Social networking websites like YouTube and MySpace are popular because they allow computer users to participate in an online community by sharing videos they've created (or found) and by commenting on what has been posted to the site.
Advertisers have started incorporating these same features into their own advertising and promotional campaigns. Some advertisers have created websites or web pages where users are encouraged to submit original content, often as part of a contest. And some advertisers have used user-created content in their own advertising campaigns.
This article addresses some of the legal and business issues that arise when advertisers (and their agencies) solicit and use user-created content on their own websites or third-party sites. Other issues in this space relate to advertiser liability when ads are placed on social networking sites that may contain infringing or defamatory content.
Protect the brand's image
False advertising concerns
User-created content can blur the distinction between commercial content (i.e., ads) and noncommercial content (i.e., entertainment and commentary). Noncommercial content is afforded more protection from the First Amendment than commercial content, while commercial content is subject to federal and state advertising laws. These laws require, among other things, that claims be substantiated, that the ad not be false or misleading, that certain disclosures be made and that testimonials and endorsements comply with federal rules.
Liability for infringement of third-party rights
An open question is whether the Digital Millennium Copyright Act and the Communications Decency Act, two federal laws that provide some protection from liability for copyright infringement and defamation, would apply to an advertiser who solicits user-created content to be posted on its own site or on a third-party site. There is no case law on this subject yet and, as a result, advertisers should be particularly careful about the content they allow to be posted, particularly on their own sites.
Note: Since the law is somewhat unsettled as to whether a complete transfer of the copyright (i.e., a buy-out or exclusive license) can be affected with a click-wrap acceptance, without a physical signature, it is more prudent to get a non-exclusive license to use the materials if obtaining consent online.
Note: Even if the advertiser obtains broad rights to the user-created materials, without any payment obligations, the use of the materials in some media, such as broadcast television commercials, may require payments under talent and other guild collective bargaining agreements.
Finally, advertisers should also bear in mind that since contracts with minors are not enforceable, if they need to obtain significant rights to the materials (for example, to run a user-created video in a commercial) and the creator is a minor, it is important to obtain a parent's consent as well.
Most advertisers or their ad agencies have insurance for advertising-related injuries, which would include a lawsuit brought against the advertiser for infringing material contained in an ad. An important question for advertisers and agencies is whether this insurance would cover any claims stemming from the display or use of user-created content. If not, an advertiser or its agency would have to pay the costs of defending such a case, and, in the event of a settlement or a judgment against the advertiser, would also have to pay the settlement costs, damages and fines.
Copyright 2007. iMedia Communications, Inc. (www.imediaconnection.com) is a trade publisher and event producer serving interactive media and marketing industries.