When developing your marketing plan, there are more things to think about than just customers and sales. You must also consider the areas of law that can intersect with your marketing strategies.
Intellectual property and consumer protection are two areas of law you need to recognize as you try to keep up with marketing in today’s fast moving digital world. Understanding how these areas of law affect marketing can help you reduce the financial risks to your company.
These are by no means the only legal issues that affect the operations of your business. Nonetheless, you should consult your attorney for advice on how laws may differ by country and state.
Intellectual property involves the things you create with your mind. Under intellectual property law, you are entitled to exclusive rights to the use these creations. The common types of intellectual property include copyright, trademarks and patents.
A copyright gives you exclusive rights to use any copy, slogan, tagline, image, video, sound, music, computer code, blog or any other type of artistic form of works your company creates.
Copyright protection fosters creativity and allows you to recapture your investment in time, energy, and money.
The demand for content on the Internet and mobile media leaves you prey from others who may use your creations without your permission. This could hurt the net worth of your company.
To protect your creations it is vital you insert a copyright symbol at the end of the content before you publish it. Plus you need to keep abreast of the market to see if anyone is using your material.
On the other hand your company could be in violation of another entity’s copyright if you use their creative work without permission. For example, your company could get hit with a copyright infringement demand letter, for posting stock photos to your blog or website that you misuse or did not get permission to use. The courts could hold you liable for non-intentional use of another entity’s content. Therefore you need an airtight policy for use of third-party material. It is wise to get their written permission should you ever want to use someone else’s content.
Trademarks are an integral part of your company identity. A trademark is a recognizable and distinct sign, design or expression, including a sound that identifies a company and its products or services from those of others. Trademarks can include your logo, brand and packaging.
If a competitor were to infringe on your trademarks, it could cause irreparable damage to your company. For example, if they were to use a similar looking logo, this could mislead your customers to do business with your competitor and not your company.
You can also inadvertently use someone else’s trademark in your marketing. If the rightful owner catches you, they can sue your company which can result in a big monetary loss.
East Carolina University in Greenville, N.C. sued Cisco in federal court in 2012 for trademark infringement. It turns out that Cisco used a slogan “Tomorrow Starts Here” in a new advertising campaign. Yet, East Carolina University has been using the same slogan for its educational institution for over ten years. This is just one example of how one organization protects its trademark and how another organization inadvertently violated that trademark.
A patent gives your company the right to utilize an invention and excludes others from using it for 20 years. An invention is something that is new, not obvious, useful, and tied to some type of process, machine, manufacturing or composition of matter. The federal government grants a patent in exchange for the inventor publicly disclosing the invention. Patents enable inventors to gain the rewards for the investment they made in time and money involved with the invention.
Patent law is among the most dynamic areas in the legal field. Plus the financial stakes involved with patent infringement are no doubt the steepest of any area of law that can affect your company. That’s because patent infringement can take sales away from the patent holder or stop the sale of a particular product for the infringer.
Patent infringement is the unauthorized use of property. Yet patent infringement occurs every day. And it can occur in any industry at any time.
If your company has a patent then it is your responsibility – and yours alone – to fight any company that violates your property. And if your products or the things you use to market your products infringes on another entity’s patent, then you could be liable.
Unlike copyright infringement which is a criminal offense in the United States, patent infringement is a civil matter. If you are a small company, you may be up against a much larger entity with deep pockets, including patent trolls. Patent trolls are patent holding companies that sue other companies for infringement.
One example of a patent troll suing other companies for infringement involves Intellectual Ventures. They filed suits for patent infringement against at least 13 leading banks and financial institutions in 2013. The defendants include Commerce Bancshares, Capital One Financial Corp., Bank of America Corp., BBVA Compass Bancshares, Fifth Third Bancorp, JPMorgan Chase & Co., PNC Financial Services Group, First National Bank of Omaha, Huntington Bancshares Inc., HSBC USA Inc., U.S. Bancorp, M&T Bank Corp. and SunTrust Banks.
Consumer protection is a very “hot” area of law with respect to the digital marketing. The Federal Trade Commission issued a set of laws in 2000 to protect the interest of consumers and prevent deceptive and unfair acts or practices from advertising and marketing on the Internet.
The FTC rules that a
“representation, omission or practice is deceptive if it is likely to mislead consumers and affect consumers' behavior or decisions about the product or service.”
Plus the FTC rules
“an act or practice is unfair if the injury it causes, or is likely to cause, is substantial, not outweighed by other benefits and not reasonably avoidable.”
There are several areas in marketing that intersect with consumer protection. These include deceptive advertising, disclosure and privacy.
The FTC Act prohibits that you use unfair or deceptive advertising in any medium – including the Internet and mobile media. When advertising your products or services your company must tell the truth. You must also not mislead consumers.
If you leave relevant information out of an ad, the FTC could interpret this as making a misleading claim. A misleading claim can also be one that implies something that is not true. For example, you could have a misleading ad if your company promotes a product that requires $0 down, but requires undisclosed charges upon purchase or lease.
A California mother sued Ferrero, the maker of Nutella, over misleading advertising that made the chocolate-hazelnut spread seem healthy. The ads stated Nutella was "healthy" and "part of a balanced meal." Yet the product contained 21 grams of sugar and 200 calories in each 2-tablespoon serving with half of those calories coming from fat. Ferrero agreed to settle the suit for $3 million dollars and changed the product label and advertising claims.
The Federal Trade Commission updated its laws pertaining to advertising disclosures in a new publication in March 2013. The new laws reflect the dramatic changes in the online world since the first .com related laws that they made in 2000. These new laws apply to all types of media, including Internet and mobile.
Under the new laws, you’ll need to include relevant limitations and qualifying information into any advertising claim, rather than using a separate disclosure that qualifies the claim. You’ll also need to make any disclosure clear and conspicuous. Here’s how:
- Place the ad close to the claim; the closer the disclosure is to the claim, the better.
- Make the claim prominent. Use large font sizes and colors to make it noticeable
- Use a hyperlink to any disclosures
- Design ads so your audience does not need to scroll their screen
- Repeat disclosures throughout your site
- Use audio disclosures for video or audio recordings
- Make the language understandable for your audience
Perhaps the area of law least understood and most violated is privacy. The Federal Trade Commission enforces consumer privacy protection of data.
Consumers share information on the Internet and mobile media. Your customers have very strong concerns about the security and confidentiality of their personal information.
Yet how your company collects, stores and uses this information can affect consumer privacy and violate the law. This is particularly the case with data collected and transmitted through email and text messaging and e-commerce. To remain in compliance with FTC regulations you’ll need to execute four fair information practices, namely notices, choice, access and security.
Do you provide a notice on your website that informs visitors how you will use the data you collect from them? If not, you’ll need to do so. Transparency can help you build trust.
Do you give your email subscribers a choice to opt in and out? If not you’ll need to provide this with your sign up form and at the bottom of each email you send to your contacts.
Do you give your customers access to the information you have collected? If not you’ll need to do that. Consumers feel safe when they know what type of information you have they shared with you. Plus it gives you an opportunity to have them update it if any of it is old and incorrect.
How do you secure the data you collect from your customers? You could be in breach of consumer protection laws and credit card industry rules if you do not protect consumer credit card information. Take the appropriate steps to protect all the data you collect from consumers.
As an example of the risks of a security breach, the Federal Trade Commission filed a suit against Wyndham Worldwide Corp and three subsidiaries in 2012 for not protecting consumer data. The FTC suit was due to Wyndham’s violation of an FTC rule that prohibits “unfair or deceptive acts.” The suit claimed between 2008 and 2009 hackers gained access to 619,000 payment card accounts leading to $10.6 million of fraudulent charges on consumers' accounts.
Whatever laws your company needs to adhere to in the U.S. may be very different in another country. Not all countries recognize intellectual property laws. For example a patent that is protected in the U.S. and Great Britain may not be in China. Not all countries have consumer protection laws. And if they do, they may not include the same mandates. Consult your attorney with respect to how your marketing may intersect with international law.
Aligning Your Marketing with the Law
The information presented is only a small tip of a large iceberg. As the digital marketing world moves at a rapid pace, the legal world tries to catch up. Many laws pertaining to digital media are fairly new or subject to change as new issues arise. Its best to include your legal team in any marketing plans you develop so you can get the proper advice to protect your company.