Coffee Break! The Issues with User-Generated Content and Social Networking.

What’s So Great About User-Generated Content?

Would you be surprised to find out that the most popular 2009 Super Bowl commercial was created by two unemployed brothers from Batesville, Indiana? Rather than paying an advertising agency to develop its commercial for the most-watched TV event of the year, Frito Lay Inc. asked consumers to create and submit their own Doritos advertisements for its consideration. Frito Lay agreed to award the creator of its winning commercial $1 million dollars if it received the most votes in the USA Today annual rankings of Super Bowl advertisements.

Not only can using user-generated content for advertising campaigns and promotions be a cost-effective means of developing innovative and unique advertising, it is more likely to appeal to the people who matter the most: loyal customers. After all, who else would spend the time and energy to create a commercial promoting the product?

User-generated content promotions create brand loyalty in a community environment. Also, these promotions allow fans to express their ideas and enthusiasm about products. For these reasons, many companies are conducting contests and promotions in which consumers develop software applications, commercials, slogans and other marketing materials for the companies’ use. While a company receives publicity and consumers receive prizes and monetary awards, however, the development and use of user-generated content can be problematic. For example, Chevrolet held a user-generated content promotion for its Chevrolet Tahoe brand, and a number of participants created videos that criticized the products because of their gas-guzzler status. As a result, Chevrolet now has a less-than-flattering commercial on Youtube.com that is more popular than the winning commercial.

Legal Challenges to Using User-Generated Content

• Ownership issues. The first issue to consider is whether your company 1) wishes to own the content outright, 2) needs a license or 3) needs a release of liability from the developer. Options 2 and 3 clearly are less obtrusive and more likely to be enforced by a court. For instance, Frito Lay used the Doritos commercial that was developed in a nationwide advertising campaign; therefore, it made sense for the company to own the content outright. If you seek to use the content only on your Web site, then you may need only a license or release of liability. Further, a liability release may also provide you with additional defenses in the event that the user-generated content is infringing or violates other laws.
• Rights clearance. The second issue is whether all intellectual property rights incorporated within the user-generated content have been cleared; if not, you may find yourself being sued for copyright, trademark or right of publicity infringement.
  
  With regard to copyright clearance, you must ensure that all copyrighted content within the user-generated content is used with permission, in the public domain or falls within the boundaries of fair use or parody. For instance, if a recording of a song is included within a video, then you must clear the copyrighted song recording used in the video, the copyrighted song lyrics and the copyrighted music of the song, which may all be owned by separate parties. Moreover, a standard performance license from BMI or ASCAP will not cover this use because such licenses do not cover the synchronization of the music with the video.
  
  Further, you must determine whether any third-party trademarks have been used in the user-generated content. Such third-party trademarks may be displayed in the background or on signs, advertisements or billboards. You must also make sure that your own trademarks are not being used in a way that will tarnish your brand.
  
  Finally, you must determine whether any publicity or privacy rights are infringed by the user-generated content. For instance, you should examine whether the video uses the voice or persona of a recognizable person to promote your product. Also, you must ensure that all individuals in the video consented to their images being used in the user-generated content if permission is required.

What Can Go Wrong?

Although there are many upsides to using user-generated content, things can go wrong. For instance, developers may develop content during user-generated content promotions that is offensive, disparages your brand or places it in a light that is less than flattering. Such videos may become immensely popular on the Internet, resulting in damage to your brand.

You can also get into trouble for things that your customers say about your competitors in their user-generated content. For instance, Quiznos asked its fan to develop commercials demonstrating why its sandwiches were superior to those sold by its main competitor, Subway. One commercial in particular described a Subway sandwich as needing “medical attention” in order to be edible. In response, Subway sued Quiznos, claiming that the ads were false and derogatory.

As mentioned above, the elements incorporated into the user-generated content can also lead to problems such as a suit for copyright, trademark or publicity rights infringement if they have not been properly cleared.

What Can be Done to Limit Liability?

You can insulate yourself from liability for copyright infringement on your Web site by taking advantage of the Digital Millennium Copyright Act safe harbor and its “Notice and Take-Down” procedure. The Notice and Takedown procedure ordinarily states that the Web site operator will take down any infringing content once it receives proper notice of such content. With this language, and the proper registration, you may avoid liability.

You may also seek immunity for certain conduct of your users by taking advantage of Section 239 of the Communications Decency Act. Section 239 regulates harassing, lewd, obscene or otherwise objectionable speech and applies to publishers and speakers of the speech. Immunity is granted to Web sites that are not the “speakers” of the content as well as to providers and users of an interactive computer service. If a Web site is involved in the development of the content, the immunity will not be granted.

For instance, Roommates.com was not immune from prosecution for discrimination because it was involved in the creation of a questionnaire that prompted users to choose whether or not they wanted a gay or straight roommate. On the other hand, Matchmaker.com was found immune from liability for a false personals advertisement on its Web site because it provided users with open-ended questions that did not prompt them for particular answers. Finally, the Communications Decency Act does not immunize companies from intellectual property infringements.