February 17, 2016
Effective January 1, 2016, the California ABC Act contains a new section that loosens the restrictions suppliers face when mentioning a retailer in a social media post. Newly added Business and Professions Code § 23355.3 is aimed at clarifying how suppliers and retailers can co-sponsor nonprofit events. It was drafted, in part, as a response to the backlash that occurred after the ABC filed accusations against several wineries for advertising sponsorship of the “Save Mart Grape Escape” charity fundraising event in 2014. In that instance, several wineries posted or tweeted their support and sponsorship of the event on social media. The ABC reasoned that the suppliers were impermissibly advertising for Save Mart, a retailer, even though the event was held under a nonprofit permit issued to a bona fide nonprofit organization. The ABC alleged that by posting or tweeting about the event, the suppliers were giving a thing of value to the retailer, a practice that has long been considered a violation of California’s tied house restrictions.
California law has long permitted supplier licensees to sponsor nonprofit events if the nonprofit gets an event license, and the new law does not fundamentally change that. However, the new section clarifies that a supplier may advertise sponsorship or participation in such events even if a retailer is also a named sponsor of the event. Payments or other consideration to the retailer are still considered a thing of value, and are not allowed, but social media postings no longer fall under that broad category. There are restrictions on what the supplier is permitted to post about the retailer; posts cannot contain the retail price of alcoholic beverages and cannot promote or advertise for the retail licensee beyond mentioning sponsorship or participation in the event. The supplier can share a retailer’s advertisement for the event on social media, but the supplier is not permitted to pay or reimburse the retailer for any advertisement and cannot demand exclusivity of its products at the event. In short, the new section will allow exactly the type of supplier social media support that occurred in the Save Mart Grape Escape situation.
July 09, 2013
The Alcohol and Tobacco Tax and Trade Bureau (“TTB”) recently released Industry Circular 2013-1, “Use of Social Media in the Advertising of Alcohol Beverages.” Most importantly, TTB dispels any notions that the advertising regulations in 27 CFR parts 4 (wine), 5 (distilled spirits), and 7 (malt beverages) don’t apply to social media, and confirms that those rules “apply to all advertisements… in any media, including social media.” The Circular goes on to address unique issues for advertising within specific social media platforms, including Facebook, Twitter, and YouTube.
TTB regulations define an advertisement as “any written or verbal statement, illustration, or depiction which is in, or calculated to induce sales in, interstate or foreign commerce, or is disseminated by mail, whether it appears in a newspaper, magazine, trade booklet, menu, wine card, leaflet, circular, mailer, book insert, catalog, promotional material, sales pamphlet, or any written, printed, graphic, or other matter accompanying the container, representations made on cases, billboard, sign, or other outdoor display, public transit card, other periodical literature, publication, or in a radio or television broadcast, or in any other media.” Content that qualifies as an advertisement must contain certain information, including a responsible advertiser statement that includes the name and address of the industry member responsible for the ad, as well as the product’s class, type, or distinctive designation. Certain content is also prohibited from appearing in ads, such as statements that are false, that disparage a competitor’s product, or that are obscene or indecent.
TTB’s Circular addresses how the advertising regulations apply to specific social media platforms. Particularly relevant points include the following:
- Facebook: A “fan page” constitutes one advertisement, so mandatory statements need to appear only once on a page, and should appear on the industry member’s “profile page;” rules on prohibited content apply to all material posted by the industry member, including material the industry member re-posts.
- Twitter: Mandatory statements are not required in each tweet, and instead must appear on the industry member’s profile page or equivalent.
- YouTube and other video-sharing websites: Videos that fit the definition of an advertisement must include mandatory statements within the actual video, not only on the page where the video is located.
- Blogs: Industry member blogs qualify as ads to which the rules on mandatory and prohibited content apply.
- Mobile Applications: Apps must include the company name or brand name of the product advertised.
The main take-away from TTB’s Circular is that industry members should monitor all social media channels to ensure that content complies with TTB regulations. Consult TTB’s guidance or call one of the attorneys at Strike & Techel for guidelines on advertising through a particular social media platform.
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·
April 29, 2013
Effective January 1, 2013, California AB 2349 amended Business and Professions Code Section 25500.1 and repealed Section 25500.2. The two sections (25500.1 and 25500.2) were duplicative in that both permitted suppliers to list the names of two or more restaurants that carry their products. Section 25500.2 included beer, wine and distilled spirits suppliers, while 25500.1 pertained to suppliers of wine and brandy. The newly amended 25500.1 covers suppliers of beer, wine and distilled spirits. In addition to consolidating the two laws, the newly amended Section 25500.1 removes the requirement that the listed on-sale retailers be restaurants - suppliers can now list bars and clubs that do not serve food. The new Section 25500.1 also clarifies that suppliers can list “other electronic media” with the retailers’ names, addresses and websites, which would include the retailers’ twitter accounts, Facebook pages, and other social media forums.
The revised Section 25500.1 parallels the existing and unchanged Section 25502.1, which pertains to supplier listings of off-sale retailers. Section 25502.1 has not been revised to include “other electronic media” as a means to list the retailers’ information, but we believe it is intended to parallel the on-sale provisions of Section 25500.1. Note that the on-sale and off-sale statutes both include restrictions, e.g., the listings may not include retail prices; the supplier must list at least two unaffiliated retailers; and the retailer may not pay for the listing.
For information about these statutes or any other California trade practices questions, please contact any of the attorneys at Strike and Techel.
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·
July 16, 2012
Wine and other alcoholic beverage industry members, along with everyone else trying to advertise and sell just about anything online, are constantly being reminded to use social media to market their businesses. While the possible benefits of social media are well known, today’s post is a reminder to use discretion and sound business judgment when launching a social media campaign, just as you would for other aspects of your business. Three recent cases highlight the importance of developing social media policies before problems arise.
In Phonedog v. Kravitz, Northern District of California, Case No. C 11-03474, Phonedog, a website that reviews mobile devices, sued its former employee over issues surrounding the ownership of a Twitter account. Kravitz was a product reviewer for Phonedog, and was tasked with maintaining a company Twitter account. While Kravitz worked for Phonedog, the Twitter account had approximately 17,000 followers. At some time after Kravitz resigned from Phonedog, the company requested that the Twitter account be returned, but Kravitz instead changed the name of the Twitter account to his own name and declined to give Phonedog access to the account (the details of when Phonedog did or did not request access to the Twitter account and related issues are up for debate and are key issues in the ongoing case). Phonedog first brought suit against Kravitz on July 15, 2011, alleging four causes of action related to Kravitz’ unauthorized use of the Twitter account, including: 1) misappropriation of trade secrets, 2) intentional interference with prospective economic advantage, 3) negligent interference of prospective economic advantage, and 4) conversion. Phonedog claimed that it suffered $340,000 in damages as a result of Kravitz’ actions. That damages calculation is based on 17,000 followers, valued at the “industry standard” of $2.50/month per follower, for an 8-month period. The case is still in its early stages, but so far the court has largely rejected Kravitz’ efforts to dismiss the lawsuit, and has allowed the case to go forward over Kravitz’ claim that the case could not meet the required jurisdictional minimum ($75,000) because Phonedog could not prove that it has ownership or the right of possession of the account or its followers. The court determined that those are factual issues not appropriate for early dismissal, paving the way for more fighting over the Twitter account.
Another ongoing federal case, Christou v. Beatport, District of Colorado Case No. 10-cv-02912-RBJ-KMT, is instructive on the issue of the ownership of social media accounts. In Christou, one of several issues is whether a nightclub owner’s Myspace page and the associated friend list can be protectable trade secrets. In this case a former business partner left the business and kept the login information and friends list of the nightclub’s Myspace account, and began using the account for his competing business. Similar to Phonedog, the court has allowed the case to survive a motion to dismiss, meaning that the court has allowed the argument to go forward that social media account information may be considered a protectable trade secret.
Lastly, in Ardis Health, LLC v. Nankivell, Southern District of New York Case No. 11 Civ. 5013, the plaintiff employer sought a preliminary injunction against its former employee, Nankivell, seeking the return of the employer’s login information for its online accounts, including its social media accounts. The court granted the preliminary injunction with respect to the account information, and required Nankivell to return the information, finding that “it is uncontested that [the employer] own[s] the rights to the Access Information.” In its decision, the court referred to the employment agreement Nankivell signed when she was hired, which included language that work created during her employment “shall be the sole and exclusive property of [the employer].”
There are several important legal tenets which will continue to evolve with the resolution of the Phonedog, Christou, and other similar cases, including whether social media customer lists can qualify as trade secrets. But regardless of how those cases get resolved, they are instructive for anyone marketing with social media. Most importantly, companies should consider several issues before launching social media campaigns, including: a) making clear who owns all social media accounts, including customer lists, friends, and followers, etc., b) developing written social media policies, addressing issues such as username and password access, customer information access, and issues related to the authority to post messages online, and c) return and/or use of company information by agents or contractors. We’ll keep you posted as the legal issues surrounding social media continue to evolve.
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·
September 22, 2011
The Distilled Spirits Council of the United States (DISCUS), the self-regulatory group for the U.S. distilled spirits industry, just released new guidelines for advertising distilled spirits online. The guidelines were drafted in cooperation with the European Forum for Responsible Drinking, which is the European counterpart to DISCUS.
Digital marketing communications that are intended to be forwarded by users, such as with a share, download or email “button click”, should include instructions to individuals downloading the content that they should not forward these materials to individuals below the legal purchase age. On a related note, if users provide content on the advertiser’s site or a site controlled by the advertiser, the advertiser should be monitoring and moderating the content every day, or at a minimum once every five business days, to remove inappropriate content.
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2011 · All Rights Reserved ·
March 31, 2011
In just a few weeks, Kristen Techel, Partner at Strike & Techel, will be speaking at the Wine Law conference in Denver, Colorado. The two-day conference, presented by Law Seminars International, runs April 11th-12th and covers rules, regulations, challenges, and practical advice for the wine industry. Kristen Techel will be part of a panel discussion on social networking platforms entitled “The Brave New World of Internet Marketing: Establishing a Web Presence Utilizing Social Media” at 3 p.m. on April 12th. Co-panelists include Benjamin Weinberg, Esq., Editor-in-Chief at Unfiltered, Unfined and Michael Lazlo, Esq., with Laszlo & Associates. The conference will be held at the Grand Hyatt Denver Hotel. If you will be attending the conference, please feel free to stop by and say hello to Kristen!
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·
December 08, 2010
We’ve posted about alcohol and social media before, but are revisiting the issue to discuss geo location and location-based advertising.
Websites and mobile apps like Foursquare, Shop Kick, and Facebook Places allow advertisers to identify the location of their audience members and then send an offer based on the consumer’s location. The marketing potential for alcoholic beverage suppliers and retailers is epic. Presume a social media savvy consumer, Joe, who checks in everywhere he goes and provides personal information across a variety of web platforms. Joe likes craft beer, and he likes to drink it in San Francisco’s Haight district. These geography-based applications will allow the brewers, bars and restaurants that Joe interacts with online and via the geo apps to know when Joe is in the Haight and send him a coupon for a discounted pint of craft beer, expiring in only a few hours. The opportunities for a personalized call to action are profound.
Though the technology is very cool, there are plentiful legal pitfalls. Leaving aside regulatory acronyms all mobile advertisers should heed (e.g. MMA, FCC, FTC, TCPA, CTIA), there are alcoholic beverage law issues with geo targeting. The rules on alcohol discounts vary by state and by the party selling the alcohol. How will these programs ensure that the underlying offers are legally compliant? How will the geo location sites identify users who are underage or have a chronic drinking problem? What about states where solicitation requires a license, or is prohibited? We expect to see alcohol advertising tiptoe into geo location in 2011, and expect to see regulators follow quickly.
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010 · All Rights Reserved ·
August 26, 2010
One of our areas of focus at Strike & Techel is the regulatory framework for the advertising and promotion of alcoholic beverages. Under that lens, we’ve been curiously watching the proliferation of alcohol marketing via social networks. The trend is mushrooming, and alcoholic beverage regulations haven’t developed to account for the specifics of the new technologies. Though there is not an intrinsic problem with utilizing social networks to reach your target market, uninformed use of the channel can end up violating a host of alcoholic beverage laws. We expect to see significant regulations imposed at the state-level in the coming years based on companies that “push the envelope” in ways that make state regulators uncomfortable.
That doesn’t mean you should sit idly by while other companies capitalize. We advise our clients and friends to proceed with caution and use common sense. Make sure your advertisements are not aimed at kids. Don’t give away alcohol, valuable prizes or promotional discounts unless you’ve confirmed legality. Be mindful of state lines, and the fact that you may be able to market to a consumer in your home state in a way that you MAY NOT be able to market to a consumer in your neighboring state. And the big one that seems to keep coming up: a promotion offered over Twitter or Facebook or FourSquare requires no less compliance because it is offered on a social media platform. Give yourself lead time to get the proper legal clearance for any promotion.
Imbiblog is published for general informational purposes only and is not intended as legal advice.
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