Outside Counsel Corner

"Managing and Protecting Corporate Brand Reputation in Social Media"

Kimberly N. Reddick [Read Bio]
Partner
K&L Gates LLP

Increasingly pervasive use of social media by individuals in making purchasing decisions illustrates that the way we do business is changing rapidly. Such widespread use of social media calls for companies to take action to protect their brands.

There are now hundreds of active social media sites with hundreds of millions of users. For example, Facebook has over 400 million active users, with over 1.5 million businesses maintaining pages on the site.¹ Additionally, there are over 2 million active blog sites, with a reported 34% of bloggers posting opinions about products and brands.² It is also estimated that 78% of consumers trust peer opinions about products and services, yet only 15% trust advertisements.³ What does this mean to the viability of your business? It means that as the economy is being driven more and more by people, rather than by advertising of particular products or services, companies must begin shifting their marketing to social media portals to stay in the game.

The broad reach of the Internet, coupled with use of social media, provides the infrastructure to create a colossal scale impact on the marketplace with just the stroke of a key. Given both the ease and speed with which consumers can transmit and share information and opinions about a company’s products and/or services, it is of paramount importance that companies have a plan to protect their brand reputation in an instantaneous and efficient manner, as well as shield themselves from liability. False, defamatory, misleading or negative statements about a company’s products or services can lead to disastrous consequences if left unchecked, including loss of sales and competitive advantage, declining stock prices, tarnishment or loss of good will and significant expenses to remedy the problem. However, as outlined below, there are a number of precautions and protective measures a company can take to mitigate the potential for such damage to its reputation and good will.

Align the company with the right social media venue

When introducing a corporate brand to social media, it is important to align the company with the right social media venues. In selecting a venue, the company should carefully review the “terms of use” and “privacy policy” closely, to determine whether they will fit with its corporate needs. For example, if it is important that the company be able to request the take down or removal of proprietary or confidential information posted by employees, it should select a social media site that states clearly in its terms of use that it will honor such requests. A company may also consider the site’s policies for handling requests to remove false, misleading or defamatory statements, for managing claims of infringement and for taking down infringing, fake or unofficial pages or materials. Essentially, the company should take care to ascertain whether the site shares the same core values and concerns regarding online content.

Create or audit the company’s social media policy

If a company has a presence on any social media site and it has not yet adopted a social media policy for its employees, it should develop one immediately. A clearly defined policy regarding employee use of social media is an excellent way for a company to prevent legal liability and harm to its reputation by employees. If the company already has a policy in place, it is a good practice to audit it periodically to ensure it covers the main objectives and serves to protect the needs of the company.

The social media policy may include, among other things:

• A definition of “social media” and an explanation of the core values the company intends to represent on its page
• A requirement that each employee read and understand the “terms of use” of the social media site
• Prohibition against divulging proprietary or confidential information, trade secrets, harassing, threatening or other unlawful conduct
• Prohibition against violating any copyrights, trademarks, rights of publicity, etc.
• An explanation of topics that may be discussed on the site and best practices
• A requirement that user state their name and/or affiliation with the company when posting
• A clear and detailed explanation of how the company handles negative feedback/posts from consumers
• An explanation regarding electronically stored information and its potential use in court
• A discussion of the consequences for employee abuse of use of social media sites, exercise of irresponsible or poor judgment, and violation of the policy

While the aforementioned provisions may be included, the social media policy should really be tailored to fit the specific needs of the company.

Educate employees and manage their use

Adopting a social media policy and putting measures in place to protect the company online is worthless if the policy and procedures are buried in an employee manual that no one will read. Companies must make it a priority to educate employees, including contractors and temporary staff, about the company’s expectations with respect to use of social media, provide examples of what is considered acceptable vs. unacceptable/encouraged vs. discouraged practice and make sure they understand the importance and meaning of the policies and protocols. It is equally important for the company to monitor employee use of social media periodically to ensure it is in line with the company’s objectives and enforce the policy if it is not.

Monitor company’s posts for false or misleading advertising or defamatory or disparaging statements

While a company may have little control over what third parties say about its products and services, it does have control over what its employees/agents post on its social media page. Companies should take care to ensure that posts made by employees or its agents do not contain any false, misleading, defamatory or disparaging statements which could subject it to liability. Likewise, they should monitor posts to insure that no trade secrets or confidential or proprietary information is shared. One way to do this is to exercise review and editorial rights over all such posts. For example a company could assign an individual to sign off on all site entries prior to posting. Dependant on the size of the company, however, this may not be feasible. One alternative would be to appoint a trained team of individuals, and allow only those individuals to post content on the site. Another option would be to assign a team to monitor all employee posts, and request removal of those which may subject the company to liability. The main objective here is for the company to exercise control over potential avenues of liability where such control is possible.

Provide guidelines regarding third party user posting of false, defamatory or misleading information, and improper use of protected trademarks and copyrighted materials

If a company’s social media page relies on third party user-generated content or solicited customer reviews, it should establish its own user guidelines which prohibit the posting of infringing, offensive, false, misleading or defamatory content, or material that may violate rights of publicity. These guidelines are in addition to the terms of use provided by the social media service venue. This extra layer of use guidelines helps protect the company from liability where the service provider might otherwise be immune.

While a company may review and edit posts made by its own employees, it should refrain from instructing third party users what to say or from asking for editorial rights prior to posting. However, since a company can be held liable for claims made by a user, it should monitor the postings for truth and accuracy. If a user posts information that may be considered false or misleading about its products or services, or those of a third party, the company should have the opportunity to request that the service provider remove this information from its page.

Monitor Social Media Sites for Negative Feedback and Take Action

In addition to monitoring for false, misleading and defamatory content, companies must also monitor and decide how to handle negative content or feedback regarding its products and services. Given the delicate nature of negative material, and the relative risk of harm such content may pose, companies must be very strategic in how they handle the information. How a company chooses to handle negative feedback says a lot about how it values its customers, and may have a profound effect on its reputation in the marketplace. Accordingly, responses to these types of posts should not be taken lightly.

Monitor trademark and copyright infringement and report to service providers

Many social media sites prohibit the improper use of trademarks, copyrighted and protected material of others, as well as the creation of fake or unofficial fan pages. Nevertheless, there is a proliferation of unofficial, fake and infringing usernames and pages created everyday. These usernames and pages have the potential to cause tremendous harm to the reputation and good will of a corporate brand. Accordingly, it is imperative that companies police social media venues for fake or unofficial fan pages, usernames or blogs featuring company intellectual property. Once these usernames and/or pages are identified they should immediately be reported to the service provider and removed. Dependant upon the size of the company, the number of fake, unofficial or malicious pages could be overwhelming. However, as daunting as the task may be, it is prudent for the company to appoint an individual or outside counsel to handle the review and removal of such harmful pages, given the level of damage just one site can produce. Further, given the affirmative duty trademark owners have to police their marks online, if a trademark owner allows too many infringing uses to slip through the cracks, it could make it more difficult to hold other third parties liable for future infringements. Another tactic a company may use is to adopt many username variants at the outset of creation of its social media presence. However, this too could prove to be an exhaustive measure.

Yet another mode of infringement on social media sites is the exploitation of virtual products bearing proprietary trademarks. For example, in a recent case, Taser, the world’s largest manufacturer of stun guns, sued Linden Research Inc., operator of the social media site Second Life, because it allegedly allowed users to purchase unauthorized virtual Tasers to use with the avatars created on the site.⁴ In order to prevent similar types of infringement or dilution of proprietary trademark rights, companies must vigilantly police for these types of unlawful uses and report them to the service providers or take alternate legal action.

Bookmark websites/blogs that track social media and the law related thereto

Law and regulations relating to social media are no doubt an emerging concept. Accordingly, it is important for companies to stay abreast of new developments. Outside of the routine reminders companies may receive from their outside counsel, persons responsible for handling social media concerns for the company should bookmark blogs and websites which highlight new cases, legal issues and regulations relating to this area of the law.

Conclusion

The widespread use of social media and the difficulty of vetting every potentially harmful post, increase the likelihood that a company will suffer harm to its reputation or will end up on either side of a false advertising, unfair competition, infringement, defamation or related claim. However, as explained above, a company can minimize the occurrence of such claims by exercising its review and editorial function for posts made by employees. Where posts consist of third party user generated content, companies can protect themselves by educating employees and by continuously monitoring social media sites for harmful or misleading information, as well as infringing use or exploitation of their valuable intellectual property rights.

Kimberly N. Reddick
Partner, K&L Gates LLP
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
(202) 778-9236

¹Facebook, http://www.facebook.com/press/info.php?statistics (2010)
²Erik Qualman, http://www.socialnomics.net
³Erik Qualman, Socialnomics, Wiley, John & Sons pp. 89, 118 (2009)
⁴Taser International v. Linden Research, District Court for Arizona, case 2:09-cv-00811-ROS, filed April 17, 2009