Legally Speaking – Legal Stuff for SEMs – SMX West
A session on the legal aspects of search and domains was an interesting addition to this years’ agenda. Moderated by Sarah Bird and featuring a selection of legal experts, a range of topics relating to search and affiliate marketing were placed under scrutiny.
Travis Crabtree – Looper Reed & McGraw, P.C
First up was Travis Crabtree. Travis outlined the 2 key criteria that must exist for a case to exist in respect to ‘misuse of Trademarks’. Those two things were either a use in commerce must occur, or that there must be consumer confusion. However differences did exist between California courts and those of New York.
For California courts, using competitors’ tags is a use in commerce. An example given was that a search engine triggered a pop-up ad on the use of the word ‘Playboy’. The California court ruled it was a use in commerce. So trademarks are being protected even in the case of triggering pop-ups. However in New York different rulings are happening. In New York in one example the court ruled it was more like product placement.
In pharmacy different brands exist. You might want to purchase Neurofen, but other brands (some of which may be cheaper) may be deliberately placed next to it in the store and you might buy the cheaper brand instead.
There is good news in that courts are starting to recognise that meta tags aren’t the be all of rankings.
Pursuing companies who may have a competing brand name in their keywords is certainly on the decline as the legal industry has began to understand more about how search engines rank pages.
Lawyers will still occasionally jump on the attack when they pick up on competitors including keywords in their tags, but this is mainly because a lot of lawyers are not aware how ineffective having the name in the meta keywords is.
According to Travis, 99%+ of cases are usually dropped if a cease and desist letter is sent and the offender stops using the competitor keyword. So taking this action combined with a quick apology is often the end of the matter.
David Mink – Chief Legal Counsel for Dream systems media
David looked at the legal ins and outs of using of and storing customer data. To illustrate the complicated nature of state laws David gave the scenario of a company who had legitimately acquired customer data but for one reason or another the data had been lost. For example:
Massachusetts. State law makes it illegal to store unencrypted SPI on a laptop. SPI = sensitive personal information and this is defined as first and last name + social security number, credit card info.
So for Massachusetts residents they say that info must be encrypted if it’s on a portable device of transmitted electronically. So if people are dealing with customers from Massachusetts they have to take necessary steps.
Risk on non-compliance? No one really knows. Possibly a fine is the risk. Main risk by not complying to the law is the brand value.
David reminded listeners that when it comes to brands “It takes a lifetime to create and nighttime to lose…”
Clarke Walton – Attorney-at-Law, Walton Law Firm
Clarke represents a number of domain name registrars. He told the conference to look out for a number of advances on the GTLD (generic top level domain name) front.
He reminded us that it was around 1984 that the first GTLDs such as .com, .net, .org and .edu were established. In 2000 additional GTLDs such as .aero, .info and .biz were launched. In 2005, .cat. .jobs, .mobil, .post, and domains like .tel came on the scene and in 2007, .asia was a major GTLD to appear.
Clarke suggested that a range of new GTLDs are going to be possible in the very near future due to recent developments, such as top level domains that are industry based, geographic or brand based.
For example: Industry-based domains may soon appear such as .hotel, .law, etc. Geographically-based TLDs could be available such as .vegas or .nyc and even brand-based domains like .ebay could be just around the corner.
Eric Goldman – Santa Clara University School of Law
In his presentation Eric looked at the legal implications of agency agreements, specifically how these relate to the use of affiliates and when (if ever) an advertiser becomes liable for things their affiliates do.
So Eric asked: When is the advertiser liable for what people do downstream (e.g. affiliates)? He argued that the company is not automatically liable for what independent contractors do. But when an independent contractor is deemed to be an agent of the principle, then the principle is generally seen as liable.
However most independent contractors are not agents. So in this respect advertisers are not liable for what affiliates do. Affiliates are not usually seen as agents.
However under spam law the advertiser could be liable if an affiliate spams. The advertiser knows the affiliate is a spammer, they know they are doing it and they don’t real them in and stop them and so get economic benefit from the spamming. (So the advertiser needs to have knowledge the affiliate is spamming.)
He added that the FTC tends to point their guns at advertisers and as a result the advertisers typically say ‘what are your terms, I’ll write a check’. However when it’s gone to court it’s not so black and white.
Plaintiffs under spam law have gone after the advertiser, but the cases have typically been dropped as the advertisers have a clause in their contracts that says affiliates shouldn’t spam. So where this clause exists the plaintiffs don’t have a case against the advertiser.
Another area is trademark. Where affiliates buy keywords of advertiser’s competitors. This area is new territory. It looks unlikely that plaintiffs will make this stick again because of agency law.
Eric suggested that in order to protect themselves it was essential advertisers put clauses in affiliate contracts that clearly prohibit affiliates to spam, put ads in adware, buying competitors’ keywords and so forth.
In addition to this, restricting affiliates from buying keywords you’re buying (as well as competitors’ brand names) in the affiliate contract was also highly recommended.