Presented by Sean J. Quinn of LADUE | CURRAN | KUEHN at the December 2014 AMA Michiana luncheon: http://www.amamichiana.com/portfolio/digital-marketing-laws/. Questions about this presentation? Visit www.lck-law.com.

1. SEAN J. QUINN
December 2014
WHAT EVERY MARKETER NEEDS TO KNOW
ABOUT THE LAW IN THE DIGITAL AGE

2. Disclosures
.com Disclosures - “How to Make Effective
Disclosures in Digital Advertising”
! FTC guidelines for mobile and other online
advertisers.
! Explains how to make disclosures clear and
conspicuous to avoid deception.
! Contains mock ads that illustrate the updated
principles.

3. Disclosures
! Rules:
! When it comes to online ads, the basic principles of
advertising law apply:
(1) Advertising must be truthful and not misleading;
- See FTC Policy Statement on Deception, appended to Cliffdale
Associates, Inc., 103 F.T.C. 110, 174
- See FTC Policy Statement on Advertising Substantiation,
appended to Thompson Medical Co., 104 F.T.C. 648, 839
(1984), aff’d, 791 F.2d 189 (D.C. Cir. 1986)
(2) Advertisers must have evidence to back up their
claims (“substantiation”); and
(3) Advertisements cannot be unfair.
- 15 U.S.C. § 45(n)
- See FTC Policy Statement on Unfairness, appended to
International Harvester Co., 104 F.T.C. 949,
1070 (1984)

4. Disclosures
! Definition of Disclosure:
! Statement needed for a claim to be:
" Truthful and not misleading;
" In compliance with the law;
" Substantiated; or
" Fair.

5. .com Disclosures
New Rules*:
To make a disclosure clear and conspicuous,
advertisers should [must]:
(1) Place the disclosure as close as possible to the
triggering claim.
(2) Take account of the various devices and
platforms consumers may use to view
advertising and any corresponding disclosure.
(3) When a space-constrained ad requires a
disclosure, incorporate the disclosure
into the ad whenever possible.
(4) Hyperlinks
(5) Design advertisements so that “scrolling” is not
necessary in order to find a disclosure.

6. .com Disclosures
New Rules* cont.:
(6) Keep abreast of empirical research about where
consumers do and do not look on a screen.
(7) Recognize and respond to any technological
limitations or unique characteristics of a
communication method when making
disclosures.
(8) Display disclosures before consumers make a
decision to buy.
(9) Repeat disclosures, as needed, on lengthy websites
and in connection with repeated claims.
(10) Prominently display disclosures so they are
noticeable to consumers, and
evaluate the size, color, and graphic
treatment of the disclosure in relation to
other parts of the webpage.

7. .com Disclosures
! Example #1

8. Example #2

9. Example #3

10. Example #3 cont.

11. Example #4

12. Example #5

13. Example #6

14. Operation Full Disclosure
! FTC warning letters to more than 60 companies – targeted
advertisements that were either:
! In fine print;
! Hard for consumers to read; or
! Otherwise easy for consumers to miss.
! Examples of inadequate disclosures:
! quoting the price of a product or service without disclosing conditions for obtaining the
price;
! failing to disclose an automatic billing feature;
! claiming that a product capability of an accessory was included without disclosing the need
to first buy or own an additional product or service;
! claiming that a product was unique or superior in a product category without disclosing the
advertiser’s narrow definition of the category;
! making comparative claims without disclosing the basis of the advertiser’s comparisons;
! promoting a “risk-free” or “worry-free” trial period without disclosing that consumers have
to pay shipping costs; and
! making absolute or broad statements without explaining relevant exceptions or limitations.

15. Operation Full Disclosure
What’s next?

16. Endorsements and Testimonials
! FTC revised Endorsement Guides in 2009
- Same guides apply to endorsements and testimonials.
! Revised Guides reflect 3 basic truth-in-
advertising principles:
! Endorsements must be truthful and not misleading;
! If the advertiser doesn’t have proof that the endorser’s
experience represents what consumers will achieve by using
the product, the ad must clearly and conspicuously disclose the
generally expected results in the depicted circumstances; and
! If there’s a connection between the endorser and the marketer
of the product that would affect how people evaluate the
endorsement, it should be disclosed.

17. Endorsements and Testimonials
Example #1:
A film critic’s review of a movie is excerpted in an
advertisement.
Example #2:
An ad for an acne treatment features a dermatologist who claims
that the product is “clinically proven” to work. Before giving the
endorsement, she received a write-up of the clinical study in
question, which indicates flaws in the design and conduct of the
study that are so serious that they preclude any conclusions
about the efficacy of the product.

18. Endorsements and Testimonials
Advertisers are subject to liability for false or
unsubstantiated statements made through
endorsements, or for failing to disclose material
connections between themselves and their endorsers
[see § 255.5]. Endorsers also may be liable for
statements made in the course of their endorsements.

19. Endorsements and Testimonials
Example #3:
A well-known celebrity appears in an infomercial for an oven roasting
bag that purportedly cooks every chicken perfectly in thirty minutes.
During the shooting of the infomercial, the celebrity watches five
attempts to cook chickens using the bag. In each attempt, the chicken
is undercooked after thirty minutes and requires sixty minutes of
cooking time.
In the commercial, the celebrity places an uncooked chicken in the
oven roasting bag and places the bag in one oven. He then takes a
chicken roasting bag from a second oven, removes from the bag what
appears to be a perfectly cooked chicken, tastes the chicken, and says
that if you want perfect chicken every time, in just thirty minutes, this
is the product you need.

20. Endorsements and Testimonials
Example #4:
An advertisement disseminated by a company that sells
heat pumps presents endorsements from three individuals
who state that after installing the company’s heat pump in
their homes, their monthly utility bills went down by $100,
$125, and $150, respectively.
The advertiser does not have substantiation for the
representation because, in fact, less than 20% of
purchasers will save $100 or more.

21. Endorsements and Testimonials
Example #5:
An advertisement for a recently released motion
picture shows three individuals coming out of a
theater, each of whom gives a positive statement about
the movie.
These individuals are actual consumers expressing
their personal views about the movie.

22. Endorsements and Testimonials
Do these guides violate the endorser’s First
Amendment rights?

23. Endorsements and Testimonials
Take Away

24. Using Copyrighted Content
Common Intellectual Property issues marketers
are likely to encounter:
Complying with Copyrighted Fair Use
Violating Terms of Use
Violating CAN-SPAM

25. Using Copyrighted Content
Article I, Section 8, clause 8, of the United States Constitution
states the purpose of copyright (and patent) laws is “to
promote the Progress of Science and useful Arts, by securing
for limited times to Authors and Inventors the exclusive
Right to their respective Writings and Discoveries.”
Copyright attaches as soon as the original work is
created.

26. Using Copyrighted Content
The copyright owner has the right to do four things:
1) Reproduce the copyrighted work;
2) Display the copyrighted work publicly;
3) Prepare derivative works based on the copyrighted work;
and
4) Distribute copies of the copyrighted work to the public by
sale, rental or lending, and/or to display the image.
See 17 USC Section 106.

27. Using Copyrighted Content
Important Note re: copyrighted works:
Copyright does not apply to works in the public domain;
words, names, slogans or short phrases (those may have
protection in trademark law); blank forms; works that are not
original; and government works. This is important to know
because if the work is not protected by copyright, then there is no
concern whether the Fair Use Doctrine will apply to allow you to
use the work.

28. Using Copyrighted Content
Fair Use Exception – 17 USC 107
Sets out four factors to be considered in determining whether
or not a particular use is fair:
1) The purpose and character of the use, including whether
such use is of commercial nature or is for nonprofit
educational purposes
2) The nature of the copyrighted work
3) The amount and substantiality of the portion used in
relation to the copyrighted work as a whole
4) The effect of the use upon the potential market for, or value
of, the copyrighted work

29. Fair Use
5 ways to avoid infringement when using (potentially)
copyrighted material:
1) Do the Fair Use Check
2) Use Creative Commons Material
3) Join a Stock Photo Site
4) Pull from a Public Domain Repository
5) Ask the Owner

30. Violating Terms of Use
Examples:
- Stock Photo Site Terms of Use
- Twitter Embeds
- TEDTalk Embeds

31. Violating the CAN-SPAM Act
! Sets the rules for commercial email.
! Establishes requirements for commercial
messages.
! Gives recipients the right to have you stop emailing
them.
! Spells out tough penalties for violations.

32. CAN-SPAM
Main Requirements:
1) Don’t use false or misleading header information.
2) Don’t use deceptive subject lines.
3) Identify the message as an ad.
4) Tell recipients where you’re located.
5) Tell recipients how to opt out of receiving future
email from you.
6) Honor opt-out requests promptly.
7) Monitor what others are doing on your behalf.

33. Final Thoughts
! Develop policies for reviewing ads at multiple levels
before publication.
! Frequently check the FTC website and subscribe to
their blog.
! When in doubt, check the guidelines and/or ask an
attorney.
! If you feel that a disclosure would help paint a more
complete picture, include it.
! Tell the damn truth.