Week6February20 07

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Published on February 20, 2008

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Legal Research, Issues and Practice in Cyberspace - Advertising and Jurisdiction:  Legal Research, Issues and Practice in Cyberspace - Advertising and Jurisdiction Todd Krieger & Cyrus Daftary February 20, 2007 Course Roadmap:  Course Roadmap Week One Welcome & Introduction Week 4 Privacy Week 6 Advertising & Jurisdiction Week 5 Access to Technology & Open Source Week 7 E-Commerce Week 3 Patents & Trademark START COMPLETION Week 2 Copyright and Digital Music Week 8 Tax and Technology PROJECTS Week 9 First Amendment and Digital Discovery Agenda:  Agenda Administrative Discussion Advertising Jurisdiction Questions & Answers Introduction to Internet and Technology Advertising:  Introduction to Internet and Technology Advertising Internet Advertising – Overview Chapter 2:  Internet Advertising – Overview Chapter 2 $4.3 B Q3 in 2006 – a record setting quarter. http://www.iab.net Still a fraction of other media. Most online advertising is done through search engines and portals http://www.clickz.com/experts/brand/capital/article.php/3448891 Online advertising is often coupled with advertising across other channels. Increases brand awareness Increase awareness of brand attributes Influence purchase intent. www.iab.net Advertisers now pay to appear on blogs, mobile phone and PDA screens. Internet Advertising - Strategies:  Internet Advertising - Strategies Ads should be visually appealing. Ads must be targeted to specific groups or to individual consumers. Content should be valuable to consumers. Content needs to be brief but memorable Ads must be part of an overall marketing strategy. Ads should be seamlessly linked with the ordering process. Internet Advertising - Methods:  Internet Advertising - Methods Banner Ads Banner Swapping/Exchange Pop-up / Interstitial ads/ Splash Screen Web page sponsorship or Spot Leasing Search Engine priority / key words Editorial sponsorship Affiliate programs Linking E-mail Chat Rooms Mobile screens Banner Ads - Examples:  Banner Ads - Examples http://www.apromotionguide.com/banners.html Banner Ads - Statistics:  Banner Ads - Statistics A popular and effective means of online advertising. Small banners have grown to ‘skyscrapers’ and other larger formats. Despite their tarnished image, they still drive traffic. Examples at http://www.iab.net/standards/adunits.asp# Create brand and web site awareness. Click through rates are no longer indication of effectiveness. Generally two types - keyword banners and random banners. Often hosted by third party ad servers. Banner Swapping / Exchanges:  Banner Swapping / Exchanges Banner swapping occurs when company A agrees to display a banner of company B in exchange for company B displaying company A’s ad. - very inexpensive A can display B’s banner, but B cannot display A’s banner optimally. However, B can display C’s banner and C can display A’s banner. - Not common - Most exchanges offer a credit ratio of approximately 2:1. Ad swapping became a substantial reporting issue when public companies listed swaps as revenue. Pop-up, Splash Screens & Interstitial Ads:  Pop-up, Splash Screens & Interstitial Ads Pop-ups appear in a new browser when you visit a web site. (X-10 camera ad). Splash screens are the initial web site page to capture the user’s attention for a short period of time. http://neumann.law.firm.tripod.com/ Can lead to other sites, be informative, and/or linked. Effective at getting attention but potentially annoying. Interstitial ads fill the browser window while another page loads. Creates a captive audience. Page and Blog Sponsorship,and Search Engine Priority:  Page and Blog Sponsorship,and Search Engine Priority Sponsorship and leasing: Similar to sponsoring a television program. Do not hide sponsorship - surfers want to know up front. Permanent space on a web site is acquired for a fixed length depending on the contract terms. Advantage - ad is always there with no competition Keywords Key words trigger banners. Key word navigation: type “Barnes and Noble” in your navigation bar. Netscape assigns key words independently. RealNames powers I.E.’s keywords. Web site may receive favorable search ranking. Editorial Sponsorship - Advertorials :  Editorial Sponsorship - Advertorials Surfers reading recipes may find ‘recommended’ sources of ingredients or cooking utensils. Amazon gave priority in their ‘what we’re reading’ section to publishers who subsidized reviews. Since anyone can publish online, the line between objective writing and advertising has blurred. Affiliate program:  Host sites link to affiliate sites. Affiliates pay hosts for customers sent via the link. http://www.associateprograms.com/ http://www.sitecash.com/ http://www.simplythebest.net/affiliates/ Affiliate program Chat Rooms & E-mail:  Chat Rooms & E-mail Chat Rooms - a vendor usually sponsors a chat room. Advertising pays for the session. Ex: Message board Chat Rooms can create a sense of community. E-mail – Effective way of reach potential customers. Sensitive medium - substantial legal issues surrounding unsolicited bulk e-mail. Online Advertising Legal Issues:  Online Advertising Legal Issues 46% of all fraud complaints with the FTC were internet related. Courts will often consider commercial web sites as advertising. Internet ads are subject to the same standards as other media. A local online advertisement may attract global attention. Local, state, federal, and foreign agencies are actively patrolling the web. Intrusive advertising, such as unsolicited bulk e-mail (SPAM) invites legal trouble. Types of Advertising Claims:  Types of Advertising Claims Explicit Our product helps you lose weight. Implicit Our product reduces the cravings that cause weight gain. Reviewing an ad includes identifying claims. Basic Guidelines from the Federal Trade Commission (FTC) :  Basic Guidelines from the Federal Trade Commission (FTC) Truth In Advertising Rules: Under the Federal Trade Commission Act: Advertising must be truthful and non-deceptive; Advertisers must have evidence to back up their claims; and Advertisements cannot be unfair. States also have consumer protection laws. Source: http://www.ftc.gov/bcp/conline/pubs/buspubs/ad-faqs.htm Claim Substantiation Unfairness Deception Key Issues Put Yourself in the Mind of the Consumer:  Put Yourself in the Mind of the Consumer What is the literal meaning of the ad? What is the message that your client is trying to convey and how could it be interpreted? Deception:  Deception A deceptive advertisement contains (or omits information) that is likely to mislead reasonable consumers and is material to the consumer’s decision to purchase. Comparison makes it look like house brand is cheaper by comparing different weight products. 13.3 c / ounce Example of ‘Deceptive Advertising’:  Example of ‘Deceptive Advertising’ Virgin Atlantic Airways advertised an inexpensive transatlantic flight online. Neglected to mention a $ 38.50 tax. FTC fined Virgin $14,000. Ads must disclose full details of the offer. Claim Substantiation:  Claim Substantiation Advertiser must have a reasonable basis (objective evidence) to support its claims ‘Puffery’ that consumers would not believe communicates any claim does not require substantiation. Wonder Bread settled with the FTC after Wonder claimed that its bread could improve children’s brain functions and memory. Claim Substantiation Pitfall:  Claim Substantiation Pitfall Client advertised “biggest printer west of Boston” on their web site. Did not qualify the claim: How far west (to California?) Based on what (revenue?) As of when (recently?) Where did they get the data? Solution: asterisk next to the claim with the details at the bottom of the page. Unfairness:  Unfairness Advertisement is unfair if it causes or is likely to cause substantial consumer injury which a consumer could not reasonably avoid. (And is not outweighed by the benefit). Get rich quick schemes Work at home Multi-level marketing Advertising Landmines:  Advertising Landmines Use of superlatives (“the best,” “only from,” etc.). Can be softened into opinions / puffery. Always include necessary disclosures: Promotion start and end dates All relevant terms and conditions Multiple meanings for the same sentence: “The best computer system…from our company.” “Two items for the price of one.” Put yourself into the mind of the consumer. Certain products may be regulated (state or Fed.). Geographic scope and international rules. Capacity to ship as promise (mail order rule). Liability for typos. Danger Mines E-mail Marketing Requires Legal Restraint:  E-mail Marketing Requires Legal Restraint Federal anti-spam law superceded dozens of states’ broad anti-spam laws. www.spamlaws.com Spammers are still flooding e-mail inboxes. Use of third party e-mail data is risky: Check the reputation of the provider www.deja.com Find out how the data was gathered (where and when?) What type of ‘opt-in’ was obtained? Third Party E-mail Considerations:  Third Party E-mail Considerations Who is sending the e-mail? What is the return address? Is it the same as the site that collected the names? What kind of site collected the name? Can the address provider include opt-in data? Domain name where name was collected Date and time IP address of submitter Obtain broad and enforceable warranties and indemnifications. Spam Dispute Example:  Spam Dispute Example Agent List Aggregator / E-mail distributor Data collection company – sweepstakes page List aggregator / database marketing company Customer Customer engages agent to distribute e-mail to opt-in third parties. Recipient sues, claiming Spam Attorney Advertising:  Attorney Advertising Sample Law Firm Sites:  Sample Law Firm Sites www.crimevictimlaw.com www.shearman.com www.arentfox.com www.taxprophet.com www.wilmerhale.com www.peabodybrown.com Finding a Lawyer:  Finding a Lawyer ABA - www.aba.net Findlaw - www.findlaw.com MH – Lawyers – www.lawyers.com Lawyershop.com – www.lawyershop.com Martindale Hubble - www.martindale.com Benefits of Online Attorney Advertising:  Benefits of Online Attorney Advertising Create awareness of a firm. Save money from yellow pages. Highlight a firm’s areas of practice/newsletters. Provide visitors with biographies & resumes. Communicate with current and potential clients. Create a resource - subject matter expertise. Ongoing blogs Attorney Advertising & State Bar Associations:  Attorney Advertising & State Bar Associations States allow attorneys to advertise through public media provided that the advertisements to not contain deceptive statements or claims. May need to submit to local bar copies of web site materials and updates. Advertisements must be noted and retained for a statutory period. Recent NY law requires ‘attorney advertising’ label on web sites. Attorneys must avoid e-mail solicitations - and contacting people off of list serves, news groups or chat rooms. Choice of law issues Avoid the unauthorized practice of law Risk of Online Attorney Advertising:  Risk of Online Attorney Advertising Lawyers advertising or solicitations may lead to ethical violations and disciplinary actions. Revised rules in Massachusetts removed the requirement of labeling solicitations ‘advertising’ since it is not required of other professions. See http://www.massbar.org/news-99/0908-sjcrules.html Rule 7.2 outlines online advertising restrictions: http://www.massbar.org/rules/advertising.html Additional Risks:  Additional Risks Poorly executed site may reflect badly on the firm. Jurisdictional exposure. Disclaim attorney client relationship. Non-compliance with ethical rules. Unreasonable expectations. Do not use chat rooms to find clients. Be cautious with blogs. Jurisdiction:  Jurisdiction Jurisdiction:  Jurisdiction A court’s power to adjudicate a controversy. Defined by ‘long-arm’ statute and due process clause of constitution. Jurisdiction - History:  Jurisdiction - History 1945 - International Shoe v. Washington: defendant must maintain ‘minimum contacts’ with forum state – so long as it doesn’t offend the traditional notions of fair play and substantial justice. Due process requires fairness and justice. Ex: Out of state salesperson who does business in California. Gave courts some discretion. Jurisdiction - History (cont.):  Jurisdiction - History (cont.) 1980 - World Wide Volkswagen v. Woodson: Plaintiff buys car in N.Y. and is injured in OK. Court finds that conduct must be directed towards forum state, not merely placing a product in the stream of commerce. Specific v. General Jurisdiction:  Specific v. General Jurisdiction General jurisdiction: (Helicopteros Nacioinales de Colombia, S.A. v. Hall) Continuous and systematic contacts with the forum state. Controversy need not arise out of the defendant's activities in the state. Specific jurisdiction: (Burger King v. Rudzewics) Cause of action arises directly from defendant’s contact with the forum state. Evolution of Online Jurisdiction:  Evolution of Online Jurisdiction Early web sites were informational, online brochures. Disputes were independent of the web sites. Plaintiffs tried to use the web sites to assert jurisdiction, usually with little success - needed to show something more. Lawyers and judges were still learning about the technology. Early Conflicting Cases – Sporadic Internet Activities:  Early Conflicting Cases – Sporadic Internet Activities Web site and toll free number (Graphic Controls Corp. V. Utah Med. Prods. Inc.) (Inset Sys. V. Instruction Set, Inc.) Soliciting and maintaining a web site for future business with knowledge of in state access (Hearst Corp. V. Goldberger) (State by Humphrey v. Granite Gate Resorts) Source: Todd D. Leitstein - A Solution for Personal Jurisdiction on the Internet, 59 La. L. Rev. 565, 1999 First Rational Framework:  First Rational Framework Zippo v. Zippo.com – class discussion: Lighter Company v. Online E-mail / Content provider. 3,000 customers in PA.; 7 agreements with PA based ISPs Sliding scale of jurisdiction Doing Business/Interactivity Jurisdiction Zippo Three Prong Test :  Zippo Three Prong Test (1) The defendant must have sufficient minimum contacts with the forum state (2) The claim asserted against the defendant must arise out of those contacts (3) The exercise of jurisdiction must be reasonable Courts in the 5th, 9th, and 10th Circuits have used the Zippo sliding scale consistently – but some courts have attempted to refine the test. Expanding Zippo:  Expanding Zippo Court in Cybersell, Inc. v. Cybersell, Inc. stated while the level of interactivity was a crucial factor for jurisdiction, interactivity alone did not provide grounds for jurisdiction but instead required something more to establish minimum contacts. Something more consisted of ‘targeting’ or intentional Internet activity expressly aimed at the forum state. S. Morantz, Inc. v. Hang, using Zippo and targeting approach found that an interactive website that did not allow for online sales and was not directed at PA residents did not provide minimum contacts with PA over a NY defendant Criticism of Zippo – Millennium Enterprises case:  Criticism of Zippo – Millennium Enterprises case Millennium Enterprises, Inc. v. Millennium Music – class discussion: P: 2 Stores in Oregon. D: Retail sales: $2,180,000. Online: $225. Contacts with forum: 1/2% of inventory purchases from Oregon. 1 online sale to customer in Oregon. Continuous and systematic or purposeful availment? Interactive Plus..:  Interactive Plus.. Millennium Enterprises, Inc. v. Millennium Music: Relatively interactive site capable of doing business. One sale does not constitute repeated contacts or doing business. Doing Business/Interactivity Jurisdiction Deliberate action is also required The “Effects” Test:  The “Effects” Test An alternative to the Zippo sliding scale test is the effects based approach. Courts focus their analysis on the actual effects that a website had in a particular jurisdiction and do not focus on the technology used. Effects test orginated in Calder v. Shirely Jones, in which a CA entertainer sued a FL publisher for libel. Effect test has been applied in Blumenthal v. Drudge and Pavolich v. DVD Copy Control Assn. Jurisdictional Disclaimer:  Jurisdictional Disclaimer Decker v. Circus Circus: Highly interactive web site. Does business in New Jersey Contains a specific forum selection clause. New Jersey District Court refuses to assert jurisdiction. Online Defamation can Lead to a Distant Courtroom:  Online Defamation can Lead to a Distant Courtroom Bochan v. LaFontaine: Newsgroup flaming war becomes a libel case. Texas based couple is dragged into VA court since their ISP (AOL) was in VA. Court asserts jurisdiction over New Mexico defendant based on web site despite jurisdictional disclaimer and no sales to VA. Defendant also posted ads on newsgroups. Other Aggressive States:  Other Aggressive States Minnesota Attorney General had posted: "...(p)ersons outside of Minnesota who transmit information via the Internet knowing that information will be disseminated in Minnesota are subject to jurisdiction in Minnesota courts for violations of state criminal and civil laws.” http://www.state.mn.us. International Jurisdiction:  International Jurisdiction Foreign companies endeavor to avoid U.S. jurisdiction. International forum shopping. (Filetech S.A. v. France Telecom). E.U. – Council of Brussels Regulation states that a consumer may sue in his or her domicile if the contract concluded with a person ‘who pursues commercial activities in the Member State of the Consumer’s domicile […] by any means.’ International Jurisdiction cont.:  International Jurisdiction cont. EU discussion - should consumers be able to sue in their local courts? How would a similar law in the US impact e-commerce? U.S. court was hesitant to assert international jurisdiction - www.Beaniebabiesuk.com (Ty, Inc. v. Max Clark) The Web is Still US Centric - For now...:  The Web is Still US Centric - For now... Registrars by Country http://www.nw.com/zone/WWW/dist-bynum.html United States Case Discussion: Yahoo Auction:  Case Discussion: Yahoo Auction Should a French court dictate the content of a U.S. based online auction? Could Yahoo block French access to Nazi memorabilia? How did Yahoo resolve the dispute? Would you have taken a different approach? Are international web sites governed by the lowest common denominator? Protective Measures:  Protective Measures Realistic measures: Web site forum selection / choice of law clause within terms and conditions of use. Purchase adequate insurance for distant risks. Other approaches: Limit degree of interactivity on web site. Limit geography of sales and / or access. You are probably breaking some distant law Questions & Answers :  Questions & Answers

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