Social media sites are transforming not only the daily lives of consumers, but also how companies interact with consumers. Here at Morrison Foerster, across all of our practice groups, we are seeing complex, cutting-edge legal issues arising out of social media. As with the Internet boom during the mid-to-late 1990s, social media is generating new legal questions at a far faster pace than the law’s ability to provide answers to such questions. In an effort to stay on top of these emerging issues, and to keep our clients and friends informed of new developments, Morrison Foerster publishes this blog devoted to the law and business of social media.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.Aaron’s practice focuses on advising both established and emerging companies in a variety of data- and technology-intensive sectors, including software, SaaS, cloud-based technology, digital media (social media, AR/VR, gaming, streaming media, AdTech), AI, healthcare, consumer electronics, e-commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on branding and marketing, trademark licensing, and content-related transactions, as well as the intellectual property aspects of mergers, acquisitions, asset spin-offs, and private equity investments.He has represented clients such as Autodesk, Meta, OpenAI, Splunk, Konami, Kaiser Permanente, SoftBank, Visa, and Yahoo, among others.Aaron has been recognized by numerous publications for his work on market-defining technology transactions. He is currently ranked by Chambers USA for “Technology Transactions.”Aaron also serves as co-editor of Socially Aware, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics. Aaron is also a sought-after speaker on new and emerging areas of law, and is a frequent presenter and panelist at conferences and legal services programs. In addition to his active practice, Aaron regularly provides pro bono assistance to various nonprofit and charitable organizations such as Common Sense Media and the Starlight Children’s Foundation. He is a member of the board of directors of California Lawyers for the Arts.While in law school at the University of California, Berkeley, Boalt Hall School of Law, Aaron served as executive editor of the California Law Review and was elected to the Order of the Coif. Following law school, Aaron served as law clerk to the Honorable William H. Orrick and the Honorable Martin J. Jenkins, both United States District Judges for the Northern District of California.

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Partner

Aaron is the chair of our Technology Transactions Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals. Aaron’s practice focuses on advising both established and emerging companies in a variety of data– and technology–intensive sectors, including software, SaaS, cloud computing, AR/VR, AI, gaming, healthcare, consumer electronics, social media, e–commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on the intellectual property aspects of mergers, acquisitions, asset spin–offs, and private equity investments.

Aaron P. Rubin

Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.Lawrence focuses his practice on technology transactions and licensing matters. His diverse experience includes advising on SaaS agreements, cross-licensing agreements, research and collaboration agreements, development agreements, and distribution agreements. He counsels a broad range of companies across the software, hardware, life sciences, biotech and FinTech spaces, as well as other entities including universities.He advises clients in connection with general corporate matters including contract negotiations, and leasing and technology placement agreements.Lawrence also serves as co-editor of <a href="https://www.sociallyawareblog.com/" target="_blank">Socially Aware</a>, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics.Prior to joining the firm, Lawrence was counsel at another major law firm. Before earning his law degree, Lawrence was a web consultant, project manager, and web developer in Portland, Oregon, where he managed and consulted on projects using industry methodologies and performed custom development and integration of content management systems.Lawrence was named a Super Lawyers “Rising Star” in 2015 and 2018–2022, and is licensed in both California and New York. Lawrence earned his J.D. from the University at Buffalo School of Law, where he was the electronic systems editor for the Buffalo Law Review and awarded the ABA-BNA Award for Excellence in the Study of Intellectual Property Law.

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Lawrence Gallick

Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster.Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions. His clients include technology, digital media and content for television and music, financial services, and communications companies with diverse intellectual property assets and issues.His practice focuses on the legal aspects of developing, licensing, and commercializing technology and intellectual property, as well as negotiating general commercial contracts, including outsourcing transactions, as well as content and data licenses. He regularly assists clients with legal issues relating to licensing and commercialization of digital media and content, digital content that is distributed over the Internet or streamed, mobile applications and social media, as well as the licensing of recorded music for distribution via digital platforms. Anthony is also experienced with issues relating to open-source software, software development, artificial intelligence and machine learning, cloud-based technology, and protection of proprietary information.Anthony has extensive experience working on matters involving disruptive technologies, such as blockchain. He has helped fintech clients with general intellectual property issues in connection with terms of service for online financial products and services.Anthony is an integral part of the outside pro bono legal team for nonprofit organizations based in New York, including advising clients on legal issues regarding entertainment, social media, privacy rights, and the negotiation of outsourcing and service agreements. Anthony received his J.D. from the University of Michigan Law School in 2009. He received his B.S. from Cornell University in 2004.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. He advises clients on general commercial and transactional matters. His clients include technology, media, and communications companies with considerable intellectual property assets. His practice focuses on the legal aspects of licensing and commercializing technology and intellectual property, as well as negotiating general commercial contracts. He also regularly assists clients with legal issues relating to mobile applications and social media.

Anthony M. Ramirez

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Socially Aware is devoted to the law and business of social media, proactively addressing emerging issues and keeping our clients informed of new developments. We cover fields such as artificial intelligence, privacy and data security, Section 230, intellectual property, and much more.

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Lawrence W. Gallick

Social Links: If the Suit Fits

Social Links: Age Verification, X Appeal, and the Great White North

Social Links: Fake Reviews, Real Rulings, and an Epic Fail

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The latest issue of our Socially Aware newsletter is now available <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/blte912682ae5c418c7/62730e2edeee7329767e73f0/170420-socially-aware.pdf" target="_blank" rel="noopener">here</a>.In this edition, we explore the threat to U.S. jobs posed by rapid advances in emerging technologies; we examine a Federal Trade Commission report on how companies engaging in cross-device tracking can stay on the right side of the law; we take a look at a Second Circuit opinion that fleshes out the “repeat infringer” requirement online service providers must fulfill to qualify for the Digital Millennium Copyright Act’s safe harbors; we discuss a state court decision holding that Section 230 of the Communications Decency Act immunizes Snapchat from liability for a car wreck that was allegedly caused by the app’s “speed filter” feature; we describe a recent decision by the District Court of the Hague confirming that an app provider could be subject to the privacy laws of a country in the European Union merely by making its app available on mobile phones in that country; and we review a federal district court order requiring Google to comply with search warrants for foreign stored user data.All this—plus an infographic illustrating how emerging technology will threaten U.S. jobs.Read our <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/blte912682ae5c418c7/62730e2edeee7329767e73f0/170420-socially-aware.pdf" target="_blank" rel="noopener">newsletter</a>.

Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.

Aaron Rubin

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Now Available: The April Issue of Our Socially Aware Newsletter

Now Available: The April Issue of Our Socially Aware Newsletter

The latest issue of our Socially Aware newsletter is now available here. In this edition, we explore the threat to U.S. jobs posed by rapid advances in emerging

Without Google’s permission, Burger King ended one of its television commercials with a statement designed to automatically cause Google Assistant devices to read a list of the Whopper’s ingredients out loud.Having passed the 1.2-billion-user mark, Facebook Messenger is now twice as popular as Instagram.A lawsuit alleges Anheuser-Busch and one of its distributors impermissibly used a photo from a woman’s Facebook page in promotional materials for the brewer’s Natural Light beer. We addressed some of the legal risks in seeking to commercialize user-generated content in a Socially Aware blog post last year that can be found here.And while on the topic of copyright law and social media, a much smaller California business is being sued in federal court by one of its competitors, Founder’s Creek Media, for allegedly copying a copyrighted promotional product video from a Founder’s Creek page on Facebook and using the video as an advertisement for its own, similar product.Germany may fine social media companies up to 50 million euros ($53 million) if they fail to remove posts that contain hate speech.A court in Egypt sentenced a lawyer who has represented torture victims to ten years in prison for criticizing that country’s government on social media.Using the data it aggregates about its users’ whereabouts, Snapchat introduced a new feature that allows marketers to determine whether the Snapchat users who view ad campaigns on the messaging app actually wind up visiting the advertisers’ retail locations and venues (in other words, whether their Snapchat ad campaigns are actually working).Unbeknownst to most of its users, Twitter rolled out a “dislike” button months ago—but the consequences of using it aren’t clear.A Business Insider article identifies ten things prospective employers and recruiters should be able to tell about you immediately upon viewing your LinkedIn profile.An eight-year-old in Ohio took his four-year-old sister for a ride to McDonald’s in his family’s van, apparently after watching driving instruction videos on YouTube.

Social Links: Burger King ad triggers Google Assistant devices; suits allege infringement of copyrights in content posted to social media; Twitter’s hidden “dislike” button

Without Google’s permission, Burger King ended one of its television commercials with a statement designed to automatically cause Google Assistant devices to re

Social Links: Burger King ad triggers Google Assistant devices; suits allege infringement of copyrights in content posted to social media; Twitter’s hidden “dislike” button

A court ruled that a particular 98-character tweet wasn’t sufficiently creative to warrant protection under German copyright law.Inspired by <a href="http://thegrio.com/2017/03/07/new-law-is-set-to-make-recording-violent-attacks-on-social-media-a-crime/" target="_blank" rel="noopener">a recording posted to Snapchat of a physical attack</a> on a 14-year-old boy, a <a href="http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180AB1542" target="_blank" rel="noopener">California bill</a> would make it illegal to “willfully record a video of the commission of a violent felony pursuant to a conspiracy with the perpetrator.”Instagram just made it easier to identify sponsored content —something required by the <a href="http://www.sociallyawareblog.com/2014/12/03/ftc-enforcement-action-confirms-that-ad-disclosure-obligations-extend-to-endorsements-made-in-social-media/">FTC’s endorsement guides</a>.Thirty-five states and the District of Columbia now have laws that make it illegal to distribute sexually explicit photos online without the subject’s permission—content known as “revenge porn” or “non-consensual pornography.” <a href="http://www.nbcnews.com/news/us-news/marines-photo-scandal-what-can-revenge-porn-victims-do-n731241" target="_blank" rel="noopener">This article</a> explores the efficacy of those laws and other legal-recourse options.A proposed state law would prohibit employers in Texas from discriminating against employees and prospective employees <a href="http://news4sanantonio.com/news/local/proposed-texas-law-protects-online-speech" target="_blank" rel="noopener">based on the political beliefs they express on their personal social media accounts</a> (and in any other non-work-related place).A <a href="http://nypost.com/2017/03/07/fdny-uses-drone-to-help-fight-building-fire/" target="_blank" rel="noopener">drone helped New York City fire fighters</a> to extinguish a building fire for the very first time.As part of its crusade against fake news, <a href="https://www.forbes.com/sites/amitchowdhry/2017/03/05/facebook-fake-news-tool/#64d8adb17ec1" target="_blank" rel="noopener">Facebook teamed up with non-partisan fact-checkers</a> including Snopes to flag stories that are “disputed.”The Wall Street Journal interviewed industry experts about <a href="https://www.wsj.com/articles/how-artificial-intelligence-will-change-everything-1488856320" target="_blank" rel="noopener">the challenges and opportunities artificial intelligence will present</a> for businesses.A Facebook Messenger chatbot created by 20-year-old helps refugees seeking asylum by asking them a series of jargon-free questions to determine which application they need to submit.The addition of a live-streaming feature helped a dating app in China to <a href="https://techcrunch.com/2017/03/09/momo-live-streaming/" target="_blank" rel="noopener">generate $194.8 million in revenue</a> during Q4 alone.While we’re on the subject of dating, is <a href="https://www.wired.com/2017/03/kia-linkedin-flirt/" target="_blank" rel="noopener">flirting on LinkedIn</a> a faux pas?

Social Links: Instagram makes it easy to label content as “sponsored”; Facebook combats fake news; better firefighting through drones

A court ruled that a particular 98-character tweet wasn’t sufficiently creative to warrant protection under German copyright law. Inspired by a recording posted

Social Links: Instagram makes it easy to label content as “sponsored”; Facebook combats fake news; better firefighting through drones

On March 22, 2017, the Supreme Court held in <a href="https://www.supremecourt.gov/opinions/16pdf/15-866_0971.pdf" target="_blank" rel="noopener">Star Athletica, LLC v. Varsity Brands</a> that design elements of cheerleading uniforms may be protected under the Copyright Act. The 6-2 decision, written by Justice Thomas, clarified the scope of protection afforded to clothing designs and, more broadly, designs on useful articles.Varsity Brands, Inc.—the country’s largest cheerleading supplier—owns more than 200 copyright registrations for two-dimensional designs consisting of combinations of chevrons, stripes, and other colorful shapes for its cheerleading uniforms. At issue in this case were the five pictured designs.Varsity Brands sued Star Athletica, LLC, an upstart competitor, for copyright infringement. The District Court for the Western District of Tennessee granted Star Athletica’s motion for summary judgment, holding that the designs could not be conceptually or physically separated from the uniforms, and they were therefore ineligible for copyright protection. The Copyright Act makes “pictorial, graphic, or sculptural features” of the “design of a useful article” eligible for copyright protection as artistic works only if those features “can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.” The Sixth Circuit reversed, concluding that the graphics were “separately identifiable” and “capable of existing independently” of the uniforms.In affirming, the Supreme Court laid out a two-part test for when a feature incorporated into the design of a useful article is eligible for copyright protection: When the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article; and (2) would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated. “To be clear, the only feature of the cheerleading uniform eligible for a copyright in this case is the two-dimensional work of art,” the Court explained. “Respondents have no right to prohibit any person from manufacturing a cheerleading uniform of identical shape, cut, and dimensions to the ones on which the decorations in this case appear.”Protection for fashion designs is a hotly contested topic because such designs do not fit neatly into any form of intellectual property under U.S. laws. Numerous parties filed amicus curiae briefs in the case, with the Council of Fashion Designers of America arguing that a ruling for Star Athletica “would have a swift and deleterious effect” and leave fashion designers “defenseless against copyists.” Other groups, meanwhile, argued that protection for useful items should remain the province of patent law, which has stricter limits on eligibility and duration.Justice Breyer, joined by Justice Kennedy, wrote a strenuous dissent which did not disagree with the majority’s separability test but argued that the designs at issue could not be perceived as works of art separable from the cheerleading uniform because when “imaginatively remov[ed]” and placed on a canvas, the designs would still possess the contours of a cheerleader’s dress. This difference of opinion suggests the difficulties that lower courts may have in applying the Court’s separability test in practice.Moreover, Justice Breyer voiced concerns with the effect of the ruling on the fashion industry. “A decision by this court to grant protection to the design of a garment would grant the designer protection that Congress refused to provide,” Justice Breyer wrote. “It would risk increased prices and unforeseeable disruption in the clothing industry, which in the United States alone encompasses nearly $370 billion in annual spending and 1.8 million jobs.”The Supreme Court’s ruling does not fully resolve the question of whether the designs at issue merit copyright protection, however, as the case will now return to the trial court on the question of whether the designs possess enough originality to be protected by copyright—a separate question from the one addressed by the high court.While the reach of this ruling remains to be seen, under the standard set forth in Star Athletica, separable artistic elements of useful articles, from apparel to furniture, may be easier to register and protect, allowing designers to become more aggressive in preventing copying of their designs. As the lower courts interpret and apply this significant ruling, we are likely to see more cases addressing the scope of copyright protection for artistic elements of useful articles.*             *             *For more information on copyright issues, please see the following Socially Aware articles: <a href="http://www.sociallyawareblog.com/2017/02/06/repeat-infringer-policy-requirement-for-key-copyright-safe-harbor-for-online-service-providers/" target="_blank" rel="noopener">Second Circuit Clarifies “Repeat Infringer” Policy Requirement for DMCA Copyright Safe Harbors</a>; <a href="http://www.sociallyawareblog.com/2016/12/06/new-copyright-office-rule-creates-potential-gotcha-for-blogs-and-websites-hosting-user-generated-content/" target="_blank" rel="noopener">New Copyright Office Rule Creates Potential “Gotcha” for Blogs and Websites Hosting User-Generated Content</a>; <a href="http://www.sociallyawareblog.com/2016/06/24/show-me-the-money-supreme-court-guidance-on-attorneys-fees-awards-in-copyright-cases/" target="_blank" rel="noopener">The Kirtsaeng Opinion: Supreme Court Guidance on Attorneys’ Fees Awards in Copyright Cases</a>; and <a href="http://www.sociallyawareblog.com/2016/05/03/do-not-go-gentle-into-that-jurisdiction-no-situs-of-injury-merely-because-copyrighted-material-is-accessible/" target="_blank" rel="noopener">Do Not Go Gentle Into That Jurisdiction: No “Situs of Injury” Merely Because Copyrighted Material Is Accessible</a>.

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Supreme Court Rules Cheerleading Uniform Designs Are Copyrightable

Supreme Court Rules Cheerleading Uniform Designs Are Copyrightable

On March 22, 2017, the Supreme Court held in Star Athletica, LLC v. Varsity Brands that design elements of cheerleading uniforms may be protected under the Copy

If your company operates a website or blog that hosts user-generated content, you’ll want to read this post carefully.We’re ringing the alarm bell on an important new U.S. copyright law development that, if ignored, could significantly increase your company’s potential liability exposure in connection with user-generated content.If your company hosts user-generated content, such hosted content may include materials that were posted without the permission of the owners of the copyrights in such materials—potentially subjecting your company to copyright infringement liability.For nearly two decades, however, <a href="https://www.law.cornell.edu/uscode/text/17/512" target="_blank" rel="noopener">Section 512(c) of the U.S. Copyright Act</a>, enacted in 1998 as part of the Digital Millennium Copyright Act (DMCA), has provided a safe harbor insulating online service providers from monetary damages for hosting copyright-infringing materials posted by their users. To receive protection under the Section 512(c) safe harbor, service providers must, among other things, designate an agent to receive notifications of claimed infringement with the Copyright Office.If a website operator fails to so designate an agent for its website, that operator runs the risk of incurring monetary damages for copyright-infringing materials hosted on its site. So, if your company is hosting user-generated content, it’s important to have designated an agent with the Copyright Office.By our rough count, over 100,000 online service providers have designated agents with the Copyright Office. Under the Copyright Office’s “interim” regulations that had been in effect since the DMCA’s enactment, a service provider would register by filling out a paper form and filing the completed form with the Copyright Office.Just last week, however, the U.S. Copyright Office rolled out a <a href="https://www.copyright.gov/dmca-directory/" target="_blank" rel="noopener">new online system</a> for the designation of agents to receive notifications of copyright infringement. The new system, effective as of December 1, 2016, replaces the old paper-based system. Under the system, an online service provider with an agent registered through the old system must also register that agent through the new system by December 31, 2017, in order to maintain a valid designation. Failure to do so by that deadline could result in the online service provider no longer receiving the benefits of the Section 512(c) safe harbor in connection with its hosting of user-generated content, at least until such provider finally gets around to registering through the new system.Moreover, going forward, online service providers will need to renew their agent designations every three years in order to maintain safe harbor protection in connection with their hosting of user-generated content. There was no such periodic renewal obligation under the old system.Why is the Copyright Office doing this? Although by no means perfect, the old system was relatively easy to use and has worked well for bloggers and website operators ever since Bill Clinton was president. Why fix something that isn’t broken, particularly if, in fixing the system, this risk is created of online service providers losing safe harbor protection? Not surprisingly, the Copyright Office’s actions have generated <a href="http://blog.ericgoldman.org/archives/2016/10/copyright-office-gratuitously-kills-the-dmca-safe-harbor-for-thousands-of-websites.htm" target="_blank" rel="noopener">some blistering criticism</a> from Internet law pundits.The Copyright Office, however, apparently believes that the system was in fact broken due to the failure of online service providers to keep their agent designation information up to date. For example, in announcing its new registration system, the Copyright Office <a href="https://www.copyright.gov/newsnet/2016/640.html" target="_blank" rel="noopener">noted that it had found</a> that 22 percent of existing agent designations were for defunct service providers and that, with respect to non-defunct service providers, an estimated 65 percent of their agent designations contained inaccurate information. The new system seeks to address this problem by allowing service providers to more efficiently submit and update designated agent information through the use of an online system and by requiring periodic renewals of designations.Perhaps in an effort to further incentivize online service providers to keep their records updated, the cost of designation under the new system will be cheaper than under the old system. Each paper form designation under the old system would have cost a service provider $105, not including additional fees to list non-legal names used by the service provider. Under the new online system, the designation fee is <a href="https://www.copyright.gov/newsnet/2016/640.html" target="_blank" rel="noopener">$6 with no additional fee for alternative names</a>. This same fee would apply to each renewal of an agent designation.The Copyright Office’s new approach also expands the options available to online service providers in designating an agent. Under the old system, service providers were required to name a natural person or a specific position or title. The new regulations provide that a designated agent may be an individual, a specific position or title held by an individual, or a specific department within the service provider’s organization or within a third-party entity.The Copyright Office has released a <a href="https://www.copyright.gov/dmca-directory/help.html" target="_blank" rel="noopener">series of tutorials</a> to assist online service providers in registering an agent under the new system. The Copyright Office regulations adopting the new system can be found <a href="https://www.federalregister.gov/documents/2016/11/01/2016-26257/designation-of-agent-to-receive-notification-of-claimed-infringement" target="_blank" rel="noopener">here</a>.Here are our key takeaways regarding this important development:<ul><li>If your company hosts, stores or even links to user-generated content, it should ensure that it has registered an agent with the Copyright Office. If your company has never registered an agent, it should do so under the new system.</li><li>Even if your company has already registered its DMCA agent with the Copyright Office, if that registration was done under the old paper-based system, it will need to re-register under the new agent designation system by December 31, 2017.</li><li>After registering under the new system, online service providers will need to ensure that they observe the “every three years” deadlines for renewing their registrations.</li><li>Until January 1, 2018, copyright owners seeking to determine whether a blog or website hosting infringing user-generated content is in compliance with the DMCA agent designation requirement will want to check both the <a href="https://www.copyright.gov/onlinesp/list/a_agents.html" target="_blank" rel="noopener">old directory</a> and the <a href="https://dmca.copyright.gov/osp/" target="_blank" rel="noopener">new directory</a>—prior to 2018, it should be sufficient that the requisite agent designation appears in either of the two directories.</li></ul>*          *          *For other Socially Aware blog posts on DMCA agent designation issues, please see: <a href="http://www.sociallyawareblog.com/2016/01/14/new-court-decision-highlights-potential-headache-for-companies-hosting-user-generated-content/" target="_blank" rel="noopener">New Court Decision Highlights Potential Headache for Companies Hosting User-Generated Content</a>; and <a href="http://www.sociallyawareblog.com/2014/06/24/court-holds-that-dmca-safe-harbors-do-not-extend-to-infringement-prior-to-designation-of-agent/" target="_blank" rel="noopener">Court Holds That DMCA Safe Harbor Does Not Extend to Infringement Prior to Designation of Agent</a>. For a recent blog post on risk issues surrounding user-generated content, please see: <a href="http://www.sociallyawareblog.com/2016/08/10/ugcrisk/" target="_blank" rel="noopener">Commercializing User-Generated Content: Five Risk Reduction Strategies</a>.

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New Copyright Office Rule Creates Potential “Gotcha” for Blogs and Websites Hosting User-Generated Content

New Copyright Office Rule Creates Potential “Gotcha” for Blogs and Websites Hosting User-Generated Content

If your company operates a website or blog that hosts user-generated content, you’ll want to read this post carefully. We’re ringing the alarm bell on an import

We’re in the midst of a seismic shift in how companies interact with user-generated content (UGC).For years, companies were happy simply to host UGC on their websites, blogs and social media pages and reap the resulting boost to their traffic numbers. And U.S. law—in the form of <a href="https://www.law.cornell.edu/uscode/text/17/512" target="_blank" rel="noopener">Section 512(c) of the Digital Millennium Copyright Act</a> (DMCA)—accommodated this passive use of UGC by creating a safe harbor from copyright damages for websites, blogs and social media platform operators that hosted UGC posted without the authorization of the owners of the copyrights in such UGC, so long as such operators complied with the requirements of the safe harbor.Increasingly, companies are no longer satisfied with passively hosting UGC. Rather, they now want to find creative ways to commercialize such content—by incorporating it into ads (including print, TV and other offline ads), creating new works based on such content and even selling such content. Yet, in moving beyond mere hosting to proactive exploitation of UGC, companies risk losing the benefit of the DMCA Section 512(c) safe harbor, which could result in potentially significant copyright liability exposure.For example, if a company finds that users are posting potentially valuable UGC to the company’s Facebook page, or on Twitter in connection with one of the company’s hashtags, that company may want to make such UGC available on its own website. The DMCA Section 512(c) safe harbor, however, is unlikely to protect the company in copying such UGC from the Facebook or Twitter platform to its own website.The reality is that any company seeking to monetize or otherwise exploit UGC needs to proceed with extreme caution. This is true for several reasons:<ul><li>UGC can implicate a wide range of rights . . . As with any content, UGC is almost certainly subject to copyright protection, although certain Tweets and other short, text-only posts could potentially be exempt from copyright protection if they qualify as “short phrases” under the Copyright Act. If any individuals are identifiable in UGC, then rights of publicity and rights of privacy may also be relevant. In addition, UGC may contain visible third-party trademarks or comments that defame or invade the privacy of third parties.</li></ul><ul><li>. . . and a wide range of rightsholders. Notably, many of the rights necessary to exploit UGC are likely to be held by individuals and corporations other than the posting user. For example, unless a photo is a “selfie,” the photographer and the subject of the photo will be different individuals, with each holding different rights—copyright, for the photographer, and the rights of publicity and privacy, for the subject—that could be relevant to the exploitation of the photo. Moreover, any trademarks, logos and other images contained in a photo could potentially implicate third-party rightsholders, including third-party corporations. Videos also raise the possibility of unauthorized clips or embedded music.</li></ul><ul><li>If the UGC is hosted by a third-party social network, it may have Terms of Service that help—or hurt—efforts to exploit the UGC. Most social media networks collect broad rights to UGC from their users, although they differ substantially when it comes to passing those rights along to third parties interested in exploiting the content. For example, if a company uses <a href="https://dev.twitter.com/overview/api" target="_blank" rel="noopener">Twitter’s Application Programming Interface (API)</a> to identify and access Tweets that it would like to republish, then Twitter <a href="https://dev.twitter.com/overview/terms/agreement-and-policy" target="_blank" rel="noopener">grants to that company a license</a> to “copy a reasonable amount of and display” the Tweets on the company’s own services, subject to certain limitations. (For example, Twitter currently prohibits any display of Tweets that could imply an endorsement of a product or service, absent separate permission from the user.) Instagram also has an API that provides access to UGC, but, in contrast to Twitter, <a href="https://www.instagram.com/about/legal/terms/api/" target="_blank" rel="noopener">Instagram’s API terms</a> do not appear to grant any license to the UGC and affirmatively require companies to “comply with any requirements or restrictions” imposed by Instagram users on their UGC.</li></ul>With these risks in mind, we note several emerging best practices for a company to consider if it has decided to exploit UGC in ways that may fall outside the scope of DMCA Section 512(c) and other online safe harbors. Although legal risk can never be eliminated in dealing with UGC, these strategies may help to reduce such risk:<ul><li>Carefully review the Social Media Platform Terms. If the item of UGC at issue has been posted to a social media platform, determine whether the Terms of Service for such platform grants any rights to use such posted UGC off of the platform or imposes any restrictions on such content. Note, however, that any license to UGC granted by a social media platform almost certainly will not include any representations, warranties or indemnities, and so it may not offer any protection against third-party claims arising from the UGC at issue.</li></ul><ul><li>Seek Permission. If the social media platform’s governing terms don’t provide you with all of the rights needed to exploit the UGC item at issue (or even if they do), seek permission directly from the user who posted the item. Sophisticated brands will often approach a user via the commenting or private messaging features of the applicable social media platform, and will present him or her with a link to a short, user-friendly license agreement. Often, the user will be delighted by the brand’s interest in using his or her content. Of course, be aware that the party posting the content may not be the party that can authorize use of that content, <a href="http://www.sociallyawareblog.com/2013/02/15/thinking-about-using-pictures-pulled-from-twitter-think-again-new-york-court-warns/" target="_blank" rel="noopener">as Agence France Presse learned the hard way in using photos taken from Twitter</a>.</li></ul><ul><li>Make Available Terms and Conditions for “Promotional” Hashtags. If a company promotes a particular hashtag to its customers, and would like to use content that is posted in conjunction with the hashtag, the company could consider making available a short set of terms alongside its promotion of that hashtag. For example, in any communications promoting the existence of the hashtag and associated marketing campaign, the company could inform customers that their use of the hashtag will constitute permission for the company to use any content posted together with the hashtag. Such an approach could face significant enforceability issues—after all, it is essentially a form of <a href="http://www.sociallyawareblog.com/2014/09/23/to-click-or-not-to-click-ninth-circuit-rejects-browsewrap-arbitration-clause/" target="_blank" rel="noopener">“browsewrap” agreement</a>—but it could provide the company with a potential defense in the event of a subsequent dispute.</li></ul><ul><li>Adopt a Curation Process. Adopt an internal curation process to identify items of UGC that are especially high risk, which could include videos, photos of celebrities, photos of children, professional-quality content, any content containing copyright notices, watermarks and so forth, and any content containing potentially defamatory, fraudulent or otherwise illegal content. Ensure that the curators are trained and equipped with checklists and other materials approved by the company’s legal department or outside counsel. Ideally, any high-risk content should be subject to the company’s most stringent approach to obtaining permission and clearing rights—or perhaps avoided altogether.</li></ul><ul><li>Adjust the Approach for High-Risk Uses. Consider the way in which the UGC at issue is expected to be used, and whether the company’s risk tolerance should be adjusted accordingly. For example, if an item of UGC will be used in a high-profile advertisement, the company may want to undertake independent diligence on any questionable aspects of the UGC, even after obtaining the posting user’s permission—or perhaps avoid any questionable UGC altogether.</li></ul>In a social media age that <a href="http://www.huffingtonpost.com/matthew-tyson/millennials-want-brands-t_b_9032718.html" target="_blank" rel="noopener">values authenticity</a>, more and more companies—even big, risk-adverse Fortune 100 companies—are interested in finding ways to leverage UGC relevant to their business, products or services. Yet the shift from merely hosting UGC to actively exploiting it raises very real legal hurdles for companies. The tips above are not a substitute for working closely with experienced social media counsel, but they collectively provide a framework for addressing legal risks in connection with a company’s efforts to commercialize UGC.*          *        *For more on the issues related to user-generated content, see <a href="http://www.sociallyawareblog.com/2016/01/14/new-court-decision-highlights-potential-headache-for-companies-hosting-user-generated-content/" target="_blank" rel="noopener">New Court Decision Highlights Potential Headache for Companies Hosting User-Generated Content</a>; <a href="http://www.sociallyawareblog.com/2014/06/24/court-holds-that-dmca-safe-harbors-do-not-extend-to-infringement-prior-to-designation-of-agent/" target="_blank" rel="noopener">Court Holds That DMCA Safe Harbor Does Not Extend to Infringement Prior to Designation of Agent</a>; and <a href="http://www.sociallyawareblog.com/2013/02/15/thinking-about-using-pictures-pulled-from-twitter-think-again-new-york-court-warns/" target="_blank" rel="noopener">Thinking About Using Pictures Pulled From Twitter? Think Again, New York Court Warns</a>.

Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions.











Anthony Ramirez

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Commercializing User-Generated Content: Five Risk Reduction Strategies

Commercializing User-Generated Content: Five Risk Reduction Strategies

We’re in the midst of a seismic shift in how companies interact with user-generated content (UGC). For years, companies were happy simply to host UGC on their w

Recently, in <a href="http://www.supremecourt.gov/opinions/15pdf/15-375_4f57.pdf" target="_blank" rel="noopener">Kirtsaeng v. John Wiley & Sons, Inc.</a>, the U.S. Supreme Court provided substantial guidance in an unsettled area of law by holding that, when deciding whether to award attorneys’ fees under <a href="https://www.law.cornell.edu/uscode/text/17/505" target="_blank" rel="noopener">17 U.S.C. §505</a>, the Copyright Act’s fee-shifting provision, a court should give substantial weight to the objective reasonableness of the losing party’s position while still taking into account all other circumstances relevant to granting fees.BackgroundThis story begins with an enterprising college student buying foreign textbooks on the cheap to sell in the United States for a profit. Petitioner Supap Kirtsaeng came to the United States from Thailand to study math at Cornell University. Respondent John Wiley & Sons (“Wiley”), an academic publishing company, sells textbooks to students in U.S. and foreign markets. Kirtsaeng noticed an arbitrage opportunity: Wiley’s textbooks sold in Thailand were virtually identical to their American counterparts, but much cheaper. Kirtsaeng asked family and friends to buy the foreign editions so that he could sell them to his fellow students for a profit.Wiley discovered what Kirtsaeng was doing and sued him for copyright infringement, claiming that his activities violated Wiley’s exclusive right to distribute its copyrighted textbooks. Kirtsaeng invoked the first-sale doctrine as a defense. Under that doctrine, the lawful owner of a book or other copyrighted work is able to resell or otherwise dispose of the work as he sees fit. In short, Kirtsaeng argued that if he bought the book lawfully, he could sell it to whomever he wished.But at the time Kirtsaeng raised the defense, lower courts were conflicted as to whether the first-sale doctrine applied to foreign-made books, and the Supreme Court ultimately divided four to four the first time it addressed the issue in <a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2015/01/20/11-57137.pdf" target="_blank" rel="noopener">Costco Wholesale Corp. v. Omega, S.A.</a> in 2010. To settle the continuing conflict, the Court <a href="https://supreme.justia.com/cases/federal/us/568/11-697/" target="_blank" rel="noopener">granted Kirtsaeng’s petition for certiorari</a> on the issue and established that the first-sale doctrine allows the resale of foreign-made books, just as it does domestic ones. Kirtsaeng thus prevailed in defending against Wiley’s infringement claim.To the Victor Goes the Spoils?Returning victorious to the district court, Kirtsaeng invoked 17 U.S.C. §505 to seek more than $2 million in attorneys’ fees from Wiley. The district court denied his motion, and the <a href="http://www.scotusblog.com/wp-content/uploads/2016/01/op-below-kirtsaeng.pdf" target="_blank" rel="noopener">Second Circuit affirmed</a>. The Supreme Court granted certiorari because lower federal courts had followed a variety of different approaches when determining whether to award attorneys’ fees.The Copyright Act’s fee-shifting provision states that a district court “may . . . award a reasonable attorney’s fee to the prevailing party.” It authorizes attorney fee-shifting but without specifying what standards or guideposts the courts should adopt in determining when such awards are appropriate. Quoting the Supreme Court’s 1994 opinion <a href="https://supreme.justia.com/cases/federal/us/568/11-697/" target="_blank" rel="noopener">Fogerty v. Fantasy, Inc.</a>, the Court <a href="http://www.supremecourt.gov/opinions/15pdf/15-375_4f57.pdf" target="_blank" rel="noopener">explained</a> that the statutory language “connotes discretion” and lacks any “precise rule or formula” for awarding fees.The Court acknowledged the limits that it has placed on a court’s discretion: A district court may not award attorneys’ fees as a matter of course but must instead make a case-by-case determination, and may not treat prevailing plaintiffs and prevailing defendants differently; litigants should be encouraged to litigate to the same extent whether they are plaintiffs or defendants. Additionally, several nonexclusive factors should inform a court’s decision: “frivolousness, motivation, objective unreasonableness[,] and the need in particular circumstances to advance considerations of compensation and deterrence.” But the Court recognized that there was “a need for some additional guidance” for lower courts.The Supreme Court agreed with Wiley that, in deciding whether to award fees, a district court should give “substantial weight to the objective (un)reasonableness of a losing party’s litigating position.” In so ruling, the Court rejected Kirtsaeng’s argument that district courts should give special consideration to whether a lawsuit resolved an important and close legal issue and thus meaningfully clarified copyright law.The Court reasoned that the objective-reasonableness approach advances the Copyright Act’s goals because it both encourages parties with strong legal positions to stand on their rights and deters ones from weak legal positions from proceeding with litigation. According to the Court, when a litigant is clearly correct, the likelihood that he or she will recover fees gives him or her an incentive to litigate all the way, even if the damages at stake are small.The Court also explained that the objective-reasonableness approach is more administrable than the “important and close legal issue” approach supported by Kirtsaeng because it would be difficult for a court to know at the end of a case whether a newly decided issue will have critical, broad legal significance.The Court made clear, however, that objective reasonableness, while an important factor, is not always controlling. In any given case, even when a party’s position is objectively reasonable, a court may still award attorneys’ fees based on other relevant factors; and it may deny fees even though the losing party made unreasonable arguments. “Although objective reasonableness carries significant weight, courts must view all the circumstances of a case on their own terms, in light of the Copyright Act’s essential goals.”Wiley Seems Reasonable Lower courts had concluded that Wiley’s position on the first sale doctrine was objectively reasonable, especially considering that several courts of appeals and four Justices of the Supreme Court had agreed that the first-sale doctrine did not apply to foreign-made works. The Court nevertheless remanded the case so the district court could again review Kirstaeng’s fee application—giving substantial weight to the reasonableness of Wiley’s litigating position but also taking into account all relevant factors.*      *      *For other Socially Aware blog posts regarding U.S. Supreme Court decisions addressing important issues of copyright law, please see the following:<a href="http://www.sociallyawareblog.com/2014/05/22/supreme-court-finds-laches-does-not-bar-copyright-infringement-claim-petrella-v-metro-goldwyn-mayer-inc/" target="_blank" rel="noopener">Supreme Court Finds Laches Does Not Bar Copyright Infringement Claim: Petrella v. Metro-Goldwyn-Mayer, Inc.</a><a href="http://www.sociallyawareblog.com/2013/03/20/supreme-court-holds-that-first-sale-doctrine-applies-to-copies-of-a-copyrighted-work-lawfully-made-abroad/" target="_blank" rel="noopener">Supreme Court Holds That “First Sale” Doctrine Applies to Copies of a Copyrighted Work Lawfully Made Abroad</a><a href="http://www.sociallyawareblog.com/2014/06/25/supreme-court-stifles-aereo-but-tries-to-keep-the-cloud-away/" target="_blank" rel="noopener">Supreme Court Stifles Aereo, but Tries to Keep the Cloud Away</a>

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The Kirtsaeng Opinion: Supreme Court Guidance on Attorneys’ Fees Awards in Copyright Cases

The Kirtsaeng Opinion: Supreme Court Guidance on Attorneys’ Fees Awards in Copyright Cases

Recently, in Kirtsaeng v. John Wiley & Sons, Inc., the U.S. Supreme Court provided substantial guidance in an unsettled area of law by holding that, when decidi