Ebook Public relations Strategies and tactics (11th edition) Part 2

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chapter

12

Laws and
Applications

After reading this chapter, you will be able to:
Identify which government agencies
regulate the commercial speech used by
public relations professionals
Explain how public relations
professionals can work effectively
with lawyers

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Describe what public relations
professionals need to know about
defamation, employee and privacy rights,
copyright, and trademark laws
Understand the key issues surrounding
freedom of speech and public relations

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A Sampling of Legal Problems
The law and its many ramifications are somewhat abstract to the average person.
Many people may have difficulty imagining exactly how public relations personnel
can run afoul of the law or generate a lawsuit simply by communicating information.
The following are just a few of the many ways that public relations practitioners can
get in legal hot water:
■ Cosmetic surgery company Lifestyle Lift paid a $300,000 settlement to the New
York State Attorney General’s office after being accused of having employees post
fake consumer reviews online.
■ LeVar Burton sued Child’s Play Communications for $10,000 for failing to
adequately represent the actor in the roll-out of his “Reading Rainbow” app for the
iPad. When Burton discovered the PR agency was using his likeness on their website
to promote their services, he filed another lawsuit, this time for $50,000.
■ The Federal Trade Commission (FTC) ruled that two video news releases from
King Pharmaceuticals were “false and misleading” because they omitted mention of
the risks associated with a painkiller drug and presented misleading claims.
■ American Apparel paid a $5 million settlement to film director Woody Allen for
using his image in an advertising campaign and other promotional literature without
his permission.
■ Papa John’s Pizza was hit with a $250 million class action suit charging it sent
customers promotional text messages without receiving opt-in permission from the
consumers. The pizza chain agreed to settle for $16.5 million.
■ Koch Industries filed a lawsuit when Internet pranksters affiliated with Youth for
Climate Truth issued a news release attributed to the conglomerate suggesting that
Koch Industries had changed its position on climate change research and advocacy.

Koch sued for “damages for the cost of responding to the fake release, trademark infringement, cybersquatting and legal expenses in pursuing the pranksters,” according
to Suffolk Media Law journal.

These examples provide some idea of the legal pitfalls that a public relations person may encounter. Many of the charges were eventually dismissed or settled out of
court, but the organizations paid dearly for the adverse publicity and the expense of
defending themselves.
Public relations personnel are charged with winning legal cases in the “court of
public opinion.” The prospect of litigation, as just illustrated, can appear from about
anywhere. For instance, in a diverse world, public relations practitioners need to be
fully aware and sensitive to cultural and religious traditions. See the Multicultural
World box on page 328 for more discussion on this issue.
A public relations person can be named a coconspirator with other organizational
officials if he or she:
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Participates in an illegal action such as bribing a government official or covering
up information of vital interest to public health and safety.
Counsels and guides the policy behind an illegal action.
Takes a major personal part in the illegal action.

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on the job

A Multicultural World

F

MillerCoors Faces Controversy in a Long-Held Sponsorship

or seven years MillerCoors had
been a primary sponsor of the
Puerto Rican Day Parade in
­ ajor
New York City. The parade is a m
cultural event, drawing 80,000 participants and 2 million spectators
and providing high visibility for Miller
Coors within the Latino community.
But in 2013, the brewer ran into public
relations and potential legal trouble.
MillerCoors, producer of Coors
Light beer, produced special packaging for the light beer. The cans featured a circular logo of the Puerto
Rican flag shaped as an apple accompanied by the words “National Puerto
Rican Day Parade, Inc.” The logo was
reviewed and approved by the parade organizers—National Puerto
­Rican Day Parade.

■

■

But selling beer by associating it
with a national emblem backfired.
City Councilwoman Melissa MarkViverito told the New York Times, “The
flag is a symbol of a nation, of a culture, and slapping it on a can of beer is
disrespectful and trivializes a community and its contributions.” A Puerto
­Rican activist organization sent a letter of objection to MilllerCoors and
coordinated a protest at a ­Coors distribution center.
MillerCoors responded quickly
distributing letters and statements
to the media and to the activists.
The company also quit making and
distributing the cans. MillerCoors
Chief Public Affairs and Communications Officer Nehl Horton wrote:
“We apologize if the graphics on our

promotional packaging inadvertently
offended you or any other members
of the Puerto Rican community.”
Dealing with the public outcry wasn’t the only problem that
MillerCoors faced. The New York attorney general Eric Schneiderman
contacted MillerCoors and the National Puerto Rican Day Parade organization requesting full disclosure
of the financial relationship between
the entities.
Do you think MillerCoors handled the controversy well? Why or
why not?
What potential legal issues do
you see?

How could the brewer have avoided
the cultural misstep?

Helps establish a “front group” whereby the connection to the public relations
firm or its clients is kept hidden.
Cooperates in any other way to further an illegal action.

These five concepts also apply to public relations firms that create, produce, and
distribute materials on behalf of clients. The courts have ruled on more than one occasion that public relations firms cannot hide behind the defense of “the client told me to
do it.” Public relations firms have a legal responsibility to practice “due diligence” in the
type of information and documentation supplied by a client. Regulatory agencies such
as the FTC (Federal Trade Commission) have the power under the Lanham Act to file
charges against public relations firms that distribute false and misleading information.

Libel and Defamation
Traditionally, libel was a printed falsehood and slander was an oral statement that was
false. Today, as a practical matter, there is little difference in the two, and the courts
often use defamation as a collective term.

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Essentially, defamation is any false statement about a person (or organization)
that creates public hatred, contempt, or ridicule, or inflicts injury on reputation.
A person filing a defamation suit usually must prove that:
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■
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■

the false statement was communicated to others through print, broadcast, or
electronic means;
the person was identified or is identifiable;
there is actual injury in the form of money losses, loss of reputation, or mental
suffering; and
the person making the statement was malicious or negligent.

In general, private citizens have more success winning defamation suits than do
public figures or corporations. With public figures—government officials, entertainers, political candidates, and other newsworthy personalities—there is the extra test
of whether the libelous statements were made with actual malice (New York Times
v. Sullivan).
Corporations, to some degree, also are considered “public figures” by the courts
for several reasons: (1) They engage in advertising and promotion offering products
and services to the public, (2) they are often involved in matters of public controversy
and public policy, and (3) they have some degree of access to the media—through
regular advertising and news releases—that enables them to respond to and rebut
defamatory charges made against them.

Avoiding Libel Suits

Libel suits can be filed against organizational officials who make libelous accusations
during a media interview, send out news releases that make false statements, or injure
someone’s reputation. For example, suits have been filed for calling a news reporter
“a pimp for all environmental groups.” Such language, although highly quotable and
colorful, can provoke legal retaliation. Accurate information, and a delicate choice of
words, must be used in all news releases.
Another potentially dangerous practice is making unflattering comments about
the competition’s products. Although comparative advertising is the norm in the
United States, a company must walk a narrow line between comparison and “trade
libel,” or “product disparagement.” Statements should be truthful, with factual evidence and scientific demonstration available to substantiate them. Companies often
charge competitors with overstepping the boundary between “puffery” and “factual
representation.”
An organization can offer the opinion that a particular product or service is the
“best” or “a revolutionary development” if the context clearly shows that the communication is a statement of opinion attributed to someone. Then it is classified as
“puffery” and doesn’t require factual evidence.
Don Sneed, Tim Wulfemeyer, and Harry Stonecipher, in a Public Relations Review
article, say that a news release should be written to indicate clearly statements of opinion
and statements of fact. They suggest that:
1. opinion statements be accompanied by the facts on which the opinions are based;
2. statements of opinion be clearly labeled as such; and
3. the context of the language surrounding the expression of opinion be reviewed
for possible legal implications.

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The Fair Comment Defense
Organizations can do much to ensure that their communications avoid materials
that could lead to potential lawsuits. By the same token, organizations are somewhat limited in their ability to use legal measures to defend themselves against
criticism.
Executives are often incensed when an environmental group includes their
corporation on its annual “dirty dozen” polluters or similar lists. Executives are also
unhappy when a consumer affairs blogger flatly calls the product a “rip-off.”
A corporate reputation may be damaged and product sales may go down,
but a defamation case is difficult to win because, as previously mentioned, the
accuser must prove actual malice. Also operating is the concept of fair comment and
criticism.
This defense is used by theater and music critics when they lambaste a play or
concert. Fair comment also means that when companies and individuals voluntarily
display their wares to the public for sale or consumption, they have no real recourse
against criticism done with honest purpose and lack of malicious intent.
A utility company in Indiana, for example, once tried to sue a citizen who had
written a letter to a newspaper criticizing the utility for seeking a rate hike. The
judge threw the suit out of court, stating that the rate increase was a “matter of public interest and concern” even if the letter writer didn’t have all the facts straight.

Invasion of Privacy
An area of law that particularly applies to employees of an organization is invasion of
privacy. Public relations staff must be particularly sensitive to the issue of privacy in at
least four areas:
■
■
■

■

Employee communication
Photo releases
Product publicity and advertising
Media inquiries about employees

Employee Communication
It is no longer true, if it ever was, that an organization has an unlimited right to publicize the activities of its employees. In fact, Morton J. Simon, a Philadelphia lawyer
and author of Public Relations Law, writes, “It should not be assumed that a person’s
status as an employee waives his right to privacy.” Simon correctly points out that
a company newsletter or magazine does not enjoy the same First Amendment protection that the news media enjoy when they claim “newsworthiness” and “public
interest.”
This distinction does not impede the effectiveness of newsletters, but it does indicate that editors should try to keep employee stories organization-oriented. Indeed,
most lawsuits and complaints are generated by “personals columns” that may invade
the privacy of employees. Although a mention that Mary Worth is now a great-grandmother may sound completely innocent, she may consider the information a violation

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of her privacy. The situation may be further compounded into possible defamation by

“cutesy” comments on social media such as Facebook.
In sum, one should avoid anything that might embarrass or subject an employee
to ridicule by fellow employees. Here are some guidelines to remember when writing
about employee activities:
■
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■
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■

Keep the focus on organization-related activities.
Have employees submit “personals” in writing.
Double-check all information for accuracy.
Ask: “Will this embarrass anyone or cause someone to be the butt of jokes?”
Don’t rely on secondhand information; confirm the facts with the person
involved.
Don’t include racial or ethnic designations of employees in any articles.

Photo Releases
An organization must have a signed release on file if it wants to use the photographs or comments of its employees and other individuals in product publicity, sales
brochures, and advertising. In a new book on public relations law, Parkinson and
­Parkinson offer straightforward advice about contracts that apply to photo ­releases:
a contract is not binding without some form of compensation. Therefore, an added
precaution is to give some financial compensation to make a more binding contract. A second principle is that amicable relationships can change, increasing the
­importance of clarity and documentation, although not necessarily in legal language.
According to Michael and L. Marie Parkinson, authors of Public Relations Law: A
Supplemental Text, the courts require only that agreements be understandable and
do-able for each side.

Public relations departments, in addition, should take the precaution of
(1) storing all photographs electronically, (2) dating them, and (3) giving the context
of the situation. This precludes the use of old photos that could embarrass employees or subject them to ridicule. In other cases, it precludes using photographs of
persons who are no longer employed with the company or have died. This method
also helps to make certain that a photo taken for the employee newsletter isn’t used
in an advertisement. If a photo of an employee or customer is used in product publicity, sales brochures, or advertisements, the standard practice is to obtain a signed
release.

Product Publicity and Advertising
The National Football League (NFL) unfortunately learned the basics of photo releases the hard way. The NFL was sued by a group of retired players because the
League continued to use the former players’ names and images. Six players filed the
class action lawsuit in which they accused the NFL of using retired players’ identities in films and highlight reels to market the League. The NFL settled the lawsuit
by setting up a $42 million fund to help retired players with medical expenses and
other issues related to the transition out of their playing careers. The League also
paid $8 million in legal costs. “The retired players who created these glory days . . .
have gone almost completely uncompensated for this use of their identities,” the

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plaintiffs argued. This action is called misappropriation of personality. Jerry Della
Femina, an advertising executive, succinctly makes the point: Get permission. “If

I used my mother in an ad,” he said, “I’d get her permission—and I almost trust her
100 percent.”

Media Inquiries about Employees
Because press inquiries have the potential to invade an employee’s right of privacy,
public relations personnel should follow basic guidelines as to what information will
be provided on the employee’s behalf.
In general, employers should give a news reporter only basic information.
Do Provide:
1. confirmation that the person is an employee,
2. the person’s title and job description, and
3. date of beginning employment, or, if applicable, date of termination.
Do Not Provide Employee’s:
1. salary,
2. home address,
3. marital status,
4. number of children,
5. organizational memberships, or
6. job performance.
If a reporter does seek any of this information because of the
nature of the story, several principles should be followed. First, as
Parkinson and Parkinson clearly establish in their public relations
law text, the rights of reporters are often exaggerated to mythic
levels, partly by the journalists themselves. In fact, reporters have
no greater rights to private information than any other citizen.
Second, because the information is private, it should be provided
by the employee through arrangement with the public relations
person. What the employee chooses to tell the reporter is not then
the company’s responsibility.
If an organization uses biographical sheets, it is important that

they be dated, kept current, and used by permission of the employee. A sheet compiled by an employee five years previously may
be hopelessly out of date. This is also true of file photographs taken
Parkinson and Parkinson, Public
at the time of a person’s employment.
Although employee privacy remains an important consideration,
Relations Law: A Supplemental Text
the trend is toward increased monitoring of employee e-mail by
­employers, who are concerned about being held liable if an ­employee
posts a racial slur, engages in sexual harassment online, or even transmits sexually explicit
jokes that might cause another employee to perceive the workplace as a “hostile” environment. In other words, everyone should assume that any e-mails he or she writes at
work are subject to monitoring and that he or she can be fired if the e-mails violate company policy. Further complicating this issue is the fact that government e­ mployees may
have their e-mails made public if some interested party files a Freedom of Information

Here we try to correct some
misconceptions about
journalists’ legal rights,
because often journalists
try to use those “rights”
to coerce information or
access from public relations
practitioners.

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Act (FOIA) request. E-mails produced by a public employee on a government-owned
computer are considered requestable documents under the FOIA.
Other important, and sometimes controversial, aspects of employee free speech
include the tension between whistle-blowing and protection of an organization’s trade
secrets. State and federal laws generally protect the right of employees to “blow the
whistle” if an organization is guilty of illegal activity, but the protections are limited and the requirements for the whistle-blower are quite specific. Whistle-­blowing
can occur in corporate, nonprofit, and government organizations. For e­ xample,
an employee might blow the whistle on his or her organization by reporting to
the Environmental Protection Agency (EPA) about the illegal release of a toxic substance from a manufacturing plant.

Copyright Law
Should a news release be copyrighted? How about a corporate annual report? Can
a New Yorker cartoon be used in the company magazine without permission? What
about reprinting an article from Fortune magazine and distributing it to the company’s sales staff? Are government reports copyrighted? What about posting a video clip
from Comedy Central on the Internet? What constitutes copyright infringement?
These are some of the bothersome questions that a public relations professional
should be able to answer. Knowledge of copyright law is important from two perspectives: (1) what organizational materials should be copyrighted and (2) how to utilize
the copyrighted materials of others correctly.
In very simple terms, copyright means protection of a creative work from unauthorized use. A section of the U.S. copyright law of 1978 states: “Copyright protection
subsists . . . in the original works of authorship fixed in any tangible medium of expression now known or later developed.” The word authorship is defined in seven categories: (1) literary works; (2) musical works; (3) dramatic works; (4) pantomimes and
choreographic works; (5) pictorial, graphic, or sculptural works; (6) motion pictures;
and (7) sound recordings. The word fixed means that the work is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated.
The shield of copyright protection was weakened somewhat in 1991, when the
U.S. Supreme Court ruled unanimously that directories, computer databases, and
other compilations of facts may be copied and republished unless they display “some
minimum degree of creativity.” The Court stated, “Raw facts may be copied at will.”

Thus a copyright does not protect ideas, only the specific ways in which those
ideas are expressed. An idea for promoting a product, for example, cannot be copyrighted—but brochures, drawings, news features, animated cartoons, display booths,
photographs, recordings, videotapes, corporate symbols, slogans, and the like, that
­express a particular idea can be copyrighted.
Because much money, effort, time, and creative talent are spent on developing
organizational materials, obtaining copyright protection for them is important. By
copyrighting materials, a company can prevent its competitors from capitalizing on its
creative work or producing a facsimile brochure that may mislead the public.
The law presumes that material produced in some tangible form is copyrighted
from the moment it is created. This presumption of copyright is often sufficient to
discourage unauthorized use, and the writer or creator of the material has some legal
protection if he or she can prove that the material was created before another person
claims having created it. A more formal step, providing full legal protection, is official

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registration of the copyrighted work within three months after its creation. This process consists of depositing two copies of the manuscript (it is not necessary that it has
been published), recording, or artwork with the Copyright Office of the Library of
Congress. Registration is not a condition of copyright protection, but it is a prerequisite to an infringement action against unauthorized use by others. The Copyright
Term Extension Act, passed in 1998 and reaffirmed by the U.S. Supreme Court (Eldred
v. Ashcroft) in 2003, protects original material for the life of the creator plus 70 years

for individual works and 95 years from publication for copyrights held by corporations.

Fair Use versus Infringement
Public relations people are in the business of gathering information from a variety of
sources, so it is important to know where fair use ends and infringement begins.
Fair use means that part of a copyrighted article may be quoted directly, but the
quoted material must be brief in relation to the length of the original work. It may
be, for example, only one paragraph of a 750-word article and up to 300 words in a
long article or book chapter. Complete attribution of the source must be given regardless of the length of the quotation. If the passage is quoted verbatim, quote marks
must be used.
It is important to note, however, that the concept of fair use has distinct limitations if part of the copyrighted material is to be used in advertisements and promotional brochures. In this case, permission is required. It also is important for the
original source to approve the context in which the quote is used. A quote out of
context often runs into legal trouble if it implies endorsement of a product or service.
The copyright law does allow limited copying of a work for fair use such as criticism, comment, or research. However, in recent years, the courts have considerably narrowed the concept of “fair use” when multiple copies of a copyrighted work are involved.
News and entertainment website BuzzFeed faced a lawsuit seeking $3.6 million
by photographer Kai Eiselein. The photographer claimed a picture he posted on
Flickr of a soccer player heading a ball was captured and used without his permission by BuzzFeed in a feature titled, “The 30 Funniest Header Faces.” He contacted
BuzzFeed and asked the site to take down the photo they were using without permission. BuzzFeed took it down, but by that time Eiselein claimed the image had already
gone viral. The damage was done.
Legal experts suggested that the photographer likely would not win a multimillion dollar verdict. But Forbes magazine opined at the time, “Of course, it’s best to
avoid a fight over fair use in the first place. Companies like BuzzFeed would be better served by steering clear of images that aren’t either in the public domain or easily
licensable.”
The ready availability of unlicensed content through online and social media
sources has only served to further muddy the legal waters surrounding copyright
infringement and fair use. Distribution of more mainstream copyrighted work can be
arranged for a fee with the copyright holder or often by paying a royalty fee to the
Copyright Clearance Center (www.copyright.com), which has been established to
represent a large number of publishers.
Government documents (city, county, state, and federal) are in the public domain
and cannot be copyrighted. Public relations personnel, under the fair use doctrine,

can freely use quotations and statistics from a government document, but care must
be exercised to ensure that the material is in context and not misleading. The most
common problem occurs when an organization uses a government report as a form

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of endorsement for its services or products. An airline, for example, might cite a government study showing that it provides the most service to customers, but neglect to
state the basis of comparison or other factors.

Photography and Artwork
The copyright law makes it clear that freelance and commercial photographers retain
ownership of their work. In other words, a customer who buys a copyrighted photo
owns the item itself, but not the right to make additional copies. That right remains
with the photographer unless transferred in writing.
In a further extension of this right, the duplication of copyrighted photos is also
illegal. This was established in a 1990 U.S. Federal District Court case in which the
Professional Photographers of America (PPofA) sued a nationwide photofinishing
firm for ignoring copyright notices on pictures sent for additional copies. Photoshop
edits and other manipulations of original artwork can also violate copyright provisions.
Freelance photographers generally charge for a picture on the basis of its use. If it

is used only once, perhaps for an employee newsletter, the fee is low. If, however, the
company wants to use the picture in the corporate annual report or on the company
calendar, the fee may be considerably higher. Consequently, it is important for a public relations person to tell the photographer exactly how the picture will be used.
Arrangements and fees then can be determined for (1) one-time use, (2) unlimited
use, or (3) the payment of royalties every time the picture is used. As noted above, the
availability of photographs—both professional and amateur—online has only served
to further complicate these issues. Another example is a lawsuit filed by photographer
Robert Caplin against Mario Armando Lavandeira, Jr. (better known as Perez Hilton).
Caplin accused Lavandeira of using 14 of his photos on the perezhilton.com website
without authorization. The safest way to treat use of photographs is to pay for their
use unless they are in the public domain.

The Rights of Freelance Writers
In the Reid case (Community for Creative Nonviolence v. Reid), the U.S. Supreme Court
in 1989 set a lasting precedent that writers retain ownership of their work and that
purchasers of it gain merely a “license” to reproduce the copyrighted work.
Prior to this ruling, the common practice was to assume that commissioned
articles are “work for hire” and that the purchaser owns the copyright. In other
words, a magazine could reproduce the article in any number of ways and even sell
it to another publication without the writer’s permission.
Under the Reid interpretation, ownership of a writer’s work is subject to negotiation and contractual agreement. Writers may agree to assign all copyright rights to
the work they have been hired to do or they may give permission only for a specific
one-time use.
In a related matter, freelance writers are pressing for additional compensation if
an organization puts their work on CD-ROM, online databases, or the Web. Writers
won a major victory when the Supreme Court (New York Times v. Tasini) ruled that
publishers, by making articles accessible through electronic databases, infringe the
copyrights of freelance contributors.
Public relations firms and corporate public relations departments are responsible
for ensuring compliance with the copyright law. This means that all agreements with

a freelance writer must be in writing, the use of the material must be clearly stated,

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and fair exchange of value must be made. Ideally, public relations personnel should
negotiate multiple rights or even complete ownership of the copyright.

Copyright Issues on the Internet
The Internet and World Wide Web raise distinct issues about the protection of intellectual property. Two issues regarding copyright are (1) the downloading of copyrighted material and (2) the unauthorized uploading of such material.
The Downloading of Material  In general, the same rules apply to cyberspace as to
more earthbound methods of expressing and disseminating ideas. Original materials in digital form are still protected by copyright, a precedent first established with
legal language delivered by telegraph early in the last century. The fair use limits for
materials found on the Internet are essentially the same as the fair use of materials
disseminated by any other means.
Related to this is the use of news articles and features that are sent via e-mail or the
Web to the clients of clipping services. An organization may use such clips to track its
publicity efforts, but it can’t distribute the article on its own website or intranet without permission and a royalty payment to the publication where the article appeared.
The Uploading of Material  In many cases, owners of copyrighted material
have uploaded various kinds of information with the intention of making it freely
­available. Examples include software, games, and even entire books. The problem
comes, however, when third parties upload copyrighted material without permission.

­Consequently, copyright holders are increasingly patrolling the Internet to stop the
unauthorized use of material.
A good example is Google Books. The online behemoth Google expressed its intention to scan and make available online every book in the world. In 2005, the Authors
Guild filed a class action lawsuit against Google. The Guild argued that the scanning
project was a violation of copyright and it sought a $125 million legal settlement. As
the case wends its way through the court system, the United States Court of Appeals
for the Second Circuit ruled that a lower court had to consider the fair use issues cited
in the case before determining whether the class action suit could move forward.
Another example is Viacom, which constantly monitors such sites as Google’s
YouTube for unauthorized postings of video clips from its various television programs.
Under the 1998 Digital Millennium Copyright Act, Internet businesses such as YouTube are immune from liability for material posted by its users, but are required to
take down any infringing material after it is notified by the copyright owner. In one
year alone, YouTube removed 230,000 clips at the request of Viacom. The posting of
illegal video clips continues to dog the industry, causing a great deal of lobbying for
more protective legislation and even major lawsuits.

Copyright Guidelines
A number of points have been discussed about copyright. A public relations person
should keep the following in mind:
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Ideas cannot be copyrighted, but the expression of those ideas can be.
Major public relations materials (brochures, annual reports, videotapes, motion
pictures, position papers, and the like) should be copyrighted, if only to prevent
unauthorized use by competitors.

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Despite the concept of fair use, any copyrighted material intended directly to advance the sales and profits of an organization should not be used unless permission is given.
Copyrighted material should not be taken out of context, particularly if it implies
endorsement of the organization’s services or products.
Quantity reprints of an article should be ordered from the publisher.
Permission is required to use segments of television programs or motion pictures.
Permission must be obtained to use segments of popular songs (written verses or
sound recordings) from a recording company.
Photographers and freelance writers retain the rights to their works. Permission and fees must be negotiated to use works for purposes other than originally
agreed on.
Photographs of current celebrities or those who are now deceased cannot be used
for promotion and publicity purposes without permission.
Permission is required to reprint cartoon characters, such as Snoopy or
Garfield. In addition, cartoons and other artwork or illustrations in a publication
are copyrighted.
Government documents are not copyrighted, but caution is necessary if the material is used in a way that implies endorsement of products or services.
Private letters, or excerpts from them, cannot be published or used in sales and
publicity materials without the permission of the letter writer.
Original material posted on the Internet and the World Wide Web has copyright
protection.
The copyrighted material of others should not be posted on the Internet unless
specific permission is granted.

Trademark Law
What do the names Diet Coke, iTunes, Kindle, eBay, Academy Awards, and even
Coco Chanel have in common? They are all registered trademarks protected by law.
A trademark is a word, symbol, or slogan, used singly or in combination, that
identifies a product’s origin. According to Susan L. Cohen, writing in Editor & Publisher’s annual trademark supplement, “It also serves as an indicator of quality, a kind
of shorthand for consumers to use in recognizing goods in a complex marketplace.”
Research indicates, for example, that 53 percent of Americans say brand quality takes
precedence over price considerations, making brand identity crucial to commercial

success.
The concept of a trademark is nothing new. The ancient Egyptians carved marks
into the stones of the pyramids, and the craftsmen of the Middle Ages used guild
marks to identify the source and quality of products. What is new, however, is the proliferation of trademarks and service marks in modern society. Coca-Cola may be the
world’s most recognized trademark, according to some studies, but it is only 1 of over
1 million active trademarks registered with the Federal Patent and Trademark Office
(FPTO). About 40,000 trademarks are registered worldwide each year, according to
the World Intellectual Property Association (WIPA).

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Protecting Valuable Trademarks
The Chrysler corporation has for years placed trademark advertisements to protect the
name “Jeep.”

Sports logos and team uniforms constitute one of the largest categories of registered trademarks. A licensing fee must be paid before anyone can use logos for
commercial products and promotions. The Licensing Letter is a trade publication
that reports on licensing issues. Recently it announced that Major League Baseball
(MLB) pocketed $2.75 billion, the NFL earned $2.7 billion, the National Basketball
Association (NBA) earned $1.75 billion, and the National Hockey League (NHL)
made $630 million just selling licensed merchandise, and the sale of college and university trademarked goods is rapidly approaching that mark.

The Collegiate Licensing Company (CLC) represents 200 universities in their
licensing agreements. CLC estimates that licensed university products earn about
$4.6 billion annually. The University of Texas at Austin, the University of Alabama,
and the University of Kentucky topped the list of CLC’s highest earning clients.
After winning the NCAA men’s basketball championship in 2012, Kentucky earned
$6.7 million from licensed products. Schools license everything from beer mugs to
T-shirts. The penalty for not paying a licensing fee is steep. The NFL and federal
investigators collaborated in a months-long investigation they called “Project Red
Zone” leading up to the Super Bowl. They confiscated more than $17 million in
bogus goods and filed criminal charges against dozens of offending vendors. They
also closed down more than 300 websites selling unlicensed goods ranging from
jerseys to caps to jackets. An array of confiscated items is shown in the photograph
on page 339.

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Because brand identity is so valuable, a major clothing company took
an equally aggressive approach against
a whimsical startup making a play on
its brand name and logo. South Butt

was a small company formed as a spoof
on the North Face outdoor clothing
brand. With the logo inverted, the
new company’s name, South Butt, became quite apt as the logo took on an
abstract resemblance to that lower anatomical part. North Face threatened
and then filed suit, boosting the spoof
into a viable company through the viral response of supporters to a South
Butt Facebook page.
Confiscated counterfeit merchandise like this from Super Bowl XLVII in New
An out-of-court settlement was
Orleans is often displayed by law enforcement at news conferences.
reached and the South Butt company
reformed as The Butt Face. North
Face was no more enamored with that
parody and again filed suit. This time the litigation ended less amicably. Courthouse
News Service reported that in a consent judgment the South Butt founders “agreed
to abandon their trademark application for ‘The Butt Face,’ cease sales of products,
silence all social media promotions and take down YouTube videos.” They were also
fined $65,000, which decreased by $1,000 for every month they continued complying
with the terms of the judgment.

The Protection of Trademarks
There are three basic guidelines regarding the use of trademarks:
■

■

■

Trademarks are proper adjectives and should be capitalized and followed by a

generic noun or phrase (e.g., Kleenex tissues or Rollerblade skates).
Trademarks should not be pluralized or used in the possessive form. Saying,
“American Express’s credit card” is improper.
Trademarks are never verbs. Saying, “The client FedExed the package” violates
the rule.

Organizations adamantly insist on the proper use of their trademarks in order
to avoid the problem of the name or slogan becoming generic. Or, to put it another
way, a brand name becomes a common noun through general public use. Some trade
names that have become generic include aspirin, thermos, cornflakes, nylon, cellophane,
and yo-yo. This means that any company can use these names to describe a product.
Organizations take the step of designating brand names and slogans with various
marks. The registered trademark symbol is a superscript, small capital “r” in a circle: ®.
“Registered in U.S. Patent and Trademark Office” and “Reg. U.S. Pat. Off.” may also
be used. A “tm” in small capital letters indicates a trademark that isn’t registered. It
represents a company’s common-law claim to a right of trademark or a trademark for
which registration is pending. For example, 3M™ Post-it® Notes.

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A service mark is like a trademark, but it designates a service rather than a product,

or is a logo. An “sm” in small capitals in a circle— sm —is the symbol for a registered
service mark. If registration is pending, the “sm” should be used without the circle.
These symbols are used in advertising, product labeling, news releases, company brochures, and so on, to let the public and competitors know that a name, slogan, or symbol is protected by law. Chrysler regularly runs trademark ads to protect
the “Jeep” brand from becoming a generic term for sports utility or other off-road
vehicles.
Public relations practitioners play an important role in protecting the trademarks
of their clients. They safeguard trademarks and respect other organizational trademarks in the following ways:
■

■

■

■

■

■

■

■

Ensure that company trademarks are capitalized and used properly in all organizational literature and graphics. Lax supervision can cause loss of trademark
protection.
Distribute trademark brochures to editors and reporters and place advertisements
in trade publications designating names to be capitalized.
Educate employees as to what the organization’s trademarks are and how to use
them correctly.
Monitor the mass media to make certain that trademarks are used correctly.

If they are not, send a gentle reminder.
Check publications to ensure that other organizations are not infringing on a registered trademark. If they are, the company legal department should protest with
letters and threats of possible lawsuits.
Make sure the trademark is actually being used. The Trademark Act does not
­permit an organization to hold a name in reserve.
Ensure that the trademarks of other organizations are correctly used and properly noted.
Avoid the use of trademarked symbols or cartoon figures in promotional materials without the explicit permission of their owner. In some cases, to be discussed,
a licensing fee is required.

The Problem of Trademark Infringement
Today, in a marketplace populated with thousands of businesses and organizations,
finding a trademark not already in use is extremely difficult. The task is even more
frustrating if a company wants to use a trademark on an international level.
The complexity of finding a new name, coupled with the attempts of many to
capitalize on an already known trade name, has spawned a number of lawsuits and
complaints claiming trademark infringement. An example is when sportswear retailer
Under Armour filed a lawsuit against rival Nike alleging the latter had used Under
Armour’s trademarked phrase “I Will” in advertising. The Nike tagline in question
was “I will protect my home court.” Organizations often claim that their registered
trademarks are being improperly exploited by others for commercial gain. In many
cases, conflicts are settled out of court; in others, the courts have to weigh the evidence and make a decision based on the following:
■

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Has the defendant used a name as a way of capitalizing on the reputation of another organization’s trademark—and does the defendant benefit from the original
organization’s investment in popularizing its trademark?

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■

■

■

341

Is there an intent (real or otherwise) to create confusion in the public’s mind? Is
there an intent to imply a connection between the defendant’s product and the
item identified by trademark?
How similar are the two organizations? Are they providing the same kinds of
products or services?
Has the original organization actively protected the trademark by publicizing it and by actually continuing to use it in connection with its products or
services?
Is the trademark unique? A company with a trademark that simply describes a
common product might be in trouble.

Misappropriation of Personality
A form of trademark infringement also can result from the unauthorized use of
well-known entertainers, professional athletes, and other public figures in an organization’s publicity and advertising materials. A photo of a rock or movie star
may make a company’s advertising campaign more interesting, but the courts call
it “misappropriation of personality” if permission and licensing fees have not been

negotiated.
Deceased celebrities also are protected. To use a likeness or actual photo of a
personality such as Elvis Presley, Marilyn Monroe, or Michael Jackson, the user
must pay a licensing fee to an agent representing the family, studio, or estate of
the deceased. The estate of Marilyn Monroe sold the licensing rights to her image
to a Canadian marketing firm for an estimated $20 million to $30 million. The
Presley estate, almost 30 years after his death, is still the “King,” with about $50
million in income annually. Similar to the Monroe business deal, Presley’s estate
sold an 85 percent stake in his licensing rights to CKX, Inc., an entertainment
conglomerate, for $100 million. Even boxing legend Muhammad Ali made a deal
with CKX, Inc. The company paid the boxer $50 million for the rights to license
his name and likeness. According to the Wall Street Journal, Ali’s name and image
currently generate about $4 million to $7 million annually in licensing fees and
endorsements.
The Guardian newspaper reported that U.S. revenue generated by dead
­celebrities is $2.25 billion. Not all of that is from licensing, of course. But when
it comes to protecting the value of a dead celebrity (or “delebs” as the Guardian dubbed them) heirs can be aggressive. The Albert Einstein estate, which
makes millions from the licensing rights to Baby Einstein products, sued General
­Motors when the automaker ran an ad showing Einstein’s head superimposed on
a sexy, nude torso. The courts found, however, that the image was in the public
domain giving GM the right to use it. In another example, every evening the
sidekick of late night talk show host Johnny Carson introduced the comedian
with the phrase “Here’s Johnny.” So the Carson heirs went to court to stop the
marketing of a portable toilet under the moniker “Here’s Johnny.” In this case,
the courts upheld the rights of the estate and issued an injunction to end the marketing campaign.
The legal doctrine is the right of publicity, which gives entertainers, athletes, and
other celebrities the sole ability to cash in on their fame. The legal right is loosely
akin to a trademark or copyright, and many states have made it a commercial asset
that can be inherited by a celebrity’s descendents. Legal protection also extends to the
use of “sound-alikes” and “look-alikes.”

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Regulations by Government Agencies
The promotion of products and services, whether through advertising, product publicity, or other techniques, is not protected by the First Amendment. Instead, the
courts have traditionally ruled that such activities fall under the doctrine of commercial speech. This means that messages can be regulated by the state in the interest of
public health, safety, and consumer protection.
Consequently, the states and the federal government have passed legislation that
regulates commercial speech and even restricts it if standards of disclosure, truth, and
accuracy are violated. One consequence was the banning of cigarette advertising on
television in the 1960s. A more difficult legal question is whether government can
completely ban the advertising or promotion of a legally sold product such as cigarettes or alcohol.
Public relations personnel involved in product publicity and the distribution of
financial information should be aware of guidelines established by major government
agencies such as the Federal Trade Commission (FTC), the Securities and Exchange
Commission (SEC), and even the Federal Communications Commission (FCC).

Federal Trade Commission
The Federal Trade Commission has jurisdiction to determine that advertisements
are not deceptive or misleading. Public relations personnel should also know that the
Commission has jurisdiction over product news releases and other forms of product

publicity, such as videos and brochures. The FTC makes it clear that its purview also
includes social media such as blogs:
“FTC guidelines state that businesses and reviewers will be liable for any false
statements made about a product. If a blogger receives a free sample of skin cream
that claims to cure his eczema, for example, the company and the blogger could be
held liable for false advertising.” See the Social Media in Action box about the celebrity endorsements on page 343 for an example of this questionable behavior.
In the eyes of the FTC, both advertisements and product publicity materials are
vehicles of commercial trade—and therefore are subject to regulation. In fact, Section 43(a) of the Lanham Act makes it clear that anyone, including public relations
personnel, is subject to liability if that person participates in the making or dissemination of a false and misleading representation in any advertising or promotional
material. This includes advertising and public relations firms, which also can be held
liable for writing, producing, and distributing product publicity materials on behalf
of clients.
An example of an FTC complaint is the one filed against Kellogg for claiming that its Frosted Mini-Wheats were “clinically shown to improve kids’ attentiveness by nearly 20%.” The Commission charged that the claim was deceptive and
­Kellogg pulled the ads. The cereal maker also faced a class action lawsuit by consumers, which it eventually settled for $4 million. It also agreed to stick to statements
such as: “Clinical studies have shown that kids who eat a filling breakfast like Frosted
Mini-Wheats have an 11 percent better attentiveness in school than kids who
skip breakfast.”
A Campbell Soup case raises an important aspect of FTC guidelines. The soup
company claimed that because its soups were low in fat and cholesterol, they were
helpful in fighting heart disease. What Campbell Soup didn’t say was that the high
sodium in the soup could actually increase the risk of heart disease. Although a

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publicized fact may be accurate in itself, FTC staff also considers the context or “net
impression received by the consumers.” In Campbell’s case, advertising copywriters
and publicists ignored the information about high sodium, which placed an entirely
new perspective on the health benefits of the soup.
Hollywood’s abuse of endorsements and testimonials to publicize its films also
has attracted the scrutiny of the FTC. It was discovered that Sony Pictures had concocted quotes from a fictitious movie critic to publicize four of its films. And 20th
Century Fox admitted that it had hired actors to appear in “man on the street” commercials to portray unpaid moviegoers.
Recently, the FTC has been focusing on the marketing of food and beverages to
children. The agency subpoenaed 44 food marketers, asking for detailed reports on
how much they spend promoting their products to children and adolescents to determine whether more federal regulations might be required.
FTC investigators are always on the lookout for unsubstantiated claims and various forms of misleading or deceptive information. Some of the words in promotional
materials that trigger FTC interest are authentic, certified, cure, custom-made, germ-free,
natural, unbreakable, perfect, first-class, exclusive, and reliable.
The FTC also has established guidelines for “green” marketing and the use of
“low-carb” in advertisements and publicity materials for food products. The FTC has
ruled that anyone who endorses a product, including celebrities and bloggers, must
make explicit the compensation received from companies. The FTC guidelines also
state that businesses and reviewers (including bloggers) may be held liable for any
false statements about a product.

on the job

Social Media in Action

T

The FTC Tackles Undisclosed Celebrity Social Media Endorsements

he Federal Trade Commission
is attempting to rein in celebrities who are paid thousands of
dollars to endorse products through
the celebrities’ social media outlets.
In 2013, the FTC issued a revised set
of social media disclosure guidelines.
The last time the federal regulatory
body issued such guidelines was
2000. A lot has happened in the online and social media landscape since
then.

Broadly the guidelines include:
1. The regulations apply to anyone
and any medium (now existing
or yet to be developed).
2. Disclosures must be made
regardless of platform. ­Using
the excuse that a medium
doesn’t support disclosure is not
acceptable.
3 . If a medium doesn’t allow
for disclosure (e.g., a limited

number of characters provides
a challenge), then perhaps
the medium isn’t appropriate.
The FTC says that preceding
a ­promotional tweet with the

word “Ad:” or “Sponsored:”
would be sufficient compliance.
4. Disclosures have to be clear
and conspicuous. Disclosures
should be of the same size as
the message and in the same
(continued)

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format. They should be close to
the promotional information so
the consumer doesn’t have to
search for them.
5. It’s not good enough to just link
to disclosures. They must accompany the message.
The complete guide is available at
“www.ftc.gov/os/2013/03/130312dot
comdisclosures.pdf”.
But FTC regulations are not laws
and so celebrities and sponsors often try to skirt the rules. Even after

the revised regulations were broadly
announced, sponsored content continues to appear. The Huffington Post
estimated that Kim Kardashian earned
about $20,000 when she posted a
TwitPic of herself using EOS lip balm
for her 17.9 million followers in May
following the March FTC announcement. Miley Cyrus tweeted a supportive statement about BlackJet to her
12 million Twitter followers. BlackJet
admitted to the New York Times that
the star “was given some consideration for her tweet.” Justin Bieber’s
40 million followers received a tweet
preceding Mother’s Day that included
a reference to 1–800-Flowers. When
fans thought a tweet from comedian
Michael Ian Black referring to Dos Equis’

Legend of You app was suspicious, they
called him on it and he admitted in a
subsequent tweet that he was paid
“thousands of dollars to run it.”
The New York Times reported, “The
F.T.C. declined to comment on any
particular instances where celebrities
have posted about companies with
which they have financial relationships. The agency did say there are
‘open investigations’ into companies
that have broken federal rules.”
What do you think? Is it ethical
for celebrities to pair with brands to
promote products or services via the

celebrities’ Twitter or Facebook or
Vine accounts? Are the FTC’s rules unreasonable? Would preceding a tweet
with the words “Ad:” or “Sponsored:”
spoil the effectiveness of the endorsement? Why or why not? Are celebrity
endorsements on television different
than on social media? If so, how?
The following general guidelines,
adapted from FTC regulations, should
be taken into account when writing
product publicity materials:
■

Make sure the information is accurate and can be
substantiated.

■

Stick to the facts. Don’t “hype”
the product or service by using

flowery, nonspecific adjectives
and ambiguous claims.
■

Make sure celebrities or ­others
who endorse the product
­actually use it. They should
not say anything about the
­product’s properties that cannot
be substantiated.

■

Watch the language. Don’t say
“independent research study”
when the research was done by
the organization’s staff.

■

Provide proper context for statements and statistics attributed
to government agencies. They
don’t endorse products.

■

Describe tests and surveys in
sufficient detail so that the
consumer understands what
was tested and under what
conditions.

■

Remember that a product is not
“new” if only the packaging has
been changed or the product is
more than six months old.

■

When comparing products or
services with a competitor’s,
make certain you can substantiate your claims.

■

Avoid misleading and deceptive
product demonstrations.

Companies found in violation of FTC guidelines are usually given the opportunity to sign a consent decree. This means that the company admits no wrongdoing
but agrees to change its advertising and publicity claims. Companies may also be fined
by the FTC or ordered to engage in corrective advertising and publicity.

Securities and Exchange Commission
The megamergers and the IPOs (initial public offerings) of many new companies has
made the Securities and Exchange Commission (SEC) a common name in the business world. Such complex and enormous deals have also made the practice of investor
relations increasingly important. This federal agency closely monitors the financial
affairs of publicly traded companies and protects the interests of stockholders.
SEC guidelines on public disclosure and insider trading are particularly relevant to corporate public relations staff members, who must meet those federal

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requirements. The distribution of misleading information or failure to make a timely
disclosure of material information may be the basis of liability under the SEC code.
A company may even be liable if, while it satisfies regulations by getting information
out, it conveys crucial information in a vague way or buries it deep in the news release.
A classic example is Enron, the now defunct Houston-based energy company that
became a household word overnight when it became the largest single corporate failure in U.S. history. The company management was charged with a number of SEC
violations, including the distribution of misleading news releases about its finances.
According to congressional testimony, the company issued a quarterly earnings news
release that falsely led investors to believe the company was “on track” to meet strong
earnings growth in 2002. Three months later, the company was bankrupt. Later, in
criminal trials, Enron’s head of investor relations, Mark Koenig, received 18 months
for aiding and abetting securities fraud.
The SEC has volumes of regulations, but the three concepts most pertinent to
public relations personnel are as follows:
1.  Full information must be given on anything that might materially affect
the company’s stock.   This includes such things as (1) dividends or their deletion,
(2) annual and quarterly earnings, (3) stock splits, (4) mergers or takeovers, (5) major
management changes, (6) major product developments, (7) expansion plans, (8) change
of business purpose, (9) defaults, (10) proxy materials, (11) disposition of major assets,
(12) purchase of own stock, and (13) announcements of major contracts or orders.
2.  Timely disclosure is essential.   A company must act promptly (within minutes or a few hours) to dispel or confirm rumors that result in unusual market activity
or market variations. The most common ways of dispensing such financial information are through electronic news release services, contacting the major international
news services (Dow Jones Wire), and bulk e-mails.
3.  Insider trading is illegal.   Company officials, including public relations staffs
and outside counsel, cannot use inside information to buy and sell company stock.
The landmark case on insider trading occurred in 1965, when Texas Gulf ­Sulphur
executives used inside information about an ore strike in Canada to buy stock while

at the same time issuing a news release downplaying rumors that a rich find had
been made.
The courts are increasingly applying the mosaic doctrine to financial information.
Maureen Rubin, an attorney and professor at California State University, Northridge,
explains that a court may examine all information released by a company, including
news releases, to determine whether, taken as a whole, they create an “overall misleading” impression. One such case was Cytryn v. Cook (1990), in which a U.S. District
Court ruled that the proper test of a company’s adequate financial disclosure is not
the literal truth of each positive statement, but the overall misleading impression that
the statements combine to create in the eyes of potential investors.
As a result of such cases, investor relations personnel must also avoid such practices as:
■
■
■

■

Unrealistic sales and earnings reports
Glowing descriptions of products in the experimental stage
Announcements of possible mergers or takeovers that are only in the speculation
stage
Free trips for business reporters and offers of stock to financial analysts and
editors of financial newsletters

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■
■
■

Omission of unfavorable news and developments
Leaks of information to selected outsiders and financial columnists
Dissemination of false rumors about a competitor’s financial health

The SEC also has regulations supporting the use of “plain English” in prospectuses and other financial documents. Companies and financial firms are supposed
to make information understandable to the average investor by removing sentences
littered with lawyerisms such as aforementioned, hereby, therewith, whereas, and hereinafter. The cover page, summary, and risk factor sections of prospectuses must be
clear, concise, and understandable. A SEC booklet gives helpful writing hints such
as (1) make sentences short; (2) use we and our, you and your; and (3) say it with an
active verb. More information about SEC guidelines can be accessed from its
website: www.sec.gov/
Fair Disclosure Regulation  In 2000, the SEC issued another regulation related
to fair disclosure, known as Reg FD. Although regulations already existed regarding “material disclosure” of information that could affect the price of stock, the new
regulation expands the concept by requiring publicly traded companies to broadly
disseminate “material” information via a news release, webcast, or SEC filing.
According to the SEC, Reg FD is intended to ensure that all investors—not just
brokerage firms and analysts—receive financial information from a company at the
same time.
Sarbanes–Oxley Act  The Sarbanes–Oxley Act was made law in 2002 as a result of the Enron and Worldcom financial scandals. Although the Enron scandal
alone cost investors an estimated $90 billion, the devastation was dwarfed by the
2009 collapse of banks, market valuation, and real estate prices. Largely due to
regulatory failings combined with ruthless speculation akin to betting, the Act
failed to protect consumers. For public relations and investor relations professionals, the admonition that ignorance is no excuse before the law should be the

­operating principle.

Federal Communications Commission
The FCC historically licensed radio and television stations, allocating frequencies
and ensuring that the public airwaves are used in the public interest. Increasingly,
the Commission oversees Internet policy. FCC actions directly impact public relations personnel who distribute video news releases (VNRs) on behalf of employers
and clients and public relations professionals who facilitate viral spread of copyrighted
material on the Web.
The controversy about proper source attribution of VNRs by television stations was somewhat discussed in Chapter 3, but political debate still continues
about the FCC’s ruling that broadcasters must disclose to viewers the origin of
video news releases produced by the government or corporations when the material runs on the public airways. The agency didn’t specify what form such disclosure should take, but broadcasters argued that the FCC was curtailing their First
Amendment rights.
FCC Commissioner Jonathan Edelstein disagreed, saying the issue is not one of
free speech, but of identifying who is actually speaking. He told the Washington Post,
“We have a responsibility to tell broadcasters they have to let people know where the

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material is coming from. Viewers are hoodwinked into thinking it’s really a news story
when it might be from the government or a big corporation trying to influence the

way they think.”
Both the broadcast and the public relations industries have joined together to call
for voluntary controls and disclosure instead of “government intrusion” into the news
process. Both industries have also adopted codes of practice (discussed in Chapter 3).
Fines have also been levied by the FCC in terms of enforcing regulations concerning
indecency on the airwaves. The triggering event was Janet Jackson’s “wardrobe malfunction” at the 2004 Super Bowl halftime show when Justin Timberlake ripped off a
piece of her black leather top, exposing her right breast for an instant. The “malfunction,” of course, garnered more media coverage and public discussion than the game
itself. The FCC, however, was not amused; it levied a $550,000 fine on CBS television
(a division of Viacom) for airing the incident.
Increasingly, the Internet has become not only a major channel for delivery of
content, but also a point of contention as a utility. The FCC has consistently supported Net neutrality. In 2010, the FCC passed a Net neutrality rule that essentially
requires all Internet service providers to treat all websites equally. Providers are
not allowed to speed up or slow down access to certain websites based on whether
the websites have paid a fee to the provider. In 2012, Verizon filed a suit against the
FCC to overturn the rule.

Other Federal Regulatory Agencies
Although the FTC and the SEC are the major federal agencies concerned with
the content of advertising and publicity materials, public relations professionals
should be familiar with the guidelines of two other major agencies: the Food and
Drug Administration (FDA) and the Equal Employment Opportunity Commission
(EEOC).

The Food and Drug Administration
The FDA oversees the advertising and promotion of prescription drugs, over-thecounter medicines, and cosmetics. Under the federal Food, Drug, and Cosmetic Act,
any “person” (which includes advertising and public relations firms) who “causes the
misbranding” of products through the dissemination of false and misleading information may be liable.
The FDA has specific guidelines for video, audio, and print news releases on
health care topics. First, the release must provide “fair balance” by telling consumers about the risks as well as the benefits of the drug or treatment. Second, the writer
must be clear about the limitations of a particular drug or treatment, for example,

that it may not help people with certain conditions. Third, a news release or media kit
should be accompanied by supplementary product sheets or brochures that give full
prescribing information. On television, these rules result in the often-parodied, rapidfire recitation of caveats and side effects of an advertised drug.
Because prescription drugs have major FDA curbs on advertising and promotion,
the drug companies try to sidestep the regulations by publicizing diseases, creating
patient advocate groups, and enlisting celebrity spokespersons. In 2012 pharmaceutical company GlaxoSmithKline was accused by the federal government of hiring

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experts including celebrity physician Dr. Drew Pinsky to promote drug uses that were
not approved by the FDA.
The government accusation was buoyed by evidence including an invoice
from a public relations firm that had arranged for “Dr. Drew” to make media appearances on behalf of GSK. Forbes reported, “A note from the PR firm . . . says:
‘During the fifteen-minute segment, Dr. Pinsky communicated key campaign
messages.’ The spot is almost a textbook for the way drug companies have used
speakers to promote medicines.” GlaxoSmithKline settled the case paying a fine
of $3 billion.

Equal Employment Opportunity Commission
Diversity in the workplace has dramatically increased in recent years, and the EEOC
is charged with ensuring that workers are not discriminated against on the basis of

their religion, ethnic background, gender, or even their English skills.
Employers, for example, need to accommodate the religious needs of their employees. For example, Muslims pray five times a day and have attire prescribed by
their religion, and Jews must also be allowed to be absent from the workplace on various Holy days. At the same time, EEOC guidelines also call for employers to ensure
that employees don’t express their religious views at work or impose their beliefs on
others. In other words, a company’s policy about harassment also
needs to include wording about religion.
Employers must understand
For example, Abercrombie & Fitch clothing retailer faced
a
$40
million lawsuit for refusing to hire a Muslim applicant
that discriminatory
for a sales associate position because the applicant intended to
English-only rules can hurt
wear a head scarf, which the manager said violated the store’s
“Look Policy.” In a similar situation, a judge fined Abercromproductivity, morale, and
bie & Fitch $20,000 for firing a Muslim teenager on the same
grounds. Abercrombie & Fitch consistently adheres to its view
ultimately their bottom line.
that the associates are part of the advertising and image of the
Kimberlie Ryan, Denver attorney
store, which overrides liberties that are protected outside the
work environment.
The EEOC also gets involved in the contentious issue of language. Federal law
doesn’t prevent employers from requiring workers to speak only English if it is justified
by business necessity or safety concerns, but a blanket policy of English-only can get an
employer in trouble if it forbids workers to speak another language during breaks, or if
the language spoken doesn’t make a difference in the performance of the job.
English-only advocates argue that multilingualism in the workplace encourages newcomers to retain their own language and that English speakers feel slighted
when fellow workers talk to each other in their native language. On the other hand,

Denver attorney Kimberlie Ryan told the Wall Street Journal, “This is not about
whether people should learn English; it’s about not using language as a weapon of
harassment.”
Being sensitive to the diversity of the workplace, plus a thorough understanding
of EEOC guidelines, are requirements for anyone working in employee communications. Public relations personnel often work closely with human resources to offer
workshops and educational materials on diversity to educate employees to be more
tolerant and understanding of each other. It is much cheaper than a series of lawsuits
charging discrimination.

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Chapter 12      Laws and Applications



349

Corporate Speech
The First Amendment to the U.S. Constitution guarantees “freedom of speech,” but
exactly what speech is protected has been defined by the courts over the past 200
years, and is still being interpreted today. However, there is a well-established doctrine that commercial speech doesn’t have the same First Amendment protection as
other forms of speech.
Essentially, the government may regulate advertising that is
■
■
■

■

false,
misleading,
deceptive, or
promotes unlawful goods and services.

The courts also have ruled that product news releases, brochures, and other
promotional vehicles intended to sell a product or service constitute commercial
speech.
Another area, however, is what is termed corporate speech. Robert Kerr, author
of The Rights of Corporate Speech: Mobil Oil and the Legal Development of the Voice of Big
Business, defines corporate speech as “media efforts by corporations that seek to affect political outcomes or social climate—in contrast with ‘commercial speech,’ which
promotes products or services.” The courts, for the most part, have upheld the right
of corporations and other organizations to express their views on public policy, proposed legislation, and a host of other issues that may be of societal or corporate concern. Organizations traditionally did so through op-ed articles, letters to the editor,
postings on their website, and even news releases.

Nike’s Free Speech Battle
The Supreme Court became involved with corporate free speech
in 2003 when it was petitioned by Nike, the shoe and sports clothes
manufacturer, to redress a California Supreme Court d
­ ecision that
had ruled that the company’s efforts to explain its labor policies
abroad were basically “garden variety commercial speech.” The
ruling seemed to equate public relations speech about a policy
­issue with commercial advertising.
The case, Nike v. Kasky, raised the thorny question of how to
deal with the blurred lines that often separate “free speech” and
“commercial speech.” Marc Kasky, an activist, had sued Nike,
claiming that the company had made false and misleading statements that constituted unlawful and deceptive business practices.

Nike, on the other hand, claimed that it had the right to express its
views and defend itself against allegations by activist groups that it
operated sweatshop factories in Asia and paid subpar wages.
The U.S. Supreme Court, however, was less certain about the
“commercial” nature of Nike’s public relations campaign. It did
not make a decision and sent the case back to the California courts
where the case was settled out of court.

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Because the commercial
message (buy our shoes)
was mixed with a political
message (our political
opponents are wrong),
and was presented outside
a traditional advertising
medium, it should have been
treated as fully protected.
Eugene Volokh, professor
of law at UCLA, in a Wall Street
Journal op-ed

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Employee Speech
A progressive organization encourages employee comments and even criticisms.
Many employee newspapers and e-bulletin boards carry letters to the editor because
they breed a healthy atmosphere of two-way communication and make company publications more credible. However, organizations are increasingly setting guidelines
and monitoring what employees say online. The following is a discussion of employee
e-mail, surfing the Internet, and blogging.

Employee E-Mail
The monitoring of employee e-mail by management is well established. A survey by
Forrester Consulting for Proofpoint, a maker of e-mail security products, found that
almost 50 percent of large companies audit outbound e-mail by their employees. In
fact, 38 percent of large U.S. companies surveyed by Proofpoint said they employ staff
to read or analyze outgoing e-mail.
A number of court decisions have reinforced the right of employers to read
employees’ e-mail. However a company must be clear about its e-mail monitoring policies. A New Jersey appeals court ruled that a home-health worker
who sent e-mail via personal account had every reason to believe her e-mail was
private. Still, the Wall Street Journal reported, “Employees often assume their
communications on personal e-mail accounts should stay private even if they are
using work-issued computers or smart phones. But in most instances when using
a work device, e-mails of all kinds are captured on a server and can be retrieved
by an employer.”
Employers are increasingly monitoring employee e-mail for two reasons. First,
they are concerned about being held liable if an employee posts a racial slur, engages in sexual harassment online, or even transmits sexually explicit jokes that
would cause another employee to feel that the workplace is a “hostile” environment. Second, companies are concerned about employee e-mails that may include
information that the organization considers proprietary, such as trade secrets, marketing plans, and development of new products, which would give the competition
an advantage. In other words, you should assume that any e-mails you write at
work are subject to monitoring and that you can be fired if you violate company
guidelines.

Surfing the Internet
Employees should also be careful about using the Internet at work. According to a
survey by the American Management Association (AMA), more than 75 percent of
American employers monitor personal Web surfing at work. And more than 25 percent of these companies have fired someone for doing it. Other studies, of course,
show that Web surfing at work for personal reasons is done by the majority of employees—and many even think of using the Internet in the same context as using the
lowly telephone.
Employers, for their part, are concerned about the loss of productivity when
employees sit at their desks watching YouTube videos or updating their Facebook

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