drafting affiliate marketing agreements: ensuring...
TRANSCRIPT
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Presenting a live 90-minute webinar with interactive Q&A
Drafting Affiliate Marketing Agreements:
Ensuring Compliance With Advertising,
IP and Internet Marketing Laws Structuring Provisions on Compensation, Indemnification,
Limitation of Liability, Termination and More
Today’s faculty features:
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
THURSDAY, DECEMBER 10, 2015
Andrew B. Lustigman, Partner, Olshan Frome Wolosky, New York
Kavon Adli, Founder and Managing Attorney, The Internet Law Group, Beverly Hills, Calif.
Rachel Hirsch, Ifrah Law, Washington, D.C.
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INTRODUCTION TO AFFILIATE MARKETING
DRAFTING AFFILIATE MARKETING AGREEMENTS: ENSURING COMPLIANCE
WITH ADVERTISING, IP AND INTERNET MARKETING LAWS
KAVON ADLI, ESQ.
THE INTERNET LAW GROUP (BEVERLY HILLS, CA)
__________________________________________________________________________________________________________________
THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
PARTIES TO AFFILIATE MARKETING RELATIONSHIP
• Affiliate network
• Publisher or “affiliate”
• Advertiser
• Sub-affiliate
• Lead purchaser or client
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
CONCEPT BEHIND AFFILIATE MARKETING
Network
Sub-affiliate
Sub-affiliate
Sub-affiliate
Affiliate
3rd party
advertiser Lead buyer
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
CATEGORIES OF AGREEMENTS IN AFFILIATE MARKETING ECOSYSTEM
• Publisher terms
between network and affiliate
• Client contract
between advertiser and lead
purchaser
• Advertiser contract
between network and third-party
advertiser
(non-exclusive)
Today’s focus: publisher terms
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__________________________________________________________________________________________________________________
THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
Key Terms in Affiliate Marketing Agreements
Part 1: The Legal Environment
Andrew B. Lustigman
Olshan Frome Wolosky LLP
General Legal Issues Involving Affiliate Marketing
• Many of the legal issues surrounding affiliate marketing center on the advertising materials produced and the method used by affiliates
• The retailer as the advertiser may be held liable for the advertising materials created by its affiliates under various federal and state laws
10
Section 5 of The FTC Act • “[U]nfair or deceptive acts or practices in or affecting commerce are
declared unlawful” (15 U.S.C. Sec. 45(a)(1))
• Is the claim likely to mislead a reasonable consumer?
• Can the consumer avoid the injury?
• Generally viewed from the reasonable consumer’s perspective
11
• What is the reasonable take away (net impression)?
• Was the claim material to the consumer’s decision to buy or use the product or service?
• Is it true?
• Is it substantiated?
• Are there unfair business practices?
12
Section 5 of The FTC Act
FTC’s Statements
• FTC’s prohibition against deceptive advertising applies
across the spectrum of players involved in affiliate marketing. David
Vladeck, Director of the Bureau of Consumer Protection for the FTC:
– “When you pay third parties to act on your behalf, you cannot
absolve yourself of responsibility for whatever actions those third
parties might take to sell your product.”
– “FTC liability for deceptive advertising can potentially reach anyone
in the chain between a seller and the ultimate consumer.”
– FTC wants to “make sure that affiliate marketers are on notice that
they will be held responsible for the claims they make.”
13
In The Matter of Legacy Learning Systems, Inc.
• FTC alleged Legacy Learning sold guitar-lesson DVDs through online affiliate marketers who falsely posed as ordinary consumers or independent reviewers
• Defendants advertised using an online affiliate program, through which it recruited “Review Ad” affiliates to promote its courses through endorsements in articles, blog posts, and other online editorial material, with the endorsements appearing close to hyperlinks to Legacy’s website
• Affiliates received commissions on the sale of each product resulting from referrals
• Such endorsements generated more than $5 million in sales of Legacy’s courses
15
FTC Settlement with Legacy Learning Systems
• Must monitor affiliates to ensure they disclose that they earn commissions for sales and are not misrepresenting themselves as independent users or ordinary consumers
• In a manner calculated not to disclose the monitoring process to the affiliates, must monitor their top 50 revenue-generating affiliates on at least a monthly basis and maintain reports documenting the same
• In a manner calculated not to disclose the monitoring process to the
affiliates, must monitor a random sampling of 50 other affiliate marketers on at least a monthly basis and maintain reports documenting the same
• Pay $250,000
16
ONE of the BEST
Amazing new
game!
[[[Game developer] hits another home
run with [game].
One of the best apps just got better
GREAT, family-friendly
board game
[[App developer]
does it again!
Deutsch LA, Inc. (March 24, 2015)
Reverb Communications, Inc., 150 F.T.C. 782 (2010) (consent order) 17
Operation Clean Turf • NY AG enters agreements with 19 companies to stop writing fake online
reviews and to pay more than $350,000 in fines
– ASEO. Company based in NYC, posted more than 1,500 fake reviews of clients on consumer-review websites such as Yelp.com and Google Places and attempted to defeat consumer-review website filters by changing the IP address of the computer from which it posted the reviews every week, making the reviews look like they came from different users.
– US Coachways, Inc. The management of this leading national bus charter company based in Staten Island, NY orchestrated an astroturfing campaign, writing bogus reviews themselves, soliciting freelance writers to write bogus reviews, and urging employees to pose as customers and write positive reviews. They also offered $50 gift certificates to customers to write positive reviews without requiring that the customers disclose the gift in the review.
19
Operation Clean Turf • Swam Media Group. The manager of this licensee of the Scores
gentlemen's club franchise orchestrated an astroturfing campaign with the help of a freelance writer that resulted in 175 fake reviews of entertainers at the Scores adult club in New York City and an affiliated website, scoreslive.com, most of which were posted online.
• XVIO, Inc. An SEO company based in NYC posted hundreds of fake reviews
of clients on consumer-review websites. Company also conducted a “secret shopper” campaign where its agents received free or discounted goods and services from Company’s clients in exchange for a review. However, the reviewers were encouraged to post on consumer-review websites only if they were positive, the “secret shopper” did not disclose that he or she had received a free or discounted product or service of the reviewed-business in the review, and the client knew the identity of the “secret shopper” prior to providing the product or service to be reviewed.
20
Competitor Claims • Swiss America Trading Corp. v. Regal Assets, LLC (C.D. Cal. Feb. 13, 2015) • Retailer relied on affiliate marketing program that included “ostensibly
independent consumer reviews” that disparaged competitor, and recommended Regal
• Failed to disclose material connection • Motion to dismiss denied
21
Use of Reviews with Commissionable Links or Business Relationship
• FTC Endorsement Guides: What People Are Asking
• Claims must be consistent with that of the retailer and must be truthful and good faith
• Disclose material connection
• Remember the 4P’s
– Prominence: big enough to read?
– Presentation: understandable?
– Placement: will it be seen?
– Proximity: close to the claim being modified
22
FTC Sues Internet Marketers and Affiliate Networks Over Fake News Sites
• Summary of cases filed in suits against marketers and affiliate networks
– False and unsubstantiated weight-loss claims about acai berry weight-loss products
– Deceptive representation that affiliates’ pages were objective news sites
– Failure to adequately disclose affiliates’ connection to the merchant (i.e., earned commission for each sale)
25
FTC Sues Recognizable Companies and Individuals
– LeadClick/CoreLogic
– IMM Interactive Inc. (COPEAC) – Operated own sites plus recruited an network of affiliates to use sites
– Circa Direct LLC
– DLMX LLC
– Lead Expose Inc.
– Coulomb Media Inc.
– Charles Dunleavy
– Thou Lee
– Ricardo Jose Labra
– Beony International LLC
– Ambervine Marketing LLC
26
General FTC Allegations • Defendants operate websites that are meant to appear as if they belong
to legitimate news-gathering organizations, but in reality the sites are simply advertisements aimed at deceptively enticing consumers to buy the featured acai berry weight-loss products from other merchants
• Typical fake news sites have titles such as “News 6 News Alerts,” “Health News Health Alerts,” or “Health 5 Beat Health News”
• Often use investigative-sounding headlines; one such site proclaims “Acai Berry Diet Exposed: Miracle Diet or Scam?”
• The sub-headline reads, “As part of a new series: ‘Diet Trends: A Look at America’s Top Diets’ we examine consumer tips for dieting during a recession.”
• Article that follows purports to document a reporter’s first-hand experience with acai berry supplements – typically claiming to have lost 25 pounds in four weeks
27
FTC v. LeanSpa, LLC (D. Conn.) • Demonstrated LeadClick recruited the affiliates, had power to
approve or reject their marketing websites, paid the affiliates, purchased advertising space for them, and gave them feedback about the content of their sites.
• Court rejected claim that affiliate network was immune under Section 230 of the Communications Decency Act
• Summary Judgment granted in April 2015 against affiliate network and its parent - $11.9 million
28
FTC Settlements • Final Orders bar not only deceptive news
format, but also unsubstantiated health claims
• Require substantiation for non-health
claims (such as earnings claims)
• Requires pre-approval and monitoring of affiliate advertising
• Merchant settlements requires pre-approval of affiliate advertising content and monitoring
29
Central Coast Nutraceuticals Settlement
• Defendants have to monitor the activities of any affiliate marketers, including reviewing any marketing materials used to ensure that they comply with the order
• Defendants need to collect the following details for each affiliate and/or affiliate network used in any program:
– Name, physical address, phone number, email address and complete bank account information as to where payments are to be made
– Name under which it does business, state of incorporation, registered agent, contact details for an owner or manager
– Obligation on the affiliate network to maintain the details on the affiliate if identity of the affiliate is not provided
• Defendants need to review all materials created, location of all URLs and the range of dates that the marketing materials will run
30
• Defendants must promptly investigate any complaints to determine whether any affiliate or affiliate network is engaging in prohibited practices
• Upon determination that an affiliate or affiliate network is engaged in such conduct:
o Immediately halt the processing of any payments of charges generated
o Fully refund each consumer charged
o Immediately terminate
31
Central Coast Nutraceuticals Settlement
Recommendations • Affiliates should receive guidelines as to what information should be
contained in the advertising they disseminate
• Affiliates should also receive foreseeable types of claims or language that might be considered misleading and should not be used in ads
• Monitor affiliate advertising
• Investigate claims by consumers and competitors
• Take steps to stop continued publication of any deceptive statements
• Bar violators from participating in marketing programs and
32
Native Advertising • Snake Oil wants Unlimited Sale$ to utilize articles that appear as news
content on third-party websites (native advertising)
• Any issues?
33
Native Advertising
• Native advertising is an online advertising method in which the advertiser attempts to gain attention by providing content in the context of the user's experience
• Native ad formats match both the form and the function of the user experience in which it is placed
• Worried that consumers might be confused by native ads, the FTC conducted a workshop to help figure out if the agency should issue additional guidance to help advertisers and publishers steer clear of enforcement action
34
Use of Negative Option Marketing
• Use of negative option with low initial cost to generate sale/leads
• Risk of affiliates failing to clearly and conspicuously disclose terms and conditions
36
The Basics:
• The Four Ps
• Clear & Conspicuous disclosure of material offer terms
• Express, informed consent
• Simple cancellation mechanism
37
30 Day Free Trial Continuity Program Auto-renewal
Free Product – Just pay shipping and handling. Enrollment will automatically renew monthly at the end of the trial period for $19.99/month unless I cancel prior to the end of the 30 day trial period.
Automatic Shipment Terms. I will automatically receive a product each month for $19.99 plus shipping & handling unless I cancel.
Automatic Renewal Terms. My order will automatically renew every year at the then current rate at the end of the first period and each year thereafter.
38
FTC: ultimate test is whether information to be disclosed is actually conveyed to consumer
Clear & Conspicuous
• Proximity and placement
• Prominence
• Understandable language
• Repeat when necessary
39
Proximity and Placement
• As close as possible to triggering claim
• Same screen, no scrolling
• Unavoidable
• Prior to payment
40
In the Matter of Boardroom, Inc. (Florida, June 2013)
• To be Clear & Conspicuous, terms of a Negative Option offer must be “presented together in a distinct location, in a stand alone paragraph”
• Note – this applies offline as well as online
41
Clear & Prominent Requirement
Disclosure that is:
• Made clearly and conspicuously
• Most prominent of all offer terms
• Appears under heading that calls out negative option feature of offer
42
30 Day Free Trial with automatic monthly renewal
Additional disclosure requirements for free-to-pay conversion offers
Must disclose that Free Trial offer includes enrollment in negative option
• On initial representation o banner ad, link, subject line, etc.
• On order/enrollment page immediately adjacent to most prominent triggering representation
• In lesser of 16 point font or ½ size of FREE representation (Boardroom)
43
Negative Option Marketing • Snake Oil wants to provide its negative option disclosures in a pop up
or hyperlink
• Alternatively, Snake Oil wishes to provide the terms on the order page and use a pre-checked box indicating that the customer has agreed to the terms
44
For written offers (online and offline):
• Consumer must affirmatively select, sign or take action to accept negative offer terms
o No pre-checked box for acceptance of offer terms
• Offer terms disclosed in “direct proximity to order button or acceptance method before billing information is obtained
45
Disclosures that are integral to or inseparable from claim should not be communicated through link
• Any significant additional costs that consumer would not expect to incur should be disclosed on same page
• If space constraints require use of link, label to communicate specific information to be provided
o Not: “details,” “terms,” “learn more”
46
FTC - First Misimpression Theory
Dot com disclosures - “Don’t focus only on the order screen”
• Consumers may not relate disclosure on order screen to information viewed earlier
• Consumer may see initial online ad and then order offline without seeing order screen disclosure
47
KEY TERMS IN AFFILIATE MARKETING AGREEMENTS PART II OF DRAFTING AFFILIATE MARKETING
AGREEMENTS WEBINAR
PANELIST:
KAVON ADLI
THE INTERNET LAW GROUP
BEVERLY HILLS, CALIFORNIA
__________________________________________________________________________________________________________________
THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
PRELIMINARY ISSUES
• Online and offline agreement forms
• Initial determination of which party will supply publisher terms
• Central battle over intermediary’s desire for “passthrough”
status as to alleged misconduct of other participants
network as against third-party advertiser and publisher
affiliate as against network and sub-affiliates
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
SPECIFIC CLAUSES
• CHOICE OF LAW
• CHOICE OF FORUM
• Common compromise: location of defending party
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
NON-CIRCUMVENT OR NON-SOLICITATION To disincentivize advertiser and publisher from cutting out intermediary
• Example (non-circumvent):
While an approved Publisher and for 180 days thereafter, Publisher
covenants that it shall not participate in any advertising relationship with
any Advertiser unless a previously existing business relationship between
Advertiser and Publisher can be demonstrated to the reasonable
satisfaction of the Network. In this connection, both parties agree and
acknowledge that if Publisher violates its obligations hereunder, in addition
to all other remedies available to Network, Publisher will forfeit any
outstanding commissions owed to it and Network will it be entitled to
liquidated damages in the amount of fifty percent (50%) of the gross
revenues resulting from transactions between Publisher and Advertiser.
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
INVALIDATING ELECTRONIC EXECUTION OF ALTERNATE TERMS
• Issue: parties to affiliate marketing relationships may inadvertently
agree to multiple sets conflicting agreements
• Example:
In the event a party is required to digitally sign or agree to additional
terms when using the other’s website or tracking platform, the parties
agree that such digital agreement is inconsequential and not binding as
it is the result of a technical requirement which cannot be altered to
view stats or access content. Therefore, such terms are to be
disregarded, and shall be superseded by this Agreement.
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
USE OF SITE CLAUSE
Example:
The Site allows Publishers to download creatives and
tracking URLs for specific offers within Network’s and its
Advertiser’s Program(s). Each Program will include the
following parameters, where applicable: Restrictions;
Description (the “Offer Description”); Payout; Category;
Landing Page (link to landing page); Link Types Allowed
(e.g., All, Email only, Search only); Incentives Allowed
(Yes/No); Region (e.g., U.S. only); From Lines (approved
from lines) and Subject Lines (approved subject lines)
(collectively the “Program Terms”). Compensation is
derived from completion of a specified event (“Event”)
identified in the applicable Program Terms, such as the
submission of a lead form or a partial lead form or a
sales transaction (collectively or individually an
“Action”), or other Event such as a click, click-through,
registration or impression. The Program Terms shall
supersede any inconsistent terms in these T’s and C’s.
The Program Terms will specify, among other things, the
Event as well as any additional terms affecting the
applicable Program. Where applicable, an Action
shall further be defined in the Offer Description. The
Network may change a Program at any time upon written
notice to Publisher. Unless otherwise specified in the Program Terms, the Network may change a
Program at any time upon written notice to Publisher.
Purpose. To:
• incorporate by reference into
publisher agreement program
terms on website that apply to
each offer
• explain how program terms
relate to publisher agreement
and possibly insertion orders
(how conflicts treated, etc.)
• define how compensation
works to the extent not
specified in program terms
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
PAYMENT TERMS
• who is responsible for tracking commissions owed
• when and how payment will be made
• minimum threshold for payment to be made (e.g., $50)
• time limitation (e.g., 30 days) on right to assert
underpayment claims or waived
• right to reduce payments in the event of invalid or
duplicate events, technical errors, tracking discrepancies
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
MARKETING GUIDELINES
Example:
If Publisher accepts a Program, Publisher agrees to
place that Program's advertising creative(s) (the
“Ad”), including, where applicable, the email subject
and from lines, lead generation opt-in copy, Can-
Spam Act disclosures and any other disclosures or
disclaimers provided therein, on Publisher’s Media in
accordance with the Program Terms. Publisher
shall display the Ad exactly as it appears and
is provided in creatives section for that
Program on the Site and will not alter it in any
way without written approval from Advertiser,
including without limitation, modifying
creatives, adding text links, editing text email
copy, popping Advertiser’s landing page for a
Program, or altering email subject or from
lines. Failure to adhere to these requirements may,
in addition to all other remedies available to
Company, result in termination of Publisher and
forfeiture of compensation to Publisher.
• Purpose: to specify
mandatory use and non-
modification of approved
marketing materials
• Pro: supports lead quality
and limits deceptive
advertising
• Con: exercise of control may
support vicarious liability
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
PUBLISHER COVENANTS
Example:
Publisher covenants that it shall not: (a) send unsolicited
commercial e-mail (spam) (i.e., it will send commercial
emails in connection with any Programs to only those email
addresses that have consented to receive such e-mails); (b)
attempt in any way to alter, modify, eliminate, conceal, or
otherwise render inoperable or ineffective the Site tags,
source codes, links, pixels, modules or other data provided
by or obtained from Company that allows Company to
measure ad performance and provide its service; (c) post
any content to newsgroups, chat rooms, bulletin boards,
social media or any other places regarding any Programs
unless expressly approved in writing by Company; (d)
promote via website or link to websites containing any
pornographic, software pirating or hacking, hate-
mongering, or otherwise illegal content; (e) use the Site or
conduct marketing in any manner other than that which is
specifically contemplated herein; (f) engage in any kind of
deceitful, misleading or other unfair trade practices, or
fraudulent or other unlawful practice when marketing any
Programs.
Purpose: general marketing
prohibitions, the violation of
which may result in pausing of
traffic, termination of publisher
and/or triggering right of
indemnity
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
FRAUDULENT OR UNAPPROVED MARKETING
Example (of remedies section, detailed prohibitions omitted):
If fraudulent or unapproved marketing is suspected, Company may
suspend the Publisher (or, if Publisher also maintains its own network
of Sub-Affiliates, the suspected Sub-Affiliate(s’) account and block all
traffic from Publisher or any Sub-Affiliate suspected of fraudulent or
unapproved marketing pending further investigation. In determining
whether fraudulent or unapproved marketing has occurred, lead to
action ratios that are materially above average for the type of
advertising (e.g., email, banners, pops or search) shall be considered
relevant. In the event of fraudulent or unapproved marketing,
Company need not return actual leads for all actions that Company
does not pay Publisher for. Failure by Publisher or its Sub-Affiliate to
cooperate to the extent reasonably requested by Company in an
investigation into suspected fraudulent or unapproved marketing shall
be considered determinative that fraudulent or unapproved
marketing has occurred. In the event of fraudulent or unapproved
marketing Company may withhold payment of Publisher’s commissions
for all events from the specific program with fraudulent or
unapproved marketing. In addition, in the event that Publisher has
receives payment for events occurring through fraudulent or
unapproved marketing, Company reserves the right to seek a credit
from future earnings or to obtain reimbursement from Publisher.
a. Includes more detailed
prohibitions to facilitate
imposition of remedies
b. Allows trends that are often
associated with fraud to be
acted upon in the absence of
proof of actual fraud
Tip: specify fraud presumed if
affiliate or sub-affiliate does not
reasonably cooperate with
investigation
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
INDEMNITY CLAUSE • Goal: To ensure that publisher will be held financially responsible if it or its sub-
affiliate causes network to be sued and/or held liable.
• Judgment call as to whether to start with one-sided or mutual clause. I prefer to
start with one-sided version and revise if there is push back. Primary reason:
Cal. Bus & Prof. Code Section 17529.5 claims have developed as a major risk
area for email marketing. Under statute, publisher and advertiser are each
strictly liable for violations of law and acts and omissions of both parties may
impact liability, so standard indemnity clause that makes each party responsible
for their own violations of law or their own acts or omissions may not be effective.
• If affiliate does not accept one-sided indemnity clause, be specific in identifying
what triggers indemnity claims. Example: since advertisers typically supply list of
required “from” and “subject” lines, specify that affiliate must indemnify for all
email marketing-related liability, except to the extent that claim relates
exclusively to alleged deceptiveness in advertiser-approved “from” or “subject”
line, in which case advertiser has indemnity obligation.
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
TERMINATION
Example:
In the event of a breach of the Agreement or suspected fraudulent or
unapproved marketing, the Company reserves the right, in its sole and absolute
discretion, to terminate a Publisher, Sub-Affiliate or Program and remove any
advertisements at any time, upon written notice to Publisher. Termination notice
will be provided via e-mail and will be effective immediately, meaning, among
other things, that Publisher must immediately cease all advertising activities. In
all other cases, the Company shall provide the Publisher seventy-two (72)
business hours written notice of termination. All moneys then due to Publisher,
subject to the terms provided herein, will be paid during the next billing cycle.
The representations, warranties and obligations contained in sections __ - __
shall survive termination of this Agreement. In addition, all payment obligations
accruing prior to the termination date shall survive until fully performed.
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
LIMITATION OF LIABILITY
Example:
LIMITATION OF LIABILITY; DISCLAIMER OF WARRANTY
EXCEPT AS PROVIDED IN SECTION __ OF THESE T’S AND C’S [THE
INDEMITY CLAUSE], IN NO EVENT SHALL COMPANY OR ANY
PUBLISHER BE LIABLE TO THE OTHER FOR ANY LOST PROFITS OR
ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE
OR OTHER INDIRECT DAMAGES OF ANY NATURE, FOR ANY
REASON, WHETHER BASED ON BREACH OF CONTRACT, TORT
(INCLUDING NEGLIGENCE), OR OTHERWISE AND WHETHER OR
NOT EITHER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. THE INFORMATION, CONTENT AND SERVICES ON THE
SITE ARE PROVIDED ON AN “AS IS” BASIS. PUBLISHER USES THE SITE
AND RUNS THE PROGRAMS AT ITS OWN RISK. OTHER THAN AS
EXPRESSLY SET FORTH IN THESE T’S AND C’S, THE COMPANY
DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE AND WARRANTY OF NON-INFRINGEMENT.
THE COMPANY MAKES NO REPRESENTATIONS AND WARRANTIES
WHATSOEVER, AND DISCLAIMS ANY RESPONSIBILITY AND LIABILITY,
REGARDING THE CONTENT OR NATURE OF ANY AD OR PROGRAM
MADE AVAILABLE ON THE SITE, OR ANY PRODUCT OR SERVICE
ADVERTISED IN CONNECTION THEREWITH.
a. Goal: To limit the scope of client’s
potential liability as provided in
agreement, and avoid consequential
damages and implied warranties that
may incentivize and/or magnify
disputes in potentially unpredictable
ways
b. Practice pointers:
i. Expressly exclude indemnity claims
from limitation of liability to ensure
limitation of liability clause does not
override right of indemnity
ii. Be aware of state law limitations
and format requirements
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
ADDITIONAL MISCELLANEOUS CLAUSES
• License: revocable, non-transferrable, non-exclusive license to
use site and site data solely for the purpose of marketing or
promoting the programs
• Nature of the relationship: publisher acting as independent
contractor only and not partner, joint venturer or agent
• Integration clause referencing main agreement, program terms
and IO which may include volume parameters and other terms
• Non-waiver, notice and “no construction against drafter”
provisions
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THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
THANK YOU! QUESTIONS:
Kavon Adli
The Internet Law Group
9107 Wilshire Boulevard, Suite 450
Beverly Hills, CA 90210
(310) 910-1496
__________________________________________________________________________________________________________________
THE INTERNET LAW GROUP WWW.THEINTERNETLAWGROUP.COM
© Ifrah PLLC. Proprietary and Confidential. / (202) 912-4823 / ifrahlaw.com
Part III: Strategies For Streamlined Negotiations And Resolving Contract Disputes
(202) 524-4140
Drafting Affiliate Marketing Agreements: Ensuring Compliance With Advertising, IP And Internet Marketing Laws
Rachel Hirsch, Esq., Ifrah Law
KNOW YOUR OPPONENT
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
Do Your Research
• Social Media • Blogs • Industry Connections • BBB Ratings • Public Filings • Choice of Counsel
Negotiate With The Right Person
65
KNOW YOURSELF
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
Are You In A Position to Negotiate?
Who Holds The Bargaining Power?
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PROTECT YOURSELF
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
Who Carries The Risk?
Advertiser Affiliate
Advertiser/Affiliate Third Parties
Advertiser/Affiliate Private Litigants
Advertiser/Affiliate Government
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PROTECT YOURSELF
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
Advertiser v. Affiliate
Representations/Warranties – Material Breaches Indemnification – Mutual/Unilateral Limitation of Liability – Damages Cap
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PROTECT YOURSELF
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
Advertiser/Affiliate v. Third Parties
Is There An (Unknown) Third Person In Your Relationship?
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PROTECT YOURSELF
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
Advertiser/Affiliate v. Private Litigants
It’s All About Control:
Messenger Message Forum Damages
REMEMBER! Private Contracts Do Not Prevent Lawsuits!
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PROTECT YOURSELF
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
Advertiser/Affiliate v. Government
The Law Matters! Agency Principles – e.g., FTC Guidelines/TCPA
Accomplice Liability – e.g., TSR
REMEMBER! Your Private Contracts May Not Matter
71
PROTECT YOURSELF
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
Insurance: Are You Covered?
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KNOW YOUR OPTIONS
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
Dispute Resolution: What Does Your Contract Say? Forum Selection Clause Governing Law Class Action Waivers Methods of Resolution:
• Negotiation • Mediation • Arbitration • Litigation
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KNOW YOUR OPTIONS
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
Mediation • Promotes Communication And Cooperation • Provides Independent Basis to Resolve Disputes • Reduces Hostility • Preserves Relationships • Tailors Agreements To Meet Your Needs • Avoids The Uncertainty, Time, Cost, And Stress Of Going To Trial • Provides Flexibility In A Voluntary, Informal Setting
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KNOW YOUR OPTIONS
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
Arbitration
Voluntary Private Less Formal Less Costly (Than Litigation)
Trial Rights Preserved (If Non-Binding)
REMEMBER! Arbitration Clauses Need To Be Well-Crafted.
Evidentiary Presentation
Choice Of Arbitrator Final Decision
Enforceable In Court
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KNOW YOUR OPTIONS
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
LITIGATION
Involuntary Formal/Structured Evidentiary Presentation Procedural Safeguards
Attorneys’ Fees/Costs
A Good Negotiator Will Not Turn To Litigation As a First Resort.
Public/Open Proceedings Law-Based Decision Final and Binding Decision Right Of Appeal
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COMMON AFFILIATE DISPUTES – CASE STUDY #1 – PAYMENT DISPUTES
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
“Per Click” “Per Lead”
“Per Sale/Action Basis”
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COMMON AFFILIATE DISPUTES – CASE STUDY #2 – CLICK FRAUD
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
Sample Language:
Publisher Accounts Are Flagged That:
• Have Click-Through Rates That Are Much Higher Than Industry Averages And Where Solid Justification Is Not Evident To The Reasonable Satisfaction Of Advertiser;
• Have ONLY Click Programs Generating Clicks With No Indication By
Site Traffic That It Can Sustain The Clicks Reported; • Have Shown Fraudulent Leads As Determined By The Advertisers; • Have Much Higher Conversions Per Click Than Industry Averages And
Where Solid Justification Is Not Evident To The Reasonable Satisfaction Of Advertiser; Or
• Use Fake Redirects, Automated Software, And/Or Fraud To Generate
Events From the Programs.
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COMMON AFFILIATE DISPUTES – CASE STUDY #3 – IP INFRINGEMENT
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com
Trademark Infringement: Utilizing Someone Else’s Trademark IN: • Keyword Searches • Online Banner Ads Copyright Infringement – • Copyrighted Material Is NOT In The Public Domain Merely
Because It is Placed on the Internet • Material May Be Copyrighted Even If It Does Not Display a
Copyright Mark.
Who Is Responsible Under The Terms Of The Affiliate Contract For Violations Of A Third Party’s IP Rights?
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AVOIDING AND WINNING AFFILIATE DISPUTES
Never Work With An Affiliate Without A Contract – Sign-Up Terms Don’t Count!
Institute Best Practices And Hold Your Affiliates Accountable.
Conduct Periodic Audits, But Don’t Micromanage.
Maintain Good Record-Keeping.
Recognize The Limits Of The Relationship – Use Your Termination Clauses Wisely!
Ifrah PLLC | 1717 Pennsylvania Avenue, N.W., Ste. 650, Washington, D.C. 20006 | (202) 524-4140 | ifrahlaw.com 80