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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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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Congress enacted the Digital Millennium Copyright Act (“DMCA”) nearly two decades ago seeking to balance the needs of two factions: Content creators, who were struggling to protect their intellectual property in the digital age, and fledgling Internet companies, who feared being held liable for the misdeeds of their customers.For the Internet companies, Congress offered relief by creating a number of “safe harbors” shielding such companies from copyright-related damages arising from their customers’ infringing activities.In particular, the DMCA established four distinct safe harbors for online service providers, each safe harbor aimed at a different type of online activity (i.e., transitory digital network communications; system caching; online hosting; and provision of information location tools) and each with its own set of eligibility requirements.To qualify for any of these DMCA safe harbors, however, the DMCA requires that service providers “reasonably implement” a policy that provides for the termination of “repeat infringers” in “appropriate circumstances.”Despite the threshold importance of repeat infringer policies, the DMCA left many questions unanswered. Who exactly counts as an “infringer”? Does it include every user accused of infringement or only those found culpable in court? If it’s somewhere in between, what level of proof is required before a service provider is required to take action? Can the repeat infringer policy differentiate between those who upload infringing content for others to copy and share and those who only download such content for their own personal viewing? And how many acts of infringement does it take to become a “repeat infringer” anyway?When the Second Circuit Court of Appeals recently denied rehearing en banc and issued a <a href="http://www.leagle.com/decision/In%20FCO%2020161213106/EMI%20CHRISTIAN%20MUSIC%20GRP.,%20INC.%20v.%20MP3tunes,%20LLC" target="_blank" rel="noopener">modified opinion</a> in EMI v. MP3tunes, it added its voice in the limited—but growing—number of cases addressing these questions. The MP3tunes case involves two websites founded in 2005 by Internet entrepreneur Michael Robertson. (Mr. Robertson is also the founder and CEO of MP3.com, which, only a few years earlier, had been held liable for widespread copyright infringement.)The first of Mr. Robertson’s two websites at issue, mp3tunes.com, was an early cloud storage “locker” for digital music. The second website, sideload.com, allowed users to search the Internet for “free” music files and then copy (i.e. sideload) those files directly to their online locker. Many of these files allegedly contained pirated music and, in 2007, EMI sued MP3tunes and Mr. Robertson for copyright infringement.In a 2011 summary judgment decision, Judge Pauley, a federal judge in Manhattan, held that, as a matter of law, MP3tunes had reasonably implemented a repeat infringer policy under the DMCA; in support of his decision, Judge Pauley noted that the company had instituted a policy for responding to DMCA takedown requests and had actually “terminated the accounts of 153 users who allowed others to access their lockers and copy music files without authorization.” The court’s analysis, however, used a narrow definition of “repeat infringers,” including only those who upload infringing content to the Internet with knowledge that the content is infringing. The court explained:MP3tunes’ users do not upload content to the internet, but copy songs from third-party sites for their personal entertainment. There is a difference between (1) users who know they lack authorization and nevertheless upload content to the internet for the world to experience or copy, and (2) users who download content for their personal use and are otherwise oblivious to the copyrights of others.Despite the court’s validation of the MP3tunes repeat infringer policy, the jury <a href="http://www.hollywoodreporter.com/thr-esq/mp3tunes-founder-michael-robertson-found-689785" target="_blank" rel="noopener">ultimately found</a> the company willfully blind to infringing activity by its customers and thus ineligible for DMCA safe harbor protection.On appeal, a panel of judges on the Second Circuit <a href="http://www.leagle.com/decision/In%20FCO%2020161213106/EMI%20CHRISTIAN%20MUSIC%20GRP.,%20INC.%20v.%20MP3tunes,%20LLC" target="_blank" rel="noopener">found</a> that the district court had erred, both regarding the definition of “repeat infringer” and on whether MP3tunes’ repeat infringer policy was reasonable as a matter of law.Reevaluating the meaning of “repeat infringer,” the Second Circuit noted that infringement is a strict liability offense with no requirement to prove unlawful intent. Moreover, both uploading and downloading can constitute infringement. Because the DMCA does not define “repeat infringer,” the court adopted this ordinary meaning and held that “all it [takes] to be a ‘repeat infringer’ [is] to repeatedly [upload or download] copyrighted material for personal use.”Next, the Second Circuit found that MP3tunes’ repeat infringer policy was not, in fact, reasonable as a matter of law because, while the site did respond to takedown notices from copyright owners and terminated the accounts of some users, “MP3tunes did not even try to connect known infringing activity of which it became aware through takedown notices to users who repeatedly sideloaded files and created links to that infringing content in the sideload.com index.”Requiring this sort of search would seemingly run up against a separate DMCA provision that prohibits the conditioning of safe harbor protection on “a service provider monitoring its service or affirmatively seeking facts indicating infringing activity.” The Second Circuit, however, found that such a search would not constitute “monitoring” or “affirmatively seeking facts” under the DMCA because “MP3tunes would simply have had to make use of information already within its possession”—the takedown notices provided by EMI—“and connect that information to known users.”In the wake of the decision, several high-powered amici, including Dropbox, Facebook, Google, Pinterest and Twitter, took issue with the Second Circuit’s approach to repeat infringer policies and joined in supporting MP3tunes’ petition for rehearing before the full Second Circuit. Specifically, these leading Internet companies were concerned that requiring service providers to “tally strikes and terminate users merely for having accessed, viewed, or otherwise engaged with content that later might be the subject of a takedown notice” would destabilize the DMCA safe harbor regime and unfairly penalize users. The Second Circuit was unmoved and denied rehearing by the full court. MP3tunes has since indicated that it will seek Supreme Court review of Robertson’s personal jurisdiction issues, but the Second Circuit has had the final say on the copyright question.Also on the horizon is a similar dispute that may provide further guidance in this area. Later this year, the Fourth Circuit Court of Appeals is slated to review a lower court decision in BMG v. Cox, which turns on whether “repeat infringers” includes all users accused of infringement or only cases of infringement adjudicated in courts. The district court squarely rejected Cox’s “adjudicated infringer” position late last year, and MP3tunes does little to signal sympathy for that reading, but, in an area with little case law, the issue is far from settled.In the meanwhile, for companies that host or are otherwise involved with user-generated content, they will want to revisit their current repeat infringer policies and determine whether such policies need to be updated in light of the emerging DMCA safe harbor case law addressing such policies. *          *          *For an earlier Socially Aware post regarding the DMCA repeat infringer policy requirement, please see Rough Waters: Repeat Infringer Policies and the DMCA Safe Harbors. For other Socially Aware posts relating to the DMCA safe harbors, please see <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">New Copyright Office Rule Creates Potential “Gotcha” for Blogs and Websites Hosting User-Generated Content</a>; <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">New Court Decision Highlights Potential Headache for Companies Hosting User-Generated Content </a>;<a href="http://www.sociallyawareblog.com/2014/06/24/court-holds-that-dmca-safe-harbors-do-not-extend-to-infringement-prior-to-designation-of-agent/" target="_blank" rel="noopener"> Court Holds That DMCA Safe Harbor Does Not Extend to Infringement Prior to Designation of Agent</a>; <a href="http://www.sociallyawareblog.com/2015/03/16/first-ever-award-of-any-damages-for-fraudulent-dmca-takedowns-under-section-512f/" target="_blank" rel="noopener">First-Ever Award of “Any Damages” for Fraudulent DMCA Takedowns Under Section 512(f)</a>.

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Change Healthcare Operations, LLC v WebMD Health Corp. 2017 WL 6610411  

Register.com, Inc. v. Verio, Inc.

Komag, Inc. v. Asahi Glass Co. Ltd.

Asante Techs. Inc. v. PMC–Sierra, Inc.

Biovail Corp. v. S.A.C. Capital Mgmt. 2009 WL 2844404 

Multi–Faceted Investigation of University Grants

Confidential International Arbitrations

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Alex advises on all aspects of complex commercial litigation in federal and state trial and appellate courts and in arbitration. He has represented U.S. and international clients in actions involving 

J. Lawrence

J. Alexander Lawrence

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Second Circuit Clarifies “Repeat Infringer” Policy Requirement for DMCA Copyright Safe Harbors

Second Circuit Clarifies “Repeat Infringer” Policy Requirement for DMCA Copyright Safe Harbors

Congress enacted the Digital Millennium Copyright Act (“DMCA”) nearly two decades ago seeking to balance the needs of two factions: Content creators, who were s

If your company operates a website or blog that hosts user-generated content, you’ll want to read this post carefully.We’re ringing the alarm bell on an important new U.S. copyright law development that, if ignored, could significantly increase your company’s potential liability exposure in connection with user-generated content.If your company hosts user-generated content, such hosted content may include materials that were posted without the permission of the owners of the copyrights in such materials—potentially subjecting your company to copyright infringement liability.For nearly two decades, however, <a href="https://www.law.cornell.edu/uscode/text/17/512" target="_blank" rel="noopener">Section 512(c) of the U.S. Copyright Act</a>, enacted in 1998 as part of the Digital Millennium Copyright Act (DMCA), has provided a safe harbor insulating online service providers from monetary damages for hosting copyright-infringing materials posted by their users. To receive protection under the Section 512(c) safe harbor, service providers must, among other things, designate an agent to receive notifications of claimed infringement with the Copyright Office.If a website operator fails to so designate an agent for its website, that operator runs the risk of incurring monetary damages for copyright-infringing materials hosted on its site. So, if your company is hosting user-generated content, it’s important to have designated an agent with the Copyright Office.By our rough count, over 100,000 online service providers have designated agents with the Copyright Office. Under the Copyright Office’s “interim” regulations that had been in effect since the DMCA’s enactment, a service provider would register by filling out a paper form and filing the completed form with the Copyright Office.Just last week, however, the U.S. Copyright Office rolled out a <a href="https://www.copyright.gov/dmca-directory/" target="_blank" rel="noopener">new online system</a> for the designation of agents to receive notifications of copyright infringement. The new system, effective as of December 1, 2016, replaces the old paper-based system. Under the system, an online service provider with an agent registered through the old system must also register that agent through the new system by December 31, 2017, in order to maintain a valid designation. Failure to do so by that deadline could result in the online service provider no longer receiving the benefits of the Section 512(c) safe harbor in connection with its hosting of user-generated content, at least until such provider finally gets around to registering through the new system.Moreover, going forward, online service providers will need to renew their agent designations every three years in order to maintain safe harbor protection in connection with their hosting of user-generated content. There was no such periodic renewal obligation under the old system.Why is the Copyright Office doing this? Although by no means perfect, the old system was relatively easy to use and has worked well for bloggers and website operators ever since Bill Clinton was president. Why fix something that isn’t broken, particularly if, in fixing the system, this risk is created of online service providers losing safe harbor protection? Not surprisingly, the Copyright Office’s actions have generated <a href="http://blog.ericgoldman.org/archives/2016/10/copyright-office-gratuitously-kills-the-dmca-safe-harbor-for-thousands-of-websites.htm" target="_blank" rel="noopener">some blistering criticism</a> from Internet law pundits.The Copyright Office, however, apparently believes that the system was in fact broken due to the failure of online service providers to keep their agent designation information up to date. For example, in announcing its new registration system, the Copyright Office <a href="https://www.copyright.gov/newsnet/2016/640.html" target="_blank" rel="noopener">noted that it had found</a> that 22 percent of existing agent designations were for defunct service providers and that, with respect to non-defunct service providers, an estimated 65 percent of their agent designations contained inaccurate information. The new system seeks to address this problem by allowing service providers to more efficiently submit and update designated agent information through the use of an online system and by requiring periodic renewals of designations.Perhaps in an effort to further incentivize online service providers to keep their records updated, the cost of designation under the new system will be cheaper than under the old system. Each paper form designation under the old system would have cost a service provider $105, not including additional fees to list non-legal names used by the service provider. Under the new online system, the designation fee is <a href="https://www.copyright.gov/newsnet/2016/640.html" target="_blank" rel="noopener">$6 with no additional fee for alternative names</a>. This same fee would apply to each renewal of an agent designation.The Copyright Office’s new approach also expands the options available to online service providers in designating an agent. Under the old system, service providers were required to name a natural person or a specific position or title. The new regulations provide that a designated agent may be an individual, a specific position or title held by an individual, or a specific department within the service provider’s organization or within a third-party entity.The Copyright Office has released a <a href="https://www.copyright.gov/dmca-directory/help.html" target="_blank" rel="noopener">series of tutorials</a> to assist online service providers in registering an agent under the new system. The Copyright Office regulations adopting the new system can be found <a href="https://www.federalregister.gov/documents/2016/11/01/2016-26257/designation-of-agent-to-receive-notification-of-claimed-infringement" target="_blank" rel="noopener">here</a>.Here are our key takeaways regarding this important development:<ul><li>If your company hosts, stores or even links to user-generated content, it should ensure that it has registered an agent with the Copyright Office. If your company has never registered an agent, it should do so under the new system.</li><li>Even if your company has already registered its DMCA agent with the Copyright Office, if that registration was done under the old paper-based system, it will need to re-register under the new agent designation system by December 31, 2017.</li><li>After registering under the new system, online service providers will need to ensure that they observe the “every three years” deadlines for renewing their registrations.</li><li>Until January 1, 2018, copyright owners seeking to determine whether a blog or website hosting infringing user-generated content is in compliance with the DMCA agent designation requirement will want to check both the <a href="https://www.copyright.gov/onlinesp/list/a_agents.html" target="_blank" rel="noopener">old directory</a> and the <a href="https://dmca.copyright.gov/osp/" target="_blank" rel="noopener">new directory</a>—prior to 2018, it should be sufficient that the requisite agent designation appears in either of the two directories.</li></ul>*          *          *For other Socially Aware blog posts on DMCA agent designation issues, please see: <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">New Court Decision Highlights Potential Headache for Companies Hosting User-Generated Content</a>; and <a href="http://www.sociallyawareblog.com/2014/06/24/court-holds-that-dmca-safe-harbors-do-not-extend-to-infringement-prior-to-designation-of-agent/" target="_blank" rel="noopener">Court Holds That DMCA Safe Harbor Does Not Extend to Infringement Prior to Designation of Agent</a>. For a recent blog post on risk issues surrounding user-generated content, please see: <a href="http://www.sociallyawareblog.com/2016/08/10/ugcrisk/" target="_blank" rel="noopener">Commercializing User-Generated Content: Five Risk Reduction Strategies</a>.

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New Copyright Office Rule Creates Potential “Gotcha” for Blogs and Websites Hosting User-Generated Content

New Copyright Office Rule Creates Potential “Gotcha” for Blogs and Websites Hosting User-Generated Content

If your company operates a website or blog that hosts user-generated content, you’ll want to read this post carefully. We’re ringing the alarm bell on an import

We’re in the midst of a seismic shift in how companies interact with user-generated content (UGC).For years, companies were happy simply to host UGC on their websites, blogs and social media pages and reap the resulting boost to their traffic numbers. And U.S. law—in the form of <a href="https://www.law.cornell.edu/uscode/text/17/512" target="_blank" rel="noopener">Section 512(c) of the Digital Millennium Copyright Act</a> (DMCA)—accommodated this passive use of UGC by creating a safe harbor from copyright damages for websites, blogs and social media platform operators that hosted UGC posted without the authorization of the owners of the copyrights in such UGC, so long as such operators complied with the requirements of the safe harbor.Increasingly, companies are no longer satisfied with passively hosting UGC. Rather, they now want to find creative ways to commercialize such content—by incorporating it into ads (including print, TV and other offline ads), creating new works based on such content and even selling such content. Yet, in moving beyond mere hosting to proactive exploitation of UGC, companies risk losing the benefit of the DMCA Section 512(c) safe harbor, which could result in potentially significant copyright liability exposure.For example, if a company finds that users are posting potentially valuable UGC to the company’s Facebook page, or on Twitter in connection with one of the company’s hashtags, that company may want to make such UGC available on its own website. The DMCA Section 512(c) safe harbor, however, is unlikely to protect the company in copying such UGC from the Facebook or Twitter platform to its own website.The reality is that any company seeking to monetize or otherwise exploit UGC needs to proceed with extreme caution. This is true for several reasons:<ul><li>UGC can implicate a wide range of rights . . . As with any content, UGC is almost certainly subject to copyright protection, although certain Tweets and other short, text-only posts could potentially be exempt from copyright protection if they qualify as “short phrases” under the Copyright Act. If any individuals are identifiable in UGC, then rights of publicity and rights of privacy may also be relevant. In addition, UGC may contain visible third-party trademarks or comments that defame or invade the privacy of third parties.</li></ul><ul><li>. . . and a wide range of rightsholders. Notably, many of the rights necessary to exploit UGC are likely to be held by individuals and corporations other than the posting user. For example, unless a photo is a “selfie,” the photographer and the subject of the photo will be different individuals, with each holding different rights—copyright, for the photographer, and the rights of publicity and privacy, for the subject—that could be relevant to the exploitation of the photo. Moreover, any trademarks, logos and other images contained in a photo could potentially implicate third-party rightsholders, including third-party corporations. Videos also raise the possibility of unauthorized clips or embedded music.</li></ul><ul><li>If the UGC is hosted by a third-party social network, it may have Terms of Service that help—or hurt—efforts to exploit the UGC. Most social media networks collect broad rights to UGC from their users, although they differ substantially when it comes to passing those rights along to third parties interested in exploiting the content. For example, if a company uses <a href="https://dev.twitter.com/overview/api" target="_blank" rel="noopener">Twitter’s Application Programming Interface (API)</a> to identify and access Tweets that it would like to republish, then Twitter <a href="https://dev.twitter.com/overview/terms/agreement-and-policy" target="_blank" rel="noopener">grants to that company a license</a> to “copy a reasonable amount of and display” the Tweets on the company’s own services, subject to certain limitations. (For example, Twitter currently prohibits any display of Tweets that could imply an endorsement of a product or service, absent separate permission from the user.) Instagram also has an API that provides access to UGC, but, in contrast to Twitter, <a href="https://www.instagram.com/about/legal/terms/api/" target="_blank" rel="noopener">Instagram’s API terms</a> do not appear to grant any license to the UGC and affirmatively require companies to “comply with any requirements or restrictions” imposed by Instagram users on their UGC.</li></ul>With these risks in mind, we note several emerging best practices for a company to consider if it has decided to exploit UGC in ways that may fall outside the scope of DMCA Section 512(c) and other online safe harbors. Although legal risk can never be eliminated in dealing with UGC, these strategies may help to reduce such risk:<ul><li>Carefully review the Social Media Platform Terms. If the item of UGC at issue has been posted to a social media platform, determine whether the Terms of Service for such platform grants any rights to use such posted UGC off of the platform or imposes any restrictions on such content. Note, however, that any license to UGC granted by a social media platform almost certainly will not include any representations, warranties or indemnities, and so it may not offer any protection against third-party claims arising from the UGC at issue.</li></ul><ul><li>Seek Permission. If the social media platform’s governing terms don’t provide you with all of the rights needed to exploit the UGC item at issue (or even if they do), seek permission directly from the user who posted the item. Sophisticated brands will often approach a user via the commenting or private messaging features of the applicable social media platform, and will present him or her with a link to a short, user-friendly license agreement. Often, the user will be delighted by the brand’s interest in using his or her content. Of course, be aware that the party posting the content may not be the party that can authorize use of that content, <a href="http://www.sociallyawareblog.com/2013/02/15/thinking-about-using-pictures-pulled-from-twitter-think-again-new-york-court-warns/" target="_blank" rel="noopener">as Agence France Presse learned the hard way in using photos taken from Twitter</a>.</li></ul><ul><li>Make Available Terms and Conditions for “Promotional” Hashtags. If a company promotes a particular hashtag to its customers, and would like to use content that is posted in conjunction with the hashtag, the company could consider making available a short set of terms alongside its promotion of that hashtag. For example, in any communications promoting the existence of the hashtag and associated marketing campaign, the company could inform customers that their use of the hashtag will constitute permission for the company to use any content posted together with the hashtag. Such an approach could face significant enforceability issues—after all, it is essentially a form of <a href="http://www.sociallyawareblog.com/2014/09/23/to-click-or-not-to-click-ninth-circuit-rejects-browsewrap-arbitration-clause/" target="_blank" rel="noopener">“browsewrap” agreement</a>—but it could provide the company with a potential defense in the event of a subsequent dispute.</li></ul><ul><li>Adopt a Curation Process. Adopt an internal curation process to identify items of UGC that are especially high risk, which could include videos, photos of celebrities, photos of children, professional-quality content, any content containing copyright notices, watermarks and so forth, and any content containing potentially defamatory, fraudulent or otherwise illegal content. Ensure that the curators are trained and equipped with checklists and other materials approved by the company’s legal department or outside counsel. Ideally, any high-risk content should be subject to the company’s most stringent approach to obtaining permission and clearing rights—or perhaps avoided altogether.</li></ul><ul><li>Adjust the Approach for High-Risk Uses. Consider the way in which the UGC at issue is expected to be used, and whether the company’s risk tolerance should be adjusted accordingly. For example, if an item of UGC will be used in a high-profile advertisement, the company may want to undertake independent diligence on any questionable aspects of the UGC, even after obtaining the posting user’s permission—or perhaps avoid any questionable UGC altogether.</li></ul>In a social media age that <a href="http://www.huffingtonpost.com/matthew-tyson/millennials-want-brands-t_b_9032718.html" target="_blank" rel="noopener">values authenticity</a>, more and more companies—even big, risk-adverse Fortune 100 companies—are interested in finding ways to leverage UGC relevant to their business, products or services. Yet the shift from merely hosting UGC to actively exploiting it raises very real legal hurdles for companies. The tips above are not a substitute for working closely with experienced social media counsel, but they collectively provide a framework for addressing legal risks in connection with a company’s efforts to commercialize UGC.*          *        *For more on the issues related to user-generated content, see <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">New Court Decision Highlights Potential Headache for Companies Hosting User-Generated Content</a>; <a href="http://www.sociallyawareblog.com/2014/06/24/court-holds-that-dmca-safe-harbors-do-not-extend-to-infringement-prior-to-designation-of-agent/" target="_blank" rel="noopener">Court Holds That DMCA Safe Harbor Does Not Extend to Infringement Prior to Designation of Agent</a>; and <a href="http://www.sociallyawareblog.com/2013/02/15/thinking-about-using-pictures-pulled-from-twitter-think-again-new-york-court-warns/" target="_blank" rel="noopener">Thinking About Using Pictures Pulled From Twitter? Think Again, New York Court Warns</a>.

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.











Anthony Ramirez

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Commercializing User-Generated Content: Five Risk Reduction Strategies

Commercializing User-Generated Content: Five Risk Reduction Strategies