Ten Issues to Consider in Launching a Social Media Presence

Kyle-Beth Hilfer, Esq. specializes in advertising, marketing, promotions, intellectual property, and licensing law. In this capacity, she advises clients who are launching a presence in social media. She welcomes communication through the social networking site LinkedIn. ' Kyle-Beth Hilfer, P.C. 2010.

As companies focus on building their brands through social media outlets like Facebook, Twitter, and YouTube, they are becoming increasingly aware that
content may be proprietary, and intellectual property laws still apply. Due to the viral nature of social media, however, mistakes happen quickly and are often difficult to correct. It is impossible for a brand owner to monitor every social networking site or blog to police online chatter about the brand. Instead, the prudent business will try to initiate and influence the conversation by launching its own social media applications, while paying attention to intellectual property concepts. While the law has not caught up to the technology in this fast-paced area of marketing, certain intellectual property and advertising issues have emerged in the forefront of social media law. This article provides a brief look at 10 of these issues.

1) Trademark Highjacking in social media is a priority concern. The social media sites do little to prevent users from adopting usernames that incorporate third-party trademarks, thus misdirecting traffic and creating confusion in the marketplace. While Twitter threatens suspension of accounts that manifest a clear intent to mislead others and Facebook has a registration process for trademarks and a reporting option for infringement, there is little consistency in enforcement. Will the social media sites police similar trademark usages or trademarks that are not registered with the USPTO? What about foreign registrations? At this point, the trademark owner bears the responsibility of monitoring the marketplace and cannot rely on the social media Web site to do so, particularly because of the safe harbor defense that is available in most instances for social media Web sites.

2) Trademark Infringement is rampant in social media. Users frequently adopt usernames that infringe on trademark rights. Bloggers, video posters, and chat room participants frequently use trademarks without licenses. Social media users in general think they are just talking, but they ignore that their conversations canbe seen by millions of people around the world. They do not realize that legal rules govern their online conversation. As in the offline environment, not all of the unauthorized usages amount to trademark infringement. Some will constitute incidental usages. If, however, the usage creates confusion or implies some kind of endorsement by the trademark owner, then a case could be made for trademark infringement.

Enforcement, however, is much more difficult in social media because of the sheer volume of unauthorized usages and the speed with which they are posted and virally disseminated. If a trademark owner ignores too many unauthorized usages, it risks losing its secondary meaning and trademark rights. At the same time, it cannot litigate around the clock. So trademark owners should work with counsel to develop a trademark enforcement policy that works for each company based on its size and resources. It should publicize such policy on its own social media pages once it is ready to commit to enforcement.

In addition, trademark owners should avail themselves of the trademark protection policies that some social media Web sites have established. Twitter denounces using “trademark-protected materials in a manner that may mislead or confuse others or be used for financial gain ' [or] with clear intent to mislead others ' ” Facebook has a reporting policy in place (see www.facebook.com/legal/copyright.php?howto_report) and will shut down the accounts of repeat offenders, but enforcement has been spotty. Ultimately, it may fall on the trademark owner to file suit for trademark infringement and violations of the Lanham Act to shut down a trademark infringer.

3) User Generated Content (“UGC”) is fraught with intellectual property land mine issues. UGC refers to materials created by the general public and uploaded onto a social media site or directly to a brand owner's site. A powerful tool for maintaining a conversation with the public, UGC may take the form of anything from comments posted to a blog or Web site or videos posted on YouTube that comment on the brand or make the brand's products integral to the video. Given that it is the creation of laypeople, UGC may easily infringe on a third party's intellectual property.

What is a copyright owner to do? The Digital Millennium Copyright Act (“DMCA”) requires the Internet Service Providers (“ISP”), such as YouTube, 1) to remove infringing content upon notice from the copyright owner, and 2) to close accounts that continue to post infringing content online. YouTube also has a Copyright Verification Tool that allows copyright owners to search for infringing material on its site. The copyright owner can either ask YouTube to block the video, track it, or monetize it. See www.youtube.com/t/copyright_program and www.youtube.com/t/contentid.

To ward off third-party infringement claims, brands soliciting UGC should not allow submissions unless posters agree not to post defamatory, profane, threatening, illegal, or inappropriate content. The user agreement should also outline that the poster is legally responsible for the UGC content and must indemnify against third-party claims. Of course, the value of such an indemnity is questionable, so companies forging a presence in social media should examine their insurance policies carefully.

Entities soliciting UGC on their sites should also determine if they want to own the copyright to the UGC so they can disseminate the content as they please and create derivative works. Web sites need to include stated policies about who owns the copyright that consumers must acknowledge before they submit the UGC. If assuming ownership of UGC, the assignee needs to be sure it has all necessary releases and copyright transfers.

4) Unsolicited Ideas are different from UGC because the marketer has not invited them. In the offline environment, they tend to be simple to handle. Companies typically do not accept unsolicited ideas without a signed release and copyright transfer. With postings to social media sites in the hands of consumers, however, it is impossible to prevent the submission of unsolicited ideas. It is no longer sufficient to publicize a policy stating that the company will not accept unsolicited ideas if a company has any kind of social media presence. Instead, company policies should be updated to clarify how they monitor unsolicited ideas for intellectual property infringement, and whether they will assume ownership of them.

5) Is UGC Commercial Speech? A company that allows consumers to participate on its Web site should screen all postings and UGC ahead of public display or in real time (this is obviously more difficult) and state its screening policy in the Web site's terms of use. The company's Web site should contain terms of use that assert the advertiser's right to edit postings in the event any of them is seen as commercial speech. Since commercial speech does not have the same level of protection under the First Amendment, it must be capable of substantiation, comply with advertising laws, and not be false or misleading.

Attorneys advising in this area should also caution regarding the FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising (16 C.F.R. 255). These guides provide that advertisers must disclose “material connections” between themselves and endorsers, and those endorsers, themselves, may bear legal liability for their statements. In two examples provided by the FTC at Part 255.5 (examples 7 and 8), the FTC suggests that if a blogger receives behind-the-scenes compensation to try a product or receives a free sample of a product and then promotes the product online, the blogger should disclose the “material connection.” Similarly, if an employee posts reviews of his employer's product on an online discussion board, the employee should conspicuously disclose his employment connection or the employer and employee could run afoul of the guidelines. Best practices, then, require a company to develop policies regarding how it promotes its products or services, how it discloses its relationships with product promoters and employees, and how it monitors the online activity of such people.

6) Are Tweets Protected By Copyright? The short answer is most likely not in most instances, making it crucial for tweeters and other social media users to contemplate whether tweeting is a viable marketing device. (See “Tweet Tweet: The Rockin' Copyright Debate,” published by this author in the December 2009 edition of this publication.) Before starting to tweet, an individual should consider whether it is a good marketing strategy to make his thoughts available to the world in a format that may not be protected by copyright.

7) Impersonation is a particular problem on social media sites like Twitter and Facebook. Twitter has an impersonation policy that defines the term as “pretending to be another person or business as entertainment or in order to deceive.” Twitter carves out an exception for parody impersonation based on the loose standard of whether it is obvious that the profile is fake or a joke. While Twitter will cooperate if notified of impersonation, and despite Twitter's creation of Verified Accounts, impersonation is still all too possible. A trademark owner or a person with a compelling reason to enforce a right of publicity needs to be vigilant in policing how others are referring to his identity.

8) Avatars create similar legal problems. Many of the virtual worlds on social media sites ask users to develop avatars to represent them in games. At times, these avatars may take celebrity names or likenesses without permission. These uses
create trademark issues, Lanham Act issues, and right of publicity issues. In at least one case, Kierin Kirby v. Sega of America, Inc. , 144 Cal App. 4th 47 (2006), a court held that the video game producer had altered a celebrity's persona sufficiently to create a “transformative work” that could be protected under the First Amendment. Undoubtedly, more case law will develop in this area that will clarify the boundaries of freedom of expression and infringement.

9) Sweepstakes and Contests are powerful tools on social media sites to spread brand awareness. The first step is to check the guidelines and legal terms of the social media Web site that the client wishes to use. As the rules are constantly changing, before running a promotion, it is essential to conduct a check on social media sites' terms and conditions governing promotions.

At the end of 2009, Facebook revised its guidelines concerning running “any sweepstakes, contest, competition or other similar offering” on Facebook. Chief among the new guidelines is the requirement for prior written consent by Facebook for any promotion being run and administered on Facebook. In addition, the promotions cannot use Facebook's “native” functionality to run a promotion. The promotion cannot allow entry by becoming a fan of a company on Facebook or by posting an entry on a Facebook wall. (See the full guidelines at www.facebook.com/promotions_guidelines.php.) YouTube and Twitter, on the other hand, are silent on these issues.

In addition, particularly in the social media context, sponsors must accomplish full compliance with offline promotions laws, and limit eligibility to those countries in which they have completed legal due diligence. It is essential to confer with counsel who specialize in this complex area of law to ensure that a promotion is not an illegal lottery.

10) International Laws govern in the world of social media. The users of social media are all international. The reach of the social media sites is global. Companies looking to protect their trademarks and copyrights on social media need to conduct monitoring audits in foreign languages and retain international legal counsel to advise them.

Conclusion

Social media is a powerful tool for advertising and marketing one's brand, but the legal landscape is still in the formative stages. In creating social media programs for clients, attorneys need to draft flexible policies that a client has the means to enforce. Companies need to train risk management departments to monitor social media activity.

All laws that apply offline still apply in the social media world, but risks and remedies could be different online. For example, if a trade secret is leaked via social media, in hours or minutes there is no injunction that can really correct the damage. Attorneys need to help their clients influence the online conversation so that engagement in social media helps the brands rather than causing damage to their reputations and exposing the owner to legal risk.

Kyle-Beth Hilfer, Esq. specializes in advertising, marketing, promotions, intellectual property, and licensing law. In this capacity, she advises clients who are launching a presence in social media. She welcomes communication through the social networking site LinkedIn. ' Kyle-Beth Hilfer, P.C. 2010.