“With regulators considering easing fund-raising rules for start-ups …” a recent Wall Street Journal story began, “social-networking sites that link entrepreneurs to large pools of donors are gearing up for a boom.”

First, the background.  Federal and state securities laws govern the sales – including the solicitation of sales – of securities, affecting all efforts to raise capital for startups.  This includes any public efforts to raise money, and includes raising small or large amounts of money.  Generally, sales and solicitations of sales of stock require compliance with SEC and various state securities law, and more particularly the registration requirements of those laws. Continue reading

A privacy policy?  Who needs a privacy policy?  Privacy is a mess.  You’re building an online business, and you figure you have to have a privacy policy.  But why?  Is “because everyone else has one” a good enough reason?  Ever wonder what you really need to know about privacy law?  I mean … what you have to comply with as a business operating in an online environment?

Here, then, the first of several Frequently Asked Questions about privacy policies.  Or to be more precise, here now some practical answers on privacy practices:

FAQ #1: Can I simply post a privacy policy and forget about it?  Short Answer: No.  Longer Answer: No, because as between posted statements and actual compliance, actual compliance is what’s required.   Continue reading

Podcast #2: January 6, 2011

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In today’s podcast, we cover trademark cases from both U.S. and European Union courts involving major search engines such as Google and Yahoo.  In particular, we look at whether and how search engines can be held responsible for trademark infringement when advertisers buy search result advertisements using the trademarked names of their competitors.

My guest is Howard Hogan, a partner in Gibson, Dunn, & Crutcher’s Washington, DC office.  Howard’s practice focuses on intellectual property litigation and counseling, including trademark, copyright, patent, false advertising, licensing, media and entertainment, and trade secret matters.

The trademark issue arises because in many countries, including the US, the search engines allow companies to advertise next to search results using their competitors’ trademarks.  We have seen a major shift in the last year.  Before 2010, it was clear that at least in France and Germany, it was not appropriate for search engines to sell marks, and Google’s policy reflected that.  In the US, there was a divide between the district courts of the Second Circuit and the rest of the country as to whether buying and selling trademarks for search engine advertising constituted a “use in commerce,” but there was very little law on whether that use was likely to cause confusion.

Now, in Europe, the law seems to have shifted against holding search engines liable, but leaving open the potential for trademark holders to go after the advertisers.  In the U.S. the “use in commerce” question has been resolved decisively against the search engines, and the debate has shifted to the “likelihood of confusion” question.  On one hand, we are starting to see more decisions finding that their sale of the marks are not confusing (Rosetta Stone, Boston Duck Tours, College Network) at the same time as other courts are finding that the use of marks by an advertiser are likely to cause confusion (Storus, Skydive Arizona).

Please press play on the audio player to hear the podcast.

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A little-appreciated requirement for trademark owners is a duty to monitor and police their trademarks.  This duty applies to owners of unregistered trademarks as much as federal registered marks, since registration is not necessary to claim many trademark rights.

What types of activities must be monitored and policed?  Infringement and dilution.  Or in other words, any third party uses of the same trademark or confusingly similar versions that might cause confusion in the marketplace about the source of the goods or services represented by the trademark.

Trademark Duty to Monitor and Police

2 basic reasons to monitor and police: First, the government won’t do it for you.  The Trademark Office is actually quite explicit about stating this, see here.  Second and more to the point, unchallenged third party uses of a trademark could legally – and actually – weaken the strength of the trademark as an identifier of the owner’s goods or services, which in turn weakens the owner’s ability to later enforce the trademark and devalues the worth of the mark. Continue reading

FTC enforcement of its new blogger guidelines has involved typically high-profile actions against Anne Taylor LOFT (FTC ultimately taking no action) and Reverb Communications (for allegedly deceptive postings of positive reviews on iTunes for games produced by Reverb clients).

While premature to draw any broad conclusions on the enforcement environment for the new rules, a philosophical problem with the FTC’s new blogger framework is its willful ignorance of the advertising underpinnings of traditional media.

So, for example, while established newspapers like the New York Times and Washington Post depend for their credibility on perceived soundness of the journalistic “church-state” divide, readers are almost never proactively alerted to major advertising support from common story subjects in business and politics.  Disclosure more typically comes from investment or ownership relationships, in the form of “full disclosure” statements like that from Ezra Klein when reporting about Facebook (“Disclosure: Washington Post Co. Chairman Donald E. Graham is on Facebook’s board, and The Post markets itself on Facebook.”).  Not, though, from advertising relationships, even major advertisers.

At least not with newspapers.  PBS’ Newshour, NPR and other public news broadcasts commonly disclose underwriting relationships involving story subjects.  However, the same cannot be said of commercial television news broadcasts unless they involve investment or ownership relationships.

Since the underwriting structure of public broadcasting is substantively no different than the advertising relationships of newspapers, commercial television and most media websites, editorial disclosure of the financial support – of any kind – of such media outlets seems equally appropriate.

Citizen Media Law Project, in its coverage of Anne Taylor action, notes that the FTC guidelines limit disclosure to cases where the sponsorship relationship is not “reasonably expected by the audience”.

Put in the context of audience reasonable expectation, this seems rather generously written for the benefit of old-line media, which has relied for generations on the presumption of credibility by its readership much more so than disclosure.

Why then, shouldn’t bloggers be afforded the same benefit of the doubt that newspaper publishers have been given for generations?  Yes, there will always be egregious cases of paid-for “earned media” such as the Reverb case with iTunes.  But it used to be that time and dedicated readership was the ultimate arbiter of media influence.

This all begs the question of why the expectation of the relationship – rather than actual influence – is the measuring stick.

[Thomas Yarnell contributed to research and drafting on this post.]

Google’s popular and dominant advertising service, AdWords, allows companies to place auction-style bids on search keywords.  If a company bids the highest amount on a keyword, that company’s ad comes up first when someone searches the keyword.  The company then pays Google on a pay-per-click basis.  In many countries, including the United States, Google lets companies advertise next to search results from use of their competitors’ trademarks.

Let’s say you want to buy a Louis Vuitton bag.  You know it’s expensive, so you might not want to buy it directly from the company’s website.  Instead, you might search “Louis Vuitton bags” on Google and assess other options.  As you can see in a search of “Louis Vuitton bags”, you may find some “Sponsored links” to the right of your search.  Sponsored links such as the “Louis V. Bags Handbags” come from the AdWords service. Continue reading

I will be moderating 2 separate panels on Monday and Tuesday at the 2010 Politics Online conference spectacular here in Washington.

The first will be Monday April 19th at 2pm, and called “Is this Barack Obama’s Real Facebook Page? Domains, Twitter Handles, Online Presence – real or fake? Intellectual Property, Cyber Identity, and More!”.  I will be joined on the panel by Jason Torchinsky of Holtzman-Vogel, Matt Sanderson of Caplin & Drysdale and Neal Seth of Baker Hostetler.

The second will be Tuesday April 20th at 10:30am, and called “Laws Affecting Digital Communications – Copyright, Privacy, Elections/FEC, Advertising, Libel, Contract Law, etc.  Rules, Regs, Fines and Community “Standards” Applicable to Communicating in Digital Media.”  On this panel, I will be joined by Jason Torchinsky of Holtzman-Vogel and John Stewart of Crowell & Moring.

Details at polc2010.com/.

Publishers are worried about cookies, specifically talk of regulatory action on the privacy front.  What’s the story here?

A Privacy Policy might typically say something like this:

“A ‘cookie’ is a small text file on your computer’s hard drive that our Web site uses to collect information about how you use our site.  The cookie transmits this information back to our Web site each time you visit a page on our site, thus allowing us to identify our most popular pages, features and data.”

To someone not working for an ad agency or at a publisher or for, say, Google, reading these terms, what they might read could be summarized like this: “Software … embedded in my computer … I have no choice … it stays there forever and ever … it will watch my every move and report back to its masters and possibly the government … my wife might find out.”

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First, what data?  This comes up in various contexts.  First example: an agency contracts with an ad campaign client for marketing, issue advocacy, corporate branding, what have you.  It used to be that creative was a “work for hire” (or assumed to be) owned by the advertising client.  With some sort of understanding that the client wouldn’t end-run the agency.

In other words, expectations were governed by historical industry practice.  Copyright and contract law didn’t play much a part.

But what about campaign performance?  What about reports and research and metrics and all the “data” compiled by the agency to make its case?  Forrester and Gartner Group and Corporate Executive Board and their ilk have been selling research reports for years on these sorts of things, but agencies typically didn’t bother with industry best practices-type studies or reports.  Work was done for clients, and work product was owned by the clients (or again, was assumed to be).

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If the thinking behind a liberal approach to web content sharing is driving traffic back to your original content source, what happens when the benefits of doing exactly that – i.e. bumping up traffic for potential advertisers – fails to generate the hoped-for commercial return?

Like all advertising, web advertising has always been somewhat more art than science (yet), for better or worse, with accompanying difficulties in translating eyeballs into advertising revenue metrics.  Comes now the collapse of the web advertising market.  What then becomes of the willingness to go along with liberal content “scraping”, excerpting and other copying under “fair use” arguments?

Brian Stelter probed this very question in the NY Times recently.  Stelter interviews, among others, Henry Blodget of Alley Insider and Arianna Huffington of The Huffington Post, whose publications are among the most aggressive and overt in the practice of integrating others’ content into their writings.  Ms. Huffington states, honestly, that “we excerpt to add value”, which is probably a fair statement, except that Stelter also notes that these sites “highlight [] what they deem to be the most meaningful parts of newspaper articles and TV segments.”

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