This presentation is from Affiliate Summit East 2014 (August 10-12, 2014 New York City).
Session Description: The session will focus on building a legally compliant affiliate business from the ground up through examining 20 common legal mistakes affiliates and networks make using real world examples.
Friends of Search '24 - Scaling SEO_ Lessons for All Types of Sites.pptx
The Top 20 Legal Mistakes Affiliate Businesses Make
1. The Top 20 Mistakes
Affiliate Businesses Make
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Tuesday August 12th from 2:00 – 3:00
Eric S. Crusius, Esq.
Partner at Fed Nexus Law
crusiuse@fednexuslaw.com
2. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Those who cannot remember the
past are condemned to repeat it.
-George Santayana in 1905
3. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
But….
4. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
You are not doomed.
5. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Let’s learn from the past.
6. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
These are the Top 20 Legal Mistakes
Affiliate Marketers Make
7. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #1: Not treating your
business like a business.
The Fix: incorporate. For a small sum, incorporation
usually allows an individual to escape liability.
Caveat: Treat your business as a separate entity. If
not, courts may still hold you personally liable.
8. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #2: Not having the right contracts.
The Fix:
• Affiliates should have contracts with their networks to
understand the parameters of what they can do.
• Networks should have contracts that protect them from
affiliates (not that they need it!)
• Do not be afraid to negotiate and make sure every contract is
read to ensure there are no trap doors.
Caveat: Each situation is different, so it may make sense to have
your contract reviewed by a lawyer.
9. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #3: Affiliate Networks operating
without contracts.
The Fix: Affiliate networks should have three categories of
contracts in place:
1. Website contracts that outline terms and conditions and
privacy policy;
2. Contracts with merchants that outline use of merchant’s
intellectual property – how and when merchant’s text,
photos, logos, etc. can be used; try to avoid blame for legal
wrongs by affiliates; set payment conditions; and
3. Contracts with affiliates that ensure there is no liability for
affiliate wrongs; pass down terms from merchants; govern
how affiliates advertise.
10. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #4: Affiliates operating without
contracts.
The Fix: Affiliates should have three categories of
contracts in place:
1. If applicable - website contracts that outline terms and
conditions and privacy policy;
2. Contracts with networks that governs how affiliates
can utilize intellectual property – how and when text,
photos, logos, etc. can be used; network/merchant
may try and obtain indemnification for legal wrongs;
set payment conditions; and
3. Contracts with 1099 workers or consultants.
11. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #5: Failing to understand
proper trademark use.
The Fix: Take a crash course in what trademarks are and
what they mean and how to use them.
1. Network/Merchant – Affiliate contracts should have
how and when to use the trademark; and
2. Affiliates should review their contracts to ensure they
are using trademarks properly.
A Deeper Look: trademarks include logo, name, and trade
dress. Violating a trademark can lead to significant
statutory damages.
12. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #6: Failing to understand
proper copyright use.
The Fix: Take a crash course in what copyrights are and
what they mean and how to use them.
1. Network/Merchant – Affiliate contracts should have
how and when to use text and pictures; and
2. Affiliates should review their contracts to ensure they
are using text/pictures properly.
A Deeper Look: copyrights are text, pictures, images, etc.
Significant statutory damages available though work is
considered copyrighted upon creation; easy to register a
copyright; beware of DMCA Takedown Notices.
13. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
An important reminder...
Intellectual property is everywhere. Every
word written and every photograph taken is
automatically and instantaneously protected
by copyright.
Whether registered or not, logos could be
protected by copyright law.
14. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #7: Not being honest with
advertising.
The Fix: Carefully vet claims (and venue of claims) made
with advertisements. Otherwise the FTC may take notice.
Among other things, the FTC monitors advertising claims
made by affiliates, networks, and other marketers.
Avoid trouble – no deceptive formats (fake news stories),
no false endorsements, no unsubstantiated claims.
15. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #8: “Free” Trials
The problem: often state attorneys general get
complaints about free trial “scams.” There are
50 state AGs out there, so beware.
The Fix: Carefully and boldly lay out free trial
terms and conditions. Is a return necessary to
avoid a credit card charge? Is it easy to return a
product? Are toll free lines staffed adequately?
16. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #9: Spamming
The Fix: The CAN-SPAM Act has certain
requirements that need to be followed. The FTC
seeks out CAN-SPAN violators and “damages”
can be extensive.
CAN-SPAM requirements include accurate
subject lines, the ability to opt-out, and using e-
mail addresses to send obtained with false
information.
17. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #10: Bad AdWord
Campaigns
The Fix: AdWords have been the subject of a lot of
confusion. Be sure not to use another’s TM when
drafting AdWords and other similar advertisements.
The Caveat: some courts have ruled using a TM as a
keyword is okay. Check with your attorney prior to
doing that, however. One thing that is not right:
using another’s TM in your advertisement.
18. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #11: Using Another’s Photos
The Fix: Use your original photos or get permission
from another to use their photos.
Additional Background: photographers and copyright
holders are aggressive. Straight product photos are
often copyrightable. Violations of the Copyright Act
can result in statutory damages and attorneys fees.
19. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #12: Merchants that do not understand
their risks
The Risks:
• Networks and affiliates violate various laws
• Networks and affiliates misappropriate merchant’s IP
• Networks and affiliates draw the ire of the FTC
• Product does not function properly
• Product does not work in accordance with claims made by advertisers
The Fix:
• Have iron-clad contracts with networks and/or affiliates. Include
indemnification if possible (though may not be effective).
• Monitor networks and affiliates to ensure they are compliant with
various laws and are in compliance with agreements.
• Research in who is used as network partner. Do they have a good
compliance history?
20. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #13: Networks that do not understand
their risks
The Risks:
• Networks are sometimes caught in the middle and catch the worst of
both worlds.
• Affiliates can violate various laws
• Affiliates can misappropriate merchant’s IP
• Affiliates can draw the ire of the FTC
• Merchant’s product does not function properly
• Merchant’s product does not work in accordance with claims made by
advertisers
The Fix:
• Have iron-clad contracts with merchants and/or affiliates. Include
indemnification both ways if possible (though may not be effective).
• Monitor affiliates to ensure they are compliant with various laws and
are in compliance with agreements.
• Research in who is used as affiliate. Do they have a good compliance
history?
21. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #14: Affiliates that do not understand their
risks
The Risks:
• Unaware of federal and state laws that govern permissible actions
• Can unwittingly misappropriate merchant’s IP
• Can unwittingly draw the ire of the FTC
• Merchant’s product does not function properly
• Merchant’s product does not work in accordance with claims made by
advertisers
The Fix:
• Understand contract signed with merchants and networks. Have a list
of what you can and cannot do.
• Evaluate a contract before signing it. Would you prefer tow walk away?
• Try to negotiate “terms of contention.”
• Ensure product claims are accurate.
• Evaluate each advertisement to ensure compliant with best FTC
practices and CAN-SPAM practices.
22. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #15: Protect yourself from the
enemy within
The Risks: companies of all shapes and sizes are vulnerable
to rogue workers or even business partners. For instance,
Rogue employees and business partners who steal trade
secrets (NDA), attempt a “corporate takeover,” engage in
cyber attacks and hacking, try to misappropriate
corporate property, and go loco.
The Fix: be vigilant and have the proper agreements in
place.
23. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Update!!!
24. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Update!!!
25. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #16: Protect yourself from
the external enemies
The Fix: Yelp! And other review websites provide
ample opportunities for those to lodge complaints.
Monitor those websites and others in addition to
performing vanity searches.
The $$$ Fix: some website such as Rip-Off Report
require payment of $$$ to investigate claims that can
result in a softer edit of the complaint. Attempts to
sue ROR have been unsuccessful.
26. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
27. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
28. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #17: Not paying attention
to Google Auto-Complete
29. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #18: Watching for dedicated
“hate” websites
30. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #19: Not utilizing best
practices
• Train your employees
• Register your name at social media websites
• Register your name for common TLD
extensions
• Register your copyrights and trademarks
• Monitor Google and other search engines
• Engage with complaint websites
31. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #20: Being afraid to ask for
help
Most lawyers will talk to you for free
to help you scope out a problem.
Take advantage of that!
32. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Just do it -
• Check the claims that are being made – are they
accurate;
• Monitor compliance by upstream and downstream
partners/parties;
• Do random Internet searches;
• Ensure how claims are framed does not run afoul of the
spirit of the FTC regulations;
• Handle defamation on the Internet immediately;
• Check to make sure IP is being respected;
• Have agreements with all partners;
• Check rights and responsibilities in all contracts and
make cheat sheet bullet list to use on daily basis; and
• Check state regulations – there are 50 state AGs!
33. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Fed Nexus Law f/k/a Centre Law Group
1953 Gallows Road, Suite 650
Vienna, Virginia 22182
(703) 288-2800
Website: www.centreinternetlaw.com
Blog: www.internetlawforbusinesses.com
E-Mail: crusiuse@fednexuslaw.com
Tweet! @InternetBizLaw