Dozier Internet Law, by John W. Dozier

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The Advertising Network Dilemma, by John W. Dozier

January 09, 2010

No one really understands the duties, responsibilities, liabilities and exposures of ad networks. With any new (relatively) business model or process comes uncertainty. The primary uncertainty in terms of success, long term viability, profitability, and sustainability inherent in the advertising network business model and operational structure rests with relationships.

Advertisers are often very happy with ad networks. Affiliate marketers (publishers) are likewise pleased. Ad networks are aggregators of advertising services (for advertisers with a product or service) and business generation opportunities (for publishers with sales acumen to push an advertiser's product or service). And networks are the middlemen, the opposite of the dis-intermediator, and a relatively new and additional layer in the process of doing business in the affiliate marketing industry. Ad networks deliver results by acting, at least in material part, as a venue to bring willing buyers and sellers together. The value is obvious to advertisers and publishers alike.

Traverse Internet Law represents ad networks, advertisers and publishers, often in litigation or at least in relation to disputes. And most of the time the disputes are about money. Usually the ad network is owed money that it has already paid out, in substantial part, to publishers selling an advertiser's wares. The advertiser claims that the traffic it received was in violation of the program guidelines or fraudulent. The network, often not being privy to the information an advertiser has about potentially fraudulent transactions, is not notified early enough to stop payment to the affiliate marketers. A no-man's land ensues. The ad network has paid for services provided, the affiliate refuses to refund the money, and the advertiser has been ripped off. That is why most ad networks have very tight time requirements for advertisers to contest transactions. The problem arises, of course, when an advertiser is slow in identifying the fraud, and does not or cannot report it early enough to stop the payouts.

Negative option deals, carrying with them hefty front loaded commissions based upon the projected customer value with a recurring revenue stream, have brought the issue to prominence. The legal issues are complex and at this point no one knows where the gavel will fall on the money disputes. The ad networks rely upon their contractual provisions, which seemingly preclude any financial adjustments after settlement. The advertisers respond that the ad networks breached the contract, acted negligently etc. and the contractually defined settlement dates do not pre-empt liability for misconduct by the ad network. It's a mess, no doubt.

If advertisers and publishers want ad networks to survive and the gravy train to continue, everyone is going to have to come together and establish standards for transaction payment processes. One big challenge will be in defining the degree of care and responsibility ad networks will assume in vetting publishers for participation (due diligence), establishing performance expectations (performance standards), and assuring compliance (compliance auditing). But the solution to the problem is wrought with risks that will potentially redefine the role and responsibilities of ad networks and invite allegedly aggrieved third parties to reach into the deep pockets of the networks when an affiliate marketer or advertiser "goes rogue".

Here's to hoping that the industry begins to have a meaningful dialogue and engage in this issue with a view towards building a bullet proof business process. If you are an advertiser or a publisher you know that ad networks have been, for the most part, financially rewarding.

So, what is the industry going to do about the problem?

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Negative Option and Continuation Billing Programs, by John W. Dozier

January 29, 2010

The online marketing industry has been hit hard recently. First, the FTC passes new requirements for disclosing economic interests. Then Google shuts down the Adwords accounts of a lot of marketers for the negative option and continuation programs, and MasterCard and Visa stop processing negative option and continuation program transactions.

It's a tough time for everyone because a small segment of the affiliate marketing and retail industry were less than honest about the programs people were buying and how those consumers would be charged. And an entire industry, many of whom were operating legitimate and legal programs, are out of luck and out of business. Including some ad networks.

At Traverse Internet Law we've had a lot of clients caught up in the web of self help enforcement actions being taken by key service providers like Google and the credit card companies. And sadly, it is another example of what happens when an industry does not police itself. Regulation is inevitable if self regulation fails. And it has. Private self help regulation is even jumping in. Until the retailing, lead generation and affiliate marketing industries establish an accreditation process, this type of regulatory reaction will continue on an ever-increasing basis, both in scope and frequency.

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Google Runs Into Trouble Oversees, by John W. Dozier

February 05, 2010

It's been interesting watching the politics of the online world lately at Traverse Internet Law. Google has been struggling with the Chinese government's information policies and threatening to pull out of China altogether. Google's claim, in summary, is that China does not adequately embrace the concepts of free speech. Yes, Google argues, China must change its attitude and approach about suppressing dissent and repressing criticism.

Is Google's problem really one of free speech? Or is the problem that Google, and other US bred online businesses, really don't like to follow the laws of other countries?

Do you remember the French legal actions against eBay for allowing the sale of Nazi memorabilia? Do you know about the ongoing trial of Google executives charged with criminal offenses in Italy over a video on Youtube?

Recently, Italy's largest media group sued Google for copyright infringement and wants 500 million euros in damages. The case is winding its way through the courts. In the US, Google would be shielded by laws in place for User Generated Content (the Communications Decency Act and the Digital Millennium Copyright Act). Those laws don't extend to Italy. And apparently to make sure Google is on the hook, new regulations proposed in the Italian parliament would create publisher liability for all user generated content, placing these sites on an even footing with television stations in terms of responsibility for the content. And that would make Google have to leave Italy for good.

When in Rome, do as the Romans do. There is merit in that belief. And Google's problem is not just about the fundamental freedoms ignored in China. Google, you see, is realizing that it cannot impose its will and wisdom on the governing forces of the world. And certainly not on Italy, and its biggest media group, Mediaset, which is controlled by...

Prime Minister Silvio Berlusconi.

Remember...all politics is local.

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Traverse Internet Law at Search Engine Strategies Conference, by John W. Dozier

March 13, 2010

If you missed the ten biggest legal risks for social media sites, contact us for a rundown of the issues discussed. We understand the PowerPoint presentation from the Miami Social Media Conference in January is on the conference site.

We had a lively debate at LeadsCon in Vegas last month in a General Session on FTC and legal compliance.

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Both Sides of Section 230 Immunity, by John W. Dozier

March 14, 2010

Traverse Internet Law is a private law firm, not a public interest group. So we get to argue both sides of issues since we represent clients-not causes.

In Federal Court in New York we are arguing that our client deserves Section 230 immunity from liability for third party content. And at the same time, in Federal Court in Florida we are arguing that the Defendant is not entitled to Section 230 immunity for liability arising from third party content.

It is critically important to have a balanced perspective on legal matters, and the process of framing legal arguments starts with anticipating and then understanding what the other side is going to argue. Seeing it from both sides makes our job easier. If you cannot argue the other side's case effectively, you cannot deal with your own client's positions most effectively. So when clients wonder whose side we are on, probably thinking we have a pre-defined bias like Public Citizen, the Electronic Frontier Foundation, and the ACLU, the answer is that we are on the side of our client. Whoever that client may be and whatever their thoughts or beliefs may be. At Dozier Internet Law, we don't cloud our vision of vigorously representing the best interests of our clients with our own personal beliefs. We just focus on doing the best job possible for our clients...whoever and wherever they might be.

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Traverse Internet Law on WebMaster Radio Tomorrow, by John W. Dozier

March 16, 2010

Join Traverse Internet Law at 5:20 PM Eastern on WebMaster Radio will be discussing, and taking calls about, the Google Bomb book and commercial email. Interested in compliance issues and the latest and greatest email issues? This chat may be for you.

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Traverse Internet Law at AdTech San Fran, by John W. Dozier

April 16, 2010

The Traverse Internet Law Federal Court Report reaches thousands of subscribers each month. We pick the best Internet lawsuits filed each month and explain what it means to your online business. And best of all....it's free. Just go to the Traverse Internet Law homepage and follow the directions for signing up. It's getting rave reviews. After all, where else can you find out who is being sued and for what?

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National Cyberlaw Bar Association Forming, by John W. Dozier

June 08, 2010

Finally, a professional group for true Internet lawyers. An organizational meeting of the Cyberlaw Bar Association is being held July 31 through Augst 1 at Mandalay Bay in Las Vegas. Here is the website for the bar association and conference: www.cyberlawbarassociation.com.

If you are an Internet lawyer, you need to be there.

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Internet Lawyer Summit in Vegas, by John W. Dozier

April 02, 2011

Traverse Internet Law is organizing the first Cyberlawyer Summit to be held May 11 and 12 at Mandalay Bay in Las Vegas. Eighteen of the leading Internet lawyers from across the country have been invited to this small, exclusive meeting focused on client development, synergistic opportunities and business operations. Many of the leading Internet law firms in the country are confirmed participants.

If your law firm is dedicated predominantly to cyberlaw, preferably with a litigation or dispute resolution slant, and you are interested in participating, then drop an email at cybertriallawyer.com (Traverse Internet Law) with information about yourself and your practice. Keep in mind that these meetings during the summit is going to involve mostly senior lawyers with decision making ability...the movers and shakers so to speak. If you are one of those, drop us a line. This is not an educational meeting for young lawyers or those new to the space. Very advanced knowledge and expertise, and seasoned internet law and business operational and marketing capabilities, will be helpful.

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Traverse Internet Law Data Loss Analysis, by John W. Dozier

April 15, 2011

Data loss has been a hot topic lately. When Epsilon lost the email addresses of millions to hackers, everyone was up in arms and awaiting an onslaught of lawsuits. But Epsilon did not provide services to the consumers victimized by this loss and the only basis for a lawsuit may be a claim asserted by consumers against those very prominent companies who entrusted their data to Epsilon.

At Traverse Internet Law we noted a decision handed down last week in Federal Court in California. The case is linked here: Claridge v. Rockyou, Inc. Note the real problem with proving actual damages in these types of cases. How did losing your data really cost you money? Mere allegations of speculative harm that might arise in the future is likely inadequate to sufficiently allege an injury in fact. Here the Court states its reservations about the injury being adequate but defers his judgment on the issue because of the evolving and unsettled nature of the law on this point.

Traverse Internet Law suggests that in any data loss case the best allegation of damages might be elements laying out an actual or imminently anticipated need to purchase fraud and id theft prevention or detection services from a credit bureau. Given the speculation surrounding what damages are really incurred in data loss cases, such a quantifiable cost with a seemingly reasonable motivation (to curtail phishing expeditions) seems to make the most sense for meeting the damages element threshold.

Tell us what you think. And is there any hope of Epsilon being held accountable for the data loss from consumers? Surely retailers of all sorts are going to look to Epsilon for compensation. Can consumers victimized do likewise?