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Social media and company websites

25 August 2009

Businesses are beginning to incorporate social media functionality into websites to energise their online presence. But before taking the plunge, others should consider the commercial and legal risks.

With social media – think Facebook and Twitter – being so popular, it is little wonder many businesses have recognised the potential it has to revitalise their online presence.

It can facilitate online conversation with customers, allow feedback on products and services, and provide new means of collaboration and knowledge sharing.

A great example comes from IT giant Dell.

In May 2007, Dell announced it would give customers the option to buy computers with the ‘Ubuntu’ Linux operating system installed, generating a huge amount of positive publicity. Dell now sells a significant number of Ubuntu PCs.

In the same year, Microsoft’s new Vista operating system launched. Dell initially announced that it would stop selling PCs with XP (the previous Microsoft operating system) and move to Vista. Not long afterwards, Dell did a U-turn, announcing that it would continue giving customers the option to choose XP.

These two business ideas did not originate within Dell. They were published on IdeaStorm (www.ideastorm.com), a website run by the company that incorporates a number of social media technologies.

IdeaStorm allows users to publicly submit suggestions to Dell. An idea published by one user may be commented on by others. A popular idea may be ‘promoted’ by other users. The Linux idea has been promoted by more than 100,000 users, and the XP idea by over 25,000.

Like many other business with an online presence, Shoosmiths is using social media.

Our website lets people get in touch to discuss our articles, and they can subscribe to them via RSS feeds. Twitter users ‘follow’ us at shoosmithslaw (for press releases), shoosmithslaw (for legal updates) shoosmithstechlaw (for IT specific legal updates). Behind the scenes, we use a number of wikis for internal collaboration and knowledge sharing.

Whilst social media can give businesses an online energy boost, there are certain risks that should be considered.

Defamation and intellectual property infringement

Two of the key legal risks presented by allowing user content on a business website are defamation and intellectual property rights infringement.

A website allowing users to post comments faces the risk of those comments including defamatory statements, and with it the risk of the website owner being sued for defamation.

A statement is defamatory if it ‘tends to lower the claimant in the estimation of right-thinking members of society generally’. To succeed in a defamation claim, the claimant must not only show that a defamatory statement has been made, but also that it refers to or identifies the claimant, and was published.

If such a statement is made, it is not just the maker of that statement who is potentially liable; any ‘publisher’ of the statement and anyone exercising ‘editorial control’ over the statement could also be liable.

A website enabling users to post or upload content – pictures, video and audio, and even plain text – runs the risk that the rights to such content are not owned by the person making the upload. Websites that allow user content therefore risk being sued by the owner of that content for infringement of their copyright or other intellectual property rights of third parties, or at least being asked to remove that content from the site.

The hosting defence

There are various possible defences to a claim for defamation or intellectual property rights infringement, depending on the circumstances of the particular claim. In respect of websites, an important defence is to be found in the Electronic Commerce (EC Directive) Regulations 2002.

The website owner has no liability (including for defamation or infringement of intellectual property rights) if they can show that one of the defences given by the regulations applies. Most relevant for websites that feature user content is the hosting defence.

The hosting defence applies if:

the website owner is unaware that the content is unlawful (or, for certain types of claim, is unaware of facts from which the content’s unlawfulness would have been apparent)
upon becoming aware of the content’s unlawfulness, the website owner acts expeditiously to remove or disable access to the content

This is similar to section 1 of the Defamation Act 1996, under which a person may have a defence against a defamation claim if they can show that they did not know, or have reason to believe, that their actions contributed to or caused the publication of a defamatory statement. To avoid losing the defence, the website owner must respond rapidly to the allegation about defamation.

Damaging content

Website owners considering implementing social media must also consider the issue of users posting damaging content, irrespective of whether that content is lawful or unlawful.

Even irrelevant content can be damaging to a business. In the run-up to the announcement of the 2009 Budget by the British government, the Daily Telegraph embraced social media by placing a ‘Twitter Fall’ on its Budget web page.

A Twitter Fall is a continuously updated stream of Twitter posts, and the Telegraph’s was for posts that included the phrase ‘budget’. Some Twitter users, seeing the potential for mischief, made irrelevant posts that included that phrase. The Telegraph failed to see the funny side, and removed the Twitter Fall.

False, biased and satirical reviews of products, services and organisations can also be damaging or even unlawful. Even if the website owner itself is relaxed about a ‘false comment’, the provider of the product or service that is ‘victim’ of the comment may be less so. It is worth noting that false reviews commissioned by the product/service owner may breach the Consumer Protection from Unfair Trading Regulations 2008.

In addition, if a website allows a user to post content, this generally also means they can post links to other parts of the internet, which may contain damaging or unlawful material.

Moderate or leave well alone?

We are presented with a situation where businesses may want to monitor and moderate user content posted to their websites in order to protect their commercial interests, but if they do so, they risk losing the immunity from, and defences to, liability outlined above.

Many major e-commerce sites have taken the view that maintaining their liability immunities and defences is more important – and requires fewer resources – than moderating their user content.

Regardless of the decision that the website takes on this issue, there will ultimately be situations where a website owner will wish to remove or amend user content. For this reason, the website owner should include in its terms and conditions for the website an ability to remove or amend content, and to prohibit users from posting unlawful or infringing or otherwise offensive content.

This should be backed up by a ‘notice and take down’ procedure to allow users to report unlawful content and to set out how the website should respond to any such report.

Data protection

Websites containing social media functionality will almost inevitably collect personal information from their users, such as names and contact details.

As a result, it is important for the owner of the website to ensure compliance with the Data Protection Act 1998, both in terms of how personal information is used, and how users are made aware of such usage through the website’s privacy notice.

For more on privacy notices, see our recent legal update: http://www.shoosmiths.co.uk/news/2361.asp

Use of third party functionality

If you plan to incorporate social media functionality provided or hosted by a third party, there are additional legal considerations.

Many stem from the contract that you enter into with the third party (which may be by accepting the third party’s terms and conditions online). You should ensure you are comfortable with the content of the contract, and have dealt with any practical or legal implications of your proposed use of the functionality, including in your terms and conditions with users.

What does this mean?

Social media can have significant benefits for businesses, making a positive impact on how it is perceived by the public, and ultimately leading to new sales and business opportunities.

But the commercial and legal risks that come with its use must be considered before it is implemented.

What should you do?

Before implementing social media on your business’ website, a review of the legal and commercial issues should be performed. In particular:

are you going to moderate user content before or when it appears on the website?
provide users with a clear and effective means of contacting you to report content that is potentially defamatory, infringing or otherwise unlawful and put in place a policy for dealing with such reports
include in your website terms and conditions the right to remove or amend unlawful or infringing or otherwise offensive content, and a prohibition against users posting such content
conduct, and act on, a review of the Data Protection Act implications of your planned use of social media
include a user-friendly and clear privacy notice as part of the website, outlining your use of personal information
if using social media functionality provided by a third party, ensure you are comfortable with any contract you enter into, and that you deal with the implications of that contract

Are any of the issues in this article giving you a headache? If so, we want to know

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