Social Media and the Law [e315]

In our latest episode, Nasir and Matt are covering the legal issues on Social Media. The average person spends most of their day on social media, whether they are scrolling for hours or publishing their own content. However, just because you publish your own content on Instagram does not equate to you owning that image. The law is a little complicated and the solutions aren’t always clear. Brands that work with influencers gain a lot of attention, but all too frequently, influencers break the law by not adhering to them.

Full Podcast Transcript

NASIR: All right. Welcome! We are covering social media and the law.

MATT: This is not even something you would have to think about.

NASIR: Do you have the right to do whatever you want?

MATT: There’s potential biases.

NASIR: You have influencers’ endorsements. Who owns what?

MATT: Kickstarter, GoFundMe, and stuff like that.

This is Legally Sound Smart Business where your hosts, Nasir Pasha and Matt Staub, cover business in the news and add their awesome legal twist. Legally Sound Smart Business is a podcast brought to you by Pasha Law PC – a law firm representing your business in California, Illinois, New York, and Texas. Here are your hosts, Nasir Pasha and Matt Staub.

NASIR: All right. Welcome. We are pretty much an A to Z – or Facebook to Twitter as I like to call it – of law and social media. How are you doing, Matt?

MATT: Yeah, doing well. You know, the interesting thing about this topic is I guess it’s still relatively new, but if you had a business a few decades ago, this is not even something you would have to think about – at least in this sort of context. It’s always evolving because social media is always evolving but, yeah, there are a lot of considerations for business owners with this.

NASIR: And it keeps changing, so much so that we actually did an episode similar – not quite the same – on social media and the law about 2017. If you take 2021 and minus 2017, that’s how many years ago it was.

MATT: Yeah, it’d be interesting. Like you said, I mean, even four years ago, I’m sure some of the things we talked about are vastly different than what we are going to talk about today – new laws, new rules. It’s something that people have to stay on top on pretty heavily.

NASIR: Right. I mean, even four years ago, social media from a legal perspective, I’m not sure how much it changed, but the way we use it keeps adapting. I’m trying to think in social media what’s been really different here. I don’t think TikTok existed four years ago. Or it barely existed, right? What other mediums? There are also mediums that are no longer existing. Wasn’t there that one where you can have those 7-second videos? What was that?

MATT: Vine.

NASIR: Vine, yeah, that’s gone. I think it was Vine, yeah. Did Twitter buy them out or something?

MATT: I’m not sure. I thought they closed down, but maybe.

NASIR: Yeah, it goes back and forth.

MATT: I think it was probably, if I can remember correctly, I think Facebook was more popular. Things like Instagram were probably less popular. I’m sure there are still a lot of Facebook users, but my guess is the popularity of those two flipped a little bit. It depends on the demographic too, but that’s kind of the general observation I’ve had.

NASIR: Right. We also went through the Trump administration which, of course, when it came to social media, there’s been quite a bit of activity with our president tweeting almost every single day multiple times. And so, that obviously was a big kind of cultural shift, I think – the mainstreaming of social media. When I have my parents getting on Facebook and Twitter and things like that, then you know we’ve gotten to a new level.

MATT: I didn’t even think about it from that context. Obviously, that was a big thing at the time. Since then, he was kicked off for a period of time. Is he back on? I haven’t paid attention.

NASIR: I think he’s still off. I mean, I don’t know about every platform, but I’m pretty sure on Twitter and Facebook, he’s still off. And so, that’s something that I think – I mean, I don’t know how we cannot talk about the kind of “cancel culture” of social media that I think there are a lot of complaints about to the extent that, you know, even in the COVID era here – I guess I’m getting right into our first topic which is this – like, when you’re communicating on social media and on these private platforms, freedom of speech and these kinds of things, I think we’ve found out that these are private companies and they can really govern how they wish. Even with legal challenges, they’ve been able to withstand that scrutiny.

MATT: Yeah. I mean, there’s definitely been a fair share of people that have gone on some sort of social media platform to voice their opinion on something and then ultimately end up getting fired because the company just doesn’t agree with their stance necessarily or maybe more of the backlash and they feel like it’s going to reflect poorly on the company. That’s happened a bunch with certain celebrities – endorsements and things of that nature too. I’ve seen them get dropped. The one that comes to mind just because it was very recent was – well, you actually follow soccer, so you might know this one – Megan Rapinoe.

NASIR: I don’t know who that is.

MATT: The soccer player for the US women’s team?

NASIR: Oh. Yeah, of course. Uh huh. Go ahead.

MATT: Well, she was one of a few athletes in the Subway commercials with Steph Curry, Tom Brady, and somebody else – I think it was Serena William? I’m trying to remember. Subway did not feel that her voice and her actions were aligned with—


MATT: It was mostly the kneeling during the national anthem and the backlash that they were kind of getting on that. That’s just one example. Like I said, particularly for celebrities, there have been countless examples of them saying or doing something – even if it’s something they’re entitled to do or allowed to do legally. It’s the brand that companies care a lot about.

NASIR: Right. A lot of endorsements which, of course, we’re going to talk about today – social media and sponsors and so forth – they often have a morals clause. Like, if you get arrested, if you get these kinds of things, and even if you do something where you take a stance that they don’t agree with, they can terminate that – of course, that’s whether it’s social content or not. But a big theme, I think, in this episode, is that social media is still real life. I think, because people are on the internet or on a computer, they think all the rules are different. There may be some changes or different perspectives but, in reality, it’s just applying existing law to the same.

And so, for example, let’s talk about employment issues, what you can restrict or access with your employees is the same whether it’s through social media or not. You cannot prohibit your employees from doing certain things outside the office, just like you can’t prohibit your employees from doing certain things on social media, and the opposite is true. You can fire somebody for their behavior outside the office to a certain extent – whether that behavior is online or offline. And so, that’s probably going to be our approach with each of these issues.

MATT: I think that’s a good way to summarize it. It’s life in a different medium, but the same rules generally apply. We’ve said this so many times, but you can terminate an employee for anything that’s not illegal which is mostly just nondiscriminatory.

NASIR: When I say that to clients, I think people hate when I say that because they’re like, “Yeah, so where’s the real advice?” Obviously, we say it to make a point.

MATT: Yeah. Well, it’s the general attorney answer – as long as it’s legal, then it’s fine. I think that’s the reason people sometimes don’t always like that answer, but it’s the truth. Like you said, it’s the same for social media too. If an employer is going to terminate an employee for something they did on social media, as long as it’s not for discriminatory reasons for the most part, or I should say mostly nondiscriminatory, there are other areas that apply as well, then it’s typically going to be fine from a legal perspective.

NASIR: Right.

To outline these social media issues, for example, when you’re hiring an employee, I don’t think it’s abnormal these days to at least Google or do some basic search on an employee that you’re considering hiring. I think, for the most part, even employees understand that to the extent that everyone is very cognizant about the privacy settings and what’s exposed to the public, but there are these companies that actually you can hire to do a much more thorough kind of social media search, and I’ll tell you, I’ve seen some of these reports. They can be pretty extensive, and people don’t realize that, when you’re doing something like that, it’s equivalent to actually getting a credit report of your potential hire. If anyone who’s done that before, you actually have to get a proper disclosure to your employees for doing that, and the law considers the same. If you’re hiring some kind of outside vendor to do a social media search, you actually need to do that disclosure to your employee or to the potential hire.

MATT: Yeah, you’re exactly right. Going back to what we were talking about earlier about our episode from four years ago, I think one area where things have changed is people have gotten a lot more savvy with what they publicly disclose on their social media as well. Like you said, you can have privacy settings, but I would think that any company would at least do a Google search of the individual and see what pops up. Again, there are laws in place, and you can’t be discriminatory based on what you find on somebody, but I think that’s kind of a baseline thing that a lot of employers do now – kind of the first vetting process.

NASIR: Right, but what’s interesting – and you mentioned it – is that let’s say that you are a big business, you’re hiring a bunch of employees, and part of your process is to review their social media accounts or what their online profile is. What is it that you’re going to discover on that you’re going to then eliminate them as a potential candidate? With that criterion, it’s pretty difficult to not accidentally fall into a protected class because, I mean, a lot of this stuff is all private behavior – whether they have a family or not. You know, when you submit a resume, often it doesn’t come with a photo, but if you Google somebody, you’ll be able to see what they look like and whether it’s a man or a woman of a certain race and a certain age, and that may not be apparent just from a resume. All of a sudden, you’re getting all this information. How do you not fall into this trap of being discriminatory towards that? By the way, that’s one reason why I think a lot of HR professionals leave this step to one of the later steps because it’s like you’ve already made the decision. Let’s just make sure that this person is not crazy, for example, basically.

MATT: Yeah. I mean, I would think there’s the one that would pop up that would affect the decision-making process that would be illegal would be if you’ve happened to find a female’s profile and she’s posting photos of being pregnant.

NASIR: All right.

MATT: Because businesses don’t always want to hire people that are pregnant because they’re going to work for a few months and then take some time off. I think that’s probably one of the bigger ones is my guess. Again, people are a lot more savvy now, so I don’t think there’s just open profiles. But, like you said, LinkedIn, for example, the person’s photo will probably be on there, so there are going to be protected classes just solely based on photos that you can see. You have to tread that water lightly and make sure you’re not doing things that are going to come back and bite you down the road.

NASIR: Let’s say you’ve hired the employee. Now, you have to deal with social media in the context of what they’re doing while they’re employed with you. There’s one issue I want to bring up that I feel like we have to bring up but it’s just so silly and crazy to me, but this happens. A big controversial legal issue came up – I want to say it’s been about ten years or less now – where employers were asking employees to give them their username and passwords of their social media accounts. Even today, thinking about employers actually doing that and the reasons why, I wouldn’t really understand it, but this was so much of an issue that there’s probably at least a dozen states – if not more – that have specific laws that prohibits employers from doing this. Do you know why they would want that access? I don’t know.

MATT: No, it’s wild to me as well. You know, obviously, you need to be professional at work, and what you do outside of work is your own thing to a certain limit, but I can’t see the need for employers to need to log into an employee’s social media account and access and view any messages. It’s way over the top. It’s still baffling that states even need to make laws to prevent that.

NASIR: Right. By the way, Texas is not one of them, but California. I’m reluctant to even go through the states that don’t have this law. Just because there’s not a specific law that says your employer can’t do this doesn’t mean that, by doing so, you may be falling into some other legal trap as well, especially if the employee refuses to do so and then you retaliate against that person for doing so.

MATT: Right, and that’s why you’ll see some people. I know people that have two Facebook accounts – one is their work account, and one is their non-work account, I guess, I should say.

NASIR: That’s where they go wild.

MATT: Yeah, maybe it’s for this reason. I don’t know, but to me that’s just way over the top. It just doesn’t seem necessary.

NASIR: I have one for every mood I’m in. I have a funny one. I have one where I’m just like a really mean person – like a troll on the internet. That’s personal but, yeah, I would never share that with anyone – at least the username and password – and I would never ask an employee to do so. It just seems crazy, but I think there is some connection with what your employees are doing online on social media and the workforce. There is some carrier work, and I think it’s different between each business. And so, that’s why, when social media came about, I remember HR companies, advisors, consultants, lawyers, and law firms were publishing all this different advice on social media policies. These policies would be a paragraph or two long. They would be two pages long. It would be a whole packet. Since then, there has been quite a bit of both laws and disputes that have kind of come out to give us some good guidance on how to actually do these policies.

MATT: Yeah, it’s definitely something most employee handbooks nowadays will have some sort of social media policy in there. As time goes on, they’re getting lengthier and more specific just because they can see what’s allowed and what’s not. I mean, any medium or large company is going to have some sort of social media policy that employees need to follow. For the most part, it’s going to be fine. I mean, again, not to go back to what I was saying earlier, you know, as long as you’re not preventing them from exercising their freedom of speech or any sort of protected activity, you know, it’s generally going to be fine and acceptable.

NASIR: Right. I think that’s the key phrase – protected activity. Just like any other context, if your employee does something that you don’t like, and so long as that thing that you don’t like is not a protected activity, you can terminate them. This whole concept that you have to have cause to terminate, that is not how the law works. And so, similarly, in social media, if you have these policies where companies actually do get into trouble – and this is easy to fall into – making these policies too general.

The National Labor Board really has a lot of guidance on this, but basically, if your policies are too broad that employees may feel kind of frozen out to even start talking about certain things that aren’t protected activity, then your policy is too restrictive. What the National Labor Board is wanting to see – and courts in general – is to be a lot more specific and narrow on how you do things. For example, you know, some general broad language. Chipotle had something like this. If you aren’t careful and don’t use your head, your online activity can also damage Chipotle or spread incomplete confidential or inaccurate information. “You may not make disparaging, false, misleading, harassing, discriminatory statements about or related to Chipotle, our employees, suppliers, customers, competition, or investors.” Okay. It sounds great. I mean, this is not something that wouldn’t come out of our mouths in writing a policy, but the National Labor Board considered this way too broad, and what they thought was employees would be reluctant to even start talking about certain things that are considered protected activity. Basically, if employees want to share information about how Chipotle is treating them poorly. I’m not saying that that’s the case, but if they felt that way, they wouldn’t be able to share that freely. This broad language seems to prohibit that. Therefore, it’s invalid or not enforceable.

MATT: Yeah, and I agree with you. Just on its face, reading it, it’s general. I don’t necessarily disagree with the general message, but it only becomes a problem if there’s some sort of disciplinary action or some termination, and they can bring it back to what the employee posted on social media. Like you said, if it’s too general, that’s when it becomes a problem. Like you said, in theory, something like this doesn’t seem too bad, but it can come back to bite you if it’s not narrowly tailored.

NASIR: Right. We can go into some details on how to make it enforceable, but you have to narrow the definition of confidential information. You can prohibit certain very clear things like discriminatory or harassing content or harassing conduct and things of that nature. Look, if they violate that policy that you outlined, you can terminate them. It’s pretty well-established. I mean, there’s one case where a person who worked for a dealership just posted an image of a photo of a car for another dealership, but it was a sister or same manufacturer of a car that broke down, and they were just making fun of the issue. Based upon that post, that employee was terminated. It was against the company policy to do what they were doing, and the courts upheld it. It’s definitely not something outside the realm of involvement of your employer. You’ve just got to figure out that fine line.

MATT: I know we talked about this at some point on the podcast. I’m pretty sure. I don’t remember if it was in the episode we referenced or not, and this was fine – the one employee who basically took time off of work. They said they were sick, and then they had photos of them that surfaced. They were just out all day. I forget exactly what they were doing, but it was like, “Okay. Well, that’s just clear malfeasance.” Examples like that, those are going to be fine, but like you said, you do have to be careful in drafting these policies, and then any sort of action as a result.

NASIR: This reminds me of another topic, but it kind of connects with what you just said. Everything that is on social media – whether it’s private or public, so I’m talking about a public tweet versus a Facebook message or even a WhatsApp message or your Slack channel – these are things that are actually discoverable. You know, subject to certain rules and so forth.

To your point, there was another case where an employee claimed that they had an on-the-job accident – an injury. And so, they filed a worker’s compensation claim. Through discovery through their Facebook, I think it was something that wasn’t available to the public, they were able to determine that he actually received his injuries through a motorcycle accident. Of course, if you get into some kind of accident, people are going to post that on social media. Of course, losing that case based upon that. And so, there are some unintended consequences of employees who post this, but I think everything – in fact, from a litigation perspective – this whole electronic discovery aspect of things has really changed the game. Can you imagine before?

Slack is a good example. For those that don’t know, a lot of modern companies use Slack to communicate. They use WhatsApp to communicate. Imagine prior when colleagues would speak to each other, especially now that they’re remote even more so. You know, nothing would be in writing. It would be over the phone, maybe emails, but when it comes to live chat and back and forth, that’s all recorded. And so, now, all of a sudden, imagine all that being discoverable. It’s a huge gamechanger when it comes to business litigation. Of course, there are ways to mitigate around that issue as well.

MATT: Yeah, I don’t think we’re varying too far off topic, but that’s been critical in a lot of the sexual harassment cases that have been filed in the last handful of years – access to those electronic records because that’s usually where enough of it seems to lie nowadays.

NASIR: Right. I mean, especially when it comes to live chat and writing, people are not as filtered versus an email, right?

All right. Let’s go on to where a lot of people talk about social media and the law – endorsements. You know, these things where you have influencers. Of course, you and I have to really know this stuff really well. Beside the fact that we represent influencers, we have quite a following ourselves, don’t we?

MATT: Yeah. I mean, I do at least three posts personally a week for items and goods that I am promoting, so I know what it’s like.

NASIR: Of course, I’m talking about my family. I share a bunch of pictures, and they always are accusing me of sharing things that are actually sponsored that I got for free because, if I did get something for free and I was endorsing or posting a photo about it, the FTC wants me to actually put a hashtag on there or some kind of clear and conspicuous notice that it’s actually a sponsored ad, and it’s weird how much that doesn’t happen. You see, most people don’t follow that.

MATT: Right. You know, it’s a relatively new requirement from a few years ago. I can’t remember exactly when, but you’re right. Even with the laws, you’d be surprised how often people just don’t follow them, and it is a requirement by the FTC. They give specific examples of what you need to put in there. Even some of the biggest names, I think nowadays they’re probably in line, but even some of the biggest celebrities won’t even follow the law on this stuff. It was just kind of crazy. It’s almost like they just ignored it or just didn’t care. Or possibly weren’t aware of it. But, yeah, there are requirements. Even if you get a product for free, you still have to disclose that basically it was a sponsr or an ad or something to that effect.

NASIR: Yeah, and that’s a common tactic. I don’t want to call it a “tactic.” It’s a marketing technique. You know, you send an influencer a product. You don’t even tell them, “Hey, leave a positive review or a positive endorsement. Can you tell your audience what you think about this product or service in exchange for a discount or any kind of consideration?” The FTC is very clear. In fact, I think it was five years ago that they called this dotcom manual or something like that. It was this whole list of things – recommendations and so forth – and they’ve updated it quite a bit. They even announced, “Hey, we’re going to crack down on this.”

To be honest, they have a little bit with egregious cases, but not much. The problem is that I think the trend on influencer marketing is not “hey, let’s hire Kim Kardashian to sponsor our product.” When that sponsorship is a million dollars, I’d rather get the million dollars and spread it out over to a thousand different influencers, and that impact may be even better because it has that more viral effect. And so, Kim Kardashian and her agency, they’re going to put “ad” on it or “sponsored.” An influencer that has 100,000 followers may or may not. Is the FTC going to go after them? Or are they going to go after the sponsors? Really, when we write these agreements when it comes to the influencers – it’s usually when we’re representing the company, I should say – it’s up to the influencer themselves to post this kind of clear and conspicuous notice.

MATT: Right, particularly now as it’s kind of evolved over time. You start seeing more and more of that language in the actual contracts for the influencers as you know you’re going to abide by FTC guidelines, regulations, et cetera, and shifting that to them because, like you said, it’s the influencer’s responsibility to do that. I think you’re right too – I think the term is “micro-influencers.” I don’t know what the threshold is to be considered that but, you know, you’ll see a lot.

NASIR: I think you would be considered a micro-influencer and I would be considered a macro-influencer. Yes, I don’t know if that’s a term, but it sounds like it.

MATT: You just coined a new phrase.

NASIR: It’s interesting because I feel like the reasons for these rules – and this may be obvious, but I’m just going to state it – is that people don’t realize that it’s misleading that people are giving an endorsement and, if you don’t know they’re getting paid for it, then it’s misleading. It’s like, “Wait a minute. You’re biased.” That’s why, even if you’re an employee and promoting products and services and you’re not disclosing that, that might be an issue to the FTC. But, I mean, people are getting more and more sophisticated. I think people get it. We all know people that are promoting certain makeup that they’ve been given for free or a product. I feel like makeup, for some reason, is common. Or different fitness products and services and things like that. The FTC seems to be a little too strict on this.

I mean, literally, can you imagine this? Their recommendation is that, in a tweet of 140 characters – which I know is expanded now but, in their mind, when it was 140 – they recommended that you put the word “Ad:” in the beginning of the tweet. It almost defeats the purpose. When you watch a commercial, it doesn’t say, “This is a commercial,” followed by the commercial. Everyone understands that it’s a commercial. In the same way, the trend is such that everyone understands that, if you are an influencer of any kind of following and you’re promoting a product in any way – even casually, even secondarily – you’re probably getting paid for it. In fact, I’ve seen more often, influencers say, “Hey, I actually genuinely like this product. I didn’t get paid for this.” The disclosure is the opposite.

MATT: Yeah, you definitely have seen more of that recently in the last few years because that’s just what they have to do now. I mean, just to reiterate what you were saying, you know, just because the person is not getting paid for it doesn’t mean they don’t have to disclose it because I’ve seen plenty of instances of companies just sending free items to these individuals, and they think, “Oh, this is great! I got something free. I can just post it,” but it still falls under those guidelines.

NASIR: Right.

One thing that people ask us a lot about when it comes to social media is who owns what? Copyright and intellectual property questions seem to be pretty common. In particular, one of the things that came up really early in social media, when it became very clear that your actual followers and who those are is an asset, right? As we talked about endorsements, if you have a million followers, especially if they’re engaging, you are an influencer that can make money off of those followers. There’s no doubt. And so, the question becomes who owns those accounts and who owns those followers? Now, if you’re an individual, that’s probably more clear, but what if you’re an employee and you create a Facebook page for your employer? Everything is in your name and so forth.

I remember having to deal with this very early in social media because, when an employee leaves, especially if they were disgruntled or so forth, a lot of these social media companies didn’t have the policies that made sense that would allow the employer to then take over that account, and that employee would often hold it hostage. It’s a lot better than it used to be, but I remember we had this issue where a Facebook page was kind of hijacked by an employee. To get Facebook, to even be able to talk to anybody or submit a support ticket or whatever at that time was impossible. Eventually, we fixed it, but it’s a lot different now. There’s an actual process and procedure that Facebook and other websites have created.

MATT: Yeah. I mean, talk about one area that’s definitely gotten better, exactly what you’ve said of just working with these different companies just to resolve an issue like you just talked about. I mean, it’s still not great overall, but it’s definitely gotten better over time because there are plenty of scenarios of those rogue employees, particularly if they are disgruntled over being terminated, and they just hold hostage the access to the accounts for the business. Even worse, and I think we’ve seen this too, just sending some sort of message to everyone, if you have access to their emails or whatever through whatever means. That creates a huge problem. It probably ruins the employee’s case for any sort of wrongful termination claim, but it’s going to be more damaging for the company in the sense of, again, their brand and their goodwill are going to be tarnished.

NASIR: Another big IP issue is copyright infringement. This is what I remember. In school, they would make copies of laminations to present to the class – teachers would. I don’t know why I remember this, but I remember the teacher being hesitant of doing so because of copyright and so forth and whether that’s fair use and all that. I remember that copyright law, even at that time, just seemed like a strange, weird thing because who’s going to enforce that, right? If a teacher in Mandale, Ohio – which is where I went to school – copies something out of a textbook that they didn’t pay for and then distributes it to the class because they’re trying to teach them, and technically that may be copyright infringement, what is the publisher going to do in that sense, right? It’s possible, and I’m sure there have been cases where that’s happened, but similarly, social media is such where it’s so easy to post an image that you find on the internet that is owned by somebody else on your own profile and claim it as your own or you can even say it’s someone else’s but that’s still maybe copyright infringement, technically.

MATT: Yeah. In your example, the teacher is probably relatively safe. There’s a good chance the artist doesn’t even find out about it, but I don’t know. I mean, how many times have we dealt with this issue though with companies, particularly if it’s an employee that’s doing it that just doesn’t even know what the rules are or what the law is? They say, “We need to post this photo for a client,” or what-have-you, and they just pull a photo from somewhere online, and then they post it up. And then, you get a request for copyright infringements. I think it’s happens. I mean, it’s actually to the point now – and it has been for years – it almost seems to be a strategy for some of these photographers and artists just putting the photos out there and then having a cease-and-desist letter sent once they find these photos that surface online.

NASIR: Right. If you own a blog and have hired an agency or even done it yourself and posted an image that wasn’t your own, you’re almost guaranteed to have received some kind of notice or request to not only take it down but give us $5,000 or $10,000 or $50,000 for copyright infringement. People fall victim to it. Even the best of people like Kim Kardashian – not that she’s the best of people.

MATT: Yeah.

NASIR: I feel like I just fell into that really horribly, but she actually posted a paparazzi photo of herself. I remember we even covered this a long time ago in one of our earlier episodes. Everyone has probably seen it. It’s a photo of a monkey that took a picture of themselves, right? The question was from a copyright perspective, who owns the photo? Because, technically, it’s the person taking the photo that owns the copyright to the photo – not the subject. In this case, that monkey was taking a photo of himself, so it became an interesting legal issue. Well, supposedly interesting.

In this case, the paparazzi – what’s the singular of paparazzi? Is it paparazzo?

MATT: I don’t know.

NASIR: Paparazza?

MATT: Paparazzi?

NASIR: That’s like fungi and fungus. Anyway, that photographer actually sued Kim Kardashian for a copyright infringement just for posting it on her social media. You know, I’m sure there might be some fair use arguments that are some exceptions to the rule, but generally, you can’t just copy and paste as much as you think you can.

MATT: Right. And so, what about the other side of that? What if it’s your photo that gets taken? Because we’ve dealt with this a lot too. Companies, especially if they sell any sort of goods or products, they need to put their photos. I think we’ve seen this a lot more with the emergence – well, not emergence but – the popularity of Amazon or any sort of ecommerce thing. People are just ripping credible photos that a business takes and then uses them for their own to sell products. There are multiple issues with that.

NASIR: Right.

MATT: But the response is what’s called a DMCA notice. Basically, you can send that to the site that actually has the photo on the server. As long as it’s true and you follow the guidelines, they are required to take it down at that point. From the business perspective, they have the route to go copyright infringement claim, so we’ve dealt with a lot of that too. Like I said, I think a lot of just emergence of all these different ecommerce sites and how easy it is to do that.

NASIR: I thought you were going a different direction at first. It reminds me, if you ever travel overseas, you’ll see images of celebrities with Photoshopped product in their hand in the glass windows. You know, that’s also a common issue in social media’s trademark infringement which that would be use of likeness and so forth. One thing that you can’t do is cause any likelihood of confusion. One thing that I think you’ve seen is that, when it comes to the actual account handles or the usernames, that’s a whole thing in and of itself, right? That’s why sometimes – I think everybody – Twitter, Facebook, and Instagram at the least all have verified accounts.

In fact, similar to domain squatting and so forth, if you register a username and you’re trying to present yourself – let’s say I did Mick D’s, right? I start posting all these things about McDonald’s and there’s some confusion as to “Wait! Is this McDonald’s posting this or is this someone who is just a McDonald’s fan?” If there is any likelihood of confusion, I could get in trouble from McDonald’s for trademark infringement.

And so, what do people do? It’s like, “Okay. This is a fan. I’m a super McDonald’s fan. I have no affiliation with McDonald’s and so forth.” Isn’t Donald Trump @therealdonaldtrump?

MATT: I think so.

NASIR: Or maybe there is another account which is a satire account of Donald Trump but, if you notice on the profile bio, it specifically says, “This is a satire account,” which Twitter allows, and it’s not trademark infringement or use of likeness because you’re being kind of clear that “I have no affiliation to the actual…”

MATT: Yeah, a parody account, basically.

NASIR: Parody account, yeah.

MATT: I think, from businesses’ perspective, we’ve seen that quite a bit too. You know, you have a social media account – let’s say, Instagram, for example – that pops up that is possibly a similar name or the same name and similar products as the company itself. You know, like you said, it’s a likelihood of confusion analysis. You know, we’ve dealt with that quite a bit too.

NASIR: One thing I do think there is some new law – since the last time we covered this on social media – which is raising capital online through crowdfunding and these kinds of things. I would say the amount of 506(c) raises has just exploded. Of course, social media is a big part of how people raise funds these days.

MATT: I put it into two separate classes. There’s the 506(c) raises, like you said, and then there’s the general – I guess they’re both crowdfunding, but you know what I’m talking about – Kickstarter.

NASIR: Yeah.

MATT: It’s varied levels. Like you said, this probably is the biggest difference from four years ago – just the regulations behind it – because it was kind of the Wild West for a while. Or is it Wild, Wild West? Wild West? I don’t know which one it is.

NASIR: It was Wild, Wild, Wild West.

MATT: Because people were just out there, you know, when there weren’t regulations in place and just raising money. You know, everything online is going to come with more scrutiny and people were losing money and getting taken advantage of, so the SEC had to step in and make some regulations on this for good reason. It’s actually pretty cool nowadays what’s able to be done legally from raising money online from people you’ve never met.

NASIR: Right. From a non-investment perspective – like, these Kickstarter campaigns and GoFundMe – even though there’s been a lot of progress there, what amazes me is that there’s still so much scamming going on. I was just thinking about the White House official. Wasn’t there a White House official or employee or affiliate? They were raising funds to raise money for the wall. Everyone was like, “Well, you collected all this money. What is this for? Who is this going to?” Ultimately, what ends up usually happening – and I don’t know what happened in that case – somehow, there ends up being this public pressure to get the money where it’s supposed to be, but I’ll tell you – that’s probably the exception.

There is no transparency as to how this money is being spent and so forth. It reminds me of Creed who collects dollars for that person that got fired and takes the cash and puts the card into the trash. By the way, Creed from The Office is the reference. By the way, if you listen to our podcast and don’t understand our Office references, then you’re going to have to get used to that or start watching The Office and catch up. Of course, I got sidetracked. I don’t even remember what we were talking about now.

These campaigns, of course, it’s illegal, but the mechanism to actually go after these people that misappropriate these funds that were given to them in trust is still pretty difficult. I mean, it’s just like anyone. Whether Creed is coming to you and asking for a couple of dollars or you’ve giving a couple of dollars online, it’s pretty much the same kind of analysis.

MATT: Again, there are kind of two different levels within that. There are the ones that are just completely fraudulent. I think the guy that started the Fry Festival thing, he also had his own separate one of these that were a scam. And there are ones that just don’t work out because, you know, with Kickstarter—

NASIR: By the way, it was Fyre Festival, not Fry Festival. By the way, if it was a Fry Festival, that would be fun.

MATT: Oh. I said Fry? Oh. Maybe you’re right.

NASIR: Well, maybe you said Fyre. I don’t know.

MATT: It’s because it’s spelled like Fry, I think. You’re right. All right.

NASIR: Right. Don’t worry. We’ll cut that out. Or should we just restart the episode?

MATT: Yeah, start from the beginning.

NASIR: Let’s restart.

MATT: But, yeah, I was saying there are ones that just don’t work out. Now, obviously, when you go up to the actual 506(c) raises, that’s a whole separate ballgame – pretty strict requirements on what types of investors you can go after, what needs to be disclosed. It’s a full-one raise with outside investment. You know, that is the highest level in terms of trying to raise funds for whatever your business is – through social media or online.

NASIR: Right, and 506(c) raises, even though they restrict it to accredited investors, and so in theory these investors are, you know, sophisticated and so forth, I’ll be honest – I personally don’t like the idea. Look, we have clients that do it and so forth, but it’s this concept of investing in a private company based upon an advertisement of general solicitation for which you don’t know much about. It’s like, how can an investor in that particular scenario really be protected, you know? At least, with other Regulation D filings or raises, the prohibitions of general solicitation at least allows some kind of intimacy between the person that’s raising the funds and the person that is giving the funds whereas, when you’re generally soliciting, that may never happen, you know. There’s some weird disconnect when it comes to investment for that, but people are willing to do that, you know. People are willing to invest in a lot of things without much care. And so, everyone’s free to do that, and I think that’s the main argument for it. It’s like, “Look, people can decide what they want to do with their money.”

MATT: There is kind of the lesser degree of that – the Reg A fillings. You know, that’s going to be lesser amounts and not the same requirement in terms of the investor sophistication or monetary threshold. You’ll see those more with basically companies – you know, small to medium-sized companies – that have a pretty good following. Not a cult following necessarily, but a pretty solid following, and they want to give all of their customers the opportunity to get involved and see the company grow and investing their own money in it for much smaller amounts than you’d see for a 506(c).

NASIR: Right. I think it is a cult following kind of deal or early adopters – that kind of culture where people are really excited and passionate about your product or service and raising funds for that. I mean, those are the cool aspects of social media raises in that respect. But, of course, they’re still complicated. It’s still not easy. There’s still a lot of regulation around it and you can’t just start raising online. We’ve seen it, right? All of a sudden, people are like, “Hey, I’m starting a new business, and we’re raising some capital.” No, you can’t and shouldn’t do it that way.

MATT: Yeah, and I think another thing too is administratively it’s much more of a burden to go that route. I mean, if that’s the only way that you’re able to raise funds, then you just have to do what you can and raise through those means.

NASIR: Absolutely. Well, that’s social media and the law. I’ll tell you, there are so many different topics that we didn’t cover. It is actually relatively vast. I mean, we did some research. There are some attorneys that specialize in this but, again, ultimately, whether it’s social media or not, it’s still real life. It’s the same kind of law as it applies to that, but you do develop some kind of interesting issues that wouldn’t come up otherwise, but I don’t know. What do you think, Matt? I think that was an interesting topic.

MATT: Yeah, and just to jump off of what you said, I think the big thing is it is similar to real life, but people behave differently behind the keyboard, so I think that’s really one of the big differences. You’ll see people take their guard down a little bit or be more willing to post or say something that they would never think about saying in person or even through work email. It’s different in that way but, like you said, at the same time, it’s similar to real life, and the same kind of guidelines have to be followed.

NASIR: Well, I think that’s our episode. We are recording this on video. Of course, you can also check out, I have our logo in the background which is cool. I added that feature to our podcast which, if you’re listening to this, you can’t see unless you go to where we basically take segments of our episodes. If you don’t want to listen to the entire episode, you can kind of take us in small snapshots based upon topics. I think some of you will enjoy that.

Of course, we’re very active on social media – Instagram and Facebook which are two mediums for which we also covered today, so that’s a nice tie-in.

MATT: Yeah, I think it’s everything aligned here. It makes sense.

NASIR: Well, thanks for joining us, everybody.

MATT: Yeah, keep it sound and keep it smart.

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