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LEGAL ISSUES IN RUNNING A NEWS BUSINESS
Law School for Digital JournalistsOctober 18, 2013
Scott Dailard Deirdre Sullivan Dow Lohnes PLLC The New York Times Company [email protected] [email protected]
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• Your Brand Online: Trademarks and Domain Names
• Privacy Primer
• Mastering the Fine Print
• Terms of Use, Click-throughs and Other Contracts
• Engaging Your Audience
• Native Advertising, Mobile Services & Promotions
• Mitigating Your Risks
• Insurance
Roadmap
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Your Brand Online: Trademarks and Domain Names
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New York Times Trademarks
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Early.
In the weeks before you launch a new product, choose a
strong, distinctive name and logo and then
do a knock-out search.
When should you think about trademarks?
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Distinctive marks are strong marks.And strong marks are easier to protect.
• Fanciful: Kodak, Exxon
• Arbitrary: Apple, Omega
• Suggestive: Coppertone, Microsoft
Picking a Name
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You have rights in your trademark without going through the registration process.
You may not want to register every trademark.
But if you don't register a trademark, it becomes very difficult (thus expensive) to protect.
To register or not to regi$ter?
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〉Conduct a search on uspto.gov〉File an Application based on either:
• Intent to Use• Use in Commerce
〉Use your trademark in commerce.〉Update your registration with use case
samples. If you expand the products or services covered by your trademark, update the registration.
Trademark Registration Process
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What is the "likelihood of confusion" as to the source, sponsorship or approval of the goods or services?
OK: Using a trademark to identify the true owner’s goods or services, even if use is unflattering to owner.
Not OK: Using mark to identify goods or services or to falsely imply an association between the trademark owner and a third party. Infringement!
If you forget all this, ask yourself one question: How would you like it if your trademark were used this
way?
Trademark Infringement
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1. Conduct a search online.
2. Register the name through a domain name registrar, e.g. GoDaddy.com, Register.com.
3. If you are also using it as a trademark, go through the trademark registration process.
Domain Registration Process
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Domain Names
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Privacy Primer
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In the US, there is no comprehensive legal regime for privacy.
PII is regulated.
Non-PII is not. *
〉 Personally Identifiable Information (PII): Information that on its own or combined with other information can identify an individual person.
〉 Non-Personally Identifiable Information (Non-PII): Anything that is not PII. Non-PII includes cookies information, clickstream or log file data and, for now at least, IP address.
The Basics: PII and Non-PII
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Ask yourself: What does your site or app do?
• Examine your four main consumer data activities:
〉Collection
〉Storage
〉Use
〉Sharing of customer information
Consumer Privacy: The Easy Part
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Much more difficult: What do your vendors do?
• Ad networks, ad servers, analytics vendors, push notification service providers, etc., all rely on putting a tag or pixel on your page or building some of their software code into your app.
• Ask them about collection, storage, use and sharing.
• Review SDKs (software development kits) carefully before building it into your app.
When you are using a cheap or free product, your users are subsidizing your use of the service with their data.
Consumer Privacy: The Hard Part
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〉 Build privacy and security into your product roadmap.
〉 Provide users with notice and choice/consent.
• Notice: Have a privacy policy. Link to it early and often.
• Consent: Allow users to opt-out and control what you share about them.
〉 Make sure you understand who is on your site and in your app. Don’t put a tag on your site or an SDK into your app until you know exactly what it does.
Your Mini Privacy Program:
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〉 Is it really Non-PII when your GPS location is combined with your telephone?
〉 Small screens challenge clear and conspicuous disclosure of privacy practices.
〉 Complicated concepts and constantly changing background technology mean only very broad privacy statements will not become obsolete with each new version release or software upgrade.
〉 Mobile apps often integrate third party software (software development kits, or “SDKs”) that we cannot control, and in some instances, cannot even monitor.
Good Questions: Mobile
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〉 The European Union considers US sites to be subject to the jurisdiction of the EU.
〉 Unlike the US, the EU regulates both PII and Non-PII.
〉 The EU prohibits transferring information on “data subjects” outside their boarder unless you meet certain Safe Harbor requirements.
Good Questions:International
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〉 The best practice is to delete data that you don’t have a business purpose for. But:
〉 What if you don’t know how to use it now, but can reasonably expect to need it in the future?
〉 What are reasonable uses of Non-PII data? How much Non-PII can you have on a user before it actually can identify her? How do you store it? Who has access? How long can you justify keeping the information?
Good Questions:Big Data and the Deletion Conundrum
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Mastering the Fine Print- Terms of Use, Click-throughs and Other Contracts
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Terms and conditions for access to and use of a website, drafted from the website owner's perspective.
Terms of Use
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The user must have〉Actual or constructive notice of the terms of
use.〉Affirmatively or impliedly assented to the
terms of use.〉Meaning: click-wrap usually is held as
enforceable, but browse-wrap is less certain.
Enforceability also depends on applicable federal and state law.
Terms of Use: Enforceability
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〉 Make them modular. 〉 Not everything has to apply to every element of your site.〉 Include the usual intellectual property statements about your ownership
of the content, as well as restrictions on the use of your content. You're giving a license to enter the site, not a license to use the content.
〉 Have clear and reasonable rules, especially around UGC. Get a broad license to UGC.
〉 Make sure you can cease providing “the Service”, change it, or shut it down at any time.
〉 Be clear that you can remove a user at any time in your sole discretion. (You likely won't be able to enforce this from a tech perspective, but you'll be glad you have the threat in your pocket). If you have a pay component, the refund section of your Terms of Purchase should contemplate this instance.
〉 Include age restrictions.
Terms of Use: Practical Advice
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Take advantage of the DMCA Safe Harbor. If you accept and post third party materials, including UGC (and who doesn’t?), the DMCA's safe harbor provisions can protect your site from copyright infringement liability based on the actions of users. Section 512(c)(2).
To qualify, a site must:
1.Designate an agent to receive notifications of claimed infringement (copyright.gov)2.Make the contact information of such designated agent available
• on your site including on its website in a location accessible to the public and
• to the Copyright Office (see above). • Act promptly and consistently. None of the Section 512 safe harbors
are available unless the service provider has implemented) a policy that provides for the termination in appropriate circumstances of repeat infringers. Section 512(i)(1)(A).
Terms of Use: User Generated Content
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〉 You can’t really negotiate if you won’t walk away.
〉 Risk is money. If you're accepting a lot of risk, don't overpay for it.
〉 Ask. You may have leverage. You may not. You won't know until you ask.
Intimidated by the contract? Reformat it.〉 THE LANGUAGE IN ALL-CAPS IS CONFUSING
AND SHRILL BUT IF SOMETHING GOES WRONG IT WILL PROBABLY BE THE MOST EXPENSIVE PART OF THE CONTRACT.
Negotiating Contracts
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You almost certainly have a contract for one of these services:
Google Maps. Gmail. Adsense. Google Analytics. Facebook. Instagram. Pinterest. Mobile app development platforms. Flickr. iTunes. Amazon.
What does it say?
Click-through Contracts
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Three great provisions that provide a lot of protection:
1.Payment upon Acceptance.
2.Termination for Convenience (or a short term).
3.Robust Product or Services description.
Contracts: Business Terms
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Indemnification is “an undertaking by one party to compensate the other party for certain costs and expenses.” It protects against claims made by third parties.
Contracts: Indemnification
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Whose IO and T&Cs? 〉Yours?〉The agency’s?〉IAB’s?
• IAB 3.0 is better for publishers than 2.0. • …so most agencies will start with 2.0.
Contracts: Ad Sales
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Terms to consider:〉No liability for failing to complete a campaign other than a
make-good.〉Advertisers should indemnify for any creative they provide:
• To the extent your team provides creative services, you should expect to be responsible for your work
• …unless you submit it to them for approval?〉Timing on any campaign should be subject to news
preemption.• Advertisers will likely be happy with this: no one wants to
run next to the photo of a plane crash.〉Have a data discussion before they send the tags.
• Best practice is to have a posted data policy.• Expect pushback. Your point of contact probably won't
know what you're talking about: often, the person is two or three degrees away from your account executive.
Contracts: Ad Sales and Insertion Orders
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Engaging Your Audience
- Native Advertising, Mobile Message Programs and Promotions
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Native Advertising and Sponsored Content – Rules of the Road
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The Past: bright Line Separation between advertising and editorial (“Bento Box” model)
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But consumers developed “banner blindness”
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Advertising and Marketing Law Casebook, Tushnet & Goldman, 2012.
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Native Advertising – What is it?
• Content provided by or created with or for an advertiser.
• Integrated with site design and presented within editorial stream.
• Has same value to reader as editorial content – and can be experienced, discovered through search and shared through social media in the same ways.
• Integration v. transparency: requires clear labeling of native advertising.
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Stricter Liability Standards Govern Sponsored Content
• Stricter liability standards for false or unsubstantiated claims.
• As a general rule, publisher cannot be held liable for publication of non-defamatory false statements in editorial content “absent proof of knowing falsity or reckless disregard for the truth.” Daniel v. Dow Jones, 520 N.Y. S.2d 334, 339 (Civ. Ct. 1987).
• By contrast, if a publisher creates sponsored content for an advertiser, both the publisher and the advertiser would be liable for any misleading or deceptive statements under FTC Act and State UDAP laws.
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• When creating sponsored content, publishers share the duty with the advertiser to substantiate factual claims about the advertiser’s products prior to publication.
• Creating sponsored content can also trigger sector-specific advertising regulations in highly-regulated categories (e.g., financial, insurance, automotive).
Stricter Liability Standards Govern Sponsored Content (Cont.)
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• “When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed.” FTC Testimonials and Endorsements Guide § 255.5.
• Advertisers and endorsers share duty of disclosure.
• An “endorsement” is any advertising message that consumers are “likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser . . . .”
Endorsers Must Disclose MaterialNon-obvious Connections with Advertisers
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• The FTC investigated Hyundai when an ad agency gave gift cards to bloggers for linking to and writing reviews of Hyundai’s Super Bowl television ads.
• FTC said that gifts for posting any “specific content promoting the advertiser’s products or services is likely to constitute a material connection that would not reasonably be expected by readers of the blog.”
What Counts as an Endorsement?
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• Required disclosures should be made in each social media post where the author has a material connection to the advertiser, and should not be hidden behind a link.
• Disclosures should be understood by consumers. For example, the FTC says “#spon” may not be understood, and recommends “Ad:” instead.
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Testimonial Guidelines & Social Media
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• An advertising message is deceptive if it “represent[s], directly or by implication, that [it is] something other than paid commercial advertising.” In re Twin Star Productions, Inc., 1990 FTC LEXIS 87 (Mar. 13, 1990).
• “Advertorials” that mimicked the structure or format of a news show or an independent journalism or research website have been targeted in more than a dozen FTC actions.
• For example, it is deceptive to format an advertorial video with “commercial breaks” because they imply that advertorial itself is editorial programming.
Third Rule: Don’t Pass off Advertising Content as Journalism
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• Marking these ads as“advertorials” did not cure deceptive format.
• Banner ad on legitimate news sites, among other sites, would link to extended “news” article.
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• The FTC also charged that these affiliates’ failure to disclose that they received a commission each time a consumer bought supplements or signed up for a free trial through their ads was a deceptive omission.
• $5 million paid to settle with the FTC.
FTC Action Against Fake News Sites
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• Paid Placement: But for payment, the merchant’s listing would not appear as high in search results.
• Paid Inclusion: In exchange for payment, the merchant’s listing is guaranteed to be included in the index for a search engine, and/or its website is spidered more frequently or reviewed at a deeper level than non-paid sites.
• The FTC says that because consumers expect search results to be based on relevancy or other objective criteria, paid placement listings should be clearly labeled and segregated from organic results. A search engine that operates a paid inclusion program should conspicuously disclose the existence of the program if it distorts rankings.
Identify Paid Inclusion and PaidPlacement Relationships in SearchResults and Rankings
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Paid Placement Labeling
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In addition to labeling its paid placement results, Google also includes the following explanation in a rollover:
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Paid Inclusion With Explanation
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The explanation suggests that both paid inclusion and paid placement are at work in the display of results.
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• The unauthorized use of a person’s identity for commercial advertising purposes generally violates statutory and common law rights of publicity.
• Very different rules apply for the use of individuals’ names, likenesses and identities in purely editorial content.
• Integrating advertising with editorial photo layouts may also violate agreements under which photos were licensed – i.e., terms may restrict use to editorial purposes or require more money for advertising.
Don’t Use Names, Likenesses or Other Personal Indicia inAdvertising Without Consent.
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• Whether a publisher can use a plaintiff’s identity without consent often turns on whether the speech is non-commercial or, in some states, whether it is in the “public interest” even if it is published to make a profit. These robust First Amendment defenses that are not available for commercial advertising.
Rights of Publicity and Prohibition Against False Endorsements
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Pixazza, now called Luminate, sells in-image advertising.
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Reputational Considerations2012 Survey By MediaBrix & Harris Interactive
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〉“Websites should not accept payment from advertisers to place or promote products in editorial content.”
〉 “Marketing messages should be visually separated from editorial content—by rules, for example, or background colors—and easily identifiable as advertising.”
Select American Society of Magazine Editors (ASME) Best Practices for Digital Media
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• Google’s Page Rank factors in the number of external websites linking to a site to determine its relevance for purposes of calculating search rank. Calculations exclude paid links.
• A publisher or advertiser may drop in Google’s rankings if it publishes links in exchange for payment and does not tag them with the required HTML attribute rel="nofollow".
• Google recently announced that it dropped a newspaper significantly in its search rankings for this practice.
Google Page Rank Policy on Paid Links
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〉 Federal law prohibits use of any automated technology to send text messages to a phone number for a wireless device without the “prior express permission” of the wireless subscriber.
〉 Higher “prior express written consent” required for advertising texts (broadly construed)
〉 Severe FCC penalties (up to $16,000 per violation)
〉 Severe class action risk -- consumers can sue for up to $1,500 in statutory damages (per message).
Text Messaging
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〉 Before sending any text messages to a mobile device, document consumer’s consent using a physical or online form that:• Identifies your company as the sender by name• Requires the user to input his or her mobile number• Describes the content/purpose and frequency of
messages that will be sent• Discloses that texts may be “autodialed” or sent using
“automatic telephone dialing system”• Requires user’s affirmative opt-in consent (e.g., by
checking an empty box)• For advertising texts (e.g., sponsored news alerts),
discloses that consent is not a condition of making any purchase.
Text Messaging
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〉 Federal and state criminal laws prohibit private lotteries.
〉 Lottery = prize + chance + consideration
〉 Must eliminate one of these 3 lottery elements to run a lawful prize promotion.
〉 Legal sweepstakes = prize + chance (no consideration)
Promotions
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〉 Consideration = a payment or purchase, or in some jurisdictions, substantial time and effort.• If entry is bundled with purchase,
eliminate consideration by also offering an alternate free method of entry (e.g., postcard, toll-free call).
Promotions
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〉 AMOE must offer same relative chance of winning.〉 Beware of:
• Different entry deadlines• Different limitations on the number of free and
paid entries• Separate prize pools for paid and free entries
〉 AMOE must be clearly and conspicuously disclosed.〉 AMOE will not cure lottery problem created by a pure
“pay to play” entry channel.
Promotions
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〉 Sweepstakes must be registered and bonded in Florida and New York if total retail value of all prizes offered is exceeds $5,000.
〉 Rhode Island requires registration (but not bonding) for retail sweepstakes with prizes over $500.
Sweepstakes: Special State Registration Requirements
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Mitigating Your Risks- Insurance
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〉 What is “media perils insurance”?• A media perils policy typically covers
lawsuits based on libel, slander, defamation, privacy torts, IP infringement and newsgathering activities.
〉 Media perils coverage may be less expensive than you think.• You can potentially obtain $1 million in
coverage for several thousand dollars as your annual premium.
Media Perils Insurance
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〉 Do you need it?• Not necessary for everyone
〉E.g., if you publish a personal blog about knitting chances of facing a lawsuit based on your content will be remote.
• But, important to obtain coverage if you operate a news website, do any kind of investigative journalism or rely on fair use.
• Ask: Is there a realistic risk of such lawsuits?
Media Perils Insurance
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〉 Be a smart shopper. These features should not increase your premium:
• Coverage for suits based on newsgathering activities as well as suits based on content.
• Coverage for defense costs.• Worldwide coverage.• Coverage that extends to your
freelancers, stringers or other independent contractors.
Media Perils Insurance
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〉 Other tips for choosing a policy:
• If you have counsel you would want to use in litigation, seek to have that counsel pre-approved by the insurer when buying coverage.
• Try to avoid a “hammer clause” that would allow insurer to settle claims without your approval.
• Consider separate endorsement for the costs of fighting third-party subpoenas.
Media Perils Insurance
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