What Can Be Learned From the Social-Media Related Lawsuits of 2010

Unless you live under a rock, it is difficult to go through an entire day without hearing about the burgeoning popularity of social media around the world.  This surge in popularity has also brought with it an abundance of lawsuits that illustrate the need for businesses to use caution while they expand their presence and take advantage of new communication technologies and eCommerce platforms.

Although market practices are necessarily steps ahead of regulation, legislation, and litigation, best business practices dictate that attention be paid to legal and regulatory developments in order to predict how courts will most likely address current and emerging technological trends and activities.  Simply stated, businesses are well-advised to familiarize themselves with past developments in order to optimize the management of future risks.

Numerous social media related-issues were litigated in 2010.  For example, courts held that the broad immunity provided by the Communications Decency Act (47 U.S.C. §230) is not unlimited.  The CDA states that “no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”  Clearly, the statute’s broad reach protects online services from many categories of lawsuits based upon third-party user-generated content, but does not apply when a service provider has contributed or changed content in a manner that makes it a “content provider.”

But where exactly is that line drawn?

In Swift v. Zynga, No. 09-5443 (N.D. Cal. Nov. 3, 2010)(15 ECLR 1728, 11/17/10), the court denied a social network application developer’s motion to dismiss a lawsuit alleging that certain ads within the applications were deceptive.  The court concluded that the developer’s contribution to the content and design of the ads might have made it liable as a content provider.  Swift introduces uncertainty about the extent of protection for interactive websites under the CDA, particularly when they play an active role in design and layout.

While courts have generally given a lot of latitude to purely editorial activities (screening, editing, inserting peripheral content), there are limits.  For example, in the recently settled Doctor’s Associates Inc. v. QIP Holder LLC, No. 06-1710 (motion for summary judgment denied Feb. 19, 2010)(15 ECLR 319, 3/3/10), allegations were made that the website host encouraged visitors to upload videos including messaging that was unlawful under the Lanham Act.  The court concluded that a jury should decide whether the host was a content provider excluded from the CDA’s protections.  Companies can minimize social media risks by consulting with an experienced Internet lawyer who can prepare unequivocal website usage policies and agreements explaining the host’s responsibilities for screening uploads and removing objectionable content.

The year 2010 also provided us with critical intellectual property and marketing developments.  Viacom v. YouTube, No. 07-2103 (S.D.N.Y. June 23, 2010)(15 ECLR 1031, 6/30/10) (currently on appeal to the Second Circuit) and Tiffany v. eBay Inc., No. 08-3947 (April 1, 2010)(15 ECLR 546, 4/7/10) were both positive Intellectual property-related rulings for online services.  Each case held that an online service’s generalized awareness of infringing third-party user-generated content on its website was insufficient to generate contributory liability.  The district court concluded that YouTubewas shielded by the Digital Millennium Copyright Act safe harbor because it complied with the statute’s notice-and-take-down procedures.  The court rejected copyright owners’ contention that the service had a duty to screen its service or otherwise seek out and remove infringing content on its own accord to avoid contributory infringement liability.  Tiffany v. eBayreached a similar conclusion under the Lanham Act.  Despite the fact that the Lanham Act does not have an analogous notice-and-take-down provision, it has evolved through case-law and acceptable use policies to require take-downs of counterfeit merchandise upon request by the trademark owner.

Finally, links between online marketers and brands must now be disclosed, lest they attract enforcement actions from regulators.  In its updated Endorsements Guides, published in 2009, the Federal Trade Commission has clearly set forth that material connections between advertisers and product reviews must be disclosed online.  In the even that it is unclear whether a connection between an advertiser or online endorser would be “material” and apparent to consumers, the endorser should post a disclosure along with the review.

Given the foregoing examples of some of 2010’s key legal issues, companies should remain mindful of the standards of state and federal regulators while continuing to monitor their online campaigns  to ensure thir compliance with applicable standards.

Richard B. Newman, Internet Lawyer and Regulatory Compliance Counselor – Hinch Newman LLP