Marketing materials – an often overlooked area of legal risk
It’s easy to forget that there’s a legal aspect to just about every operational area of a business, including marketing. Whether a business is planning an event sponsorship, creating content for emails or point-of-sale materials, using a particular hashtag, or posting website content, there are numerous laws and regulations to keep in mind, and possibly a number of third-party rules (e.g., trademark usage guidelines) that have to be followed.
Even if a business outsources creation of marketing content, the business can still be held responsible for legal missteps. Although the vendor will usually have an indemnification obligation, it is probably limited to infringement claims and a dollar cap. Indeed, it takes only one use of unlicensed content to gain unwanted attention and lawsuits. Think that is an exaggeration? Surf the internet for warnings or actions by the US Olympic Committee (USOC) with respect to the use of a word that starts with the letter “o”. Hint, it’s in the committee’s name.
Aside from the misuse of someone else’s intellectual property (e.g., a trademark or copyrighted material) or likeness, what other trouble could result from not properly vetting marketing materials? Depending on the subject matter, it takes only one complaint to the right regulator from a consumer or an industry player for a civil fraud investigation to be launched because the content is perceived as deceptive or misleading.
For example, pursuant to the Maryland Consumer Protection Act, a careless advertisement about a consumer good or realty you are selling or leasing can get you in trouble with the Attorney General’s Office. Another example – if your company conducts insurance business in the state (a subject of a future blog), a deceptive advertisement about your services would run afoul of the prohibitions against “unfair trade practices” under Maryland’s Insurance laws. Don’t forget, the Federal Trade Commission also enforces prohibitions against misleading advertisements.
What a business and each agency consider “deceptive” could be near opposite ends of the spectrum. Moreover, actual deception or damages need not be proved. Not only are statutory civil and criminal penalties possible, but reputational damage could be significant. Businesses should not expect regulators to have the inclination, motivation, or resources to vet complaints for ulterior motives.
Examples of how advertising can land a business in court or in the sights of regulators are abundant. Need a second set of eyes on your marketing materials? Contact us.