Wednesday, July 10, 2019

Advertising Law and Social Media Law – A Case Study for Entrepreneurs

By Jonathan Husted and Kirsten Donaldson

All startups and budding entrepreneurs want to get the word out about their business, and social media makes advertising extremely accessible even for entrepreneurs with low marketing budgets.

Like everything else though, advertising — including advertising done on social media — must be truthful and nondeceptive and abide by a certain set of rules. What potential pitfalls might be waiting for a new business advertising on social media? Let’s take a look…

Meet Sally. Sally is excited to launch into her second career — operating a mobile ice-cream food truck called “Scoops in the City!” Sally used some of her savings to purchase and refurbish a used food truck, and is employing her daughter Madison specifically to launch her new venture’s social media presence. Sally loves her city, and she wants her ice-cream truck to be associated with the same charming aspects of the city that makes her call it home, including the well-known local baseball team. And you really can’t miss the truck — Sally commissioned a friend of hers to paint the truck to look like an ice-cream sundae, with bright and sparkly sprinkles all around. Now Scoops is ready for business!

Scoops plans to park outside the local baseball stadium before games to catch families on their way to and from the ballpark. One morning, Madison suggests that they have an informal photo shoot that evening when Sally takes the truck to the stadium so she can post pictures on various social media pages. Madison’s friend, Sawyer, has a camera and considers himself a semiprofessional photographer, and he’d be happy to stop by the stadium to take some pictures for Sally as a favor — no photography contract needed among friends, he thought.

That afternoon, Sawyer meets Madison and Sally outside the ballpark, where Scoops is already set up, with the day’s specials listed on the chalkboard and some customers in line. A few kids are walking away with ice-cream cones in their hands — with melted chocolate ice cream dripping down their chins — and Sawyer takes a few quick candid pictures as they walk by. Sawyer walks to the truck and takes a few pictures, including one he was quite proud of — a profile shot of a father and son being handed their cones by a smiling Sally leaning out of the bedazzled truck, with the ballpark lights and logos in the background. 

Sawyer went home and uploaded the pictures from the evening onto his website and texted Madison to let her know the pictures of her mom’s ice-cream truck were posted. Over the next few days, Madison created Twitter and Instagram accounts for Scoops in the City! and posted some of the pictures Sawyer had recently taken. What could be wrong with some free publicity? 

Little did Madison know, she may have exposed the business to some serious liability by posting those pictures. So what are the advertising law and social media law concerns?

Before posting photos for commercial purposes, entrepreneurs must “clear” 1) the intellectual property rights to use the photos (if not owned by the business already); 2) the name and likeness of people in the photographs; and 3) the right to use any other intellectual property in the photograph, such as other companies’ trademarks or other copyrights visible in the photo. 

In our hypothetical, Sally did not secure the rights from photographer Sawyer to republish his photographs. Even though they are of Sally’s truck, the intellectual property rights in the pictures themselves belong to the photographer (unless otherwise assigned via contract). Sawyer could force Sally to take his pictures down, and could require a royalty payment for Sally’s unauthorized use of the work. 

Further, Sally did not secure a release from the identifiable people in the pictures, and could be liable for commercial use of their likenesses (and names, if used). Even though the people were in public when photographed, meaning that they had no right to privacy as they would in their own homes, the people would not likely have the expectation of being on social media with ice cream running down their chins. And the stakes would be greater if any of the people in the photographs were local or global celebrities. There are also heightened legal protections for children in advertisements, which could open Sally up to even more potential liability. Sally would have been smart to obtain releases from all people visible in the photos before posting the photos online. 

Would Sally need permission to have her truck’s paint job featured in advertising? Probably. Because Sally commissioned the work, the contract likely included a provision stating that Sally owns the intellectual property rights in the commissioned work. However, should a mural or other independent copyrighted work been captured in the photo advertisements, Sally would have needed to secure the right from the artist to use the work in her ads prior to posting the photos online.  

Lastly, the baseball team did not give their permission to have their federally registered trademark featured in the background. Consumers might view use of the baseball team’s logo as sponsorship or other endorsement, which would not be accurate. The team’s lawyer may send Sally a cease and desist letter asking her to blur the trademark or remove the photos from social media altogether.

As a new entrepreneur, Sally understandably didn’t appreciate the potential advertising law and social media law implications of posting a few photos. But even budding entrepreneurs are not exempt from federal and state advertising laws that may result in federal or state legal action or civil lawsuits. 

Entrepreneurs are pulled in many directions when starting up a new business venture and an advertising and social media presence is an absolutely critical component to growing a business. But as Sally found out, it can also lead to potential liability if advertising laws and social media laws are not considered from the outset. At a minimum, this includes taking steps to ensure advertisements are truthful and not deceptive, and that all necessary rights in advertisements are properly cleared before a photo is posted to social media. Several other rules apply including proper disclosure of endorsements and proper substantiation of all claims made in advertisements.

Entrepreneurs who are mindful of such laws from the beginning, may be protecting themselves from costly litigation down the road.

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