Social Media Breakfast 2014

Protect Your Company From Legal Threats on Social Media

CO-HOSTED BY

What You Need to Know

• Mitigate risks of having your brands discussed in an open forum.

• Workplace issues.

• Exercise legal rights without experiencing social media backlash.

Social Media Policies(Incorporate with workplace agreements)

• Guidelines re official social media sites.

• Content - who owns what?

• Acceptable / non-acceptable use:

– what is considered unauthorised communication

– staff training / induction programmes

• Legal ramifications.

• Reporting lines and complaints procedures.

COMMUNICATIONS

Corporate Governance

• Four pillars of corporate governance:– Disclosure

– Internal policy

– Privacy

– Ethics

• Risk management - audit and compliance

“Social media should not be notionally relegated to middle

management and marketing.”

Issues to Consider

• Reputation management:– control of name, brand and image

– appropriate action (legal or otherwise)

• Damaging comments, photos or videos of company or individual:– trivial complaints become magnified

– negative publicity / freedom of speech

– potential for international corporate embarrassment

“A company without an adequate social media policy and crisis management plan could face damage to its reputation and a

decline in share price overnight.”

• In 2010, Greenpeace attacks Nestle via YouTube:– video equating eating a KitKat to killing an Orang-utan. It

had over 500,000 views

– Nestle moved to remove it on grounds of trade mark infringement (only course of action available)

– returned to YouTube without the offending brand

Disclosures by Management

• In 2012, Netflix CEO Reed Hastings posted a statement on Facebook proudly announcing:

Netflix users streamed 1 billion hours in June

–his Facebook page had 200,000 subscribers

–shares jumped 6% overnight

–Wells Notice issued by the SEC

• In Australia, the definition of “company officer” under the Corporations Act extends to:

–senior management personnel includes anyone with autonomous decision making power

• Alan Joyce admitted the fake tweets caused the drop in share price:

“We first noticed a problem when our share price started to collapse, and that's because these reports coming out of Twitter."

• Qantas took immediate action to issue a press release confirming the aircraft was still in the air.

• 4 November 2012, mainstream media reported on tweets that a Qantas A380 had crashed over Indonesia.

• REFLECTS the ability of social media to connect with investors and foster shareholder confidence.

• INDICATES potential of social media posts to amount to a breach of the Corporations Act disclosure requirements as regulated by ASIC (ASX Guidance Note 8).

BACKLASH

External Communications

•Social media:- a tool for others to “police” businesses online

- blacklist/disparage companies who try to legitimately protect legal rights

- bad press if not handled properly

•‘Community’ support social media groups dedicated to criticising and even boycotting a company’s goods or services.

Case Study

• Hungry Jack's experienced social media backlash after serving legals on a Central Coast burger joint over its use of the term “Wambie

Whopper”.

• Wambie customer Matt Burke started a Facebook page:- over 29,000 ‘likes’- a petition on change.org over 5,000 signatures pledging not to buy HJ's burgers.- HJ’s social media accounts inundated with comments and criticisms- increased business for Wambie burger joint

• Hungry Jack’s remained silent and forced to withdraw the demand.

Flame Grilled on Social Media

Don’t Mess with Messina

• Gelato Messina created the ‘Gaytime’ flavour as a tribute to both the Sydney Gay & Lesbian Mardi Gras and the ice-cream:

– Unilever sent a cease and desist letter

– Gelato Messina promptly changed the name to ‘the flavour formerly

known as Gaytime’

– Unilever demanded Gelato Messina change the name again by 5pm

• Harnessing the power of social media, Gelato Messina appealed to its loyal fans on Facebook to rename the ice-cream.

• The Ice cream was aptly renamed UNILEAVE US ALONE.

• In 2012, counsel for Louis Vuitton sent a cease & desist to Penn Law School for trade mark infringement, demanding the poster be changed.

• Louis Vuitton criticised for being overly aggressive.

• The poster design:

– a form of parody

– use in a law school seminar

– posed no threat to the LV brand

• Chick-fil-A sent a cease & desist letter to Bo Muller-Moore, owner of “Eat More Kale” a silk -screening business selling shirts and stickers via eatmorekale.com.

• Muller-More and his supporters created Facebook pages: thousands of fans.

• Muller-More began a Kickstarter campaign: raised more than $80,000 to fund a documentary movie.

https://www.kickstarter.com/projects/1674889308/a-defiant-dude

Asserting Rights: No Backlash• Probably the most polite cease-and-desist letter you will ever read.

“We are certainly flattered by your affection for the brand, but while we can appreciate the pop culture appeal of Jack Daniel’s, we also have to be diligent to ensure that the Jack Daniel’s trademarks are used correctly.”

• Jack Daniel’s took aim at the book Broken Piano For President by Patrick Wensink:

–asked author to change the cover design when the book was reprinted

–offered to contribute a “reasonable amount” towards the costs

• Wensink agreed to change the cover, but did not accept any payment.

Confusing or Amusing: Parody

• Recently seeing more controversial parodies of popularbrands on social media.

• Sparking interesting debates over the protected scopeof parodies and how companies can protect their IPrights.

Cease and Desists• Remember the recipient may not be the only audience.

• Is there anything that could be perceived as over the top that is not necessary to the letter’s intent?

• Prepare for publicity issues that could ensue if the recipient starts a ‘social shaming’ campaign.

• Seek solutions not threats: what can achieve the necessary results without threats of litigation?

• Is coexistence with restrictions in writing sufficient?

• Is a phone call a better way to start? At least it won’t be in writing.

Employees and Social Media

Social Media in the Workplace

• Employees receive personal client information for a limited purpose only – what happens when they leave?

• When employees use social media:– content that impacts negatively on your brand

– breaching confidentiality

– cyberbullying, cyber-flirting, discrimination

– unfair dismissal complaints

– misleading and deceptive conduct

• Colleagues posting embarrassing / inappropriate material about one another

Humberston Comprehensive School (UK) failed to see the funny side of teacher Sonya McNally’s comment about the antics of her 8G1 Class. She was sacked.

The First Case

• In October 2008, 13 members of the Virgin Atlantic cabin crew were sacked over calling passengers “chavs” on Facebook.

Who Else

• Linfox Australia Pty Ltd v Fair Work Commission (2013):- the Full Federal Court found that Linfox unfairly dismissed Mr Stutsel for posting

discriminatory and offensive posts about two managers on his own Facebook page

- there was no formal training of staff re its social media policy

• In 2010, Vodafone suspended an employee after he tweeted this on the official Twitter account:

Confidential Information

• Social media sites can reveal company / client confidential information.

• Confidentiality of client lists can be compromised by social media platforms: Hays Recruitment (UK) 2008.

• Does everyone know:– what is considered to be company confidential information?

– which social media contacts are owned by them / company?

– how their use is being monitored?

– that they can be asked to remove company contacts before leaving?

Employment contracts must include a social media ‘pre-nup’ (also applies to work for hire or contractor agreements).

Take Home Message

• Be vigorous and clear in efforts to keep ‘company secrets’ a secret

• Have policies in place and offer training to all staff.

• Update policies annually.

• Restraints of trade/non-compete clause in employment agreements

• Legal advice / sign-off (don’t risk employee actions).

How Big is Your Sandpit?(know the social media legal borders)

1. Virtual IP Rights (TMs and designs)2. Privacy and Spam3. Copyright4. Misleading and deceptive conduct5. Defamation

Virtual IP Rights

• Trade Marks:– protect all brands on social media

– update registrations

– police improper or incorrect third party use

– use the ™ ® or © symbols

– app icons as trade marks or designs?

• Watch for imposters / counterfeits.

• Harness the power of brand fans by issuing licenses

• Google Adwords and other SEO tools:

– ACCC v Trading Post: “Kloster Ford” brand use

Australian Privacy Principles • Applies to companies with >$3 million turnover.

• Collection and management of personal information (use and disclosure).

• Security issues – how is your database stored?

• Employee issues to consider:

– Griffith v Rose 2011: workplace surveillanceof employees can extend to home use.

– Barminco Case 2013: 15 mine workerssacked over the Harlem shake for breachingsafety guidelines lead to unfair dismissalcases.

Spam Act 2003

• Even if you’re not caught by the NPPs, you could be caught by Spam.

• Covers all ‘commercial’ electronic messages.

• To decide if it’s a CEM, ACMA looks at:– the purpose, or one of the purposes, of the message

– the content and presentation/format

– links / contact info included in the message

User Generated Contentand other

Marketing Activities

1. Misleading and deceptive conduct (s18 CCA)

2. Use of third party content

3. Exposures to legal action

Main Issues

1. Social media platform rules:- each have unique terms and conditions

- don’t forget age limits that apply in your jurisdiction

2. Misleading and deceptive conduct:- make sure competition rules are easily accessible and clear

- remove (or respond by clarification to) all misleading / deceptive

content immediately: ACCC v Allergy Pathway

3. Advertising standards:- compliance is voluntary

- Board determinations about breaches are not binding

- non-compliance may reflect poorly on your business

Some rules stay the same…

‘Cash for Comment’ and Testimonials

• Avoid an impression of dishonest business practices and conflicts of interest.

• Using celebrities (extends to bloggers):– if you have a “material connection” with the seller of advertised

goods/services must disclose the connection: US Federal Trade

Commission Act (1914) - “SPON”

– Michael Hill Jewellers / Kim Kardashian

– Australian Consumer Laws apply (s18)

• Bloggers must:– be open and honest with their endorsements

and reviews

– make it perfectly clear what information is editorial versus advertising.

• In November 2011, removal company Citymove was forced to pay a $6,600 fine to the ACCC after it published false consumer testimonials on it’s MovingReview.com.au website.

• In 2013, Tripadvisor came under fire for allowing fake reviews on its site.

• Sued by hoteliers who suffered financial damage as a result.

• Such reviews are considered to be misleading and can attract penalties up to $1.1 million for companies and up to $220,000 for individuals.

• NB: the company and advertiser are liable.

Unfairly Reviewed?

• If your company gets an unfair / improper review or comment:– send author or website owner a letter requesting a review and/or

removal of the comments

– if unanswered or response is unfavourable, a more threatening legal letter may be necessary

– get legal advice

• If anonymous or pseudonym:– social media sites can reveal the identity of anonymous users if required

to do so under the laws of a particular country (eg subpoena or a court order)

• DMCA Complaint Notices must comply with legal disclosure requirements: Roadshow Films Pty Ltd v iiNet Limited14 (the iiNet Case)

• Daniel Morel v AFP/Ghetty: photographer won $1.2 million in damages after his photo was used on the cover of papers around the world….

Copyright Matters

• Whilst there was no copyright notice, Morel’s name did appear on the images.

• AFP did not dispute Morel’s interest in the copyright of the photographs, but argued (unsuccessfully):

– use of the images was allowed under Twitter’s terms of service– they were uploaded freely to the internet

Defamation

• Social media posts not immune from legal action for defamation.

• Liability not limited to person who made original statement.

• Not defamation if it is:– true statement

– (justifiable) personal opinion

• All social media users are considered ‘publishers’.

Mickle v Farley (2014)• Andrew Farley, a former student at Orange High School, defamed music

teacher, Christine Mickle on Twitter and Facebook.

• Mr Farley was warned on social media to be careful what he posted online. He replied: ''I can post whatever the f--- I like. I don't give a shit … if anyone

gets hurt over what I have to say about her.'‘

• District Court Judge Elkaim ruled:– Farley pay $85,000 in compensatory and $25,000 aggravated damages

– the comments had a ''devastating effect'' on the popular teacher, who immediately took sick leave and returned to work only on a limited basis late last year

''When defamatory publications are made on social media it

is common knowledge that they spread''

The End

Thank you!

Axis Legal (Australia) Pty LimitedTel: 8204 1100Sara Delpopolo

sdelpopolo@axislegal.com.au