Pulling Back The Curtain, Part I

Has a federal district court judge found inspiration in Toto, Dorothy's dog in The Wizard of Oz?  While a great deal of attention has been paid to the patent infringement trial pitting Apple against Samsung, which resulted in a $1 billion jury verdict in Apple's favor at the end of last week, recent events in a case involving another patent infringement trial, this one featuring Oracle against Google, have caught the attention of the legal and public relations communities.

Oracle had sued Apple, alleging that elements of Apple's Android operating system contained misappropriated items from Oracle's Java code.  Early in May, 2012, the jury found that Apple had infringed Oracle's copyrighted program, but the jury deadlocked on whether Apple's infringement fell within the "fair use" doctrine.  The jury later found that Google had not infringed two Oracle patents.

On August 7, 2012, U.S. District Court Judge William Alsup, who had presided over the trial, issued an order requiring the attorneys on both sides to file a statement by August 17th "identifying all authors, journalists, commenters or bloggers who have reported or commented on any issues in this case and who have received money (other than normal subscription fees) from the party or its counsel during the pendency of this action."

Judge Alsup's order was procedurally and substantively unusual.  As to procedure, the order came two months after the trial had ended, and neither side had requested the issuance of such an order.  Judge Alsup issued the order on his own volition, saying that he was "concerned that the parties and/or counsel herein may have retained or paid print or internet authors, journalists, commentators or bloggers who have and/or may publish comments on the issues in this case."  Judge Alsup justified the order by stating that it would be useful for the appellate court to know "whether any treatise, article, commentary or analysis on the issues posed by this case are possibly influenced by financial relationships to the parties or counsel."

The substance of the order, that a judge wanted to know whether bloggers and others were being paid by the parties to comment on the case, caused both the legal and public relations communities to speculate on what led to its issuance.  One thought was that the disclosure in April by Florian Muller, a prominent blogger who had been critical of Google, of his financial ties to Oracle may have led Judge Alsup to wonder whether there were other undisclosed relationships between bloggers and the parties.  Another thought was that a July 27th San Jose Mercury News article had brought attention to the "vast shadow army of law firms, public relations specialists, trade organizations, pundits, think tanks and academics [that] has emerged to dominate the debate over Google," and the fact that "many of them are paid for their opinions."  The article began with a specific example:

"Scott Cleland hates Google for a living.  For the past five years, the McLean, Va.-based analyst has churned out an endless stream of anti-Google papers, memos, research, testimony -- even a book: 'Search & Destroy: Why You Can't Trust Google Inc.' While his views that Google is a dangerous monopolist once seemed like a fringe theory, it has now drawn the attention of antitrust and privacy regulators throughout the world.  'I feel less lonely,' Cleland said. 'I have a strong belief that the wheels of justice turn slowly, but they turn truly.'  But as Cleland's crusade has gained popularity it has also gained funding -- to a degree that he won't disclose -- from Google's competitors, including Microsoft. While he insists that his influential views remain his own, the financial connection begs the very real question of whether he is a hero or a paid corporate hit man -- and whether the debate he pushes is a legitimate intellectual discussion or a commercial enterprise."

Members of the legal community also questioned the scope of the order, whether Judge Alsup had the power to issue it, and whether it was constitutional.  See, for example, "Alsup Goes Fishing With Wide Net."  However, since neither Oracle or Google challenged the order, the issues of power and constitutionality were unlikely to be addressed.  Similarly, questions as to the scope of the order would have to wait until Judge Alsup reviewed the parties' submissions to see whether they had complied.

Getting favorable media for clients, or neutralizing unfavorable media, is a large part of the public relations raison d'etre. Within the public relations community however, Judge Alsup's order revealed differing attitudes as to the propriety of paying bloggers.  PRWeek interviewed representatives of several agencies, and the consensus seemed to be that it is an acceptable practice to pay bloggers as long as the compensation is disclosed.  However, as I blogged about in "Social Media and Astroturfing," this is no more than the law requires.  Payments to bloggers for favorable reviews are required to be disclosed by the Federal Trade Commission, and the FTC has brought enforcement actions against companies that failed to make the required disclosure.  Hill + Knowlton Strategies expressly forbids compensation to bloggers.   Steve Barrett, a PRWeek editor,  wondered whether, even with disclosure, paying bloggers is appropriate:

"Am I the only one who feels extremely uneasy and uncomfortable about this whole paying bloggers debate?  . . .  [i]f a brand or an agency is paying these bloggers to write about brands, that has gone way beyond PR's traditional territory of earned media into the paid media environment - or, as it is also known, advertising.  That's an area that is fraught with danger in my opinion."

When the August 17th deadline for compliance arrived, Oracle confirmed in its submission that it had a paid consulting relationship with Florian Mueller.  As for Google, it notified Judge Alsup that the scope of his order created a group too large to list, but it assured Judge Alsup that it had not compensated anyone "to report or comment on any issues in this case" or otherwise struck a "quid pro quo" arrangement for favorable coverage.  In response, Judge Alsup issued a new order expressing his dissatisfaction with Google's submission:

"in the court's view, Google has failed to comply with the August 7 order.  . . .  Google suggests that it has paid so many commenters that it will be impossible to list them all. Please simply do your best but the impossible is not required. Oracle managed to do it. Google can do it too by listing all commenters known by Google to have received payments as consultants, contractors, vendors, or employees."

Judge Alsup required Google to supplement its filing by August 24, directing it to "disclose those commenters that can be identified after a reasonably diligent search,"  with the following clarification of  his original order:

"Payments do not include advertising revenue received by commenters. Nor does it include experts disclosed under Rule 26.  . . .  As for organizations receiving money, they need not be listed unless one of its employees was a commenter. Gifts to universities can be ignored."

Google filed its supplemental disclosure on August 24th.  I'll discuss what was in it, and the reaction to it, on Tuesday, September 4th.  Have a good Labor Day Holiday.

Social Media Monitoring and Astroturfing

In my last post, Monitoring Social Media, I discussed how Gatorade is monitoring social media to, among other things, protect its brand. Gatorade has constructed “Mission Control,” a social media monitoring operation staffed by four Gatorade employees 24 hours a day, seven days a week. According to an article in the Wall Street Journal that described Mission Control:

Sitting in a glassed-in converted conference room at Gatorade headquarters [in Chicago], Meg Poulelis tweets encouragement to high-school athletes before big games and taps out responses to Facebook queries such as when to use the new protein drink. . . . Whenever someone uses Twitter to say they’re drinking a Gatorade or mentions the brand on Facebook or in other social media, it pops up on a screen in Mission Control. On Saturday, the staff jumped into a Facebook conversation to correct a poster who said Gatorade has high-fructose corn syrup. . . . Aware that consumers may be wary of intrusion, Ms. Poulelis and her colleagues have to figure out when to pipe up – and when to hang back – when someone is talking about Gatorade. “If they’re directly asking where to buy products, we’re going to weigh in,” Ms. Poulelis said. “If they want to talk about working out, we let them have that conversation.”

Putting aside what some consider an intrusive practice, when the staffers at Mission Control jump into an online conversation to talk about Gatorade, they use the Gatorade logo as their avatar and identify themselves as Gatorade employees, which, of course, is the correct way to do things. Doing it the wrong way can have serious legal repercussions.

That is because in October, 2009, the Federal Trade Commission (FTC) announced that it had approved revisions to the Guides Concerning the Use of Endorsements and Testimonials in Advertising to specifically cover bloggers and social networking sites. Specifically, the FTC’s revised Guides made clear that any online posts by a blogger connected to a marketer must disclose the blogger’s connection to the marketer in such posts. Then, in late August of this year, the FTC announced a settlement with a California based public relations firm, Reverb Communications, Inc. and its owner, Tracie Snitker. The settlement resolved claims that Reverb and Snitker had engaged in “astroturfing” on behalf of its video game developer clients.

Specifically, the FTC alleged that between November 2008 and May 2009, Reverb employees posted reviews about its clients’ video games using account names that gave readers the impression that the reviews were written by disinterested consumers, not by individuals who had been hired to promote certain games. The employees “astroturfed” by consistently giving the Reverb clients’ applications four or five stars or by positively commenting on them with testimonials such as “amazing new game,” “one of the best,” and “one of the best apps just got better.”

As part of the settlement, Reverb agreed to remove any posted endorsements that misrepresented the authors of such posts as independent users or ordinary consumers, and that failed to disclose the connection between Reverb and the video game developers. The settlement also prohibited Reverb from engaging in such deceptive practices in the future.

There are two interesting aspects to the Reverb matter. The first is that the FTC chose to go after the public relations firm and not the video game developers, thus establishing that the employees of a marketer’s public relations firm have the same duty of disclosure as the marketer’s own employees. Second, the FTC went after conduct that occurred before the December 1, 2009 effective date of the revised Guides, thus establishing that it has always considered “astroturfing” a deceptive practice.