North America

Sixth Circuit Affirms $3.7 Million Award And Permanent Injunction In Trade Secret/Breach Of Duty Of Loyalty Case

In Nedschroef Detroit Corp. et al. v. Bemas Enterprises et al., the U.S. Court of Appeals for the Sixth Circuit recently affirmed an award of nearly $3.7  million in damages against two individuals found to have engaged in misconduct related to the operation of a business which competed with their employer.

Nedschroef Detroit Corporation (“Nedschroef”) services and provides replacement parts for fastener machines made by an affiliate in Europe.  Without Nedschroef’s knowledge, two of its employees formed a business – under their wives’ names – to do exactly what Nedschroef did.

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A Question of Privilege: Protecting Data in a Clinically Integrated Network

In this emerging era of healthcare reimbursement based on value, many providers are considering different ways to provide services to patients.  The old fee-for-service model, which often awarded providers based on volume, is being replaced with a model that incentivizes providers to provide quality care at reduced costs.

In order to position themselves for value-based reimbursement, many providers have banded together to form clinically integrated networks (CINs) to coordinate and standardize patient care across various service lines.

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Spotlight on Big Data and Connected Devices

As the number of connected devices grew (the so-called “Internet of Things”), so, too, did the risk of data hacking and unauthorized access to sensitive personal information. After the Federal Trade Commission (FTC) action against, and its settlement with, in-store beacon tracking company Nomi Technologies, other companies — especially the makers of data-connected devices and apps — spent time and money on ensuring that they provided consumers with transparency and choice with respect to how and when their data was collected.

The continued collection, sale, and use of vast amounts of consumer data in the Big Data industry regularly was raised as a primary concern of the FTC due to the perceived lack of transparency and consumer control.

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The Rise of Ad Blocking

2015 saw the continued rise of programmatic buying and cross-device tracking, as well as the continued focus on related concerns such as ad fraud and privacy compliance. These trends will remain pertinent in the coming year, and marketers and their agencies should continue to be mindful of transparency and privacy issues when conducting media buys.

The big issue to grab the spotlight in 2015 was ad blocking. Ad blocking is not a new phenomenon; it has long been a concern of agencies, marketers, and publishers. Recent developments, however, significantly broadened the potential for the use of ad blocking technology.

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Political Advertisers Campaign to Avoid Transparency and Disclosures

Political candidates and their supporters have been projected to spend a record $11.4 billion on advertising during the election cycle ending on Tuesday, November 8, 2016. As a result of legal and media developments that occurred in 2015, much of this advertising will withhold from voters the identity of the people paying for it. 2015 should be remembered as the year that political advertisers rejected transparency and disclosure in their campaign communications, and received support in that effort from the government and the press.

Reformist politicians and public interest groups pushed the Federal Election Commission (FEC) to require advertisements placed by political action committees (PACs) to more clearly identify the individuals paying the bills, but the FEC did not act. As a result, ads nominally sponsored by PACs with indistinguishable patriotic names continue to proliferate, and voters continue to have little knowledge of who actually is funding those ads.

 

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Lessons Learned & Practical Tips: Green Marketing Still Needs Support

The marketing communications industry experienced a number of important changes in 2015. In the third edition of our Lessons Learned/Practical Advice publication, lawyers from Davis & Gilbert explore the key regulatory developments, statutory changes, and court decisions in numerous areas such as children’s advertising, entertainment, social media, trademark, and data security. To read the full publication, click here.  In addition, each article suggests steps that marketers and agencies may take to decrease risks and help ensure compliance with applicable laws and regulations.

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Regulators Scrutinize Social Media Campaigns

2015 saw greater regulatory scrutiny of social media marketing campaigns. Specifically, the Federal Trade Commission (FTC) advised on social media promotions, online influencers, and online reviews.

In an update to Frequently Asked Questions (FAQs) about its Guides Concerning the Use of Endorsements and Testimonials in Advertising (the FTC Endorsement Guides), the FTC reiterated that entries into a contest in return for an endorsement required a clear and conspicuous disclosure that the post was incentivized.

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Regulators Continue to Focus on Native Advertising Practices

Native advertising is still on the rise, with marketers continuing to shift media buys into the sponsored content arena as a means of addressing issues such as ad fraud, viewability, and ad blocking – which are primarily issues for traditional display advertising. By way of context, native advertising spending rose from $4.7 billion in 2013 to $7.9 billion in 2014 and is projected to rocket beyond $20 billion by 2018, according to data reported by Business Insider.

The FTC has expressly taken the position that long-standing consumer protection principles apply to native advertising, and that native advertising disclosures are required and subject to enforcement under Section 5 of the FTC Act.

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Courts and USPTO Analyze Hashtags, with Varying Results

In the social media world, hashtags are ubiquitously used by the general public, marketers and their agencies. But the legal protectability of hashtags as intellectual property has largely gone unaddressed. This began to change in 2015, with courts and government entities analyzing the interplay between hashtags and trademark law, with mixed results.

A court in California held that hashtags did not function as trademarks. The case involved a dispute between two competing manufacturers of electronic vaporizers. The parties had entered into a settlement agreement that prohibited one of the manufacturers from using the term “CLOUD PEN” as a unitary trademark.

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House Passes Federal Trade Secrets Bill

After years of stops and starts in Congressional efforts to pass a law creating a federal claim for misappropriation of trade secrets that can be pursued by private citizens and companies (as opposed to federal prosecutors), the last few weeks have produced an astonishing acceleration of those efforts.  This month, the Defend Trade Secrets Act has been approved by both houses of Congress in resounding fashion.  It is on the brink of being enacted into law.

On April 27, 2016, the House of Representatives voted 410-2 to pass the Defend Trade Secrets Act.  That vote came quickly on the heels of the April 20, 2016 approval of the bill by the House Judiciary Committee, where the bill had languished since July 2015.  The Judiciary Committee finally took action on the bill after the Senate voted unanimously by a tally of 87-0 to approve the bill on April 4, 2016.

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