With the explosion of social media, in-house counsel should give careful consideration to unique problems presented by it, 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 intellectual property 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. The following are some specific, brief considerations that in-house counsel should analyze about use of social media and protecting IP.

1. It's gone in a flash (or click) - Even inadvertent statements or posts can innocently give away a company's trade secrets and confidential information. Care must be taken to educate employees about proper use of social media and how to safeguard confidential information. Examples of this include inadvertent disclosure of product launches and other sensitive information. Once Tweeted, that new confidential product feature is known to the world, and there is nothing that can be done.

2. Employee posts in social media may be protected speech - The National Labor Relations Board (NLRB) has ruled that certain employee gripes, while made publicly in social media at the company's expense, are protected and therefore, are not properly the subject of employee termination. Employers should take caution in disciplinary action involving employee posts. The NLRB is watching. Several cases have been filed by employees claiming retaliatory firing due to online posts and comments.

3. Employee posts may subject the company to liability - False statements made by employees or paid third parties about a company's products and services in social media and review sites have lead to claims for deceptive trade practices and false advertising. This is an important consideration about social media and protecting IP of a company. These risks should be communicated to employees. A post is not just a post, and can have serious consequences. Companies have been sued for deceptive trade practices and false advertising based on fake reviews and untrue statements published online. Another area of potential liability is employee posts that are disparaging or defamatory of a competitor's products. Obviously, a clear line needs to be communicated between online posts as an employee and the employee's private activities. Regardless, care should be taken.

4. Employee posts may also create federal administrative action - The Federal Trade Commission (FTC) promulgated new regulations in December 2009 that require disclosure of any connections between an endorser and a company's products and services. Employees who puff or exaggerate a company's products or services, even if completely truthful, without disclosing their employment relationship run the risk of subjecting the company to administrative action by the FTC. This is another important thing to remember in training of employees about social media and protecting IP and the company. Employers should take care in educating employees about the disclosure requirements. A violation could lead to administrative action against an employer even if it was unaware of the sponsored endorsement. These concerns also include bloggers that are paid or provided free product to review.

5. Social media provides a much bigger, real-time audience for yesterday's problems - All the issues facing companies and employee relations, from employee discrimination and harassment to embarrassing pictures and comments at the company party, may be played out in a very public arena at the speed of light. Policies should be implemented to address these issues. Being on the losing end of an embarrassing video that "went viral" can devastate a company's brand. Employers should incorporate social media policies into employment manuals and educate employees as to the proper usage. Simple guidelines to employees should eliminate many problems, particularly innocent posts by employees.

6. Be careful using social media as a recruiting tool - The highly personal nature of social media provides potential employers ample opportunity to learn extensive personal information about employment candidates that ordinarily would not be disclosed in a resume. Companies should exercise care in using this information to avoid claims for discriminatory hiring. One approach is to segregate the researcher and the hiring decision make to ensure that if sensitive or protected information is uncovered, it was not presented to the hiring decision maker and therefore could not have played a role in the hiring decision. While a highly useful tool to screen potential job applicants, there are some legal risks associated.

7. Registering usernames is a cost-effective, protective measure - One of the best ways to prevent trademark infringement is for a company to register its name and key brands as usernames for social media sites to prevent username squatters and other infringers from controlling the usernames. Proactive registration is much less expensive than attempting to recover the username later. Litigation over identity theft or trademark infringement can be quite expensive. Best to be proactively protect rights on the front end.

8. Social media policies are becoming a best practice - Companies should incorporate policies into their employee handbook or develop policies as separate guidelines. The concerns outlined in this article are just a few of the issues that can be covered by a well-drafted social media policy. Additionally, a policy should address who owns social media accounts, usernames, posts, and other content. Finding out later that an employee or independent contractor owns a Twitter handle and associated posts can be a painful lesson for a company. There has already been litigation over who owns Twitter accounts. Companies should not wait to address this issue and should use contracts that clearly define these rights.

9. The best defense is a good offense - Proactively monitoring brand and trademark usage in the social media space is often the best strategy to protect trademark rights and other IP rights. Often, a company can get a third party to stop using its trademarks or brand names with a simple request or through using the intellectual property policies of media companies. This is usually a better and less expensive route than waiting and filing litigation later. Facebook, Twitter, and eBay all provide mechanisms to address IP disputes. The Digital Millennium Copyright Act (DMCA) also provides a take down procedure used by many companies. While the DMCA expressly applies to copyrights, the safe harbor provides a road map for potentially addressing other IP disputes.

10. Social media adds additional litigation considerations - Because it aggregates millions of users, the public relations aspect of this should be considered before commencing litigation. The trademark infringement case between North Face and South Butt, for instance, was played out heavily in social media. Typical aggressive litigation tactics may backfire and actually lead traffic to a sympathetic defendant's pages. Careful consideration should be given to these consequences before suit is filed. Additionally, lawyers should check with local rules to ensure they do not run afoul of juror pool research and inadvertent contact.

Social media has not only opened up new avenues for communications and brand marketing, but has also added whole new ways to infringe on those efforts. Making sure that your brand and company is protected in cyberspace isn't just important; it's an integral part of how companies and their employees must communicate today. Care should be taken to educate employees and third-party independent contractors regarding the risks of online posts, particularly ensuring that any endorsements are properly disclosed.

About the Firm:

Klemchuk LLP is a litigation, intellectual property, transactional, and international business law firm dedicated to protecting innovation. The firm provides tailored legal solutions to industries including software, technology, retail, real estate, consumer goods, ecommerce, telecommunications, restaurant, energy, media, and professional services. The firm focuses on serving mid-market companies seeking long-term, value-added relationships with a law firm. Learn more about experiencing law practiced differently and our local counsel practice.

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