Articles Posted in Social Media

Handicapped signThe Americans with Disabilities Act (ADA) of 1990, 42 U.S.C. § 12101 et seq., significantly affected businesses across the country, requiring them to install facilities to ensure accessibility for people with disabilities. After more than 25 years, this aspect of the ADA has become commonplace, but the ADA’s reach to online, “virtual” spaces is still a matter of dispute. As more and more business is conducted online, the issue of website accessibility has gained in importance. This refers to measures that allow people with disabilities, such as impaired vision, hearing, or mobility, to use a website. A recent trial in an ADA discrimination lawsuit is believed to be the first to address website accessibility under the ADA. Gil v. Winn Dixie Stores, Inc., No. 1:16-cv-23020, verdict and order (S.D. Fla., Jun. 12, 2017). The verdict, which found a business liable for failing to make its website accessible to an individual with vision impairment, could affect businesses all over the country.

Title III of the ADA prohibits discrimination on the basis of disability by “public accommodations,” which are defined broadly to include hotels, restaurants, theaters, retail stores, laundromats and other service-oriented businesses, public transportation terminals, parks, museums, schools, and exercise or recreation venues like bowling alleys. 42 U.S.C. § 12181(7). The statute requires businesses “to design and construct facilities…that are readily accessible to and usable by individuals with disabilities,” unless doing so would be “structurally impracticable.” Id. at § 12183(a)(1). It set a deadline of “30 months after July 26, 1990.” Id. Perhaps the most common conception of an accommodation required by the ADA is a wheelchair ramp that allows access to a building. This is far from the only type of disability covered by the ADA, however.

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The internet offers seemingly infinite possibilities for businesses to connect with their customers and reach out to new ones. It also gives consumers nearly unlimited ways to communicate with businesses and also with other consumers about businesses. Websites like Yelp enable consumers to post reviews of businesses for the public to see. Many businesses take negative reviews as a sign that they need to reconsider some aspect of their operations. A few, however, have taken a more assertive stance by attempting to bar customers entirely from posting negative reviews. A law passed by Congress and signed by President Obama in late 2016, the Consumer Review Fairness Act (CRFA) of 2016, prohibits businesses from using form contracts that purport to restrict consumers’ ability to post negative or critical reviews, commonly known as “gag clauses” or “non-disparagement clauses.”

1 starsAt first glance, a contract prohibiting someone from posting negative reviews to a site like Yelp, while possibly allowing positive reviews, might seem to violate the free speech guarantee of the First Amendment. This is not entirely accurate, though, since the prohibition comes from a contract between two private parties—a business and its customer. The First Amendment, simply stated, only prohibits the government from imposing content-based restrictions on speech. A private party, such as a restaurant or retail store, is legally permitted to eject a customer for almost any reason, including offensive speech.

One exception to the First Amendment’s free speech protection is defamatory speech. This is a statement made to the public that is false, that causes harm to the subject of the statement, and that the person making the statement knows or should know is false. A spoken defamatory statement is known as slander, and a written one is called libel. A customer who posts a negative review of a business that contains false information could be liable to the business for damages in a defamation lawsuit. The CRPA does not concern itself with this type of situation but instead with contractual clauses that prohibit both truthful and false negative reviews.

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careerSmall businesses must overcome a near-countless array of obstacles in order to succeed and prosper. Competition from larger companies, which might have more resources, more institutional experience, and more connections can be a significant hurdle for a small or startup business. Many companies never clear this particular hurdle, but the Small Business Administration (SBA) offers some tools to help small businesses overcome various obstacles and disadvantages. It recently unveiled a new program designed to help small business “protégés” obtain guidance from large business “mentors” with regard to government contracts. Under the Small Business Mentor-Protégé Program (SBMPP), qualifying pairs of businesses will be able to bid on government contracts as joint ventures.

The federal Small Business Act defines a “small business concern,” in a very general sense, as a business that is “is independently owned and operated and…not dominant in its field of operation.” 15 U.S.C. § 632(a)(1). The SBA has promulgated additional rules for determining whether a particular business qualifies as a “small business concern.” 13 C.F.R. § 121.101 et seq. Prior to the establishment of the SBMPP, the SBA only offered a mentor-protégé program for “disadvantaged businesses” under § 8(a) of the Small Business Act, 15 U.S.C. § 637(a). Congress authorized the expansion of the SBA’s mentor-protégé program in § 1345 of the Small Business Jobs Act of 2010, Pub. L. 111-240, 124 Stat. 2546 (Sep. 27, 2010); and § 1641 of the National Defense Authorization Act for Fiscal Year 2013, Pub. L. 112-239, 126 Stat. 2076 (Jan. 2, 2013). See also 15 U.S.C. § 657r.

The purpose of the SBMPP, according to the new rule issued by the SBA, is to “improve the protégé firms’ ability to successfully compete for federal contracts.” 13 C.F.R. § 125.9(a). A business may qualify to act as a mentor by “demonstrat[ing] a commitment and the ability to assist small business concerns.” Id. at § 125.9(b). This includes demonstrating “good moral character” to the SBA. Id. A small business that meets the SBA’s size standards may qualify as a protégé. A company acting as a mentor may only have one protégé, unless the SBA approves a request to have more than one, and small businesses are generally limited to one mentor.

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Open APISA jury recently issued a significant verdict in a legal fight between two major technology companies, although it might not resolve some questions brought up by the litigation. The two companies are fighting over protocols used in a wide range of software applications, known as application programming interfaces (APIs). The plaintiff sued for copyright infringement, alleging that the defendant unlawfully appropriated its APIs for use in its mobile device operating system. Oracle America, Inc. v. Google, Inc., No. 3:10-cv-03561, complaint (N.D. Cal., Aug. 12, 2010). APIs are essential tools for countless digital technologies, so the outcome of this case ought to be of great interest to anyone who regularly uses the web. A federal judge ruled in 2012 that APIs are not subject to copyright infringement, but an appellate court reversed that ruling. On remand, a jury found that Google breached Oracle’s copyright, but the breach was excused under the Fair Use Doctrine.

Copyright law protects “original works of authorship fixed in any tangible medium of expression.” 17 U.S.C. § 102(a). This includes books and other written works, musical recordings, video or film recordings, and software code. It does not, however, include “any idea, procedure, process, system, [or] method of operation.” Id. at § 102(b). A copyright can be a very valuable asset for a business, and copyright owners must take affirmative steps to protect their copyright interests. The Fair Use Doctrine holds that unauthorized use of a copyrighted work is not infringement under certain circumstances, including “criticism, comment, news reporting, teaching…, scholarship, or research,” provided that the use is “transformative.” Id. at § 107; Campbell v. Acuff-Rose Music, 510 U.S. 569, 579 (1994).

The Oracle case presented the question of whether APIs are subject to copyright protection, or whether they are non-copyrightable procedures or processes. An API, simply stated, allows one software application to communicate or interface with another application, acting as a sort of translator between different pieces of software. APIs are essential parts of many common digital technologies, allowing mobile devices to run a wide range of applications and allowing websites to interface with social media services like Facebook and Twitter, to name just two examples.

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False_morel_sauce_with_vegetables.jpgOnline user-submitted reviews have become a critical component of many businesses’ public images. According to a 2011 study from Harvard Business School, a one-star increase in an independent restaurant’s overall Yelp rating increased revenues by five to nine percent. Just as businesses benefit from good reviews, bad reviews can have a devastating impact on a business’ bottom line. Competition among small businesses can, in some instances, lead to false or misleading negative reviews about a competitor, or false positive reviews about a business’ own products or services. Some companies, under the guise of marketing services, provide positive reviews purportedly written by consumers. State and federal law prohibit many of these practices, and both the authors of false or misleading reviews and the businesses that benefit from them have been held liable.

Perhaps the most straightforward method of affecting a business’ online profile involves posting negative information about its products or services. This includes negative reviews posted to websites like Yelp, which allow consumers to write reviews of businesses, or sites like Ripoff Report, which collect consumer complaints. The reviews themselves could contain false information, such as false claims about a restaurant’s cleanliness or food quality, or the reviewer could assume a false identity by posing as a disgruntled former employee or other insider. Many sites attempt to screen and remove fraudulent reviews, but no system is perfect.

False positive reviews promote a business’ reputation at the expense of its competitors. The business could post its own reviews to Yelp and similar sites, or outsource the job to “marketing” companies. A more advanced form of false-positive reviewing involves creating a blog or website that appears to offer impartial reviews of multiple businesses in a particular market. The site ultimately and unsurprisingly recommends the company that created it, although readers do not know of the company’s involvement. Businesses may offer incentives to bloggers and writers with large audiences to promote their product, but without disclosing the writer’s financial interest.
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Facebook-like-button.pngBusinesses often use social media to market their products and services, but unlike other forms of advertising, services like Facebook and Twitter enable companies to interact directly with consumers. This allows them to build relationships with existing customers and engage potential customers. A business’ social media presence may acquire a value of its own as the company and its brand grows, and it acquires “fans” or “followers” that provide it with an audience. A recent decision from a Louisiana bankruptcy court noted the value of social media. In re Thundervision, LLC, No. 09-11145, mem. op. (Bankr. E.D. La., Feb. 5, 2014). The court found that an employee breached a fiduciary duty to his employer, a magazine publisher in Chapter 11 bankruptcy, by starting a competing magazine and using the company’s social media accounts to promote it to the company’s followers.

Thundervision, LLC published Louisiana Home & Gardens (LH&G) magazine as its principal business activity. It maintained a website to support the magazine, ourhouse.biz. The company is owned and managed by two members, one of whom, Roger Wayne Smith, was employed as its primary salesperson. Thundervision operated out of Smith’s home, and employed between two and eight people at different times. It filed for Chapter 11 bankruptcy in April 2009. The bankruptcy court confirmed a reorganization plan in June 2010, but the magazine’s sales began to drop in November 2010. Thundervision published the last issue of LH&G in May 2011, and Smith unilaterally decided to cease operations soon afterward.

Smith registered R W Smith Publishing, LLC with the Louisiana Secretary of State in April 2011, naming himself as the sole member. RW Smith began publishing Our Louisiana magazine after LH&G stopped publication, using the same office, telephone and fax numbers, computers, and office equipment that Thundervision had used for LH&G. The new company also used LH&G‘s subscriber and advertiser lists. It used LH&G‘s Facebook page, which had 1,533 followers, to announce a new page for Our Louisiana. It began using the ourhouse.biz website to solicit Our Louisiana subscriptions, although the site’s content belonged to LH&G. It never compensated Thundervision for the use of these assets.
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TheNorthFace2.JPGOnline counterfeiting is fast surpassing physical markets in terms of losses sustained by trademark owners. Counterfeiters often register websites whose domain names bear deceptive similarities to the actual brands, a practice known as cybersquatting. Federal law has prohibited cybersquatting since the 1990’s, but enforcement can be difficult. A New York federal court case gave trademark owners additional means to fight cybersquatting and counterfeiting in 2010 by holding that the federal Lanham Act allows not only monetary and injunctive relief against cybersquatters, but also injunctive relief against internet registries and internet service providers (ISPs).

The internet has enabled piracy and counterfeiting, once limited to street vendors and marketplaces, to expand globally. The Office of the U.S. Trade Representative (USTR) which monitors other countries’ enforcement of intellectual property rights laws and treaties, estimates that counterfeiting and piracy cost the American economy $48 billion in 2011. It periodically publishes a report on “Notorious Markets,” internet sites and other markets believed to be “engaged in substantial piracy and counterfeiting, ” such as websites and hosting services based in China that sell counterfeit products to other businesses and to the public.

A major breakthrough for trademark owners’ rights came in September 2010, in a default judgment granted in The North Face Apparel Corp., et al v. Fujian Sharing Import & Export Ltd. Co., et al, No. 1:10-cv-01630 (S.D.N.Y.) The plaintiffs, owners of the North Face and Polo Ralph Lauren brands, filed suit against a group of defendants who operated a network of more than a hundred websites in China that shipped counterfeit goods directly to U.S. consumers. The defendants owned thousands of websites using the plaintiffs’ marks, such as ilovethenorthface.com and poloshirtssale.com.
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Haiti_Earthquake_building_damage.jpgA New York federal jury awarded the maximum amount of statutory damages to a photographer alleging copyright infringement against several media companies that used pictures he posted to the social media service Twitter. Agence France Presse v. Morel, No. 1:10-cv-02730, amended judgment (S.D.N.Y., Dec. 11, 2013). The decision could have important implications for any New York business that maintains a social media presence. Copyright protections still apply to pictures posted publicly on the internet. The cost of getting caught infringing someone’s copyright, if this case is any indication, vastly exceeds the cost of purchasing the rights to a stock photo.

Daniel Morel, a freelance photographer, was in Port au Prince, Haiti on January 10, 2010, when a devastating earthquake struck the city, and took photographs of the aftermath. He posted thirteen photos that day to the social networking website Twitter through Twitpic, an affiliated service that lets users attach pictures to tweets. The images did not contain any copyright notices, but his Twitpic page attributed the pictures to him under the name “Morel” and his Twitter username “photomorel.” His pictures were reportedly among the first to reach the outside world from Haiti.

He quickly received multiple requests from news agencies to purchase rights to his photographs. A photo editor at Agence France Presse (AFP) allegedly corresponded with Morel about the photographs, but then downloaded them and posted them to AFP’s own online image database. The editor also sent them to Getty Images, an image licensing company with the exclusive right to market AFP’s images in North America. The photos appeared in multiple news media, including the CBS Evening News and CNN, with AFP/Getty identified as the source.
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2008-03-13_Rave_crowd.jpgNew federal laws may allow entrepreneurs and small business owners to seek investors publicly without having to go through the complex and expensive process of creating an initial public offering (IPO). New businesses may soon be able to raise capital via social media and the internet, in a process known as “crowdfunding.” Currently, websites like Kickstarter allow people to crowdfund creative projects, but businesses seeking equity investments have had to follow strict regulations enforced by the Securities and Exchange Commission (SEC). New rule proposals recently issued by the SEC, however, may change that.

Entrepreneurs have generally had to limit their efforts to raise capital to private sources. According to Forbes, most startup capital comes from the entrepreneurs themselves, who might invest their own savings, take out loans, or use credit cards. Family members, such as parents and spouses, account for a small percentage of startup capital. “Outsiders,” including government programs, venture capitalists, angel investors, and other businesses, account for some startup financing. Venture capitalists fund 0.04% of all startups, and angel investors fund 0.91%. Despite such a small percentage of businesses, venture capitalists are expected to invest $2.7 billion in New York-based startups in 2013. A startup seeking individual equity investors may only approach people who meet certain criteria as “accredited investors,” such as individuals whose net worth is at least $1 million or whose annual income exceeds $200,000.

The Jumpstart Our Business Startups Act (JOBS Act) became law in April 2012. Its purpose was, in part, to help businesses that are not large enough for an IPO but have difficulty raising capital through private channels. It raises the maximum number of shareholders corporations may have, from five hundred to two thousand, before they are required to register with the SEC. The JOBS Act allows companies to raise up to $1 million per year from individual investors, and it greatly relaxes the restrictions on who may invest. Individual investors with a net worth or annual income below $100,000 may invest up to the greater of $2,000 or five percent of their annual income, while investors with a net worth or annual income above $100,000 may invest a maximum of ten percent of their annual income. Companies must still provide information to the SEC, such as names of directors and officers, but the reporting burden is far less than for fully public companies.
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Booker1.jpgNewark Mayor Cory Booker spoke at the South By Southwest (SXSW) Interactive Conference in Austin, Texas earlier this month about his involvement with social media and the potential for social media to help bring people and government together. Booker’s SXSW session, titled “The New Media Politician,” was a seated discussion with Steven James Snyder, an editor at TIME.com. The topics of discussion ranged from his experiences using social media in office to his future political plans. His remarks, which earned him the designation of “Speaker of the Event,” are applicable to New Jersey businesses, which may also benefit from connecting with consumers and government alike via social media.

Reaching a Wider Audience

With around 1.3 million followers, Booker reaches a far wider audience on Twitter than Newark’s population of around 280,000. This has allowed him to communicate with a broad range of people, and it has allowed news about issues facing Newark, and New Jersey in general, to gain a wide following. Issues like Hurricane Sandy relief have brought New Jersey to the forefront of the nation’s attention in recent months, and social media has been a major driver of information. New Jersey businesses, even those that only do business within their community, can also reach a wider audience via services like Twitter or Facebook. This can lead to new markets, or merely to greater exposure for the company’s product or brand.
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