Mobile Apps and Terms of Use: the Instagram Debacle

Mobile app developers frequently need to update their Terms of Use, prompting the familiar but often ignored, “Terms & Conditions Have Changed” iPhone alert. The updates usually accompany new technologies and services, and do not represent policy shifts or noticeable service changes; hence the heedless recipient. But as the recent Instagram controversy shows, providers should avoid hiding big changes in small print.

Instagram is a mobile application downloaded by more than 80 million users to date. It allows users to stylize and share photographs and other images using a variety of preset filters. Late last year, Instagram unveiled its new Terms of Use policy that included the following clause:

“You agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you.”

Thus, it seemed, by uploading photos to Instagram, users were deemed to have consented to use by others of the images for advertising materials.

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Mobile Apps and Consumer Privacy: California is Setting a New Standard for App Developers

California Attorney General Kamala Harris

Do your mobile apps run afoul of California’s privacy laws?  About one hundred mobile application developers are discovering that their products might be “illegal,” and many others now have to worry.  California Attorney General Kamala Harris, consistent with her commitment to consumer privacy interests, has begun to send non-compliance letters to companies like United Airlines and OpenTable, whose applications not only offer consumers the convenience of tracking their flights or making dinner reservations, but also collect information about their preferences through their smartphones.  The letters, which the AG’s office started sending in November, warn of a $2,500 fine for each copy of a non-compliant app downloaded by a California consumer.  Developers were given thirty days to respond. 

This is yet one more battleground as the law tries to catch up with the pace of technology (and vice versa).  At issue is whether the privacy policies these companies must post are conspicuous and reasonably accessible for consumers.  The California Online Privacy Protection Act (“CalOPPA”) requires that mobile application providers (“online service providers” within the language of the Act) post privacy policies describing the “personally identifiable information” (“PII”) their products gather, how that information will be used or shared, and the processes in place for a user to review and edit their PII.

 

The CalOPPA also requires this disclosure to be “reasonably accessible” to consumers.  For companies developing mobile applications, providing a privacy policy website, accessible only outside of the app, may not be enough.  Mobile developers must either post the policy or include a link to the policy within the app itself.

Harris’ action follows an agreement reached in February with Amazon, Apple, Google, Hewlett-Packard, Microsoft and Research In Motion, which together comprise the bulk of the mobile application market and are the industry’s largest accumulators of consumer data.  These six developers agreed not only to formulate privacy policies compliant with the CalOPPA’s requirements, but also to make these policies available to consumers before they download the application.

    

LinkedIn's in-app privacy policy

Going forward, entities developing applications that capture Californians’ personally identifiable information must carefully examine their privacy practices to avoid enforcement action by the California Attorney General.  Best practices include a carefully drafted privacy policy that clearly articulates what information an app will gather, how it will be used, whether and when it will be shared, and the consumer’s right to review and edit their collected data.  The policy should be accessible within the application, either on a separate screen or through a link.  A company may also choose to make the policy automatically available to consumers, in advance, on the platform from which the application is purchased (e.g., Apple’s App Store or GooglePlay) in order to bring itself in line with standards now being set by the large corporations that have already worked through the particulars with the AG’s Office.

There is a further caveat for app developers and providers.  Don’t forget that privacy policies create their own teeth and can bite back.  That is, a policy may be held to constitute a contractual obligation between the company and the consumer who agrees to it.  Thus, failing to provide the protections that a policy promises may subject a provider not only to an enforcement action from the Attorney General’s office (when, for example, the CalOPPA has been violated), but also to claims by consumers (perhaps many thousands of them in the case of a popular app) that a contract has been breached.  For example, in Claridge v. RockYou (2011), a judge in the Northern District of California allowed a class action to go forward where RockYou represented their servers as “secure” in its privacy policy despite its knowledge of security issues with its database.  RockYou later settled the action.

Although the Los Angeles Times reports that the state will “give app makers time to craft a privacy policy and fall into line with California law,” Harris has sent a clear message: her newly created Privacy Enforcement and Protection Unit will enforce the Golden State’s privacy laws.  A barrage of warning letters may sound relatively benign, but this is an opening salvo to what appears to be a vigorous litigation strategy.  On December 6, the Attorney General sued Delta Airlines in a San Francisco Superior Court for its failure to respond to a thirty-day warning letter concerning its Fly Delta app for mobile devices.  The complaint alleges that Delta’s application stores users’ credit and debit card information, geo-location information and photographs, and that Delta has “knowingly and willfully” or “negligently and materially” failed to disclose how it collects, manages, or shares this information.  The lawsuit seeks $2,500 in damages for each violation of the CalOPPA, which could quickly add up to given the fact that the Fly Delta app has been downloaded by millions of users already.  With the swiftness of the Attorney General’s action and the extent of relief that CalOPPA affords, any business seeking to reach California consumers through a mobile app must take heed.  And as we know, especially in the technology world, as California goes, so goes the country …  

The Lively Jurisprudence of Dead Celebrities: Albert Einstein, New Jersey, and the Post-Mortem Right of Publicity

Will your image live longer than you do?  Artists, celebrities, and other creatives often invest substantial time and effort cultivating a personal brand image, and most likely anticipate its longevity.  The law recognizes a person’s right to profit from this investment by preventing third parties from “free riding” on a famous individual’s name or likeness.  A majority of states recognize this “right of publicity,” but vary as to whether this right should outlast its initial rightsholder and for how long.  In some, like New York, the right is extinguished with the death of the individual.  But in others, including California, the right of publicity constitutes personal property that can be passed on to ones’ heirs.

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Big News for Small Copyright Claims?

Copyright Office considers new proposals for a copyright small claims court, but specifics are still lacking.

The story is familiar to many artists.  A freelance photographer is surprised to find that an online service has reproduced a number of copyrighted images from her website.  She reaches out to the organization with phone calls, offers to license her work for what she considers a reasonable fee, and drafts her own “cease and desist” letter.  These all go unanswered.  Realizing that her only remedy may be to sue, she seeks out an attorney who will file her case in federal court.  But the case is too small; attorneys’ fees are high; it would take at least a year to litigate; and the recovery, if she wins, is uncertain.  In the end, she simply gives up.

In 2006, the United States Copyright Office brought stories like these to the attention of Congress.  In a statement before the subcommittee on intellectual property, the Office noted the costs associated with the federal court system, which has exclusive jurisdiction over copyright cases, and concluded that “[it] is reasonable to ask whether federal courts are hospitable to most small claims.”  Two years later, Congress directed the Office to study the creation of a special network of courts that would hear low-value copyright claims.  As part of its research, the Copyright Office asked for input from interested parties in the creative community.  That commenting period just ended on October 19, and the opinions of artists’ rights organizations, corporations, and intellectual property scholars are ready for review.

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Copyright owners, such as the photographer in our example, would generally like to see an inexpensive, easily accessible forum with robust powers to grant and enforce judgments.  Reduced cost and ease of access, they argue, will lead to meaningful enforcement of intellectual property rights.  On the other hand, some worry about the potential danger to small-scale defendants who often settle rather than engage in expensive, lengthy litigation, even if they have valid defenses.  They suggest that a copyright small claims court may end up a mechanism for powerful interests to extract settlements from unsophisticated defendants.

Proposals submitted thus far address these concerns and others.  Foremost among them are the questions of how independent a court of small claims would be, whether it would limit the role of attorneys and the discovery process, whether it would be a voluntary option or mandatory, and where the cap on monetary damages would be placed.

Although the debate continues, a consensus has emerged with respect to at least some of these issues.  For example, a majority of commentators agree that such a court should be instituted outside the federal court system, either at the Copyright Office, or as an independent administrative agency.  State courts do not present a viable alternative since their dockets are already crowded and state court judges have relatively little experience with copyright law.  However, the field is far less unified when it comes to the questions of attorneys, attorneys’ fees, the permissible amount of claims, and the right of appeal.

Recently, the United Kingdom instituted its own “small claims track” in the Patents County Court, which may offer some insight.  The “small claims track” provides a venue for suits under £5,000 where neither lawyers nor experts are required and the rules of evidence are less strict.  Further, judges may grant either monetary damages or permanent injunctions, but are prohibited from entering preliminary injunctions or awarding attorneys’ fees in excess of £200.

While copyright holders laud the UK’s new “small claims track,” it is unlikely that a comparable court will be established in the United States any time soon.  As a next step, panels in New York and Los Angeles will meet next month to consider specific aspects of the many proposals offered.  As the discussion progresses, the many questions raised are sure to receive a hard look from interested parties, and the debate is bound to intensify.

Update: the Copyright Office is extending the time to submit requests to participate in the public meeting to consider remedies for small copyright claims in Los Angeles on November 26 and 27, 2012. Requests to participate are now due by November 9, 2012.

For more information, see www.copyright.gov/docs/smallclaims

Color Trademarks and Fashion: Branding That “Pops"

Color trademarks are those which use a color alone as the brand for a product, what trademark experts call a “source indicator.” Color marks are considered non-traditional trademarks, and they are generally disfavored by the U.S. Patent and Trademark Office.  Nonetheless, some color marks have achieved “distinctiveness,” that is, the degree of public recognition as a source indicator compels the USPTO to allow owners to register the color as a mark in their field of commerce.

For example, United Parcel Service holds a registration [Reg. No. 2901090] for “the color chocolate brown” [Pantone 462C] as applied to the entire surface of vehicles and uniforms” for the service of delivering personal property. Yellow is registered by the USPTO [Reg. No. 78706568] to the Lance Armstrong Foundation as a single color for wristbands for use in charitable fundraising.

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An Expanded Scope for the Copyright Misuse Defense?

We are often reminded that the basis for U.S. copyright law is the short provision of the Constitution giving Congress the “Power…To Promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” [Art. 1, Section 8] 

This constitutional source says that the “monopoly” granted must be temporary, and that the restraints (under copyright and patent law) should serve a particular purpose, the promotion of knowledge and art. Still, over the years, the duration of those “temporary restraints” (exclusive rights) has been increasing. 

It is also not apparent that the constitutional purpose is a consistently observed guiding principle. Some argue there is too fierce a trend currently toward expanding copyright and its enforcement. At the same time, increased copyright vigilance has been regarded by others as a necessity given the ready distribution and easy duplication afforded by digital technology.

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[1] Other invocations of the copyright misuse defense served a similar purpose. In Alcatel U.S.A., Inc. v. DGI Technologies, Inc., 166 F.3d 772 (1999), the Fifth Circuit allowed a copyright misuse defense when the holder of a copyright in software licensed its use only on the condition that the licensee use the software only on the copyright holder's hardware. In DSC Communications Corp. v. DGI Technologies, 81 F.3d 597 (1996), another Fifth Circuit case, a license prohibiting the development of a competing microprocessor card was found to be copyright misuse.

Expanding the Internet: What do ICANN’s New gTLD Applications Mean for Trademark Owners?

One year ago, as part of a plan to expand the capacity of the Internet’s domain name system, the Internet Corporation for Assigned Names and Numbers (ICANN) began accepting applications for more generic top-level domain names (gTLDs). Currently, the well-known gTLDs include .com, .org, and .net, as well as some of the country indicators that have been repurposed, such as .tv and .es. Adding gTLDs will allow for exponentially more domain names. During the new gTLD application period, ICANN opened the door to any combination of three or more letters in most major alphabets: .blue, .school, .mcdonalds, .law or .商城. The possibilities might seem almost endless, but, on “Reveal Day,” ICANN disclosed a list of 1,930 applications for new gTLDs.  

What does this mean for trademark owners and businesses? Some procedures have been set up; some are still vague and in development. At this stage trademark owners can review the list of proposed gTLDs to determine whether their brands, products or industry names are impacted, and then decide the next step to take with ICANN or otherwise. 

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