Digital Feature

#SocialMediaLegalFails, Ramifications of Online Overshare: IP, Native Advertising, Brand Endorsements, and Other Media Pitfalls

Luke S. Curran

©2016. Published in Landslide, Vol. 8, No. 6, July/August 2016, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

In corporate and political contexts, the widespread adoption of new social media vehicles and advertising methods has precipitated a host of unclear legal issues warranting examination. From native advertising and endorsements to infringement issues and discoverable information, the results of online “overshare” unearth new challenges. In order to limit this greater risk of exposure when integrating a social media plan as a facet of a business practice or political campaign, companies and politicians alike must update or institute effective policies, procedures, and education and monitoring programs to foster a secure intellectual property culture.

Acting as a barometer, America’s Fortune 500 companies’ online behavioral norms and emergent media trends offer valuable insight into the vibrant future of online legal implications.1 In 2015, Twitter narrowly overtook Facebook: 78 percent of Fortune 500 companies used the tool as compared to Facebook’s 74 percent. Corporations hosting public-facing blogs suffered a 10 percent hit—only 21 percent actively used that medium, whereas Instagram use surprisingly increased by 13 percent. Glassdoor, a business-networking platform, challenged LinkedIn’s 93 percent use by saturating 87 percent of the Fortune 500 list. Only nine corporations did not actively use any of these social media platforms, which is likely subject to change as this year unfolds.

Similarly, politicians are realizing the ancillary benefits derived from comprehensive social media campaigns. However, the adoption of new media and marketing methods for political purposes does not foreclose the opportunity for online legal implications. While employing these mediums to generate political support, the opposite effect may just as easily occur if not handled with diplomacy.

And as with any method of increasing online presence, to avoid running into costly legal issues, companies and politicians must be cognizant when implementing new media strategies. The following catalogues several nonexhaustive considerations that corporations and politicians commonly face as they implement social media to stimulate visibility.

Discovery of Social Media during Litigation

As the use of social media continues to permeate the corporate and political sectors, its importance is increasing in litigation. The number of cases hinging on the discovery of social media is rapidly climbing.2 While individuals and entities make more information available online—coupled with the limited expectation of privacy in this sphere—this area of the law is still “under construction.” Playing catch-up with technology, the courts will continue to build a framework for issues of spoliation, retention obligations, authentication, and much more.3

Recognizing that more companies, politicians, and individuals host relevant information in cyberspace—as you may likely know (but your employees may not)—narrowly tailored discovery requests may uncover important evidence available on social media sources. Company tweets, Facebook posts, and LinkedIn discussions all may be found discoverable and can be rather damaging. If a company authorizes an employee or agent to generate social media communications on its behalf, it will likely need to establish steps to preserve and review such data. Thus, companies must explicitly include these types of communications as corporate property within their electronic document retention policies. In light of the fact that general privacy objections will not effectively shield relevant social media information from discovery,4 the importance of social media evidence will continue to grow.

#FTCTrouble, FTC Clarifies Native Ads and Brand Endorsement Policy

Forewarned is forearmed. The Federal Trade Commission (FTC) has recently vocalized that it is shifting more attention toward social media marketing, specifically the now commonplace practices of native advertising and brand endorsements. Propagated by sites such as Twitter and Facebook, native advertising and brand endorsements can even be found within traditional media outlets. Here, the operative word is “transparency” and, as a result, the FTC is poised to take corrective action when necessary. Read below because “what happens next will shock you!”

“Native Advertising” and “Sponsored Content”

In December 2015, the FTC issued an enforcement policy statement clarifying how established consumer protection principles apply to certain advertising formats, namely “native advertisements” or “sponsored content.”5

A native advertisement is an ad that matches the design, style, and behavior of the digital media in which it is disseminated.6 Native ads are seamlessly integrated into a social media user’s feed and look like the surrounding nonadvertising content. Rather amorphous in nature, these ads can be embedded in or take the form of social posts, search results, e-mails, written narratives, videos, animations, infographics, images, in-game modules, streaming service playlists, consumer reviews, expert opinions, featured articles, investigative reports, and scientific research.

Applying long-standing truth-in-advertising principles to new media, section 5 of the Federal Trade Commission Act (FTC Act)7 is arguably the broadest regulating and investigative tool available that is granted to the FTC. It empowers the agency with the ability to target certain commercial acts or practices that it deems unfair or deceptive. When determining whether a native ad materially misleads consumers, the FTC will examine the ad’s “net impression” that it conveys in order to determine if it is likely to affect a reasonable consumer’s decisions.8 The FTC will scrutinize the context of the interaction by examining both the content and format of the ad. Thus, when examining the blurry line between advertising and noncommercial content, ask yourself whether consumers can discern the source of the content and whether it misleads consumers into believing the ad is impartial or independent.

So, what is the remedy for deceptively formatted advertisements? Although these enforcement policies do not have the force of law, adhering to the following prophylactic measures is important to ensure that digital media disclosures are clear and prominent:

  1. use clear and unambiguous language (plain language that is as straightforward as possible);
  2. use a font, size, and color that is easy to read (consider the size and configuration of the device screens consumers will use to view the content);
  3. use a distinguishable shade that stands out (background shading used to differentiate ads from noncommercial content should be appropriately saturated for consumers to notice); and
  4. place disclosures close in proximity to the native ads or sponsored content (i.e., close to the ad’s focal point).9

Addressing video and audio ads, the disclosures must be:

  1. on screen long enough to be noticed, read, and understood (as opposed to being located in a video description); or
  2. read at a cadence that is easy for consumers to understand and follow.10

In March 2016, Lord & Taylor tarnished its online reputation with a #socialmedialegalfail in the form of a fashion faux publication.11 In failing to make the requisite disclosures, the national retailer settled charges with the FTC alleging, in relevant part, that it deceived consumers by paying for a native advertisement in an online publication. In that case, Lord & Taylor launched a comprehensive social media campaign to promote its new collection. The retailer edited and placed a native advertising editorial in an online fashion magazine with no indication to consumers that the content was sponsored. In settling the charges, the company is prohibited from misrepresenting that paid ads are from an independent or objective source and must adhere to a monitoring and review program. The FTC subsequently emphasized that each violation of a consent order may result in a civil penalty of up to $16,000. Guess what does not accessorize well with that outfit? An FTC complaint.

The essence of the FTC enforcement policy strives to prevent consumers from affording greater credence to ad claims or from interacting with content that they normally would have ignored. Although still ambiguous, it is urged that all parties that participate (directly or indirectly) in generating or hosting sponsored content ensure that the ads avoid misleading consumers about their commercial nature. Ensuring compliance with these guidelines by updating company policies and procedures will help foreclose the possibility of a future FTC investigation or enforcement action.

Adding yet another ethical consideration to an already gray area, native ads are also encroaching the political space, which is an area not necessarily within the purview of the FTC. As the race for the White House intensifies, innovative digital media companies are looking to increase their market share in the realm of political advertising. Recognizing political and advocacy groups’ desire to reach certain target demographics that have phones fused to their hands, various online social news companies are rolling out new plans to create and sell native advertising for office seekers.12 These political ads are also required to adorn special disclosures, which are specified by the Federal Election Commission (FEC) when placed for a fee on another’s site. However, the natural cloaking ability of native ads is a cause for heightened concern given the underlying subject matter here. The FEC’s similarly named (but poorly outlined) “clear and conspicuous” disclaimer requirement only briefly mentions the Internet and sparsely outlines where and how disclaimers should appear.13 Further, based on the overly histrionic nature of the current race, the marriage of sponsored content and politics could easily become a new industry standard—a wedding I’d rather not attend. Maybe the FEC will take notes from the FTC as this medium gains popularity in politics.

Calm before the Storm: Clarifying Endorsement Guidelines

Also in 2015, the FTC reiterated the importance of transparency by clarifying specific practices previously highlighted in its endorsement guidelines.14 In that publication, the FTC emphasized that endorsements must truthfully and accurately reflect the opinion or experience of the endorser while disclosing material connections between the sponsoring advertiser and endorser. If an endorser is acting based on a “compensated relationship” with an advertiser, this type of speech is generally considered commercial speech, which may violate the FTC Act when deceptive. Ask yourself: will the incentive provided by the sponsoring advertiser affect the weight or credibility the readers afford to the endorser’s recommendation?

Although violations of the FTC Act do not result in fines, these actions may result in orders requiring defendants to give up profits they received from their violations in addition to other remedial measures. For instance, the FTC recently approved two final orders with Sony and Deutsch LA regarding false advertising and the PlayStation Vita console.15 The FTC alleged, in relevant part, that Deutsch LA, Sony’s former ad agency, misled consumers by pressing its own employees to create awareness for the PS Vita on their personal Twitter accounts. Ultimately, the FTC approved a final consent order with Deutsch LA as a result of its failure to have employees disclose the connection between the ad agency and its then-client in the Twitter promotions. This gentle slap on the wrist barred the agency from making similar future misrepresentations and required the agency to disclose such material connections.

Likewise, improperly soliciting user-generated content may draw the attention of the FTC. In September 2015, Machinima, an online entertainment network, also settled charges that it engaged in deceptive advertising practices. In that case, it paid “influencers” generously to post videos to YouTube endorsing Microsoft’s Xbox One system and numerous games.16 These compensated relationships were not disclosed. However, the FTC only admonished Machinima—simply requiring Machinima to prominently disclose such compensated relationships—because these were isolated incidents that occurred in the face of established company procedures.

In January 2016, Lumos Labs agreed to settle FTC charges that it deceived consumers with unfounded claims that Luminosity games can help reduce cognitive impairment associated with age.17 As part of the settlement, Lumos Labs agreed to pay $2 million in redress. The complaint also charged the defendants with failing to disclose that consumer testimonials hosted on their website had been solicited through contests offering significant prizes, such as free iPads, lifetime subscriptions to the game, and vacations. The FTC stressed that the deceptive use of testimonials was material to consumers in their decision to subscribe to the Luminosity program.

Accordingly, it is critical to implement a comprehensive social media policy. It must adequately address compensated relationships, enforcement mechanisms, and social media screening and surveillance issues. Streamline the process by creating a policy that can be distributed to and enforced against third parties interacting with the brand. Err on the side of caution. If the advertiser initiates the process leading to the endorsement—e.g., by providing products, sweepstakes or contest entry, or anything of value—the advertiser and its client may become subject to an investigation for any misleading testimonials made by the endorsers. Further, no bright-line rule has been articulated for determining whether a smaller gift or even a nonmonetary incentive affects the credibility of the endorsement. From free meals to gifts with little to no pecuniary value, look to whether the endorser is acting independently or on behalf of the sponsoring advertiser.

Thus far, it’s safe to conclude that the FTC has been extremely reasonable, as displayed in the Deutsch LA and Machinima settlements. Further, no legalese is necessary when writing disclosures as long as they are clear and conspicuous. So, when drafting endorsement disclosures to avoid future legal issues and attorneys’ fees, follow the guidelines also used to remedy native advertising disclosures previously discussed above. While the FTC has been lenient in its enforcement measures, its recent press releases with specific detailed guidance may signify the transition from firing warning shots to full-fledged enforcement actions.

Intellectual Property: Intangible Assets with Tangible Online Implications

Social media’s inherent ability to facilitate a large-scale and immersive marketing or political campaign can also facilitate the opportunity for third-party abuse of trademarks and copyrights. Intellectual property (IP) frequently ranks among a company’s most valuable assets—often as valuable as the respective products or services it offers. Likewise, when running for office, a politician’s brand and ability to control his or her message is imperative. In turn, it is critical for companies and politicians alike to effectively secure, protect, and enforce their IP rights. Fostering a strong IP culture is essential, especially when integrating a social media campaign for brand promotion.

Trademark Turbulence: How to Control Your Message

Several types of trademark misuse can occur on various media vehicles within seconds. Although, in many circumstances, it may be permissible to reference a company and its products or services, evidence of consumer reactions to marketing messages can affect enforcement later down the line. These consumer reactions can play a critical role in legal disputes about whether a mark is protectable or whether a likelihood of confusion exists.

The unauthorized use of another’s mark may lead to liability stemming from harmful activities that injure the brand’s reputation. Improper suggestions of affiliation or sponsorship, dilution, tarnishment, inaccurate comparative advertising, and online imposters all have parasitic effects on the strength and goodwill associated with a mark.18 While it is common practice for competitors to employ another’s mark to fairly and accurately compare products and services, this type of advertising cannot mislead the public. Although seldom, issues of tarnishment may occur online when a user associates a famous mark with substandard goods or services. Additionally, the widespread issue posed by imposters trolling a company’s consumers online by impersonating company employees threatens the brand and can be difficult to combat due to defenses like parody. NSFW: Do not throw water on the fire and engage imposters publicly.

Turning to the political space, take “Twittergate” for instance, and learn vicariously from Mayor Jim Ardis of Peoria, Illinois.19 Here, a Peoria resident acquired the Twitter name @peoriamayor using third-term Mayor Jim Ardis’s official portrait. Under the parody account, he painted a vibrant picture of the politician whose extracurriculars involved drugs, alcohol, and prostitutes. Tragically, the politician misfired back and essentially claimed his likeness was appropriated. In a failed effort to prosecute the owner of the parody account for falsely identifying oneself as a public official, subpoenas were sent to Twitter and Comcast to discover the account holder’s identity and location. Subsequently, a raid was promptly executed on the resident’s home and multiple electronics were seized. In addition to paying $125,000 in damages and attorneys’ fees, the settlement required Peoria to issue a directive to the Police Department explaining the law proscribing impersonation of a public official does not apply to satire. Some serious damage was done in fewer than 140 characters.

Accordingly, in order to traverse these delicate scenarios without being publicly labeled as a bully, it is crucial to prioritize enforcement by knowing your customers (or constituents) and which sites they engage frequently. At all costs, mind your tone. Tread lightly and avoid alienating your target demographic while remembering the duty to police. Often softer and more creative responses are the best approach. Your responses to social media issues may spread extremely fast and are difficult to contain. So before issuing or responding to a cease-and-desist letter, scrutinize your draft from the lens of a typical consumer because it may likely end up online. Also, try sending promotional items as a sign of gratitude when an innocent user complies and remedies the problem.

It is also important to be proactive in social media communities by preemptively acquiring usernames and domain names that reflect the brand (and key variations). Strategize and revise the company’s branding policies and licensing agreements to include detailed online usage restrictions for employees and third parties. Assign employees to oversee the process, study the terms of use for the major social platforms, consider hiring an independent monitoring service, and develop consistent monitoring and enforcement procedures. Also, carefully review proposed marketing campaigns to identify red flags and opportunities for future enforcement. Although tedious, brand owners and politicians need to catalogue relevant consumer comments while developing a strategy for addressing consumer responses that pose risk to their brands.

On a practical note, exploit social media sites’ compliance procedures and privacy policies as an efficient and inexpensive outlet to handle abuse. Lanham Act claims obviously suffer from substantial limitations when arising from social media use due to the scope of the “use in commerce” requirement. However, social media marketing has commonly been used as evidence during a likelihood of confusion analysis.20 Turn to the social media sites’ compliance procedures because they likely have sophisticated infringement, misuse, and parody policies. Even when no trademark infringement is present, many policies interpret an account with the clear intent to mislead others as tantamount to business impersonation and will suspend the account. Some sites’ policies even reserve the right to excise content that may violate another’s IP rights and, in some cases, permit recovery of usernames. Here, even when viable, litigation is always the last resort as negative limelight can far outweigh the benefits.

Copyright or Copy-Wrong?

Similarly, the ease and frequency of copying and transmitting a third party’s creative work in the online space has further highlighted the fundamental disconnect between IP laws and Internet users’ behavioral norms. Analogous to the trademark implications discussed above, many social media vehicles have also established procedures affording rights holders the opportunity to report copyright abuse. These guidelines can be located in the respective social media website’s terms of service. They act as a more expedited and cost-effective mechanism to safeguard rights, report infringement, receive prompt action, remove infringing content, and halt disingenuous efforts of serial infringers.

The Digital Millennium Copyright Act (DMCA) may also provide additional recourse for rights holders under certain circumstances.21 Because a majority of social media sites enable cybernauts to upload user-generated content, this inevitably leads to copyright issues. The DMCA provides safe harbor for service providers by limiting their liability for infringement based on their users’ activities. Thus, if a rights holder discovers that its work was posted to certain social media sites, the owner may file a DMCA takedown notice with the site requesting that the content uploaded by its user be removed. Subsequently, the user has an opportunity to file a counternotice if he or she believes the content was wrongfully removed. Before issuing a takedown notice, always consider whether there is a legal basis when a third party posts your work, and perform and retain records of your fair use analysis. Remember that both the DMCA and social media sites’ terms of service procedures are not self-executing and require owners to personally police violations of their intellectual property.

Peppering in some politics heavily garnished with copyright issues. Music engenders a unique power to inspire, especially when used for political ads hosted on social media. However, the controversy over many candidates’ unauthorized use of music has recently generated negative publicity. If a campaign employs a song in an ad, this use may require synchronization rights, the potential use of the master sound recording, and a public performance license. Yes, even online campaign videos with accompanying music require these licenses. Further, if an artist does not want his or her music associated with a campaign—despite obtaining the requisite licenses—the campaign may run into other legal issues, namely, right of publicity, Lanham Act, and false endorsement claims. Generally, if a song is tied to the message of the campaign, the artist might object. From Jackson Browne settling an infringement suit against John McCain (use of “Running on Empty” in ad) to David Byrne’s settlement with Governor Charlie Crist (use of Talking Heads’ “Road to Nowhere” in ad), ensure that the music is properly licensed. For a belt and suspenders approach, also reach out to the artist’s manager and/or songwriters to obtain permission.

Honorable Mention

A few additional social media implications are worthy of noting. First, confidential information may be inadvertently disclosed on social media and their messaging services. Although rare, an employee or third party may reveal confidential information online, which may result in the loss of IP rights. Second, the force awakens with digital age defamation as statements made over the Internet travel at light speed. Cyber defamation cases are growing in popularity as courts fumble to balance the effects of chilling free speech against the harm to reputations in an online forum.22 Finally, right to publicity claims have also joined the crowded party and added yet another legal crease in the already wrinkled shirt worn by social media. Specifically, companies have been attempting to increase brand awareness by implying a connection with a celebrity without permission.23 When a company is associating its product or service with a celebrity to create awareness—even if it seems noncommercial in nature—the company may have an issue if the underlying intent is to increase recognition.

Fostering a Secure IP Culture

With the prospect of new media platforms and innovative online marketing techniques in view, companies and politicians must keep e-discovery, native advertisements, brand endorsements, and IP rights on the radar. Melding social networking with a business practice or political campaign can enhance a company’s or candidate’s visibility through an interactive medium, but as always, there are risks. Like nine of the Fortune 500 companies, even if your company does not have a social media presence, your employees and customers already do. Accordingly, minimize liability by educating employees about the legal issues implicated on social media. When drafting a comprehensive media policy, include detailed restrictions for employees and third parties. Adequately address disclosures, compensated relationships, enforcement mechanisms, marketing screens, surveillance, and licensing issues. Preempt squatters by acquiring social media handles and domain names that reflect the brand and notable variations. With a modicum of forethought and adequate surveillance, a company can minimize or avoid many online legal disputes while fostering a secure IP culture.


1. Nora Ganim Barnes, Ava M. Lescault & Glenn Holmes, The 2015 Fortune 500 and Social Media: Instagram Gains, Blogs Lose, UMass Dartmouth Center for Marketing Res. (2015), (counting a company as having a presence on each platform studied if the primary corporation, as opposed to individual subsidiaries, had an active account exhibiting activity within the past 30 days).

2. 2015 Mid-Year E-Discovery Update, Gibson, Dunn & Crutcher (July 15, 2015), (emphasizing that number of cases focusing on the discovery of social media skyrocketed in 2015).

3. See, e.g., Katiroll Co. v. Kati Roll & Platters, Inc., No. 10-3620 (GEB), 2011 WL 3583408, at *11–12 (D.N.J. Aug. 3, 2011) (finding it “somewhat prejudicial” that the defendant had committed technical spoliation when he changed his Facebook profile picture, where the picture at issue was alleged to show trade dress infringement).

4. See Nucci v. Target Corp., 162 So. 3d 146, 153–55 (Fla. Dist. Ct. App. 2015) (reasoning that “[b]ecause ‘information that an individual shares through social networking web-sites like Facebook may be copied and disseminated by another,’ the expectation that such information is private, in the traditional sense of the word, is not a reasonable one” (quoting Beswick v. N.W. Med. Ctr., Inc., No. 07-020592 CACE(03), 2011 WL 7005038 (Fla. 17th Cir. Ct. Nov. 3, 2011))).

5. Press Release, Fed. Trade Comm’n, FTC Issues Enforcement Policy Statement Addressing “Native” Advertising and Deceptively Formatted Advertisements (Dec. 22, 2015),

6. Interactive Adver. Bureau, The Native Advertising Playbook: Six Native Ad Categories, Six Marketplace Considerations, and IAB Recommended Disclosure Principles 4–5 (2013),

7. 15 U.S.C. § 45.

8. See Native Advertising: A Guide for Businesses, Fed. Trade Comm’n (Dec. 2015), (scrutinizing the entire ad by examining such factors as its “overall appearance; the similarity of its written, spoken, or visual style or subject matter to non-advertising content on the publisher site on which it appears; and the degree to which it is distinguishable from other content on the publisher site”).

9. Id. (providing multiple examples of when clear and prominent disclosures are warranted).

10. Id.

11. See Press Release, Fed. Trade Comm’n, Lord & Taylor Settles FTC Charges It Deceived Consumers through Paid Article in an Online Fashion Magazine and Paid Instagram Posts by 50 “Fashion Influencers” (Mar. 15, 2016),

12. Jack Murtha & Chava Gourarie, Do BuzzFeed’s Native Political Ads Cross a Line?, Colum. Journalism Rev. (Oct. 20, 2015),

13. See 11 C.F.R. § 110.11.

14. See The FTC’s Endorsement Guides: What People Are Asking, Fed. Trade Comm’n (May 2015),

15. Press Release, Fed. Trade Comm’n, FTC Approves Final Orders Related to False Advertising by Sony Computer Entertainment America and Its Ad Agency Deutsch LA for PS Vita Game Console (Mar. 31, 2015),

16. Press Release, Fed. Trade Comm’n, Xbox One Promoter Settles FTC Charges That It Deceived Consumers with Endorsement Videos Posted by Paid “Influencers” (Sept. 2, 2015),

17. Press Release, Fed. Trade Comm’n, Luminosity to Pay $2 Million to Settle FTC Deceptive Advertising Charges for Its “Brain Training” Program (Jan. 5, 2016),

18. Lorillard Tobacco Co. v. Cal. Imports, LLC, 886 F. Supp. 2d 529, 538 (E.D. Va. 2012) (determining that the defendant, who operated a Facebook page that carried NEWPROT products, was liable for the infringement and dilution of the plaintiff’s NEWPORT trademarks).

19. Dawn Rhodes, Police Raid over Fake Twitter Account Costs Peoria $125,000, Chi. Trib., Sept. 3, 2015,

20. Compare Wm. Wrigley Jr. Co. v. Swerve IP, LLC, 900 F. Supp. 2d 794, 801 (N.D. Ill. 2012) (considering social media marketing when examining the area and manner of concurrent use factor), with Swatch, S.A. v. Beehive Wholesale, LLC, 888 F. Supp. 2d 738, 753 (E.D. Va. 2012) (examining social media advertising under the similarity of advertising factor in its likelihood of confusion analysis).

21. 17 U.S.C. § 512.

22. Hadley v. Doe, 12 N.E.3d 75, 88 (Ill. App. Ct. 2014) (highlighting that in Internet defamation cases, “any solution to the problems posed by these new suits must be tuned finely enough to distinguish incivility that must be tolerated for the good of public discourse from the incivility that destroys public discourse” (quoting Lyrissa Barnett Lidsky, Silencing John Doe: Defamation and Discourse in Cyberspace, 49 Duke L.J. 855, 903–04 (2000))).

23. See Jessica Corso, Jordan Reaches Undisclosed Deal with Chicago Grocers, Law360 (Nov. 23, 2015), (settling a lawsuit against two Chicago-area supermarket chains accused of the unauthorized use of Michael Jordan’s likeness on advertisements).

Luke S. Curran

Luke S. Curran is an attorney at Dennemeyer Group in Chicago, IL. He advises on many aspects of intellectual property, with particular emphasis on trademark clearance and prosecution, trademark enforcement, copyright, IP licensing and contracts, and domain name and Internet related issues.