February 2008 - Legal File

The Risks and Rewards of User-generated Content

By Jeffrey D. Knowles and Mikhia E. Hawkins

Who wouldn’t want to exploit the incredible popularity of user-generated content? Small companies, blue chip brick-and-mortars and e-commerce mavericks have used it to break through ad clutter and promote everything from potato chips to television networks. But despite the promise of user-generated content, marketers must be aware of the legal issues the medium can create-and take steps to protect themselves.

The marketing potential of user-generated content is virtually immeasurable. It can create a tremendous “viral” buzz for products, services or even the marketer itself. Consumers who produce content in connection with the marketing campaign gain a sense of ownership in the content, developing a personal connection with the product and brand. At the same time, the medium’s authentic feel lures consumers with the notion that well-funded marketing machines can, at times, take a back seat to the little guy, and that anyone can be a star.

Most user-generated marketing campaigns are conducted through the Internet, a modern-day Wild West of content, and a medium highly coveted by marketers. Online video websites such as YouTube have become widely used marketing tools, and blogs and customer review sites brim with marketing promise. However, it is the rapidly growing social networking sites such as MySpace and Facebook that are widely seen as the mother lode to marketers seeking to employ user-generated content.

Although user-generated content comes with legal risks-including liability for trademark and copyright infringement, defamation, false advertising and unfair competition-companies can safely harness its immense marketing power.

Congress enacted the Communication Decency Act (CDA) in part to carve out broad immunity for Internet service providers and website operators from liability for content created by third parties. Section 230 of the CDA provides federal immunity to interactive computer service providers-including Internet service providers such as Yahoo and website operators such as Amazon-for content originating from a third-party user of the service.

This immunity, however, does not cover liability under criminal law, intellectual property laws, or state laws that are consistent with Section 230 of the CDA. Moreover, an interactive computer service provider loses CDA protection if it plays some role in the development of the content, including editing or modifying the content, or gives the appearance that it played such a role (e.g., the interactive service provider fails to make clear that it is publishing content originating from a third party).

Also, CDA only protects providers of interactive computer services, not marketers that publish content through the website or Internet service of a third party. Thus, if a marketer conducts a campaign leveraging user-generated content that appears on another party’s website, the CDA will not shelter the marketer from liability for content originating from a third party.

In one area that CDA immunity does not reach, the federal Digital Millennium Copyright Act (DMCA) affords some protection. In general, the DMCA shields Internet service providers and website owners from all monetary and most equitable relief for copyright infringement where a third party initiated the transmission of the allegedly infringing content and the service provider did not edit or selectively disseminate the content.

The DMCA also provides “take down” procedures through which service providers are immune from liability for removing or disabling access to content that allegedly infringes a copyright.

To be eligible for these DMCA safe harbors, a service provider must: 1) implement a policy that provides for termination of a repeat infringer’s access to the Internet service or website; 2) designate an agent registered with the U.S. Copyright Office to receive copyright infringement notices; and 3) promptly take down allegedly infringing content upon receiving notification of the alleged infringement.

As with the CDA, a marketer is immune under the DMCA only with respect to third-party content transmitted through the marketer’s own website or Internet service. Thus, marketers utilizing user-generated content will not find protection under the DMCA for content that infringes a copyright if the content is published through an Internet service or website that the marketer does not own or operate.

In addition to the CDA and DMCA protections, marketers can take certain steps to reduce legal risks associated with the use of user-generated content. When conducting campaigns in which users have instant access to the forum that carries the content-for example, blogs and consumer review sites-marketers should regularly monitor postings and remove or request removal of any postings that may pose a significant legal risk. In lieu of requesting removal, marketers might consider posting a statement disclaiming any association with the content or the user who produced the content and perhaps expressing disapproval of the content.

When feasible, marketers should screen user-generated content before dissemination. If legal issues are identified, including potential infringement of intellectual property rights, they should take prompt, appropriate action to address each issue.

Marketers should develop comprehensive terms and conditions that users must affirmatively agree to and then conspicuously disclose the terms and conditions of the campaign. A well-constructed set of terms and conditions can protect marketers from certain claims from users and others.

Disclaimers are another essential measure. Whether the content appears on the marketer’s outlet or via an outlet owned and operated by a third party, marketers should use disclaimers that make it clear that the company played no role in developing the content, and, where appropriate, that the content does not reflect the opinions of the company.

To guard against claims that a user’s intellectual property rights have been infringed, marketers should have users agree to the marketer’s use of the content. This easily can be accomplished by including a provision in the terms and conditions granting the marketer the right to use the content without compensating the user. When feasible, marketers can require that users sign a release agreement permitting the marketer’s use of the content.

User-generated content’s strong emotional connection with consumers has led some marketers to build campaigns which mimic user-generated content. One tactic has been to use “snapshot” images from blogs and photo-sharing websites such as Flickr to achieve user-generated content’s amateur look and spontaneous feel. While there is nothing wrong with this tactic, marketers must take the same steps to secure rights to use the user-generated image or content as they would when dealing with a professional artist or photographer. Failing to do so exposes marketers and their advertising agencies to claims of copyright infringement and other intellectual property claims.

Marketers can also reduce liability risks by limiting the content that consumers can develop. One way to accomplish this is to provide consumers with an assortment of creative content that has already been reviewed and cleared. Consumers can choose from the available content in creating their works.
With the expansion of the Internet, it has become simultaneously easier to advertise and more difficult to effectively convey a marketing message. User-generated content can cut through the clutter and capture consumers’ attention. An increasing number of marketers are turning to user-generated content and leveraging the creative impulses of their customers to build campaigns that spread like wildfire.

However, it’s imperative that marketers be aware of the legal risks inherent in the use of user-generated content, and consult an experienced attorney to take steps that mitigate those risks.

Jeffrey D. Knowles manages Venable LLP’s Government Division and heads the firm’s Advertising and Marketing Practice Group. Knowles is the immediate past chairman of the ERA Board. He can be reached at (202) 344-4860. Mikhia Hawkins is an attorney with Venable. He can be reached at (202) 344-4573.


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