Pinning Your Company's Hopes on Pinterest

Pinterest encourages its users to “organize and share all the beautiful things you find on the web.” Unfortunately for Pinterest users, the images of many of these beautiful things are protected by copyright. Courts have found that merely reproducing works, even without distribution to the public, can constitute copyright infringement if the user has neither obtained permission to pin, nor paid a licensing or royalty fee for use of a copyrighted image. If a copyrighted work is infringed, the copyright holder is entitled to damages, the infringer's profits, and possibly statutory damages ranging from $200 to $150,000 depending on the innocence or willfulness of the infringer, according to 17 U.S.C. ' 504.

Licensing and Contributory Copyright Infringement Risk

Marketing companies and graphic designers, for example, typically purchase licenses for use of images owned by third parties to use in advertising. However, license permissions vary widely, and licensees often have no right to transfer or sublicense a non-exclusive license without authorization from the licensor. A company may have rights to use an image on its corporate website, for instance, but not the right to allow third parties to pin or repin the image on Pinterest. A company risks copyright infringement or contributory infringement if one or more of its employees or agents knowingly encourages others to reproduce or display a copyrighted image without authorization. Thus, even if an image is licensed, do not assume that the license includes every potential use.

Fair Use

Pinterest fans often claim that pinning images from around the Internet onto their virtual pin boards constitutes fair use and is thus protected from charges of infringement. Unfortunately, the U.S. Supreme Court has ruled that the fair use analysis requires a highly fact-intensive inquiry on a case-by-case basis. Therefore, a fair-use question should be framed in specific terms, e.g., “Is it fair use to pin an image of a boat, with a link to the copyright owners' website, on our corporate Pinterest board titled 'Outboard Motors Company,' which promotes my company's outboard motors?” The specific facts surrounding the pin will determine whether it constitutes a fair use.

Four factors are particularly relevant in guiding the determination of fair use:

1. Purpose and Character of the Use

In general, making copies of a copyrighted work for commercial or profitmaking purposes is presumptively unfair, whereas a noncommercial, nonprofit activity may be considered fair use. If the image has been highly transformed, e.g., into a parody, courts are more likely to find that such use is fair.

2. The Nature of the Copyrighted Work

In general, courts grant greater copyright protection to creative rather than factual works. For instance, fictional stories typically receive a broader scope of copyright protection than do scholarly works, as established in Stewart v. Abend, 495 U.S. 207, 237-338 (1990); and motion pictures for entertainment typically receive more protection than news broadcasts, as established in Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 455 (1984). The more protection afforded a copyrighted work, the less likely it is that fair use will be found.

3. The Substantiality of the Portion Used in Relation to the Copyrighted Work As a Whole

In several lawsuits involving Google, the courts ruled that displaying low-resolution “thumbnail” images in search-engine page results was fair use because the purpose was to direct users to the image source, rather than to serve as a substitute for the actual image. On Pinterest, any image arguably serves the same purpose as the original image and, therefore, is less likely to be considered fair use.

4. The Effect on the Potential Market for or Value of the Copyrighted Work

The Supreme Court has on multiple occasions identified this factor as the single most important element in determining fair use. Often, in cases of commercial use, courts will presume harm to the market value of the copyrighted work when the infringing use is merely a replacement in the market for the copyrighted work ' but not always. For instance, the Supreme Court found 2 Live Crew's parody of Roy Orbison's song “Pretty Woman” to be a fair use even though, like Pretty Woman, the parody was a song sold to consumers for profit (Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994)).

Pinterest will no doubt raise new issues because of its dual capacity to drive traditional fair use of copyrighted material, such as criticism and commentary, while also creating significant opportunities for commercial activity such as marketing and e-commerce. As a company's presence on Pinterest will largely be commercial ' i.e., building brand equity, selling products and services ' the fair use justifications for pinning unlicensed images will need to be particularly compelling.

Risk of Infringement

All new social media sites risk the possibility of third parties establishing false or misleading celebrity or company brand accounts. The major sites have methods for distinguishing official brand sites. While Pinterest, like Facebook and Twitter, does provide a method for reporting trademark infringement, it does not have a method for indicating that a brand's account is “official.”

To prove trademark infringement, a plaintiff must establish the likelihood of confusion between the source of the goods or services at issue and the defendant's use of the mark at issue. Each circuit court has adopted its own test for trademark infringement, but the factors considered are fairly similar, including: similarity of the marks, similarity of the goods or services provided under the marks, strength of the plaintiff's mark, the trade channels involved, the care exercised by consumers in purchasing the parties' goods and services, and any actual confusion.

Under the U.S. Trademark Act, 15 USC ' 1125, owners of famous brands can also risk trademark dilution by blurring or tarnishment, when the similarity between a mark or trade name and a famous mark impairs the distinctiveness or reputation of the famous mark. The U.S. Trademark Act specifically excludes those engaging in noncommercial uses, fair uses, and news reporting and commentary from liability for dilution.

Companies establishing corporate Pinterest accounts to advertise their brands and products will have a difficult time convincing a court that their use is noncommercial. Accordingly, as a general rule, corporate pages should not pin images containing other brands, including images of people, as the unauthorized use of a person's image or likeness outside of the scope of a license is likely to be found to be a
misappropriation of that person's right of publicity. Before pinning such images, a firm should obtain the permission of those individuals for all proposed uses of the individual's image.

One exception to this general rule is comparative advertising. The use of a competitor's trademark in comparative advertising is permissible under 16 C.F.R. ' 14.15, but only to the extent that the use of the competitor's mark does not mislead consumers into presuming some kind of affiliation between the advertiser and the trademark holder.

FTC Endorsement Guidelines

Companies will no doubt want to enlist popular Pinterest users, whether celebrities or ordinary users who have managed to generate large followings, to endorse their products. Taking note of the increasing use of paid online endorsers, such as bloggers, in 2009 the FTC released the revised Guides Concerning the Use of Endorsements and Testimonials in Advertising (the Endorsement Guides), clarifying that paying a blogger or sending product to a blogger for review creates a material connection between the blogger and a company. Failure to disclose the relationship can result in significant fines.

The Endorsement Guides should be considered in developing a company's Pinterest policies. In general, Pinterest users should disclose: 1) when a company provides free products and asks that they pin an image of the product and comment; 2) when companies provide payment for pinning a product; and 3) when the user pins products for a company with whom the user has an endorsement contract, even if the contract does not specify Pinterest.

Recommendations

Many companies are excited to launch their Pinterest accounts, but are understandably concerned about intellectual property risks. The following recommendations should reduce exposure to infringement risk.

Confirm copyright ownership or license for Pinterest uses. The number one legal concern in using Pinterest is copyright infringement liability. A marketing department should be careful to pin only images the company owns or for which it has valid licenses that encompass usage on Pinterest, including being repinned by other users. The company should confirm that it owns the right to the images that it encourages its customers to pin. While the company ultimately may not liable for copyright infringement or contributory copyright infringement, it would be embarrassing if its customers were challenged for pinning unauthorized images that they received from the company.

Leverage use of intellectual capital. Once a company confirms that it owns appropriate rights for each image, counsel can collaborate with the marketing department to create a bank of authorized digital images for use in social media. Pinterest images can be pinned from the company website, partner websites containing authorized images (e.g., Amazon.com) or a corporate Facebook page. An online photo bank can be created on the company's website, or with third-party services such as Flickr, to which the company can direct its partners, endorsers and customers to access authorized images.

Be clear in authorizing customers to pin. Much of the ambiguity and uncertainty surrounding images in social media is that the majority of web images contain no designation as to what uses their owners are willing to permit. Consider using a designation service, such as Creative Commons, to electronically label images with information about permitted usage. Another option is to clearly label pages that contain images that you would like consumers to pin by adding the “Pin It” icon or other indicator to the page. For pages that contain images that should not be pinned, Pinterest provides a “no-pin” code that can be inserted into the page header.

Beware of user-generated content. Asking consumers to create branded Pinterest pages in a sweepstakes or contest can be risky. While it is tempting to leverage the creative energy of the public, the marketer could unwittingly encourage copyright infringement and other third-party claims. Again, one solution is to offer a library of preapproved images to consumers.

Review image content. Even after the company has determined that it owns the copyright to a photograph, the image could contain people or third-party brands. If it does, it is possible that third-party trademark or right of publicity rights may be implicated. Legal counsel should review the proposed use of the photographs to determine whether permission should be obtained.

Require endorsers to disclose. If a company gives products to bloggers or Pinterest users, it should inform the users that they are required to disclose their connections to the company, per the FTC's Endorsement Guides.

Create internal guidelines. A company starting a Pinterest page should develop a plan and guidelines before launch, with the goal of taking advantage of Pinterest's benefits while limiting the risks. Brand managers should designate certain employees to build the brand's Pinterest boards and educate them on the legal issues at stake. Companies should also consider how to respond to product pinning that creates consumer confusion or disparages the company or product, and integrate prevention into its broader brand protection policy. Finally, companies should educate employees responsible for preparing and reviewing licenses and endorsement deals to ensure that their contracts reflect the company's Pinterest policy.

Scott J. Slavick ([email protected]) is a shareholder with Brinks Hofer Gilson & Lione, Chicago. Andrew J. Avsec ([email protected]) is an associate at the firm.

Launched in 2010 by Cold Brew Labs Inc., Pinterest is one of the fastest-growing social media websites of all time. A March 2012 Experian report estimated that Pinterest received 104 million visits, making it third only to Facebook and Twitter in popularity, while online sharing service Shareaholic reported in January 2012 that Pinterest drives more traffic to websites than Google+, LinkedIn and YouTube combined.

Pinterest is a scrapbooking site or, as the company itself proclaims, a virtual pinboard that allows users to create topical, individual bulletin boards on which they can “pin” images linked to third-party websites. Members use their boards to collect, bookmark and share information for personal projects, such as “My Kitchen Idea Book” or “Wedding Plans”; to display their own products for sale, e.g., jewelry or artwork; or to promote their company brands.

Heralded as the next big thing in social media, Pinterest presents new legal risks for companies engaged in social media marketing. By sharing images and encouraging others to re-pin them, Pinterest users may inadvertently engage in copyright or trademark infringement, violate licensing agreements, or run afoul of U.S. Federal Trade Commission (FTC) rules for commercial endorsements. Naturally, marketing departments are very interested in Pinterest'so it falls to corporate counsel to prevent Pinterest activity that poses such risks.

Pinterest encourages its users to “organize and share all the beautiful things you find on the web.” Unfortunately for Pinterest users, the images of many of these beautiful things are protected by copyright. Courts have found that merely reproducing works, even without distribution to the public, can constitute copyright infringement if the user has neither obtained permission to pin, nor paid a licensing or royalty fee for use of a copyrighted image. If a copyrighted work is infringed, the copyright holder is entitled to damages, the infringer's profits, and possibly statutory damages ranging from $200 to $150,000 depending on the innocence or willfulness of the infringer, according to 17 U.S.C. ' 504.

Licensing and Contributory Copyright Infringement Risk

Marketing companies and graphic designers, for example, typically purchase licenses for use of images owned by third parties to use in advertising. However, license permissions vary widely, and licensees often have no right to transfer or sublicense a non-exclusive license without authorization from the licensor. A company may have rights to use an image on its corporate website, for instance, but not the right to allow third parties to pin or repin the image on Pinterest. A company risks copyright infringement or contributory infringement if one or more of its employees or agents knowingly encourages others to reproduce or display a copyrighted image without authorization. Thus, even if an image is licensed, do not assume that the license includes every potential use.

Fair Use

Pinterest fans often claim that pinning images from around the Internet onto their virtual pin boards constitutes fair use and is thus protected from charges of infringement. Unfortunately, the U.S. Supreme Court has ruled that the fair use analysis requires a highly fact-intensive inquiry on a case-by-case basis. Therefore, a fair-use question should be framed in specific terms, e.g., “Is it fair use to pin an image of a boat, with a link to the copyright owners' website, on our corporate Pinterest board titled 'Outboard Motors Company,' which promotes my company's outboard motors?” The specific facts surrounding the pin will determine whether it constitutes a fair use.

Four factors are particularly relevant in guiding the determination of fair use:

1. Purpose and Character of the Use

In general, making copies of a copyrighted work for commercial or profitmaking purposes is presumptively unfair, whereas a noncommercial, nonprofit activity may be considered fair use. If the image has been highly transformed, e.g., into a parody, courts are more likely to find that such use is fair.

2. The Nature of the Copyrighted Work

In general, courts grant greater copyright protection to creative rather than factual works. For instance, fictional stories typically receive a broader scope of copyright protection than do scholarly works, as established in Stewart v. Abend , 495 U.S. 207, 237-338 (1990); and motion pictures for entertainment typically receive more protection than news broadcasts, as established in Sony Corp. v. Universal City Studios, Inc. , 464 U.S. 417, 455 (1984). The more protection afforded a copyrighted work, the less likely it is that fair use will be found.

3. The Substantiality of the Portion Used in Relation to the Copyrighted Work As a Whole

In several lawsuits involving Google, the courts ruled that displaying low-resolution “thumbnail” images in search-engine page results was fair use because the purpose was to direct users to the image source, rather than to serve as a substitute for the actual image. On Pinterest, any image arguably serves the same purpose as the original image and, therefore, is less likely to be considered fair use.

4. The Effect on the Potential Market for or Value of the Copyrighted Work

The Supreme Court has on multiple occasions identified this factor as the single most important element in determining fair use. Often, in cases of commercial use, courts will presume harm to the market value of the copyrighted work when the infringing use is merely a replacement in the market for the copyrighted work ' but not always. For instance, the Supreme Court found 2 Live Crew's parody of Roy Orbison's song “Pretty Woman” to be a fair use even though, like Pretty Woman, the parody was a song sold to consumers for profit ( Campbell v. Acuff-Rose Music, Inc. , 510 U.S. 569, 577 (1994)).

Pinterest will no doubt raise new issues because of its dual capacity to drive traditional fair use of copyrighted material, such as criticism and commentary, while also creating significant opportunities for commercial activity such as marketing and e-commerce. As a company's presence on Pinterest will largely be commercial ' i.e., building brand equity, selling products and services ' the fair use justifications for pinning unlicensed images will need to be particularly compelling.

Risk of Infringement

All new social media sites risk the possibility of third parties establishing false or misleading celebrity or company brand accounts. The major sites have methods for distinguishing official brand sites. While Pinterest, like Facebook and Twitter, does provide a method for reporting trademark infringement, it does not have a method for indicating that a brand's account is “official.”

To prove trademark infringement, a plaintiff must establish the likelihood of confusion between the source of the goods or services at issue and the defendant's use of the mark at issue. Each circuit court has adopted its own test for trademark infringement, but the factors considered are fairly similar, including: similarity of the marks, similarity of the goods or services provided under the marks, strength of the plaintiff's mark, the trade channels involved, the care exercised by consumers in purchasing the parties' goods and services, and any actual confusion.

Under the U.S. Trademark Act, 15 USC ' 1125, owners of famous brands can also risk trademark dilution by blurring or tarnishment, when the similarity between a mark or trade name and a famous mark impairs the distinctiveness or reputation of the famous mark. The U.S. Trademark Act specifically excludes those engaging in noncommercial uses, fair uses, and news reporting and commentary from liability for dilution.

Companies establishing corporate Pinterest accounts to advertise their brands and products will have a difficult time convincing a court that their use is noncommercial. Accordingly, as a general rule, corporate pages should not pin images containing other brands, including images of people, as the unauthorized use of a person's image or likeness outside of the scope of a license is likely to be found to be a
misappropriation of that person's right of publicity. Before pinning such images, a firm should obtain the permission of those individuals for all proposed uses of the individual's image.

One exception to this general rule is comparative advertising. The use of a competitor's trademark in comparative advertising is permissible under 16 C.F.R. ' 14.15, but only to the extent that the use of the competitor's mark does not mislead consumers into presuming some kind of affiliation between the advertiser and the trademark holder.

FTC Endorsement Guidelines

Companies will no doubt want to enlist popular Pinterest users, whether celebrities or ordinary users who have managed to generate large followings, to endorse their products. Taking note of the increasing use of paid online endorsers, such as bloggers, in 2009 the FTC released the revised Guides Concerning the Use of Endorsements and Testimonials in Advertising (the Endorsement Guides), clarifying that paying a blogger or sending product to a blogger for review creates a material connection between the blogger and a company. Failure to disclose the relationship can result in significant fines.

The Endorsement Guides should be considered in developing a company's Pinterest policies. In general, Pinterest users should disclose: 1) when a company provides free products and asks that they pin an image of the product and comment; 2) when companies provide payment for pinning a product; and 3) when the user pins products for a company with whom the user has an endorsement contract, even if the contract does not specify Pinterest.

Recommendations

Many companies are excited to launch their Pinterest accounts, but are understandably concerned about intellectual property risks. The following recommendations should reduce exposure to infringement risk.

Confirm copyright ownership or license for Pinterest uses. The number one legal concern in using Pinterest is copyright infringement liability. A marketing department should be careful to pin only images the company owns or for which it has valid licenses that encompass usage on Pinterest, including being repinned by other users. The company should confirm that it owns the right to the images that it encourages its customers to pin. While the company ultimately may not liable for copyright infringement or contributory copyright infringement, it would be embarrassing if its customers were challenged for pinning unauthorized images that they received from the company.

Leverage use of intellectual capital. Once a company confirms that it owns appropriate rights for each image, counsel can collaborate with the marketing department to create a bank of authorized digital images for use in social media. Pinterest images can be pinned from the company website, partner websites containing authorized images (e.g., Amazon.com) or a corporate Facebook page. An online photo bank can be created on the company's website, or with third-party services such as Flickr, to which the company can direct its partners, endorsers and customers to access authorized images.

Be clear in authorizing customers to pin. Much of the ambiguity and uncertainty surrounding images in social media is that the majority of web images contain no designation as to what uses their owners are willing to permit. Consider using a designation service, such as Creative Commons, to electronically label images with information about permitted usage. Another option is to clearly label pages that contain images that you would like consumers to pin by adding the “Pin It” icon or other indicator to the page. For pages that contain images that should not be pinned, Pinterest provides a “no-pin” code that can be inserted into the page header.

Beware of user-generated content. Asking consumers to create branded Pinterest pages in a sweepstakes or contest can be risky. While it is tempting to leverage the creative energy of the public, the marketer could unwittingly encourage copyright infringement and other third-party claims. Again, one solution is to offer a library of preapproved images to consumers.

Review image content. Even after the company has determined that it owns the copyright to a photograph, the image could contain people or third-party brands. If it does, it is possible that third-party trademark or right of publicity rights may be implicated. Legal counsel should review the proposed use of the photographs to determine whether permission should be obtained.

Require endorsers to disclose. If a company gives products to bloggers or Pinterest users, it should inform the users that they are required to disclose their connections to the company, per the FTC's Endorsement Guides.

Create internal guidelines. A company starting a Pinterest page should develop a plan and guidelines before launch, with the goal of taking advantage of Pinterest's benefits while limiting the risks. Brand managers should designate certain employees to build the brand's Pinterest boards and educate them on the legal issues at stake. Companies should also consider how to respond to product pinning that creates consumer confusion or disparages the company or product, and integrate prevention into its broader brand protection policy. Finally, companies should educate employees responsible for preparing and reviewing licenses and endorsement deals to ensure that their contracts reflect the company's Pinterest policy.

Scott J. Slavick ([email protected]) is a shareholder with Brinks Hofer Gilson & Lione, Chicago. Andrew J. Avsec ([email protected]) is an associate at the firm.