In Elliott et al. v. Google Inc., Case No. CV-12-1072 (U.S. District Court, D. Arizona, order entered September 10, 2014), the U.S. District Court for the District of Arizona held that the primary significance of the term “Google” to a majority of the Internet-searching public was to refer to the Google search engine specifically, rather than as a descriptive term for search engines generally. This was so even if “google” is widely used as a generic verb, regardless of whether Google’s search engine is being used. The court opined that “a trademark performs its statutory function so long as it distinguishes a product or service from those of others and indicates the product’s or service’s source.” The court concluded that plaintiff had failed to present conclusive evidence that the primary meaning of “google” was as a generic verb rather than as an indicator of the origin of the services at issue.
On September 9, 2014, California Governor Jerry Brown signed Assembly Bill 2365, which prevents consumer contracts for goods and services from containing provisions that require consumers to waive their rights to make disparaging comments about those goods or services. It also forbids threatening or penalizing consumers for making disparaging comments. The law takes effect on January 1, 2015, and will be enforceable by consumers and public prosecutors.
In Boston et al. v. Athearn et al., Case No. A14A0971 (Ga. Ct. App., order entered October 10, 2014), the Georgia Court of Appeals reversed a trial court’s grant of summary judgment and ruled that a couple may be held liable for not requiring their minor child to cancel a fake Facebook account after they learned about it. Their child had created an account using a classmate’s name, which included an altered photo and sexual, racist, and otherwise offensive postings. He then invited his classmate’s teachers, family members, and other students to “friend” the account. The victim’s parents sued the child and child’s parents for libel and intentional infliction of emotional distress, claiming the parents breached a duty to supervise their child’s use of a computer and Internet account. The appellate court ruled that the parents may be held directly liable for their own negligence in failing to supervise or control their child in a matter involving conduct that posed an unreasonable risk of harm to others.
Summary Judgment Precluded by Dispute Over Alleged Material Misrepresentation in Unsolicited Commercial Email
In Wagner v. Digital Publishing Corporation et al., Case No. C 13-04952 (U.S. District Court, N.D. California, order entered October 10, 2014), the U.S. District Court for the Northern District of California held that a triable issue over whether the “From” lines, domain names, and subject lines of unsolicited commercial emails contained material misrepresentations defeats partial summary judgment on plaintiff’s state law claims. The court held there were genuine issues of material fact about whether the companies listed as the registrants of the domain names from which the emails were sent were valid entities when the emails were sent. It also held there was no evidence that the defendants used privately registered domain names to conceal their identities as part of the emails, and that a reasonable juror could find that the subject lines were too good to be true and thus unlikely to mislead a recipient.
On October 28, 2014, the Federal Trade Commission (“FTC”) filed a complaint against AT&T in the U.S. District Court for the Northern District of California, alleging it sold consumers unlimited smartphone data plans without telling them it would slow Internet speeds once consumers reached a certain amount of data in a particular billing cycle. The FTC alleges this practice of data “throttling” reduced Internet speeds by up to 90% in some instances. It also alleges that AT&T violated the FTC Act by changing the terms of consumers’ unlimited data plans during contract periods, and by failing to fully disclose the specifics of the practice of throttling to consumers renewing unlimited data plans. Finally, the FTC alleges that when customers cancelled contracts due to slowed Internet speeds, AT&T charged high early termination fees.
In Rosolowski et al. v. Guthy-Renker LLC, Case No. B250951 (Cal. Ct. App., 2nd Dist., Div. 3, order entered October 29, 2014), a California court of appeals held that a header in a commercial email does not misrepresent the sender’s identity simply because it fails to identify the name of the entity that sent it, or because it fails to identify an entity with a traceable domain name, as long as the sender’s identity is readily ascertainable from the email body. California Business & Professions Code section 17529.5 prohibits email ads with falsified, misrepresented, or forged header information, or that contain a subject line likely to mislead a recipient about a material fact regarding the contents or subject matter of the message. In this case, defendant’s emails were ads for its consumer brands and the emails provided a link to its Web site, an unsubscribe notice, and physical address. The bodies also clarified that the free gift mentioned in the “subject” line was contingent on a purchase, although the subject line did not refer to the purchase agreement.
On August 15, 2014, the Federal Communications Commission (“FCC”) extended the deadline for the second round of public comments on its proposed new “net neutrality” rules by three business days to September 15, 2014. The extension comes in response to the overwhelming one million plus comments received by the FCC on the proposed new rules, and mirrors a similar three day extension to the initial commentary period in July of 2014. FCC Chairman Tom Wheeler outlined his proposed new net neutrality rules in April of 2014, but met with fierce opposition from critics who argued the rules would let content companies like Netflix pay Internet Service Providers for faster delivery to their customers, thereby slowing speeds for users of other sites. The FCC intends to review all comments and establish new net neutrality rules by the end of 2014.
California Federal Court Dismisses in Part Plaintiff’s Claims Against Emailer Arising under California’s Email Law
On June 18, 2013 in a case arising under California’s Commercial Email Law (“CEL”; Business and Profession Code §17529.5), Moreland v. Ad Optimizers LLC, et al., Case No.: 5:13-CV-00216-PSG, a federal court in the Northern District of California dismissed in part Moreland’s second amended complaint against an emailer where he failed to plead fraud with particularity as required by the Federal Rules of Civil Procedure 9(b). The court noted the lack of specifics alleged such as the types of allegedly false or misleading advertisements, the number of advertisements or the date ranges of the emails in each category of alleged wrong. The court further noted that Moreland did not allege the domain names for the landing sites to which the emails redirected, who those sites were registered to, any of the allegedly unlawful subject lines or the sender of any of the emails.
While the court was prepared to dismiss plaintiff’s claims on this ground alone, it nonetheless addressed Moreland’s two other arguments. The court said that plaintiff’s conspiracy claim against defendant Lopez – an owner of co-defendant Ad Optimizers – was barred by California’s Agent’s Immunity Rule, which bars a claim that an agent of a corporation conspired with its corporate principal where it acts in an official capacity on behalf of the corporation and not for individual advantage. It also barred Moreland’s claim that Lopez also conspired with at least one unnamed third party.
However, the court rejected Lopez’ argument that he was not liable under the CEL, where Lopez argued the law applied only to advertisers and not those who create and send third-party email advertisements. In support of this position, Lopez pointed to the difference between the use of “advertiser and initiator” language in §17529.4 and §17529.6 and the solitary “advertiser” language in §17529.5. The court referenced past interpretation by California courts to reject the contention.
On March 12, 2013, the Federal Trade Commission (“FTC”) updated its online advertising guidelines (“.com Disclosures”). The update is intended to provide guidance to digital advertisers delivering ads to desktop computers, laptops, net books and mobile devices, in order to help them comply with consumer protection laws regarding deceptive and unfair business practices.
The main theme of the update relates to clarity and conspicuousness. The FTC listed several factors that should be used in determining whether a disclosure is clear and conspicuous. These include proximity and placement, prominence, other distracting factors in the ads, repetition, multimedia messages and campaigns, and understandable language.
The FTC suggested disclosures be as close as possible to the claims to which they relate. Disclosures and claims should appear on the same screen, if possible, and suggestive text or visual cues should be used otherwise to encourage scrolling that leads to the disclosure. Any hyperlinks should be obvious, well-labeled and easy to access.
In light of the guidance, advertisers should ensure their disclosures will appear clearly and conspicuously on all platforms and devices that may be used to view the ad. If an ad would be deceptive or unfair without a disclosure, and the disclosure cannot be made clearly and conspicuously on a particular platform or device, that platform or device should not be used for the ad.
The FTC can bring an enforcement action against an advertiser for deceptive or unfair business practices in violation of the FTC Act. The dot com Disclosures are not intended as a regulation or rule, but rather as guidance to digital advertisers regarding how the FTC interprets the laws it administers.