The U.S. Court of Appeals for the Fourth Circuit recently ruled that the Telephone Consumer Protection Act (TCPA) does not violate the First Amendment by requiring robocallers to identify themselves when making calls.
Three months before the Maryland gubernatorial election in 2010, political consultant Julius Henson and his company Universal Elections, Inc., were hired to assist with efforts for the Republican candidate. On Election Day, Universal Elections made 112,000 robocalls to voters that did not identify the campaign as the source of the message, nor did the calls include the campaign’s phone number. The State of Maryland filed a civil suit against Henson and Universal Elections for violating the TCPA. The state alleged that the defendants violated the TCPA by failing to identify the campaign as the sponsor of the message as required under the statute.
The TCPA and its implementing regulations require that automated and prerecorded messages state clearly at the beginning of the message the identity of the business, individual, or other entity that is responsible for initiating the call. If a business or other corporate entity is responsible, the prerecorded voice message must contain that entity’s official business name. In addition, the telephone number of the business must be provided either during or after the prerecorded voice message. This disclosure applies regardless of the content of the message.
Political calls are exempt from some of the TCPA’s requirements, but other requirements do apply — including the disclosure requirement at issue here and the restrictions on autodialed or prerecorded calls or texts to wireless phones, which require prior express consent. Last year the Federal Communications Commission issued an enforcement advisory regarding political robocalls to cellphones and cited two marketing companies for making millions of illegal robocalls.
In its supplemental motion to dismiss, the defendants asserted a First Amendment defense, arguing that the TCPA is a content-based burden on political speech that cannot withstand a high strict-scrutiny standard of review. The United States intervened to defend the constitutionality of the TCPA. The district court ruled in favor of Maryland, holding that the TCPA withstands First Amendment challenges, and granted a $1 million judgment in favor of the state.
The Fourth Circuit affirmed the district court. The appeals court had previously issued the opinion in July, but as an unpublished opinion. The court issued an order amending its previous opinion to change it to a published opinion after a request from the government that it be published.
The Fourth Circuit held that the TCPA provisions requiring all automated and prerecorded telephone messages to disclose the source of the message are content-neutral and thus subject to an intermediate scrutiny level of review. Content-neutral laws that regulate speech are valid if they further a substantial governmental interest. The Fourth Circuit noted that at least three important governmental interests are advanced by the TCPA’s identity disclosure provision, including protecting residential privacy, promoting disclosure to avoid misleading recipients of recorded calls, and promoting effective law enforcement. Since the TCPA advances important governmental interests and the appellants did not raise an argument to the contrary, the Fourth Circuit affirmed that the TCPA’s identity disclosure provisions are constitutional.
TCPA litigation continues to increase, and potential liability can be significant. All businesses should review their TCPA compliance policies carefully to ensure that their procedures and scripts comply with all requirements. In addition to the identification requirements that have been in effect for many years, companies should make sure that they are prepared for the upcoming TCPA rule changes. These changes will require a called party’s prior express written consent for autodialed or prerecorded calls to wireless phone numbers and for prerecorded telemarketing calls to residential lines, among other requirements.
While Google is already subject to commitments it made to the FTC regarding the requirement to afford advertisers non-discriminatory access to its search engine, the FTC’s latest guidance makes clear that Google and other search engines must also maintain clear disclosures to the public about sponsored content in search results.
On June 24, 2013, in a series of letters to general search engines such as Google, Yahoo, and Ask.com, as well as to specialized search engines, the FTC issued updated guidance concerning disclosures regarding paid advertisements in search results.
This latest FTC action follows on the heels of the Commission’s recent updates to the Dot Com Disclosures and the updated Endorsements and Testimonials Guides. The FTC’s letters came in response to industry and consumer organizations’ requests to the Commission to update its policies on search engine results, last released in 2002. The FTC also noted that it has observed a decline in search engines’ compliance since 2002.
The FTC’s central concern, first articulated in 2002, remains the problem that consumers may be deceived in violation of Section 5 of the FTC Act unless search engines clearly and prominently distinguish advertising from natural search results.
Consumers assume that search results reflect the most relevant results. When results appear because the advertiser has paid a search engine for, say, prominent placement, that placement could be deceptive to consumers if they are unaware of the commercial relationship between the advertiser and the search engine.
The growth of mobile commerce in particular has spurred the FTC to issue new guidelines. Search results on a mobile phone screens are, by their nature, small, and consumers could be easily confused by paid search results if the “paid” nature of those results is not clear.
In the new guidance, the FTC states that if search engines continue to distinguish advertising results by giving a different background color or shading combined with a text label (such as “sponsored” or “ad”), the search engines should consider multiple factors to ensure that any labels and visual cues are sufficiently “noticeable and understandable” to consumers. The agency clarified that there is no “one size fits all” and that search engines may use various methods, provided the disclosures are noticeable and understandable.
Proper disclosures, according to the FTC, include the following:
• Visual Cues – Search engines must select hues of sufficient luminosity to account for varying monitor types, technology settings, and lighting conditions. The FTC notes that search engines should consider using web pages of different luminosities for mobile devices and desktop computers. Further, the FTC recommends that search engines should use:
o more prominent shading that has a clear outline;
o a prominent border that distinctly sets off advertising from the natural search results; or
o both prominent shading and a border
• Text Labels – The FTC asserts that text labels must be used in addition to the visual cues a search engine may use to distinguish advertising. Text labels must:
o use language that explicitly and unambiguously conveys that a search result is advertising;
o be large and visible enough for consumers to notice it;
o be located near the search results (or group of search results) that it qualifies and where consumers will see it; and
o be placed immediately in front of an advertising result, or in the upper-left hand corner of an ad block, including any grouping of paid specialized results in adequately sized and colored font.
The new guidance also recognizes that technology will continue to evolve, such as voice assistants on mobile devices (e.g., the iPhone’s “Siri”). While technology may change, the new guidance makes clear that the FTC Act’s Section 5 prohibition on deceptive practices remains. Therefore, businesses must make sure that they differentiate advertising from other information. For instance, if a voice interface is used to deliver search results (for example, “find me a Mexican restaurant”) the search engine should disclose audibly any paid advertisements in adequate volume and cadence for ordinary listeners to hear and comprehend.
The FTC continues to be vigilant in monitoring the online marketplace. Search engines and advertisers need to review their practices, keeping in mind that disclosures that may be readily apparent on a desktop may be hidden on a mobile screen. As with the “Dot Com Disclosures,” the agency is providing guidance to businesses; however, FTC enforcement remains vigilant and companies that do not clearly disclose paid advertising in search results could face an FTC investigation.
Recently, the Consumer Financial Protection Bureau, the watchdog agency of the financial industry, has proved that it has considerable bite. Created under the Dodd-Frank act to fill gaps in regulatory coverage, the CFPB’s mandate is to enforce federal regulations that, among other things, restrict “unfair deceptive or abusive acts or practices” in consumer finance. The CFPB in recent months announced two major debt relief crackdowns, the most recent of which permanently shut the doors of a Florida company.
Last month, the CFPB announced that it filed a complaint against a Florida debt-relief company that misled consumers across the country by charging upfront fees for debt-relief services without actually settling most of the consumers’ debts. According to the complaint, the defendants engaged in abusive practices by knowingly enrolling vulnerable consumers who had inadequate incomes to complete debt-relief programs. The complaint charged American Debt Settlement Solutions, Inc. (ADSS) and its owner, Michael DiPanni, with actions that were not just unfair and deceptive, but also abusive. Indeed, this case if the first time that the CFPB in its short history has enforced this prohibition on “abusive” acts or practices.
While “unfair” and “deceptive” are familiar terms to anyone who follows the Federal Trade Commission, the term “abusive” is new to Dodd-Frank and has been the subject of much consternation among Republicans in Congress, who consider it too vague. With this complaint, the CFPB provided what may be its first example of the type of conduct it will consider “abusive.” ADSS allegedly collected about $500,000 in fees from hundreds of consumers in multiple states, charging illegal upfront fees for debt-relief services and “falsely promising them it would begin to settle their debts within three to six months when, in reality, services rarely materialized.
The CFPB said the actions were “abusive” because consumers reasonably relied on the company to “act in their interest by enrolling them in a debt-relief program that they can be reasonably expected to complete, and which will therefore result in the negotiation, settlement, reduction, or alteration of the terms of their debts.” The CFPB simultaneously filed a proposed consent order that would settle the matter by halting the company’s operations and imposing a $15,000 fine.
ADSS and its owner may have walked away relatively unscathed, with only a civil penalty, but others caught in the CFPB’s cross hairs have not been as fortunate. Earlier this year, the CFPB filed suit against two lawyers and two debt relief companies in New York, alleging that they charged thousands of consumers illegal advance fees and left some worse off financially, while illegally profiting themselves. One of the lawyers, Michael Levitis, also faces mail and wire fraud charges brought by the Manhattan U.S. Attorney’s Office – the first-ever criminal charges stemming from a CFPB referral. What’s notable in this complaint is that the acts are described as both deceptive and unfair, but not as abusive.
Although a relatively new agency, the CFPB is proving that it has the chops to take down offenders in the financial industry. Both the Florida and New York cases are signs of future enforcement, and they send a stern warning to offenders – if you prey on vulnerable consumers, be prepared for a fight.
Ignorance of the law is no excuse; nor is (willful) ignorance of a business partner’s illegal activities.
That’s a lesson to be learned from a recent amended complaint filed by the FTC which named a payment processor in its complaint against a telemarketer that allegedly engaged in a scam concerning credit card interest rate reduction. The Commission originally filed suit against the telemarketing company, Innovative Wealth Builders, Inc., and its owners in January for misrepresenting the debt relief service they were selling, charging a fee before providing debt relief services, and billing consumers without their express informed consent. The January action resulted in the temporary shutdown of the company’s operations pending outcome of the suit.
But earlier this month, the Commission filed an amended complaint, adding charges against Independent Resources Network Corp., IWB’s payment processor. The payment processor was accused of assisting and facilitating IWB’s deceptive practices, in violation of the Telemarketing Sales Rule (TSR). 16 C.F.R. § 310.3(b).
The TSR was created by the FTC in 1995 at the direction of Congress, which directed the Commission to proscribe rules to address abusive and deceptive telemarketing acts. The FTC has amended the TSR several times in order to respond to developments in telemarketing schemes. The amendments allow for liability for third parties such as payment processors and lead generators that have provided “substantial assistance or support” to any seller or telemarketer while knowing, or consciously avoiding knowing, that the seller or telemarketer is engaged in activity in violation of the TSR.
In the FTC’s complaint against IRN, the Commission notes that IRN “processed millions of dollars of credit card transactions for IWB, thereby earning considerable fees for itself.” The complaint identifies several indicators that would have, or should have, put IRN on notice of IWB’s practices in violation of the TSR, including the following:
• IWB sent IRN copies of company documents including, but not limited to, telemarketing scripts and samples of the IWB defendants’ “financial plan”
• IRN was aware that IWB had a variety of complaints on consumer websites
• IWB had an “F” rating with Better Business Bureau and IRN accessed the BBB website several times
• IRN received thousands of copies of chargeback disputes initiated by dissatisfied consumers
• IRN received multiple fraud alerts from Discover regarding IWB
Instead of ceasing to process transactions for IWB, IRN responded to these “red flags” by increasing the percentage it withheld from transactions processed for the telemarketer and holding such sums in a reserve account.
Some takeaways from the complaint and other FTC developments: if you are going to invest in basic due diligence to determine the risk level and credibility of a prospective account, you should probably follow through with your findings, following the letter of the law. The FTC recently issued additional proposed rule changes to the TSR to address more payment processing concerns.
“Cramming” – while it sounds like the experience of being in the middle row of a cross-country flight – actually refers to unauthorized charges on phone bills. Residential and business telecommunications customers have experienced cramming on their wireline bills for years, particularly for premium and other pay-per-call services. And the FTC has brought nearly two dozen cases against those companies.
With so many U.S. consumers using mobile phones (and many replacing their wireline phones and relying on wireless service exclusively), cramming has migrated to mobile phone bills. We have previously discussed the FTC’s ongoing review of mobile payments and the agency’s continuing concerns with cramming practices.
Last week, the FTC filed its first legal action to shut down a mobile cramming operation. In federal court in Georgia, the FTC alleges that since 2011, Wise Media, LLC, its CEO Brian Buckley, and its owner Winston Deloney have made millions of dollars by placing unauthorized charges for premium text messages services offering “horoscopes, flirting, love tips and other information” on consumers’ mobile phone bills. The FTC’s complaint also names Concrete Marketing Research, LLC, a company owned by Deloney, as having received funds earned through the allegedly unfair and deceptive practices.
According to the FTC, consumers did not “opt in” to receive these text message services, for which Wise Media charged $9.99 per month. The charges appeared on the bills and were repeated each month. Many consumers did not notice the charges and simply paid them. Some consumers noticed the charges but had great difficulty finding a contact for Wise Media, according to the complaint. Other consumers contacted the company, indicating they had not authorized the charges, but were still charged. Still others allegedly were told they would receive refunds, but Wise Media never issued those refunds. Instead, the underlying mobile phone carriers often ended up refunding money to complaining customers. The FTC noted that mobile phone carriers had experienced a high rate of complaints on Wise Media charges. One unnamed major phone carrier had even terminated Wise Media based on its excessive rates.
The FTC’s complaint charges that Wise Media and the other defendants violated Section 5 of the FTC Act by representing that consumers were obligated to pay for premium text services they never ordered. According to the FTC, these representations were false or misleading statements, constituting deceptive acts or practices under Section 5. Further, the complaint states that the placing of charges on consumers’ mobile phone bills without consumers’ “express informed consent” constituted unfair acts and practices also prohibited by Section 5.
The agency is seeking substantial relief and penalties from Wise Media and the other defendants. The FTC’s requested relief includes a request for a temporary and preliminary injunction to prevent future violations of the FTC Act by defendants, an asset freeze, and the refund of monies paid and “the disgorgement of ill-gotten monies.” In fact, after the filing of the complaint, Wise Media and the other defendants entered into a stipulation with the FTC agreeing to a temporary restraining order, an asset freeze, and other relief. The court also ordered that a receiver be appointed to oversee Wise Media’s assets and is requiring financial disclosures by the defendants.
This action signals that the FTC is continuing to monitor closely the mobile payment marketplace and that it will use its broad Section 5 authority to curb alleged deceptive practices in this medium. In fact, on May 8, the FTC staff will host a roundtable discussion on preventing mobile cramming, which will feature consumer advocates, industry leaders, and government regulators. It will be interesting to see what actions the major mobile carriers may propose, as the carriers have been on the receiving end of many of the consumer complaints (and refunds) resulting from third-party charges.
Some lawyers who deal regularly with the Federal Trade Commission in investigations of allegedly false and deceptive online advertising have noticed that the agency is beginning to take steps in these investigations that are unprecedented and draconian – and that judges seem to be going along. Below is a set of questions and answers with Jeff Ifrah, founding partner of Ifrah Law, on these new enforcement methods.
1. What is the first thing that a lawyer representing a company being probed by the FTC on false-advertising charges can expect to see?
IFRAH: Agency lawyers will go to a federal district judge with a copy of a temporary restraining order (TRO) for the judge to sign on an ex parte basis (without the defendant or its lawyers being present). Judges are allowed to do this as long as a hearing is set in a few days for a preliminary injunction, at which the defendant is represented. Meanwhile, the company is essentially barred from doing business by the terms of the TRO.
2. What is the FTC’s usual next step?
IFRAH: The agency will then go before the same judge with a draft of a preliminary injunction that is pretty much identical to the temporary restraining order. These injunctions basically require the business to continue to remain at a standstill until a trial is held and a settlement is reached. In addition, they require the company to disclose on all its web sites that it is being investigated for false and deceptive practices and to disclose online all of its sensitive financial information and that of its owners. Very often, the defendant will not contest this injunction request by the FTC. It is remarkable how many lawyers simply capitulate and agree to these draconian orders and set their clients up to fail.
3. What’s wrong with that? Isn’t the injunction lifted when the defendant agrees to settle the case?
IFRAH: Yes, but by that time, it may be too late, and the company may have gone out of business as a result of the restrictions that were imposed on it by the injunction and as a result of the disclosures that it had to make.
4. Are there other problems with these preliminary injunctions?
IFRAH: Yes. The FTC usually asks for a preliminary injunction with many standard features, and the judge usually grants it. But no two cases or defendants are the same. The courts are not taking into account the fact that different situations require different results. Instead, the injunctions are overbroad and reach behavior that is beyond what is alleged in the complaint.
Some of these restraining orders and injunctions restrict how much money a defendant can spend in a month or what type of online advertising it can use while the case is pending. Other injunctions require affirmative behavior, such as a requirement that the defendant report to the FTC every time it creates or operates any type of business. In either case, the defendant is forced to open its entire existence to the FTC, and everything it does is subject to scrutiny.
Another problem with standard, overbroad injunctions is that a defendant may become uncertain as to what it must do to prevent being held in contempt of court for non-compliance. The language in the injunction is often so vague and undefined that the FTC can act in its discretion to find a defendant in contempt.
5. And is that the end of the story?
IFRAH: No, unfortunately, plaintiffs lawyers often look to copycat an FTC action, and as a result companies may then have yet another headache to deal with, if they haven’t already been irreparably damaged by the FTC’s actions.
This week, the FTC released updated guidance to its 2000 “Dot Com Disclosures,” a guide covering disclosures in online advertising. The online world has certainly changed in 13 years, and the new guidelines, available here, cover advances in online advertising, including mobile advertising.
One central theme still prevails: existing consumer protection laws and rules apply no matter where you offer products and services: newspapers, magazines, TV and radio commercials, websites, direct marketing, and mobile marketing. Thus, the basic principle applies that companies must ensure that their advertisements are truthful and accurate, including providing disclosures necessary to ensure that an advertisement is not misleading. Further, the disclosures should be clear and conspicuous – irrespective of the medium of the message.
In determining whether a disclosure is “clear and conspicuous” as the FTC requires, advertisers should consider the disclosure’s placement in the ad. Importantly, the 2000 guidelines defined proximity of disclosures to ads as “near, and when possible, on the same screen.” The new guidelines state that disclosures should be “as close as possible” to the relevant claim. The closer the disclosure is to the claim, the better it is for FTC compliance purposes.
Advertisers should also consider: the prominence of the disclosure; whether it is unavoidable (e.g., consumers must scroll past the disclosure before they can make a purchase); whether other parts of the ad distract attention from the disclosure; whether the disclosure should be repeated at different places on the website; whether audio message disclosures are of sufficient volume and cadence (e.g., too fast); whether visual disclosures appear long enough; and, whether the language of the disclosure is appropriate for the intended audience. The FTC suggests avoiding “legalese” or technical jargon.
Mobile marketers should take note that the FTC provided some additional guidance regarding disclosure issues particular to mobile marketing. In particular, the FTC stated that the various devices and platforms upon which an advertisement appears or a claim is made should be considered. For example, if the advertiser cannot make necessary disclosures because of the limit of the space (e.g., in a mobile app), then the claim should not be made on the platform.
The FTC does permit hyperlinks for disclosures in certain circumstances. However, hyperlinks must:
- be obvious
- be labeled appropriately to convey the importance, nature and relevance of the information they lead to (such as “Service plan required. Get service plan prices here”)
- be used consistently
- be placed as close as possible to the relevant information the hyperlink qualifies and made noticeable
- take consumers directly to the disclosure after clicking
Companies should assess the effectiveness of the hyperlink by monitoring click-through rates and make changes accordingly. The agency also suggests that advertisers design ads so that scrolling is not necessary to find a disclosure. The FTC discourages hyperlinks for disclosures involving product costs or certain health and safety issues (similar to its 2000 guidelines).
Probably the most helpful part of the new guidelines are the 22 different examples of proper/improper disclosures the FTC provides at the end of the guidelines. As companies move forward in promoting products and services online, particularly on mobile platforms, reviewing these examples along with the general principles of truthful and complete statements in advertising may save a company from an FTC enforcement action.
Organizations are increasingly marketing their products and services on mobile platforms. Advertisers should take note that special considerations apply in the mobile marketplace, especially the space and text size limitations. If a disclosure is necessary to prevent an advertisement from being deceptive, unfair, or otherwise violative of an FTC rule, it must be clear and placed next to the offer. If that can’t be done, the safest course would be to move the offer to another platform, such as a traditional website. The FTC and the states have demonstrated that they take a keen interest in mobile marketing and they will be watching claims and disclosures in the smartphone/tablet universe.
Once again, the FTC has completed a major enforcement action against the illegal use of robocalls, a form of prerecorded, computerized telemarketing calls. This time, the action resulted in a $1.1 million civil penalty against Roy M. Cox, an individual whom the FTC considered to be the architect of an illegal robocall operation. The FTC alleged that Cox and several companies he controlled were using robocalls to market credit card interest-rate reduction programs, extended automobile warranties, and home security systems. Due to Cox’s inability to pay, the dollar penalty has been waived and Cox has been permanently banned from participating in any telemarketing activities.
According to the December 2011 complaint, Cox and his co-defendants were not only making prerecorded sales calls to consumers without their consent, in violation of the Telemarketing Sales Rule, but they were also illegally disguising their identity on customers’ caller ID displays. Instead of displaying the companies’ actual name and contact information, generic names such as “CARD SERVICES,” “CREDIT SERVICES,” or “PRIVATE OFFICE” would appear on a recipient’s caller ID. This tactic, known as “caller ID Spoofing,” is also prohibited by law.
As we reported in October, the FTC has been struggling to keep pace with these technological advancements, so it called on the public to come up with a solution. The commission offered a $50,000 prize to whoever could design a program to screen out illegal robocalls. The challenge was open to the public for three months and garnered nearly 800 submissions. The agency expects to announce a winner in early April.
The case against Cox and many of the FTC’s previous enforcement actions indicate that the FTC may be most concerned with robocalls that use patently deceptive advertising to lure in vulnerable, unsuspecting customers. Companies offering fraudulent credit card services, auto-warranty protection, and medical plans have made themselves an easy mark for the FTC, because of the likelihood that they will be reported by recipients or advocacy groups. However, companies interested in using computerized telemarketing must remember that even innocuous content can violate the Telemarketing Sales Rule (and the Telephone Consumer Protection Act) if recipients have not given prior written consent to receive such calls. Also, any company engaging in telemarketing should be subscribing to the federal “do not call” list and scrubbing its calling lists against the federal list. Some states still maintain their own lists as well. In addition to FTC or FCC enforcement, illegal robocalling can result in costly civil litigation, including class actions.
When the Baltimore Ravens and San Francisco 49ers won their NFL conference championship games, a Super Bowl matchup emerged with a great storyline — the opposing head coaches are brothers. An interesting legal question has also developed regarding the right to trademarks associated with the match-up between brothers.
Last February, Roy Fox, a football fan in Indiana, said he spent more than $1,000 to file for the trademarks “Harbowl” and “Harbaugh Bowl” in anticipation that Jim Harbaugh’s San Francisco 49ers and John Harbaugh’s Baltimore Ravens might meet in the Super Bowl. Fox said he remembered how former Los Angeles Lakers Coach Pat Riley made money by trademarking the term “Three-Peat” and thought that if the brothers were to meet in the Super Bowl he could make some money selling some T-shirts.
Fox applied for a trademark in February. In July, the United States Patent and Trademark Office (USPTO) published the trademark request, which is the standard procedure used by the office to see if anyone is opposed to a request.
In August, the NFL got the USPTO to extend the period of time allowed for filing an objection. At the same time, the NFL sent Fox a note saying that it was concerned that his recent trademarks could be easily confused with the NFL’s trademark of the Super Bowl or that “it may cause the public to mistakenly believe that your goods and/or services are authorized or sponsored by or are somehow affiliated with the NFL or its Member Clubs.”
The NFL continued to push Fox to drop his trademark application and began using more aggressive language in its correspondence.
“If you are still interested in resolving this matter amicably and abandoning your trademark application, please contact me as soon as possible,” NFL Assistant Counsel Delores DiBella wrote to Mr. Fox in October. She warned that otherwise, the NFL “will be forced to file an opposition proceeding and to seek the recoupment of our costs from you.”
Fox said he made a few requests of the league including a reimbursement of money he spent on the trademark applications, Indianapolis Colts tickets, and an autographed picture of NFL Commissioner Roger Goodell. Fox said that all of his requests were denied. Fox said he then dropped the trademark applications in October when additional correspondence from the league became more threatening and because he did not want to go to court to fight the NFL.
Trademark law protects a trademark owner’s exclusive right to use a trademark when use of the mark by another would be likely to cause consumer confusion as to the source or origin of the goods.
In order for the NFL to prevail on a challenge to Fox’s trademark, the league would have to show that the use of the “Harbowl” or “Harbaugh Bowl” mark would “cause a likelihood of confusion” as to the affiliation, connection or association of the mark with the marks owned by the NFL, or as to the origin, sponsorship, or approval of defendant’s goods services or commercial activities. Generally speaking, a “likelihood of confusion” exists when consumers viewing the allegedly infringing mark would probably assume the product or service it represents is associated with the source of a different product or service identified with a similar mark.
The NFL’s strong-arm tactics were successful in getting Fox to abandon his trademark application. The threat of a lengthy and costly legal battle is often enough to deter people from pursuing trademarks that another trademark owner – in this case the NFL – considers to be possibly infringing, even if the USPTO or a court may not ultimately agree.
It is unclear who would have prevailed had this case been contested, but it seems unlikely that the NFL ultimately would have prevailed. While it is clear in some sense, with the benefit of knowing now that the Ravens and 49ers are in the championship game, that “Harbowl” or “Harbaugh Bowl” is referring to the “Super Bowl” (which is a trademark owned by the NFL), it likely would not have risen to the “likelihood of confusion” level that would be needed for the NFL to prevail before the USPTO or in court.
The Federal Trade Commission released a report on December 10, 2012, that concluded that mobile apps targeted at children were collecting large amounts of data from children and sharing their information with advertisers without disclosing their practices.
The FTC report examined 400 leading apps designed for kids that were sold in the mobile stores run by Apple and Google. The agency said it is launching an investigation to determine if certain mobile apps developers have violated the Children’s Online Privacy Protection Act (COPPA) or engaged in unfair or deceptive trade practices.
The FTC’s authority over children’s mobile apps comes from laws that prohibit unfair and deceptive acts of commerce, as well as from COPPA, which requires operators of online services for children under 13 to get consent from parents before collecting and sharing personal information, among other requirements.
The report itself does not call for regulatory changes. However, the FTC is reviewing COPPA to determine if it needs to be updated, and is expected to announce updates soon COPPA was enacted in 1998, and FTC officials say the law needs to be changed to reflect the growing prominence of mobile apps and social networking sites used by children. The regulations under COPPA have not been substantially revised since its introduction. COPPA sets forth specific requirements for websites aimed at children, but its guidance on mobile technology is far less clear.
The FTC proposed updating COPPA, but it has been met with pushback thus far from technology companies. The proposed changes could significantly increase the need for children’s sites and apps to obtain parental permission to collect certain types of data, including device IDs, photos, and voice recordings. FTC officials have also emphasized that they consider the exact location of a mobile device to be personal information that would require parental permission to collect.
The FTC report noted that it was particularly concerned with the collection of a user’s device ID, which is a string of letters or numbers that identifies each mobile device. Nearly 60 percent of the mobile apps that the FTC reviewed transmitted the device ID. Some of those apps then shared that ID with an advertising network or other third party, including some apps that disclosed the phone number and location of the device. Additionally, more than half the apps also contained interactive features such as advertising or in-app purchases that were largely undisclosed to parents.
Only 20 percent of the apps reviewed in the report disclosed any information about the app’s privacy practices. FTC Chairman Jon Leibowitz said, “Our study shows that kids’ apps siphon an alarming amount of information from mobile devices without disclosing this fact to parents.”
This week’s report serves as further notice to all mobile app developers that the FTC is monitoring the mobile app market. App developers, particularly developers that are targeting children, need to review their compliance with FTC guidelines, as well as their overall truth-in-advertising and data privacy policies, to make sure their apps are complying. The FTC has made clear that it will take enforcement actions against industry participants and will continue to aggressively pursue action in the future.