Social media sites are transforming not only the daily lives of consumers, but also how companies interact with consumers. Here at Morrison Foerster, across all of our practice groups, we are seeing complex, cutting-edge legal issues arising out of social media. As with the Internet boom during the mid-to-late 1990s, social media is generating new legal questions at a far faster pace than the law’s ability to provide answers to such questions. In an effort to stay on top of these emerging issues, and to keep our clients and friends informed of new developments, Morrison Foerster publishes this blog devoted to the law and business of social media.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.Aaron’s practice focuses on advising both established and emerging companies in a variety of data- and technology-intensive sectors, including software, SaaS, cloud-based technology, digital media (social media, AR/VR, gaming, streaming media, AdTech), AI, healthcare, consumer electronics, e-commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on branding and marketing, trademark licensing, and content-related transactions, as well as the intellectual property aspects of mergers, acquisitions, asset spin-offs, and private equity investments.He has represented clients such as Autodesk, Meta, OpenAI, Splunk, Konami, Kaiser Permanente, SoftBank, Visa, and Yahoo, among others.Aaron has been recognized by numerous publications for his work on market-defining technology transactions. He is currently ranked by Chambers USA for “Technology Transactions.”Aaron also serves as co-editor of Socially Aware, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics. Aaron is also a sought-after speaker on new and emerging areas of law, and is a frequent presenter and panelist at conferences and legal services programs. In addition to his active practice, Aaron regularly provides pro bono assistance to various nonprofit and charitable organizations such as Common Sense Media and the Starlight Children’s Foundation. He is a member of the board of directors of California Lawyers for the Arts.While in law school at the University of California, Berkeley, Boalt Hall School of Law, Aaron served as executive editor of the California Law Review and was elected to the Order of the Coif. Following law school, Aaron served as law clerk to the Honorable William H. Orrick and the Honorable Martin J. Jenkins, both United States District Judges for the Northern District of California.

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Partner

Aaron is the chair of our Technology Transactions Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals. Aaron’s practice focuses on advising both established and emerging companies in a variety of data– and technology–intensive sectors, including software, SaaS, cloud computing, AR/VR, AI, gaming, healthcare, consumer electronics, social media, e–commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on the intellectual property aspects of mergers, acquisitions, asset spin–offs, and private equity investments.

Aaron P. Rubin

Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.Lawrence focuses his practice on technology transactions and licensing matters. His diverse experience includes advising on SaaS agreements, cross-licensing agreements, research and collaboration agreements, development agreements, and distribution agreements. He counsels a broad range of companies across the software, hardware, life sciences, biotech and FinTech spaces, as well as other entities including universities.He advises clients in connection with general corporate matters including contract negotiations, and leasing and technology placement agreements.Lawrence also serves as co-editor of <a href="https://www.sociallyawareblog.com/" target="_blank">Socially Aware</a>, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics.Prior to joining the firm, Lawrence was counsel at another major law firm. Before earning his law degree, Lawrence was a web consultant, project manager, and web developer in Portland, Oregon, where he managed and consulted on projects using industry methodologies and performed custom development and integration of content management systems.Lawrence was named a Super Lawyers “Rising Star” in 2015 and 2018–2022, and is licensed in both California and New York. Lawrence earned his J.D. from the University at Buffalo School of Law, where he was the electronic systems editor for the Buffalo Law Review and awarded the ABA-BNA Award for Excellence in the Study of Intellectual Property Law.

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Lawrence Gallick

Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster.Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions. His clients include technology, digital media and content for television and music, financial services, and communications companies with diverse intellectual property assets and issues.His practice focuses on the legal aspects of developing, licensing, and commercializing technology and intellectual property, as well as negotiating general commercial contracts, including outsourcing transactions, as well as content and data licenses. He regularly assists clients with legal issues relating to licensing and commercialization of digital media and content, digital content that is distributed over the Internet or streamed, mobile applications and social media, as well as the licensing of recorded music for distribution via digital platforms. Anthony is also experienced with issues relating to open-source software, software development, artificial intelligence and machine learning, cloud-based technology, and protection of proprietary information.Anthony has extensive experience working on matters involving disruptive technologies, such as blockchain. He has helped fintech clients with general intellectual property issues in connection with terms of service for online financial products and services.Anthony is an integral part of the outside pro bono legal team for nonprofit organizations based in New York, including advising clients on legal issues regarding entertainment, social media, privacy rights, and the negotiation of outsourcing and service agreements. Anthony received his J.D. from the University of Michigan Law School in 2009. He received his B.S. from Cornell University in 2004.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. He advises clients on general commercial and transactional matters. His clients include technology, media, and communications companies with considerable intellectual property assets. His practice focuses on the legal aspects of licensing and commercializing technology and intellectual property, as well as negotiating general commercial contracts. He also regularly assists clients with legal issues relating to mobile applications and social media.

Anthony M. Ramirez

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Socially Aware is devoted to the law and business of social media, proactively addressing emerging issues and keeping our clients informed of new developments. We cover fields such as artificial intelligence, privacy and data security, Section 230, intellectual property, and much more.

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Lawrence W. Gallick

2024 Recap: Ten Lords A-Leaping!

Social Links: If the Suit Fits

Social Links: Age Verification, X Appeal, and the Great White North

Social Links: Fake Reviews, Real Rulings, and an Epic Fail

Lawrence W. Gallick on Toth v. Everly Well, Inc.

A federal appeals court in Miami held that a judge needn’t necessarily recuse herself from a case being argued by <a href="http://www.thegazette.com/subject/news/nation-and-world/legal-ruling-facebook-friends-arent-necessarily-real-friendsphoto-20170823" target="_blank" rel="noopener noreferrer">a lawyer with whom the judge is merely Facebook “friends.”</a>Bills in both houses of Congress propose amending <a href="http://www.sociallyawareblog.com/2016/12/15/the-decline-and-fall-of-section-230/" target="_blank" rel="noopener noreferrer">Section 230 of the Communications Decency Act</a> to clarify that it doesn’t insulate website operators from <a href="https://www.washingtonpost.com/news/true-crime/wp/2017/08/01/senate-launches-bill-to-remove-immunity-for-websites-hosting-illegal-content-spurred-by-backpage-com/?utm_term=.104aa26c1da9" target="_blank" rel="noopener noreferrer">liability for violating civil or criminal child-sex-trafficking laws</a>.The Commonwealth Court of Pennsylvania held that an unemployment-benefits board acted appropriately when it <a href="http://www.thelegalintelligencer.com/id=1202797015936/Court-Reaffirms-Social-Medias-Role-in-UC-Benefits-Rulings?mcode=0&curindex=0&curpage=ALL" target="_blank" rel="noopener noreferrer">relied, in part, on an applicant’s Facebook post</a> to determine that the applicant was not entitled to benefits.A Texas law makes <a href="https://www.dailydot.com/irl/texas-davids-law-cyberbullying/" target="_blank" rel="noopener noreferrer">cyberbullying punishable</a> by as much as a year in jail and/or a fine of up to $4,000.Google is trying to make it more difficult to find and profit from <a href="https://www.bloomberg.com/news/articles/2017-08-24/google-rolls-out-its-biggest-crackdown-on-youtube-hate-speech" target="_blank" rel="noopener noreferrer">YouTube videos that contain</a> extremist content by placing warnings on those videos and disabling the advertising on them.A company backed by Mark Cuban is planning to create a social media platform that will anonymize its users’ identities using blockchain technology and attempt to cut down on trolls by charging people with bad reputations on the platform more for premium services.The online publishing platform Medium is giving some of its content writers the option to put their work behind Medium’s subscription pay wall and <a href="https://blog.medium.com/expanding-the-medium-partner-program-3be09dd146e4" target="_blank" rel="noopener noreferrer">get paid based on the number of “claps” that work gets</a>.Evolutionary psychologists aren’t at all surprised by the popularity of <a href="https://www.bustle.com/p/why-do-we-love-to-snoop-on-social-media-it-might-be-in-our-biology-77482" target="_blank" rel="noopener noreferrer">snooping on social media</a>.Tips for law firm marketers on how to <a href="http://www.thelegalintelligencer.com/id=1202796969152/Instagram-The-Next-Frontier-for-Law-Firm-Branding?mcode=1202619332875&curindex=3&curpage=2" target="_blank" rel="noopener noreferrer">best leverage Instagram</a>.Advice on how to <a href="https://www.nytimes.com/2017/08/25/smarter-living/what-youre-truly-saying-with-your-out-of-office-reply.html?rref=collection%2Fspotlightcollection%2Fsmarter-living&action=click&contentCollection=topics&region=rank&module=package&version=highlights&contentPlacement=3&pgtype=collection" target="_blank" rel="noopener noreferrer">pen the best automated out-of-office reply</a>.When you visit someone’s home these days, <a href="http://www.apartmenttherapy.com/millennials-are-killing-doorbells-amp-honestly-good-riddance-249740?utm_source=facebook&utm_medium=social&utm_campaign=managed" target="_blank" rel="noopener noreferrer">do you use the doorbell or text instead</a>?

Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.

Aaron Rubin

Social Links: Bills that would take a bite out of §230; court opinion on social media & ethics; using evidence on social media to determine unemployment benefits eligibility

A federal appeals court in Miami held that a judge needn’t necessarily recuse herself from a case being argued by a lawyer with whom the judge is merely Faceboo

Social Links: Bills that would take a bite out of §230; court opinion on social media & ethics; using evidence on social media to determine unemployment benefits eligibility

Recent challenges to the Federal Trade Commission’s (FTC) authority to police data security practices have criticized the agency’s failure to provide adequate guidance to companies.In other words, the criticism goes, businesses do not know what they need to do to avoid a charge that their data security programs fall short of the law’s requirements.A series of blog posts that the FTC began on July 21, 2017, titled “<a href="https://www.ftc.gov/news-events/press-releases/2017/07/stick-security-ftc-provide-additional-insights-reasonable-data">Stick with Security</a>,” follows <a href="https://www.ftc.gov/news-events/press-releases/2017/03/ftc-testifies-house-committee-about-data-security-small">promises</a> from acting Chair Maureen Ohlhausen to provide more transparency about practices that contribute to reasonable data security. Some of the posts provide insight into specific data security practices that businesses should take, while others merely suggest what, in general, the FTC sees as essential to a comprehensive data security program.Building on the data security principles drawn from FTC enforcement actions and articulated more than two years ago in <a href="https://www.ftc.gov/tips-advice/business-center/guidance/start-security-guide-business">Start with Security: A Guide For Business</a>, the <a href="https://www.ftc.gov/news-events/blogs/business-blog/2017/07/stick-security-insights-ftc-investigations?utm_source=govdelivery">inaugural post</a> addresses the question of whether there any recurring themes of data security investigations closed by the FTC. The answer is general, stating that the practices that led the staff to close investigations largely aligned with the practices recommended in Start with Security: “For example, the companies typically had effective procedures in place to train their staff, keep sensitive information secure, address vulnerabilities and respond quickly to new threats.”These general conclusions from the FTC do not suggest actual practices that businesses can operationalize. It may be more helpful for the FTC to specify precisely what those companies did to avoid prosecution. The blog post does note that the FTC may close an investigation where the risk of harm in the event of a data breach is low because the data was properly encrypted.It appears that the Stick with Security series will generally affirm the types of “reasonable” security practices that are by now becoming standard best practices. Indeed, the <a href="https://www.ftc.gov/news-events/blogs/business-blog/2017/07/start-security-stick-it">second post</a> refreshes the baseline “start with security” principle from the FTC’s Start with Security guidance. Companies are reminded (with updated examples): to not collect personal information they don’t need, to hold onto information only as long as there is a legitimate business need, to not use personal information when it is not necessary, to regularly train and remind staff on security standards and practices, and, when feasible, to offer consumers more secure choices.The <a href="https://www.ftc.gov/news-events/blogs/business-blog/2017/08/stick-security-control-access-data-sensibly">third post</a> discusses access controls, recommending specific measures such as implementing a “clean desk” policy for employees and limiting administrator-level IT privileges, and the <a href="https://www.ftc.gov/news-events/blogs/business-blog/2017/08/stick-security-require-secure-passwords-authentication">fourth post</a>, covering passwords and authentication processes, provides a few helpful pointers. For example, the FTC recommends that systems be designed to automatically reject passwords that are too obvious or simple and to suspend accounts whenever multiple incorrect logins have been attempted. It also recommends that companies protect sensitive databases with multifactor authentication, such as a password in combination with a verification code sent to a user’s phone. Like most of the preceding posts, however, the most recent installment, which recommends that companies segment and monitor access to their networks, does not go very far beyond approvingly citing general examples of implementing segmentation and network monitoring.The FTC promises a new post every Friday over the coming months. The next post is expected to discuss how companies should secure remote access to their networks. While it is encouraging that the FTC is attempting to increase its guidance to businesses, it remains to be seen what new insights a business will actually be able to glean from these efforts.*     *     *For more on federal and state regulation of computer security matters, please see the following Socially Aware articles: <a href="http://www.sociallyawareblog.com/2017/04/10/new-yorks-new-cybersecurity-regulations/">N.Y.’s New Cybersecurity Regulations: What Financial Services Companies Need to Know</a>; <a href="http://www.sociallyawareblog.com/2017/02/14/rules-for-cross-device-tracking/">FTC Report Reinforces the Rules for Cross-Device Tracking</a>; and <a href="http://www.sociallyawareblog.com/2015/02/02/ftc-issues-landmark-report-on-internet-of-things/">FTC Issues Landmark Report on Internet of Things</a>.

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Clients seek out Julie because of her practical advice on cutting-edge issues at the intersection of privacy and consumer protection laws. She provides clients with practical solutions to compliance c

Julie O'Neill

Clients seek out Julie because of her practical advice on cutting-edge issues at the intersection of privacy and consumer protection laws. She provides clients with practical solutions to compliance challenges around a wide variety of both online and offline privacy issues, including tracking, interest-based advertising, geo-targeting and other mobile tracking, personalization, and cross-device tracking. Recognized in The Legal 500 US 2014, 2016, 2019, and 2020 and Chambers USA 2021 for her exceptional legal work, her clients praise her saying, “She is really good at giving practical, targeted advice and taking stock of what the risk profile of the client is, so that the advice is holistic.” (Chambers USA 2021).

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More Insight From the FTC on Data Security—or More of the Same?

More Insight From the FTC on Data Security—or More of the Same?

Recent challenges to the Federal Trade Commission’s (FTC) authority to police data security practices have criticized the agency’s failure to provide adequate g

We <a href="http://www.sociallyawareblog.com/2016/08/10/ugcrisk/" target="_blank" rel="noopener noreferrer">discussed last year</a> the trend toward companies seeking to monetize user-generated content. A recent Central District of California decision in Greg Young Publishing, Inc. v. Zazzle, Inc. serves as an important reminder of the serious risks that can arise from seeking to commercially exploit such content.Under the Digital Millennium Copyright Act’s (DMCA) Section 512(c) safe harbor, online service providers that comply with the eligibility requirements are shielded from copyright damages in connection with their hosting of infringing content uploaded by service users. This powerful safe harbor has played a major role in the success of Facebook, Instagram, YouTube and other U.S. social media and Internet sites.Although the DMCA is nearly 20 years old, questions remain as to the boundaries of the Section 512(c) safe harbor. In Zazzle, the court addressed one such question: Whether the safe harbor protects an online service provider that not only hosts images uploaded by its users, but also creates and sells—at the direction of those same users—physical products featuring such images. In a victory for copyright owners, the court ultimately concluded that the Section 512(c) safe harbor did not protect the online service provider’s activities with respect to such physical products.<h4>The Parties’ Dispute</h4>Zazzle, Inc. (“Zazzle”) operates a website that allows site users to upload images of artwork, slogans and designs; in doing so, users can elect to have the images printed on coffee mugs, posters, t-shirts and other physical products for sale to the public. When a sale occurs, Zazzle manufactures the ordered product and delivers it to the purchaser, and then pays a royalty to the user who had uploaded to Zazzle’s website the image that appears on the product.As is often the case with user-generated content sites, many of the images uploaded to the Zazzle site are not owned by the uploading users, and are uploaded without authorization from the owners of such images.Greg Young is a producer and marketer of works created by the visual artist Kerne Erickson, and the licensing agent for Scott Westmoreland, who is also a visual artist. Alleging that Zazzle was publicly displaying and creating consumer products using images from 41 paintings created by Erickson or Westmoreland, Young—through a corporate entity named Greg Young Publishing, Inc. (GYPI)—sued Zazzle for copyright infringement. Zazzle moved to dismiss the suit, arguing that GYPI lacks standing to sue and that Zazzle is protected against liability for copyright infringement under the Section 512(c) safe harbor.<h4>Standing to Sue for Copyright Infringement</h4>Westmoreland CopyrightsThe court first considered whether GYPI had standing to enforce the copyrights in Westmoreland’s works. GYPI and Westmoreland had entered into an agreement specifying that GYPI would be Westmoreland’s “exclusive representative” for soliciting, negotiating and administering licensing agreements with third parties. The court, however, distinguished the right to negotiate license agreements from the power to use or authorize use of the paintings, and found that GYPI’s status as an exclusive representative of Westmoreland was insufficient to establish standing.GYPI further argued that an “Enforcement of Copyrights” provision in the parties’ agreement gave GYPI “the right to enforce the copyrights as a beneficiary to th[e] Agreement” if Westmoreland declined to do so. Citing <a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2013/05/09/11-16751.pdf" target="_blank" rel="noopener noreferrer">Ninth Circuit precedent</a>, the court held that the mere right to sue for copyright infringement without the transfer of an associated exclusive right in the Westmoreland copyrights was insufficient to confer standing on GYPI.Finding that Westmoreland did not grant GYPI any exclusive rights under his copyrights, the court determined that GYPI lacked standing to sue Zazzle for alleged infringement of the Westmoreland paintings.Erickson CopyrightsTurning to the Erickson copyrights, the court noted that the copyrights in the Erickson paintings had been assigned to Young’s d/b/a entities, “Greg Young Publishing” (GYP) and “Greg Young International” (GYI).  Zazzle argued that GYPI had no standing to enforce the copyrights because, at the time of the alleged infringement, the copyrights were technically owned by GYP and GYI, not GYPI.The court, however, noted that GYP, GYI and GYPI “were all one-man shops” controlled by Young; “[a]s a practical matter, Young is GYPI, just as Young was GYP and GYI.” Because Young “could decide that copyrights owned by any of these entities would be jointly owned by all of them, and no one could disagree,” the court held that GYPI is entitled to assert claims belonging to Young’s d/b/a entities. Moreover, and as an alternative to this holding, the court deemed GYPI’s complaint amended to add GYP and GYI as plaintiffs.<h4>Applicability of the DMCA Section 512(c) Safe Harbor</h4>Once the court found that GYPI had standing to sue for infringement of the Erickson works, Zazzle asserted the DMCA Section 512(c) safe harbor as an affirmative defense. In response, GYPI argued that Zazzle is ineligible for Section 512(c) safe harbor protection because (1) Zazzle is not a service provider for purposes of the safe harbor; (2) Zazzle knew that its services were being used to infringe GYPI’s copyrights; and (3) Zazzle received a financial benefit from the infringing activity and had the right and ability to control it.Is Zazzle a Service Provider?In determining the applicability of the Section 512(c) safe harbor, the court first considered whether Zazzle was a “service provider” eligible for protection under the safe harbor.GYPI argued that Zazzle is not a service provider because Zazzle “goes beyond passively accepting and displaying user-submitted images” by also directly manufacturing and selling physical products bearing the user-submitted images.The court, however, rejected this argument, noting that “a company does not cease to be a provider of online services because it offers offline services as well.” The court held that Zazzle’s services—allowing users to upload images online to be printed on consumer goods—were “unquestionably ‘online services’” and that Zazzle was therefore “a provider of online services” consistent with the definition of a “service provider” in the statute.Did Zazzle Have Knowledge of the Infringing Images or Conduct?Having found Zazzle to be a service provider, the court turned to the issue of whether Zazzle had actual or constructive knowledge of the infringing Erickson images or of activity using such images that was infringing; any such knowledge would render Zazzle ineligible for Section 512(c) safe harbor protection.Observing that constructive knowledge “<a href="https://www.leagle.com/decision/infco20130314153" target="_blank" rel="noopener noreferrer">has been construed so narrowly in the Ninth Circuit</a> that it is questionable whether it retains any independent meaning,” the court held that a service provider does not have knowledge of the infringement unless (1) the copyright holder submits a complaint that complies with the DMCA’s procedural requirements or (2) a third-party submits a “sufficiently specific complaint” about potential infringement.Although GYPI argued that it had complained to Zazzle regarding its users’ unauthorized uploading of the Erickson images and had provided Zazzle with a catalogue of such images to check for future infringement, the court determined that, even if such allegations are true, they do not show that Zazzle had “specific knowledge of particular infringing activity” that would render Zazzle ineligible for Section 512(c) safe harbor protection.Did Zazzle Receive a Financial Benefit From Infringement That It Could Control?Finally, the court considered whether Zazzle received a financial benefit directly attributable to the infringing activity where it had the right and ability to control such activity.Because Zazzle did not dispute that its sale of physical products bearing the Erickson images resulted in a financial benefit directly attributable to infringing activity, the court focused on whether Zazzle had the right and ability to control the infringing activity. The court stated that the following rights and activities, standing alone, do not result in a right and ability to control:<ul><li>That the service provider has “the general ability to remove infringing materials and terminate the accounts of repeat infringers;” and</li><li>That the service provider engages in “limiting monitoring” of its site or network for “apparent infringements.”</li></ul>Rather, the right and ability to control exists where a service provider exerts “substantial influence” over the activities of its users—for example, by playing “an active role in selecting, monitoring, or marketing user content.”Zazzle argued that it lacked the ability to control the sale of infringing products because, after a user’s order was approved by Zazzle’s content management team (CMT), the production process was “effectively automated.” The court rejected this argument, noting that “[i]t doesn’t matter if Zazzle lacked the ability to control its productions process after CMT approved the product,” given that the CMT presumably had the authority to reject infringing products. Moreover, even if Zazzle’s entire process were automatic, “that would suggest at most that Zazzle had chosen not to exercise its right and ability to reject infringing products, not that it lacked the right and ability to do so.”The court concluded that Zazzle had the right and ability to control the sale of infringing products; “[u]nlike eBay or Amazon, Zazzle’s role is not limited to facilitating the sale of products owned and marketed by third parties. Zazzle creates the products.” As a result, the court found Zazzle ineligible for DMCA Section 512(c) safe harbor protection to the extent it manufactured and sold the infringing physical products featuring the Erickson images. (One prominent Internet law commentator, Prof. Eric Goldman, <a href="http://blog.ericgoldman.org/archives/2017/06/dmca-safe-harbor-doesnt-protect-zazzles-printing-of-physical-items-greg-young-v-zazzle.htm" target="_blank" rel="noopener noreferrer">has questioned</a> the court’s reliance on the “right and ability to control” factor—rather than the “service provider” factor—in ruling against Zazzle.)In a small victory for Zazzle, the court noted that its ruling “does not preclude Zazzle from invoking Section 512(c) with respect to images that were displayed on its website but never printed onto physical products.”<h4>Concluding Thoughts</h4>After nearly two decades of court decisions taking an ever more expansive approach to the DMCA Section 512(c) safe harbor, is the pendulum beginning to swing in the other direction?Although the outcome of Zazzle is perhaps not surprising, when viewed in connection with the Ninth Circuit’s recent decision in <a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2017/04/07/14-56596.pdf" target="_blank" rel="noopener noreferrer">Mavrix Photographs, LLC v. LiveJournal, Inc.</a>, it suggests that courts are increasingly seeking to reign in the scope of the safe harbor.As website operators, brands and other companies have become more bold in their efforts to curate and monetize user-generated content, Zazzle and Mavrix highlight the need for companies to step back and reassess the potential copyright risks associated with their exploitation of user-generated content.*                   *                  *For more on copyright-related challenges in connection with user-generated content, please see the following Socially Aware articles: <a href="http://www.sociallyawareblog.com/2017/08/17/could-the-use-of-online-moderators-increase-copyright-liability-exposure/" target="_blank" rel="noopener noreferrer">Could the Use of Online Volunteers and Moderators Increase Your Company’s Copyright Liability Exposure?</a>; <a href="http://www.sociallyawareblog.com/2016/08/10/ugcrisk/" target="_blank" rel="noopener noreferrer">Commercializing User-Generated Content: Five Risk Reduction Strategies</a>; and <a href="http://www.sociallyawareblog.com/2016/12/06/new-copyright-office-rule-creates-potential-gotcha-for-blogs-and-websites-hosting-user-generated-content/" target="_blank" rel="noopener noreferrer">New Copyright Office Rule Creates Potential “Gotcha” for Blogs and Websites Hosting User-Generated Content</a>.

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Zazzle Fizzles: Website Operator Denied Copyright Safe Harbor Protection for Its Sale of Physical Products Featuring User-Generated Images

Zazzle Fizzles: Website Operator Denied Copyright Safe Harbor Protection for Its Sale of Physical Products Featuring User-Generated Images

We discussed last year the trend toward companies seeking to monetize user-generated content. A recent Central District of California decision in Greg Young Pub

As Socially Aware readers know, privacy and data security issues are among the most critical legal issues confronting companies that do business online. With ransomware attacks and hacking incidents on the rise, and with privacy and data security laws becoming increasingly burdensome, companies are spending more time and resources than ever before addressing privacy and data security issues. Indeed, Morrison & Foerster recently collaborated with ALM Intelligence to take an in-depth look at the types of privacy and data security issues with which in-house legal departments are wrestling, and how such departments are dealing with these issues. The resulting report is interesting and informative, and can be found <a href="https://media2.mofo.com/documents/170722-gc-up-at-night-privacy-data-security-report.pdf?utm_source=mofo&utm_medium=web&utm_campaign=ALM%20GC%20Up-at-Night" target="_blank" rel="noopener noreferrer">here</a>.

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In-Depth Report: Privacy + Data Security

As Socially Aware readers know, privacy and data security issues are among the most critical legal issues confronting companies that do business online. With ra

In-Depth Report: Privacy + Data Security

In an <a href="https://www.documentcloud.org/documents/3932131-2017-0814-Hiq-Order.html" target="_blank" rel="noopener noreferrer">opinion</a> granting a preliminary injunction preventing LinkedIn from blocking a startup’s use of information in LinkedIn profiles accessible to the entire public, the U.S. District Court for the Northern District of California expressed doubts that a <a href="https://arstechnica.com/tech-policy/2017/08/court-rejects-linkedin-claim-that-unauthorized-scraping-is-hacking/" target="_blank" rel="noopener noreferrer">federal anti-hacking law—the Computer Fraud & Abuse Act—prohibits the startup’s scraping of such publicly available information from a website</a>, even if the website owner has asked for the scraping to stop.Former U.S. president Obama’s tweet quoting Nelson Mandela in the wake of the violent Charlottesville rally is now the most “liked” tweet in history, surpassing Ariana Grande’s response to the Manchester terrorist attack in May.Does the First Amendment prohibit politicians from blocking people with opposing views on Twitter, Facebook and other social media platforms? A new wave of lawsuits are teeing up this issue for the courts to resolve.In a rape case involving two former college football players, the Tennessee Supreme Court held the state’s law on defense subpoenas <a href="http://www.knoxnews.com/story/news/crime/2017/08/16/supreme-court-backs-a-j-johnsons-bid-see-alleged-victims-social-media/573332001/" target="_blank" rel="noopener noreferrer">entitles the defendants to receive access to their alleged victims’ relevant social media and text messaging histories</a>.Google researchers discovered<a href="https://venturebeat.com/2017/08/17/google-researchers-made-an-algorithm-to-delete-watermarks-from-photos/" target="_blank" rel="noopener noreferrer"> an algorithm capable of removing the watermarks</a> that stock-imagery sites use in an effort to protect copyrighted content—and suggest a way to thwart the algorithm’s use.With 2-to-3-minute long episodes, Snapchat’s first daily news program, NBC News’s “Stay Tuned,” has<a href="http://variety.com/2017/digital/news/nbc-news-snapchat-show-29-million-viewers-1202532550/" target="_blank" rel="noopener noreferrer"> more than 29 million unique viewers</a>.Speaking of Snapchat, the innovative social media platform just introduced a feature called Crowd Surf that allows users to watch an event like a concert by connecting snaps together based on their audio.Instagram will soon <a href="https://www.theverge.com/2017/8/15/16151624/instagram-comment-threads-ios-android" target="_blank" rel="noopener noreferrer">begin organizing comments into threads</a> the way Facebook does.A former partner at an Illinois law firm is the subject of a complaint filed by the state’s attorney disciplinary committee for setting up a phony profile on Match.com for a female attorney who practices in his town.A Georgia judge was <a href="https://lawnewz.com/high-profile/judge-suspended-after-criticizing-anti-confederate-snowflakes-on-social-media/" target="_blank" rel="noopener noreferrer">suspended for his social media posts</a>, which, among other things, called supporters of de-Confederatization efforts “the nut cases tearing down monuments” and compared them to the radical Islamic terrorist group ISIS.By <a href="https://www.wired.com/story/this-lumbering-self-driving-truck-is-designed-to-get-hit/" target="_blank" rel="noopener noreferrer">deploying the first autonomous impact protection vehicle</a>—a truck designed to absorb the impact of an errant car—the Colorado Department of Transportation eliminated the need for a human driver to risk taking one of the most dangerous jobs around.Social media has had a huge impact on <a href="https://www.bostonglobe.com/lifestyle/travel/2017/08/17/does-social-media-make-miserable-flight-attendant-asked/4OzuRWAdQPKfzceuT3FAcI/story.html" target="_blank" rel="noopener noreferrer">flight attendants’ work lives</a>.

Social Links: A seminal opinion on web scraping; Obama breaks Twitter record; court holds state’s subpoena law applies to digital communications

In an opinion granting a preliminary injunction preventing LinkedIn from blocking a startup’s use of information in LinkedIn profiles accessible to the entire p

Social Links: A seminal opinion on web scraping; Obama breaks Twitter record; court holds state’s subpoena law applies to digital communications

With over one billion websites on the Internet, and 211 million items of online content created every minute, it should come as no surprise that content curation is one of the hottest trends in the Internet industry. We are overwhelmed with online content, and we increasingly rely on others to separate the good from the bad so that we can make more efficient use of our time spent surfing the web.Consistent with this trend, many websites that host user-generated content are now focused on filtering out content that is awful, duplicative, off-topic, or otherwise of little interest to site visitors. And these sites often find that humans—typically passionate volunteers from the sites’ user communities—are <a href="https://www.forbes.com/sites/stevenrosenbaum/2015/07/26/the-curation-explosion/#2473ecf8409c" target="_blank" rel="noopener noreferrer">better than algorithms</a> at sorting the wheat from the chaff.Of course, any website that deals with user-generated content needs to consider potential copyright liability arising from such content. We’ve <a href="http://www.sociallyawareblog.com/2016/01/14/new-court-decision-highlights-potential-headache-for-companies-hosting-user-generated-content/" target="_blank" rel="noopener noreferrer">discussed</a> in past Socially Aware blog posts the critical importance of <a href="https://www.law.cornell.edu/uscode/text/17/512" target="_blank" rel="noopener noreferrer">Section 512(c) of the Digital Millennium Copyright Act</a> (the DMCA) to the success of YouTube, Facebook and other online platforms that host user-generated content. By providing online service providers with immunity from monetary damages in connection with the hosting of content at the direction of users, Section 512(c) has fueled the growth of the U.S. Internet industry.Nevertheless, questions have persisted as to whether a website operator’s use of employees or volunteers to review and filter user-generated content could deprive the operator of protection under the Section 512(c) safe harbor. A new Ninth Circuit decision, <a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2017/04/07/14-56596.pdf" target="_blank" rel="noopener noreferrer">Mavrix Photographs, LLC v. LiveJournal, Inc.</a>, tackles this subject head on, concluding—to the alarm of many online service providers—that a company’s use of volunteer moderators to curate content hosted on its website resulted in triable issues of fact as to whether the company qualifies for DMCA safe harbor protection to the extent that such content infringes third-party copyrights.<h4>LiveJournal and the Oh No They Didn’t! Community Journal</h4>The defendant in the case, <a href="https://en.wikipedia.org/wiki/LiveJournal" target="_blank" rel="noopener noreferrer">LiveJournal</a>, operates a <a href="http://www.livejournal.com/" target="_blank" rel="noopener noreferrer">social media platform</a> on which a user can, among other things, create a “community journal” focused on a particular topic or theme. As the name suggests, a community journal allows multiple users to submit content to the journal. The creator or administrator of a community journal decides whether to enable moderation, to have no moderation, or to employ a hybrid moderation model (e.g., whitelisting certain domains while requiring moderation for others).The dispute involved a moderated community journal focused on celebrity gossip and pop culture, called <a href="http://ohnotheydidnt.livejournal.com/" target="_blank" rel="noopener noreferrer">“Oh No They Didn’t!”</a> (ONTD). Initially run entirely by volunteers, ONTD created rules to govern user submissions and posted comments; these rules included a requirement that users incorporate any referenced articles and photos in their submissions (rather than linking to such items), and a prohibition on the submission of old gossip and outdated photos.  ONTD also adopted a “blacklist” of third-party sources from which users were prohibited from copying materials for inclusion in their submissions.By 2010, ONTD was generating 52 million page views a month, making it the most popular journal on the LiveJournal platform. To maintain this success, ONTD relied on volunteer moderators (who review user-submitted items to ensure compliance with ONTD’s rules) and maintainers (who review and delete posts, and have the authority to remove users and even moderators from the ONTD community).That same year, for the first time, LiveJournal became directly involved in the operation of ONTD. In particular, it hired one of ONTD’s volunteer moderators—Brendan Delzer—to serve as the journal’s full-time “primary leader.” In this new role, Delzer instructed ONTD moderators regarding their own review and selection of content, and monitored and evaluated moderators, removing underperformers; Delzer also continued to review and select user-submitted content for posting to ONTD. By making Delzer an employee, LiveJournal sought to “take over” ONTD, in order to further grow the journal and run ads against the journal’s content.<h4>The Parties’ Dispute</h4>The plaintiff, Mavrix, is a company that specializes in candid photographs of celebrities; it generates revenue by selling its photos to magazines. Between 2010 and 2014, 20 celebrity photographs owned by the plaintiff were allegedly posted to ONTD in seven separate posts, all without Mavrix’s authorization. Some of these photos incorporated either a generic watermark or a Mavrix-specific watermark.In 2014, in lieu of sending a DMCA takedown notice, Mavrix sued LiveJournal for copyright infringement in connection with the 20 photographs. Upon learning of the suit, LiveJournal removed the photographs from its site and terminated the LiveJournal account holders who had posted the photographs. LiveJournal ultimately moved for summary judgment on the basis that it was shielded from copyright liability under the Section 512(c) safe harbor.Mavrix opposed LiveJournal’s motion and filed its own motion asserting that LiveJournal was disqualified from the Section 512(c) safe harbor because, as a result of the activities of ONTD’s volunteer moderators acting as LiveJournal’s agents:<ul><li>The photographs had not been hosted on the LiveJournal site “at the direction of a user,” as required under Section 512(c);</li><li>LiveJournal had actual or at least red flag knowledge of the photographs through the ONTD moderators; and</li><li>LiveJournal received a financial benefit directly attributable to the allegedly infringing activity, where it had the right to and ability to control such activity.</li></ul>The district court granted LiveJournal’s summary judgment motion, finding that ONTD moderators constituted independent third-party users, not agents of LiveJournal. Mavrix appealed, and the Ninth Circuit reversed.<h4>Storage at Whose Direction?</h4>As noted above, the Section 512(c) safe harbor is available only where content is stored by an online service provider “at the direction of the user.” In reaching its decision, the Ninth Circuit focused on whether LiveJournal’s use of moderators to pre-screen user-submitted content meant that the Mavrix photos were posted at LiveJournal’s direction, rather than at the direction of the users who submitted such photos to ONTD.After reviewing the sparse case law on the subject, the Ninth Circuit held that the common law of agency applies in determining whether the acts of the ONTD moderators are attributable to LiveJournal, and that genuine issues of material fact existed as to whether the moderators are LiveJournal’s agents.In reaching this conclusion, the Ninth Circuit examined the common law agency concepts of actual and apparent authority and the level of control of a principal over the agent, and found:<ul><li>Regarding actual authority (which arises where the principal assents to the agent taking action on the principal’s behalf), Mavrix had presented evidence that LiveJournal “gave its moderators explicit and varying levels of authority to screen posts” and provided “express directions about their screening functions.” Unlike other online platforms where users may independently post content, “LiveJournal relies on moderators as an integral part of its screening and posting business model.”</li><li>Regarding apparent authority (which arises when a third party reasonably believes that a person has authority to act with legal consequences on behalf of another), Mavrix had presented evidence that ONTD users may have reasonably believed that the journal’s moderators had authority to act for LiveJournal.</li><li>Regarding the level of control, Mavrix presented evidence showing that “LiveJournal maintains significant control over ONTD and its moderators”; that Delzer—a LiveJournal employee—had engaged in “substantive supervision” of ONTD moderators, and had exercised the power to select and remove moderators; and that LiveJournal had “ratified” the ONTD-developed rules that moderators relied on in screening user submissions.</li></ul>Based on its analysis of actual authority, apparent authority and control principles, the Ninth Circuit held, “From the evidence currently in the record, reasonable jurors could conclude that an agency relationship existed” between LiveJournal and ONTD’s volunteer moderators.The Ninth Circuit next turned to a related issue: If the fact finder were to determine that the ONTD moderators are agents of LiveJournal, the fact finder would then need to determine whether Mavrix’s photos “were indeed posted at the direction of the users in light of the moderators’ role in screening and posting” the photos. The court noted that posts are at the direction of the user if the online service provider (1) “played no role in posting them on its site” or (2) “carried out activities that were ‘narrowly directed’ towards enhancing the accessibility of the posts.”Regarding this second item, the Ninth Circuit observed that activities such as the automatic reformatting of posts or the manual screening of posts “for infringement or other harmful materials like pornography” can be “accessibility-enhancing,” and thus do not necessarily deprive an online service provider of protection under Section 512(c). But, if ONTD’s moderators are determined to be LiveJournal’s agents, the fact finder would then need to decide “whether the moderators’ acts were merely accessibility-enhancing activities or whether instead their extensive, manual, and substantive activities went beyond the automatic and limited manual activities we have approved as accessibility-enhancing.” In this regard, the Ninth Circuit noted that the ONTD moderators manually review the substance of user-submitted items to ensure that they contain new and exciting gossip and that only one-third of all submitted items are ultimately approved for posting.<h4>Lack of Knowledge</h4>Having provided guidance to the lower court on the threshold requirement of whether the Mavrix photos were stored at the direction of users, the Ninth Circuit turned to another Section 512(c) safe harbor requirement disputed by the parties: Whether LiveJournal lacked actual and red flag knowledge of such users’ infringing activities. If, on remand, the fact finder were to determine that the photos were stored by LiveJournal at the direction of users (rather than at LiveJournal’s own direction via its agents), LiveJournal would then need to establish that it had neither actual nor red flag knowledge that the photos were infringing.The actual knowledge inquiry looks at whether an online service provider has subjective knowledge of the specific infringing activity at issue. The district court had held that actual knowledge can only be conferred through a DMCA-compliant takedown notice received by a service provider from the copyright owner; because Mavrix had never sent such a notice, LiveJournal necessarily lacked actual knowledge of its users’ infringing activities in connection with the Mavrix photos.Sending shockwaves through the online service provider community, the Ninth Circuit rejected the district court’s approach, holding that a fact finder may determine that LiveJournal—either directly or through its agents, the volunteer moderators—in fact possessed subjective (and thus actual) knowledge of the infringing posts, even in the absence of a takedown notice from Mavrix.Further, even if LiveJournal can establish on remand that it lacked actual knowledge, it must also show that it did not have red flag knowledge of the infringing posts. Red flag knowledge exists where an online service provider is aware of facts that would have made the specific infringement at issue objectively obvious to a reasonable person. Such infringement must be “immediately apparent to a non-expert.”The Ninth Circuit noted that some of the posted Mavrix photos contained either a generic watermark or a Mavrix-specific watermark, and that, on remand, the fact finder will need to determine whether it would have been objectively obvious to a reasonable person that photos bearing such watermarks were infringing.<h4>Lack of Financial Benefit and the Right and Ability to Control</h4>The Ninth Circuit then turned to the final Section 512(c) safe harbor requirement at issue: Even if LiveJournal were to establish on remand that the Mavrix photos were stored at the direction of users, and even if it were able to establish that it lacked actual or red flag knowledge that the photos were infringing, it then must show that it did not financially benefit from infringing activities that it had the right and ability to control.The Ninth Circuit stated that the right and ability to control component of this final requirement involves “something more” than the mere ability of the service provider to remove or block access to materials posted on its website. This “something more” exists where the service provider exerts “high levels of control” over the activities of users. The court observed that, on remand, the fact finder should take into account the following in assessing whether LiveJournal had a right and ability to control the infringing posts:<ul><li>LiveJournal ratified ONTD rules that instruct users on the substance of their posts;</li><li>ONTD moderators screened the substantive content of user submissions;</li><li>Nearly two-thirds of posts submitted by ONTD users were rejected by ONTD moderators, including on substantive grounds;</li><li>ONTD prohibited users from submitting content taken from third-party content sources identified on a “blacklist” maintained by ONTD; and</li><li>LiveJournal implemented a mechanism to automatically block any submitted items originating from one of the sources on the ONTD blacklist.</li></ul>The court concluded that “the fact finder must assess whether LiveJournal’s extensive review process, infringement list, and blocker tool constituted high levels of control to show ‘something more’.”Finally, the Ninth Circuit noted that LiveJournal would need to establish that it did not derive a financial benefit from infringement that it had the right and ability to control. A safe harbor-disqualifying financial benefit “need not be substantial or a large portion of the service provider’s revenue,” and could be based on a broad availability of infringing materials attracting advertisers to the service provider’s site. On remand, the fact finder would need to consider the following:<ul><li>LiveJournal’s receipt of revenue from advertising based on the number of ONTD page views; and</li><li>Evidence presented by Mavrix (but contested by LiveJournal) showing that approximately 84% of posts on ONTD contain infringing material</li></ul>In order for LiveJournal to prevail on its safe harbor defense, the fact finder would need to determine whether LiveJournal met its burden of establishing that it did not financially benefit from infringement or that, if it did so benefit, it lacked the right and ability to control such infringement.<h4>Concluding Thoughts</h4>The Ninth Circuit’s Mavrix opinion may be the most significant DMCA safe harbor decision since the Second Circuit’s landmark <a href="http://scholar.google.com/scholar_case?case=13644579048975596329&hl=en&as_sdt=6&as_vis=1&oi=scholarr" target="_blank" rel="noopener noreferrer">Viacom Int’l, Inc. v. YouTube, Inc.</a> ruling in 2012. On numerous fronts—including what constitutes “at the direction of a user,” what constitutes “actual knowledge,” what constitutes “red flag knowledge,” what constitutes a “right and ability to control” and what constitutes a “financial benefit”— the Mavrix decision appears to go against the tide of generally pro-service provider decisions on these issues over the past two decades.Regardless of what the district court ultimately decides on remand, Mavrix is a wake-up call to website operators and other online service providers who rely on volunteers to screen, review or curate user-generated content. Such operators and service providers will want to carefully study the Ninth Circuit’s decision to determine whether they should take steps to modify their current practices regarding user-generated content. And, although Mavrix focuses on volunteers, not employees, companies should keep in mind that employees engaged in screening, reviewing or curating user-generated content are even more likely than volunteers to qualify as company agents, and thus may raise some of the same DMCA safe harbor concerns discussed in the Mavrix decision.

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Could the Use of Online Volunteers and Moderators Increase Your Company’s Copyright Liability Exposure?

Could the Use of Online Volunteers and Moderators Increase Your Company’s Copyright Liability Exposure?

With over one billion websites on the Internet, and 211 million items of online content created every minute, it should come as no surprise that content curatio

Nearly all companies—whether they’re focused on the B2C market or the B2B market—have embraced social media as a way to promote their goods and services and to interact with customers and potential customers. The growing use of social media has, however, created challenges for federal securities regulators who must enforce antifraud rules that were written prior to the digital age.Our Guide to Social Media and the Securities Laws summarizes how regulation has evolved in the face of the growing use of social media. It discusses the principal areas of focus for SEC-reporting companies, registered investment advisers, registered investment companies and registered broker-dealers that use social media.

Hot Off the Press: Our New Guide to Social Media and the Securities Laws