Regulatory Rumblings

Food Advertising Under Attack Yet Again

Posted: Jun 20, 2014 12:00am ET

Recently, there has been a major resurgence of efforts to substantially change the status quo of food advertising in the U.S.  In mid-May, Senator Richard Blumenthal (D-Conn.), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Senator Tom Harkin (D-Iowa) introduced the Stop Subsidizing Childhood Obesity Act of 2014.  This legislation would end the federal tax deduction for advertising foods of “poor nutritional quality” to children, “children” being defined in the bill as anyone under 14 years of age.  The change would include marketing for beverages, candy and chewing gum, along with other foods.  The bill would also require the Institute of Medicine (IOM) to develop procedures to identify which foods and brands should be included under the new limitation.

This effort would be in addition to proposals pending in both the House and Senate tax writing committees to amortize 50% of all advertising expenses for either 5 or 10 years.  This one-two advertising tax punch would clearly have a devastating impact on food, beverage, and restaurant marketers.

If this new effort was not enough, a recently released documentary entitled “Fed Up” attempts to uncover why generations of American children will now live “shorter lives than their parents.”  The film, led by TV journalist Katie Couric, producer Laurie David (who also produced the Academy Award-winning film “An Inconvenient Truth”), and director Stephanie Soechtig, claims the food industry is almost single-handedly responsible for America’s obesity epidemic due to advertising of sugar-laden foods.  It suggests that people will stop trusting advertisements once they become aware of what manufacturers are actually putting in food.  What “Fed Up” fails to acknowledge are recent CDC studies that found that obesity for children under 5 years of age has been reduced by as much as 43 percent.  

All of the attacks also ignore several positive initiatives by the food advertising industry to combat obesity.  The industry, for example, has cut more than 6.4 trillion calories from foods in the last four years.  Many major companies have reformulated 20,000 products and now offer lower calorie, lower fat, lower sodium, or lower sugar options.  The self-regulatory efforts of the Children’s Food and Beverage Advertising Initiative (CFBAI) have shifted the content of ads directed to children 12 and under to healthier foods.  The 17 participants in the CFBAI represent about 80% of child-directed TV food advertising. Healthy meals and products with lower sodium, sugar, or fat content are now the focus of the majority of advertising on child-directed media.

Obesity, especially childhood obesity, is a major problem.  Fortunately, the food and ad communities are systematically carrying out major programs to combat these dangers and provide healthy options for consumers.

Senate Finance Committee Reexamining Tax Reform

Posted: Jun 9, 2014 12:00am ET

On Thursday, Senate Finance Committee Chairman Ron Wyden, D-Ore., and Ranking Member Orrin Hatch, R-Utah, confirmed that they are still committed to overhauling the nation’s broken tax code through comprehensive reform.  In a joint statement, Wyden and Hatch announced three upcoming hearings on issue areas that are “essential to a modern, effective tax code.”  These hearings include education, ID theft, and corporate tax reform topics and are slated for June and July, although no definitive dates have been set yet.

Wyden and Hatch stated, “When it comes to tax policy, comprehensive tax reform is our ultimate objective, and we are committed to using these hearings as the building blocks to that goal.”  Chairman Wyden has been a longtime supporter of comprehensive tax reform and has already pushed forward on this goal several times during his four months as Chairman.  Most notably, he worked to pass out of his committee a major tax extender package that included 56 provisions not part of the permanent tax code.  Following this vote, he stated unequivocally that as long as he was Chairman, these provisions would not pass again without being part of a major tax reform package.

While ANA is strongly in favor of tax reform and the lowering of the corporate tax rate, we believe this effort must be done carefully and thoughtfully.  Furthermore, it must not undermine the generation of jobs and economic activity in the U.S.

Unfortunately, the proposals to amortize advertising over five or ten years, which have been put forward in both the House and Senate tax committees, seriously fail to meet these criteria.  These proposals, by burdening the effort to sell, would place a substantial drag on the economy.

ANA will continue to fight to protect the viability of advertising.  While a comprehensive reform package is unlikely to be passed this year, these new hearings are directed toward creating the foundation for the final tax reform package, and therefore need to be very carefully monitored.

Advertisers’ Role in Protecting Location Data Privacy

Posted: Jun 5, 2014 12:00am ET

Yesterday, the Senate Judiciary Committee’s Subcommittee on Privacy, Technology, and the Law held a hearing on location data privacy. The hearing focused on a bill sponsored by Senator Al Franken (D-MN) called the “Location Privacy Protection Act of 2014.”  This bill addresses voluntary location tracking of electronic communications devices, especially “stalking apps” on cellphones.  Senator Franken’s goal is to help victims of stalking and domestic abuse and to give consumers control over their sensitive information.

While the hearing mainly focused on these so-called “stalking apps,” Lou Mastria, Executive Director of the Digital Advertising Alliance (DAA), was given the opportunity to testify on behalf of advertisers and the DAA.  While online advertisers do collect data from individuals for interest-based advertising, which allows ads to be targeted to specific interests, Mr. Mastria made the distinction that this data is far different from data collected by “stalking apps” and should be carefully and completely differentiated from it.  In regard to location data for commercial purposes, Mr. Mastria stated, “For the collection of precise location data, the DAA program requires consent prior to collection and the provision of an easy to use tool to withdraw such consent.”  

The centerpiece of Mr. Mastria’s testimony was the self-regulatory efforts of the DAA.  The DAA was founded by the ANA and a number of other major industry associations to administer and promote self-regulatory principles for online data collection and use.  The DAA’s principles have already been adopted by a large number of advertisers and others in the ad community for the desktop arena, and the Mobile Guidance program for addressing data practices on mobile or other devices is currently in the roll out process.  

There is proof the DAA’s efforts are working.  The DAA icon is served more than a trillion times a month to alert consumers to the use of interest-based ads.  Over 30 million unique Internet users have gone to the DAA website to learn about the program and to have the opportunity to opt-out of having interest-based ads served to them if they don’t desire to receive this information.  After examining these options, only 3 million people have opted out of the program.

There is a strict enforcement arm to the program as well.  To date, the DAA has pursued over 30 investigations against entities engaging in practices that do not adhere to the self-regulatory principles; in the one instance where there was not voluntary compliance, this information was forwarded on to federal regulators for further action.

For our information-driven economy to survive, self-regulation led by industry codes of conduct is the ideal way to balance privacy and innovation.  Accountability and enforcement, both key tenets of the DAA program, are best handled through industry self-regulation.  Federal legislators must be careful not to stifle the success and growth of online advertising in the push for greater safeguards against unrelated illegal activities.  

ANA Joins in Support of Federal Data Breach Legislation

Posted: May 22, 2014 12:00am ET

ANA has joined with fifteen other industry groups to call for Congress to pass federal data breach legislation this year.  The industry letter is available here.

High-profile data breaches recently have increased the focus of policymakers and consumers on data security and privacy issues.  Several data security bills have been introduced in the Congress and at least five congressional committees have held hearings this year on the most recent breaches.  The White House report on “big data” which was released on May 1st called for federal data security legislation.  The time has come for Congress to approve a clear federal standard.  Data security bills have been introduced for several years and jurisdiction is spread across several congressional committees, however no decisive action has taken place.  ANA firmly believes the time for Congressional action is now on this increasingly critical issue.  A unified, federal law that preempts the patchwork of 47 inconsistent state laws would help businesses better comply with data breach standards and ensure the safety of customer data.

European Court of Justice Establishes “Right to Be Forgotten” Online

Posted: May 15, 2014 10:30am ET

A surprising and potentially landmark decision dealing with the future of online privacy was handed down by the European Court of Justice in Luxembourg earlier this week. The case involved a Spanish national who filed a complaint alleging that when his name was entered into Google, the search results displayed links to two articles from 1998 that discussed the auction of his home, which had been repossessed. He contended that Google should be required to remove or hide the links from appearing in a search request, as the cases were resolved and therefore “irrelevant.”

A 1995 EU directive established privacy protections regarding how personal information is processed. It allowed for consumers to request that this data be erased in certain situations.  Based on this directive, the European Court of Justice found that Google is a processor and controller of personal information based on its search function and is therefore required, if asked, to remove links to web pages relating to a person from search results, even if the material contained in those links is true.

In determining when such request should be honored, the court found that a “fair balance” should be sought between the interests of free access to information and the privacy rights of individuals. This balance, the court determined, should be tilted towards the individual’s right to privacy, except in specific cases based on the nature of the information and the interest of the public having the information (such as if it concerns a public figure). If it is found that the inclusion of such links in a search result is incompatible with the rights of the individual, then a right to be “forgotten” exists and the links should be removed.

The case could have major implications on freedom of expression. It lets individuals determine what is presented in a search request online without regard for truth or falsity. It also interferes with the free expression rights of search engines and online publishers to allow legitimate information to pass to end users. Instead, it would require companies like Google or Twitter to serve basically as censors and remove data whenever the subject of the information asks, even if the information about them is true and lawfully published. The information would still exist, but search providers would be prevented from delivering it. It requires the search engines to determine whether to block access to third-party information to which they are merely providing links, asking them to use their judgment rather than any legal process.  

This case also starkly demonstrates the different paths the European Union and the United States are taking on privacy issues. In the United States, such a ruling would most likely never happen due to the strong constitutional protections provided by the First Amendment in favor of free expression. Signals such as these from Europe indicate that the EU may be in the process of taking more strident positions on privacy issues across the board. Advertisers are likely to be drawn in to the debate as the EU moves forward in regard to data privacy and security.

This decision puts many online companies, not just Google, in a precarious position. Will they have to honor European requests to delete information that was lawfully published in the United States? Will Facebook need to “untag” persons in photos that show them engaged in activity they would now prefer to be hidden? How long a period will there need to have passed to make information “irrelevant?” These Solomonic decisions are far from simple. What this decision means for companies that do business in Europe remain to be seen, but is likely to be time consuming, expensive, highly burdensome, and undermine free speech values.

ICANN Delegates First New English Language Top Level Domains

Posted: Nov 11, 2013 12:00am ET

ICANN has released the first nine English-language new Top Level Domains (TLDs). These are not the first new TLDs to be delegated, as four non-Latin script TLDs have been delegated previously. ICANN has said the list of new names will be updated, “as the measured rollout of the new gTLDs progresses over the coming years.” Now is the time for brand holders to take action to protect themselves within the limited trademark protections that have been approved by ICANN. Information about the Trademark Clearinghouse, which will allow brand holders to protect their names, is available here.

We encourage all brand holders to be proactive in protecting themselves in the beginning of this unprecedented expansion of Top Level Domains.

Internet Users Strongly Favor Interest-Based Advertising, Value Tools to Make Choices over their Internet Experience

Posted: Nov 5, 2013 10:15am ET

A new survey released today revealed what we’ve long suspected—people strongly support interest-based advertising on the Internet. They especially support this type of advertising if it means that they won’t have to pay to visit what are now their favorite free ad-supported websites.

According to a new Zogby survey commissioned by the Digital Advertising Alliance, more than 57 percent of respondents said they wouldn’t pay to visit any free, ad-supported site they currently use if those sites converted to a pay model. Fewer than 5 percent of the respondents said they would be willing to pay in order to continue to access the free, ad-funded websites they currently visit. Internet users clearly appreciate that advertising powers the Internet. Advertising levels the market place and information playing fields by providing all consumers with continued access to free content that they currently enjoy.

The poll also shows that Internet users are overwhelmingly supportive of interest-based advertising when they learn about the protections and choices available to them. The more users learn about their choices, the more comfortable they become with interest-based advertising.

The Association of National Advertisers has long believed that consumers should have the ability to make their own choices in controlling their Internet experience. The only way web users can truly control the ads they see is to be empowered to take action to make these determinations themselves. Fortunately, consumers have that ability. The Digital Advertising Alliance, an alliance of advertising interests, maintains a robust program that allows consumers to dictate whether or not they receive interest-based advertisements. Users have the freedom to choose quickly and easily whether or not they would like to receive interest-based ads.

Users can click on the Advertising Option Icon on the corner of a banner ad for more information on the ads they see and choose to opt-out. Not only are users given a choice, but they have the opportunity to learn why they are receiving these ads.  Since its inception in 2010, more than 25 million consumers have visited the DAA coalition’s websites – AboutAds.info and YourAdChoices.com – and only two million of them have taken action to choose to opt out of receiving interest-based advertising.

In fact, today’s survey found that if an ad has the “advertising option” icon, users will feel more comfortable about these ads.  The survey revealed that 73 percent of polled consumers said they’d feel more comfortable with interest-based ads if they knew they had access to the protection that the DAA currently provides with the opt-out and more information links, limitations on data collection, and third party enforcement. By providing users with information on interest-based advertising, companies and brands are only enhancing their advertising power. These findings demonstrate that businesses that participate in the self-regulatory effort engender greater trust from their consumers.

The Internet has brought an unprecedented wealth of free and valuable content, directly supported by revenue generated by serving relevant ads. For the consumer, it’s a service. It is another way for consumers to receive information that is relevant to their specific needs. Consumers are guaranteed ads that are more likely to interest them rather than being inundated with ads in which they have no interest. As the survey found, users are committed to advertising-supported content. By a ratio of five-to-one, users said their favorite Internet sites were supported by advertising (50 percent) rather than subscription fees (10 percent).

Movement Continues Against Patent Trolls

Posted: Oct 28, 2013 4:00pm ET

On Wednesday, House Judiciary Committee Chairman Bob Goodlatte (R-VA) introduced a long-awaited bipartisan bill, the Innovation Act, to combat the growing threat from patent assertion entities (PAEs), often called patent trolls. This bill requires heightened pleading standards for patent suits, including descriptions of which patents are actually infringed, as well as how they are infringed. Transparency is another key element, with the requirement that plaintiffs disclose any party which has a financial interest in the patent at issue, as well as an allowance for defendants to join these other parties in the litigation. There is a cost-shifting mechanism in the Innovation Act that can allow a court to require that the loser pays for the winning side’s litigation fees. In cases where there is litigation between a troll and a manufacturer, cases against end users are stayed until the resolution of the case against the manufacturer. The Innovation Act also expands the Patent and Trademark Office’s post-grant review authority of business method patents, which are frequently the subject of patent suits involving trolls.

Despite the divisions in Congress over a wide range of issues, efforts to limit patent trolling are an area with real momentum on both sides of the aisle. Republican and Democratic co-sponsors of the Innovation Act include, among others, Anna Eshoo (D-CA), Zoe Lofgren (D-CA), Jason Chaffetz (R-UT), and Spencer Bachus (R-AL). Additionally, Senate Judiciary Committee Chairman Patrick Leahy (D-VT) expressed his support for Chairman Goodlatte’s bill and stated that he is continuing to work on patent reform legislation with Senator Mike Lee (R-UT) and others.

Bad news for trolls might also come soon from the country’s highest court. Last month, the Supreme Court granted certiorari in two cases regarding the award of attorney’s fees in so-called “exceptional” patent infringement claims where it is determined that the claims were 1) brought in bad faith and 2) objectively baseless. In Highmark, Inc. v. Allcare Management Systems, Inc., the Court will evaluate whether or not a trial court’s finding that a case was exceptional (resulting in a subsequent grant of attorney’s fees) is entitled to deference at the appellate level. And in Octane Fitness v. Icon Health and Fitness, the Court will examine whether the test for “exceptional” cases used by the U.S. Court of Appeals for the Federal Circuit (which hears appeals of patent cases and creates patent case law) is too strict and, therefore, actually incentivizes trolling lawsuits. Reversals in either of these cases could potentially raise the stakes significantly for trolls in filing claims.

These newer developments all come in the wake of an investigation into patent trolling activities by the FTC, as well as actions against accused trolls by several state attorneys general. While the ultimate fate of the legislation and outcome of the Supreme Court cases remains unclear, patent trolling may soon become a much more risky game to play. We are hopeful that our members will keep us informed of any developments in this area that affect them.

ICANN Should Look Before It Leaps: Part II

Posted: Sep 24, 2013 12:15pm ET

Yesterday, I wrote about the proposal by the Internet Corporation for Assigned Names and Numbers (ICANN) (which manages domain names (DNS) on the Internet) to expand dramatically the number of those names. Rather than the 22 names we all know (e.g., “.com” “.gov”), ICANN now intends to add more than a thousand new names – but so far, without sufficient care about the potential harms to consumers, businesses and Internet users. These concerns about an overly rapid Top Level Domain rollout are very widespread. Governmental entities – and even ICANN’s own subgroups – have identified serious potential harms.  

Here is what some of our leading companies and industries are saying:

So, let’s see: electricity providers; national security experts; telecommunications providers; insurers; Internet users; large manufacturers; national advertisers; and groups representing business generally—these are just some of the entities that stress that we’re not ready for a major deployment of new gTLDs, and that the rush to roll them out will expose consumers, businesses and users of the Internet to major risk of harm.  The concern about ICANN’s plans is growing and very serious. ANA believes ICANN needs to step back, collect more information, and assess the potential implications before delegating new strings into the root. If not, the very stability and security of the Internet will be jeopardized.

ICANN Should Look Before It Leaps: Part I

Posted: Sep 23, 2013 3:45pm ET

The Internet Corporation for Assigned Names and Numbers (ICANN) manages domain names (DNS) on the Internet, and it is planning a dramatic expansion of those names. Rather than the 22 names we all know (e.g., “.com” “.gov”), ICANN now intends to add potentially more than a thousand new names. Unfortunately, as the Association of National Advertisers has been warning for some time, ICANN appears to be rushing to deploy those names without taking the necessary steps to ensure the stability and security of the Internet. The potential harms to consumers, businesses and Internet users could be very serious, increasing the dangers of fraud, deception, phishing, cybersquatting and other cyber harms. Yet ICANN plows ahead on its determined – and potentially very dangerous – schedule.

Various governmental entities have stated real concerns about the DNS expansion. Officials at the Federal Trade Commission (FTC) have said that, “the potential for consumer fraud is great, and that the planned deployment was a “potential disaster.” Commissioner Julie Brill stated at ANA’s Advertising Law & Public Policy Conference, “I remain concerned, as I have been since ICANN first announced its plans, that the expansion could create opportunities for scammers to defraud consumers online, shrink law enforcement’s ability to catch scam artists, and divert the resources of legitimate businesses into litigating and protecting their own good names.” The Chairman of the US Senate Committee that oversees Internet issues, Jay Rockefeller, wrote to ICANN urging that a limited round of domain name deployment be done at first, so as to permit a one-year review period as to its effectiveness. In July, the US Senate Appropriations Subcommittee with jurisdiction over Internet issues called on the Department of Commerce to assess whether ICANN will have in place the necessary security elements to protect stakeholders during the DNS deployment.

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About This Blog

Focuses on all federal and state government and legal initiatives that threaten national advertisers' freedom of commercial speech. The blog is penned by Dan Jaffe, the ANA's Group Executive Vice President, Government Relations, who also heads the trade association's Washington office.