Co-Branding, Commercial Tie-Ins and Celebrity Endorsements
Presented by Roger Goff
Partner, Wolf Rifkin Shapiro Schulman Rabkin, LLP
Co-Branding, Commercial Tie-Ins and Celebrity Endorsements
Roger Goff 1
Partner, Wolf Rifkin Shapiro Schulman Rabkin, LLP
Daniel L. Rogna 2
Associate, Partridge & Garcia P.C.
I.
Introduction
Intellectual property law is often a reflection of the delicate balance between personal
freedom and commerce. The individual’s right to free expression of ideas is a primary tenet of
our political system and national culture. However, equally central to our way of life is each
individual’s ability to gather wealth and property through commercial activities. The
amalgamation of these sometimes competing goals is at the heart of much of the practice of
intellectual property law.
Trademark protection is very much driven by commercial factors. The essential goal of
most trademark law is to incentivize trademark owners to build the value of their respective
brands by protecting their exclusive right to derive the economic benefits from the use of those
brands. The majority of those benefits are derived from the sale of products and services under
brand names. However, as mass communication capabilities have expanded over the past
several decades, it has become increasingly popular for trademark owners to derive additional
benefit from their marks by allowing others to use those marks as a means of increasing revenues
in their own (non-competing) businesses. This relationship and these goals form the essence of
trademark licensing.
In the film and television industries, the use of trademarks provides some unique benefits,
along with some particular challenges. And because the entertainment industry is the primary
means by which we communicate ideas to the society at large, the freedom of expression and the
protection of our First Amendment rights are a particularly important aspect of the licensing and
use of trademarks. In this paper, we will explore the business and legal issues surrounding the
ways in which film and television productions take advantage of trademark licensing
opportunities, as well as looking at the underlying legal principles and challenges which are an
inexorable part of this area of commerce. In particular, we will look at some of the deal
structures that are used to share and extend brand equity within the entertainment business, and
the law surrounding those uses.
II.
Licensing and Co-Branding Agreements
1 The opinions expressed in this paper are those of the author alone and in no way reflect the opinions of Wolf Rifkin
Shapiro Schulman Rabkin, LLP.
2 The opinions expressed in this paper are those of the author alone and in no way reflect the opinions of Partridge &
Garcia P.C.
1
Because each brand relationship is somewhat unique, the negotiation and drafting of cobranding agreements can be some of the most interesting and challenging work faced by
entertainment attorneys.
In every transaction, the specific goals of both parties must be
examined and understood in detail in order to craft an agreement and relationship that will truly
meet the parties’ respective commercial needs while also providing them with adequate
protection of their brands and intellectual property.
As attorneys, we normally deal first with the risks involved in each transaction.
Therefore, our first concern in these transactions is to assure that each party is able to maintain
control over its respective brand. This means that explanations of the permitted uses must be
very specific and that approval processes are precise and practical. The timeframes and
processes for approvals must meet the exigencies of the production process while still giving the
trademark owner every opportunity to assure that the presentation of the brand is accurate and
favorable. There must be definite actions (normally undertaken by a specific person identified in
the agreement as having that authority) which constitute approval, as well as processes for timely
resolution in the event that needed communication does not occur within the stated timeframes.
While protection is of paramount importance to the licensor, the licensee is equally
concerned that it will benefit from the use of the mark to the fullest extent possible. This means
that every necessary and desirable use of the mark must be anticipated, which requires carefully
addressing geography, media, formats and timeframes, including any specific limitations that
may be necessary. For licensors, it is important to assure that any rights granted do not conflict
with rights granted to third parties under other licensing arrangements. Counsel and business
affairs executives should pay special attention to the language used in describing the permitted
uses of the mark as slight variations in this language can have a substantial impact on the
expectations and performance of the parties. It is an easy place to make a mistake if one is not
careful.
Also relevant in today’s environment are the descriptions of the nature of the crossmarketing efforts to be undertaken by the parties. Specifically, it is now very common for
parties to specify the nature and amount of social media activity that will be included as a part of
the co-branding relationship. A major purpose of sharing one’s brand is to tap into the audience
that is already favorably oriented towards the other party’s brand. Much of the brand
communication with these audiences now occurs through social media, making it important to
give each party access to and presence in the other party’s social media channels. Typical
agreements will include a specific number of social media messages to be published during the
term of the agreement and the basic content of those messages, while still maintaining each
party’s ability to control its own communications and marks. The use of clauses based on “best
efforts” or “commercially reasonable efforts,” and the mandated reasonable exercise of approval
rights are a critical part of these provisions.
Finally, it is important to carefully craft the economic provisions of each deal in order to
assure that the parties are actually receiving their anticipated benefits. As with all royalty
provisions, the royalty base must be carefully defined, including the precise nature of any
permitted deductions. The manner of calculation, collection, reporting and audit of the royalties
must all be included in language which reflects the reality of the business processes. The use of
2
third party collection agents is not unusual in the film industry, and the inclusion of royalty
payments in a collection account management agreement is often a practical and secure solution
for facilitating that aspect of the transaction.
III.
Co-Branding in Film and Television Productions
The term “co-branding” in its broadest sense refers to a variety of arrangements where
two (or more) different non-competitive brands are each associated with a single product,
presumably for the mutual benefit of both companies. An example is the Eddie Bauer version of
the Ford Explorer. In that arrangement, the Eddie Bauer brand (which is normally used in
connection with the sale of outdoor gear and clothing, and represents a certain “outdoorsman”
lifestyle) is used to enhance the message that the particular version of the Ford Explorer is a
perfect vehicle for the type of person who relates to the Eddie Bauer brand and lifestyle. This
benefits Ford by providing a premium differentiator to a specific segment of its target market,
and it benefits Eddie Bauer by extending the presence of the brand beyond the clothing and
equipment sold in its stores and catalogs. Eddie Bauer also likely receives a royalty from the
sale of those vehicles.
Co-branding in the film and entertainment industry is driven by two primary commercial
goals. The first is to create an association between the film and the unique characteristics
identified with the brand itself, as described in the Eddie Bauer example above. Ideally, this will
attract potential audience members who desire to see a film possessing or expressing those
qualities. The second goal is to gain maximum efficiency from the expenditure of advertising
dollars. In other words, if it is possible to advertise two products at the same time (and for the
same cost), then theoretically this should create a higher overall return on that advertising
expenditure.
When done properly, co-branding relationships can be very successful for both the film
and the branded product. However, there are many challenges, both legal and practical, inherent
in implementing this type of marketing campaign and strategy.
Co-branding arrangements in the film industry occur in several different forms. A very
common structure is to feature a particular product within the entertainment property itself. This
is typically referred to as “product placement” or sometimes “brand integration.” There are
countless examples of this, but one well-known relationship which has persisted for the better
part of a decade is the prominent featuring of GM cars in the Transformer films. This
relationship provides the production company with a free source for the many vehicles that are
used in the production of the film, greatly reducing that line of the production budget. The
production also receives tremendous technical assistance from GM in designing the robots into
which the vehicles transform and the process by which that occurs. From GM’s standpoint, the
prominent integration of their products into this popular series of films obviously introduces the
GM brands and vehicles to a wide audience, in the process giving the products an extra “cool”
factor because they are so central to the theme and action of the film.
Another form of integrated co-branding in the film industry involves the brand and the
film sharing advertising and promotional opportunities. This is often referred to as a
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“commercial tie-in.” A typical recent example of this would be the manner in which the film,
Smurfs 2, was advertised and promoted through McDonalds. The Smurf characters, as well as an
onscreen promotion for the film, were featured in McDonalds television ads leading up to the
release of the film. McDonalds also featured in-store promotions of the film, including a
branded Smurfs Happy Meal. Presumably, this benefitted both the film and McDonalds in that
the popular Smurf characters were used to attract customers to McDonalds, and the film received
additional television advertising and in-store exposure without raising its advertising budget.
Another recent example of a “commercial tie-in” was the inclusion of the Godzilla
character in television and online advertising for Snickers candy bars. The concept was a
somewhat typical Snickers ad, but it included the Godzilla monster as the central character. The
ad then finished with a short tag for the Godzilla film that was released last spring. As with the
Smurfs/McDonalds campaign, there was really no inherent connection between Snickers and
Godzilla (other than perhaps a viewer might buy a Snickers candy bar while watching the film at
the theater). However, the campaign effectively promoted both the candy bar and the film within
a normal 30-second television spot.
Co-branding strategies in film do not always include television advertising. A real
success story in film co-branding occurred with the innovative relationship between The Best
Exotic Marigold Hotel and Starbucks. This was a relatively small film aimed at an adult
audience. The distributor could not reasonably afford massive amounts of television advertising,
and the adult target audience was not easy to reach. The distributor arranged to feature the film
in an in-store campaign at Starbucks. This associated the film with one of the most ubiquitous
adult lifestyle brands in the hospitality space. Starbucks customers saw the poster for the film
countless times while stoking their coffee habits, and gradually interest in the film began to take
hold. When it was finally released, the film drew worldwide theatrical revenues that were over
ten times the cost of its production, as well as solid home video and VOD numbers, eventually
spawning the recently released sequel. This was highly profitable and unexpected performance
for a film about elderly retirees living in India, and arguably that success is attributable to the cobranding strategy with Starbucks.
Co-branding strategies are certainly not limited to feature films. A very recent and
interesting example of brand integration on television occurred only a few weeks ago on the hit
ABC television series, Modern Family. On the February 25, 2015 episode, “Connection Lost,”
Apple products were front and center, featured in an unconventional and highly integrated
manner as a primary plot device in the story. “The episode features truly organic product
integration, with the entire plot being told through family matriarch Claire Dunphy’s MacBook
Pro and the apps she uses to communicate with her family.” Lynch, Jason, “Modern Family
Shows How to Do Product Placement Right,” The Atlantic (February 26, 2015), available at
http://www.theatlantic.com/entertainment/archive/2015/02/unsponsored-comedy-how-modernfamily-did-product-integration-right/386177/.
The episode revolves around the characters’ use of Apple’s apps, including FaceTime,
Safari, and iCloud, and was shot completely on MacBooks, iPhone 6s and iPads. The plot
unfolds through the use of this technology, showcasing the functionality of the products rather
then just putting them on display. As The Atlantic sums up, “it doesn’t end up feeling like a
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gimmick, nor does it come off as particularly desperate or promotional.” Id. Instead, the episode
depicts Apple products as they are or could be used by a real family, particularly because
technology is now an inescapable part of daily life.
This episode was largely considered a success for Apple. Twenty-one percent of tweets
reacting to the Modern Family episode mentioned Apple, and the majority of these tweets were
positive. Flomenbaum, Adam, “21% of Twitter Reactions to ‘Modern Family’s’ ‘Social’
Episode Mentioned Apple,” AdWeek: Lost Remote (Feb. 27, 2015), available at
http://www.adweek.com/lostremote/21-of-twitter-reactions-to-modern-familys-social-episodementioned-apple/50667. The positive response to Apple and ABC’s organic production
integration points to a potential increase in innovative product advertising in film and television.
Expect other brands to follow suit.
An interesting aspect of this particular product placement transaction is that it was not
born in the marketing department at Apple, but instead was a purely creative decision by the
show's creator and showrunner, Steve Levitan. 3 Levitan recognized the rule that Apple products
were playing in his relationship with his own daughter and used that as a basis for the episode
concept. Despite the deep integration of the Apple products into the plot, Apple did not pay for
this presence. In fact, they only provided a few pieces of hardware for the show to use in the
production and in connection with the editing of the segment. This is an example of how often
the most effective product integrations are the result of organic relationships between the brands
and the programming, and how advertisers can benefit most from a desire to truly support the
creative process rather than trying to force products into plot lines in unnatural ways.
IV.
Legal Aspects of Trademark Use in Film and Television
A.
Case Law of Trademarks Used in Film 4
Although a co-branding agreement can (and should) benefit both the production and the
brand, in the absence of such an agreement the use of trademarks in films is generally protected
by the First Amendment. “The fact that [companies] can pay for control doesn’t mean they have
the right to control,” the use of their marks in film. Priska Neel, Is That A Budweiser In Your
Hand?: Product Placement, Booze, And Denzel Washington, NPR: Monkey See (Nov. 27, 2012),
http://www.npr.org/blogs/monkeysee/2012/11/27/165989232/is-that-a-budweiser-in-yourhandproduct-placement-booze-and-denzel-washington (quoting Daniel Nazer). However, when
brands are used without permission, the desire and pressure to maintain control and protect the
goodwill of the brand can lead to litigation.
A classic example of such litigation is the “George of the Jungle 2” case. See Caterpillar
v. Walt Disney Studios, 287 F. Supp. 2d 913 (2003). In that case, Caterpillar sued Disney for
unauthorized use of genuine Caterpillar bulldozers, which bore apparently unaltered Caterpillar
trademarks. Caterpillar’s concern was not just that the marks were used without authorization in
3 “Interview with Steve Levitan” The Business podcast, KCRW (February 21, 2015).
4 Portions of this section were adopted with permission from “Trademarks in Film, Television, Webcasts, Video Games
and Songs” by Mark V.B. Partridge published by PLI on January 3, 2014.
5
the film, but that those bulldozers were used to tear down the rainforest and were visible for eight
of the film’s eighty-seven minute run time. No brand wants to be cast as the villain.
Ultimately, the court found for defendant Disney, stating that the appearance of well
known trademarks in cinema and television is a common phenomenon. Id. at 919. The court first
found that there was no trademark infringement because Disney did not intend “to free ride on
the fame of Caterpillar’s trademarks to spur the sales and awareness” of its movie, and that “it
appear[ed] unlikely . . . that any consumer would be more likely to buy or watch ‘George 2’
because of any mistaken belief that Caterpillar sponsored this movie.” Id. at 920. Second, the
court concluded that no trademark dilution was likely because “nothing in [the film] even
remotely suggest[ed] that Caterpillar products are shoddy or of low quality,” noting that Disney
did not anthropomorphize the machines but rather made them the “inanimate implements” of the
villain’s schemes. Id. at 923.
This ruling is typical of cases involving trademark infringement in film. For example, the
misuse of a Slip-n-Slide toy in the movie Dickie Roberts: Former Child Star led to a suit against
the film’s producers, claiming unauthorized use and blurring. Wham-O, Inc. v. Paramount
Pictures Corp., 286 F. Supp. 2d 1254 (N.D. Cal. 2003). The Wham-O court denied Wham-O’s
request for a temporary restraining order, despite finding that the Slip-n-Slide was being
misused. Similarly, Hormel, the producer of Spam, sued Jim Henson Productions over the
creation of a puppet named Spa’am. Hormel Foods Corp. v. Jim Henson Prods., 73 F.3d 497 (2d
Cir. 1996). There, the court concluded that, “[t]here is very little likelihood that Henson’s parody
will weaken the association between the mark SPAM and Hormel’s luncheon meat. Instead, like
other spoofs, Henson’s parody will tend to increase public identification of Hormel’s mark with
Hormel.” Id. at 506.
“In Hormel, Wham-O, and Caterpillar the courts expressly noted that moviegoers-even
children-would understand that the marks were being depicted to achieve a humorous effect, and
since they realize the fantastical nature of the genre, they would not be deceived into believing
the plaintiffs endorsed the movies in which their marks appeared.” Robert C. Welsh and
Pratheepan Gulasekaram, Protecting Products that Go Hollywood, Daily Journal MCLE,
http://www.dailyjournal.com/cle.cfm?show=CLEDisplayArticle&qVersionID=133&eid=589011
&evid=1.
In November 2012, Anheuser-Busch asked Paramount Picture Corp. to obscure or
remove all Budweiser logos from the Denzel Washington film Flight. See Budweiser Seeks
Removal of its Logo from ‘Flight’, Entertainment Weekly (Nov. 6, 2012),
http://insidemovies.ew.com/2012/11/06/flight-budweiser-denzel-washington/. Anheuser-Busch
did not grant permission for the use of Budweiser products in the film and was concerned with
the negative implications of Budweiser in the film.
In contrast, Heineken signed a $45 million partnership to have its beer featured in the
most recent James Bond movie, Skyfall. Neel, Is That Budweiser, NPR. Flight depicts beer in a
negative light, and Skyfall depicts it positively. How the product is portrayed makes a huge
difference for trademark owners, but it does not require film makers to seek consent for every
use of a mark in a film, as discussed above.
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The fact that any company would be willing to pay such a substantial sum as Heineken
raises the possibility that consumers may not be able to tell the difference. As Mark Partridge
suggested, “with the explosion of product placement in recent years, a company might try to
make an argument that by the brand appearing in a film, the audience assumed it had granted
permission.” Budweiser Seeks Removal, Entertainment Weekly. However, there is an
inconsistency inherent in a plaintiff alleging both confusion and tarnishment claims. If a
trademark is placed in a negative context through a defendant’s depiction, the reasonable
consumer is correspondingly less likely to be fooled into thinking that any trademark owner
would sponsor or endorse such a negative portrayal. See Mattel, Inc. v. MCA Records, Inc., 296
F.3d 894 (9th Cir. 2002), cert. denied, 537 U.S. 1171 (2003).
Regardless, the continued use and enhanced visibility of product placement in films
raises the concern that consumers will be confused by any use of a trademark in film, whether it
is a positive or negative depiction. Although the law currently favors the use of marks as artistic
expression, there is potential for change.
B.
Television and Embedded Advertising
Theoretically, the case law discussed above applies to television as well as film.
However, the interrelated nature of television programs and advertising could skew the analysis,
as viewers could be more likely to assume a relationship between the television program and the
brand presented therein.
“Consumers who watch television sitcoms and see product placements through covert
marketing have better memories of the products and better attitudes toward the brands, according
to three joint studies led by the University of Colorado Boulder.” Covert product placements in
TV shows increase consumers’ memories and brand attitudes, says CU-Boulder study,
University
of
Colorado
Boulder
(Sept.
23,
2013),
http://www.colorado.edu/news/releases/2013/09/23/covert-product-placements-tv-showsincrease-consumers%E2%80% 99-memories-and-brand. However, disclosure of paid product
placements “decreased the influential effects, especially when the disclosure occurred after the
consumer was exposed to the marketing.” Id.
This study comes only a few months after the General Accountability Office “urged the
Federal Communications Commission to revise standards for disclosing TV product
sponsorships . . . for product placement,” noting that “FCC guidance for the sponsorship
identification requirements has not been updated in nearly 50 years” and that the FCC’s 1992
revisions provided “little useful information.” FCC Urged to Revise Standards for TV Product
Disclosure, The Wrap (Feb. 28, 2013), http://www.thewrap.com/tv/article/fcc-urgedrevisestandards-tv-product-disclosure-79751. This report was requested in January 2013 by Rep.
Nancy Pelosi and Rep. Henry Waxman, who “questioned whether DVR and commercialskipping were prompting sponsors to switch to alternative forms of advertising that wasn’t
always being fully disclosed.” Id.
7
A major concern is the extent to which consumers are unaware of “embedded
advertising.” Currently, “[f]or commercial content, such as advertisements, embedded
advertisements, and video news releases, the [disclosure of content aired in exchange for money,
services, or other inducement] must be aired when the content is broadcast and can be either a
visual or an audible announcement.” Gov’t Accountability Office 13-237, Broadcast and Cable
Television, at 6-7 (January 2013).
Ultimately, the GAO recommended an update of the law to reflect current technologies.
Id. at 31. The GAO Report explores what kind of embedded advertisements may or may not
require sponsorship disclosure:
a sponsorship announcement is not required every time a product appears in a
program. For example, FCC’s guidance describes scenarios in which a
manufacturer provides a car to a television show for a detective to chase and
capture the villain, and states that the use of the car alone would not require a
sponsorship announcement. In this scenario the use of the car could be considered
“reasonably related” to its use in the show. However, in the same scenario, if a
character also made a promotional statement about the specific brand—such as its
being fast—FCC requires a written or verbal sponsorship announcement
sometime during the program. According to FCC’s guidance, in this second
scenario, the specific mention of the brand may go beyond what would be
“reasonably related” to its use in the show.
Id. at 10-11. These examples reveal subjective line between what does and does not require
disclosure.
Arguably, the current television environment encourages advertising through the
“reasonably related” option. In addition to the recent episode of Modern Family discussed above,
compare episodes of FOX’s sitcom New Girl, both using Ford SUV’s. First, in the October 23,
2012 episode “Models,” main character Jess must fill in for her friend Cece, a model, who is
unable to do her job of modeling with a new Ford SUV. Not only does Jess appear on a rotating
stage with the Ford, a Ford executive discusses talking points about the new car throughout that
minute of the show. “The dialogue on the show during that scene was literally written by the
Ford Motor Co.” Ford product placement runs over episode of Fox’s ‘New Girl’, The L.A.
Times (Oct. 29, 2012), http://articles.latimes.com/2012/oct/29/entertainment/la-et-ct-fordnewgirl-promo-20121029. This placement go beyond what is “reasonably related” to use in the
show, despite the Ford being specifically worked in to the plot of the episode, which would
require a sponsorship announcement.
In contrast, a Ford appears in both the April 4, 2013 “First Date” and November 12, 2013
“Menus” episodes. In both episodes, the characters utilize the Ford’s “hands-free liftgate”
technology, in which an individual can tap the underside of the car’s rear fender to automatically
open the trunk. In both episodes, the characters have objects in their hands and “need” to utilize
the technology to open the trunk without their hands. See Product Placement: The TV Ads
Consumers
Can’t
Skip
Or
Hop,
Marketing
Land
(May
28,
2013),
http://marketingland.com/product-placement-tv-ads-45729. These episodes almost perfectly
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recreate the Ford commercials themselves. See, e.g., Ford Escape Hands-Free Liftgate
Commercial, YouTube (Aug. 29, 2012), http://www.youtube.com/watch?v=I1V_rm645S0.
In the second set of episodes, the use of the Ford is arguably “reasonably related” to the
plot of the episodes and arguably would not require disclosure by FOX of the paid endorsement.
The importance of this analysis is to highlight the arbitrary nature the current guidelines
regarding such advertisements can be.
As a final note, even if producers and networks do disclose these advertisements, how
much use is it to the consumer if the disclosure comes in rapidly scrolling credits at the end of a
TV show? 5
In a time when viewers are skipping commercials with greater frequency, producers will
look to integrated advertisement as a method to maintain revenue streams from big budget
advertisers. Increasingly, licensing agreements may be geared towards these kind of product
placement relationships.
V.
Disclosing Celebrity Endorsements and Social Media Tie-Ins
As referenced above, almost every current film and television licensing deal incorporates
clauses regarding promotion on social media. Sponsored and endorsed social media content is
regulated by FTC guidelines. Counsel should be aware of these regulations (i) to inform
licensing negotiations and (ii) to advise clients about the appropriate protocols and best practices.
A.
FTC 2009 Guides
The Federal Trade Commission (“FTC”) has provided guidance for those who endorse or
provide testimonials about products. The FTC guidelines specifically apply to social media. In
October 2009, the Federal Trade Commission released updated Guides Concerning the Use of
Endorsements and Testimonials in Advertising. 6 These Guides had not been updated since 1980,
so an update for the Internet era was in order.
The FTC Guides, 16 CFR Part 255, were implemented to prevent consumers from being
deceived by unidentified endorsements. Whether an endorsement must be disclosed depends on
whether there is a “material connection” between the advertiser and the endorser. Particularly
important is that the consumer would not normally expect this “material connection.”
The 2009 changes included updated examples of what constitutes a “material connection”
and required that such a connection be disclosed to the public. 7 Under the updated FTC Guides,
5 See Eric Goldman, Think You Want To Be Told About Product Placements In Movies? Think Again, Forbes (July 9, 2013),
http://www.forbes.com/sites/ericgoldman/2013/07/09/think-you-want-to-be-told-about-product-placementsinmovies-think-again-2/.
6 FTC Publishes Final Guides Governing Endorsements, Testimonials, Oct 5, 2009, available at
http://www.ftc.gov/opa/2009/10/endortest.shtm, accessed on February 22, 2015.
7 FTC, 16 CFR Part 255.
9
for example, a blogger who receives cash or in kind payment to review a product is considered
an endorser. This blogger must disclose the material connection to the seller of the product or
service.
Importantly, the revised Guides also changed the extent to which celebrities must
disclose their relationships with advertisers. Specifically, celebrities making endorsements
outside the context of traditional advertising now had a duty to disclose any relationship with an
advertiser. For example, celebrities endorsing a product on a talk show or in social media must
disclose their relationship with the advertiser.
The concept is simple: although consumers will readily understand that a celebrity
appearing in a television ad is endorsing the product featured therein, consumers are less likely to
assume that a celebrity gushing about their favorite soft drink on Twitter is being paid by the soft
drink company to share that opinion.
The FTC Guides are administrative interpretations of law meant to assist advertisers so
that they comply with the FTC Act. They are not binding law. As outlined on the FTC website:
“The Guides are not regulations, and so there are no civil penalties associated with them. But if
advertisers don’t follow the guides, the FTC may decide to investigate whether the practices are
unfair or deceptive under the FTC Act.” 8 The goal of the Guides is, as the FTC puts it, “Being
Up-Front With Consumers.” 9
Being up-front is not easy, particularly when the advertiser is relying on a celebrity to
promote their products on social media. The paragon example of deceptive promotion on social
media is a 2013 tweet from Kim Kardashian that read: “Pregnancy lips.... @EOS to the rescue!
LOL twitpic.com/ctpyjj.” 10 The accompanying picture shows Kardashian using Eos brand lip
balm.
Kardashian’s tweet, which seemed like an organic, honest appreciation for a brand of lip
8 Advertisement Endorsements, available at http://www.ftc.gov/news-events/media-resources/truth-
advertising/advertisement-endorsements, accessed on February 22, 2015.
9 Id.
10 @KimKardashian, May 27, 2013, available at https://twitter.com/kimkardashian/status/339188796191027200,
accessed on February 22, 2015.
10
balm, was estimated to have net her $20,000. 11 It is unclear how many of Kardashian’s millions
of Twitter followers were influenced by this tweet, but what is clear is that Kardashian did not
disclose a relationship with the Eos brand.
Other suspicious tweets include a Miley Cyrus tweet about a trip on BlackJet, 12 a private
jet service, and a Justin Bieber tweet for 1-800 Flowers in advance of Mother’s Day. 13 Clearly,
despite the 2009 update to the Guides, there was sometimes a disconnect between theory and
practice.
B.
FTC 2013 “Dot Com Disclosures” Update
Recognizing that the evolving world of social media required further attention, the FTC
released further guidelines in 2013. The “Dot Com Disclosures” were released with the stated
purpose of addressing current online and mobile advertising. 14 Emphasizing consumer
protection laws, the “Dot Com Disclosures” takes into account the expanding use of smartphones
with small screens and the rise of social media marketing. 15 The guidelines offer examples to
illustrate the principles.
Importantly, “[u]nder the new guidance . . . advertisers should ensure that the disclosure
is clear and conspicuous on all devices and platforms that consumers may use to view the ad.” 16
The tweets noted above are anything but “clear and conspicuous.”
Ideally, as applied to Twitter, a sponsorship disclosure needs to be in the same tweet as
the endorsement itself. A subsequent tweet divulging a “material connection” between the
celebrity endorser and the advertiser could be overlooked by consumers, thus becoming
deceptive. That means that that a celebrity endorsing a product on Twitter must convey the
message of the advertiser and explain that the tweet is a paid ad, all in 140 characters.
C.
Current Practices
In the past few years, celebrities and advertisers had adopted certain practices to toe the
line with the FTC guidelines. Generally, hashtags 17 are used to identify the tweet, post, or other
11 “Celebrity Sponsored Tweets: What The Stars Get Paid For Advertising In 140 Characters,” Huffington Post, May 30,
2013, available at http://www.huffingtonpost.com/2013/05/30/celebrity-sponsored-tweets_n_3360562.html, accessed
on February 22, 2015.
12 @MileyCyrus, June 3, 2013, available at https://twitter.com/mileycyrus/status/341611204004962304, accessed on
February 22, 2015.
13 @justinbieber, May 9, 2013, available at https://twitter.com/justinbieber/status/332472678835437569, accessed on
February 22, 2015.
14 “FTC Staff Revises Online Advertising Disclosure Guidelines,” March 12, 2013, available at http://www.ftc.gov/news-
events/press-releases/2013/03/ftc-staff-revises-online-advertising-disclosure-guidelines, accessed on February 22,
2015.
15 Id.
16 Id. (emphasis added).
17 For more information on Hashtags, see “Hashtag,” Wikipedia, available at http://en.wikipedia.org/wiki/Hashtag,
accessed on February 22, 2015.
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social media content as a paid advertisement. Typically, #spon or #ad are used to disclose the
relationship. A quick search reveals of #spon on Twitter reveals that the hashtag is used
frequently for all kinds of products, including teeth whiteners, detox teas, and promotional
contests, to name a few.
However, despite the FTC updates, some celebrities continue to tweet seemingly
sponsored ads without disclosing the material connection to the advertiser by including #spon or
#ad. Take, for example, Justin Bieber, shill for 1-800 Flowers in 2013, who in 2014 again
tweeted his love for the delivery flower service just before Mother’s Day. 18 Despite linking
directly to 1-800 Flowers’ Mother’s Day page, Bieber outwardly appears simply to be a fan of
the brand, not a paid spokesperson. Failing to tag the tweet as sponsored content makes all the
difference.
Ultimately, the FTC guidelines appear to be imprecise but positive attempts at consumer
protection. Although it is unclear whether hashtags disclosure really makes the “material
connection” “clear and conspicuous” to the consumer, those hashtags are the best practice for
compliance with the rules.
When agreeing to social media provisions in a licensing agreement, counsel should
caution their clients to be sure to focus on these practices to comply with the rules.
D.
Application to Licensing Deals
Disclosing “material connections” can be important for film and television programs that
involve commercial tie-ins. This is particularly true where the “advertised” brand was not
included in a larger branding scheme of the production. For example, Ashton Kutcher, an
investor in several technology companies, is reported to have snuck endorsements of those
companies into his show “Two and a Half Men,” by placing stickers of the tech companies on his
character’s laptop. 19 Actions like this can communicate to the viewing consumer that the
character endorses the represented brand, and by extension so does the actor, the show, and the
network.
V.
Conclusion
In the current environment, where consumers are exercising increasingly precise control
over their mass communication consumption, film and television producers and advertisers are
seeking innovative means of maintaining product exposure. As new strategies are developed, the
inherent legal issues will only increase. It is the role and task of entertainment lawyers to assure
that freedom of expression is not compromised, commerce continues and the rights of consumers
18 @justinbieber, May 7, 2014, available at
https://twitter.com/justinbieber/status/464083437393948672https://twitter.com/justinbieber/status/464083437393
948672, accessed on February 22, 2015.
19 “Disruptions: Celebrities’ Product Plugs on Social Media Draw Scrutiny,” Bits, The New York Times, June 9, 2013,
available at http://bits.blogs.nytimes.com/2013/06/09/disruptions-celebrities-product-plugs-on-social-media-drawscrutiny/?_r=1, accessed on February 22, 2015.
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are respected.
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