Avoid catastrophe and build in great offensive weapons and defensive shields by a carefully-crafted affiliate agreement. Bear in mind that most lawyers do not understand this specialized field. Pete Wellborn, Founding Member, Wellborn, Wallace & Woodard

1. BULLETPROOFING YOUR AFFILIATE AGREEMENT Stocking Your Legal Arsenal To Avoid Or Win Legal Disputes Pete Wellborn & Jamie Woodard New York, New York August 2009

2. Affiliate Programs

3. Affiliate Programs

4. Types of Claims & Disputes The Affiliate Model Law 101: Theories of Liability Affiliate Management & Agreements Questions & Open Discussion

5. The Affiliate Model AFFILIATE PROGRAMS 101 CONSUMER SELLER AFFILIATE AFFILIATE is PAID “ Cost/Action” or “ Cost/Click-Through” Drives CONSUMER to SELLER. Affiliate’s Web Site Affiliate’s ID’d Links (E-mail, Text, etc.) Affiliate’s Pixel Tracked E-mail

6. The Affiliate Model AFFILIATE PROGRAMS 101 CONSUMER SELLER AFFILIATE SUB-AFFILIATES PROGRAM MANAGER or ADVERTISING NETWORK Sub-Affiliate’s Web Site Sub-Affiliate’s ID’d Links (E-mail, Text, etc.) Sub-Affiliate’s Pixel Tracked E-mail

7. Types Of Claims And Disputes Performance Disputes Payment Disputes Consumer Claims FTC Actions ISP Actions Other Regulatory Actions Trademark/Service Mark Claims . . . And many others . . .

8. Seller liable for Affiliate acts? Seller liable for Ad Network acts? Affiliate liable for Sub-Affiliate acts? Law 101: Theories of Liability VIOLATION VICARIOUS LIABILITY

9. Respondeat Superior (Employer liability for employee) ALMOST CERTAINLY NOT Q: Is the Affiliate an “employee” ? A: Control Test: Time & Manner Law 101: Theories of Liability VICARIOUS LIABILITY

10. Independent Contractors Principal liable for contractor acts only under limited circumstances Law 101: Theories of Liability VICARIOUS LIABILITY

11. Liability For Contractors’ Acts GENERALLY/USUALLY  Participation  Ratification/Adoption  Willful Ignorance  Negligent Hiring Law 101: Theories of Liability VICARIOUS LIABILITY

12. What will your answer be when you receive a demand letter or lawsuit seeking to hold you responsible for the misconduct of another person or entity? Law 101: Theories of Liability VICARIOUS LIABILITY

13. FTC: “ STRICT LIABILITY” FOR AFFILIATE ACTS Law 101: Theories of Liability VICARIOUS LIABILITY

14. No “Strict Liability” . . . BUT . . . Law 101: Theories of Liability COURTS’ HOLDINGS VICARIOUS LIABILITY

15. Law 101: Theories of Liability COURTS’ HOLDINGS U.S. v. CYBERHEAT U.S. v. IMPULSE MEDIA U.S. v. BANG BROTHERS U.S. v. KILBRIDE HOT TOPIC FTC ON THE WARPATH REGARDING AFFILIATE ADMINISTRATOR LIABILITY VICARIOUS LIABILITY

16. PRACTICAL STEPS WHO  WHAT  WHERE  HOW WITH WHOM ARE YOU DEALING? ( WHO IS YOUR AFFILIATE ?) Affiliate Management & Agreements ADDRESS BANK INFO SSN/TAX ID PHONE

17. PRACTICAL STEPS CONTRACT TERMS  Eligibility  Compliance (CAN-SPAM)  Compliance (ISP AUP/CEP)  Sub-Affiliate Voucher  Consent to Release Info  Copyright Acknowledgments  Indemnify, Defend & Hold Harmless  Boilerplate WHO  WHAT  WHERE  HOW Affiliate Management & Agreements

18. PRACTICAL STEPS WRITTEN AGREEMENT EXECUTED BY BOTH PARTIES WHO  WHAT  WHERE  HOW Affiliate Management & Agreements

19. PRACTICAL STEPS WHO  WHAT  WHERE  HOW HOW are your Affiliates doing re: compliance with CAN-SPAM and other governing laws and contractual provisions? MONITORING METHODS Seeded suppression list Comprehensive monitoring Affiliate Management & Agreements POINT/COUNTERPOINT . . . Damned if you do and Damned if you don’t . . .

20. PRACTICAL STEPS WHO  WHAT  WHERE  HOW HOW do you deal with violations of federal law, state law, or the governing agreement by an Affiliate? Affiliate Management & Agreements HOW do you assign affiliate ID’s? Multiple ID’s for one Affiliate? HOW do you monitor, discover, prevent, or address click fraud?

21. These materials have been prepared for informational purposes only and are not legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship. Internet subscribers, listeners and online readers should not act upon this information without seeking professional counsel. The information contained in this presentation and/or web site is provided only as general information which may or may not reflect the most current legal developments. This information is not provided in the course of an attorney-client relationship and is not intended to constitute legal advice or to substitute for obtaining legal advice from an attorney licensed in your state. This web site is not intended to be advertising and neither Media Breakaway, LLC nor its officers, members, employees, or agents wish to represent anyone desiring representation. QUESTIONS? Pete Wellborn & Jamie Woodard Wellborn, Wallace & Woodard, LLC 1175 Peachtree St. NE 100 Colony Square, Suite 300 Atlanta, GA 30361 Ph: (404) 815-9595 pete@wellbornlaw.com Questions & Open Discussion