Cybertelecom Federal Internet Law & Policy An Educational Project

E-Commerce :: Advertising

Derived from Dot Com Disclosures: Information About Online Advertising [TEXT] [PDF]

The FTC Act's prohibition on "unfair or deceptive acts or practices" broadly covers advertising claims, marketing and promotional activities, and sales practices in general. The Act is not limited to any particular medium. Accordingly, the Commission's role in protecting consumers from unfair or deceptive acts or practices encompasses advertising, marketing, and sales online, as well as the same activities in print, television, telephone and radio. Indeed, since 1994, the Commission has brought over 100 law enforcement actions to stop fraud and deception online and is working to educate businesses about their legal obligations and consumers about their rights.

Source: WikiCommons

For certain industries or subject areas, the Commission issues rules and guides. Rules prohibit specific acts or practices that the Commission has found to be unfair or deceptive. Guides help businesses in their efforts to comply with the law by providing examples or direction on how to avoid unfair or deceptive acts or practices. Many rules and guides address claims about products or services or advertising in general and are not limited to any particular medium used to disseminate those claims or advertising. Therefore, the plain language of many rules and guides applies to claims made on the Internet. For example, the Mail or Telephone Order Merchandise Rule, which addresses the sale of merchandise that is ordered by mail, telephone, facsimile or computer, applies to those sales regardless of "the method used to solicit the order." Solicitations made in print, on the telephone, radio, TV or online naturally fall within the Rule's scope. In addition, the Guides Concerning the Use of Endorsements and Testimonials in Advertising apply to endorsements, which are defined as "any advertising message . . . [that] consumers are likely to believe reflects the opinions, beliefs, findings, or experience of a party other than the sponsoring advertiser." The Guides refer to advertising without limiting the media in which it is disseminated, and therefore, encompass online ads.

Proceedings

RFC "Dot Com Disclosures: Information About Online Advertising," the business education publication :: Comments Due July 11, 2011 August 10, 2011 :: Submit comment electronically by clicking here.

• FTC Staff Extends Deadline for Public Comments on Businesses Education Publication About Online Disclosures June 10, 2011 ("At the request of a stakeholder, the comment deadline has now been extended for 30 days until August 10, 2011.")
• FTC Seeks Input for Revising Its Guidance to Businesses About Disclosures in Online Advertising May 26, 2011
• The staff of the Federal Trade Commission is updating "Dot Com Disclosures:  Information About Online Advertising," the guidance document that advises businesses how federal advertising law applies to advertising and sales on the Internet.  [ Download "Dot Com Disclosures" here .]  The online world has changed dramatically since the original guidance was published in 2000, and the FTC is seeking public comment about how it should be modified to reflect these changes. [ Read staff invitation to submit comments here .]

Since the FTC staff published Dot Com Disclosures, mobile marketing has become a reality, the "App" economy has emerged, the use of "pop-up blockers" has become widespread, and online social networking has emerged and grown popular.  In seeking public comment on possible revisions to the guidance document, the staff is interested in the technical and legal issues that marketers, consumer advocates, and others believe should be addressed.

The 2000 guidance emphasizes that the same consumer protection laws apply to marketers whether they operate online or not.  It illustrates how online marketers should provide clear and conspicuous disclosures of information that consumers need to make informed online purchasing decisions.  It also discusses how the traditional factors used to evaluate whether disclosures are likely to be clear and conspicuous apply in the context of online advertising.

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Pop Up Ad Cases

There are three closely related sets of cases that involve the use of trademark keywords to direct internet users to competitors online content. These involve

Metatags (trademarks used to manipulate search results),

Keywords (trademarks used to display advertisements), and

Pop-Up Ads (trademarks used to trigger pop-up ads).

In the Pop Cases, plaintiff website owners have sought to fight defendant adware companies by arguing that the popup ads constitute trademark violations. Plaintiffs argue that the popup ads are keyed off of trademark keywords. When, for instance, an individual on the Internet goes to the Washington Post, the trademark term "Washington Post" is in the adware database and triggers the adware to display a popup ad for a competing media source such as The Onion.

In resolving these cases, the courts have generally considered the following factors: trademark law and initial interest confusion, the fact that the adware program is a program voluntarily downloaded by the computer user, the fact that the popup ad makes no alteration or change to the underlying website, and that the popup ad makes no use of the trademark term. The courts, however, are split with regard to outcome.

District Court

• Newsweek Interactive Co., LLC, et al. v. The Gator Corp. , 2002 WL 32153438 (E.D. Va. 2002) (Phillip Nizer) (Findlaw copy of order) (defendant reportedly distributed adware which would cause pop-up ads to appear which displayed third party advertisements; court enjoined defendant from causing its pop up ads to be displayed on plaintiff's websites without consent of plaintiffs, or altering plaintiffs' websites in any way) Gator, now known as Claria Corp, reportedly subsequently settled this suit, and others, out of court. IPFrontline; Pop Goes the Trademark
• WhenU Cases WhenU reported distributed adware that produced pop-up ads based on individual's Internet activity, search terms, and web addresses, where Pop up ads was labeled as produced by WhenU program SaveNow and not by any website individual might be visiting.
• 1-800 Contacts, Inc. v. WhenU.Com and Vision Direct, Inc. , 309 F. Supp. 2d 467 (S.D.N.Y. 2003) rvsrd 414 F.3d 400 (2d Cir. 2005) cert denied (S.Ct) (circuit court reversed lower courts injunction, finding that Popup ads appeared in a separate window, popup ads did not display trademark of plaintiffs, popup ads did not divert individuals from plaintiff's website, and WhenUs software was voluntarily downloaded by computer user. Court noted that Whenu triggered ads based on URLs which are not the same thing as trademarks, and any use of trademarks was internal, not exposing consumers to confusion)
• A company's internal utilization of a trademark in a way that does not communicate it to the public is analogous to an individual's private thoughts about a trademark. Such conduct simply does not violate the Lanham Act, which is concerned with the use of trademarks in connection with the sale of goods or services in a manner likely to lead to consumer confusion as to the source of such goods and services. [p 409]
• Pop-Up Advertisements Are Not Use Under Trademark Law, Richard Balough
• Review of WhenU Pop-Up Case Refused by Supreme Court Ladas & Perry
• Court: Trademarks No Bar to Pop-Up Tool, Ecommerce Times July 1, 2005
• U Haul Int'l, Inc. v. WhenU.com, Inc. , 279 F. Supp. 2d 723 (E.D.Va. 2003) (dismissing case, noting that the computer user consented to the appearance of WhenU's pop up ads when the user downloaded the WhenU software, "under the circumstances, while pop-up advertising may crowd out the U-Haul's advertisement screen through a separate window, this act is not trademark or copyright infringement, or unfair competition." The court noted that the WhenU ads were in a fully separate window from plaintiffs; and WhenU's ads did not include plaintiffs trademark)
• Wells Fargo & Co. v. WhenU.com, 293 F. Supp. 2d 734 (E.D. Mich. 2003) (dismissing case, with findings consistent with the Virginia court, also stating "SaveNow interacts only with the web servers of WhenU or WhenU’s advertisers. It has nothing to do with plaintiffs’ web servers. As plaintiffs’ own expert acknowledged, SaveNow cannot and does not access the servers where plaintiffs’ websites are physically located." Court found that defendant did not modify plaintiffs' websites. Court also noted that plaintiff Quicken had a division that was using WhenU for advertising)

News

• Pop-ups don't amount to unfair competition in Utah case, Internet Cases 8/20/2008

FCC Bans Web Addresses in Commercials Aimed at Kids

In Re Children's Television Obligations of Digital Television Broadcasters, MM Dkt 00-167 (Released Sept 27, 2006)

8. In the 2004 Order, the Commission updated the children’s television rules and policies to ensure that they continue to serve the interests of children and parents as the country transitions from analog to digital television. Among other things, the Commission revised the three-hour core programming processing guideline as it applies to DTV broadcasters that choose to multicast.15 Specifically, the 2004 Order increased the core programming benchmark for digital broadcasters in a manner roughly proportional to the increase in free video programming offered by the broadcaster on multicast channels.16 The 2004 Order also permitted the display of Internet website addresses during children’s programming only if the website meets a four-prong test limiting commercial matter on the site, and prohibited broadcasters from displaying website addresses during both children’s programs and commercials appearing in those programs if the website uses host selling.17 The 2004 Order also imposed a percentage cap on the number of preemptions of core children’s programs and revised the definition of “commercial matter” for purposes of the commercial limits to include promotions of other television programs unless they are children’s educational or informational programs.

29. The CTA requires that commercial television broadcasters and cable operators limit the amount of commercial matter in children’s programs to no more than 10½ minutes per hour on weekends and 12 minutes per hour on weekdays.73 The Commission noted in the 2004 Order that some broadcasters are displaying Internet website addresses during children’s program material (for example, in a crawl at the bottom of the screen) and expressed concern that the display of such addresses for websites established for commercial purposes in children’s programs was inconsistent with the CTA’s mandate to protect children from excessive and inappropriate commercial messages. Accordingly, the 2004 Order required that, with respect to programs directed to children ages 12 and under, the display of Internet website addresses during program material is permitted only if: (1) the website offers a substantial amount of bona fide program-related or other noncommercial content; (2) the website is not primarily intended for commercial purposes, including either e-commerce or advertising; (3) the website’s home page and other menu pages are clearly labeled to distinguish the noncommercial from the commercial sections; and (4) the page of the website to which viewers are directed by the website address is
not used for e-commerce, advertising, or other commercial purposes (e.g., contains no links labeled “store” and no links to another page with commercial material).74 This restriction applies to analog and digital broadcasters as well as cable operators

32. We will retain the rule on website addresses and, in addition, adopt the clarifications proposed in the Joint Proposal. As the Commission stated in the 2004 Order, the website address rule fairly balances the interest of broadcasters in exploring the potential uses of the Internet with our mandate to protect children from over-commercialization.82 The display of the address of a website that sells a product is the equivalent of a commercial encouraging children to go to the store and buy the product.83 Thus, including the display during program material converts that program material into commercial matter just as a host telling children to race to their local toy store would. We note that broadcasters are free to display the addresses of websites that do not comply with the test during the allowable commercial time, as long as it is adequately separated from the program material; thus, the burden is minimal and outweighed by the benefits discussed above. The minor clarifications recommended by the Joint Proposal make this point clear.

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Remarks of Jonathan S. Adelstein, Commissioner, Federal Communications Commission, PointSmart.ClickSafe: Summit on Children's Online Safety and Literacy, June 10, 2008:

That is why, with my strong support, the FCC has taken steps to try to draw brighter lines between advertising and programming in children's shows. In the fall of 2004, we issued a landmark ruling that drew on the expertise of groups like Children NOW and many of you in this room. We prevented broadcasters from displaying website addresses during children's programming unless certain requirements designed to draw clear distinctions between commercial and other content were satisfied.

The Commission wanted to encourage broadcasters to develop interactive services that would enhance the educational value of children's programming, so we decided not to prohibit the appearance of interactive links to commercial Internet sites.

But perhaps the most critical part of the decision - when you think about its long-term impact - was our tentative conclusion that we should prohibit interactive advertisements during children's programming. We agreed unanimously that the TV should not connect viewers to interactive commercial matter unless parents "opt in" to such services.

That was the right conclusion then, and I am even more convinced that it is the right conclusion now. I urge Chairman Martin to issue a final rule to ban interactive advertisement to children. I hope all of my colleagues will support this. Now it is important to recognize that not all of the initiatives are problematic. One cable network reportedly launched a major mobile and interactive TV campaign to promote healthy eating to children as part of a week of on-air programming. That is truly commendable, and more of that should be done.

But I simply cannot accept the argument that it is too soon to act, because interactive television is a nascent technology or that we simply do not know what will unfold. We know pretty well what is going to happen. Just look at what companies are doing overseas. Look at a Kaiser Family Foundation study on online food advertising targeting children or the recent Washington Post series on obesity. If we think the epidemic of childhood obesity and diabetes is bad now, just wait until interactive advertising makes its force known on television. But by then, it will be too late.

We should quickly move on the Further Notice on interactivity we issued in 2004 seeking comment on how to implement sensible restrictions on interactive ads and how those restrictions fit within our current regulatory structure. We really need to take a hard look at interactive advertising and promulgate rules before it becomes an established business model here in this country.

47 CFR 73.670(b)

(b) The display of Internet Web site addresses during program material or promotional material not counted as commercial time is permitted only if the Web site:

(1) Offers a substantial amount of bona fide program-related or other noncommercial content;

(2) Is not primarily intended for commercial purposes, including either e-commerce or advertising;

(3) The Web site's home page and other menu pages are clearly labeled to distinguish the noncommercial from the commercial sections; and

(4) The page of the Web site to which viewers are directed by the Web site address is not used for e-commerce, advertising, or other commercial purposes (e.g., contains no links labeled "store" and no links to another page with commercial material).

(c) If an Internet address for a Web site that does not meet the test in paragraph (b) of this section is displayed during a promotion in a children's program, in addition to counting against the commercial time limits in paragraph (a) of this section the promotion must be clearly separated from program material.

(d)(1) Entities subject to commercial time limits under the Children's Television Act shall not display a Web site address during or adjacent to a program if, at that time, on pages that are primarily devoted to free noncommercial content regarding that specific program or a character appearing in that program:

(i) Products are sold that feature a character appearing in that program; or

(ii) A character appearing in that program is used to actively sell products.

(2) The requirements of this paragraph do not apply to:

(i) Third-party sites linked from the companies' Web pages;

(ii) On-air third-party advertisements with Web site references to third-party Web sites; or

(iii) Pages that are primarily devoted to multiple characters from multiple programs.

Note 1: Commercial matter means air time sold for purposes of selling a product or service and promotions of television programs or video programming services other than children's or other age-appropriate programming appearing on the same channel or promotions for children's educational and informational programming on any channel.

Note 2: For purposes of this section, children's programming refers to programs originally produced and broadcast primarily for an audience of children 12 years old and younger.

47 CFR 76.225

(b) The display of Internet Web site addresses during program material or promotional material not counted as commercial time is permitted only if the Web site:

(1) Offers a substantial amount of bona fide program-related or other noncommercial content;

(2) Is not primarily intended for commercial purposes, including either e-commerce or advertising;

(3) The Web site's home page and other menu pages are clearly labeled to distinguish the noncommercial from the commercial sections; and

(4) The page of the Web site to which viewers are directed by the Web site address is not used for e-commerce, advertising, or other commercial purposes (e.g., contains no links labeled "store" and no links to another page with commercial material).

(c) If an Internet address for a Web site that does not meet the test in paragraph (b) of this section is displayed during a promotion in a children's program, in addition to counting against the commercial time limits in paragraph (a) of this section the promotion must be clearly separated from program material.

(d)(1) Entities subject to commercial time limits under the Children's Television Act shall not display a Web site address during or adjacent to a program if, at that time, on pages that are primarily devoted to free noncommercial content regarding that specific program or a character appearing in that program:

(i) Products are sold that feature a character appearing in that program; or

(ii) A character appearing in that program is used to actively sell products.

(2) The requirements of this paragraph do not apply to:

(i) Third-party sites linked from the companies' Web pages;

(ii) On-air third-party advertisements with Web site references to third-party Web sites; or

(iii) Pages that are primarily devoted to multiple characters from multiple programs.

(e) The requirements of this section shall not apply to programs aired on a broadcast television channel which the cable operator passively carries, or to access channels over which the cable operator may not exercise editorial control, pursuant to 47 U.S.C. 531(e) and 532(c)(2).

Note 1 to §76.225: Commercial matter means air time sold for purposes of selling a product or service and promotions of television programs or video programming services other than children's or other age-appropriate programming appearing on the same channel or promotions for children's educational and informational programming on any channel.

Note 2 to §76.225: For purposes of this section, children's programming refers to programs originally produced and broadcast primarily for an audience of children 12 years old and younger.

Note 3 to §76.225: Section 76.1703 contains recordkeeping requirements for cable operators with regard to children's programming.

01/24/07 FCC Issues Rule To Ban Website Addresses On Kid Commercials

FCC Issues New Rules for Children's Television Programming, Wilmer Hale (Dec. 21, 2006)

Kids TV faces new Net restrictions, CNET Jan 24, 2007

See Also Child Protection

See also

FTC

Trademark

Is it Legal to Link

Metatags

Keyword Terms for Search Engines

Law

15 USC § 45

Lanham Act / Trademark

18 USC § 2252C Misleading Words or Digital Images on the Internet (enacted as a part of the Adam Walsh Child Protection and Safety Act Sec. 703, Pub. L. 109-248)

(a) In General - Whoever knowingly embeds words or digital images into the source code of a website with the intent to deceive a person into viewing material constituting obscenity shall be fined under this title and imprisoned for not more than 10 years.

(b) Minors - Whoever knowingly embeds words or digital images into the source code of a website with the intent to deceive a minor into viewing material harmful to minors on the Internet shall be fined under this title and imprisoned for not more than 20 years.

(d)(2) Definitions - the term 'source code' means the combination of test and other characters comprising the content, both viewable and non viewable, of a web page, including any website publishing language, programming language, protocol or functional content, as well as any successor languages or protocols.

Caselaw

FTC

In re Interstate Bakeries Corp., Docket No C-4042 (FTC Apr 16, 2002) (applying existing advertising law to online advertisements) (Complaint)

Federal Activity

• FTC Outlines Recommendations for Online Advertising In Testimony Before Senate Homeland Security Subcommittee FOR RELEASE May 15, 2014
• Commission Approves Issuance of Federal Register Notice Announcing Review of Mail Order Rule, FTC 9/12/2007
• FTC to Host Town Hall to Examine Privacy Issues and Online Behavioral Advertising, FTC 8/8/2007
• < name="ftcpap">FTC Papers
• How to be Web Ready
• Advertising and Marketing on the Internet: The Rules of the Road [TEXT] [PDF]
• BBB-Online: Code of Online Business Practices [TEXT]
• Dot Com Disclosures: Information About Online Advertising [TEXT] [PDF]
• Electronic Commerce: Selling Internationally. A Guide for Business [TEXT] [PDF]

Papers

• Eyetracker III: Online News Consumer Behavior in the Age of Multimedia 2004
• Kendall Bodden, Pop Goes The Trademark? Competitive Advertising on the Internet , 1 Shidler J. L. Com. & Tech. 12 (Aug. 2, 2005)
• Trademarks on the Internet - Fair Play or Fair Game, IPFrontline (Mar 2006)

Links

• Poynter Online: Everything You Need to be a Better Journalist

Statistics

• Top 50 Advertisers by Media Value in May February, 2008, ClickZ (July 2006)
• Top 50 Advertisers by Media Value in January, 2008, Clickz 3/26/2008
• Top 50 Advertisers by Media Value in February 2006, ClickZ (April 2006)

 

News

• Google D.C. Talks: 10 Things You Don't Know About Online Advertising, Google 9/17/2010
• FTC said to prepare review of Apple tactics in mobile ad market, Wash Post 6/14/2010
• The ECJ's Ruling on Google Adwords, Center for Internet and Society 3/24/2010
• Behavioral Ad Industry: We're Not Creepy! - New ad campaign designed to fend off consumer protection laws..., dslreports 12/8/2009
• FTC rules against Web practices of real estate group, CW 11/4/2009
• Self-regulatory principles for behavioral advertising, Google 7/2/2009
• Sixth Lawsuit Filed Over Google AdWords, Plus an Assault on Google's Organic Search Results--Ascentive v. Google, Tech & Marketing Law 6/30/2009
• Online Advertising Suffers First Quarterly Loss Since '02, Ecommerce Times 6/9/2009
• Sears Settles FTC Charges Regarding Tracking Software, FTC 6/5/2009
• Advertising: Pay-Per-Click Web Advertisers Combat Costly Fraud, NYT 5/13/2009
• Google facing Texas-sized class action lawsuit over AdWords, Ars Technica 5/13/2009
• Google's Ad Preference Manager: One Small Step for Google, One Giant Leap for Privacy, PFF 3/12/2009
• Advocates Blast FTC Guidelines on Web Privacy, Internet News 2/18/2009
• FTC's behavioral ad regulations are underwhelming, CW 2/18/2009
• Congressman, privacy groups challenge FTC Web-ad policy, CNET 2/18/2009
• Reaction to the FTC's advertising privacy principles, Google 2/18/2009
• FTC warns of "day of reckoning" for online advertisers, Ars Technica 2/18/2009
• FTC Issues Behavioral Advertising Guidelines, CDT 2/18/2009
• Court Slams Competitive Metatagging and Keyword Advertising--Soilworks v. Midwest Industrial Supply, Tech & Marketing Law 8/28/2008
• Pop-ups don't amount to unfair competition in Utah case, Internet Cases 8/20/2008
• Anti-Spyware Companies Debate Blocking ISP-Injected Advertising, Techdirt 4/29/2008
• Comparative keyword ads OK in Utah, Google 3/10/2008
• Net advertiser self-regulation falling short, Globe and Mail 11/5/2007
• Google's Motion to Dismiss American Airlines' Lawsuit Denied, Tech & Marketing Law 10/26/2007
• S & L Vitamins, Inc. v. Australian Gold, Inc., 2:2005cv01217 (EDNY Sept 30, 2007), Justia 10/18/2007
• The FTC's close look at online advertising, Google 9/18/2007
• More Misplaced Google Ad Lawsuits... This Time In Australia, Techdirt 9/12/2007
• Stealth Trademarks: Ad Keywords, Cybertelecom 7/10/2007
• Google Subpoenaed for Keyword Purchase Data--Rhino Sports v. Sport Court, Technology & Marketing Law Blog 7/10/2007
• Google To Pay Nothing in Keyword 'Sucker's Bet', Internet news 9/4/2007
• American Blinds Realizes That It Was About To Lose Google Keyword Ad Suit, Techdirt 9/4/2007
• Link by Link: Whiting Out the Ads, but at What Cost?, NYT 9/4/2007
• American Blinds-Google Lawsuit Settles, Tech & Marketing Law 9/4/2007
• Google's Keyword Ads Don't Fly With American, Ecommerce Times 8/21/2007
• A look at the American Airlines v. Google suit, Internet Cases 8/21/2007
• Utah Tries To Ban Keyword Advertising On Trademarked Terms, Techdirt 4/5/2007
• Utah Bans Keyword Advertising, Technology & Marketing Law Blog 4/5/2007