Contractual Obligations:

Brands may need to reposition to keep up with changing consumer values. In so doing, review existing contracts and partnerships. Some pivots may conflict with existing exclusivity clauses or brand association restrictions. Proactive legal review can prevent costly disputes.

Advertising Substantiation:

Brands may rejigger their advertising content to respond to evolving consumer preferences. All claims must be substantiated, specific, and verifiable. They also need to consider applicable regulatory guidance. For example, to avoid problematic greenwashing, brands should consider the FTC’s  Green Guides. Similarly, any wellness or health claims must comply with FTC’s broadened Health Products Compliance Guidance. In addition, at the end of 2024, the FDA announced a final updated rule for “healthy” labeling on food products. Remember that a brand is responsible for all reasonable net impressions of its advertising claims, whether intended or not.

Intellectual Property Concerns:

Using hashtags, heritage marks, social movements names or catch phrases can demonstrate brand relevance. Companies should navigate trademark and intellectual property issues carefully. Always verify rights and consider trademark searches before launching trend-focused campaigns. In addition, the use of generative artificial intelligence (“AI”) may expose the brand to significant intellectual property issues. Without clear policies, employees may reveal confidential intellectual property in input prompts to the AI platforms. In addition, the AI output may violate multiple laws around intellectual property, right of publicity, or brand transparency. These laws are in a state of flux at the federal and state level. To best protect the brand, include a trusted legal advisor at the concept stage.

Influencer Partnerships and Authenticity:

New social media platforms are emerging, and old ones have new policies. Consequently, consumer use patterns are in flux. Brands may be responding swiftly to adopt new influencer relationships on new or different platforms. Remember that social media laws mandate authenticity and transparency. In showcasing brand evolution with influencer partnerships or user testimonials, ensure proper disclosures and maintain documentation of genuine consumer experiences. The updated FTC Guidelines on Endorsements and Testimonials require evidence and dictate disclosure standards.

Consumer Privacy:

Data privacy laws are intensifying in their requirements on a state by state level. In 2025, eight new consumer privacy laws will go into effect, five in January. Any new advertising strategy will undoubtedly impact data privacy. Always consider how a new initiative dovetails with a brand’s data privacy policy. If using AI-driven consumer insights, here too, a brand must comply with data privacy statutes Compliance includes providing transparent disclosures about AI use, implementing proper consent mechanisms.

Philanthropy:

2025’s market headwinds are headlined with tragedies in New Orleans and California. Brands may be determining how they want to help. For brands making donations based on their customer behavior (e.g. “$1 of each purchase”, “round up your purchase”, “follow us and we will donate”), consider whether the campaign falls under commercial co-venture charitable donation or even professional fundraising laws. In addition, California has a brand new statute that requires substantial compliance obligations for online campaigns. Hawaii is expected to implement an even more complex statute next year.

Dark Patterns:

Regulators and class action lawyers continue to focus on dark patterns that obfuscate terms or fail to disclose terms clearly and conspicuously. Autorenewal and subscription offerings are ripe for regulatory focus. The FTC’s new Click to Cancel Rule, California’s new amendment (effective July 1, 2025), and other states require express affirmative consent to clear and conspicuous terms, simple cancellation methods, limited save efforts, and business recordkeeping mandates. Trial periods, free gifts, and upselling are other areas where dark patterns could trick the consumer. In addition, while FTC’s final December 2024 junk fee rule applies to live-event ticket sales and short-term lodging, state regulators and plaintiffs’ attorneys are still focused on price advertising. In particular California and Minnesota have broader statutes that mandate clear and conspicuous disclosure of all mandatory charges. The lesson here for brands is to audit proactively their programs’ terms and conditions and pricing disclosures. Remember that disclosures should generally be unavoidable to meet regulatory standards.

Conclusion:

As your brand adapts its advertising and marketing strategies to this year’s market headwinds, proactive planning can mitigate substantial legal risk. If you need assistance in confronting these market hardwoods and mitigating legal risk, contact Kyle-Beth Hilfer.

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Arbitration and Confidentiality: A Delicate Balance

On May 15, 2024, Kyle-Beth Hilfer led a thought-provoking program entitled “High-Profile Arbitration and the Press: What About Confidentiality?” The course delved into the high-stakes world of entertainment and the often conflicting issues of confidentiality and press relations.

The program explored a hypothetical entertainment dispute that landed in arbitration. The dispute was publicly reported and captured the public and media outlet’s ongoing interest. As the arbitrator, Kyle-Beth Hilfer shared valuable insights in to the unique challenges and responsibilities facing arbitrators. She explored arbitration confidentiality myths, methods to ensure confidentiality, and arbitrator tools for managing parties who talk to the press.

A transcript of the program from the  New York State Bar Association is available here.

The Power of Mindfulness in Mediation

Later in the year, on October 23, 2024, Kyle-Beth Hilfer moderated a NYSBA program on mindfulness in mediation or any negotiation. This event highlighted the importance of adopting a mindful approach to navigate complex negotiations and achieve optimal outcomes.

Ms. Hilfer emphasized the transformative potential of the “yes and” mindset, a technique borrowed from improvisational theater. She discussed how to convert mediation participants from “yes but” to “yes and” thinking.  This method can assist mediators and negotiators as they foster collaboration and break impasse to resolve disputes.

A recording of the program is available upon request by contacting Kyle-Beth Hilfer.

Dispute Resolution in 2025

As we move into the new year, it is clear that effective dispute resolution requires a multifaceted approach. Arbitrators and mediators will have to recommit to existing processes and develop new strategies to ensure confidential processes. Navigating complex factual and legal frameworks to manage party participation also requires strong interpersonal skills. A mindful approach to negotiation is key to creating successful dispute resolution. Kyle-Beth Hilfer utilizes this integrated approach in all arbitrations and mediations. To learn more about her dispute resolution practice, click here.

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The Nuances of Awarding Prizes

Commenting on the nuances of awarding prizes, she said: “Sweepstakes rules should be crystal clear about whether a sponsor will award all prizes or whether a sponsor will choose alternate winners if the original potential winners are disqualified. Any ambiguity could lead to a legal challenge from an entrant or even a regulator.”

The entire article can be read here.

Background of Ambiguous Sweepstakes

The rules in a Trump campaign sweepstakes contained two provisions of note:

• In the event that a potential winner does not respond to Sponsor’s attempts to contact them or are otherwise disqualified such that Sponsor is unable to award the Prize, Sponsor may select additional potential winners by random drawing from remaining eligible entries.
• If the winner does not meet eligibility requirements, fails to respond to the notification within twenty-four (24) hours, or fails to return the signed documents within twenty-four (24) hours, he or she will be disqualified and an alternate winner will be selected from the remaining entries, in the same manner as outlined above.

In the first provision, the Sponsor had discretion to choose other winners in the event of a potential winner being disqualified. The permissive word “may” did not obligate the Sponsor to choose another winner. In the second provision, however, the language promised that an alternate winner will be selected on disqualification of the potential winner. Here the Sponsor was committing to choosing another winner. Thus, these rules contained an ambiguity as to whether the Sponsor of the sweepstakes, according to the terms of its own offer, must choose an alternate winner if the original potential winner either did not respond or were disqualified.

Sweepstakes ambiguity creates legal risk for the sponsor of a sweepstakes who does not choose an alternate winner. Such a sponsor could find itself facing legal challenge from a regulator or an entrant.

For more information about how to draft sweepstakes rules that avoid ambiguity, contact Kyle-Beth Hilfer.

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The Federal Trade Commission (FTC) is activist and pursuing creative ways to obtain financial penalties. In so doing, it is working with state attorney-generals to investigate and pursue settlements. At the same time, the class action bar is similarly active, filing lawsuits that pursue the regulatory trends. Below are twelve areas of risk for advertisers and their agencies. In preparing a business plan for 2024, brands should work with their legal advisors and address  all of these hot topics to mitigate their risk.

The Hot Topics

1. Artificial Intelligence: 2023 brought an explosion of generative artificial intelligence. Despite the flurry of intellectual property litigation around the input/output of generative AI, it is here to stay. Each brand or agency needs internal policies and guidelines governing use of AI and disclosure around its use. It will take time for the market to adjust and technology solutions to emerge that contend with the intellectual property legal issues. For now, brands and agencies need to consider closely the impact of AI use on their third party relationships and contractual obligations In addition, AI targeting of consumers can result in bias and discrimination. Systemic review and policies are important here.
2. Influencer Marketing: In 2023, FTC issued revised endorsement/testimonials guides that impose strict standards for legal compliance. FTC’s proposed rule, expected to be implemented in 2024, would attach substantial financial penalties to violations of many of the same items mentioned in the guidelines. It is crucial to review influencer marketing programs and ensure compliance with updated guidance. In addition, now is the time to verify that brand training and compliance programs are sufficiently robust. If marketers are content with using #ad as a disclosure, they should be aware that this hashtag, that used to be the gold standard, may not be an appropriate disclosure in all situations. Finally, brands should consider auditing their agency and influencer contracts for possible amendments and optimal brand protection.
3. Reviews: Brand use of reviews is closely connected to influencer marketing. We can expect to see continued legal enforcement regarding evaluation, solicitation, moderation, screening, and posting practices. The days of only posting five star reviews or squashing low star reviews are over if a brand wants to avoid legal risk. In addition, repurposing organic reviews can create heightened legal risk, depending on the content of such reviews.
4. Dark Patterns: The phrase “dark patterns” identifies a now rampant regulatory lens for reviewing advertising/marketing practices. It is a high priority for regulators to view campaigns aggressively and seek out any potential manipulations of the consumer experience. So far, we have seen regulators apply this concept to the following marketing types of campaigns: auto-renewals, junk/hidden fee situations (pending active review at FTC now), pricing/discounts/free, cancellations and save-a-sale practices, refunds, sweepstakes, pre-approvals/qualifications, opt-in/opt-outs. Settlements with FTC have ranged from $3 million to $245 million. State regulators are in the game as well. Marketers should be auditing the consumer experience closely with legal involved.
5. Junk Fees: While the junk fees issue fits neatly into dark patterns, it is its own category for marketers auditing their practices. Passage of a new FTC rule and California Junk Fee law is imminent. Teams will need to consider the use of all-in pricing as a best practice. In addition, unfairness, rather than deception may become the applicable regulatory standard for judging how pricing is disclosed. (Note NY has pending legislation to expand its regulatory authority to unfair advertising. It is unclear yet whether that will include a private right of action.)
6. Disclosures: We are expecting new updated DotCom Guidelines sometime this year. Previously issued FTC consent orders, however, clarify the expected updates. The FTC is trending towards a new definition of “clear and conspicuous” and “prominent.” Disclosures need to be unavoidable. Implementation will be different depending on the context.
7. Puffery: In light of the above, the definition of puffery is narrowing. Marketers need to consider if it’s possible to substantiate claims before assuming they are puffery. In particular, with financial products, consumers are at high risk, and this historically activist regulatory climate will not be kind to “puffery” claims.
8. Health Claims: The Prevagen case is finally coming to trial in NY. That will certainly be one to watch in terms of understanding substantiation for health claims. In addition, NAD and FTC are pushing more scrutiny of studies, with more demands for randomized, controlled human clinical trials. Brands may want to have experts ready to explain the studies and how they support marketing claims. In preparing and maintaining a claims library, a marketing team needs to work with legal to determine if results have changed over time, remain statistically significant, and are relevant to consumers.
9. ESG & Aspirational Claims: To the extent a brand is involved with this kind of marketing, there is close scrutiny again to substantiation. Review needs to be ongoing to determine if any modifications to claims are needed. So, determining the lifecycle of a claim is important. In addition, reliance on seals/certifications continues to be potentially risky. On the environmental side, “free of” or “made with” may imply product benefits that don’t exist. FTC will likely issue revisions to its Guides for the Use of Environmental Marketing Claims (Green Guides) this year. The agency may also engage in rulemaking around these guides to increase the chances of financial penalties.
10. Prize Promotions: Regulators are taking a closer look at the concept of substantial effort as consideration. In addition, marketing, entry, and fulfillment execution may create as much legal risk as inadequate terms and conditions. Ideally, brands should invite legal involvement in every aspect of creating prize promotions. Vendor contracts need scrutiny as well for warranties and indemnities.
11. Auto-renewal, Negative Option, and Continuity Programs: There is a cascade of regulation out of states in this area, as well as pending changes on the federal law. The focus is on communication of terms, clear and easy cancellation, and reminder notices. This area of marketing is likely to result in large figure settlements if legal action is brought by regulators or plaintiffs’ attorneys.
12. Arbitration and Terms of Services: We are continuing to see an evolution of mass arbitration and risks to clients. It may be appropriate to consider all options on dispute resolution, including providers of arbitration services to avoid large administrative fees. It also may be appropriate to redraft consumer-facing arbitration and other dispute resolution clauses. On a related note, brands should not rely on browsewrap agreements or email to gather consumer consent to terms of service. It is best to obtain explicit consent from the consumer, such as clicking a button or checking a box.

WHAT TO DO

With all of the above hot topics in advertising law in mind, what should  advertisers and agencies prioritize?
• Clarify policies and contractual relationships around the use of generative AI.
• Audit your customer interactions to identify what regulators or plaintiffs’ attorneys may see as a “dark pattern.” 2024 should be the year to focus on unavoidable disclosures. The more a brand can prove clarity around consumer decisions, the better legal position it will have.
• Substantiate your claims and do not assume the puffery defense will work in this regulatory climate. Be careful of claims embedded in organic consumer posts.
• Clarify your contractual positions, training programs, and monitoring programs around influencer marketing. Do not assume the rogue influencer will not be a threat to the brand. While influencers need freedom, they need to understand that they have legal obligations. You may need to update your endorser/influencer agreements.
• Review your collection and use of customer reviews. With a proposed FTC rule about to be codified, the financial stakes are high. Your use of reviews should be transparent, truthful, and honest.
• Consider your pricing. The FTC and California are paving the way for new law around junk fees.
• Review your terms of service and consider how you may need to update the consumer experience around consent. Think proactively about future disputes and consider the implications of an arbitration clause and the potential for mass arbitration.

If you need legal advice on these twelve hot topics in advertising law, contact us here. 

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Copyright Law Basics

The panel first reviewed the basics of copyright law:

• Copyright law protects original works of authorship, such as books, music, art, movies, and software.
• Copyright owners own exclusive rights to reproduce, distribute, perform, display, and create derivative works from their copyrighted works.
• Copyright infringement occurs when someone makes unauthorized copies of or uses a copyrighted work.
• Copyright infringement can be a costly mistake, as copyright owners can sue infringers for damages and injunctive relief.

Types of ADR for Copyright Disputes

Copyright disputes are typically complex and too costly for most creators to resolve in court. Lawsuits can stretch out for years. Arbitration and mediation are alternative means of dispute resolution that can offer a more efficient and cost-effective way to resolve these disputes.

• In arbitration, the parties to a dispute agree to have their case decided by a neutral third party, known as an arbitrator. The arbitrator’s decision is binding on both parties. There typically is no right of appeal unless the parties agree to appeal to another arbitrator. The arbitrator’s award is enforceable in court.
• Mediation is a process in which a neutral third party, the mediator, helps the parties to reach a mutually agreeable resolution. The mediator does not make any decisions for the parties, but rather helps them to communicate and negotiate effectively.
• Copyright owners should also be aware of the newly created Copyright Claims Board (CCB) as an alternative to court. It covers copyright disputes up to $30,000. Lawyers are not required. A respondent can opt out of the process and choose to go to court. There are three types of disputes heard by the CCB: infringement; declaration of non-infringement; misrepresentation in a takedown notice or counter notice under the DMCA. For more information on the CCB, click here.

Why use ADR with Copyright Disputes?

There are several advantages to using arbitration and mediation to resolve copyright disputes, among them, efficiency, cost-savings, confidentiality, flexibility.  Most importantly, the parties can choose a neutral who understands copyright issues and the relevant creative material’s marketplace. In court, the parties have no control over the judge’s prior experience. In addition, an arbitrator has the authority to grant broad equitable relief, similar to court, including, injunctive relief, credit/corrections, terminating licenses, ordering future approvals or specific performance of a license, ordering take-downs or removal of infringing material.

For more information on how Kyle-Beth Hilfer can help you draft copyright licenses or protect your copyright, click here. For more information on Kyle-Beth Hilfer’s arbitration and mediation practice, click here.

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The full program is available to stream here. This blog contains some of Ms. Hilfer’s key insights the use of arbitration to resolve cannabis industry disputes.

What are the advantages of arbitration for cannabis industry disputes?

• Cannabis disputes are often complex and can be expensive to resolve in court.
• Arbitration offers a more efficient and cost-effective way to resolve cannabis disputes.
• Speed is critical for most cannabis industry disputes since the cannabis product loses value the longer it sits. Arbitration can move much more quickly than the court system.
• Arbitration offers confidentiality to its participants, whereas court filings are typically available publicly. (For more on confidentiality in arbitration, click here.)
• Parties to a cannabis industry dispute can choose their arbitrator. They may want to screen candidates to identify those who are not biased against the industry, have experience with the industry, understand how to grant equitable remedies, and run an efficient arbitration process.

What powers does an arbitrator have that are important for cannabis industry disputes?

• In addition to providing monetary awards that are enforceable in courts, arbitrators are empowered to provide emergency relief, sometimes within days. Such remedies can be critical to preserving the plant. In addition, arbitrators may be persuaded to award long term injunctive relief, specific performance, and a range of other equitable remedies.
• In certain states, the arbitrator may be able to appoint a receiver in the event of bankruptcy.
• An arbitrator may choose to bifurcate proceedings and decide liability before damages in certain instances. A bifurcated proceeding may be more cost and time efficient, allowing disputants to move on quickly with their business goals.

What considerations should transactional attorneys give to drafting dispute resolution clauses in cannabis industry deals?

• Too often advocates use a “form” arbitration clause without thought for how it will affect arbitration proceedings if there is a dispute.
• When drafting an arbitration clause, a great resource is the American Arbitration Association’s Clause Builder. It offers customization options and even potential language to use.
• Keep in mind how an arbitrator thinks. Even in cannabis industry disputes, the first thing she will do is confirm her jurisdiction. She will want to see if she has the proper and all parties to a dispute in front of her. She will confirm the governing law based the contract.
• For cannabis industry disputes, governing law is particularly important. An ideal clause delineates applicable state law but also voids as a defense federal illegality or improper purposes. It may even provide for federal law to govern, except if contradicted by state law or the business operation is voided under federal law. 
• As the cannabis industry matures, consumer facing contracts in the cannabis industry, for example, loyalty programs, sweepstakes ,etc., may also incorporate arbitration clauses. Advocates need to be aware of the developing body of case law around mass arbitration and draft proactively to secure a cost-efficient process for cannabis industry disputes with consumers.
• Often arbitration clauses contain a carve out to go to court for intellectual property ownership or infringement disputes. Is that appropriate in the cannabis context? Federal statutory remedies under the Lanham Act, for example, may not be available due to the federal illegality of cannabis. Another carve out that frequently occurs is for injunctive relief. Do you need it? An arbitrator has authority to grant emergency and long term injunctive relief, and typically, the arbitrator will move more quickly than the courts with less publicity.

If you have questions about how to draft an arbitration clause for your cannabis transaction or you are interested in learning more about Kyle-Beth Hilfer’s arbitration services for cannabis industry disputes, click here.

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