New York Advertising Law Blog

Here is a look at four recent class-action lawsuits under the Telephone Consumer Protection Act (TCPA):

In Friedman v. Torchmark Corp., decided on April 16, 2013 in the Southern District of California, the court dismissed a class action-lawsuit because a prerecorded telephone call inviting the plaintiff to view a free recruiting webinar was construed as an offer of employment, not as an unsolicited advertisement or telephone solicitation. Calls made for a non-commercial purpose to land lines do not require express consent, and the court found that an invitation to a webinar was a non-commercial call.

The State of Florida has amended its laws regarding "game promotions" and "drawings by chance." The amendments as well as an April 11, 2013 press release issued by the Florida Division of Consumer Services has raised numerous questions regarding the impact on non-profit organizations. Not all is clear, but here's what we know so far.

In a speech yesterday to the American Advertising Federation new Federal Trade Commission Chair Edith Ramirez urged the advertising industry to give consumers "effective and meaningful privacy protection" by agreeing on a global standard that would let consumers signal with their browsers to websites, advertising networks and data brokers that they do not want their online activities monitored for marketing purposes. According to Ramirez, "consumers still await an effective and functioning do-not-track system, which is now long overdue."

Yesterday the New York Post ran an interesting article about a trial now under way in Seattle in which actress Junie Hoang is suing popular film Web site IMDb for publicizing her true age. According to the article, Hoang says she has been struggling for years to make it in Hollywood, but after nearly two decades in the business she has yet to break through. According to the Post, Hoang claims that all hope of joining the A-list ended when IMDb violated her privacy by posting her real age (41) on its site, and she's suing IMDb for $1 million to prove it. Though IMDb alleges that it double-checked the birth date info with a publicly available database, Hoang clams the publication of her age was a violation of her privacy and that IMDb owes her damages for the harm the revelation did to her chances of getting choice roles. (According to the Post, Hoang evidently has the support of her actors union, which has also criticized IMDb for posting accurate ages.) The Post rightly notes that the result in the case may have an impact on how companies collect information for commercial purposes.

In anticipation of the rapid expansion of the number of top-level domain names from the current handful (.com, .net., .mobi, .jobs, etc.) to well over 1,000, earlier this week ICANN's new Trademark Clearinghouse opened for business. The Trademark Clearinghouse (http://trademark-clearinghouse.com/) is a global repository for trademark data. The new Trademark Clearinghouse will allow trademark owners to submit qualified trademarks to a central repository as a tool to help protect their marks. The verified data in the Trademark Clearinghouse will be used to support both Sunrise Services and Trademark Claims, required in all new gTLDs.

Sunrise Services allow trademark holders an advance opportunity to register domain names corresponding to their marks before names are generally available to the public. New gTLD registries are required to offer a Sunrise period of at least 30 days. The Trademark Claims period follows the Sunrise period and runs for at least the first 60 days of an initial operating period of general registration. During the Trademark Claims period, anyone attempting to register a domain name matching a mark that is recorded in the Trademark Clearinghouse will receive a notification displaying the relevant mark information. If the notified party goes ahead and registers the domain name, the Trademark Clearinghouse will send a notice to those trademark holders with matching records in the Clearinghouse, informing them that someone has registered the domain name.

The Trademark Clearinghouse will cost $150 for a one-year registration, $435 for three years, and $725 for five years (fees are for one trademark).

The Trademark Clearinghouse will play an important role in helping trademark owners protect their trademark rights.

In a decision published last week, Kirtsaeng v. John Wiley & Sons Inc., the United States Supreme Court held that the "first sale" doctrine under the United States Copyright Act applies to copies of a copyrighted work lawfully made abroad. The decision is the culmination of a legal battle fought by John Wiley & Sons, Inc. ("Wiley"), a publisher of academic text books, against former student Supap Kirtsaeng ("Kirtsaeng") since 2008.

Kirtsaeng, a citizen of Thailand, moved to the United States in 1997 to study mathematics at Cornell University. While he was studying in the United States, Kirtsaeng asked his friends and family in Thailand to buy copies of foreign edition English-language textbooks at Thai book shops, where they sold at low prices, and mail them to him in the United States. Kirtsaeng would then sell them, reimburse his family and friends, and keep the profit. In 2008 Wiley filed a lawsuit against Kirtsaeng for copyright infringement, alleging that Kirtsaeng's unauthorized importation of its books and his later resale of those books amounted to an infringement of Wiley's Copyright Act § 106(3) exclusive right to distribute, as well as the Copyright Act's related import prohibition. Kirtsaeng replied that the books he had acquired were "lawfully made" and that he had acquired them legitimately. Thus, in Kirtsaeng's view, the Copyright Act's "first sale" doctrine (§ 109(a)) permitted him to resell or otherwise dispose of the books without Wiley's further permission.

The District Court held that Kirtsaeng could not assert the "first sale" doctrine defense because, in its view, the doctrine does not apply to "foreign-manufactured goods" (even if made abroad with the copyright owner's permission). The jury then found that Kirtsaeng had willfully infringed Wiley's American copyrights by importing and selling, without authorization, copies of eight of Wiley's copyrighted titles. The jury assessed statutory damages of $600,000 ($75,000 per work). On appeal, a split panel of the Second Circuit agreed with the District Court. It pointed out that the "first sale" doctrine applies only to "the owner of a particular copy ... lawfully made under this title." (Emphasis added.) In the majority's view, this language means that the "first sale" doctrine does not apply to copies of American copyrighted works made abroad. The Supreme Court granted Kirtsaeng's petition for certiorari in order to resolve a split among the circuit courts of appeal as to whether the "first sale" doctrine applies to copies of works made outside the United States or only to those made within the United States.

In an opinion authored by Justice Breyer, the Court sided with Kirtsaeng that the "first sale" of the Wiley books, which were lawfully printed and sold abroad under a contract with Wiley, exhausted Wiley's exclusive distribution right. According to the majority, the "first sale" doctrine makes no geographical distinctions. The Court found that (i) the language of the Copyright Act's "first sale" doctrine read literally favors Kirtsaeng's non-geographical interpretation, namely, that "lawfully made under this title" means made "in accordance with" or "in compliance with" the Copyright Act; (ii) historical and contemporary statutory context indicate that Congress, when writing the present version of the Copyright Act's "first sale" doctrine, did not have geography in mind; (iii) a relevant canon of statutory interpretation favors a non-geographical reading of the Copyright Act's "first sale" doctrine; and (iv) the concerns of technology companies, consumer-goods retailers, booksellers, libraries, and museums, whose practices have long relied on a non-geographical interpretation of the "first sale" doctrine, were too important too ignore.

The Supreme Court of the United States has closed a loophole used by class action plaintiffs to avoid trying their cases federal court. The case, entitled Standard Fire Insurance v. Knowles, was decided on March 19, 2013. In order to ensure that class actions of national significance were decided in federal, rather than state courts, Congress passed the Class Action Fairness Acts (CAFA) in 2005. It provided for federal jurisdiction over most class action lawsuits where $5 million dollars were at stake. Many plaintiffs' attorneys, however, preferred to be in state court, and came up with a way to avoid having their cases removed to federal court. The ploy they came up with was to file a stipulation or certification with the complaint that the plaintiff was seeking less than $5 million and would not accept any more than that amount. Critics of this tactic pointed out the unfairness of a lead plaintiff compromising the potential recovery of the class he or she claimed to represent. However, many federal courts, notably the Eighth Circuit Court of Appeals sanctioned such arrangements and routinely remanded class actions back to state courts over the defendants' objections.

The Supreme Court unanimously put a stop to this practice. The plaintiff, Greg Knowles sought to represent a class of "hundreds, and possibly thousands" of Arkansas insurance policyholders, who he alleged were denied certain payments by Standard Fire Insurance. In his bid to avoid federal court, Knowles said he "will not at any time during this case . . . seek damages for the class . . . in excess of $5,000,000 in the aggregate."

In an opinion delivered by Justice Breyer, the Supreme Court said it would be unfair to allow Knowles to compromise the rights of the absent class members "because plaintiff who files a proposed class action cannot legally bind members of the proposed class before the class is certified. Because his precertification stipulation does not bind anyone but himself, Knowles has not reduced the value of the putative class members' claims. For jurisdictional purposes, our inquiry is limited to examining the case as of the time it was filed in state court. At that point, Knowles lacked the authority to concede the amount-in-controversy issue for the absent class members. The Federal District Court, therefore, wrongly concluded that Knowles' precertification stipulation could overcome its finding that the CAFA jurisdictional threshold had been met.

The National Advertising Division ("NAD") recently recommended that Toys "R" Us modify or discontinue a price-matching claim advertised. Specifically, Toys "R" US advertised its price matching claim as follows: "Price Match Guarantee-Spot a lower advertised price? We'll match it. See a Team Member for details" on in-store banners.

NAD reviewed this claim in response to a complaint by a consumer who reported that he had unsuccessfully attempted to purchase a game at Toy "R" Us for the same price offered online by a Toys "R" Us competitor. Toys "R" Us claimed that it would match prices in competitor's print ads, but, with certain limited exceptions, does not match online pricing.

While acknowledging that in-store banners have limited space, NAD nonetheless determined that the price matching claim was overbroad and should be discontinued or modified to more accurately describe that the price-match guarantee. NAD concluded that the disclosure - "[s]ee a Team Member for details" - with the price-matching guarantee not applicable to prices found online, directly contradicted the main message conveyed by the in-store banner reading, "Price Match Guarantee - Spot a lower advertised price? We'll match it."

It is important to note that a disclaimer will not cure a misleading claim and cannot contradict the main message conveyed by the claim.

NAD's decision is available on its website: http://www.asrcreviews.org/category/enter-the-asrc-online-archive/