Month: June 2021

Categories
Intellectual Property

How to Protect Your Designs with Patents and Trade Dress

How to Protect Your Designs with Patents and Trade Dress

Laura Marmulstein

Share Post:

Designs are in everything—the computer you are currently looking at, the clothes you are wearing, the chair you are sitting on, the bottle you are drinking out of (and the list goes on).

There is value to having a product that looks different from anything else on the market. People often want things simply because they look cool or are unique. And wouldn’t it be cool if you could be the exclusive producer of that unique, cool-looking product? With the right protection, you can. There are several ways to protect a design, including design patents and trade dress.

Design Patents

Design patents protect new, original, and ornamental designs for articles of manufacture (35 U.S.C. § 171). In other words, they protect the way a product looks. Specifically, a design patent can protect the configuration or shape of a product and/or its surface ornamentation. An example of a product protected by a design patent is depicted below—which I’m sure you recognize as Apple’s iPhone.

U.S. Design Patent No. D593,087

A design patent gives the owner the right to prevent others from making, using, or selling a product that appears “substantially the same” as the patented product, as determined by an “ordinary observer, giving such attention as a purchaser usually gives.” Gorham Co. v. White, 81 U.S. 511, 528 (1871). An product may appear substantially the same as a patented product if a buyer purchases the infringing product thinking it was the patented product. Id.

As an example, the products depicted in the right two columns of the table below were found to be nearly identical to and to infringe on the Crocs footwear design protected by U.S. Patent No. D517,789, as represented by the drawings in the left column. Crocs, Inc. v. Int’l Trade Com’n, 598 F.3d 1294, 1304 (Fed. Cir. 2010). In this case, the court found that “an ordinary observer…would be deceived into believing the accused products are the same as the patented design.” Id.

A design patent provides the owner with a limited monopoly lasting fifteen years from the date the patent is granted. Once the patent term expires, the patented article falls into the public domain, meaning that anyone can use or sell it. A patent term cannot be extended; however, it is possible to effectively extend the monopoly through other means of design protection, such as trade dress.

Trade Dress

Trade dress is the non-functional physical detail and design of a product or its packaging, which indicates or identifies the product’s source and distinguishes it from the products of others. Trade dress is usually defined as the “total image and overall appearance” of a product, or the totality of the elements, and “may include features such as size, shape, color or color combinations, texture, graphics.” Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 764 (1992).

When a company continuously uses a design, the public may come to recognize the design as exclusively coming from that company. For example, without seeing a company name for the images below, you likely recognize the product designs as Apple products. These products are protected by trade dress.

Apple has developed a strong reputation in the electronics industry, and consumers know they will get a certain quality product with Apple products. As such, consumers will continue to buy products simply because they come from Apple. A design protected by trade dress has associated value by serving as an indicator of a particular quality product coming from a particular source, influencing purchasers to buy it.

A trade dress owner can prevent others from producing products with designs that are likely to cause consumer confusion. Likelihood of confusion exists when another’s product design or packaging is so similar and the goods and/or services for which they are used are so related that consumers would mistakenly believe they come from the same source. See TMEP § 1207.01.

For a design to be protected by trade dress, the public must associate the design with a source or producer of goods or services, rather than just the product itself. A product design is not capable of functioning as a trademark without a showing of secondary meaning, i.e., that the public associates the trade dress with a source or producer, rather than just the product itself. See, e.g., Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 216 (2000). For this reason, it often takes time to acquire trade dress protection for a product design. Product packaging, on the other hand, may not require time to show it has acquired source-identifying function. See, e.g., Samara Bros. at 215 (“product packaging…normally is taken by the consumer to indicate origin.”).

During the time it takes to develop trade dress protection for a product design, the design can be protected by a design patent (so long as it is novel, non-obvious, and ornamental). Once the design has acquired source-identifying function, the design can also be protected by trade dress. In this manner, a design can be protected by both a design patent and trade dress. When the design patent expires fifteen years after its grant date, the design will still be protected by trade dress so long as the public continues to associate the design with its source or producer.

As an example, Coca-Cola has obtained numerous design patents on its unique bottle shape, including U.S. Design Patent Nos. D63,657 and D105,529, shown below. The Coca-Cola bottle is also protected by trade dress, as the public readily recognizes the bottle as Coca-Cola’s product. Coca-Cola registered the trade dress with the U.S. Patent and Trademark Office in 1977 under U.S. Registration No. 1057884, which is depicted in the far right image below. While the design patents provided Coca-Cola a fourteen-year monopoly (design patent term changed from fourteen years to fifteen years in 2015) on the bottle designs, Coca-Cola was able to effectively extend this monopoly through trade dress protection, which still exists today.

U.S. Pat. No. D63,657

U.S. Pat. No. D105,529

U.S. Reg. No. 1057884

In conclusion, design patents and trade dress provide valuable protection, and you should consider these forms of intellectual property protection when designing a product.

Disclaimer: This article is intended for scholarship and educational purposes only. The images used in this article were taken from publicly available documents on the U.S. Patent and Trademark website (tsdr.uspto.gov and portal.uspto.gov/pair/PublicPair) and Google Patents (patents.google.com). The image used from Crocs, Inc., is from a publicly available case accessed through Westlaw (next.westlaw.com). We believe incorporating images showing examples of design patents and trade dress is necessary to adequately convey the information to educate the general public. We believe our use of these images constitutes fair use. If you are the copyright owner of any of these images, please feel free to contact us at info@milgromlaw.com. 

READ BIO

ABOUT THE AUTHOR

LAURA MARMULSTEIN
LAURA MARMULSTEIN

ASSOCIATE

Laura counsels clients on legal issues related to intellectual property, including patents, trademarks, and copyrights. Laura helps clients build strong intellectual property portfolios, taking into account various types of protection options, such as utility and design patents, including both U.S. and foreign, trademark and trade dress registrations, and copyright registrations.

More Articles
Business & Corporate Law

Recent Crypto Enforcement Actions and the Brewing Battle Between Regulators for Jurisdiction Over Digital Assets

Readers of my last, irresistibly juicy blog post, “First-Ever Court Ruling Means Your Utility Token May Be an Unregistered Security,” know that the Securities and Exchange Commission (“SEC”) recently landed a blow against blockchain-based media company LBRY when a district court in New Hampshire held that LBRY’s native “utility token,” LBC, was an unregistered security.

Read More »
Rachel Yeates March 13, 2023
Entrepreneur & Startup

Entity Selection: How QSBS Could Save You Millions in Taxes

I often work with entrepreneurs starting new ventures. While there are multiple considerations for new businesses, the first important item to address is entity formation, governance, and finance/ownership. This is the starting point to get your venture headed in the right direction.

Read More »
Jonathan Milgrom March 2, 2023
Business & Corporate Law

Do Colorado Courts Still Enforce Liquidated Damages Provisions?

Do Colorado courts still enforce liquidated damages provisions? When are such provisions enforceable? As a litigator, I notice this is a frequent topic of conversation among my transactional attorney friends when they are drafting contracts with no real consensus. So, what does Colorado law say?

Read More »
Amanda Milgrom February 21, 2023
Categories
Employment Law

How Employers Can Support Working Moms Post-Pandemic

Young mother in home office with computer and her baby. Work and child care

How Employers Can Support Working Moms Post-Pandemic

Lindsey Brown

Share Post:

Working moms have been especially hard-hit by the stress of pandemic life. When schools and daycares shut down, working moms* were expected to take on the role of teacher, in addition to their other two full-time jobs: mom and employee.

This added stress resulted in women leaving the work forces in droves, at a time when women’s participation had been setting record highs. In September 2020 alone, 865,000 women left the workforce, compared to 216,000 men. Women’s participation in the workforce is now the lowest it’s been in thirty years.

Working moms are expected to always be “on,” which results in exhaustion. A study by FlexJobs reported that 40% of working women were unable to unplug or were working more than they thought they should. This is compounded by the pressure to subvert “maternal bias,” the conscious or unconscious belief that a working mom can’t be effective both in work and in motherhood. It’s no wonder, then, that more women than men report exhaustion, burnout, and pressure to work more.

As life begins to return to normal (at least in the United States), employers are in a unique position to implement the lessons learned during the pandemic and to shape a future that better supports working parents. Given the downward trend in the size of the workforce, it is ultimately in employers’ best interest to support mothers, lest companies continue to lose valued employees.

So what can employers do to support working moms?

1. Build community; support engagement.

Parenting is tough. Parenting in a pandemic is even harder. But as we emerge from a year of isolation and lockdown, we’ve learned that having a supportive community of like-minded women can make all the difference.

Connecting working moms with other working moms—who understand the daily stress of meeting deadlines while also getting kids dropped off on time—really matters. Being able to tap into this community is incredibly valuable.

Whether they are groups of moms within a particular profession (like Denver-based MAMA for attorneys) or organized around motherhood generally (like the mama’hood), support systems for working moms are there, but moms may not know they exist or may be unsure of how to get involved. Companies can help by connecting their employees with community groups, and they can support participation and leadership within those groups. For example, employers can offer to cover membership fees or dues and can allow flexibility for parents to attend group events or classes.

2. Money matters.

Childcare costs are continuing to rise. For many families, monthly childcare costs equal or exceed their monthly mortgage. Employers can offer stipends to help cover the cost of childcare. Additionally, companies could offer subscriptions to services like TULA (a Denver-based, on-request personal assistant service), grocery or meal-kit delivery, or even house-cleaning services—anything to help ease the daily, mile-long checklist of working moms.

3. Continue flexible schedules, including time off.

A silver lining of the pandemic is that many businesses learned that their employees could succeed while working remotely or with flexible hours and could still maintain pre-pandemic productivity.

Employers should continue fostering a sense of adaptability and flexibility. Companies can implement parent-friendly scheduling policies and cultivate a culture where it’s encouraged and expected that these will be used. Offering a flexible schedule and then penalizing an employee who utilizes that option is disingenuous and undercuts the relationship between employer and employee.

Studies show a compressed work week or shorter workday can reduce burnout, but simply offering a flexible schedule won’t completely cure the problem. While flexible scheduling has allowed many moms to stay in the workforce, it has come at the cost of their well-being. The hours after kids’ bedtimes used to offer a brief reprieve from the daily chaos, but that time is now supposed to be used for catching up on emails and finishing projects, leading to burnout.

Employers can offer part-time or reduced schedules, extra paid time off, or even unpaid leave. Employers should let moms know that it’s acceptable to take time for themselves, and employers should respect those boundaries. Employees who have dedicated time away from work are more productive than those who are “always on.”

4. Most importantly, ask what moms need.

Companies should foster an understanding of the lived experiences of working moms. Having open and honest conversations about the needs and expectations of working parents will allow both employee and employer to succeed. Employees who feel heard and supported are far less likely to quit. Retention and employee satisfaction in turn increases productivity and the company’s bottom line. All employees, not just parents, will benefit from a culture of empathy and open communication.

While working moms have been hurt by the pandemic, employers have the opportunity to set the course for a better future. Employers who enact thoughtful policies that prioritize and support working moms will see the benefits of a culture of trust across the company.

*This piece focuses on women, as our society traditionally assigns the majority of child-rearing responsibilities to moms, either overtly or subconsciously, and because the author is writing from her perspective as a mother. However, the same supports equally apply for parents of all genders, as well as for other primary caregivers.

Lindsay Brown
READ BIO

ABOUT THE AUTHOR

LINDSEY BROWN
LINDSEY BROWN

PARTNER

Lindsey is a litigation partner and mom to her one-and-a-half-year-old daughter. Lindsey is proud to work at Milgrom & Daskam, where being a parent and an attorney is celebrated and encouraged. Milgrom & Daskam works to support its working parents by fostering dialogue and understanding.

More Articles
Business & Corporate Law

The Importance of Morality Clauses in Contracts with Public Figures

In the age of social media and the 24-hour news cycle, opportunities for public figures to be called to the mat and canceled over their statements and behavior are plentiful. Whether looking at Kanye West, aka Ye, with his antisemitic statements on Twitter, “White Lives Matter” t-shirt at Paris Fashion Week, and a myriad of other public offenses, T.J. Holmes and Amy Robach’s affair, or Try Guys’ Ned Fulmer’s affair with an employee, when the transgressions become public, so do the calls from the public for the brands and companies they work with to cut them loose.

Read More »
Madison Shaner January 30, 2023
Employment Law

U.S. Supreme Court Hears Oral Arguments on Colorado Business’s First Amendment Speech Rights

The U.S. Supreme Court heard oral arguments last month in a case challenging the Colorado Anti-Discrimination Act (CADA) in a scenario similar to the Masterpiece Cakeshop decision of 2018. 303 Creative LLC, a Colorado based graphic design service is seeking to provide wedding website design services but only for opposite-sex weddings due to the owner’s religious beliefs that preclude her from providing the same services for same-sex couples.

Read More »
Jason Fisher January 17, 2023
Categories
Copyright Law

Tattoos, Copyright Law, and the Doctrine of Fair Use

Professional tattoo artist making beautiful tattoo on young woman hand. Man tattooist drawing floristic picture on female arm with special machine, closeup, copy space

Tattoos, Copyright Law, and the Doctrine of Fair Use

Milgrom Team

Share Post:

The murmuring conversation surrounding tattoos as copyrightable art is growing increasingly loud. Tattoos, once stereotyped as a heart surrounding “mom” on a nostalgic sailor’s shoulder, are now coveted artworks which can shape an individual’s identity and how one is seen by the world. Would Mike Tyson’s persona be the same without the face tattoo surrounding his left eye? And, speaking of face tattoos, would we recognize Post Malone without the sixty-plus tattoos on his face?

The subject of “famous” tattoos—those that adorn celebrities—and their re-creation in instances where the celebrities are depicted, has become controversial. The tattoos are inextricably linked to how we perceive celebrities themselves. As such, the many re-creations of celebrities in cartoons, drawings, SNL skits, video games, and even Coachella holograms feature the famous person with tattoos identical to those the person has in real life—sometimes to the chagrin of tattoo artists.

Some tattoo artists are taking legal action by claiming copyright infringement and seeking damages for the un-permitted re-creation of their art on imitations of celebrities. This brings to the surface several legal questions: (1) Is a tattoo on a famous person entitled to copyright protection enforceable by the tattoo artist? and (2) Does depicting a celebrity with tattoos fall under the doctrine of Fair Use?

1. Copyright Protection

Under Section 102 of the Copyright Act, copyright protection begins at the moment of creation for (1) original works of authorship (2) fixed in any tangible medium of expression from which they can be (3) perceived, reproduced, or otherwise communicated.

Under this statute, tattoos are copyrightable works. Tattoos certainly fall under original works of authorship, specifically pictorial works. And, as my grandmother will tell you, tattoos are permanent marks on a body and therefore “fixed” in a tangible medium. Depending on the subject’s decision of where to place the tattoo, a tattoo is also perceivable to the public. Thus, tattoos are entitled to copyright protection and all the rights connected thereto. Under copyright law, the tattoo artist is able to protect his/her/their art (even if it is on someone else’s body) and to prevent others from using or copying it without the artist’s permission.

2. The Doctrine of Fair Use

What if the tattoo is publicly decorating Scarlett Johansson’s shoulders—or any other famous person’s shoulders? Can tattoo artists enforce their copyrights for the re-creation of a celebrity with their tattoos?

Tattoo artists can protect their copyrights, with one caveat (and a very amorphous caveat at that): the doctrine of Fair Use under Copyright Law. Under Fair Use, it is permissible to use another’s copyrightable work without the original author’s permission but only under certain circumstances, such as criticism, comment, news reporting, teaching, parody, scholarship, and research.

Fair Use is a notoriously gray area of law, and courts have landed on four factors for evaluating a question of Fair Use:

  1. The purpose and character of the use: Courts consider whether the use is for commercial or nonprofit purposes and whether the use is “transformative,” meaning that it adds something new, with a further purpose or different character than the original work’s purpose.
  2. The nature of the copyrighted work
  3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole
  4. The effect of the use upon the potential market for or value of the copyrighted work

When applied, these four factors lead to highly inconsistent results across the country’s circuits, frustrating tattoo artists and unlicensed users all over the world.

So, is the depiction of a celebrity with precise tattoos protected by the Doctrine of Fair Use? As is the answer with most Fair Use questions: it’s unclear. Two recent district court cases had opposite conclusions.

Solid Oak Sketches, LLC v. 2K Games, Inc., 449 F.Supp.3d 333 (S.D.N.Y. 2020)

In the Solid Oak Sketches, LLC v. 2K Games, Inc. 449 F.Supp.3d 333 (S.D.N.Y. 2020), the federal district court in New York considered whether the defendant 2K Games, a video game developer owned by Take-Two Interactive Software, was guilty of copyright infringement for its highly realistic rendering of the tattoos of NBA stars LeBron James, Eric Bledsoe, and Kenyon Martin in its NBA 2K basketball game featuring various NBA athletes. The athletes had each granted permission to the NBA, who then granted the defendant permission to use the athletes’ likenesses in the game.

The plaintiff in the case, Solid Oak Sketches, an entity consisting of tattoo artists, held exclusive licenses to five of the tattoos featured on the athletes. Each tattoo was determined to be highly recognizable and essential to any depiction of the athletes themselves. Solid Oak Sketches alleged that 2K Games infringed on its copyrights (which were federally registered after the game was developed) by depicting these players’ tattoos without a license from Solid Oak Sketches. 2K Games claimed that its used was de minimus and, further, was protected under Fair Use. The Court agreed with 2K Games.

When applying the four factors of Fair Use, the Court found that 2K Games’s use of the tattoos was negligible and only constituted 0.000286%—0.000431% of the entire game’s data; that the use was transformative because they were necessary to render a realistic image of the players’ likenesses; and that the tattoos did not play a significant role in marketing NBA 2K, nor did it hurt Solid Oak Sketches’ market. The court further held that the tattoo artists had granted the athletes an implied, nonexclusive license to use the tattoos as part of their likenesses and personas since the tattoo artists knowingly tattooed public figures, and the players had, in turn, licensed the use of their likenesses for use in the NBA 2K game. Thus, the Solid Oak Sketches court held in favor of 2K Games: the depiction of the players’ tattoos in the NBA 2K game constituted Fair Use.

Catherine Alexander v. Take-Two Interactive Software, Inc, 489 F.Supp.3d 812 (S.D. Ill. 2020)

Solid Oak Sketches’ holding that (a) tattoo artists who ink celebrities grant those celebrities implied, nonexclusive licenses to their copyrightable tattoos and (b) the unpermitted depiction of a celebrity’s tattoos in a video game is protectable under Fair Use contrasts the holding in a recent district court case with nearly identical facts, Catherine Alexander v. Take-Two Interactive Software, Inc. 489 F.Supp.3d 812 (S.D. Ill. 2020). In Alexander, plaintiff  tattoo artist Alexander brought suit against Take Two, the maker of WWE 2K (yes, the same 2K), alleging that Take Two infringed on Alexander’s six copyrighted tattoos which she had rendered on wrestler Randy Orton’s body when WWE2K recreated those tattoos in its realistic depiction of Randy Orton in its WWE 2K video game series. Take Two adopted the same argument as in Solid Oak Sketches, claiming that its use was de minimus and permissible under the doctrine of Fair Use.  In contrast to Solid Oak Sketches, the Alexander court ruled that Take Two was guilty of copyright infringement and that it unlawfully infringed on tattoo artist’s Catherine Alexander’s copyrights in its realistic depiction of wrestler Randy Orton’s six tattoos in its WWE-2K video game series. Take Two admitted to copying the tattoos to create a realistic avatar.

The court in Alexander did not determine whether Alexander granted Orton an implied license when she rendered his tattoos and concluded that the use was not de minimis since Alexander’s tattoos were copied onto Orton’s avatar in their entirety. The court held that, although Take Two had a license from Orton to use his likeness in the game and although copying Orton’s tattoos were necessary to render a realistic game experience, Take Two’s use of the artists’ tattoos was not protected under the doctrine of Fair Use. The court found that the use was not transformative because it served the same purpose as Alexander’s: to decorate Orton’s body, and that Take Two did not use any creativity when it fully copied the copyrighted tattoos in Orton’s avatar. These factors weighed against a finding of Fair Use. Thus, the Alexander court ruled in favor of the tattoo artist and the protection of her copyrights.

Both of these decisions may be appealed to the 2nd and 7th circuits, respectively. However, we may still not have a clear answer for Fair Use as it relates to tattoos and to artists’ ability to enforce their copyrights. In other words, while tattoos are permanent, the extent of the copyrights of the artists who design them may still be in flux.

For additional information, please contact us.

EMAIL US

More Articles
Estate Planning

Should I Consider an Ethical Will?

A Last Will and Testament seems to be on most people’s radar, especially individuals with young children, individuals who have lost a loved one, or just individuals who consider themselves to be “Type A” planners. But what about an ethical will? What is an ethical will and why might you consider executing one as part of your legacy planning?

Read More »
Kim Raemdonck December 19, 2022
Data Privacy

Navigating and Complying with Colorado’s New Consumer Privacy Act

On July, 7, 2021, Colorado Governor Jared Polis signed the Colorado Privacy Act (CPA or “the Act”) into law. With that pen stroke, Colorado joined California and Virginia as the third state to enact comprehensive consumer privacy legislation. While the law does not take effect until July 1, 2023, Colorado businesses would do well to study up on the new law to ensure compliance when it does become active.

Read More »
Michael Callahan December 5, 2022
Business & Corporate Law

The Small Business Reorganization Act and Its Prolonged Adoption Through June of 2024

Chapter 11 bankruptcy code generally provides businesses with avenues and protections to reorganize and restructure obligations. This form of bankruptcy is very often more favorable than chapter 7 bankruptcy because it allows business owners to stay in the driver’s seat while attempting to negotiate a plan that complies with the bankruptcy code. In contrast, filing a chapter 7 petition results in full relinquishment of control of the business and the appointment of a third-party trustee whose primary obligation to is to liquidate estate assets for the benefit of unsecured creditors.

Read More »
Mike Richardson November 23, 2022
Categories
Contracts

Legal Fundamentals of Contracts for Influencers and Brands

Legal Fundamentals of Contracts for Influencers and Brands

Madison Shaner

Share Post:

Whether you call them influencers, brand advocates, or goodwill ambassadors, social media content creators represent a rapidly growing marketing segment, with companies set to spend up to $15 billion on influencer marketing by 2022.

As more and more businesses move toward using content creators and influencers in their marketing campaigns, and as the percentage of marketing budgets spent on content creators grows, the question becomes how to effectively paper these transactions to protect both content creators and the businesses that hire them. 

The use of content creators for marketing allows businesses access to targeted demographics in an easy, relatively inexpensive manner, and the quality of traffic driven to businesses from content creators is often seen as better than traffic coming from other sources. Influencer marketing, especially ads in stories, has a significant impact on click-through rates because the content feels less like an advertisement to viewers. Consequently, viewers may be more inclined to trust the ads and to purchase products featured. With changes to how apps can track user activity and therefore how brands can use that information to target ads to their desired audiences, even larger portions of marketing budgets may move toward the use of content creators as time goes on.

If your business hires content creators for marketing campaigns or has ongoing relationships with content creators, having effective and efficient contracts with your influencers is critical to protecting your business. Alternatively, if you are a content creator, the contracts you sign as you work with companies are critical to building your brand and maintaining your own business. The contracts between brands and content creators should cover everything from employment status, to the payment and posting terms, to the ownership of intellectual property, to the requirements set forth by the Federal Trade Commission (FTC) and truth in advertising, and even what happens if either the brand or the content creator does something that results in being “canceled,” or how the parties can part ways.

If a business and a content creator don’t anticipate an ongoing contractual relationship, the parties should, at a minimum, document the brand’s permission to use the content and the duration and parameters of that grant. For instance, if a content creator posts images unsolicited by the brand that features the brand’s product, the brand should make an inquiry to the content creator and obtain their permission before reposting the images. Failure to obtain the content creator’s consent to re-posting the images may result in claims of copyright infringement or misappropriation of the creator’s right of publicity and may lead to Digital Millennium Copyright Act (DMCA) takedown requests through social media platforms. This could negatively impact both the brand’s image as well as its ability to market itself on the content creator’s social media channel in the future.

Critical to the conversation around using content creators in marketing is the FTC’s increased interest in influencer advertising. FTC rules provide that content creators must disclose their relationships with brands within their posts so that followers can understand whether the content that they are seeing is organic or whether it’s an ad that the content creator is being paid to post. Failing to appropriately disclose the relationships between brands and content creators can result in penalties, fines, and legal fees. In November 2019, the FTC released a “Disclosures 101 for Social Media Influencers” brochure to teach content creators how to correctly disclose when the content they post constitutes a paid endorsement. In 2020, the FTC requested public comments on whether the guidelines for influencers should be revised. The guidelines from the FTC indicate that even products received for free in exchange for an endorsement trigger the disclosure requirement, and the disclosures must be easy to understand and placed in such a way that an average viewer would be able to see that the content is sponsored.

While the FTC guidelines place adherence to the disclosure requirements on the shoulders of content creators, it is incumbent on companies to ensure content creators they work with are following these requirements because brands may also be held liable when the content creators they work with aren’t diligent about their disclosures. For instance, in March of 2020, the FTC entered into a settlement with Teami, LLC, for $1 million after alleging that Teami promoted its products using deceptive health claims and endorsements by well-known influencers and celebrities who failed to adequately disclose that they were being paid to promote the products. The FTC imposed a $1 million fine on Teami after determining that Teami would be unable to pay the full $15.2 million judgment against it.

The corporate attorneys at Milgrom & Daskam have extensive experience drafting and negotiating contracts between businesses and content creators. If you are entering into such an agreement and would like counsel to help you protect your interests, feel free to reach out to the corporate practice group at Milgrom & Daskam for a free consultation

READ BIO

ABOUT THE AUTHOR

MADISON SHANER
MADISON SHANER

ASSOCIATE

Madison (Maddie) Shaner joined Milgrom & Daskam as an Associate in 2019. Her practice focuses on corporate and real estate transactions. Prior to joining Milgrom & Daskam, Maddie was an associate at Tyson, Gurney & Hovey, LLC where she conducted oil and gas title examination and assisted in drafting drilling and division order title opinions for upstream oil and gas clients.

More Articles
Business & Corporate Law

Beneficial Ownership Disclosure: New Reporting Requirements for Small Businesses

On September 30, 2022, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued its highly anticipated Final Rule establishing a beneficial ownership information (BOI) reporting requirement under the Corporate Transparency Act (CTA) of 2019. These rules significantly change the obligations of business entities to disclose previously private information regarding the ownership and control of these entities. The primary purpose of the CTA, enacted as part of the Anti-Money Laundering Act of 2020 is to protect the US financial system from being used for illicit purposes, including preventing corrupt actors, terrorists, and criminals from hiding assets in anonymous shell companies. Background for this rule was addressed in prior blog posts including The Corporate Transparency Act (1/31/22) and FinCEN and Real Estate (8/2/22).

Read More »
Charles Knight October 24, 2022
Miscellaneous

When Shares are Not Cares

As attorneys representing startups, Milgrom & Daskam knows that early-stage businesses often have many needs and not much capital to meet them. This often results in startups bartering for services using whatever currency they have. Sometimes this results in interesting exchanges (two hundred pounds of Valencia oranges in exchange for a logo design being our personal benchmark); more often it results in founders giving away the most freely available form of credit they have—equity in their company.

Read More »
Jared Stipelman October 13, 2022