When Marketing Through Social Media, Legal Risks Can Go Viral

When Marketing Through Social Media, Legal Risks Can Go Viral

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Description: This business presentation is about When Marketing Through Social Media, Legal Risks Can Go Viral - The exponential rise in popularity of social networking websites and other social media outlets such as Facebook, Twitter, LinkedIn, and individual blogs, is due in large part to their viral nature. Social networking sites are essentially self-promoting, in that users spread the word for the sites. The more quickly social networking sites grow, the more quickly they spread.

The viral quality of social media makes it an appealing way for businesses to market products and services, and marketers have long recognized and tapped the potential of social media outlets. Many advertisers have conducted consumer promotions involving social media to generate attention to and participation in their promotions, thereby maximizing brand exposure. Incorporating social media into a marketing campaign is not, however, without legal risks.

Companies utilizing the power of social media must be cognizant of the relevant legal issues in order to protect themselves from liability risks. It is of the utmost importance for companies to protect their own trademarks and copyrights when using social media to promote their brands. A company’s brands and other intellectual property are often nearly as valuable as the products or services that they offer.

Social media’s capacity to facilitate informal and impromptu communication – oftentimes on a real-time basis – can aid companies in promoting their brand ...Please navigate Paper pages for more details.

 
Author: Melissa Landau Steinman, Mikhia Hawkins (Fellow) | Visits: 1616 | Page Views: 2078
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Contents:
white paper
MAY 2010

When Marketing Through
Social Media, Legal Risks
Can Go Viral
VENABLE LLP ON ONLINE MARKETING LAW

CALIFORNIA MARYLAND

NEW YORK

VIRGINIA WASHINGTON, DC

1.888.VENABLE ww.Venable.com

white paper
MAY 2010

AUTHORS
Melissa Landau Steinman
Partner
Advertising and Marketing
202.344.4972

Mikhia Hawkins
Associate
Advertising and Marketing
202.344.4573

When Marketing Through Social
Media, Legal Risks Can Go Viral
VENABLE LLP ON ONLINE MARKETING LAW
The exponential rise in popularity of social networking websites
and other social media outlets such as Facebook, Twitter, LinkedIn,
and individual blogs, is due in large part to their viral nature.
Social networking sites are essentially self-promoting, in that users
spread the word for the sites. The more quickly social networking
sites grow, the more quickly they spread. The viral quality of social
media makes it an appealing way for businesses to market products
and services, and marketers have long recognized and tapped the
potential of social media outlets. Many advertisers have conducted
consumer promotions involving social media to generate attention
to and participation in their promotions, thereby maximizing brand
exposure. Incorporating social media into a marketing campaign is
not, however, without legal risks. Companies utilizing the power of
social media must be cognizant of the relevant legal issues in order
to protect themselves from liability risks.
Trademark and Copyright Issues
It is of the utmost importance for companies to protect their own
trademarks and copyrights when using social media to promote
their brands. A company’s brands and other intellectual property
are often nearly as valuable as the products or services that they
offer. Social media’s capacity to facilitate informal and impromptu
communication – oftentimes on a real-time basis – can aid
companies in promoting their brands and disseminating
copyrighted material, but it can also facilitate third-party abuse of a
business’ trademarks and copyrights.
When using social media, whether via a third party outlet or a
company’s own social media platforms, marketers should regularly
monitor the use of their trademarks and copyrights. Companies
should monitor their own social media outlets as well as third-party

social media platforms to ensure that their intellectual property is
not being misused by those providing content through the media
outlets. Internet monitoring and screening services are available to
monitor the use of your business’ marks and copyrights on thirdparty sites, including checking social media sites for profile or user
names that are identical or substantially similar to your company’s
name or brands. This form of business impersonation can damage
a company’s brand and reputation if left unchecked; such
monitoring can also serve as a positive indicator of business
success. Companies should consider reserving, on various social
media sites, user names that match or closely resemble their trade
names and marks.
Social networking sites generally have terms and conditions that
prohibit trademark and copyright infringement, and many sites,
such as Twitter, also have rules regarding business and/or
celebrity impersonation. Twitter terms and conditions state, in
relevant part:
Using a company or business name, logo, or other
trademark-protected materials in a manner that
may mislead or confuse others or be used for
financial gain may be considered a trademark
policy violation. Accounts with clear intent to
mislead others will be suspended; even if there is
not an explicit trademark policy violation, attempts
to mislead others may result in suspension.

© VENABLE 3/2008

Twitter has specific provisions governing business or individual
impersonation and name squatting. A well-known lawsuit involving
allegations of impersonation on Twitter involved Tony La Russa,
Manager of the St. Louis Cardinals Major League baseball team. In
May 2009, La Russa sued Twitter for trademark infringement for
allowing an impersonator to use La Russa’s name as a Twitter
profile name and post offensive “tweets” under the name. The case
was eventually settled. Anthony La Russa v. Twitter, Inc., Case
Number CGC-09-488101 (Cal. Super. Ct., San Fran. Co., May 6, 2009).
Many social media outlets have procedures by which entities or
individuals can report trademark or copyright abuse to the outlet,
which may then take appropriate actions, including suspending the
responsible user’s account and removing infringing content. In
fact, many social media companies, including Facebook, YouTube,
and Twitter, provide instructions specifically for submitting a takedown notice relating to allegedly copyright infringing content, a
procedure that can afford the social media outlets some immunity
under the federal Digital Millennium Copyright Act (which is
discussed in detail below).
In addition, companies should have terms and conditions for their
own social media outlets, with provisions specifying how to
properly use the company’s and/or third parties’ intellectual
property. Marketers conducting certain types of social media
marketing campaigns, particularly promotions and user-generated
content campaigns, should have rules in place that include specific
prohibitions regarding trademark and copyright infringement and
impersonation.

General Legal Standards Applicable to Social Media Marketing
The law treats advertising and marketing via social media just as it
does similar practices as they are employed in the context of
traditional media. The backbone of federal consumer protection
law is Section 5 of the Federal Trade Commission Act, which is
enforced by the Federal Trade Commission (the “FTC”) and
declares that unfair or deceptive acts or practices are unlawful.
Most states have statutes modeled after the FTC Act, known as
“mini-FTC Acts”; many of these laws expressly provide that the
mini-FTC Act should be interpreted in accordance with FTC
guidance and case law. States may also (or alternatively) have
general false advertising laws, or prohibitions of specific types of
deceptive and misleading conduct such as advertising misleading
price comparisons, rebates or sweepstakes promotions. Social
media marketing campaigns must comply with these laws and their
implementing regulations.
As with advertising through any channel, marketers using social
media must ensure that their advertising claims are truthful and
accurate and that they have substantiation for their claims before
disseminating them. They must also clearly and conspicuously
disclose all material information regarding an offer in their
advertisements.
Companies that have relationships with third-party affiliate
marketers should ensure that those affiliates comply with
advertising and marketing laws in marketing the companies’
products or services through social media. Businesses should
have agreements with affiliates requiring the affiliates to comply
with all applicable federal, state, and local laws and regulations; it
may be prudent to include specific representations and warranties
by the affiliate with respect to compliance, with specific references
to significant laws such as the FTC Act. The agreements should
also have a provision whereby the affiliate agrees to indemnify the
company (either though a mutual indemnification or otherwise)
from liability arising out of the affiliate’s conduct – preferably with
a provision requiring that the affiliate carry sufficient insurance to
fund the indemnification should it be triggered. On a related note,
confidentiality provisions and related provisions ensuring data
security have become increasingly important in the current legal
environment, particularly in agreements involving cross-border
activities where consumer personal information is collected online.
Additionally, businesses should, to the extent it is feasible, monitor
the advertising and marketing practices of affiliates and review
their marketing materials before they are disseminated.
A
company should take similar measures with respect to third parties
who market through social media outlets operated by the
company.
A recent lawsuit in this area is Swift v. Zynga Game Network Inc., No.
CV-09-5443 (N.D. Cal. Nov. 17, 2009). In November 2009, Facebook
was named in a federal consumer class action suit alleging that
advertisers disseminated deceptive ads through games offered on
the social media site, such as Mafia Wars and Farmville. The
company that offers many of the games on Facebook, Zynga Game

Network Inc. (“Zynga”), was also named in the suit. The suit alleges
that third party marketers published deceptive advertisements
through Zynga-produced games on Facebook, and that Facebook
and Zynga received payments for the ads. The suit seeks to hold
Facebook and Zynga liable for its alleged involvement in the
dissemination of the advertising.
Complying with the Terms and Conditions of Social Media
Outlets
Social networking websites generally have terms and conditions in
place that govern the use of their sites. Some sites’ terms and
conditions contain provisions specifically regulating advertising
and other commercial practices conducted on the site, including
consumer sweepstakes, contests, and giveaways.
LinkedIn, for example, prohibits users from disseminating any
unsolicited or unauthorized advertising or promotional materials.
Twitter prohibits the use of the site to disseminate mass
unsolicited messages (i.e., “spamming”). According to Twitter’s
rules, what constitutes “spamming” will evolve as the site responds
to new tactics used by spammers. Twitter’s rules list several
factors that the site considers in determining what conduct
constitutes spamming, including whether a Twitter user has
followed a large number of users in a short amount of time;
whether a user’s Twitter updates consist mainly of links and not
personal updates; and whether a user posts misleading links.
Facebook has rules in place (discussed in detail below), which were
substantially revised and updated last Fall, that specifically govern
the administration and advertisement of promotions on the site.
In addition to complying with the provisions of a social networking
site that are directly applicable to advertisers, when designing
promotional activities, marketers should also take into account any
rules that restrict users’ involvement in advertising and other
commercial activities on the site. A marketing campaign that leads
consumers to violate a social networking site’s terms and
conditions could expose the marketer to liability, damage the
marketer’s standing among consumers, and lead the site to bar the
marketer from conducting future marketing campaigns through the
site.
Social networking sites frequently impose various other rules that
restrict how a marketer can use their sites. For example, Facebook,
YouTube and Twitter prohibit the uploading or posting of content
that infringes a third party’s rights, including intellectual property,
privacy and publicity rights.
Implementing Your Own Terms and Conditions
If a marketer creates and/or administers its own social media
platform, such as a blog or podcast, it should have in place terms
and conditions governing use of the platform and should make the
terms and conditions readily available to potential users. By
providing guidelines governing the use of the site, carefully crafted
terms and conditions can prevent both company employees and
third parties from using the social media platform in an unlawful

manner. To some extent, such terms and conditions may also
shelter companies from liability for the actions of third parties and
employees. Comprehensive terms and conditions should reflect a
good faith, reasonable effort to control and police third-party and
employee conduct with respect to the platform. Such efforts are
often taken into consideration by courts and regulators in
determining a marketer’s level of responsibility for the conduct of
third parties and employees.
A site’s terms and conditions should prohibit unlawful use of the
platform, and ideally should specify particular types of unlawful
conduct in addition to a broadly prohibiting illegal activity. For
example, the rules should bar use of the site in a manner that is
defamatory, libelous, or infringing upon the company’s or a third
party’s intellectual property rights or right of privacy/publicity.
The terms and conditions should also expressly state that the
company is not responsible for content published through the
platform by third parties.
User-Generated Content
Oftentimes marketing campaigns involving social networking sites
or other social media incorporate user-generated content into the
campaigns. Whether it’s a video or photo shared on a site, or
messages that site users disseminate to members of network, usergenerated content holds much promise as a marketing tool.
Consumers who create content in connection with a marketing
campaign may develop a strong connection with the promoted
brand, and audiences are often drawn to the authenticity of the
content and the notion that an everyday Joe may perhaps obtain
some degree of fame through low-budget, amateur productions that
he or she created. In addition, user-generated content comes with
a relatively high degree of credibility in the eyes of consumers,
particularly if the content was created by someone the consumer
knows (for example, a “Tweet” between friends).
Soliciting user-generated content in connection with a marketing
campaign comes with some risk of incurring legal liability for
content created by an individual participating in the campaign.
Incorporating user-generated content in a marketing campaign
could expose the sponsor to liability for libel, copyright
infringement, violation of one’s right of privacy/publicity, deceptive
advertising, trademark infringement, or other violations. The law
affords social networking sites and marketers some limited shelter
from liability stemming from user-generated content used for
limited purposes, but gives marketers minimal protection for usergenerated content when it is republished in connection with a
promotion or other marketing campaign. Marketers can, however,
take certain steps to minimize legal risks associated with
campaigns that involve the dissemination of user-generated
content through social media.
When conducting marketing campaigns in which participants can
publish content that they created through a social media outlet,
whether the outlet is administered by the marketer or a third-party,
marketers should regularly monitor published content and remove
or request removal of any postings that violate the marketer’s rules

or the third-party’s rules, or otherwise pose a legal risk.
Alternatively, or pending removal of the content, marketers can
post a statement disclaiming any association with the content or
the content creator, and perhaps also express disapproval of the
content.
When practicable, marketers should screen usergenerated content before it is disseminated. If, in screening
content, a marketer identifies any legal issues, it should promptly
take appropriate steps to address each issue.
Marketers should also have in place clear (and easily accessible)
terms and conditions governing the marketing campaign, and those
rules should include specific provisions addressing user-generated
content. Marketers should also adopt disclaimers stating that the
company had no hand in producing the user-generated content
used or published in connection with the marketing campaign and,
where appropriate, stating that the content does not reflect the
opinions of the marketer.
To provide protection from intellectual property infringement
claims by creators of user-generated content used by a marketer,
the marketer should obtain the consent of participating consumers
to use such content and the terms and conditions for the campaign
should grant the marketer the specific right to use the content
without compensating the consumer. Companies can also require
that participants execute a release agreement allowing the
marketer to use the participant’s content. To protect against
infringement claims by third parties, companies should consider
either: (a) prohibiting the use of third party content altogether; (b)
restricting the use of third-party content to only content that is in
the public domain; or (c) permitting the use of third-party content
only when the participant has provided written releases from each
third party permitting the use of such content. Marketers can also
find creative ways to reduce legal risks while facilitating the
screening process by limiting the content that consumers can
create in connection with marketing campaign – for example, by
providing consumers with a selection of content that they can
choose from that the marketer has previously cleared.
Monitoring and Screening Social Media Content
When conducting marketing campaigns in which participants can
post content that they created to a social networking site,
marketers should regularly monitor the postings and remove or
request removal of any postings that violate the marketer’s rules or
the site’s rules, or otherwise pose a legal risk. Alternatively,
pending removal of any content, marketers can post a statement
disclaiming any association with the content or the content
creator, and perhaps expressing disapproval of the content.
When practicable, marketers should screen user-generated content
before it is disseminated. If, in screening content, a marketer
identifies any legal issues, it should promptly take appropriate
steps to address each issue.
There are companies that provide Internet monitoring and
screening services, including companies that provide services
focusing on social networking sites. Some of these services allow a

marketer to provide certain terms (e.g., company name) that it
wants the service to search for on a regular basis, and the service
will provide the search results. This allows companies to monitor
their social media marketing campaigns and any content that is
published regarding the company, thereby protecting its brand and
limiting its liability exposure.
Sweepstakes, Contests, and Other Promotions
As with any marketing campaign, conducting a promotion through
social media can be an effective means of reaching a broad
audience and capturing the attention of consumers through fresh,
appealing, and interactive marketing formats. Like social media
itself, promotions are by their very nature interactive and can thus
be seamlessly integrated with social media outlets in a manner that
heightens consumer interest in a marketer’s brand. Promotions
involving prizes incentivize consumer conduct in a manner that
increases exposure to the promoters brand and, as such, are selfpromoting -- consumers are more likely to inform people they know
about a promotion if prizes are offered. Social networking sites and
other social media allow consumers to spread the word about a
promotion quickly and with ease. Thus, promotions are an optimal
means of exploiting the viral nature of social media.
When conducting or publicizing promotions through social media,
marketers must not keep in mind both the general legal
requirements governing promotions (e.g., the sweepstakes laws,
the CAN-SPAM Act applicable to email marketing, privacy laws,
etc.) and the applicable terms and conditions of the social media
outlet being used to “spread the word” about the promotion.

Facebook’s Guidelines for Promotions
On November 4, 2009, Facebook issued new Promotions Guidelines
containing specific rules for conducting sweepstakes and contests
on its website. These Promotions Guidelines, which supplement
the site’s existing Advertising Guidelines, set forth separate
guidelines for administering a promotion on Facebook and for
publicizing a promotion on the Facebook site. Under the rules,
“administering a promotion” on Facebook means “operating any
element of the promotion on Facebook or [by using] any part of the
Facebook Platform” (a program that links Facebook to outside
applications and websites).
For example, collecting entries,
conducting a drawing, judging entries, or notifying winners through
Facebook constitutes administering an element of a promotion on
the site. Publicizing a promotion, on the other hand, means
“promoting, advertising or referencing a promotion in any way on
Facebook or [through] any part of the Facebook Platform.” This
includes, for example, announcing a promotion through a status
update or wall post.
Under the new Promotions Guidelines, a company does not have to
obtain Facebook’s consent merely to publicize a promotion on the
site. To administer a promotion on Facebook, on the other hand, a
company must obtain Facebook’s prior written consent and the
promotion must be administered through Facebook Platform. A
marketer that plans to conduct a promotion on Facebook must

submit materials to for the promotion to a Facebook Account
Representative at least seven days before the start date of the
promotion.
If Facebook users are allowed to enter through the site, then the
promotion sponsor may allow entry only through a third-party
Facebook Platform application. Entry into a promotion, whether
administered or merely publicized on Facebook, cannot be
conditioned upon a user providing content on the site, including
posting content on a profile page, posting a status update, or
uploading a photo onto a Facebook page. In contrast, a promotion
sponsor may condition entry upon a user providing content
through a third-party application. Further, specific disclosures
regarding Facebook’s non-affiliation with the promotion and the
promotion sponsor’s collection of data from entrants must appear
adjacent to the entry field. The guidelines also require that the
official rules for a promotion administered on Facebook include
specific provisions, including an acknowledgment that Facebook is
not affiliated with the promotion and a provision releasing the
social networking site from liability. Various other requirements
apply.
Other social networking sites may follow suit and establish
comprehensive policies governing consumer promotions.
Marketers planning to conduct a promotion involving a social
networking site should take great care to ensure that they comply
with the site’s terms and conditions, paying special attention to any
advertising and promotion guidelines.
Endorsements and Testimonials in Social Media
The FTC recently amended its Guides Concerning the Use of
Endorsements and Testimonials in Advertising (the “Guides”), which
address endorsements by consumers, experts, organizations, and
celebrities in advertising. The amendments, which took effect on
December 1, 2009, clarify – among other things – how the Guides
apply in the context of social and other “new media”.
The amendments to the Guides add examples to illustrate how the
longstanding requirements that “material connections” (e.g.,
compensation arrangements) between advertisers and consumer
endorsers must be disclosed. Under the Guides, a material
connection is one that consumers generally would not expect and
that may affect the credibility or weight of the endorsement.
In determining whether a disclosure is required, the threshold
issue is whether an endorsement was made. If a blogger was paid
to blog about the marketer’s product, the blogger’s favorable blog
posts concerning the product will likely be considered an
endorsement under the Guides. If, on the other hand, a blogger
makes favorable comments about a marketer’s product, but was in
no way incentivized by the marketer to post any blog entry about
the product, then the blogger’s product review would not be
considered an endorsement. Further, if that consumer receives a
single free sample from a marketer and writes positively about it on
a personal blog or on a public message board, his or her comments
are not likely to be deemed an endorsement given the lack of any

continuing relationship with that advertiser that would suggest that
the consumer is disseminating a sponsored message. But in some
cases, receiving free products may warrant disclosure. The
fundamental question with respect to whether an endorsement was
made is whether the speaker is (1) acting independently or (2)
acting on behalf of the advertiser (or its agent). If the latter, the
speaker’s statement is an endorsement. This is also important in
the expert or celebrity context, where previously compensation or
a free gift might not previously have been considered to be a
"material connection," but may now warrant disclosure in certain
circumstances in the social media context.
A material connection certainly exists between a company and its
employees. Thus, when an employee makes favorable comments
through social media regarding his or her employer, or its products
or services, the employee must disclose the employment
relationship. If a company encourages its companies to post blog
entries or otherwise make favorable statements regarding the
company or its products or services, the company should develop
procedures and policies that employees must comply with to avoid
violating the standards reflected in the Guides. In relevant
situations, employees should generally be advised to disclose their
employment relationship with the company and whether they are
acting on behalf of the company (or, as if often the case, whether
they are simply acting on their own behalf); the company may wish
to consider limiting the forums through which employees can make
comments or even prohibiting altogether comments about the
company or its products or services in any online forum. In short,
companies encouraging employees to provide endorsements
through social media channels should have adequate controls in
place to avoid legal liability for their employees’ statements, and
even if a company does not encourage employees to make
comments about the company or its products or services through
social media, it should nonetheless have policies in place
concerning such conduct.
The amendments to the Guides also address the issue of who is
responsible for a deceptive social media endorsement. The FTC
recognizes that because the advertiser does not disseminate the
endorsements made in blogs or other consumer-generated media,
it does not have complete control over the contents of those
statements. Nonetheless, the FTC has taken the position that if the
advertiser initiated the process that led to these endorsements
being made – e.g., by providing products to well-known bloggers or
to endorsers enrolled in word of mouth marketing programs – it is
potentially liable for misleading statements made by those
consumers. Whether liability will be imposed in these
circumstances may turn on a determination that the advertiser
chose to sponsor the consumer-generated content and, therefore,
established an endorser-sponsor relationship. But in determining
whether a marketer should be held responsible for a third party’s
statements through social media, the FTC will consider the
marketer’s efforts to advise endorsers of their responsibilities (e.g.,
adoption of a blogger endorsements policy), monitor bloggers'
online behavior, and deal with rogue endorsers (e.g., ceasing
providing free product to noncompliant bloggers).

Privacy and Data Security Issues Concerning the Use of Social
Media
Using social media to promote one’s brand, products, or services
can also implicate privacy and data security issues. It is important
for companies to be aware of these issues and take appropriate
measures to minimize their exposure to liability related to personal
data collection, use, and maintenance.
Social media companies like Facebook and Twitter generally have
their own privacy policies that govern their use of consumer data
and third-party conduct on the social media platform with respect
to personal data. Marketers utilizing third-party social media
outlets should ensure that their marketing campaigns do not
encourage consumers or any other parties to engage practices that
would violate the social media company’s privacy policy, and
marketers should also ensure that they are abiding by the policies
as well. Companies that administer their own blogs and/or other
social media platforms should also maintain comprehensive
policies that disclose the company’s data collection, use, and
storage practices, and any responsibilities that third parties have
as regards privacy and data security.
Operators of social media platforms must fulfill the promises they
make in their privacy policies and elsewhere with respect to data
security and privacy, and they must maintain reasonable personal
data protection procedures. The FTC and states have targeted
companies for failing to abide by their privacy policies and/or
maintain adequate data security protocols.
Companies using social media in marketing campaigns should also
be aware of legal and self-regulatory restrictions on privacy and
data security practices as regards minors. The Children’s Online
Privacy Protection Act (“COPPA”), 15 U.S.C. §§ 6501-6506, and its
implementing FTC regulations govern the online collection, use,
and disclosure of personal information from children under 13
years of age. COPPA applies to any operator of a website or online
service directed to children under 13 who collects personal
information from children under 13, or who has actual knowledge
that it is collecting or maintaining personal information from a
child under 13. If data collection and use practices come within the
scope of COPPA, the statute and its implementing regulations
require the website operator to include a privacy notice on its site
and make available a notice to parents regarding its information
collection and use practices relating to children under 13. It also
requires that the website operator obtain parental consent before
collecting personal information from children under 13.
The Children’s Advertising Review Unit (“CARU”), an industryfunded, self-regulatory body that reviews nationally disseminated,
children-directed advertising, has guidelines concerning the
collection, use, and storage of personal data from children. CARU’s
guidelines are consistent with COPPA and its implementing FTC
regulations.
In addition, after some prodding by the FTC, leading industry
associations developed the Self-Regulatory Program for Online

Behavioral Advertising in an effort to set standards for and police
online “behavioral advertising,” which is the practice of tracking a
consumer’s activities online (e.g., the searches the consumer has
conducted, the web pages visited, and the content viewed) in order
to deliver advertising targeted to the consumer’s interests. The
self-regulatory program consists of seven principles that are aimed
at ensuring that consumers have control over the collection of
their personal information and that marketers protect consumers’
data and privacy when engaging in behavioral advertising.
Companies should adhere to these principles when undertaking
behavioral advertising activities using social media.
In November 2007, Facebook introduced its Beacon advertisement
system, which transmitted data from external websites to Facebook
for the purpose of allowing targeted advertising to Facebook users.
As part of the system, certain activities on partner websites were
published on a Facebook user’s news feed. In response to protests
by many Facebook users, Beacon amended its user agreement
policy. However, a class action lawsuit was filed against Facebook
and marketers that used the Beacon service, including Blockbuster,
Inc., Fandango, Inc., and Hotwire, Inc., among others, and the
lawsuit was settled in September 2009. Lane v. Facebook, Inc., Case
No. 5:08-CV-03845-RS (N.D. Cal. Aug. 12, 2008). As part of the
settlement, Facebook agreed to provide $9.5 million, minus $3
million for legal fees, to create a “Digital Trust Fund” dedicated to
studying online privacy. Ultimately, the Beacon advertisement
system was shut down, but Facebook continues to "push" the
envelope with its privacy practices.
Legal Protections for Social Media Platforms
There are laws that afford website owners and operators, including
social networking sites, some protection against legal liability for
third-party content published on the sites. Two federal statutes in
particular – the Communications Decency Act (“CDA”) and the
Digital Millennium Copyright Act (“DMCA”) – provide some
immunity from such liability. The DMCA’s “take-down” procedures
may provide a particularly valuable tool for marketers seeking to
address copyright infringement without resorting to litigation.

The Communication Decency Act
The federal Communications Decency Act (“CDA”) was enacted to
provide Internet service providers and website operators broad
protection from liability for content created by third parties.
Section 230 of the CDA affords immunity to interactive computer
service providers, which includes owners of websites such as
Facebook, YouTube, and other social networking or user-generated
content sites, for content posted by third-party users of the
service.
The CDA does not, however, extend immunity to intellectual
property laws, criminal laws, or state laws that are consistent with
Section 230 of the CDA. In addition, an Internet service provider is
not entitled to CDA immunity if it plays some role in the creation of
the content, including by editing the content, or gives the
appearance that it played such role; for example, by failing to make

clear that it is publishing content that was created by a third party.
Moreover, CDA does not protect marketers that publish content
through a third party’s Internet service or website; accordingly, a
marketer may not be sheltered from liability arising from usergenerated or other content that it disseminates through a thirdparty social networking site.

The Digital Millennium Copyright Act
The federal Digital Millennium Copyright Act (“DMCA”) generally
protects Internet “service providers”, a term that has been
interpreted broadly to include all website owners, from all
monetary and most equitable relief for copyright infringement
where a third party initiated the delivery of the allegedly infringing
content and the service provider did not edit or selectively
disseminate the content.
The DMCA provides “take down”
procedures through which service providers are immune from
liability if they remove or disable access to content that allegedly
infringes a copyright.
To be eligible for the DMCA “safe harbors,” an Internet service
provider must (1) establish a policy that provides for termination
of a repeat infringer’s access to the Internet service; (2) designate
an agent registered with the U.S. Copyright Office to receive
copyright infringement notices; and (3) promptly remove allegedly
infringing content upon receiving notice of the alleged
infringement.
Like the CDA, the DMCA does not shield non-ISP marketers from
liability for third-party content disseminated through another
party’s Internet service. Thus, marketers utilizing user-generated
content are not protected under the DMCA with respect to
copyright-infringement if the content is published through a third
party’s Internet service (although they may access its protections if
they own the website and follow the prescribed procedures).
However, even marketers using third-party websites may request
that an ISP remove third-party infringing content pursuant to its
DMCA takedown procedures; the "accused" party is then given a
chance to respond. A judiciously used DMCA takedown request
may thus be a cost-effective means of addressing intellectual
property infringement issues – particularly those where the
infringer is overseas and difficult to reach in the United States
courts due to jurisdictional issues.
Employer-Employee Issues
As discussed with respect to endorsements and testimonials
above, employers should have reasonable policies and procedures
in place with respect to employee use of social media to minimize
exposure to liability for the statements of employees. Companies
should prohibit employees from making negative comments about
a competitor, and should implement controls over employees’ use
of social media to make favorable statements about the company
or its products/services. Companies should also consider adopting
policies concerning employee use of internal blogs, online news
bulletins, and other internal media channels, in order to prevent
internal issues that could potentially arise due to inappropriate,

confidential, or other statements or conduct by employees in
connection with the use of intra-company social media platforms.
Relevant case law indicates that users of social networking sites do
not have a reasonable expectation of privacy from employers with
respect to information on the users’ profile pages. However, an
employee may have a cause of action if an employer pressures an
employee to reveal a password to a protected web page. In one
case, waiters at a restaurant in New Jersey started a group
discussion forum on a social networking site for the purpose of
voicing their complaints about the restaurant. A manager of the
restaurant discovered the site and demanded the password to the
group forum web page, then fired two employees in the group after
reviewing the web page. The terminated employees subsequently
filed suit against the restaurant. The jury found that the employees
did not have a reasonable expectation of privacy in the contents of
the web page and that it was reasonable to assume that
information on the page would be used by their employer.
However, the jury found that the restaurant violated the federal
Stored Communications Act by improperly coercing an employee
to divulge the password for the web page and then using the
password to access the page. Pietrylo v. Hillstone Restaurant Group,
No. 2:06-cv-05754 (D. N.J. 2008).
Companies should proceed with caution when using information
gathered from social media in screening prospective employees,
including information on a candidate’s profile pages on social
networking sites. Such information could include an individual’s
ethnicity, religion, marital status, or sexual orientation, each of
which can form the basis for unlawful discrimination claims.
Retaining Records Related to Use of Social Media
Companies using social media should retain records related to
such use for a reasonable period of time in the event the records
are needed in connection with a regulatory investigation or other
legal proceeding. Information and communications conveyed
through social media channels may become relevant to a legal or
self-regulatory proceeding, and may ultimately be the subject of a
subpoena or other compulsory process. Indeed, the legal action
may not directly involve a company that has custody of relevant
social media exchanges or information, but a regulatory, court, or
other authority may nevertheless compel the company to produce
the materials. Further, records related to a company’s use of social
media may also ultimately prove useful in supporting a company’s
position in a legal proceeding or in connection with a threatened
proceeding.
Recent case law has imposed harsh penalties for spoliation of
electronic records evidence and raised the bar for maintenance
and production of electronic files such as databases, emails, and
even personal data assistants in anticipation of and during
litigation. Accordingly, it is important to implement sound records
retention policies and procedures with respect to social media
projects. Companies should consult with counsel for assistance in
designing a sound policy that takes into account business
requirements, current case law and relevant statutes of limitation.

*

*

*

Social networking sites can be effective platforms for advertising
and marketing endeavors. Increasingly, marketers are using such
sites as a vehicle to spread the word about a product or service
through advertisements, promotions and other means.
But
marketing campaigns utilizing social networking sites unavoidably
involve various third parties – including consumers, the social
media outlets, marketing affiliates and potentially other third
parties. Marketers must be aware of the legal issues raised by the
involvement of these parties. In particular, campaigns that leave
certain components of the campaign in the hands of the sites
and/or users – as when users are encouraged to disseminate their
own announcements regarding the marketing campaign through a
social media outlet – can carry liability risks for marketers. By
structuring campaigns properly and taking other steps to minimize
legal risks, marketers can cash in on the marketing opportunities
that social networking sites and other social media present without
leaving themselves vulnerable.

Melissa Landau Steinman is a partner and Mikhia Hawkins is an
associate in Venable LLP’s Regulatory Group; they focus their
practices on advertising, marketing and new media law. Ms.
Steinman can be reached at (202) 344-4972 or
mlsteinman@venable.com. Mr. Hawkins can be reached at 202-3444573 or mehawkins@venable.com.

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