Monday, January 16, 2012

Social Media Site Ownership: Who controls your account?

If you are like many companies, you likely have a Twitter, Facebook, YouTube or other social media account used for public relations, product promotion or simply advertising and marketing.  Such accounts are valuable to a business; however, the ownership and exact value of such accounts is uncertain.  A recently filed lawsuit filed in California federal court raises these issues and may provide some guidance.
The California Lawsuit
California company PhoneDog is suing Noah Kravitz alleging harm from his continued use of a Twitter account that was created while Kravitz was employed at PhoneDog.  During his time at PhoneDog, the account grew to 17,000 followers.  The suit seeks $340,000 in damages, as well as an injunction against Mr. Kravitz from disclosing or trading the list of followers or soliciting business from them. 
PhoneDog offers an interactive web site with mobile news and mobile phone plan comparisons and claims 2.5 million unique visitors each month (See  A significant source of the company’s income derives from the sale of ad space on its website.  To increase page views, PhoneDog requests it agents and employees to maintain Twitter accounts and to tweet links directing followers to PhoneDog’s website.
Defendant Kravitz was a social media specialist while employed by the company.  He published tweets on Twitter under the “handle” or account name “@Phonedog_Noah.”  Kravitz resigned on good terms with PhoneDog and he kept the Twitter account, changing his handle to “@noahkravitz.”  When PhoneDog asked Kravitz to return control of the Twitter account, he refused and PhoneDog filed suit alleging conversion, misappropriation of trade secrets and other claims.
To quantify the harm caused by Kravitz, PhoneDog valued the ability to send tweets to each follower at $2.50 per month.  They multiplied this value by the number of months Kravitz retained the Twitter account after his departure ($2.50 x 8 months x 17,000 customers) to reach the total of $340,000. 
Other cases involving similar ownership issues are also working through the courts (see e.g., Eagle v. Morgan, 2011 WL 6739448 (E.D. Pa. 2011).  These cases will likely require further factual discovery to resolve factual issues that may have been avoided through the use of a well drafted social media policy.
Social media accounts, the goodwill they represent and the followers of customers and prospective customer are valuable assets.   While the ultimate outcome of the PhoneDog lawsuit is yet to be determined, it is clear that companies should include provisions in their social media policy that govern the ownership and control of social media accounts.  Companies should avoid allowing agents or employees to establish social media accounts in their own name for company business—otherwise companies risk potential loss of the account and interruption of customer communications when the account holder leaves. 
Training on use of company accounts, and monitoring of such usage is also an important aspect of mitigating company risk of litigation and potentially adverse publicity.  It is certainly less expensive to prospectively clarify these issues by policy or contract rather than later seek relief through the courts. 

 Paul Van Slyke

Gregory Casamento
Jason Mueller

Thursday, January 12, 2012

Court holds that Website Operator Not Liable Without Specific Knowledge of Copyright Infringement

Court holds that Website Operator Not Liable Without Specific Knowledge of Copyright Infringement
In a case of first impression, UMG Recordings v. Shelter Capital Partners, et al., the Ninth Circuit refused to hold a website operator liable for copyright infringement based solely on the operator’s general knowledge that some of the third party content on its site may be infringing copyright owners’ rights.  While the case only involved video content submitted by users, its holding applies to text, audio, photos and all user generated content.   The holding also applies to all industries and businesses that have websites, social media or blogs and that permit uploading of user-generated content.
Facts and Issues
The Defendant Veoh operates a publicly accessible website that enables users to share videos with other users. The Plaintiff, Universal Music Group, produces and distributes recorded music and music videos. Although Veoh has implemented various procedures to prevent copyright infringement through its upload system and its website, users of Veoh’s service have in the past been able, without authorization from copyright owners, such as UMG, to upload music videos containing songs in which UMG owns the copyright rights.  This in turn allows other Veoh users to view and even download those music videos.
The Digital Millennium Copyright Act (DMCA) provides so-called “safe harbor” for website operators so that even when a user of the website operator’s site shares a copyright protected video with other users, if the website operator meets the requirements set forth in the “safe harbor”, that operator is not liable for copyright infringement.
In the UMG Recordings case, the particular “safe harbor” Veoh invoked protects website operators and other “service providers” from liability for the copyright infringement of others who provide content on their sites when the provider “expeditiously” takes down the allegedly infringing content residing on its servers in response to a notice from a copyright owner (commonly referred to as a DMCA notice) that the content is infringing the owner’s copyright.
UMG’s Claims
There was no question that Veoh acted expeditiously to remove allegedly infringing content from its servers upon receipt of DMCA notices alleging that specific content on its site was infringing.  UMG claimed, however, that Veoh’s actions were insufficient  due to Veoh’s late adoption of filtering technology to detect infringing material and that Veoh removed only the specific videos identified in DMCA takedown notices, but not other infringing material that the filter detected. 
UMG argued that Veoh’s failure to remove other infringing material detected by its filters imputed Veoh with “actual knowledge” of the infringing activity, which, if true, would deprive Veoh of the DMCA safe harbor.  UMG also raised numerous factors that could have tipped off Veoh to the presence of infringing content on its servers, such as the presence of music videos without any license from a rights holder.
The Court’s Ruling
The Court concluded that to be liable for infringement a service provider must be aware of specific infringing material to have the ability to control that infringing activity.
In finding that Veoh was entitled to the DMCA safe harbor, the Court first found that Veoh’s functions in connection with video uploads by users fell within the safe harbor requirement that the uploaded content on Veoh’s website was “by reason of the storage at the direction of the user.”  The court upheld summary judgment and a Rule 12(b)(6) dismissal in favor of defendants.
The Court reached the same conclusion regarding the safe harbor condition that, “in the absence of [actual] knowledge, [the service provider] is not aware of facts or circumstances from which infringing activity is apparent.”
When statutorily compliant and specific DMCA takedown notices are received, a website operator or service provider that acts expeditiously to remove the specifically identified infringing content will not likely lose the DMCA safe harbor insulating liability for user-generated content.  At least that is the law in the Ninth Circuit and persuasive authority in other circuits until the Second Circuit issues its decision on the same issue in Viacom v. YouTube.

       Paul Van Slyke

Gregory Casamento

Mike Schulman