Online Marketing and Advertising Laws

Online marketing and advertising can be a complicated process since the internet has opened new channels that did not previously exist before the technology age’s expansion. Now, with the advent of sophisticated technologies, business owners, startups, and entrepreneurs have more options when it comes to online marketing and advertising.

They can use email, telephone, or other online marketing and advertising tools to reach their customers. They can also use banners, pop-ups, metatags, mass emails, mass text messages, or linking and co-branding plans. The internet has no boundaries so you should realize that even though your company is located in one state, yet your online marketing and advertising campaign may implicate state, federal, or international laws. This can be true when your company is targeting customers in other states or nations. So, your contacts with that jurisdiction whether by having offices, employees, or customers there can play an important role in determining which court has authority to resolve disputes.

There are several state and federal laws that can be relevant to internet advertising. For example, the Lanham Act, FTC Act, or California Business and Professions Code regulate internet marketing and advertising. The Trademark Act – which is also known as the “Lanham Act” – regulates trademarks, service marks, trade names, and trade dress issues. This federal statute deals with infringements and outlines the remedies. It also creates a private right of action pursuant to 15 U.S.C. Section 1125(a)(1) against the infringing parties. A private right of action (or “implied cause of action”) is the legal right granted to a private party to file a lawsuit.

The courts have ruled that the unauthorized use of a third-party’s trademark within metatags is considered as trademark infringement, unfair competition, or deceptive trade practices. For example, a competitor cannot use “hidden texts” on its website’s code to promote search engine optimization. This sort of practice is considered to being unethical and unlawful. The plaintiff may seek monetary and non-monetary damages (e.g., injunctions) against the unlawful usage of metatags. As such, if the plaintiff is able to prove that the defendant’s action has caused a likelihood of confusion, then the court will be inclined to issue a favorable ruling.

The Federal Trade Commission (“FTC”) Act regulates most types of internet advertising. This federal statute grants limited authority to the FTC when it comes to commerce with foreign nations. In general, the FTC is charged with the task to prosecute unfair or deceptive acts or practices. For example, it may prosecute a company for omitting material information or providing false or misleading information to the general public. So, in other words, it can prosecute a commercial organization for engaging in fraud or deception. The bottom line is that the commercial organization must engage in fair marketing and advertising. The disclosures must be visible and accessible to all customers. The hyperlinks must be clearly labeled on the website.

Moreover, paid placement advertisement which takes place by buying keywords from search engines, has been criticized by legal and non-legal scholars. This type of practice, which is also called pay-per-click advertising is often used by competitors. So, the search engines sell placements to the highest bidders. However, some have argued that it would be unfair to other non-paying competitors because the potential customers cannot differentiate between the paying and non-paying competitors. Therefore, at this time some of the more prominent search engines have labeled the paying competitor’s advertisements as “sponsored” advertisements.

There are laws that regulate telephone, internet and catalog sales. For example, California Business and Professions Code § 17500 prohibits any person from disseminating untrue or misleading statements in reference to the sale of property or services. In other words, it prohibits actions that would likely deceive the general public. The statute provides for civil remedies and injunctive relief. The Department of Consumer Affairs regulates advertising and prohibits false and misleading in this jurisdiction.

Business and Professions Code § 17940 regulates the use of bots. It strictly prohibits any person to use a bot to communicate or interact with another person with the intent to mislead that person about its artificial identity for the purpose of knowingly deceiving him or her about the content of the communication to incentivize a purchase or sale of goods or services in a commercial transaction.

It’s important to know your legal rights and responsibilities when it comes to online marketing and advertising laws. Please contact our law firm to speak with an internet and technology attorney at your earliest convenience.