United States: Intellectual Property Issues And Social Media Promotions

Promotions such as sweepstakes and contests are frequently conducted by businesses on a social media platform and often require an entrant to submit and post a photo, video or some other form of user-generated content (UGC). While a fun and interactive way to engage with your audience, these types of submissions have potential to expose a promotion sponsor to potential liability for various intellectual property-related claims, including trademark infringement, copyright infringement and violation of rights of publicity or privacy

Trademark

When UGC submissions entail an entrant's submission of a photo or video, they may expose a promotion sponsor to potential liability for infringement of a third party's intellectual property right if, for example, an entrant's submission displays third-party trademarks in the background, on signage or on clothing. This could subject the sponsor to a Lanham Act1 claim since utilizing a third-party's trademark in this manner could arguably give rise to a false association between the trademark owner and promotion sponsor, by suggesting that the trademark owner: (i) is a co-sponsor of the promotion; (ii) has given permission for use of its trademark; (iii) endorses the promotion; and/or (iv) is otherwise affiliated with the promotion sponsor.

If a third-party's famous trademark is being used in a way that tarnishes the reputation of the trademark owner (for example, by associating the trademark with pornography or drugs), there could also be potential liability for trademark dilution.2

Copyright

Copyright laws could be implicated if UGC submissions contain copyrighted material, such as music or photos. Use of copyrighted materials in social media promotions raises a number of potential issues and risks relating to infringement of third party rights, both for the participant and the sponsor of the promotion, unless the copyrighted material has been used with permission, is in the public domain or falls within the parameters of parody or fair use.3

Copyright is the exclusive right of an author to use original creative material that has been fixed in a tangible form (including photos, videos, music and other content that can be used as part of online contests and promotions). The copyright holder has the exclusive right to copy, sell, distribute, display, exhibit, perform and/or make derivative works from the copyrighted work.4 Direct copyright infringement occurs when someone violates one of the foregoing exclusive rights of the copyright holder.5 Unless the user either creates the image/content, obtains permission from the copyright owner, or the image/content is in the public domain, use of copyrighted material in connection with a social media promotion runs the risk of triggering a direct copyright infringement issue.

If a copyright owner can make the requisite showing of ownership and violation of one of its statutory exclusive rights, the user may nonetheless avoid liability if it can show that the unauthorized use was either "de minimis" or a "fair use."

The "de minimis" use defense is considered separately from, and in advance of, the fair use analysis and focuses on whether "copying has occurred to such a trivial extent as to fall below the quantitative threshold of substantial similarity, which is always required as an element of actionable copying."6 In cases involving visual works, the analysis centers on the observability of the copied work, including the length of time the copied work is observable in the allegedly infringing work.7 Courts have found that film clips incorporated into documentaries, film trailers or other works that are plainly observable and appear prominently in the other work are likely to exceed the de minimis threshold.8

The "fair use" defense provides that the "fair use of a copyrighted work for purposes such as criticism, comment, news reporting, teaching, scholarship, or research," is not an infringement of copyright.9 The fair use determination is based upon consideration of: (i) the purpose and character of the use, including whether such use is commercial or for nonprofit educational purposes; (ii) the nature of the copyrighted work; (iii) the amount and substantiality of the portion used in relation to the work as a whole; and (iv) the effect of the use upon the potential market for and value of the copyrighted work.10 These factors are not meant to be exclusive or constitute a bright line rule, but rather, are applied on a case-by-case basis.11

Another potential defense to a copyright infringement claim is an implied license.12 Generally, a court can find an implied license "where the copyright holder engages in conduct from which [the] other [party] may properly infer that the owner consents to his use."13 In certain circumstances, courts have found silence or the failure to object to the use to be the equivalent of a non-exclusive license, particularly where the plaintiff is aware of and encourages the defendant's use.14

In addition to potential direct infringement claims, sponsors of social media promotions run the risk of being found contributorily or vicariously liable in connection with copyright infringement on the part of their promotion participants.

Contributory infringement involves "intentionally inducing or encouraging direct infringement."15 It can take one of two forms: actively encouraging (or inducing) infringement through specific acts or distributing a product that recipients use to infringe copyrights if the product is not capable of substantial or commercially significant non-infringing uses.16

Vicarious infringement involves "profiting from direct infringement while declining to exercise a right to stop or limit it."17 To be vicariously liable, a party must have "both a legal right to stop or limit the directly infringing conduct, as well as the practical ability to do so."18

Footnote

1. 15 USC § 1125.

2. 15 USC § 1125(c)

3. 15 USC § 107.

4. 17 USC § 106.

5. See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001)(noting that to establish a direct infringement claim, a plaintiff must show ownership of the allegedly infringed material and that the alleged infringer violated at least one of the exclusive rights set forth in Section 106); Perfect 10 v. Cybernet, 213 F. Supp. 2d 1146, 1168 (C.D. Cal. 2002)(to prevail on a direct copyright infringement claim, it must be shown that defendants "actively engage in" and "directly cause" one of the activities set forth in Section 106).

6. Ringgold v. Black Entertainment Television, Inc., 126 F.3d 70, 74 (2d Cir. 1997).

7. Id. at 75

8. See Video-Cinema Films, Inc. v. The Lloyd E. RiglerLawrence E. Deutsch Found., No. 04 Civ. 5332 , 2005 WL 2875327 at *6 (S.D.N.Y. Nov. 2, 2005)(unauthorized use of an 85 second clip from a two hour film not de minimis); Twentieth Century Fox Film Corp. v. Marvel Enters., Inc., 155 F. Supp.2d 1, 46 (S.D.N.Y. 2001) (incorporation of three second film clips into advertising not de minimis where clips appear prominently and are plainly observable to the lay viewer).

9. 17 U.S.C. § 107.

10. Id.

11. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577-78 (1994); Elvis Presley Enters. Inc. v. Passport Video, 349 F.3d 622, 627 (9th Cir. 2004); Association of Am. Med. Coll. v. Cuomo, 928 F.2d 519, 524 (2d Cir. 1991).

12. See MacLean Assoc., Inc. v. Wm. M. Mercer-MeldingerHansen, Inc., 952 F.2d 769, 778-79 (3rd Cir. 1991).

13. Field v. Google, Inc., 412 F. Supp.2d 1106, 1116 (D. Nev. 2006); Parker v. Yahoo!, Inc., 2008 U.S. Lexis 74512 *10 (E.D. Pa. 2008).

14. Id. at 1116.

15. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005).

16. Id. at 942; see also Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971)("one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a 'contributory' infringer'").

17. Grokster, 545 U.S. at 930.

18. Perfect 10, 487 F.3d at 730

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