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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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.

Popular online marketplace <a href="http://www.cafepress.com/">CafePress.com</a> suffered a legal setback recently when a U.S. District Court in the Southern District of New York denied CafePress’s motion for summary judgment against <a href="http://digitalcommons.law.scu.edu/cgi/viewcontent.cgi?article=1141&context=historical">claims of trademark infringement</a>. CafePress operates an online “print on demand” service that allows users to upload designs which CafePress then prints on a variety of items. The users receive a share of the money that CafePress makes when it sells items displaying the users’ designs. These items include everything from coffee mugs and <a href="http://www.cafepress.com/+steins">beer steins</a> to iPhone cases and <a href="http://www.cafepress.com/+flip-flops">flip-flops</a>. In 2009, guitar neck manufacturer Born to Rock Design Incorporated (BTR), which owns a federal registration for the trademark “Born to Rock,” sent a letter to CafePress asking the site to stop selling merchandise displaying the mark. Since 2003, CafePress had produced a number of different items displaying the “Born to Rock” phrase, all based on designs provided by users. These designs included the following:After CafePress refused to remove user designs incorporating the phrase, BTR filed a complaint for, among other things, trademark infringement. Following discovery, CafePress filed a motion for summary judgment, arguing that the “Born to Rock” designs were not used in commerce (an element of trademark infringement) and that, even if they were, CafePress’s use was “fair use”—i.e., a descriptive or ornamental use of the phrase “Born to Rock” in a non-trademark sense.  The court struck down the first argument outright, stating that CafePress was being “facetious” in arguing that it did not use the mark in commerce given that CafePress actually imprints the designs on merchandise and ships that merchandise to customers. In considering the fair use argument, the court acknowledged that certain uses of the “Born to Rock” designs may constitute non-trademark fair use (e.g. “Born to Ride / Born to Rock”), but concluded that CafePress could not rely on fair use as a blanket defense for all of the designs.Legal scholar Eric Goldman has pointed out that CafePress can raise other, stronger arguments in the future, including that the trademark is invalid and that consumers were not likely to be confused by CafePress’s <a href="http://blog.ericgoldman.org/archives/2012/09/cafepress_could.htm">use of the mark</a>. Nonetheless, the district court’s denial of summary judgment does send a message to trademark holders: you can sue online service providers for trademark infringement based on user-generated content and you just might win.  The Digital Millennium Copyright Act (DMCA) creates a safe harbor for online service providers who promptly remove user-generated copyright-infringing content after receiving takedown notices, but there is no equivalent safe harbor for content that infringes trademarks (although chillingeffects.org, a website devoted to the DMCA, does note that “in the absence of any caselaw on the subject, should a trademark holder bring a claim for contributory infringement, an [online service provider] might be able to mount a valid defense by analogy to [DMCA] section 512(c).”).Social media sites in particular may be easy targets for trademark claims based on user-generated content. Such sites often host “community pages” that serve as fan pages for brands without any authorization from the companies involved (for example, compare this <a href="https://www.facebook.com/CinnamonToastCrunch">official Facebook page</a> established by a trademark holder with this <a href="http://www.facebook.com/pages/Cinnamon-Toast-Crunch/62890498529">community page run by a fan</a>). In the wake of the case against CafePress, social media sites and other websites that host user-generated content should be aware of these trademark-related risks and the fact that the DMCA safe harbors do not apply to trademark claims.

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Jessica’s practice focuses on complex civil litigation, with an emphasis on class action, financial services litigation and enforcement, and commercial disputes. Recent representative matters include the defense of a leading marketplace lender in a putative nationwide class action under state usury laws; a major consumer products company in multidistrict antitrust litigation; a

Jessica Kaufman

Jessica’s practice focuses on complex civil litigation, with an emphasis on class action, financial services litigation and enforcement, and commercial disputes. Recent representative matters include the defense of a leading marketplace lender in a putative nationwide class action under state usury laws; a major consumer products company in multidistrict antitrust litigation; a professional services firm in a malpractice action; a lingerie company facing consumer protection claims, including claims of false advertising; and financial institutions facing claims under the federal and state contract and antitrust laws, RICO Act, Right to Financial Privacy Act, Fair Debt Collection Practices Act, and state unfair and deceptive practices statutes. She also regularly advises and represents clients in complex commercial disputes.What do you like best about your work? Our work is our role as problem solvers. As litigators, we help clients address immediate problems. But when we know our clients and their businesses well, our clients also turn to us for longer term advice, to help identify issues before they arise, and think about how to do things better.What do you enjoy doing in your free time? I try to work with my hands. I started learning wheel-thrown pottery last year and enjoy forcing my family and friends to accept impractically shaped mugs, not just at Christmas, but — lucky for them — all year long.How do you see your practice changing in the next few years? I see my practice including more state AG enforcement work in the years ahead. The regulatory environment for our financial services clients is poised to change dramatically at the federal level; active AGs in New York and California will see that as an opportunity to fill the void.

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Born to Mock: Trademark Holder’s Fight to Remove Mark on Kitsch Merchandise May Have Broad Legal Implications

Born to Mock: Trademark Holder’s Fight to Remove Mark on Kitsch Merchandise May Have Broad Legal Implications

Popular online marketplace CafePress.com suffered a legal setback recently when a U.S. District Court in the Southern District of New York denied CafePress’s mo

On September 27, 2012, California Governor Jerry Brown signed a bill that restricts employer access to the “personal social media” of employees and applicants for employment.<a href="http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201120120AB1844&search_keywords=">Assembly Bill 1844 </a>(“AB 1844”) adds to the California Labor Code new section 980.  Under this section, an employer may not “require or request” an employee or applicant to do any of the following:<ul><li>Disclose a username or password for the purpose of accessing personal social media;</li><li>Access personal social media in the employer’s presence; or</li><li>Divulge any personal social media, except in connection with the investigation of allegations of an employee’s misconduct or violation of applicable laws.</li></ul>The exception for employee investigations applies if the employer reasonably believes that the personal social media is relevant to the investigation or to a related proceeding, and does not use the personal social media for any other purpose.AB 1844 does not preclude an employer from requiring or requesting an employee “to disclose a username, password, or other method for the purpose of accessing an employer-issued electronic device.”AB 1844 expressly prohibits retaliation against an employee or applicant who declines to comply with a request that violates the terms of AB 1844, but it does not immunize the individual from any adverse action that is otherwise permitted by law.Notably, the state Labor Commissioner is not required to investigate or determine violations of AB 1844.AB 1844, which passed in both the California Senate and Assembly by wide margins, is similar to recently enacted laws in Delaware, Maryland, and Illinois.  During this legislative season, at least 13 states have proposed legislation restricting employer access to employee social media accounts, including Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, Pennsylvania, South Carolina, and Washington.

New California Law Limits Employer Access to Employee Social Media Accounts

On September 27, 2012, California Governor Jerry Brown signed a bill that restricts employer access to the “personal social media” of employees and applicants f

New California Law Limits Employer Access to Employee Social Media Accounts

On September 5, 2012, the Federal Trade Commission (FTC) published a brief guide to assist developers of mobile applications, both large and small, in complying with truth-in-advertising, privacy, and data security principles. In publishing this advice, the FTC makes clear that its <a href="http://www.law.cornell.edu/uscode/text/15/45">Section 5</a> enforcement powers against unfair or deceptive acts or practices apply in the mobile app arena, and with equal force to large and small developers.The FTC’s guidance briefly lays out the practices developers should follow in order to avoid such enforcement, thereby suggesting that more enforcement is on the horizon. Indeed, it has already started: last August the <a href="http://ftc.gov/opa/2011/08/w3mobileapps.shtm">FTC reached a settlement</a> with W3 Innovations, LLC for alleged violations of the COPPA rule in its apps directed at children.The guide, called “<a href="http://www.ftc.gov/opa/2012/09/mobileapps.shtm">Marketing Your Mobile App: Get it Right from the Start</a>,” explains general consumer protection principles, and applies them to the context of mobile applications. Although the title of the guide suggests that the advice is primarily about marketing the apps, the FTC also gives advice about the design and implementation of apps.WHAT IS THIS GUIDE?This is NOT a new FTC trade regulation carrying the force of law. This is guidance issued by the Commission for how it may apply its Section 5 authority to police deceptive and unfair practices in the app environment. The FTC expects that the industry will review this guidance and take it into account in developing and advertising their apps.This guidance is also specifically directed at mobile app developers; it does not relate to the “<a href="http://www.ftc.gov/bcp/workshops/inshort/index.shtml">In Short” Dot-Com Disclosures workshop</a> held on May 30, 2012, which relates to proper disclosure techniques in all online commerce. Guidance arising from that workshop, which is expected to be far more fulsome, may be released as early as this fall.WHAT COMPLIANCE STEPS IS THE FTC LOOKING FOR?Substantiate Your ClaimsThe FTC advises that app developers advertise their apps truthfully, and explains that “pretty much anything” a company tells a prospective user about what the app can do, expressly or by implication, no matter the context, is an “advertisement” requiring substantiation for claims as they would be interpreted by the average user.If Disclosures are Necessary, Make them Clearly and ConspicuouslyIf developers need to make disclosures to users in order to make their advertising claims accurate, the FTC notes, then those disclosures must be clear and conspicuous. Although this does not require specific type or font sizes, the disclosures must be large enough and clear enough that users both see and understand them. This means, according to the FTC, that disclosures cannot be buried behind vague links or in blocks of dense legal prose.Incorporate Principles of “Privacy by Design” In Developing AppsThe FTC also gives advice to developers on how to avoid enforcement for violations of user privacy. First, it notes that developers should implement “privacy by design,” meaning that they should consider privacy implications from the beginning of the development process. This entails several elements:<ul><li>Incorporate privacy protections into your practices;</li><li>Limit information collection;</li><li>Securely store held information;</li><li>Dispose of information that is no longer needed;</li><li>Make default privacy settings consistent with user expectations; and</li><li>Obtain express user agreement for information collection and sharing that is not apparent.</li></ul>Incorporate Transparency and Choice into Apps and Honor Users’ ChoicesThe FTC urges that developers be transparent about their data collection practices, informing users about what information the app collects and with whom that information is shared. Developers should also, according to the FTC, give users choices about what data the app collects, via opt-outs or privacy settings, and give users tools that are easy to locate and use to implement the choices they make.Importantly, the FTC emphasizes that developers must honor the choices they offer consumers. This includes following through on privacy promises made. This also includes getting affirmative permission from users for material changes to privacy practices—simply editing the privacy policy is not enough, according to the FTC guide.Apply COPPA Protections Where AppropriateThe FTC notes that there are special rules for dealing with kids’ information. Developers who aim their apps at children under 13, or know that children under 13 are using the app, must clearly explain their information practices and obtain verifiable parental consent before collecting personal information from children. The guide links to further advice for compliance with the Children’s Online Privacy Protection Act (COPPA).Special Protections for Sensitive InformationEven for adults, the FTC urges developers to get affirmative consent before collecting “sensitive” information, such as medical, financial, or precise location information. For sensitive information, the FTC states that developers must take reasonable steps to ensure that it remains secure. The FTC suggests that developers:<ul><li>Collect only the information needed;</li><li>Take reasonable precautions against well-known security risks;</li><li>Limit access to the data to a need-to-know basis; and</li><li>Dispose of data safely when it is no longer needed.</li></ul>The FTC notes that these principles apply to all information the app collects, whether actively from the user, or passively in the background. In addition, any contractors that work with the developers should observe the same high security standards.

FTC Issues Guidance for Mobile App Privacy and Advertising; Signals More Enforcement Coming

On September 5, 2012, the Federal Trade Commission (FTC) published a brief guide to assist developers of mobile applications, both large and small, in complying

FTC Issues Guidance for Mobile App Privacy and Advertising; Signals More Enforcement Coming

Plaintiffs’ attorneys seeking to cash in on grande class action lawsuits against companies that launch text message advertising campaigns suffered a setback in June as the U.S. District Court in the Southern District of California granted Taco Bell summary judgment in a lawsuit for Taco Bell’s alleged violation of the Telephone Consumer Protection Act (TCPA). The case, Thomas v. Taco Bell, was brought on behalf of a number of the 17,000 mobile phone owners in the Chicago area who received a text message in October 2005 encouraging them to purchase an order of delicious <a href="http://www.tacobell.com/food/nachos/Nachos-BellGrande">Nachos Bellgrande</a> from their local Taco Bell franchises.  As unsolicited text message advertisements are often found to violate the TCPA, there may have been a case against the marketing company that actually sent the text messages, but the plaintiffs instead asserted their claim against the local Chicago franchisee association that ordered the advertisement and Taco Bell itself.  The case against the association was dropped for a <a href="http://www.scribd.com/doc/101030295/Thomas-v-Taco-Bell-Dismissal-of-Chicago-Assoc">lack of personal jurisdiction</a>, while the court granted summary judgment to Taco Bell based on a finding that Taco Bell was not vicariously liable for the franchisee association’s texting campaign.Using precedent from the Ninth Circuit, the court stated that vicarious liability for the text message campaign would have existed only if Taco Bell controlled the “manner and means” of the text message campaign.  Although the franchisee association did need to secure Taco Bell’s approval in order to receive reimbursement from Taco Bell for the campaign, the court held that control of the “purse strings” in this case did not constitute Taco Bell’s control of the manner and means of the advertising, particularly because the franchisee association could have launched the campaign with alternative funding without Taco Bell’s permission or any repercussions from the franchisor.  The court also rejected the plaintiffs’ argument that Taco Bell having one member on the franchisee association’s board (out of four) established control, as this minority interest was not controlling, and further stressed that approval by a company of an advertising campaign is not the same as the control required for liability.This decision allows a little more breathing room for large franchisor companies, as it suggests that a franchisor-franchisee relationship does not automatically lead to vicarious liability for violations of the TCPA, which can carry penalties of up to $500 for each violation (a vast increase in cost over the usual five or so cents per text).  However, since the Ninth Circuit declared in Scatterfield v. Simon & Schuster, Inc. that text messages are tantamount to phone calls for the purposes of the TCPA, plaintiffs’ attorneys have been relentless in their attacks on companies that employ text message ad campaigns (as we <a href="https://www.sociallyawareblog.com/2012/07/19/face-off-consumer-sues-hockey-team-over-text-messages/">previously</a> pointed out in this blog, hockey fans are now suing their own beloved team for text-related TCPA violations).  In fact, the Thomas summary judgment was Taco Bell’s second favorable TCPA decision in a month, with a California District Court <a href="http://www.scribd.com/doc/99354515/Ibey-v-Taco-Bell-12-CV-0583-HVG-S-D-Cal-June-18-2012">dismissing a claim</a> that Taco Bell’s confirmatory opt-out messages violated the TCPA just one week earlier.  Despite these two victories for Taco Bell, with hundreds of companies launching thousands of advertising campaigns and promotions leading to the sending of millions of text messages, it seems unlikely that plaintiffs will have a shortage of TCPA claims any time soon.

G2G, Yo Quiero TB: Taco Bell Found Not Liable for Franchisee Text Message Campaign

Plaintiffs’ attorneys seeking to cash in on grande class action lawsuits against companies that launch text message advertising campaigns suffered a setback in 

G2G, Yo Quiero TB: Taco Bell Found Not Liable for Franchisee Text Message Campaign

Over the past year, a number of courts across the country have decided cases involving contributory infringement and the application of the <a href="http://www.law.cornell.edu/uscode/text/17/512">Digital Millennium Copyright Act’s § 512(c) safe harbor</a> in the social media context. Unfortunately for those who favor a uniform approach to the law, the precedent being developed is in many ways inconsistent. On one side of the country, the Ninth Circuit solidified § 512(c)’s protections for social media sites in <a href="http://caselaw.findlaw.com/us-9th-circuit/1589029.html">UMG Recordings, Inc. v. Shelter Capital Partners LLC</a> by holding that social media sites are not liable for infringing user-posted material subject to compliance with the DMCA’s notice and takedown procedures.  Several months later on the other side of the country, the Second Circuit addressed similar questions in Viacom Int’l, Inc. v. YouTube, Inc. Judge Cabranes’s opinion introduced the possibility that a social media site-owner’s “willful blindness” to infringing activity may trigger liability, thus raising the specter of (very) expensive litigation. The Seventh Circuit has now held in <a href="http://www.scribd.com/doc/102162833/Flava-Works-Inc-v-Gunter-Opinion-7th-Cir-Aug-2-2012">Flava Works, Inc. v. Gunter</a> that online service providers are protected from contributory infringement liability—and therefore need not depend on the DMCA’s safe harbors at all—where they do not actually host allegedly infringing material or encourage copyright infringement but merely link to such material.In an opinion written by one of <a href="http://abovethelaw.com/2012/07/benchslap-of-the-day-justice-scalia-pulls-rank-on-judge-posner/">the country’s preeminent circuit judges</a> and <a href="http://www.youtube.com/user/mugumogu?feature=results_main">cat</a> fanciers, <a href="http://www.newyorker.com/archive/2001/12/10/011210fa_fact_macfarquhar">Richard Posner</a>, the court addressed whether to uphold a preliminary injunction against <a href="http://en.wikipedia.org/wiki/Social_bookmarking">social bookmarking</a> site myVidster for <a href="http://www.copyright.gov/docs/regstat072204.html">contributory copyright infringement</a>. myVidster allows users to “bookmark” videos they find on the Internet, such as videos from <a href="http://www.youtube.com/user/mugumogu?feature=results_main">YouTube</a> or <a href="http://www.vimeo.com/">Vimeo</a>. myVidster automatically retrieves the “embed code”—code that permits the video to be viewed in a browser window separate from the original website (for example, when you link to a YouTube video on your Facebook page, the site automatically embeds the video so that your friends can view the video on Facebook rather than having to go to YouTube). myVidster then creates a new page for the embedded video, replete with advertisements.Plaintiff Flava Works is an entertainment company that produces and streams adult videos through various websites. Flava allows its customers to download its content solely for personal use. Users are not permitted to upload Flava’s videos to other sites or to create any additional copies of the content. Thus, in Judge Posner’s view, a user who copies Flava’s videos by downloading them and then uploading the copyright-protected video to a third-party website is a direct infringer of Flava’s copyright. Because myVidster didn’t upload the infringing videos, the court found that myVidster did not directly infringe Flava’s copyright.The court next considered whether myVidster should be held liable for contributory infringement based on such copying by Flava’s users. Posner disregarded the oft-cited <a href="http://scholar.google.com/scholar_case?case=13919786496570065695">Gershwin Publishing Corp. v. Columbia Artists Management, Inc.</a> definition of contributory infringement in favor of a more succinct standard from <a href="http://scholar.google.com/scholar_case?case=13557798298967650893">Matthew Bender & Co. v. West Publishing Co.</a>: contributory infringement is “personal conduct that encourages or assists [direct] infringement.” The court ultimately held that myVidster was not liable for contributory infringement for two reasons.First, myVidster does not make any copies of Flava’s videos—whether on its own initiative or at its users’ direction—but instead links to videos on servers controlled by third parties. In bookmarking offending videos, myVidster’s users were not copying such videos. And by embedding those videos on its site, myVidster was not furthering any copying. Rather, the court found that myVidster effectively acts as an exchange, connecting the server hosting the video and myVidster’s users. Posner wrote:[The user’s] bypassing Flava’s <a href="http://en.wikipedia.org/wiki/Pay_wall">pay wall</a> by viewing the uploaded copy is equivalent to stealing a copyrighted book from a bookstore and reading it. That is a bad thing to do (in either case) but it is not copyright infringement. The infringer is the customer of Flava who copied Flava’s copyrighted video by uploading it to the Internet.Second, the court found that myVidster had done nothing to encourage uploaders to upload Flava’s videos. Therefore, myVidster did not “encourag[e]” infringement and was not a contributory infringer. As a result, myVidster had no need to resort to the § 512(c) safe harbors.One of the most interesting aspects of the Flava Works opinion is its discussion of the various flavors (flavas?) of contributory infringement. Google and Facebook submitted an <a href="http://www.scribd.com/doc/74734810/Flava-Works-vs-Myvidster-Marques-Rondale-Gunter-Salsa-Indy-LLC-Filed-Non-Party-Motion-for-Leave-to-File-Brief-of-Amici-Curiae-Google-Inc-and-Fa">amicus curiae brief</a>  in which they argued that the connections between myVidster’s (and other social bookmarking sites’) activities and any copyright infringement by users are simply too attenuated to constitute either direct or contributory infringement. They argued that myVidster was, at most, “contributing to contributory infringement.” Thus, myVidster’s potential infringement was not “secondary,” but rather, tertiary: the direct infringers are those who uploaded Flava’s copyrighted material, those who bookmarked the videos are arguably “secondary” infringers, while myVidster might be a “tertiary” infringer. Posner dismissed this argument, finding that common law notions of remoteness were sufficient to deal with this “contributing to contributory infringement” situation: “<a href="http://scholar.google.com/scholar_case?case=10670839327799086762">An injury will sometimes have a cascading effect that no potential injurer could calculate in deciding how carefully to act. The effect is clear in hindsight—but only in hindsight</a>.” For Judge Posner, even in social media situations, there’s no need for the direct-secondary-tertiary “layer cake” model; there is simply infringement, contributory infringement, and non-infringement. And regardless of the theoretical “level” of removal of myVidster from the underlying direct infringement, myVidster was not “materially contributing” to that infringing activity—that is, myVidster’s actions were too remote from the uploader’s infringement—and was therefore not liable for contributory infringement by copying.Judge Posner also addressed whether myVidster might be liable for contributory infringement based on public performance of Flava’s videos. The <a href="http://www.law.cornell.edu/uscode/text/17/106">Copyright Act</a> makes it unlawful “to transmit or otherwise communicate a performance . . . of the work . . . to the public . . . whether the members of the public capable of receiving the performance . . . receive it in the same place or in separate places and at the same time or at different times.” Posner identified two ways in which myVidster might infringe Flava’s performance right: “performance by uploading” and “performance by receiving.” On the “uploading” interpretation, “uploading plus bookmarking a video is a public performance because it enables a visitor to the website to receive (watch) the performance at will[.]” On the “receiving” interpretation, the performance occurs (or is, in other words, finalized) when the user clicks on and plays the video.Posner dismissed the “uploading” view, arguing that myVidster is simply “giving web surfers addresses where they can find entertainment[,]” much like <a href="http://www.timeout.com/san-francisco/">TimeOut</a> and the <a href="http://www.newyorker.com/archive/2001/12/10/011210fa_fact_macfarquhar">New Yorker </a> list the details of various social events happening in the real world. According to Posner, the only infringer on the “uploading” view is the uploader himself. myVidster does not interfere with the data streaming directly from the host to the viewer, so myVidster did not contribute to the uploader’s infringement of Flava’s public performance right.On the “receiving view,” the infringing act occurs when the myVidster users click “play” on Flava’s videos. Flava argued that, by providing an exchange that makes Flava’s videos available to myVidster’s users, myVidster provides “‘support services’ without which ‘it would [have been] difficult for the infringing activity to take place in the massive quantities alleged.’” Posner, however, was not persuaded by the “receiving” argument either. First, myVidster was not selling the allegedly infringing videos and thus had no direct pecuniary motive for pushing visitors to view Flava content bookmarked by the site’s users. Second, there was no substantial evidence that the videos were being accessed via myVidster rather than other websites. Thus, in Posner’s view, there was no basis to hold that myVidster was “abet[ting] others’ infringements” of Flava’s public performance right.Judge Posner left open the possibility that myVidster had invited users to post infringing material, in which case it could be liable for <a href="http://scholar.google.com/scholar_case?case=8647956476676426155">inducing infringement</a>. Similarly, he stated that myVidster’s now-discontinued <a href="http://en.wikipedia.org/wiki/Sideloading">sideloading</a> service constituted direct—not secondary—infringement. Sideloading typically involves the transfer of data between two local devices. myVidster’s service allowed premium members to back up bookmarked videos on myVidster’s servers. As at least one <a href="http://blog.ericgoldman.org/archives/2012/08/video_embedding_1.htm">commentator</a> has noted, this raises interesting issues for sites like <a href="http://www.pinterest.com/">Pinterest</a> and other social networks that periodically sideload copyrighted material posted by users on the presumption that such sideloading is authorized by, and therefore done at the direction of, the user. If such actions constitute direct infringement, the §512(c) safe harbors may not be available.

Judge Posner Kicks that Flava in Ya Ear: New Guidance on Contributory Infringement from the Seventh Circuit

Over the past year, a number of courts across the country have decided cases involving contributory infringement and the application of the Digital Millennium C

Judge Posner Kicks that Flava in Ya Ear: New Guidance on Contributory Infringement from the Seventh Circuit

Following this morning’s meeting, the Commission has published its <a href="https://www.sec.gov/files/rules/proposed/2012/33-9354.pdf" target="_blank">proposed rules</a>.SummaryThe SEC published its guidance today as a proposed rule, with a comment period, and not as an interim final rule.The SEC proposes to amend Rule 506 to provide that the prohibition against general solicitation contained in Rule 502(c) shall not apply to offers and sales of securities made pursuant to Rule 506 provided that all purchasers are accredited investors and the issuer takes reasonable steps to verify their status.Form D will be amended so that an issuer will be required to indicate whether it has used general solicitation.The SEC is not proposing to amend the Section 4(a)(2) exemption.Rule 506 offeringsRelease implements a bifurcated approach—that is an issuer can conduct a Rule 506 offering without general solicitation, or a Rule 506(c) offering using general solicitationA new Rule 506(c) is introduced, which would permit general solicitation provided:  issuer takes reasonable steps to verify investor status; purchasers are accredited investors; and other conditions of Rule 501 and 502(a) and 502(d) are satisfied.The Staff is not prescribing a verification approach, but recognizing that the reasonableness of the steps taken to verify status will be based on particular facts and circumstances.  The Staff sets out a number of measures (in the form of a non-exclusive list) that could be used in order to assess investor status.Rule 144ARule 144A will be amended to remove the reference to “offer” and “offeree” from Rule 144A(d)(1), requiring only that securities be sold only to a QIB or person reasonably believed to be a QIB.IntegrationRule 144A/Rule 506 offerings will not be integrated with contemporaneous Regulation S offerings—however, the language used in the release may not be as clear as market participants would like.

SEC Releases Proposed Rules Relaxing Ban on General Solicitation

Following this morning’s meeting, the Commission has published its proposed rules: http://www.sec.gov/rules/proposed/2012/33-9354.pdf Summary The SEC published 

SEC Releases Proposed Rules Relaxing Ban on General Solicitation

At a meeting this morning, the SEC voted to propose rules relaxing the ban on general solicitation for certain offerings conducted pursuant to Rule 506 and resales under Rule 144A.  In a meeting that lasted approximately 45 minutes, the Staff outlined the principal aspects of the proposed rules.  The Staff indicated that it was proposing rules for comment, and not proposing an interim final rule.  As a result, market participants will have an opportunity to comment on the proposal and the Staff will have an opportunity to consider these comments prior to the adoption of final rules.  As anticipated, close attention will be required in relation to the Staff’s proposals regarding the “reasonable steps” to be taken to verify accredited investor status for offerings in which general solicitation is used.  The Staff discussed generally the verification process.  The Staff also discussed proposed changes to Form D.  The Staff also noted that the proposal would address the “directed selling effort” prong of Regulation S.  We will provide a detailed analysis of the proposal shortly.The Commissioners provided interesting perspectives on the proposed rules and on the rulemaking process.Commissioner Walter noted her support for modification of the communications rules in order to make these rules more contemporary.  She noted that allowing general solicitation is “a profound change,” which likely will have “unintended consequences.”  Commissioner Walter noted that comments on the proposal should help to identify these potential unintended consequences.  She also suggested that the Staff consider updating Form D in order to make it a source for more information regarding the types of offerings in which general solicitation is used and that the Staff should study the uses of general solicitation.  Commissioner Walter asked how the Staff intended to monitor the use of Rule 506 offerings involving general solicitation.  Meredith Cross noted that a multi-divisional task force would be formed in order to identify offerings in which general solicitation was used and to understand the verification processes used in these offerings.Commissioner Aguilar noted he did not support the proposal and he would issue a separate statement which would be forthcoming.  He expressed concerns about investor protection.Both Commissioners Paredes and Gallagher expressed their support for the proposal, while noting their significant concerns with the rulemaking process itself.  The two Commissioners noted that the original rulemaking course, which had been to release an interim final rule (not a proposal), had been changed in midstream.  This change had been occasioned after significant concerns had been expressed by various groups, including state regulators.  Both Commissioners Paredes and Gallagher noted their concern regarding the change in course and the resulting delays.

SEC Proposes Rules to Relax the Ban on General Solicitation: First Take

At a meeting this morning, the SEC voted to propose rules relaxing the ban on general solicitation for certain offerings conducted pursuant to Rule 506 and resa

SEC Proposes Rules to Relax the Ban on General Solicitation: First Take

In today’s information economy, content owners are faced with a challenging decision regarding digital content. On the one hand, the viral nature of social media can mean unprecedented exposure as digital content is shared. On the other, that opportunity can come with significant legal risk if companies take an insufficiently careful approach to intellectual property clearance issues. One luxury clothing brand, Burberry Ltd., recently discovered just how substantial that legal risk can be.Burberry approached social media with an innovative concept: “historical timelines” on its various social media pages, including <a href="http://www.facebook.com/burberry">Facebook</a>, <a href="http://www.twitter.com/Burberry">Twitter</a>, and Instagram. These timelines featured photos of celebrities wearing Burberry’s iconic trench coats, scarves, and other products. Among Burberry’s chosen photos was a shot of Humphrey Bogart from the final scene of <a href="http://www.imdb.com/title/tt0034583/">Casablanca</a>, in which Bogart’s Rick, clad in a timeless Burberry trench, sends Ingrid Bergman’s Ilsa off to Brazzaville. While Burberry acquired permission to use the photo from photo agency <a href="http://www.corbisimages.com/">Corbis</a>, which manages the rights to various stock photos from Casablanca, Burberry failed to clear its use with Bogart LLC, which owns the actor’s publicity rights. <a href="http://www.law.cornell.edu/uscode/text/15/1125">Applicable law</a> allows a celebrity to object to use of his or her name or likeness in a commercial context, particularly if the use is likely to cause members of the intended market to believe that the celebrity endorses the product. Bogart LLC <a href="http://www.scribd.com/doc/92146247/Burberry-v-Bogart">alleged</a> that Burberry’s use of the photo falsely implied that Bogart had endorsed the brand, thereby violating Bogart LLC’s publicity rights. Burberry countered, arguing that its timelines constituted “a historical positioning of the image within an educational project along with numerous other photographs of people wearing Burberry apparel over the last century.”Although Burberry and Bogart LLC settled their pending state and federal cases for an undisclosed amount, this case provides a good example of the unexpected issues that can arise when brand managers fail to consider the full spectrum of rights that may be implicated by the use of photographs and other content. While the content industries have spent the last decade educating the public on copyright law’s effects in the digital media world, less attention has been paid to other areas of potential liability, such as trademark infringement and privacy and publicity rights violations, and their respective effects on the social media experience.For example, in 2007, Virgin Mobile Australia (VMA) launched an advertising campaign using amateur photography culled from the social photo-sharing site, <a href="http://www.flickr.com/">Flickr</a>. The photos used by VMA were licensed under a Creative Commons “<a href="http://creativecommons.org/licenses/by/2.0/">Attribution</a>” license, which requires only that the original creator—that is, the copyright holder—be given credit. VMA chose for its campaign a photo of then-15-year-old Alison Chang, taken by her church youth counselor and uploaded by him to Flickr. Although VMA had appropriate copyright clearance to use the counselor’s picture under the Creative Commons license, Chang’s parents <a href="http://www.smh.com.au/news/technology/virgin-sued-for-using-teens-photo/2007/09/21/1189881735928.html">sued</a> VMA for failing to get permission from Chang or her parents to use Chang’s name or likeness. Although the case was <a href="http://www.citmedialaw.org/sites/citmedialaw.org/files/2009-01-16-%20Dismissal%20Opinion%20%28Chang%29.pdf">dismissed</a> on procedural grounds, the incident illustrates how easily (and often) clearance procedures are overlooked when it comes to Internet-based content.Similar cases have raised complex issues relating to federal preemption of state law claims. For example, in <a href="http://scholar.google.com/scholar_case?case=16156934007444564709">Laws v. Sony Music Entertainment, Inc.</a>, the plaintiff sued Jennifer Lopez and LL Cool J, alleging misappropriation of her name and voice through use of a sound recording on which the plaintiff’s voice was featured. The defendants had obtained a license to use the sound recording on which the plaintiff’s voice was featured, but had not obtained from the plaintiff the right to use her voice. Nonetheless, the Ninth Circuit held that, on this set of facts, the federal Copyright Act preempted the plaintiff’s state law right-of-publicity claim. Thus, her permission was not required for the defendants to use the validly licensed sound recording. By contrast, a different Ninth Circuit panel in <a href="http://scholar.google.com/scholar_case?case=13816450651302557386">Downing v. Abercrombie & Fitch, Inc.</a>, held that the Copyright Act did not preempt the plaintiffs’ state law publicity claims based on Abercrombie’s advertising use of a photo of the plaintiffs taken after the 1965 Makaha International Surf Championship in Hawaii. Thus, Abercrombie should have sought the plaintiffs’ permission in the first instance. The preemption inquiry is fact-bound—the Copyright Act preempts state law publicity claims in some circumstances, but not others.While the details of these preemption cases exceed the scope of this article, suffice it to say that a company’s social media marketing personnel may not have the expertise to wade through such complex clearance issues. A clearance system that focuses narrowly on copyright issues and doesn’t consider other forms of intellectual property may therefore result in unexpected claims. It is also worth noting that the safe harbors provided by the <a href="http://scholar.google.com/scholar_case?case=13644579048975596329">Digital Millennium Copyright Act</a> apply only to copyright claims, not other types of claims such as those mentioned above, and in any event, provide protection only with respect to <a href="http://www.youtube.com/user/mugumogu?feature=watch">user-generated content</a>, not content posted by a company’s own employees. Therefore, companies should not assume that the DMCA will shield them from all liability for content posted on their social media pages.Social media is an exciting new channel for reaching both current and prospective customers. But from a rights-clearance perspective, the old rules largely remain in force. Accordingly, companies’ review procedures for company-driven social media content should, to the extent possible, mirror the process they undertake for print ads and other traditional media. And where that may not be feasible (given the speed and flexibility often required on social media platforms), companies should institute rigorous policies and train marketing associates on how to avoid potential liability.

The Potential Perils of Posting Pictures (on Social Media)

The Potential Perils of Posting Pictures (on Social Media)