Addressing legal issues with the latest technological developments and social media trends.
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The Federation of State Medical Boards recently adopted Model Policy Guidelines for use of social media in medical practice.  The use of social media by medical practitioners and the number of mobile medical and wellness applications continues to increase. These factors are transforming certain aspects of the doctor patient relationship. However, this also creates legal issues of which practitioners and mobile app developers must be aware.

Among other things, these policies make clear that:

·         provider organizations should develop social media policies

·         patient privacy and confidentiality must be protected at all times

·         physicians should not interact with patients on personal social networking or social media websites such as Facebook

·         medical practitioners may use social networking sites to engage in peer-to-peer sharing with other physicians of experiences and education and to discuss areas of medicine and particular treatments, provided these sites are password-protected so that non-physicians do not gain access and view discussions implying medical advice

·         when using peer-to-peer physician sites, physicians must reveal any existing conflicts of interest and they should be honest about their credentials as a physician

With respect to mobile medical applications, the FDA has issued draft guidance.

Social Media HealthcareThe FDA currently plans to apply its regulatory oversight only to certain types of mobile apps, focusing on mobile apps that either have traditionally been considered medical devices or affect the performance or functionality of a currently regulated medical device.  For the subset of mobile medical apps that are subject to regulatory oversight, manufacturers must meet the requirements associated with the applicable device classification.

The following examples represent mobile apps the FDA considers mobile medical apps and that will be subject to its regulatory oversight:

  • Mobile apps that are an extension of one or more medical device(s) by connecting17 to such device(s) for purposes of controlling the device(s) or displaying, storing, analyzing, or transmitting patient-specific medical device data. Examples of displays of patient-specific medical device data include remote display of data from bedside monitors, display of previously stored EEG waveforms, and display of medical images directly from a Picture Archiving and Communication System (PACS) server, or similar display functions that meet the definition of an MDDS. Examples of mobile apps that control medical devices include apps that provide the ability to control inflation and deflation of a blood pressure cuff through a mobile platform and mobile apps that control the delivery of insulin on an insulin pump by transmitting control signals to the pumps from the mobile platform.
  • Mobile apps that transform the mobile platform into a medical device by using attachments, display screens, or sensors or by including functionalities similar to those of currently regulated medical devices. Examples include a mobile app that uses a mobile platform for medical device functions, such as attachment of a transducer to a mobile platform to function as a stethoscope, attachment of a blood glucose strip reader to a mobile platform to function as a glucose meter, or attachment of electrocardiograph (ECG) electrodes to a mobile platform to measure, store, and display ECG signals; or, a mobile app that uses the built-in accelerometer on a mobile platform to collect motion information for monitoring sleep apnea.
  • Mobile apps that allow the user to input patient-specific information and – using formulae or processing algorithms – output a patient-specific result, diagnosis, or treatment recommendation to be used in clinical practice or to assist in making clinical decisions. Examples include mobile apps that provide a questionnaire for collecting patient-specific lab results and compute the prognosis of a particular condition or disease, perform calculations that result in an index or score, calculate dosage for a specific medication or radiation treatment, or provide recommendations that aid a clinician in making a diagnosis or selecting a specific treatment for a patient.

The FDA plans to address in a separate issuance mobile medical apps intended to analyze, process, or interpret medical device data (electronically collected or manually entered) from more than one medical device. The implications of these analyses and interpretations may pose a wide range of risks to public health and patient safety.

The use of social media in health care and the number of mobile medical and wellness applications are sure to increase. If you are leveraging either or both of these trends, please make sure you consult with knowledgeable social media/health care attorneys to understand the legal issues.  

Pillsbury’s social media team includes a number of attorneys who regularly assist clients in these areas.

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With the meteoric rise of Pinterest, many companies are leveraging its popularity. One way this is happening is that Brands are creating contests and promotions around users “pins.” This is a growing trend in the use of social media for contests, promotions and sweepstakes. However, this is an area that is highly regulated, and the law can vary widely from state to state. As a result, Pinterest has issued new Promotions and Marketing Policies.

Among other things, Pinterest has provided the following list of Do’s and Don’ts

Do:

  • Encourage authenticity: Reward the quality of pinning, not just the quantity of it.
  • Promote your contest: Link to your Pinterest account or contest board from your website, social media and marketing channels.
  • Prevent spam: Read up on our anti-spam measures to help keep your contest fun and useful.
  • Make getting involved easy: Create clear instructions and a simple process.

Don’t:

  • Encourage spam: Steer clear of contests that encourage spammy behavior, such as asking participants to comment repeatedly.
  • Run a sweepstakes where each pin, repin, or like represents an entry. Ask pinners to vote with a repin or like.
  • Overdo it: Contests and promotions can be effective, but you don’t want to run a contest too often.
  • Suggest that Pinterest sponsors or endorses you: Make sure you don’t say or imply this anywhere in your marketing materials or branding.

Additionally, the Pinterest policies state:

If you use Pinterest as part of a contest or sweepstakes, you are responsible for making sure it complies with all legal requirements. This includes writing the official rules, offer terms and eligibility requirements (ex: age and residency restrictions), and complying with marketing regulations (ex:, registration requirements and regulatory approvals). These rules can vary from place to place, so please work with a lawyer or other expert to make sure you’re in compliance. You should also always comply with our Terms of Service. Please note that Pinterest isn’t responsible or liable in any way to you if you use us as part of your promotion.

The rise of promotions and contests on Pinterest is part of an overall trend regarding the increased use of gamblification. For more information on the legal issues with gamblification, please email us for a copy of our Client Advisory on Legal Issues with Gamblification.

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As the online gaming market slowly evolves, many companies are preparing to capitalize on it once the legislative process moves forward. In one of the latest announcements, Zynga has applied to get licensed in Nevada. According to a recent statement from Zynga:

Zynga has filed its Application for a Preliminary Finding of Suitability from the Nevada Gaming Control Board. This filing continues our strategic effort to enter regulated RMG markets in a prudent way. We anticipate that the process will take approximately 12 to 18 months to complete. As we’ve said previously, the broader U.S. market is an opportunity that’s further out on the horizon based on legislative developments, but we are preparing for a regulated market. We’ve also recently partnered with bwin.party to bring the highest quality real money gaming experiences to our UK players in the first half of 2013.

Social gaming has been an active field in 2012 and from what we are seeing 2013 will likely see even more activity.The legal issues and regulatory enforcements will continue to increase.

While many companies are focusing on real money gambling, many other companies are focusing on various forms of gamblification – the use of gambling mechanics for non-real money gambling purposes.  The use of virtual goods and virtual currency in gamblification models, though prevalent, further complicates the legal issues. Our team has advised numerous companies on the legal issues with gamblification, including the use of virtual goods and virtual currency. If you would like more information on thees issues please contact us.

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As the multi-billion market for virtual goods continues to grow, so too does the regulatory scrutiny. One area where many companies in this space may want to review is their SEC disclosure practices.

At a recent conference of the American Institute of Certified Public Accountants, a Securities and Exchange Commission representative stated:

“The sale of a virtual good represents a service, not the sale of an actual good” and that the SEC is seeking  “enhanced disclosure” about virtual goods accounting policies, including how the goods were purchased (e.g., with virtual currency, stored value or real time money purchase) and the time period over which they are recognizing revenue from the sale of a good. Brad Skinner, senior assistant chief accountant at the SEC’s Division of Corporation Finance added that virtual goods sellers should be disclosing whether the company is being charged processing fees by the platform it uses to sell the goods, and whether it faces any legal or regulatory requirements to refund consumer purchases.

As the use of virtual goods and virtual currency continues to grow, these and other legal and regulatory issues will continue to emerge. For more information on legal issues with virtual currency, see our guide to legal issues with virtual currencies.

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Senator Richard Blumenthal (D-CT) recently introduced S. 3636, the Gift Card Consumer Protection Act of 2012, which would ban expiration dates and specified fees for inactivity or services on gift certificates, store gift cards, or general-use-prepaid cards (“Cards”), including those issued in connection with loyalty, award and promotional programs (“Loyalty Products”). The legislation would change current federal gift card law, which permits issuers to charge certain fees after 12 consecutive months of inactivity, permits expiration after 5 years, and excludes Loyalty Products from these restrictions if certain disclosures are made. Senator Blumenthal commented: “Today I am introducing legislation to help substantially remedy that problem and to ensure that consumers receive the full value that is stored on their gift cards.

Whether it is a bankrupt company that refuses to honor a gift certificate, a gift card with hidden fees that slowly withers down to nothing, or a ‘promotional’ gift card that expires in the virtual blink of an eye, consumers in Connecticut and across the nation are in danger of seeing the value of their gift cards disappear.”

In summary, the bill proposes to:
·         Ban inactivity fees on Cards
·         Ban expiration dates on Cards
·         Eliminate the exclusion for Loyalty Products
·         Provide stronger consumer protections for cardholders when a company that issues or sells gift cards files for bankruptcy protection

Click here to read the complete bill.

Many issuers of Cards will be surprised to learn that the bill would prohibit expiration dates on Loyalty Products. Loyalty Products typically include strategically developed expiration dates designed to incentivize patronage during periods of time when sales are generally slower or when competition is fierce. If expiration dates on these products are prohibited, Loyalty Products may be far less effective for these and other purposes.

 

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Kickflip, which does business under the name Gambit, sued Facebook for allegedly monopolizing the “virtual currency” market used in online games by requiring game publishers to use Facebook credits. It is also alleges tortious interference with Gambit’s contracts and prospective business opportunities.

The complaint alleges:

Image for blog·         That Gambit was a leading virtual-currency and payment-processing provider to software developers that published games on Facebook and other social networks.

·         Until Facebook violated antitrust laws, game developers turned to a vibrant and competitive market of virtual currency and payment-processing service providers competed vigorously on service and price.

·         In 2009, Facebook began offering its own virtual-currency services to compete with Gambit and its rivals and charged a 30% fee which was significantly more than the market rate (e.g., the 10% charged by Gambit), yet provided only a narrow range of services.

·         Unsurprisingly, Facebook’s virtual-currency services never gained significant market share when competing on the merits.

·         Facebook exploited its dominance in the separate market for social-game networks to force its virtual-currency competitors to the sidelines.

·         Facebook blacklisted Gambit under the false pretext of maintaining the integrity of its social network, prohibited social-game developers from accessing Facebook’s social-game network unless they agreed to only use Facebook’s virtual-currency services and forced developers to switch to its services exclusively in 2009 and 2010, thereby systematically excluding alternative virtual-currency services providers like Gambit.

·         Consequently, Facebook leveraged its dominance in the social-game marketplace to control and dominate the separate market for virtual-currency services.

·         As the result of Facebook’s actions, Gambit’s business was destroyed.

The complaint is chock full of other interesting allegations about how Facebook allegedly choreographed a perceived need for a “safe” virtual currency in the aftermath of the infamous “Scamville” incident  and made Gambit a fall guy in the process.

Among other things, Kickflip seeks an injunction barring Facebook from enforcing its policies as a condition for access to its social-game network.

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Binary world A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

 

 

Social Casino Games Market Now Worth $1.6 Billion
The social gaming market is moving fast, as more companies take advantage of the growing online phenomenon. According to a new study by internet games research firm SuperData, the global social casino games market will reach $1.6bn in 2012 and grow to $2.4bn by 2015.

Nintendo’s Wii, 3DS Targeted in Texas Patent Suit
Nintendo Co. Ltd. was sued Friday by a Texas company that claims the Japanese-gaming giant’s Wii and 3DS gaming systems infringe one of its patents.

USPTO Head Defends Software Patents Amid Smartphone Wars
Patents on software are vital to the American economy and calls to abolish them are wrong, U.S. Patent and Trademark Office Director David Kappos said in a speech Tuesday that also belittled claims that the smartphone wars show the patent system is broken.

Buy Virtual Goods in Zynga Games, Give Non-Virtual Money to Charity
Buying a $1 virtual horse for your virtual farm in FarmVille or a $15 tower for your castle in CastleVille might go farther than you think for the next couple of weeks. Those virtual goods are being turned into tangible cash — cash that Zynga will be donating to Toys for Tots.

 

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The U.S. Copyright Office recently issued its exemptions to the Digital Millennium Copyright Act of 1998 (“DMCA”). The exemptions, effective as of Oct. 28, 2012 define the limited circumstances that users are allowed to circumvent technology that prevents access to copyrighted works, e.g., content encryption schemes.  The exemptions are reviewed and issued anew every three years, so what was allowable prior to the ruling may not be anymore, and new exemptions, primarily directed to assistive technologies for the blind, are available.

Companies that relied on previous exemptions should take heed that many are no longer lawful, and the Copyright Office affirmatively denied the universal legality of jailbreaking devices. For our complete client alert on the topic, please click here.

The following are the newly issued exemptions:

Literary works distributed electronically – Assistive Technologies: This exemption allows blind people or those with “print disabilities” to work around circumvention measures on lawfully obtained copies of an electronic book (“eBook”) for the purpose of enabling “read aloud” functionality in the eBook.  The only catch is that the author must be paid for the work as he or she would be if the book had been purchased through other channels.  This caveat though should not be an issue for any eBook that is purchased from an established eBook seller.

Motion Pictures and Other Audiovisual Works – Captioning and Descriptive Audio: This exemption allows users to circumvent access control mechanisms to access the playhead and time codes in a motion picture or audiovisual work so that assistive technologies can be developed to render descriptions of the visual portions of the content.  The exemption was made so that that visually or hearing impaired users can enjoy a lawfully obtained copy of the work.

The following are alterations to prior exemptions:

Wireless Telephone Handsets – Software Interoperability: This exemption allows users to circumvent access control schemes on cellular telephones for the purpose of executing lawfully obtained software programs that the cell phone provider has not provided (e.g., “jailbreaking” a phone).  A request to extend this class of works to tablet computers was rejected. 

Wireless Telephone Handsets – Interoperability with Alternative Networks:  This exemption allows users to circumvent access control schemes for the purpose of “unlocking” a cell phone and using it on a network that it was not originally purchased for (e.g. purchasing a phone at a T-Mobile store and then unlocking the phone so it may be used on AT&T’s network).  The change in this exemption is that owners of legacy phones may still circumvent the control schemes to unlock previously purchased phones, but for phones purchased more than 90 days after the effective date of the exemption, the exemption does not apply.       

Motion Picture Excerpts – Commentary, Criticism, and Educational Uses: This exemption allows users to excerpt portions of motion pictures, lawfully obtained on DVDs or online where the use is for the purposes of commentary or criticism, provided the use must also be: in noncommercial videos, in documentary films, in nonfiction eBooks offering film analysis, or in educational classes such as film study or that require close analysis of media excerpts.  The alteration is that excerpts from motion pictures obtained online are now allowable.

Various Proposed exemptions that were not adopted relate to:

·        Digital Access to Literary Works in the Public Domain
·        Software Interoperability of Video Game Consoles
·        Software Interoperability of Personal Computing Devices
·        Space Shifting of Motion Pictures and Others Works on DVDs and Other Media

Various Prior exemptions that are no longer available:

·        Circumvention of technological protection measures to control access to video games accessible on a personal computer provided the circumvention is accomplished solely for the purpose of good faith testing for, investigating, or correcting security flaws.
·        Computer programs protected by dongles that prevent access due to malfunction or damage and which are obsolete. 

 

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Zynga and Facebook revised their two year-old agreement that provided special terms to Zynga as compared with other game companies publishing via the Facebook network. Going forward Facebook will treat Zynga with the same rules as it applies to all other game developers. These revisions prevent Zynga from driving gamers from Facebook to Zynga.com. This provision benefits Facebook as it allows Facebook to keep such gamers on the Facebook network. Facebook is also now free to develop its own games, but has said “We’re not in the business of building games and we have no plans to do so.”

Zynga benefits from the revision by having more latitude to expand Zynga.com, its own gaming network. Additionally, Zynga is no longer required to display Facebook ads or use Facebook credits.

iStock_000017045675small.jpgFacebook and Zynga are both spinning this as a positive.

Facebook stated: “We have streamlined our terms with Zynga so that Zynga.com’s use of Facebook Platform is governed by the same policies as the rest of the ecosystem. We will continue to work with Zynga, just as we do with developers of all sizes, to build great experiences for people playing social games through Facebook.”

Zynga stated: “Zynga’s mission is to connect the world through games. In order to do this, Zynga is focused on building enduring relationships with consumers across all platforms from Facebook and Zynga.com on the web to tablets and mobile. Our amended agreement with Facebook continues our long and successful partnership while also allowing us the flexibility to ensure the universal availability of our products and services.”

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Due to “legal and regulatory pressure” Dublin-based Intrade will no longer accept bets from US customers and all existing US customers must exit their trades and close their accounts. Intrade operates a real-money based prediction market. This announcement from Intrade came just hours after U.S. regulators filed a civil complaint against it.  

This action is another example of how gambling and gambling related activities are being subject to regulatory scrutiny. This trend is important for companies to note, particularly as a broader range of companies get involved in on line gambling. This is also important for companies involved in “gamblification.” Gamblification is the use of gambling mechanics for non-gambling purposes, i.e, leveraging the fun of gambling without real money at stake. Gamblification raises a whole host of legal issues, of which companies leveraging this phenomena must be aware.

The lawsuit was filed by the Commodity Futures Trading Commission, which accused Intrade and its parent company of violating its ban on off-exchange options trading, by enabling users to bet on predictions relating to commodities prices. But commodity trading is just one aspect of Intrade’s business. Intrade’s prediction market also enables users to bet on “predictions,” ranging from who will win presidential elections or Academy Awards or whether a dictator will be toppled by a certain date.

“It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called “prediction” contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt,” Enforcement Director David Meister said in a statement. However, the CFTC has previously rejected exchange applications from companies that wanted to sell options on political outcomes, because they involve gaming and are contrary to the public interest.

A number of US-based companies operate prediction market platforms that enable users to make predictions on a range of activities, but sports-related predictions are among the most popular.  However, most of these platforms do not enable users to wager and/or win real-money. Some use virtual currency that users “wager” in connection with a prediction, but usually the virtual currency cannot be cashed out. The “win” that keeps users coming back is the bragging rights for those who are most accurate in their predictions.

While many of these models steer clear of the gambling laws, they must be done right to avoid crossing the line. Getting it right is especially tricky when virtual goods and/or currency are involved. Pillsbury’s social media team has prepared a client advisory on gamblification and the use of virtual goods/currency in these gamblification models. For a copy email us.