Five Strategies from Fay Sharpe on social media’s impact on IP protection Featured

9:01pm EDT April 30, 2012
Five Strategies from Fay Sharpe on social media’s impact on IP protection

The risks for companies using social media are plentiful, from employees who reveal trade secrets to being held responsible when outside users post copyrighted material to company-operated web pages. To avoid legal ramifications and lost business opportunities, you need to be aware of potential pitfalls.

“Social media increases the ease with which information is communicated and it does it in a permanent and attributable way,” says Robert Sieg, a Partner with Fay Sharpe LLP. “This can make it easier for confidential information to be leaked out of a company and create a potentially more harmful situation when such a leak occurs.”

Smart Business spoke with Sieg, as well as Fay Sharpe attorneys Mark Rogge and Sean Weinman, about how social media can impact your company’s intellectual property and image.

What security issues can arise with the use of social media?

With many people conditioned to post almost anything on the Internet, confidential company information such as upcoming product releases and acquisition plans are more at risk. With information posted online, that creates a record that can be found by a routine keyword search and that is directly attributable to an employee of the company, giving it more credibility. This can give the media a much stronger lead to dig into what is going on in your company. Information could also be posted that would compromise a company’s ability to obtain patent protection on new inventions or that reveals trade secrets.

As a safeguard, make sure that only those authorized to do so post to your company’s web site and social media sites that your legal department reviews posts before they go live and that patent attorneys review materials to make sure confidential technical matters aren’t being released.

What ownership issues arise in the context of social media?

While the ownership of a tangible item such as a company car can be clear, when it comes to social media, the distinction becomes blurry. In many cases, employees are creating pages on sites such as Facebook for company purposes using their own names and information.

That is something that you need to monitor. If you really want that site being used to represent your company, you need to make sure that it’s clear that you own that site. This can mean opening the account in the company’s name and having documentation, such as an internal social media policy, that describes ownership and proper use of the site, as well as addressing contingencies such as severance issues.

However, sites such as LinkedIn can make it difficult to distinguish between work and personal use, as many companies encourage employees to set up accounts to network with and build business contacts. But if an employee leaves for a competitor, he or she may  take that LinkedIn account upon departure, and all of those contacts created as a result of employment with your company go with the employee.

While a company can argue that the account was created on company time as part of the employee’s assigned work, this can be difficult to prove, so you need to proactively set up policies to establish guidelines to ensure employees don’t walk out with your property.

What should be considered in deciding what can be posted to a company’s social media site?

If you allow visitors to post to your site, consider that it could open you up to liability. The Digital Millennium Copyright Act offers some protections against copyright infringement by providing a 'safe harbor' notice and takedown procedure in some cases in which owners of copyrighted material ask for posts to be removed. Companies should be familiar with these policies and have someone monitor posts to the company’s site to ensure that improper material is not posted.

Many companies have a dedicated employee policing their site, but with that approach, you might already be in trouble before that person becomes aware of an issue on the site. To prevent this, companies can implement a moderated system, which allows the host to queue comments for review before they go live.

What are the dangers of using social media for promotion?

While social media can be used to drive awareness and generate sales, you need to avoid misleading and deceptive advertising such as false blogs that appear to be independent but that are actually operated by someone working for the company.

In 2009, the Federal Trade Commission established guidelines concerning the use of endorsements and testimonials in advertising, which require the disclosure of connections between advertisers and endorsers. If you have third-party endorsers rating products on your web site, but they’re misleading the public, your may be liable for that false or misleading practice. But beyond any legal considerations, it's just not good advertising for your company if people discover that you’re misleading them.

How can social media impact the branding of a company?

The growth of social media has brought with it problems that can affect trademark management and the preservation of goodwill associated with a company’s brand. Practices such as cybersquatting, which involves parties purchasing Internet domains related to brands or company names, is a rising trend. Cybersquatters hold companies hostage and try to sell them those domain names for a price. In other cases,  squatters may post explicit material under the brand name or company banner, or using your good name to drive traffic to their own sites.

Registering your company or brand trademark can go a long way toward stopping a cybersquatter, but the problem is exacerbated as new social media sites continue to appear. As a result, once a brand new social media network arrives, register whatever space you can that could be associated with your product to make sure that no one else does so.

Robert Sieg, Mark Rogge and Sean Weinman are attorneys with Fay Sharpe LLP. Reach them at (216) 363-9000 or rsieg@faysharpe.com, sweinman@faysharpe.com or mrogge@faysharpe.com.