Ping® May 2022 – Improving Affiliate Engagement

Affiliate Marketers: Want to learn best practices, strategies, and tactics from a seasoned legal professional who works with businesses and regulators at the federal and state levels? 

David Adler takes clients through the ins-and-outs of providing advertisers, merchants, agencies and affiliates the tools they need for running a trustworthy and successful business.

On May 25, 2022 David Adler is presenting Trafficking in Trust: How to Enhance Affiliate Engagement an AMDays Workshop at Affiliate Summit East 22. In case you can’t make the presentation, here’s an excerpt of one of the topics covered:

The 3 C’s of Affiliate Marketing Disclosures: Clear Conspicuous Content. 

Clients often seek my counsel on issues related to Affiliate Marketing legal disclaimers and disclosures. For example, this might require guidance on the substance and placement of legal disclaimers for a consumer-oriented, product review and ratings website. This type of website needs to include at least two different, but related, disclosures. First, it must disclose that it is compensated when a user clicks on a link. Second, it must disclose certain material connections. 

Affiliate Disclosure Content

There are several factors to the affiliate commission disclosure. Appropriate disclosures have both the necessary content and the correct placement within a specified context.

What needs to be in your affiliate commission disclosure? 

The disclosure must make clear that you earn a commission if a user buys something after clicking on a link on your site.

Affiliate Disclosure Context

Where is the optimal location for the disclosure?

Although there is a general practice of putting disclosures on the bottom of the website pages, it can be somewhat obscured and less effective. A location at the bottom of the page, in the same font style, font color, size, and placement as the rest of the text on the bottom of the page, does not help it “stand out.”   

The key to proper affiliate link disclosures is making sure the disclosure is “clear and conspicuous.” This depends on both context (placement and proximity to the relevant content) as well as the content of the disclosure itself.  The general rule is that the closer the disclosure is placed next to the relevant message, the better.

Although not required, it is recommended to add the affiliate link disclosure on the home page, above the fold. While there is no explicit requirement, FTC disclosure cases and guidelines suggest that, in their view, this is required for adequate disclosures. 

What should I do now? Always seek experienced counsel. A seasoned lawyer will help you address other considerations including prominence, distractions, industry vertical (i.e. healthcare, financial services) requirements, and language. 

Ping® February 2022 – Just How Enforceable Are Online Terms?

Just How Enforceable Are Online Terms? What You Need To Know

We have all, at some point while online, clicked on the “I Accept” button without giving it a second thought. Whether creating a social media account, signing up a for an online service, or just trying to get to bank statements, more and more businesses are linking to their standard terms and conditions online for suppliers and customers. But just how enforceable are these? Does it matter where the link is displayed or how it is displayed. Some courts have refuse to enforce online disclosures due to perceived problems with website layout.

Almost every commercial website provides some amount of information and resources. More often than not, today’s websites offer robust features and content such as article commenting/discussion groups and “pay-wall” access to restricted content and features. In addition, many websites offer content, feeds and articles that are licensed from third parties the use of which may be restricted to in-browser page viewing or caching, with further commercial use restricted. For most businesses, since customers will search and purchase through a website (or mobile application), the principal ecommerce risk is the legal relationship between website users and the web site operator. Whether users only browse information or continue to complete a purchase transaction, a contractual relationship can be formed addressing both parties rights, obligations and remedies.

Two Types of Online Contracts

With respect to contract law in relation to the offer and sale of goods or services, online (ecommerce) contracts generally take one of two forms: (1) Click-through or “Click-wrap” agreements, and (2) User Agreements, often referred to as Terms of Use, Terms of Service, or “Browse-wrap” Agreements. As a general proposition, formation of contracts (offer and acceptance) and enforceability of contractual provisions (choice of governing law) are matters determined by reference to state law. However, in the United States, federal courts are often required to determine matters of state law and most states have relatively uniform requirements with respect to the three principal concepts in the determination of contract enforceability: offer, acceptance and consideration.

Click-wrap Agreements

The first type of contract, the so-called “Click-wrap” agreement, is usually the agreement formed when a website user purchases goods or services through an ecommerce shopping cart application (e.g. purchasing airline tickets). In the context of online contracts, a user is presented with the online terms and conditions and must “click-through” as part of the transaction.

“Click-wrap” agreements derive their name from the shrink-wrap agreements that were first incorporated into commercially-distributed software. Users were deemed to have accepted the terms of the agreement by opening the package and installing the software. In ProCD, Inc. v. Zeidenberg, the court held that a user was bound by the terms and conditions of a software license agreement (contract) included in a users’ manual within the packaging, and which was displayed on a computer screen upon installation and use of the software. Such contracts are enforceable unless their terms are objectionable on grounds applicable to contracts in general (for example, if they violate a rule of positive law, or if they are unconscionable).

Browse-wrap Agreements

The second type of contract, commonly-known as “browse-wrap” agreements, apply to contractual agreements between the website user and the website operator that arise even though the user may not engage in pro-active contract acknowledgement. Browse-wrap agreements are generally comprised of terms and conditions posted on a website, typically accessible via a hyperlink appearing on various pages on the website, or at the bottom of the website pages, with no requirement that a website user take any affirmative action to indicate assent to the terms and conditions. 

The existence and enforceability of browse-wrap agreements is crucial to operation of a website because as a user may search information, information related to the other programs or other information available on the website, without actually consummating a purchase transaction. Since a business likely wishes to protect its proprietary information and other content available to users of the website, it is important review the availability and enforceability of browse-wrap contracts.

Two Cases Two Different Outcomes

Maine State Court held in Sarchi v. Uber Technologies (2022 ME 8 – Maine Judicial Branch) that online contracts are enforceable only if the consumer (1) has reasonable notice of the online contract terms, and (2) has manifested consent to those terms. Following First Circuit’s formulation in Cullinane v. Uber Technologies (No. 16-2023 (1st Cir. 2018)), the Court held the contract unenforceable because 1) the consumer was not provided reasonable notice of the terms, 2) the hyperlink to the contract terms was not readily identified as a link through the use of underlining, blue text, or appearance as a button; 3) the hyperlink was inconspicuous given the use of small font; and 4) the hyperlink was unlikely to draw attention because the screen focused on payment information rather than the hyperlink.

Additionally the Court concluded the consumer did not assent to the terms by clicking the “Done” button on the payment screen because the significance of clicking that button to indicate the user’s consent to the terms of agreement was not explained.

Ping® December 2021 – Data Protection & Copyright Law 

Globally, non-profits, NGOs, and environmental advocacy organizations are expanding scientific data collection while combining this data with data from third parties. Data scientists increasingly find themselves applying creative thought the the selection of tools and instruments, calibration of those instruments, and the process and selection of data to measure. This combined data is then used for synthesis, modeling and reporting, with the goal of making some or all of it available to the public. As Data scientists look to make these resources public, there are concerns with protecting the integrity, availability, and accessibility, of these resources. Since availability and accessibility and driven by funding, there is a need to commercialize these assets.

I recently had the honor of discussing the question of what legal rights exist in data at the Environmental Defense Fund‘s monthly Lunch & Learn.

In legal terms, those rights are intellectual property (IP) rights such as copyright, patents, and trademarks, confidentiality obligations, and contract rights. Each IP right has its own rules, and applying those rules to data leads to a complex, multi-layered analysis where the law can be unsettled and uncertain.

The principal areas of law discussed were copyright and contracts. The other forms of IP rights such as Patent, and Trademark did not apply to this discussion on data insofar as the term refers to information only, as opposed to a method or process applied to that data (Patent). A trademark is a source identifier that distinguishes one company, product or service from another and  which is used to prevent confusion in the marketplace.

If you would like a copy of the Presentation in .PDF format, please Subscribe to Ping® -Arts, Entertainment, Media,  Communications, & Technology  Legal News From Adler Law Group.

Ping® Webinar: 5 Things Every Design Contract Needs

I want to give a big thanks to Houzz PRO for hosting this webinar.

This program covered: 

–The five key problem areas in design contracts 

–What the key terms of a contract should be, why they are there and when they should be changed 

–Rights & Remedies: what a designer can do if a client is not living up to his/her side of the deal.

Read More Here.

Ping® – Arts, Entertainment, Media and Advertising Law News – Protecting Furniture Design Keeps Getting Harder

Herman Miller, Inc. – a leading furniture brand and purveyor of the iconic Eames Chair Design – suffered a loss at US Trademark Trial and Appeal Board (TTAB) in its bid to protect as “trade dress” the design of the chair. The case involves a well-known chair design dating from the 1940’s, by designers Ray and Charles Eames. The chair ultimately was recognized by Time Magazine as the Best Design of the 20th Century, and now is in the design collections of numerous museums. Herman Miller sought registration of most of the chair’s configuration as a mark, depicted in more than one view, for “furniture, namely, chairs.”

The court weighed each of the Morton-Norwich factors, concluding that the proposed three-dimensional product configuration as a whole indicates that it is functional. The court found that patent evidence, the advertisements touting utilitarian advantages of the design, and the limited availability of alternative designs that would work equally well, proved functionality.

Key Take Aways:

  1. Beware of patent evidence in trade dress protection due to risk that distinctive design elements be treated as de jure functional. In general, examining attorneys no longer make this distinction in Office actions that refuse registration based on functionality. De facto functionality is not a ground for refusal. In re Ennco Display Sys. Inc., 56 USPQ2d 1279, 1282 (TTAB 2000); In re Parkway Mach. Corp., 52 USPQ2d 1628, 1631 n.4 (TTAB 1999).
  2. Ensure that advertising promotes the nonfunctional design elements, such “look for” advertising. Examples include evidence, including SEO data, that connected the applicant’s efforts to promote the applied-for mark as a trademark and consumers’ ability to conceive of the applied-for mark as such, and examples of unsolicited media coverage

Ping® – Arts, Entertainment, Media & Advertising Law News – “Five Rs” To Remember

“Five Rs” To Remember When Letting Employees Go

It is inevitable in almost every business. You will need to let an employee go. Whether it’s a seasoned designer coming with plug-and-play experience or a fresh face just out of design school, sometimes it just doesn’t work out. Recently, several of my designer clients have had to fire an employee due to the employee’s misconduct. This could be anything from soliciting and directing company clients and prospects, to doing personal consulting work on the company’s dime, to taking property and information. Regardless of the reason, here are five “R”s to keep in mind.

1. Review the contract.

2. Reconcile and pay.

3. Request return of property.

4. Reiterate respectfulness. 

5. Reserve rights.

With those ideas in mind, let’s consider each one. A little more.

1. Review the contract/offer letter. This is always the first step and will provide guidance on termination rights, procedures and remedies, if any.

2. Reconcile and pay what’s owed. See number 1. Ensure that except for payment of contractual and statutory amounts, no other salary, commissions, overtime, bonuses, vacation pay, sick pay, severance pay, additional severance pay or other payments or benefits whatsoever will be paid.

3. Request return of property and information, in whatever form. Request all property any and all property or documents the employee created or received in the course of employment, including, but not limited to e-mails, passwords, documents and other electronic information, hardware such as laptop computers and cellular telephones, calculators, smartphones and other electronic equipment (mobile phone, tablet, etc.), software, keys, company credit cards, calling cards, parking transponder, information technology equipment, client lists, files and other confidential and proprietary documents, in any media or format, including electronic files.

4. Reiterate a professional’s obligation to remain respectful. Specific admonition of non-disparagement such as “refrain from saying, making, writing or causing to be made or written, disparaging or harmful comments about us, our employees and/or our clients.”

5. Reserve rights. Close your termination notice by expressly reserving legal and equitable rights and remedies.

Please note that this is not legal advice and you should consult your own lawyer regarding your rights and obligations in the context of terminating your employee’s employment.

COVID-19 is changing consumer behavior in important and probably permanent ways.

COVID-19 is changing consumer behavior in important and probably permanent ways. This is why marketers should take notice.

Sparked by the coronavirus pandemic, consumer and business e-commerce transactions accelerated the ongoing shift toward online commerce. This enables even more marketing opportunities that create real time connections with customers. From pink ribbons to Product Red, social feeds are full of calls to support those in need. In this way, online cause marketing can drive “consumption philanthropy” replacing mindless buying with virtuous action. Tying cause-worthy buying with the latest ecommerce boom creates new opportunities for marketers.

However, before turning your blog, social media accounts, or website into a funnel to raise money for First Responders, it is important to understand that all states have laws that govern charitable solicitations. Running promotions and undertaking solicitations for charities means that unless the business itself is set up as a tax exempt charitable entity, these activities are considered “Commercial co-ventures.” Generally this is a person (or business) who, for profit, is primarily engaged in commerce other than in connection with soliciting for charities and who conducts a charitable sales promotion.

In Illinois, Sec.3. (b) of the Solicitation for Charity Act provides the following persons shall not be required to register with the Attorney General: 3. “Persons requesting any contributions for the … benefit of any individual, specified by name at the time of the solicitation, if the contributions collected are turned over to the named beneficiary, first deducting reasonable expenses for costs of banquets, or social gatherings, if any, provided all fund raising functions are carried on by persons who are unpaid, directly or indirectly, for such services.” Emphasis mine.

Even if you are not raising money for a good cause, consider using disclaimer s to let your audience know product and company names are trademarks of the respective owners and does not imply any affiliation with or endorsement by them.

Copyright Must Read: SKIDMORE V. LED ZEPPELIN reversed, remanded for prejudicially erroneous Jury Instructions.

Hat tip to Joshua L. Simmons, Copyright Division Council Liaison from KIRKLAND & ELLIS LLP in New York for keeping the #Copyright Bar up to date on important developments.

From this week’s news letter is the decision in Skidmore v. Led Zeppelin involving a claim by Michael Skidmore, a Trustee, alleging Led Zeppelin copied key portions of its timeless hit “Stairway to Heaven” from the song “Taurus.” At trial, the jury found in favor of the Defendants. Skidmore appealed on the grounds of alleged trial errors. He also disputed the district court’s determination that the scope of the copyright for unpublished works under the Copyright Act of 1909 (“1909 Act”) is defined by the deposit copy.

The appellate court made several key holdings. First, the failure to instruct the jury that the “selection and arrangement of unprotectable musical elements are protectable” was prejudicial error.  Second, a jury instruction incorrectly stated that copyright does not protect “chromatic scales, arpeggios or short sequences of three notes.” Third, a jury instruction on originality  incorrectly omitted a statement that “any elements from prior works or the public domain are not considered original parts and not protected by copyright.” “In copyright law, the ‘original’ part of a work need not be new or novel.”  Lastly, the district court must revisit the issue whether as a matter of law, that Skidmore’s “evidence as to proof of access is insufficient to trigger the inverse ratio rule.”

For more more information:

SKIDMORE V. LED ZEPPELIN
No. 16-56057, 16-56287, 2018 WL 4654729 (9th Cir. Sep. 28, 2018)

Technology, Innovation and the Law

In today’s world, business is no longer about simply having an online presence. Digital business is transactional and social across platforms and networks across thew globe. The previous model of one-to-one transactional business relationships has evolved to one that is reciprocal, collaborative and highly interactive.

This new level of engagement is not without risks. As businesses expand into new online areas for marketing and commerce, businesses should be aware of a myriad of laws and risk areas implicated when one conducts business online. Business lawyers must be familiar with Technology Law.

There are a wide variety of services around the most common types of content and businesses need legal disclaimers, protection of intellectual property rights and other ways to limit liability.

Generally, the key areas and issues are:

Trade & Commerce Issues

  • Advertising & Promotions Laws (these vary by state)
  • Affiliate Marketing Agreements/Relationships
  • Federal Regulatory Guidelines
  • Industry Regulations & Guidelines
  • CAN-SPAM Act
  • Online Contracts/Terms of Use (Click-Wrap/Browse-Wrap Agreements)
  • Disclaimers
  • Limits of Liability
  • Sales & Taxation/Clarifying Nexus Confusion
  • Choice of Law/Forum
  • Insurance Law
  • Website Representations and Warranties

Intellectual Property Issues

  • Copyright & Digital Millennium Copyright Act
  • Defamation/Free Speech
  • Trademark Law
  • Unfair Internet Business Practices Such as Domain Name Hijacking & Cybersquatting
  • Anti-cybersquatting Consumer Protection Act
  • Linking/Scraping/Crawling
  • Patent Law
  • Licensing
  • Trade Secrets

Privacy & Security Issues

  • Credit Cards / Transaction Processing
  • E-Payment and Credit Card Security/Privacy
  • Children’s Online Privacy Protection Act
  • Data Breach Notification Laws
  • Data Privacy Laws

Human Resources & Employment Issues

  • BYOD & Computer Usage Guidelines for Employees
  • Employment and Labor Laws
  • Social Media Guidelines for Employees

We look forward to the opportunity to discuss any questions you may have regarding the range of business, technology and intellectual property services we offer. Our law office is based in Chicago, Illinois. Please feel free to call us at (866) 734-2568 should you have any questions.

Best Practices EU/US Privacy Shield

In case you missed it, Ken Dort at Drinker Biddle held a discussion covering high points of the EU/US Privacy Shield. Talking points covered:

1. Application Overview
2. Certification Issues
3. Privacy Shield Principles and Supplemental Principles
4. Implementation Timelines (Expected)
5. Best Practices Going Forward Pending Implementation

The draft EU-U.S. Privacy Shield “adequacy decision” includes the Privacy Shield Principles companies must follow. Suggested Best Practices for compliance with EU-U.S. Privacy Shield Principles include: evaluating disclosures about data collection and use to determine whether they are sufficiently clear and evident to consumers, and 2) giving strong consideration for implementation of a formal opt-in mechanism. European government trade regulators are concerned about whether consumers are being sufficiently informed about the nature and scale of data collection.

Ken graciously provided this great list of resources for the discussion:

* Full text of the Privacy Shield can be found here.

* European Commission draft adequacy decision can be found here.

* Department of Commerce Fact Sheet can be found here.

* European Commission Fact Sheet can be found here.

* European Commission FAQs can be found here.

* Statement from U.S. Secretary of Commerce Penny Pritzker on release of the Privacy Shield text can be found here.

* European Commission statement on the Privacy Shield text can be found here.

Article 29 Working Party statement on the Privacy Shield can be found here.

As part of Adler Law Group’s Privacy & Information Security Practice, we continue to follow the developments in this area. We can help you review, enhance and adopt standardized contracts and implement methodologies for approaching these challenges by setting objectives, determining scope, allocating resources, and developing agreements that will efficiently and effective manage risks.