Staying Safe in the Sphere of Influencers
Social media influencer marketing is a growing field; one source estimates that the market grew to 13.8 billion in 2021. Read on to learn about key intellectual property, regulatory, and contractual issues businesses and influencers should consider.
Intellectual Property
As with all intellectual property, IP used in social media influencer marketing needs to be properly cleared to avoid infringing third-party rights. Clearance entails reviewing the content on a web page or social media post, including photographs, music, trademarks and taglines, to identify potential IP, investigating the ownership, and forming an opinion whether permission is required to use it. For example, some free online media is limited to personal use. Check the terms to ensure commercial use is permitted and look for restrictions and credit requirements. A good example is TikTok’s Commercial Music Library, which includes music that has been pre-cleared for commercial use on the TikTok platform. Also be sure to consider issues regarding privacy and the rights of publicity and privacy of people included in the content. While there is no federal statute or case law recognizing a right of publicity in the United States, federal unfair competition law can include claims for false endorsement, association or affiliation. See §15 USC 1125(a).
Ownership of IP rights in social media influencer marketing also follows traditional IP rules. If an influencer creates copyrightable expression, then the influencer will generally be the owner of those rights, unless there is a valid work-for-hire agreement in place. Rights in any trademarks or slogans should be addressed contractually before use begins.
Regulatory Issues
Social media influencer marketing can be subject to regulations promulgated by the Federal Trade Commission (FTC) and the Food and Drug Administration (FDA). The FTC takes an active role in policing, while the FDA typically plays a more remedial role due to its limited jurisdiction.
The FTC has authority to prohibit “unfair or deceptive acts or practices in or affecting commerce.” Based on that authority, the FTC issued Endorsement Guides regarding advertising that apply to ads relying on endorsers, including influencers. In particular, it is important that paid product endorsements include a disclosure, unless the paid nature of the ad is obvious. The FTC summarizes its rules regarding social media influencers in “Disclosures 101 for Social Media Influencers.”
The FTC is taking an active role in enforcing its regulations. For example, a recent action by the FTC included potentially fining Warner Brothers over an influencer campaign that did not disclose the paid nature of multiple endorsements. Warner Brothers ultimately avoided the fine by reaching a settlement with the FTC. The FTC also filed a false advertising lawsuit against a seller of tea and skincare products alleging it made false and unsubstantiated claims, including through its paid influencers, about the efficacy of its products and failed to disclose a material connection with the influencers. That case resulted in a $15.2 million settlement.
The FDA has its own set of stringent rules used for regulating the advertisement of drugs. The most familiar example of these rules is the requirement that drugmakers include the risks and warnings of a drug within an advertisement. To clarify how the rules apply to social media influencers, the FDA has issued four draft guidances and continues to work on and enforce these issues. When Kim Kardashian posted a paid endorsement for the morning sickness drug Diclegis, the warnings were only available by clicking a link — in violation of the FDA’s rule about featuring them prominently in the body of the ad. At the behest of the FDA, Kardashian later made a remedial post with the required information displayed.
Occasionally, the FTC and FDA jointly send warning letters regarding social media influencers. In 2019, both agencies together warned sellers of flavored e-liquids of their failure to follow advertising regulations, including material safety risks, in their marketing to children.
Contractual Issues
Contractual issues should be addressed in writing before beginning an influencer campaign. Topics to consider include who is responsible for clearance, what are the deliverables, and what is the timeline. For example, Bethany Mota recently made news when her client, Studio 71, sued her for not adhering to a schedule of posts that was predetermined.
Takeaway
Nancy will be speaking about social media influencer marketing at the upcoming AIPLA Annual Meeting. If you have questions or would like to discuss these issues, please feel free to contact us.
Nancy J. Mertzel
Mertzel Law PLLC
5 Penn Plaza, 19th Floor
New York, NY 10001
(646) 965-6900