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Social Media and the Law – 5 Things for AM4U to remember

November 4, 2014 Leave a comment

Various social media legal issues arise when website users share content online across different platforms like Facebook, Twitter, LinkedIn, Pinterest, Instagram, Tumblr, Google+, Reddit, Wikipedia, personal blogs and more.

Social media laws relating to who owns the content being shared, when and where sharing is appropriate and what limits may be imposed on sharing often raise issues relating to trademark infringement, copyright infringement, social media marketing, labor relations and more.

Here are five tips that may keep you from finding yourself in trouble when it comes to different social media platforms.

1. Online Contests & Promotions: Look at the Terms of Service (TOS) or other similar guidelines posted by the platform that you are using. These are the rules to follow. Facebook has some very specific guidance. “Promotions may be administered on Pages or within apps on Facebook. Personal Timelines must not be used to administer promotions (ex: “share on your Timeline to enter” or “share on your friend’s Timeline to get additional entries” is not permitted).”

2. Reviews: Sites like Yelp allow users to share their experiences and provide ratings for different businesses. Negative ratings can be harmful and some business owners may be wary of these review sites. However some may have pushed against the reviews a bit too hard by adding clauses into consumer contracts that would prevent their customers from making negative comments against them online. California recently passed a law protecting the rights of consumers to leave bad online reviews. An article in The Washington Post says, “The bill bans businesses from forcing consumers into contracts in which they waive their right to comment on the service they receive, and it also bars businesses from otherwise penalizing customers for such statements. It imposes fines of $2,500 for the first violation and $5,000 for each thereafter. If a violation was willful, intentional or reckless, an additional fine of $10,000 could be levied.”

3. Endorsements: When bloggers and others write online about products and services, disclosure is key. If they were paid and/or received free items by a company and then wrote about these items, then that relationship must be disclosed in a way that is clear to the reader. The Federal Trade Commissionrevised its Endorsement Guides to include social media to make sure that endorsements are honest and not misleading to the public.

4. Photographs: Social media and the law often collide when it comes to pictures that are being shared online. Cute baby animal pictures and beautifully decorated cupcakes can be irresistible. Not only do we want to look at them, but we want to share them with our friends. Before you use that picture, don’t assume that it’s yours for the taking just because you found it online. Many if not most photographs are copyrighted and owned by the person who took the picture. Try to find the source and seek permission before you use it. On sites like Pinterest, where photos are shared by Pinning, owners of copyrighted material may request to have it removed. “If you receive a notification that a Pin has been removed due a copyright complaint, it means that the Pin’s content has been deleted from Pinterest at the request of the content’s owner. If your account receives too many copyright complaints, you may lose the ability to Pin new content on Pinterest, and your account may be disabled completely,” according to Pintrest’s Copyright page.

5. Employee Rights: Employers should take a second look before deciding to fire employees based on negative comments on social media. Similar to the issue of consumers having the right to write negative reviews about a business online, employees may sometimes have the right to vent about their employers online as well. A Nixon Peabody blog post discusses a recent ruling by the National Labor Relations Board (NLRB) regarding employees who were found to be wrongfully terminated by their employer for activity on Facebook. According to the NLRB analysis, “The NLRB concluded that the two employees did not disparage their employer’s’ products or services, rather they engaged in social media to seek and provide mutual support for a group activity addressing the terms and conditions of employment.”

Paying attention as the law surrounding social media evolves is the best way to keep from walking off that metaphorical pier.

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Apparel Companies Under Threat from “Made in USA” Cases Under California Law

November 4, 2014 Leave a comment


Apparel Companies Under Threat from “Made in USA” Cases Under California Law
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U.S. apparel companies that use de minimisamounts of foreign-made components such as zippers or buttons in their garments were dealt a blow recently when a federal judge declined to throw out a class action lawsuit alleging that clothing labeled as “made in USA” is in violation of California’s strict false advertising law. The case will thus continue and could still result in settlements, damages or other expensive alternatives for affected companies.

 

In Paz v. AG Adriano Goldschmeid Inc. et al, the defendant requested that such an allegation against it be dismissed on the grounds that the California law is pre-empted because it conflicts with federal laws – namely, the Federal Trade Commission Act and the Textile Fiber Products Identification Act – that allow more flexibility in the use of the “made in USA” label.

 

In its decision, the court indicated for the first time that a  “made in USA” claim using qualifying language, such as “made in USA of imported fabric and components,” would not run afoul of the California statute. The court noted that the strict conditions in the California law only apply to “made in USA” labels and that the statute fails to provide any guidance on whether qualified labels would constitute a violation.  However, the decision is not yet final.

 

The court held that there is no conflict between the different federal and California standards because it is possible to comply with both (e.g., by labeling the jeans according to the California standard inside California and according to the federal standard elsewhere), even though doing so may be burdensome to the apparel company.

 

California law prohibits any product from being labeled “made in USA” if that product or any article, unit or part thereof has been entirely or substantially made, manufactured or produced outside of the United States. Apparel companies are particularly vulnerable to claims of violating this law because their goods are typically composed of many components sourced from numerous locations around the world.

 

For more information, please contact Elise Shibles at (415) 986-1088 or Arthur Purcell at (212) 549-0131.

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How Jessica Alba Proved Her Doubters Wrong

November 4, 2014 Leave a comment
Even movie stars have to stare down skeptics when they’re launching a company and seeking funding. Here’s how Jessica Alba persevered–and wound up with a company valued at nearly $1 billion.

When actress Jessica Alba first conceived her idea to launch a line of nontoxic household and baby products in 2008, skeptics tried to push her toward the same tried and true starlet formula: Why not just be the face of a new perfume? A few years later, she has a pretty good answer. The Honest Company is expected to pull in more than $150 million in revenue in 2014, has a reported $1 billion valuation, and is poised to go public. Take that, Hollywood.

As told to Lindsay Blakely.

I founded The Honest Company on this idea: Everything that touches you and your family–everything in your home–needs to be nontoxic, needs to be effective and beautiful to look at, and needs to be affordable. I really wanted it to have an e-commerce model. What are the things that all parents need? Diapers and wipes, for sure. And then a mix of cleaning and personal care products. Wouldn’t it be great if you could pick five things and get them delivered through a monthly subscription?

Everyone I approached was skeptical. There wasn’t one person who said, “Yeah, that can happen.” I heard “Just do one thing really well and then you can expand” a lot. But I wanted this to be a whole lifestyle brand. Everyone I talked with in Hollywood could not wrap their heads around the idea. Whenever I tried to sit down with them about it, they would just get this glazed look on their faces. Entertainment is a totally different business. It’s like, how do you squeeze the most out of a person for five seconds, and then you move on to the next one. It’s hard for people to take anyone seriously who’s never done this before. They see you only as something else. But all that just gave me fire to move forward.

I approached this guy who built the top-selling accessories brand at Macy’s. We’re friends, and he was trying to help me figure out how to execute on this idea. But he built his brand off of one item and then expanded. He found traditional retail partners and then opened his own stores. He didn’t understand how to build this thing from scratch. Friends want to help you, but they’re also going to be the most critical. We launched with 17 products. Even my husband, Cash, thought the idea was too big.

It took me three years to find my business partners. You have to be brutally honest with yourself and understand your strengths and weaknesses. I’m not a business person–I’m a mom. I wasn’t going to be coding. I wasn’t going to be in the lab mixing potions. (Though I do test all the products on my kids!) I wasn’t going to be the one doing the business model and running the operation. If I went in there and said, “Hey, I’m going to put together this business from scratch all by myself, ” I’m sure it would have been a lot more difficult to get VCs to take me seriously, but once you have the right partners, it isn’t. Having the right partners also means having people you like. They’re all people I wouldn’t mind getting stuck with at an airport for five hours. We can hang and have a beer and chat it up, or stay silent together and be totally cool with that. That’s really important.

Then the team sat down with a lot of people who weren’t going to invest–friends like Tory Burch and Narciso Rodriguez, both of whom built successful businesses, and people from big tech companies and public companies–to test our pitch. They asked us great questions: What are you going to do when you run out of product? What if it’s not delivered on time? How are you going to get people to your website?

With them, it didn’t matter that we weren’t perfect in the way we pitched Honest. It was kind of like how comedians go out and do standup in small clubs in different cities to test their material before they do their HBO special: All of that back-and-forth helped us refine our pitch. And it got a lot shorter–we got it down to a 10-minute pitch deck and a 15-minute question-and-answer session. So then we knew we could do it in a 30-minute meeting.

Almost every VC we talked to was on their first or second child and told me their wives were doing the same research that I was, trying to find a brand they could trust. We didn’t try to find investors with young families. It just happened. But in retrospect, that would have been a good tactic!

By the time we got into the room with VCs, it wasn’t that hard of a sell. We went in with a real plan of attack, a strong process, and smart people. By that point we had talked to so many people, having them try to poke holes in the idea. Because that is exactly what the VCs are going to do. Inevitably, they’re going to ask questions you can’t answer. If you’re writing down the 20th question to which you don’t have an answer, that’s a problem. You can say “I’ll get back to you,” but not more than five times.

Inside the Honest Formula

The Honest Company–which Jessica Alba co-founded in 2011 with CEO Brian Lee, COO Sean Kane, and chief product officer Christopher Gavigan–pitches its products as the solution to many a parent’s woes: They’re nontoxic, they actually work, and they look nice on the counter. Many doubted the company could succeed, but it’s rung up impressive numbers in a few short years. Revenues in 2014 are projected to hit $150 million, and Honest has scored $122 million in funding, including a $70 million round in August that valued the company at nearly $1 billion. How did Alba and the Honest team manage to come so far so quickly?

Recurring revenue

Nearly 80 percent of Honest Company’s sales come from its subscription plans, which let customers bundle items and have them delivered monthly. Those subscribers pay up front, giving the business more cash flow and providing predictable, repeating revenue–and such businesses are valued at higher multiples.

The upsell

Honest’s biggest seller is diapers: The company ships more than 10,000 product orders daily, and half include its fashionably patterned, plant-based diapers. To promote its cleaning and personal care products, Honest offers free trials (customers pay $6 for shipping). And it works. Half of Honest’s trial users wind up buying more products.

The feel-good halo

Like startups Toms and Warby Parker, the Honest Company built a charitable mission into its business model. With every customer purchase, the company promises to do some good work–such as donating baby supplies to local diaper banks and sending employees to volunteer for L.A.-area beach cleanup days.

The not-so-secret weapon

Sure, Alba brought a great idea–and star power–when the Honest team approached investors in 2011. But she also brought something else. “It helps when your partner is pitching a clean-living lifestyle brand for families, and she walks into the room almost nine months pregnant,” says Gavigan. “She was practically about to go into labor!”

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Neiman Marcus Launches 3D Visual Fashion Search App Print PDF

November 4, 2014 Leave a comment

Instead of walking down the street wondering where a stranger got that amazing handbag or perfect pumps, consumers will now find it easier to track those items down. Luxury retailer Neiman Marcus has made it even simpler to stay on top of the latest fashion – all with just one tap on a smartphone.

The already sleek and structured Neiman Marcus mobile app now has an added innovative feature called “Snap. Shop. Find.” The fashion retailer has teamed up with leading mobile visual search firm, Slyce (SLC), to make shopping even more seamless from any channel.

All consumers need to do is open the “Snap. Shop. Find.” feature on the app, snap a photo of the sought-after fashion item, and a list of similar products found at neimanmarcus.com will pop up. The user doesn’t need to do any cropping or editing, and photos can be taken of real-life products or even printed images in a magazine or book. Neiman Marcus is the first luxury retailer to offer such a feature through its mobile application.

By integrating the find feature into the existing app, users don’t have to go through the trouble of downloading a separate application. According to internetretailer.com, one of the most important things to Neiman Marcus consumers–or savvy mobile users in general–is instant gratification. Shoppers see something they want and they want it right away.

Other applications like Cream Style have incorporated the same concept. Cream Style, however, displays a list of street style photos with links to different products, whereas Neiman Marcus allows users to snap their own photos and all products provided are the Neiman Marcus brand.

For now, the feature has been introduced to the public with the ability to search shoes and handbags, but additional categories will be added in the future. The visual aspect of this application along with the ability to achieve instant results is what makes the feature so promising. “Today, most online shopping begins with search – either through key words or navigating filters, and as they say, a picture is worth a thousand words,” according to Wanda Gierhart, Neiman Marcus Group CMO.

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