food & Beverage Advertising to Children: Self-Regulation or Indigestion?

Earlier today, an Interagency Working Group released a report on the Federal Trade Commission's website making sweeping recommendations relating to the marketing of food to children. The report, entitled "Interagency Working Group on Food Marketed to Children Preliminary Proposed Nutrition Principles to Guide Industry Self-Regulatory Efforts Request for Comments," is the result of the U.S. Congress' request that standards for the marketing of food products to children under the age of 18 be subject to review and recommendation by an interagency task force comprised of the FTC, the Centers for Disease Control and Prevention, the Food and Drug Administration, and the United States Department of Agriculture.

The recommendations in the Principals bifurcate foods into two categories, for determinations as to the appropriate marketing approaches and restrictions: (a) foods that are deemed to make a "meaningful contribution to a healthful diet"; and (b) foods that, given their nutritional content, should have their advertising limited.

While the proposed recommendations are referred to as "voluntary," this not only flies in the face of the inevitable pressure on advertising practices in the food and beverage industry, but—if previous government agency regulatory recommendations, guidelines or proposals are a precedent—these can also quickly become de facto standards that the regulators themselves use in enforcing "industry standards." As with so many areas currently under scrutiny by the regulators both in the United States and around the world, deference to self-regulation is a welcome trend; but if it is mere lip service, and if industries are not given a meaningful opportunity to design both self-regulatory standards, and appropriate and meaningful enforcement mechanisms, it simply ends up creating further adversarial tensions and needless contention between industry and regulators – none of which is ultimately good for consumers in terms of cost or benefit.

The Interagency Working Group has provided a very short window for public comment: comments are due by June 13, 2011, although with enough outcry, given the scope and breadth of the Principles, they might be persuaded to extend the deadline. That said, if your company is in the food and beverage industry and will be affected by any government or self-regulatory pronouncements in this arena, now is the time to engage in the dialogue – in your own right and through the various industry associations that may be submitting comments. Of course, if you need help and guidance, the Advertising Technology & Media law practice at Reed Smith has lawyers ready to counsel, assist and represent you.

Free Speech on the Internet - India Goes Schizophrenic

Unreasonable restraints on free speech? India? Well, you decide. According to an article published today in the Pittsburgh Post-Gazette, storm clouds are brewing over just how far the government should and can go in restricting free speech on the Internet. Indeed—just how ambiguous the regulations can be such that interpretation becomes a subjective problem, enforceable at the discretion of regulators.

Unfortunately, the new rules (referred to as “Information Technology (Intermediaries Guidelines) Rules, 2011”) stem from a 2008 amendment, widely supported by Internet service providers (I.T. Act 2008) to an Indian information technology statute first enacted in 2000. For a history of the Indian legislation, see Information Technology Act 2000 (ITA-2000).

The Amendment removed intermediary liability of Internet service providers, many of whom are represented by the Internet and Mobile Association of India, for any content created by third parties and for which the ISP played no active role in creating. While the removal of passive ISP intermediary liability is one of growing consistency in the international community, the regulations broadly empowering officials to curtail free speech on the web are not.

Growing trend, justified by security? Aberration spawned by immediate and local concerns? Abuse of power? Reasonable trade-off for protection of society? Ahh, but whose society? Where is the balance? Who decides?

Take a look at the regulations, then you decide. But if you need legal guidance or have questions about regulations that apply to the Internet—internationally, multi-nationally or domestically, in almost any part of the world—let us know. We are here to help.

Cloud Computing - Clouds Can Sometimes Be Storm Clouds

This post was written by Joe Rosenbaum and Adam Snukal.

Among others news publications, CNN Money just recently reported that Amazon.com’s cloud-based Web service EC2 suffered a “rare and major outage” this past Wednesday that affected several online sites it supports, including Reddit, HootSuite, Foursquare and Quora. Amazon.com hosts many major websites on its servers through its cloud-based service and, in total, “[t]housands of customers hitch a ride on Amazon's cloud, renting space on its servers.” The recent outage crashed several customer sites and created glitches of varying degrees on others.

As cloud-based Web services have proliferated, the risks associated with major outages for companies dependent on cloud-based services have become a reality. This recent outage, and potentially others like it, could create reputational risk not only to the cloud providers, but also to those who use the cloud computing services of those providers for their technology infrastructure – processing, applications and data – exposing them to contractual liabilities for failure to meet promised service levels, breaches of performance representations and warranties, and even potential security and data breaches. All these and more, possible legal and contractual problems arising from the use of and reliance on cloud computing. These potential risks should be eliminated or mitigated, and while contracts cannot always guarantee operational integrity or performance, they can provide indemnities and remedies that offer a measure of protection or mitigation in many circumstances.

Reed Smith has been at the forefront of cloud computing legal thought-leadership and risk-mitigation strategy for our clients. Our lawyers have significant U.S., international and multinational experience in implementing strategies, such as service level agreements and risk-mitigating tools that help limit risks associated with cloud-based computing and cloud service outages. Indeed, to appreciate the risks, one need only look to one of the very first articles by Rauer Meyer, entitled When the Cloud Bursts – SLAs and Other Umbrellas, drawn from Reed Smith’s on-going series – one that you can view or download entirely in up-to-date form – entitled "Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing." You can access and download a PDF of the individual article or the entire "Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing" compendium, up to date and including all of the previous chapters in one document.

Of course, feel free to contact Christopher G. Cwalina or Daniel Z. Herbst or Joe Rosenbaum or Adam Snukal (or the Reed Smith lawyer with whom you normally work) if you have any questions or require legal counsel or assistance. Make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information.

ILO Publishes 'Twitter Settles with FTC - Gets 20 Years' Probation!'

On April 5, 2011, the International Law Office published a customized version of the March 14, 2011 blog on Legal Bytes, Twitter Settles with FTC - Gets 20 Years' Probation! You can read it online or download your own copy of the ILO posting here: ILO Posts Twitter Settlement news.

Federal Grand Jury Seeks To Open Pandora's Box

Knock Knock. Who's there? Andover. Andover who? Andover those records Pandora.

So Pandora Media, Inc., the company that brings us the popular Pandora® Internet Radio, has reportedly received a subpoena from a federal grand jury looking into the practice of information-sharing involving smart phone applications. Pandora did indicate, however, it had been advised it was not a target of the grand jury investigation, and that it believed the legal request for the production of information had been served on an "industry-wide basis" to many other smart phone application publishers. Not much else is known about either the specific subpoenas (or is the correct Latin, "subpoenae"?) or the nature or focus of the federal investigation; but guessing that it relates to the sharing of information about location-based target-marketing practices, and the disclosure of information by and among ad publishing networks, can't be far from the target.

The Advertising Technology & Media law practice group, in conjunction with our global regulatory practice and litigators when we need them, has experience in dealing with such subpoenae (or is the correct English "subpoenas"?). Think about knowing how to respond before you get served – with a subpoena or on a platter. OK. I'm still in the April Fool's Day spirit. What can I say?

Twitter Settles with FTC - Gets 20 Years Probation!

On Friday, March 11, 2011, the Federal Trade Commission issued a press release announcing that, by a 5-0 vote, the Commissioners had approved a settlement with Twitter, stemming from charges that the social media and social networking site had deceived consumers by failing to protect personal information and potentially compromising their privacy. Last June, the FTC had charged Twitter with lapses in data security sufficiently serious that hackers were able to compromise administrative control, including both non-public user information and consumers’ private tweets. Hackers could send out fraudulent phony or spoofed tweets from virtually any user’s account.  The complaint originally filed against Twitter alleged that there were at least two instances where hackers were able to get control in early 2009, although it is possible there were other times as well. 

Twitter’s privacy settings ostensibly permit a user to identify tweets as private, and the FTC has consistently maintained that when a company posts a privacy statement or policy, aside from seeking to form a binding agreement between company and consumer regarding use of the site and the service, it also can make claims, announcing (i.e., advertising) the quality, integrity, reliability and security (among other things) of the features, functions and operations of the site that the public and each consumer using the service can rely upon. As the FTC noted in its press release, Twitter’s privacy policy says, "Twitter is very concerned about safeguarding the confidentiality of your personally identifiable information.  We employ administrative, physical, and electronic measures designed to protect your information from unauthorized access." From a regulatory perspective, this statement is viewed as constituting a ‘claim’ relating to the data protection measures Twitter utilizes and how the company treats customer information and activity.  

Although a settlement finalized in a consent agreement doesn’t amount to an admission of liability or a violation of any law or regulation, a final consent order does have the force of law against the company going forward. In this case, Twitter has agreed that for the next 20 years it will (a) not mislead consumers about the extent to which it protects the security, privacy and confidentiality of nonpublic consumer information, (b) respect and honor consumers’ privacy choices, and (c) not mislead consumers about what it does or how safe the mechanisms are that are designed to prevent unauthorized access.  Twitter also agreed that every two years for the next ten years, it will have an independent auditor review and evaluate Twitter’s information security program.

Need more information about how the FTC views terms of use, privacy statements and the ‘advertising’ claims that arise in social media?  Contact me or the Reed Smith attorney with whom you regularly work.

2011 ANA Law and Public Policy Conference - Don't Miss It

The Association of National Advertisers (ANA) is holding its annual Law and Public Policy Conference in Washington, D.C. The digital revolution is well underway and changing the legal landscape every day at lightning speed.  Keeping up is becoming a nearly impossible task.  The Seventh Annual ANA Advertising Law and Public Policy Conference, co-chaired by Reed Smith partner and ANA General Counsel, Doug Wood, and the ANA’s Executive Vice President for Government Relations, Dan Jaffe, enters the battlefield by putting together a stellar faculty, including leading regulators, top practitioners, and serious critics, capped off by a session that puts it all together, led by a leading law professor.  The new world started with everything becoming an "e" – e-mail, e-commerce, e-this, e-that.  And then came wiki -- Hawaiian for speed.  Enter Wikipedia, wiki-news, wiki-this, wiki-that.  Welcome to the new world of wiki-lawyers.

Continuing Legal Education (CLE) credits will be provided.  What are you waiting for?

When

Tuesday, March 15, 2011, at 7:30 a.m., through Wednesday, March 16, 2011, at 5:00 p.m.

Where

Park Hyatt Washington, D.C.
24th & M Streets, NW
Washington, D.C.

Get more information & REGISTER.

Advertisements going Mobile - something new or just the matrix reloaded?

Wow! I thought I was cool playing "Going Mobile" by The Who (from their album – remember albums? - Who's Next, released in the United States August 14, 1971) to introduce my presentation about the legal implications of mobile advertising and mobile marketing (see Advertising on the Go - Mobile Marketing or Mobile Mayhem).

But I tip my hat to you Legal Bytes readers. You are on the ball. After blogging about the presentation, a friend and avid Legal Bytes reader reminded me of an article I wrote in 2005, published in the New York Law Journal Magazine, entitled "Transformed", in which I stated: "No longer tied to desks or offices located in centers of commerce and society, we carry our electronic tool boxes with us wherever we go. We have pagers, cell phones and wireless PDAs with names like Treo™ and the BlackBerry® . . . whose addictive qualities . . . (make us refer to them) as 'crack' berries! We carry them with us into restaurants, Broadway shows, buses and even bathrooms."

Wow, déjà vu all over again (with respect to Yogi Berra). Can you make it through the day without your BlackBerry or your Smartphone (we didn't call them that in 2005)? What's the first device you look at in the morning? What about before going to bed? Now I can even access Legal Bytes with a scan using my mobile. Wow!!

I am reminded of one of my favorite quotes from George Santayana, Spanish American philosopher (perhaps most remembered for his remark, "Those who cannot remember the past are condemned to repeat it"). My personal favorite quote of his is, "We must welcome the future, remembering that soon it will be the past; and we must respect the past, remembering that once it was all that was humanly possible." (The Philosophy of George Santayana, Northwestern University Press, 1940, p. 560). Oh, and if you actually like The Who, you can listen to Going Mobile:

 

 

Indeed. Déjà vu all over again!

Social Media & the Party of We: The Empire Strikes Back

Last week, Legal Bytes posted reference to an opinion piece written by my Reed Smith partner and colleague, Douglas J. Wood, describing the creation of the ‘party of We’ as a byproduct of social media and its enabling technology (See Social Media Revolution - The Party of We). Not one to rest on his laurels, Doug has followed it up with a new article, published last Friday on Law.com, entitled, Let My People Go ... Online! The Party of We and People Power. Change is in the air, and these insights should not be missed.

Social Media Revolution - The Party of We

Think social media is a fad? Think Common Sense or the Federalist Papers were just articles and bits of information? Wonder if broadcast television and radio – access to information – contributed to the demise of the Berlin Wall (that, and of course, Pink Floyd)? Well hearken ye well, citizens of the planet. Check out the editorial by my Reed Smith partner and colleague, Douglas J. Wood, entitled, WikiLeaks Lessons: The Party of We — Already in Control and buckle up. The revolution has just begun.

That Face is Written All Over Your Expression - Facebook Adds Ads

Hi. Do you like Legal Bytes? Have you told friends about Legal Bytes? Shared the link www.LegalBytes.com with at least 10 friends and colleagues? Have you told anyone about an article, a Useless But Compelling Fact or perhaps a Light Byte on Legal Bytes? Well, have you? I mean do you REALLY like Legal Bytes? If you do, please click the icon now:

What? Nothing happened? Well, that's right. Nothing happened. Sorry to disappoint you, but aside from the satisfaction of reading very exciting and timely postings; thoroughly enjoying the insights; admiring the wit and wisdom of the authors and editor; and, we hope, feeling enlightened and mildly entertained – this is, after all, a legal website, and you get nothing. We don't even publish comments or invite debates – that's not what Legal Bytes is about. Oh, and we don't use your name or email address. We just want you to read, and we thank you!

Not so any more on Facebook; and although I have been given absolutely nothing and have had no contact with any of the following companies about this or any other blog posting, here goes:

Have you been posting nice things on your friends' Facebook pages about your morning Starbucks coffee or perhaps checking in at Steamboat Springs, eager to hit the slopes? Have you felt compelled to comment to a Facebook friend that you just bought a new General Motors Cadillac and how great it now looks and drives? Has your Twitter feed, your LinkedIn comment, or your Digg dig shown up on Facebook, remarking about the lovely feel of Proctor and Gamble's Charmin bathroom tissue? Perhaps you have been browsing the official Facebook pages of MTV or Coca-Cola, or marveling at Kellogg's Cares? Like what you see? Well just click the "Like" icon at the top of those pages to let them and the world know.

Advertisers will now be able to take your nice posts, comments, remarks and words – those messages posted about brands – or your "like" clicks, and turn them into advertisements and "sponsored stories" for your friends to see. Although they won't be edited – not even the advertiser will be able to do that – postings on your wall that now show up on your "friends'" news feeds will now also show up on your friends' home page, right along with the other advertisements – more noticeable and conspicuous to be sure.

Although you won't be notified it's happening and you can't opt out, don't worry about someone stealing your words or preferences. The ad will have your name and profile photo, and will appear as an advertisement, along with the others, only now labeled as a "Sponsored Story." Going one better than "word of mouth," your posts, your check-ins and your likes will be as plain as the expression on your Facebook. According to what we have read, Facebook has stated that "A sponsored story never goes to somebody who's not one of your friends."

So far the griping has not been whether Facebook has the right, or even about keeping the ads limited to Facebook "friends" who already can see your postings. It's been about not being told that my "check-in," which enables me to connect with others while I'm on the move, is now going to be used to "promote" the places I check into – without my approval or without me necessarily knowing. If my neighborhood diner is going to get an endorsement (explicitly or implicitly), do I get royalties (or a complimentary egg-white omelet)? Listen up, Converse, I need a new pair of sneakers. 

Transcending the Cloud - Financial Services: Show Me the Money!

This post was written by Joseph Rosenbaum, Adam Snukal and Leonard Bernstein.

Welcome to the New Year. As they do each year, clouds, together with some sunshine (and a cold winter blast periodically in our Northern Hemisphere), roll in, too.

Last year we published a number of topical updates to our Cloud Computing initiative – new chapters and white papers intended to provoke thought, stimulate ideas and, most of all, demonstrate the thought leadership Reed Smith attorneys bring to bear when innovative and important trends and initiatives in the commercial world give rise to new and interesting legal issues.

So here, from Adam Snukal, Len Bernstein, and Joe Rosenbaum, is a glimpse at some issues that apply to the world of financial services arising from Cloud Computing. This next chapter in Reed Smith’s on-going series, "Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing," is titled "Look, Up in the Cloud, It’s a Bird, It’s a Plane, It’s a Bank." This white paper examines the issues that arise within financial services institutions in the wake of complex and evolving regulation and scrutiny, and we hope it provides some insight into the considerations and concerns that apply, even while the industry and the regulatory landscape are still evolving. A special note of thanks to Anthony S. Traymore, an Advertising Technology & Media associate and a good friend and colleague, who has now joined the legal department of a Reed Smith client. Anthony was instrumental in helping put the initial topical white paper draft together while at Reed Smith, and we like to give credit where credit is due – both here and in the white paper itself. Thanks Anthony.

As we do each time, we have updated the entire work so that, in addition to the single "financial services" white paper, you can access and download a PDF of the entire "Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing" compendium, up to date and including all of the previous chapters in one document.

Of course, feel free to contact Adam Snukal, Len Bernstein or Joe Rosenbaum directly if you have any questions or require legal counsel or assistance related to financial services. Make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information. And if you ever have questions, you can always contact any Reed Smith attorney with whom you regularly work.

Mobile Marketing & Privacy - Gnus from DataGuidance

In connection with an announcement by the Mobile Marketing Association, Joe Rosenbaum was interviewed by London-based, Rita Di Antonio, Journalist and Editor of DataGuidance (and Managing Editor of Data Protection Law & Policy), a publication of Cecile Park Publishing Ltd. You can read the article online “MMA to discuss 'comprehensive mobile privacy guidelines' during January forum”, or download your own copy in PDF Format.

Looking Ahead to 2011: If Brevity Be the Soul of Wit

A line recited by Polonius in Shakespeare's Hamlet (1602) comes to mind today. It's the phrase "since brevity is the soul of wit . . . I will be brief." FYI, Polonius is a windbag in the play. There is also another phrase, often wrongfully attributed to Franz Kafka, that goes something like "lawyers are the only creatures that can write 1000 pages and call it a brief."

Well, here we are at the end of 2010. Those of you who have been reading faithfully know that each year, I create a Legal Bytes piece with no hypertext links to distract you; no citations; no dazzling factoids; and no breaking news stories. This time, I've decided to do something different. I am going to be brief. Instead of philosophy or predictions, I'm going to give you 10 words I believe may stimulate YOUR thinking about 2011. That's it. I trust you. Most of you are sharper than I anyway.

You don't have to buckle up or fasten your seat belts. Pull up a chair, open your BlackBerry, Kindle, Droid, iPhone, PC, Laptop, Netbook, Web-TV, PDA, Tablet or whatever your favorite Legal Bytes' reading device might be; grab an espresso, a glass of tea (or whatever your liquid of choice might be); sit back and enjoy. Here goes:

  1. Mobile
  2. Behavior
  3. Privacy
  4. Social
  5. Cloud
  6. Neutrality
  7. Monetize
  8. Consolidate
  9. Engagement
  10. Global

That's it. Oh, there is another word – profile – but that's the subject of my first Legal Bytes blog for 2011. You will just have to come back for it!

 

Happy Holidays and Best Wishes for 2011!

Season's Greetings - New Year 2011

To all the readers of Legal Bytes:

This is the time of year when many of you are celebrating holidays, spending time with family, friends and loved ones, bidding farewell to the end of 2010, and celebrating the coming New Year. It is a time when many of us take a moment to reflect on the year gone by and perhaps wonder what the New Year will bring. There are people we remember with fondness; perhaps a few we might be happy to forget. But as 2010 comes to an end, we should take a moment to reflect on the friendships and experiences that helped us grow, and resolve to do some things better next year—perhaps for those less fortunate.

Most of all, this time of year gives us an excuse to say thank you for the blessings we have and to express appreciation to people who have enriched our lives. If you are reading this, you likely have or will read something else posted in Legal Bytes. You are my audience and I have to follow you—you are part of the fabric of my professional life and each of your threads enriches me, helps me weave the patterns and textures in these electronic pages. I am grateful for your readership—that you take a moment out of your busy lives to read and comment, and maybe gain some insight while being a little entertained. Thanks.

I would be remiss if I didn't also thank a few people at Reed Smith like Erin Bailey and Lois Thomson, who make this blog happen, and Rebecca Blaw and Mike Scherpereel, who give their support and pitch in when needed. These are the folks you don't see, but I do—they help make Legal Bytes feel alive. They are awesome and there aren't words to express how grateful I am—especially when they get my email that says "please can we get this posted ASAP." Thank you so much. I couldn't do this without you! I would also like to thank Carolyn Boyle at the International Law Office (ILO) - she is the force behind motivating me to push content into the U.S. Media and Entertainment Newsletter, and while I can take credit for the substance, without her, the thousands of readers who enjoy the links and insights would be waiting far too long. Thank you. No, you aren't nagging me.

As the year comes to an end, let me express my appreciation and gratitude to each of you. Thank you for reading. You motivate me to keep this interesting and exciting. Let me know if I succeed; scream at me if I fail. In addition to my thanks, please accept my best wishes for a wonderful holiday season and a terrific new year, filled with health, happiness and success. Thank you.

Joseph I. ("Joe") Rosenbaum

Advertising Across the Pond - In Case You Missed It

In case you missed Reed Smith’s Columbus Day seminar, presented by Reed Smith partner Marina Palomba, you can read and download a copy of the presentation right here: "A Global View on Advertising Law from the Other Side of the Pond." The presentation covered four main areas: green claims, on-line behavioural and location-based advertising, the extension of self regulation of advertising to promotional messages on the Internet, and ambush marketing and the 2012 Olympics. Need to know more? Want to appreciate how regulation and the legal framework apply to any or all of these areas in your business? Feel free to contact Marina Palomba directly or the Reed Smith lawyer with whom you regularly work.

Advertising Across the Pond - Don't Miss This

If you haven’t already, please register for "A Global View on Advertising Law from the Other Side of the Pond" presented by Reed Smith partner Marina Palomba with an introduction from Doug Wood. Don’t miss this exciting and timely presentation. Follow this link to obtain more information and register: http://guest.cvent.com/d/vdqvn3/4W.

You won’t want to lose the opportunity to gain valuable insights; besides, if the economy continues to deflate the U.S. dollar and inflate the value of British Pound Sterling, Marina has intimated that the United Kingdom may attempt to simply buy the United States and make it a colony again.

Hope to see you at the seminar.

Transcending the Cloud - Tying Up Cloud Antitrust Issues in a Bow

As you know, we have been updating our Cloud Computing initiative with a consistent stream of information – new chapters and white papers intended to provoke thought, stimulate ideas and, most of all, demonstrate the thought leadership Reed Smith attorneys bring to bear when new and important trends and initiatives in the commercial world give rise to new and interesting legal issues. Often, especially when words like "privacy" and "security" are thrown about, it becomes easy to overlook some of the other issues lurking in the background.

So here, from Jeremy D. Feinstein, is a glimpse at some antitrust issues. This next chapter in Reed Smith's on-going series, "Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing," is titled "Tying Up the Cloud," and seeks to give you some insights into the potential antitrust and competitive issues that even customers should be aware of, if not concerned with, when considering entering the cloud.

As we continue to do, we have updated the entire work so that, along with the single chapter on "Tying Up the Cloud" applicable to antitrust, you can now access and download the PDF of our complete "Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing" compendium, up to date and including all the previous chapters in one document.

Feel free to contact Jeremy D. Feinstein directly if you have any questions or require legal counsel or assistance related to competition or antitrust. Make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information. Of course, if you ever have questions, you can contact me, Joseph I. ("Joe") Rosenbaum, or Adam Snukal, or any Reed Smith attorney with whom you regularly work.

What Every Litigant Should Know About Social Media Channels

On September 8, 2010, from 12 p.m. to 2 p.m. (ET), Joseph I. ("Joe") Rosenbaum will be presenting on social media for a web cast entitled "What Every Litigant Should Know About Social Media Channels: Their Impact on Discovery and at Trial." 

This program will address social media channels from several key perspectives for litigants: (1) understanding what social media channels are and what information they contain; (2) how social media channels figure in the discovery process, as to the preservation, collection and production of the information they contain; (3) what courts have held regarding the admissibility of evidence from social media sites at trial; and (4) what types of policies and procedures organizations should adopt around social media tools. As part of the overall presentation, Joe's discussion will center around understanding the distinctions that online social media present, looking at the issues of social media in the judicial process (e.g., can judges have "friends"?), and corporate policies designed to guide employees and prevent litigation disasters before they occur.

The Knowledge Congress is producing the event and Reed Smith has secured a special discount of $50 off the registration fee for this program. Click to Register and enter code mith6874 for your discount.

Transcending the Cloud - The German Perspective

As part of our Cloud Computing initiative entitled, we take a step over to Europe and proudly present our next chapter in Reed Smith’s on-going series “Cloud Computing - A German Perspective.” This white paper and chapter, takes a look at cloud computing from a German and, to some extent, potentially representative European perspective. It’s a refreshing look at both some legislative and regulatory implications, as well as a view from outside the United States.

We would like to thank Thomas Fischl and Katharina A. Weimer in our Reed Smith Munich office for their insight and effort. Feel free to contact them directly if any questions arise or if you need help or more information. As we continue to do, we updated the entire work so that when you access the .PDF of our “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing” compendium, you will receive all of the sections, now updated with this chapter from Germany.

Make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information. Of course, if you ever have questions, you can always contact me Joseph I. (“Joe”) Rosenbaum, Adam Snukal, or any Reed Smith attorney with whom you regularly work.

Every Cloud Has a Lining - Maybe a Legal One

Stimulated by the recently launched Reed Smith Cloud Computing initiative, Joseph I. ("Joe") Rosenbaum was interviewed by CFO U.S. reporter David McCann, and in the August 10, 2010, Today in Finance section, you can read the entire interview, "The Cloud's Legal Lining".

You can also read and download a current copy of all of the white papers in our ongoing series, "Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing." Be sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with the latest and most updated version, as new white papers on additional topics are released. Of course, if you have questions, you can always contact Joseph I. ("Joe") Rosenbaum directly, or the Reed Smith attorney with whom you regularly work.

E-Discovery in the Cloud: Next Installment in Transcending the Cloud

As part of our Cloud Computing initiative, we are proud to present the next installment and chapter in our on-going series, "Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing." This White Paper and Chapter, entitled E-Discovery in the Cloud, takes a close look at some of the challenges that lie ahead in the world of discovery, when information and applications are processed, stored, accessed and used in a cloud-computing environment.

We would like to thank Jennifer Yule DePriest and Claire Covington for their hard work in putting this together, and you should feel free to contact them directly if any questions arise or if you need help or more information. As we have in the past, we have also updated the entire work so that when you access the PDF of our "Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing" compendium, you will receive all of the sections, now updated with this "E-Discovery in the Cloud" chapter, and you will have our updated and growing body of legal and regulatory insight into Cloud Computing.

Make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information. Of course, if you ever have questions, you can always contact me Joseph I. ("Joe") Rosenbaum, Adam Snukal, or any Reed Smith attorney with whom you regularly work.

Cloud Computing: 'Transcending the Cloud' Adds Government Contracting Case Study

Last week, Legal Bytes announced Reed Smith’s new global initiative, Cloud Computing. With that announcement, the Task Force released the first three in a series of white papers entitled, “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing.” We also promised to release “case studies” shortly after the white papers, to demonstrate how the insights in each paper have practical implications through case study examples.

Here is the first: A case study on government contracting, now attached to the white paper entitled, “The Risks and Rewards of a U.S. Federal Government Contractor Employing a Cloud Service Provider to Perform a Federal Government Contract,” authored by Lorraine Campos, Stephanie Giese and Joelle Laszlo. Contact them if you need to know more about this important area of cloud computing.

We will update each individual paper, as well as the compendium, as each paper, case study and update is released, so make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with the latest information. Of course, if you ever have questions, you can always contact me Joseph I. (“Joe”) Rosenbaum, Adam Snukal, or any Reed Smith attorney with whom you regularly work.

'Transcending the Cloud' - Reed Smith Announces White Paper Series & Legal Initiative on Cloud Computing

This post was written by Joseph I. Rosenbaum, Adam Snukal and Douglas J. Wood.

For those of you who have wondered why Legal Bytes has been so quiet recently, it’s because I, and my colleague Adam Snukal, have been hard at work coordinating and putting together a new initiative – Cloud Computing.

Today, we are proud to announce the launch of a new Reed Smith initiative focusing on Cloud Computing and showcased with our new series of white papers entitled, “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing.”  The term “cloud computing” is showing up with greater frequency, but there is still much confusion and unawareness of what it means, and, more significantly for our purposes, how it is affecting and will increasingly affect you.  In the decade ahead, cloud computing likely will affect everyone, from major multinational corporations to consumers; from governments to the local grocery store. 

But cloud computing, like social media, is ultimately not about technological innovation or novel or transformative invention – it is about changing the fundamental nature of our relationships and how all of us access and use information and application programs: at work, in school, at play, as we shop and as we grow.  Cloud computing is transformative because it will enable anyone, anywhere and at any time, to access, use and create information and content – whether working on a spreadsheet, collaborating on a graphic design, creating an online gaming program, searching for a new restaurant, streaming music, or watching a motion picture – independent of a robust processing device.  No longer tied to desktops, laptops or proprietary pieces of equipment – just plug into the wall, as you would for electricity, and it’s there.  All you need is the ability to enter commands (input) and to display and receive (output) the results.  No plugs, no problem.  Just as sending and receiving transmissions wirelessly occur today, so too will the devices that access the cloud. 

In this brave new world, there will be new providers, new economic models, new access plans, and broadened capabilities, at differential pricing.  On demand, subscription, tiered pricing (anyone remember the timesharing companies of the late ‘60s and ‘70s?) will likely return to fashion in a world of cloud computing.

As mentioned above, the Cloud Computing Task Force at Reed Smith has created a series of white papers – collectively entitled “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing” – to elucidate the opportunities and dangers, the risks and rewards of cloud computing.  Our collection of white papers will cover cloud computing issues you may have heard little about, but that are and will be no less significant.  Will we still need backup on our devices?  What about cloud insurance?  New economic and business models mean – yes, you knew this was coming – new taxes.  What about security and privacy and data protection in the cloud?  We will worry about standards and interoperability.  No one provider can possibly cover the world or a world of data and applications – mobile phone carriers interexchange based on regulations over decades; Internet protocols evolved to ensure that email and other providers would enable individuals to communicate regardless of proprietary networks or email programming.  Will clouds evolve the same way?  Will there be barriers to entry as a cloud provider?  Infrastructure is expensive; global capability more so.  Providers will vie for cloud apps.

Our approach is also unique.  Today, we are launching our initiative.  An introduction and three exciting new introductory white papers all dealing with the cloud: government contracting, tax and service levels, and other contractual performance protections.  We will release case studies in the weeks ahead, providing practical examples based on the white papers and insights into how law and regulation is likely to affect each of these areas.  Where answers are available, we’ll tell you.  Where they are not, we’ll be insightful.  We have assembled a multi-jurisdictional, cross-disciplinary team, a task force of lawyers and professionals dealing with the issues arising in Cloud Computing.  In the weeks and months ahead we’ll keep releasing white papers – antitrust and competition law, e discovery, litigation, insurance, contract law and regulatory compliance.  We will not only deal with U.S. law, but will also provide you with contributions from our lawyers around the world.  Each release will not only provide an individual chapter that is the subject of the release (today we have Government Contracting, Tax and SLA/Performance Protection), but also an updated comprehensive copy of the growing compendium.  Transcending the Cloud will dynamically provide insights as the industry and challenges grow.  Keep a copy handy.  Make sure you check back for updates regularly.  Join us in the conversation.

I want to thank my colleague Adam Snukal for his steady hand and keen insight in helping me to put this Cloud Computing initiative together.  And Kevin Vaarsi, our marketing guru, who coordinated much of the logistics and the planning for our initiative.  Most important, as you will see today and in the months ahead, a team of Reed Smith lawyers who have invested countless hours and done significant research to contribute these white papers and bring you their insights – none of this would be possible without them, and each paper will have names, contact information and biographical information about these terrific professionals.  As our body of work grows, we will make each white paper available as a separate PDF, but we will also update our “Transcending the Cloud” compendium for those of you wanting a constantly updated and growing body of legal and regulatory insight into Cloud Computing in one place.  Make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information.  Of course, if you ever have questions, you can always contact me Joseph I. ("Joe") Rosenbaum, Adam Snukal, or any Reed Smith attorney with whom you regularly work.

New Edition of Reed Smith White Paper -- Network Interference: A Legal Guide to the commercial Risks and Rewards of the Social Media Phenomenon

This post was written by Douglas J. Wood and Gregor J. Pryor.

We're pleased to make available our new edition of our Social Media White Paper with expanded chapters and new coverage of Social Media issues in Europe. Our first edition fast became one of the most downloaded documents on Reed Smith's website. Click here for the new edition and bookmark the entry to be sure to get ongoing revisions.

Update: Virtual Worlds Governance Conference

In his remarks at the Virtual Worlds Governance Conference described previously, Joe Rosenbaum used examples of how digital content taken from real world material, as well as samples that have been merged with user generated content or imported from digital online gaming or entertainment environments, can create problems and potential legal issues that make it difficult for brand owners, celebrities and even the average consumer to not only protect content, but also to determine which laws or contractual agreements are effective and, significantly, enforceable. You can see or download a copy of the slides prepared for this educational event that took place in both real life and Second Life, by clicking "Joe Rosenbaum's Virtual World Governance Presentation Slides." If you want to know more or need legal counsel or support in virtual worlds, online gaming, digital entertainment and rights of privacy and publicity, don't hesitate to contact Joe directly.

Hats Off to CAP: New Advertising Codes in the UK Launched

This post was written by Christopher Hackford.

After an extensive year-long review, on March 16, 2010, the Committee of Advertising Practice in the United Kingdom announced the launch of new Advertising Codes for both broadcast and non-broadcast media, covering television standards, television scheduling, radio and text services.

Much remains nearly the same, but there are some notable new rules, including rules intended to offer greater protection for children, rules to prevent exaggerated environmental claims, and a new section dedicated to lotteries and promotions.

That said, here are two examples of some rules that have actually been relaxed. One: charities are now allowed to make comparisons with each other (competitive advertising fighting for your British Pound Sterling). Two: advertisers in the UK are now permitted to advertise condoms on television before 10:00 pm on television. Some of this may reflect the increasing contention among advertisers for share of wallet from consumers.

The new Codes did not deal with some contentious areas of British advertising, but to find out more, you will either have to plod through the Advertising Code yourself, or you could read the Reed Smith Advertising Technology & Media Alert, New Advertising Codes Launched, written by our ATM colleagues in the UK.

So, if you need help understanding the new Advertising Codes, or you want to hear from the authors of the alert and experts in this area, feel free to contact Marina Palomba, Christopher Hackford or Huw Morris directly. Of course, you can always contact me, Joe Rosenbaum, or the Reed Smith attorney with whom you regularly work.

What in the World! Wait a Minute. Which World? Find Out On March 26th.

On March 26, 2010, the Center for Law, Science and Innovation at the Sandra Day O'Connor College of Law at Arizona State University and World2Worlds, Inc., will present “Governance of Virtual Worlds,” a conference held live in the Great Hall at the Sandra Day O'Connor College of Law at Arizona State University and in Second Life™.  For many, an opportunity to save on travel time, cost and carbon emissions.  Audience participation will be facilitated virtually within Second Life, live in the Great Hall at ASU and via a chat-bridge. So you can attend in person and live at The Great Hall of the Sandra Day O'Connor College of Law at Arizona State University, on the web via video and interactive text-chat, or by avatar in the immersive virtual world of Second Life.

Joseph I. (“Joe”) Rosenbaum, Reed Smith partner and Chair of its Advertising Technology & Media Law practice and an Advisory Board Member of the College of Law, is among the panelists participating. The conference will bring together, physically and virtually, a program of experts from academia, legal practice, corporations, governments, and online communities, to present a broad panorama of the state of governance of virtual worlds. 

National and international participation is encouraged and the conference will begin at ASU at 8:00 a.m. PDT (11:00 a.m. EDT), but for those brave virtual warriors there will be a reception starting at 7:00 a.m. Mountain Standard (Phoenix) Time – one hour before the formal conference begins.  If you wish to attend and/or share this invitation with others, here is a:

When Pressing Suits, Judges Tell Jurors Neither Social Nor Media is OK

A few months ago, Legal Bytes reported some important developments and judicial rulings concerning social media and freedom of the press in the United States (see, Freedom of the Press = Freedom to Tweet). But lest you be lulled into a false sense of security, freedom of the press only applies to the ‘press’ and not to jurors.

You have all seen the motion picture and television courtroom scenes played out numerous times. Evidence is admitted or not admissible. The jury is admonished to disregard certain remarks or testimony as inadmissible or irrelevant. Jurors are told they must reach a verdict on only the evidence that is allowable during the trial - nothing else. Now decades ago, a jury was told not to watch accounts of a case on television, or to listen to such on the radio, or to read newspaper articles about the case. Juries could be sequestered - squirreled away out of sight and, theoretically, out of harmful evidence’s way - until the verdict was rendered and justice done.

But today, with a mobile phone, PDA or any one of literally hundreds of devices – some no larger than a credit card – one can ‘tweet’ (www.Twitter.com), one can post to your or someone else’s wall (www.Facebook.com), one can upload photos (www.flickr.com) or videos (www.YouTube.com) or post to one’s own blog (www.LegalBytes.com). All from the convenience of the palm of your hand, purse or jacket pocket. One can also surf, search, ask and obtain answers across the web, almost instantaneously, with the press of a few buttons or the wave of one’s fingers across a touch screen. The interactive two-way communication and searches for independent information is at odds with our jury system that limits the juror’s knowledge base for decision-making purposes to what’s in her or his head when they walk in along with the evidence that is presented and deemed admissible by the court. Everything else is off limits – at least for administering justice. Although not the subject of this two-part blog posting, Legal Bytes has also covered the growing issue of whether a mindless application of disqualification criteria makes sense simply because you have a ‘friend’ or someone is ‘following’ you among the other thousands or millions of individuals on some social media platform (See, Florida Judges Can't Have Friends).

But now back to our story. Just this past December, the Judicial Conference Committee on Court Administration and Case Management issued its “Proposed Model Jury Instructions - The Use of Electronic Technology to Conduct Research on or Communicate about a Case”. I know this will surprise you, but the basic do’s and don’ts they proposed are:

  • Thou shalt not undertake any independent research, use any outside reference works, dictionaries, surf the web, or use any digital or other means to try and get information about the case or anything related to the case.
  • Thou shalt not communicate with anyone about the case – anyone - not even other jurors. No mobile phones, email, Blackberry, iPhone, SMS text messaging, tweets, blogging, chat rooms or social media platforms. None, nada, zilch, zero, null, never. Period.
  • Thou shalt decide the case solely on the admissible evidence presented in the courtroom.

Sound familiar? While many of us recognize there are sophisticated rules and regulations established to ensure evidence is presented in a fair manner, consistent with the system of justice - protecting the rights of the accused and the accuser, the plaintiff and the defendant - jurors often are curious – curious about questions that aren’t asked or answered during the course of a trial. In motion pictures or television, we get to go behind the scenes. We can often see what the jury cannot. But real juries may not appreciate, under the constraints of a particular case, why some information is simply not available to them, some questions not permissible, some witnesses never called and some answers never provided. It’s far too tempting to try and find out and with today’s digital technology – well, it’s not that hard to do so – sometimes even believing one can escape detection when doing so.

So stay tuned. In the next installment of this post, Legal Bytes will take you on a brief tour of some court decisions over the last few years, starting from simple emails and online surfing by jurors, to jurors who post blogs in the middle of jury deliberations, to tweets before, during and after multimillion dollar civil trials. Yes, we even have jurors communicating to each other on Facebook during a trial. You just can’t make this up.

While the next installment is pending, if you need to know more – how social media can help or hurt your company in litigation – remember that Reed Smith has teams of litigators who not only know digital (e-)discovery, forensic evidence, security and other technology applicable to legal proceedings, but also know social media – increasingly relevant, for good or bad, in dispute proceedings. Need us to press your suit and avoid being taken to the cleaners? Contact me, Joseph I. Rosenbaum or any Reed Smith attorney with whom you regularly work and stay tuned for Part II – Jurors Behave, or We’ll Throw the Facebook at You!

Online Endorsements, Testimonials and Reviews Fake? Really?

Online ratings got you perplexed? Seems like someone forgot to put "user ratings" on the list of reality shows. Well maybe, just maybe, those user ratings aren’t really "user" or "ratings" at all. What should you consider?

Well, on October 23, 2009, Joe Rosenbaum was interviewed by Sally Herships for Marketplace Money, a regular feature of Public Radio. If you missed it on the air, you can now listen to the audio, read a transcript of the interview, download an MP3, or subscribe to the podcast, by checking out the interview at: "Don't let online reviews fake you out."

Legal implications abound—for website operators and ratings' services that enable users to post reviews and content, as well as for anyone posting fake reviews or failing to disclose a material connection to the advertiser, its brands or products. So go listen and then come back if and when you need legal support. Contact Joe Rosenbaum, or the Reed Smith attorney with whom you regularly work.

Déjà vu All Over Again: Online Behavioral Advertising

Just catching up with continuing efforts to educate the legal community on the implications of digital behavioral advertising and the importance of the industry self-regulatory efforts, as well as the dangers of legislation and regulation arising from insufficient or inaccurate information. In November of last year, Cyberspace Lawyer [Volume 14, Issue 10; November 2009], published "Advertising Industry Collaboration Releases Self-Regulatory Online Behavioral Advertising Principles," written by Joseph I. Rosenbaum.

The article follows the release, by the major advertising industry associations, of Self-Regulatory Principles for Online Behavioral Advertising, and Legal Bytes had numerous blog postings summarizing the individual principles, as well as an overview (see Self-Regulatory Online Behavioral Advertising Principle No. 7: Accountability that will link you to the others; or simply search "social media" in the keyword search box in the navigation column on the left side of the web page). The Cyberspace Lawyer article consolidates and integrates these summaries into a single article that you can read in that issue, or you can download the article here: "Advertising Industry Collaboration Releases Self-Regulatory Online Behavioral Advertising Principles" [PDF].

Joe Rosenbaum, who edits and publishes Legal Bytes, is general counsel of the Interactive Advertising Bureau (IAB), one of the major industry associations that participated in the development and release of the actual principles. Behavioral advertising can be viewed as another aspect of the social media phenomenon sweeping the digital world, and if you want (or need) to know more, you should know that Reed Smith's Advertising Technology & Media Law Group can help with integrated experience and legal skills, both nationally and internationally. Let us know if we can help you.

Isn't Technology Supposed to Help Us? Help Us Work Smarter?

If you have been reading Legal Bytes regularly, you know that Lois Thomson here at Reed Smith has been one of the primary people supporting my efforts to transform "legal-ese" into understandable English – no trivial task for those of you who are interacting or have ever interacted with lawyers. So it is with great joy that I was not only able to have her write a post for Legal Bytes, but that I also finally got to edit her article. Hopefully she will smile and agree it's been helpful. So, Lois, thank you, and here is your relevant and very timely note for all the world to see:

"I looked at an email I received from my friend, Robert, and wondered why the subject line was a reply regarding an issue of Legal Bytes that I had proofread for Joe Rosenbaum. 'Are you aware that you have been sending these to me?' Robert's message read. 'It seems like that might have been a mistake.'

"Ouch! A mistake indeed! You see, when Joe sends his documents to me to review, I proof them and make my suggested changes. I then simply hit the forward button to return them to him. Now as many of you email-program (e.g., Outlook) users already know, to make life easier (that's ostensibly what technology is supposed to do), once I start to type in "ro," Rosenbaum, Joseph I.'s name should automatically populate the 'To' field. Oops. Not this time. Instead, my friend Robert's name came up, and without looking – as I'm guessing so many of us routinely do – I hit enter and sent it off, pleased I had been so timely and responsive. Unfortunately, I was responding to my friend Robert, who may happily read Legal Bytes, but not, I suspect, the artist's proof!

"Fortunately, Joe and Robert were gracious about the whole thing and in this case, both felt no harm was done. But what if the message had been from your lawyer or doctor or a rabbi or priest, or was some other communication that was not ultimately meant for public consumption. It was a simple but powerful reminder to me (and one that Joe felt was important enough to ask me to pass it on to you), that while automated tools can make routine tasks like 'field completion' simpler, they can also lead to problems if we rely on them without thinking. Hmmmm, now why can't I remember phone numbers anymore – is it because they are all programmed into every device I own, so that I no longer have to think?"

A helpful reminder that while automated tools are great, they are just that – tools. If we aren't careful, the tools can work against us and not for us, and can create embarrassment at best, liability at worst. Thank you Lois (and Robert).

Need to know more? Contact me, Joseph I. Rosenbaum, or any Reed Smith attorney with whom you regularly work. Need proofreading skills? If you don't work for Reed Smith, don't call Lois. She's busy helping us every day. Thanks again, Lois.

Social Media Risks and Rewards

On February 18, 2010, the International Law Office (ILO) published an article authored by Gregor Pryor and Sachin Premnath in the London office of Reed Smith, and Joe Rosenbaum in New York. It discusses the benefits and pitfalls of social media, and raises issues and concerns applicable to global companies—not just those on either side of the pond!

The article was derived from one published in Legal Week, and you can download your own PDF copy of “Commercial risks and rewards of the social media phenomenon” right here.

Social Media Could Get You Fired? Really? Well, Yes. Really.

If you aren’t careful, social media can hurt in the workplace, too. While recruiters, college and university admissions counselors, and many others have used profiles, postings, YouTube videos, and other social media platforms to gather information about candidates and prospects—corporations that are now increasingly monitoring their own presence, mentions, and brands in social media are discovering that employees—at work and outside the workplace—can be outstanding goodwill ambassadors, or may be saying a bit too much. In an interview with Laurie Sullivan, reporting in MediaPost News, Online Media Daily describes how Twitter And Facebook Could Get You Fired—because the same rules apply online as offline, but online are magnified by technology. Read the article, and when your company needs to develop a policy or understand how to optimize the benefits and minimize the legal risks, call me, Joe Rosenbaum; or Douglas J. Wood or Stacy Marcus, key lawyers in our Social Media Task Force; or any of the Reed Smith lawyers with whom you regularly work.

Social Media Risks and Rewards

In the wake of our release and distribution of the Reed Smith Social Media Task Force’s groundbreaking white paper entitled “Network Interference: A Legal Guide to the Commercial Risks and Rewards of the Social Media Phenomenon,” Practical Law Publishing has published a summary, prepared by The Social Media Task Force at Reed Smith, available here and entitled, Social Media Risks and Rewards. The published article represents a condensation of the entire white paper, previously announced in Legal Bytes, and which you can still download in its entirety.

As we mentioned, we will be adding, supplementing and updating these materials with even more chapters and new information, and we will soon be launching a special web page dedicated to the evolving social media legal landscape. If you need help navigating this environment, bear in mind that Reed Smith has a Social Media Task Force – a team of lawyers who have experience, and can advise and guide you as the medium and media evolves. Contact me, Joe Rosenbaum, or Douglas J. Wood, Stacy Marcus, or any of the Reed Smith lawyers with whom you regularly work. How can we help you? 

FINRA Issues Guidance in New Social Media Websites Notice

In November, Legal Bytes reported (Regulators Poised to Give Financial Institutions a Slap in the Facebook) that Richard Ketchum, Chief Executive of the Financial Industry Regulatory Authority (FINRA), acknowledged Wall Street is eager to use social media to interact with customers. In the course of his remarks at a recent meeting of the Securities Industry and Financial Markets Association (SIFMA), he noted, "We continue to witness the advent of technologies that will challenge your ability to ensure compliance with regulatory requirements,” and “Social networking is one such innovation.

Now, supplementing existing FINRA Rules, FINRA has released a notice concerning online media rules (you can download and read a copy of the notice below) whose key components include requirements that securities firms:

  • Must develop policies and require its employees to comply with the new regulatory requirements
  • Must retain records of communications (a compliance requirement of the Securities Exchange Act of 1934) when social media is used to communicate
  • Must ensure that recommendations made through social media are suitable to all investors to whom the recommendation is made (e.g., by limiting or filtering access based on investor/consumer qualifications)

FINRA’s notice takes the position that securities firms must adapt existing rules to social media and essentially mirror the 2003 FINRA definition of “public appearance.” This definition noted that chat room postings were no different than if a firm representative was in a room making statements to a room filled with investors. FINRA’s current notice indicates that information posted or content placed online (static information) is subject to these same rules and must be approved by a firm principal – presumably, even information about individuals in the firm that may be part of an individual’s profile on the firm’s website or in social media platforms. But online interactions that are occurring on the fly (e.g., in real time), while subject to supervisory requirements (e.g., they must be supervised, perhaps even monitored), do not require such approvals.

You can read or download the FINRA Regulatory Notice 10-06 (Social Media Web Sites) [PDF] here.

As mentioned in the Legal Bytes November post, SEC disclosure rules apply to Tweets, blog postings, wall postings and other communication platforms provided by social media sites, and other regulatory agencies are seeking to address the use of social media sites by the entities they regulate (e.g., the FCC, the New York State Insurance Department). So if any of this is of interest and if you need to know more or need help, please contact me, Joseph I. Rosenbaum, or the Reed Smith attorney with whom you regularly work. We are happy to help.

Update:  Reed Smith lawyers Christopher P. Bennet, Amy J. Greer, Jacob Thride and Kevin Xu have prepared a Client Alert on the subject which you can read by going to: FINRA Issues Notice for Financial Firms Using Social Media.

Freedom of the Press = Freedom to Tweet

Twitter keeps hitting the newswires—in this instance, in a matter involving freedom of the press. You might have heard from time to time, especially in high-profile or emotionally charged cases, about judges who have used their power to control proceedings by restricting the use of certain communications equipment and mechanisms from within their courtrooms (e.g., use of mobile phones, video recording equipment, etc.).

From Pennsylvania comes an order from a Dauphin County judge refusing to bar reporters from sending Tweets during the course of a public and high-profile trial. In response to a motion by the defendants counsel, Judge Lewis, in a brief order, noted that ". . . to impose the proposed restriction would be premature and that the restriction itself is overly broad."

In this particular case, the defendants were concerned that reporters, using Twitter inside the courtroom, would broadcast witnesses testimony, which could then be read or seen by other witnesses who were yet to testify. While refusing to ban Twitter to reporters, the judge did order the witnesses to avoid reading or listening to reports concerning the trial.

As icing on the cake, our own Reed Smith lawyers, Tom McGough, Mark Tamburri and Tom Pohl, won the order on behalf of the Associated Press and Pittsburgh Post-Gazette. Yes, Virginia, there is a place for social media in jurisprudence.

If you remember, Twitter was also the subject of some controversy in Pittsburgh during the G20 Summit last year. In that case, involving freedom of speech, police in Pittsburgh arrested a man who was using Twitter to send messages about the movements of police officers as protests were unfolding. Although the police sought to charge the man with aiding an illegal protest, the man was broadcasting what was easily visible in plain sight.

While commercial cases often involve money or intellectual property rights, or rights of publicity or privacy, cases are emerging that involve fundamental Constitutional rights. The law will need to move quickly into the digital and social media age in order to keep up. Some courts and judges are doing just that! 

Need to know more? Contact me, Joseph I. Rosenbaum, or any Reed Smith attorney with whom you regularly work.

Court Rules Twitter Libel is Stale, and Neither Ripe Nor Moldy

Back in July, Legal Bytes posted a report (Landlord Can't Let Tweet sMOLDer) about a Twitter "tweet" posted by Amanda Bonnen, that contained the following statement: "Who said sleeping in a moldy apartment was bad for you? Horizon realty thinks it's OK."

Back then we told you that Horizon Group Management, the landlord of the apartment building involved, filed suit in a Cook County Illinois Court for libel, alleging that it was a "malicious and defamatory" tweet about the state of her apartment. 

Well this past Wednesday (Jan. 20, 2010), Cook County Circuit Court Judge Diane J. Larsen dismissed the suit, and Ms. Bonnen's attorney indicated the judge described the posting as too vague to constitute libel under the legal tests applicable to such a claim.

To support a claim of libel, Horizon would have had to show that Ms. Bonnen wasn't merely offering her opinion, that the statement must be reasonably understood by everyone to refer to the specific entity—in this case, this particular Horizon realty company—and that there was actual harm that can be proved, flowing from the statement. The fact that the statement was made on Twitter, and consequently widely available across the Internet, doesn't change the standard one must meet to prove libel, and the judge dismissed the case. 

As you can guess, these aren't the only cases involving defamation in the context of social media. For example, the action against Courtney Love, wife of the late Kurt Cobain, is alive and well. You might recall that case arose when a fashion designer claimed Ms. Love tweeted that the designer was a drug addict, a prostitute and called her a "lying hosebag thief." As we reported in Legal Bytes this past August (Court Orders Google to Turn Over Blogger Identity Information), cases of defamation become even more complex when the identity of the actual "tweeter" is hidden behind a pseudonym.

These cases all hinge upon the friction created by social interaction. Defamation is not a new concept, and whether broadcast over radio waves or propagated across the web, it should come as no surprise that when human beings populate the borderless universe of cyberspace, these interactions can give rise to legal actions. The laws that apply to publicity, privacy, libel, deceptive advertising, unfair competition and intellectual property may need to be applied or viewed differently, but they don’t disappear simply because the content is digital. Need to know more? Contact me, Joseph I. Rosenbaum, or any Reed Smith attorney with whom you regularly work.

2010 ANA Advertising Law & Public Policy Conference

Join top legal professionals and government regulators March 17-18, 2010 in Washington, D.C., at the 2010 Annual ANA Advertising Law & Public Policy Conference, where you will hear from Jon Leibowitz, Chairman of the FTC and Doug Gansler, Maryland attorney general, as well as leading legal experts both from law firms and client-side marketers.

Connect with key industry leaders and policymakers as we discuss the most volatile and fast-moving legal and political environment for advertising and marketing in decades. Learn about the new regulations, legislation and major court cases that are fundamentally changing the business environment, and how you can keep up!

For the full agenda and to register, go to http://www.ana.net/adlaw2010.

Happy New Year Wishes for 2010

Wishing you health, happiness, prosperity and peace in 2010

In a tradition that started almost 4,000 years ago by the ancient Babylonians – although they celebrated the new year upon seeing the first new moon after the vernal equinox – please enjoy a very happy, safe and joyous new year celebration.  Those of you who look forward to Useless But Compelling Facts can read more about the history of new year celebrations, or how the new year’s festivities, now televised around the world, began in New York’s Times Square.

New Year's Greetings
 
This is the first year we have published in a blog format, and with your feedback – mostly positive and always constructive – and more than 17,000 visitors in slightly less than 11 months, I am grateful and appreciative for your support.  Thank you for reading Legal Bytes.

Joe Rosenbaum

Looking Ahead to 2010: To Boldly Go . . . .

Each year, at the end of the year, I create a Legal Bytes piece intended to be more thoughtful and philosophical than the articles posted during the year. Thank you, in advance, for reading and allowing me to attempt to provide some insight and thoughtfulness to your day, in what I hope is an enlightening and entertaining manner. While my normal postings are designed to bring you news, updates and thoughts about timely events, this is one is longer – and arguably less exciting – and asks you to indulge me in a bit of philosophy, or what passes for an attempt at philosophy about the year past and the year ahead.

This article will contain no hypertext links to distract you; it will not have citations to offer more information about a snippet; nor will it dazzle you with factoids or intrigue you with today's news. It's just me philosophizing, my one chance during the year to ramble about where we've been and where I think we might be headed – without any credentials, qualifications or expertise to do so. 

So loyal Legal Bytes' readers, you don't have to buckle up or fasten any seat belts. Just pull up an easy chair, open your Blackberry, your Kindle, your Droid, your iPhone, PC, Laptop, Netbook, Web-TV, PDA, or whatever your favorite Legal Bytes' reading device might be; pour a glass of tea (or whatever your liquid of choice might be), sit back and enjoy . . . and again, thank you. So here goes.

*****

I'm a Star Trek fan. I've watched all of the television episodes, starting from the day Captain Pike, bound to a wheelchair resulting from his own heroism, is taken to the very first virtual world I can recall being displayed in mass media. I've watched all of the Star Trek movies. I confess to being a victim of an "even number" preference, culminating so far in this last Star Trek – certainly among, if not the favorite of all of them. 

Computers that can search for anything and everything. Touch screens and voice commands. Warp speed and instant communication across multiple languages and without regard to geography or time zones. All that with a bit of humor, a bit of clever philosophy and a social network (crew) that have hugely diverse (one might say inter-planetary) ethnic, cultural and racial characteristics, and at the same time work seamlessly together as a team. More than science fiction, Star Trek is really science within fiction, and a fiction that might just be reality if we close our eyes long enough and hard enough. Most of all, to boldly go where most of us have never gone before isn't really referring to space as the "final frontier," is it?

Now I know not everyone is a Trekkie, and I confess that while I am a big fan, I'm not really obsessed. I don't go to conventions or wear uniforms, nor do I run around screaming "Beam me up," although I do confess to a feeble attempt at a Scottish accent when I respond "I can't do it, Captain." So what is it that makes me able to watch over and over again and relish each scene and each episode, and look forward to each new motion picture? It's not simply because I like science fiction. Nor is it solely because of an ensemble cast, made up of some extraordinarily fine individual actors who work extraordinarily well with each other and with scripts that combine serious science fiction with some tongue-in-cheek individualism, not always in human form.

Let me digress to a personal, but relevant anecdote. Many years ago I had the pleasure of actually meeting Leonard Nimoy. I won't go into detail, but on behalf of a client, I had contacted Phil Gersh, the gentleman (a true gentleman) who represented Mr. Nimoy at the time, and Mr. Gersh must have relayed our conversation to Mr. Nimoy, resulting in a meeting in New York. It was over lunch, very relaxed and informal, but I admit to feeling an amazing sense of excitement, good fortune and privilege at being able to actually sit down and talk with someone I had long admired as an actor, writer, director and producer.

Continue Reading...

Florida Judges Can't Have Friends

Just last month, the Judicial Ethics Advisory Committee in Florida issued an Opinion that Florida judges may not have social media "friends" if they are lawyers who may appear before them in court. While the average person may question what being a "friend" on any media platform really means in terms of the level or relationship outside the virtual world of web-based interaction – how many of you are "friends" with people you have never met and don't even know? – the Judicial Ethics Advisory Committee indicated that their main issue is not fact, but perception.

The Committee expressed concern that the "friend" identifier could create the impression or the appearance in a publicly available forum, that the lawyer might be in a position to influence the judge.

Influence the judge? Hmmm. So, let's see. If I'm a government official or a corporate procurement officer, or perhaps I'm just campaigning for public office, I really can't befriend anyone on any social media platform or network – unless I'm prepared to face potential charges of bribery, accepting bribes, improperly influencing a public official, or being improperly influenced in procurement and purchasing decisions. Can you think of other situations in which acknowledging another individual as a "friend" on a social media platform or social networking site might be considered a violation of some code of conduct? Have you read your employer's code of conduct lately?

Not to worry, that's just the tip of the iceberg. Have you checked those "fan" pages recently? Are you a journalist? Celebrity endorser? Blogger? Check the revised FTC Endorsement Guides carefully. Perhaps you need to disclose your material connection when you became a fan! Oh, and you corporate employees and investment advisors (and journalists) better think twice before becoming a friend or a fan. After all, do you have to disclose to your clients or the Securities and Exchange Commission that you are a fan of "INSERT YOUR FAVORITE BRAND HERE"?

Now I don't want to worry anyone needlessly, so here's a tip for all of you Legal Bytes readers, whether you are a judge (are judges allowed to read Legal Bytes?), a lawyer or simply a normal person: If you wish to recuse yourself from a case, change the venue or forum for a trial, or simply avoid being picked for jury duty, I have a recommendation. Befriend the defendant, become a fan of the company, send a Facebook friend request to as many police officers (or, depending on your preference, inmates) as you can, and become a Twitter "follower" of as many products, services, public officials and political parties as you can.

Much to my regret, I have now been permanently removed from the White House guest list because I have become a fan of the Presidential Portuguese water dog "Bo" - the "First Dog." While it had never occurred to me that being thoroughly engaged by this adorable puppy would get me into trouble, the fact that the dog is "Portuguese" appears to have created the perception that there could be a conflict between my loyalties to our government and Portugal – although I confess to being partial to the food and the Algarve as an occasional vacation spot.

That said, I don't feel alone any more since, even though the pup is officially registered with the American Kennel Club as "Amigo's New Hope," I believe that the President and First Lady Obama, as well as their daughters Malia and Sasha, for whom Bo was an election day promise, are also under investigation for possible ethics violations in connection with their love for Bo. Strange, brave new world.

So keep your web browser tuned (or bookmarked) to www.LegalBytes.com for breaking news. The social media fun is just beginning, and if you haven't checked your company policy lately (or revised it), or if you need help making sense of social media and the legal implications, you've come to the right place. Feel free to contact me—Joe Rosenbaum—or any of the lawyers at Reed Smith you work with. We are happy to help.

Legal Predictions for 2010 - Ad Age Book Of Tens

As it does every year at this time, Advertising Age has again published its Book of Tens. For as long as I can recall, that has included an amazingly prescient set of legal prediction ‘Tens’ from my partner, Douglas J. Wood, and this year is no different.

Go. Look. Read. Recall last year’s. Save this one for December 2010. It’s amazing how good his track record is . . . but then, if you know him, that shouldn’t surprise you. But some of his predictions this year, just might: Book of Tens: Legal Predictions for 2010.

You can contact Douglas J. Wood directly to tell him how ‘on target’ he is, or you can contact me, Joseph I. Rosenbaum, or any of the Reed Smith attorneys with whom you regularly work if you need more information or help in areas related to advertising, media, technology and entertainment. We are here to help.

H.R. 4173 = CFPA = Amend FTC Act. Why Should You Care?

Today, the U.S. House of Representatives is scheduled to vote (and likely pass) H.R. 4173. H.R. 4173, entitled the Wall Street Reform and Consumer Protection Act of 2009, but commonly referred to as the CFPA (Consumer Financial Protection Act), has been blogged about on Legal Bytes before (see Congressional Hammer Poised to Strike at Financial Advertising). The provisions to which advertisers might wish to pay particular attention are those that would amend the Federal Trade Commission Act.

Rather than summarizing industry concerns over this legislation, I’ve posted a copy of the Industry Letter, signed and sent to members of Congress on behalf of at least these twenty two (22) U.S. associations and coalitions: American Advertising Federation, American Association of Advertising Agencies, American Escrow Association, American Financial Services Association, American Herbal Products Association, Association of National Advertisers, Consumer Data Industry Association, Consumer Electronics Association, Direct Marketing Association, Direct Selling Association, Electronic Retailing Association, Financial Services Institute, Inc., Financial Services Roundtable, Interactive Advertising Bureau, International Franchise Association, Internet Commerce Coalition, National Association of Manufacturers, National Association of Professional Background Screeners, National Business Coalition on E-Commerce and Privacy, National Retail Federation, Natural Products Association, U.S. Chamber of Commerce.

If you need more information, or if you believe you should have a voice in this process and don’t already have one, Reed Smith is here to help. You can contact me (Joseph I. Rosenbaum) or, of course, any Reed Smith attorney with whom you regularly work.

Anti-Social? I'll Still Share Our Social Media Presentations

In case you weren’t able to attend any of our three seminars on Social Media, we’ll still let you get a glimpse of what you missed. First, you missed Joe Rosenbaum and Anthony Traymore in San Francisco and Palo Alto, and in Century City (L.A.), where we were joined by Kate O’Brien, where we presented: "Social Media: It’s 10:00 p.m. Do You Know Where Your Brand Is?"

If that alone didn’t make you sad, you also missed all the substantive insights and experiences that were shared, the audio-visual effects, the examples and live experience of our presenters and local hosts, as well as the hospitality of three of Reed Smith’s West Coast offices.

What you don’t have to miss is a copy (in PDF form) of the presentations – each of which had slight variations. You can see and download each by selecting the live link on each city below.

While the base presentations were much the same in all three places, in San Francisco we focused a bit more on social media in financial services and corporate securities law. In Silicon Valley (Palo Alto), we did a somewhat deeper dive into the implications of social media in online gaming and entertainment, and in Century City, we focused on user-generated content, open-forum platforms and competitive advertising.

While the results are still being tabulated, we do know that a significant number of our clients and guests received continuing legal education credit (CLE) for attending, in addition to a meal – worth the price of free admission anywhere. We haven’t looked at all the evaluations yet either, but no one fell asleep, everyone stayed through the closing credits and a rousing rendition of the Social Media Blues, and many of our attendees stayed for follow-up questions.

We also received a number of inquiries about the possibility of individual companies or groups hosting a Social Media seminar presented by Reed Smith, and we are happy to do so for yours – we are an accredited CLE provider in most jurisdictions, if that is important to the legal folks – but many have asked about presenting to senior executives, business development, marketing, media and other professionals as well.

Not only can we tailor a seminar to your particular company, your brands and/or your industry, but we have developed, and will continue to develop, modules and focused presentation materials regarding online gaming and virtual worlds; promotions (e.g., sweepstakes, contests, product placements, branded entertainment); advertising and marketing (e.g., testimonials, endorsements, buzz, viral and word-of-mouth); labor and employment; corporate policy, public relations and crisis management; financial services; media and entertainment, including motion pictures and machinima; pharmaceutical, health and life sciences; technology and e-commerce; digital rights management (e.g., user-generated content, hybrid media); privacy, data protection and security; target marketing, location-based and behavioral advertising; regulatory requirements – both government and SRO (e.g., FTC, FCC, CSPC, FDA, PCI compliance, FACTA, GLB, HIPAA); cloud computing, and so much more – and we haven’t even mentioned our international or global experience, expertise or resources in other jurisdictions around the world.

If you are interested, please contact me (Joseph I. Rosenbaum) and we can work with you to help you engage us in your social media conversation with topics that are relevant to you. We will also be updating the research work already released in our Social Media White Paper with some of the materials and further work we continue to do in this area. Stay tuned – social media is not a fad.

Now, Web-Birds of a Feather Can Actually Flock Together

Well, it seems like almost yesterday (actually a little more than a month ago), that a subsidiary of Mixx, the popular social voting site, launched TweetMixx, a new service that enables companies, brands, politicians, and celebrities collect and aggregate all the mentions about them on Twitter on a single page. “TweetMixx Channels,” as the service is branded, enables you to create a branded page, tailored to you – from your own Twitter Tweets and RSS Feeds to comments from customers, reviewers, fans or pretty much anything you like. We’ll use “you” generically to mean any label that fits – people, brands, goods, services, you name it.

Ever see those vanity license plates on cars? Now you can have your own vanity Twitter Mixx channel, and the service uses “Tabs” to allow a variety of features and functions. There’s one that uses search terms to find links and tweets about you on Twitter, in apparent deference to the new Federal Trade Commission Endorsement Guides (see our post FTC (Revised) Endorsement Guides Go Into Effect earlier today; there’s an “Insiders” tab that identifies anyone with a material connection or that is associated with you (e.g., employees, agents, paid endorsers); and other tabs that enable you to customize and populate the channel. In addition, since the service appears to act both as an aggregation and a search tool for content about you, consumers can find all the Twitter traffic and channel information about you in one place, and at the same time, you can use the service to track and monitor conversations and references to you on Twitter. Right for consumers; right for you – clever.

Remember Facebook’s personalized URLs just a few months ago (Legal Bytes blog post Facebook Adds Personalization & a (Brand) New Dimension)? This is not simply another social media fad. Already companies are getting on the bandwagon (or should we say birdwagon). Today, the National Hockey League (www.nhl.com) will be among the first few enterprises launching its TweetMixx Channel – its own private label branded distribution platform using the TweetMixx service. TweetMixx even provides you with a widget that can be embedded on other websites (think bloggers, profile pages, etc.). The NHL’s “Chatter” tab on TweetMixx, for example, will provide streaming tweets from hockey fans, while a “Links” tab will keep track of the tweets that are retweeted most often, and will rank these favorites by putting them at the top of the TweetMixx Channel web page.

So for advertisers, brand managers, marketing professionals and agencies, this new tool is the beginning of enabling a clearer strategic use of Tweets. Just as branded pages and channels, enabling two-way conversations, have emerged on YouTube and Facebook, allowing brands and celebrities to engage with consumers and fans, TweetMixx seeks to provide an ecosystem for Twitter traffic. Chris McGill, founder and CEO of Mixx, noted that each TweetMixx Channel can be analogized to a “tree.” You have TweetMixx plant a customized tree of your choice, then you are given the tools to nurture it, to prune it and to watch it grow. Do it right and you have branches where Twitter users can “flock, sit and sing” about you – the people, products, services and things they care about. TweetMixx owns the forest!

Can you or your brand afford to stay out of the social media arena? Are you afraid of the new risk-reward paradigm and uncertain what to do? Do you know you have to do something, but are suffering from analysis paralysis? Have traditional models got you stuck in the mire? Call us. Our Advertising Technology & Media law practice group and our newly formed Social Media Task Force already have unparalleled depth, experience and bench-strength in understanding, working with, and advising clients in this brave new world. From developing policies to monitoring compliance; from protecting and enforcing your rights to developing relationships and partnerships with others to engage in the conversation. To win it, you have to be in it. If you need help, contact me, Joseph I. (“Joe”) Rosenbaum, or the Reed Smith attorney with whom you regularly work. We are happy to help.

FTC (Revised) Endorsement Guides Go Into Effect

This post was written by John P. Feldman

Yesterday, Dec. 1, 2009, the revised "Guides Concerning the Use of Endorsements and Testimonials in Advertising" released by the Federal Trade Commission came into effect. If you are a loyal Legal Bytes' reader, you know we have been following this as early as November 2008, when we posted Endorsements & Testimonials - FTC Broom Proposes Some Sweeping Changes. Numerous updates and informational pieces have graced these pages since then (now when we say "pages," we mean web pages), and you can refer back to any or all of them, or you can check out any you may have missed right here: FTC Testimonial and Endorsement Guides Stimulate Industry Comment (March 2009); a presentation given at the University of Limerick on the subject entitled "Trust Me, I'm a Satisfied Customer: Testimonials & Endorsements in the United States," which you can download (If You Didn't Make It to Ireland ...); Ghostwriters: Medical Research or Paid Endorsers (and are they mutually exclusive?) and Rights of Publicity - Wake Up and Smell the Coffee! (both in August 2009); and FTC Releases Updated Endorsement & Testimonial Guidelines and Reed Smith Analysis of the New FTC Endorsement and Testimonial Guidelines (both in October 2009).

Yesterday, John P. Feldman, an authority in these types of advertising regulations and compliance and who is based in Washington, D.C., put together some thoughts concerning the implications of these Guides upon coming into effect, continuing his thoughtful and practical analysis. While we will maintain bringing you news and information about the Guides, John's analysis is timely and helpful, and outlines some considerations every advertiser – online, in social media and off-line – and every blogger, viral marketer, celebrity endorser or consumer making a testimonial, should take into account. John's analysis, which you can download and read in its entirety by selecting the link below, asks and answers the following questions about these Guides:

  • What does this mean for advertisers?
  • What is the most dramatic shift in enforcement policy?
  • What will this mean for advertisers that use celebrity endorsers?
  • How much control should sponsoring advertisers exercise over endorsers in new mediachannels?
  • What impact will the FTC's new approach to clinical trials have on the OTC, cosmetic, and pharmaceutical industry?
  • Is there a role for self-regulation and what do you make of the proposed "best practices" recently announced by the Word of Mouth Marketing Association (WOMMA)?

You can download your own copy of John's analysis or you can read it online right here: "FTC Endorsement Guides (Revised) - Some Thoughts As They Become Effective". You won't be disappointed. In addition, if you want to know more about these issues or have questions about your particular circumstances, please do contact John P. Feldman directly, or you can call Joseph I. Rosenbaum or Douglas. J. Wood or, of course, any Reed Smith attorney with whom you regularly work.

Join Us for Cookies - It's the Social (Media) Thing to Do

Just a reminder that space is filling up, so if you want to join us for any of the three West Coast social media law seminars please use the registration link below to sign up. Joseph I. (“Joe”) Rosenbaum and Anthony Traymore from the Advertising Technology & Media Group in New York and local Reed Smith lawyers in each office will present: "Social Media: It’s 10:00 p.m. Do You Know Where Your Brand Is?"

Can’t attend?  If you are a client, we can do a customized in-house seminar for your legal department, executive management, marketing or other professionals. Not a client, perhaps you should be.  Interested? Contact Joe Rosenbaum.

Joe Rosenbaum - A Busy Week (Lexblog & American Banker)

Joseph I. ("Joe") Rosenbaum had a busy week. In an interview with the editors of Lexblog, Joe tells Lexblog why blogging on Legal Bytes is both fun and informative. You can read the entire interview on the Lexblog page "Real Lawyers Have Blogs".

Joe was also quoted in an article by Maria Aspan in the American Banker, about the announcement by American Express that it was acquiring Revolution Money - part of Amex' efforts to continue to evolve and provide a broader (and increasingly relevant online and digital) range of payment options for consumers and merchants. If you are interested, feel free to read Maria’s entire story, "Amex Tries to Buy a 'Revolution'".

Social Media: It's 10 p.m. Do You Know Where Your Brand Is?

Did you miss our New York seminar on Social Media? Well now you can catch us in California. Three of Reed Smith's offices in California will be hosting a seminar on social media, where Joseph I. ("Joe") Rosenbaum and Anthony Traymore from the Advertising Technology & Media Group in New York, and local Reed Smith lawyers in each office, will present:

"Social Media: It's 10 p.m. Do You Know Where Your Brand Is?"

Tweets, profiles, avatars, blogs, chats, friend requests, user-generated content, personalized pages, customized URLs—keeping up with social media is daunting. Social media continues to change the rules of engagement, and for companies, brands, marketing professionals and their legal advisors, engagement is now the rule. Just as economic and advertising models for whole industries are changing to take advantage of social media, industries must confront new and unprecedented legal risks in this brave new world of engagement—a world where lawmakers, regulators and courts are struggling to figure it out. Legal risks and challenges abound; so does opportunity—for brands who know before they go!

Reed Smith LLP is a State Bar of California-approved MCLE provider, and this course qualifies for 1.5 general MCLE Credit. The presentations will highlight:

  • Best practices for corporate engagement in social media
  • How to approach workplace policies
  • The current and potential legal landscape evolving around social media platforms
  • Case studies—social media successes and failures
  • Highlights of our "white paper": A Legal Guide to the Commercial Risks and Rewards of the Social Media Phenomenon, recently released by the Reed Smith Social Media Task Force
  • And much more

Because of the high level interest received, we will be conducting the seminar in three of our California offices.

1.  Reed Smith's San Francisco Office

Tuesday, December 8, 2009

Registration & Breakfast: 8:30 a.m.; Program: 9:00 – 10:30 a.m.

2.  Reed Smith's Silicon Valley (Palo Alto) Office

Tuesday, December 8, 2009

Registration & Lunch: 12:30 p.m.; Program: 1:00 – 2:30 p.m.

3.  Reed Smith's Century City (Los Angeles) Office

Wednesday, December 9, 2009

Registration & Breakfast: 8:30 a.m.; Program: 9:00 – 10:30 a.m.

We hope you will attend, and we encourage you to share this invitation with others. For your convenience, here is a link to the invitation & registration page for these sessions.

Friday the 13th - No Need To Worry. It's Your Lucky Day.

Yesterday evening, Reed Smith and Boyden Executive Search Agencies co-sponsored a seminar in which Douglas J. Wood, head of Reed Smith’s Media & Entertainment Industry Group, joined by Sarah Needleman from The Wall Street Journal, and Kathy Ewing, assistant general counsel at Benjamin Moore, discussed the legal, social and economic implications of the social media and social networking revolution.

Friday the 13th notwithstanding – it’s the third one this year and, for you Useless-But-Compelling-Facts fans, the most any single year can have – today is your lucky day. Even if you missed it, the seminar can be downloaded right here: “Making Sense of Social Media.” And, in keeping with our triskaidekaphobic theme, Legal Bytes is proud to present a double whammy.

Simultaneously with this first-in-a-series of seminars, we have released a groundbreaking white paper entitled Network Interference: A Legal Guide to the Commercial Risks and Rewards of the Social Media Phenomenon. The white paper, which you can also download by clicking the linked title above, was compiled by Stacy Marcus and edited by Douglas J. Wood (head of Reed Smith’s Media & Entertainment Industry Group) and Joseph I. Rosenbaum, Chair of Reed Smith’s global Advertising Technology & Media Law Practice). The white paper includes contributions from our social media task force – numerous Reed Smith lawyers across many disciplines affected by or involved in the social media revolution.

We will be adding, supplementing and updating these materials with even more chapters and new information as this exciting area continues to dynamically unfold. Whether you are an active participant in the commercial world of social media or are confused by it, this is a must read.

Oh, and if you want to actually be social and sociable Joseph I. Rosenbaum and Anthony S. Traymore will be presenting MCLE accredited and customized variations of these Social Media Seminars in our offices in San Francisco, the morning of December 8th, in Palo Alto at mid-day the same day and in Century City the morning of December 9th – so be social and if you are on the West Coast and your schedule permits, mark your calendar and watch the Whatz Gnu? section of Legal Bytes over the next week for further information and links to an invitation and registration.

If you or your brand advertising and marketing professionals think social media is a fad, you need to GWI or start waving goodbye. The train is leaving the station without you. But, if you recognize that digital and web-based technology, coupled with new interactive social platforms and applications are changing the way we interact, communicate, work, play, learn and entertain; are changing the legal and socio-economic landscape; and, indeed, are changing how brands and companies engage with their customers, their employees, their suppliers and yes, their investors and shareholders: well, then OMG, you totally get it.

But even if you do, navigating the waters as legislators, regulators and courts struggle to enact or apply a legal framework originally intended for a world with easily defined borders and tangible products, can be daunting. That’s why Reed Smith has a core and virtual team of lawyers who have experience and can advise you and guide you through the uncertainties. Contact me, Joe Rosenbaum, or Douglas J. Wood, Stacy Marcus, or Anthony Traymore, or any of the Reed Smith lawyers with whom you regularly work. How can we help you?

Collection and Use of Consumer Information - Congress is Listening

Congress is listening—why do you think they are called "hearings"? But will your voice be heard? The U.S. House of Representatives' Subcommittee on Commerce, Trade and Consumer Protection, and the Subcommittee on Communications, Technology and the Internet, will hold a joint hearing on "Exploring the Offline and Online Collection and Use of Consumer Information" Thursday, Nov. 19, 2009. If you or your representatives aren't in the room, you can't be part of the conversation and you won't be heard. If you can't make it, but you want to listen, or be heard, or both—let me (Joe Rosenbaum), or any Reed Smith attorney with whom you regularly work, know.

Because That's Where the Money Is

Presumably, that's why Willie Sutton robbed banks. So I ask you, somewhat rhetorically, why would anyone defraud advertisers on the Internet. Well, if you don't know, please refer to the title—that's what this note is about.

Remember click fraud? That's the name for illicit activity in which someone or something (a computer executing macros, automated scripts, etc.) emulates the click-selection process on a web advertisement. Why is that fraud? Well for one thing, if you are counting the number of times visitors "select" your advertising, click fraud makes it seem like lots of browsers out there are attracted to your advertising. But it ain't necessarily so. Even worse, if an advertiser is paying each time a visitor browses the ad—pay per click—that advertiser can pay a significant amount of money for eyeballs that simply aren't there. While you might think some clever computer hackers or scammers were engaging in this activity for kick (something like a teenager joyriding with the family car), when you find out your competitors are retaining the services of others to engage in that activity, making your advertising seem exceedingly successful and driving up your cost of sales while they are merrily trimming their costs—well that's why they call it fraud after all.

Solid investigative work, pattern detection, programs designed to sniff out repetitive or rapid clicks and Internet protocol and address tracking—1000 clicks per second from the same address—can't completely prevent click fraud, but they can make it more difficult, make the insertion companies, publishers and networks more accountable for accurate metrics and payment mechanisms, and can sometimes even lead to prosecutions.

More recently, even more sophisticated schemes have arisen, including fake advertisements, appearing to be for a legitimate company, but that are actually a launching pad for malicious code—capable of phishing or denial of service attacks, or penetrating corporate firewalls to access company networks and systems.

Now this is not a particularly new problem. After Hyundai was victimized, earlier this year, Initiative, the Agency of Record for Hyundai, sent out letters to its business partners, presumably to its publishing and advertising network partners, stating “someone allegedly working for Hyundai, or working at other agencies, has contacted various sites requesting proposals, and have even run a short campaign,” and requesting that they be notified immediately if contact is made “from an e-mail domain address of 'Hyundai-inc.com'.”

Publicis, one of the world's largest advertising holding companies and the largest global network within the Publicis Groupe, headquartered in France, has also been warning publishing networks about these fake ads. This past Oct. 5, Digitas, Optimedia, MediaVest, Zenith, and Spark (each of them Publicis companies) sent letters to their media partners [link to PDF] alerting them to: "rogue software and malicious advertising that is being placed on websites by individuals pretending to represent legitimate insertion requests."

A recent article in The Wall Street Journal noted yet another scam in web-based advertising: invisible ads. Agencies and media buyers are generally unable to audit banner campaigns when bought through ad networks and purchased on a CPM basis. Now imagine you are paying for ads based on web pages loaded, not clicks. Well, according to the article, Ben Edelman, an assistant professor at Harvard Business School who has been studying Internet advertising, has discovered that these "invisible" ads use computer programming code to make it appear as if the ads are where they are supposed to be. But when you point your browser to the web page where the ad is supposed to be, NOTHING IS VISIBLE. Notice I didn't say that nothing was there. I said it wasn't visible. BUT, if you are reading this, pay attention.  Take your cursor and highlight the entire blank space above right after the words "ad is supposed to be," all the way through to "Notice I didn't say," the previously hidden text becomes visible.  You see, the letters are there, but they are in the same color as the background, so they appear invisible to the reader. A fairly old trick. Now imagine there's a web-based advertisement on an invisible web page. The browser "sees" the page and acts as if that page is loaded and open—only you can't see it.

The Wall Street Journal article notes that security experts at Symantec and McAfee, as well as at online verification and audit companies DoubleVerify and Anchor Intelligence, have confirmed the programming code used to create the invisible ads. Code that ultimately causes advertisers, including some major companies and brands, to pay for advertising that is "there," but not to the user. Just like the text color coded to appear invisible against the background here, these programming codes—normally used to tell the computer how to display a web page when a browser loads the page—make the display (referred to as an "iframe") invisible, so the user won't actually see anything within that iframe. Because you can't see any of the contents, scammers can create multiple invisible iframes, even on the same page. Mr. Edelman reported that he "opened a series of invisible pages on the visitor's computer with as many as 46 ads"—none of which could be seen.

I suspect that when Congress and regulators refer to targeted advertising, they aren't thinking about criminals who target legitimate advertisers and publishing networks and ultimately cost them (and you) money. But here at Legal Bytes, and among the lawyers at Reed Smith, we are! Need to know more about digital advertising, publishing networks, media and marketing online? Call Joe Rosenbaum, or any of the lawyers at Reed Smith you work with. We are happy to help.

Regulators Poised to Give Financial Institutions a Slap in the Facebook

This post was written by Anthony S. Traymore and Joseph I. Rosenbaum.

A few weeks ago, Legal Bytes reported that, buried in the new financial services "reform" legislation, is the establishment of a brand new regulatory agency – the Consumer Financial Protection Agency (see Congressional Hammer Poised to Strike at Financial Advertising). Guess what. Not to be outdone, the regulators are in the act – pardon the pun – already. Witness recent statements by Richard Ketchum, Chief Executive of the Financial Industry Regulatory Authority (FINRA). In recent statements, Ketchum acknowledged that Wall Street is eager to use social media like Facebook, Twitter and Linked In to interact with customers and, that to a large extent, the growth of the use of these sites is inevitable. But at a recent Securities Industry and Financial Markets Association (SIFMA) meeting, he noted, "We continue to witness the advent of technologies that will challenge your ability to ensure compliance with regulatory requirements," and "Social networking is one such innovation."

At that same meeting, Ketchum raised the issue that retention functionality available on social media services may not be sufficient to ensure a financial service firm's compliance with applicable regulations, including the FINRA Rules. If you aren’t a broker-dealer, don't read the next sentence. But if you are: Imagine how social media services used by brokers to communicate with clients could impact FINRA Rules concerning Communications and Disclosures (see, Section 2200). FINRA has now set up a taskforce comprised of industry professionals to explore how firms may utilize social media to better communicate with their customers without "compromising investor protection."   

Such studies and evolutionary (or revolutionary) regulation are increasingly common these days. As our loyal readers already know, Legal Bytes reported previously (FTC Releases Updated Endorsement & Testimonial Guidelines and Reed Smith Analysis of the New FTC Endorsement and Testimonial Guidelines), that the FTC’s revised Guides Concerning the Use of Endorsements and Testimonials in Advertising will become effective Dec. 1, 2009. These revised guidelines represent updates to the prior guides, and acknowledge the proliferation of false claims, phony testimonials, and spurious endorsements (or negative comments) by consumers, experts, organizations and celebrities, through the use of blogs and other "word of mouth" marketing tools. As described in a recent Wall Street Journal article, the SEC disclosure rules apply to Tweets, blog postings, wall postings and other communication platforms provided by social media sites. Other regulatory agencies are similarly seeking to address the use of social media sites by the entities they regulate (e.g., the FCC, the New York State Insurance Department).

Do you have a social media policy?  The complexities are enormous. Internal (during work) and external (non-working hours). Employees, agents, contractors and suppliers. Domain names, URLs and trademarks (which include service marks, for you purists in the audience). Approved content or ad hoc comments. Official presence or not – condoned or not. Today, activities outside the scope of employment are often considered not attributable back to the company absent special circumstances or relationships. Will social media break down those barriers further? If so, what can companies do to reach their customers while continuing to protect their most valuable assets – their employees and their brands? Does a company have the right to regulate conduct outside the workplace, even if it involves reference to the company? Oh, and by the way, you do know that social media, enabled by the borderless web, doesn’t really pay attention to national boundaries, AND that means it's not just U.S. law you may need to worry about – even if you are a U.S. company. If you are an international, multinational or global company . . . good luck. No, not good luck. Call us. Our Advertising Technology & Media Law group has unparalleled breadth and depth in understanding, working with, and advising clients in this brave new world. 

So if any of this is of passing interest, stay tuned. If it is or becomes a pressing need, please contact Joseph I. Rosenbaum or Anthony S. Traymore, and let us help you avoid being anti-social. Of course, if you are already a Reed Smith client, feel free to contact the Reed Smith attorney with whom you regularly work, and he or she will be happy to coordinate your legal needs with us.

Rosenbaum Quoted in American Banker

Joseph I. (“Joe”) Rosenbaum was recently interviewed by American Banker reporter Maria Aspan in connection with advertising and marketing consumer credit cards, and certain legal implications in brand marketing and advertising, including some of the more subtle viral and social media campaigns. Joe’s quotes appear in an article by Ms. Aspan entitled, "Barclaycard U.S. Taking Baby Steps in the Public Eye".

Did You Miss our Legal Seminar for Publishers? No Worries.

Even if you missed the educational webinar—held Oct. 23, 2009; sponsored by the Long Tail Alliance Program of the Interactive Advertising Bureau (IAB); and presented by Joseph I. (“Joe”) Rosenbaum, partner at Reed Smith and general counsel of the IAB, and Adam Snukal, senior associate at Reed Smith—you're in luck. A PDF copy of the seminar, which covered many current legal issues in advertising compliance, privacy, and social media, can be downloaded right here: What Me Worry? Legal Best Practices for Small Publishers.

We’ve been told the Interactive Advertising Bureau will be posting a video recording of the webinar, so you can watch a replay of the entire broadcast, if you like, at your convenience. We will provide details once we receive them.

IAB Long Tail Alliance: Join The Legal Briefing from Reed Smith

Just a reminder that this coming Friday, October 23, 2009, from 12 – 1 p.m. (Eastern US Time), Joseph I. (“Joe”) Rosenbaum, partner at Reed Smith and general counsel of the IAB, assisted by Adam Snukal, senior associate at Reed Smith, will be presenting an educational webinar, sponsored by the Long Tail Alliance Program of the Interactive Advertising Bureau (IAB). The title is: What, Me Worry? Legal Best Practices for Small Publishers

The webinar will provide an overview of the legal issues and suggested best practices in the following areas:

Advertising Compliance ** Privacy ** Social Media

There will be a Q&A session as time permits at the end of the session, and a .PDF copy will be available on Legal Bytes after the seminar is over.

The webinar is open not only to IAB members and Reed Smith clients, but also to anyone who is interested - on a first-come, first-served basis. So register now. You can get more information and register right here for What, Me Worry? Legal Best Practices for Small Publishers. 

About the Long Tail Alliance Program

The IAB formed the Long Tail Alliance program in summer 2008 to encourage involvement with individuals and small business who, powered by interactive advertising, have turned their interests and passions into a media revolution. The Alliance is the beginning of something the IAB envisions as a much larger portrait of American entrepreneurs who are pursuing and achieving the American dream, even as they row hard against strong economic currents. The IAB hopes to expand its Long Tail Membership in order to encourage advocacy, training, and a coming-together of smaller publishers across America as their businesses grow, all while the dynamic of technology and media continues to change.

For more information, click here: http://iamthelongtail.com/707346

About the IAB

The Interactive Advertising Bureau is comprised of more than 375 leading media and technology companies who are responsible for selling 86 percent of online advertising in the United States. On behalf of its members, the IAB is dedicated to the growth of the interactive advertising marketplace, of interactive's share of total marketing spend, and of its members' share of total marketing spend. The IAB educates marketers, agencies, media companies and the wider business community about the value of interactive advertising. Working with its member companies, the IAB evaluates and recommends standards and practices, and fields critical research on interactive advertising. Founded in 1996, the IAB is headquartered in New York City, with a Public Policy office in Washington, D.C.

About Reed Smith

Reed Smith is a global, full-service law firm with nearly 1600 lawyers in 23 offices around the world. Joseph I. (“Joe”) Rosenbaum, a partner in the New York office, chairs the firm’s global Advertising Technology & Media law practice, is the editor and publisher of Legal Bytes, is Corporate Secretary & General Counsel to the IAB, and is an ex-officio member of the IAB Board. Adam Snukal is a senior associate who works with Joe in the Advertising Technology & Media law group and is editor of Adlaw by Request, the gold standard in advertising legal publications in the industry.

Join us for this exciting and timely IAB Long Tail Alliance webinar presented by Reed Smith. We look forward to your participation.

Maine Recommends Repeal of Controversial Privacy Law

Under mounting pressure that "An Act To Prevent Predatory Marketing Practices against Minors"—which was recently enacted and which became effective last month—was unconstitutional (both on free speech grounds and because it unduly restricted intestate commerce), a Maine legislative committee recommended that the new privacy law be repealed. The law would have placed restrictions on the collection and use of data of minors—effectively extending many provisions of COPPA to teens age 13 to 18—and requiring parental consent for the collection of any personal information. While concern still remains over sensitive data (e.g., medical- and health-related information), Maine appears to be poised to modify the original law to limit its applicability to health- and medical-related information of minors. 

Without belaboring the Constitutional arguments (preemption by federal law, unlawful restriction on interstate commerce beyond a state’s interest in protecting its citizens) the Act, if enforced, would have even restricted the rights of teenagers to receive certain information or to participate in social media and social networking activities. Opposition was unusually diverse—with the Center for Democracy & Technology. a civil liberties-focused organization, and the Maine Independent Colleges Association, joining the marketing-oriented Motion Picture Association of America and the Association of National Advertisers in objecting to the legislation.

Apparently in deference to the court cases that had been filed in opposition and the arguments made, Maine’s attorney general previously indicated she would not enforce the Act.

Privacy? Children’s Advertising? State vs. federal law? We can help sort out the confusion. Call me, Joseph I. Rosenbaum, or John Feldman or Douglas J. Wood, or the Reed Smith attorney with whom you regularly work.

Congressional Hammer Poised to Strike at Financial Advertising

The late Will Rogers, that wonderful American humorist from Oklahoma, once said: "This country has come to feel the same when Congress is in session as when the baby gets hold of a hammer." Presumably, the image conjured up by that remark relates to just how much damage can be done before someone takes the hammer away! Well, in those days, Mr. Rogers lauded then-President Franklin D. Roosevelt for taking the hammer away from Congress before they did too much damage. If the strong response the newest Administration/Congressional initiative has evoked from the banking, advertising and media industries is any indication, one might conclude that President Obama has been providing too many hammers these days. This may be a little longer than my usual blog post, but read on . . . you won’t be disappointed.  

To provide a little context for the consternation, a few months ago, gift cards were inserted (for the first time) into federal legislation, ostensibly targeted at the practices of financial institutions applicable to credit cards. Where previously state legislation reigned supreme, the promotion of gift cards, disclosures regarding dormancy or inactivity fees, expiration dates, among other things, became part of U.S. federal law under the new Credit Card Act of 2009.. The legislation was intended to prevent abuses in the credit card industry and protect consumers, and in that spirit, a section covering gift cards seemed like a nice idea. But when it came to gift cards, it was unclear what problems had arisen that were not already (or couldn't be) dealt with by state law – what was broken that needed to be fixed by federal regulators. Is concentrating regulatory power and discretionary rulemaking in the hands of federal agencies, simply for the sake of control, always a good thing?

So in case you haven’t heard, let’s talk about the newly proposed Consumer Finance Protection Agency (the “CFPA”). The CFPA is part of the Administration’s regulatory reform proposal submitted to Congress a few months ago, intended to provide a new regulatory framework for the financial services industry and, among other things, prevent practices and problems that led to the current crisis in the financial industry. Well, if you are a banker, broker-dealer, insurer or a financial officer, you probably already know the government is considering such major reforms and a restructuring of the current regulatory scheme.

BUT, have the finance folks told the marketing and advertising professionals to start worrying too? Perhaps now would be a good time to do so! In referring to the CFPA, Edward L. Yingling, President of the American Bankers Association, has said, “This agency would have broad powers that go beyond every consumer law that has ever been enacted.” You see, the newly proposed Consumer Financial Protection Agency Act of 2009, now fast-tracking its way through the U.S. House of Representatives, would restructure the Federal Trade Commission and give much of its current responsibility for regulating financial services-related advertising and marketing to a brand new regulatory agency - the newly proposed CFPA. I direct your attention to Subtitle C – Specific Authorities (Sections 131 - 139) of the Act, which would give the new CFPA the authority to review not only consumer lending practices, but also fraud and deceptive advertising, to determine and establish rules governing whether or not marketing practices and advertising are misleading, or if consumer financial products and services are being advertised and marketed fairly to consumers. By the way, the CFPA would also be empowered to interpret and enforce the new Credit Card Act of 2009 noted above. Would it surprise you that the Association of National Advertisers and the U.S. Chamber of Commerce would worry about what a new and potentially confusing and overlapping regulatory scheme, and a completely new regulatory agency, will mean for the advertising, agency and media industries?

If you thought all you had to worry about were things like privacy, behavioral advertising, free speech, blogger liability for claims, ‘Net neutrality, cloud computing, celebrity endorsements and social media - tweet, tweet – think again. Just yesterday, Advertising Age reported that some media industry professionals fear certain aspects of the new legislation will hold media liable for simply running advertisements related to financial services and products that the newly created CFPA believes are misleading. That would effectively push media into the role of de facto censors of advertising content. In other words, it would be a "safer" path (read less legal liability) to simply refuse to accept or run advertising that it determines might be too risky. One section of the proposed bill would empower the CFPA to create standards regarding what is or is not lawful in financial services advertising. Another section could be construed to extend liability to anyone in the chain of development, insertion, creation, displaying or broadcasting an unlawful advertisement. Could that be you?

Continue Reading...

Buzz Over Behavioral Advertising - Listen, Do You Want to Know a Secret?

This post was written by Stacy Marcus and Joe Rosenbaum.

The buzz over online behavioral advertising in the United States has been building since the 2008 hearings in Congress over deep packet inspection. The first class-action lawsuit targeting behavioral advertising, Valentine v. NebuAd (N.D. Cal., No. 3:08-cv-05113), was filed in November 2008, followed soon thereafter by Simon v. Adzilla (N.D. Cal., No. 3:09-c-00879) in February 2009.

In the first case, NebuAd and six other ISPs were accused of violating the Electronic Communications Privacy Act, the California Computer Crime Law, the California Invasion of Privacy Act, and the Computer Fraud and Abuse Act, by using deep packet inspection technology. Specifically, the NebuAd complaint alleged that customers were unaware their online activity was being monitored for marketing purposes; that either no notice or consent was provided; that any notice that may have been attempted was insufficient or misleading; and that their technology intentionally sought to negate customers’ efforts to remove tracking cookies. For their part, the defendants vigorously deny having violated customers’ privacy rights, noting that they did not collect personally identifiable information, and that the data collected was anonymized to protect the identities of customers.

Since its filing in November 2008, all of the defendants in the NebuAd case have moved to dismiss the action on various grounds, including lack of personal jurisdiction and failure to state a claim. Just a few days ago (Oct. 6, 2009), the court granted the motions in respect of five of the defendants, to dismiss for lack of personal jurisdictions, citing the fact that the ISPs that were not based in California did not provide a sufficient and constitutionally reasonable basis for a California court to assert jurisdiction. However, the ruling leaves NebuAd as the last defendant standing in the action. But wait. There’s more. In May 2009, NebuAd liquidated its assets and went out of business. In fact, on the day the court dismissed the action against the other five defendants, the court also granted NebuAd’s counsel’s motion to withdraw from the case. That said, the court refused the additional request to stay the proceedings against NebuAd until new counsel could be retained. Stay tuned . . . we’ll track this for you!

Now in the second case, Adzilla (whose website is currently “under construction”) and three other defendants were parties to a joint venture that created a technology called the “ZILLAcaster.” According to the press release of Adzilla partner NetLogix, “[t]he ZILLAcaster technology resides within the service provider's network, the closest point to the subscriber, and utilizes network data in combination with contextual and behavioral targeting to make decisions regarding the delivery of the most relevant ad content for network users. Content can be delivered down to individuals without the use of any desktop, software, or adware.” The plaintiffs claim that this ZILLAcaster oversees, inspects, copies, transmits and actually permits the alteration of the user’s Internet communications – all without any notice to the user. Although there is no allegation that any actual ads were served to Simon (the plaintiff) as a result of this ZILLAcaster, the plaintiffs argue that simply tracking them in this manner violates the Electronic Communications Privacy Act, the California Computer Crime Law, the California Invasion of Privacy Act, and the Computer Fraud and Abuse Act through the use of deep packet inspection. Adzilla has denied plaintiffs’ allegations and asserted numerous defenses. 

Less than two months ago (Aug. 18, 2009), Continental Broadband was dismissed from the action, and on Oct. 2, 2009, a filing in the case seeks to voluntarily dismiss Core Communications d/b/a CoreTel as a defendant in the lawsuit. If the filing is granted, only Adzilla and its parent company, Conducive Corporation, will remain as defendants.

So why should you care? Because given the settlement of Facebook’s class action lawsuit over its Beacon technology, these two lawsuits are the only major ones we are aware of that are pending, that concern online behavioral advertising AND that could potentially yield decisions and opinions. Given Congress’ and the FTC’s interest in consumer privacy in general, and online behavioral advertising in particular, a decision in either of these two cases could set the stage for government regulation and policy – confirming with or reactive to these decisions – and may well set precedent for future online behavioral advertising cases in the months and years ahead. While it’s too soon to tell, we will keep you posted as they unfold. As always, you can contact the authors, Stacy Marcus and Joe Rosenbaum, or any Reed Smith attorney with whom you regularly work, for more information or assistance.

Reed Smith Analysis of the New FTC Endorsement and Testimonial Guidelines

A few days ago, Legal Bytes alerted you to the fact that the Federal Trade Commission has issued revised "Guides Concerning the Use of Endorsements and Testimonials in Advertising". These revisions update the FTC’s Guides, last modified in 1980, that provide direction to advertisers and agencies regarding compliance with the FTC Act.

John P. Feldman, a partner in our Washington, D.C. office and a key member of our Advertising Technology & Media law team, has prepared (and you can view and download) an Analysis of the New Guides. Of course, no memorandum prepared for general information or a summary of this type can provide legal advice, and you should be careful not to rely on it since everyone’s circumstances and the facts of each situation will differ – at a minimum, based on the type of product or service, the target audience, and the advertising media, among other things. That said, the summary will give you a good overview of what is in the Guides and what is different or updated from the prior Guides.

Of course, if you need specific guidance or need to know more about the FTC Guides, or the implications to social media advertising and marketing or traditional advertising, feel free to contact John P. Feldman, Douglas J. Wood or Joseph I. Rosenbaum, or the Reed Smith attorney with whom you regularly work.

What Me Worry? Don't Get Mad, Get Informed!

On Friday, October 23, 2009, from 12 – 1 p.m. (Eastern U.S. Time), Joseph I. (“Joe”) Rosenbaum, Partner at Reed Smith and General Counsel of the IAB, assisted by Adam Snukal, Senior Associate at Reed Smith, will be presenting an educational webinar, sponsored by the Long Tail Alliance Program of the Interactive Advertising Bureau (IAB), entitled: What Me Worry? Legal Best Practices for Small Publishers.

The webinar will provide an overview of the legal issues and suggested best practices in the following areas:

Trademarks: Buying someone else’s key words? Displaying advertising? Sponsoring or hosting contests, sweepstakes, co-branded promotions? Using social media or virtual worlds? Trademarks are everywhere. When should you worry?

Compliance: What’s new at the FTC and FCC? Industry groups want self-regulation. Privacy and consumer advocacy groups want more regulation. Congress is poised to “do something.” What you need to know about marketing to children, adults, compliance with sectoral advertising regulations, from finance and health care to product safety.

Privacy: Behavioral targeting has everyone up in arms. What should a small publisher do if she feels her privacy policy has been violated?

Social Media: Blogs, splogs and vlogs. Virtual worlds, avatars and pseudonyms. Profiles and networks, friends and fans. Testimonials and endorsements – from celebrities to consumers, paid and unpaid. Buzz, viral and word of mouth. Defamation, libel, copyright and personalized URLs. Sound confusing? It is. But ignorance won’t insulate you from liability. Don’t want to become a regulatory target? What you should know.

Q&A: IAB and Reed Smith to answer questions from participants.

The webinar is open to IAB members, to Reed Smith clients, and to the general public on a first-come, first-served basis. Register now. You can get more information and register right here for What Me Worry? Legal Best Practices for Small Publishers.

About the Long Tail Alliance Program

The IAB formed the Long Tail Alliance program in summer 2008 to encourage involvement with individuals and small businesses who, powered by interactive advertising, have turned their interests and passions into a media revolution. The Alliance is the beginning of something the IAB envisions as a much larger portrait of American entrepreneurs who are pursuing and achieving the American dream, even as they row hard against strong economic currents. The IAB hopes to expand its Long Tail Membership in order to encourage advocacy, training, and a coming-together of smaller publishers across America as their businesses grow, all while the dynamic of technology and media continues to change.

For more information, click here.

About the IAB

The Interactive Advertising Bureau is comprised of more than 375 leading media and technology companies that are responsible for selling 86 percent of online advertising in the United States. On behalf of its members, the IAB is dedicated to the growth of the interactive advertising marketplace, of interactive's share of total marketing spend, and of its members' share of total marketing spend. The IAB educates marketers, agencies, media companies and the wider business community about the value of interactive advertising. Working with its member companies, the IAB evaluates and recommends standards and practices, and fields critical research on interactive advertising. Founded in 1996, the IAB is headquartered in New York City, with a Public Policy office in Washington, D.C.

About Reed Smith

Reed Smith is a global, full service law firm with nearly 1600 lawyers in 23 offices around the world. Joseph I. (“Joe”) Rosenbaum, a partner in the New York office, chairs the firm’s global Advertising Technology & Media law practice; is the editor and publisher of Legal Bytes; is Corporate Secretary & General Counsel to the IAB; and is an ex-officio member of the IAB Board. Adam Snukal is a Senior Associate who works with Joe in the Advertising Technology & Media law group, and is editor of Adlaw by Request, the gold standard in advertising legal publications in the industry.

Join us for this exciting and timely IAB Long Tail Alliance webinar presented by Reed Smith. We look forward to your participation.

FTC Releases Updated Endorsement & Testimonial Guidelines

Although it will be published in the Federal Register shortly, you can download and read the text of the Federal Trade Commission’s  revised "Guides Concerning the Use of Endorsements and Testimonials in Advertising" issued earlier today, right on Legal Bytes now. As reported previously in Legal Bytes, the final revisions are intended to update the FTC’s guidance, last revised in 1980, that provide advice to advertisers and agencies regarding compliance with the FTC Act.

While the prior guidelines allowed advertisers to use a “results not typical” disclaimer, that is no longer a safe haven from liability, and advertisers will be required to disclose what a consumer should generally expect when purchasing or using the product. Furthermore, any connection that a consumer might not reasonably know between an advertiser and an endorser needs to be disclosed. In recent years, comments by bloggers, through word of mouth, buzz or viral marketing were never addressed in the Guides. The updated version now deals with and provides examples of when these rise to a level of connection requiring disclosure.. For example, if a blogger receives any consideration in cash or in kind (e.g., free gaming console to try) to review products or services, that would now be considered an endorsement that requires disclosure – even if the review remains unbiased. 

The fact that a consumer should be informed about a material connection between the advertiser and the maker of the statements is now firmly embedded in the FTC Guides, even though these cases were always subject to review on a case-by-case basis. Of course, what constitutes a “material” connection will still be subject to a factual determination, but if a company, for example, sponsors research about its products or services (or potentially about the products or services of a competitor, if the results will be used in a comparative ad), then the company must disclose its sponsorship in the ad. Similarly, although consumers may expect celebrities to be paid for appearing in commercials, if an endorsement is made outside that context – for example, on a talk show, at a book signing, at a motion picture premiere, or on Facebook, Twitter or other social media - any material relationships must be disclosed.

The proposed new guidelines were the subject of a seminar, "Trust Me, I'm a Satisfied Customer: Testimonials & Endorsements in the United States", presented by Joseph I. Rosenbaum, at the University of Limerick in July. You can go to the previous Legal Bytes blog post and download a copy of the presentation at any time.  "

Want to know more about the FTC Guides, or the implications to social media advertising and marketing, or traditional advertising? Feel free to contact me or the Reed Smith attorney with whom you regularly work.

British High Court is for the Birds? Actually, for Twitter!

Again in the category of "you can’t really make this up," yesterday the High Court in Britain ordered an injunction served through Twitter – the social networking site.

Donal Blaney, a lawyer, runs a blog called Blaney's Blarney. Another account, named blaneysbarney, was impersonating Blaney, a politically conservative blogger. Inspired by a case in Australia, where Facebook was used to serve a court order, Blaney asked the court to allow him to serve the anonymous Twitter-user with a court order using the very social network the imposter was using – Twitter! As a practical matter, the court order will only actually be served (i.e., the writ received) when that account owner logs in and accesses his or her account on Twitter.

Since access to British courts appeared much more facile than heading to California in the hopes that a U.S. court will deal with the issue and with Twitter in the United States, he opted to petition the High Court in Britain to allow him to serve the order using Twitter. In the United Kingdom, the law permits an injunction to be delivered through electronic means (e.g., telecopy or even email), so in principle, no new law has actually been created, although this is certainly a novel twist to the existing law – especially since the identity of the imposter account owner was not known to Blaney.

The British High Court agreed, noting that issuing the writ using the Tweeting facility appeared to be the best way to get to the individual behind the anonymous tweeting. As has been noted in Legal Bytes previously, obtaining the identity of anonymous account holders on social media networks can be difficult, with favorable results far from a certainty in all jurisdiction and legal venues.

In the Australian case reported last year, which did not involve impersonation, a couple in Australia defaulted on their mortgage with MKM Capital, but were successfully able to avoid being served with papers in person. They ignored emails and never showed up in court. So, a Supreme Court judge in Australia’s Capital Territory agreed to let MKM Capital serve papers over the Internet. Facebook profiles (you know, those great facts and tidbits you share with everyone in your social media network and the public) had birth dates, email addresses and all the information necessary to satisfy the judge that they could indeed communicate and contact the defendants using Facebook.

Getting back to the recent UK order, online impersonation of sports figures and entertainment celebrities has become an increasing problem and nuisance on social media networks, and Twitter has even reacted to the problem by allowing celebrity "Tweeters" to have their authenticity certified with an icon (similar to a "seal") that is attached to their real profile pages.

The ability to serve legal papers and court orders using digital means through social media – imagine serving my avatar in a virtual world – may have wide-ranging implications for bringing legal actions against those who seek to use anonymity or pseudonymity to insulate themselves from detection when engaging in inappropriate or illegal activities. That said, if the actual account owner is anonymous, how will we know who they are even after they are "served," unless the host or ISP is somehow bound by the service of process.

Stay tuned. Social media is turning the legal world upside down, too . . . let us know if we can help keep you upright. Contact me if you have questions about this or any other matters.

Are You Behaving Badly? Redux

If you missed our teleseminar “Global Regulation of Behavioral Marketing in an Age of Privacy & Data Protection,” presented by Reed Smith partners Douglas J. Wood and Joseph I. Rosenbaum from New York and Gregor Pryor from London, I am pleased to make a copy of the “Are You Behaving Badly” presentation available to our Legal Bytes’ readers. The industry gave us “New Hope.” Privacy and consumer advocacy groups responded, and the “Empire Strikes Back.” Just recently, Congress commended the self-regulatory efforts of the industry, but noted a perceived need for additional legislation. “The Phantom Menace” persists.

The intergalactic battles continue, battle lines remain drawn, tensions remain high and the balance unclear – perhaps because changing technology, social media norms and advertising models keep rewriting the rules of engagement. If you listened in, thank you. If you missed it, here is the presentation. In either case, don’t hesitate to contact any of us with questions.

Online Behavioral Advertising - Congress Poised to Act

Late last week, Rep. Rick Boucher (D-Va.), who chairs the Subcommittee on Communications, Technology and the Internet, released a statement indicating that despite industry collaboration and efforts at self-regulation, his belief is that government regulation remains necessary. Rep. Boucher intends to introduce legislation, regulating online behavioral advertising. His statement notes that the intention would be “to assure Internet users a high degree of privacy protection, including transparency about the collection, use and sharing of information about them and to give them control over that collection, use and sharing,” and that the advertising industry’s self-regulatory principles, “while proactive . . . . do not go far enough.”

In deference to the industry, however, Rep. Boucher’s statement also acknowledges that “online advertising supports much of the commercial content, applications and services that are available to Internet users today without charge,” and mentions that the intention of any legislation is not to disrupt well-established business models. The announcement asserts the legislation will have bipartisan support, and although it notes that actual draft legislation is not yet ready for prime time, it will be targeted primarily at privacy concerns, seeking to establish baseline standards relating to the disclosure, collection and use of consumer information, and safe harbors for advertisers that adhere to certain online practices in connection with these issues. In addition, the Federal Trade Commission will be given the authority to enforce the principles in the legislation and define the specific policies and practices that would allow advertisers to take advantage of the proposed safe harbor protections.

You can read all of Rep. Boucher’s statement right here. Fittingly, there is still time to register for tomorrow’s teleseminar “Are You Behaving Badly”, sponsored by the Advertising Technology & Media law practice at Reed Smith.

Self-Regulatory Online Behavioral Advertising Principles: What's Déjà New?

In a speech in November 1942, Sir Winston Churchill remarked, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

So, if you have been following along with the original announcement and each of the following “principle summaries” posted on Legal Bytes:

. . . and, if you have read the actual report, then you will appreciate that “Self-Regulatory Principles for Online Behavioral Advertising”, consistent with the Federal Trade Commission’s support of industry self-regulation, are patterned after the highly successful record of the Council of Better Business Bureaus in regulating the traditional advertising industry for more than 30 years. A record that includes industry collaboration, self-regulatory principles and monitoring, and close collaboration with the Federal Trade Commission over the years, as the industry and advertising models evolved.

While one is always careful to ensure that at some point governmental intervention may be necessary to protect consumers from those who abuse the system or violate the law, the question to ask is whether and to what extent new or different regulation is required. That is certainly a question being asked (and being answered) by a coalition of 10 consumer advocacy and privacy groups in its recently released report, “Online Behavioral Tracking and Targeting Concerns and Solutions”, in response to the industry principles. More importantly, one may ask whether a concretized and codified piece of legislation is likely to remain relevant or even defensible in the face of innovation and technology that could not have been predicted five years ago and, I believe, will remain relatively unpredictable in the future.

That said, some aspects of advertising are predictable. Development, display and distribution mechanism will evolve dynamically as technology and innovation continue. Notions of consumer privacy and data protection will continue to evolve and be difficult to harmonize across nations, across cultural and local boundaries, and—because privacy is and has always been context specific—in time and space. What might have been considered private in 16th century France is very different from the concept of privacy that permeates the hearts and minds of citizens of Japan or Brazil today. Indeed, even the role of government in protecting one’s right to privacy and the use of information about oneself, is an ever-changing one. Advertising models and economics will continue to change, with metrics and quantification methodologies being sparred and argued over, recognizing that even the roles of advertisers, agencies, media buyers, and broadcast and publishing networks, as well as ISPs, search engine, browser and web hosting companies—the technology players—are and will continue to change. Wireless and mobile devices will continue to expand the domain of advertising and challenge our ability to capture consumers’ interest on tiny mobile screens, while the opposite is taking place in our living rooms—with the separation of desktop or laptop computing and home television and entertainment centers being increasingly irrelevant (and screens becoming larger). Oh, and did we forget to mention how online gaming and the interplay between gaming console, entertainment and product placement, virtual worlds and display advertising, are all blurring (pardon the pun) right before our eyes?

So if you have ever attempted to change a tire on a moving automobile, you have a vision of what the “industry” is and will look like in the future. Under these circumstances, traditional regulation as we knew it, may not make sense. What might make sense is a more dynamic system of regulation. One that is more flexible, more adaptable and more capable of interacting and reacting to changing circumstances, mechanisms, technology and the environment. Perhaps allowing the industry and the Federal Trade Commission, in conjunction with other agencies already tasked with the mission of protecting consumers within their particular areas of authority (e.g., FDA, FCC, FAA, and the list goes on) to develop self-regulatory enforcement mechanisms, referral mechanisms, and a track record, may be the best way to determine what, where and when regulation may be needed.

In the meantime, you may want to ask yourself if you are misbehaving as an advertiser or marketing professional, and register and listen in to our “Are You Behaving Badly” Teleseminar Sept. 30, which will tackle current issues in global regulation of behavioral advertising.

As always, I and my colleagues in the Advertising Technology & Media law practice at Reed Smith are ready to assist in guiding, advising and providing legal support where and when you need it. We’ve been changing tires for more than a century!

Privacy: FTC Announces the First in a Series of Public Roundtables

Earlier today the Federal Trade Commission announced details of the first of a series of Public Roundtables being held to deal with continuing efforts to examine, evaluate and determine if, and to what extent, regulation may be needed in connection with consumer privacy. In its announcement, the FTC specifically cites its intention to review privacy practices related to social networking, cloud computing, online behavioral advertising, mobile marketing, and the collection and use of information by retailers, data brokers and third-party applications.

The FTC’s announcement acknowledges the beneficial uses of information and technological innovation, while seeking to balance those against the need to protect consumer privacy. The first full-day session will be held Monday, December 7, 2009, at the FTC Conference Center at 601 New Jersey Avenue, N.W., Washington, D.C., and no registration is required. Those who cannot attend in person are welcome to go to FTC.gov and will be able to view the proceedings as a webcast.

The FTC has invited individuals and organizations to participate and/or to suggest topics. To participate, your request can be submitted directly to the FTC by email sent to privacyroundtable@ftc.gov on or before October 30th, and comments surrounding the issues to be discussed can be submitted on or before November 6th. The FTC has prepared a list of specific questions it intends to use in opening the dialog at this first in its series of public roundtable discussions and has invited written comments, as well as research submissions. Details can be found at the Privacy Roundtable Workshop page of the FTC’s website. Comments can be mailed to the FTC, or you can check the FTC website for instructions as to submitting comments electronically. Of course, Reed Smith stands ready to assist clients in preparing comments or providing representation, and if we can be of assistance, don’t hesitate to contact us. If you need to know more, please feel free to call me or the Reed Smith attorney with whom you regularly work.

Self-Regulatory Online Behavioral Advertising Principle No. 7: Accountability

This post was written by Adam Snukal and Joseph Rosenbaum.

Well, here it is. A summary of the last of the seven principles contained in the Self-Regulatory Online Behavioral Advertising Principles released by the Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association, and the Interactive Advertising Bureau, in concert with the Council of Better Business Bureaus. The seven principles are:

The Accountability principle is the one concerned with the “effect,” rather than the “cause” and calls upon the industry to establish and implement programs to monitor its online behavioral advertising activities and take steps to ensure compliance with the principles within a self-regulatory framework. In the context of the self-regulatory principles, Accountability means – monitoring, transparency, reporting and compliance.

  • Monitoring: Both random and systematic, depending on the circumstances;
  • Transparency: Widely available, easy to use communication tools and channels so that the public, competitors and government agencies can file complaints when the Principles are violated;
  • Reporting: Violators will be publicly reported, including the reason for a finding of violation, a description of the violation, and the actions taken in response to, and to correct, the non-compliance; and
  • Compliance: The establishment of mechanisms and procedures to bring any publicly-reported entity into compliance with the principles, or, if necessary, to refer the violation to the appropriate government agency.  

The Accountability principle also notes the importance of coordination and consistency among programs to promote efficiencies in implementation, so as to avoid multiple enforcement actions against the same entity for the same violation. 

While the blueprint for the specifics surrounding the proposed monitoring, transparency, reporting and compliance initiatives under this principle are yet to be drawn, the Direct Marketing Association (“DMA”) and National Advertising Review Council of the Council of Better Business Bureaus (“CBBB”), have agreed to cooperate and collaborate, with the stated goal of having something in place by early 2010. Both the DMA and the CBBB were called upon to provide leadership in this area because of their widely respected existing self-regulatory accountability programs. The DMA also has agreed to integrate the principles into its longstanding DMA Self-Regulatory and Compliance Tools.

If you would like to read the entire “Self-Regulatory Principles for Online Behavioral Advertising” report now, in its entirety, just follow the link, but stay tuned for next week, when we will post a short consolidated summary of all seven principles and you can always read the entire “Self-Regulatory Principles for Online Behavioral Advertising” report here. So now, as always, if you have any questions or need help, please feel free to contact Adam Snukal or me, or any of the Reed Smith attorneys with whom you regularly work.

Are You Behaving Badly? Global Regulation of Behavioral Marketing

On Wednesday, September 30, 2009, from 12 noon – 1 p.m. (U.S. EDT), Reed Smith will be hosting a teleseminar as part of its “Doing Business Globally” series. Entitled Global Regulation of Behavioral Marketing, this seminar will be presented by Reed Smith partners Douglas J. Wood and Joseph I. Rosenbaum from New York, and Gregor Pryor from London. The seminar will explore the legal implications to advertisers, marketing professionals and brands associated with the labyrinth of global regulation increasingly applicable, or newly enacted, in connection with the targeting of consumers — on and off the web — through behavioral marketing.

Privacy and consumer groups object to such sophisticated techniques, fearful it further erodes what little privacy protection remains. Regulators are concerned such practices may violate privacy and data protection laws, or worse, are simply not covered by existing law and regulation. Marketers respond that such advances allow for a far more efficient, consumer-friendly marketplace, and that self-regulation has been a successful model in the advertising industry for more than 30 years. In this interconnected, networked age of social networking and global communication, understanding the implications and the legal and regulatory landscape is critical for every advertising professional and marketer, and the brands they represent. The camps remain far apart. Advertising industry associations call for self-regulation, recently releasing a report entitled Self-Regulatory Principles for Online Behavioral Advertising. Only about two months later, as previously reported in Legal Bytes, a coalition of 10 consumer advocacy and privacy groups released a fresh call for new regulation in a report referred to as a Legislative Primer, entitled Online Behavioral Tracking and Targeting Concerns and Solutions. The dividing lines remain drawn, tensions remain high, and the balance unclear – perhaps because the technology environment keeps rewriting the rules of engagement. Want to know more? Don’t miss this informative presentation.

Join us for this exciting and timely Reed Smith Teleseminar. You can view the Invitation to obtain more information, or go right to the Registration page. We look forward to your participation. 

Self-Regulatory Online Behavioral Advertising Principle No. 6: Sensitive Data

This post was written by Anthony S. Traymore and Joseph I. Rosenbaum.

Almost down to the wire, here is the next installment summarizing the sixth of the seven principles contained in the Self-Regulatory Online Behavioral Advertising Principles released by the Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association, and the Interactive Advertising Bureau, in concert with the Council of Better Business Bureaus. For reference, the seven enumerated principles are:

The Sensitive Data principle segments sensitive data into two basic categories - personal information of children under the age of 13, and financial and health-related information, regardless of the age of the individual.

The Sensitive Data principle segments sensitive data into two basic categories - personal information of children under the age of 13, and financial and health-related information, regardless of the age of the individual.

With respect to the collection and use of data for online behavioral marketing purposes, if you have actual knowledge that any of the information being collected is from individuals under the age of 13, or if your website is targeted at children under the age of 13, the Sensitive Data principle states you should not be collecting any personal information from or be engaged in any online behavioral advertising with regard to that individual, unless you comply with the Children's Online Privacy Protection Act (COPPA), and then, only to the extent specifically allowed by COPPA.

In case you’ve forgotten, COPPA requires you to have "verifiable parental consent" prior to collecting any personal data from children under the age of 13. The Federal Trade Commission routinely enforces COPPA, and violations may carry fines in excess of $1 million, in addition to the damage to goodwill and public image that can result. Compliance with the provisions of COPPA is tricky. While this post will not belabor the ambiguities that have already been reported about what constitutes "verifiable parental consent", suffice it to say that when dealing with children under the age of 13, it is best to exercise considerable caution in connection with online marketing efforts – behavioral or otherwise – and to always consult an attorney well-versed in guiding you through the compliance maze.

With respect to personal information related to an individual’s financial or health status, age is not relevant to this sixth principle. What is relevant is the requirement that you obtain the consent of the individual if you are collecting the information online and you intend to use it. Prudent practice would indicate you should affirmatively obtain the individual’s consent in advance – whether during the process of registration, through formal acceptance of terms of use that clearly solicit consent, or through any other means. Clearly, if you plan to share this information with third parties in connection with online behavioral marketing efforts, you should indicate that to the individual. In all cases, the principle notes that you should always provide the individual with the right and an option, at any time, to opt-out of the use of his or her information for such purposes.

As mentioned, this is the sixth of the seven principles being highlighted, but if you would like to read the entire “Self-Regulatory Principles for Online Behavioral Advertising” report now, in its entirety, just follow the link. Legal Bytes will be bringing you a summary of the remaining principle next week. And now, as always, if you have any questions or need help, please feel free to contact Anthony S. Traymore or me, or any of the Reed Smith attorneys with whom you regularly work.

Privacy and Consumer Groups Want More Than Just Self-Regulation

This post was written by Adam Snukal and Joseph Rosenbaum.

As previously reported in Legal Bytes, it seems that not everyone is satisfied with the Self-Regulatory Principles for Online Behavioral Advertising recently promulgated by several leading advertising associations. A group of 10 consumer and privacy advocacy organizations (i.e., Center for Digital Democracy, Consumer Federation of America, Consumers Union, Consumer Watchdog, Electronic Frontier Foundation, Privacy Lives, Privacy Rights Clearinghouse, Privacy Times, U.S. Public Interest Research Group and The World Privacy Forum called on Congress earlier this week to enact legislation in response to what they feel are genuine threats to privacy arising from online behavioral tracking and targeting.

The guiding principles the coalition wants Congress to follow in its enactment of privacy legislation are substantively contained in the following Fair Information Practices (“FIP”), which the coalition claims has been the foundation of U.S. privacy policies for decades: collection limitations, data quality, purpose specification/communication, use limitation, security safeguards, appropriate openness, individual participation and knowledge rights, accountability, and redress. FIP was coined by a U.S. government advisory committee in 1973 in response to the use of automated data systems that contained information about individuals. The U.S. Privacy Act of 1974 established a code of fair information practices, and the FTC refers to these practices in a report entitled, Privacy Online: Fair Information Practices in the Electronic Marketplace (May 2000).

A sample of the principles contained in the coalition’s Legislative Primer, entitled Online Behavioral Tracking and Targeting Concerns and Solutions, includes:

  • A definition of “sensitive information,” along with guidelines as to the kinds of data that should not be collected or used for behavioral tracking/targeting
  • A prohibition on the collection or use of data from anyone under the age of 18
  • The right of an individual to obtain access to his/her personal or behavioral data
  • Personal and behavioral data collected must be relevant for the purposes for which they are to be used
  • A private right of action given to each individual whose data is collected and tracked, along with liquidated damages and appropriate federal/state regulation and oversight

Given the July release of self-regulatory principles, crafted and widely embraced by the advertising industry, with explicit support for self-regulation from the FTC itself, and three decades of successful self-regulation in the advertising industry (guided by the Council of Better Business Bureaus), it is not clear why a spokesperson for the Privacy Rights Clearinghouse would take the position that “The record is clear: self-regulation doesn’t work. It is time for Congress to step in and codify the principles into law.” Or why a spokesperson for Consumer Watchdog commented: “We’ve seen in industry after industry what happens when the fox is left to guard the chicken coop – consumers lose.”

With Congressman Boucher (D-Va.), Chairman of the Subcommittee on Communications, Technology and the Internet, indicating that his Subcommittee intends to visit this issue in the fall, it is not clear whether Congress will allow the industry and the FTC an opportunity to give self-regulation time to work, or if a perceived need to “do something” and change the status quo remains. One thing has not changed: the positions of the industry and consumer and privacy advocacy groups.

Legal Bytes will keep you posted on developments in this area as they evolve, but if you need help or want further information, feel free to contact Adam Snukal, me, or any of the Reed Smith attorneys with whom you regularly work.

Self-Regulatory Online Behavioral Advertising Principle No. 5: Material Changes

Here is the fifth in our installments of summarizing the seven principles contained in the Self-Regulatory Online Behavioral Advertising Principles released by the Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association, and the Interactive Advertising Bureau, in concert with the Council of Better Business Bureaus, For reference, the seven enumerated principles are:

The Material Changes principle requires an organization engaged in behavioral advertising to obtain consent before applying any material changes to its existing online behavioral advertising policies and practices – specifically, to the data collection-and-use policies and practices that apply to data collected prior to the effective date of any material change to these policies and practices.

This principle also makes it clear that a change in policy or practice that would result in less data collection or more restrictive use of the data (i.e., less or more restrictive use of the data than existing usage) is NOT a material change that would require prior consent. This makes sense considering that the purpose of the principle, when coupled with Transparency and Consumer Control, is not to merely give consumers an absolute right to consent or to reject any and all changes, but only those that would broaden, deepen or alter in an expansive or materially different manner, the existing collection-and-use practices of the organization. If a change would result in less data being collected or more constrained use of the data being collected, a consumer would likely be notified of the change, but consent would not be required.

Legal Bytes will be bringing you a summary of the remaining two principles in the next week. And now, as always, if you have any questions or need help, please feel free to contact me or any of the Reed Smith attorneys with whom you regularly work.

Self-Regulatory Online Behavioral Advertising Principle No. 4: Data Security

The Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association, and the Interactive Advertising Bureau, in concert with the Council of Better Business Bureaus, recently released its Self-Regulatory Online Behavioral Advertising Principles. When we announced these principles, we also promised to provide you with a bit more detail regarding each of these principles, which are listed below; so here is a brief summary of the fourth – Data Security. For reference, the seven enumerated principles are:

The Data Security principle requires entities to provide reasonable security for, and limited retention of, data collected and used for online behavioral advertising purposes. Consistent with the FTC standard, entities must maintain appropriate physical, electronic and administrative safeguards based upon the sensitivity of the data. Further, data collected and used may not be retained any longer than necessary to fulfill a legitimate business need (e.g., testing and auditing) or as required by law. In addition, the principle sets forth the steps that service providers (e.g., entities that provide Internet service, toolbars, web browsers or comparable desktop applications) must take in connection with data collection and use, including alteration, anonymization or randomization (e.g., hashing) of personally identifiable information; enhanced notice and disclosure at the time the data is collected; and the protection of the non-identifiable nature of data shared with non-affiliates. Under the Data Security principle, service providers will be held accountable for compliance with these principles in connection with their collection and use of data for online behavioral advertising purposes. Thanks to Stacy Marcus for her analysis.

We can now also report to you that yesterday a coalition of 10 consumer and privacy advocacy groups (i.e., Center for Digital DemocracyConsumer Federation of America, Consumers UnionConsumer WatchdogElectronic Frontier FoundationPrivacy LivesPrivacy Rights ClearinghousePrivacy Times, U.S. Public Interest Research Group, and The World Privacy Forum, has released a draft of their own principles, in the form of a Legislative Primer, entitled Online Behavioral Tracking and Targeting Concerns and SolutionsLegal Bytes will have a more detailed report for you on this new development in the next day or two, and in the meantime – or any time – feel free to contact me, Stacy Marcus, or any of the Reed Smith attorneys with whom you regularly work.

Self-Regulatory Online Behavioral Advertising Principle No. 3: Consumer Control

Last month we promised to provide you with a bit more detail regarding each of the self-regulatory principles that form the basis of the Self-Regulatory Online Behavioral Advertising Principles, announced by the Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association, and the Interactive Advertising Bureau, in concert with the Council of Better Business Bureaus. The principles are intended to provide a framework for industry participants to adopt, implement and adhere to standards of conduct applicable to their online behavioral advertising practices. Seven basic principles are contained in the report, and Legal Bytes is briefly summarizing each one, although we urge you to read the full report. 

We previously reported on the Education and Transparency principles; those links in the outline below will take you to the summaries, or you can read the overview posted when we reported on the initial release of the Self-Regulatory Online Behavioral Advertising Principles.

For reference, here are the seven enumerated principles:

Today, Keri S. Bruce highlights the Consumer Control principle that relates to the practice recommended by the report of providing consumers with additional control over whether data is collected about them and whether it is shared with others. The principle applies to third parties that collect or use behavioral advertising data and the websites from which the data is collected. The principle also applies to “service providers” (i.e., parties that provide Internet access services, toolbars, Internet browsers or comparable services, and who are engaged in online behavioral advertising). Through notices that are described under the Transparency principle, with respect to third parties and websites, consumers should be able to control the use and collection of their personally identifiable information by opting-out of having data collected or shared with non-affiliate websites. With respect to service providers, because they potentially can, by the nature of the services they provide, gain access to all or substantially all online behavioral data of a particular user when that user is online with or through the service provider, the Consumer Control principle requires industry participants to follow practices that require consumers to opt-in to data collection for online behavioral advertising purposes by the service provider. Further, even after consent is given, service providers must provide a means for the consumer to withdraw her or his consent. 

Thanks to Keri S. Bruce for her analysis. For further information, you can also call me or the Reed Smith attorney you regularly work with. Stay tuned for summaries of the remaining principles.

Self-Regulatory Online Behavioral Advertising Principle No. 2: Transparency

Last month, Legal Bytes reported to you that the Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association, and the Interactive Advertising Bureau, in concert with the Council of Better Business Bureaus, released its Self-Regulatory Online Behavioral Advertising Principles. As reported, the major participants in the online advertising industry have proposed to apply these principles to their practices related to online behavioral advertising: “the collection of data from a particular computer or device regarding Web viewing behaviors over time and across non-Affiliate Web sites for the purpose of using such data to predict user preferences or interests to deliver advertising to that computer or device based on the preferences or interests inferred from such Web viewing behaviors.” 

We promised to provide you with a bit more detail regarding each of these principles. We previously reported on Education, and today we summarize Transparency. As we go through each one, we’ll use the outline below to enable you to link to all the prior principles covered in Legal Bytes, while highlighting the one covered today. The seven enumerated principles are:

  • Education
  • Transparency
  • Consumer Control
  • Data Security
  • Material Changes
  • Sensitive Data
  • Accountability

The Transparency principle seeks clear and accessible consumer disclosures regarding the type of data collected and how the data will be used to conduct behavioral advertising. Because behavioral advertising is often conducted by third-party advertising networks that lease space on a website, the principle applies to both third-party entities collecting and/or using the data, and the websites from which such data is being collected. Under this principle, these parties would provide “enhanced notice” on the page where data is collected through links embedded in or around advertisements, or on the web page itself. Customers will have the ability to read these notices and use the information to enable themselves to take control over the use of their personal information, choosing whether they would like to permit their information to be used for online behavioral advertising purposes.

Thanks to Amy S. Mushahwar for her analysis. Stay tuned for summaries of each of the remaining principles.

Court Orders Google to Turn Over Blogger Identity Information

Earlier this week, New York State Supreme Court Judge Joan Madden ordered Google to turn over account information about an anonymous blogger to model Liskula Cohen in order to enable her to pursue a claim of defamation. The blogger had used Google’s blogging service to create a blog entitled “Skanks in NYC,” and had posted pictures and references to the model that were anything but flattering, and which, she claimed, lost potential opportunities for her. When Ms. Cohen originally sought to find out who had posted the content, predictably Google resisted, maintaining that its privacy policy does not permit the disclosure of the blogger’s account information.

To put this in perspective, the protection of free speech—especially anonymous speech—is a concept in American jurisprudence and history that traces its roots to Thomas Payne’s pamphlet, Common Sense. First published in 1776, it anonymously challenged the authority of Great Britain in the New World and is widely regarded as the first work to openly ask for independence for the Colonies from Britain.

Since then, state courts have varied on just how wide those rights go and for what purposes protection is appropriate. Although I am hardly a First Amendment lawyer or a Constitutional scholar, the legal issue still seems simple. If the speaker—anonymous or not—is expressing ideas or an opinion or belief, he or she is more likely to enjoy protection. While there are limitations on freedom of expression (e.g., yelling “fire” in a crowded theater), political expression has typically enjoyed greater protection than “commercial” speech—one being fundamental to a society’s encouragement of the free flow of ideas, the other designed to promote a product, service or brand in a free market economy. On the other side of the spectrum and generally not protected, would be public expressions that are clearly and solely intended to hurt someone, where actual harm can be shown from intentional or malicious public expression or, as was determined by the New York court here, where an illegal act was or was likely to have been committed—in this case, defamation.

While it is difficult to pinpoint a single factor that will always favor protection, anonymity is a strong legal shield U.S. jurisprudence holds dear to protect individuals from the potential swords of those in power, or from anyone who might seek to stifle dissent or ideas that might be unpopular. For example, in 2005, a blogger who ranted against a politician, accusing him of “obvious mental deterioration,” was ultimately protected by the Delaware Supreme Court expressing concern over the potential “chilling effect” on anonymous speech. The blogger in this case was referring to a politician, and the court ruled that in order to justify revealing the identity of an anonymous blogger, the plaintiff must provide evidence sufficient to all the elements of the claim if the case were to go to trial. Because the court concluded no reasonable person would believe the blogger’s statements to be factual, no action for defamation could be sustained, and the court dismissed the case. You can read the Delaware Supreme Court’s decision in full right here, but clearly for bloggers, this represented a significant landmark and affirmation of the substantial protection afforded anonymous posting.

In a subsequent 2008 case, a Maryland Court of Appeals decision (Independent Newspapers, Inc. v. Zebulon J. Brodie) similarly concluded that anonymous posts should be protected, and set out an approach first detailed in a New Jersey case (Dendrite Int'l, Inc. v. John Doe No. 3) describing the steps judges should take in deciding whether to compel disclosure of anonymous online speakers in cases that come along in the future.

Unlike the previous cases, and potentially distinguishing this case, is the fact that the blogger here targeted Ms. Cohen intentionally, exclusively, and individually; and while the defendant argued the postings were just “trash talk” and only opinion, Judge Madden noted that if Ms. Cohen could prove the blogger’s statements were factually inaccurate, it would refute the argument that the posts were merely opinion and would support a legal claim of defamation.

As we have previously noted in Legal Bytes in articles describing the FTC’s efforts to regulate the blogosphere, and in presentations we have made, it is clear that online speech is coming under increased scrutiny, and that regulators and courts appear to nibbling away at the virtually complete immunity anonymous bloggers once seemed to enjoy, seeking to define the contours of what is or is not permissible conduct on the web. Does anyone remember the term “netiquette”?

For more information, or for assistance with issues like these or any social media, online, digital content, gaming or matters that meet at the crossroads of advertising, technology & media, look up Joseph I. Rosenbaum, send me an email, or contact the Reed Smith attorney with whom you regularly work. We are happy to help.

Self-Regulatory Online Behavioral Advertising Principle No. 1: Education

Last month, Legal Bytes reported to you that the Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association, and the Interactive Advertising Bureau, in concert with the Council of Better Business Bureaus, released its Self-Regulatory Online Behavioral Advertising Principles. As reported, the major participants in the online advertising industry have proposed to apply these principles to their practices related to online behavioral advertising: “the collection of data from a particular computer or device regarding Web viewing behaviors over time and across non-Affiliate Web sites for the purpose of using such data to predict user preferences or interests to deliver advertising to that computer or device based on the preferences or interests inferred from such Web viewing behaviors.” 

Since we promised to provide you with a bit more detail regarding each of these principles, which are listed below, here is our first installment in fulfilling that commitment. The seven enumerated principles are:

  • Education
  • Transparency
  • Consumer Control
  • Data Security
  • Material Changes
  • Sensitive Data
  • Accountability

The Education principle requires everyone in the online behavioral environment to participate in meaningful efforts to educate consumers and businesses about behavioral advertising, the purpose of the Self-Regulatory Online Behavioral Advertising Principles, and the potential benefits and consumer choices that are available when these principles are followed, and to explain to consumers the means and implications of exercising their rights and the choices they may have. While the specifics of all of the proposed educational outreach are yet to be established within the framework of the industry groups that have formulated these principles, the one thing that was agreed on as a tangible, quantitative objective is that through industry-developed website(s) and a major online education campaign, the initial educational outreach would be developed to achieve at least 500,000,000 (yes, that’s five hundred million) impressions over the next 18 months. Thanks to Keri Bruce for her input. Stay tuned for highlights of the six other principles.

Landlord Can't Let Tweet sMOLDer

If you have been wondering what happened to the third grade line “there’s a fungus among us,” we have the answer. It seems a “tweet” made available May 12, 2009 on Twitter contained the following statement: ". . . Who said sleeping in a moldy apartment was bad for you? Horizon realty thinks it's OK." Since the tweet is alleged to be available publicly for the world to see on Twitter, that didn’t seem particularly humorous to the management of the apartment building in which the Tweeter lives.

So non-humorous in fact, that Horizon Group Management, landlord of the apartment building in question, has filed suit in a Cook County Illinois Court for libel, alleging this was a "malicious and defamatory" tweet about the state of her apartment. The complaint further contends that because the "statement damaged the plaintiff's reputation in its business, the statement is libel per se." Horizon is seeking a minimum of $50,000 in damages and that isn’t birdseed. You can read a copy of the complaint right here.

Facebook Flap Over Ad Photos (Déjà vu All Over Again)

Last week, rumors started spreading that Facebook had changed its policy and was now allowing third-party advertisers to use your photos (i.e., images users post onto Facebook) without permission. The flap over the use of Facebook user-profile photos in advertising came into the limelight when a man, using a third-party application, saw an advertisement displayed for an online dating website, and much to his surprise—it happened to include a picture of his wife. There’s Good, Bad & Ugly.

Good news: His wife wasn’t out looking for a date. Bad news: The photo emanated from a Facebook profile photo available to companies that use the Facebook platform ad network. Ugly news: You could be next!

So here’s the scoop:

Facebook has not changed its policy and does not allow the use of your photo(s) without permission. Facebook had previously suspended two ad networks from the Facebook platform for deceptive practices and user complaints. Those ad networks were said to be using third-party applications in which these photos were embedded and, according to Facebook, that violates Facebook’s privacy policy; and the ads were misleading since they made it look as if someone’s Facebook friend had taken action when they really had not. Facebook itself issued a statement noting, “We are as concerned as many of you are about any potential threat to your experience on Facebook and the protection of your privacy. That’s why we prohibit ads on Facebook Platform that cause a bad user experience, are misleading, or otherwise violate our policies.” 

Although some Facebook users might not know it, Facebook has been running ads from its own ad system for more than a year—it lets your Facebook friends know of any direct connections you have with products and services. So if you become a "fan" of a Facebook Page, your Facebook friends might see an advertisement showing both the action you took (becoming a fan) and your profile photo along with the ad. According to Facebook, it will only do this when a Facebook user has taken some affirmative action indicating a connection with the product or service being advertised. Facebook also claims no data is shared with third parties in this process.

The best we can determine, Facebook technically only allows any user content to display in or with third-party advertising if the content isn’t being cached. While Facebook likely tries to control these networks, some obviously are not adhering to this policy, with photos then appearing not only on third-party ad networks within Facebook when they haven’t been authorized, but also in some cases outside the Facebook domain itself.

If you are a Facebook user and have actually read (and understood) its Terms and Privacy Policy, which is part of the Facebook Principles, you might know that Facebook ad networks can use these user photos in ads—they just can’t do so in violation of their privacy policy or in a deceptive manner. While clearly Facebook has an interest in keeping users comfortable with the online social media environment it has created, it will likely either do a better job of disclosing and explaining the potential uses that may be made of user information (including images, connections, and the like), or it will need to monitor and control the use of its advertising platform by third-party advertising networks that are allowed to use the platform.

Every user on Facebook is opted-in to allowing the use of their photos as described above, by default, when they sign up. Perhaps part of the flap is the fact that many users may simply have not known this. Or perhaps there's a disclosure or communication problem within the community. Facebook might also provide more visible or multiple ways of enabling users to opt-out of this feature or create more refined privacy settings so that users are given more options and more information that allows them to control the use of their photos (and other information), certainly outside and potentially inside the Facebook social media community. Most users simply may have had no clue this was the default or that this was happening. Even when they realize this is occurring, many can’t figure out how to change the settings. Currently, the only way to fix the problem is to have users change the privacy settings that are found under “Settings,” “Privacy Settings,” “Newsfeeds and Wall”; looking for the tab that says “Facebook Ads”; and re-setting your “Appearance in Facebook Ads” preference to “No One.”

HOWEVER, just so everyone is clear—this still may not opt you out of Facebook ads displayed to your friends with your photo when you expressly take action within Facebook (e.g., becoming a "fan"), but it will opt you out of third-party network ads. That said, it remains to be seen how Facebook will deal with the delicate reality of handling third-party ad networks that aren’t Facebook affiliates, since these represent a significant source of revenue for creators of Facebook applications. 

To put it more simply, if you provide a third-party application with the right to access your information (which you generally need to do in order to use the application), then technically the advertising networks can access that information, too. That’s why users should pay attention to the applications they add, and get rid of applications they are no longer using. You can do this through the “Settings” menu as well. Head for the “Application Settings” page, and if you see a menu that says “Recently Used,” change it to “Authorized” and you will see the applications you have approved with an “X.” Just click to remove those you no longer wish to have authorization. That way, you won’t wind up as a poster child for some product or service that you did not and would not ever intend to endorse.* 

If you need to know more, please contact Joseph I. Rosenbaum at jrosenbaum@reedsmith.com, or you can view his bio at reedsmith.com. Of course, you can always contact your favorite Reed Smith attorney, who will be more than happy to help you. 

* Speaking of endorsements, Joseph I. Rosenbaum was actually speaking of Endorsements (and Testimonials) at a recent CLE Conference in Ireland, sponsored and hosted by the School of Law at Limerick University and previously featured in Legal Bytes. A copy of Joe’s presentation (without the embedded videos) has been posted in .PDF format in an update to the previous posting.

Advertising Industry Collaboration Releases Self-Regulatory Online Behavioral Advertising Principles

A group of the nation's largest media and marketing trade associations today released self-regulatory principles to protect consumer privacy in ad-supported interactive media that will require advertisers and websites to clearly inform consumers about data collection practices, and enable them to exercise control over that information.

In an extraordinary show of industry cooperation and collaboration, the American Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association, and the Interactive Advertising Bureau last week released a series of self-regulatory principles, intended to be implemented by 2010 and designed to protect consumer privacy in advertising-supported interactive media. As part of the announcement, the Council of Better Business Bureaus along with the DMA, has agreed to implement accountability programs relative to these principles.

These self-regulatory guidelines come on the heels of a recently released study commissioned by the IAB entitled “Economic Value of the Advertising-Supported Internet Ecosystem,” which reported that the advertising-supported Internet represents 2.1 percent of the total U.S. gross domestic product (GDP), contributing $300 billion to the economy, and has created 3.1 million U.S. jobs.

“Guided by the seven Principles we have announced today, the advertising community is developing one of the most comprehensive self-regulatory programs ever undertaken by the business community. The fast-changing online marketing environment is best addressed by a self-regulatory framework that is transparent, flexible and accountable to consumers' needs and concerns. On behalf of our 360 members, who collectively invest more than $200 billion annually in marketing communications, we look forward to jointly developing a comprehensive business system that respects and honors these Principles,” said Bob Liodice, President and CEO, (ANA).

“This historic collaboration represents businesses and trade associations working together to advance the public interest,” said Randall Rothenberg, President and CEO, IAB. “Although consumers have registered few if any complaints about Internet privacy, surveys show they are concerned about their privacy. We are acting early and aggressively on their concerns, to reinforce their trust in this vital medium that contributes so significantly to the U.S. economy.”

The seven Principles designed to address consumer concerns about use of personal information without wreaking havoc to advertising that subsidizes and supports the vast array of free online content relate to:

  • Education
  • Transparency
  • Consumer Control
  • Data Security
  • Material Changes
  • Sensitive Data
  • Accountability

We will be highlighting each of these principles separately in Legal Bytes over the weeks ahead, but if you would like to read the “Self-Regulatory Principles for Online Behavioral Advertising” report now, in its entirety, just follow the link.

Did You Miss Our Seminar: "Facebook Personalized URLs: Titanic Brand Opportunity or Tip of an Iceberg?"

As we reported previously, Facebook announced the availability of a personalized Facebook URLs, raising serious issues — yet another example of technology colliding with traditional intellectual property laws. In this case, laws intended to protect trademarks and brand names. If you followed the news, the promotional momentum created by Facebook's offer has made every astute brand owner ponder the implications! While you, of course, should look at my previous Legal Bytes post on Personalized URLs, if you missed the informative one-hour seminar on the subject presented by Douglas J. Wood and myself, Co-Chairs of the Reed Smith Advertising Technology & Media Law Group, you can find it here: “Facebook Personalized URLs: Titanic Brand Opportunity or Tip of an Iceberg?

Whatz Gnu? Reed Smith Teleseminar: Facebook Personalized URLs: Titanic Brand Opportunity or Tip of an Iceberg?

Last week, Facebook announced the availability of a personalized Facebook URLs. This latest offering from Facebook raises serious issues—issues that are typically encountered when technology collides with traditional intellectual property laws intended to protect trademarks and brand names. Much like the confusion and abuse that proliferated when cybersquatting became rampant over the ownership and administration of domain names, we now have social networks and service providers allowing users to generate content and offering customized URLs within their domains in a digital and borderless world. Significantly, the promotional momentum created by Facebook's offer has caused every astute brand and trademark owner to ponder whether they should be in a rush to register their personalized URL on Facebook, or let it ride and deal with potential infringements when—and if—they occur! You need practical guidance and insightful approaches to these problems.

The Media & Entertainment Industry Team and the Advertising Technology & Media Law Group at Reed Smith have put together an informative one-hour teleseminar entitled Facebook Personalized URLs: Titanic Brand Opportunity or Tip of an Iceberg?” airing on Tuesday, June 23 at 12 p.m. EDT with partners Doug Wood and Joe Rosenbaum, to help you understand the issues, formulate an approach and make informed decisions and you are invited to participate. Participation is free, although long-distance telephone charges apply outside of the United States, the UK, France, and Germany, where 800 numbers are used. Don’t miss this call!

Call-in ports are limited, so please click here to register or contact Anna Kazachkov at akazachkov@reedsmith.com no later than Monday, June 22, to receive a dial-in number and a passcode. If you require additional information, you can contact Anna by telephone directly at +1.212.702.1399.

Facebook Adds Personalization & a (Brand) New Dimension?

On Tuesday, June 9, the popular social networking website, Facebook, announced that on Saturday, June 13 at 12:01 a.m. U.S. EDT, it will allow its registered users, subject to certain criteria and qualifications, to create personalized URLs for profiles and pages on Facebook (e.g., http://www.Facebook.com/insertyournamehere.   Currently, a user’s Facebook URL consists of the Facebook.com URL followed by numbers (e.g., http://www.facebook.com/profiles.Php?349485).

Allowing users to register personalized names on the web raises, among other things, infringement issues under federal and state trademark and related intellectual property laws, particularly for owners of well-known brands. Any registration process creates fears of cyber squatting and other attempts to hijack trademarks and brand names. Sometimes these fears are well founded; other times they are not. You may have already received bulletins from law firms and bloggers eager to alert you to the fact that Facebook has also announced it has created an online submission form that allows owners of registered trademarks to notify them of their IP rights. Ostensibly, Facebook intends to use the information submitted to preclude others from attempting to use registered marks in personalizing their URLs on Facebook.

While we applaud advising clients and friends of this development, we believe the matter is considerably more complicated than previous briefs and hasty reports may indicate. As is so often the case, the devil is in the detail, and the information below will give you a deeper look at the issues before racing to submit notifications of your IP rights to Facebook.

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Employees Off-Work, But Online

This post was written by E. David Krulewicz and Cindy Schmitt Minniti.

Facebook, MySpace and Twitter have become household names, a ubiquitous part of the daily lives of many and often a tool for keeping in touch with friends and family. These websites are increasingly being used by individuals to document their daily lives and activities, voice their concerns and post their opinions for the world to read and to respond. The business community has also turned to these “social media” websites as means for marketing their brands and, in some instances, for obtaining information about current employees and prospective job applicants. A series of recent cases reminds us there are significant risks related to the posting and/or use of information discovered on “social media” websites.

For example, in Pietrylo and Marino v. Hillstone Restaurant Group, a case pending in the Unites States District Court for the District of New Jersey, two individuals sued their former employer after they were terminated for posting complaints about their workplace on an invitation-only discussion forum on MySpace.com. Much to the employees’ surprise, managers from Hillstone Restaurant Group were able to access this discussion board (although the parties dispute whether the managers had a right to do so) and were less than pleased with what they read. The employees were quickly terminated and a lawsuit followed. 

In their complaint, the former employees assert their employer not only violated state and federal Wiretap and Stored Communications Acts by accessing the invitation-only forum, but wrongfully terminated them in violation of New Jersey’s public policy favoring free expression and privacy as embodied in the U.S. and the New Jersey Constitutions. Their employer has denied the claims and asserts the plaintiffs were “at-will” employees who could be terminated for any reason or no reason at all.

Ultimately, the question of liability may hinge upon whether the employees had a right to privacy for statements made online and whether the employer has a right to make disciplinary decisions based on an employee’s off-duty conduct.

Although legal commentators and privacy advocates debate how the trial will unfold when the case goes to trial later this summer, they all agree the case highlights real- world issues that can follow an individual’s seemingly innocent decision to post his or her thoughts on a social networking website. This is far from an isolated incident – indeed, the sports media recently reported a similar incident involving the Philadelphia Eagles’ termination of a long-time employee for disparaging the team’s management and its decision to release a prominent player on his Facebook page.  

While it is unclear if any of the companies in the cases above had a policy or provided instruction to their employees on these issues, it should not surprise you that increasingly business employers are finding they must do so. Clearly, before making decisions or taking action against employees for online, but off-duty conduct, employers should seek legal counsel from lawyers who understand these issues and can guide you in this dynamically evolving environment – where federal and state (and sometimes municipal or local) law may apply and little, if any, precedent currently exists. Worried? Need help? Need to understand more? Contact E. David Krulewicz or Cindy Schmitt Minniti or the Reed Smith lawyer with whom you work. 

Update:  Today, May 20th, after this story was posted, the U.S. House of Representatives also approved the bill regulating some common credit card and gift card industry practices. It is likely President Obama will sign the bill once it arrives on his desk.

Better to Lose Face Than Facebook

Facebook, the very informal and ostensibly open social network, hinting at an apology for what its CEO acknowledged were “overly formal and protective” Terms of Service, did an abrupt about-face recently, retracting them and reverting to its old Terms of Service—presumably reacting to a sea of complaints from just about everyone. Complaints? Over legal terms—does anyone still read them? Well, they do, and they didn’t like what they read—particularly the part that claimed unrestricted, perpetual ownership of your personal data, even if you decide to delete your entire account and go away. 

While we respect Facebook’s right to better manage, control, and disclose to consumers how and for what purpose it treats and handles personal data, it highlights a number of things the online world continues to teach us. First, don’t assume those innocuous changes buried somewhere in terms of service, terms of use, privacy policies, codes of conduct, rules of the road, or whatever you choose to call them, aren’t being scrutinized—by consumers, by your customers, by the media and, lest we forget, by regulators and legislators. While Facebook has not admitted it was caught a bit red-faced, it is taking your feedback in a “Facebook Bill of Rights and Responsibilities” group to which you can contribute your thoughts. For those in the know, Facebook’s population has grown to more than 175 million users—does that make it the sixth-largest country in the world? Hmm, I wonder if that country has a growing budget deficit too; we’ll have to wait for the State of the Reunion speech, when results are posted, to find out.

Dazed & Confused, Not Shock and Awe

For 2009, here are my predictions:

The economy and strife, regulation and surveillance will dominate the agenda, with the burden of paying for everything from wars to bailouts right in the crosshairs: watch those advertising budgets boys and girls, the taxman cometh.

Privacy and advertising, long separated by passive print, television and radio, will continue to collide—Congress will either pass ineffective and inappropriate legislation because it’s too busy to pay attention, or will defer legislation another year because it’s too busy to pay attention.

Wireless and mobile technology will continue to make us say “wow” and will continue to miniaturize our lives, putting not just communication, but also our wallets, calendars, purchasing, entertainment and working tool kits in our hands, not our laps.

The use of wireless and additional licenses, spectrum and bandwidth will bring the FCC and the FTC colliding in their zeal to regulate, and they will either cooperate because they are too busy to fight or fight because they are too busy to cooperate. In either case, regulation, re-regulation and self-regulation will continue to increase, unregulated.

Marketing, promotions, new media, digital content and distribution platforms will transform gaming and interactive play into entertainment, education and information—giving us more choices, but continuing to blur the lines between advertising, entertainment and information.

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Red Faced or Saving Face. Facebook Faces the Music!

Facebook has built a highly popular business, but it turns out making that popularity profitable appears to depend, in large measure, on advertising. Sound familiar? So Facebook announced a new program, Beacon, an online tracking tool. No, online tracking certainly isn’t new: companies track where your browser has been and your online activity, and routinely serve up ads based on “preferences”—where you have been, what you look for, and what you purchase. But that takes place behind the scenes—you just see the results: relevant, targeted advertising.

Facebook has taken online tracking one step farther: Beacon sends messages telling your Facebook buddies what you are buying and, in some cases, what you are doing. So don’t plan that surprise trip to Puerto Rico just yet—buying a ticket might ruin the surprise. In fact, don’t come back from the trip and rate the hotel—your friends who weren’t invited will know you’ve been there.

Facebook faced criticism last year when its “News Feed” function came under fire. Media and industry pundits and Facebook executives note often schizophrenic and hypocritical marketplace attitudes. Indeed, there is some irony to be considered when the generation that posts profiles, adding everything from drinking, sexual preferences, and religious affiliations, to family videos, in blatantly public web-spaces, complains about privacy. But consumers still distinguish between their choice to share, and allowing a host to decide what, when, where and how to share information about them, or whether to characterize activities as some form of an “endorsement without consent” to their friends.

As usual, privacy and consumer advocacy groups were poised to file complaints with the FTC, right on the heels of investigations already launched by several Attorneys General into Facebook’s privacy practices. The New York Attorney General has issued a subpoena to Facebook for copies of complaints about “inappropriate solicitation of underage users and inappropriate content on the site.” As innovators have learned, success shines a spotlight that creates a glow—and discloses warts; let’s see if they can keep Facebook blemish-free.

Content is King, but the Medium Is Still the Message

Recently lawyers have begun to debate the question of just how much control advertisers can exert when paying for product placements or branded entertainment before the line between First Amendment expression by the creative staff putting together the program and the financial subsidies from advertisers is crossed. Now, the Ninth Circuit has dealt with a similar question relating to the immunity that interactive computer service providers have typically enjoyed under the Communications Decency Act (the “CDA”). The CDA insulates service providers from liability so long as the service provider remains a publisher of information and content of others (there are exceptions, so the immunity is not blanket and you should always consult legal advice for specifics that apply to your situation). That said, a company that operates an online web service that specializes in matching roommates based on their preferences has been held in violation of the Fair Housing Act because a questionnaire put together by the company asks for certain demographic information that, when posted on the website, could be used by users and site visitors to discriminate against others. The company, Roommates.com, asked users to disclose information, among other things, about roommate preferences such as age, sex, children, etc. The Ninth Circuit held that although Roommates.com was immune as long as it was simply enabling the distribution or display of information provided by its members, when it became an information content provider, it lost immunity with respect to that activity and information. And by putting together the questionnaires and soliciting their preferences in response, Roommates.com was not simply posting content authored by users, but rather was eliciting specfic information that could be abused and that might or might not have been voluntarily posted or disclosed absent the questionnaires.

Hmmmm…user profiles, play lists, segmented marketing, asking consumers to participate in promotions…this is an interesting test of the limitations of the CDA to protect and insulate interactive online service providers from liability. As social networks, virtual worlds and other digital arenas that don’t simply enable but also solicit or encourage certain information to be provided, and as web services become more targeted, focused and segmented to match consumer preferences, the immunity is likely to be tested further. Stay tuned.

User-Generated Content

User-generated content (“UGC”) on the Web is serious business and becoming more so by the day. While many know UGC as a challenge to IP rights, eMarketer is predicting advertising spending on social networking, photo sharing, gaming and amateur video websites to reach $4.3 billion by 2011—compared with the $450 million in advertising revenue they reported in 2006. That means companies are going to have to figure out how to differentiate themselves and maintain positioning in the face of increased competition. The ease of creation, coupled with technology—whether embedded players, gadgets and widgets, or more sophisticated interactive game sites—means that millions of users can create, post and “snag” user-generated content, and the trend shows no sign of diminishing. Social networking companies are significant sources of advertising revenue and are growing targets for investors seeking to build market share or obtain a piece of the transactional pie. Increasingly, mobile marketing and messaging companies are building the wireless and global brands, and are increasingly monetizing their social networking and messaging capabilities.

Legislators and regulators are noticing the exuberant success and popularity these services enjoy and, with a demographic skewed to a younger portion of the population, there is no question these services, the advertising they carry, and the content available on their sites, will continue to draw scrutiny in the months and years ahead. Reed Smith represents social networking companies, advertising agencies, and advertisers and media companies around the world. When you think of legal issues surrounding user-generated content—standards, copyright protection, digital rights management, filtering, viral or buzz marketing and so much more—please think of our Advertising Technology & Media Law practice group.

Parallel Universe Spawns Parallel Legal Woes

You knew it had to happen, but are still surprised when it does. In what may be a first-ever, a lawsuit has been filed against a defendant that doesn’t really exist, over a non-existent furniture line. Yes, you guessed it, a bed with special embedded animations that allow participants in Second Life, the virtual reality world established by Linden Labs, to essentially recreate an adult film with their virtual persona—avatars.

For the past few years, Second Life’s approach to IP protection has been to allow players to keep rights to programs, animations and objects they create—although many of the tools (programming scripts, etc.) are Linden’s and are provided to enable players to build things in this virtual world. Much like user-generated content in the world of multimedia audio-visual works, creativity and innovation is creating virtual content by the boatload and creating virtual objects and businesses is not simply a recreational pastime, but also a source of entrepreneurial glee and money for many. Clothing, real estate, automobiles, virtually (pardon the pun) anything, becomes the object of virtual purchases, sales and licensing.

Well, the law has caught up with reality. One player, whose avatar is selling virtual items under the brand “SexGen” bed, is suing another avatar for selling fakes for less—undermining the business. Since you have no obligation to disclose your true identity in Second Life, who do you sue? Well, first you try to get information from Linden, presumably because their computers house the underlying registration and information that would disclose who is behind the knock-offs. But, if the alleged infringer has not registered a real name, credit card or other “real world” items to enable identification, you might only get an IP address.

So we’ll keep you posted on developments, but who knows where this will go. Will a court entertain the case? Will they discover the identity of the alleged infringer? Will copyright infringement principles apply in a virtual world? Perhaps the plaintiff will try to enjoin Linden from allowing or enabling the fake products, or send them a virtual Digital Millennium Copyright Act (“DMCA”) “take-down” notice.

Don't Like Pop-Ups or Banners? Try a Widget

Studies now show that marketing professionals looking to attract today’s generation of social networking, mobile messaging, interactive gaming young people might well experiment with more digital features that one can play and interact with on the Internet. If you responded to last month’s Legal Bytes “Useless But Compelling Facts” (or you peeked at the answer below), you know that a widget refers to a computer program that allows Web pages to be sophisticated and interactive—using graphics, animation, audio-visual effects and user-generated content. While advertisers lose control over where these little widgets are placed (e.g., next to a competitor’s widget), giving consumers—especially young people (another issue for marketing to children?)—a premium or incentive is more likely to get them to put advertising content on their pages. It appears, at least according to one study, that when kids are given a choice of what they want to appear on their pages, especially when some “goodie” is part of the offering (a game, free download, coupon, etc.), they are more likely to choose to use advertisers’ content, than if it is “pushed” to them.

Although using widgets as a promotional tool doesn’t guarantee a successful advertising campaign, especially if the product or service isn’t up to par, widgets represent another arrow in the quiver of advertising and marketing professionals to personalize and target audiences. Some social networking sites block users from putting up widgets, or selectively enable widgets based on endorsements or the protection of intellectual property rights. Widgets also represent another challenge to traditional advertising economics. Since users choose when and where to post the widget applications, the widget creator—generally a hosting, server or similar technology or digital graphics firm—is the only entity getting paid, and beyond that, advertising (and thus advertising revenue) is not tracked.

COPPA - Xanga Settles

Based on a complaint that Xanga knew it was collecting (and sharing) personal information from children under the age of 13 (they asked for and were given the birth dates from registrants), the FTC reached a settlement agreement in which Xanga.com agreed to pay a civil penalty of $1 million. The complaint also alleged that Xanga didn’t notify children’s parents, nor did they give parents access to or control over their children’s information.

The Children’s Online Privacy Protection Act (“COPPA”) mandates that commercial web sites give parents notice and get consent before collecting personal information from children they know to be younger than 13 years old. The order which is part of the settlement with the FTC forces Xanga to erase any personal information collected and stored that violates the Act. Xanga also will have to put up hypertext links for the next five years to FTC-designated consumer educational materials.

Social networking has been in the news recently for many reasons. Recently, Facebook was faced with controversy when it started serving automated alerts about users’ friends and classmates. Facebook has less than 10 million users, compared with MySpace—which is now owned by News Corp.—which has in excess of 100 million users.

Virtual Worlds--Not Really Virtual, Not Virtually Real

I was having an interesting discussion with a lawyer friend whose views about promotions and marketing I respect greatly. We started out talking about virtual worlds and avatars and the new proliferation of non-reality based entertainment—virtual Laguna Beach, for example. Now, I seem to have enough trouble juggling the demands of life in the real word. I have had my fill of reality shows—which never seem to be quite real—and I was just beginning to get the hang of fantasy sports leagues and interactive game playing. Now along come virtual worlds, where fantasy, role-playing, game-playing and interactive social networking collide. I remember playing Kings Quest and Police Quest and Space Quest and chuckling, with my kids, about the funny lines and the clever clues as we searched kingdoms, busy streets and outer galaxies to solve the puzzle. My daughter just recently reminded me of Ecoquest—a game I can’t find anymore that taught us all a little bit about saving the environment. Then came MMOGs and MMPORGs (that’s “Massively Multiple Player Online Role-Playing Games”—for the uninitiated). In virtual worlds, I get to act out a combination of real and fantasy activities with virtual characters called “avatars” which are created within parameters defined by the computer code, but which are otherwise open to my unique interpretation of the characters and roles I choose to play. I read a report about a man in South Korea who died of heart failure last year. Apparently stopping only for bathroom breaks and short catnaps, he played an online simulated war game for 50 hours and, ostensibly because of exhaustion, his heart gave out. I recently read several reports that made me realize this was no longer just child’s play. The first was about a woman who was able to quit her job because, through buying, selling and creating properties and providing services in a virtual world, she was able to “earn” more than $150,000 per year. Although I don’t know exactly what she did, I know you can convert your digital earnings into real money at websites such as www.gamingopenmarket.com. These sites not only enable you to convert digital-virtual money into U.S. cash at exchange rates that are established much the same way monetary exchanges do around the world, but they also enable folks like you and me to dabble in arbitrage trading in virtual currency. Will I someday be able to take my virtual company public in an IPO or solicit venture capital investments from qualified avatars? Is the SEC far behind?

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