Do you work with start-up companies and need a basic understanding of the various intellectual property issues that can arise?

I will be co-presenting in this online seminar that will help you:

  • understand the trademark and copyright problems your client may encounter with branding;
  • learn how to protect your client’s branding once established;
  • familiarize your practice with patents, including what they protect, timing, and strategies to prevent inadvertent loss of patent rights before filing the application;
  • understand trade secrets and the importance of non-disclosure and confidentiality agreements;
  • recognize intellectual property issues relating to technology, including open source code and the cloud;
  • establish a proactive approach toward intellectual property ownership between cofounders, employees, and vendors; understand business names, domain names, promotional issues, and website content concerns.

The program qualifies for 1.5 hours MCLE credit.

I would like to personally invite you to attend the upcoming Law Ed program titled, “Identifying Intellectual Property Issues in Start-Ups,” which I will be co-presenting via live webcast on Tuesday, May 27th.

Presented by the ISBA Business Advice and Financial Planning Section

Co-Sponsored by the ISBA Intellectual Property Section

Online marketing continues to evolve and affiliate marketing can be a great method of building brand awareness. Online marketers need to stay ahead of legal and regulatory compliance trends. This article looks at recent Federal Trade Commission (“FTC,” “Commission,” or “agency”) activity that impacts online marketing.

Given the lack of a comprehensive federal regulatory scheme, and the increasing awareness of deceptive marketing practices, it is not surprising that the FTC has ramped up enforcement efforts against entities not covered by existing, industry-specific federal regulations over the last decade. Notably, one company has defended itself against the FTC by challenging the FTC’s authority to pursue such broad enforcement.

Jurisdiction

The widely-watched case of FTC v. Wyndham Worldwide Corp is not just about Cybersecurity.

The Federal Trade Commission (FTC) has just won the first major round of its fight with Wyndham Hotels over data security. However, the importance of the case has more to do with the FTC’s jurisdiction, challenged when Wyndham moved to dismiss the FTC’s case. Affirming the FTC’s broad jurisdiction, the federal judge overseeing the controversy noted that the case highlights “a variety of thorny legal issues that Congress and the courts will continue to grapple with for the foreseeable future.”

Affiliate Marketing: A Roadmap for Compliance: Text Message Marketing

The Commission is cracking down on affiliate marketers that allegedly bombard consumers with unwanted text messages in an effort to steer these consumers towards deceptive websites falsely promising “free” gift cards.

For example, in eight different complaints filed in courts around the United States, the FTC charged 29 defendants with collectively sending more than 180 million unwanted text messages to consumers, many of whom had to pay for receiving the texts. The messages promised consumers free gifts or prizes, including gift cards worth $1,000 to major retailers such as Best Buy, Walmart and Target.

By now, many in the Affiliate Marketing industry are familiar with the Legacy Learning Systems case. In March, 2011 the FTC settled charges against Legacy — which sells instructional DVDs — that Legacy represented, directly or indirectly, expressly or by implication, reviews of their products were endorsements reflecting the opinions of ordinary consumers or independent reviewers, when many of the favorable endorsements were posted by affiliate marketers who received a commission from Legacy for sales they generated.

Regardless of the form of affiliate marketing – email campaigns or text message campaigns – there are a couple key take-aways here.

First, identify and disclose a material connection between a product user or endorser and any other party involved in promoting the product. A “material connection” is a relationship that affects the credibility of an endorsement and wouldn’t be reasonably expected by consumers. See our article about complying with the endorsement guides here.

Second, set up and maintain a system to monitor and review affiliates’ representations and disclosures to ensure compliance. For example, Legacy looked at its top 50 revenue-generating affiliates at least once a month, visiting their sites to review their representations and disclosures. It has to be done in a way designed not to disclose to the affiliates that they’re being monitored.

Third, understand he requirements for conducting legally-compliant text message marketing. The Telephone Consumer Protection Act (TCPA) makes it unlawful to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice … to any telephone number assigned to a . . . cellular telephone service … or any service for which the called party is charged for the call. The prohibition on calls to cell phones applies to text messaging.

Over the last few years privacy, and the lack of comprehensive protection, have made numerous headlines. From overly inquisitive mobile applications that fail to disclose how cell photo data is accessed and shared (Path) to handset manufacturers failures to properly inculcate privacy in the design and manufacturing process (HTC) to security lapses at government databases resulting in exposure of sensitive personal information (South Carolina), consumers, regulators and legislators are waking up to privacy issues.

Recent developments highlight the trend in Privacy

In the U.S. we lack a single comprehensive privacy law, although many state and federal laws address various aspects of collecting, storing and sharing personal information. In the absence of a single, over-arching, mandate, legislators and regulators are stepping into fill at perceived need.

GPS, Location & Privacy

The Geolocation Privacy and Surveillance (GPS) Act addresses use of location data by law enforcement. The bill (not yet law) requires police to obtain a warrant based on probable cause whenever it seeks “location information.” Unfortunately, the term “location information” is very broadly defined, does not distinguish requests for access based on the level of precision, time period, or whether the information is for past or future conduct.

Proposed Federal Privacy Standards

Two bills introduced this year aim to create a baseline level of privacy protection at the federal level. John Kerry (D-MA) and Sen. John McCain (R-AZ) introduced S. 799, the Commercial Privacy Bill of Rights Act of 2011, to create a regulatory framework for the comprehensive protection of personal data for individuals, enforceable by the Federal Trade Commission (FTC). Similarly, Rep. Cliff Stearns (R-FL) is promoting a Consumer Privacy Protection Act (H.R.1528), directed at consumers and focused on restricting the sale or disclosure of personal information.

FTC Protects Privacy Under Mantle of Consumer Protection

As a result of alleged data security failures that led to three data breaches at Wyndham hotels in less than two years, the Federal Trade Commission filed suit against hospitality company Wyndham Worldwide Corporation. The case against Wyndham is part of the FTC’s ongoing efforts to make sure that companies live up to the promises they make about privacy and data security.

Wyndham’s web site privacy policy claimed that, “We recognize the importance of protecting the privacy of individual-specific (personally identifiable) information collected about guests, callers to our central reservation centers, visitors to our Web sites, and members participating in our Loyalty Program …”

The FTC complaint alleges that Wyndham failed to maintain adequate and industry standard security measures by storing credit-card information in unencrypted format, allowing servers to remain unpatched, and failing to use firewalls.

The FTC alleges that these failures led to fraudulent charges on consumers’ accounts, millions of dollars in fraud loss, and the export of hundreds of thousands of consumers’ payment card account information to an Internet domain address registered in Russia.

Most notably, the lawsuit will test whether the Federal Trade Commission has the jurisdiction to compel companies to provide a certain level of cybersecurity in order to safeguard consumer personal information.

Privacy Remains Top Concern

Many companies across many industries, financial services, higher education and healthcare, just to name a few, are facing a wide range of security and privacy concerns, scrambling to implement A defensible security framework and demonstrate compliance. It’s alarming, considering the significant consequences associated with not complying.

Organizations can lose contracts, customers and their reputation. That could put some out of business.

Compliance Preparation & Best Practices

Large organizations can spend many months and millions of dollars on compliance. Your business need not go to such extremes. To prevent getting caught by surprise and to prepare for the compliance journey, I’ve listed below some suggested best practices.

Periodic risk assessments. Evaluate potential damage and disruption caused by unauthorized access, use, disclosure, modification, or destruction of data or systems.

Policies and procedures. Incorporate procedures for detecting, reporting, and responding to security incidents, as well as business continuity plans.

Standardize. Set standards of acceptable information security for networks, facilities, and information systems.

Train Employees. Awareness training for employees, contractors, and other users of information systems is critical. Articulate the security risks associated with activities and define users’ responsibility for complying with policies and procedures.

Test & Evaluate. Periodic assessment of the effectiveness of information security policies, procedures, practices, and controls helps determine weak spots. At a minimum they should be conducted annually, according to Ford.

Respond & Repair. Have a pre-defined process for planning, implementing, evaluating, and documenting remedial actions designed to address legal, PR, HR and related risks in the event of a breach.

THIS IS NOT LEGAL ADVICE. The procedures outlined above are merely suggestions and there is no guarantee that implementation will reduce risk or mitigate liability.

Please contact Leavens, Strand, Glover & Adler at 866-734-2568 for a free consultation to learn how LSGA can help meet your specific needs.

The rapid growth and expansion in the mobile market presents a number of privacy and security issues for mobile software and hardware developers, platform operators, advertisers and marketers who collect, store, use and share consumer information. As awareness of privacy risks grow among consumers, legislators and regulators are increasing scrutiny of mobile privacy and privacy policies in mobile apps.

Businesses operating in the mobile industry are facing a widening array of Regulatory compliance issues. Staying abreast of legal risks and issues can be daunting. How can mobile operators and application developers spot trends and adjust strategies to start competitive? First, keep an eye on FTC activity. Second, monitor new bills coming up in Congress. Third, follow this blog, adlerlaw.wordpress.com.

FTC Privacy Enforcement Actions

Earlier this year, the FTC expanded mobile privacy obligations beyond software to include hardware makers when it announced a settlement with HTC America over charges that HTC failed to use adequate “security by design” in millions of consumer mobile devices. As a result, the company is required to patch vulnerabilities on the devices which include #Smartphones and #Tablets. The settlement, the first action involving a mobile device manufacturer and the new “Privacy By Design” guidelines, sheds some light on the legal risks for mobile device manufacturers and, to some extent, mobile application developers.

Congressional Privacy Laws, Bills & Initiatives

Not surprisingly, federal legislators are taking up the mantle of Consumer Privacy in the area of Mobile Applications. In January 2013, U.S. Rep. Hank Johnson, introduced his mobile privacy bill, The Application Privacy, Protection and Security Act of 2013, or the “APPS Act,”. The bill focuses on transparency, user control and security, mandating that an application 1) provide the user with notice of the terms and conditions governing the collection, use, storage, and sharing of the personal data, and 2) obtain the consent of the user to the terms and conditions. Significantly, the privacy notice is required to include a description of the categories of personal data that
will be collected, the categories of purposes for which the personal data will be used, and the categories of third parties with which the personal data will be shared.

The Bill also requires that application developers have a data retention policy that governs the length for which the personal data will be stored and the terms and conditions applicable to storage, including a description of the rights of the user and the process by which the user may exercise such rights in addition to data security and access procedures and safeguards.

App developers unaware of the data protection requirements may face significant risks and potential harm to their reputation among users of smart devices. If you have concerns about what key data protection and privacy legal requirements apply to mobile applications and the types of processing an app may undertake contact us for a mobile app legal audit. Vague or incomplete descriptions of the ways which a mobile app handles data or a lack of meaningful consent from end users before that processing takes place can lead to significant legal risk. Poor security measures, an apparent trend towards data maximisation and the elasticity of purposes for which personal data are being collected further contribute to the data protection risks found within the current app environment.

Learn more David M. Adler here.

VIDEO: The Evolving Insider Threat- Dawn Cappelli, Randy Trzeciak of CMU’s Insider Threat Center

This video from RSA Conference 2013 discusses:

  • Who typically commits insider crimes – and how;
  • How employees are being victimized from outside;
  • Why our critical infrastructure is at heightened risk.

Even if you are an employer using standard commercial verification measures, you should be cautious about misuse of any information by employees, managers and contractors. Accordingly, you should be careful with training and education and not on only newly-hired employees. Further, plan on how login credential and access to sensitive information will be handled and/or turned over when training or when terminating, suspending, withholding pay, lowering pay, or taking any other adverse action against an employee.

Intel Mobile Device

Intel Mobile Device (Photo credit: Frank Gruber)

On February 22, 2013, the FTC announced a settlement with HTC America over charges that HTC failed to use adequate “security by design” in millions of consumer mobile devices. As a result, the company is required to patch vulnerabilities on the devices which include #Smartphones and #Tablets. The settlement, the first action involving a mobile device manufacturer and the new “Privacy By Design” guidelines, sheds some light on the legal risks for mobile device manufacturers and, to some extent, mobile application developers.

The FTC alleged that HTC failed to take reasonable steps to secure the software it developed for its smartphones and tablet computers, introducing security flaws that placed sensitive information about millions of consumers at risk. The resulting vulnerabilities posed risks to sensitive functionality, including the possibility that malware could send text messages, record audio, and install additional malware onto a consumer’s device.

Here are four key take-aways for mobile device manufacturers and application developers from the FTC’s complaint:

  1. provide your engineering (programming) staff with security training
  2. review or test your software on mobile devices for potential security vulnerabilities
  3. follow well-known and commonly accepted secure coding practices
  4. establish a process for receiving and addressing vulnerability reports from third parties

Smartphones and tablets are powerful, popular, and continue to find their ways into our personal and business lives. New mobile apps hit the market each day. In this fast-moving era of entrepreneurship and creativity, mobile device and app developers need to keep up with evolving privacy and security. Apps and mobile devices that tap into consumer data — including contact information, photos, and location to name a few — pose a heightened risk to digital snoops, data breaches, and real-world thieves.

Please contact us if you are interested in learning how to evaluate your mobile security and privacy risk or to help develop a “Privacy By Design” approach mobile app security.

Please comment, tweet and forward!

I will be speaking at Affiliate Management Days SF 2013 (April 16-17, 2013) on the topic of “Managing Risk: Legal Issues for Merchants & Affiliate Managers.”

 

Affiliate marketing is one of the most cost-effective techniques for monetizing web site traffic and driving sales. Unfortunately, it has a reputation for high risk. While the industry is unlikely to ever be risk-free, it is possible to manage risk by: (1) understanding how techniques like behavioral and contextual targeting affect consumers, affiliates and merchants, (2) understanding the legal and regulatory environment, (3) understating risks involved with prospective marketing partners, (4) using and maintaining proper contracts that allocate risk and provide appropriate indemnifications, and (5) keeping informed about the changes in technology, marketing practices and the regulatory environment. Attendees will learn how to identify these issues and develop policies and procedures to keep informed about the current technology, marketing strategies and regulatory compliance.

 

Topics covered include:

 

  • Behavioral/Contextual Advertising
  • Regulatory/Industry Compliance : FTC Guides & Enforcement Actions
  • CAN-SPAM compliance
  • IP Law: Rules governing use of others™ Trademarks/Keywords, Right of Publicity/Endorsement Issues.
  • Identifying, protecting against, and disputing accusations of Click-Fraud

 

Geno Prussakov, the Founder & Chair of Affiliate Management Days and the CEO & founder of AM Navigator LLC did a pre-interview with me on Small Business Trends that can be found here.

 

 

 

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