Protecting Your Consumer Product and Retail Brand in the Social Media Era

Protecting Your Brand in the Social Media Era
Retail West, Vancouver, October 15, 2014
Christopher W. Gouglas, Head Counsel, Best Buy Canada Ltd.
Elder C. Marques, Litigation Partner, McCarthy Tétrault LLP
McCarthy Tétrault LLP / mccarthy.ca

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The Promise of Social Media & Retail
• Instant feedback
• Free/cheap marketing
• Reach young customers
• Create online “community”
• The illusion of being “cool”
• Quick, agile, responsive
communications

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The Perils of Social Media & Retail
• Instant feedback that’s
negative, embarrassing
• A single “bad apple”
customer rep brings the
brand down
• Picture worth a thousand
words
• There is nothing less “cool”
than trying to be “cool”

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The Perils of Social Media & Retail: Examples
Rookie Mistake: “Hashtag Spam”

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Losing Control of the Account
(at a particularly bad time)

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Other Twitter Disaster-Makers:
• Misunderstanding “trending” hashtags (i.e., it’s not always
about you)
• Being “funny” about news items (i.e., you’re not really that
funny)

7
Other Twitter Disaster-Makers (Cont’d):
• Using automated messages
• Asking for trouble: e.g., asking for “stories”
• Personal messages going out on official account

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Practical & Legal Risks of Increased Online Activity
• Regulatory Risk: your interactions are exposed to the world for
all to see, including Competition Bureau, other regulators, future
litigants
• Third Party Abuse: Use of your customer lists

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Practical & Legal Risks of Increased Online Activity
• Mistake Magnification: A small error becomes a big one –
pricing misprints, advertising errors, contests
• Harder to Maintain Consistent Marketing “Voice”

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Online Forum/Reviews
• Depending on nature of retailer, opportunity to make
your site a go-to for product information
• Can drive hits, enhance your credibility, and create a
“community”

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Online Forum/Reviews
• Do you monitor/approve posts or not? What principles
do you apply and how do you do it consistently?
• Risk of your brand being disparaged
• Risk of consumer product brands being disparaged

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Social Media, Data, and Your Employees
Two major sets of risks relating to employees and data:
• Risk #1: Employee use of customer data that you collect
• Risk #2: Employees on their own accounts, talking about:
• Your brand (e.g., “My boss is a tyrant”)
• Your customers (e.g., “These customers are idiots”)
• Your internal data (e.g., business secrets)

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Risk #1: Your Employees and Your Customer Data
Privacy litigation is here to stay and it’s growing - Different
rules in different provinces
• Strong statutory protections (e.g., British Columbia)
• Common law remedies plus statutory rules (e.g., Ontario)
• Limited protections (e.g., Alberta)

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Your Employees and Your Customer Data
In Ontario, common law tort of “intrusion upon seclusion”
recognized by Court of Appeal
• Jones v. Tsige, 2012 ONCA 32
Already the subject of a class action about customer
information being given to third parties, who allegedly used it
to commit identity fraud
• Evans v. The Bank of Nova Scotia, 2014 ONSC 2135

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In British Columbia, no common law tort, but Privacy Act
makes privacy violations actionable
• Demcak v. Vo, 2013 BCSC 899
Class action against Facebook about use of photos based
on Privacy Act
• Douez v. Facebook, Inc., 2014 BCSC 953

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In Alberta, limited protection through Commission
• Martin v. General Teamsters, Local Union No. 362, 2011
ABQB 412
In all provinces, public takes privacy violations seriously,
creating serious legal and reputational risks

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What to do to protect customer privacy?
• Technology is part of the solution, but not enough
• Internal controls: develop policies and communicate them

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Policies/contractual terms to protect customer privacy
• Who can use what, for what purpose
• What happens in event of breach (e.g., statutory reporting
obligations; legal and communications strategy)
• Document retention policies should be consistent with these
principles and applied regularly

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Additional considerations about customer privacy
• Relationship with third party contractors:
• Requiring them to respect policies
• Liability for breaches
• Insurance implications
• What are you covered for?

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Risk #2: Your Employees and Their Own Expression
Employee Expression is Complicated
• Sharing concerns with colleagues and others is legitimate
and protected, yet restrictions on certain public
statements may also be legitimate and protected
• Courts recognize harm of attacks by employees on:
• Customers
• Your brand

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What is boundary between conduct that is properly
subject to reprimands by employer and conduct that is
not?
Social media posts often entirely public or at least broadly
disseminated (e.g., even if limited to registered “friends”)
and can have significant impact on business/

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B.C. Labour Relations Board found “proper cause” where
derogatory Facebook posts suggested violence
• Lougheed Imports Ltd. (West Coast Mazda) v. United Food
and Commerical Workers International Union, 2010 CanLII
62482 (BC LRB)
Posts were particularly offensive:
• “punches” and “stab in his face”
• “Top five kills” from Dexter television show

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Inquiries are always fact-specific :
• Mixed outcome in Bell Technical Solutions v. CEP Union of
Canada 2012 CanLII 51468 (ON LA)
• United Steelworkers of America v. Tenaris Algoma Tubes
Inc., 2014 CanLII 26445 (ON LA)

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Employee posts reflect on Company for good or bad
Need Social Media Policy so employees:
- distinguish between personal and work
- do not speak for company without authority
- do not disclose confidential information
- do not infringe third party rights

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Policies covering social media use must be coordinated
with other policies dealing with:
• Confidentiality/ethics
• Harassment/inappropriate conduct
• Securities

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Law of Defamation and Protecting Your Brand
A statement is defamatory if it “tends…to lower him [a
person] in the estimation of right-thinking members of
society generally and in particular to cause [that person]
to be regarded with feelings of hatred, contempt, ridicule,
fear, dislike or disesteem. The statements is judged by
the standard of an ordinary, right-thinking member of
society. Hence the test is an objective one…”
Color Your World v. CBC (1998), 38 O.R. (3d) 97 (C.A.)

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Corporations can be defamed – the law recognizes that
they have reputations which have value. Corporations
may also be entitled to punitive damages
See Barrick Gold Corp. v. Lopehandia (2004), 71 O.R. (3d) 416 (C.A.)

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To be actionable, the words must be:
1. Defamatory;
2. Referring to the Plaintiff;
3. “Published” (broad definition).
There are lots of defences that then might apply.

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Truth Wins: If something is substantially true, even
if it was said maliciously, truth is a full defence.
Other defences:
• Absolute Privilege
• Qualified Privilege
• Innocent Dissemination
• Fair Comment
• Responsible Communication

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Courts also consider
• Was there malice? If there was, most defences are
defeated
• Was there an apology or retraction?
• What was the nature of the circumstances in which
the comments were made?

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Considerations if you are considering bringing an action
• Limitation periods may be very short
• Is the publicity of the action going to do more harm
than the initial injury?
• If the attacker is anonymous, courts will generally be
sympathetic and help you unmask the defendant
See Manson v. John Doe, 2013 ONSC 628

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Considerations if you are defending an action
• The law has evolved in some ways in favour of
freedom of expression in these matters, assuming
there is no malice
• What is the impact of the litigation (whether you fight
or settle) on your own brand?

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Considerations if you are facing a possible scandal
• Courts value the freedom of the press
• The defences of “fair comment” and “qualified
privilege” can apply in media cases
• The more recent defence of “responsible
communication” protects responsible and diligent
journalists even if they are wrong

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“Responsible Communication” requires
• Good faith reporting on a matter of public interest
• Real efforts to be diligent and responsible
• Efforts to be balanced, which often means getting a
comment from both sides
See Grant v. Torstar, 2009 SCC 61

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Lessons for dealing with “bad news”:
• Saying “no comment” creates real risk of giving
up your legal rights to complain later
• Get your story out there
• Recognize potential problems early on by
monitoring the health of your brand online

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Questions?
Christopher W. Gouglas
Head Counsel
Elder C. Marques
Partner, Litigation

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