Connecticut Business Litigation Blog : Connecticut Business Lawyer & Attorney : N. Kane Bennett : Raymond & Bennett Law Firm : Hartford, Middletown, Glastonbury

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.   

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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 ....

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• 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 MyShingle.com an excellent resource for solos and small firm lawyers.  
•  Megan Erickson's Social Networking Blog also details the Classmates.com 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.  

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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. 

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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 Chicagonow.com 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. 

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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.

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I just read an excellent article posted on Law.com 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.  

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