Details In The New FTC Endorsements and Testimonial Rules May Curb False Product Testimonial Claims But It Will Create Confusion

The Federal Trade Commission just released its final guidelines governing the use of edorsements and testimonials in advertising. Implementing updated rules for the first time since 1980 is a great idea. A lot has changed since the Carter administration. In particular, the Internet has supplanted television, radio, and printed newspapers as the most important media communication tool. However, upon closer review of the new rules, it appears that some of the rules are beneficial, while others are ill conceived, difficult to enforce, and create more problems than then solve.

I recently reviewed the text of Federal Register Notice 73 FR 72374 that was published last year. This notice discussed proposed changes to the regulations governing endorsements and advertisements. The new guidelines published in 16 CFR Part 255 are subject to go into effect on December 1, 2009. Under the new rules, bloggers will now have to disclose if they are receiving monetary incentives or payment in kind to write about a product or service. Additionally, celebrities will now be required to disclose if they have any economic ties to a product or service if they promote a product it on a talk show or via social media. I am in favor of the spirit of these rules because it will inform consumers about any possible conflicts of interest by those who are giving testimonials. Unfortunately, the rules appear to be intentionally broad and ambiguous and therefore they may cause more problems than they solve.

In addition, as part of the overhaul, there is a less publicized rule regarding celebrity endorsements that I like to call the Entertainment Lawyer Employment Act. Under this new rule, if a celebrity stars in an advertisement and reads a script that misleads the public about a product or a service, the celebrity may be personally liable along with the company who hired the celebrity. This new rule will force entertainment lawyers to include language in endorsement deals that requires advertisers to cover any attorney fees an endorser may incur related to the endorsement.

16 CFR Part 255 states, "[t]he addition of new Section 255.1 (d) and the new examples featuring celebrities, does not create new liability for celebrities, but serves merely to let them (and their advisors) know about the potential liability associated with their endorsement activities." I have to disagree with this assertion because it opens the door for celebrities to be held personally responsible for the information in their paid endorsements.

If you read example 4 on 73 FR 72391, you will understand the ridiculousness of the above statement about the rule. The rule places an unfair burden on celebrities and actors to ensure that the content of an advertisement is not misleading. This burden should only be with the company that is making the claim and not an actor. In the example that the FTC provides, a celebrity endorser is pitching a chicken roasting system. During the commercial's taping, the celebrity watches the roasting system cook 5 chickens incorrectly. However, the script calls for the celebrity to state, "if you want the perfect chicken every time, in just 30 minutes, this is the product you need." The celebrity follows the script as required by his or her contract and under the new rules the celebrity is subject to liability along with the advertiser for misrepresentation. The rationale given is that, "a significant percentage of consumers are likely to believe the celebrity's statements represent his own views even though he is reading from a script."

I have no problem with the advertiser being liable for intentional misrepresentations, but holding an actor, celebrity, professional athlete, or paid endorser liable also over reaches. This new rule may force paid endorsers to read scientific journals or memorize the Encyclopedia Britannica to ensure that their statements about products they endorse are true. Additionally, it may require specialized insurance to cover any claims that may arise from a celebrity endorsement. If a significant percentage of consumers in our country believe everything that comes out of a celebrity's mouth we have a bigger problem on our hands that no guidelines will be able to resolve.

If John Madden states, "EA Sports Madden NFL Football is the Perfect Football Video Game," he may be liable under the FTC's new rules for misrepresentation. Every Baltimore NFL fan knows this is a false statement because the perfect NFL football video game would have an All-Time Baltimore NFL team that includes both Johnny Unitas and Ray Lewis playing on the same Baltimore NFL team. Until Madden's NFL football game corrects this problem, Mr. Madden and EA Sports cannot claim that Madden NFL Football is the perfect product without incurring liability under the new rule.

Do you now see the ridiculousness of this part of the new guidelines?

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

The UK's High Court Permits Injunction To Be Served Via Twitter

The United Kingdom's High Court has permitted an injunction to be served via Twitter. Under UK law, there is no requirement that an injunction be served in person. In the UK, injunctions may be served via fax and e-mail, and now via social media.

It is possible that one day service by social media will be allowed in the U.S. However, the authentication issues involved must be properly addressed.  One reason for requiring personal service in the U.S. is to ensure that the person being sued is made aware of the litigation.  In my opinion, it may take years, but once all of the authentication issues are addressed it would not surprise me if service of process by social media is eventually allowed in the U.S.  

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

Catch-22: Scrib.com Copyright Dispute Has the Potential to Create New Law

A unique copyright lawsuit has recently been filed in the U.S. District Court of the Southern District of Texas, Houston Division. The lawsuit was filed by Elaine Scott, an author of children's books against Scribd.com, an internet based social publishing company. Ms. Scott claims that Scribd.com is violating copyright law because it is using unauthorized "digital fingerprints" of her book "Stocks and Bonds, Profits and Losses: A Quick Look at Financial Markets" ("Stocks and Bonds") in a filtering system to ensure that her book does not appear again on its website.

In July 2009, Ms. Scott visited Scribd.com and found that her book "Stocks and Bonds" was illegally uploaded to the site. Subsequently, a letter was sent to Scribd.com notifying the company about the copyright violation. Scribd.com removed the copyrighted work and left "digital fingerprints" of the work in its filtering system to ensure that the the copyrighted work did not appear again on its website. However, before including the "digital fingerprints" of the copyrighted work in its filtering system, it appears that Scribd.com did not obtain a license from Ms. Scott permitting it to utilize her work in this manner.

Generally, before a copyrighted work can be utilized a license from the copyright holder must be obtained. For example, when The Sopranos ended a couple years ago, the show's creator had to obtain permission from the band Journey so the song "Don't Stop Believin" could be played in the background of the last scene of the series finale. Sometimes, copyrighted material may be used without obtaining permission due to the Fair Use Doctrine. In determining whether a utilization falls under the Fair Use Doctrine there are 4 factors that the courts consider.

This lawsuit brings up a very interesting Catch-22 for companies trying to abide by copyright law after they are notified of a copyright violation. If a company does not take protective measures to ensure that it is following copyright law, the company may be held liable for copyright infringement. However, Scribd.com's solution to avoid violating copyright law appears to include a filtering system that may violate copyright law by utilizing part of the author's work without permission. The courts will have to decide if utilizing part ("digital fingerprints") of a copyrighted work without an author's permission in a filtering system to stop others from committing copyright infringement falls under the Fair Use Doctrine.

In my opinion, Scribd.com and others in Scribd.com's space should be denied the ability to claim Fair Use because Scribd.com is in the commercial business of publishing content and its proprietary filtering system may be licensed out to other companies confronting the same dilemma as Scribd.com. Therefore, Scribd.com should be forced to obtain a license from Ms. Scott. However, since Scribd.com appears to be trying to protect Ms. Scott's published work, Ms. Scott should not be allowed to obtain an unreasonable license fee. If Scribd.com would have approached Ms. Scott about obtaining a license before including her work without her permission in its filtering system, I believe Ms. Scott would have granted the required license at a reasonable rate. I learned a long time ago that being polite and making a fair offer resolves most legal matters.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

U.S. Secret Service Requests That Facebook Remove a Poll Asking Whether President Obama Should Be Assassinated

The U.S. Secret Service is investigating a poll on social media website Facebook that asked whether President Obama should be assassinated. Facebook complied with the Secret Service's request to take down the poll and now the Secret Service is investigating the creator of the poll to determine the intent behind its creation.

I understand the Secret Service's concerns regarding keeping the President and his family safe. In 1995, while attending The George Washington University, I woke up one day and the Secret Service without any announcement decided to permanently close down Pennsylvania Avenue in front of the White House due to security concerns. This occurred two years after the first attack on the World Trade Center and soon after the Oklahoma City bombing. These tragedies along with several other incidents made the Secret Service reassess the security measures in place to protect the President and the First Family.

I have mixed feelings about the Secret Service getting involved in this matter. I think the Secret Service should do all it can to protect the President and his family. However, my question is where do we draw the line in determining what is acceptable free speech under the 1st Amendment? There are many opinions
that I find distasteful and moronic; in particular, some opinions from members of my own extended family. Even though I may not agree with an opinion, I agree that everyone has a right to his or her own opinion and ideas.

Most interactive web sites have a Terms of Service/Terms of Usage section that discusses how the site can be utilized by its users. If a user is violating a web site's policies, the user can be barred from the website and the user's posts can be removed. However, I am not in favor of the executive branch of the government determining what is acceptable speech. In general, the legislative branch of our government creates the laws, the executive branch enforces the laws, and the judicial branch determines if a law is constitutional and how it may apply. These checks and balances have generally worked for more than 200 years.

This type of censorship by the Secret Service or other law enforcement agencies will increase with the rise in popularity of social media. I predict that one day that the U.S. Supreme Court will hear a case involving censorship of a social media website by the government.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

Social Media Law Issues Will Grow Proportionately With Social Media Use

According to the media tracking company, Nielson, Social Media usuage drastically increased this past August compared to a year earlier. This past August, 17 percent of all time spent on the internet was spent doing Social Media related activities compared to only 6 percent the prior August. I predict that as the use of social media grows so will the legal issues that confront its users and society. As with any new technology, it takes some time for the law to evolve and for legal standards to be developed.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

Federal Trade Commission is Planning Privacy Discussions in December

Due to the increasing popularity of social media web sites and the numerous legal issues involved, the Federal Trade Commission is planning to hold a series of discussions regarding privacy issues and social media.

I believe this type of government involvement is long overdue. I am generally against government intervention in the private sector. However, due to the underlying concern for identity theft that is intertwined into this discussion, I believe the FTC's involvement is long overdue.

For those who are interested in submitting written comments or original research regarding this topic you should click on the link to do so. The deadline is November 6th.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

Google Book Lawsuit Not Ending Any Time Soon

Earlier today, Judge Denny Chin of the United States District Court for the Southern District of New York granted a motion to delay an Oct. 7th hearing on the Google Book Lawsuit Settlement because it appears that Google and its allies are now willing to modify some of the proposed settlement terms to allay the fears of copyright holders and Google's competitors. I believe this is a good sign because this signals that Google may be more flexible in their position. Lets hope this is the case for all stakeholders since the proposed settlement has the ability to fundamentally change copyright law throughout the world.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

Facebook Increasing Users' Privacy

Great news on the Facebook Privacy Front. Facebook has agreed to dismantle its Beacon Advertising System and to create an independent foundation that will focus on online privacy. This agreement will settle a class action suit that was brought against Facebook because its Beacon Program was collecting a large amount of data about the Internet activities of Facebook users and then broadcasting this information.

To Facebook users this program was like a "Peeping Tom" that would also inform others about your activities. The system was extremely difficult to opt out of it entirely and this problem rightfully frustrated many users.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

Even Saying Good Things About Others Online Can Come Back to Haunt You

Due to our litigious society, anything you say, whether it is good or bad has the ability to come back to haunt you. Before Social Media websites become vogue, most people would obtain a written recommendation from a boss and/or ask a colleague or friend to act as a reference. To ensure that a potential hire was being honest about their background, a recruiter or potential employer might contact your former supervisor for verification of your employment.

On LinkedIn, Facebook, and other social media websites, a boss and/or colleague can easily recommend you or become a fan of yours and provide a recommendation for all users to view. In theory this sounds great because it has the potential to cut down on the costs of employment verification and due diligence. However, a problem may arise when an employee is terminated and the official reason provided is poor performance while the boss recently sang the employee's praises on a social media website. This type of conflicting information raises a red flag for labor lawyers.

Therefore, the best policy is to be reserved in your social media communications with your employees, supervisors, and/or colleagues. If an employee requests a recommendation an employer should feel free to act as personal reference since the employer has the ability to change their mind about the employee/former employee down the road. However, when acting as an online reference, the employer may not have full control over the reference after it has been posted and this lack of control has the potential to cause future potential problems.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

U.S. DOJ is Against the Google Book Settlement

Not surprisingly, the U.S. Justice Department came out against the proposed Google Book settlement. DOJ advised the U.S. District Court for the Southern District of New York that it should not accept the class action settlement in The Authors Guild Inc. et al. v. Google Inc. DOJ encouraged the parties involved to continue discussions to craft a resolution that all parties affected would be willing to accept. I hope that that the U.S. Copyright Office's official position along with the U.S. Department of Justice's official position will encourage Google to make a good faith effort to resolve the outstanding issues in a manner that does not shortchange copyright holders and does not create a monopolistic system that harms consumers.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

Lawyers Must Be Mindful of Their Social Media Usage

There is an excellent New York Times article by the paper's National Legal Correspondent, John Schwartz, that discusses some examples where lawyers have been sanctioned for their Facebook posts, blogs, and tweets. Lawyers who utilize social media must realize that the Code of Professional Responsibility that every member of the Bar must follow in their every day interactions with prospective clients, clients, opposing counsel, judges, etc...is also in effect in cyberspace. Even though the First Amendment protects most speech, a person still can't falsely yell fire in a public area. Attorneys as officers of the court have additional responsibilities. The bottom line is that every lawyer should thoroughly read their prospective posts, blogs, or tweets before they are published in cyberspace. Before I publish a post, I ask myself:

1) Will my post add value to an area of discussion?
2) Does my post violate the Code of Professional Responsibility?

If my post can add value to a discussion and does not violate the Code of Professional Responsibility I publish my post. If my thoughts do not add value to an area of discussion or if I think they may violate the Code of Professional Responsibility I do not make the post. In general, I try to avoid personal attacks on others. I try to live by, blog by, tweet by, and post by this adage that my late Grandfather instilled upon me: "Better to keep your mouth closed and be thought a fool than to open it and remove all doubt."

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

U.S. Register of Copyrights Attacks Google Book Settlement

The U.S. Register of Copyrights, Marybeth Peters agrees with most of my previously stated positions on the proposed Google Book Settlement. In particular, Ms. Peters stated in her testimony to Congress on September 10, 2009, "[i]n the view of the Copyright Office, the settlement proposed by the parties would encroach on responsibility for copyright policy that traditionally has been the domain of Congress...We are greatly concerned by the parties' end run around legislative process and prerogatives, an we submit that this Committee should be equally concerned. To read Ms. Peters entire statement click on the link above.

According the New York Times, [h]er ("Ms. Peters") opinion is important because it could be reflected in a brief expected from the Justice Department this month. The government has until September 18, 2009 to make a filing in the case so stay tuned.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

Proposed San Francisco Superior Court Social Media Policy May Be A Model For the U.S. Court System

San Francisco Superior Court has proposed a new rule scheduled to go into effect on January 1, 2010, that notifies prospective jurors on the cover sheet of the juror questionnaire that blogging, tweeting, or utilizing the Internet to obtain or share information about their case is prohibited. According to Ann Donlan, the Communications Director for San Francisco Superior Court, "the judges currently admonish jurors from the bench about discussing the case. This [rule] is not to prohibit the use of technology by jurors. This is a rule to (1) provide consistent instructions for jurors in those cases in which a questionnaire is being used and (2) to remind jurors, in writing, of the admonishment not to discuss the case with anyone."

In my opinion, this is a very practical and long overdue rule that I believe should be implemented in some form throughout the entire U.S. court system. The last time I was called for jury duty I noticed that several prospective jurors were utilizing their blackberries and there is no way to know if they were just reading their email or tweeting about their jury duty service.

I would like to thank Ms. Donlan for sending me a copy of the proposed draft rules and providing some insight about them.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

Google Book Search Copyright Class Action Settlement

I have talked at length in previous posts about the proposed Google Book Search Copyright Class Action Settlement. In my opinion, the settlement is a raw deal for copyright holders and consumers due to many issues that I have discussed in some of my older posts. One of the most important sections of the settlement is the cash payment section that discusses how copyright holders are compensated for their work. Many rights holders will not be pleased with the details.

If you made a claim by the filing deadline and receive documentation from the lawsuit claims administrator you should read the documents thoroughly. If you disagree with your claim determination you may want to consider sending a rejection of the claim determination certified return receipt. If the company contacts you and states that there is nothing more they can do and asks you to send a letter or email stating that you now agree with their claim determination you may want to consider contacting an attorney to assist you with the claims process.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.

Tweeting Can Be Hazardous to Your Game

Twitter is currently in the fad stage of American Society. It is trying to move into the mainstream to become as ubiquitous as email but only time will tell if this will happen. I have a Twitter account but I do not use it often because I do not think people want to know what I am doing all the time. I doubt my followers would be interested in knowing what type of diaper my son had this morning and whether I changed it.

As an attorney, most of the things that people would be interested in hearing me tweet about are priviledged attorney-client communications. Therefore, I rarely tweet since some of the things I could possibly say may provide a clue as to whom I am representing, the type of matter I am working on, or a possible strategy that I may be thinking about employing on a client matter.

The U.S. Open has joined the NFL and some Fortune 500 Companies in instituting a social media policy. The NFL announced yesterday that its players will be allowed to utilize social media during the season. However, NFL players, coaches, and football operations personnel will not be authorized to use social media 90 minutes before a game or during a game. The last time I checked the NFL's Collective Bargaining Agreement I didn't see anything directly relating to social media so until this issue is collectively bargained I think this policy strikes a good balance between employee and employer rights.

However, the United States Tennis Association's (USTA) Twitter policy appears ambiguous and difficult to enforce. The USTA's policy appears to try to control the actions of not just its members but also its member's "entourages." As anyone who has watched the funny HBO series Entourage, controlling a member of your entourage is not always as easy as you may believe. Therefore, the USTA's social media may sound like a great idea but for all practical purposes it is almost impossible to hold a player responsible for the tweets of another.

In order for both the NFL and USTA's social media policies to be successful they need to be:

1) Collectively bargained or negotiated between the parties so a mutually acceptable policy is crafted.

2) Clear and unambiguous so all parties know what is expected.

3) Enforced in a consistent manner so all parties know the consequences for non-compliance.

Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.