General Advertising Industry News & Updates

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SCOTUS has finally resolved the copyright registration debate but in doing so has emphasized a statute of limitations issue of which we should all be aware. This post follows up on my colleague’s prior posts (and here) regarding when a copyright holder can properly file a copyright infringement lawsuit.

Pursuant to 17 U.S.C. § 411(a), “no civil action for infringement of the copyright in any United States work shall be instituted until…. registration of the copyright claim has been made in accordance with this title.” As previously noted, some circuits have adopted a “registration approach,” which interprets the statute to mean a plaintiff must have a registration of their copyright before they can bring suit. Other circuits have adopted the “application approach,” holding that simply applying for and pursuing a copyright registration is all that is required to maintain a suit for infringement.

This circuit split was recently resolved by the Supreme Court, which adopted the registration approach. “[R]egistration occurs, and a copyright claimant may commence an infringement suit, when the Copyright Office registers a copyright.” However, because an author gains its exclusive copyright rights immediately upon the work’s creation, SCOTUS clarified that “[u]pon registration of the copyright… a copyright owner can recover for infringement that occurred both before and after registration.” Notably, any recovery is still also dependent upon other factors such as when publication occurred, fair use, etc.

The Court acknowledged the time for registration has increased from one to two weeks in 1956 to several months today, due in large part to staffing and budgetary shortages. Because of the long wait to obtain registration, the petitioner, Fourth Estate, raised the concern that under the registration approach a copyright owner may lose the ability to enforce her rights if the Copyright Act’s three-year statute of limitations runs out before the Copyright Office acts on her application for registration. The Court dismissed petitioner’s fear as “overstated” because the “average processing time for registration applications is currently seven months, leaving ample time to sue after the Register’s decision, even for infringement that began before submission of an application.”

This raises an interesting and rare, if not novel, issue. By requiring a potential claimant to apply for and obtain a registration on their copyright before filing suit, the statute of limitations is, in essence, substantially shortened. That is, a copyright owner cannot wait until the end of the statute of limitations period to act. If she intends to sue, she must file an application for registration months before the statute of limitations expires. Moreover, even if the applicant acts diligently and submits their application months in advance, registration is entirely dependent upon a third party, the Copyright Office. Accordingly, the statute of limitations could pass before registration occurs through no fault or want of diligence on the copyright owner’s part. Because further budgetary shortages are entirely possible, if not likely, this problem is only likely to grow.

In recent years, the FTC has ramped up efforts to deter deceptive marketing practices on social media and customer review websites by issuing guidelines that apply to marketers and influencers alike and instituting enforcement actions against the guidelines’ most blatant violators.  These actions have largely placed the onus on brands and companies to ensure that any material relationships with influencers and reviewers who endorse or recommend their products or services are clearly disclosed, even if that means monitoring influencers’ social media accounts and review websites to confirm that all necessary disclosures have, in fact, been made.

Just this month, the FTC approved final settlements in enforcement actions against a PR company and a publisher in relation to a media campaign which used the mosquito-borne Zika virus outbreak and the 2016 Summer Olympics in Brazil to promote a mosquito repellant product.  According to the complaint, the companies hired athletes to promote the mosquito repellant on Instagram and other social media platforms.  The athletes’ social media posts failed to disclose that they were paid for their endorsements, and the companies themselves reposted many of the endorsements, again without any disclosure.  The complaint also alleged that the companies reimbursed employees and “friends” for posting positive reviews on ecommerce websites like Walmart.com.  According to the FTC, these practices constitute unlawful unfair or deceptive acts or practices.

The case highlights the FTC’s continuing interest in deterring deceptive marketing practices on social media by aggressively pursuing brands and companies that fail to ensure compliance with FTC guidelines.  Companies engaged in social media marketing can protect themselves by reviewing the FTC’s Endorsement Guides, which provide guidance for marketers and influencers alike.  Some takeaway points include:

  • Material connections must be disclosed.  Any “material connection” between an endorser and an advertiser must be disclosed unless it is already clear from the context of the communication.  A “material connection” is one that might affect the weight or credibility that consumers give the endorsement.  This could be a business or family relationship, a monetary payment, or the gift of a free product.
  • Disclosures must appear clearly across all devices and platforms.  Disclosures must be clear and prominent regardless of the device or platform that a consumer uses to view the post.  Understanding how consumers interact with posts differently depending on these variables is important because what works in one context might not in another.  For example, consumers viewing Instagram posts on mobile devices typically see only the first three lines of a longer caption unless they click “more,” which many users do not do.  As a result, any material connections must be disclosed above the “more” button.
  • Use plain, straightforward language.  The language used must also Disclosures are not effective unless they communicate the nature and existence of the material connection to reasonable consumers.  As such, disclosures should be in plain language that is as straightforward as possible.  Acceptable terms include “Ad,” “Advertisement,” “Paid Advertisement,” and “Sponsored Advertising Content.”  Commonly used terms that do not satisfy FTC guidelines include “#sp,” “Thanks [Brand],” and “#partner.”

Much like the sphere they are meant to regulate, the FTC’s rules for social media endorsements are still evolving.  Companies can protect themselves by keeping informed of changes to the Enforcement Guides and by regularly auditing their social media practices.

The United States Patent and Trademark Office (“USPTO”) approved Campbell Soup Company’s (“Campbell’s”) application to trademark the word “chunky.”  Campbell’s filed an application with the USPTO back in May 2018.  In its application, Campbell’s cited to “massive unsolicited media coverage of chunky,” according to the Philadelphia Business Journal.  The word “chunky” has been parodied by pop culture on various outlets, including programs like Saturday Night Live, The Simpsons, Family Guy, and The Daily Show.  Campbell’s has also maintained a twenty-year partnership with the NFL.

According to the Philadelphia Business Journal, Campbell’s said the “chunky” trademark will be limited to connection with soups.  Using “chunky” in connection with other types of food will not be an issue.  “’Non-prominent, descriptive’ uses of the word — like ‘chunky-style’ — that aren’t a trademark or brand name also pose no issues.”  Campbell’s first used the word “chunky” back in 1969.  Since that time, Campbell’s said it has spent more than $1 billion in advertising soup products under the word “chunky.”  About 75 percent of consumers associate “chunky” with Campbell’s.

From beer to snacks to cars to tech, we love them all. Or, we love judging them all. Each year, we tune in to see which companies—both the old staples and the new blood—will shell out the cash for a Super Bowl ad.

Top 10 IllustrationThroughout breaks in the game (or cheating with an online search), we intently watch for laugh-out-loud quips, emotional storylines, and cringe-worthy moments, knowing “which was your favorite?” will be an office topic of conversation the following morning. There are things we anticipate (cute animals promoting products having nothing to do with animals), and things we don’t (our favorite celebs feeling like sell-outs). But that’s all part of keeping us entertained. And keeping us guessing.

Whether the advertisers ultimately yield a return on their investment matters none to we consumers who have come to expect—even demand—high-quality and creative commercials we love to hate every other day of the year. This is advertising at its finest. Particularly when the game itself is, well, rather boring.

 

Earlier this month, the U.S. Supreme Court refused to review a California court’s dismissal of actress Olivia de Havilland’s lawsuit against FX Networks.  The decision sustains First Amendment protection to expressive works and free speech rights of the creators.

De Havilland had accused FX of violating her right of publicity and depicting her in a false light in the FX miniseries “Feud: Bette and Joan.”  She claimed that actress Catherine Zeta-Jones’s portrayal of De Havilland created “a public impression that she was a hypocrite, selling gossip in order to promote herself at the Academy Awards, criticizing fellow actors, using vulgarity and cheap language with others.”  De Havilland also alleged that FX’s “misappropriation” caused her harm, and she sought a permanent injunction restraining FX “from continuing to infringe [her] right of publicity.”

A California trial court initially concluded that De Havilland had met her burden on her right of publicity and false light claims.  This decision was later reversed by a California Court of Appeal, which concluded that these types of claims were precluded by the First Amendment.  De Havilland petitioned both the California Supreme Court and the U.S. Supreme Court.  Both courts refused to review the decision.

One of our Fox Rothschild partners, Lincoln Bandlow, was featured in a Daily Journal article about this decision.  Bandlow told the Daily Journal that had the trial court’s decision been upheld, “it would have had a severe creative chilling effect.”  The California Court of Appeal decision was “one of the best First Amendment decisions on rights of publicity out there,” according to Bandlow.

Read the California Court of Appeal’s full decision here.

Nothing is as it seems. I previously blogged about the marketing of non-dairy products as “milk” – now it’s meat’s turn.  According to a recent article in the Star Tribune, multiple states are either already regulating or considering regulating use of the term “meat” on product labels.

As explained in the article, supporters of a potential regulation in Nebraska, a large producer of meat products, believe the measure is necessary to protect consumers from being misled and to promote truth in advertising. The concern is that consumers making purchasing decisions may be unable to distinguish between farm-grown meat products and lab-grown products labeled as “meat.”  According to a Food Safety News article, the proposed 10-page bill would amend the Nebraska Deceptive Trade Act to make it illegal or advertise or label any insect-based, plant-based, or lab-grown food product as “meat.”

Again, nothing is at it seems.  As lab-grown food products increase in volume and popularity, we are likely to consider to see proposals and regulations like these.

The Second Circuit Court of Appeals returned a favorable ruling for major record companies in a copyright infringement case on December 12, 2018.  The ruling came down in Capitol Records, LLC v. ReDigi Inc., a lawsuit involving an online platform (“ReDigi”) designed to enable the lawful resale of purchased digital music files.  The Second Circuit concluded that ReDigi infringed the record companies’ exclusive rights under Section 106 of the Copyright Act.

ReDigi is an online platform created to enable the lawful resale of lawfully purchased digital music under the first sale doctrine.  ReDigi hosts a space online that allows users, who lawfully purchased files from iTunes, to resale those same files online.  In order to resale the files, the user who owns the digital music must first download and install ReDigi’s Music Manager software program (“Music Manager”).  After installation, Music Manager analyzes the digital file intended for resale, verifies that the file was originally lawfully purchased from iTunes, and scans it for indications of tampering.  If the file was lawfully purchased, Music Manger considers it an eligible file that may be resold.  Once the file has been verified, the user transfers the eligible file to ReDigi’s server.  While the file is being transferred, ReDigi breaks the music into small blocks of data, creates a temporary copy of each block, and then sends a command to delete the block of data of the digital file from permanent storage on the initial user’s device.

ReDigi tries to guard against a user’s retention of duplicate digital music files after they are sold through ReDigi by continuing to search the user’s connected device for duplicate.  Major record companies pointed out that ReDigi’s protections do not prevent the retention of duplicates after resale through ReDigi.  According to the record companies, prior to resale, a user could retain duplicates of the digital music file on devices not linked to the computer that hosts Music Manager, and access those duplicates post-resale.  ReDigi’s efforts were not sufficient to prevent the user from retaining sold files.

The US District for the Southern District of New York concluded that ReDigi’s online platform infringed the record companies’ copyrights by unauthorized reproduction and distribution of copyrighted works.  In June 2016, the district court entered a stipulated judgment awarding damages to the record companies for $3.5 million and permanently enjoining ReDigi from operating their online platform.  ReDigi appealed the judgment, but the Second Circuit affirmed the district court’s decision.

In its decision, the Second Circuit found that ReDigi’s temporary copy of the digital file created a new phonorecord which was an unauthorized reproduction.  The Court also found that the making of the reproduction was not a fair use under Section 107 of the Copyright Act where the creators made no change to the copyrighted sound recordings, the system made identical copies of the whole of the recordings, and the reproductions were made for the purpose of resale in competition with the record companies.  The Court made no decision whether ReDigi also infringed the record companies’ exclusive rights under Section 106(3) to distribute their works.

Earlier this month, the European Court of Justice ruled that the taste of a food product is not eligible for protection under EU copyright laws.

The ruling by European Union’s highest legal authority, which is binding on all EU member states, came in a lawsuit brought by the Dutch manufacturer of a popular spreadable cheese dip in which the manufacturer accused a rival company of copyright infringement after it began producing a similar product.

The Court explained that to be eligible for copyright protection, the subject matter must be expressed “in a manner which makes it identifiable with sufficient precision and objectivity.”  Unlike works of literature, art, or music, which offer “a precise and objective expression,” a food’s taste “is identified primarily on the basis of subjective sensations and experiences which depend on factors particular to the subject person, such as age, food preferences and consumption habits, as well as on the environment or context in which the food is consumed.”

The Court also noted a lack of any technical means for precisely and objectively identifying the taste of a food product which enables it to be distinguished from other tastes.

This post is authored by Fox Rothschild associate Paul Fling:

Met with widespread support, the Music Modernization Act was signed into law on October 11, 2018. The Music Modernization Act (“MMA”) largely came about as a reaction to music streaming services’ domination of the music consumer market. In fact, streaming services such as Spotify and Pandora have more than doubled in revenue since 2015. As a result, a new system for distributing royalties was sorely needed.

So what does the MMA do? Generally, the MMA will set up a new, and (hopefully) more efficient way of paying mechanical royalties to songwriters when a musical composition is reproduced. Prior to the MMA, no central database or organization existed to facilitate music services filing for and obtaining a mechanical license to use a particular song. Because the growth of streaming services has led to a drastic increase in entities seeking mechanical licenses, the pre-MMA system no longer met the needs of songwriters/owners and streaming services alike. Essentially, services claim it is too difficult to find and pay the correct author for every song, while song owners claim services use such an excuse to avoid paying royalties.

To address these issues the MMA will set up a centralized entity to collect royalties and distribute them to the proper songwriter or owner. This group, for the time being, is called the Mechanical Licensing Collective. To participate in this system, digital services will pay the MLC and receive a blanket license allowing them to use any song without threat of infringement. In turn, the MLC will then seek to find the proper owner of songs that are played and pay those owners in accordance with the volume services have used the owner’s song.

Ultimately, musicians and music consumer services are hoping the MMA succeeds in creating an efficient and fair way of providing mechanical licenses and distributing royalties to the proper owners.

You can read the act in its entirety here.

The General Data Protection Regulation, or GDPR, took effect May 25, 2018. As predicted, the GDPR has complicated access to WHOIS information (commonly used to look up the contact information for website domains for, among other things, stopping others from infringing IP rights) and given ICANN (the corporation that manages WHOIS data) a headache.

ICANN (Internet Corporation for Assigned Names and Numbers) continues to struggle to identify a proposal that bridges the gap between the requirements of the GDPR and access to WHOIS information. On the day the GDPR took effect, ICANN passed a Temporary Specification, which attempted to facilitate GDPR compliance while also preserving parts of the WHOIS system of domain name registration data. This temporary guideline states the registrar and registry operator must provide reasonable access to personal registration data to third parties for: (1) legitimate interests, except where those interests are overridden by the interests or fundamental rights and freedoms of the registrants or (2) when the specified request is deemed lawful by the European Data Protection Board (EDPB), a court having jurisdiction, or applicable legislation or regulation.

First, these temporary specifications have not prevented the brand enforcement problems I previously discussed. For example, some European domain name service registrars have decided to no longer collect WHOIS information. Furthermore, Brian Winterfeldt has reported that a California-based registrar has declined a data access request related to a specific enforcement effort of intellectual property rights and that other registrars are responding to such requests on a “case-by-case basis with no transparent or predictable criteria.” More alarming is the report that at least one global company has estimated its ability to enforce trademark rights against infringing domains may drop 24%.

Second, the EDPB still has problems with ICANN’s proposal. On July 5, 2018, the EDPB urged ICANN to develop new legal justifications for why it asks for the data that makes up the WHOIS database and provided further guidance in developing a GDPR-compliant WHOIS model. ICANN appears to be taking the EDPB’s guidance to heart and is hopeful they can create a GDPR-compliant-model that satisfies their purpose of providing WHOIS data to those who need it.

Unfortunately, only time will tell if a GDPR-compliant WHOIS database will emerge. In the meantime, it has become more difficult to determine who is in charge of websites infringing on intellectual property rights making brand enforcement more challenging.