Legal and Privacy Issues with Social Media
Unified Wine & Grape Symposium
January 27, 2011
Tracy Genesen
Kirkland & Ellis LLP
555 California St.
San Francisco, CA 94104
TEL: 415-439-1826
[email protected]
www.kirkland.com
John Hinman
Hinman & Carmichael LLP
260 California Street, Suite 1001
San Francisco, CA 94111
TEL: 415-362-1215
[email protected]
www.beveragelaw.com
Suzanne DeGalan
Hinman & Carmichael LLP
260 California Street, Suite 1001
San Francisco, CA 94111
TEL: 415-362-1215
[email protected]
www.beveragelaw.com
Caveat
The following model is a general framework
that addresses most basic regulatory
concerns. It is not represented to be a model
compliant in all particulars with the laws of
any specific state. Rather, prior to
implementation the models are adjusted to
accommodate local legal concerns. Different
models for different states may be operated in
parallel.
In the Beginning, there was the
Direct to Consumer Symposium
2009
On-Line Sales/Marketing Programs
Presented by:
Matthew D. Botting
General Counsel
Cal. Alcoholic Beverage Control
Regulatory Issues
• Tied-house: No supplier may, directly or indirectly, furnish or
give anything of value to any off-sale retail licensee.
• Free goods: No licensee may, directly or indirectly, give any
premium, gift or free goods in connection with the sale or
distribution of any alcoholic beverage, except as may be
specifically authorized.
• Consignment sales: Sales of alcoholic beverages to consumers
may only be from an inventory of product actually purchased
and possessed by the licensee undertaking the sale.
• Exercising license privileges: Only licensees may exercise
license privileges, including decisions regarding the purchase
and pricing of alcoholic beverages.
Tied-House
• Section 25502: No supplier may, directly or
indirectly, furnish, give, or lend any money or
other thing of value to an off-sale retail licensee.
• Be very cautious of programs that involve both
suppliers and retailers.
• If retailer receives any benefit from supplier
payment or involvement, then could be
problematic.
Free Goods
• Section 25600 and Rule 106: No licensee may,
directly or indirectly, give any premium, gift, or
free goods in connection with the sale or
distribution of any alcoholic beverage, unless
expressly permitted.
• Typical violations: “free shipping”; “free gift”;
“buy one, get one free”; etc.
• Whether third-party called “marketing agent”
of winery or “agent of consumer”, licensee will
be subject to discipline.
Consignment Sales
• Comes up when sale made by retailer.
• At time of sale, retailer must actually own the
wine being sold.
• Red flags include:
▫ Wine not ordered and/or winery not paid until after retailer
makes the sale.
▫ Winery ships wine sold by the retailer.
▫ Any agreement under which retailer can return unsold wine to
winery.
(Sections 23355, 23393, 23394, 25502, and 25503(a).)
Exercising License Privileges
• Section 23300: Only licensees may exercise
license privileges.
• Includes:
▫ Purchasing decisions.
▫ Pricing decision.
▫ Profiting from sale of alcoholic beverages.
• Biggest issue tends to be fees for services
provided—if based upon sale of alcoholic
beverages (such as percentage basis) then
problematic.
Within Weeks of the
Direct to Consumer Symposium . . .
The California Alcoholic Beverage Control
Department issued its now-infamous
Industry Advisory
INDUSTRY ADVISORY
SO CAN YOU BE BOTH EFFECTIVE AND
LEGAL WHEN USING SOCIAL MEDIA TO
DRIVE SALES?
Selection of Wine
Overview of Process
1
2
Customer
Customer
3
Trusted
Merchant
Website
Customer
Customer
Trusted
Merchant
Website
Licensee
(Winery
Importer
or Retailer)
Beginning of process
Step 1
Customer
Customer goes to website of Trusted Merchant (TM),
sees recommendation for wine that has been tasted
and is endorsed by TM and that TM has agreed may
be advertised on TM website. Customer goes to TM
website and starts process.
Transmission of Customer Information
Step 2
Trusted Merchant
Website
TM collects information from customer for
transmission to Selling Licensee, who is only
entity qualified to accept order. TM receives fee
from Licensee for advertising and marketing
services. Fees are usually fixed payments based
on total transactions through website over
varying periods of time.
Acceptance of Order by Licensee
Step 3
Selling
Licensee
(Winery or
Retailer)
Licensee receives customer information,
verifies funds, age of customer, product
availability, location of customer and
accepts or rejects order. Acceptance or
rejection communicated to customer.
Delivery from Selling Licensee to Consumer
Direct or Permit
Licensee
(Winery
or
Retailer)
Goods
• Customer in state of
residence of seller, or permit
state in which seller is
qualified.
• Delivery requirements
(taxes, identification
requirements, case
shipment restrictions, etc.)
tracked by compliance
software.
Delivery from Selling Licensee to Consumer
3-Tier
Winery/
Importer
Goods
Goods
Wholesaler
Goods
Retailer
Consumer
Plus Ordering
Information
This is a dynamic system with information flowing back and forth between the
participants on a real time basis. Funds are held by the retailer and reconciled
on weekly or monthly basis by EFT or other electronic funds transmission
systems. Reports may be generated at any point and each participant is
responsible for its federal excise taxes, state taxes (excise and sales) and state
permit reporting requirements.
Delivery from Selling Licensee to Consumer
3-Tier Step 1
Winery/Importer
Winery/Importer holds goods to satisfy
expected orders based on information
from marketing agent.
Delivery from Selling Licensee to Consumer
3-Tier Step 2
Wholesaler
Information and goods
go to wholesaler;
1. Responsible for state
import procedures
1. State Taxes
2. Delivery to Retailer
[Note: if no at-rest delivery required by state, goods
could go directly to retailer or consumer]
Delivery from Selling Licensee to Consumer
3-Tier Step 3
Retailer
Retailer receives order information
and processes credit card. Verifies
age of consumer, product
availability, location of customer,
accepts order and directs shipment
of wine to consumer.
Retailer places funds (after deduction of retailer margin) into
escrow account for disbursement up the chain to all vendors
and service providers.
Avoiding Other Potential
Legal Pitfalls in Social
Media
General laws still apply:




Copyright laws
Trademark laws
Privacy rights
First Amendment issues
Federal advertising
standards for wine still apply,
including:
No false or misleading
statements
 No disparagement
 No statements inconsistent
with labeling
 No misleading health claims


Federal Law: Currently there is no single body of
federal law regulating privacy, but the Federal Trade
Commission regulates online privacy violations.
 The FTC recently proposed new guidelines for online
consumer data collection.
▪ These include the proposal of a “Do Not Track” registry to allow
consumers to opt out of data collection from behavioral marketing
advertisers.
California: Business & Professions Code §22575 et seq.
requires commercial websites that collect personally
identifiable information to follow certain guidelines.
 Best Practices: Businesses should track these
developments and make sure their Privacy Policies are
up-to-date and conspicuously posted.

THE TTB AND ADVERTISING – what is it?
• No person engaged in the business as a producer, rectifier, blender, importer, or
wholesaler of wine, directly or indirectly or through an affiliate, shall publish or
disseminate or cause to be published or disseminated by radio or television
broadcast, or in any newspaper, periodical, or any publication, by any sign or
outdoor advertisement, or any other printed or graphic matter, any
advertisement of wine, if such advertising is in, or is calculated to induce sale in,
interstate or foreign commerce, or is disseminated by mail, unless such
advertisement is in conformity with §§4.60–4.65 of this part. 27 CFR 4.60
• As used in §§4.60 through 4.65 of this part, the term advertisement includes any
written or verbal statement, illustration, or depiction which is in, or calculated
to induce sales in, interstate or foreign commerce, or is disseminated by mail,
whether it appears in a newspaper, magazine, trade booklet, menu, wine card,
leaflet, circular, mailer, book insert, catalog, promotional material, sales
pamphlet, or any written, printed, graphic, or other matter accompanying the
container, representations made on cases, billboard, sign, or the outdoor display,
public transit card, other periodical literature, publication, or in a radio or
television broadcast, or in any other media 27 CFR 4.61
…radio or television broadcast, or in any
newspaper, periodical, or any publication,
by any sign or outdoor advertisement, or
any other printed or graphic matter…
No person engaged in the business as a producer, rectifier, blender, importer, or wholesaler of wine,
directly or indirectly or through an affiliate, shall publish or disseminate or cause to be published or
disseminated by radio or television broadcast, or in any newspaper, periodical, or any publication, by
any sign or outdoor advertisement, or any other printed or graphic matter, any advertisement of wine,
if such advertising is in, or is calculated to induce sale in, interstate or foreign commerce, or is
disseminated by mail, unless such advertisement is in conformity with §§4.60–4.65 of this part. 27 CFR
4.60
…written or verbal
statement, illustration, or
depiction…
As used in §§4.60 through 4.65 of this part, the term advertisement includes any
written or verbal statement, illustration, or depiction which is in, or calculated to
induce sales in, interstate or foreign commerce, or is disseminated by mail, whether it
appears in a newspaper, magazine, trade booklet, menu, wine card, leaflet, circular,
mailer, book insert, catalog, promotional material, sales pamphlet, or any written,
printed, graphic, or other matter accompanying the container, representations made on
cases, billboard, sign, or the outdoor display, public transit card, other periodical
literature, publication, or in a radio or television broadcast, or in any other media 27
CFR 4.61

Mandatory Statements: At the very least, all advertisements must
state the name and address (county and state) of the permittee
responsible for its publication. 27 C.F.R. §4.62(a)

Legibility of Mandatory Information: All statements appearing in
any written, printed or graphic advertisement shall be in lettering
or type size sufficient to be conspicuous and legible. 27 C.F.R.
§4.63.
Every Post, Blog Entry, Uploaded
Video and Tweet from Your
Company Is An Advertisement.
In “Old” Media . . .
You Worry About Your Own Actions.
In “New” Media
(Blogs, Facebook, Twitter, YouTube)
You Worry About the Actions of Everyone
Else.
LIKE WHO?
 Privacy
violations
 Copyright Infringement
 Trademark Infringement
 Harassment
 Impersonation
 Defamation
Best Practices
 If content is on your own blog, add appropriate disclaimers
and other language to your Terms of Use.
 If content is on Facebook, Twitter or other public social media
sites, rely on these sites’ Terms of Use.
 Monitor your social media for offending material.
 When appropriate, work with the social media site to remove
offending material.
What happens if a customer posts a
comment on your social media site that
seems to violate the federal advertising
standards for wine?
• Example: “I had a wine tasting
party and we compared X wine
with Y and Z, and Z was the best. In
fact, X wine tasted like dirt.”
• Example: “Let’s face it, wine
drinkers live longer than anyone
else.”
27 C.F.R. §4.61(b) provides that an
advertisement does NOT include:
“Any editorial or other reading material . . . In any
periodical or publication or newspaper for the
publication of which no money or valuable
consideration is paid or promised, directly or
indirectly, by any permittee, and which is not
written by or at the direction of the
permittee.”
LIKE WHO ELSE?
Like Employees –
They’re your greatest asset.
But What If You Need to
“Curb Their Enthusiasm”?
Federal Trade Commission Guidelines for
Endorsements and Testimonials (16 C.F.R. 255)
As of December 1, 2009, businesses now have the
responsibility to educate and require disclosure from
company employees and any influential bloggers the
companies work with on social media marketing
programs.

In essence, employees who discuss your company or its
products on their own personal social media sites must fully
disclose their affiliation with your company on these personal
blogs, Facebook pages, etc.
 Copyright
infringement
 Revealing employer trade secrets/proprietary
information
 Gripe sites: criticizing employer
 And everyone’s favorite . . .
“Unprofessional” messages and photos
Create a Social Media Policy.
Educate Employees Regarding:
 Endorsements and Disclosures on Personal




Social Media Sites
Protection of Company’s Trade Secrets and
Other Proprietary Information
Obtaining Permission Before Posting Any
Copyrighted Material
Using Discretion
Following the Federal Advertising Standards
for Wine in 27 C.F.R. 4.60 to 4.65
And Above All . . .
DON’T:
Blog about it
Post it
Tweet it . . .
Until you’ve gotten the appropriate internal
approvals.
Treat your social media marketing products
with the same standards of care and quality
you use for traditional marketing publications
and programs.
CAREFUL – IT’S DANGEROUS OUT THERE
Questions???
Descargar

Title