NEWSLETTER: Advertising, Marketing & Promotions, Summer 2009

Dear Clients, Colleagues and Friends,

Hurray for summer! Hurray for rain? Here’s to the coolest wettest summer in New York we can remember. Hopefully, it means that we will have a longer summer. Well, on to more interesting news.

There have been a number of important recent developments of interest. For instance, a ruling just announced by the Ninth Circuit may dramatically change reliance on third-party opt-in lists, particularly in the mobile channel….After a long drought, the FTC is finally cracking down on environmental-friendly-type claims…..The FDA is taking a harder look at off-label marketing for pharmaceuticals and health claims for foods.....Florida continues its "maverick" enforcement relating to mobile marketing campaigns….These and other notable developments relating to advertising and Internet marketing law are discussed below.

Legal Developments of Interest

Ninth Circuit Throws A Wrench Into Third-Party Opt-In Campaigns
On June 19, 2009 the Ninth Circuit ruled that the District Court had erred in ruling in Simon & Schuster's favor in a class action suit brought by Laci Satterfield. In Satterfield v. Simon & Schuster, the Court of Appeals reversed the lower court's decision which had vindicated the company of violating the Telephone Consumer Protection Act (TCPA) when it sent text messages to promote Stephen King's novel “The Cell”. The Ninth Circuit decision raises serious questions as to future reliance on opt-ins for third-party marketing in both SMS campaigns and in other marketing channels. Click here for more details. In addition, two podcasts of Andrew Lustigman’s interviews on Mobile Presence are now available. The interviews highlight recent legal developments in mobile marketing law, including message delivery and promotions. Included in the first interview is a detailed discussion of the Satterfield decision.

Settlement with Verizon Wireless Establishes Standards for Advertising on Websites
On June 24, 2009, Florida's Attorney General announced a $1.5 million dollar settlement with Verizon Wireless and Alltel over “free” ringtone offers. The settlement, the latest in a continuing series of enforcement action in the mobile space by the Florida Attorney General's office, is very important to mobile marketers because it require the implementation of a series of detailed “best practices” standards that impose significant compliance obligations on those involved in marketing mobile content. Continue Reading

FTC Announces Actions Against Kmart, Tender and Dyna-E Alleging Deceptive "Biodegradable" Claims and An Upcoming Consumer Perception Study
On June 9, 2009 the FTC charged Kmart Corp., Tender Corp., and Dyna-E International with making false and unsubstantiated claims that their paper products were “biodegradable.” Kmart and Tender have agreed to settle the cases against them; the case against Dyna-E will be litigated. With the recent growth in “green” advertising and product lines, the FTC stated it will continue its efforts to ensure that environmental marketing is truthful, substantiated, and not confusing to consumers. Continue Reading

In a related Federal Register announcement, the FTC announced that it plans to conduct a study to examine consumer perception of environmental marketing claims. The study is part of the Commission's regulatory review of the Guides for the Use of Environmental Marketing Claims. Click here for more details.

Amazon Tax: Latest Developments in NY and Beyond
As Amazon.com pursues its appeal in NY, other states are working to pass “Amazon Tax” laws which will dramatically affect affiliate marketing practices. Continue Reading

Judge Blocks Unauthorized Catcher In The Rye Sequel On Copyright Grounds
A July 2009 copyright decision in New York confirmed a trend towards strengthening copyright protection for fictional characters by limiting the ability of others to make commercial use of the fictional characters in outside works of literature. Judge Batts has preliminarily enjoined the publishing, distribution and sale of 60 Years in the United States. Continue Reading

Pharmaceutical Company Manager Sentenced for Off-label Marketing
A Branchburg, New Jersey woman who was employed as Regional manager of a Pharmaceutical company was sentenced upon criminal conviction for having instructed sales reps to market a drug product for conditions for which it had not been approved. The drug, Bextra, was a Cox-II inhibitor which had been approved for symptoms of osteoarthritis, and rheumatoid arthritis but which had not been approved for acute pain in general, including the pain of surgery. The FDA had told the company that it could not approve the product for these other conditions without further tests and studies to assure safety and efficacy. Continue Reading

New Federal Law Regulates Gift Certificates and Gift Cards
On May 25, 2009, President Obama signed the Credit Card Accountability, Responsibility and Disclosure (“CARD”) Act of 2009. The Act amends the Truth in Lending Act and imposes a number of new requirements on gift certificates, store gift cards, and general use prepaid cards by putting limits on expiration dates and fees that can be imposed, and setting forth new disclosure requirements. The new law will become effective on August 22, 2010. Continue Reading

Red Flags Compliance Deadline August 1, 2009
The FTC deadline for certain businesses to comply with the Red Flags Rule regarding potential data breaches and identity theft arrives August 1, 2009. Continue Reading

FTC Warns Behavioral Marketers to Self-Regulate or Face Regulation
At a Reuters conference in Washington, DC, the chairman of the FTC warned behavioral marketers that if they didn't better manage and protect customer data themselves, the government would force them to. Continue Reading

FTC Seeks Public Comments on Prenotification Negative Option Rule
The Federal Trade Commission is seeking public comment on its Negative Option Rule, as part of the agency's systematic review of its rules and guides. The Rule regulates one type of negative option marketing - so-called prenotification negative option plans for the delivery of merchandise. In this type of negative option marketing, consumers receive periodic announcements that merchandise will be delivered unless they decline the items within a set time. Continue Reading

Cheerios FDA Warning Letter Signals Narrow Interpretation of Authorized Health Claims
Signaling a new focus on food health-related claims, the FDA has issued a Warning Letter to General Mills with respect to the labeling of Cheerios® Toasted Whole Grain Oat Cereal. The FDA accused General Mills of marketing Cheerios as an unapproved new drug because the product is promoted as being intended for use in the prevention, mitigation, and treatment of disease. The FDA also found that the product was a misbranded food because it bears unauthorized health claims in its labeling and on its referenced website. Continue Reading

Twitter-Based Prize Promotions: Tweeting for Trouble
Running a contest or sweepstakes on Twitter? Don't forget that traditional sweepstakes laws still apply. Continue Reading

Embarrassed From Afar: Remote Workers and Reputational Damage
How can your business manage the risks of smartphone and laptop use and reap the benefits of a flexible workforce? This excerpt from Jonathan I. Ezor's new free e-book discusses some best practices. Continue Reading

News and Events

Lustigman Named Industry Leader and Notable Practitioner by Chambers
Andrew Lustigman has been named an industry leader and notable practitioner in his primary practice area for the second consecutive year. The ranking appears in the internationally recognized Chambers USA Guide: America's Leading Business Lawyers 2009, a legal directory of U.S. lawyers and law firms published by London-based Chambers & Partners. Continue Reading

Andrew Lustigman and Adam Solomon to Present at HBA
On Wednesday, September 16, 2009 Andrew Lustigman will speak on Complying With the New Regulatory Order: Changes in the Endorsement, Testimonial Guides and Green Guides and on Tuesday,September 15, 2009 Adam Solomon will speak on Legal Do’s and Don’ts for New Media Promotion Utilizing Cost-Effective Technologies both at the HBA Global Expo.

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As always, we strive to stay on top of all of this to provide our clients with the most relevant and efficient legal advice. If you find any legal marketing news of interest, please feel free to send it to us!

Please feel free to pass this newsletter on to your friends and colleagues and invite them to join our mailing list. As always, please feel free to contact us with any comments, questions or recommendations.

We hope for continued prosperity to all our friends and colleagues in these challenging times.

Sheldon S. Lustigman
Andrew B. Lustigman
Scott A. Shaffer
Adam Z. Solomon
Jonathan I. Ezor

This newsletter is a publication of Olshan, a law firm with offices in New York and New Jersey. This newsletter and the referenced articles are intended to provide a general overview of legal issues. It is not intended to cover all laws or to serve as legal advice or as a replacement for specific advice of counsel. The views, opinions, statements, analysis and information contained in this outline do not necessarily reflect the views of Olshan or any of its past, present and future clients. © MMVIII by Olshan.

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Originally published by The Lustigman Firm, P.C. and has been re-branded and edited to conform and to correct certain references.