Copyright infringement and other forms of intellectual property (IP) risk have long been a major concern for publishers and entertainment companies, but the explosive growth of the Internet and social media, along with the ease of content production, have turned almost every business into a publisher. Examples include:
- The “widget” maker that maintains a website with an online catalog and instructional videos for using their product.
- The cosmetics company that has Instagram and Tik Tok accounts where staff share videos of influencers that are synced to music or have music playing in the background.
- A restaurant chain that has a Facebook account showing photos of its food, as well as articles and reviews of its restaurants.
- A non-profit entity that posts on its YouTube and Twitter accounts activist videos and short films filmed in front of a building marked with graffiti.
Like companies in the media and entertainment industry, each of these companies engages in activities that risk infringing the intellectual property rights of another party.
Here are five common activities that can expose businesses to intellectual property risks:
1. Posting photos and video clips on websites and social media.
Companies that post or share photos and video clips in content they create or distribute are subject to liability for copyright infringement if they do not have permission to do so from the copyright holder. author. For anyone thinking “How are they going to find out?” or “Who is watching our Facebook page which only has 216 followers?” : There is a cottage industry of plaintiff attorneys who represent photographers and their licensing agents. They use software that scours the Internet and social media sites for specific photos.
If a company uses a photo without permission or removes copyright credentials, the attorney or representative will make a claim, usually not for their usual licensing fees, but for an exponentially higher settlement amount. than a license fee. Or they could simply file a lawsuit in federal court. These claims may result in substantial defense costs, and the defendant could be subject to actual or statutory damages and attorneys’ fees under the Copyright Act.
2. Use of Third-Party Music in Social Media Posts.
When a company posts a video on its website or social media posts, such as Tik Tok or Instagram Reels, that is synced to music owned by a third party, copyright exposure arises for the use of this music if it has not been properly authorized. This risk also applies if music is accidentally playing in the background. For example, a local bar or restaurant might post a video interviewing employees and customers while a song plays on the sound system in the background. Even though the establishment may have a “blanket license” with ASCAP or BMI that permits public performance of the song, this license does not include the synchronization rights necessary to synchronize the song with the video.
Similar to the industry representing photographers, there is an industry of song tracking companies and attorneys who scour the internet and social media to find songs that have been used without a license for that use. A law firm filed many of these claims on behalf of record labels and music publishers. They have primarily focused on specific industries, like sports teams and traditional media companies, but the company is also pursuing other non-media industries.
3. Promotional material and advertising may violate trademark and trade dress rights.
When a company posts content that promotes its products or services, if it uses a word, phrase, slogan, or label that misleads someone else’s intellectual property, the company could be exposed to a claim for trademark or trade dress infringement.
A trademark is an appellation of origin and is subject to a sophisticated regulatory framework. For example, if Company A expands its brand to add a category of services it has not previously provided, and Company B owns the trademark rights for that brand name in the new category, the Company A could be held liable for trademark infringement when it promotes its new services under that name.
As another example, consider a company that has an employee who designs a label for a product it distributes, and the employee draws inspiration from a famous manufacturer’s label for an entirely different product. The employee’s creative inspiration may result in a trademark and trade dress lawsuit by the famous manufacturer.
Defending trademark and related claims can be very expensive to defend, and an injunction could be sought that jeopardizes a company’s ability to use that name or trade dress, and potentially devalue its investment.
4. Misappropriation of Name or Likeness.
Promotional materials and advertising can also expose a business to claims of misappropriation of name or likeness, otherwise known as violation of the right of publicity.
Although some Company employees may find it helpful, fun, or effective to reference and/or feature photos of celebrities, politicians, or sports figures in their promotional or advertising materials, such creative use may give rise to a significant risk of liability. Many public figures are well aware of the value of their name and likeness, and they choose when to license their rights for commercial purposes. If they learn that someone has used their name or likeness without their permission to sell products or services, or otherwise imply that they have endorsed the products or services, they could sue for misappropriation. name or likeness, violation of their right of publicity, trademark infringement or other related claims.
5. Misappropriation of Ideas, Plagiarism and Trade Secrets.
The work of any business is the sum of the contributions and creative efforts of its employees, independent contractors, and other associated employees or suppliers. Any creative contribution by an employee is generally owned by the company as a “work made for hire” under the Copyright Act, but other types of relationships between a company and its employees – and other associated persons or entities – are subject to varying contractual terms. .
Sometimes disputes arise over ownership of the intellectual property rights that accompany these creative contributions. For example, a company may hire a new employee from a competitor who has great ideas for developing a product. The competitor could sue the company if they believe their former employee shared their trade secrets with the company. A worker who produced written materials and presented a concept to a company could sue for misappropriation of ideas if they believe the company took the written material or developed the concept without adequately compensating the worker.
How to mitigate the risk
Given these intellectual property risks, businesses of all types would be wise to seek out an attorney who can provide appropriate advice on intellectual property laws and how to manage intellectual property exposures. However, even when companies act under the direction of legal counsel, mistakes do happen and claims can still be made. Therefore, a company should conduct a thorough review of its business practices and how they might give rise to exposure to intellectual property, and should also consult with its insurance broker on how to insure against such risks.
Enterprise risk managers might consider a media liability insurance policy, which would be specifically designed to provide defense and indemnification for errors and omissions (E&O) resulting from the creation, broadcast, publication , distribution, printing or licensing of content. Media liability insurance policies typically cover traditional copyright and trademark claims, as well as claims for misappropriation of ideas, violations of publicity rights, and theft of trade secrets. One of the main benefits of having a media liability insurance policy issued by a dedicated media liability insurer cover is the handling of the claim by someone familiar with intellectual property laws who can give a overview of defenses and strategy, and who will appoint the best specialist defense lawyers. in intellectual property law.
Evynne Grover is Vice President, Claims Practice Leader – Media Liability, at QBE North America. With over 20 years of experience in the insurance industry, she handles media liability claims, primarily relating to allegations of defamation, copyright infringement, trademark infringement, publicity and privacy torts against television productions, film productions, newspaper publishers, television networks, media companies and other content creators.