Senate Passes Bill to Facilitate Fax Marketing

Two years ago the Federal Communications Commission issued an order that aimed to toughen the regulation of unsolicited fax advertisements. Existing law allowed businesses to fax ads to customers with whom they had an established business relationship. The FCC decided that such a relationship did not constitute adequate authorization for fax-based marketing. It ruled that marketers would need signed written consents before transmitting unsolicited ads. Sharp protests from the business community led the FCC to postpone the effective date of the new rule. At the end of June, Congress passed a bill that, when signed by the President, will reinstate the safe harbor. Under the Junk Fax Prevention Act of 2005 (S.714), marketers will be able to send unsolicited faxes to recipients with whom they have a business relationship until the recipients object. The first page of each fax must notify the recipient that it may opt out of future communications.

Meanwhile, marketers who send unsolicited faxes to persons with whom they have no business relationship face increasing legal scrutiny. Government agencies can sue for penalties. Disgruntled fax recipients are taking a variety of approaches. Some are pursuing class actions while others are proceeding in small claims court.

Legislature Likely to Approve Car Buyer's Bill of Rights

Last year the California Legislature approved a “Car Buyer's Bill of Rights,” but car dealers opposed the measure and the Governor vetoed it. Proponents responded by reintroducing the legislation and by circulating a petition for a ballot measure. The proponents and the dealers have now reached agreement on a milder version of the legislation. Under the current draft of Assembly Bill 68, dealers who sell used cars for less than $40,000 must offer the purchaser a contract cancellation option, for a fee, that will allow the purchaser to return the car within two days of the purchase. The bill also provides that dealers can mark up the interest rates on the financing they offer to customers by no more than 2.5 percentage points over the wholesale rate offered by the finance company. Existing state law does not limit the amount of the markup.

Further, the bill defines the circumstances under which a dealer can advertise a used car as “certified” and requires greater itemization of the costs associated with options such as service agreements, alarm systems and surface protection products.

Unauthorized Use of Photo Results in $15 Million Judgment

In a cautionary tale for marketers, a Los Angeles County Superior Court jury awarded more than $15 million based on the unauthorized use of a photograph. Nestle prominently featured the image of Russell Christoff on the labels of Taster's Choice coffee. Christoff contended that, while he had sat for a modeling shoot, he had not been paid for the widespread use of his likeness. Under California law, all individuals have a “right of publicity.” Marketers who exceed the boundaries of contractually authorized use do so at their peril because models can claim damages that include a share of the profits. While Nestle has appealed the jury's verdict, the lesson learned is that marketers should either always bargain up front for unlimited rights or check that each new usage falls within the scope of the rights previously acquired.

Nevada Casinos Must Defend in California

Nevada casinos can be sued in California based on their marketing claims even if they have no business operations in the state. So held the California Supreme Court in June when presented with a case involving an allegedly undisclosed energy surcharge applied to room rates. The court, in Snowney v. Harrah's Entertainment, Inc., found that casinos subject themselves to the jurisdiction of the California courts when they direct substantial advertising to California consumers. While the outcome of this case is not surprising, it serves as a reminder that those who advertise in California should be prepared to defend themselves in the state's courts.

Court Upholds Wine Labeling Law

In May the California Court of Appeal rejected a challenge to a recent California statute (Business and Professions Code section 25241) that prohibits the use of a brand name with the word “ Napa ” on a wine label unless the wine is mainly from Napa grapes. Bronco Wine Company sought to continue to use the brand names “Napa Ridge,” “Rutherford Vintners,” and “Napa Creek Winery,” even though the wine is made from grapes grown outside Napa County . The Court of Appeal, in Bronco Wine Co. v. Jolly, initially ruled that federal law preempted the state statute, but the California Supreme Court overruled that decision. In the most recent ruling, the Court of Appeal rejected other constitutional arguments advanced by Bronco Wine. The Court explained that “the Legislature was standing on firm ground when it concluded that the name Napa in a brand name is inherently likely to mislead consumers when the grapes used to make the wine are not grown in the Napa Valley .”

What Happens When Palm Trees Obstruct Billboards?

The California Supreme Court announced in May that it will decide whether Regency Outdoor Advertising can obtain damages from the City of Los Angeles for planting palm trees at Los Angeles International Airport that obstructed the view of six billboards. Regency contended that it was entitled to damages under a condemnation theory, but the lower courts disagreed. According to the Court of Appeal, the government has no obligation to compensate billboard owners for visibility impairments. The Supreme Court likely will not reach a decision until 2006, at the earliest. Meanwhile, outdoor advertisers no doubt will seek a legislative fix.

“Red Bull” Targets “Red Rave”

Red Bull, an Austrian purveyor of popular energy drinks, has sued Red Rave, a competitor, in federal court in Sacramento . Red Bull alleges that its rival has infringed its trademarks and copyrights by falsely suggesting an affiliation between the companies. Red Bull contends that the names of the two drinks are confusingly similar. It also complains the Red Rave slogan “MIND w BODY w SOUL” is too much like the Red Bull mantra “VITALIZES BODY AND MIND.” And Red Bull charges that Red Rave has copied, word for word, the product description that appears on the Red Bull can.

Internet Marketer Claims that Rival Copied Website

In the digital age, it is all too easy to lift text or graphics from another's web page, but those who do so may be liable for copyright infringement. A case filed last month in federal court in Sacramento illustrates the point. Synergy Computing Business Group, which operates from Southern California under the name Chef's Resource, sued Andi's Kitchen Specialties, Inc., which does business from Florida . According to Synergy, both companies sell kitchen goods to consumers via websites. Synergy claims that Andi's visited the Synergy website, copied at least ten product photographs and several product descriptions, displayed the copyrighted material on the Andi's website, and then failed to promptly remove the material after Synergy objected.

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