Social Media: The Good, the Bad, and the Lucky

SOCIAL MEDIA:

The Good, the Bad, and the Lucky

Written By:

Cheryl P. Leb

Kelly Hart & Hallman LLP

201 Main Street, Suite 2500

Fort Worth, Texas 76102

Presenters:

HON. SUSAN CRISS, Galveston

CHERYL LEB, Fort Worth

MARICELA SIEWCZYNSKI, Dallas

State Bar of Texas

19th

ANNUAL

TEXAS MINORITY COUNSEL PROGRAM

September 7-9, 2011

Austin, Texas

CHAPTER 7

Cheryl Poulin Leb Kelly Hart & Hallman LLP

201 Main Street, Suite 2500

Fort Worth, Texas 76102

(817) 878-3547 ■ [email protected]

EDUCATION Southern Methodist University School of Law, Dallas, Texas

Juris Doctor, May 1998, Order of the Coif

Florida State University, Tallahassee, Florida

Bachelor of Science, Magna Cum Laude, April 1995

EMPLOYMENT Partner, Kelly Hart & Hallman LLP, Fort Worth, Texas

June 1998 to present.

PROFESSIONAL ACTIVITIES Member, American Law Institute

Fellow of the Texas Bar Foundation, 2008-Present

Named ―40 Under 40‖ Fort Worth Business Press, 2011

Texas Rising Star, honored in the 2005-2010 Rising Stars Edition of Texas Monthly

magazine, and individually featured for work with the

Estate of Ben Hogan in the 2006 edition

Listed among the top Intellectual Property lawyers in Fort Worth, Texas magazine's

Top Attorney Guide, 2005-2010

Listed among the top Technology lawyers in Fort Worth, Texas magazine's Top

Attorney Guide, December 2002

2010-2011 Chair, Tarrant County Bar Intellectual Property Section

2009-2010 Vice Chair, Tarrant County Bar Intellectual Property Section

SPEECHES AND

PUBLICATIONS Lecturer, 2009 Tarrant County Bar Intellectual Property Section: Copyright Update

Lecturer, 2006 14th Annual Texas Minority Counsel Program:

―Negotiation Strategies: Issues Faced in the Negotiation of Intellectual Property

Licenses and Entertainment Industry Agreements.‖

Author, ―Dying a Slow E-Death: Don‘t Give Away Your Company‘s Intellectual

Property,‖ Fort Worth Business Press, June 14, 2002

SEC Bio

Judge Susan Criss presides over a criminal and civil trial court in Galveston, Texas. For twelve

years she has served as the elected judge of the 212th District Court of Galveston County. She is

a former prosecutor and criminal defense lawyer.

Judge Criss is frequent lecturer on handling high profile cases and social media for trial attorneys

and judges. She has presided over several high profile trials including the Robert Durst murder

trial and the 2005 Texas City British Petroleum explosion cases.

She won the Telly Award in 2005 for producing the video “The Color of Justice,”. The film

features minority lawyers and judges and encourages minority children to pursue careers in the

law and judiciary.

Judge Criss’s guest columns and opinion editorials have been published in The Galveston

County Daily News, Beaumont Examiner, The Police News-Galveston, In Chambers magazine

and her former blog As The Island Floats. She has appeared on 48Hours, The Today Show,

Dateline, The John Walsh Show and The Abrams Report.

Judge Criss is board certified in Criminal Law by the Texas Board of Legal Specialization.

Judge Criss has served on the Board of Directors of the National Association of Women Judges.

She also chairs Gulf Coast Task Force on Jail Diversion for the Mentally Ill.

She is a co-founder of the Galveston County Child Advocacy Center and the Galveston County

Child Abuse and Neglect Task Force.

Maricela Moore Siewczynski

Practice Areas

Employment Law and Litigation Mediation

Bilingual (Spanish/English)

Bar Admissions

Texas, 2001

Education

J.D., George Washington University Law School, 2001.

B.S., magna cum laude, Boston College, Carroll School of Management.

Biography

Maricela Siewczynski practices primarily in the areas of employment and business litigation

defense. Before joining the firm, Ms. Siewczynski was a solo plaintiff's employment litigator;

and she was formerly a litigation defense associate with Baker & McKenzie LLP. Maricela is

bilingual (English-Spanish) and is a trained mediator.

Maricela Siewczynski is the President of the Mexican American Bar Association of Texas and

President of the Dallas Hispanic Bar Scholarship Foundation. In 2007, she served as the

President of the Dallas Hispanic Bar Association. Ms. Siewczynski has also served on the Board

of Directors of the Girl Scouts of Northeast Texas, and she is the first Hispanic to serve on the

Board of Trustees of Dallas County Schools. Maricela volunteers as a mediator and translator at

Dallas Dispute Mediation Services.

Mediator Training:

● Dispute Mediation Services Mediator Training Course

● Dispute Mediation Services Course on Mediation of Employment Cases

● Dispute Mediation Services Course on Mediation of Car Accident Cases

Professional Memberships and Awards:

● Mexican-American Bar Association of Texas, President

● Dallas Hispanic Bar Association Scholarship Foundation, Past President

● Dallas Hispanic Bar Association, Past President (2007)

● Mac Taylor Inn of Court, Associate Member

● Patrick E. Higginbotham American Inn of Court, Associate Member (2005-2006)

● Texas Bar Foundation, Fellow

● Dallas Bar Foundation, Fellow

●Dallas Association of Young Lawyers Foundation, Fellow

●Dallas Association of Young Lawyers, Judicial Intern Co-Chairperson (2005)

● Dallas County Associate Judge Selection Committee (2004)

● Dallas Association of Young Lawyers Leadership Class (2004)

● Recipient of Texas Monthly "Rising Star" Super Lawyer Award (2005, 2011)

http://www.fghlaw.net/images/Maricela_bw_crop_side.jpg

Social Media Chapter 7

i

TABLE OF CONTENTS

I. SOCIAL MEDIA 101 ................................................................................................................................ 1

A. What is Social Media? .......................................................................................................................... 1

1. Facebook .......................................................................................................................................... 1

2. Twitter .............................................................................................................................................. 1

3. YouTube ........................................................................................................................................... 1

4. LinkedIn ........................................................................................................................................... 1

5. MySpace ........................................................................................................................................... 1

6. Google+ ............................................................................................................................................ 1

B. Why Social Media? .............................................................................................................................. 2

1. Global Audience Reach and Low Cost ............................................................................................ 2

2. Ease of Use ....................................................................................................................................... 2

3. Instantaneous Publishing .................................................................................................................. 2

C. What Can Social Media Do For Businesses? ....................................................................................... 2

II. POLICING TRADEMARKS ON THE SOCIAL MEDIA AND THE WEB ........................................... 2

A. Policing Trademarks on Social Media ................................................................................................. 2

B. Infringing Domain Names .................................................................................................................... 3

C. Future of Domain Names ..................................................................................................................... 4

1. What is a gTLD? .............................................................................................................................. 4

2. How Do Businesses Protect Their Trademarks Under the New gTLD System? ............................. 5

III. USE OF SOCIAL MEDIA TO CONDUCT BUSINESS PROMOTIONS ............................................... 5

A. Sweepstakes Defined ............................................................................................................................ 5

B. State and Federal Sweepstakes Law ..................................................................................................... 6

C. Official Rules ....................................................................................................................................... 7

APPENDIX A .................................................................................................................................................. 9

APPENDIX B ................................................................................................................................................ 10

APPENDIX C ................................................................................................................................................ 11

APPENDIX D ................................................................................................................................................ 12

APPENDIX E ................................................................................................................................................. 13


1

SOCIAL MEDIA:

The Good, the Bad, and the Lucky Ok, I‘ll admit it. I may be the lone holdout on

Facebook. I don‘t get it. Well, I get it in so far as I

know how it works, but I don‘t get the appeal of it.

This is not to say that I don‘t spend a lot of time on

social media sites. In fact, sometimes I spend hours a

day playing detective and documenting infringing

uses of my clients‘ intellectual property. As an

attorney, maybe I‘m just a little jaded after spending

hours tracing infringers through an invisible web or

reading case after case where information posted on

Facebook or tweeted on Twitter gets people in trouble.

At any rate, despite my aversion to having my own

Facebook profile or letting my kids post videos on

YouTube, I can appreciate the fact that social media

will only expand in the coming years. Therefore, for

all of those who don‘t ―Like‖ Facebook, twiddle away

Tweeting on Twitter, or just simply do not practice in

areas of the law that are impacted by social media, I

hope this paper provides some background and useful

information on social media, business, and the law.

I. Social Media 101

A. What is Social Media?

Social media is a relatively inexpensive means of

disseminating information, pictures, video, and news

through electronic media. Social media is different

from traditional media, such as newspapers and

television, because of the relatively low cost to use

social media outlets and the worldwide audience.

Popular social media sites include:

1. Facebook: Facebook is an online platform that

lets individuals and businesses keep others updated on

what‘s going on in their lives or with their businesses.

Facebook ―helps you connect and share with the

people in your life.‖1 Specifically, Facebook allows

you to post information, pictures, and videos and

share them with your Facebook ―Friends.‖ Appendix

A shows an example of how Justin Brands, the

famous boot manufacturer, uses Facebook to increase

its marketing and media exposure.

2. Twitter: The following description of Twitter is

found on Twitter‘s site:

Twitter is a real-time information network that

connects you to the latest information about

what you find interesting. Simply find the

public streams you find most compelling and

follow the conversations. At the heart of

Twitter are small bursts of information called

1 www.facebook.com

Tweets. Each Tweet is 140 characters in length,

but don‘t let the small size fool you—you can

share a lot with a little space. Connected to each

Tweet is a rich details pane that provides

additional information, deeper context and

embedded media. You can tell your story within

your Tweet, or you can think of a Tweet as the

headline, and use the details pane to tell the rest

with photos, videos and other media content.2

3. YouTube: YouTube is a video-based social

media platform. The following description is found on

YouTube‘s site: ―Founded in February 2005,

YouTube allows billions of people to discover, watch

and share originally-created videos. YouTube

provides a forum for people to connect, inform, and

inspire others across the globe and acts as a

distribution platform for original content creators and

advertisers large and small.‖3

4. LinkedIn: LinkedIn is a platform for exchanging

professional information, such as where you work and

where you went to school. Launched on May 5, 2003,

―LinkedIn operates the world‘s largest professional

network on the Internet with more than 100 million

members in over 200 countries and territories.‖4

5. MySpace: MySpace touts itself as ―the leading

social entertainment destination powered by the

passion of fans. MySpace drives social interaction by

providing a highly personalized experience around

entertainment and connecting people to the music,

celebrities, TV, movies, and games that they love.‖5

6. Google+: On June 29, 2011, Google launched its

own social media site in an attempt to compete with

Facebook. Google+ (Google Plus) is designed to tie

together all of Google‘s existing functionality for a

user, including Gmail. Google+ is structured similarly

to Facebook, allowing the user to post and share

profiles, pictures, and news feeds. There is, however,

one significant difference between Google+ and

Facebook---unless a Facebook user reads all of the

privacy setting information closely and sets up ―Lists‖

(not a commonly used feature), all ―Friends‖ are

placed in the same classification (i.e., all Friends can

see the same information). Understanding the privacy

settings and designating certain ―Lists‖ of people has

proven difficult for many users. On the other hand,

Google+ is designed for a user to designate certain

people in certain ―Circles‖ from the outset using a

user-friendly drag and drop feature. This is significant

2 http://twitter.com/about.

3 http://www.youtube.com/t/about_youtube

4 http://press.linkedin.com/about

5 http://www.myspace.com/Help/AboutUs


2

because Google+ encourages and makes it easy for

users to place college friends in one Circle, close

friends in another Circle, and business contacts (e.g.,

your boss) in yet another Circle. This makes it easier

to prevent your business contacts from accidently

learning about what you did (or shouldn‘t have done)

over the weekend. Another feature that is a bonus on

Google+ is the ―Hangout‖ feature, which allows up to

ten users to chat simultaneously and through the use

of video. I anticipate the ease of the ―Circles‖ and the

functionality of the ―Hangout‖ feature will be huge

selling points for Google+.

B. Why Social Media?

Social media has become an integral part of

communication in the digital age. Like it or not, use

of social media is here to stay, and even if you are not

yet convinced of its usefulness or necessity, the fact is

that peer pressure (both on individuals and businesses)

spurs on its use. While there are a plethora of reasons

why people and businesses use social media, the

following three reasons are at the crux of any

explanation of the success of social media:

1. Global Audience Reach and Low Cost. Social

media technology provides a person or company with

the ability to reach a global audience for a relatively

low cost. When a US company posts information on

its Facebook page, it is able to share that information

with not only US consumers, but also consumers

around the world. If traditional forms of media were

used (e.g., newspapers or TV commercials) to

communicate to people worldwide, the cost would

likely be prohibitive for most individuals and

businesses. On the other hand, social media outlets

allow the same breadth or scope circulation with little

cost to the individual or business.

2. Ease of Use. Unlike publishing a newspaper or

running a television station, which most individuals

don‘t have the requisite knowledge or capital to do, an

individual can create and control his or her own social

media site. Social media is readily available to the

public and requires very little skill or training to

operate. Anyone with access to the Internet can use

social media, and it is also easy to edit and update.

3. Instantaneous Publishing. While this feature of

social media can be both good and bad, social media

allows a user to publish information almost

instantaneously and posts can be updated in seconds,

thus bringing news to millions almost instantaneously.

As we recently learned from Mr. Sohaib Athar, the

―tweeter‖ who unknowingly tweeted about the Osama

Bin Laden operation as it was being carried out,

sometimes information published on social media is

so fresh, not even the disseminator knows its

relevance.

C. What Can Social Media Do For Businesses?

Social media can increase communication to

customers and can foster brand awareness. Social

media can also greatly decrease the cost of marketing

campaigns and provide a relatively inexpensive

platform for organizations to expand product

knowledge and goodwill. For example, Twitter

permits a business to promote itself and its products in

real time to consumers on an individual level for

virtually no cost. Specifically, Tweeting allows a

business to send short messages about a product or

promotion directly to a follower‘s home page.

Because of the brevity of the messages, the

information is more likely to be read by the individual

and capture his or her attention. Even though Tweets

are short, they can provide links to the business‘s

website, Facebook profile, or videos on YouTube, so

that the individual can learn more about the company

or its products with the click of button or touch of a

finger.

Unlike Twitter, Facebook profiles are more detailed

and can contain more information, pictures, and

videos about a business‘s product. Facebook pages

can show videos of the product being used, as well as

testimonials and feedback from other users. Like

Twitter, Facebook can also provide links to other

social media sites, such as Twitter or YouTube.

Finally, while YouTube may not contain as much

written information about a business or its product,

YouTube is the perfect outlet for showcasing products

and how they are used via video. Businesses

frequently use Facebook, YouTube, and Twitter in

complementary ways to provide information and

showcase products.

II. Policing Trademarks on Social Media and

the Web

A. Policing Trademarks on Social Media

With the advent of social media, protecting your

business‘s trademarks is a full time job. With the

expanse of the Internet, it may not be possible to find

all possible infringements of your marks, but a

trademark owner still needs to put forth the effort to

find and police infringing uses of its trademarks.

Finding infringing uses is the easy part—what to do

once you find them is another matter.

Once you find an infringing use, you need to

determine what type of infringement it is and what

governing authority, if any, would apply. For sake of

discussion, we will use Company X as an example.

Company X is a designer jean manufacturer, and its


3

official website is www.CompanyX.com. Company

X realizes that someone has registered the Facebook

profile ―Company X‖ and is advertising Company X‘s

jeans at a discount or even worse, advertising jeans

from competitors on the Facebook page.

Often an infringer will use not only domain names,

but social media platforms to squat on trademarks.

When an unauthorized use of your client‘s name or

trademark occurs on a social media site, the first thing

you should do is go to that specific site and read all of

the applicable user terms and conditions.

Among many other terms of use and rules, Twitter

provides the following:

•Impersonation: You may not impersonate

others through the Twitter service in a

manner that does or is intended to

mislead, confuse, or deceive others.

•Trademark: We reserve the right to

reclaim user names on behalf of

businesses or individuals that hold legal

claim or trademark on those user names.

Accounts using business names and/or

logos to mislead others will be

permanently suspended.6

Similarly, Facebook provides the following within its

terms of use:

We respect other people's rights, and

expect you to do the same.

1. You will not post content or take any

action on Facebook that infringes or

violates someone else's rights or

otherwise violates the law.

2. We can remove any content or

information you post on Facebook if we

believe that it violates this Statement.

3. We will provide you with tools to help

you protect your intellectual property

rights. To learn more, visit our How to

Report Claims of Intellectual Property

Infringement page.

4. If we remove your content for

infringing someone else's copyright, and

you believe we removed it by mistake, we

will provide you with an opportunity to

appeal.

5. If you repeatedly infringe other

people's intellectual property rights, we

will disable your account when

appropriate.

6 http://support.twitter.com/articles/18311-the-twitter-rules

6. You will not use our copyrights or

trademarks (including Facebook, the

Facebook and F Logos, FB, Face, Poke,

Wall and 32665), or any confusingly

similar marks, without our written

permission.

7. If you collect information from users,

you will: obtain their consent, make it

clear you (and not Facebook) are the one

collecting their information, and post a

privacy policy explaining what

information you collect and how you will

use it.

8. You will not post anyone's

identification documents or sensitive

financial information on Facebook.

9. You will not tag users or send email

invitations to non-users without their

consent.7

If you experience an infringement on a social media

site, the first step should be to notify the site pursuant

to its reporting policies. For Facebook, trademark

owners can report infringements using Facebook‘s

Notice of Intellectual Property Infringement (non-

Copyright Claim) form (at

http://www.facebook.com/legal/copyright.php?noncop

yright_notice=1). (See Appendix C for the form of

Facebook‘s Notice of Intellectual Property

Infringement (non-Copyright Claim)). On Twitter,

you will want to take advantage of Twitter‘s

Trademark Policy, which can be found at:

http://support.twitter.com/groups/33-report-a-

violation/topics/148-policy-information/articles/

18367-trademark-policy. (See Appendix D). If the

infringement occurs on YouTube, trademark owners

are encouraged by YouTube to contact the infringer

directly through YouTube‘s private messaging

feature.8 If the infringer ignores the trademark

owner‘s communication or refuses to comply with the

trademark owner‘s requests, then YouTube allows

owners to submit their trademark claims through

YouTube trademark complaint form, which can be

found at:

http://www.google.com/support/youtube/bin/request.p

y?contact_type=legal2&hl=en. (See Appendix E).

B. Infringing Domain Names

Often an infringement occurring on a social media site

will link to an unauthorized domain name as well.

Let‘s use Company X again as an example in the

domain name context. Company X‘s official website

is www.CompanyX.com. Company X realizes that

someone has not only created an unauthorized

7 http://www.facebook.com/terms.php

8 http://www.google.com/support/youtube/

bin/answer.py?answer=151655.


4

Facebook profile, but has also registered the domain

name www.CompanyXjeans.com and is selling

Company X‘s jeans at a discount or possibly even

selling counterfeits or jeans from competitors through

this site. In this case, the first step would be to find

out who registered the domain name

www.CompanyXjeans.com. You can usually do this

by going to the Whois database and searching for the

registration records for that domain name. I say

usually because sometimes you find the information

given is inaccurate or incomplete. Once you find the

registration information for the domain name, you

have the option of contacting the registrant directly or

filing a Uniform Domain Name Dispute Resolution

Policy (―UDRP‖) proceeding.9

The UDRP is a policy between a registrar and the

domain name registrant, and is included in registration

agreements for all Internet Corporation for Assigned

Names and Numbers (―ICANN‖) accredited domain

name registrars. As long as the registrar is an

ICANN-accredited registrar, a party will be able to

bring a UDRP proceeding against the infringing

domain name registrant. For a party based in the

United States, the proceeding is usually filed with

either the World Intellectual Property Organization

(―WIPO‖) or the National Arbitration Forum, both of

whom are listed as approved dispute resolution

providers on ICANN‘s website. For information on

UDRP proceedings visit the following ICANN and

WIPO sites:

http://www.icann.org/en/udrp/#proceedings or

http://www.wipo.int/amc/en/domains/resources.

Occasionally, an infringing use appears on a domain

name sold through a non-ICANN-accredited registrar.

When this occurs, we have had success in using the

registrar‘s own stated terms and conditions to enlist

the registrar‘s help in taking down the website. Often

the registrar‘s own terms for URL registration have

the registrant certify that their requested domain name

will not infringe upon or otherwise violate the rights

of third parties and that their use of the domain name

will not violate any laws. Unfortunately, in cases

where you have to appeal to the registrar directly, the

remedies available to your client are highly dependent

on the terms and conditions that the registrant agreed

to when it purchased the domain name. So, while you

may not be able to get the domain name transferred to

your client (as is the typical remedy in a UDRP

9 The Uniform Domain-Name Dispute Resolution Policy

(UDRP) has been adopted by ICANN-accredited registrars

in all gTLDs (.aero, .asia, .biz, .cat, .com, .coop, .info, .jobs,

.mobi, .museum, .name, .net, .org, .pro, .tel and .travel). A

copy of the policy can be found at

http://www.icann.org/en/dndr/udrp/policy.htm.

proceeding), you may at least get the infringing site

and the illegal activities conducted through that site

shut down. Given that most of these non-ICANN-

accredited registrars are in remote areas outside the

U.S., we have actually had surprising success with

contacting the registrar directly and getting infringing

websites disabled.

As a final note about domain name infringement,

Benjamin Franklin‘s old adage ―[a]n ounce of

prevention is worth a pound of cure‖ certainly rings

true. Try to remind your clients that they should

purchase all close variations of their brand name on as

many of the top level domains as possible. Spending

a few hundred dollars upfront to prevent a domain

name squatter is undoubtedly less expensive than

paying an attorney thousands of dollars to initiate a

UDRP proceeding later.

C. Future of Domain Names

On June 20, 2011, ICANN voted to approve the

addition of potentially thousands of new Generic Top

Level Domains (gTLDs). If your company is like

most, it has not given much thought to whether or how

the new gTLDs will affect it. Given the short timeline

that ICANN has set for implementation (January

2012), companies need to begin thinking about their

gTLD strategies now.

1. What is a gTLD?

First, you need to understand what a gTLD is and how

it could affect your company. Many of us are so

accustomed to using .com, .net, .gov, etc. that we

rarely think of them as top level domains, but that is

what they are. When a company adds their name or

trademark in front of the top level domain, you have a

second level domain. For example, CompanyX.com--

-―.com‖ is the top level domain and ―CompanyX‖ is

the second level domain. Companies have

traditionally only had to police their marks on the

popular top level domains (e.g., .com, .net, .biz);

however, when ICANN opens up new gTLD

possibilities, companies will have to expand their

policing to include all of the new top level domains as

well.

Again using www.CompanyX.com as our example,

what happens if an applicant applies for and receives

any one or more of the following gTLDs: .clothes,

.jeans, .apparel, etc. or even .companyX? In this case,

not only will Company X have to monitor all new

gTLD applications approved by ICANN, but then

once those gTLDs are up and running, Company X

will need to police use of its mark on the approved

gTLDs.


5

2. How Do Businesses Protect Their Trademarks

Under the New gTLD System?

If you are a large corporation and have a significant

trademark portfolio, one option would be to apply for

your own gTLD. For example, we could see gTLDs

like ―.Apple‖ or ―.Coke‖ in the near future. So, one

method of protecting your mark would be to purchase

your own gTLD. If, however, your company finds the

$185,000 (yes, $185,000) proposed application fee

and the cost of maintaining your own gTLD cost

prohibitive, then you may want to consider registering

your trademarks with ICANN‘s Trademark

Clearinghouse in an effort to at least keep a would-be

infringer from purchasing your trademark as a gTLD.

ICANN‘s gTLD Applicant Guidebook10

provides the

framework for a Trademark Clearinghouse, through

which companies can provide copies of their

registered marks11

in order to alert ICANN of its

rights in the trademark and to prevent an infringing

gTLD from being issued in the first place. ICANN

has also provided for procedures to oppose gTLDs

that have been published for approval, as well as a

dispute resolution mechanism for contesting gTLDs

that have been issued.

III. Use of Social Media to Conduct Business

Promotions12

Businesses now commonly use social media to offer

prizes and conduct contests via the Internet. Where

participants used to have to mail in postcards to

register for a sweepstakes, in many cases, all a person

has to do these days is ―Retweet‖ a message to

register. These giveaways have become a very

popular way for businesses to attract its customer base

to follow the business online. The problem is, while

most lawyers know that there are laws governing

sweepstakes and contests, most advertising agents and

marketing personnel responsible for social media

marketing for businesses do not.

For purposes of legal analysis, we will continue with

our Company X example. Company X currently

carries out promotions over Twitter that allow

participants to ―Retweet‖ the promotion in order to be

entered for a chance to win a free pair of jeans. An

example of one of the promotions states:

Want #freecompanyxjeans? We're

giving away a pair of Company X

10

At this time, ICANN has only issued the gTLD Applicant

Guidebook in Proposed Final form. 11

There are also some narrow exceptions for unregistered

marks. 12

The information in this section was researched with the

assistance of Chad Smith, Kelly Hart & Hallman LLP.

jeans on May 31! Retweet to enter to

win!

The promotion contains no disclaimers, disclosures, or

Official Rules concerning the promotion. Participants

must have a Twitter account to participate, and

―Retweeting‖ consists of simply hitting a ―Retweet‖

button on the promotion‘s ―Tweet‖ of the Company X

Twitter page.

So, is a promotion that allows participants to

―Retweet‖ the promotion details over Twitter in order

to be entered for a chance to win a free [insert prize],

considered a sweepstakes? If so, what state and

federal laws govern the promotion? And, is the

promotion required to have a set of Official Rules?

The short answer is, yes, the ―Retweet‖ described

above would be considered a sweepstakes and there

should be Official Rules (even if not required by law

specifically).

A. Sweepstakes Defined

Sweepstakes are regulated by both state and federal

law. In Texas, a sweepstakes is a ―contest that awards

one or more prizes based on chance or the random

selection of entries.‖13

Federal law defines a

sweepstakes as a ―game of chance for which no

consideration is required.‖14

The most important

aspect of any sweepstakes is that the contest must

eliminate the element of consideration to avoid being

classified as an illegal lottery.15

Consideration can be

either monetary (requiring an entry fee, purchase, etc.)

or non-monetary (requiring considerable time/effort or

highly sensitive information); however, many states

ignore non-monetary consideration for lottery

purposes.16

As stated in the example above, one of Company X‘s

many promotions requires participants to ―Retweet‖

the promotion in order to be entered for a chance to

receive a free pair of jeans. The promotion provides

no other information or rules. Assuming the prize is

awarded based on chance or random selection, the

promotion would fall under the definition of a

sweepstakes; however, simply being a sweepstakes

13

Tex. Bus. & Com. Code Ann. § 622.002[4] (Vernon

2009). 14

Deceptive Mail Prevention and Enforcement Act § 109,

39 U.S.C.A §§ 3001[k][1][D] (2010). 15

Gabrial Karp, Complying with State-by-State

Requirements in Online Sweepstakes & Contests,

Practicing Law Institute Order No. 19051 (2009); see also

G2, Inc., v. Midwest Gaming, Inc., 485 F.Supp.2d 757, 769

(W.D. Tex. 2007). 16

Id.


6

does not automatically make a sweepstakes conducted

via social media subject to federal and state laws.

B. State and Federal Sweepstakes Law

Sweepstakes can be regulated by both state and

federal laws. Federal sweepstakes regulations are

aimed at sweepstakes conducted through the United

States mail or over the phone.17

The Federal

Deceptive Mail Prevention and Enforcement Act

characterizes any sweepstakes material that does not

fit the requirements listed in the statute and that is

distributed through the mail as a non-mailable matter,

and thus not subject to the law.18

While sweepstakes

conducted through social media do not fall within the

parameters of the Federal Deceptive Mail Prevention

and Enforcement Act, the Federal Trade Commission

is authorized to prescribe rules prohibiting deceptive

telemarketing acts, including sweepstakes conducted

over the phone.19

Therefore, while the Federal

Deceptive Mail Prevention and Enforcement Act is

not applicable to social media sweepstakes,20

it is

possible that the Federal Trade Commission could

expand its scope or even create a new law.

Furthermore, sponsors of sweepstakes conducted over

the Internet, through Facebook, Twitter, or other

social media, still need to be cognizant of other

federal regulations governing unfair or deceptive trade

or advertising practices.

In Texas, sweepstakes are regulated under §§ 622.001

to 622.206 of the Texas Business and Commerce

Code.21

However, Section 622.051 states:

(a) This chapter applies only to a sweepstakes

conducted through the mail.

(b) This chapter does not apply to a

sweepstakes for which the only use of the mail is for a

consumer to return an entry form to the sweepstakes

sponsor.

17

See Deceptive Mail Prevention and Enforcement Act §

109, 39 U.S.C.A § 3001[k][1][D] (2010); and 16 C.F.R. §

310 (2010). 18

39 U.S.C.A § 3001. 19

15 U.S.C.A. 39 U.S.C.A § 6102 (2010); see also 16

C.F.R. § 310 (2010) (concerning the Federal Trade

Commission‘s regulations on sweepstakes telemarketing). 20

The express language of the Deceptive Mail Prevention

and Enforcement Act does not rule out the possibility of a

court interpretation that mail was intended to encompass

email. However, because the Act is included under Title 39

Postal Service and because the Act continually refers to the

Postal Service, this interpretation is unlikely. 21

Sweepstakes concerning certain industries may also be

regulated or expressly authorized by other Texas Code

sections. See Tex. Alcoholic Beverage Code Ann. §

108.061 (Vernon 2010) (authorizing sweepstakes

promotions for alcoholic beverages).

Thus, in Texas, sweepstakes conducted over the

Internet using social media platforms do not appear to

be subject to the provisions of the Texas Business and

Commerce Code. Therefore, under our Company X

example, neither Texas nor federal sweepstakes

regulations would govern the Company X

sweepstakes. Nevertheless, Company X will still need

to consider other states‘ laws when conducting online

sweepstakes.

Sweepstakes must be conducted in accordance with

the laws and regulations in every state for which the

sweepstakes is carried out. This issue is particularly

important for sweepstakes carried out over the

Internet, because the sweepstakes may be subject to

the laws and regulations of every state and country in

which the host web site is accessible.22

For this

reason, companies are usually advised to include a

clause in the Official Rules to limit eligibility to U.S.

residents unless they want to conduct a state-by-state

and country-by-country analysis of sweepstakes law.

Moreover, sweepstakes promoters should expressly

deny eligibility to residents of any states in which the

promoter would like to avoid compliance with the

local laws and regulations.23

There are several states that have sweepstakes laws

that may govern sweepstakes carried out through

social media and other internet mediums.24

For

example, Connecticut sweepstakes law25

requires any

―person advertising a sweepstakes‖ in the state

(regardless of the medium) to disclose in ―immediate

proximity to and in at least the same size and face

type:‖

(1) the retail value of the prize,

(2) the odds of winning, and

22

See Don’t Take Chances with Internet Sweepstakes,

Southeast Tech Wire, July 23, 2002 (available at

http://www.wcsr.com/filefolder/ad100509.pdf). 23

For instance, a company conducting a sweepstakes may

want to restrict eligibility for citizens in New York and

Florida. Both states require sweepstakes with an aggregate

total prize value over $5,000 to be registered and bonded

with the state. See Fla. Stat. Ann. § 849.094[3] (West

2010); and N.Y. Gen. Bus. Law § 369[e][1] (McKinney

2010). 24

The scope of the analysis of state laws governing

sweepstakes is based on the research gathered by Thomson

Reuters/West in a survey of sweepstakes laws in all 50

states. Civil Laws: Gaming – Rules for Sweepstakes

(Statutes) (West 2009). Extensive research into the

sweepstakes laws of all 50 states was not conducted.

Moreover, the paper focuses on state laws that may have an

impact on sweepstakes conducted over the internet–not

state sweepstakes laws in general. 25

Conn. Gen. Stat. Ann. §42-297 (West 2010).


7

(3) whether the receipt of the prize is

restricted or qualified.

Advertising a sweepstakes in Connecticut includes the

―use of the media, mail, computer, telephone or

personal contact to offer… the opportunity to

participate in a sweepstakes.‖

In Illinois, Minnesota, and South Dakota sweepstakes

or ―written promotional prize offers‖ must contain:

(1) name & address of the sponsor,

(2) retail value of the prize,

(3) disclosure that ‗no purchase is necessary,‘

(4) disclosure that a purchase will not improve

chances of winning,

(5) the odds of receiving a prize,

(6) disclosure of any requirement to pay shipping &

handling upon winning,

(7) description of any restrictions on receipt of prize,

(8) any limitations on eligibility, and

(9) a statement of the maximum number of people

included in a group of enhanced likelihood of

winning, if the sponsor represents to a participant that

they are ―specially selected,‖ etc.26

These statutes do not address or define ―written

promotional prize offers,‖ and it is unclear as to

whether these statutes apply to sweepstakes and

promotional offers carried out over the internet.

Moreover, some states require all sweepstakes

sponsors, regardless of how the sweepstakes is carried

out, to provide contestants with their prize within 30

days after giving notice that the contestant has won.27

C. Official Rules

While Texas law does not specifically apply to online

sweepstakes, it would be wise for sponsors to follow

the regulations as much as possible. Texas regulations

require that sweepstakes materials include the

language:

Buying Will Not Help You Win. Your

chances of winning without making a

purchase are the same as the chances of

someone who purchases something. It is

illegal to give any advantage to buyers in

a sweepstakes.28

As discussed above, the Texas sweepstakes regulation

does not directly apply to a sweepstakes conducted

over Twitter, but it would be wise for Company X to

26

815 Ill. Comp. Stat. Ann. 525/25 (West 2010); Minn.

Stat. Ann. § 325F.755 (West 2010) (does not include

requirements (3) & (4)); S.D. Codified Laws § 37-32-3

(2010) (does not include requirements (3) & (4)). 27

See Minn. Stat. Ann. § 325F.755 (West 2010); see also

N.D. Cent. Code § 53-11-03 (2010). 28

Tex. Bus. & Com. Code Ann. § 622.101[a][3] (Vernon

2009).

include this statement in its promotion nevertheless.

Other states, with sweepstakes regulations that are

specifically applicable to an online sweepstakes, still

do not require promotions to include Official Rules of

the contest, but do require that certain disclosures or

statements be provided.29

The required statements and

disclosures of these states were discussed in the

proceeding section.

Despite the analysis on applicability of law, most legal

commentary on sweepstakes law suggests that

sponsors should still include Official Rules to avoid

possible liability with the continually changing

sweepstakes laws and deceptive trade regulations of

all 50 states.30

A properly drafted set of Official Rules

constitutes ―the contract between the sponsor and the

consumers participating in the promotion.‖31

Moreover, these commentators suggest that the

Official Rules should include at least the following

disclosures:

(1) No purchase necessary & purchase will not

improve chances of winning,

(2) Name/Address of the promoter,

(3) Accurate description of the prize(s),

(4) The odds of winning,

(5) Eligibility requirements (e.g., residency and age),

(6) Opening/closing dates of the contest,

(7) How the prizes will be awarded,

(8) How the winners are selected, and

(9) Whether there are any special requirements.32

Moreover, promoters of sweepstakes conducted over

the Internet via social media sites may want to include

special statements to account for technical problems,

situations unique to the Internet, and requirements

29

See Conn. Gen. Stat. Ann. §42-297 (West 2010); 815 Ill.

Comp. Stat. Ann. 525/25 (West 2010); Minn. Stat. Ann. §

325F.755 (West 2010); S.D. Codified Laws § 37-32-3

(2010). 30

See Don’t Take Chances with Internet Sweepstakes,

Southeast Tech Wire, July 23, 2002 (available at

http://www.wcsr.com/filefolder/ad100509.pdf); and

Gabrial Karp, Complying with State-by-State Requirements

in Online Sweepstakes & Contests, Practicing Law Institute

Order No. 19051 (2009); and Julia A. Archer, Sweepstakes

and Skill Contests – The Basics, Enns & Archer LLP (2003)

(available at

http://www.ennsandarcher.com/s_basics.html). 31

Julia A. Archer, Sweepstakes and Skill Contests – The

Basics, Enns & Archer LLP (2003) (available at

http://www.ennsandarcher.com/s_basics.html). 32

Id; See also Don’t Take Chances with Internet

Sweepstakes, Southeast Tech Wire, July 23, 2002 (available

at http://www.wcsr.com/filefolder/ad100509.pdf); and

Gabrial Karp, Complying with State-by-State Requirements

in Online Sweepstakes & Contests, Practicing Law Institute

Order No. 19051 (2009).


8

imposed by the social media site through which the

sweepstakes is conducted.33

In conclusion, while there is no federal or state law

that requires a sweepstakes conducted through social

media to include a list of all Official Rules, the

general consensus among legal commentators on

sweepstakes law is that all sweepstakes sponsors

should include the Official Rules of the contest and

that those rules should contain the disclosures required

by the states to avoid liability.

33

For instance, internet sweepstakes may want to include

rules such as: (1) a disclaimer for entries that are corrupted

or otherwise not received due to technical malfunction, etc.,

(2) reserve the rights to cancel the promotion in the event

that computer malfunction, etc., are encountered, and (3) a

provision stating any dispute as to the winner‘s identity will

be attributed to the holder of the email/Twitter account

associated with the entry. Don’t Take Chances with

Internet Sweepstakes, Southeast Tech Wire, July 23, 2002

(available at http://www.wcsr.com/filefolder/ad1005

09.pdf).


9

Appendix A


10

Appendix B


11

Appendix C


12

Appendix D


13

Appendix E

Documents

Social Media: The Good, the Bad, and the Lucky