AAF Government Report

*This issue of the AAF Government Report includes a legal brief provided by AAF member Frost Brown Todd, LLC. We hope you find it useful and informative.

January 29, 2010

Clark Rector Jr., Executive Vice President – Government Affairs
Alaina Flaherty, Federation Intern

First Lady to Announce Obesity Plans

First Lady Michelle Obama, Health and Human Services Secretary Kathleen Sebelius and U.S. Surgeon General Regina Benjamin have announced plans to address the growing problem of overweight and obesity in adults and children.

The First Lady has said she will soon launch a major initiative on childhood obesity. In her first release to the nation as Surgeon General Dr. Benjamin has made public The Surgeon General's Vision for a Healthy and Fit Nation. Among its recommendations are limiting television time and limitations of advertisements of less healthy foods and beverages. It is unclear at this time if this second item is a call for governmental mandates or a statement of support for the food and advertising industries' self–regulatory Food and Beverage Advertising Initiative.
– Back to Top –

Image Advertising Under Fire

Congressman John Hall, D–N.Y., has introduced legislation (HR 4518) to deny the federal tax deduction for image advertising by large companies. Specifically, the bill would only allow "any trade or business" with gross receipts of over $100 million to deduct advertising for a service or product. The legislation may be in response to the recent Supreme Court decision affirming that corporations have a First Amendment right to spend corporate dollars in political campaigns. Congressman Hall has spoken out strongly against that decision. HR 4518 currently has no cosponsors. It has been referred to the Committee on Ways and Means where no action has been scheduled. Congressman Hall is not a member of the committee.
– Back to Top –

Rep. Lipinski Pushes to Remove Advertising Deductibility

On Friday, January 22, Congressman Dan Lipinski, D-Ill., released a statement outlining his views on healthcare reform. He favors an incremental approach of limited bills addressing particular topics. One of the specific pieces of legislation he mentioned was his own HR 2917 which "would end the tax deduction that drug companies can claim for their advertising and promotional expenses." The bill was introduced in June of 2009 and has not attracted any cosponsors. Like HR 4518 it has been referred to the Committee on Ways and Means, but has not been scheduled for any action. Like Congressman Hall, Congressman Lipinski does not serve on the committee.
– Back to Top –

Advertising Tax Exemption up for Elimination in Colorado

Two bills of interest to the advertising community have been introduced in Colorado. HR 1189 would remove the state sales and use tax exemption for direct mail advertising materials distributed in Colorado. The bill would give local governments the option to allow exemptions where they see fit.

H.B. 1192 would repeal Special Regulation 7 and provide that "standardized software" is defined as tangible personal property and is thus subject to sales or use tax. The AAF and the New Denver Ad Club are working with a broad-based industry coalition to oppose the measure.
– Back to Top –

FCC Commissioner Urges Delay on Net Rules

In remarks to a recent event, FCC Commissioner Meredith Attwell Baker urged the agency to delay network neutrality proceedings. She said the Commission should wait until the U.S. Court of Appeals for the D.C. Circuit rules on whether the FCC should have taken action against Comcast for certain network management practices. In 2008, Comcast interrupted service to customers who frequently used high–bandwidth applications. Baker expressed concern that the Court could undermine the FCC's authority to impose tougher regulations on net neutrality.

On the other hand, Commissioner Michael Copps, who spoke to the same event said he believes the Commission must continue to move forward saying, "there's not lot of time to waste when guaranteeing an open Internet."

In October the FCC voted to tentatively approve changes to strengthen its four net neutrality principles to bar network operators from engaging in discriminatory behavior, require more disclosure about online traffic management and create stricter enforcement of the regulations. Baker opposed the proposal while Copps voted in favor of it.
– Back to Top –

Documenting Your Intent to Use

Choosing a trademark is often like a land rush. Advertisers want the best, brightest, and biggest trademark, logo, or tagline they can find—far, far away from anyone else. But they have to stake their claims before anyone else can think about using or claiming any rights to their exact marks or confusingly similar marks. An advertiser may claim federally protected rights in its proposed trademark before it actually uses the mark in commerce by filing an “intent to use” application, which requires the advertiser to attach a sworn statement that it has a bona fide intent to use the mark in commerce. In the rush, however, advertisers should not forget to formally document their plans to use the mark in the future.

NBOR Corp. recently learned this lesson the hard way when Research in Motion, owner of the BLACKBERRY mark, successfully opposed NBOR’s intent-to-use application for its proposed mark BLACK MAIL. NBOR filed its intent-to-use application for the mark BLACK MAIL for “computer software that facilitates interactive communication.” Research in Motion claimed that the mark was likely to cause confusion with its BLACKBERRY mark, opposed the application, and requested proof of a bona fide intent to use the mark in commerce. NBOR could only point to its sworn statement of intent that accompanied its trademark application.

NBOR Corp. lost its argument for registration because it had no documentary evidence regarding its intent to use the BLACK MAIL mark.The Board will look for an applicant’s specific plans to use the mark, including:

a proposed date of first use,
identification of trade channels and target customers,
plans for the product line,
product design efforts,
manufacturing and distribution plans,
test marketing,
correspondence with prospective licenses,
preparation of marketing plans or business plans,
label designs, and
promotional materials.

Certainly, a trademark applicant does not need all—or even most—of these items to have a bona fide intent to use a trademark, but applicants should have documentary evidence to demonstrate their intent should they face an opposition or cancellation proceeding.

When finalizing their intent-to-use applications and sworn affidavits, advertisers should remove themselves from the “land rush” mentality and confirm that they have documented evidence that establishes a bona fide intent. Further, their evidence should include information about all of the goods and services described in the trademark application. As a best practice, advertisers should create formal logs regarding their plans to use the mark for each product or service, including a target date of first use.

AAF Government Report is available to all members of the AAF. If you are interested in receiving an e-mailed copy, please e-mail government@aaf.org.

If you are interested in receiving AAF SmartBrief, an opt-in news service, please visit www.smartbrief.com/aaf. AAF SmartBrief condenses advertising industry news from dozens of media sources into a succinct, easy to read e-mail.