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A Look into Digital Media’s Influence on Brand Identity and Intellectual Property Rights

February 10, 2017 (13 min read)

Q&A with Po Yi, Partner at Venable LLP.

A Look Into Digital Media’s Influence

Please provide some general background on the types of transactional work you do currently.

I counsel and work with clients on the front end of their marketing activities. My practice focuses on business transactions and counseling in the areas of sponsorships, marketing alliances, sports and entertainment marketing, celebrity endorsements, digital and social media marketing, technology, advertising and marketing compliance, and general intellectual property (IP).

Tell us about the intellectual property issues you handle for clients, including IP ownership, clearance and risk, and determining what contracts clients need to enter into, what IP rights they need, and what clearances are necessary.

I do a lot of copyright and trademark counseling as well as counseling on right of publicity issues. I wouldn’t call myself a copyright lawyer or a trademark lawyer, but I am a generalist lawyer who practices in the area of intellectual property because everything that I do or that my clients do involves intellectual property. In my transactional work, whether it involves advertising transactions, entertainment transactions, or technology transactions, I look at the IP issues related to those transactions. I determine what specific language we need to insert into the contract to secure, first, my client’s rights, and second, to make sure that we are indemnified with respect to any IP issues.

Within IP, my work primarily consists of analyzing clearance issues. Whether it is marketing related or straight entertainment, I look at the transaction and determine if there are third-party rights involved, whether they flow from copyrights, trademarks, or right of publicity. I look at right of publicity issues on a daily basis and determine what contracts, if any, we need to obtain in order to clear any third-party IP rights. An example of a right of publicity situation would be if my client wants to hold an event in connection with the promotion of its products and invites celebrities, and my client takes a picture of a celebrity and wants to post it on social media. I have to analyze right of publicity issues to see if my client actually can do that or not. Social media is where right of publicity issues come up a lot. If my client wants to engage in social media banter with celebrities or even reference them, that could be a potential problem unless the client has a talent agreement in place with such celebrities.

Have you seen changes in these IP activities over the course of your practice? What issues are most significant now? Are there any trends emerging?

Digital media, especially social media, has changed the way people think about IP issues because there is so much content out there, and it is available to everyone. A lot of my clients, and this is true of the general public, think that just because you can see it and it’s in public areas, that you can take that content and use it. It doesn’t matter how many times I have told my clients you cannot do that, it still comes up every day. When they see something in social media or in digital media online, they think they can just take it. And because so many people and legitimate companies appear to be just taking this content without obtaining a license, my clients will come back to me and say: “But everybody else is doing it, why can’t I do it? Isn’t it in the public domain?” I hear public domain all the time. Clients will talk about public domain and fair use without knowing what those terms actually mean.

Another change is that everything is just so fast. We used to have time to think about issues, but we don’t have time anymore because of social media. Things are happening instantly, and we have to help our client make decisions on issues as they arise for immediate execution every day. Some issues we have seen before, but some issues we have not seen before.

Application of IP laws has become more challenging because of changing technology. An example of changing technology affecting IP issues is virtual reality. I have written on virtual reality and IP issues. How do you apply existing IP laws to virtual reality? When you are doing these deals and you are obtaining rights, what do you do about the virtual reality rights? For example, if you have the right to create or use a person’s image, or the right to use a song, or the right to broadcast an NFL game, have you included in the basket of rights the right to create a virtual reality experience using that image, song, or game? If not, is the rights grant language broad enough to allow you to use that image, song, or game in a virtual reality environment? If you don’t include the right to create a derivative right or derivative product, that may become a problem. A virtual reality version would be a derivative product of that image, song, or game.

It will be really important to add derivative rights language, the right to create derivative products, if you are going to be working with virtual reality. When you are drafting or negotiating contracts for a licensee, you need to make sure that you are including all derivative rights in the scope of the license. On the other hand, if I am representing the IP rights holder, I may want to take the opposite position and say that virtual reality rights are not included in the basket of rights licensed, unless they are expressly provided in the license grant. I may want to reserve the right to create virtual reality and exclude such right from the license grant. Everybody is really talking about virtual reality now, and you need to think about whether you want to include or not include virtual reality in your licensing rights.

In your advertising practice, what are the key issues your clients are facing currently?

Native advertising and influence marketing are the top issues right now. The Federal Trade Commission (FTC) has been extremely active in this field. Native advertising is advertising using contextually relevant content that has been paid for by the brand. Influencer marketing involves a brand engaging influencers (primarily in social media) to communicate a marketing message to reach the influencers’ fan base. Typically, the influencer has been given a promotional consideration or free products by the brand, or the production costs have been paid for by a brand. If the connection between the brand and the native advertising content or the influencer is not disclosed to the consumers, that could be a major problem for the brand, the content partner, and the influencer. The FTC issued a guide about native advertising last year, business-center/guidance/nativeadvertising- guide-businesses, and prior to that there were FAQs on the FTC’s Endorsement Guide that discussed social media and influencer marketing issues. The FTC has recently conducted several high-profile enforcement actions that have brought these issues to the forefront of marketing and advertising compliance.

My partners and I speak quite a bit on these issues because native advertising and influencer marketing are highly effective marketing tactics. The FTC is not saying that you can’t engage in these activities, but you have to disclose any material connection related to the brand, such as payment or other consideration provided by the brand. The influencer has to disclose it, and the brand hiring the influencer or the brand involved in the sponsored content also has an obligation to disclose or require the influencer or the content partner to disclose the material connection. This was really the hottest issue in advertising in 2016. Venable has been involved in a number of high-profile cases, and I was personally involved with one of the first major cases. The material disclosure issue is especially a big issue in social media, which is why you see often see #ad or #paid in social media posts.

You mentioned a recent move where brands are becoming more involved in creating content and distributing it to consumers in new ways rather than relying entirely on advertising agencies. Could you please provide some examples?

Brands are now very much involved in the creation and distribution of content that is not what you may consider to be a commercial. Brands used to rely primarily on commercials to deliver messages. Those commercials were broadcast on TV, and more recently they were also distributed via the web. Brands have traditionally poured a lot of money into doing commercials—30 seconds, 60 seconds, even 15 seconds—to get their message across. A brand might pay millions of dollars for a 30-second spot during the Super Bowl.

But in recent years brands have started to directly create their own communities using social media. Every brand has a Facebook brand page, a YouTube channel, and a Twitter handle. And because they have created their own communities, they have a direct line of communication with their consumers or potential consumers. The brands have now become celebrities in many ways and are extremely influential. Because of that, brands have become fantastic distribution partners for content.

Thus, brands create content and have become an integral part of the distribution network. Instead of going to traditional media companies and agencies to create commercials that contain strictly commercial messages, brands are turning to production companies, and in many cases directly to the media companies themselves, for content that promotes the brands’ marketing and promotion agenda. YouTube has an in-house group that creates content, as does Facebook. So if you are working with a brand that works directly with media companies or producers of content and sponsors a show or works with the creators of a show to produce something that is specifically and exclusively for the brand, and then uses the proprietary distribution channel of the brand through social media and websites to distribute that content, you can see the power of the brand in helping a nascent production get eyeballs.

There are so many brands working with producers now to create content, and the content is not necessarily related to the products they sell; sometimes it is just great content. As brands find that showing traditional advertising is not effective, especially in digital media where ads may not even be delivered due to ad blocking, they are turning to non-commercial content and nontraditional distribution methods (such as proprietary distribution channels) to reach their customers.

Another reason that influencer content is so big and the FTC is so focused on influencer marketing issues is because of YouTubers. Average consumers and even kids turn to YouTube all the time and create original content. Brands want to tap into that market because it’s more relevant and more authentic, and therefore it becomes much more powerful. There’s a lot of earned media involved when you have influencers and consumers creating user-generated content and distributing it through their networks. Brands can facilitate the creation of this kind of content by YouTubers. The FTC cares very much about making sure that the content that is created and distributed is not somehow biased, or that at least when you are delivering such content, you are disclosing the connection that the brand has with the content or the content creators.

Are there any other recent trends impacting transactional practice in the advertising and marketing area?

I do a lot of media deals where brands and agencies are entering into media integration deals with media companies. In negotiating these deals, I make sure that the contracts specifically address influencer marketing. I also regularly work on compliance issues and help clients build a compliance program when using influencers. The FTC’s consent order with Lord & Taylor (accused of failing to disclose paid native advertisements and fashion influencer endorsements) and other similar highprofile consent orders from last year have made us think about what language we should include in talent contracts and endorsement agreements to address the issues raised by the FTC.

Technology and data issues come up a lot in transactions that I handle, such as marketing agreements that involve software, data collection and processing, and technology services, especially related to adtech (advertising technology). So I have to understand and think about software, data security, privacy, and technology issues. Thank goodness for the Internet—I am constantly searching the web for information and the latest news on technology, industry, and companies related to my deals to keep me up to date. One nice thing about being in a big law firm is that the people at Venable tend to update each other on things that are relevant. So I do rely a lot on other people to keep me up-to-date on a lot of the issues that I don’t deal with on a dayto- day basis.

Regarding the sports and entertainment marketing areas of your current and previous practice, could you talk a little about your involvement in negotiations with celebrities when handling sponsorships and other agreements?

I have been involved with celebrity endorsement deals that are just endorsement deals, where they are doing commercials or making an appearance. But I have also been involved with quite a few celebrity deals where the talent is doing much more, such as creating a new brand where the talent gets royalties. In some deals, the talent gets really involved with the creative aspect of the campaign. So endorsement deals can be very different in so many different ways. The best kinds of deals, the deals that I love to work on, the deals that are the most successful, are where the brand is really partnering with the talent to create a campaign.

Is this a growing area that should be considered by new lawyers and law students? If so, what do you find most rewarding about your transactional practice?

This area of the law is not itself new; branded content is not new, but it was not as prevalent as it is now. Digital media obviously did not exist in the past, but the idea of brands working with entertainment and sports content has existed for decades.

This is an area that is difficult to break into as a lawyer. I interview a lot of people who would love to do what I do because it’s sort of sexy. You’re dealing with content, and people love content. Whether it’s marketing content or entertainment content, I deal with content. It’s an area that a lot of people want to work in, but they don’t quite understand how to get into this space. For new lawyers and law students, you need to have good underlying skills— transactional skills, litigation skills, research skills. And the most important thing, in addition to knowing the substantive law, is to be practical, to use a pragmatic approach. So if you really want get to into this space, you have to be a lawyer with a basic foundation in transactional law, counseling, research, and in the substantive areas of the law like IP or advertising. Finally, and just as important, you have to study and know the industry.

Po Yi is a partner in the advertising and marketing group at Venable. She has extensive experience in private practice and formerly as Chief Advertising Counsel for American Express. Her current practice focuses on transactions and counseling on sponsorships, marketing alliances, sports and entertainment marketing, digital media, technology, advertising and marketing compliance, and intellectual property. She represents major consumer brands, retail companies, financial services companies, advertising agencies, media and production companies, and entertainment organizations.

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