These days, it seems that all marketing teams are using interactive media as a platform for their marketing activities. While the allure of online social media platforms for building lead-generation databases is undeniable, marketers need to be wary of potential legal traps.  

Online Interactive Contests/Sweepstakes  

Marketers know that their customers love to participate in edgy online contests and sweepstakes where participants upload videos, photos, or other user generated content (UGC) in the hopes of winning prizes or notoriety. While this type of marketing is now “de rigueur,” marketers need to be aware of the intellectual property issues associated with such campaigns. Of course, most companies are well aware that copyright issues lurk behind user generated content and warn contestants not to use, for example, third-party music or video clips without express authorization. However, many people forget that under copyright law, if someone else held the camera, wrote part of the script or even appeared in the work, these other contributors also might have strong intellectual property rights of their own. Therefore, contestant forms should include an assignment of rights from everyone who helped create the content, or at a minimum, an express representation by the named entrant that he or she has obtained an assignment of rights to use all of the contributions. One way to help contestants be mindful of who contributed is to have forms that ask for explicit identification of people who helped the contestant, including the videographer and any writers.  

In addition, thorny issues are created when the UGC contains images of people or their voices, especially if the video, photo or soundtrack includes more than just the image or voice of the named contestant. Specifically, use of faces and voices implicates a complicated web of publicity and privacy rights that vary by state. In general, because such rights are personal to the individual, a single contestant cannot validly waive them, or represent that he or she has authorization on behalf of all others who may appear. Savvy marketers will need to chase for releases from everyone, or choose not to post content involving multiple people.  

Similarly, if the contest encourages UGC that discusses the merits of one product over another, chances are good that third-party trademarks will be part of the uploaded content as part of a product comparison. While such comparisons can be legally acceptable, care should be taken to ensure that the UGC, if broadcast, will not result in claims of trademark infringement, disparagement or unfair advertising. Savvy marketers who want to avoid the issue will discourage direct comparison or use of third-party brands, and instead encourage UGC that focuses uniquely on the company’s products.  

Social Networks, Marketing Campaigns and Disclosure Rules  

Traditionally, if an advertisement was materially deceptive to the consumer, advertisers could expect retaliation from the consumer or more likely, the Federal Trade Commission (FTC), which is charged with policing and enforcing against deceptive marketing practices. As a general rule, the same laws against deceptive marketing apply to internet and interactive media, but the new media-created wrinkles to traditional marketing styles have challenged the application of existing laws. Specifically, the new “buzz marketing" and the ability for “word of mouth” endorsements to “go viral”, caused some zealous marketers to encourage corporate employees to blog about products without disclosing the employee relationship. Similarly, advertisers sought to pay celebrities to mention products on Twitter®, and to set up what appear to be grass roots-created Facebook® pages about products rather than disclose corporate sponsorship. These activities lead some commentators and consumer rights advocates to question whether corporate marketing participation in social networks was potentially misleading to consumers. As a result, the FTC recently revamped its guidelines for online marketing to attempt to curb some of the more misleading activities.  

Under the FTC’s new guidelines, which went into effect on December 1, 2009, bloggers who discuss products or services in exchange for money or other compensation must disclose that relationship in the blog. Additionally, celebrities who engage in product endorsements also must disclose if they benefit financially from a relationship with the producer of the product. Interestingly, the new rules also clarify that celebrities can be held personally liable if their paid endorsements are misleading or deceptive.  

Enforcement of these new guidelines can result in the imposition of fines of up to $16,000. However, the FTC has also stated that its intention is not to chase down every blog, rather the blog or posting would probably also have to be misleading or deceptive in some way, in addition to a failure to disclose the corporate relationship before the FTC would investigate. That said, corporate marketers would do well to ensure that its paid bloggers and word of mouth marketers disclose relationships while blogging. In short, online and interactive marketing techniques, including contests and sweepstakes, are replete with potential legal pitfalls, including those discussed above. Marketers would do well to seek legal review of their practices in order to avoid the potential for significant exposure.