Social Media Law Update : Intellectual Property, Advertising and Video Game Law: Sheppard Mullin Lawyers & Attorneys

By Paul Cowie and Wayne Chang

Eagle v. Morgan, 2013-11-4303 (E.D. Pa. 2013), represents one of the first trials on the issue of who owns social media accounts: the individual employee who first created the account or the employer whose business was promoted using the account? In Eagle a company's founder sued her former employer for the alleged illegal use of her LinkedIn account. The U.S. District Court for the Eastern District of Pennsylvania held that an employer's conduct, absent a company social media policy, resulted in the torts of unauthorized use of name, invasion of privacy by misappropriation and misappropriation of publicity. The court, however, held the employer not liable for conversion, tortious interference with contract, civil conspiracy and civil aiding and abetting. Lastly, the court rejected the employer's counterclaims of misappropriation and unfair competition.

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California’s Attorney General today issued recommendations for mobile app developers and the mobile industry to safeguard privacy for consumers.

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Pinterest has released new Promotions and Marketing Guidelines for retailers, consumer brands and other companies running promotions on its platforms. Among other things, the new guidelines say don’t run a sweepstakes where each pin, repin or like represents an entry.

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By Rachel Tarko Hudson

Mobile app developers must now conspicuously post and follow privacy policies just like websites and other commercial online services according to California Attorney General Kamala Harris. On October 30, the Attorney General’s office began sending warning letters to app developers notifying them that they had 30 days to comply. Time is now up. And the consequences are potentially substantial with the law carrying fines of up to $2,500 per download.

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By Rachel Tarko Hudson

The New York Attorney General’s Charities Bureau recently released “Five Best Practices for Transparent Cause Marketing” which contains general best practices for cause marketing campaigns, including campaigns conducted on social media.  Cause marketing, also known as commercial coventures, is the practice by a for-profit company of donating a portion of the purchase price of an item or service to a charity.  Cause marketing is becoming increasingly popular among companies looking to do good as well as to generate positive publicity for their brand.  Many states regulate cause marketing, however, New York’s Best Practices indicate that greater attention may begin to be focused on campaigns conducted using social media and other newer online platforms for giving.

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The Federal Trade Commission recently proposed several updates to the Children's Online Privacy Protection Act of 1998 (COPPA).

COPPA currently provides that operators of websites and other online services that collect personal information online about children under 13, or whose websites or services are directed at children under 13, must:

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By Elizabeth Berman

Facebook, Inc. was sued in a class action last year over one of its advertising practices called “Sponsored Stories,” which typically consist of a Facebook Friend’s name, profile picture, and an assertion that the person (your Facebook Friend) “likes” an advertiser, coupled with the advertiser’s logo, featured on your Facebook page or News Feed. The idea is that the target of the advertisement (i.e., you) will be more influenced by the company’s advertisement because someone in your network (i.e., your Friend) “likes” that company. The disconnect is that “liking” a page on Facebook does not necessarily mean the user likes that company in the normal sense of the word. For example, one could “like” a page in order to get some promotional benefit from the company or learn more information about the company or its product.

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By Neil Ray

Continuing its focus on privacy issues, the Federal Trade Commission (FTC) reached a settlement earlier this month with social networking service, Myspace, over charges that it misrepresented its protection of users' personal information. The FTC alleged that Myspace allowed advertisers to access personally identifiable information despite previous assurances to its users that it would keep such information private. The settlement requires Myspace to implement a comprehensive privacy program, and calls for regular, independent privacy assessments for the next 20 years.

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By Rachel Tarko Hudson

Pinterest has seen its number of daily visitors increase by 145 percent since the beginning of 2012, now counting 11 million users on its site, according to recent reports. It is a powerful social media tool by any standard, however, in recent months, with its meteoric rise, concerns have also surfaced about potential copyright issues. Needless to say, companies are clamoring to gain access to this vast and ever increasing pool of users, but they should (and can) proceed with caution in order to stay on the right side of the copyright issues.

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By Craig Cardon and Rachel Tarko Hudson

Occupy protesters in New York are attempting to quash the Manhattan District Attorney's subpoenas of their tweets and Twitter account information. The protesters were arrested for obstructing the Brooklyn Bridge during a protest in October. The District Attorney wants to use the tweets to show that the protesters knew their actions were not sanctioned by the police. The D.A. is also attempting to obtain account information in order to connect anonymous Twitter accounts to their real owners. The protesters' motions argue that the subpoenas violate their privacy rights and their right to speak anonymously.

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By Michelle Sherman

The wide dissemination of news on the Internet through “new media” online sites such as the Huffington Post, well recognized blogs like the Drudge Report, or social media sites such as Twitter is changing how we get our news today. The Internet is also making it harder for someone to be the first and original source for allegations of corporate malfeasance that can be the basis for a whistleblower or false claims action. In other words, businesses who are defending themselves against a whistleblower or qui tam (false claims) plaintiff (collectively, “whistleblower”) should exhaustively search the Internet for evidence showing that the whistleblower is not the “original source” of the information.

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By Michelle Sherman

Agatha Christie had a novel take on invention being the mother of necessity. She disagreed and said, “[I]nvention, in my opinion, arises directly from idleness, possibly also from laziness. To save oneself trouble.” She may have been onto something when you think about businesses that are turning to outside vendors to research employees and job candidates for them. Whether or not these outside vendors are the best solution, however, remains to be seen.

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By Michelle Sherman

If your company adopted a social media policy more than two months ago, or, if your company modeled its policy after one of the sample policies available on the Internet, then there is a very good chance that your social media policy is overbroad and needs to be revised. For example, if your social media policy prohibits social media activity that disparages the company without making it very clear that this prohibition does not include protected concerted activity (as more fully described below), then your policy needs to be amended.

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By Michelle Sherman

Companies would be legally remiss not to add a social media component to their corporate compliance and ethics program. As we have seen and reported on, agencies such as FINRA, the FTC, and the NLRB are bringing complaints against companies arising from their social media activity or employee related activity, thus, highlighting the need for companies to demonstrate that they are exercising due diligence to promote ethical conduct and prevent criminal conduct in the context of social media activity [e.g. Federal Sentencing Guidelines, § 8B2.1].
 

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By Michelle Sherman

A sound social media governance program means more than having a social media policy, or updating your document retention policy to include social media activity. It may also mean updating your Sarbanes-Oxley Act (“SOX”) compliance program to ensure that your company is complying with Section 409. Section 409 of SOX requires companies to disclose material changes in their financial conditions or operations, by updating information on your social media networking sites. Credit Suisse Securities was fined $4.5 million by FINRA last month, and one of the reasons for the fine was failing to update its website with relevant and accurate disclosures concerning the performance of some residential subprime mortgage securitizations (“RMBS”).
 

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By Michelle Sherman

Many businesses are still coasting along enjoying the marketing advantages of social media without making sure they have a good compliance program in place. For every company with a Facebook fan page or Twitter account roughly 65 percent would admit they do not have a social media policy. For companies with a social media policy, many of those policies have been lifted from online samples that may be over broad, and include provisions that have been challenged with some success in court.
 

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By Michelle Sherman

It should come as no surprise that employers are trying to assert a claim for violation of the Computer Fraud and Abuse Act (“CFAA”) based on employees accessing social networking sites such as Facebook from work computers. While one employer was unsuccessful in stating a claim, employers should not give up on opportunities to assert the CFAA as a claim in an employment related action.
 

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• Social Media Issues For Corporate Counsel
   
• Conversations You May Want To Have About Social Media
   
• Anatomy Of A Trial With Social Media
   
• Protecting Trade Secrets In A Post Wikileaks World

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By Michelle Sherman

Your company has a dispute with a vendor or customer, and the terms of the agreement between the company and the person you are about to sue provide for binding arbitration. It is common for contracts to have arbitration provisions. Arbitration is viewed as less expensive and more expeditious than litigating a dispute in court. Arbitration provisions also allow the parties to agree that consequential (e.g. down time, finance fees, lost profits) and/or punitive damages cannot be awarded. Arbitration also gives the parties more control in deciding who will adjudicate their dispute, rather than having a judge randomly assigned to your case. There are many positives to arbitrating a dispute.
 

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By Michelle Sherman

It is now cliché to say that social media activity by companies is growing exponentially. Companies, hospitals, non-profits, the armed services, insurance companies…. every type of entity can be found on social networking sites with Facebook fan pages and Twitter accounts. The marketing opportunities for companies continue to manifest themselves with directed marketing campaigns, discounts on Foursquare and other location based networking sites, and data mining to analyze social networking activities.
 

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By Michelle Sherman

We are the Google generation. We meet someone interesting, then search the Internet to learn more about them. There is nothing wrong with doing this in the context of networking, making new friends, or pitching for business. However, searching the Internet for information about someone who is trying to get a job with your company is another matter entirely. This is not to say you cannot Google them. In fact, it is estimated that 45% of companies research a job candidate on the Internet. In a December 2009 survey commissioned by Microsoft, 70 percent of the 275 U.S. recruiters, human resources professionals and hiring managers who responded said they have rejected candidates based on information found online. Thirty-five percent of those employers said they rejected applicants based on membership in certain groups.
 

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By Michelle Sherman

The setting is the week before trial and the company has been ordered by the court to attend a final settlement conference. The company Kris Kringle Inc. is suing a former employee for taking the customer list and setting up a competing business for video games. Kris Kringle is also suing for deceptive trade practices and arguing that the defendant is getting business by confusing consumers and also posting disparaging comments about its video games.
 

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By Michelle Sherman

This article is the first in a series on how social media is being used in trials.

Jury Selection

When picking a jury, some cases have enough at stake that a client will pay for mock trials and jury consultants, who will recommend the ideal composition of a jury in that case. It is also the case that the ideal jury may not be reflected in the actual jury pool for that judicial district. Thus, the trial attorney must select from people who are not his ideal jurors. The trial attorney is left to rely on answers given during the voir dire process. Depending on the judge, the attorneys may be allowed to question the prospective jurors, or the judge may do all of the questioning with input from the attorneys.
 

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By Michelle Sherman

The author is a member of the Firm's Government Contracts & Regulated Industries Practice Group. For additional articles and postings concerning this and related topics, please refer to Sheppard Mullin's Government Contracts Blog, which can be found at www.governmentcontractslawblog.com.

“Loose tweets sink fleets” is a new twist on a familiar saying. It is also borrowed from the Navy Command Social Media Handbook issued October 15, 2010. The Navy appreciates that social media is widely used, and that a ban on social media is not the answer. Trying to turn a blind eye to the use of social media, or banning its use in the workplace is naive. Whether they are doing it at work or in their free time, people who hold security clearances, or have access to classified or sensitive information, are using Facebook to connect with friends who may be one to three degrees removed. They are connecting with other professionals on Linkedin, and sometimes tweeting about their every day activities on Twitter.
 

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By Riaz Karamali

Many social media and social gaming companies have launched products and achieved remarkable viral growth on a relative shoe string, in the process setting a new standard for efficient utilization of capital and human resources. We are frequently approached by new entrepreneurs who are about to launch social media or social gaming ventures and asked to incorporate their startups. In keeping with the mantra of efficiency and economy, we like to take a step back and ensure that the time is in fact right to begin the incorporation formalities. It is possible to go through the incorporation process too early. It is also possible to be too late. Let's take a quick look at some possible consequences of each mistake:
 

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By Michelle Sherman

Words matter. Words can come back and bite you. Think before you speak. These are all self-evident truths that no one is likely to dispute. Yet, we continue to see examples of people, who should know better, doing just the opposite. This is especially true in the context of electronic communications – first, in work emails, and now, on social media websites. If it was a simple matter of personal embarrassment alone, then there would be no need for this article. This is not the case however.
 

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By Shawn Foust

I’ve spent the better part of the last few months acquainting myself with the intersection between privacy and social games. Things can be a bit complicated.[1] The goal of this article will be to explain the current state of affairs and suggest some options to consider when drafting a privacy policy that touches on social games.
 

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