Legal Implications of Social Media for Business Owners

Use of social media makes trademark infringement and brand confusion as easy as creating a username and password. Therefore, social media for business owners creates new business legal complications.

For businesses that create a Facebook Page, they are in essence creating customizable mini-sites touting organizations, products, or public personalities. In reaching out to target demographics, companies allow users, or "fans" of the page, to post about that company. With tools like these open to the public, how can companies protect brands and trademarks in a social media world?

1. A good offense is the best defense in protecting trademarks and brands.

Social media has not only opened up new avenues for communications and brand marketing. It has also added new ways to infringe on those efforts. Brand protecting in cyberspace has become even more important. One way to prevent trademark infringement is for companies to register their names and key brands as usernames.  Registering marks in social media handles helps prevent username squatters and other infringers from controlling the usernames. Proactive registration is much less expensive than attempting to recover the username later.

Once brand owners should implement a trademark monitoring program. A few employees or even outside contractors can regularly check social networking sites for damage to the brand. Such monitoring program can include checks for bad press, trademark infringement, and the sale of counterfeit goods, etc. A company can create a plan for what social networking site it will regularly monitor. Some websites, such as eBay, make searches simple for the brand owner. A user can designate favorite searches that will regularly return resulits for their designated brand, products, or sellers. Other websites such as, and search blogs, Twitter, MySpace, and news groups. If a company finds infringement, it should first employ that particular site's intellectual property dispute resolution procedure. For example, eBay's Verified Rights Owner (VeRO) program. IP legal counsel can provide assistance if such approach is unsuccessful.

It is important to develop a well-thought out strategy when dealing with trademark infringement. A company should take the seriousness of the infringing activity in account in determining approach. If a misguided fan creates a fan page for products, a soft approach in dealing with the issue may be best. However, dealing with intentional infringement may warrant more aggressive measures.

2. Ensure that the company owns all social media accounts.

Surprisingly, there have been a number of lawsuits over ownership of social media accounts between a company and either an employee or independent contractor. Finding out later that someone else owns a Twitter handle and associated Tweets and followers can be a painful lesson. Be careful to ensure that the company acquires ownership and control over any social media accounts and content. It is possible a legal claim could arise that implicates communications stored in social media accounts. A company should safeguard and preserve this information as it could be considered evidence. The consequences of deleting or losing evidence after a claim has been made can be dire.

3. Be extremely careful with employees.

The National Labor Relations Board has ruled that certain employee gripes are protected, while made publicly in social media at the company's expense. Therefore, they are not properly the subject of employee termination. Likewise, employee posts can lead to harassment, discrimination, and hostile work environment claims if not handled properly. Employers should use caution in mining social media to research potential hires as that could lead to the discovery of protected information and claims of discriminatory hiring practices. While social media provides significant advantages, employee issues are one area of risk if not properly managed.

False statements made by employees or paid third parties about a company's products and services in social media and review sites have led to claims for deceptive trade practices and false advertising. In addition to civil liability, a company should be careful of running afoul of federal law governing posts. The Federal Trade Commission promulgated new regulations in December 2009 that require disclosure of any connections between an endorser and a company's products and services.

Employees who put off or exaggerate a company's products or services - even if completely truthful and done innocently - without disclosing their employment relationship, run the risk of subjecting the company to administrative action by the FTC.

One final risk concerns confidentiality. Even inadvertent statements or posts can innocently give away a company's trade secrets. Companies should educate employees about proper use of social media and how to safeguard confidential information. Examples of this include inadvertent disclosure or product launches and other sensitive information.

4. Social media policies should be incorporated into a company's employee handbook.

Companies should incorporate social media policies into their employee handbook or develop policies as separate guidelines.

A well-drafted social media policy can cover the concerns outlined above. Additionally, a social media policy should address who owns social media accounts, usernames, and other content.

With the explosion of social media, companies should give careful consideration to unique problems presented by social media, how it affects the workplace, and how to address social media usage by employees and third parties. As with the rise of the internet and blogs, existing employee and company issues are played out in this new venue creating unique problems. However, unlike other venues, social media has the capability to dramatically increase problems by providing a much larger, well-connected audience.

About the Firm:

Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm.  The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights.  The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution.  Additional information about the IP law firm and its IP law attorneys may be found at

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