And the law won

In this Legal Update we review developments that could affect your approach to social media, data storage, web marketing, direct mail and intellectual property.

Facebook is a form of advertising

Source: Allens Linklaters

The Federal Court and Advertising Standards Bureau have determined that businesses are responsible for third-party comments posted on their Facebook and Twitter pages. This means businesses and brands may be in breach of consumer laws and advertising standards if those comments are misleading or offensive and/or breach advertising standards. One recent case was against Fosters and concerned the VB Facebook page, which featured fan posts that used coarse language and made sexual references. Fosters submitted that the user comments had to be considered in context – that is, the ‘tongue in cheek and ironic’ tone of the VB page and the demographic principally targeted by VB, being males aged 35-plus, ‘comfortable with swearing’ and for whom ‘no words are taboo’. However, the ASB determined that a number of comments posted on the Facebook page were discriminatory toward women, derogatory and degrading toward homosexual people, contained inappropriate references to sexual activity, and contained strong and obscene language. As such, they breached a number of the Code’s provisions.

SO WHAT?

• Your brand or business could be held liable for comments posted by third parties on your Facebook and Twitter pages if the comments contravene consumer laws, for example, by being misleading and deceptive.

• Third-party comments are regarded as advertising or marketing communications under the Australian Association of National Advertisers Code of Ethics (the Code). If those comments are offensive or discriminatory, you will be found to have breached the Code.

• If you want to use social media pages to promote your business, you must implement procedures to regularly monitor user comments and remove any content that is misleading, offensive or discriminatory. The ACCC’s expectation is that large corporations will remove misleading posts on their Facebook pages within 24 hours. Returning to the Fosters example, in addition to removing all of the offending comments from the VB Facebook page, Fosters also implemented twice-daily monitoring of user comments, including removal of inappropriate comments, broader language filters, age restrictions, and an internal policy document addressing inappropriate topics and how to respond.

Privacy principles and cloud

Source: Colin Biggers & Paisley

Though cloud computing promises many new benefits, it also presents new risks, particularly concerning data privacy and security.

Depending on where they are based, cloud computing service providers may be subject to local laws that give foreign authorities rights to access and use their stored data. For example, the US Patriot Act is designed to give the US government ondemand access to information that may help prevent terrorist attacks on its soil.

Soon, under proposed updates to Australia’s Privacy laws (Principle 8 of the Privacy Amendment (Enhancing Privacy Protection) Bill 2012), businesses using offshore cloud storage solutions could be liable for any privacy breaches of data they store offshore.

Hotmail was one of the first successful cloud computing solutions. Today, identifying data (name, address, credit card number, phone etc) is stored in off-shore data centres by countless global enterprises.

Experts claim security of data is not really an issue as cloud computing is extremely secure (we will ignore recent widely-reported data security breaches at the hands of Sony, Google, Vodafone and Dell). Instead, data sovereignty is touted as the primary threat as the country where the data is stored may not recognise a right to privacy, meaning third parties could have relatively open access to stored information.

SO WHAT?

• Before sending data offshore, businesses will need to think very carefully about whom they are trusting with their data.

• If you are considering using the cloud for your business, you should find out where the servers are. If they are not in Australia, you need to take further steps to ensure compliance with the Privacy Act.

Dot opportunities

Back in 2011 ICANN (the body that governs the domain name space) announced it would remove the restrictions around the number of generic top level domains – the letters that follow the last dot in a domain name (think .com or .org). Right now there are 22 ‘generics’ in the domain name system but that is all about to change.

Earlier this year ICANN invited applications for new generic top-level domains (gTLDs). The process was expensive (upwards of $185,000 per application) but did not deter almost 2,000 applications, including from big brand names in the automobile, accounting, pharmaceuticals, FMCG, electronics and technology sectors.

To prioritise the processing of these applications, a lottery now looks likely to take place as early as this December. This will involve each new gTLD applicant purchasing a $100 non-transferable, numbered ticket for their applied-for string. The processing will take an estimated nine months, with each drawn ticket causing the applicant to pass through multiple phases from evaluation through to contract execution. The objection window is likely to remain open until March and the first batch of new gTLDs is expected to go live in about June 2013. ICANN is confident it will process about 1,000 annually. Whether applications are ever invited again is uncertain and, according to some, unlikely.

SO WHAT?

Soon, there will be three new types of domains:

• Brands, such as .samsung, .nike and .pfizer

• Common words such as .home, .art, .shop, .hotel and .news and

• Place names, such as .paris.

If you are a brand owner or manager who is ultimately successful in your application for a new gTLD, you will soon control who can register and use domain names, websites and email addresses with that ending. How will you use that power? How will you protect what you paid for? You should be thinking about that now. Even if you have not applied, the new gTLDs could present an opportunity for your brand or business. A number of savvy individuals are competing to own generic terms which would be attractive to other business-owners. Now would be a smart time to be thinking about how the new domains might feature in your marketing strategy.

Spam smack

Source: Addisons Lawyers

In September, two Australian businesses were caught out for not providing an opt-out. The Australian Communications and Media Authority issued formal warnings to two businesses for their failure to comply with the Spam Act.

SO WHAT?

If you engage in direct marketing, you must comply with three principal requirements of the Spam Act:

• Consent: the people on your mailing list must have consented (expressly or through inference) to the message being sent.

• Contact information: as the sender of direct mail, you must ensure your contact information is contained in the message.

• Unsubscribe facility: the message must contain an unsubscribe facility which the recipient can use to opt-out of receiving future messages. The unsubscribe facility must be easy to understand and use; operational for a minimum of 30 days after the message is sent; and able to be used by recipients at no cost or minimal cost.

Are your trade secrets protected?

Source: Holding Redlich

Earlier this year, the Australian Bureau of Statistics released a report which revealed about two-thirds of Australian businesses use no form of intellectual property protection. The construction sector was the most remiss (with 78 .6% of businesses using no method of IP protection), followed by transport, postal and warehousing (74.4%) and accommodation and food services (74.4%).

SO WHAT?

There are a number of steps you can take in order to protect your brand and intellectual property, including:

• Undertaking an audit of intellectual property to ascertain what is owned and/or licensed in connection with the business

• Considering what confidential information and trade secrets are used in your business and ensuring their security and that you have confidentiality arrangements with key stakeholders

• Ensuring you have the right to use any material (such as copyright material) used for marketing your business and products. Do you have ownership or rights under a licence agreement? Is this recorded in writing?

• Determining whether any third parties (such as agents or distributors) have the right to use your intellectual property. Is there adequate documentation recording any rights and/or restrictions of use?

• Ensuring that where materials (such as trademarks or marketing material) are developed by external agencies, that any developed intellectual property is actually assigned or appropriately licensed to your business. This may prove to be a particularly problematic issue to safeguard value upon the sale of a business or business asset; • When embarking on a product launch or re-brand, consider legal issues including the impact of any competition or trademarks laws. For example, are there any other competitors with a similar “get-up” or trademark?

• Ensuring you protect your interests by keeping records of authors and developers of any copyrighted material, including marketing materials and trademarks.

• Registering trademarks used in your business.

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