Legislative fortune teller sees tax hikes and spending cuts in our future

Are we surprised? No, but stay tuned. Len Lazarick, Staff reporter for MarylandReporter.com reports that Department of Legislative Services recommends legislators consider extending Maryland's sales and use tax to include services:

"The no-growth budget for next year that legislative leaders recommended Thursday, combined with a promise of no new taxes, might soon look like a relic of the good old days if a new report from the Department of Legislative Services proves accurate. In a section of a new 246-page study of the issues facing the legislative session that begins in three weeks, budget analyst David Juppe forecasts “structural deficits” of at least $2 billion in each of the next five years. ...

Juppe gives examples of potential tax or fee increases: 'expansion of the sales tax base to services, a more progressive restructuring of the personal income tax, repeal of tax credits or improved tax compliance.'”

As this past weekend's online holiday shopping broke retail records, one wonders when state revenue collectors will target online sales originating from their jurisdictions.

Read Lazarick's entire report here...

"Results Not Typical" — Bloggers and Celebrities (and Advertisers) Must Comply with New FTC Guides

Grass roots marketing just became a little less green. The Federal Trade Commission (FTC) issued the final updated Guides Concerning the Use of Endorsements and Testimonials in Advertising. Effective December 1, 2009, the new Guides expand in scope to include advertising messages in websites, blogs, and other social media. Bloggers failing to follow the Guides could pay up to $11,000 per violation. Advertisers and agencies connected to a blogger's post may share liability. It's imperative that businesses review current marketing practices with the new Guides now. The FTC can challenge misleading and deceptive advertising anytime.

That's because the new Guides do not change the law. The Guides were developed to help advertisers and agencies determine if their advertising is deceptive under Section 5 of the FTC Act. The Guides provide principles and examples demonstrating how the FTC determines if advertising is misleading. By following the old Guides, advertisers and ad agencies could steer clear of FTC enforcement actions and the class action lawsuits and state enforcement actions that often follow. The new Guides cast a broader net, and in uncharted waters. No, the new Guides do not provide an unambiguously safe path for blogging about products. But they do reveal the types of marketing activities the FTC is targeting. Continue reading here.

Ad Adversaries Continue to Battle

New York Times reported that the ongoing Soup Wars have not benefited either Campbell's or Progresso, both losing market share in canned soup products. The article says advertisers continue to challenge their competitors' advertising as false and misleading despite the recession.

The NYT also reports that the National Advertising Bureau (NAB) is settling about one disparaging puffery dispute a month. The NAB is the industry self-regulatory division of the Better Business Bureau resolves disputes between large advertisers. The NAB procedures are less expensive than court but take longer to stop misleading advertising. NAB decisions also have few teeth, relying on the parties to voluntarily comply with settlement terms. But, competitors who refuse to comply and change false and misleading advertising, risk the NAB referring the matter to the FTC. See my previous post about how to avoid the risk that ad puffery disparages the competition's goods or services.

Potential New Threat to Snack Food Advertising

Today's AAF Government Report brings news of new threats to advertising. Congressman Dennis Kucinich, D-Ohio, sent a “Dear Colleague” letter to other members of Congress announcing his intention to introduce legislation to “eliminate the tax deductibility of fast food and junk food advertising directed at children.” The Congressman is inviting other members to join him as a cosponsor. While well-intentioned, this plan, if enacted would increase the cost of convenience food and restrain advertisers from communicating healthy messages about food.

A misleading statement made by Mr. Kucinich is that snack food advertisers are granted a special tax write off to subsidize obesity, see bolded text below. All businesses have the right under the tax code to deduct ordinary and reasonable business expenses like advertising. To eliminate the deduction for some advertisers but not others would violate those advertisers's Constitutional right to be treated equally under the law, in addition to restraining commercial speech.

Mr. Kucinich's letter follows, as does his aide's contact info. Please let him (and your own Congressional members) know that you do not agree!

Re: Don't Subsidize Childhood Obesity
From: The Honorable Dennis J. Kucinich
Date: 10/28/2009

Dear Colleague:

Research clearly shows that childhood obesity has reached epidemic proportions in this country. As we develop programs to combat childhood obesity, we must also examine the root causes of this problem. The effect of advertising on youth, especially advertising of fast food and junk food, has long been a concern of mine. The Institute of Medicine estimates that in 2004 approximately $10 billion was spent on food advertising directed at children, using every method available--television, radio, the internet, even embedded in video games. Simply put, marketing to children works--companies would not make such a substantial investment if it were ineffective. See n. 1.

Marketing directed at youth is extremely well constructed and relies heavily on behavioral science. The developing brain of the child cannot discriminate fact from opinion; cannot think critically; and cannot yet fully understand abstract thinking. This makes no difference to food advertisers, who exploit this using cartoons, cross branding with popular toys, giveaways, and myriad other methods to develop brand loyalty and shape judgment as early as possible, knowing that those affinities are the most enduring.

Astonishingly, the federal government subsidizes this methodical preying on children by granting a tax write-off for expenses associated with it. (Emphasis added by Ad Disclaimer) This must stop. The government must take action to protect American children and ensure that they grow up in a healthy environment. For this reason will be introducing legislation that would eliminate the tax deductibility of fast food and junk food advertising directed at children. I invite you to join me as a cosponsor of this legislation. There is precedent: approximately 50 countries, including Sweden, Norway, Australia, and Great Britain, have limited or prohibited food advertising directed at youth. Additionally, recent research has concluded that eliminating the tax deductibility of food advertising directed at youth would reduce obesity among youth. See n. 2.

For more information or to cosponsor, please contact Tom Mulloy in my office at 5-5871 or thomas.mulloy@mail.house.gov.

Sincerely,

/s/

Dennis J.Kucinich Member of Congress

n. 1. Institute of Medicine (2006). Food Marketing to Children and Youth: Threat or Opportunity? National Academies Press.

n. 2. Chou, S., Rashad, I. & Grossman, M. (2008). "Fast Food RestaurantAdvertising on Television and Its Influence on Childhood Obesity."Journal of Law and Economics, 51(4), 599-618.

The Threat Returns-- NO TAX ON DTC-- email now!

Senators Al Franken, D-Minn., Sherrod Brown, D-Ohio, and Sheldon Whitehouse, D-R.I., have introduced legislation (S. 1763) to disallow the federal tax deduction for all advertising and marketing expenses for prescription drugs. The Senators have indicated they would like to have the proposal added to the health reform legislation and may offer it as an amendment when the measure is considered by the full Senate.

Please contact both of your Senators as soon as possible and express your strong opposition to any effort to deny the deductibility of advertising expenses. Talking points and contact information are both included.

Here's the rest of Clark Rectors' message. Suggested email text is below.

You know the drill:

Contact Senator Mikulski here.

Contact Senator Cardin here.

Dear Senator _________:

As a taxpayer working in Maryland's advertising industry, I oppose any effort to eliminate tax deductions for the cost of advertising prescription drugs. There are several compelling reasons NOT to eliminate the deduction of advertising prescription drugs as ordinary and necessary business expense:

• It will increase the cost of informing the consumer about prescription drugs by 35%. If an advertiser is taxed at the highest corporate rate of 35%, the loss of the deduction for prescription drug advertising becomes a 35% tax on such advertising.
• Taxing advertising expenses for prescription drugs but not other advertising expenses is discriminatory.
• Taxing advertising expenses for prescription drugs chills constitutionally protected commercial speech. In 1936, the Supreme Court struck down a 2% tax on newspapers as an unconstitutional restraint on speech in Grosjean v. American Press Co.
• Consumers - particularly elderly consumers - will receive less information about prescription drug choices if advertisers reduce spending on prescription drug advertising.
• Legislation requiring a tax on advertising expenses for prescription drugs will make it easier to tax other advertising expenses, adversely affecting the advertising industry.

Advertising for all products and services helps generate $6 trillion in U.S. economic activity and supports more than 21 million jobs. I request that you do not support any legislation that eliminates tax deductions for the cost of advertising prescription drugs.

Sincerely,

Your Name
Address

Advertising Squeezed by States Looking for Funds

Monday's Advertising Age features a 50 state survey on state legislative initiatives to raise funds from or otherwise regulate advertising and production activitities. AAF Baltimore is the only club noted for having a legislative committee --and a climate that is, at times, less than welcoming to advertising and communications businesses. Want to help change the climate in Maryland for advertising and communications businesses? Contact Linda Stanley, director AT baltimoreadvertising DOT com or 410-821-6968, about volunteering on AAF Baltimore's Legislative Committee.

Twitter Allows Advertising

BBJ reports today that Twitter has changed its policy to allow advertising. It's understandable - surprisingly the Internets has an actual cost (!) but also game-changing. Okay we're all aware (a) that ad tweets are highly annoying; and (b) marketers need to follow the current (and proposed) FTC guidelines for endorsements and testimonials when hyping--ahem--discussing products and services. But now there is a new consideration.

The presence of advertising on Twitter converts the website where your tweets appear from editorial to commercial. That conversion casts a commercial light on the messages you tweet. The commercial effect means that parodying celebrities, criticizing brand owners, twitterature, and linking to other websites will cause those so tweeting to climb a steeper slope to prove fair use. Think twice before you use someone else's brand, name, prose, or news story.

Although some brand owners show that they are starting to "get" the important crowd sourcing and grassrooting roles that apps like Twitter provide, many others do not. Some of the great accounts may disappear. That's disappointing since many of the parody and brand criticism tweets like my personal fave, UnPeter Angelos, have an important role in giving readers uncontrollable belly laughs or providing important unfiltered info to consumers.

How to Rock Your Film - Without Landing in Copyright Jail

It's a miracle that Nina Paley's feature length animation, "Sita Sings the Blues," escaped a life sentence. Sadly many films never do. Great music enhances film and video. Digital video editing tools make it easy to add popular music and remixes to a film. Unfortunately, permission to use commercial music in an independent film is not easy to acquire. Filmmakers, who sync commercial music to their films planning to seek permission later when the film attracts investors, are often devastated to learn that the music is unavailable or prohibitively expensive.

Filmmaker Nina Paley is one of the lucky few who find a way to keep their films out of copyright jail. A veteran of syndicated comic strips, Paley began creating short animations in 1998. Inspired by a Ramayana tale she encountered while living in India, Paley spent 5 years creating "Sita Sings the Blues" by hand. Along the way Paley was attracted to similar themes of romance gone wrong found in Annette Hanshaw's 1920's blues recordings. Paley did some research and concluded that her desired recordings are in the public domain. So she developed her animation to sync with Hanshaw's recordings and entered "Sita Sings the Blues" in several film festivals. As it often happens, Paley won awards and was soon offered distribution deals.

Unfortunately, Paley then learned that the songs Hanshaw sang in the recordings were not public domain. Click to continue...

Maryland Employers Improperly Classifying Workers as Independent Contractors Do So at Their Peril

On July 14, 2009, Maryland Governor Martin O'Malley signed an Executive Order establishing The Joint Employment Task Force on Workplace Fraud (Download PDF). Maryland businesses which fail to properly classify individuals as employees as opposed to independent contractors will face large fines, penalties and assessments by treating an individual as an independent contractor when that individual should be treated as an employee. Employers may have heard about recently enacted language focused on the construction and landscaping business, but this Executive Order establishes a Task Force that may affect all Maryland businesses.
This Executive Order comes on the heels of the passage of Maryland Senate Bill 909, the Workplace Fraud Act of 2009, which will take effect on October 1, 2009, and will affect construction and landscaping businesses operating in Maryland. The Executive Order on The Joint Employment Task Force on Workplace Fraud seeks to coordinate and expand in areas other than construction or landscaping. One of its goals is "to develop strategies for systematic investigations of workplace fraud within those industries in which misclassification is most common," and "to consult with representatives of business, organized labor and other agencies to improve and expand upon the operation and effectiveness of the Task Force and its members." This new executive order is a "preview of coming attractions" for Maryland employers other than construction and landscaping contractors. Any Maryland employer utilizing "independent contractors" needs to carefully evaluate its practices because if the newly created law dealing with construction and landscaping contractors expands into other areas at the recommendation of the Joint Employment Task Force on Workplace Fraud, it is conceivable and even likely that the draconian logic of the newly enacted workplace fraud law will be expanded to other types of businesses. Click to Continue...

Tell your Congressmen - NO TAX ON DTC ADS!

Clark Rector, Head of Government Affairs for the AAF has issued an urgent request that we all email our Congressmen ASAP to protest reducing or eliminating tax deductions for Direct To Consumer pharmaceutical advertising in connection with funding healthcare reform. The result would be an unconsitutional tax on DTC ads and a restraint on speech. Worse, it could encourage Congress to eliminate deductions for all advertising.

Rector: "The Ways and Means Committee is scheduled to release it's list of revenue options for healthcare reform on Friday [TOMORROW!]. We are down to the final hours that we have to convince members of the committee and others in the House of Representatives, that it would be bad policy and very harmful to media and advertising industries to impose a tax on the advertising of prescription medications. By denying the ordinary and necessary business expense deduction for this advertising, it would be the first time in history that the Congress would have targeted one form of speech and made it more expensive in order to discourage people from speaking.

Every advertising club member, every newspaper publisher, every magazine publisher, every broadcaster who calls his or her Member of Congress is critical to this effort. We only have a few hours left. Be sure that every member of Ways and Means hears our message."

Clark's message may be read seen in the AAF Government Affairs bulletin linked at right. His message includs a letter from Global Insight that predicts that potential tax revenue from the proposed DTC Ad Tax is far less than the Ways and Means Committee estimates.

Clark also attached a letter from the Advertising Coalition (comprised of the AAF, 4A's, ANA Broadcasters and other media) urging the House Ways and Means Committee to look elsewhere for healthcare reform funding because in addition to raising only modest tax revenue the DTC Ad Tax is an unconsitutional restriction of speach and will further slow the economic recovery of the advertising industry.

Email Maryland Congressman Chris Van Hollen who is on the Ways and Means Committee and let him know that you do not support the DTC Ad Tax and that it will have a devastating impact on the advertising industry! Then email your Congressmen.

Here is suggested text:

Dear Congressman ______:

As a taxpayer working in Maryland's advertising industry, I oppose any effort to eliminate tax deductions for the cost of advertising prescription drugs. There are several compelling reasons NOT to eliminate the deduction of advertising prescription drugs as ordinary and necessary business expense:

• It will increase the cost of informing the consumer about prescription drugs by 35%. If an advertiser is taxed at the highest corporate rate of 35%, the loss of the deduction for prescription drug advertising becomes a 35% tax on such advertising.
• Taxing advertising expenses for prescription drugs but not other advertising expenses is discriminatory.
• Taxing advertising expenses for prescription drugs chills constitutionally protected commercial speech. In 1936, the Supreme Court struck down a 2% tax on newspapers as an unconstitutional restraint on speech in Grosjean v. American Press Co.
• Consumers - particularly elderly consumers - will receive less information about prescription drug choices if advertisers reduce spending on prescription drug advertising.
• Legislation requiring a tax on advertising expenses for prescription drugs will make it easier to tax other advertising expenses, adversely affecting the advertising industry.

Advertising for all products and services helps generate $6 trillion in U.S. economic activity and supports more than 21 million jobs. I request that you do not support any legislation that eliminates tax deductions for the cost of advertising prescription drugs.

Sincerely,

Your Name
Address

Have the Munchies for Self Regulation of Cookies?

Today's Wall Street Journal reports ($ - sorry) that the 4As, ANA, IAB and DMA are expected to announce new guidelines to better protect consumers' privacy online soon. The joint recommendation is to give consumers more control by employing an icon that appears when a website is tracking consumer information. Clicking the icon would reveal what information is tracked and how it is being used.

Yawn. Yes, there are people who don't realize that websites work more efficiently when tracking applications ("Cookies" etc) remember your shopping preferences. And in return, few of us actually mind that websites serve up ads that reflect our wants and needs. Those who do can use Ad Blocker but bear in mind that these free websites we love could disapear with out our eyeballs seeing the ads! Cookies are pretty basic web tracking applications. But how we protect our privacy become considerably less clear when we participate in one of the multitude of social networking "quizzes." These "Which Back Street Boy are you?" quizzes quietly examine and quantify our demographics while we share our humorous test results with our "friends" online.

The 4As' industry self regulation effort followed closely on the heals of an FTC announcement that Sears agreed to enter into a consent order because its website did not effectively apprise visitors of Sears' collection and use of visitor information. The FTC had previously announced that it would allow the industry to pursue self-regulation, but wants meaningful guidelines for websites and consumers. Let your representatives know that self regulation and educating online consumers is more effective than increasing regulation. The Sears Consent Agreement makes it crystal clear that the FTC Commissioners are not going to be patient with the online ad industry.

Two important tips for online businesses arise from the Sears FTC action -- (1) Sears' website must now clearly, conspicuously display its privacy policy separate from the its terms of use. (2) Sears must provide a means to allow a visitor to agree or "opt in" before enabling the tracking applications to collect his or her consumer information. If this sounds familiar, the requirements in the FTC consent order are similar California's privacy statute. It would be a good idea to check your privacy policy now! Do you have one?

Lawsuit planned to challenge FDA tobacco regulation

Congress passed legislation on June 12 that places tobacco under the purview of the FDA. The bill, H.R. 1256/S. 982, was sent to President Obama, who announced that he would sign it, but the signing ceremony has been announced. The New York Times reported last Sunday that one aspect of the legislation -- the reimplementation of a 1996 regulation that restricts tobacco advertising within 1000' of schools and limits certain tobacco advertising and labelling to black text on a white background. It seems likely that the tobacco advertising regulation will be challenged on free speech grounds. The Congressional Research Service issued a report analyzing H.R. 1256/S. 982 suggesting that the 1996 advertising rules are unconstitutional. The Supreme Court in Lorillard Tobacco
Co. v. Reilly (2001) decided that the same regulation-- restricting tobacco ads near schools did not meet the four-part test for deciding the constitutionality of commercial speech regulation set out in its earlier decision in Central Hudson Gas & Electric Corp. v. Public Service Commission (1980).

Mr. Obama advocates an open and tranparent government process and actively solicits feedback, so make your opinion known by contacting the President here http://www.twitter.com/whitehouse or in email here http://www.whitehouse.gov/contact/.

Minnesota Consider Sales Tax on Unboxed Items

"Unboxed" does not refer to purchases of bulk organic oats and the like. Unboxed is music and video downloads. Today's AAF Government Report notes that a bill has been introduced in the Minnesota Legislature to tax "specified digital products." Specified digital products is defined to include digital music and videos, ringtones, e-books and electronic greeting cards.

Relevant to the advertising community -- The bill also includes digital artwork and periodicals as specified digital products.

Come On and Take a Free Ride — Blogging Without Infringing

Ober's new IP Watch is out, here's my lede:

The wonder of the internet is the speed and ease with which it allows us to share information. Before it can be shared, however, this information must be produced or procured and producing this original content takes time and money. As media companies move to monetize their online publishing, "free-riding" by blogs that reuse content to channel traffic to their own sites is increasingly challenged. As print advertising declines, media companies are less willing to simply give content and traffic away. ...

Maryland Legislative Update

Children's Online Safety. Two recently proposed bills, if passed, would require "Internet Access Providers" to provide parental controls to Maryland households. Senate Bill 550 - Online Child Safety Act of 2009 was proposed on February 5th and had its hearing today. The Online Child Safety Act is positioned as a consumer protection measure and would amend commercial laws to provide that a failure to offer parental controls that meet the acts' standards to internet access subscribers in Maryland is an unfair and deceptive practice. The standards require the parental controls to prevent children age 18 or younger from accessing the internet, particular websites and categories of websites that the subscriber selects to be blocked. Senate Bill 893 - Protection of Children from Online Predators Act of 2009 proposes a similar measure but adds criminal measures aimed at online sexual predators, including preventing a convicted online sexual predator from accessing the internet and a safe harbor for interactive service providers from civil liability from wrongly blocking access.


My take--Both bills seek to bolster the ailing Children's Online Privacy Protection Act (COPPA) which suffers from Constitutional enforcement issues. SB 550 requires ISPs to do mo more than provide subscribers with a link to parental control software vendors. This bill expects parental controls to work on older teens. Best of luck with that one. I rely on my older teens to fix computers. They're more likely to block ME from sites I'd like to see, like their Facebook pages! SB 893 takes that requirement and raises the bid by profiling an online sexual predator as someone 4 or more years older than a 16 year old who prompts the teen to expose or touch "private parts" online. A surprise is that SB 893 appears to exempt mobile applications. Many teens do everything from their phones, looks like a loophole to me.

Advertise Strengths Without Disparaging the Competition

Economic downturns tend to produce an increase in comparative advertising campaigns. Meager sales revenues make it tempting to aggressively target the competitor's business. Consumers enjoy watching advertisers take potshots at each other. But a competitor whose weaknesses are targeted — not so much. A competitor can choose to respond in kind or legally challenge the ad. If the ad message is truthful and does not mislead or deceive consumers, then the challenge is generally not difficult to rebuff. A recent court opinion suggests that advertisers whose ads are challenged by competitors should look to commercial liability policies for advertising injury coverage. It may be possible to cover legal fees for defending ads challenged by competitors.

  
This recession has produced several memorable comparative ad campaigns. Apple's ad campaign personifying Microsoft and Apple computers was answered by Microsoft's "I'm a PC" spot, to which Apple responded with its "Bean Counter" spot. A soup war is raging between Campbell's and Progresso as to who has the healthiest soups. The opening salvo in the soup war began with a Campbell's print ad depicting a can of Progresso Chicken Noodle under the label "Made With MSG" soup next to a can of Campbell's Select Harvest Chicken Noodle soup under the label "made with TLC." Progresso responded with an ad depicting numerous Campbell's soup cans under the headline "Campbell's has 95 soups made with MSG." Neither the Apple-PC ads nor the Soup War ads have resulted in court action — possibly because these advertisers skillfully employ truthful statements mixed with puffery.

Read the full article at http://tinyurl.com/d9yykm.

Chimp Pranks Versus Outhouse Parodies

Reading in the Baltimore Sun about the firing of a WBAL-Baltimore NBC affiliate reporter John Sanders (no relation to me) for taking audio from Fox broadcast coverage of a missing monkey whose most distinuguishing feature is his "bright blue scrotum" and dubbing those words into Fox Anchor John Gibson's discussion of a speech by Attorney General Eric Holder. Strangely (or not maybe) , the Huffington Post posted the video as authentic.

News media may be hitting a new low in professionalism--but it reminds me of a "parody ad" published by Hustler Magazine targeting Reverend Jerry Falwell. The ad mocked a series of ads Campari was running during that period under the double entendre theme "X talks about his first time." On a page labeled "AD PARODY - NOT TO BE TAKEN SERIOUSLY", Hustler publishes a fake interview with Falwell in which the Moral Majority chief discloses that his first time was in an outhouse with his mother. (Wikipedia displays a copy of the ad here.) Falwell sued Hustler for defamation and intentional infliction of emotional distress.

Trial court awarded Falwell $150,000 in damages and Flint appealed on First Amendment grounds. Falwell argued that the piece was so outrageous as to remove First Amendment protection. The Supreme Court did not agree. Noting that outrage is subjective, the court reversed--holding that the trial court's decision to award damages to a satirized public figure for emotional distress unreasonably burdens non-obscene speech by political cartoonists and satirists. Speech considered vital to our society. The Court also found for Flint on the defamation claim because no one would believe that the "AD PARODY" was factual anyway.

In the Bright Blue Scrotum prank, Eric Holder is the obviously satirized public figure. But to add a twist to the Falwellian analysis, Fox Anchor John Gibson was also smeared by Sanders' prank and Huffington Post's (now retracted) publishing of the prank video as authentic. I'll let you know if my law school class thinks Gibson has a case against Huffington Post. Since the internet is considered to be self-correcting and the Huffington Post aplogized to Gibson, I know at least one IP lawyer who wouldn't take his case on contingency.

Do Family Videos Require a Take-Down Notice?

If a kid posts a prank video to YouTube, a copyright owner that believes its copyright was infringed sends YouTube a DMCA* take-down notice. If YouTube complies, its not liable for the infringement under the DMCA's safe harbor for internet service providers. Since the kid is small potatoes, removal of the offending video generally ends the controversy.

But not always--Stephanie Lenz posted a home video to YouTube of her toddler taking his first dance steps so her inlaws could see. Twenty second of Prince's Let's Go Crazy plays in the background. --Maybe-- I didn't hear any Prince. Universal Music Publishing Group did detect Prince on Lenz' video and automatically sent YouTube the customary DMCA take-down notice. YouTube sent Lenz' the notice and removed her video. Lenz' claims her video is fair use, and with the help of the Electronic Frontier Foundation asked a court for a ruling that Lenz had not infringed any UMPG copyright.

So far the Court has only said maybe that she might be right. The question is did UMPG have a reasonable belief that it's copyright was infringed? If UMPG recognized the Lenz video for what it is clearly is--a family video. And where UMPG's music's is clearly incidental to parental pride of toddler cuteness--did it have a reasonable belief?

Media so dominates human experience today that room must be reserved to freely permit documentation of personal experiences even if copyright protected media is incidentally captured.

*Digital Millennium Copyright Act (yes, it's way more complicated than this--but this is the "cliff notes" version.)

AAF Government Report

The AAF Government Report (2/15/2009) notes

The House and Senate agreed in Senate Bill 352 to postpone the analog to digital television transition to June 13, 2009, and extends (pending budget authority) the period during which converter box coupons will be available and provides for replacement coupons for those that expire.

The AAF hosted Rep. Joe Crowley (D. NY), a key member of the house Ways and Means Committee, at a breakfast meet and greet to allow advertising executives discuss their business and industry particularly in light of renewed interest in limiting the income tax deduction for advertising expenses.

The FDA announced that is will conduct a study on DTC advertising in which it proposes to show 2400 subjects a fictional blood pressure medication ad to guage the typical consumer's understanding of the presentation of the risks and benefits presented in the ad. THe FDA said that the study is needed to develop standards called for in the FDA Amendments Act of 2007.

Outgoing Chair William Kovacic of the FTC, in the agency's self-assessment report FTC at 100: Into Our Second Century, commended self-regulation by the advertising industry, particularly by the BBB's National Advertising Division and the National Advertising Review Council. Chairman Kovacic noted that industry self regulation is particularly suited to advertising in which government restrictions implicate First Amendment concerns.

New Tax Proposals

The Sun is reporting today that Sen. Barbara Mikulski is concerned that her proposal including in the massive stimulus package to provide new car buyers with a tax rebate may end up on the conference committee's cutting room floor. Her proposal could be worth $1,500 to the buyer of a $25,000 car. Sen. Mikulski is urging voters to call House members and the White House to demand that Congress preserve the tax break.

The Daily Records' Andy Rosen reports today in his Eye on Annapolis blog today that several new tax proposals were introduced this week--

Del. Bill Bronrott introduced a bill that would raise the tax on beer, wine and spirits. The bill proposes to raise the tax on beer from 9 to 36 cents per gallon. The tax on wine would rise from 40 cents t.o $1.60, and the tax on distilled spirits would go up from $1.50 to $6 per gallon. Rosen reports that Bronrott more than half the money raised would go to alcohol treatment and counseling programs.

A second bill (the Snack Tax) seeks to raise a tax on snacks sold in vending machines.

A third bill, introduced by Sen. Paul Pinsky D. PG County, seeks to have combined tax reporting in Maryland, charging companies based on the business they do in Maryland rather than the company's location, and would allow the comptroller to drop the corporate rate below 8.25%. A commission is studying the combined reporting proposal.

Shepherd Fairey files First, Can AP show Ownership?

Street artist Shepard Fairey, creator of the Obama HOPE poster, filed for a declaratory judgment from the federal court in Manhattan that his use of a photograph to create the HOPE poster is a fair use. The lawsuit was filed following the Associated Press' announcement that it owns the copyright in the underlying photo and did not consent to Mr. Fairey's use.

Copyright provides the "author" of creative expression fixed in a tangible medium with the exclusive rights to reproduce, distribute, adapt, display and perform the work. Use without the author's permission is infringement unless a defense applies. "Fair Use" is a complex defense to copyright infringement that requires courts to apply four nonexclusive factors to the particular situation of each case alleging fair use. Comparison pictures and a copy of the court papers filed by Mr. Fairey's attorneys are posted on the San Jose Mercury's website here.

Attorney Anthony Falzone of the Stanford Copyright & Fair Use Center is representing Mr. Fairey. The Stanford Copyright & Fair Use Center has defended clients in several high profile copyright fair use cases, including actor Ben Stein and the producers of Expelled, a documentary film that the court determined 'fairly used' a portion of John Lennon's Imagine without his estate's permission.

AP claims that the photo was shot by Manny Garcia who was working as an AP staff photographer at the time the photograph was created in 2006. Mr. Garcia, according to the San Jose Mercury, disputes that he was an AP staff photographer and has gone on the record as being proud that his photo was made into the now historic poster. For AP to claim copyright infringement of the original photo requires that either (1) Mr. Garcia was an employee of AP when he snapped the photo, or (2) if he was an independent contractor on assignment, that Mr. Garcia signed a written agreement transferring all rights in the photo to AP as a Work Made For Hire (for a project that qualified for treatment as a WMFH) or assigning AP the exclusive rights to reproduce and distribute his photo.

On this copyright ownership issue-- I know that many of you are tired of my rant--but a written agreement between content creators can save a lot of hassle later!

Will Branded TV Help the FCC Accept Product Integration?

The New York Times reports today that TNT will launch a new show "Trust Me" Monday about a fictional ad agency that goes head to head with real agencies like Leo Burnet and DDB. Written in cooperation with brand managers for UniLever, Amheiser Busch InBev and GM, products like Dove and in some cases their real-life brand managers are written into the program. TNT is simultaneously launching an online game for viewers to create their own ad campaigns.

Sounds entertaining? Tell it to the FCC which sought comments in 2008 on whether broadcasters should be required include an on-screen "crawl" whenever product placements occur in a TV program. The AAF, 4As, ANA and media companies rebuttal comments are here.

The FCC has a low opinion of the average TV viewer's IQ. Facing thousands of brand impressions every morning on their way to work and school, consumers are far more savvy than the FCC believes. In my house there is a competitive effort to rout out all ad references.

From my perspective as a content clearance attorney, the trend toward branded entertainment means advertisers and agencies should take care to avoid a claim of false endorsement or affiliation arising from a inadvertent (or intentional but unauthorized) background logo or brand reference.

Ravens Win in the Courtroom

A U.S. District Court Judge in Baltimore found that incidental reproductions of the infringing "Flying B" shield design in historic images and film footage from the NFL Baltimore Ravens' inaugural season is fair use. Amateur artist Fred Bouchat designed the Flying B design as a suggested Baltimore Ravens team logo. The NFL used his logo design without permission during the team's inaugural season (1996-1998). In 2001, Bouchat established in a Federal appellate court that the NFL logo infringed his design, but Bouchat had not registered the Flying B design prior to infringement. Consequently, he was required but unable to prove NFL profits resulted from the infringing logo. Subsequent lawsuits by Bouchat against NFL licensees were also unsuccessful.

In the recent case, Bouchat sought to halt NFL's public display and sale of materials in which the infringing Flying B logo is visible. The court found (i) that the NFL's display and sale of photos and videos in which the infringing logo is visible on uniforms and displays is an incidental and primarily historic use — balancing an insignificant commercial purpose; and (ii) that although the Flying B design is highly protectable (iii) and the entire design was used, the use comprises an inconsequential portion of the overall NFL use, and since (iv) Bouchat's design has no foreseeable market, the NFL's use has no effect upon any potential market for his design. Weighing the results of the four factors together, the court found that the NFL's use was fair use. The Court's illustrated opionion can be viewed here: http://www.mdd.uscourts.gov/Opinions/Opinions/bouchat1121.pdf.

Bottom Line: Incidental unauthorized use of creative works in historic materials where the use is minimally commercial and does not supplant the copyright owner's intended purpose is likely defensible as fair use.