Businesses have become increasingly aware of the power of interactive social networking websites like Facebook and Twitter, which are part of the broader so-called "Web 2.0" movement. Web 2.0 sites let businesses target and develop new markets, create buzz about products and services, and allow for a level of interaction with customers that advertising or other forms of static media have never afforded. A host of legal pitfalls comes with these powerful tools. Unless businesses are conscious of the legal implications associated with social networking and the manner in which Web 2.0 sites are used and operated, they may not only be exposing themselves to liability, but also potentially jeopardizing valuable intellectual property rights.
This article identifies some of the steps that businesses should take with respect to Web 2.0 sites, in an effort to maximize the protection of their intellectual property rights and minimize their exposure to liability for violating or infringing others' intellectual property rights.
Adopting a Web 2.0/Social Media Written Policy
Every business using Web 2.0 sites should adopt a stand-alone written social media policy or incorporate such a policy into its existing Internet policy. Such a policy can aid in ensuring that Web 2.0 resources are used effectively by the business, and educate employees about acceptable conduct when utilizing social media networks, thereby minimizing the employer's potential exposure to liability from third-party intellectual property infringement and/or unfair competition claims. The mere development and implementation of a social media policy helps businesses and their employees increase awareness of important legal issues to consider.
Generally speaking, an employer is vicariously liable for the conduct of its employees, at least when such conduct occurs within the scope of their employment. Employers, therefore, are potentially subject to liability for their employees' misuse of Internet resources, including Web 2.0 sites. Employees can, through their use of Web 2.0 sites, infringe on third party intellectual property rights, such as copyrights and trademarks, leaving the employer liable.
Specifically, an employee's unauthorized copying of copyrighted materials onto his/her employer's Web 2.0 pages may constitute copyright infringement. Similarly, an employee's use of another's trademark on his/her employer's Web 2.0 pages may be considered trademark infringement and/or unfair competition. The potential for such liability is increased where, as it is often the case, a business gives its marketing or public relations division free reign to make use of social media networks without providing guidance, auditing or monitoring what content is being posted and how it is being used. Since employees are using company resources, conducting their activities during working hours, and are subject to employer control, employers can find themselves subject to vicarious liability for its employees' conduct, particularly where the employer has an obvious and direct financial interest in the infringing activity. Further, if after learning that its employees are engaging in infringing activities an employer does nothing, the employer also may be deemed liable under a theory of contributory infringement.
A clear social media policy, combined with a regular audit procedure, will substantially limit a business' exposure to liability. When it comes to educating employees about how to make proper and effective use of social media networks for business purposes, the best strategy is to educate employees about the legal boundaries attendant to such uses, and to take appropriate action to regularly audit and properly address improper activities. Employers should have a well-defined written policy, and should ensure that it is effectively communicated and understood by all of its employees. Legally, it is insufficient to simply inform employees that the policy exists and leave the burden on them to comply with it. To ensure the policy's continuing effectiveness, businesses should periodically review it and reconsider it in view of legal and technological developments, and distribute reminders and updated policies to employees regularly.
Knowing The Applicable Web 2.0 Terms Of Service
Those using a Web 2.0 site should familiarize themselves with the Terms of Use or Terms of Service (TOS) associated with the site. When users subscribe to Web 2.0 sites, the websites often require users to "click through" or check off a radio box that they have read and agreed to the TOS before allowing the users to access interactive portions of the sites. While few users go through the trouble of reading the TOS, the TOS can have significant ramifications on the users' intellectual property rights. A business' written social media policy should require that employees know the applicable Web 2.0 policies and only make use of a site with TOS that is consistent with the business' social media policy.
"Click-through" agreements are generally binding on parties. These agreements often contain a grant of a license, generally broad in scope, from the user to the website (or even third parties) to use the content of any posts to the site, often even after the user has terminated his or her account with the service. An example of a somewhat broad license is found in the TOS for Google's Blogger site. It states:
By submitting, posting or displaying Content on or through Google services which are intended to be available to the members of the public, you grant Google a worldwide, non-exclusive, royalty-free license to reproduce, publish and distribute such Content on Google services for the purpose of displaying and distributing Google services.
TOS also typically contain a clause stating that the user agrees to any modifications or amendments to the TOS, without requiring notice to the users. This can be particularly troubling, since a site might change the TOS without notice and with its users having no appreciation for the significance of the modifications. Though it is unlikely that any user would be able to negotiate modifications to the TOS for a Web 2.0 site, users should at least be aware of the relevant TOS before posting or beginning use of a site and any changes to the TOS thereafter. Users should also consult the Electronic Frontier Foundation's website http://www.tosback.org/, which aggregates and catalogs changes to various Web 2.0 sites' TOS.
Ultimately, businesses that wish to use Web 2.0 sites should read the various sites' TOS, and fully understand the ramifications of its provisions, including those applicable to the intellectual property rights. They should also include in their social media polices any restrictions pertaining to the use of Web 2.0 sites containing certain specified provisions that would negatively affect their rights, including its intellectual property rights.
Taking Steps to Protect Intellectual Property Rights
Using Web 2.0 sites and adopting a Web 2.0 policy also affords businesses an opportunity to monitor for infringing use of their own intellectual property rights. Marketing and public relations divisions involved in developing Web 2.0 pages are often the first to encounter intellectual property infringement taking place on the Internet. Vigilant protection of intellectual property on the web is essential since failure to enforce rights can have significant negative legal consequences. Trademark owners have a duty to police their marks against infringing uses. Trademark owners must monitor the usage of similar marks by others, and in appropriate circumstances, must take action against potentially infringing third parties in order to protect their rights. Failure to do so may result in the mark being deemed abandoned. In addition, a trademark owner with knowledge of prior infringing uses who fails to take any action might have little leverage, if any, in its attempt to prosecute future infringement claims.
Thankfully, many Web 2.0 sites offer tools that intellectual property owners can use to help protect and enforce their rights. These tools are most often embedded and explained carefully in a site's TOS, giving users yet another reason to read and understand the terms of each site's TOS. Many Web 2.0 sites take advantage of the Digital Millennium Copyright Act's (DMCA) safe harbor provision, which provides an effective means for copyright owners to have web pages that infringe on their copyright either removed or disabled by submitting a DMCA takedown notice. Additionally, many Web 2.0 sites will also have abuse pages or special applications where users can log complaints of copyright infringement, trademark infringement, impersonation, or other misuses. These tools are useful to intellectual property owners who are trying to get expeditious results when protecting and enforcing their intellectual property rights. This summer, Facebook launched a new service that allowed users to pick a username. The username was designed to make it easier to navigate to a particular user's Facebook page, as the name would become part of the URL associated with that individual's or entity's page. What resulted was an Oklahoma style "land grab" of usernames, leaving many trademark owners faced with the reality of thousands of users attempting to grab and use their trademarks as their Facebook handle. Facebook responded by creating a "username infringement form" to allow holders of intellectual property rights to report such infringement as far as usernames are concerned. Trademark owners should avail themselves of such tools when appropriate in seeking to protect its rights.
Conclusion
Web 2.0 sites provide remarkable opportunities for businesses to target and develop new markets, create buzz about products and services, and interact with customers. Businesses must recognize, however, that Web 2.0 sites are still part of an overarching legal structure, and that use of these sites often significantly implicates intellectual property rights. In order to minimize potential liability arising out of the use of Web 2.0 sites, businesses should become educated about the risks of using such sites, formulate a written, clear and detailed social media policy (and take the necessary steps to vigilantly and consistently enforce it), and police and protect its intellectual property rights on the Web. Taking such precautions should enable businesses to protect their rights and enjoy the benefits of Web 2.0 sites.
This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice. Your receipt of Good Company or any of its individual articles does not create an attorney-client relationship between you and Sheehan Phinney Bass + Green or the Sheehan Phinney Capitol Group. The opinions expressed in Good Company are those of the authors of the specific articles.
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