You are on page 1of 5

Morrison & Foerster Social Media Newsletter Vol.

1, Issue 3 September 2010

Socially Aware:
The Social Media Law Update

2 PR Firm Settles With FTC for

Posting Positive Reviews for
Clients’ Products on iTunes

2 Facebook Launches Location-

Based “Facebook Places”

3 Account-Holders May Quash

Subpoenas Served on Social

3 Caveat Emptor: Key

Provisions in Facebook’s
Statement of Rights and

If your company has established a presence on Facebook, it 5 Proposed German Bill Would
Prohibit Employers From
has presumably “click-accepted” the terms and conditions set Using Social Networks for
forth in Facebook’s online Terms of Use. But has your company Background Checks
actually reviewed Facebook’s Terms of Use? Is your company
aware of its obligations under Facebook’s Terms of Use? In 5 Facebook Quietly Buys Up
Social Networking Patents
this issue of Socially Aware, we take a look at some of the
key provisions in Facebook’s Terms of Use. We also discuss
a recent FTC settlement against a PR company that had its
employees post positive iTunes reviews of its clients’ iPhone Editors
apps; Facebook’s launch of its location-based “Facebook John Delaney
Places” functionality; and Facebook’s purchase of a patent Gabriel Meister
portfolio from social networking pioneer Friendster. Further,
we summarize the recent Crispin decision addressing whether Contributors
private messengering services provided by Facebook and Kara Alesi
MySpace are protected under the Stored Communications Act, Maddy Batliboi
and we highlight a proposed German bill that, if adopted, would Matt King
prohibit employers from using social networks for background Leo Lipsztein
checks. Finally, we identify the Top Ten Corporate Facebook Katherine Nolan-Stevaux
Karin Retzer
Pages—is your company’s Facebook Page on the list?
Jane Kim (Summer Associate)
Morrison & Foerster Social Media Newsletter Vol. 1, Issue 3 September 2010



Posting Positive
Starbucks 13,964,386 fans

YouTube 13,744,266 fans

Reviews for Coca-Cola 12,199,672 fans

Clients’ Products Oreo

9,914,641 fans

9,613,787 fans

on iTunes Red Bull 8,080,353 fans

Victoria’s Secret 7,107,450 fans

The Federal Trade Commission recently
announced that a public relations agency Disney 6,507,721 fans
has settled charges that it engaged http://statistics.
iTunes 5,961,472 fans
in deceptive advertising by having its
5,781,112 fans leaderboard
employees write positive iTunes reviews of Live Messenger
its clients’ iPhone apps without disclosing
that the reviews were written by the
agency’s paid employees.
Facebook “Friends Only,” and permitting each user to
opt in to being tagged by a particular friend
According to the New York Times, Reverb
Communications—which provides public Launches the first time such friend seeks to tag the
user. Nevertheless, Facebook Places has
relations and marketing services for video
game developers—allegedly hired interns
Location-Based drawn criticism for not providing a “single”
opt out from all location-based functionality
to write “influential game reviews” for its
clients from November 2008 through May
“Facebook and for its lack of transparency with
respect to how advertisers and marketers
2009. Places” will be using location information; indeed,

The consent order requires Reverb to the Center for Digital Democracy has
remove the employee-posted reviews of stated that it will be raising the latter issue
its clients’ products from iTunes and to with the FTC.
On August 18, 2010, Facebook rolled out
refrain from misrepresenting “the status Facebook Places, a new location-based Interestingly, Foursquare implemented
of any user or endorser of a product feature that allows Facebook users to several privacy-related measures prior
or service, including, but not limited to, “check in” at their current physical location to Facebook Places’ launch, including
misrepresenting that the user or endorser and “tag” friends who are there with them. by providing an intuitive grid of privacy
is an independent user or ordinary The feature also gives Facebook users defaults on its site, which measures have
consumer of the product or service.” access to a “Here Now” function that been well received in the trade press.
Reverb, however, will not be penalized permits users to determine what other
monetarily. Given the FTC’s interest in location
Facebook members are at the same
information (for example, a panel
In October 2009, the FTC issued location at or around the same time.
discussion on mobile “location-based
comprehensive “Guides Concerning the Location-based social networking has services” was held during the FTC’s 2008
Use of Endorsements and Testimonials attracted many start-up companies, such Town Hall meeting on mobile marketing),
in Advertising” (16 CFR Part 255) that, as the immensely popular Foursquare, and indications that the FTC may require
among other things, target endorsements which is Facebook Places’ main opt-in consent for the use of precise geo-
by reviewers of products and services who competitor, as well as Google Latitude, location (for example, see staff comments
fail to disclose financial compensation or Gowalla, loopt, and brightkite. Still, on pages 43 and 44 of the FTC Staff
other consideration received directly or concerns have already been raised over Report: Self-Regulatory Principles For
indirectly from the seller of the product or Facebook Places’ privacy implications. Online Behavioral Advertising), we
service in question. The charges against anticipate further developments in privacy
Reverb are the first to be brought under Facebook has sought to address privacy
measures for location-based social
these Guides. More information about the concerns, setting Facebook Places’ default
networking in the future.
Guides can be found at the FTC’s website. setting for visibility of a user’s location to

Morrison & Foerster Social Media Newsletter Vol. 1, Issue 3 September 2010

Account-Holders subpoenas that targeted webmail and

private messaging specifically, as the
As social media platform providers
become more powerful, however, their

May Quash court was “satisfied that those forms of

communications… are inherently private
so-called “Terms of Use” agreements are
attracting greater scrutiny. For example,

Subpoenas such that the stored messages are not

readily accessible to the general public,”
an effort by Facebook last year to
modify its main governing agreement, its
Served on Social and are therefore protected under the
SCA. The court, however, remanded the
“Statement of Rights and Responsibilities”
or “SRR,” sparked an end-user revolt
Network issues of whether Facebook wall postings that resulted in Facebook abandoning
and MySpace comments were readily the modification effort. Further, corporate
The U.S. District Court for the Central accessible to the public; specifically, the users are beginning to focus on how best
District of California recently held in court ordered “the parties to develop to assess and manage the risks posed by
Crispin v. Christian Audigier, Inc. that a fuller evidentiary record regarding these online contracts. To facilitate this
private messaging services provided by plaintiff’s privacy settings and the extent effort, we are presenting the first in what
Facebook and MySpace are protected of access allowed to his Facebook will be a series of pieces examining the
under the Stored Communications Act wall and MySpace comments.” More Terms of Use agreements of some of the
(“SCA”) because the sites constitute both information on the case can be found high-profile social media sites; we start
electronic communication service (“ECS”) at (We will feature this series with a look at Facebook’s SRR.
and remote computer service (“RCS”) further thoughts on the Crispin decision in
providers—which are typically treated One challenge in analyzing social media
our next issue.)
differently under the SCA. Interestingly, websites’ Terms of Use agreements is

Caveat Emptor:
the ruling also suggested that postings untangling the complex web of policies
to a social media service’s “wall” would and rules that often comprise such
be entitled to SCA protection as well, so
long as access to the wall is restricted to
Key Provisions agreements. Indeed, the Facebook
SRR is merely one of twelve documents
invitees only. in Facebook’s constituting Facebook’s online contractual

Enacted in 1986, the SCA, which is part

of the broader Electronic Communications
Statement of
However, in their
Privacy Act, created a set of Fourth
Amendment-like privacy protections that
Rights and rush to capitalize
regulate the relationship between, on
one hand, service providers that possess
Responsibilities on the social media
boom, corporations
Companies are setting up shop on social
private user information, and, on the are “click accepting”
other hand, government investigators. media platforms at an astonishing rate;
the extremely
The SCA governs both voluntary and indeed, one struggles to name a major
consumer-focused company that has one-sided, overly
compelled disclosures of “stored wire and
electronic communications…” and applies not already established a presence on burdensome
to services that either “provide[ ]…the Facebook and Twitter (this would not have online contracts
ability to send or receive wire or electronic been difficult to do a year ago). However, in that typically
communications” (that is, ECS providers), their rush to capitalize on the social media govern their
boom, corporations are “click accepting” the
or provide public “computer storage or access to social
processing services by means of an extremely one-sided, overly burdensome
online contracts that typically govern
media platforms —
electronic communications system” (that
their access to social media platforms— contracts that these
is, RCS providers).
contracts that these same corporations same corporations
The standard of care that must be applied would be loathe to accept in the offline would be loathe to
under the SCA depends on which type world, at least not without extensive accept in the offline
of service is involved—but in Crispin, negotiation. Moreover, many companies
the district court ruled that Facebook world, at least not
enter into these online agreements without
and similar sites perform the services of without extensive
any prior review, and often remain unaware
both types of providers. In light of this, of their binding obligations and potential negotiation.
the court quashed the portions of the liability exposure under these agreements.

Morrison & Foerster Social Media Newsletter Vol. 1, Issue 3 September 2010

regime (which, if printed out, spans in which case the license appears to user information, and (c) post a privacy
more than 33 pages). The graphic below continue in perpetuity. policy explaining what information is being
attempts to show how Facebook’s twelve collected and how it will be used.
governing documents interrelate.
Facebook May Unilaterally Modify the
SSR’s Terms at Any Time [Facebook
1 SRR, § 13.1]: Facebook reserves the
Terms of Use
(“Statement of right to change the Facebook SRR by
Privacy Policy
Rights and providing notice to users on the Facebook
Site Governance Page, where it gives
users an opportunity to comment on such
changes. To keep abreast of changes
to the Facebook SRR, companies that
2 3 4 5 6 regularly use Facebook should check
Payment Pages Advertising Promotions Facebook’s Governance Page from time
Terms Terms Guidelines Guidelines
Policies to time (or consider “Liking” the Page to
ensure receipt of notices of any changes).

Facebook May Terminate User

Accounts for Violation of SRR or Where
7 8 9 10 11 There Is a “Legal Risk” to Facebook
Branding Facebook
Facebook Escalation Developer and [Facebook SRR, § 14]: Unsurprisingly,
Connect Procedures PR Policy Promotion
Policy Terms Facebook reserves the right to stop
providing all or part of its services to any
user who violates “the letter or spirit” of
Promotions Are Subject to Restrictive the SRR. More interestingly, Facebook
We cannot here summarize all of the “Promotions Guidelines” [Facebook also reserves the right to stop providing
important terms and conditions to be SRR, § 3]: Is your company thinking Facebook to any user who “creates risk
found in these twelve documents that about operating a contest, giveaway, or possible legal exposure for Facebook.”
govern one’s use of the Facebook sweepstakes or similar promotion Read broadly, the foregoing language
platform; however, we do wish to highlight on Facebook, or merely advertising could allow Facebook to withhold its
terms that may come as a surprise to such promotion on your company’s service from companies making novel
many corporate users of Facebook: Facebook Page? The Facebook SRR commercial uses of Facebook, at least to
Facebook Receives a Broad License may require that your company obtain the extent that such use create any “risk”
to User-Posted Content [Facebook Facebook’s prior written permission to for Facebook.
SRR, § 2.1]: Is your company posting run the contemplated promotion. Also,
keep in mind that all such activities are All Disputes to Be Resolved in
text, images, sound recordings or videos
governed by a set of supplemental terms Facebook’s Home Forum [Facebook
to its Facebook Page? If so, then your
and conditions contained in Facebook’s SRR, § 15.1]: Facebook’s SRR requires
company may be granting Facebook
separate Promotions Guidelines, all Facebook users—including companies
a broad license to such content. In
introduced in November 2009, which that operate Facebook “Pages”—to
particular, § 2.1 of the Facebook SRR
govern not only the content of the resolve any disputes regarding the
provides that, by posting content that is
promotion but how the promotion may Facebook service in the state or federal
“covered by intellectual property rights,”
and may not be operated and promoted. courts of Santa Clara County, California
such as photos and videos on or “in
(the location of Facebook’s headquarters).
connection with” Facebook, users (which, Consent and Notice Requirements
again, includes companies as well as for Collection of User Information Facebook Disclaims Security, Implied
individual end-users) grant to Facebook [Facebook SRR, § 5.7]: Does your Warranties and Liability for Third-
a non-exclusive, transferable, sub- company collect information on the Party Acts [Facebook SRR, § 15.3]:
licensable, royalty-free worldwide license Facebook platform from other Facebook Facebook’s SRR includes a number
to use any such content. This license users? If so, Facebook’s SRR appears of broad disclaimers, including (a)
terminates when the posted content to require your company to (a) obtain disclaimers concerning the safety or
is deleted from Facebook—unless the such users’ consent, (b) make it clear security of the Facebook platform; (b)
content has been “shared” with others, that your company is the one collecting disclaimers of express and implied

Morrison & Foerster Social Media Newsletter Vol. 1, Issue 3 September 2010

warranties; and (c) a disclaimer of

Facebook’s liability for the actions, content,
by a supermarket chain, an automobile
manufacturer, and the government-owned Facebook Quietly
information or data of third parties.
Although these broad disclaimers are
railway company Deutsche Bahn AG, which
was assessed to be the largest-ever fine
Buys Up Social
commonly found in consumer-focused
online Terms of Use agreements, they are
for non-compliance with the BDSG. The
bill, as approved by the government, now
the types of provisions that corporations
have typically sought to negotiate out of
goes to the German Parliament, where it is
expected to undergo substantial changes;
their contracts with their service providers. although it could still become law in 2010. With little fanfare, Facebook recently
purchased a portfolio of patents and
Facebook’s Liability Capped at $100 Among other things, the bill would prohibit
patent applications covering a wide range
[Facebook SRR, § 15.3]: The Facebook employers from using social networking
of social networking activities. Based
SRR caps Facebook’s aggregate liability sites such as Facebook when conducting
on documents filed with the U.S. Patent
arising out of the SRR or the Facebook background checks and screening current
and Trademark Office, VentureBeat
service at the greater of $100 or the and potential employees. According to
reported recently that, earlier this summer,
amount that the user has paid Facebook the relevant provisions, employers should
Facebook purchased 18 patents and patent
in the past twelve months. Presumably, limit their searches to “publicly available”
applications from MOL Global, the parent
most Facebook users—including corporate information only. However, searching on
of social networking pioneer Friendster.
users—pay little or no money to Facebook, “professional” online networks such as
According to VentureBeat, Friendster
in which case $100 would be the cap LinkedIn or Xing would still be permitted.
never actively enforced these patents,
on Facebook’s liability under the SRR. In practice, the distinction between
but there is a possibility Facebook could
The cap presumably will increase if, for professional social networks (which
take a more aggressive position. Of the
example, a company were to purchase ad are “primarily used for the presentation
18 purchased items, eleven are pending
space or other services from Facebook. of professional qualifications”), which
patent applications, several of which
may be accessed, and other social
In future editions of this newsletter, we appear to be quite broad, covering subject
networks, which employers may not
will continue our exploration of the online matter such as a “system and method
use, will sometimes be difficult to make.
terms of use of social media providers. for managing an online network” (U.S.
Moreover, the bill raises several interesting
Pat. App. No. 10854054) and a “system,

questions: How will information on
method and apparatus for connecting users
non-“professional” social networks that
in an online computer system based on
German Bill has been made “publicly available”—for
example, a photograph or status update
their relationships within social networks”
(U.S. Pat. No. 7069308). According to
Would Prohibit that a user has designated as viewable
by all users—be treated? And what if an
TheSocial, Facebook likely wants control

Employers From
of the patents to prevent imitation, and
item of content that was formerly “publicly
to give Facebook significant leverage in
available” on a social network is cached by
Using Social Google or another popular search engine,
and is later designated “private” by such
light of Google’s efforts to enter the social
networking space. The patents were

Networks for user on the social network on which it

transferred on May 13 and, as GigaOm
reports, at a purchase price of $40 million,

originally appeared?
the acquisition of Friendster’s patent
Thomas de Mazière, the German Secretary portfolio is one of Facebook’s largest such
Checks of the Interior who is responsible for the
initial draft, stated, “If it turns out that an
acquisitions to date.

The German government has approved employer rejected a candidate because of
a bill that would substantially amend the a private picture on Facebook, a fine can If you wish to review the earlier issues of
country’s framework data protection law, be imposed.” However, when questioned Socially Aware, please click here and here.
the Bundesdatenschutzgesetz (BDSG), how a candidate would evidence that the
expressly with regard to human resources employer used such information, he had Because of the generality of this newsletter, the
information provided herein may not be applicable in
data. Chancellor Angela Merkel’s coalition no answer. The draft bill is available (in all situations and should not be acted upon without
government had promised to revise the German) by following this link. specific legal advice based on particular situations.
The views expressed herein shall not be attributed to
BDSG following a wave of alleged corporate Morrison & Foerster or its clients.
breaches of employee privacy, including
©2010 Morrison & Foerster LLP |