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SOCIAL MEDIA:
The Good, the Bad, and the Lucky
Written By:
Cheryl P. Leb
Kelly Hart & Hallman LLP
201 Main Street, Suite 2500
Fort Worth, Texas 76102
Presenters:
HON. SUSAN CRISS, Galveston
CHERYL LEB, Fort Worth
MARICELA SIEWCZYNSKI, Dallas
State Bar of Texas
19th
ANNUAL
TEXAS MINORITY COUNSEL PROGRAM
September 7-9, 2011
Austin, Texas
CHAPTER 7
Cheryl Poulin Leb Kelly Hart & Hallman LLP
201 Main Street, Suite 2500
Fort Worth, Texas 76102
(817) 878-3547 ■ Cheryl.Leb@kellyhart.com
EDUCATION Southern Methodist University School of Law, Dallas, Texas
Juris Doctor, May 1998, Order of the Coif
Florida State University, Tallahassee, Florida
Bachelor of Science, Magna Cum Laude, April 1995
EMPLOYMENT Partner, Kelly Hart & Hallman LLP, Fort Worth, Texas
June 1998 to present.
PROFESSIONAL ACTIVITIES Member, American Law Institute
Fellow of the Texas Bar Foundation, 2008-Present
Named ―40 Under 40‖ Fort Worth Business Press, 2011
Texas Rising Star, honored in the 2005-2010 Rising Stars Edition of Texas Monthly
magazine, and individually featured for work with the
Estate of Ben Hogan in the 2006 edition
Listed among the top Intellectual Property lawyers in Fort Worth, Texas magazine's
Top Attorney Guide, 2005-2010
Listed among the top Technology lawyers in Fort Worth, Texas magazine's Top
Attorney Guide, December 2002
2010-2011 Chair, Tarrant County Bar Intellectual Property Section
2009-2010 Vice Chair, Tarrant County Bar Intellectual Property Section
SPEECHES AND
PUBLICATIONS Lecturer, 2009 Tarrant County Bar Intellectual Property Section: Copyright Update
Lecturer, 2006 14th Annual Texas Minority Counsel Program:
―Negotiation Strategies: Issues Faced in the Negotiation of Intellectual Property
Licenses and Entertainment Industry Agreements.‖
Author, ―Dying a Slow E-Death: Don‘t Give Away Your Company‘s Intellectual
Property,‖ Fort Worth Business Press, June 14, 2002
SEC Bio
Judge Susan Criss presides over a criminal and civil trial court in Galveston, Texas. For twelve
years she has served as the elected judge of the 212th District Court of Galveston County. She is
a former prosecutor and criminal defense lawyer.
Judge Criss is frequent lecturer on handling high profile cases and social media for trial attorneys
and judges. She has presided over several high profile trials including the Robert Durst murder
trial and the 2005 Texas City British Petroleum explosion cases.
She won the Telly Award in 2005 for producing the video “The Color of Justice,”. The film
features minority lawyers and judges and encourages minority children to pursue careers in the
law and judiciary.
Judge Criss’s guest columns and opinion editorials have been published in The Galveston
County Daily News, Beaumont Examiner, The Police News-Galveston, In Chambers magazine
and her former blog As The Island Floats. She has appeared on 48Hours, The Today Show,
Dateline, The John Walsh Show and The Abrams Report.
Judge Criss is board certified in Criminal Law by the Texas Board of Legal Specialization.
Judge Criss has served on the Board of Directors of the National Association of Women Judges.
She also chairs Gulf Coast Task Force on Jail Diversion for the Mentally Ill.
She is a co-founder of the Galveston County Child Advocacy Center and the Galveston County
Child Abuse and Neglect Task Force.
Maricela Moore Siewczynski
Practice Areas
Employment Law and Litigation Mediation
Bilingual (Spanish/English)
Bar Admissions
Texas, 2001
Education
J.D., George Washington University Law School, 2001.
B.S., magna cum laude, Boston College, Carroll School of Management.
Biography
Maricela Siewczynski practices primarily in the areas of employment and business litigation
defense. Before joining the firm, Ms. Siewczynski was a solo plaintiff's employment litigator;
and she was formerly a litigation defense associate with Baker & McKenzie LLP. Maricela is
bilingual (English-Spanish) and is a trained mediator.
Maricela Siewczynski is the President of the Mexican American Bar Association of Texas and
President of the Dallas Hispanic Bar Scholarship Foundation. In 2007, she served as the
President of the Dallas Hispanic Bar Association. Ms. Siewczynski has also served on the Board
of Directors of the Girl Scouts of Northeast Texas, and she is the first Hispanic to serve on the
Board of Trustees of Dallas County Schools. Maricela volunteers as a mediator and translator at
Dallas Dispute Mediation Services.
Mediator Training:
● Dispute Mediation Services Mediator Training Course
● Dispute Mediation Services Course on Mediation of Employment Cases
● Dispute Mediation Services Course on Mediation of Car Accident Cases
Professional Memberships and Awards:
● Mexican-American Bar Association of Texas, President
● Dallas Hispanic Bar Association Scholarship Foundation, Past President
● Dallas Hispanic Bar Association, Past President (2007)
● Mac Taylor Inn of Court, Associate Member
● Patrick E. Higginbotham American Inn of Court, Associate Member (2005-2006)
● Texas Bar Foundation, Fellow
● Dallas Bar Foundation, Fellow
●Dallas Association of Young Lawyers Foundation, Fellow
●Dallas Association of Young Lawyers, Judicial Intern Co-Chairperson (2005)
● Dallas County Associate Judge Selection Committee (2004)
● Dallas Association of Young Lawyers Leadership Class (2004)
● Recipient of Texas Monthly "Rising Star" Super Lawyer Award (2005, 2011)
Social Media Chapter 7
i
TABLE OF CONTENTS
I. SOCIAL MEDIA 101 ................................................................................................................................ 1
A. What is Social Media? .......................................................................................................................... 1
1. Facebook .......................................................................................................................................... 1
2. Twitter .............................................................................................................................................. 1
3. YouTube ........................................................................................................................................... 1
4. LinkedIn ........................................................................................................................................... 1
5. MySpace ........................................................................................................................................... 1
6. Google+ ............................................................................................................................................ 1
B. Why Social Media? .............................................................................................................................. 2
1. Global Audience Reach and Low Cost ............................................................................................ 2
2. Ease of Use ....................................................................................................................................... 2
3. Instantaneous Publishing .................................................................................................................. 2
C. What Can Social Media Do For Businesses? ....................................................................................... 2
II. POLICING TRADEMARKS ON THE SOCIAL MEDIA AND THE WEB ........................................... 2
A. Policing Trademarks on Social Media ................................................................................................. 2
B. Infringing Domain Names .................................................................................................................... 3
C. Future of Domain Names ..................................................................................................................... 4
1. What is a gTLD? .............................................................................................................................. 4
2. How Do Businesses Protect Their Trademarks Under the New gTLD System? ............................. 5
III. USE OF SOCIAL MEDIA TO CONDUCT BUSINESS PROMOTIONS ............................................... 5
A. Sweepstakes Defined ............................................................................................................................ 5
B. State and Federal Sweepstakes Law ..................................................................................................... 6
C. Official Rules ....................................................................................................................................... 7
APPENDIX A .................................................................................................................................................. 9
APPENDIX B ................................................................................................................................................ 10
APPENDIX C ................................................................................................................................................ 11
APPENDIX D ................................................................................................................................................ 12
APPENDIX E ................................................................................................................................................. 13
Social Media Chapter 7
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SOCIAL MEDIA:
The Good, the Bad, and the Lucky Ok, I‘ll admit it. I may be the lone holdout on
Facebook. I don‘t get it. Well, I get it in so far as I
know how it works, but I don‘t get the appeal of it.
This is not to say that I don‘t spend a lot of time on
social media sites. In fact, sometimes I spend hours a
day playing detective and documenting infringing
uses of my clients‘ intellectual property. As an
attorney, maybe I‘m just a little jaded after spending
hours tracing infringers through an invisible web or
reading case after case where information posted on
Facebook or tweeted on Twitter gets people in trouble.
At any rate, despite my aversion to having my own
Facebook profile or letting my kids post videos on
YouTube, I can appreciate the fact that social media
will only expand in the coming years. Therefore, for
all of those who don‘t ―Like‖ Facebook, twiddle away
Tweeting on Twitter, or just simply do not practice in
areas of the law that are impacted by social media, I
hope this paper provides some background and useful
information on social media, business, and the law.
I. Social Media 101
A. What is Social Media?
Social media is a relatively inexpensive means of
disseminating information, pictures, video, and news
through electronic media. Social media is different
from traditional media, such as newspapers and
television, because of the relatively low cost to use
social media outlets and the worldwide audience.
Popular social media sites include:
1. Facebook: Facebook is an online platform that
lets individuals and businesses keep others updated on
what‘s going on in their lives or with their businesses.
Facebook ―helps you connect and share with the
people in your life.‖1 Specifically, Facebook allows
you to post information, pictures, and videos and
share them with your Facebook ―Friends.‖ Appendix
A shows an example of how Justin Brands, the
famous boot manufacturer, uses Facebook to increase
its marketing and media exposure.
2. Twitter: The following description of Twitter is
found on Twitter‘s site:
Twitter is a real-time information network that
connects you to the latest information about
what you find interesting. Simply find the
public streams you find most compelling and
follow the conversations. At the heart of
Twitter are small bursts of information called
1 www.facebook.com
Tweets. Each Tweet is 140 characters in length,
but don‘t let the small size fool you—you can
share a lot with a little space. Connected to each
Tweet is a rich details pane that provides
additional information, deeper context and
embedded media. You can tell your story within
your Tweet, or you can think of a Tweet as the
headline, and use the details pane to tell the rest
with photos, videos and other media content.2
3. YouTube: YouTube is a video-based social
media platform. The following description is found on
YouTube‘s site: ―Founded in February 2005,
YouTube allows billions of people to discover, watch
and share originally-created videos. YouTube
provides a forum for people to connect, inform, and
inspire others across the globe and acts as a
distribution platform for original content creators and
advertisers large and small.‖3
4. LinkedIn: LinkedIn is a platform for exchanging
professional information, such as where you work and
where you went to school. Launched on May 5, 2003,
―LinkedIn operates the world‘s largest professional
network on the Internet with more than 100 million
members in over 200 countries and territories.‖4
5. MySpace: MySpace touts itself as ―the leading
social entertainment destination powered by the
passion of fans. MySpace drives social interaction by
providing a highly personalized experience around
entertainment and connecting people to the music,
celebrities, TV, movies, and games that they love.‖5
6. Google+: On June 29, 2011, Google launched its
own social media site in an attempt to compete with
Facebook. Google+ (Google Plus) is designed to tie
together all of Google‘s existing functionality for a
user, including Gmail. Google+ is structured similarly
to Facebook, allowing the user to post and share
profiles, pictures, and news feeds. There is, however,
one significant difference between Google+ and
Facebook---unless a Facebook user reads all of the
privacy setting information closely and sets up ―Lists‖
(not a commonly used feature), all ―Friends‖ are
placed in the same classification (i.e., all Friends can
see the same information). Understanding the privacy
settings and designating certain ―Lists‖ of people has
proven difficult for many users. On the other hand,
Google+ is designed for a user to designate certain
people in certain ―Circles‖ from the outset using a
user-friendly drag and drop feature. This is significant
2 http://twitter.com/about.
3 http://www.youtube.com/t/about_youtube
4 http://press.linkedin.com/about
5 http://www.myspace.com/Help/AboutUs
Social Media Chapter 7
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because Google+ encourages and makes it easy for
users to place college friends in one Circle, close
friends in another Circle, and business contacts (e.g.,
your boss) in yet another Circle. This makes it easier
to prevent your business contacts from accidently
learning about what you did (or shouldn‘t have done)
over the weekend. Another feature that is a bonus on
Google+ is the ―Hangout‖ feature, which allows up to
ten users to chat simultaneously and through the use
of video. I anticipate the ease of the ―Circles‖ and the
functionality of the ―Hangout‖ feature will be huge
selling points for Google+.
B. Why Social Media?
Social media has become an integral part of
communication in the digital age. Like it or not, use
of social media is here to stay, and even if you are not
yet convinced of its usefulness or necessity, the fact is
that peer pressure (both on individuals and businesses)
spurs on its use. While there are a plethora of reasons
why people and businesses use social media, the
following three reasons are at the crux of any
explanation of the success of social media:
1. Global Audience Reach and Low Cost. Social
media technology provides a person or company with
the ability to reach a global audience for a relatively
low cost. When a US company posts information on
its Facebook page, it is able to share that information
with not only US consumers, but also consumers
around the world. If traditional forms of media were
used (e.g., newspapers or TV commercials) to
communicate to people worldwide, the cost would
likely be prohibitive for most individuals and
businesses. On the other hand, social media outlets
allow the same breadth or scope circulation with little
cost to the individual or business.
2. Ease of Use. Unlike publishing a newspaper or
running a television station, which most individuals
don‘t have the requisite knowledge or capital to do, an
individual can create and control his or her own social
media site. Social media is readily available to the
public and requires very little skill or training to
operate. Anyone with access to the Internet can use
social media, and it is also easy to edit and update.
3. Instantaneous Publishing. While this feature of
social media can be both good and bad, social media
allows a user to publish information almost
instantaneously and posts can be updated in seconds,
thus bringing news to millions almost instantaneously.
As we recently learned from Mr. Sohaib Athar, the
―tweeter‖ who unknowingly tweeted about the Osama
Bin Laden operation as it was being carried out,
sometimes information published on social media is
so fresh, not even the disseminator knows its
relevance.
C. What Can Social Media Do For Businesses?
Social media can increase communication to
customers and can foster brand awareness. Social
media can also greatly decrease the cost of marketing
campaigns and provide a relatively inexpensive
platform for organizations to expand product
knowledge and goodwill. For example, Twitter
permits a business to promote itself and its products in
real time to consumers on an individual level for
virtually no cost. Specifically, Tweeting allows a
business to send short messages about a product or
promotion directly to a follower‘s home page.
Because of the brevity of the messages, the
information is more likely to be read by the individual
and capture his or her attention. Even though Tweets
are short, they can provide links to the business‘s
website, Facebook profile, or videos on YouTube, so
that the individual can learn more about the company
or its products with the click of button or touch of a
finger.
Unlike Twitter, Facebook profiles are more detailed
and can contain more information, pictures, and
videos about a business‘s product. Facebook pages
can show videos of the product being used, as well as
testimonials and feedback from other users. Like
Twitter, Facebook can also provide links to other
social media sites, such as Twitter or YouTube.
Finally, while YouTube may not contain as much
written information about a business or its product,
YouTube is the perfect outlet for showcasing products
and how they are used via video. Businesses
frequently use Facebook, YouTube, and Twitter in
complementary ways to provide information and
showcase products.
II. Policing Trademarks on Social Media and
the Web
A. Policing Trademarks on Social Media
With the advent of social media, protecting your
business‘s trademarks is a full time job. With the
expanse of the Internet, it may not be possible to find
all possible infringements of your marks, but a
trademark owner still needs to put forth the effort to
find and police infringing uses of its trademarks.
Finding infringing uses is the easy part—what to do
once you find them is another matter.
Once you find an infringing use, you need to
determine what type of infringement it is and what
governing authority, if any, would apply. For sake of
discussion, we will use Company X as an example.
Company X is a designer jean manufacturer, and its
Social Media Chapter 7
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official website is www.CompanyX.com. Company
X realizes that someone has registered the Facebook
profile ―Company X‖ and is advertising Company X‘s
jeans at a discount or even worse, advertising jeans
from competitors on the Facebook page.
Often an infringer will use not only domain names,
but social media platforms to squat on trademarks.
When an unauthorized use of your client‘s name or
trademark occurs on a social media site, the first thing
you should do is go to that specific site and read all of
the applicable user terms and conditions.
Among many other terms of use and rules, Twitter
provides the following:
•Impersonation: You may not impersonate
others through the Twitter service in a
manner that does or is intended to
mislead, confuse, or deceive others.
•Trademark: We reserve the right to
reclaim user names on behalf of
businesses or individuals that hold legal
claim or trademark on those user names.
Accounts using business names and/or
logos to mislead others will be
permanently suspended.6
Similarly, Facebook provides the following within its
terms of use:
We respect other people's rights, and
expect you to do the same.
1. You will not post content or take any
action on Facebook that infringes or
violates someone else's rights or
otherwise violates the law.
2. We can remove any content or
information you post on Facebook if we
believe that it violates this Statement.
3. We will provide you with tools to help
you protect your intellectual property
rights. To learn more, visit our How to
Report Claims of Intellectual Property
Infringement page.
4. If we remove your content for
infringing someone else's copyright, and
you believe we removed it by mistake, we
will provide you with an opportunity to
appeal.
5. If you repeatedly infringe other
people's intellectual property rights, we
will disable your account when
appropriate.
6 http://support.twitter.com/articles/18311-the-twitter-rules
6. You will not use our copyrights or
trademarks (including Facebook, the
Facebook and F Logos, FB, Face, Poke,
Wall and 32665), or any confusingly
similar marks, without our written
permission.
7. If you collect information from users,
you will: obtain their consent, make it
clear you (and not Facebook) are the one
collecting their information, and post a
privacy policy explaining what
information you collect and how you will
use it.
8. You will not post anyone's
identification documents or sensitive
financial information on Facebook.
9. You will not tag users or send email
invitations to non-users without their
consent.7
If you experience an infringement on a social media
site, the first step should be to notify the site pursuant
to its reporting policies. For Facebook, trademark
owners can report infringements using Facebook‘s
Notice of Intellectual Property Infringement (non-
Copyright Claim) form (at
http://www.facebook.com/legal/copyright.php?noncop
yright_notice=1). (See Appendix C for the form of
Facebook‘s Notice of Intellectual Property
Infringement (non-Copyright Claim)). On Twitter,
you will want to take advantage of Twitter‘s
Trademark Policy, which can be found at:
http://support.twitter.com/groups/33-report-a-
violation/topics/148-policy-information/articles/
18367-trademark-policy. (See Appendix D). If the
infringement occurs on YouTube, trademark owners
are encouraged by YouTube to contact the infringer
directly through YouTube‘s private messaging
feature.8 If the infringer ignores the trademark
owner‘s communication or refuses to comply with the
trademark owner‘s requests, then YouTube allows
owners to submit their trademark claims through
YouTube trademark complaint form, which can be
found at:
http://www.google.com/support/youtube/bin/request.p
y?contact_type=legal2&hl=en. (See Appendix E).
B. Infringing Domain Names
Often an infringement occurring on a social media site
will link to an unauthorized domain name as well.
Let‘s use Company X again as an example in the
domain name context. Company X‘s official website
is www.CompanyX.com. Company X realizes that
someone has not only created an unauthorized
7 http://www.facebook.com/terms.php
8 http://www.google.com/support/youtube/
bin/answer.py?answer=151655.
Social Media Chapter 7
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Facebook profile, but has also registered the domain
name www.CompanyXjeans.com and is selling
Company X‘s jeans at a discount or possibly even
selling counterfeits or jeans from competitors through
this site. In this case, the first step would be to find
out who registered the domain name
www.CompanyXjeans.com. You can usually do this
by going to the Whois database and searching for the
registration records for that domain name. I say
usually because sometimes you find the information
given is inaccurate or incomplete. Once you find the
registration information for the domain name, you
have the option of contacting the registrant directly or
filing a Uniform Domain Name Dispute Resolution
Policy (―UDRP‖) proceeding.9
The UDRP is a policy between a registrar and the
domain name registrant, and is included in registration
agreements for all Internet Corporation for Assigned
Names and Numbers (―ICANN‖) accredited domain
name registrars. As long as the registrar is an
ICANN-accredited registrar, a party will be able to
bring a UDRP proceeding against the infringing
domain name registrant. For a party based in the
United States, the proceeding is usually filed with
either the World Intellectual Property Organization
(―WIPO‖) or the National Arbitration Forum, both of
whom are listed as approved dispute resolution
providers on ICANN‘s website. For information on
UDRP proceedings visit the following ICANN and
WIPO sites:
http://www.icann.org/en/udrp/#proceedings or
http://www.wipo.int/amc/en/domains/resources.
Occasionally, an infringing use appears on a domain
name sold through a non-ICANN-accredited registrar.
When this occurs, we have had success in using the
registrar‘s own stated terms and conditions to enlist
the registrar‘s help in taking down the website. Often
the registrar‘s own terms for URL registration have
the registrant certify that their requested domain name
will not infringe upon or otherwise violate the rights
of third parties and that their use of the domain name
will not violate any laws. Unfortunately, in cases
where you have to appeal to the registrar directly, the
remedies available to your client are highly dependent
on the terms and conditions that the registrant agreed
to when it purchased the domain name. So, while you
may not be able to get the domain name transferred to
your client (as is the typical remedy in a UDRP
9 The Uniform Domain-Name Dispute Resolution Policy
(UDRP) has been adopted by ICANN-accredited registrars
in all gTLDs (.aero, .asia, .biz, .cat, .com, .coop, .info, .jobs,
.mobi, .museum, .name, .net, .org, .pro, .tel and .travel). A
copy of the policy can be found at
http://www.icann.org/en/dndr/udrp/policy.htm.
proceeding), you may at least get the infringing site
and the illegal activities conducted through that site
shut down. Given that most of these non-ICANN-
accredited registrars are in remote areas outside the
U.S., we have actually had surprising success with
contacting the registrar directly and getting infringing
websites disabled.
As a final note about domain name infringement,
Benjamin Franklin‘s old adage ―[a]n ounce of
prevention is worth a pound of cure‖ certainly rings
true. Try to remind your clients that they should
purchase all close variations of their brand name on as
many of the top level domains as possible. Spending
a few hundred dollars upfront to prevent a domain
name squatter is undoubtedly less expensive than
paying an attorney thousands of dollars to initiate a
UDRP proceeding later.
C. Future of Domain Names
On June 20, 2011, ICANN voted to approve the
addition of potentially thousands of new Generic Top
Level Domains (gTLDs). If your company is like
most, it has not given much thought to whether or how
the new gTLDs will affect it. Given the short timeline
that ICANN has set for implementation (January
2012), companies need to begin thinking about their
gTLD strategies now.
1. What is a gTLD?
First, you need to understand what a gTLD is and how
it could affect your company. Many of us are so
accustomed to using .com, .net, .gov, etc. that we
rarely think of them as top level domains, but that is
what they are. When a company adds their name or
trademark in front of the top level domain, you have a
second level domain. For example, CompanyX.com--
-―.com‖ is the top level domain and ―CompanyX‖ is
the second level domain. Companies have
traditionally only had to police their marks on the
popular top level domains (e.g., .com, .net, .biz);
however, when ICANN opens up new gTLD
possibilities, companies will have to expand their
policing to include all of the new top level domains as
well.
Again using www.CompanyX.com as our example,
what happens if an applicant applies for and receives
any one or more of the following gTLDs: .clothes,
.jeans, .apparel, etc. or even .companyX? In this case,
not only will Company X have to monitor all new
gTLD applications approved by ICANN, but then
once those gTLDs are up and running, Company X
will need to police use of its mark on the approved
gTLDs.
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2. How Do Businesses Protect Their Trademarks
Under the New gTLD System?
If you are a large corporation and have a significant
trademark portfolio, one option would be to apply for
your own gTLD. For example, we could see gTLDs
like ―.Apple‖ or ―.Coke‖ in the near future. So, one
method of protecting your mark would be to purchase
your own gTLD. If, however, your company finds the
$185,000 (yes, $185,000) proposed application fee
and the cost of maintaining your own gTLD cost
prohibitive, then you may want to consider registering
your trademarks with ICANN‘s Trademark
Clearinghouse in an effort to at least keep a would-be
infringer from purchasing your trademark as a gTLD.
ICANN‘s gTLD Applicant Guidebook10
provides the
framework for a Trademark Clearinghouse, through
which companies can provide copies of their
registered marks11
in order to alert ICANN of its
rights in the trademark and to prevent an infringing
gTLD from being issued in the first place. ICANN
has also provided for procedures to oppose gTLDs
that have been published for approval, as well as a
dispute resolution mechanism for contesting gTLDs
that have been issued.
III. Use of Social Media to Conduct Business
Promotions12
Businesses now commonly use social media to offer
prizes and conduct contests via the Internet. Where
participants used to have to mail in postcards to
register for a sweepstakes, in many cases, all a person
has to do these days is ―Retweet‖ a message to
register. These giveaways have become a very
popular way for businesses to attract its customer base
to follow the business online. The problem is, while
most lawyers know that there are laws governing
sweepstakes and contests, most advertising agents and
marketing personnel responsible for social media
marketing for businesses do not.
For purposes of legal analysis, we will continue with
our Company X example. Company X currently
carries out promotions over Twitter that allow
participants to ―Retweet‖ the promotion in order to be
entered for a chance to win a free pair of jeans. An
example of one of the promotions states:
Want #freecompanyxjeans? We're
giving away a pair of Company X
10
At this time, ICANN has only issued the gTLD Applicant
Guidebook in Proposed Final form. 11
There are also some narrow exceptions for unregistered
marks. 12
The information in this section was researched with the
assistance of Chad Smith, Kelly Hart & Hallman LLP.
jeans on May 31! Retweet to enter to
win!
The promotion contains no disclaimers, disclosures, or
Official Rules concerning the promotion. Participants
must have a Twitter account to participate, and
―Retweeting‖ consists of simply hitting a ―Retweet‖
button on the promotion‘s ―Tweet‖ of the Company X
Twitter page.
So, is a promotion that allows participants to
―Retweet‖ the promotion details over Twitter in order
to be entered for a chance to win a free [insert prize],
considered a sweepstakes? If so, what state and
federal laws govern the promotion? And, is the
promotion required to have a set of Official Rules?
The short answer is, yes, the ―Retweet‖ described
above would be considered a sweepstakes and there
should be Official Rules (even if not required by law
specifically).
A. Sweepstakes Defined
Sweepstakes are regulated by both state and federal
law. In Texas, a sweepstakes is a ―contest that awards
one or more prizes based on chance or the random
selection of entries.‖13
Federal law defines a
sweepstakes as a ―game of chance for which no
consideration is required.‖14
The most important
aspect of any sweepstakes is that the contest must
eliminate the element of consideration to avoid being
classified as an illegal lottery.15
Consideration can be
either monetary (requiring an entry fee, purchase, etc.)
or non-monetary (requiring considerable time/effort or
highly sensitive information); however, many states
ignore non-monetary consideration for lottery
purposes.16
As stated in the example above, one of Company X‘s
many promotions requires participants to ―Retweet‖
the promotion in order to be entered for a chance to
receive a free pair of jeans. The promotion provides
no other information or rules. Assuming the prize is
awarded based on chance or random selection, the
promotion would fall under the definition of a
sweepstakes; however, simply being a sweepstakes
13
Tex. Bus. & Com. Code Ann. § 622.002[4] (Vernon
2009). 14
Deceptive Mail Prevention and Enforcement Act § 109,
39 U.S.C.A §§ 3001[k][1][D] (2010). 15
Gabrial Karp, Complying with State-by-State
Requirements in Online Sweepstakes & Contests,
Practicing Law Institute Order No. 19051 (2009); see also
G2, Inc., v. Midwest Gaming, Inc., 485 F.Supp.2d 757, 769
(W.D. Tex. 2007). 16
Id.
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does not automatically make a sweepstakes conducted
via social media subject to federal and state laws.
B. State and Federal Sweepstakes Law
Sweepstakes can be regulated by both state and
federal laws. Federal sweepstakes regulations are
aimed at sweepstakes conducted through the United
States mail or over the phone.17
The Federal
Deceptive Mail Prevention and Enforcement Act
characterizes any sweepstakes material that does not
fit the requirements listed in the statute and that is
distributed through the mail as a non-mailable matter,
and thus not subject to the law.18
While sweepstakes
conducted through social media do not fall within the
parameters of the Federal Deceptive Mail Prevention
and Enforcement Act, the Federal Trade Commission
is authorized to prescribe rules prohibiting deceptive
telemarketing acts, including sweepstakes conducted
over the phone.19
Therefore, while the Federal
Deceptive Mail Prevention and Enforcement Act is
not applicable to social media sweepstakes,20
it is
possible that the Federal Trade Commission could
expand its scope or even create a new law.
Furthermore, sponsors of sweepstakes conducted over
the Internet, through Facebook, Twitter, or other
social media, still need to be cognizant of other
federal regulations governing unfair or deceptive trade
or advertising practices.
In Texas, sweepstakes are regulated under §§ 622.001
to 622.206 of the Texas Business and Commerce
Code.21
However, Section 622.051 states:
(a) This chapter applies only to a sweepstakes
conducted through the mail.
(b) This chapter does not apply to a
sweepstakes for which the only use of the mail is for a
consumer to return an entry form to the sweepstakes
sponsor.
17
See Deceptive Mail Prevention and Enforcement Act §
109, 39 U.S.C.A § 3001[k][1][D] (2010); and 16 C.F.R. §
310 (2010). 18
39 U.S.C.A § 3001. 19
15 U.S.C.A. 39 U.S.C.A § 6102 (2010); see also 16
C.F.R. § 310 (2010) (concerning the Federal Trade
Commission‘s regulations on sweepstakes telemarketing). 20
The express language of the Deceptive Mail Prevention
and Enforcement Act does not rule out the possibility of a
court interpretation that mail was intended to encompass
email. However, because the Act is included under Title 39
Postal Service and because the Act continually refers to the
Postal Service, this interpretation is unlikely. 21
Sweepstakes concerning certain industries may also be
regulated or expressly authorized by other Texas Code
sections. See Tex. Alcoholic Beverage Code Ann. §
108.061 (Vernon 2010) (authorizing sweepstakes
promotions for alcoholic beverages).
Thus, in Texas, sweepstakes conducted over the
Internet using social media platforms do not appear to
be subject to the provisions of the Texas Business and
Commerce Code. Therefore, under our Company X
example, neither Texas nor federal sweepstakes
regulations would govern the Company X
sweepstakes. Nevertheless, Company X will still need
to consider other states‘ laws when conducting online
sweepstakes.
Sweepstakes must be conducted in accordance with
the laws and regulations in every state for which the
sweepstakes is carried out. This issue is particularly
important for sweepstakes carried out over the
Internet, because the sweepstakes may be subject to
the laws and regulations of every state and country in
which the host web site is accessible.22
For this
reason, companies are usually advised to include a
clause in the Official Rules to limit eligibility to U.S.
residents unless they want to conduct a state-by-state
and country-by-country analysis of sweepstakes law.
Moreover, sweepstakes promoters should expressly
deny eligibility to residents of any states in which the
promoter would like to avoid compliance with the
local laws and regulations.23
There are several states that have sweepstakes laws
that may govern sweepstakes carried out through
social media and other internet mediums.24
For
example, Connecticut sweepstakes law25
requires any
―person advertising a sweepstakes‖ in the state
(regardless of the medium) to disclose in ―immediate
proximity to and in at least the same size and face
type:‖
(1) the retail value of the prize,
(2) the odds of winning, and
22
See Don’t Take Chances with Internet Sweepstakes,
Southeast Tech Wire, July 23, 2002 (available at
http://www.wcsr.com/filefolder/ad100509.pdf). 23
For instance, a company conducting a sweepstakes may
want to restrict eligibility for citizens in New York and
Florida. Both states require sweepstakes with an aggregate
total prize value over $5,000 to be registered and bonded
with the state. See Fla. Stat. Ann. § 849.094[3] (West
2010); and N.Y. Gen. Bus. Law § 369[e][1] (McKinney
2010). 24
The scope of the analysis of state laws governing
sweepstakes is based on the research gathered by Thomson
Reuters/West in a survey of sweepstakes laws in all 50
states. Civil Laws: Gaming – Rules for Sweepstakes
(Statutes) (West 2009). Extensive research into the
sweepstakes laws of all 50 states was not conducted.
Moreover, the paper focuses on state laws that may have an
impact on sweepstakes conducted over the internet–not
state sweepstakes laws in general. 25
Conn. Gen. Stat. Ann. §42-297 (West 2010).
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(3) whether the receipt of the prize is
restricted or qualified.
Advertising a sweepstakes in Connecticut includes the
―use of the media, mail, computer, telephone or
personal contact to offer… the opportunity to
participate in a sweepstakes.‖
In Illinois, Minnesota, and South Dakota sweepstakes
or ―written promotional prize offers‖ must contain:
(1) name & address of the sponsor,
(2) retail value of the prize,
(3) disclosure that ‗no purchase is necessary,‘
(4) disclosure that a purchase will not improve
chances of winning,
(5) the odds of receiving a prize,
(6) disclosure of any requirement to pay shipping &
handling upon winning,
(7) description of any restrictions on receipt of prize,
(8) any limitations on eligibility, and
(9) a statement of the maximum number of people
included in a group of enhanced likelihood of
winning, if the sponsor represents to a participant that
they are ―specially selected,‖ etc.26
These statutes do not address or define ―written
promotional prize offers,‖ and it is unclear as to
whether these statutes apply to sweepstakes and
promotional offers carried out over the internet.
Moreover, some states require all sweepstakes
sponsors, regardless of how the sweepstakes is carried
out, to provide contestants with their prize within 30
days after giving notice that the contestant has won.27
C. Official Rules
While Texas law does not specifically apply to online
sweepstakes, it would be wise for sponsors to follow
the regulations as much as possible. Texas regulations
require that sweepstakes materials include the
language:
Buying Will Not Help You Win. Your
chances of winning without making a
purchase are the same as the chances of
someone who purchases something. It is
illegal to give any advantage to buyers in
a sweepstakes.28
As discussed above, the Texas sweepstakes regulation
does not directly apply to a sweepstakes conducted
over Twitter, but it would be wise for Company X to
26
815 Ill. Comp. Stat. Ann. 525/25 (West 2010); Minn.
Stat. Ann. § 325F.755 (West 2010) (does not include
requirements (3) & (4)); S.D. Codified Laws § 37-32-3
(2010) (does not include requirements (3) & (4)). 27
See Minn. Stat. Ann. § 325F.755 (West 2010); see also
N.D. Cent. Code § 53-11-03 (2010). 28
Tex. Bus. & Com. Code Ann. § 622.101[a][3] (Vernon
2009).
include this statement in its promotion nevertheless.
Other states, with sweepstakes regulations that are
specifically applicable to an online sweepstakes, still
do not require promotions to include Official Rules of
the contest, but do require that certain disclosures or
statements be provided.29
The required statements and
disclosures of these states were discussed in the
proceeding section.
Despite the analysis on applicability of law, most legal
commentary on sweepstakes law suggests that
sponsors should still include Official Rules to avoid
possible liability with the continually changing
sweepstakes laws and deceptive trade regulations of
all 50 states.30
A properly drafted set of Official Rules
constitutes ―the contract between the sponsor and the
consumers participating in the promotion.‖31
Moreover, these commentators suggest that the
Official Rules should include at least the following
disclosures:
(1) No purchase necessary & purchase will not
improve chances of winning,
(2) Name/Address of the promoter,
(3) Accurate description of the prize(s),
(4) The odds of winning,
(5) Eligibility requirements (e.g., residency and age),
(6) Opening/closing dates of the contest,
(7) How the prizes will be awarded,
(8) How the winners are selected, and
(9) Whether there are any special requirements.32
Moreover, promoters of sweepstakes conducted over
the Internet via social media sites may want to include
special statements to account for technical problems,
situations unique to the Internet, and requirements
29
See Conn. Gen. Stat. Ann. §42-297 (West 2010); 815 Ill.
Comp. Stat. Ann. 525/25 (West 2010); Minn. Stat. Ann. §
325F.755 (West 2010); S.D. Codified Laws § 37-32-3
(2010). 30
See Don’t Take Chances with Internet Sweepstakes,
Southeast Tech Wire, July 23, 2002 (available at
http://www.wcsr.com/filefolder/ad100509.pdf); and
Gabrial Karp, Complying with State-by-State Requirements
in Online Sweepstakes & Contests, Practicing Law Institute
Order No. 19051 (2009); and Julia A. Archer, Sweepstakes
and Skill Contests – The Basics, Enns & Archer LLP (2003)
(available at
http://www.ennsandarcher.com/s_basics.html). 31
Julia A. Archer, Sweepstakes and Skill Contests – The
Basics, Enns & Archer LLP (2003) (available at
http://www.ennsandarcher.com/s_basics.html). 32
Id; See also Don’t Take Chances with Internet
Sweepstakes, Southeast Tech Wire, July 23, 2002 (available
at http://www.wcsr.com/filefolder/ad100509.pdf); and
Gabrial Karp, Complying with State-by-State Requirements
in Online Sweepstakes & Contests, Practicing Law Institute
Order No. 19051 (2009).
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imposed by the social media site through which the
sweepstakes is conducted.33
In conclusion, while there is no federal or state law
that requires a sweepstakes conducted through social
media to include a list of all Official Rules, the
general consensus among legal commentators on
sweepstakes law is that all sweepstakes sponsors
should include the Official Rules of the contest and
that those rules should contain the disclosures required
by the states to avoid liability.
33
For instance, internet sweepstakes may want to include
rules such as: (1) a disclaimer for entries that are corrupted
or otherwise not received due to technical malfunction, etc.,
(2) reserve the rights to cancel the promotion in the event
that computer malfunction, etc., are encountered, and (3) a
provision stating any dispute as to the winner‘s identity will
be attributed to the holder of the email/Twitter account
associated with the entry. Don’t Take Chances with
Internet Sweepstakes, Southeast Tech Wire, July 23, 2002
(available at http://www.wcsr.com/filefolder/ad1005
09.pdf).
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Appendix A
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Appendix B
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Appendix C
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Appendix D
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Appendix E