Social media sites are transforming not only the daily lives of consumers, but also how companies interact with consumers. Here at Morrison Foerster, across all of our practice groups, we are seeing complex, cutting-edge legal issues arising out of social media. As with the Internet boom during the mid-to-late 1990s, social media is generating new legal questions at a far faster pace than the law’s ability to provide answers to such questions. In an effort to stay on top of these emerging issues, and to keep our clients and friends informed of new developments, Morrison Foerster publishes this blog devoted to the law and business of social media.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.Aaron’s practice focuses on advising both established and emerging companies in a variety of data- and technology-intensive sectors, including software, SaaS, cloud-based technology, digital media (social media, AR/VR, gaming, streaming media, AdTech), AI, healthcare, consumer electronics, e-commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on branding and marketing, trademark licensing, and content-related transactions, as well as the intellectual property aspects of mergers, acquisitions, asset spin-offs, and private equity investments.He has represented clients such as Autodesk, Meta, OpenAI, Splunk, Konami, Kaiser Permanente, SoftBank, Visa, and Yahoo, among others.Aaron has been recognized by numerous publications for his work on market-defining technology transactions. He is currently ranked by Chambers USA for “Technology Transactions.”Aaron also serves as co-editor of Socially Aware, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics. Aaron is also a sought-after speaker on new and emerging areas of law, and is a frequent presenter and panelist at conferences and legal services programs. In addition to his active practice, Aaron regularly provides pro bono assistance to various nonprofit and charitable organizations such as Common Sense Media and the Starlight Children’s Foundation. He is a member of the board of directors of California Lawyers for the Arts.While in law school at the University of California, Berkeley, Boalt Hall School of Law, Aaron served as executive editor of the California Law Review and was elected to the Order of the Coif. Following law school, Aaron served as law clerk to the Honorable William H. Orrick and the Honorable Martin J. Jenkins, both United States District Judges for the Northern District of California.

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Aaron is the chair of our Technology Transactions Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals. Aaron’s practice focuses on advising both established and emerging companies in a variety of data– and technology–intensive sectors, including software, SaaS, cloud computing, AR/VR, AI, gaming, healthcare, consumer electronics, social media, e–commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on the intellectual property aspects of mergers, acquisitions, asset spin–offs, and private equity investments.

Aaron P. Rubin

Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.Lawrence focuses his practice on technology transactions and licensing matters. His diverse experience includes advising on SaaS agreements, cross-licensing agreements, research and collaboration agreements, development agreements, and distribution agreements. He counsels a broad range of companies across the software, hardware, life sciences, biotech and FinTech spaces, as well as other entities including universities.He advises clients in connection with general corporate matters including contract negotiations, and leasing and technology placement agreements.Lawrence also serves as co-editor of <a href="https://www.sociallyawareblog.com/" target="_blank">Socially Aware</a>, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics.Prior to joining the firm, Lawrence was counsel at another major law firm. Before earning his law degree, Lawrence was a web consultant, project manager, and web developer in Portland, Oregon, where he managed and consulted on projects using industry methodologies and performed custom development and integration of content management systems.Lawrence was named a Super Lawyers “Rising Star” in 2015 and 2018–2022, and is licensed in both California and New York. Lawrence earned his J.D. from the University at Buffalo School of Law, where he was the electronic systems editor for the Buffalo Law Review and awarded the ABA-BNA Award for Excellence in the Study of Intellectual Property Law.

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Lawrence Gallick

Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster.Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions. His clients include technology, digital media and content for television and music, financial services, and communications companies with diverse intellectual property assets and issues.His practice focuses on the legal aspects of developing, licensing, and commercializing technology and intellectual property, as well as negotiating general commercial contracts, including outsourcing transactions, as well as content and data licenses. He regularly assists clients with legal issues relating to licensing and commercialization of digital media and content, digital content that is distributed over the Internet or streamed, mobile applications and social media, as well as the licensing of recorded music for distribution via digital platforms. Anthony is also experienced with issues relating to open-source software, software development, artificial intelligence and machine learning, cloud-based technology, and protection of proprietary information.Anthony has extensive experience working on matters involving disruptive technologies, such as blockchain. He has helped fintech clients with general intellectual property issues in connection with terms of service for online financial products and services.Anthony is an integral part of the outside pro bono legal team for nonprofit organizations based in New York, including advising clients on legal issues regarding entertainment, social media, privacy rights, and the negotiation of outsourcing and service agreements. Anthony received his J.D. from the University of Michigan Law School in 2009. He received his B.S. from Cornell University in 2004.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. He advises clients on general commercial and transactional matters. His clients include technology, media, and communications companies with considerable intellectual property assets. His practice focuses on the legal aspects of licensing and commercializing technology and intellectual property, as well as negotiating general commercial contracts. He also regularly assists clients with legal issues relating to mobile applications and social media.

Anthony M. Ramirez

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If your company collects information regarding consumers though Internet-connected devices, you will want to take note of the Federal Trade Commission’s (FTC) r

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Watch Out: The Federal Trade Commission Continues to Watch the (Alleged) Watchers

Watch Out: The Federal Trade Commission Continues to Watch the (Alleged) Watchers | Socially Aware

Julie O'Neill

If your company collects information regarding consumers though Internet-connected devices, you will want to take note of the Federal Trade Commission’s (FTC) recent privacy-related <a href="https://www.ftc.gov/news-events/press-releases/2017/02/vizio-pay-22-million-ftc-state-new-jersey-settle-charges-it?utm_source=govdelivery" target="_blank" rel="noopener">settlement</a> (brought in conjunction with the New Jersey Attorney General) with smart TV manufacturer Vizio, Inc. The settlement is significant for four reasons:<ul><li style="text-align: left;">The FTC reinforces the position it has taken in other actions that the collection and use of information in a way that would surprise the consumer requires just-in-time notice and choice in order to avoid a charge of deception and/or unfairness under Section 5 of the <a href="https://www.ftc.gov/enforcement/statutes/federal-trade-commission-act" target="_blank" rel="noopener">FTC Act</a>.</li><li>The FTC takes the position that television viewing activity constitutes sensitive data. This marks a departure from its approach of limiting sensitive data to information that, for example, can facilitate identity theft, precisely locate an individual, is collected online from young children or relates to matters generally considered delicate (such as health information).</li><li>The settlement includes a payment of $1.5 million to the FTC (as well as payment of civil penalties to New Jersey), but the legal basis for the FTC payment is not stated. This could suggest that the FTC will more aggressively seek to obtain injunctive monetary relief in Section 5 cases.</li><li>Acting Chairwoman Maureen Ohlhausen explicitly noted in a <a href="https://www.ftc.gov/system/files/documents/public_statements/1070773/vizio_concurring_statement_of_chairman_ohlhausen_2-6-17.pdf" target="_blank" rel="noopener">concurring statement</a> her skepticism regarding both the allegation that TV viewing data is “sensitive” and that the FTC’s complaint adequately established that the practices at issue constitute “substantial injury” under the unfairness prong of Section 5.</li></ul>Leaving aside what the chairwoman’s concurrence may portend for future enforcement efforts, the FTC again seems to be using allegedly bad facts about privacy practices to push the envelope of its authority. Accordingly, with the Internet of Things boom fueling <a href="http://www.gartner.com/newsroom/id/3165317" target="_blank" rel="noopener">a dramatic increase in the number of Internet-connected devices</a>, companies that either collect information via such devices or make use of such collected information should consider the implications of this enforcement action.The Challenged PracticesThe FTC alleged that Vizio’s collection of viewing and other information—“up to 100 billion data points each day from more than 10 million Vizio TVs”—and its disclosure and use of such information for advertising practices was both unfair and deceptive in violation of Section 5 of the FTC Act because it was done without adequate notice and consumer choice.The gravamen of the <a href="https://www.ftc.gov/system/files/documents/cases/170206_vizio_2017.02.06_complaint.pdf" target="_blank" rel="noopener">complaint</a> is that Vizio used automated content recognition (ACR) technology to continuously identify virtually all of the content viewed by users of its Internet-connected TVs and then used and disclosed that information, including on a personal or household level, for advertising purposes—all without adequate notice to the consumers or their consent.According to the FTC’s complaint, the company not only collected such information on TVs sold with the ACR technology installed, but it also remotely installed the technology on older TVs that had been sold without it.Vizio allegedly shared the information it collected with third parties for three purposes:<ul><li>Measuring audiences, based on a persistent identifier for each TV and details about the content viewed on it (e.g., programming and commercials, time and duration of viewing, and so on);</li><li>Analyzing advertising effectiveness, including by using IP address information to review consumers’ behavior across devices and determine if, for example, consumers visited a particular website after viewing a television advertisement related to that website; and</li><li>Using TV viewing data to target advertising to consumers on their other digital devices.</li></ul>The FTC alleged three violations of Section 5, based on the allegedly inadequate disclosures Vizio made regarding its practices. In short, the FTC alleged that consumers had “no reason to expect” that Vizio was tracking their viewing data on a second-by-second basis and that consumers were not adequately notified of the tracking or of Vizio’s use and disclosure of the information collected. The FTC therefore alleged in relevant part that:<ul><li>Vizio’s collection and sharing of television viewing data without consent was an unfair act or practice in violation of Section 5; and</li><li>Vizio’s failure to adequately disclose the collection and sharing was a deceptive act or practice in violation of Section 5.</li></ul>What Is New Here and Why It MattersRoughly three years ago, the <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/blt680227acbdf679ca/62731982220ab5285f519189/131206-ftc-expands-reach.pdf" target="_blank" rel="noopener">FTC brought a case against the maker of a flashlight app</a> based on allegedly unexpected practices relating to the collection and use of precise geolocation information (which the FTC has long deemed to be sensitive information). The FTC used that case, <a href="https://www.ftc.gov/enforcement/cases-proceedings/132-3087/goldenshores-technologies-llc-erik-m-geidl-matter" target="_blank" rel="noopener">In Re Goldenshores Technologies</a>, to firmly establish that out-of-policy notice and opt-in consent were required to collect precise geolocation information, and that the purposes of the collection, along with the identity or categories of third parties that received the information, also needed to be disclosed outside the privacy policy.With the Vizio case, it appears that the FTC is doing for the Internet of Things what it previously did for mobile applications. In its <a href="https://www.ftc.gov/sites/default/files/documents/reports/federal-trade-commission-report-protecting-consumer-privacy-era-rapid-change-recommendations/120326privacyreport.pdf" target="_blank" rel="noopener">2012 Privacy Report</a>, the FTC stated that companies “do not need to provide choice [i.e., obtain prior consent] before collecting and using consumer data for practices that are consistent with the context of the transaction or the company’s relationship with the consumer.” Thus, the first noteworthy thing about this case is that the FTC alleges that the tracking of consumers’ TV viewing activity required notice and consent because it was conducted “through a medium that consumers would not expect to be used for tracking.”In other words, while a consumer might reasonably expect to receive a marketing email or mailer from a retailer after making a purchase, here the FTC seems to be strongly suggesting that the use of information collected from connected TVs for tracking or advertising purposes is not reasonably expected by consumers and thus requires out‑of-policy notice and choice.The case is also noteworthy because the FTC deemed the television viewing data to be “sensitive,” such that its collection and sharing without consent “caused or is likely to cause substantial injury to consumers” and was therefore unfair.Chairwoman Ohlhausen’s concurrence indicates that she was skeptical of both the classification of TV viewing data as sensitive and of the use of unfairness in this case, as she specifically noted that the FTC needs to “examine more rigorously” what constitutes a substantial injury under the unfairness prong of Section 5. Indeed, the complaint says nothing about how or why consumers were actually injured or likely to be injured by Vizio’s practices. Nevertheless, Vizio apparently decided not to challenge the FTC on this point, thereby giving the FTC another precedent regarding its unfairness authority that may be germane to the cases it is currently litigating with respect to that authority.A third noteworthy point is that the FTC indicated how it expects the required notice and choice to be provided to consumers in this context. It did so first by outlining, in its complaint, the notice practices it found to be inadequate:<ul><li>Vizio failed to provide any onscreen notice on TVs that had ACR tracking technology preinstalled and turned on by default;</li><li>The initial onscreen pop-up notice presented when ACR technology was remotely installed on a previously purchased TV was not specific about the collection of viewing data or the ACR software, and it did not directly link to either a settings menu (so that users could exercise choice regarding these practices) or even a privacy policy (so that users could learn more about these practices); and</li><li>Vizio’s effort to rectify the above practices (during the pendency of the FTC investigation) was also insufficient because, while the notice did refer to the collection of viewing data, it timed out after 30 seconds without any action by the consumer (i.e., it did not obtain affirmative consent), and it did not provide easy access to the settings menu (i.e., it did not tell consumers about their ongoing choices with respect to Vizio’s viewing-data practices).</li></ul>The stipulated <a href="https://www.ftc.gov/system/files/documents/cases/170206_vizio_stipulated_proposed_order.pdf" target="_blank" rel="noopener">order</a> requires that Vizio provide consumers with out-of-policy notice of the following practices: (1) the types of data it will collect through the TVs; and (2) the data that will be shared with third parties, those parties’ identities or specific categories, and the purposes for the sharing. Vizio must also obtain affirmative express consent to these practices at the time the disclosure is made—and after any material changes to its practices.Finally, the case is noteworthy because the FTC’s relief included a payment of $1.5 million from Vizio. As noted above, the FTC does not have civil money penalty authority in connection with ordinary violations of Section 5 of the FTC Act. It does, however, have the authority to obtain monetary equitable relief, such as to redress injury to consumers or in the form of disgorgement of ill-gotten gains. Here, however, the complaint and order do not specify the basis for the monetary relief.For example, there is no indication that the FTC believes consumers overpaid for the TVs at issue or that they are due refunds or payments in light of the practices alleged, or that any refunds will be paid to consumers. It is possible that it is intended to be a recoupment of the fees that Vizio received in licensing the data to third parties. But, at this point, the required payment appears difficult to differentiate from what a simple penalty for a violation of Section 5 would look like.In SummaryThis case can serve as a roadmap for what the FTC currently considers may be required to avoid a charge of deception or unfairness under Section 5 relating to the collection and use of information from connected devices, when that information is used or shared for unexpected purposes. In addition, in light of the FTC’s apparently aggressive use of its authority to obtain relief for consumer redress, companies working in this space may now need to re-evaluate the potential risks of alleged noncompliance with the FTC Act. *   *   *For more information on the FTC’s actions and guidelines regarding privacy and data security, please see the following Socially Aware articles: <a href="http://www.sociallyawareblog.com/2016/01/13/big-data-big-challenges-ftc-report-warns-of-potential-discriminatory-effects-of-big-data/" target="_blank" rel="noopener">Big Data, Big Challenges: FTC Report Warns of Potential Discriminatory Effects of Big Data</a>; <a href="http://www.sociallyawareblog.com/2017/02/14/rules-for-cross-device-tracking/" target="_blank" rel="noopener">FTC Report Reinforces the Rules for Cross-Device Tracking</a>; <a href="http://www.sociallyawareblog.com/2015/02/02/ftc-issues-landmark-report-on-internet-of-things/" target="_blank" rel="noopener">FTC Issues Landmark Report on Internet of Things</a>; and <a href="http://www.sociallyawareblog.com/2014/05/13/snap-judgment-ftc-alleges-snapchat-did-not-keep-its-privacy-and-security-promises-but-suggests-broad-new-duty-in-the-process/" target="_blank" rel="noopener">Snap Judgment: FTC Alleges Snapchat Did Not Keep Its Privacy and Security Promises, But Suggests Broad New Duty in the Process</a>.For earlier posts regarding the Internet of Things, please see: <a title="Permalink to The Internet of Things: Interoperability, Industry Standards & Related IP Licensing Approaches" href="http://www.sociallyawareblog.com/2016/02/02/the-internet-of-things-evaluating-the-interplay-of-interoperability-industry-standards-and-related-ip-licensing-approaches/" target="_blank" rel="bookmark noopener">The Internet of Things: Interoperability, Industry Standards & Related IP Licensing Approaches</a>; <a title="Permalink to The Internet of Things: Interoperability, Industry Standards & Related IP Licensing Approaches (Part 2)" href="http://www.sociallyawareblog.com/2016/04/14/the-internet-of-things-evaluating-the-interplay-of-interoperability-industry-standards-and-related-ip-licensing-approaches-part-2/" target="_blank" rel="bookmark noopener">The Internet of Things: Interoperability, Industry Standards & Related IP Licensing Approaches (Part 2)</a>; and <a title="Permalink to FTC Issues Landmark Report on Internet of Things" href="http://www.sociallyawareblog.com/2015/02/02/ftc-issues-landmark-report-on-internet-of-things/" target="_blank" rel="bookmark noopener">FTC Issues Landmark Report on Internet of Things</a>.