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PREFACE
In Summer 2009, I watched in wonder as Twitter became a vital communications link in the election riots in Iran. Until then, I didnt think much about social media and hadnt done much with my Facebook or LinkedIn accounts. They just didnt seem that relevant to me. Then the marketplace exploded. Government agencies started opening Facebook and Twitter accounts. Major companies signed on as well and began using social media platforms as communication centers for employees and customers. There was an avalanche of new social media sites, each with its own twist. And people were making money from the sites. A lot of money. It occurred to me that the legal issues were far deeper than first met the eye. Yet companies and employees were populating sites in droves, oblivious to those risks. I further learned, upon talking to my partners, that we were advising companies across practices on issues central to this new media. Collectively, we agreed to team up to present companies with a holistic solution Reed Smiths Social Media Task Force. From these conversations, the idea of this White Paper was born. Partners and associates from many of our practice groups have provided chapters to help our clients navigate through this rapidly changing landscape. Stacy Marcus and Rita DeCaria took up the laboring oars of organizing and editing. I had the easy jobwrangling writers and reviewing the final copy. This was truly a team effort, and special thanks also go to the following people: Eric Alexander, Jesse Ash, Chris Bennett, Paul Bond, Maureen Cain, Darren Cohen, Gerry DiFiore, Michael Golebiewski, Amy Greer, Daniel Herbst, Mark Hersh, Greg Hessinger, John Hines, Andrew Hurst, Tony Klapper, Janice Kubow, Leah March, Andrew Moss, Amy Mushahwar, Meredith Pikser, Joe Rosenbaum, Carolyn Rosenberg, Casey Ryan, Nancy Schulein, Amber Spataro, Sandy Thomas, Lois Thomson, Jacob Thride, and Anthony Traymore. Most importantly, this White Paper will forever be a living document as we add more chapters and update those we have, making sure it remains the definitive source for legal issues in social media. We welcome your ideas and comments as well. If you have anything youd like to share with usgood or badplease send it to socialmedia@reedsmith.com. Thank you. Douglas J. Wood Editor
Network Interference: A Legal Guide to the Commercial Risks and Rewards of the Social Media Phenomenon
EDITORS
Douglas J. Wood dwood@reedsmith.com Stacy K. Marcus smarcus@reedsmith.com Joseph I. Rosenbaum jrosenbaum@reedsmith.com
TABLE OF CONTENTS
Introduction .................................................................................................... 1 Advertising & Marketing ................................................................................ 3 Commercial Litigation ................................................................................. 10 Data Privacy & Security ............................................................................... 18 Employment Practices................................................................................. 24 Government Contracts & Investigations .................................................... 28 Insurance Recovery ..................................................................................... 30 Litigation, Evidence & Privilege .................................................................. 33 Product Liability ........................................................................................... 36 Securities ...................................................................................................... 39 Trademarks ................................................................................................... 44 Biographies of Authors ............................................................................... 49 Guide to Social Media Terminology and Websites ................................... 56 Endnotes....................................................................................................... 66
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Network Interference: A Legal Guide to the Commercial Risks and Rewards of the Social Media Phenomenon
Introduction
Network Interference: A Legal Guide to the Commercial Risks and Rewards of the Social Media Phenomenon
United Airlines broke a passengers guitar. They handled his complaint through traditional procedures, eventually refusing to pay for $1,200 in repairs. In response, the passenger launched a humorous music video to draw attention to Uniteds consumer support incompetence on YouTube. 4 To date, there have been nearly 6 million views of the video. After two other videos, and United donating the cost of the guitar repairs to charity per the musicians requests, United managed to lose the musicians bags, an event that was reported to millions in the blogosphere.5 The story was a lead story on CNNs Situation Room, reported by anchor Wolf Blitzer.6 As a result, Uniteds stock value fell considerably.7 To add insult to injury, the incident is impacting the law. U.S. Sen. Barbara Boxer (D-Cal.) is championing the Airline Passenger Bill of Rights Act of 20098, citing the United debacle.9 We cant help but wonder if United would have fared better if it had discarded the old way and instead engaged in the conversation using the same social media platforms that were used to attack their brand. For at least one major company, engaging made all the difference. Two employees of Dominos Pizza posted a disgusting video on YouTube in which they adulterated the chains food. In addition to reporting the video to the police, Dominos Pizzas CEO posted his own video, apologizing for what consumers saw and assuring them that such things were not condoned nor practiced at Dominos. It all made the Today Show and other media reports.10 Both traditional media and the blogosphere applauded his open communication and willingness to engage in a conversation about the problem.11 Rather than seeing its brand value and reputation take a major blow, it survived the negative media. As social media pioneer Erik Qualman puts it, A lot of companies say were not going to do social because were concerned about letting go of the conversation, and what I argue is thats like an ostrich putting their head in the sand. Youre not as powerful as you think. Youre not going to enable social to happen, its happening without you so you might as well be part of the conversation.12