Lewis Roca Blog

Incorporating user-generated content (e.g., video and photo contests) into a promotion can be an effective way to not only build brand awareness but also develop ties with potential customers.  However, use of user-generated content can be risky. In particular, requiring participants to post photos or videos and share such content could not only potentially tarnish the company’s brand but also presents liability risks. Instituting proper safeguards are therefore essential.

At a minimum, a company should include in its official rules provisions identifying that to be eligible for consideration in the promotion a user-generated entry may NOT contain, as determined by the company at its sole discretion, any content that is obscene, hateful, promotes illegal activities, defames or misrepresents another, is threatening, depicts dangerous or harmful acts, disturbs the peace or that communicates messages or images inconsistent with the positive images and/or goodwill to which the company wishes to associate.

The next safeguard is screening of such postings. In particular, a policy of ongoing monitoring and review of published content helps to ensure that any postings that violate the company’s rules or that of a third-party social media provider are timely removed. While more costly and difficult to implement, to provide even more quality control, a company may consider screening user-generated content before it is posted. Then, if any issues are identified while screening the content, the company could proactively address each issue prior to them being posted. Regardless of the review structure implemented, the company should specify that such review does not relieve potential entrants from responsibility to comply with the rules.

Another potential pitfall relates to entrants posting false or misleading claims about competitors as a result of a company’s user-generated promotion. For example, in a lawsuit between Subway and Quiznos, Quiznos sponsored a contest in which entrants submitted videos comparing sandwiches from the two chains. Quiznos posted some user-generated videos as examples and was sued by Subway for false and misleading advertising under the Lanham Act. The case settled out of court after Quiznos’ motion to dismiss based on the immunity for user-generated content publication was denied by the court.

It is imperative that a company understand that it can lose its immunity under the Communications Decency Act, if it is responsible for generating the content. To prevent destruction of immunity, a company should take caution against inviting entrants to submit material showing why their brand is better than another brand, naming the promotion in a way that is derogatory toward the other company, and once entries are submitted, a company should screen for false claims about competitors. [i]

Official rules for promotions utilizing user-generated content should also include representations and warranties to prevent liability exposure due to privacy, publicity, security, and intellectual property issues. Even when the user gives permission, the risk of infringing rights of third parties still exists. For example, the photographer who took the picture, or the musician who provided background music for a video have rights to the content. Companies should therefore be aware that the user may not be the only person with rights to the content, and require entrants to represent submissions are their original work and do not violate laws or infringe the rights of third parties; an indemnification provision is also advised. Best practices also dictate a prominently featured “report abuse” functionality and established Digital Millennium Copyright Act procedures and policies.

Finally, user-generated content submissions may be considered endorsements so submissions should be accompanied by a disclosure of the promotion (e.g., #contest or #sweepstakes). For example, Cole Haan offered a contest on Pinterest in which entrants created boards with Cole Haan shoes and were told to include the hashtag #wanderingsole. The Federal Trade Commission (FTC) investigated the contest and determined the entries were endorsements and that the contest was a material connection between the entrant and Cole Haan which should have been disclosed. While enforcement action was not taken because this was a case of first impression for the FTC, it does serve as a cautionary tale.

In short, a company intending to offer promotions utilizing user-generated content must recognize that while such promotions are a great way to develop customer loyalty and brand awareness, numerous risks exist. Counsel therefore, plays a pivotal role in the design, review, and, ultimately, dissemination of any online promotional offering. Should you have any questions regarding these issues or other promotional offerings, please do not hesitate to contact me at krutledge@lrrc.com.

[i] Gonzalo E. Mon, Court Denies Motion for Summary Judgment in Case Involving User-Generated Content, ad law access (Mar. 8, 2010), http://www.adlawaccess.com/2010/03/articles/court-denies-motion-for-summary-judgment-in-case-involving-user-generated-content/