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.

Soy milk. Almond milk. Coconut milk. With the increase in health-conscious shopping and non-dairy diets, these terms and others have become household names.

But the Food & Drug Administration (“FDA”) recently suggested these products don’t constitute milk at all, since they do not come from animals. According to multiple sources, during the Politico Pro Summit in July, the FDA Commissioner commented that the FDA is probably not currently enforcing its “standard of identify” for milk considering the FDA defines “milk” by referencing the milking of cows.

Manufacturers and sellers of non-dairy products currently advertised and labeled as “milk” should keep watch on whether the FDA issues guidance on this issue or decides to strictly enforce its current definition of “milk.” If it does, the marketing for these products may drastically change.

When a trademark owner/licensor files for bankruptcy, there is an open question as to whether the licensee of the trademark can legally continue use of the mark or whether the trademark owner/licensor can reject its obligations under the licensing agreement and effectively prohibit the licensee’s continued use of the mark.  When it comes to the licensing of patents and copyrights, the question is already closed: Congress created an exception in U.S. bankruptcy law that allows licensees of such intellectual property to retain their rights even after a licensing agreement has been rejected by the intellectual property owner who has filed for bankruptcy.  However, whether purposely or not, Congress did not mention trademarks in the exception, thereby leading to the current question.

The U.S. Supreme Court is currently considering whether to grant certiorari in a case that would answer this question and resolve a circuit-split on the issue.  That case is Mission Products Holdings, Inc. v. Tempnology, LLC N/K/A Old Cold LLC, which was decided by the First Circuit early this year in favor of the trademark licensor, Tempnology.  The First Circuit held that Tempnology’s rejection of its licensing agreement with Mission Products Holdings caused the latter to lose its trademark rights under the parties’ agreement in light of Tempnology’s bankruptcy.  Now Mission Products Holdings, Inc., the trademark licensee, has filed a petition seeking review by the Supreme Court and a ruling that a trademark licensee’s rights to use a trademark cannot be revoked upon the trademark owner/licensor filing for bankruptcy.

The International Trademark Association (INTA) has already filed an amicus brief asking that the Supreme Court take the case and resolve the dispute in favor of trademark licensees, who make significant investments in their businesses using the licensed marks.  According to INTA’s brief, trademarks “are the most widely used form of registered intellectual property” and a ruling in favor of trademark licensees “enhances the value of trademark licenses and promotes the stability of the trademark system.”  Tempnology’s response to Mission Product Holdings’ petition is due in early September, and the case is set for conference in late September, after which the justices may decide to hear the case (or not).

The FTC has amended its Jewelry Guides (formally, the “Guides for the Jewelry, Precious Metals, and Pewter Industries”) which aim to help prevent deception in jewelry marketing by providing clear standards.

The Jewelry Guides, like other industry guides published by the FTC, are intended to help marketers understand their responsibilities with respect to avoiding consumer deception.  The Guides themselves are not binding law, but instead offer the FTC’s interpretation of how Section 5 of the FTC Act applies to certain practices within the industry.

For those in the jewelry industry, the issuance of these changes suggests it may be a good time for a compliance check.  Some noteworthy changes include:

  1. No more thresholds for describing alloys as “gold” or “silver.”

Under the old Guides, marketers were prohibited from using the terms “gold” and “silver” to describe a product made of a gold or silver alloy (combination of gold or silver and one or more other precious metals) unless the ratio of gold/silver to other metals met certain minimum thresholds.

The revisions eliminate these requirements.  From now on, any gold alloy may be marketed as “gold” as long as the marketing contains “an equally conspicuous, accurate karat fineness disclosure.”  The same goes for silver alloys as long as the marketing contains a conspicuous and accurate disclosure of the parts-per-thousand measurement.

  1. New requirements for describing silver- and platinum-coated products.

A preexisting rule advises against using the term “gold” to describe a product that is merely gold-coated.  The revised Guides extend this rule to silver and platinum products.

  1. New rule prohibiting the use of incorrect varietal names to describe gemstones.

The FTC now expressly prohibits the use of incorrect varietal names like “yellow emerald” or “green amethyst” to describe gemstones.  Instead, marketers should use scientifically-correct terms like “heliodor” and “prasiolite.”

  1. Relaxed rules for lab-grown diamonds and gemstones.

The revisions make several changes to the rules for marketing lab-grown diamonds and gemstones.  For the most part, these changes benefit the lab-grown sector.  For instance, the FTC now cautions marketers not to use the terms “real, genuine, natural, or synthetic” to imply that a lab-grown diamond “is not, in fact, an actual diamond.”

The Guides still prohibit the use of terms like “real” and “natural” to describe lab-grown diamonds and gemstones, but the FTC indicated that it might be willing to reconsider this position.

When evaluating how to address what you believe constitutes infringement, false advertising, or unfair competition, the decision to send a cease and desist letter or to file a lawsuit becomes an important one.  Is there a right approach in each instance?  No.  There are pros and cons to each and, in a typical lawyer answer, the best approach “depends.”

On the one hand, sending a cease and desist letter has the potential of resolving the issue outside of court, with fewer legal fees and on a quicker timeline.  It also has the effect of placing the other party on notice of your claim and allowing you to make an argument for willfulness down the road (if the party continues the conduct despite the allegations).

On the other hand, filing a lawsuit shows the seriousness of the allegations and preserves your choice of venue—i.e. which court you want to be in.  Sending a cease and desist letter first would let the other party know that there is a potential of a lawsuit, which would allow that party to file a declaratory judgment action in its own choice of venue before you have the chance to do so.  As a reminder, under the Declaratory Judgment Act, a party who has been accused of illegal conduct like infringement, false advertising, or unfair competition can affirmatively file suit and ask that a court declare its conduct lawful.

Deciding which approach to take will depend on the situation and any prior history with the alleged infringer or advertiser.  Make sure to weigh all of your options and discuss with your legal counsel if necessary.

We do it all the time, but is it legal? Maybe. Maybe not.

Embedding content from one source, e.g., a website, into another source, e.g., another website, is not uncommon. News sites embed photographs from Instagram, twitter messages, and videos into their content. Businesses embed videos and photographs of their products into their websites. Embedding also occurs when we post a link from a website into our social media accounts. For instance, after copying and pasting a website link into a social media post, an embedded version of the website automatically generates. This auto embedding typically consists of the formation of a small box or window which may include a reference to the website, an article name or title, and/or an image or video from the website. But is such use of embedded content copyright infringement?

Under the Copyright Act, the owner of a copyright has the exclusive right to “perform…. [or] display the copyrighted work publicly.” 17 U.S.C. §§ 106(4)-(6). Under the act, to” perform or display a work publicly” includes “to transmit or otherwise communicate a performance or display of the work… to the public, by means of any device or process.” 17 U.S.C. § 101. The Act further defines “display” as “to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process.” Id.

In Perfect 10 v. Google the Ninth Circuit established the “server test.” In this 2007 decision, it was held that Google’s presentation of images in its search results via in-line linking did not infringe another’s copyrights because Google did not make a copy or store a copy of the image on its servers. That is, the court found that Google wasn’t displaying a “copy.” For many, this settled the issue: as long as the content was hosted on third-party servers, an in-line or embedded link showing the same content elsewhere would not infringe. But in the last several months, something unexpected happened.

Two district courts recently rejected the holding in Perfect 10 to the extent it required actual possession (e.g., a copy on the accused infringer’s server) as a prerequisite for infringement because neither could find any such requirement in the express language of the Copyright act.

First, the Northern District of Texas held that when one website displays content from another’s website through embedding, it can publicly display copyrighted works of another “by ‘showing a copy’ of the works via a ‘process’” in violation of the Copyright Act. In effect, the court held, this was a live stream of another’s copyrighted content and no different than if a movie goer live streamed a movie via the internet to the public – actions that clearly constitute infringement even if the infringer does not possess a copy. Next, the Southern District of New York similarly held that embedding content into a website such that it displays content from another source could violate a copyright holder’s display rights, even if the website’s server did not store a copy of the work.

Thus, the law on embedded content may not yet be as settled as some believed. Of course, there are always defenses to copyright infringement to consider, like fair use. In the meantime, however, it may be wise to think twice before posting embedded content.

Yesterday the United States Supreme Court announced that it was granting the petition for writ of certiorari in the copyright infringement case previously discussed on this blog here and here.  The case is Fourth Estate Public Benefit Corp. v. Wall-Street.com LLC and involves the question of when a copyright holder can properly file a copyright infringement lawsuit.

34126235 - copyrightCurrently there is a circuit-split as to whether the term “registration” as used in the Copyright Act includes the mere filing of a registration application or whether it requires that the Copyright Office have actually approved or denied the registration application.  The plaintiff in the case, Fourth Estate Public Benefit Corp., filed suit before the Copyright Office had approved or denied its application, and the Eleventh Circuit affirmed the lower court’s dismissal of its complaint on that basis.  The United States Solicitor General, who the Supreme Court invited to weigh in earlier this year, urged the Court to take the case and uphold the Eleventh Circuit’s position.

The Supreme Court is now poised to resolve the dispute and to give copyright holders clarity as to whether they may file suit merely after filing an application for a copyright registration.

Justice Anthony Kennedy of the United States Supreme Court announced his retirement yesterday, after having served three decades on the bench.  Justice Kennedy is known for casting the swing vote in a number of major cases and has drafted opinions on a myriad of hotly-contested issues, including LGBT rights and the First Amendment.  His retirement places President Trump in a position to select a conservative justice that will shift the ideological balance of the Court for years to come.

How this will impact future rulings in advertising, trademark, and other intellectual property cases remains to be seen, but we can certainly expect a more conservative slant from the bench going forward.

Today we welcome Brian Tu, a leader in the fast-paced and complex space formed at the intersection of technology, media and finance. Brian has worked with some of the most prominent—and interesting—media technology companies in Silicon Valley, helping them find ways to turn pageviews into dollars. He was the Head of Revenue Operations at Medium.com, a Senior Vice President of Revenue Strategy and Operations at DEFY Media, and has held similar positions with Break Media and America Online.

Brian Tu, Digital Media Industry Leader1. How did you get started in the digital media industry?

I’ve always been interested in the intersection of media and technology and particularly fascinated with the ability of technology to connect people and promote the sharing of ideas and information. I remember being one of the first of my friends and family to have an email address with CompuServe and America Online, back when a 14.4k modem was still a big deal. When I graduated from the University of California, Santa Barbara in 1999, I leveraged all of my personal connections to get a job in the nascent tech industry in Northern California. I landed an entry-level sales coordinator position with AOL right after I graduated, which was the perfect entrée for me into digital media. AOL was a real powerhouse and was poised right at the intersection of traditional media and technology and I’m profoundly grateful for the experience, opportunities, and friendships I gained while working there.

2. What do you see as the most interesting or impactful change in the digital media industry since you started with AOL in 1999?

The monetary life cycle of digital media has come full circle. In the early years, users paid for content on places like AOL and CompuServe. Then, as digital media exploded along with the proliferation of smartphones and tablets, the financial model shifted to an ad-supported system . Users became accustomed to free content—they would pay for the technology and Internet access, but not content. The problem, though, is that free content has eroded the quality of content in general. And, of course, the need for free content has caused content providers to look for other sources of revenue—advertisements and harvesting information from users. Certainly this has contributed to the firestorms surrounding “fake news” and the sale of user data to analytics firms. Now, there is a growing backlash against these practices and a concomitant growth in subscription models for high-quality content providers. Users are reembracing the old adage that, “You get what you pay for.” Publishers are realizing that a purely ad-supported model may not be the best model, and consumers are realizing they are willing to pay for better quality.

3. Do you see any potential for significant disruption in the digital media industry over the next several years?

Yes. People are becoming increasingly educated to the fact that their personal data—how they use the Internet, what they are reading and watching, what sites and pages they visit, all the data about how they consume the Internet—is being harvested, packaged and sold, and that this information is one of the most significant components of value in the digital ecosystem. People have come to realize that they are essentially selling their personal data in exchange for free content. This has enormous potential to change how people use the Internet.

Also, there is potential for disruption and growth in that a few major players control a vastly disproportionate share of the revenue from digital advertising. Some people would tell you, and I think this is reasonably accurate, that the two largest sellers of digital advertising receive roughly 85% of all digital media dollars spent. Everyone else is fighting for the remaining 15%, and of course the digital media market continues to swell as more and more consumers have access to the Internet.

4. What changes to your industry do you see happening over the next 10 years?

I think digital media publishers are going to be smarter about how they work with some social media platforms. For a long time, those platforms have been able to convince publishers to provide free access to the publisher’s content, primarily through links or embedded stories and videos. I expect that publishers are going to push back on this. And I think that people are going to be much smarter about how they share their data or allow it to be used.

5. Does the digital media industry need more, less, or better regulation?

We should expect changes to the regulations governing how data is collected and used by publishers and other websites. Frankly, in the advertising industry, everyone already knew about the widespread practice of harvesting data to provide advertising targeted to specific consumers. That’s been happening in digital media forever. Now, however, recent events have really opened the public’s eyes to how organizations use their data. We’re probably only scratching the surface as to what companies are doing with data—right now consumers really have to work hard to find out how a company is collecting and sharing their data. Usually these disclosures and settings are buried inside account setting pages or the end user license agreements. I would not be surprised to see regulation that increases transparency or requires more robust disclosures from websites that are collecting data.

6. How will the need for consumer privacy and data protection (and the massive legal exposure arising from data breaches) shape future business models?

I think we will see a ripple effect as consumer privacy issues spread to other industries. Right now, the focus seems to be on digital media and the use of analytics and targeted advertising. This may open people’s eyes towards how other industries such as finance and banking are collecting information. Digital media advertising is usually focused on immediate data collection, where ads are targeted to the consumer while they are actually browsing online. But many traditional industries are still collecting data, using it for slower-response advertising, and re-selling it to other companies.

Eric A. Bevan is an attorney with the law firm of Fox Rothschild LLP and a member of the firm’s Litigation, Financial Services Industry, Fiduciary Litigation, Construction and Government Contracts practice groups. He represents clients in the resolution and litigation of complex commercial disputes, including federal and state court litigation as well as alternative dispute resolution methods such as private arbitration and mediation. You can contact Eric at 561-804-4470 or ebevan@foxrothschild.com.

The FTC filed a lawsuit earlier this month in the U.S. District Court for the District of Utah charging telemarketers with violating the FTC Act and the Telemarketing Sales Rule.  The FTC alleges that defendants deceptively claimed their “business coaching” would help consumers earn thousands of dollars a month by starting a home-based Internet business.

According to the complaint, the defendants’ telemarketing operation relied on “leads” supplied by other companies.  Typically, these were consumers who had purchased some work-from-home-related product or service online for less than $100. For a fee or a percentage of defendants’ sales, the company that sold the product or service would encourage the buyer to contact an “expert consultant” or “specialist” to see if they qualify for an “advanced” coaching program.  However, when the consumer called to speak to a “specialist” they were merely routed to defendants’ telemarketers.

According to the lawsuit, the defendants then charged consumers up to $13,995 for their purported business coaching program, which merely provided information that was already freely available on the Internet.  Ultimately, most people who bought the service did not develop a functioning business, earned little or no money, and ended up deeply in debt.