How to stay on top of advertising law to protect and promote your business Featured

8:01pm EDT March 31, 2011
How to stay on top of advertising law to protect and promote your business

A company’s reputation is critical to its prosperity. In developing this reputation through advertising, businesses need to be mindful of the complex and ever-changing body of laws that regulate advertising in myriad forms of media.

From traditional print ads to social media postings, advertising is pervasive and important to every business. How you protect yourself and your business from running afoul of the laws and protect yourself from attacks by your competitors can get tricky, says John Greenberg, chair of the Intellectual Property and Advertising Law practices at The Stolar Partnership LLP.

Smart Business spoke with Greenberg about how to promote your business, comply with the law and protect your brand.

What is advertising law?

Advertising law is an umbrella term that is often used to refer to legal issues relating to the trillion-dollar industry that consists of advertising, promotions and marketing.

It covers a multitude of important areas of the law: traditional advertising and trade disparagement; more cutting-edge advertising such as behavioral or targeted advertising, interactive advertising and advertising over the Internet; social media marketing; sweepstakes, contests and promotions; and even the use of gift cards, coupons, rebates and other incentives.

Why should businesses care about advertising law?

There has been a significant increase in the number and seriousness of lawsuits in this area over the past several years. The Federal Trade Commission has been active in challenging advertising campaigns that the FTC perceives to be a problem for consumers.

Plaintiffs’ lawyers have become increasingly aggressive in bringing class-action lawsuits. Businesses have also come to recognize that litigation, or at least the threat of litigation, is a powerful weapon to use against competitors whose advertising campaigns impugn their brands or otherwise make false or overly aggressive claims.

How can a business work with a partner to avoid litigation?

Businesses should work with their legal counsel in the early stages of the development of their campaigns so that they can avoid litigation later. By involving a law firm at this early stage of the process, businesses can have an attorney run an ad clearance early and provide preventive advice before the costs and stakes get higher — whether that means having the piece of mind that the campaign is on the right track legally or becoming aware of areas in which the campaign may run afoul of the law in some respect.

What types of issues should a business’s legal partner be looking for when running an ad clearance?

The attorney should look at a wide range of issues which, of course, vary from campaign to campaign. The attorney should consider whether there is factual support for the material ‘claims’ that are being made at the heart of the ad, and whether the claims and other elements of the campaign will violate the rights of others in terms of intellectual property rights, publicity or privacy rights, or third-party contract rights.

The attorney should also consider whether the claims and other elements violate applicable law on a federal, state, county and/or local level. This is of particular importance in some specific industries. The food and restaurant industry, for example, is highly regulated at a number of levels of the government.

The attorney also should look at whether a whole host of ancillary, but still very important, issues are in play, such as whether the campaign is likely to be distributed through proprietary social media sites, or is to be directed at children, or involves endorsements or testimonials, or affects privacy rights or data security.

These kinds of issues are particularly tricky under current law.

You also mentioned that companies are using advertising law as a weapon against competitors. How so?

When we discuss an ad clearance, we are talking defense. Yet, litigation in this area is increasingly being viewed as an offensive weapon, as well. Companies today are more sensitive to the value of their intellectual property and the potential to exploit it to their advantage against their competitors.

Whereas in the past, litigation was typically filed over only egregious conduct — an outright lie about another’s product — now there are an increasing number of lawsuits over more nuanced issues, such as whether implied claims about the superiority of another product’s performance are overreaching, or even whether too much of another’s trademark is used.

Underlying these lawsuits is the notion that the plaintiff company sees litigation as a worthwhile avenue for improving its competitive positions over competitors. Turning back to the issue of defense, the prospect of such litigation obviously brings into better focus the importance of conducting a thorough ad clearance up front.

John Greenberg is chair of the Intellectual Property and Advertising Law practices at The Stolar Partnership LLP. Reach him at (314) 641-5199 or jbg@stolarlaw.com.