Part II in a Series
In my previous blogpost about sweepstakes and contests, I addressed the primary differences between those two types of prize promotions (chance vs. skill) and the need for Official Rules. This post examines user-generated content.
For both sweepstakes and contests, a popular format invites entrants to upload, post, or otherwise share their photos, videos, Tweets, or other content on social media platforms or the sponsor’s website or microsite. This user-generated content (“UGC”) requires a set of well-drafted Official Rules to ensure that appropriate content is submitted, the sponsor has broad distribution rights, and has some indemnity from potential third party copyright, trademark, or right of publicity infringement claims. In short, proper licensing rights and indemnity provisions are essential in UGC promotions and the Official Rules must include these terms.
To Own or License UGC?
We encourage our clients to license UGC rather than acquire ownership/copyright interests at the time of submission. We feel this is beneficial in the event an intellectual property or right of publicity infringement claim arises as the sponsor does not actually own the content. In addition, the Official Rules must clearly state that the entrant has the unfettered authority to submit the content and that it does not infringe upon any third party’s IP rights or right of publicity. A broad license should also permit the sponsor to use the UGC worldwide in a variety of media during and following the promotion, in perpetuity, for no fees or royalties.
Digital Millennium Copyright Act (DMCA) language should accompany any UGC promotion. In essence, there must be a way for an authorized third party to properly notify the sponsor in the event an entrant’s UGC has allegedly infringed upon a third party’s intellectual property rights. The sponsor may then elect to remove the UGC if the material is posted on the sponsor’s website, microsite, or another platform that the sponsor controls. However, if the UGC is posted to an entrant’s personal social media account, then the sponsor may have limited options for removing the UGC. This is another reason to license, not own, the UGC.
FTC Endorsement Guides
When UGC material is submitted for a prize promotion on certain social media platforms (e.g. Instagram or Twitter) Federal Trade Commission guidelines require disclosure that the posts were made as part of a contest or sweepstakes. The FTC’s basic position is that consumers should know the material was submitted as part of a promotion, and that a disclosure in the platform’s comments section may never be seen. Therefore, disclosures of this type are inadequate. As a result, the FTC guidelines require that appropriate hashtags accompany the submission. They can incorporate the promotion’s name such as #XYZSweepstakes, #XYZContest, or use separate #Sweepstakes or #Contest hashtags. The Official Rules should clearly state the hashtag requirements and convey that failure to do so may void the entry.
Social Media Platforms Compliance
Beware Public Voting Elements
UGC contests (based on skill/judging, not a random drawing) often include public online voting. In this situation, sponsors must be prepared for potential fraud or vote manipulation, and proper safeguards and/or contingencies need to be in place. In addition, the Official Rules must clearly state whether multiple votes are allowed (if at all) and also address the sponsor’s potential remedies in the event of fraud, hacking, or technical issues arise. The sponsor, online platform, or third party vendor must have the technical ability to monitor and fairly conduct the voting. Problems in this area can quickly devolve into a legal and public relations disaster for the promotion and the sponsor. Always ensure that technical safeguards and proper rules language are in place.
UGC promotions provide the advertiser/sponsor with an opportunity to directly engage with consumers and utilize social media’s benefits. However, it is absolutely essential that the Official Rules clearly state the UGC submission requirements, licensing and indemnity parameters, and the sponsor’s options if problems develop. For UGC campaigns, there is no such thing as a small promotion if things don’t go as planned.