Augmented reality and virtual reality: IP considerations DLA Piper launches global and Technology News Artificial Intelligence practice PERSPECTIVES • ANALYSIS • VISIONARY IDEAS ITC update

Supreme Court Corner

The Russian Supreme Court clarifies IP legislation

ISSUE 43 / Q3 2019 / ATTORNEY ADVERTISING IPT NEWS

Editor’s Column

We are excited to bring you this 43rd issue of IPT As a firm, DLA Piper is proud to announce the launch News. Inside are thought-provoking articles about of a new global practice group focused on artificial ITC Section 337, intellectual property rights in intelligence. And, adding depth and strength to our augmented and virtual reality, and two cases we are West Coast patent practice, we welcome two new following in the Supreme Court – Iancu v. Brunetti, patent prosecution partners to IPT in Silicon Valley: which held that the Lanham Act’s prohibition Christopher Mooney, who focuses on strategic patent Matt Gruenberg on the registration of “immoral or scandalous” counseling, patent prosecution and patent litigation, Partner violates the First Amendment, and and Maria Swiatek, who focuses on cross-border Intellectual Property Return Mail Inc. v. USPS, which held that the federal prosecution and portfolio management for high and Technology government is not a “person” capable of filing a technology, energy and life sciences clients. covered business method review petition under I hope you will enjoy this issue of IPT News. the America Invents Act.

You will also find an article about Ruling No. 10, in which the Russian Supreme Court has clarified its IP law, and a look at potential “influencer” liabilities arising from promotions on Instagram. [email protected]

Helping you embrace the changing marketplace

Artificial intelligence, virtual reality, augmented reality, digital assets, and blockchain are among the new technologies we discuss in this issue, each of them requiring regular review and analysis of current laws and sometimes new laws to ensure appropriate protection. Frank Ryan Partner We are here to help you embrace the changing marketplace while protecting your digital assets and intellectual Global Co-Chair and property. Whether it’s helping you overcome legal challenges in the age of digitization or protecting your US Co-Chair, Intellectual intellectual property concerning a virtual reality, we have the legal experience you need. We’re proud of our 34 Property and Technology lawyers in 9 countries who were ranked by the IAM Patent 1000 as some of the top patent professionals in the world. The members of our team, among them the authors in this issue, strive to stay at the cutting edge of IPT business law. Our global footprint can help you manage your operations in important geographies around the world, online, and in the virtual space.

To learn more about how DLA Piper can help you, please contact any member of our team.

Ann K. Ford Partner Global Co-Head, Sectors, [email protected] [email protected] US Co-Chair, Intellectual Property and Technology

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DLA Piper launches global Artificial Intelligence practice

DLA Piper’s new Artificial Intelligence practice aims to assist companies as they navigate the legal landscape of AI’s emerging and disruptive technologies.

The launch responds to the rapidly evolving needs of clients who work with and in technology. In recent months, the firm also established practices dedicated to blockchain and digital assets, proptech, and fintech.

Larissa Bifano, co-chair of the AI practice, commented, “Artificial intelligence and automation are changing the way we do business, and organizations across a wide range of industries are deploying machine learning technologies to automate and optimize processes in almost every facet of their operations.” She adds, “Our global platform provides us with a broad base of sector- focused practitioners to respond to the wide range of legal challenges across jurisdictions, especially in areas such as regulatory compliance, privacy and ethics.”

See more at: dlapiper.com/en/us/focus/artificial-intelligence

3 IPT NEWS

Patent prosecution capabilities grow on the West Coast Supreme Court Corner Cases we are following

Christopher Mooney Maria Swiatek By Stan Panikowski and Brian Biggs

Patent prosecution partners Christopher Mooney and Maria Swiatek have joined the firm’s Intellectual Property and Technology practice in Silicon Valley.

Chris focuses on strategic patent counseling, patent prosecution and patent litigation. He is often consulted by clients to help them monetize, enforce and build high-quality portfolios in a number of sectors, among them technology, artificial intelligence, manufacturing and life sciences. He received his J.D. from Franklin Pierce Law Center, his M.S. from the University of Texas at Dallas and his B.S. from Texas A&M University.

Maria focuses on the cross-border prosecution and portfolio management of high technology, energy and life science clients. She is often sought out by emerging growth companies that are seeking to offer new and innovative devices or methods in markets around the world. Maria received her J.D. from the University of the Pacific, McGeorge School of Law, and her B.S. from California State Polytechnic University, Pomona.

Learn more about Christopher Mooney at: dlapiper.com/en/us/people/m/mooney-christopher

Learn more about Maria Swiatek at: dlapiper.com/en/us/people/s/swiatek-maria

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Iancu v. Brunetti Return Mail Inc. v. United States – DECIDED: JUNE 24, 2019 Postal Service Holding: The Lanham Act’s prohibition on PATENT – DECIDED: JUNE 10, 2019 registration of “immoral or scandalous” trademarks Issue: The federal government is not a “person” capable violates the First Amendment of filing a covered business method review petition under the Leahy-Smith America Invents Act. Supreme Section 2(a) of the Lanham Act permits the USPTO to refuse a trademark if it “comprises immoral, deceptive, The AIA allows a “person” to challenge a patent’s validity or scandalous matter…” 15 U.S.C. § 1052(a). Erik through a covered business method (CBM) review Brunetti has used the mark “FUCT” for his clothing line before the Patent Trial and Appeal Board (PTAB). AIA Court Corner since 1990, only applying for federal registration in §18(a)(1)(B). 2011. Citing § 2(a), the USPTO refused registration as When patent-holder Return Mail’s attempts to license a “scandalous.” The TTAB affirmed the mark as vulgar and patent to USPS were unsuccessful, Return Mail filed suit Cases we are following unregistrable in light of the “strong, and often explicit” in the United States Court of Federal Claims. Then USPS imagery in the apparel’s promotional material. Brunetti By Stan Panikowski and Brian Biggs filed a CBM petition with the PTAB. In its final written appealed to the Federal Circuit. decision, the PTAB rejected Return Mail’s argument During the appeal, the Supreme Court issued its opinion that USPS lacked statutory standing to file a CBM suit in Matal v. Tam, 137 S. Ct. 1744 (2017), finding the and invalidated all of the challenged claims as drawn to Lanham Act’s clause an unconstitutional ineligible subject matter under 35 U.S.C. § 101. viewpoint-based restriction of speech. In light of Tam, In a 6-3 opinion by Justice Sonia Sotomayor, the Court the Federal Circuit reversed, deeming the registration held the AIA excludes the Postal Service and other bar on “immoral” or “scandalous” marks facially invalid. federal agencies from the definition of “person.” There In a 6-3 opinion by Justice Elena Kagan, the Court is a “longstanding interpretive presumption that postulated, “[t]he government may not discriminate ‘person’ does not include the sovereign.” The Court against speech based on the ideas or opinions it rejected the Postal Service’s arguments to overcome conveys.” When the PTO disapproves marks that some the presumption, finding no evidence that Congress may find offensive, it infringes the First Amendment. In intended to allow a federal agency to file an adversarial dissent, Justice Sonia Sotomayor contended Brunetti’s challenge like a CBM review petition. mark should be rejected, opining one could read In dissent, Justice Stephen Breyer found the “scandalous” narrowly to mean “vulgar” or “obscene,” presumption is overcome because the Postal Service which is viewpoint-neutral and thus does not violate the can apply for, obtain, and maintain a patent; sue First Amendment. others for, be sued for, and assert defenses to patent In a win for free speech, Brunetti reaffirms that restrictions infringement; and invoke and defend against other on the content of a trademark must be viewpoint-neutral. administrative procedures for challenging patents. But four justices (Justice Samuel Alito in concurrence and Return Mail restricts the federal government’s ability Chief Justice John Roberts and Justices Stephen Breyer to challenge a patent – even one asserted against it and Sonia Sotomayor in dissent) expressed concern that in a patent infringement lawsuit – through the AIA’s the Court’s decision would open the door for obscene streamlined, post-issuance review procedures. Patent trademark applications – and recent reporting shows that holders, particularly those considering suit against a concern is being realized. Practitioners should watch this federal agency, will see this as a win, but they should space, including whether the PTO rejects offensive or also note the Court’s opinion does not restrict a federal vulgar marks under other provisions in the Lanham Act agency’s ability to petition for ex parte reexamination or or whether Congress amends the Lanham Act, to more for Congress to clarify the AIA’s definition of “person.” narrowly prohibit obscene marks.

Partner Stan Panikowski, based in San Diego, focuses on IP, Associate Brian Biggs, based in Wilmington, Delaware, represents antitrust, appeals and other areas of business litigation. Reach clients across many technical fields in patent litigation. Reach him at him at [email protected]. [email protected].

5 IPT NEWS

Electronic signature leader Margo H.K. Tank named to the National Law Journal’s Technology Law Trailblazers list

Margo H.K. Tank, US Co-Chair of the firm’s Financial Services sector and co-leader of the new Blockchain and Digital Assets group, has been named to the National Law Journal’s list of Technology Law Trailblazers. The editors recognized Margo for her efforts enabling “the use and acceptance of electronic signatures” and noted her prediction that “in the next decade we will continue to see the intersection of technology and law in every sector.”

The journal also highlights Margo’s advocacy to establish a baseline and legislation for the use of electronic signatures, along with her work advocating for the passage of the Electronic Signatures in Global and National Commerce Act.

Reach Margo at [email protected].

The Recorder names Mark Radcliffe to 2019 California Trailblazers list

Silicon Valley-based partner Mark Radcliffe was recently named toThe Recorder’s 2019 list of California Trailblazers. In highlighting Mark’s career, the editors noted Mark’s work with technology companies and companies that use leading technologies around the world, including blockchain and digital asset deployment.

The editors of The Recorder noted that, in a career that “has undergone continual reinvention,” Mark has been a leader from the “open- source software revolution to the emergence of cryptocurrencies and blockchain technology.”

Mark is a co-leader of the Blockchain and Digital Assets practice. Reach him at [email protected].

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DLA Piper lawyers in 9 countries ranked among 34 The World’s Leading Patent Professionals IAM Patent 1000: The World’s Leading Patent Professionals 2019 has named 34 DLA Piper lawyers from 9 countries to its list of top patent professionals – representing an increase for the firm in numbers of both lawyers and countries. IAM identifies leading professionals based on 1,800 interviews with lawyers and in-house counsel to determine those with “exceptional skill sets and profound insights into patent matters.”

John Allcock Aleksandra Baczykowska Philipp Cepl United States Poland

Dan Christenbury Sean Cunningham Ron Dimock United States United States Canada

Michael Dougherty Gualtiero Dragotti Ryan Evans United States Italy Canada

William (Skip) Fisher Mark Fowler Markus Gampp China United States Germany

John Guaragna Lisa Haile James Heintz United States United States United States

Denise Seastone Kraft Ewa Kuroska-Tober Joe Lavelle United States Poland United States

Dale Lazar Alan Macek Gianni Minutoli United States Canada United States

Steven Park Tony Pezzano Mark Radcliffe United States United States United States

Paul Reeskamp Johan Renes Robynne Sanders Netherlands Netherlands

Matthew Satchwell Paul Steadman Bruce Stratton United States United States Canada

Richard Taylor Alexander Tsoutsanis Nicholas Tyacke United Kingdom Netherlands Australia

Roberto Valenti Italy

7 IPT NEWS Augmented reality and virtual reality: IP considerations

By Tom Ara, Katherine Imp and Erica Dixon

The augmented reality (AR) and virtual reality (VR) forecast for 2019 is $16.8 billion and is expected to expand dramatically in the coming years, with market forecasts for 2023 eclipsing $160 billion. As new AR and VR technologies emerge, so do legal questions arising from their use. This article examines certain intellectual property considerations for publishers and users venturing into this space in the United States.

Defining AR and VR technology Augmented reality is a technology that overlays virtual content on the real-world environment. Marker-based AR requires a marker (eg, an image) that users can scan with their smartphone camera to bring the virtual content to life. Location- based AR overlays virtual content based on a user’s location (using GPS). Examples of existing AR systems include Nintendo’s Pokémon Go app, IKEA’s Place app and photo and video filter apps like Instagram and Snapchat.

Virtual reality is a technology that immerses users into a completely virtual environment. Examples of existing VR systems include the Oculus Rift, PlayStation VR and HTC Vive.

Mixed reality combines AR and VR technology, allowing users to simultaneously interact with both real-world and virtual environments.

In the AR and VR realm, intellectual property rights are commonly divided into two categories: (1) use of real-world intellectual property in the virtual world; and (2) use of virtual intellectual property in the real world.

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Use of real-world intellectual Use of virtual IP in the real world property in the virtual world Similar infringement claims (and similar defenses to such Under US intellectual property laws, use of trademarks, claims) arise with the use of virtual IP in the real world. such as names and of products or , and use In the AR environment, publishers incorporate the real of copyrightable materials, such as photographs, text, world into the AR environment generated for its users. video and music, require permission from the owner of This means that IP in the real world may be incorporated the trademark or regarding applicable rights. into the AR environment, giving rise to infringement claims, particularly where AR replicates, distorts or “Use of trademarks… and use of replaces trademarked or copyrighted works.

copyrightable materials… require For example, could occur if the permission from the owner of AR environment encourages users to take pictures of an artistic work, or could occur if the trademark or copyright the AR environment utilizes third-party logos captured on regarding applicable rights.” a smartphone camera to trigger features within the AR environment. This type of technology could also lead to a business being tagged with undesirable or misleading However, to prevail on a claim of trademark infringement content (and the creators of such tags could escape liability under federal law, a plaintiff must establish that the using the defenses set forth above). On the other hand, defendant used the same or a similar mark “in commerce” this type of technology could change the face of marketing in connection with the sale or advertising of goods or campaigns by making such advertisements as movie services without the plaintiff’s consent. Thus, the user posters, storefronts or billboards more interactive, offering of a real-world trademark in an AR or VR environment businesses new opportunities to connect with consumers. may attempt to escape liability under federal law by claiming that the “in commerce” prong of the trademark As the law evolves infringement test cannot be satisfied. There are enormous possibilities in what AR and Similar problems arise for an aggrieved party faced with VR technology can do to enhance existing forms of the fair use defense available to the public under US entertainment, social media and advertising. AR and VR copyright laws. Under the Copyright Act, the copyright technology offer users an immersive experience, allowing owner has the exclusive right to reproduce, distribute, them to connect with their environments, and the perform and prepare derivative works based on the movies, TV programming, brands and products in their copyrighted work. However, under the doctrine of fair environments, in an unprecedented way. As these new use, the user of a real-world copyright in an AR or VR AR and VR experiences and uses continue to develop, environment could potentially escape liability if the four publishers and users of AR and VR technology must fair use factors are satisfied. Arguably, the most important consider the legal implications on their IP rights and the factor would be whether the allegedly derivative work is IP rights of others while the laws governing such media transformative, which is determined by analyzing whether also continue to evolve. the copyrighted material has been transformed through the addition of new original material and whether the new Tom K. Ara is the co-chair of DLA Piper’s Entertainment Finance and Entertainment Transactions practices. In 2019, Hollywood Reporter material adds value to the original. named him to its 2019 Power Lawyers list, which highlights the 100 top attorneys in Hollywood. He is based in Los Angeles and Shanghai. Reach Tom at [email protected].

Katherine Imp is a senior associate in the Entertainment Transactions practice and based in Los Angeles. In 2019, Variety named her to its 2019 Legal Impact Report “Up Next” list, which highlights the top up-and-coming attorneys in the entertainment business. Reach her at [email protected].

Erica Dixon is an associate in the Entertainment Transactions practice. Recently joining the team, she is based in Los Angeles. Reach her at [email protected].

9 IPT NEWS

In Ruling No. 10, the Russian Supreme Court clarifies intellectual property legislation By Roman Golovatsky

The Plenum of the Russian Supreme Court’s 2019 1. DEFINITIONS The Supreme Court gives lower courts advice on Ruling No. 10, “On the Application of the Fourth Part terminology: “intellectual property” should only be of the Civil Code,” is a comprehensive explanation of applied to results of intellectual activities and means of identification (such as trademarks, services marks, the statutory norms of the Fourth Part of the Russian appellations of origin, commercial designation, and Civil Code related to intellectual property. company names); it does not cover rights to these objects. Rights to intellectual property should be defined as “intellectual rights.” Such rulings by the Supreme Court are always Intellectual rights include the exclusive right, which high-profile news because clarifications from the is an economic right, and moral rights (such as Supreme Court have a significant impact on the paternity rights, rights to names, withdrawal rights, and integrity rights). development of court practice in Russia, providing direction to the lower courts to ensure a unified 2. JOINT OWNERSHIP OF THE EXCLUSIVE RIGHT The exclusive right to the results of intellectual and accurate application of laws. activities and means of identification (except for a company name) may jointly belong to several holders, Ruling No. 10 contains 182 items addressing different areas of and this rule also applies to the inheritance of IP. The intellectual property legislation, including , trademarks, Supreme Court pointed out, however, that this does patents, know-how, appellations of origin, commercial designation, not mean the holders may split the exclusive right and company names. and obtain shares in it. The Court has therefore ended the long-running debate as to whether it is possible In this article, we review eight general, top-level provisions in Russia to split an exclusive right and define shares, of Ruling No. 10. For a more thorough review, please see: explicitly stating it is not possible. dlapiper.com/ipt-news-q3-russian-supreme-court-clarifies-ip-legislation Relations of the holders of the exclusive right among themselves should be regulated by mutual agreement.

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3. DISPOSAL OF AN EXCLUSIVE RIGHT 7. DISPOSAL OF THE EXCLUSIVE RIGHT FOR OBJECTS The Supreme Court clarified that if the assignment TO BE CREATED IN THE FUTURE agreement imposes any limitations on a successor of The Supreme Court clarified that it is possible to the right regarding the use of a result of intellectual conclude an assignment agreement or a license activity or means of identification (for example, agreement for results of intellectual activity or means in terms of territory, term or methods of use) or of identification that are expected to be created in the stipulates a particular term of this agreement, it can be future. The exclusive right or license will be deemed reclassified by a relevant court as a license agreement. transferred/granted at the moment defined by the If, however, there is no legal possibility to reclassify agreement, but not earlier than the moment the such agreement, then it will be deemed invalid, in exclusive right arises. full or in part. 8. ENFORCEMENT OF INTELLECTUAL RIGHTS 4. FORMAT; STATE REGISTRATION Financial sanctions: right holders have a variety of As a general rule, an assignment agreement must options to impose financial sanctions on infringers be executed in writing. A license agreement must in the areas of copyright, trademark and patent. The be in writing unless otherwise stipulated by the Supreme Court clarified that such compensation law. Non-compliance with this rule invalidates the cannot be claimed together with damages; a right relevant agreement. In some cases, the assignment holder must choose one or the other. of an exclusive right or a license is subject to Plurality of infringers: in case of subsequent obligatory state registration with the Russian patent infringements of an exclusive right by several authority (Rospatent). This rule mainly applies to infringers, each bears a separate responsibility. trademarks and patents. If the infringement has been done jointly, the infringers are jointly liable. 5. TERMS AND CONDITIONS OF THE LICENSE AGREEMENT The Supreme Court explained that a license agreement Parallel import: existing law considers parallel imports with a term exceeding the term of the duration of the (“grey” imports of genuine branded goods avoiding relevant exclusive right will be deemed concluded for official supply channels) to be a type of infringement. a term equal to the term of the exclusive right. If the In 2018, the Constitutional Court found the ban on exclusive right is renewed after the conclusion of the parallel imports does not violate Russia’s Constitution. license agreement, then the agreement’s duration In Ruling No. 10, the Supreme Court found that will be determined on the basis of its conditions and genuine goods imported by parallel importers, the new term of the exclusive right. If the license unlike , cannot be seized and destroyed. agreement does not stipulate that there is a royalty- However, the Court emphasized this does not prevent free license, and it does not contain any provisions on the right holder from using other remedies to stop the license fees, it will then be deemed non-concluded. circulation of such goods.

Website owners: for situations where infringing 6. PLEDGE OF THE EXCLUSIVE RIGHT materials are posted on a website, the Supreme A right holder may dispose of an exclusive right by Court explained that a website’s owner determines means of a pledge. Enforcement of the exclusive the way the website is used. In the absence of right and legal action against infringers can only evidence that infringing materials were posted by be initiated by the pledgor. The pledgee is not third parties, it should be presumed that the website granted such possibility. owner posted them.

Roman Golovatsky is a Legal Director of DLA Piper’s Intellectual Property and Technology group and is based in St. Petersburg. He helps IP owners develop and implement measures to protect their IP rights in Russia and the CIS, including patent, copyright and trademark litigation, and measures to combat illegal imports of goods. Reach him at [email protected].

11 IPT NEWS

ITC Section 337 Update Expect heavy emphasis on public interest in pharma/medical device investigations

By Tony V. Pezzano and Michael P. Dougherty

The principal form of relief for patent infringement available in the ITC is an exclusion order barring the importation of the infringing product into the US. Before issuing an exclusion order, the Commission must consider the effect of the order on (1) the public health and welfare; (2) competitive conditions in the US economy; (3) the production of like or directly competitive articles in the US; and (4) US consumers. While these public interest factors rarely present an obstacle to the grant of an exclusion order in typical investigations involving consumer electronics and the like, they can raise difficult issues when the product sought to be excluded is a potentially life-saving drug or medical device.

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Consider, for example, an accused the scope of the safe harbor of 35 After receiving comments from the biologic drug approved for the USC §271(e)(1), and that patients parties, patients, physicians and treatment of certain types of now taking Novoeight be given hemophilia treatment centers, the cancer. How would the Commission until 60 days after the conclusion 956 investigation was terminated, evaluate the public interest if the of the presidential review period to settling before the Commission alternative products on the market transition to alternative products. addressed these issues. were approved for the same Nevertheless, at least two things indications, but were somewhat The Commission initiated a review of are clear from the Commission’s less effective, or had equal efficacy this recommendation and solicited questions. First, the public interest but more side effects? What if comments from the parties and the inquiry in pharmaceutical/medical they were equally effective but the public on several issues, including: device investigations may be noninfringing alternative had to be extensive and potentially require • Alternatives to the accused intravenously administered three input from many different sources product, and what criteria should times per week, while the accused besides the parties, including be used to identify them product required infusion only once patients, physicians, hospitals and per week, potentially reducing the • The likelihood that a patient insurance companies. Second, threat of infections from repeated who has insurance coverage for any exclusion order is likely to be IV dosing and improving patient Novoeight will also have coverage tailored to the needs of the affected lifestyle? What if switching from for a comparable alternative patients, eg, by allowing patients the new product to an alternative who respond better to the accused • The costs patients will incur in could cause unwanted immune product to continue receiving switching from Novoeight to responses in some patients? it, and/or providing safeguards an alternative Should differences in insurance allowing an orderly transition to coverage be considered? • The therapeutic and safety noninfringing alternatives. advantages, if any, of Novoeight The Commission recently identified over an alternative With pharmaceuticals and such issues in Certain Recombinant medical devices already making • Whether the Commission should Factor VIII, Inv. No. 337-TA-956, up the second largest category consider hemophilia patients’ fear in which the accused product of ITC investigations by subject of developing an inhibitor upon (Novoeight) was a recombinantly matter (after computer/ switching medications engineered analogue of the blood telecommunications products), and clotting protein used to treat • Whether any remedial order with further growth on the horizon hemophilia. The Administrative should be tailored to allow as increasing numbers of biosimilar Law Judge recommended a patients currently using Novoeight medicines are imported, we expect limited exclusion order and cease to continue using it that public interest considerations and desist order if a violation will take on growing importance in • Whether patients being treated were found. The ALJ further the Commission’s efforts to fashion for the first time should have recommended, however, that remedies for infringement. access to Novoeight if the those orders should not apply to alternatives are not suitable importations for clinical trials within

Tony Pezzano is a partner in the IPT group and Michael Dougherty is a partner in the IPT group based in New York. In his almost 30-year career and based in New York. Representing as a patent litigator, he has tried numerous pharmaceuticals in suits against generic drug cases involving technology . Reach companies under the Hatch-Waxman Act is a him at [email protected]. cornerstone of his 30-year career. Reach him at [email protected].

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With great influence comes great responsibility Potential liabilities in the growing influencer marketplace

By Tamany Bentz and Carolina Veltri

“You guys...@flattummyco just dropped a new product. They’re Appetite Suppressant Lollipops and they’re literally unreal,” gushed Kim Kardashian in a now- deleted Instagram caption. Below a photo of herself with a lollipop in her mouth, Kim urged her 110+ million Instagram followers to use her unique promotional code on their purchase so they, too, could curb their food cravings at a discount.1

Sponsored social media posts like this are ubiquitous, showcasing a wide array of products and raising issues beyond the irony of an appetite-suppressing dessert. What responsibility, if any, falls on the influencer for these endorsements?

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Like the efficacy of Flat Tummy Tea lollipops, the Similarly, private plaintiffs have attempted to sue answer has yet to be elucidated. Both government celebrity endorsers, but again, courts have yet to and private plaintiffs have tried to sue celebrity definitively hold that such endorsers can be liable endorsers directly for false or deceptive advertising, to consumers. Investors in what turned out to be a but with mixed results. Ponzi scheme brought suit against an actor who had appeared in commercials endorsing the “investment According to the Federal Trade Commission’s website, opportunity” in In re Diamond Mortgage Corp.5 In “FTC law applies to endorsers and influencers, too.” denying the actor’s summary judgment motion, In 2017, the FTC issued its first charges against social the court held that as an endorser, the actor “had media influencers for deceptive endorsements for a duty pursuant to the FTC Guides to substantiate failing to conspicuously disclose a material connection the truthfulness of the endorsements and obtain between the influencer and the company – in this independent and reliable information regarding the case, that the influencers also owned the online financial stability” of the endorsed investment.6 The gaming service they promoted.2 While this case, case later settled and the question of whether this like many, ultimately settled without court review, it duty had been breached was never answered. suggests that the FTC will enforce regulations against influencers. Courts, however, have yet to apply a Other cases facing this question have side-stepped it, theory of “endorser liability” to an influencer. with courts instead rendering the issue of endorser liability moot by finding that the celebrities in question In 2004, the FTC took the rare step of suing a celebrity were not endorsers.7 Still more cases settle and avoid endorser under a theory of “endorser liability” for court decisions on this issue altogether.8 false advertising and misrepresenting the results of a dietary aid.3 The case reached the Ninth Circuit, but But as influencers’ pockets are deepening and the court held that the spokesperson at issue did not celebrity marketing is capturing ever more interest meet the FTC’s own standard for liability because he from consumers and the FTC, it is highly likely that the was not “recklessly indifferent to the truth or falsity issue of endorser liability will steadily move to the fore of a misrepresentation, or had an awareness of a of advertising law. high probability of fraud along with an intentional avoidance of the truth.” 4

1 huffingtonpost.co.uk/entry/kim-kardashian-west- Tamany Bentz, a partner in the IPT group and based in Los Angeles, slammed-for-promoting-appetite-suppressant-lollipops_ focuses on intellectual property litigation, with particular experience in uk_5afbfc1be4b0a59b4dff0a27 federal litigation. You may reach her at [email protected].

2 ftc.gov/news-events/press-releases/2017/09/csgo-lotto-owners- Carolina Veltri is an associate in the IPT group and is based in Los settle-ftcs-first-ever-complaint-against Angeles. She focuses on trademark, copyright and media. You may 3 F.T.C. v. Garvey, 383 F.3d 891, 901, 903-04 (9th Cir. 2004) reach her at [email protected].

4 Id. at 901

5 118 B.R. 575 (Bankr. N.D. Ill. 1989)

6 Id. at 583.

7 See, eg, Luman v. Theismann, 647 Fed. Appx. 804 (9th Cir. 2016); Kramer v. Unitas, 831 F.2d 994 (11th Cir. 1987).

8 See, eg, Brady v. Basic Research, LLC, No. 13-cv-7169 (SJF) (E.D.N.Y. Dec. 21, 2016).

15 DLA Piper LLP (US) 2000 Avenue of the Stars Suite 400 North Tower Los Angeles, CA 90067-4704

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