Zuni and Axis Legal explained in a Social Media Breakfast on how to protect a company from general legal threats on social media

1. Social Media Breakfast 2014
Protect Your Company From Legal
Threats on Social Media
CO-HOSTED BY

2. What You Need to Know
• Mitigate risks of having your brands discussed
in an open forum.
• Workplace issues.
• Exercise legal rights without experiencing
social media backlash.

3. Social Media Policies
(Incorporate with workplace agreements)
• Guidelines re official social media sites.
• Content - who owns what?
• Acceptable / non-acceptable use:
– what is considered unauthorised communication
– staff training / induction programmes
• Legal ramifications.
• Reporting lines and complaints procedures.

4. COMMUNICATIONS

5. Corporate Governance
• Four pillars of corporate governance:
– Disclosure
– Internal policy
– Privacy
– Ethics
• Risk management - audit and compliance
“Social media should not be notionally relegated to middle
management and marketing.”

6. Issues to Consider
• Reputation management:
– control of name, brand and image
– appropriate action (legal or otherwise)
• Damaging comments, photos or videos of company or
individual:
– trivial complaints become magnified
– negative publicity / freedom of speech
– potential for international corporate embarrassment
“A company without an adequate social media policy and crisis
management plan could face damage to its reputation and a
decline in share price overnight.”

7. • In 2010, Greenpeace attacks Nestle via YouTube:
– video equating eating a KitKat to killing an Orang-utan. It
had over 500,000 views
– Nestle moved to remove it on grounds of trade mark
infringement (only course of action available)
– returned to YouTube without the offending brand

8. Disclosures by Management
• In 2012, Netflix CEO Reed Hastings posted a statement on
Facebook proudly announcing:
Netflix users streamed 1 billion hours in June
–his Facebook page had 200,000 subscribers
–shares jumped 6% overnight
–Wells Notice issued by the SEC
• In Australia, the definition of “company officer” under the
Corporations Act extends to:
–senior management personnel includes anyone with autonomous
decision making power

9. • 4 November 2012, mainstream
media reported on tweets that a
Qantas A380 had crashed over
Indonesia.
• Alan Joyce admitted the fake tweets caused the drop in
share price:
“We first noticed a problem when our share price started to
collapse, and that's because these reports coming out of Twitter."
• Qantas took immediate action to issue a press release
confirming the aircraft was still in the air.

10. • REFLECTS the ability of social media to
connect with investors and foster
shareholder confidence.
• INDICATES potential of social media
posts to amount to a breach of the
Corporations Act disclosure
requirements as regulated by ASIC (ASX
Guidance Note 8).

11. BACKLASH

12. External Communications
•Social media:
- a tool for others to “police” businesses online
- blacklist/disparage companies who try to legitimately protect legal rights
- bad press if not handled properly
•‘Community’ support social media groups dedicated to
criticising and even boycotting a company’s goods or
services.

13. Case Study

14. Flame Grilled on Social Media
• Hungry Jack's experienced social media backlash after serving legals
on a Central Coast burger joint over its use of the term “Wambie
Whopper”.
• Wambie customer Matt Burke started a Facebook page:
- over 29,000 ‘likes’
- a petition on change.org over 5,000 signatures pledging not to buy HJ's burgers.
- HJ’s social media accounts inundated with comments and criticisms
- increased business for Wambie burger joint
• Hungry Jack’s remained silent and forced to withdraw the demand.

15. Don’t Mess with Messina
• Gelato Messina created the ‘Gaytime’ flavour as a tribute to both the
Sydney Gay & Lesbian Mardi Gras and the ice-cream:
– Unilever sent a cease and desist letter
– Gelato Messina promptly changed the name to ‘the flavour formerly
known as Gaytime’
– Unilever demanded Gelato Messina change the name again by 5pm
• Harnessing the power of social media, Gelato Messina appealed to
its loyal fans on Facebook to rename the ice-cream.
• The Ice cream was aptly renamed UNILEAVE US ALONE.

17. • In 2012, counsel for Louis Vuitton
sent a cease & desist to Penn
Law School for trade mark
infringement, demanding the
poster be changed.
• Louis Vuitton criticised for being
overly aggressive.
• The poster design:
– a form of parody
– use in a law school seminar
– posed no threat to the LV brand

18. • Chick-fil-A sent a cease & desist letter to
Bo Muller-Moore, owner of “Eat More
Kale” a silk -screening business selling
shirts and stickers via eatmorekale.com.
• Muller-More and his supporters created
Facebook pages: thousands of fans.
• Muller-More began a Kickstarter
campaign: raised more than $80,000 to
fund a documentary movie.

19. https://www.kickstarter.com/projects/16748
89308/a-defiant-dude

20. Asserting Rights: No Backlash
• Probably the most polite cease-and-desist letter you will ever read.
“We are certainly flattered by your affection for the brand, but while we can appreciate the
pop culture appeal of Jack Daniel’s, we also have to be diligent to ensure that the Jack
Daniel’s trademarks are used correctly.”
• Jack Daniel’s took aim at the book Broken Piano For President by Patrick Wensink:
–asked author to change the cover design when the book was reprinted
–offered to contribute a “reasonable amount” towards the costs
• Wensink agreed to change the cover, but did
not accept any payment.

21. Confusing or Amusing: Parody
• Recently seeing more controversial parodies of popular
brands on social media.
• Sparking interesting debates over the protected scope
of parodies and how companies can protect their IP
rights.

23. Cease and Desists
• Remember the recipient may not be the only audience.
• Is there anything that could be perceived as over the top that is not
necessary to the letter’s intent?
• Prepare for publicity issues that could ensue if the recipient starts a ‘social
shaming’ campaign.
• Seek solutions not threats: what can achieve the necessary results without
threats of litigation?
• Is coexistence with restrictions in writing sufficient?
• Is a phone call a better way to start? At least it won’t be in writing.

24. Employees and Social
Media

25. Social Media in the Workplace
• Employees receive personal client information for a
limited purpose only – what happens when they leave?
• When employees use social media:
– content that impacts negatively on your brand
– breaching confidentiality
– cyberbullying, cyber-flirting, discrimination
– unfair dismissal complaints
– misleading and deceptive conduct
• Colleagues posting embarrassing / inappropriate
material about one another

26. The First Case
Humberston Comprehensive School (UK) failed to see the funny side of
teacher Sonya McNally’s comment about the antics of her 8G1 Class.
She was sacked.

27. Who Else
• In October 2008, 13 members of the Virgin Atlantic cabin crew were
sacked over calling passengers “chavs” on Facebook.
• In 2010, Vodafone suspended
an employee after he tweeted
this on the official Twitter
account:
• Linfox Australia Pty Ltd v Fair Work Commission (2013):
- the Full Federal Court found that Linfox unfairly dismissed Mr Stutsel for posting
discriminatory and offensive posts about two managers on his own Facebook
page
- there was no formal training of staff re its social media policy

28. Confidential Information
• Social media sites can reveal company / client confidential
information.
• Confidentiality of client lists can be compromised by social media
platforms: Hays Recruitment (UK) 2008.
• Does everyone know:
– what is considered to be company confidential information?
– which social media contacts are owned by them / company?
– how their use is being monitored?
– that they can be asked to remove company contacts before leaving?
Employment contracts must include a social media ‘pre-nup’ (also
applies to work for hire or contractor agreements).

29. Take Home Message
• Be vigorous and clear in efforts to keep ‘company secrets’ a secret
• Have policies in place and offer training to all staff.
• Update policies annually.
• Restraints of trade/non-compete clause in employment agreements
• Legal advice / sign-off (don’t risk employee actions).

30. How Big is Your Sandpit?
(know the social media legal borders)

31. 1. Virtual IP Rights (TMs and designs)
2. Privacy and Spam
3. Copyright
4. Misleading and deceptive conduct
5. Defamation

32. Virtual IP Rights
• Trade Marks:
– protect all brands on social media
– update registrations
– police improper or incorrect third party use
– use the ™ ® or © symbols
– app icons as trade marks or designs?
• Watch for imposters / counterfeits.
• Harness the power of brand fans by issuing licenses
• Google Adwords and other SEO tools:
– ACCC v Trading Post: “Kloster Ford” brand use

33. Australian Privacy Principles
• Applies to companies with >$3 million turnover.
• Collection and management of personal information (use and
disclosure).
• Security issues – how is your database stored?
• Employee issues to consider:
– Griffith v Rose 2011: workplace surveillance
of employees can extend to home use.
– Barminco Case 2013: 15 mine workers
sacked over the Harlem shake for breaching
safety guidelines lead to unfair dismissal
cases.

34. Spam Act 2003
• Even if you’re not caught by the NPPs, you
could be caught by Spam.
• Covers all ‘commercial’ electronic messages.
• To decide if it’s a CEM, ACMA looks at:
– the purpose, or one of the purposes, of the message
– the content and presentation/format
– links / contact info included in the message

35. User Generated Content
and other
Marketing Activities

36. Main Issues
1. Misleading and deceptive conduct (s18 CCA)
2. Use of third party content
3. Exposures to legal action

37. Some rules stay the same…
1. Social media platform rules:
- each have unique terms and conditions
- don’t forget age limits that apply in your jurisdiction
2. Misleading and deceptive conduct:
- make sure competition rules are easily accessible and clear
- remove (or respond by clarification to) all misleading / deceptive
content immediately: ACCC v Allergy Pathway
3. Advertising standards:
- compliance is voluntary
- Board determinations about breaches are not binding
- non-compliance may reflect poorly on your business

38. ‘Cash for Comment’ and
Testimonials

39. • Avoid an impression of dishonest business practices and
conflicts of interest.
• Using celebrities (extends to bloggers):
– if you have a “material connection” with the seller of advertised
goods/services must disclose the connection: US Federal Trade
Commission Act (1914) - “SPON”
– Michael Hill Jewellers / Kim Kardashian
– Australian Consumer Laws apply (s18)
• Bloggers must:
– be open and honest with their endorsements
and reviews
– make it perfectly clear what information is
editorial versus advertising.

40. • In November 2011, removal company Citymove was forced to pay
a $6,600 fine to the ACCC after it published false consumer
testimonials on it’s MovingReview.com.au website.
• In 2013, Tripadvisor came under fire for allowing
fake reviews on its site.
• Sued by hoteliers who suffered financial
damage as a result.
• Such reviews are considered to be misleading and can attract penalties up
to $1.1 million for companies and up to $220,000 for individuals.
• NB: the company and advertiser are liable.

41. Unfairly Reviewed?
• If your company gets an unfair / improper review or comment:
– send author or website owner a letter requesting a review and/or
removal of the comments
– if unanswered or response is unfavourable, a more threatening legal
letter may be necessary
– get legal advice
• If anonymous or pseudonym:
– social media sites can reveal the identity of anonymous users if required
to do so under the laws of a particular country (eg subpoena or a court
order)

42. Copyright Matters
• DMCA Complaint Notices must comply with legal disclosure
requirements: Roadshow Films Pty Ltd v iiNet Limited14 (the iiNet
Case)
• Daniel Morel v AFP/Ghetty: photographer won $1.2 million in
damages after his photo was used on the cover of papers around
the world….

43. • Whilst there was no copyright notice, Morel’s name did appear on the
images.
• AFP did not dispute Morel’s interest in the copyright of the photographs, but
argued (unsuccessfully):
– use of the images was allowed under Twitter’s terms of service
– they were uploaded freely to the internet

44. Defamation

45. • Social media posts not immune from legal action for
defamation.
• Liability not limited to person who made original
statement.
• Not defamation if it is:
– true statement
– (justifiable) personal opinion
• All social media users are considered ‘publishers’.

48. Mickle v Farley (2014)
• Andrew Farley, a former student at Orange High School, defamed music
teacher, Christine Mickle on Twitter and Facebook.
• Mr Farley was warned on social media to be careful what he posted online.
He replied: ''I can post whatever the f--- I like. I don't give a shit … if anyone
gets hurt over what I have to say about her.'‘
• District Court Judge Elkaim ruled:
– Farley pay $85,000 in compensatory and $25,000 aggravated damages
– the comments had a ''devastating effect'' on the popular teacher, who immediately
took sick leave and returned to work only on a limited basis late last year
''When defamatory publications are made on social media it
is common knowledge that they spread''

49. The End
Thank you!
Axis Legal (Australia) Pty Limited
Tel: 8204 1100
Sara Delpopolo
sdelpopolo@axislegal.com.au