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Law of Advertising and Public Relations Final Study Guide

by: Megan Angelo

Law of Advertising and Public Relations Final Study Guide JMC-40016-001

Marketplace > Kent State University > JMC-40016-001 > Law of Advertising and Public Relations Final Study Guide
Megan Angelo

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Final Study Guide
Timothy A. Roberts (P)
Study Guide
Law, Advertising, public relations, final study guide
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This 20 page Study Guide was uploaded by Megan Angelo on Tuesday May 3, 2016. The Study Guide belongs to JMC-40016-001 at Kent State University taught by Timothy A. Roberts (P) in Spring 2016. Since its upload, it has received 21 views.


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Date Created: 05/03/16
Law Final Time: 12:45-3pm Wednesday May 11 th 20% of your grade (100pt Scale) Possible Bonus Question: Chief Justice of Supreme Court- John Roberts Current legal Cases: Ex. Free Speech (spoken) Brandenburg v. Ohio- Established the “imminent lawless action” standard for regulating spoken speech. States can only restrict speech that is directed or inciting or producing imminent lawless action and is likely to incite or produce such action. It is a two-part test. The First Amendment and types of “legal speech” in the U.S. 1.) Press 2.) Speech 3.) To peaceably assemble 4.) Religion 5.) Right to petition the government for a redress of grievances Not Protected: 1.) Libel/slander= defamation 2.) Inciting a panic 3.) Fighting words= threat 4.) Treason= spilling state secrets 5.) Obscenity 14 Amendment Clauses: 1.) Citizenship Clause: born in the U.S. - You are a citizen in the state in which you reside - Former slaves/ Native Americans - Right to have citizenship 2.) Due Process Clause - Can’t enforce a law that abridges privileges or immunities of citizens - Nor deprive any person of life, liberty, or property without due process of law - Due process- trial by jury, right to appeal government decisions 3.) Equal Protection Clause - Can’t deny to any person within its jurisdiction the equal protection of laws - Cant make laws discriminating against groups of people - Ex.) End segregation- overturn bans on same-sex marriage Patents and Trademarks 3/5 Patent: a constitutional property right Do: provide a limited monopoly for inventors to profit from innovation 3 Types: Utility: mechanical device, electrical Plant: invention of asexual reproduction- natural plant Design: new, original and ornamental design Creation/Duration: USPTO: agency in the department of commerce-generally last for 20 years- from the day it’s filed Trademark: any word, name, symbol, or device-used by a manufacturer or merchant to identify his/her goods or service- identification/ distinction Service Marks: identify sources of services rather than goods Purpose: identify origin of product or service- law is identical to trademark Lanham Act (1946): governing law: enforced by U.S. Department of Commerce- means for registering-consumers are excluded Symbols: R with a circle around it- registered trademark TM- Not registered trademark- not protected SM- service mark- not registered/ not protected Process: USPTO- name address, drawing of trademark list of all goods and services- 5 specimens showing the trademark being used, and a filing fee Must be distinct: trademark- examining attorney- appeal- trademark trial and appeal board - If approved – you must use the R with the circle around it, phrase- registered in U.S., or reg. U.S. Pat of Tm off Owners: purchase ads in professional publications- inform names are trademarked Protection: renewed every 10 years - Must be maintained - Could become into public domain - Fight infringers Remedies: Injunction- court order- traditional – Monetary Relief- Not 100% but often significant when awarded Not: Political communication- editorial content- parodies Violations: 1.) Infringement- “knock-off” Ex.) coache- coach 2.) Dilution- blurring and tarnishing another trademark- “famous” marks a. Federal Trademark Dilution Act 1995 – spells out blurring/ tarnishing i. Blurring-distracting from a mark’s effectiveness Ex.) Victoria Secret case ii. Tarnishing- disparaging the mark Ex.) dumb Starbucks Moseley v. Victoria’s Secret (2003) Victors Secrets – changed Victors Little Secrets – sued for dilution Supreme Court- ruled against VS - No actual harm Trade –Dilution Revision Act (2006) - Changed to “potential harm” Dumb Starbucks: Starbucks could have sued for tarnishing Copyright- parody –defense Trademark- NO- commercial FTDA- impact 1.) Comparative Ads: use of competitors trademark is allowed- can compare differences- Not similarities 2.) Informational Ad: references other trademark- Cannot create confusion – Can’t suggest a relationship What is Commercial Speech? 3/31 Under debate - Traditional- any speech that “ proposes a transaction” - Too narrow? - Economically motivated? Economically beneficial- more accurate? Why is it regulated? - Second- class citizen- in terms of the first Amendment - “intermediate” scrutiny rather than “strict” scrutiny - Protects children- swayed by commercials Commercial vs. Non- Commercial - Kasky vs. Nike - Fuzzy legal distinction between corporate and commercial speech New York Times vs. Sullivan (1964) - Not considered commercial speech - No commercial speaker - No economic motivation - Political Speech Bolger vs. Young’s Drug Product (1983) - Mailed out circulars about condoms - Violated a federal mailing statute (offensive mail) - Argued- non-commercial speech - Violated first amendment - Talked about benefits of condoms- public health Outcome - Ruled- commercial speech - Link a product to a current public debate Kasky vs. Nike (2002) - Nike accused of operating overseas sweatshops- child labor - Ordered an independent audit of its labor practices- outside party- Andrew Young- Former United Nations Ambassador Results: - Most allegations made were false Response: Mixed/ Whitewashed - Questions about authenticity and some of the findings - Quotes were questionable Nike- Started and IMC Campaign with advertising and public relations - Promote audit findings and counter claims - Ad space in newspapers - Letters to editors, and letters to college athletic directors Audit found to be lacking - Marc Kasky- California Resident - Sued for false statements - State law in California- ( California Business Professional Code) - Allowed- considered commercial speech California- Superior Court - False advertising and unfair practices- California Code Nike’s Response: - Corporate Speech- this does not apply Question: Nikes Campaign is it commercial or non-commercial speech Superior Court- sided with Nike Kasky Appealed: dismissed Supreme Court- Appealed again - Sided with Kasky- reversed lower court’s decisions o Limited- Purpose Test- California- determine if commercial speech - 1.) the speaker- is the speaker engaged in commerce - 2.) intended audience- are they actual or potential buyers of those likely to repeat the message (media, press release) - 3.) The content of the message: is the message commercial in nature? (facts about the business products- services, operation for the purpose of promoting sales) Applications: - Courts ruled- “ Commercial in Character” - Commerce - Letters to editor Case was sent back- courts needed to determine other claims Nike- U.S. Supreme Court - Agreed to rule on it and heard some oral arguments - Then decided No- not until the California appellate court makes its ruling - This meaning they were not ready to make a decision themselves Nike and Kasky settled out of court - $500,000 overseas worker education - Donate $1 million to Fair Labor Association Impact: BE CAREFUL! – May be deemed commercial speech in another state- website Public company: legal entity that is separate and distinct from its owners Compliance: the Securities and Exchange Commission (SEC)-regulates public companies -ensure fair and orderly market SEC- rules cover corporate and commercial speech Securities Act of 1933 – addressed New stocks and their public trading Section 5- before a security is offered – registration statement – filed with the SEC – must have financials and who are the head people Quiet Period: no press/release, ads, promotion- no news about it until it is approved by the SEC and foes on the market-Exception- tombstone ad Tombstone Ad: not creative or colorful, boring and black and white Securities Exchange Act of 1934- created SEC, extended protections to investors in Existing Securities SEC: ensures that a timely, complete, and truthful information be made available to the public about publicity traded secrets Material information: “basic facts of a company that is important to an investor’s decisions to buy, hold, sell security Ex. Financial results, planned mergers, research findings Securities Exchange Act of 1934: focus on banning false, deceptive speech Safe Harbor for forward –looking statements-project within reason Private Securities Litigation Reform Act 1995: sound and reasonable forecasts of future business and financial results-disclaimer- things that could happen –evidence- made in good faith Disclaimer: 1.) Discussing projections on financial matters 2.) Discussing plans and objectives for future operations or future economic performance Not: 1.) Going private 2.) Initial public offerings 3.) Financial statements Insider Trading: 1.) An officer/director of a corporation 2.) Anyone who owns more than 10% of the stock SEC Rule: strictly prohibits any insider form ACTING on material information received before that information is made pubic Corporate Speech Tillman Act (1907): prohibited banks and corporations from spending money on federal campaigns Smith Connelly Act (1943): prohibited unions from donating Treasury money to support federal candidates Taft- Hartley Act (1948): further restricted union involvement in federal elections-created informal PAC’s Federal Election Campaign Act (1971): regulates amount individuals and businesses could contribute to federal political candidates campaigns Buckley v. Valeo (1976): Supreme Court upheld part of FECA – CANNOT limit how much candidates could spend First National Bank of Boston v. Bellotti (1978): Massachusetts law prohibited most for-profit corporations as well as public utilities from political spending in regards to tax issues unless the issues MATERIALLY affect the corporation –sued to overturn the law- affects the people who put money in their bank- Counter- “drown out the voice of the individual citizen” Outcome- Supreme Court ruled in favor of the bank- rationale – Corporate or individual speech doesn’t matter Austin v. Michigan Chamber of Commerce (1990): restricted general treasury funds to influence elections- PAC’s allowed- prevent corruption – labor unions and media corporations not restricted Outcome- Supreme Court- upheld the law- chamber restricted 1 and 14 Amendment – Rationale – no complete restriction – still use PAC –can decline to contribute Citizen United v. FEC (2010): overturned Austin – returned to the Bellotti standard Citizen United Legacy: Unlimited treasury funds to support independent political speech groups- super PAC’s Speech v. FEC (2008): limits on individual, district court rejected- No limit- Must report contributions to FEC and make public Lobbying: 1 amendment right- petition government for a redress of grievances Federal- controlled by congress State- Ohio general assembly and Secretary of state- Ohio Direct Lobbying: influence legislative bodies through direct communication with members of the legislative body Indirect Lobbying: (grassroots lobbying) efforts to influence Congress indirectly by trying to change public opinion Lobbying Disclosure Act of 1995 (Federal): must register as a federal lobbyist if you meet certain spending levels for lobbying over a set period of time Ohio: register and report 3 x annually with the Joint Legislative Ethics Committee- specify who you lobbied, what issues and detail spending Political Action Committee: any organization in the U.S. that campaigns (gives money) for or against political candidates, ballot initiatives or legislation PAC’s started with unions -Smith Connelly Act (1943) - prohibited unions form giving treasury money FEC oversees PAC’s -all federal PAC’s must register with FEC within 10 days of formation -name -who’s in charge -what they do Limits individual from giving $5,000 annually to a federal connected or unconnected PAC Candidates- Cannot work with Super PAC’s No PAC can accept foreign donations 3/10 Copyright Law -form of protecting intellectual property Other forms include-trademarks, patents, and trade secret -Protects ORIGINAL works in fixed and tangible media of expression –facts, ideas, procedures, titles, names, slogans, logos, symbols, designs, NOT copyrightable Copyright Act of 1976- basis for current law- gives ownership of copyright to someone or an organization- reproduce, create a derivative work, distribute, perform, display, and transmit his/her work -literary works -music -dramatic works -choreographed (pantomime) -graphics -movies -sculptural works -sound recordings -architectural works -motion picture/ audio visual Not Protected: - An idea, procedure, process, discovery - works of common info Ex. Calendars, rulers - Works in “ public domain” - Expression of facts- protected - C with a circle around it - The year of creation - The name of the copyright owner -only get damages if sued Formally File-Must: - Send an application to the U.S. Copyright Office - Must have authorship - Must have an original work - In a fixed tangible medium - Benefits: -actual or statutory damages -An injunction – (considered an appropriate prior restraint) -attorney’s fees -seizure of offending work Length of Copyright Protection: Individual- life of author plus 70 years Corporate- 95 years from publication or 120 years from creation; whichever is shorter EX: 1960 – published in 1980 - 95 years is shorter Length of Protection -work for hire Under contract for an employer, copyright belongs to the employer Freelancer- Company can use it once, then ownership goes back to the creator- unless contract states different terms Infringement: violated exclusive copyright 3 types 1.) Direct Infringement: engaging in actual infringing of someone’s copyrighted work a. Most common infringement 2.) Contributory Infringement: those who directly aid in copying or otherwise enable copyright infringement to occur may be liable 3.) Vicarious Infringement: infringement occurs for profit, and are in position to stop it a. Ex. Flea market- bootleg CD’s Proof: - Ownership of copyright - Access by the alleged infringer - Substantial similarity Defenses: - Permission/consent from creator - Expired copyright (public domain) - Lack of jurisdiction (Europe) - Independent Creation- no access to work - De minimis- infringement is too trivial for the courts - Fair use (educators, media) – limited amount of work for purposed that show no intent to “steal” – most common defense 4 elements 1.) Purpose and character of the use- money v. research, reporting, comment 2.) Nature of the copyrighted work- Fiction= more protection 3.) Amount of work copied or the substantiality of the work copied 4.) Effect of use on potential market for or value of copyrighted material - Parody - Similar ideas o Creative efforts appear to be independent o Can’t stop second person to fix the idea from getting profit - Criminal v. Civil - Felony - -existence of a copyright - Acted willfully Music: must obtain permission from composers/lyricists or representative - Pay royalty - Performance License – allows use- certain amount of times or for a certain time period - Performance rights societies o ASCAP o BMI - Peer-to-Peer-Networking o Illegal to share files over a network with larger number of users, especially if this is the main intent of the network to share those types of files EX. Napster o Permission  Photo, videos, music, texts, internet files Creative commons -cc with a circle around it - Attribute of creation - Noncommercial use - No derivative works Development of Commercial Speech Doctrine 4/5 Loose Garment- but will be needed for the research paper Definition – is still under debate - Proposes a transaction – 49 states- Not California - Too narrow? Why is it regulated? - Second class citizen- according to the first amendment Penny press- news important to the readers End of 1800’s prompted concern for ad claims - Regulations grew as advertising grew - 1 regulation- “Printers Ink” – criminal sanctions and fines o Developed a model statute for false ad claims in 1911 Federal Trade Commission - Established in 1914- address deceptive business acts and practices - Grew to oversee enforcement of commercial speech Food and Drug Administration – 1930 - Monitors commercial speech in FED Sectors Valentine v. Chrestensen (1943) MMC. Pg. 21 - Legal commercial speech doctrine classifying it as regulated speech - Purely commercial speech - Distributed handbills/ flyers - Included cost of tour - This broke the city ordinance - Revised the handbill- 1 side talked about the tour- no price- on the other side it protested the ordinance - He won twice and the city appealed - Supreme Court revised the ordinance - Purely advertising - Not protected Bigelow v. Virginia (1975) - “underground” Virginia Weekly - Ad for abortion - Misdemeanor- cant advertise about abortion - Virginia Weekly ran an ad for an organization in New York- where you can get an abortion - Two lower courts- Bigelow- guilty - Supreme Court- Bigelow- won o Factual information o “public interest”- beyond commercial speech - Helped widen protection to commercial speech - “advertising is not stripped of all First Amendment protection” Virginia Citizens Consumer Council v. Virginia State Board of Pharmacy (1976) - Virginia statue – prohibiting prescription drug advertising- such ads are considered to be “unprofessional” - Board of Pharmacy claimed- ignorant consumers might be swayed to patronize the store with the lower cost rather than the higher quality alternatives - Citizens- it is the right of consumers to know alternatives with respect to drug prices - Right of Consumers - Council said consumers have 1 Amendment right to know the prices - District court- struck down - Board appealed - Supreme Court- affirmed the District Court o Cant restrict public knowledge about lawful competitive pricing Importance st th - Extended 1 and 14 Amendment rights to commercial speech, even when the advertisers interest is “purely economic” - Narrowed the 1 Amendment commercial speech exception to speech that touted an illegal product or activity and to false misleading and deceptive commercial claims Commercial Speech Doctrine 4/12/16 Central Hudson v. Public Service Commission st - Current 1 Amendment advertising precedent - Supreme Court created a 4-prong test to assess the constitutionality of restrictions on commercial speech Background - During energy crisis of 1970’s the Public Service Commission of New York banned advertising/ promoting the consumption of electricity - After the crises abated, the PSC continued the ban as a conservative measure Utility Disagrees - Central Hudson Gas and Electric Co. sued to overturn the ban, arguing that it violated their 1 Amendment right to exercise free speech without warranted government regulation Lower courts upheld the ban Question: Dos it violate the 1 and 14 Amendments? Outcome: - Ruled the ban was unconstitutional- the ban was too broad Legacy: - 4 pronged test- assess if regulations were constitutional 4- Pronged Test Part 1- Does the speech promote illegal activity or products, or is it false or misleading? - If yes, regulation is constitutional - If no, the government can relate ONLY if it can successfully answer the next three questions Part 2- Does the government have a substantial interest in regulating the speech in question? - Government has burden of proof- public interest Part 3- Does the manner in which the government actually seeks to regulate directly help the government achieve this substantial interest? Part 4- Is the regulation no more extensive than necessary “narrowly tailored” to further the substantial government interest? Central Hudson- 4- Pronged Test Applied to the Case 1.) Not misleading or illegal 2.) Substantial government interest- conserve energy 3.) Would help achieve substantial government interest - Connection- advertising and the demand for electricity 4.) Ban too broad and not narrowly tailored- ban was overturned - No complete ban - The ban suppresses speed that in no way impairs that state’s interest in energy conservation Impact: Court retreated from its anti-paternalism stance 4- Prong test established 1.) A level of intermediate scrutiny for commercial speech 2.) A greater tolerance for commercial speech restrictions that still exists today Loose Garment: Posades de Puerto Rico Association v. Tourism Company of Puerto Rico (1986) - No advertising within the area- for gambling- they didn’t want the residents to gamble- tourists were ok - Seen as an exception to Central Hudson Case State University of New York v. Fox (1989) th - Centered on 4 - Prong - Advertising of a Tupperware party in a dorm room- No commercial Solicitation- regulation of SUNY - Supreme Court ruled for SUNY - Required a reasonable fit Rubin v. Coors Brewing (1995) - Prohibited beer companies from displaying alcohol content on labeling - Outcome- people need to know the content- so it’s now legal Federal Communications Commission FCC- Broad scope - Regulates interstate and international communications- radio, TV, wire, satellite and cable in all 50 states - 5 commissioners- appointed by the President - Confirmed by the U.S. Senate - 5 year term - Only 3 can be in the same political party Created by Telecommunications Act 1943 Mission: 1.) Regulate frequencies- TV and radio don’t “own” the frequencies they broadcast from a. They receive license from the FCC 2.) Monitor content of broadcasts to ensure they were directed to meet “the public interest convenience and necessity” The public owns the airwaves - FCC can decide not to renew a license - And they can fine broadcasters NBC v. U.S. and CBS v. U.S. - Supreme Court upheld the right of the FCC to impose fines and regulate content of broadcasts Telecommunications Act of 1996 - Overhauled telecommunication regulation - FCC began deregulation of ownership and began overseeing of the internet Advertising and Public Relations 1.) Net neutrality- equal pay for service 2.) Behavior marketing and privacy Federal Trade Commission 4/14/16 Lanham Act: allows businesses to sue each other for unfair practices - False advertising/unfair business practices - consumer cannot sue a business To Win: 1.) the advertiser made factually false claims about the product 2.) the ad could or did deceive a large segment of the target population 3.) the deception was an important part of the ad 4.) the product was sold across state lines 5.) the competitor (plaintiff) was likely to be harmed by the deception FTC – 1914 Ad Regulation - consumers can file complaints - most complaints resolved through a “consent order” Corrective Orders - can ban future commercials speech which includes products or services - can require a commercial speaker to publish corrective information - if cease-and-desist is ignored – seek civil law remedy - guilty of a criminal misdemeanor Liability - independent commercial speakers- agencies - original manufacturers or providers of the products FTC and Commercial Speech - Supreme Court- often upholds regulation of commercial speech as constitutional - False or deceptive speech gets more attention and regulation - FTC- jurisdiction extends to all forms of communication used for publicity and marketing purposes False Commercial Speech - False based on the perception of the commercial message by the receiver of the message - Statement of fact is made - Includes sins of omission as well - Conveyed as an objective statement of fact and is false Deceptive Commercial Speech - A representation, practice, or omission likely to mislead consumers - Content- interpreted reasonably under the circumstances - Material representation that could influence consumers decision- respect to purchase a product FTC - Expects advertisers to prove claims- burden of proof - Substantiated in advance Puffery - An exception to the rule - No one would rely on its exaggerated claims - Subjective claims do not require prior substantiation - Ex.) “Better Ingredients, Better Pizza” - Used for promotion- not deception - Subjective and cannot be quantified Endorsements Testimonials - Celebs and other non- employee spokespeople endorsement statements require prior substantiation - “Experts” must have adequately evaluated the product or service prior to endorsing Influencer Endorsements - Ethically it is imperative that brands be transparent with consumers – proper disclosure of compensation FTC Section 5 - “clear and conspicuous” disclosures of compensated relationships brands have with bloggers and publics - Blogger- 2008- required to disclose compensation - 2013- refined disclosures- required on social media including- Vine, Pinterest, Twitter - Ex.) # Ad # Sponsor Enforcement - Erratic enforcement Requirements “Clear and Conspicuous”- Disclosure 1.) Proximity of disclosure- same tweet 2.) Prominence of disclosure- clearly 3.) Multimedia- includes audio and video 4.) Presentation Order- must be seen before article or purchase Health and Beauty - Viewed with special scrutiny - Minimum of two independent clinical trials Food and Drug Administration - Approving new drugs, medical devices, and food additives for safety and effectiveness o Set standards for foods and labeling o Must meet via testing - Inspect production, manufacturing sites - Issue public warnings- take legal action if unsafe products threaten public welfare FDA and Commercial Speech Jurisdiction 1.) Regulating information about the contents and safety of prescription drugs as they are advertised and promoted 2.) Tobacco advertising - Content- based regulation of prescription drug information - Require detailed list and proportion of the ingredients must be prominent and readable - Generic equivalent must be listed as well Side effects: - “summary” of specified information about its safety and effectiveness - Suggesting new uses could re-classify it as a “new drug” Red Flags: Commercial speech on prescription drugs will be deemed false, unfair, or misleading if: 1.) Fails to indicate potential side effects 2.) Exaggerates the effectiveness of a drug 3.) Doesn’t specify the negative effect of long-term usage 4.) Claims a drug is more effective than a competitors without scientifically valid support 5.) “represents” … that a drug is better, or more effective or useful in a broader range of conditions or patients without at least two clinical trials indicating so Monitors- ensures 1.) Statistics are valid: sample sizes are appropriate 2.) There are no false or misleading interpretation of data Enforcement: - Seek injunctions to stop sales - Confiscate products - Can seek criminal penalties against companies and advertisers Graphic Tobacco Warnings- 2009 - Family Smoking and Prevention and Tobacco Control Act - They wanted more graphic warnings on cigarette packs - Show a non-smokers lung and a lung of someone that has smoked for 30 years R.J. Reynolds- sued – aimed at discouraging use- not purely factual Split appellate - District and 2 Circuit Courts ruled- Reynolds- Did not prove the third prong of the Central Hudson th - 9 Circuit Court- ruled for FDA FDA- bows out - No graphic warning labels


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