Social media and intellectual property risks

The ever increasing adoption of social media by business begs the question: What if any legal risks are attached to social media adoption by business?

February 28, 2011
Social media and intellectual property risks

Heard of Facebook, Twitter, My Space, LinkedIn or Flickr? Collectively, these refer to (primarily) internet and mobile based publishing technologies that allow you, me, our friends and anyone else really, to share information in various forms with each other and the general public.

Traditionally most social media tools were a means of personal social interaction. More and more however, businesses are using social media as a marketing/brand building tool and as another communications platform for engaging with their client or potential client base.

The ever increasing adoption of social media by business also begs the question: What if any legal risks are attached to social media adoption by business?

Considering the multitude of audio, text and images shared by businesses, the most significant legal risk must be the ensuing blurring of intellectual property rights over the content published on such social media sites.

A survey of legal commentary from around the globe reveals that the top 5 intellectual property risks are as follows:

1. Ownership of Social Media Accounts: Where an employee creates a Social Media account in the name of the company on for instance, Twitter and uses Twitter to communicate (tweet) information about the company, does the company or the employee own the account? Does the company or employee own the contacts (followers)? Most importantly, does the company, employee or Twitter own the content posted?

2. Cybersquatting: Cybersquatting traditionally referred to the bad faith registration of a domain name identical to the name (trademark) of a large company with intention to profit from the goodwill of a trademark belonging to someone else or to sell the domain to the trademark owner at an inflated price. This risk has trekked to social media sites and companies such as CNN have had to purchase social media accounts incorporating the company name from the first registrants.

3. No Back Up of Intellectual Property: Often companies will post content to social media sites assuming that such content will be available indefinitely. A closer inspection of the Terms and Conditions of Service of specific social media sites reveals that the site may shut down at any time, without notice to the account holder and in the event of such shut down, the site owner has no obligation to retain or pass on any content to the account holder. A failure to back up the content posted may result in the instant loss of significant intellectual property.

4. Unauthorised Disclosures of Trade Secrets by Employees: This refers to the risk of employees who are not bound to appropriate internal policies sharing confidential information or trade secrets (formulas, know how) to their contacts through social media.

5. Brand Damage: There are numerous examples of companies that have invested millions in brand building losing brand power due to consumers bad ratings of the company, its employees, products or services on social media sites such as Facebook and Twitter. The most recent of which is Pringles, the potato chips company. In addition consumers are posting comparisons of services or pricing of different companies. Whilst companies may control use of social media by employees, the reality is that companies cannot control what consumers do. With this in mind, the real risk is the inability to respond appropriately when the brand is “hit.”

What is necessary is for organisations, large and small, to ensure that they undertake a Social Media Policy that results from an evaluation of social media on the organisation and the controls to be deployed by the company to manage risks relevant to the organisation.

The message of old is to ensure that the benefits of using ICT’s must always be met with a risk management strategy.

Social media and intellectual property risks << Comments and views

Pria Chetty is the founder of Chetty Law, a technology and innovation law firm specialising in ICT Law, Information Management, Intellectual Property Law, and Media Law.

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