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® January 2022 – Reminder To Review Your Contracts

Review Your Contracts Every Year.

One of the most important tools to protect your business – your ideas (copyrights, trademarks, trade secrets, confidential and proprietary information), customer relationships and talent pool – is your written contract. Your contract is the foundation for a reliable relationship for you, your customers and your employees. More importantly, it helps to prevent misunderstandings and false expectations that can lead to a breakdown in your customer relationship, jeopardize projects, or even worse, result in litigation.    

Starting with a form is just OK.

Many companies start with a model or “form” contract adapted from forms available online or drafted when the business first started.  Oftentimes, I am presented with form contracts “downloaded from the Internet” or provided by a form-filling service that will do cheap and quick corporations or LLCs, without actually providing any legal services. Although these forms may be a good starting point, your business needs, it deserves, contracts tailored to the specific needs of the enterprise or relationships.

Franken-contracts can ruin your business.

As businesses develop over time, you may have revised your contracts, adding a little here, removing a little there. Maybe you read an article about an important case in your industry and decided to add some text from the contract discussed in the court’s legal opinion. In many cases, over time, the agreements become “Franken-contracts” an odd amalgamation of trade lingo, inconsistent terms and even contradictory conditions. At best these are ambiguous and confusing to read. At worst, they become unenforceable.

Review contract annually to avoid weak spots.

At some point, you should review, revise and generally “tighten” existing contracts. You should have your lawyer review them to make sure that there are no mistakes, ambiguities or omissions that could cost you or your customers. I urge clients to have their contract forms reviewed on an annual basis. Depending on changes in the law, changes in the industry or changes in your own business, this process should only take a few hours.

Contact us for a free, no-obligation consultation.

To learn more about how we can help your with your business and contracts, contact the Lawyers at the Adler Law Group at David @ adler – law . com (without spaces) or (866) 734-2568. Learn more abut us here:

http://www.adler-law.com

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® October 2021 Changes Coming to Non-Compete Agreements in Illinois

EMPLOYMENT (820 ILCS 90/) Illinois Freedom to Work Act.

Illinois passed a law that amends the Illinois Freedom to Work Act. Expands the scope of the Act to apply to all employees (rather than only low-wage employees). Prohibits all covenants not to compete.

Scope

The law goes into effect January 1, 2022 and amends the Freedom to Work Act (the Act), which restricts the use of non-compete agreements for low wage workers. For the first time, Illinois will have statutory requirements for mandatory review periods, definitions of adequate consideration and legitimate business interests, as well as specific salary minimums for employees subject to restrictive covenants. 

Application

The law will apply to non-compete and non-solicit covenants. The law does not apply to contracts covering confidential and proprietary information, protection of trade secrets, or inventions assignment agreements. The law also does not address covenants for independent contractors, and expressly carves out restrictions on a person purchasing or selling the goodwill  or an ownership interest in a business.

Mandatory Review

The law requires that an employer advise the employee in writing to consult with an attorney prior to entering into the covenant and provide the employee with at least 14 calendar days to review the agreement. 

Consideration

Contract lawyers know that to be enforceable a promise must be supported by consideration. Due to the unique nature of restrictive covenants, there is heightened scrutiny of what will constitute sufficient consideration for a restrictive covenant under the Illinois law. The leading Illinois case, 

Fifield v. Premier Dealer Services, Inc., 993 NE 2d 938 (Ill.App.1st 2013), an Illinois court decided that mere employment or continued employment for at-will employees, is not adequate consideration to support a restrictive covenant unless the employee remains employed with the employer for at least two years after signing the agreement. 

Illinois law will now expressly defines “adequate consideration” as either (1) the employee working for the employer for at least two years after signing the non-compete or non-solicitation covenant or (2) other sufficient consideration, such as “a period of employment plus additional professional or financial benefits or merely professional or financial benefits adequate by themselves.”

The law leaves open the definition of “additional professional or financial benefits.” Courts have found signing bonuses, equity grants, and other types of consideration sufficient under current case law. 

Going Forward

While there is time to plan for the effect of the new law, it’s not too soon to begin reviewing current existing “form” contracts and consider changes. One-size-fits-all contracts always need fine-tuning. Change sin the business operating environment require a closer look at non-compete and non-solicitation covenants. 

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

Adler Quoted in BNA’s Electronic Commerce & Law Report

A recent article by Alexis Kramer, Legal Editor for Bloomberg BNA’s Electronic Commerce & Law Report, examines the nature of social media platform messenger applications and the move into e-commerce. This shift raises the implications for policing counterfeit goods and enforcement of online purchases.

The article entitled “E-Commerce May Come to Messaging Apps; Watch for Counterfeits and Contract Issues” highlights that “[b]uying and selling goods through messenger apps” … “is definitely the future of mobile.”

David M. Adler was interviewed for the article for insight around ecommerce legal issues, which include intellectual property and contractual issues, that arise when consumers transact business through messenger apps. Many of these issues were identified in his article Pinterest “Buyable Pins” And Ecommerce Liability.

The legal risks and issues vary widely depending on industry and product/service mix and encompass many interrelated areas of the law. Specifically, Adler inditified five main areas of concern for ecommerce, especially on mobile devices and/or through messenger apps:

  1. Trade & Commerce Issues (Brand protections)
  2. Online Agreements (limitations of liability)
  3. Intellectual Property Issues (content ownership and use)
  4. Privacy & Security (data gathering, usage, storage & sharing)
  5. Human Resources & Employment Issues (reputation and social media use)

Facebook, WeChat, Instagram, Snapchat, Twitter and other social networks already allow users to send payments to one another through private messages. New tools such as the Pinterest “Buy Now” pin, and Twitter’s direct messages, facilitate commercial transactions with consumers.

As the article notes “enabling retail transactions via chat” opens the door for more counterfeit goods, difficulty monitoring the sales channel, increasing difficultly of enforcing online purchase terms, and lack of visual space to properly notify customers of the terms and conditions.

‘‘All the issues you would have when conducting transactions over the Internet are magnified when you’re using a messenger app,’’ David Adler, principal of Adler Law Group in Chicago, said.

Five Best Ways to Protect Your Ideas

Idea

When I first meet a client, I am often asked “How can I protect my ideas?” While it may seem like a simple question, getting the answer right is often tricky. That’s because one can’t actually own an idea, in and of itself. Sounds confusing, I know. The five best ways to protect your ideas are 1) Identify, 2) Organize, 3) Register (or restrict), 4) Monitor, and 5) Enforce. This articles focuses on how to identify the best ways to protect your ideas.

Regardless of industry, Ideas are the keys to any successful business. While one cannot “own” an idea, one can protect one’s Intellectual Property rights that relate to the embodiment or manifestation of that idea. For example, Copyright, Patent, Trademark, Trade Secret and Publicity Rights are all forms of Intellectual Property rights that grant exclusive rights to the owner, both artistic and commercial.

Copyright protects works of creative artistic expression such as books, movies, audio-visual music, paintings, photographs, and importantly, software. Copyright protection requires that a work be “fixed” in tangible format (this includes electronic format) and gives the owner (called the “author”) of such works the exclusive rights to reproduce, distribute, publicly display, publicly perform, and modify a work for a certain period of time.

Patents (utility and design), Trademarks and Trade Secrets protect creative commercial expression sometimes known as “industrial properties,” as they are typically created and used for industrial or commercial purposes.

A Patent protects the invention or discovery of “any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof.” A Patent gives the inventor “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or “importing” the invention into the United States for a period of time.

A Trademark is any word, name, symbol, or device, or any combination, used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from others, and to indicate the source of the goods. In short, a trademark is a brand name or logo that is a distinctive sign which is used to prevent confusion among products in the marketplace. A Trademark enjoys protection indefinitely, as long as it is being used.

An industrial design right protects the form of appearance, style or design of an industrial object from infringement.

A Trade Secret is an item of non-public information concerning the commercial practices or proprietary knowledge of a business. Public disclosure of trade secrets may sometimes be illegal. A Trade secret enjoys protection indefinitely, as long as it is being kept secret.

Some rights are “statutory” in that they exist because they are granted by the Constitution of the United States, e.g. Copyright and Patent. Other rights arise from “use,” e.g. Trademark and Trade Secret rights. Some arise under State law, e.g., Rights of Publicity. Not all types of intellectual property require registration in order to obtain, maintain or enforce one’s rights. However, registration is HIGHLY RECOMMENDED if available, is required in certain circumstances and, even when not required, registration often confers several benefits that enable enforcement, reduce the risk and costs of enforcement, and provide additional incentives and remedies for enforcement.

The term “Intellectual Property” denotes the specific legal rights described above, and not the intellectual work, concept or idea itself. Oftentimes, the largest value of a businesses can be traced to its intangible assets. Knowing how to identify intangible assets and understanding which Intellectual Property rights apply to these assets is critical to the ability to protect and commercialize one’s ideas. Therefore, great care should be given to maintaining and enhancing their power and value. Value can be increased through a carefully planned and executed strategy. Innovative companies that successfully leverage their Intellectual Property rights will stand to benefit most from the opportunities presented by the current economic marketplace and demand for innovation.

 

Focus | Vision | Perspective | Passion

Executives face a confusing and dynamic set of challenges ensuring their business remains legally compliant. Yet few can afford the highly-qualified and versatile legal staff needed to deal with today’s complex legal & regulatory environment.

Adler Law Group was created to provide clients with a competitive advantage by enabling them to leverage their intangible assets and creative content in a way that drives innovation and increases the overall value of the business.

For a FREE, no-obligation 1 hour consultation to learn the best ways to identify, protect and leverage your ideas, please call: (866) 734-2568, click: http://www.adler-law.com, or write: David @ adler-law.com.

Adler Law Group – Providing innovative legal counsel that elevates aspirations to achievements.™

Why Every Trademark Owner Should Care About B&B Hardware

Does a Trademark Trial and Appeal Board (TTAB) decision that there is a likelihood of confusion between two trademarks prevent federal district court trademark litigation?

The purpose of a trademark is two-fold: to identify the owner or “source” of goods and services, and to prevent consumer confusion in the marketplace. Therefore, the test for trademark infringement under the Trademark Act of 1946 (Lanham Act), is whether use of a trademark is “likely to cause confusion” with an existing, registered mark. A person generally may neither use nor register a mark that would be “likely to cause confusion” with an existing trademark. If a person uses a mark that one believes is likely to cause confusion, the owner of the registered mark may sue in federal court for trademark infringement. 15 U.S.C. § 1114(1). If a person seeks to register a mark that is likely to cause confusion with an existing registered mark, the owner of the existing registered mark may oppose the registration of the new mark before the TTAB. 15 U.S.C. § 1052(d); see id. §§ 1063, 1067(a).

In B&B Hardware, Inc. v. Hargis Industries, Inc., 134 S. Ct. 2899 (US 2014), the United States Supreme Court was asked to decide whether the TTAB’s determination of a likelihood of confusion precludes a trademark litigant from re-litigating that issue in a federal court infringement action involving a likelihood of confusion element.

Plaintiff B&B Hardware Inc. (“B&B”) produced industrial fasteners for the aerospace industry under the mark SEALTIGHT since 1990. B&B’s SEALTIGHT mark was registered with the PTO in 1993. Subsequently, Hargis Industries, Inc. (“Hargis”) adopted the mark SEALTITE for its self-drilling, self-taping screws for use in the metal-building industry. Hargis applied to register SEALTITE with in 1996, but its application was initially refused due to the existence of B&B’s registration. Hargis then sought to cancel the B&B registration alleging that the B&B mark had been abandoned. However, prior to a final decision by the Board, B&B sued Hargis in U.S. District Court alleging infringement of its registered SEALTIGHT trademark.

A jury in the District Court found in favor of Hargis that there was no likelihood of confusion between the marks. The parties appealed to the Eighth Circuit which affirmed the District Court decision and the issue was ultimately taken by the U.S. Supreme Court.

Reversing the Circuit Court, the Supreme Court remanded the case for further proceedings, holding that a likelihood of confusion determination by the TTAB should have preclusive effect as long as the ordinary elements of issue preclusion are met and the usages of the marks are materially the same.

“Issue preclusion” or “res judicata” is an important concept for both fairness and judicial economy. Essentially, litigants should not get two bites at the same apple. In the past, the TTAB would suspend its proceedings if a case was simultaneously pending in District Court.

The key take away for trademark practitioners is strategic since trademark oppositions and cancellations do not result in a damages award or determination of infringement. Yet, its decisions can now be used as the basis for finding infringement in District Court where an adverse decision may have far-reaching effects.