Social Media: Five Legal Issues

By Jill M. Goldman, Esq.

The first question to ask when trying to deliver any type of message is, “who is your audience and how do you reach them?”

This is especially important for the bank marketer. In today’s changing world, the main portion of the audience is online and readily accessible in social media applications and sites. According to the Pew Research Center’s Social Media Update 2014 and Social Networking Fact Sheet, 74 percent of online adults use social networking sites.While Facebook is the most popular, with 71 percent of online adults, it is followed by Linkedin (28 percent), Pinterest (28 percent), Instagram (26 percent), and Twitter (23 percent).

While these sites may seem like a golden opportunity to a bank marketing professional to reach a large audience quickly and efficiently, social media is not a risk-free environment. The same principles that apply in print, television, and in-person advertising and communications apply to social media. Consequently, there are some legal issues to consider when using social media.

This is not an exhaustive list, but just a starting point of items to consider before using social media. The top five legal concerns being discussed below are trademark infringement, copyright infringement, confidentiality, privacy, and defamation.

The first two categories of concern both fall within the scope of “intellectual property.” Due to the nuances in the law regarding trademarks and copyrights and how they differ from one another, it is important to view them separately even though they may be similarly situated in the same category. All of the legal principles discussed below are being adapted to encompass new and emerging technology, but the practical application is ever changing, especially in regards to social media.

  • Trademark Infringement

 How are you expected to compare products or mention companies without using a consumer identifier such as a company logo or product image? Well, the answer is, “it’s tricky.” This is because companies own their consumer identifiers (i.e., names, logos) for their use to the average consumer to represent their brand or product. These consumer identifiers are known as trademarks or service marks. The only difference between the two is the former identifies goods and the latter identifies services.

If a company has registered for state or federal protection of its mark it has an obligation to protect and enforce such registration against third parties, otherwise they may lose the ownership rights of the mark itself. Social media makes people forget that their mere words or a 120-character response may have significant legal consequences. Most people may not even be aware that by using the name of a product or company that they have even run afoul of someone else’s trademark rights.

The first factor when considering trademark infringement is how this is being used. A company or owner is less likely to come after an individual using their trademark without a license if they are posting positive commentary, testimonials or affirmations. The owner may see this as free advertisement and allow through omission. Therefore, the context is quite important.

While there is still free speech in America, there are some limitations to how that speech can be said. Conversely, negative treatment of someone else’s consumer identifier can cause the owner to file not only infringement claims, but other claims such as tarnishment of the brand and reputation of the mark being used.

Another factor, and the most important one, is whether your use is confusing the average consumer as to the owner or origin of such trademark or service mark. If your words or use fall within this factor, you should beware of a cease and desist or worst case scenario, an infringement lawsuit may be in your immediate future. This is because the underlying principle of trademark law is to prevent any type of consumer confusion in the marketplace for certain goods and services. If you fall within this type of use, you not only are using someone else’s property without their permission, but can be cited for other claims such as false affiliation or false designation of origin for the goods or services.

So, what’s the risk if I use someone else’s mark in social media? Depending on the type of use, the answer is money … lots and lots of money. Not to be flippant but the type and amount of damages a party may seek and ultimately collect from claims of trademark infringement, tarnishment, false designation of origin, or false affiliation can be in the seven figures and up. Also, it is important to note that on trademark issues, the damages can be trebled, which is the legal term of art for tripled.

  • Copyright Infringement

The second legal concern when using social media is copyright infringement. Copyrights are created when an original idea is fixed in a tangible medium or an individual “puts pen to paper.” In the case of social media it is “keystrokes on a keyboard.”

Infringement occurs when someone’s copyrighted work is used without authorization. Just like with trademarks, the owner has the right to determine if and when their valuable intellectual property can be used in any manner. While social media is quick, it can be quicker to create an infringement. All it takes is the simple act of cutting, pasting, copying, or linking to a third party’s content and an infringement may be triggered if the owner feels this type of use, reproduction and distribution has not been authorized. This becomes hard to determine when some social media applications are based upon reposting or “liking” the content of another.

Reposting content within a social media application will be governed under the terms and conditions of that site. More risk occurs when you cross populate over other applications without using pre-established authorized links by the applications themselves. While these social media application icons are becoming more common place to share and repost content from one site to another, it does not guarantee safety based upon the statutory definitions of what constitutes infringement under copyright law.

Like trademarks, the infringement can be quite costly. Copyright law allows for set damages up to $150,000 for each instance of infringement based on intent.  The more willful and deliberate your actions showing a reckless disregard for the owner’s rights, the higher statutory damages are authorized.

A good rule of thumb before posting the content of others is to look for a copyright notice or disclaimer attesting to how the material can be used. If it does not explicitly grant such use (Example: © 2015 ABC Company. All rights reserved. Not-for-profit or educational reproduction is authorized. Commercial use is strictly prohibited) then you have two options.  The first option is to determine if the work is in the “public domain,” allowing for public use, not merely being publicly available. Works in the public domain are defined as all those works that are either no longer protected by copyright (protection term has ended) or never were protected in the first place. Generic information (facts, numbers or ideas), works where the copyrights have lapsed due to time or failure to renew, works prior to 1989 without proper notice, works created by the U.S. government, or works donated to the public are all public domain material.

The second option is quite simple. Ask permission. There is no harm is sending the owner a request to link or repost their content.

  • Confidentiality

Confidentiality involves a set of rules or promises that limits access or places restrictions on the disclosure of certain types of information. Patient medical records, attorney-client communications, proprietary business information, classified government operations, and trade secrets are all various types of confidential information.

This information is restricted in order to protect the parties involved. The disclosure of such information can irreparably harm those same individuals. For example, the very nature of a trade secret is that it is a formula, process, design, pattern or the like that is not generally known or reasonably ascertainable by others so that a business can obtain an economic advantage over competitors or customers. A company will lose its economic advantage if such trade secret is disclosed unlawfully.

The risk of disclosure of the above types of confidential information is increased as the number of parties aware of such confidential information use and communicates online and with social media. When using social media, all information that is kept private or secret should not be disclosed or revealed without opening yourself up to liability.

  • Privacy

Privacy is an area of concern for social media usage. It does not just involve your personally identifiable information such as your name, address, age, social security number, but also includes your Internet privacy, such as IP address, location and browser history. Disclosure of such private information may coincide with confidential information, but not always. In addition to basic privacy concerns is that all countries have a different approach and laws that govern privacy. Use on the Internet crosses these geographic borders, opening up liability on various fronts.

In the United States, legislation has protected various privacy interests such as the Children’s Online Privacy Protection Act (“COPPA”), Gramm-Leach-Bliley Act (“GLB”) and Health Insurance Portability and Accountability Act (“HIPPA”). COPPA protects the privacy rights of children under 13 from the online collection of their personal information without parental consent. GLB governs the privacy rights of consumers’ nonpublic personal information by financial institutions and HIPPA governs the protected health information held by covered entities.

  • Defamation

The nursery rhyme “sticks and stones may break my bones but names will never hurt me” is contrary to the concept of defamation. Defamation is the communication of a false statement that harms the reputation of an individual, business, product, government, religion or nation. Defamation falls within two categories: spoken, commonly known as slander; and libel, used for printed words or images.

Words, especially on social media need to be chosen wisely. “Name calling” is not just uncivilized, but it is legal cause of action. The party harmed has to simply prove the statement is false, and they have sustained an injury in some fashion from the false statement. Not only are you opening up yourself to a legal cause of action, but all writings available on the social media application itself are documented evidence of the defamation that can be cited against you in a legal suit. Due to the vastness and perpetual nature of content posted on the Internet and social media, any such false statement can themselves be the evidence of the reputational injury.

While 74 percent of all adults use social media today, it is not without risk. However, by understanding that the Internet is not the last bastion of totally free speech and considering some legal issues that could occur, a bank marketing professional can avoid such pitfalls and still get out their message.

This and other marketing risk management and compliance issues are covered in depth at the ABA Bank Marketing School.

Jill Goldman is Vice President & Senior Counsel II, Contracts & Intellectual Property with the American Bankers Association.

This article is for informational and educational purposes only. It is not offered as and does not constitute legal advice or legal opinions. The information contained in the article should not be used as a substitute for seeking professional legal advice. If legal or other expert assistance is required, the services of a competent professional should be sought.