Posted Fri Mar 01 2013
I’ve recently opened a menswear boutique called “Haus Of Jorts” – we sell jean shorts, or “jorts,” to the discriminating Megadeth fan on the border of New York and Massachusetts – and business is lagging just a little bit. I thought about a couple of different strategies for getting our sales numbers up, and I came up with two totally awesome ideas. First, I think I want to change the name of the shop to “Jorts R Us” because then people will know that we R jorts. Then, I want to run a contest: whoever submits the best picture of himself (or herself even!) rockin’ a pair of jorts to our Facebook page will get a $700 shopping spree! People will “share” and “like” our contest all over their social media, and that’s an easy promotion for our store. What do you think?
Rock and roll,
Dear Jorts Fan,
While I certainly applaud your entrepreneurial spirit, I must proffer a quick “slow your roll” on your marketing concepts. The first idea won’t work, and there’s a bunch of things you’ll have to consider about the second.
First off, while “Jorts R Us” is a terribly clever name and would convey the message that you R, in fact, Jorts, there’s a relatively famous brand out there with a fairly strong grasp on trademark rights for “R Us.” Under the Federal Trademark Dilution Act, the owner of a “famous trademark” is entitled to injunctive relief. That means you can’t commercially use the trademark after it’s become famous in a way that is likely to cause “dilution by blurring” (creating confusion over whether you’re affiliated with the other “R Us”) or “dilution by tarnishment” (making the other “R Us” look bad).
The good people at Toys “R” Us have traditionally been very proactive in defending their “famous trademark.” The unfortunate enterprises that have come up against this intellectual property juggernaut include “Smokes ‘R’ Us”[i], “Adults ‘R’ Us”[ii], and “Guns Are We / Guns Are Us”[iii], each of which probably presents a pretty decent argument for “dilution by tarnishment.” Additionally, Toys “R” Us has used the procedures of the World Intellectual Property Association to successfully seize domain names such as “bestcreditcardsrus.info,” “insurancerus.info,” “personalinjurylawyersrus.com,” “freeonlinegamesrus.com,” “homebusinessopportunityrus.com,” “tattoosrus.info,” “digitalproductsrus.com,” “desklampsrus.com,” and many others.[iv] In other words, this wouldn’t exactly be their first trip to the rodeo. Sorry, Jorts Fan, but I think “Haus of Jorts” is a … fine … name, so you probably shouldn’t waste too much time on clever rebranding.
Let’s move on to your promotional contest. You’re right that it’s a very easy way to get some publicity, but it’s also an easy way to get into some trouble. First off, while you can use Facebook’s service to run a contest, doing so is subject to their Terms of Service[v], including the requirement that you build or use an App. You can’t just have people post pictures to your “timeline” (or “wall”), for example. So that’s one hurdle. You can roll the dice I suppose, but if Facebook sees that you’re violating their Terms, they might deactivate your account, and then the dozens of folks who’ve “liked” Haus of Jorts won’t be able to keep up with you anymore.
As an even more preliminary matter, the method of operating the promotion is very important as well. There are both state and federal laws that control here, and you don’t want to run afoul of them; because you’re located at the border of two states, you probably need to worry about the promotions laws in both New York and Massachusetts (and if you open your contest to people from any other state, that state’s laws as well).
There are three main categories of promotions: lotteries, sweepstakes, and contests. A lottery involves a prize (something of value) being awarded by chance (i.e., random drawing) in exchange for consideration (paying for an entry). “Consideration” doesn’t necessarily just mean money – effort, or anything of value, can constitute consideration. While some courts have found that merely having internet access isn’t consideration, to my knowledge, no court has ruled on whether having a Facebook account might count as consideration. And if you’re found to be running a lottery, well, that’s illegal.
A sweepstakes includes a prize and chance, but must either be completely free to enter or provide for a free entry method (i.e., “no purchase necessary”). A contest offers a prize, can involve consideration, but is judged on skill or ability. I’m guessing that your promotion would probably be best operated as a contest – note that you need to set up some definitive judging criteria and have judges who are qualified to apply them. So, maybe you need to go to a Megadeth show, find some people that really know jorts and have also appeared on Bravo’s “Project Runway,” and have them judge the contest using clearly defined criteria (“most jorty” or “best jort + mullet combo” perhaps).
Also, depending on the value of the prize being offered, some states will require you to post a bond and satisfy other requirements. Generally this threshold is around $5,000, so you might be OK here – and you’ll need to report the prize to the IRS as it’s over $600.
If you want to keep reading up on the exciting world of promotions law, other people have written some more “professional”-type blog posts – you can probably find them if your typing finger works, but here are a couple leads: http://www.socialmediaexplorer.com/digital-marketing/sweepstakes-contests-bloggers/ and http://www.savingforsomeday.com/blog-law-is-your-giveaway-legal/.
Rock on, Jorts Fan,
Li’l Tommy Hagen
[ii] 1996 U.S. Dist. Lexis 17090 (N.D. Cal. October 29, 1996)
[iii] http://cyber.law.harvard.edu/property/domain/toys.html (text of 1998 WL 760219 (S.D.N.Y.))
Note: This column is titled “This Does Not Constitute Legal Advice” because it does not constitute legal advice. If you want that, please see an attorney.