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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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.

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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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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.

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We have <a href="../2012/12/03/which-side-are-you-on-employers-and-employees-battle-over-ownership-of-social-media-accounts/">written before</a> about cases involving disputes between employers and employees over work-related social media accounts, but a new case out of Arizona federal court raises issues that appear to be unlike those we have addressed previously.In Castle Megastore Group, Inc. v. Wilson, plaintiff Castle Megastore Group (CMG), a retailer of novelty and adult-themed merchandise, brought suit against three former employees for various causes of action related to the employees’ alleged misuse of CMG’s confidential information. Among its allegations, CMG claimed that one of the defendants, Michael Flynn, uploaded a video of a confidential CMG managers’ meeting to Flynn’s private Vimeo account and shared access to this video with the other two defendants (who had both been fired from CMG prior to the sharing of the video). CMG also alleged that Flynn, after having been fired, changed the username and password of the Facebook page he created for CMG while employed as CMG’s Social Media Specialist.CMG appears to have brought its social media-related claims solely under the <a href="http://www.law.cornell.edu/uscode/text/18/part-I/chapter-121">Stored Communications Act</a> (SCA), a federal statute that provides for a cause of action against anyone who “intentionally accesses without authorization a facility through which an electronic communication service is provided; or intentionally exceeds an authorization to access that facility, and thereby obtains . . . access to a wire or electronic communication while it is in electronic storage in such system.”The SCA protects individuals’ privacy in their electronic communications by making it criminally punishable for hackers and other unauthorized individuals to obtain, alter or destroy such communications. The statute, however, also provides relief to aggrieved parties in civil causes of action. The SCA has, for instance, been invoked by employees whose employers have improperly accessed, and read messages from, the employees’ private email accounts.CMG alleged that Flynn violated the SCA when he posted the managers’ meeting on his Vimeo account and when he shared access to the site with the other two defendants. CMG also alleged that the other two defendants violated the SCA when they accessed the posted video.In its ruling on the defendants’ motions to dismiss, however, the court found that, while Vimeo might be an “electronic communication service” within the meaning of the SCA, CMG failed to allege that Flynn lacked authority to authorize others to view his Vimeo account, a required element for SCA liability. Accordingly, CMG failed to state a claim that the two former employees with whom Flynn shared access to the video violated the SCA. Further, while CMG alleged that Flynn was not authorized to have or to share the video, it did not allege that Flynn obtained the video through unauthorized access of an electronic communication service—also necessary to state a claim under the SCA. The court therefore dismissed CMG’s SCA claims related to the uploading and accessing of the managers’ meeting video.Regarding Flynn’s alleged changing of the Facebook account password, the court held that CMG failed to allege facts about the company’s use of the Facebook page from which the court could conclude that the page was an electronic communication service under the SCA. The court therefore dismissed the claim, finding that “[t]he threadbare statement that Flynn changed the Facebook password . . . does not state a claim under the SCA.”With the dismissal of the plaintiff’s SCA claims (the only federal law claims brought in the action), the court declined to exercise supplemental jurisdiction over the remaining state law claims, and granted the defendants’ motions to dismiss the action. In dismissing the case, however, the court granted CMG leave to file an amended complaint. Will CMG be able to re-state its SCA claims so as to address the court’s concerns?  Stay tuned.

More Trouble With Work-Related Social Media Accounts

We have written before about cases involving disputes between employers and employees over work-related social media accounts, but a new case out of Arizona fed

More Trouble With Work-Related Social Media Accounts

The Supreme Court of the United States issued its much-anticipated decision in Kirtsaeng v. John Wiley & Sons, Inc., holding that the “first sale” doctrine protects a buyer or other lawful owner of a copy of a copyrighted work that was lawfully made abroad, following a lawful first sale. The 6-3 decision resolves a contested issue of copyright law on which the Supreme Court had been equally divided 4-4 two Terms ago. Kirtsaeng may be relied upon to protect businesses such as retailers and technology companies that regularly sell copies of foreign goods that contain copyrighted materials.BACKGROUNDJohn Wiley & Sons, Inc. is an academic textbook publisher that sells textbooks both in the United States and abroad. Each copy of its textbooks sold outside the United States contains a disclaimer that the copy may be sold only in a particular geographic region and may not be exported to the United States without permission. The contents of the American version and the foreign versions of the textbooks are essentially equivalent.Supap Kirtsaeng is a citizen of Thailand who moved to the United States to attend undergraduate school. Kirtsaeng’s family and friends in Thailand purchased copies of foreign versions of Wiley textbooks in Thailand, where the textbooks were sold at lower prices than the American versions were sold in the United States, and sent them to Kirtsaeng. Kirtsaeng then resold the copies in the United States, making a profit for himself.Wiley sued Kirtsaeng for copyright infringement, claiming that the importation into and resale of the textbooks in the United States constituted copyright infringement. Kirtsaeng claimed that his activities were protected under the “first sale” doctrine, 17 U.S.C. § 109(a).Section 109(a) provides that “the owner of a particular copy or phonorecord lawfully made under this title … is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”A divided panel of the Second Circuit held that Kirtsaeng’s importation and resale infringed Wiley’s copyrights, holding that the “first sale” doctrine did not apply to copies of American copyrighted works manufactured abroad. The federal courts of appeals were divided over the question whether the “first sale” doctrine protects owners of copies of works that were made lawfully outside the United States. The Supreme Court previously had granted review in Costco Wholesale Corp. v. Omega, S.A., No. 08‑1423, to decide this question. In Costco, however, the Court was unable to resolve the issue because it was divided equally by a 4-4 vote. (Justice Kagan was recused in Costco because she had filed a brief in the case on behalf of the United States when she was Solicitor General, arguing that the Court should not grant review.)THE SUPREME COURT’S DECISIONIn a 6-3 decision, the Supreme Court held in Kirtsaeng that the “first sale” doctrine applies to copies of copyrighted works that were lawfully manufactured outside the United States. The Court explained that the “language of § 109(a) read literally” does not support a geographical limitation to the “first sale” doctrine. The phrase “lawfully made under this title,” the Court reasoned, does not mean lawfully made in the United States, but rather “in accordance with” or “in compliance with” the Copyright Act, wherever the copy was made.Moreover, the Court believed “that Congress, when writing the present version of § 109(a), did not have geography in mind.” Section 109(a)’s predecessor statute referred to works that were “lawfully obtained.” The Court explained that Congress changed that wording to “lawfully made under this title” not to impose a geographic limitation but for other reasons, including to make clear that a lessee of a copy will not receive protection and to exclude copies that were pirated.The Court also was concerned with implications for owners of copies of works, stating that “reliance upon the ‘first sale’ doctrine is deeply embedded in the practices of those, such as book sellers, libraries, museums, and retailers, who have long relied upon its protection.”Justice Breyer delivered the Court’s opinion. Justice Kagan filed a separate concurring opinion, joined by Justice Alito, although both Justices fully joined the Court’s opinion.Justice Ginsburg dissented, joined by Justice Kennedy in full and by Justice Scalia with respect to all but the discussion of legislative history. In their view, “Congress intended to grant copyright owners permission to segment international markets by barring the importation of foreign-made copies into the United States.”KIRTSAENG’S SIGNIFICANCE FOR BUSINESSESKirtsaeng provides a measure of assurance to businesses that distribute products containing components lawfully made abroad. The Court noted that many businesses rely extensively on the “first sale” doctrine to import and sell products that contain copyrighted components: “Technology companies tell us that ‘automobiles, microwaves, calculators, mobile phones, tablets, and personal computers’ contain copyrightable software programs or packaging.” A geographical limitation to the “first sale” doctrine “would prevent the resale of, say, a car, without the permission of the holder of each copyright on each piece of copyrighted automobile software.” Moreover, “over $2.3 trillion worth of foreign goods were imported in 2011,” many of which “bear, carry, or contain copyrighted” materials.The Court’s holding also benefits businesses such as museums, as well as libraries. In reaching its decision, the Court considered the issue that a geographical interpretation of the phrase “lawfully made under this title” might require art museums that display foreign-produced works (e.g., paintings by Pablo Picasso) pursuant to Section 109(c)—which contains the same “lawfully made under this title” language as Section 109(a)—“to obtain permission from the copyright owners before they could display the work … even if the copyright owner has already sold or donated the work to a foreign museum.” Likewise, the Court observed that “library collections contain at least 200 million books published abroad,” and a geographic limitation to the “first sale” doctrine “will likely require the libraries to obtain permission … before circulating or otherwise distributing these books.” Kirtsaeng, as a result, protects these entities with respect to works lawfully made abroad, following a lawful first sale.On the other hand, companies that price products differently across geographic markets may wish to revisit their pricing strategies in view of Kirtsaeng, and may seek to tailor products, where possible, to the needs of a particular region. The Kirtsaeng decision may also impact a company’s decision to distribute content electronically, rather than in print.Finally, while the analysis in Kirtsaeng rests primarily on statutory interpretation of Section 109 of the Copyright Act, it is worth noting that the result in Kirtsaeng is markedly different from the Federal Circuit’s controversial precedent in the Jazz Photo cases on patent exhaustion and will likely reignite the debate in that area.

Supreme Court Holds That “First Sale” Doctrine Applies to Copies of a Copyrighted Work Lawfully Made Abroad

The Supreme Court of the United States issued its much-anticipated decision in Kirtsaeng v. John Wiley & Sons, Inc., holding that the “first sale” doctrine prot

Supreme Court Holds That “First Sale” Doctrine Applies to Copies of a Copyrighted Work Lawfully Made Abroad

According to a federal judge in Oklahoma in Pre-Paid Legal Services, Inc. v. Cahill, simply sharing information about a new job over social media does not mean that you are inviting former co-workers to come join you in violation of a non-solicitation agreement.On February 12, 2013, U.S. District Court Judge James Payne of the Eastern District of Oklahoma adopted Magistrate Judge Steven Shreder’s report and recommendation on plaintiff Pre-Paid Legal Services, Inc.’s motion for preliminary injunction. Judge Shreder, among other things, rejected issuing an injunction against former employee Todd Cahill’s online activities. In doing so, the court held that general posts on a personal Facebook page about a new employer and invitations to former coworkers to join him on Twitter did not violate Cahill’s non-solicitation agreement.Cahill was originally hired as a sales associate for Pre-Paid Legal Services, now known as LegalShield. Like Amway, LegalShield generates sales through its <a href="http://en.wikipedia.org/wiki/Multi-level_marketing">multi-level marketing program</a>. Sales associates are rewarded not only for selling the product, but also for building their own team of junior sales associates. A percentage of every sale made by a recruit accrues to the associate who recruited them.LegalShield tracks the contact information and performance statistics of each associate’s “downline,” the network of recruits, using a password-protected site. Cahill supplemented these resources with private Facebook pages of his own creation, to better communicate with the top sellers in his downline.Cahill thrived at LegalShield, rising from sales associate to regional manager and eventually becoming a regional vice president. Upon promotion to regional manager, Cahill signed an agreement that included a non-solicitation provision.In 2012, Cahill decided to leave LegalShield to work with a skin-care company called Nerium, also a multi-level sales firm. Notwithstanding his non-solicitation agreement, he met with other top-performing sales associates at LegalShield and urged them to join him when he left for Nerium. On August 10, 2012, Cahill called a meeting of high-ranking associates, told them of his imminent departure, and invited the curious to email him about his new plans.The following day, Cahill emailed his resignation letter, and LegalShield cut off access to his downline through its site. With the exception of a final posting to the private Facebook pages that he had set up, Cahill’s relevant social media activity extended only to general updates on Facebook about his new job, and invitations to former coworkers to join Twitter.In response to LegalShield’s request for a preliminary injunction, the court barred Cahill from direct contact with current LegalShield employees, as his in-person soliciting was undisputed. LegalShield, however, also requested that the court find that Cahill’s social media activity constituted impermissible solicitation.The court examined Cahill’s activities in light of the defendants’ behavior in two other non-solicitation cases involving social media. In <a href="http://www.in.gov/judiciary/opinions/pdf/06301103par.pdf">Enhanced Network Solutions Group, Inc. v. Hypersonic Technologies Corp.</a>, the court found that a job posting on a LinkedIn page did not constitute “solicitation” because the initial contact came through “a publicly available portal of LinkedIn.” The fact that the defendant, Hypersonic, had publicly posted a job listing that an Enhanced Network employee found did not rise to the level of solicitation.Similarly, in <a href="http://www.scribd.com/doc/113917571/Invidia-LLC-v-DiFonzo">Invidia, LLC v. DiFonzo</a>, the court held that “friending” a former employer’s customers on Facebook did not constitute impermissible solicitation. There the court stated, “one can be Facebook friends with others without soliciting those friends to change [business].”In the instant case, the court compared the facts of Invidia and Enhanced Network to Cahill’s behavior and found his actions were even more general. Cahill discussed his new employer in personal Facebook updates, which were directed to his friends at large, and invited former coworkers to sign up for Twitter. The court found that neither act was sufficiently direct to constitute solicitation, and LegalShield offered no evidence that Cahill’s posting would cause irreparable harm or had caused a LegalShield employee to change jobs.The court did not say that the use of social media—as opposed to traditional means of communication—can never be a means of solicitation. The court left open the possibility that social media behavior that had the effect of targeting or soliciting employees, even absent direct messaging, could be prohibited. It remains possible that impermissible solicitation may be only a tweet away.

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