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.
Posted: Sep 5, 2013 9:15am ET
In July, I wrote about the growing number of legislative proposals that have been put forward in Congress to battle patent assertion entities, more commonly referred to as “patent trolls.” So-called patent trolls get their names by operating much like a troll from folklore. They produce nothing, buy up broad patents, and then hide and wait until the time is right to strike unsuspecting businesses with threats of highly damaging and expensive litigation. Trolls from folklore often meet their end in sunlight. For patent trolls, legislative and regulatory sunlight appears to be the only appropriate remedy. As we await expected major anti-patent troll legislation from Chairman Goodlatte and Chairman Leahy of the House and Senate Judiciary Committees respectively, momentum has begun to build against patent trolling in other areas.
On August 30th, the Government Accountability Office (GAO) released a report on patent infringement litigation. This report found that between 2010 and 2011, the number of patent infringement lawsuits increased by roughly 33 percent. GAO further found that between 2007 and 2011, the number of defendants in patent litigation increased by 129 percent. The GAO determined that up to twenty percent of those suits were brought by patent trolls. This percentage, however, likely did not capture the true magnitude of the problem, as it is important to note that companies often settle with trolls well before a trial or even the filing of a complaint. Most importantly, this report notes that much of the problem in this arena is sparked by the grant of overly broad patents, especially for business method patents relating to software. A number of the pending legislative proposals would help to remedy this problem. This report will certainly provide momentum to efforts already underway.
State Attorneys General also have begun to indicate a willingness to step in to stop patent trolls. On August 20th, Minnesota Attorney General Lori Swanson announced a settlement with a patent troll known to some as the “scanner troll.” This entity claimed to own a patent on scanning office documents to e-mail and targeted a number of businesses with demand letters threatening litigation if it was not paid $1,000 or more for each employee using the technology. Some of these letters even contained a draft complaint in an effort to increase the threat. Under the terms of the settlement, the company may not send further demand letters without the prior permission of the Attorney General’s office and may not grant its patent rights to any other entity unwilling to comply with these terms. Vermont Attorney General Bill Sorrell also filed a lawsuit against this same patent troll in May alleging unfair business practices under Vermont’s Consumer Protect Act.
The FTC has also indicated its willingness to step into the game. Chairwoman Edith Ramirez has stated that she believes the FTC should use its Section 6(b) investigative subpoena authority to determine whether or not patent trolls may be committing unfair business practices.
The abuse of the patent system by so-called trolls is harmful to innovation and economic growth. The American Intellectual Property Law Association found that patent litigation can cost as much as $650,000 for smaller claims, and as much as $5 million for larger claims. When costs of settlement to avoid litigation were factored in, the White House Report stated that as much as $29 billion was paid by companies to patent trolls in 2011. While recent actions by Attorneys General indicate a growing willingness to fight back against abusive practices, the GAO Report demonstrates that broader reform is needed to help provide the sunlight necessary to put a stop to the “trolling industry.” ANA is continuing to work hard as a part of several coalitions to ensure that such reform happens as soon as possible.
Posted: Aug 28, 2013 2:30pm ET
Name Collision is a major concern for global brands and consumers as ICANN prepares to roll out more than 1,000 new web site suffixes or top level domains (such as .hotel, .buy, .bank, .sucks, and .gripe). Name collision occurs when new top level domains (TLDs) are identical to internal company domains, which can lead to major conflicts that could raise significant security and stability issues for the Internet.
ICANN’s preparations for this deployment have been woefully inadequate. ANA, which represents the interests of major global advertisers, has long expressed concerns about ICANN’s persistent rush to deploy these domains before it has adopted sufficient protections for consumers and brandholders. To date, those protections have been anything but sufficient.
ICANN itself has recently raised red flags that it may not fully know the true ramifications of a roll-out of new TLDs by stating that as many as 20% of all of the proposed TLDs present a large potential risk for name collision. A recent 3rd party report commissioned by ICANN admits that the chance of clashes is significantly larger than ICANN initially suggested.
What is more concerning is that the third-party report readily admits that the data only counted the number (and not the types) of potential name clashes, which means ICANN has virtually no data to determine whether delegating new TLDs could interrupt important public safety communications, government web traffic, e-commerce applications, internal corporate communications or just casual web traffic.
Yesterday, ANA sent a letter to ICANN strongly expressing its concerns, stating that “ICANN must know what underlying services could potentially ‘break’ on the Internet to begin to gauge risk” before rolling out any new TLDs. ANA’s member companies are working to determine if clash issues are present within their networks. However, ANA has hundreds of members that must generate new data to determine the potential service failures on their respective network. These issues are highly technical, complex, and they will take more time than ICANN has allowed for a thorough assessment.
It is extremely disappointing that ICANN is forcing companies to rush to conduct this analysis when ICANN has been aware of clash issues since 2009.
ICANN’s failure to determine adequately the extent of the problem means that many companies are only now learning about these clash issues on the eve of the planned new TLD deployment.
ANA calls on ICANN to fulfill its mission to maintain Internet security and stability in the public interest and postpone the rollout until the full extent of name collisions can be determined.
Posted: Aug 9, 2013 1:30pm ET
Today, we sent a letter to ICANN President & CEO Fadi Chehadé asking for an extension of the public comment period for proposals to mitigate name collision risks. In our letter, we argue that the current due date for comments, August 27th, is wholly insufficient given the amount of time needed by stakeholders to run a full technical analysis of possible risks, as well as the fact that many companies are currently short-staffed due to summer vacations. We call for the comment period to be extended to November 1, 2013 and for the reply comments to be due on November 22, 2013.
Companies who are in agreement with these views should strongly consider sending requests for an extension of the comment period as well.
On a related note, Verisign has responded to the letter it received from NTIA on August 2, 2013. This exchange of letters provides interesting background on the security issues which prompted ICANN’s recent release of a third-party report on name collision risks in new Top Level Domains earlier this week.
Posted: Aug 6, 2013 2:30pm ET
I have a guest post on The Hill's Congress Blog on the announcement by Mozilla to block third-party cookies in its Firefox browser. The post also discusses the recent actions of the industry's self-regulatory program, the Digital Advertising Alliance (DAA). You can read the post at The Hill's website.
Earlier this week, the DAA ran an ad in Advertising Age on the Mozilla initiative. You can view that ad here.
Posted: Jul 31, 2013 10:11am ET
A new front in the ongoing assault against food, beverage and restaurant marketing has recently opened up.
Last week, Rep. Rosa DeLauro (D-CT) introduced legislation (H.R. 2831) to eliminate the tax deductibility of advertising expenses for marketing to children of “food of poor nutritional quality.” It uses the most recent Dietary Guidelines to determine which foods meet the criteria, and broadly defines marketing to include advertising on television, radio, print, the Internet and social media, product packaging, point of sale displays, character licensing, and celebrity endorsements. The use of the Dietary Guidelines is significant in that the guidelines proposed by the Interagency Working Group on Food Marketed to Children (consisting of the FDA, FTC, USDA and CDC) set far more sweeping and stringent nutritional standards for which foods could be marketed to children. If the IWG guidelines ever were to take effect, it could lead to an extremely high baseline for marketing food and beverages to children.
Meanwhile, a senior member of the U.S. Senate is also pressing to get rid of the tax deduction. Recently, four powerful members of the U.S. Senate – Richard Blumenthal (D-CT), Dick Durbin (D-IL), Tom Harkin (D-IA) and Jay Rockefeller (D-WV) – recently wrote a letter to Viacom urging it to implement strong nutrition standards for marketing. In a statement released concurrently with the letter, Senator Rockefeller noted that he is working to eliminate the tax deduction for advertising of “junk food” to children. As Senator Rockefeller states, “this effectively results in the federal government footing the bill for corporations to market junk food and sugary beverages – that are directly tied to increased rates of obesity – to children.” His statement further indicates that he will push for a provision to end the deduction as part of the Senate Finance Committee’s consideration of tax reform. As the second ranking member of the Senate’s tax writing committee, Rockefeller’s views have to be seriously considered.
Obesity continues to be a major health concern.The American Medical Association recently recognized obesity as a disease. The pressure on Congress to be seen as taking action against a public health threat will remain high. These proposals to end the tax deductibility of some food advertising are a clear shot across the bow.
Posted: Jul 30, 2013 2:00pm ET
In a time when the Congress too often looks like it cannot agree on anything, one issue seems to be gaining both momentum and increasing bipartisan support. That issue is combating the growing business of patent trolling and the legislative proposals to curb it.
When used properly, patents foster innovation by granting limited exclusive rights to inventors. The public is served by the advent of newer and better technologies and products, and producers benefit by reaping rewards for expensive research and development. However, if abused, patent rights serve only to stifle growth and hinder economic progress.
In recent years, a growing number of patent infringement claims have been filed by patent assertion entities, also called “patent trolls.” They exist not by producing or manufacturing patentable products themselves, but instead by purchasing numerous patents with broadly defined terms and then filing infringement suits against manufacturers and service providers with deep pockets. The trolls also attack numerous end users like small businesses or advertisers with shallower pockets, but far less ability to fight extortionist demands.
The White House recently released a report showing that as many as 100,000 companies were threatened with litigation by patent trolls in the last year and that these suits inflict significant harm on both companies and the economy. Given the immense cost of patent litigation, most businesses settle with these trolls, even though the trolls would likely lose at trial. The trolls grow further energized and enriched and are only incentivized to repeat the process over and over again with new claims.
Members of Congress on a bipartisan basis have shown their mounting frustration with these practices with a burst of legislative initiatives just this year:
- H.R. 2766, co-sponsored by Representatives Darrell Issa (R-CA) and Judy Chu (D-CA) would amend the Leahy-Smith Investments Act to expand the US Patent and Trademark Office’s post-grant review authority for business method patents (those commonly used by patent trolls). Currently, only business method patents related to “financial services” are subjected to this stricter review. A similar bill, S. 866, was introduced by Senator Chuck Schumer (D-NY).
- H.R. 2639, introduced by Representatives Hakeem Jeffries (D-NY) and Blake Farenthold (R-TX) would require heightened pleading standards in complaints for patent infringement suits with regard to the identity of the party bringing the suit and the actual infringement alleged. Further, it would allow for suits against end users to be stayed until suits against the manufacturer have been resolved.
- H.R. 2024, introduced by Representative Ted Deutch (D-FL) requires the owner and any other parties with interests in a patent to disclose themselves to the US PTO when the patent is filed. Should the patent owner change, the new owner must likewise disclose all parties with interests. The collection of damages in a suit is barred if entities have not complied with these requirements.
- H.R. 845, co-sponsored by Representatives Peter DeFazio (D-OR) and Jason Chaffetz (R-UT) would allow for the recovery of legal fees in any wrongful patent infringement suit.
- Senator Patrick Leahy (D-VT) and Congressman Bob Goodlatte (R-VA), the chairmen of the Senate and House Judiciary Committees respectively, released draft legislation in May incorporating many different approaches to diminishing patent trolling.
The White House, in June, announced seven legislative recommendations, as well as five executive directives, designed to combat abusive practices by patent trolls. Federal Trade Commission Chairwoman Edith Ramirez said in a June speech that she believes the FTC should use its investigative authority (basically, subpoena powers) under Section 6(b) of the FTC Act to investigate these practices. And the Attorney General of Vermont recently filed suit against an alleged patent troll that had sent demand letters to a number of Vermont organizations, including non-profits.
ANA is working as a part of several coalitions to address these abusive and economically damaging actions. We are focusing on indemnity issues, as well as proposed legislative fixes. We signed a letter to congressional leadership, along with more than 50 others organizations from nearly every sector of the economy, encouraging legislative action against patent trolls. We are working to collect data on demand letters and the numbers of suits threatened against our members.
There is serious momentum to address this problem. Advertisers need to step up to fight these entities in order to protect themselves and the consumers they ultimately serve. Please let ANA know if your company is confronted with patent troll issues so we can effectively stay on top of trends in this area and help combat these problems.
Digital Advertising Alliance Releases Guidelines for Expansion of Self-Regulatory Principles to Mobile Media
Posted: Jul 24, 2013 12:00pm ET
The Digital Advertising Alliance (DAA), of which ANA is a founding member, released guidelines today for expanding its self-regulatory program of consumer choice to the mobile environment. These guidelines cover cross-app, personal directory, and precise location data in mobile apps.
The release of these mobile guidelines is critically important given the explosion of the mobile environment as a major point of contact with consumers and the enormous number of activities that are now carried out with the use of mobile devices. These guidelines demonstrate that the DAA is the real mechanism for true consumer choice in the online world.
ANA President and CEO Bob Liodice said, “The DAA program is not only global, but now also mobile. The expansion of the DAA program into the mobile realm is an extraordinarily important development. Mobile is, by far, the fastest growing media category. Half of all U.S. adults now have a connection to the web through either a smartphone or tablet, so it’s all the more critical that they have control over how they receive advertising on their mobile devices. The DAA mobile guidelines give them that control.”
Posted: Jul 17, 2013 2:00pm ET
Last week, the House Appropriations Subcommittee for Financial Services and General Government renewed a provision in the appropriations bill barring the FTC from releasing a final Interagency Working Group (IWG) Report until a cost-benefit analysis is performed. But recent developments have not all been good news for food advertisers. Domestically, obesity was officially named a disease by the American Medical Association in June, which will certainly change the way that the medical community and policy makers view the obesity epidemic in the U.S.
Internationally, things have been heating up as well. Just recently, a new law has come into effect in Chile that places significant restrictions on the advertisement of foods considered high in calories, fat, salt, or sugar content. Under this law, foods in these categories must be labeled as such, and such products may not be sold in primary or secondary schools in Chile. There is an absolute prohibition on advertisements of these products targeted to children under the age of 14, and any use of so-called toys or prizes in connection with the sale of such products is banned. The Health Ministry of Chile must issue guidelines to determine which products qualify to be covered by the law before the law can be fully enforced.
In June, WHO Europe issued a report recommending increased restrictions on the marketing of foods high in fat, salt, and sugar (“HFSS”) to children. This report stated that a majority of advertisements in Europe are for HFSS foods and said there is a direct link between food advertising and obesity. WHO Europe also called industry efforts insufficient.
And the National Assembly of Ecuador recently passed a law with significant restrictions on all advertisements, including those for food products. Under the Ecuadorian law, all foreign ads (those for companies without a majority of the stockholders being Ecuadorian nationals or legal residents and those ads which do not have 80 percent or more of those contributing to the ad being Ecuadorian nationals or legal residents) will be banned. Any advertisement, including food advertisements, that will be shown during children’s programming must be approved by the country’s Health Ministry. The law also states that ads for any products whose regular use may “harm” the health of consumers (including alcoholic beverages, tobacco, and potentially some foods) are prohibited.
Also in June, back home at the federal level, Senators Richard Blumenthal (D-CT), Tom Harkin (D-IA), Richard Durbin (D-IL), and Jay Rockefeller (D-WV) sent a letter to Nickelodeon and Viacom urging them to ban advertisements for “unhealthy food” on the network. And in a separate press release about the letter, Senator Rockefeller called for the elimination of the advertising tax deduction for marketing of such foods.
Nevertheless, the food and beverage industry has a very positive story to tell. The industry has been proactive through its self-regulatory efforts, such as the Healthy Weight Commitment Foundation and Children’s Food and Beverage Advertising Initiative (CFBAI), in cutting more than a trillion five hundred million calories out of foods in just the last couple of years and in shifting the mix of food advertising directed to children 12 and under to healthier foods. As successful as these efforts have been, the pressure on governments to “do something” in response to the obesity problem will only continue to grow. It is our responsibility to help educate policymakers that we are working diligently to be part of the solution.
Posted: Jun 28, 2013 2:00pm ET
As long expected, it appears the Senate Finance Committee is ramping up efforts on tax reform. On Thursday, Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) of the Senate Finance Committee have released a “Dear Colleague” letter, asking for proposals for tax reform. Their letter states that they will start with a “blank slate,” and so-called “special provisions” will be assumed eliminated, unless it is shown that those provisions: “1) help grow the economy, 2) make the tax code fairer, or 3) effectively promote other important policy objectives.”
They ask for legislative language describing expenditures that meet these tests, as well as other provisions that should be added or repealed in an ultimate tax reform bill. The Senators also make clear in their letter that every expenditure added back to their “blank slate” will reduce the amount by which corporate and individual income tax rates could ultimately be lowered. They state that they will give extra attention to any proposals that are bipartisan in nature.
Advertising expenditures, which are fully deductible as a necessary and ordinary business expense in the year they are made, clearly meet these tests and should be kept. A study by IHS Global Insight in 2010, developed by Nobel Laureate in Economics Lawrence Klein, demonstrates that advertising is responsible for $4.1 trillion in economic output and directly supports more than 15 million jobs in the United States annually. In a time of recovery from an economic downturn, advertising clearly provides a powerful engine of economic growth.
The taxation of advertising is counterproductive when trying to generate economic activity and jobs. It would be totally counterproductive to impose extra costs and burdens on advertising. Such a step would only serve to weaken economic growth, and ultimately, tax revenue.
Now begins a period of great challenge. In a time when everyone will be jockeying to be the expenditure or deduction that is not targeted, advertisers must be ready and willing to show why ad deductibility needs to be supported rather than undermined.