New John Doe Copyright Infringement Suit Filed in Connecticut

A lawsuit relating to online copyright infringement of synthesizer software using “peer-to-peer” networks was filed recently in Connecticut District Court.  The case is captioned reFX Audio Software, Inc. v. Does 1-89.  The complaint alleges that certain individuals and Connecticut residents committed acts of copyright infringement through the use of a common “peer-to-peer” (“P2P”) file transfer protocol known as BitTorrent.  

A common tactic in mass copyright infringement lawsuits is the use by plaintiffs of “tracking software” which identifies the internet protocol addresses (“IP Addresses”) that were allegedly used to commit acts of software piracy. 

By way of background, Internet service providers, (i.e., Comcast, Cox, etc.) provide the account holders with specific IP addresses from which users can access the Internet.  In these lawsuits, attorneys bringing the lawsuits allege that each IP address is unique and is therefore linked to a specific user account. In order to identify the allegedly infringing users, reFX hired a Connecticut attorney to file a motion with the court, asking to conduct discovery in order to learn the identities of the account holders.  If granted by the court, the attorney for reFx will issue a subpoena to each of the Internet providers requesting that they turn over information (typically name, address, telephone number) for the account holder.  

On March 20th  Judge Janet Hall granted Plaintiff’s motion for leave to take discovery in the reFX Audio case.  As a result, certain Internet providers have now sent letters to cable customers and account holders notifying them of the pending lawsuit.  Typically, Internet providers will wait 60 days to allow  the account holders to seek legal counsel prior to providing the court-ordered personal information.

If you have received a letter from your Internet provider identifying your IP address as having participated in the alleged copyright infringement of reFX software, read here from our earlier post on the issue for next steps and to consider if you need to hire an attorney to represent you. 

We already have received calls in response to this lawsuit.  Many callers have read or been told to ignore these letters.   Each circumstance is typically unique in these cases, and there is no one size fits all defense.  Do not assume that ignoring the letter will result in the problem going away.  While it is true that in some cases ignoring the letter is an appropriate response, it many other cases the risks are too high to simply ignore the problem.  Once you are fully informed of all of your options such as, filing motions to quash, settling or compromising the claim, defending the action, or ignoring it,  you can then decide the proper cost/benefit for your case.

Social Media Continues To Impact Litigation and Trial

The impact of social media  (Facebook, Twitter, LinkedIn, etc) continues to grow in legal matters including litigation and trial.  The court decisions cut across numerous areas from employment law and personal injury to privacy rights and defamation.  Social media use has involved all the key players in lawsuits inclding judges, jurors, consultants, attorneys, reporters, and witnesses.  Lawyers are using Facebook to screen jurors; jurors are using Facebook to post about the case they are sitting on; judges are checking Facebook to make sure jurors are not using it; jury consultants are following Twitter to give advice on trial strategy to attorneys during the trial; and reporters are giving first hand accounts of trials 140 characters at a time. Bottom line: Social media is everywhere and lawyers and litigants should pay attention.

In keeping up to date on the topic, here are some new resources and  articles on social media and litigation and trial:

Vianei Lopez Robinson published an article for Texas Lawyer featured on Law Technology News that covers some recent decisions involving Facebook and the discovery of public and non-public information.  The article also discusses some of the ethical implications for attorney's "friending" litigation opponents. 

Dan Schwartz's Connecticut employment law blog continues to cover social media for employers. He recently posted a new update for employers on the newest social network site, Google +. 

Corey Dennis, who previously submitted to this blog a great summary on the basics of Connecticut civil procedure, has just published a comprehensive law review article on social media and the various laws implicated by its use. Here is a link to his article for the Massachusetts Law Review. 

 Leita Walker and Joel Schroeder published a thorough review of social media "crashing into the courtroom" in an article posted by  The article describes several recent cases, juror misconduct with social media, attorney use of social media in discovery and cases ranging from employment to trademark matters.

A year or two ago it used to be relatively easy to track social media and the impacts on lawsuits and litigation. There were very few cases, and I posted about most of them.   Now, there are new reports and articles,  cases, and legal issues involving social media almost daily.   Just today,  a Google search of social media and trial brings up articles about the Roger Clemens perjury trial and the Casey Anthony murder trial. 

The bottom line is social media is here to stay and has clearly "crashed into the courtroom."  Attorneys, and especially trial lawyers and litigators, have to become familiar with all the legal implications as social media just might crash into one your cases.   

Will The "It Was Just A Tweet" Defense Work In The First Twitter Defamation Trial?

As mentioned before on this blog, Courtney Love was sued for defamation arising out of her notorious Twitter posts. As the case heads to trial on February 6th, she has taken down her Twitter page. Recall that Love was sued by fashion designer Dawn Simorangkir for a series of allegedly defamatory tweets. (She called her a drug-pushing prostitute for starters). THR, Esq Bloggers Matt Belloni and Eriq Gardner have a good summary of what’s expected at the upcoming trial.  Simorangkir’s lawyer claims it is the first case of its kind, and he may be right.

Legal observers are paying attention to whether the court or jury gives more leeway to someone posting on Twitter because tweets by their very nature are opinionated posts. According to legal blog watch, the case is also likely to feature another first, a social media expert.   Jessie Stricchiola is the expert.  Apparently, as a social media expert, she will testify as to the nature of Twitter posts, number of readers, and credibility.

My own opinion is that there should not be any special consideration for commentary on Twitter.  The posts or tweets should be judged under the same standard as any other potentially defamatory statement.   Twitter is now part of the mainstream media. Take for example the recent Hayes trial in Connecticut. There were numerous reporters “live tweeting” from the courtroom. Most media personalities and journalists have twitter accounts where they regularly report and tweet facts. The reverse is also true. Journalists are now reading Twitter posts to get news stories. 

The statements at issue here appear to be defamatory (assuming she is not a drug pushing prostitute) and stated as fact.  I think the “forgive me, it was just a tweet" defense is not going to work.  The idea that statements posted on Twitter are somehow less defamatory ignores the reality of the Internet.  Perhaps Love's lawyer is banking on the jury not understanding Twitter.  The counter to that defense was the social media expert.  If the expert is able to help the jury understand Twitter, and assuming there is no truth to these statements, I suspect the bigger issue will be whether any damages can be established. We will have to wait and see. I will do another post about this case once the trial finishes. 

Social Media Attorney - A New Niche To Address A Growing Concern For Business

I have written several posts on risk management and litigation arising out of social networking or media websites such as Facebook, Twitter and LinkedIn. Dan Schwartz's Employment Law Blog includes coverage of a variety of concerns with use of social media and the need for internal policies and procedures.  While Dan's blog covers employment law and this blog covers business litigation, social media ends up a frequent topic on both blogs.  In fact, you can read about social media on legal blogs across the country covering litigation, intellectual property, privacy, defamation, and the first amendment.  

Some say social media is a fad so why the extensive coverage on legal blogs?  The facts is that as the use of social media continues to grow and involve massive numbers of users, so does the risk of litigation and potential for numerous other legal issues.   To see some staggering statistics on social media,  check out the link to this video I came across on Tyson Snow's blog Social Media Esq. The video is by Erik Qualman, the author of socialnomics.  Here is a link to the video on YouTube (social media revolution 2 refresh).

If you want a real world example of social media's growing impact on the legal industry, consider Citigroup (Citi).  Citi posted on its website a job listing for Associate General Counsel.   The Citi job is not for auditing, compliance, or litigation.  Instead, in what may be a new trend, the Citi job is for Associate General Counsel-Social Media Attorney.   Citi is not alone.  Clorox also sought out an attorney to oversee its social media programs. I expect more companies will follow with new stand alone social media attorney positions.

The responsibilities posted for the Citi position give business owners a snap shot of the potential areas for concern. As posted on its website:  

The Citi Social Media Attorney will be responsible for the legal oversight of social media in three spheres:
A.        Citi-sponsored media such as company websites, Twitter accounts, and   YouTube;
B.        Social media interaction between Citi and the public/third parties; and,
C.        Employee participation in social media, as site user and/or site administrator.

The specific duties of the Citi Social Media Attorney provide a glimpse of the need for management of a vast array of legal areas.  The duties for the Citi job include:

•           Continued development and management of documentation for Citi-sponsored web initiatives (internal and external).
•           Lead establishment of legal risk framework for the Company's social media efforts.
•           Work with specific business counsel to ascertain approval of content, as appropriate.
•           Consolidate, identify and address legal issues presented in content submissions for the social media sponsor.
•           Help establish consistent processes for vetting and replying to comments in interactive environments (websites, Twitter, etc) and promote consistency of policy implementation and risk-related practices.
•           Help protect Citi intellectual property in the world of social media.
•           Help oversee negotiation and drafting of contracts with third parties such as social media providers and content sources.
•           Serve as a resource for Citi's business areas and business counsel as to inquiries regarding legal risks and parameters for social media.
Citi requested that the attorney for this position have experience in:
Advertising, Intellectual property, Information privacy/data security including specifically relevant sections of Lanham Act; Copyright Act as amended by Digital Millennium Copyright Act;  FTC Act and Guides (including recent Endorsements/Testimonials Guidelines); rights of publicity/privacy; promotions law; defamation law; Communications Decency Act.

In my view, Citi has smartly recognized that managing social media does not fall into a traditional field of law such as advertising or intellectual property alone, but rather overlaps several areas that can rapidly change.  As such, proper management of social media issues for a large company likely requires a dedicated position.  This could be a sign of a new practice area or niche: the Social Media Attorney. Either way, it certainly confirms that business and employment attorneys need to understand these areas of law to address the risks clients face as the use of social media continues to grow.

Continue Reading...

Lawyers Going Fishing on Facebook - - Is It Ethcial?

Lawyers are all over Facebook and LinkedIn.  What are they doing?  If they are not marketing or social networking, they are fishing or "mining" for information about individuals and businesses.  They are looking for this information to help with lawsuits.  The business and employment trends involving social media are growing and as a result we will continue to see a variety of different lawsuits and legal issues involving some aspect of Facebook, LinkedIn, Twitter, MySpace and YouTube.  For example, read the posts yesterday by Dan Schwartz's Employment Law Blog detailing how privacy settings on Facebook permit easier production in electronic discovery and how facebook wall postings might be unavailable in discovery and deemed private. 

One of the issues lawyers will have to address when mining for data on Facebook and other sites is how to get the information.  Do you seek the material in discovery and possibly risk a judge deeming the information unavailable as private or irrelevant?  Do you just limit your search to what is publicly available?  Better yet, what about having an investigator try to "friend" your target so you can get access to the information that is not available to public searches?   If you are concerned about the ethics of this type of searching, you good instincts. 

Lawyers fishing on Facebook would be well advised to read through a few ethical opinions on the issue. Recently, the New York Bar Association issued an opinion related to ethical concerns for lawyers "fishing" for information and evidence on Facebook and LinkedIn.  The verdict?  Relying in part on a 2009 Pennsylvania Bar Association opinion, it was deemed ethical for lawyers to search for this information from public pages.  Seeking to "friend" for improper purposes, however, is more problematic and may land a lawyer in ethical trouble.  Specifically, if deception was used (by either the lawyer or a third party directed by the lawyer) to gain access as a "friend," it likely would violate the rules of professional conduct. 

Clearly, LinkedIn and Facebook are treasure troves for litigation attorneys.  However, it is a good idea to be cautious about how you access any information from these sites, especially if the information is not generally available from public searches. 

Disturbing Rise in Internet Harassment and Cyber Bullying Part Of Growing Trend

The tragic suicide of Rutgers University student, Tyler Clementi, shows the potential devastating impacts arising from misuse of the Internet and social media sites such as YouTube, Facebook, and Twitter.  This incident also serves as a reminder of the rapid sea change that technology brings and how our laws struggle to keep pace especially when it comes to new forms of media and the Internet.  I have seen two trends develop as it relates to lawsuits and social networking litigation. Both of these trends will continue. 

The first trend concerns the potential problems and risks to business owners over social media.  These issue have been well documented for over a year now.  Some of these issues include privacy rights, defamation, trade secrets, non-competition agreements, electronic monitoring, evidentiary use, and concerns over social media policies in the workplace. 

The second trend that has developed is the unfortunate increase and rise in cyber bullying, harassment, and invasion of privacy from users posting content on Blogs, Facebook, MySpace, Twitter, and YouTube.  The sad fact is that this often involves school age children as victims of cyber attacks or as users who do not fully understand the significance and devastation that might result from posting content online to the entire world.

As another glaring example, Anderson Cooper of CNN reported just last night on the disturbing story of Chris Armstrong, an openly gay student at the University of Michigan.  The story detailed how a Michigan Assistant Attorney General, Andrew Shrivell, was outright harassing and stalking Mr. Armstrong both in person and on a blog.   Mr. Shrivell's conduct was revolting and disturbing for anyone let alone a law enforcement official.   His actions are an example of someone running wild on the Internet with harassment.

Individuals facing harassment or bullying over the Internet often feel as if there is nothing that can be done to stop the conduct.  For example, as of last night, the Michigan Attorney General had done nothing to discipline Shrivell for his conduct based on purported concerns for "First Amendment" rights.  Although the available laws for bringing a lawsuit for improper use of the Internet continue to evolve, an attorney can help a victim of Internet or online harassment.  In short, something can be done.  Some of the legal theories available for a civil lawsuit include defamation, negligent misrepresentation, invasion of privacy, stalking statutes, and infliction of emotional distress.  

The explosive growth of use of social media is not going to end. Instead, these trends will continue to dominate and grow.   As use and misuse of social media and the Internet continues, litigation attorneys would be well served to stay on top of the evolving legal issues.  Businesses and individuals will continue to need legal representation  to address these growing trends.




Wondering Where The Line Is On Internet Privacy - - Just Watch Facebook

My firm receives many calls from new or existing businesses with Internet privacy questions.  Many calls come from e-commerce businesses, start ups, or businesses that want to utilize information gathered from users accessing their Web sites. Some business owners have ideas or concepts that test the limit on use of user profiles, preferences, and content.  The question becomes, just what are the limits for user expectations on privacy?

Take Facebook for example.  Facebook has a reported 400 million users.  Facebook is constantly in the headlines over its privacy policies and security settings related to its user's profile information.  Whether it is a class action lawsuit in California  or the recent $10 million settlement for its Beacon program, you can count on Facebook to have dealt with any number of privacy issues in litigation.  

Recently, another lawsuit has been filed over Facebook's "opt out" setting concerning the instant personalization feature.  Wendy Davis on  Online Media Daily reported on the story.  This feature automatically shares user information with three outside companies, Microsoft Docs, Pandora, and Yelp.  The lawsuit was filed in U.S. District Court in Rhode Island for violation of the Stored Communications Act (Download here).  By my count, Facebook has been sued at least 30 times in Federal court in recent years.

In the Internet privacy area, Facebook tests the outer limits of what is acceptable for privacy rights and user expectations.  When Facebook makes a change or tries something new, everyone pays attention.  As a result, Facebook's privacy policies get vetted by 400 million users, numerous industry and trade groups, leading technology blogs like TechCrunch, and even the federal government. 

If you want to know what crosses the line when it comes to privacy on the Internet,  just watch Facebook.   

LinkedIn Evidence In A Lawsuit -- It Was Only A Matter of Time

When I started this blog, I decided I would keep an eye on lawsuits related to social networking websites as it seems this type of evidence will soon take the place of the smoking gun email of the last ten years.  The impact of social networking evidence in Connecticut business litigation will continue to grow.

My interest in social networking cases started with a Facebook lawsuit so I made a Facebook category on this blog and discussed some concerns for individuals and Connecticut businesses.  Then Twitter exploded to growth of 1000% last year, so I added a Twitter defamation case and a new category.  And now, its finally here ... I need a  LinkedIn category for LinkedIn lawsuits. 

I do not claim to know about all of the social networking lawsuits out there.  There are also some social networking sites that I ignore, like the dying MySpace.  Nevertheless, I do track cases of interest in this area.  You might also check out Megan Erickson's Social Networking blog as a resource to check on these type of claims or visit Dan Schwartz's Connecticut Employment Law Blog for resources and tips on policies for employers related to social networking.  

The LinkedIn lawsuit involves a non-compete agreement and solicitation of employees by a former employee. Molly DiBianca with The Delaware Employment Law Blog detailed the case in a post about the lawsuit filed by TEKSystems against its former employees.  Nothing strange about this type of lawsuit, only in this case, TEKSystems claims it has evidence of breach of the employment contract arising from post-termination solicitation of its employees through the LinkedIn connections of one of the defendants.  Here is a copy of the lawsuit (go to paragraph 37). 

Molly DiBianca states it is the first lawsuit she is aware of using an employee's LinkedIn account.  She may be right, as I am not aware of another case like it.  Nevertheless, I certainly expect this type of social networking evidence to be the focus of more lawsuits and it was only a matter of time for LinkedIn to be involved in a case with media attention.  In Connecticut, we had our own social networking evidence case with Facebook.  In a bullying case involving Miss Porter's School, Judge Arterton ruled that the plaintiff's postings in an expired account were relevant.   

The way I see it, this is only the beginning.  Soon enough, social networking evidence will be as significant and commonplace as email evidence.  At that point, I'll have to find something else to blog about ....

Business Blog Round Up: YouTube, Coffee Cups, Anna Nicole and Identify Theft


  • Ashby Jones of Wall Street Journal blog writes an intriguing post about the Google and Viacom lawsuit concerning Viacom's claims of copyright infringement against YouTube (Google subsidiary).  The post recites how Viacom employees were uploading copyrighted copies of their own videos to YouTube to help prove that YouTube was not promptly removing videos that infringe copyrights.  At stake: immunity under the Digital Millennium Copyright Act.  Google says its protected from suit under the Act because YouTube removes content upon request of a copyright holder.  Viacom says otherwise and points to some of its own videos that were not removed.  I do not know the particulars of the lawsuit, but if Viacom hopes to prevail, you would expect that they have more to proceed on than there own employee videos.
  • PatentlyO, the nations leading patent law blog, has a humorous post indicating Starbucks may soon be subject to a false marketing claim if it keeps a patent number on its corrugated cardboard cups for much longer.  Professor Dennis Crouch looked up the patent  on the cup and its set to expire in a month.  Maybe Starbucks will settle out of court like the coffee house did with Kramer on Seinfeld for lifetime free coffee!  (if you are wondering, this happened in the Maestro episode)   
  • Brendon Tavelli of The Privacy Law Blog writes about the Federal Trade Commissions settlement against LifeLock,Inc. for misrepresentation concerning its identity theft services and protections.  35 states joined in the settlement.  According the the settlement, LifeLock was not providing the comprehensive identify theft coverage it advertised.  Any consumer considering identify theft should do a very detailed investigation of the company and its services.  I wrote a post recently about data loss and noted that many victims are offered identity theft protection as part of the settlement.  Many times, the protection is not adequate. 
  • Victoria Pynchon's Settle It Now Blog has a compelling post about her project to teach women to negotiate better in retail, relationships, employment, and the law.  I recently discovered this popular blog and now I am a regular reader.  Great insights, not only for women (although she says so a few times).
  • John Buford of the North Carolina Business Litigation Report has a post about a business valuation case involving a closely held business.  At issue in the case was determining a value of an unproven technology.  The problem was setting a fair price to avoid a windfall for either side.  Although it is a North Carolina case, the concepts of valuing intellectual property, especially unproven technology, is more of a function of the science of appraisals than state law.  Some useful concepts are discussed including the appraiser's methodology that the court accepted.
  • Mashable, a top 100 blog, discusses Twitter's birthday only 4 years ago.  Twitter hit 50 million tweets per day last month. Mashable is a great blog that has just about everything there is to do with social media and web 2.0.
  • For more on social media: Nicole Black's Sui Generis - a New York Law Blog - discusses Nicole's new book, "Social Media for Lawyers: The Next Frontier."  The book is co-authored by Carolyn Elefant, who publishes the blog an excellent resource for solos and small firm lawyers.  
  •  Megan Erickson's Social Networking Blog also details the settlement.  I guess  I was not the only one getting those annoying emails claiming my classmates were looking for me. 
  • Cannot do a business blog round up without mentioning the ScotusBlog and its post on Anna Nicole Smith's estate losing her long disputed claim for millions from her tycoon husband J. Howard Marshall.  The Post includes the decision and a summary story.  


Twitter Defamation Case Gets Tossed - But Concerns Remain

In a previous post, I linked to a story about a tenant who was sued for libel after posting an allegedly disparaging comment on Twitter about her apartment. The Twitter lawsuit was a hot topic on the internet for some time.   Many commentators believed it was only a matter of time before Twitter resulted in a damage award for libel.  Not so in this case.   A Chicago judge has tossed out the lawsuit.  Reports indicate that the Judge made a specific finding that the "tweet was nonactionable as a matter of law."   

In this case,  the tenant made a Twitter post that her apartment was moldy.  Before bringing the suit, the landlord might have considered how many people actually read the Tweet.  My guess is probably a few hundred at best.  After the lawsuit was filed, millions read about it.  At the time of the lawsuit, the landlord company issued a statement saying "we're a sue first, ask questions later kind of organization."   That is not a wise strategy in general, but in particular when it comes to an Internet defamation case.   Anything involving a lawsuit and social networking has a good chance of being picked up in the media and in various places on the Internet. 

The Chicago court's ruling that the statement on Twitter failed to meet the standard for defamation seems correct if you consider Connecticut's defamation standard, which is similar.  The takeaway here is that not every negative statement qualifies as a defamatory statement.  This does not mean a post on Twitter cannot constitute defamation.  In fact, Twitter postings remain fair game for defamation suits, and we are likely to see more of these claims. 



Connecticut Defamation Law, The Internet, And Social Networking

In the Business Torts category of this blog, I recently covered the basic law in Connecticut concerning interference with business relationships.  Today's post concerns another business tort known as "defamation" and how it intersects with the growing use of social networking sites.

There already have been several lawsuits for defamation arising out of use of social networking sites, such as Twitter and Facebook. For example,  The California Defamation Blog lists several celebrities involved in defamation cases, including Courtney Love who was sued by a fashion designer for defamation after a series of derogatory Twitter posts by Love.  Craig Kanalley of reported that a property owner sued a tenant for disparaging Twitter comments. The Chicago Tribune recently reported on a defamation lawsuit brought by a mother and her son after a phony Facebook profile was created showing the son was a racist.   

Should Connecticut businesses be concerned?  Clearly, the type and variety of these suits are on the rise. In legal circles, these type of claims have a category of their own called "cyber slander" or "internet defamation."  Given the popularity in use of social networking sites, and the ease in which statements can be broadcast to millions, it is safe to  predict that more defamation cases will be filed in the future. 

Connecticut businesses can be affected by defamation suits involving social networking sites and the internet in a number of ways, such as:

  • Employees making comments about a competitor
  • Employees making comments about supervisors or co-employees
  • Employees making comments about the company's products
  • Competitors making derogatory comments about the company
  • Phony Facebook or Twitter profiles
  • Derogatory comments about the company 

In Connecticut, defamation encompasses defamation by spoken (slander) and written (libel) words. In general, to raise a proper claim for basic defamation, a plaintiff must show that:

  1. A defamatory statement was made
  2. The statement identified the plaintiff to a third person
  3. The statement was published to a third person
  4. The plaintiff's reputation suffered injury as a result of the defamatory statement

In regards to businesses, there is also a defamation claim sometimes referred to as "commercial disparagement" or "trade libel."  For this type of claim, a plaintiff must prove disparagement of a business' goods or services by falsehoods published or communicated to a third person.

With the ease of publication to millions over the internet, it is easy to see how someone might publish a defamatory comment whether it be on a blog, social networking site, or website.   Chances are, if you are in business, either you, someone who works for you, or a competitor has commented about the business in cyberspace.

For a business, the best way to avoid a lawsuit for defamation as a result of employee use of sites such as Twitter and Facebook is to have a written policy that governs employee use.  The details of each policy will differ depending on your business, but clearly the policy should prohibit any defamatory or derogatory comments about the business, employees, or competitors.

In situations where a competitor or customer disparaged your business' products or services, a business may want to consider legal action and determine if grounds exist to issue a cease and desist letter, a take down letter, or initiate a lawsuit.  Internet defamation can ruin a business' reputation overnight and should be addressed immediately regardless of whether the business pursues legal action.   

For a business, whether legal action is taken may depend on the severity of the disparagement and the damage done.  In some cases, a cease and desist or retraction is a practical solution especially when a defamation suit would bring added attention to the matter.  In other cases, legal action, such as a defamation lawsuit, may be required to stop ongoing damage or serious problems.

Regardless of the situation, Connecticut businesses should, at a minimum, monitor cyberspace for defamatory comments.  Comments that might lead to a lawsuit could come from your own employees, a competitor, or a disgruntled customer.  A written policy is a good way to minimize risks of employee comments.  As for competitors and customers, Google alerts is a good way to monitor use of a business' name on the Internet. The alert will send you an email every time your business name is found on the internet. 

Three Lawsuits Against Facebook For Fraud Raise Concerns For Advertisers

If your business is advertising on Facebook, or considering it, you should do some research on the newest allegations of advertising fraud against the online giant.  Facebook reportedly has over 250 million users so it is understandable that a business would want access to Facebook's users.  Facebook offers businesses advertising space online that is targeted to specific demographics of its users.  Facebook charges for the advertising based on the number of views or clicks that the ad receives from users.

As reported by TechCrunch's Michael Arrington, massive complaints started surfacing recently against Facebook for "click fraud."  Basically, advertisers were clicking on competitor's ads, or paying others to do it, to artificially drive the price up.  Advertisers were also reporting that Facebook was charging for more clicks than the ad was actually receiving. There are now three lawsuits filed against Facebook for advertising click fraud.

 The most recent lawsuit was filed on July 31st by an individual advertiser seeking class action status.   The second lawsuit was filed by Unified ECM, a software company, seeking class action status for massive click fraud by Facebook.  The first click fraud lawsuit was filed by sports company RootZoo and it also seeks class action status. 

BNET Media's Catharine Taylor posted a good report on the details of the first two lawsuits including email comments from Facebook.  In the email, Facebook maintained that the Unified lawsuit is "unnecessary and baseless."  Wendy Davis of Online Media Daly posted a good report on the fist lawsuit by RootZoo. All three suits alleged discrepancies between the charges by Facebook and the actual number of clicks recorded by the advertisers.

Although Facebook has denied all the fraud allegations, TechCrunch takes the position that the click fraud problem is real and confirmed by Facebook. The Lost Press Marketing Blog presents a different view accusing Unified ECM of a "marketing stunt" to get exposure through press coverage of its lawsuit. 

Any business considering advertising with a pay per click campaign, should take caution whether on Facebook, another website, or a search engine.  If you want to measure your return on investment, you should consider monitoring any pay per click campaign internally.   If you are considering Facebook, you should wait to see what Facebook does to reassure its advertisers that fraud will be monitored effectively.  For now, the problem does not appear to be going away.


Social Networking Lawsuits Are Big Risk to Business

I just read an excellent article posted on from the New York Law Journal on social networking and challenges to business owners and their legal counsel.  The authors Christopher Boehning and Daniel Toal focus on a new emerging problems associated with electronic discovery of social networking data.  The authors also point out many of the potential problems for employers and businesses related to social networking sites.

When Facebook started exploding in popularity, you could see that the future in communication was social networking.  Boehning and Toal cite to a New York Times articles that indicates the future is now upon us as more people spend time on social networking sites than e-mailing.  The authors correctly point out something I emphasize to all my business clients:  businesses need to have a policy on how to handle social networking sites like Facebook, MySpace, LinkedIn and Twitter.  The policy should cover the business' use of such sites and use by employees.  Policies on preservation of the data should also be included as social networking data is akin to the new email.

Lawsuits involving some aspect of social networking sites are increasing in frequency from across the country. Take for example the recent jury verdict in New Jersey against Hillstone Restaurant for violation of the Federal Stored Communications Act. 

In that case, the employers accessed an employee MySpace group that was dedicated to criticizing the employer.  Although the verdict amount was relatively small, the implications are far reaching.  This case was reported on by Charles Toutant in the New Jersey Law Journal.  The employees' trial brief is a good read and spells out some of the arguments in favor of employees' rights to privacy with social networking sites. 

The outcome in the New Jersey case may have been different if the restaurant had a policy addressing use and access to social networking sites.  Businesses will have different concerns when it comes to adopting a policy, and no policy will cover every situation.  However, the lack of any policy at all is likely to lead to problems and potential litigation.  The best way to avoid litigation is to implement a written policy on use and access to social networking sites.