The Perils of Social Media Under the Laws of the United States and Canada: A Cautious Tale for Lawyers and Clients

The Perils of Social Media Under the Laws of the United
The Perils of Social
States and Canada: A Cautious Tale for Lawyers and Clients
and Canada: A Cautious Tale for Lawyers and Clients

August 4, 2011

Presented by Dominique Shelton

Complex Litigation | Business Transactions | Intellectual Property | wildman.com
© 2011 Wildman, Harrold, Allen & Dixon LLP.

Seminar Overview

 WHAT IS SOCIAL MEDIA?
 WHERE DO YOU FIND IT?
 HOW ARE MARKETERS USING IT?
 WHAT ARE THE LEGAL ISSUES
 Copyright and DMCA
 CDA Immunity
 Trademark
 Behavioral Advertising
 Regulatory Compliance

© 2011 Wildman, Harrold, Allen & Dixon LLP. Web 3.0: How Digital Marketing is Affecting Your Company 2

What is Social Media?

Social media is the use of web-based and mobile
technologies to turn communication into interactive dialogue.
A common thread running through all definitions of social
media is a blending of technology and social interaction for
the co-creation of value.


Overview
Social Networking, UGC, MMOGs


What is UGC?

“User generated content (UGC) refers to various kinds
of media content that is produced or primarily influenced
by end-users; as opposed to traditional media producers,
licensed broadcasters, and production companies.”
Wikipedia.com


Types of User Generated
Content Sites – Blogs

Blogging Sites
“A blog is a user generated website
where entries are made in journal
style and displayed in a reverse
chronological order. Blogs often
provide commentary or news on a
particular subject, such as food,
politics, or local news; some
function as more personal online
diaries. A typical blog combines
text, images, and links to other
blogs, web pages, and other media
related to its topic.”
Wikipedia.com


Content Sites
(Written Cont’d)

Wiki Sites
“A wiki is a website that allows visitors to add, remove, and
otherwise edit and change content, typically without the need
for registration. It also allows for linking among any number
of pages. This ease of interaction and operation makes a wiki
an effective tool for mass collaborative authoring.”
Wikipedia.com


Content Sites
(Written Cont’d)

 Administered
Wiki
 Response to
manipulation


Content Sites
(Video)

Video Posting Sites
“Video sharing refers to websites or software where a
user can distribute their video clips. Some services may
charge, but the bulk of them offer free services.”
Wikipedia.com

Practice Pointer: Master use, synch and public
performance licenses for the music.


Examples of Places to Find User
Generated Content
(Video Cont’d)

 youtube.com  pageflakes.com
 twitter.com  popcurrent.com
 buzznet.com  pixsy.com
 Blip.tv  singingfish.com
 digg.com  tagworld.com
 friendster.com  typepad.com
 flixya.com  videobomb.com
 magnifynetworks.com  current.tv
 mymoviefest.com
 livevideo.com
 myyahoo.com
 Veoh.com
 Metacafe.com
 Mywaves.com

User Generated Advertisements continued
- Doritos and Pepsi MAX “Crash the Super Bowl”


Content Sites
(Hybrid)


Types of User Generated Content
(Hybrid Cont’d)

MashUp: A Mashup is a new type of web application that brings together several sources of data to form a
unique new combination of information. Mashups originated from the world of pop music where DJs would
mix two or more songs together to present a new blended version.

Source: Sorena Software.


MMOG – Virtual Worlds

 13 Million people WW regularly play
MMOGs (mmogchart.com)
 World of Warcraft (9M WW);
EverQuest; Final Fantasy XI; Sims Online;
City of Heroes; Linage; Second Life;
Legend of Mir; Habbo Hotel, etc.
 Virtual Goods generate “real value” in “real world” due to supply and
demand and secondary exchange (IGE) and “gold farming”

 Google buys Adscape (in game ad technology)

 Business models include sales of gameplay (whether through
subscription, access fees, software/hardware sales, game token sales),
sales of virtual goods, and sale of virtual currency.


MMOG Examples


The Scale of the Market

“US online ad spending in 2010 will rise by 13.9%, reaching a record
$25.8 billion. But records are made to be broken. In each of the following
four years, internet ad spending will hit new peaks, passing $30 billion in
2012 and breaking the $40 billion barrier in 2014.

Another milestone: For the first time, online ad spending will surpass
newspaper advertising, which eMarketer estimates at $25.7 billion for
2010. That makes internet advertising second only to TV among measured
media.


Projections For Digital Advertising
for 2011-2013

At the same time, internet advertising continues to grow
at breakneck pace, at a forecast average rate of 14.4
percent annually between 2010 and 2013. Zenith is
forecasting newspaper ad spend to fall from $95.2 billion
in 2010 to $91.2 billion in 2013, while internet ad
expenditure rises from $63 billion to $94.5 billion over
the same period. Reported by Zenith: Global Forecast
Revised Down; But Display Remains
‘Invigorated’ http://paidcontent.org/article/419-zenith-
global-forecast-revised-down-but-display-remains-
invigorated/#


Widgets & WebApps


User-Generated Advertisements

 Over the past few years, Super Bowl ads have included consumer-
generated advertising, such as campaigns from Coors, Toyota, the NFL,
Frito-Lay and GM.
 Issues: Regulatory compliance and infringement
 Quizno’s UGC Contest: Lanham Act Claim by Subway

Doctor’s Assoc. v. QIP
Holders, 82 U.S.P.Q.2d
1603 (D. Conn 2007)


User Generated Advertisements continued

Nesquik UGC
Advertisement
• Creation/Posting
– Inducing or contributing to
infringement
– DMCA / CDA Issues
– Disclaimers / Disclosures
• User’s Use
– Viral / CAN SPAM
– Control
• Your Use
– Identify underlying rights
– Clear underlying rights and claims
– Value of indemnity?
– Union Shop Issues


Legal Issues Relating to Behavioral Advertising


FTC Report:
December 2010


What is Behavioral Advertising and Who is
Involved

Behavioral targeting is a technique used by online publishers and advertisers to
increase the effectiveness of their campaigns.
Behavioral targeting uses information collected on an individual's web-browsing
behavior, such as the pages they have visited or the searches they have made, to
select which advertisements to display to that individual. Practitioners believe this
helps them deliver their online advertisements to the users who are most likely to be
interested.
Behavioral marketing can be used on its own or in conjunction with other forms of
targeting based on factors like geography, demographics or the surrounding content.
Behavioral targeting allows site owners or ad networks to display content more
relevant to the interests of the individual viewing the page. On the theory that
properly targeted ads will fetch more consumer interest, the seller may ask for a
premium for these over random advertising or ads based on the context of a site.
Wikipedia.com


What are “flash cookies” and HTML-5 Code

Flash cookies, are collections of cookie-like data stored as a file on
a user's computer. LSOs are used by all versions of Adobe Flash
Player and Version 6 and above of Macromedia's now-obsolete
Flash MX Player
HTML, which stands for Hyper Text Markup Language, is the
predominant markup language for web pages. HTML is the basic building-
blocks of webpages …HTML is written in the form of HTML elements
consisting of tags, enclosed in angle brackets (like <html>), within the web
page content …The purpose of a web browser is to read HTML documents
and compose them into visual or audible web pages. The browser does not
display the HTML tags, but uses the tags to interpret the content of the page.
Wikipedia.com


What If We Are An Advertiser Who Wants
Ads Served Through OBA?

 Ability to comply is going to depend heavily on our vendors
 Ad agency: will be pulling together all the vendors
 Ad network: will be serving the ads
 Data aggregators: will be giving data to make targeting work
 Publishers: will be the sites where the ad appears
 Worth negotiating with vendors to ensure OBA is not happening
 If don't want it to happen, make sure they aren't doing things that would impact your obligations
 Need to make sure there is notice
 Can appear in the advertisement itself (the logo, if have license from DAA)
 Self-regulatory program also requires notice on your own website
• Our ads are served on other sites based on OBA
 Provide ability to opt-out
 Can link from notice – would take people to the central www.aboutads.info/choices page
 Describe how to opt out now or later
 Consistency
 Ensure that OBA activity is consistent with information use disclosed in posted privacy policy and in initial notice
 Communicate policy requirements to internal customers


Behavioral Advertising continued

The “Power I” Icon (Announced January 2010)
 Starting mid-summer 2010, many major companies running online ads will add
the “Power I” icon, with small notes that say “Why did I get this ad?” When the
icon is clicked, users will reach a page explaining how the advertiser used the
consumer’s internet surfing history and demographic information to display an
ad. The “Power I” Icon is the result of discussions between trade associations,
major companies and the FTC. It is a direct response to the FTC’s calls for
greater self-regulation and recent congressional interest in behavioral
advertising. The purpose is (a) to notify consumers that online behavioral
practices are followed on a particular web site; and (b) to provide opportunities
for consumer choice.


Behavioral Advertising cont.

The “Power I” Icon (Changed in March 2010 and Released in )


How the In-Ad Notice Works

Logo in Ad: Hover over logo: Click link:
A hyperlink
get brief disclosure Takes you to notice


Behavioral Advertising is on Mail Portals


 Facebook announced April 19, 2010 the roll
out of its new “Like” function.
 "Like" or "Recommend" icons will start
appearing on popular websites spanning a
variety of industries, including
NYTimes.com, IMDb, CNN.com,
TIME.com, LIFE.com, Fandango,
NHL.com and ABC.com.
 Currently Facebook targets ads based on
information users provide including
location, age, gender, favorite activities
and music.
 Like function will allow users to signal
what content they like on the internet.
 Like function will be rolled out to
engagement ads.

 2007 when Microsoft bought a 1.6% stake in
Facebook, which valued it at $15 billion.
Facebook had practically no revenue back
then.
 Over 550 million users. And, after “Like”
feature.
 Facebook's value has shot to $50 billion. In a
private placement Goldman will take a $450
million stake, and Digital Sky, which already
holds a position, will invest an additional $50
million, according to the The New York Times
http://srph.it/dXUyBQ


Self-Regulation: What is Happening Outside
the US?

 EU EASA Best Practice Recommendation on Online Behavioral
Advertising
 Finalized April 12, 2011
 At the beginning stages, framework for members to take back to
their countries
 Includes non-EU members (Australia, Brazil, Canada, Chile, Peru,
India, New Zealand, South Africa)
 Very similar to the US approach
 Also prohibits OBA to kids
 May help fend off potential negative impact of cookie directive, if
widely implemented in time


Behavioral Lawsuits

Valdez v. Quantcast, MTV, NBC
Universal et al (C.D. Cal. July
23, 2010)
Plaintiffs filed class action against
ABC, MTV Networks, NBC
Universal and Quantcast for use of
flash cookies on plaintiffs’
websites to track consumer
behavior


Behavioral Lawsuits:

 White v. Clearspring Technologies, Disney Internet Group, Warner
Bros. Records et al.) (C.D. Cal. August 10, 2010)
 NBC and Warner Bros Records sued due to widgets.
 $3.25 Million Settlement – No payment to class


Mobile-web Advertising Company Sued
September 2010 for Behavioral Advertising

 Ringleader Digital mobile-web advertising company was hit Wednesday
with a proposed class action lawsuit over its use of an HTML5 trick to
track iPhone and iPad users across a number of websites, in what is
believed to be the first privacy lawsuit of its kind in the mobile space.


Interclick is Sued on December 17, 2010

 Interclick is the latest ad network facing a class action lawsuit over the
now-infamous practice of “history sniffing” – using flash cookies and
hidden code to secretly monitor the activity of online users and see what
websites they've visited.


Mobile Apps – Behavioral Advertising
Lawsuits (December 2010)

 Freeman v. Apple was filed in a northern California federal court and
targets applications such as Pandora, Dictionary.com, The Weather
Channel, Toss It, Text4Plus, Talking Tom Cat and Pimple Popper Lite.

Lalo v. Apple was filed in federal court in San Jose, California and seeks
class action status for anyone who has downloaded an offending
application between December 2008 and December 2010. Similar to the
first lawsuit, the Lalo vs. Apple suit targets Pandora, Paper Toss, The
Weather Channel and Dictionary.com. Apple is included in both suits as
the App Store approval process makes the company an "aider and
abetter" to the deceptive practices of these applications.

The lawsuits stem from a recent Wall Street Journal Investigation that
revealed several iOS and Android applications were transmitting age,
gender, location and device identifier information to third-party
advertising companies.


Arkansas State Computer Tresspass
(December 30, 2010- January 10, 2011)

 17 consumer class actions
 McDonalds
 Nordstroms
 Reebok
 TV Guide
 E-Trade
 State law
 Removal Barriers:
 Under jurisdictional limits for CAFA and diversity


LEGISLATION – THREE BILLS INTRODUCED
INTO CONGRESS FEBRUARY 2011

 JACKIE SPIEIR: DO
NOT TRACK (February
11, 2011)
 BOBBY RUSH:
PRIVACY BILL
(February 10, 2011)
 FINANCIAL PRIVACY
(February 11, 2011)
 SENATE BILLS


Things to Do

 Find out whether the client has flash cookies.
 Sensitize them to the issues.
 Be up to date on industry standards.
 Ask questions of your vendors and obtain indemnities
/reps and warranties for privacy related claims.


Discussion

© 2010 Wildman, Web 3.0: & Dixon Digital
Harrold, Allen How LLP. Marketing is Affecting Your Company 42
© 2011 Wildman, Harrold, Allen & Dixon LLP.

The Perils of Social Media Under the Laws of the United States and Canada: A Cautious Tale for Lawyers and Clients

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