As brands integrate social media marketing into their business plans, they often voice concerns about doing it “right.”  They look to competitors to figure out what seems to be working, but they often overlook a detailed risk analysis from both a marketing and legal perspective. 

Almost a year after, The Altimeter Group released its new report  “A Strategy for Managing Social Media Proliferation”, many of its findings are still relevant.  Altimeter reported that companies’ resources are strained to manage all their social media operations and may need the help of outside vendors. The result is often chaotic social media management. In determining how to manage social media, brands should consider several key legal issues and include strategies for minimizing risk in its business plan.

Who owns your social media accounts? Altimeter’s report highlights that companies may have as many as 178 discrete social media accounts, not including employee accounts. How many of those companies thought through the legal implications of who owns the intellectual property associated with the brand accounts and the employee accounts? The ongoing battle between PhoneDog and Noah Kravitz may prove instructive on this point, but absent a court precedent, brands need to take proactive steps to establish ownership of their intellectual property in social media.

• Best Practice:  Establish ownership in writing BEFORE launching social media accounts. Do this in employee manuals, policy statements, and contractually with employees, and consider filing for trademark registrations to protect your monikers.

Outsourcing could be an invitation for disaster. Altimeter warns that the marketplace has a low barrier to entry for social media vendors, and consequently, companies need to understand their vendors’ capabilities and weaknesses before hiring them. Altimeter recommends a full test drive of products before hiring, but what of the other elephant in the room, legal liability? Social media vendors, as a whole, do not accept legal liability for their work. They are typically unwilling to warrant the legality of content or indemnify against enforcement actions. What happens if data security is breached? Who is clearing the sweepstakes that the vendor is helping brands post to Facebook? And who is bearing the risk of liability? Digging even deeper, most brands overlook due diligence on their vendors’ patents to determine their validity. Imagine the business interruption after hiring a vendor, becoming reliant on them, and then losing them to a patent infringement lawsuit.

• Best Practice: Before you hire one of the vendors mentioned in Altimeter’s report or any other vendor, look carefully at your contract and assess not only potential legal liability but also how the vendor will work with you to avoid an investigation or crisis from occurring in the first place.

Policies are not sufficient. Altimeter recommends the use of third party experts and taking the time for policy development. But policies, in and of themselves, may be insufficient. Take the FTC’s recent investigation of Hewlett-Packard Company and its public relations firm, Porter Novelli, Inc. or its November, 2011 investigation of Hyundai Motor America regarding potential violations of the FTC’s Endorsement and Testimonial Guidelines. In both cases, the brands’ agencies sought to induce a small group of bloggers with gift certificates in exchange for urging bloggers to promote the brands. In both instances, the FTC dropped their investigations because of the small numbers of blogger recipients and the brands’ revisions to their social media policies. At the same time, the FTC continued to remind advertisers that they are responsible for the actions of their agencies.

• Best Practices: The FTC’s Business Center blog offers the first practice point here. In December, 2011, describing the Hyundai case, it offered a mnemonic “M.M.M.” to help guide brands into compliance with the FTC’s Endorsement Guides: 1) Mandate a disclosure policy that complies with the law; 2) Make sure people who work for you or with you know what the rules are; and 3) Monitor what they’re doing on your behalf.  For a second practice point, it is essential to have your policies dictated by your practices and not the other way around. A policy crafted by an attorney in isolation from company marketing efforts will not serve you. Altimeter wisely recommends a social media planning audit. Legal counsel should be actively involved throughout all initiatives. In addition, bi-annual audits are highly recommended because social media marketing strategies shift frequently.

For more in-depth examinations of the Hewlett-Packard and Hyundai cases, see my posts (click here)

© Kyle-Beth Hilfer, P.C. 2012

Kyle-Beth Hilfer, Esq. has over 20 years experience as an attorney specializing in advertising, marketing, promotions, intellectual property, and new media law.

Ms. Hilfer is a graduate of Yale College and Harvard Law School.  She is of Counsel to Collen IP.  Read more about her law practice, click here.